Hyzon Motors Inc. (NASDAQ:HYZN) Q4 2023 Earnings Call Transcript

Hyzon Motors Inc. (NASDAQ:HYZN) Q4 2023 Earnings Call Transcript March 22, 2024

Hyzon Motors Inc. beats earnings expectations. Reported EPS is $-0.19, expectations were $-0.2. HYZN isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Hello, and welcome to the Hyzon Fourth Quarter 2023 Earnings Call. [Operator Instructions] I will now turn the conference over to Henry Kwon. Please go ahead.

Henry Kwon: Thank you, operator, and good morning, everyone. Welcome to Hyzon’s fourth quarter 2023 earnings call. With me on the call today are Parker Meeks, Chief Executive Officer; Stephen Weiland, Chief Financial Officer; and Dr. Christian Mohrdieck, Chief Technology Officer. As a reminder, you can find the press release detailing our financial results and the presentation accompanying today’s call in the Investor Relations section of our website. Today’s discussions include references to non-GAAP measures. These measures are reconciled to the most comparable U.S. GAAP measures and can be found at the end of the Q4 earnings press release. This morning’s discussions include forward-looking statements regarding future plans and expectations.

Actual results might differ materially from those stated, and factors that could cause actual results to differ are explained in the forward-looking statements at the end of the press release and Page 2 of our earnings presentation. Forward-looking statements speak only as of the date on which they are made. You are cautioned not to put undue reliance on forward-looking statements. With that, I will turn the call over to our CEO, Parker Meeks.

Parker Meeks: Good morning, everyone, and thank you for joining our fourth quarter 2023 earnings call. I’m pleased to be joined by Steve today and to introduce Dr. Mohrdieck, who are thrilled to have as Hyzon’s CTO. Hyzon continues to progress as a leader in the global transition to clean energy by developing and commercializing our proprietary high-power zero-emission fuel cell technology. Our leading technology provides a lighter, smaller, more cost-effective and more fuel-efficient fuel cell system. Today, we deploy that fuel cell technology in heavy-duty fuel cell trucks. As the hydrogen ecosystem grows, we have the potential to deploy both our existing and our future generation fuel cell technology and additional heavy-duty industrial ecosystems, such as rail, mining, aviation and stationary power with several of these opportunities in early development.

We believe 2024 will be a year of foundational commercialization for Hyzon. Our single stack 200-kilowatt fuel cell technology is coming to start of production or SoP. We are commercially deploying fuel cell trucks into customer operations in our prioritized markets on three continents. And government, commercial and regulatory support for hydrogen continues to grow even stronger. We believe our accomplishments in the fourth quarter of 2023 demonstrate the inflection point we have achieved for Hyzon’s technology commercialization, and I will take a few minutes to describe why. Turning first to Technology & Manufacturing. In the fourth quarter, we achieved our full year 2023 operational milestone of manufacturing 25 single-stack 200-kilowatt fuel cell system B-samples.

In our fuel cell production facility outside Chicago, Illinois, here in the U.S. This includes factory acceptance testing, full design verification and significant durability testing. We also progressed fuel cell system development to the C-sample stage, a crucial step in the standard automotive product development process as these samples are built with production tooling to meet all technical requirements for SOP. With this progress, we are on track for SOP of the 200-kilowatt fuel cell system in the second half of 2024 with minimal CapEx requirements remaining to achieve that SOP. Additionally, we expect the facility to have an annual capacity of 700, 200-kilowatt fuel cell systems on three shifts at SOP with plans to debottleneck further and efficiently manage associated debottlenecking CapEx in line with demand.

We expect this approach to maintain the benefits of our asset-light business model. Fuel cell assembly capacity additions efficiently taken in line with anticipated demand increases from our customers over multiyear commercial agreements. On the commercial front, we’re excited to have deployed 19 heavy-duty fuel cell electric vehicles under commercial agreements in the customer operations across three continents in 2023, achieving the high end of our guidance of 15 to 20 vehicles commercially deployed. Of those vehicles, five were deployed in the U.S. to both and large fleet customers, three in Europe and 11 in Australia. I would like to briefly highlight our U.S. deliveries, four of which were to Performance Food Group, or PFG in California.

