Hyliion Holdings Corp. (NYSE:HYLN) Q3 2024 Earnings Call Transcript

Hyliion Holdings Corp. (NYSE:HYLN) Q3 2024 Earnings Call Transcript November 15, 2024

Operator: Good morning. Thank you for standing by. My name is Prilla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hialeah Holdings third quarter 2024 earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number on your telephone keypad. If you would like to withdraw your question, simply press the star one again. Thank you. I would now like to hand the conference over to Greg Standley. Please go ahead.

Greg Standley: Thank you, and good morning, everyone. Welcome to Hailion Holdings’ third quarter 2024 earnings conference call. On the call today are Thomas Healy, our Chief Executive Officer, and John Panzer, our Chief Financial Officer. A slide presentation accompanies this conference call and is available on Hailiang’s Investor Relations website, at investors.halian.com. Please note that during today’s call, we will make certain forward-looking statements regarding the company’s business outlook. Forward-looking statements are predictions, projections, and other statements about anticipated events that are based on current expectations and assumptions. As such, they are subject to risks and uncertainties. Many factors could cause actual results to differ materially from forward-looking statements made on this call.

For more information on factors that may cause the company’s results to differ materially from such forward-looking statements, please refer to our presentation and press release as well as our filings with the Securities and Exchange Commission. You are cautioned not to put undue reliance on forward-looking statements, and we undertake no duty to update this information unless required by applicable law. Thank you, and I will now turn the call over to Thomas.

Thomas Healy: Hello, and thank you for joining us for Hylian’s third quarter 2024 earnings call. Today, I am joined by our CFO, John Panzer. Over the past quarter, we have made significant progress on the Karno generator, and I am excited to share key updates as we approach the start of early adopter customer deliveries in the coming weeks. Today, I will cover our progress on development, early deployments, and our commercialization plans, the growing market interest we are seeing, especially from the data center sector, and additional details on our recent Office of Naval Research contract. To start, I would like to provide an update on product development progress. I am pleased to announce that we have achieved the second-to-last milestone in our commercialization timeline, completing beta development work for the 200-kilowatt Carnot generator.

With this phase finished, the generator and its components have now moved to the testing and validation stage as we prepare for early adopter customer deliveries. Over the past year of testing the Carnot generator, we have seen promising results that highlight its high efficiency, fuel flexibility, and low emissions. These qualities align closely with the needs of customers in our target markets, and we believe they will differentiate the Carnot generator from other power generation solutions in the industry. In both our Cincinnati and Austin facilities, we are currently manufacturing components, running our additive manufacturing printers 24/7, and receiving parts from vendors to kick off the assembly of the first generators. The key takeaway here is that while we still have further testing and validation steps to complete in the coming weeks, we plan to deliver a couple of customer units before the end of the year.

Our plan is to produce about a dozen early adopter units. Initially, we had planned that all early adopter units would be deployed in the field at customer sites. However, some of these early units will initially be deployed at our facility to perform customer-specific requirements testing before being moved to their final locations, while others will go directly to customer sites in 2025. As we have mentioned in previous calls, the goal of the early deployment unit is to integrate Carnot generators into various customer use cases to showcase their performance. We will closely monitor the performance of these units, provide immediate operational support, and make any necessary adjustments to ensure the technology is ready to scale. As noted previously, revenue recognition for units will occur once we have confirmed that the generators meet design specifications, including key performance criteria, in line with the terms of sale.

Starting at the end of this year and going through the first half of next year, we will deliver early adopter units and incorporate insights gained from their operation into design modifications and enhancements for future units. This iterative process is essential to ensuring we deliver the highest quality product to our customers. As we continue scaling production, we expect commercial deployments to begin around mid-2025. This approach allows us to incorporate any feedback and necessary fixes identified from early adopter deployment into the system before we officially commercialize the 200-kilowatt Carnot generator and begin recognizing revenue on sales starting sometime around mid-2025. Shifting now to some significant recent accomplishments, I am excited to highlight our contract win with the US Office of Naval Research for up to $16 million announced earlier in the quarter.

