Hyliion Holdings Corp. 10-Q

ITEM 1. FINANCIAL STATEMENTS HYLIION HOLDINGS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except share data) September 30, 2024 December 31, 2023 (Unaudited) Assets Current assets Cash and cash equivalents $ 28,065 $ 12,881 Accounts receivable 1,257 40 Prepaid expenses and other current assets 5,678 18,483 Short-term investments 122,897 150,297 Assets held for sale 3,463 — Total current assets 161,360 181,701 Property and equipment, net 17,428 9,987 Operating lease right-of-use assets 5,779 7,070 Other assets 1,173 1,439 Long-term investments 86,545 128,186 Total assets $ 272,285 $ 328,383 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 1,654 $ 4,224 Current portion of operating lease liabilities 1,531 847 Accrued expenses and other current liabilities 5,975 10,051 Total current liabilities 9,160 15,122 Operating lease liabilities, net of current portion 4,997 6,792 Other liabilities 400 203 Total liabilities 14,557 22,117 Commitments and contingencies (Note 9) Stockholders’ equity Common stock, $ 0.0001 par value; 250,000,000 shares authorized; 184,335,183 and 183,071,317 shares issued at September 30, 2024 and December 31, 2023, respectively; 173,725,113 and 183,034,255 shares outstanding as of September 30, 2024 and December 31, 2023, respectively 18 18 Additional paid-in capital 407,259 404,045 Treasury stock, at cost; 10,610,070 and 37,062 shares as of September 30, 2024 and December 31, 2023, respectively ( 14,135 ) ( 33 ) Accumulated deficit ( 135,414 ) ( 97,764 ) Total stockholders’ equity 257,728 306,266 Total liabilities and stockholders’ equity $ 272,285 $ 328,383 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents HYLIION HOLDINGS CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollar amounts in thousands, except share and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenues Product sales and other $ — $ 96 $ — $ 672 Total revenues — 96 — 672 Cost of revenues Product sales and other — 677 — 1,675 Total cost of revenues — 677 — 1,675 Gross loss — ( 581 ) — ( 1,003 ) Operating expenses Research and development 9,462 25,115 25,741 73,472 Selling, general and administrative 5,648 8,186 18,502 30,265 Exit and termination costs ( 929 ) — 2,946 — Total operating expenses 14,181 33,301 47,189 103,737 Loss from operations ( 14,181 ) ( 33,882 ) ( 47,189 ) ( 104,740 ) Interest income 2,979 3,534 9,504 10,345 Gain on disposal of assets — — 3 1 Other income, net — 26 32 14 Net loss $ ( 11,202 ) $ ( 30,322 ) $ ( 37,650 ) $ ( 94,380 ) Net loss per share, basic and diluted $ ( 0.06 ) $ ( 0.17 ) $ ( 0.21 ) $ ( 0.52 ) Weighted-average shares outstanding, basic and diluted 173,612,768 181,641,060 175,302,069 180,914,250 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents HYLIION HOLDINGS CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Dollar amounts in thousands, except share data) Nine Months Ended September 30, 2024 Common Stock Treasury Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity Shares Amount Shares Amount Balance at December 31, 2023 183,071,317 $ 18 ( 37,062 ) $ ( 33 ) $ 404,045 $ ( 97,764 ) $ 306,266 Exercise of common stock options and vesting of restricted stock units, net 945,378 — — — ( 247 ) — ( 247 ) Share-based compensation — — — — 1,320 — 1,320 Repurchase of treasury stock — — ( 8,675,395 ) ( 11,337 ) — — ( 11,337 ) Net loss — — — — — ( 15,592 ) ( 15,592 ) Balance at March 31, 2024 184,016,695 $ 18 ( 8,712,457 ) $ ( 11,370 ) $ 405,118 $ ( 113,356 ) $ 280,410 Exercise of common stock options and vesting of restricted stock units, net 138,419 — — — ( 68 ) — ( 68 ) Share-based compensation — — — — 1,125 — 1,125 Repurchase of treasury stock — — ( 1,897,613 ) ( 2,771 ) — — ( 2,771 ) Net loss — — — — — ( 10,856 ) ( 10,856 ) Balance at June 30, 2024 184,155,114 $ 18 ( 10,610,070 ) $ ( 14,141 ) $ 406,175 $ ( 124,212 ) $ 267,840 Exercise of common stock options and vesting of restricted stock units, net 180,069 — — — ( 12 ) — ( 12 ) Share-based compensation — — — — 1,096 — 1,096 Repurchase of treasury stock — — — 6 — — 6 Net loss — — — — — ( 11,202 ) ( 11,202 ) Balance at September 30, 2024 184,335,183 $ 18 ( 10,610,070 ) $ ( 14,135 ) $ 407,259 $ ( 135,414 ) $ 257,728 Nine Months Ended September 30, 2023 Common Stock Treasury Stock Additional Paid-In Capital (Accumulated Deficit) Retained Earnings Total Stockholders’ Equity Shares Amount Shares Amount Balance at December 31, 2022 179,826,309 $ 18 — $ — $ 397,810 $ 25,746 $ 423,574 Exercise of common stock options and vesting of restricted stock units, net 869,263 — — — ( 176 ) — ( 176 ) Share-based compensation — — — — 2,040 — 2,040 Net loss — — — — — ( 28,831 ) ( 28,831 ) Balance at March 31, 2023 180,695,572 $ 18 — $ — $ 399,674 $ ( 3,085 ) $ 396,607 Exercise of common stock options and vesting of restricted stock units, net 456,579 — — — 44 — 44 Share-based compensation — — — — 1,721 — 1,721 Net loss — — — — — ( 35,227 ) ( 35,227 ) Balance at June 30, 2023 181,152,151 $ 18 — $ — $ 401,439 $ ( 38,312 ) $ 363,145 Exercise of common stock options and vesting of restricted stock units, net 