The deployment of these trucks is a foundational step toward achieving emission reduction goals shared by Hyzon PFG and the State of California. It also marks a crucial step in Hyzon’s progress as it demonstrates our ability to deliver vehicles with a positive cash contribution margin at the truck level to large fleet customers. As previously announced, pending a successful trial with Hyzon’s 200-kilowatt heavy-duty fuel cell truck, Hyzon and PFG intend to work together on an agreement for 15 200-kilowatt fuel cell trucks and a potential further option for an additional 30 fuel cell trucks bring the total potential to 50 fuel cell trucks if all options are fully exercised. This is exactly the customer profile and multiyear scaling commercial agreement structure.

We are focused on delivering to large fleets with a number of fleets already through their trials and the full trial schedule anticipated for the U.S. 200-kilowatt fuel cell truck platform kicking off in the first half of this year. We remain focused on converting additional large fleets to similar multiyear commercial agreements on the back of our trial program. Outside North America, we also launched a commercial trial deployments of our first heavy rigid fuel cell electric refuse collection truck platform in Australia with REMONDIS, a global recycling service and water company. After completing a successful 4-month trial, the vehicle delivered performance in line with its combustion engine equivalents, including full shifts with over 1,200 Vinlifts with fuel left over at the end of the workday, no refueling required.

That performance is significantly better than even the best battery electric refuse truck alternatives that our customers are seeing, in some cases, doubling the daily work rate of battery electric — demonstrating our clear view that fuel cell trucks are the only viable decarbonization option in refuse to fully perform the work a combustion engine can deliver and the fleet’s need. Additionally, the operating cost of the Hyzon fuel cell truck was equivalent to the operating cost of the diesel alternative without subsidies, proving that with the right fuel availability, fuel cell heavy-duty trucks can do the work at a similar operating cost today. With the trial complete and successful, the team is working with REMONDIS to transfer full ownership of the truck to the REMONDIS fleet under the existing commercial agreement.

Hyzon also entered into a revised commercial agreement with TR Group, New Zealand’s largest heavy-duty truck fleet owner, up to 20 fuel cell trucks upfit with Hyzon’s single-stack 200-kilowatt fuel cell system. Following the initial commercial trial, TR Group has an option to purchase the two trial trucks as well as to upfit another 18 trucks with Hyzon’s 200-kilowatt fuel cell systems. Turning to governance. Throughout 2023, we took significant steps to strengthen our Board of Directors and management, including appointing two new Board members, a new Chairman of the Board and accomplished leaders to the executive team. We completed the reinforcement of our leadership team by welcoming Dr. Christian Mohrdieck to the team as our Chief Technology Officer.

Christian is a globally respected leader in the fuel cell industry. He joins us from his role as Chief Commercial Officer at a joint venture between Diamward Truck AG and the Volvo Group, which Christian helped establish through his previous role as CEO of Mercedes-Benz Fuel Cell GMBH. Christian’s combination of deep experience developing and critically commercializing fuel cell technology will both accelerate our leading U.S.-made 200-kilowatt fuel cell system and further bolster our ability to extend our leadership in fuel cell technology R&D and IP generation. With Christian joining an already strong management team and Board, we are confident in the leadership and governance foundation we have in place to drive Hyzon forward into commercialization.

Turning briefly to our financial performance. We delivered another quarter with declining net cash burn and met our second half 2023 net cash burn guidance by remaining disciplined in maximizing our technology development and commercialization progress, while driving real efficiencies in Hyzon’s cost structure and cash burn, which Steve will comment on further. We continue to evaluate financing options to support our commercialization, including potential strategic counterparties I’ll being thoughtful about valuation and dilution. With the operational and commercial milestones achieved in 2023, we start 2024 with strong momentum and a positive outlook. We expect 2024 will be the year Hyzon realizes meaningful commercialization. By advancing our 200-kilowatt technology and heavy-duty fuel cell trucks, their respective SOPs and cementing and advancing our large fleet customer portfolio as the foundation for scaling through multiyear commercial agreements and subsequent deployments.

