ROCHESTER, NY, June 8, 2023 – Hyzon Motors Inc. (NASDAQ: HYZN) (“Hyzon” or the “Company”), a high-power hydrogen fuel cell technology developer and global supplier of zero-emission heavy-duty fuel cell electric vehicles (“FCEVs”), announced its first quarter 2023 financial results and provided a business update.
Recent Business Highlights
- Refocused the Company’s core mission on the development and production of single stack 200kW fuel cell systems, commercialized via streamlined heavy-duty vehicle platforms.
- Strengthened governance in response to identified concerns and material weaknesses in controls and procedures; progressing implementation of special committee recommendations and Sarbanes-Oxley; current on periodic filing obligations.
- Upgraded management team with addition of Chief Operating Officer (“COO”) and Chief Human Resources Officer (“CHRO”); restructured and integrated global vehicle and technology functions, to drive increased performance, efficiency and accountability across the Company.
- Produced and tested three single stack 200kW hydrogen fuel cell systems in U.S., with first 200kW prototype FCEV under testing; accumulated over 2,000 miles as of June 2023.
- Published whitepaper Designing the Future of Fuel Cells, describing design and performance advantages of Hyzon’s single stack 200kW fuel cell system and supporting intellectual property (“IP”).
- Signed the first commercial agreement in U.S. with Performance Food Group (“PFG”) with the potential for up to 50 trucks upfit with Hyzon’s proprietary fuel cell systems.
- Commercially activated key customers in Europe with initial vehicle deployments into trials with Hylane in Germany and Juve in Austria.
- During the first quarter of 2023, net loss was $30.3 million, EBITDA was $(29.3) million and adjusted EBITDA was $(27.3) million.
- Reported unrestricted cash, cash equivalents, and short-term investments of $209.0 million as of March 31, 2023, and approximately $185 million as of May 31, 2023.
“Hyzon has made tremendous progress over the past year to restructure our operations and focus on the development and commercialization of our proprietary fuel cell technology,” said Parker Meeks, Hyzon Motors Chief Executive Officer (“CEO”). “We now have a strengthened leadership team, streamlined vehicle offerings and a rationalized geographic footprint to focus on three core markets. As we look to the balance of 2023, we aim to deliver our first commercial Class 8 FCEV to a major U.S. fleet customer, produce and validate 25 200kW fuel cell system prototypes, and declare C-sample of the 200kW fuel cell system. I want to thank our incredibly talented, global team for their commitment to commercialize our 200kW fuel cell technology and create long-term value for all our stakeholders.”
Business Update and Realignment Overview:
Technology: Single 200kW Fuel Cell Focus
Hyzon owns significant IP covering the design, development, and production of high-power fuel cell technology. The Company increased investments in FCEV powertrain research and development (“R&D”), specifically for its 200kW fuel cell system, designed for mobility applications. The standard industry approach to reach ~200kW combines two ~100kW fuel cell systems; Hyzon’s single 200kW fuel cell system is 30% lower in weight and volume, and 25% lower in total fuel cell system cost compared to two of its 110kW fuel cell systems combined.
In the first half of 2023, the Company started initial production on its Membrane Electrode Assembly (“MEA”) line. Additionally, the Company produced and tested three 200kW fuel cell system B-samples. By the end of 2023, Hyzon aims to produce and validate 25 200kW fuel cell system prototypes and have its C-sample 200kW declared. The Company is currently targeting second half of 2024 as Start of Production (“SOP”) for the 200kW fuel cell system in its Bolingbrook, IL facility.
Vehicle: Single Platform per Region
Hyzon rationalized its vehicle product offering from over 20 distinct vehicle variants globally to one vehicle platform developed in each of our three core markets: conventional platform developed in the U.S., cabover platform developed in Europe, and rigid platform developed in Australia. Hyzon also signed its first commercial agreement in the U.S. with PFG for five FCEVs in a pilot phase, with the potential for up to 50 FCEVs total. The first five FCEVs will be upfitted with Hyzon Class 8 110kW fuel cell systems, and an additional 15 FCEVs will be upfitted with Hyzon’s next-generation single 200kW fuel cell system conditional on a successful 200kW vehicle trial. Following these vehicles, PFG and Hyzon also have agreed to work together regarding a mutually agreeable option for 30 additional FCEVs. In Europe, customer trials under commercial agreements have also commenced; in Australia, the rigid platform has received ISO certification and commercialization has begun.