1,564,294 — — — 130 — 130 Share-based compensation — — — — 1,409 — 1,409 Net loss — — — — — ( 30,322 ) ( 30,322 ) Balance at September 30, 2023 182,716,445 $ 18 — $ — $ 402,978 $ ( 68,634 ) $ 334,362 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents HYLIION HOLDINGS CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollar amounts in thousands) Nine Months Ended September 30, 2024 2023 Cash flows from operating activities Net loss $ ( 37,650 ) $ ( 94,380 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 2,140 1,796 Amortization and accretion of investments, net ( 2,489 ) ( 1,821 ) Noncash lease expense 1,291 1,072 Inventory write-down — 992 Gain on disposal of assets, including assets held for sale ( 2,109 ) ( 1 ) Share-based compensation 3,541 5,170 Carrying value adjustment to assets held for sale 5,564 — Changes in operating assets and liabilities: Accounts receivable ( 580 ) 996 Inventory — ( 1,057 ) Prepaid expenses and other assets ( 5,215 ) ( 1,200 ) Accounts payable ( 2,655 ) 555 Accrued expenses and other liabilities ( 4,018 ) ( 3,295 ) Operating lease liabilities ( 1,111 ) ( 1,254 ) Net cash used in operating activities ( 43,291 ) ( 92,427 ) Cash flows from investing activities Purchase of property and equipment ( 10,548 ) ( 6,755 ) Proceeds from sale of property and equipment 4,110 2 Payments for security deposit, net — ( 45 ) Purchase of investments ( 55,383 ) ( 170,197 ) Proceeds from sale and maturity of investments 126,686 178,556 Net cash provided by investing activities 64,865 1,561 Cash flows from financing activities Proceeds from exercise of common stock options 67 230 Taxes paid related to net share settlement of equity awards ( 393 ) ( 232 ) Repurchase of treasury stock ( 13,982 ) — Net cash used in financing activities ( 14,308 ) ( 2 ) Net increase (decrease) in cash and cash equivalents and restricted cash 7,266 ( 90,868 ) Cash and cash equivalents and restricted cash, beginning of period 21,464 120,133 Cash and cash equivalents and restricted cash, end of period $ 28,730 $ 29,265 Supplemental disclosure of noncash investing and financing activities: Repurchase of treasury stock included in accrued expenses $ 120 $ — Acquisitions of property and equipment included in accounts payable and other $ 227 $ 512 Right-of-use assets obtained in exchange for lease obligations $ — $ 2,096 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents HYLIION HOLDINGS CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except as separately indicated) Note 1. Overview Hyliion Holdings Corp. is a Delaware corporation headquartered in Cedar Park, Texas, with research and development facilities near Cincinnati, Ohio, that designs and develops power generators for stationary and mobile applications and provides research and development services. References to the “Company,” “Hyliion,” “we,” or “us” in this report refer to Hyliion Holdings Corp. and its wholly owned subsidiary, unless expressly indicated or the context otherwise requires. Note 2. Disposals Strategic Plan Wind Down On November 7, 2023, the Board of the Company approved a strategic plan to wind down its powertrain business and preserve the related intellectual property (the “Plan”). We have not accounted for the impacts of the Plan as a discontinued operation through September 30, 2024 as we have not abandoned or sold the underlying intellectual property. We historically provided limited assurance-type warranties under our powertrain contracts and plan to continue to service such warranties through their remaining term, with the majority ending in 2024. Total charges and expenses (income) related to the Plan of ($ 0.9 ) million and $ 2.9 million for the three and nine months, respectively, ended September 30, 2024, inclusive of recoveries from assets sold and charges to assets held for sale discussed below, are included in exit and termination costs in the condensed consolidated statements of operations. Th e change in total liabilities associated with the Plan is included within accrued expenses and other current liabilities as presented in Note 8, and accounts payable, and is summarized as follows (in millions): June 30, 2024 Charged to Expense Costs Paid or Settled September 30, 2024 Employee severance and retention $ 0.4 $ — $ ( 0.1 ) $ 0.3 Contract terminations 1.0 — ( 0.2 ) 0.8 Warranty obligations 0.1 — — 0.1 $ 1.5 $ — $ ( 0.3 ) $ 1.2 March 31, 2024 Charged to Expense Costs Paid or Settled June 30, 2024 Employee severance and retention $ 0.7 $ — $ ( 0.3 ) $ 0.4 Contract terminations 2.1 — ( 1.1 ) 1.0 Warranty obligations 0.1 — — 0.1 $ 2.9 $ — $ ( 1.4 ) $ 1.5 December 31, 2023 Charged to Expense Costs Paid or Settled March 31, 2024 Employee severance and retention $ 1.1 $ — $ ( 0.4 ) $ 0.7 Contract terminations 6.5 ( 0.7 ) ( 3.7 ) 2.1 Warranty obligations 0.4 ( 0.3 ) — 0.1 $ 8.0 $ ( 1.0 ) $ ( 4.1 ) $ 2.9 The above estimates of the cash expenditures and charges that the Company expects to incur in connection with the Plan, and the timing thereof, are subject to a number of assumptions and actual amounts may differ materially from estimates. In