Through this collaboration, we will be working with the Navy to explore the Carnot generator’s potential for use in naval vessels and stationary power applications. This contract includes the sale of up to seven Carnot generator systems, which the Navy will deploy in various environments to validate the generator’s unique performance characteristics. Key attributes like fuel flexibility, low noise, and low maintenance align closely with the Navy’s operational objectives, supporting their goal of identifying advanced power solutions for future vessels. I am also pleased to share a new development in our business. With the addition of the new Office of Naval Research contract, we will now begin recognizing revenue from R&D services as part of our core business services.

Along with the development and sale of Carnot generators, including this contract along with two earlier government-awarded agreements, we expect the total value of our R&D services and Carnot generator sales with the Office of Naval Research in future periods will be up to $17.2 million. This will enable us to begin recognizing revenue from these and future R&D contracts starting in Q4. We are enthusiastic about this partnership with the Office of Naval Research and believe we have considerable potential for similar contracts in the future, both within the military and across other sectors that stand to benefit from our technology. We also recently announced a successful demonstration of the Carnot generator operating seamlessly on various fuel sources.

The test began with natural gas, then shifted to a nitrogen-rich gas, and finally transitioned through various mixtures of hydrogen and natural gas. This demonstration highlights the generator’s unique capability to adapt to different fuel sources mid-operation, offering unmatched flexibility. This adaptability is particularly beneficial for renewable fuels and oil and gas, where fuel composition may vary during operation. Now turning to some exciting market updates, I am pleased to report that we have secured letters of intent that exceed the number of units we plan to ship in 2025. We expect to deliver several dozen units over the course of the year, aligning with our previously shared guidance of achieving low double-digit million in revenue next year.

This early interest highlights the strong demand and market confidence in the Carnot generator’s potential to transform power generation across multiple industries. Please note that these letters of intent are nonbinding and subject to the execution of definitive sales agreements. A few weeks ago, we also signed an LOI with ANA Incorporated, a leader in mobile industrial equipment, to pilot the deployment of up to six Carnot generators in mobile power rental applications. We expect that this partnership will provide us with a strategic entry into the rental power generation market, allowing us to accelerate adoption with an established industry leader. ANA plans to start their initial deployment of the Carnot generator in 2025 after the parties execute a definitive agreement.

In recent quarters, we have seen increased interest in the Carnot generator from the data center sector. The rapid growth of cloud computing, artificial intelligence, and data analytics is driving demand for more data centers, each requiring substantial power. The Carnot generator aligns well with the industry needs, offering a dispatchable power generation solution that delivers high reliability while meeting strict emission standards. Our generator can serve as both a primary and backup power source, ensuring uninterrupted operation, a critical requirement for data centers. Power demands at data centers in development usually range from 20 megawatts for smaller facilities to over 100 megawatts for large-scale centers, equivalent to deploying 100 200-kilowatt Carnot generators on the low end and more than 500 for larger sites.

This scale is likely to prompt customers to request an accelerated timeline for our 2-megawatt Carnot generator system. We plan to begin development of this system early next year, with the first units expected to be available in 2026. One major advantage of the Carnot generator is its modular design. Each 2-megawatt system contains ten 200-kilowatt shaft arrays integrated into a single operating unit to achieve higher power levels. These generators can operate together or independently, providing flexible power output to meet diverse demand. Lastly, we announced this past quarter that the Carnot generator now qualifies under California’s Renewable Portfolio Standard. This qualification is a major milestone as it opens new opportunities within California, a leader in renewable energy adoption and emission reduction.

The RPS legislation requires utilities to source a portion of their electricity from renewable sources, and the Carnot generator’s capability to operate on renewable fuels like hydrogen and biofuels makes it an attractive option for utilities and other organizations aiming to meet these requirements. To meet demand, we have been rapidly expanding our additive manufacturing capabilities in Austin. Over the past six months, we have grown our fleet of additive print machines, with additional units scheduled for delivery through the second half of next year. In the coming weeks, we expect to take delivery of our first M Line production printers from Equilibrium Additive, a GE Aerospace company. These advanced printers, specifically designed for volume manufacturing, will significantly support our scale-up by providing more lasers, a larger print area, and enhanced production capacity.

In parallel, we are working to improve the throughput of our existing machines, consolidating prints for greater efficiency, and reducing the number of additive parts by transitioning select less complex components to conventional manufacturing. Together, these efforts aim to increase production capacity while also reducing system costs.

Thomas Healy: In conclusion, we continue to make excellent progress on multiple fronts: product development, market engagement, and strategic growth initiatives. All of this culminates with initial deliveries beginning in the coming weeks, followed by a commercial launch and production ramp-up in 2025. With that, I will now hand the call over to John to cover our financial results and outlook.