As mentioned previously, Hyzon’s innovative single-stack 200-kilowatt fuel cell system continues to advance towards its SOP in the second half of 2024. We are currently completing durability testing, which is said to conclude around the midpoint of the year and pending favorable results will be ready to start production soon thereafter. By generating 200 kilowatts from a single fuel cell system Hyzon can offer significantly lighter, smaller, more cost-effective and more fuel-efficient fuel cell system when compared to the conventional approach of combining two systems or stacks to reach 200 kilowatts or more fuel cell power. Our U.S.-based fuel cell production facility is nearing completion with less than $5 million in remaining capital investment to reach SOP.

As I mentioned, the facility is projected to have an initial annual capacity over 700, 200-kilowatt fuel cell systems operating on three shifts. Alongside SOP of the fuel cell system, we also expect to reach SOP with two of our initial vehicle platforms. the 200-kilowatt conventional and a 200-kilowatt caliber over fuel cell trucks. 200-kilowatt caliber truck was unveiled last week in Australia as the first launch of Hyzon’s 200-kilowatt fuel cell system and powertrain. The 200-kilowatt powertrain was designed in the U.S. and adapted regionally to maximize efficiencies from a common powertrain solution. As one of only two companies with heavy-duty fuel cell trucks commercially deployed in 2023 in the U.S. Starting production with these high-powered vehicles positions us well to achieve our commercial targets in 2024, continuing the early mover advantages we established in 2023 and with our first deployment to large fleets in each region.

From a commercial standpoint, 2024 is focused on securing large fleet multiyear fuel cell truck commercial agreements, similar in design to the agreement in place with PFG securing vehicle contracts with multiyear scaling potential with large fleets on the back of successful trials, activating several of these contracts with initial deliveries in this year, and then advancing multiple large fleets to their second stage orders and deliveries later in 2024, which will be a significant milestone for the company and the industry when it is achieved. These fleets with internal and government mandates to decarbonize are experiencing the limitations of heavy-duty battery electric trucks in their operations and are turning to fuel cell trucks for long routes with heavy payloads and minimal downtime for refueling.

This real-world customer feedback bolsters our confidence that the mix of a decarbonized fleet is shifting clearly towards hydrogen. One application where battery electric today cannot compete with hydrogen fuel cell trucks is refuse collection or garbage trucks. As demonstrated in our trial with REMONDIS our hydrogen refuse drug delivers similar operational capabilities as a traditional diesel truck. Typical battery electric version today completes roughly half of that work goes home at lunch and charges for the next day. The gap in performance is significant, leading us to believe the future of zero mission refuse collection is clear. It is one that only hydrogen fuel cell electric refuse trucks can deliver. We also see the refuse truck market as one that can develop more quickly given the back-to-base nature of the use case and the ability to produce hydrogen on site from landfill gas or solid waste.

Hydrogen powered refuse can create a circular zero emission ecosystem with an estimated 120,000 refuse trucks on the road in the U.S. alone and many publicly funded fleets in California, facing expected near-term zero-emission purchase mandates under California’s Advanced Clean Fleet Rule. With this in mind, we are accelerating our program in North America, building off the development in Australia. We recently announced a joint development agreement for refuse trucks in the U.S. with New way, the largest private refuse equipment manufacturer in North America. The first U.S. fuel cell waste collection truck is currently an assembly with a full customer trial schedule expected to launch in the first half of 2024 and initial commercial deliveries projected in 2025.

We are excited by the strong response refuse fleet customers have shown and the upcoming customer trial schedule. All of this is supported by strong tailwinds worldwide for hydrogen and zero-emission vehicles. Major markets globally have policies to accelerate adoption. In the U.S., for instance, the Biden administration has allocated $7 billion to seven hydrogen hubs, several of which Hyzon directly supported. Inflation Reduction Act earmarks $2.6 billion under the EPA’s Clean ports program to decarbonize coastal and inland ports nationwide, including drayage trucks and fueling infrastructure, which Hyzon is initially participating in as part of Houston’s application. California remains a well-funded zero-emission Class 8 truck subsidy market with several hundred million dollars available as of the beginning of 2024, including over $300 million available through CARB’s HVIP program, over $70 million from the Volkswagen Environmental Mitigation Trust and funding specifically for trade trucks to the Port of LA and Long Beach Clean Truck Fund.