addition, the Company may incur other cash expenditures or charges not currently contemplated due to unanticipated events. Assets Held for Sale Through the quarter ended September 30, 2024, certain assets of our powertrain business, including Class 8 semi-trucks and capital equipment, were being actively marketed for sale, and we were actively locating buyers for these assets at prices that were reasonable in relation to their current fair value and the assets were available for immediate sale in their present condition. At the time of initial classification as held for sale, we estimated that the sale of these assets was expected to be completed within one year and it was unlikely that significant changes to the plan of sale would be made. We review assets held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to their estimated fair values less costs to sell. 5 Table of Contents HYLIION HOLDINGS CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except as separately indicated) We had assets held for sale of $ 3.5 million consisting of property and equipment in connection with the Plan at their fair value less costs to sell at September 30, 2024. We used fair value hierarchy Level III inputs including comparable assets, adjusted for condition, and recorded charges of $ 0.0 million and $ 5.6 million included in exit and termination costs in the condensed consolidated statements of operations in the three and nine months, respectively, ended September 30, 2024. The estimates of fair value less costs to sell are subject to a number of assumptions and actual amoun ts may differ materially from estimates. We recorded net benefits for recoveries related to asset sales of $ 0.9 million and $ 2.1 million included in exit and termination costs in the condensed consolidated statements of operations in the three and nine months, respective ly, ended September 30, 2024 and included in gain on disposal of assets in the condensed consolidated statements of cash flows for the nine months ended September 30, 2024. Note 3. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Hyliion Holdings Corp. and its wholly owned subsidiary. Intercompany transactions and balances have been eliminated upon consolidation. The condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”), which permit reduced disclosure for interim periods. The condensed consolidated balance sheet at December 31, 2023 was derived from audited financial statements for the fiscal year then ended, but does not include all necessary disclosures required with respect to annual financial statements. In the opinion of the Company, these condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the dates and periods presented. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s 2023 Annual Report. Results for interim periods are not necessarily indicative of the results to be expected for a full fiscal year or for any future period. These condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The Company is an early-stage growth company and has generated negative cash flows from operating activities since inception. At September 30, 2024, the Company had total equity of $ 257.7 million, inclusive of cash and cash equivalents of $ 28.1 million and total investments of $ 209.4 million. Based on this, the Company has sufficient funds to continue to execute its business strategy for the next twelve months from the issuance date of the financial statements included in this Quarterly Report on Form 10-Q. Use of Estimates The preparation of financial statements in conformity with GAAP require s management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of expenses during the reporting period. The Company’s most significant estimates and judgments involve assets held for sale, income taxes and valuation of share-based compensation. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to the Company’s condensed consolidated financial statements. Concentration of Supplier Risk The Company is dependent on certain suppliers, many of which are single source suppliers, and the inability of these suppliers to deliver necessary components of the Company’s products in a timely manner at prices, quality levels and volumes that are acceptable, or the Company’s inability to efficiently manage these components from these suppliers, could have a material adverse effect on the Company’s business, prospects, financial condition and operating results. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity date of 90 days or less at the time of purchase to be cash and cash equivalents only if in checking, savings or money market accounts. Cash and cash equivalents include cash held in banks and money market accounts and are carried at cost, which approximates fair value. The Company maintains cash in excess of federally insured limits at financial institutions which it believes are of high credit quality and has not incurred any losses related to these balances to date. The Company believes its credit risk, with respect to these financial institutions to be minimal. 