John Panzer: Thank you, Thomas, and good morning, everyone. Operating expenses for the third quarter were $14.2 million, flat with the second quarter of this year and down compared to the $33.3 million in the third quarter of 2023. This decrease in expenses related to the wind-down of our powertrain business, partly offset by an increase in Carnot spending this year. During the quarter, we recorded a $929,000 credit in powertrain exit and termination expenses, which was driven by the sale of certain assets of the discontinued powertrain business, partly offset by ongoing shutdown costs. Our total net loss in the third quarter was $11.2 million, about flat compared to the second quarter, but down from $30.3 million in the third quarter of 2023.

Year-to-date operating expenses totaled $47.2 million compared to $103.7 million in the first three quarters of 2023. Expenses in 2024 include $2.9 million of powertrain exit and termination costs, net of asset sale gains. As we noted last quarter, the wind-down of powertrain is mostly complete, except we do expect to continue to realize income and cash in the coming quarters from the sale of assets. As of early May, we suspended our share repurchases due to the recent strengthening of our share price and do not expect to execute upon further repurchases but may resume repurchasing activity at a later date as deemed appropriate. Since program inception, we repurchased 10.6 million shares for an aggregate cost of $14 million, resulting in an average purchase price of $1.32.

Turning to our cash and investment position, we spent $11 million during the third quarter, net of asset sales and interest income. Year-to-date, cash used was $62 million, including previously restricted cash. We finished the third quarter with $238 million of cash and investments on our balance sheet. Breaking down uses of cash and investments for the year thus far, spending on core Carnot development activities totaled about $39 million, including capital investments of $10.5 million. Capital investments were directed mostly towards the purchase of additive printing machines and related equipment. In addition to the $14 million spent on share repurchases, we also spent approximately $9 million on powertrain shutdown, net of asset sale proceeds.

We expect that Carnot operating expenses will grow slightly in the fourth quarter compared to the third quarter and that capital spending will be a little higher than the run rates due to faster deliveries of additive printers in Texas. For the full year, we continue to expect that cash usage in 2024 will be approximately $55 million. As a reminder, our cash forecast includes operating expenses, capital spending, and interest income, but excludes cash spent for share repurchases, powertrain shutdown activities, and asset sale proceeds. Note also that this forecast could fluctuate up or down based on the timing of printer deliveries between now and the end of the year. As Thomas mentioned earlier, we expect to begin recognizing revenue from R&D services in the fourth quarter of this year and to ramp up Carnot generator deployments with early adopter customers in the first quarter of 2025.

While these will be paid deployments, the timing of the payments to Hylian and the recognition of payments as revenue will be subject to the terms of sale and the timing of Carnot generator commercialization. These terms include certification and permitting of the generator as well as achievement of operating performance criteria. We currently expect commercialization of the generator to occur sometime around mid-2025. For the fourth quarter of this year, we expect to realize revenue of less than $1 million related to research and development activities. We are maintaining previous guidance that we expect revenue in 2025 to be in the low double-digit millions of dollars, including for R&D services. Initially, we expect gross margins to be negative but also to improve quickly as we realize scale efficiencies in production and purchasing.

We are currently targeting gross margins to be approximately breakeven, measured on a cash basis, by late 2025 or early 2026. Beyond that time frame, we have not yet developed a firm forecast. Finally, we continue to expect that the capital we have on hand today will be sufficient for the foreseeable future, including commercialization of Carnot generator sales. Now I will turn the call back over to Thomas.

Thomas Healy: Thank you, John. Before we open the call to questions, I would like to reiterate our excitement about the quarters ahead and the future beyond that. We have seen the need for more power and demand for distributed generation solutions significantly increase over the past year. With our unique technology and the growing market interest, we believe Hylian is well-positioned to play a pivotal role in this energy transition. Operator, we can now open the call for questions.

Q&A Session

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, simply press the star followed by the number one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and listening by a loudspeaker on your device, please speak off your handset and ensure that your phone is not on mute when asking your question. Once again, please press star one to join the queue. And your first question comes from the line of Sean Milligan with Janney. Please go ahead.