Geography: Growth Led, Government Supported
Hyzon conducted an in-depth evaluation of its global market presence, assessing near-term growth opportunities and current and future potential customer commercialization to prioritize its development activities and resources. The Company’s goal was to refocus its geographic presence to markets with strong government support for energy transition, high growth expectations and margin expansion opportunities, along with large fleet customers with clear decarbonization ambitions. The Company determined that the U.S. (California, port drayage), Europe (Germany, Austria and Netherlands), and Australia-New Zealand are the most prudent markets to focus on, due to government mandates, commercial appetite for clean-energy alternatives and attractive financial opportunities. As a result of this evaluation, the Company commenced its exit of the commercial market in China, and acquired the remaining 49.5% equity interest of Hyzon Motors Europe B.V. from the Company’s prior joint venture partner, Holthausen Clean Technologies Investments B.V. to better serve customers and their needs in Europe.
Organization: Expanded Expertise, Centralized Functions
Since the launch of Hyzon’s reorganization in August 2022, Hyzon has streamlined its management reporting lines to pivot to a centralized, integrated business organization structure and reallocated resources to focus on the commercialization of its fuel cell technology. Additionally, Hyzon has strengthened its management team with a series of appointments both organically and from technology-led companies. Parker Meeks, formerly Hyzon’s Chief Strategy Officer, was named CEO. Jiajia Wu, Hyzon’s Chief Accounting Officer since 2021, was additionally named interim Chief Financial Officer. Dr. Bappa Banerjee, formerly of Wabtec and Caterpillar, joined as COO, a newly created position at Hyzon. Dr. Banerjee’s focus will be on centralizing Hyzon’s core component engineering and supply chain management, and streamlining interface engineering and vehicle homologation. Additionally, Sue Sun-LaSovage joined as CHRO to oversee staff investment and retention critical to scaling Hyzon’s business.
Governance: Prioritized and Strengthened
In response to self-reported accounting concerns raised in July 2022, the Company’s Board of Directors formed a special committee of independent directors to investigate these issues, with the assistance of outside counsel and other advisors. During this period, the Company identified several material weaknesses and has been diligently working on measures to improve its governance framework. The Company is also improving its control environment through Sarbanes-Oxley implementation, and has made additions to its management and board of directors.
First Quarter 2023 Financial Results
For the quarter ended March 31, 2023, the Company reported Cost of Revenue of $0.8 million, R&D expense of $9.3 million and selling, general, and administrative expenses of $30.9 million. Net loss attributable to Hyzon was $30.2 million, including non-cash gains from a change in estimated fair value of private placement warrant liability of $0.6 million and earnout liability of $6.4 million. Basic and diluted loss per share was $(0.12) for the quarter ended March 31, 2023. For the prior year first quarter ended March 31, 2022, the Company reported a net loss attributable to Hyzon of $6.5 million, resulting in basic and diluted loss per share of $(0.03).
At the end of the first quarter of 2023, cash and short-term investments were $209.0 million, approximately $46.3 million lower than the fourth quarter of 2022. The change in cash includes legal payments of $11.4 million in connection with the Special Committee Investigation, the SEC and regulatory investigations and other litigation matters, $4.7 million paid to strategic consultants, $1.5 million invested in capital expenditures and associated deposits, $1.1 million paid to cancel the Orten business combination, $1.0 million paid for accounting and audit services related to the restatements, and $0.3 million paid to our former Executive Chairman and Chief Technology Officer.
Non-GAAP Financial Measures
The Company reported EBITDA of $(29.3) million, and Adjusted EBITDA of $(27.3) million for the three months ended March 31, 2023. Adjusted EBITDA was driven primarily by (a) non-cash items from change in estimated fair value of earnout liability of $6.4 million and private placement warrant liability of $0.6 million, for a total of $7.0 million, and (b) stock-based compensation of $1.4 million and (c) regulatory and legal expenses of $7.7 million. These non-GAAP financial measures have been reconciled to the nearest GAAP measure in the tables under “Non-GAAP Financial Measures” within this press release.
SOURCE: Hyzon Motors Inc