6 Restricted Cash The Company provided a supplier with a letter of credit for $ 7.9 million in the fourth quarter of 2023 to secure the performance of the Company’s obligations to purchase semi-trucks related to the Founders Program, backed by a restricted cash deposit to pay any draws on the letter of credit by the supplier. The Company was released from this letter of credit in the first quarter of 2024. The Company has provided its corporate headquarters lessor with a letter of credit for $ 0.7 million to secure the performance of the Company’s lease obligations, backed by a restricted cash deposit to pay any draws on the letter of credit by the lessor. Total cash and cash equivalents and restricted cash as presented in the condensed consolidated statements of cash flows is summarized as follows: September 30, 2024 December 31, 2023 September 30, 2023 December 31, 2022 Cash and cash equivalents $ 28,065 $ 12,881 $ 28,600 $ 119,468 Restricted cash included in prepaid expenses and other current assets — 7,918 — — Restricted cash included in other assets 665 665 665 665 $ 28,730 $ 21,464 $ 29,265 $ 120,133 Accounts Receivable Accounts receivable are stated at a gross invoice amount, net of an allowance for doubtful accounts. The allowance for doubtful accounts is maintained at a level considered adequate to provide for potential account losses on the balance based on the Company’s evaluation of the anticipated impact of current economic conditions, changes in the character and size of the balance, past and expected future loss experience and other pertinent factors. At September 30, 2024 and December 31, 2023, there were no accounts receivable due from customers or allowances for doubtful accounts. Accounts receivable consisted of amounts due from performance of government contracts for which the Company was a prime and subcontractor and for sales of equipment associated with the wind down of the powertrain business. Investments The Company’s investments consist of corporate bonds, U.S. treasury and agency securities, state and local municipal bonds and commercial paper, all of which are classified as held-to-maturity, with a maturity date of 36 -months or less at the time of purchase. The Company determines the appropriate classification of investments at the time of purchase and re-evaluates such designation as of each balance sheet date. Investments are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, along with interest, is included in interest income. The Company uses the specific identification method to determine the cost basis of securities sold. Investments are impaired when a decline in fair value is judged to be other-than-temporary. The Company evaluates investments for impairment by considering the length of time and extent to which market value has been less than cost or amortized cost, the financial condition and near-term prospects of the issuer as well as specific events or circumstances that may influence the operations of the issuer and the Company’s intent to sell the security or the likelihood that it will be required to sell the security before recovery of the entire amortized cost. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded to other income (expense) and a new cost basis in the investment is established. Fair Value Measurements ASC 820, Fair Value Measurements , clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level I : Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company can access at the measurement date; Level II : Significant other observable inputs other than level I prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data; and 7 Level III : Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. An asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company believes its valuation methods are appropriate and consistent with other market participants, however the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The Company’s financial instruments consist of cash and cash equivalents and restricted cash, accounts receivable, investments, accounts payable and accrued expenses. The carrying value of cash and cash equivalents and restricted cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of those instruments. The fair value of investments is based on quoted prices for identical or similar instruments in markets that are not active. As a result, investments are classified within Level II of the fair value hierarchy. Inventories Through September 30, 2024, we have not yet commercialized the KARNO generator. Costs incurred for components acquired prior to our determination of reaching a commercial stage are expensed as research and development costs, resulting in zero cost basis for those components. As a result, moving-average prices for inventory that is capitalized in future periods may be significantly affected by those zero cost items. Revenue The Company has been performing under two contracts as both a prime and subcontractor to the United States government to provide research and development services in contractual amounts up to $ 2.4 million. The larger of these two contracts was