Sean Milligan: Hi. Thank you for taking the questions this morning. This first question is just as you exit the beta period and you head into delivering. I am curious, you know, kind of what your experience has been in the beta period in terms of learnings or any key takeaways, or is the system kind of operating as you would expect?

Thomas Healy: Yeah. I appreciate the question. So just to kind of do a look back from, you know, where we were a year ago, we were launching the alpha version of it. We had a lot of good learnings there around the linear electric motor, the bearings, to get just better reliability performance out of the genset. We did incorporate a lot of those learnings into the alpha version to be able to test them out. We got that operating at a great level. You know, very pleased with it. And then as you saw, we completed the development of the beta, which really means all the design was done. It has moved into the test validation phase. We are still in that phase, but things are looking very promising, and that will put us on track to being able to start customer deliveries by the end of this year.

So thankfully, a lot of the learnings of new product development seem like we were able to catch on the alpha side of things and make great advancements there. And that has really helped with getting us ready for these initial customer deliveries. And as highlighted on this call, we have done a great job of just lining up these early adopter units to where this is really a partnership with these customers. They realize they are getting early units, and we will be working closely with them to get their feedback and if there are any learnings while these units are being run in the field, then be able to make those improvements.

Sean Milligan: Okay. And then I was hoping you could talk about the data center product a little bit more. I just wanted to confirm. So is it just ten Carnot generators inside of a housing? Like, is there any risk in upsizing the Carnot size there, or are you just stringing together units you have already worked on?

Thomas Healy: Yeah. Great question. So inside that enclosure, the plan is there will be ten four-shaft systems, but then all of the accessories around that, when you think about, like, the cooling system, the air handling system, that will be integrated together. And so from a development risk, this is more down the packaging side of things as opposed to the actual generator. And so from that standpoint, you know, we carry over all the learnings of developing this 200-kilowatt genset. The genset really is not changing. More of what is changing is the packaging, the accessories that go around the generator to make it run. So that is where, you know, we do believe we will be in a good position to be able to make initial deliveries of those 2-megawatt systems in 2026.

And then, you know, from there, we do see the data center space as being just a great driver of market demand. Actually, today, we recently saw an announcement of power generation for their fuel cell solutions. So I think that points very positively just to the demand we are seeing out of space and the need for on-site power generation and looking for alternative solutions like fuel cells or like our solution, a linear generator.

Sean Milligan: That is great. And that kind of segues into my next question, if I can ask a couple more, but, like, in terms of Carnot competing versus fuel cells or traditional gensets. Like, how do you stack up? I realize you are not at scale yet, but just cost efficiency, like, how are your customers thinking about those metrics in terms of potentially buying Carnots in 2026 and 2027?

Thomas Healy: Yeah. So there are a couple of things that really stand out as differentiators. So one is upfront cost, which we plan on the Carnot generator being less expensive than what we have seen fuel cell providers offering. The next is just the size of the system. So we are looking at probably in the order of magnitude of about a third the size of a fuel cell. So that will help with, you know, one of the things you may have seen in the Bloom announcement is just they had an emphasis on energy density and how much power can be provided out of an acre of land. This is really important stuff for data centers because, you know, they are looking for a lot of power. They have land constraints, and so if you can provide more power out of the same amount of land, that is a big positive.

And then the other advantage we see, and obviously more of this will be proven out over time, but maintenance and reliability. One of the downsides with fuel cells is the membranes do deteriorate over time. Those need to be replaced, and so that is where we see an advantage with the Carnot generator as well.

Sean Milligan: Okay. Thank you so much. I will turn it over if there are other people in the queue. If not, I can come back and ask some more.

Operator: Thank you. And once again, if you would like to ask a question, simply press the star one. And your next question comes from the line of Ted Jackson with Northland. Please go ahead.

Ted Jackson: Thanks very much. Good morning.

Thomas Healy: Morning, Ted.

Ted Jackson: So a couple of questions. Actually, I had a lot of questions around fuel cells and you guys just went right into it. So that was the meat of my Q&A. But when you comment on you have sold your production capacity for 2025. And I know, you know, producing and revenue do not necessarily correlate linearly, but with regards to production capacity for 2025, what is it on a unit basis?

Thomas Healy: Yeah. So we are expecting to ship several dozens of units next year. And so we will get, you know, as we go through it, we will get more definitive. But at this time, you know, several dozen units is what we are expecting, and then that will generate in the low double-digit millions of revenue for the year.