In short, we are excited to build on this momentum with the following milestones and focus for 2024. Again, we are on schedule to reach SOP for our single-stack 200-kilowatt fuel cell system in the second half of 2024. And for our 200-kilowatt vehicle platforms, with the U.S. 200-kilowatt truck platform SOP expected in the second half of 2024. These will be major technology and commercial milestones, clearing the path for commercial scale-up of our 200-kilowatt technology to large fleet customers globally. Second, we are progressing well on our trial-based large fleet customer pipeline with a focus on converting additional large fleets from trials to multiyear commercial agreements. We are focused on signing new large fleet multiyear customer agreements in 2024 and targeting the advancement of large fleet customers to the second stage of their multiyear order pattern as well.

Third, we will be launching U.S. refuse truck trials in 2024, with initial commercial agreements expected in the second half of 2024. Fourth, we are targeting 20 to 40 fuel cell truck deployments on the commercial agreements to customers in 2024 globally, purposely focusing on deployments to large fleet customers to activate their multiyear commercial agreements or to advance to the second delivery of their agreements. By deploying a smaller number of trucks per fleet to priority large fleets, we are purposefully managing working capital and associated net cash burn while maximizing the commercial foundation we have in place to enable scaling in 2025 and 2026. Lastly, we are focused on strengthening our balance sheet and securing additional capital to fund our business.

I want to thank our global team for their tenacity and commitment, our leading technology, in-house manufacturing and partnerships, make us ready to scale production, and drive commercialization as an early mover in this fast-growing industry. Now I would like to introduce our newly appointed Chief Technology Officer, Dr. Christian Mohrdieck. Christian?

Christian Mohrdieck: Thank you, Parker, and thanks for having me. I would like to first start off by saying how excited I am to join the Hyzon team. After having spent two-thirds of my career developing fuel cell technology at automotive OEMs, most recently as Chief Commercial Officer of SelCentriq, a joint venture between DunnerTruck, AG and the Volvo Group AB. It is refreshing to work for a company solely dedicated to fuel cell technology, especially during this stage of scale-up and commercialization. What makes me stick to automotive fuel cells for more than 25 years, my energy source is based on the 3 Ps: product, people and purpose. User products are based on a fascinating technology, which delights my physicist heart and brain.

Knowledgeable people with a strong passion to attack challenges are the biggest asset in this business and drive me to work every single day. Fuel cells are helping make this a better zero-emission world. This convincing purpose enables me to go high speed and full power all the time. I joined Hyzon because of its existing strength in product and people and because as a company, we are fully focused on our purpose of decarbonization. On the product side, one of my biggest motivations to join Hyzon was the significant fuel cell technology advantage and the corresponding intellectual property we hold. Hyzon has developed a single-stack 200-kilowatt fuel cell system, which brings significant advantages in weight, size fuel efficiency, cost to manufacture and product cost.

There are currently very few companies developing a single stack 200-kilowatt fuel cell system. And I believe Hyzon is the first to deploy a heavy-duty vehicle with a single stack 200-kilowatt per cell system, which brings me to another reason, Hyzon technology is at an advantage. Hyzon not only develops and manufactures its use systems but also integrates them into heavy-duty vehicles. We have deployed these vehicles on three continents and work directly with the fleet customers to understand their real-world operations. With that data, we can intelligently manage and adjust our fuel technology to increase durability, reliability and performance in different environmental circumstances. By doing so, we constantly expand our portfolio of intellectual property, maintaining and building our competitive edge.