modified and will be accounted for as a new contract in the quarter ending December 31, 2024. These contracts were not accounted for as revenue as they were not made in the ordinary course of business and the counterparties were not customers under GAAP. In September 2024, the Company was awarded a cost-plus-fixed fee contract up to $ 16.0 million by the United States Department of the Navy’s Office of Naval Research (“ONR”) to research the applicability of its KARNO generator for navy ships and stationary power applications. Under the agreement, the Company will provide up to seven KARNO generators and related research and development services through September 2026. The ONR contract represented a significant change in business strategy toward providing research and development activities in the ordinary course of business in addition to designing and developing power generators for stationary and mobile applications. The Company will account for all three contracts under ASC 606 beginning in the quarter ending December 31, 2024. The amounts remaining to be billed on these contracts was up to $ 17.2 million as of September 30, 2024. We had accounts receivable due on these contracts of $ 0.5 million and nil at September 30, 2024 and December 31, 2023, respectively, and no allowance for doubtful accounts. Inventory is consumed in the performance of these contracts in the quarter in which it is purchased and we therefore do not record inventory at each reporting period pertaining to these contracts. Research and Development Expense Research and development costs did not meet the requirements to be recognized as an asset as the associated future benefits were at best uncertain and there was no alternative future use at the time the costs were incurred. Research and development costs include, but are not limited to, outsourced engineering services, allocated facilities costs, depreciation on equipment utilized in research and development activities, internal engineering and development expenses, materials, internally developed software and employee related expenses (including salaries, benefits, travel, and share-based compensation) related to development of the Company’s products and services. Recent Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) , to enable investors to better understand the major components of an entity’s income statement. The pronouncement is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027 and we expect a material impact to our disclosures as a result of adoption. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) , to enhance transparency and decision usefulness of income tax disclosures. The pronouncement is effective for fiscal years beginning after December 15, 2024 and we expect a material impact to our disclosures as a result of adoption. 8 In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , to improve the disclosures about a public entity’s reportable segments. The pronouncement is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024 and we expect a material impact to our disclosures as a result of adoption. Note 4. Investments The amortized cost, unrealized gains and losses, fair value and maturities of our held-to-maturity investments at September 30, 2024 and December 31, 2023 are summarized as follows: Fair Value Measurements at September 30, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Commercial paper $ 3,444 $ 7 $ — $ 3,451 U.S. government agency bonds 19,674 13 ( 28 ) 19,659 State and municipal bonds 10,885 32 — 10,917 Corporate bonds and notes 175,439 1,016 ( 15 ) 176,440 $ 209,442 $ 1,068 $ ( 43 ) $ 210,467 Fair Value Measurements at December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Commercial paper $ 35,218 $ 18 $ ( 10 ) $ 35,226 U.S. government agency bonds 27,602 56 ( 186 ) 27,472 State and municipal bonds 15,262 1 ( 48 ) 15,215 Corporate bonds and notes 200,401 515 ( 255 ) 200,661 $ 278,483 $ 590 $ ( 499 ) $ 278,574 September 30, 2024 December 31, 2023 Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 122,897 $ 123,220 $ 150,297 $ 149,934 Due after one year through five years 86,545 87,247 128,186 128,640 $ 209,442 $ 210,467 $ 278,483 $ 278,574 Note 5. Fair Value Measurements The fair value measurements of our financial assets at September 30, 2024 and December 31, 2023 are summarized as follows: Fair Value Measurements at September 30, 2024 Level I Level II Level III Total Cash and cash equivalents $ 28,065 $ — $ — $ 28,065 Restricted cash 665 — — 665 Held-to-maturity investments: Commercial paper — 3,451 — 3,451 U.S. government agency bonds — 19,659 — 19,659 State and municipal bonds — 10,917 — 10,917 Corporate bonds and notes — 176,440 — 176,440 $ 28,730 $ 210,467 $ — $ 239,197 9 Fair Value Measurements at December 31, 2023 Level I Level II Level III Total Cash and cash equivalents $ 12,881 $ — $ — $ 12,881 Restricted cash 8,583 — — 8,583 Held-to-maturity investments: Commercial paper — 35,226 — 35,226 U.S. government agency bonds — 27,472 — 27,472 State and municipal bonds — 15,215 — 15,215 Corporate bonds and notes — 200,661 — 200,661 $ 21,464 $ 278,574 $ — $ 300,038 Note 6. Property and Equipment, Net Property and equipment, net at September 30, 2024 and December 31, 2023 is summarized as follows: September 30, 2024 December 31, 2023 Production machinery and equipment $ 18,734 $ 10,376 Vehicles 912 2,013 Leasehold improvements 4,074 2,236 Office furniture and fixtures 248 223 Computers and related equipment 2,086 1,963 26,054 16,811 Less: accumulated depreciation ( 8,626 ) ( 6,824 ) Total property and equipment, net $ 17,428 $ 9,987 We began placing new additive manufacturing equipment into service in our Cedar Park facility during the current quarter, with useful lives up to 12 years, included in production machinery and equipment. Note 7. Share-Based Compensation During the nine months ended September 30, 2024 and 2023, the Company granted 6.1 million and 2.2 million, respectively, restricted stock units which will vest over a period of one to three years . During the nine months ended September 30, 2024 and 2023, 1.2 million and 0.6 million, respectively, of restricted stock units and options were forfeited. Share-based compensation expense for the three and nine months ended September 30, 2024 was $ 1.1 million and $ 3.5 million, respectively. Share-based compensation expense for the three and nine months ended September 30, 2023 was $ 1.4 million and $ 5.2 million, respectively. In May 2024, stockholders of the Company approved the Hyliion Holdings Corp. 2024 Equity Incentive Plan which allows issuance of up to 8,000,000 shares, subject to certain adjustments. Of the restricted stock units granted in the first quarter of 2024, 2.7 million units may vest between February 13, 2025 and December 31, 2026 contingent upon achieving underlying closing stock price thresholds. These awards were valued at $ 0.83 per unit using fair value hierarchy Level III inputs including an underlying share volatility of 90 % and a risk-free rate of 4.35 %. There were no material amounts of market-conditioned awards granted after the first quarter of 2024. 10 Note 8. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities at September 30, 2024 and December 31, 2023 are summarized as follows: September 30, 2024 December 31, 2023 Accrued professional services and other $ 1,822 $ 2,606 Accrued compensation and related benefits 2,516 1,510 Other accrued liabilities 470 1,922 Accrued severance, contract termination, and other charges 1,167 4,013 $ 5,975 $ 10,051 Note 9. Commitments and Contingencies Economic Incentive Agreement During the quarter ended March 31, 2024, in connection with our operations in Cedar Park, Texas, the Company entered into an agreement with the Cedar Park Economic Development Corporation (“EDC”) that superseded prior agreements, whereby the Company would receive cash grants up to $ 1.1 million from the EDC at various measurement dates during the term of the agreement contingent upon the Company fulfilling and maintaining certain occupancy, investment, and employment requirements. The requirements must be met on or before specific measurement dates and maintained throughout the term of the agreement, which expires effective December 31, 2029. The Company has received payments to date of $ 0.4 million which remain refundable and subject to these performance requirements and are included within other liabilities as of September 30, 2024. Under the agreement, the EDC has the right to file a security interest to all assets of the Company. Legal Proceedings The Company is periodically involved in legal proceedings, legal actions and claims arising in the nor mal course of business, including proceedings relating to product liability, intellectual property, safety and health, employment and other matters. The Company believes that the outcome of such legal proceedings, legal actions and claims will not have a significant adverse effect on the Company’s financial position, results of operations or cash flows. Note 10. Net Loss Per Share The computation of basic and diluted net loss per share for the three and nine months ended September 30, 2024 and 2023 is summarized as follows (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Numerator: Net loss attributable to common stockholders $ ( 11,202 ) $ ( 30,322 ) $ ( 37,650 ) $ ( 94,380 ) Denominator: Weighted average shares outstanding, basic and diluted 173,612,768 181,641,060 175,302,069 180,914,250 Net loss per share, basic and diluted $ ( 0.06 ) $ ( 0.17 ) $ ( 0.21 ) $ ( 0.52 ) 11 Potential common shares excluded from the computation of diluted net loss per share because including them would have had an anti-dilutive effect for the three and nine months ended September 30, 2024 and 2023 are summarized as follows: Three and Nine Months Ended September 30, 2024 2023 Unexercised stock options 190,529 683,090 Unvested restricted stock units* 6,446,843 3,976,223 6,637,372 4,659,313 * Potential common shares from unvested restricted stock units for the periods ended September 30, 2024 and 2023 include no and 653,334 shares, respectively, where no accounting grant date had been established. 12 Table of Contents