Ted Jackson: When would you expect to record recognize revenue on all those units, or will some of them, you know, have to go through their, you know, qualification and compliance, if that makes sense? You know, that you were to say I do not know. I could just call it twenty-four units two thousand units, you know, how many of those do you think you would be would be revenue-generating for you during the year?

John Panzer: I will take that one, Ted. So maybe I can summarize what Thomas was saying earlier about revenue recognition. So just to recap, we are expecting to start delivering units to customers later this year, and then we are going to ramp that up into the first quarter. The early deployment units, and then we are going to be addressing any issues and opportunities that come out of those learnings. And then what we said is mid-next year, sometime around there, we think we will be done with R&D, and we will officially commercialize the product. At that point, we expect to be able to recognize revenue from all of those previous sales and then all the sales going forward from that point. So I think the safe way to think about it is if Thomas is, as he was talking about, our estimate of a few dozen units, we would be able to recognize revenue on all of those units that we sold both this year and next year.

Ted Jackson: And then with regards to the production capacity that you are looking for in 2025, is that predicated on the installation of the new equipment that you referenced in the call earlier, or is that equipment to be installed and then part of the growth strategy beyond 2025?

Thomas Healy: Yeah. So the equipment that has been installed over the last quarter will be assisting us with volume for 2025. Now, as we shared during the call, we do have more machines on order, into the second half of next year, and we actually anticipate deliveries from GE. We also shared we are weeks away from just taking delivery of the next latest and greatest additive machine out of GE. So those units that will come more later next year are more focused on 2026 volume. Obviously, units that are installed earlier in the year will assist with volume for 2025. But then as we look at 2026, we will also plan to probably place more orders throughout 2025 to assist with that 2026 ramp-up.

Ted Jackson: And then you mentioned that the GE equipment that you have on order is coming in will increase capacity, not just because it is just more of the same machines, but it is capable of producing more for you. So when we think about 2026, if your current manufacturing capacity is a couple of dozen units, where does the investment take you in terms of production capacity in 2026? And, you know, I mean, for the best of your ability, how much will it cost to put that capacity into place?

John Panzer: I will take a shot at that. You know, as Thomas mentioned, it is not just a couple of dozen units next year versus a couple of dozen units. So we are going to be taking delivery of units of additive printers throughout next year. So that is going to continuously grow our capability. So you have to think about it as the capacity that we will have at the end of next year is more than three dozen units. If you start to look into 2026, we are also looking at additional potential additional capacity beyond that. So you should think of it as a growing number just of, you know, several things. One is we are getting more printers. The printers we are getting have higher capacity, and then all of the printing units that we have, we are getting more throughput over time from those through various means.

So it is going to be continuously growing. What we gave you for next year is just our estimate just based upon what we know and the timing of deliveries and so forth that, you know, we should be at least a few dozen units next year plus or minus. And then it will grow in 2026. We just do not have a definitive number yet what that looks like.

Ted Jackson: No. And I know it is pretty far away, and I mean, the fact that you are giving the color you are giving on 2025 is more than many companies do at this stage of the game, so I do appreciate it. Shifting the focus to I guess,

John Panzer: Can I add one thing, Ted? You know, you had asked about capital. You know, so just maybe just give you a little more color on that. If you look at what we said, we said about $15 million in capital this year for that capacity. And then we also said that next year, overall cash spending should be up modestly compared to this year. So right now, that would include capital. So it is a similar number, maybe a little bit higher next year, and that is going to, again, depend on some timing and deliveries. So that kind of gives you a little bit of an insight into your question of just production capacity versus capital spending.

Ted Jackson: Okay. Thank you for that. And then my last question for you, going over into, you know, the research revenue that is going to be coming into play with the Navy contract. So less than a million for this year. Can you put some brackets around terms of, you know, what is the sort of, I guess, the length of the contract in terms of timing, you know, how we should think about, you know, how you know, make some color about how you actually generate the revenue. And then I am curious, are there any costs associated with that kind of revenue, or is it a pure margin play?

John Panzer: Yeah. I will answer that. So first of all, we mentioned we have actually a number of contracts right now with ONR, which is the Office of Naval Research, on behalf of the Navy. And we are actively pursuing more. So this is not a one-and-done type of a thing, but more of a continuous process. In fact, we have been executing under agreements, much smaller ones, just going back even a little bit in the past. So it will be more of a continuous process. That, you know, so it will be a fairly significant amount of revenue. We mentioned it includes seven Carnot units, and it is really based upon there is definitely work and cost associated with it in terms of, you know, building and selling Carnot units, doing testing, developing new capabilities like testing different fuels and so on.

There will be costs associated with it, and that is built into our, of course, into our revenue forecast for next year. But it is very positive for the company for a number of reasons. It does support a lot of our R&D work. It is setting us up for future sales for the military and other applications. And so we look at it as a very positive, and the fact that we are recognizing it as revenue means we do expect it to be a base part of our core service offerings going into the future.

Ted Jackson: No. It is nothing but positive. I mean, it is obvious that you could see over the military would have a lot of interest in a Carnot generator. I am just kind of trying to understand, like, you know, what drives the revenue, you know, in terms of activity on your part. So delivery of Carnot units, I guess, is one, and then just, I guess, milestones and such as other. Yeah. Exactly. How I would think about it flowing through your P&L. That is all.

John Panzer: Yes. Exactly. It is engineering work, so it is direct services. It is the purchase of materials. It is the sale of Carnot units, and even the fourth thing would be outsourcing services that we oversee to other test labs and so on. So it is a little bit of all of that.

Ted Jackson: And the nice thing just to add to that is the system for the military is the same. It is a 200-kilowatt genset. So, obviously, any testing validation that is done with the military and good news, it carries over into our other deployments as well. So the nice thing is, you know, it is one 200-kilowatt system.

Ted Jackson: Okay. Alright. Well, it is all exciting. I will step out of line and see if there is anyone else who wants to ask some questions.

Operator: Thank you.

John Panzer: Thanks, Ted.

Operator: Thank you. And your next question comes from the line of Sean Milligan with Janney. Please go ahead.

Sean Milligan: Thank you. I just wanted to go back to ask a question about the manufacturing side and just the supply chain there and lead times for the printers and the equipment that you are ordering. And just thinking ahead kind of to 2026 when you talk about delivering or, you know, at least from a testing side, one of the data center ones, like, that is obviously ten gensets right there and data center market is very big. The orders coming out of there. So just kind of, like, if you could talk about how quickly you could ramp printer orders and how quickly those deliver after you order them?

Thomas Healy: Yeah. So it is a multiple-quarter lag between when we place orders for the printers and then when we receive them. Now one thing to note though is we are taking delivery here of the latest and greatest machine out of GE. So I think, you know, we do expect that time between order and delivery of machines to decrease as we go forward as GE starts ramping up the production of those machines. Now in other great news, GE’s additive, which is called Equilibrium Additive, is a very established business within GE. I actually just this past quarter was over at their Germany facility, and they have got tremendous amounts of production capabilities. So we have a great relationship with them. We will plan on continuing to scale with them, but there are also other printer companies out there that we would be able to source from as well if we needed to.

So I think, you know, as we think about, you know, can we get the printers we need in order to scale capacity, I think that is something we will work closely with GE on and or others as we need more capacity. But the other thing that we are going to focus on is do we get more out of the existing printers that we have. So for those who are familiar with additive manufacturing, you know, there are levers you can pull. You can increase the number of lasers. You can increase laser power. You can increase the depth of the powder that is being welded. All these things will make the machines more productive. And so that is an effort we are going to be focusing on in 2025 is how do we take the existing printer base we have and get more out of it in order to make these machines as productive as possible.

Sean Milligan: Okay. Great. Thank you.

Operator: And, again, if you would like to ask a question, simply press the star followed by the number one on your telephone keypad. And I am showing no further questions at this time. I would like to turn the call back to Thomas Healy for closing remarks.

Thomas Healy: Well, thank you, everyone, for joining our third quarter 2024 earnings call. As you heard today, a lot of progress has been made on the commercial front with having LOIs in place that exceed our expected production capacity next year, as well as this interest we are seeing coming out of the data center market and that acceleration of the 2-megawatt solution to really be able to address the demand we are seeing from that space. So with all that, though, the most important and just weeks away of getting the initial customer deliveries out there. So we are looking forward to that and being able to share more as we update you on the next earnings call. Thank you very much for joining us.

Operator: Thank you, presenters. And ladies and gentlemen, this concludes today’s conference call. Thank you all for joining. You may now disconnect.