As we continue to drive fuel cell development, we expect new use cases in new industry to come into view, both for the 200-kilowatt and for future fuel cell generations. Our goal is to provide hydrogen-powered decarbonization not only for trucking, but across tomorrow’s mobility industries, including mining, construction, rail, marine and airport ecosystems. Earlier this month, we launched the first truck with Hyzon’s 200-kilowatt fuel system and powertrain in Australia. As Parker mentioned, we plan to introduce 200-kilowatt vehicles in North America and Europe later this year. As the hydrogen economy grows, Hyzon’s opportunity to decarbonize sectors growth, all based on the same fuel cell technology. I look forward to working with our team of expert engineers to increase Hyzon’s competitive advantage by bringing the 200-kilowatt fuel cell system to SOP this year and to continue advancing fuel technology beyond the 200-kilowatt system in the future.

With that, I would like to turn the call over to Steve for a closer look at the numbers. Steve?

Stephen Weiland: Thank you, Christian. It’s great to have you on the team. One of the primary reasons why I joined Hyzon last November was our differentiated technology and intellectual property. I believe that our ability to attract an experienced fuel cell experts such as yourself as an affirmation of this value. It demonstrates that Hyzon’s technology is compelling, and I very much look forward to working closely with you. I am proud of the execution that we demonstrated throughout 2023 in achieving the important operational milestones set out earlier in the year. Advancing to the C-sample phase of our 200-kilowatt fuel cell system has us on track for startup production later in the year and also for deploying our first 200-kilowatt FCEV trials.

Our continued commercial progress is most recently evidenced with our customer, PFG, refuse market opportunity with new trucks and trial activity. In addition to achieving our operational milestones, we also met or beat the financial guidance established earlier in the year on both the second half and full year basis for SG&A, R&D and net cash burn. I’ll highlight this in more detail as I next walk through our results. I would like to kick off my discussion by pointing to our Q4 and 2023 revenues of approximately $0.3 million versus $3.7 million in 2022. The Q4 revenue reflected our first truck sale in the U.S., one of our 19 truck deployments. We also delivered four trucks to PFG shortly before year-end for which we will begin to recognize revenue starting in Q1 2024.

While this was structured as a sale and we collected cash in Q1 2024, given the contract terms, it is effectively accounted for as a lease in our financials and recognized over time. The 14 remaining 2023 deployments translate into revenue if certain contract terms are achieved and customer acceptance is provided. Cost of revenue came to $15.7 million in 2023 versus $23.3 million in 2022. 2023 cost of revenue primarily represents inventory write-downs and customer contract cost provisions. The decrease from 2022 is primarily driven by costs incurred in 2022 in China and Europe for FCEVs, upfit services and other charges that did not occur in 2023. R&D expenses came to $43.7 million in 2023 versus $39.1 million in 2022 slightly below our guidance range of $45 million to $49 million.

The primary driver for the increase in R&D over 2022 is higher personnel costs supporting our development efforts. SG&A came to $121.2 million in 2023 versus $114.1 million in 2022 and below our guidance range of $130 million to $134 million. The primary reason we fell below the guidance range is because we began recognizing asset impairment charges as a separate line item in Q3 2023. The drivers behind the increase in SG&A over 2022 where the $25 million SEC charge, offset by certain activities that did not occur in 2023, such as the cancellation charge. A significant portion of our 2023 SG&A came from an elevated level of legal accounting and consulting fees from ensuring filing compliance and legal work relating to the SEC investigations, which are now behind us.

We recognized $7.8 million in restructuring and asset impairment charges in 2023, driven primarily by charges in Europe and the U.S. On the balance sheet, we ended 2023 with $112.3 million in cash and equivalents, representing a net cash burn of $25.5 million in Q4. This represents our lowest quarterly net cash burn over the last nine quarters and fourth consecutive quarter of declining brand. Our full year 2023 net cash burn of $143 million came in below our guidance of $148 million to $156 million driven by the timing of our $8.5 million first tranche SEC payment, and we would have fallen in the range had that payment occurred in Q4. That payment landed this January versus in Q4 due to the timing of the court approval as previously discussed could happen.

We have an additional $8.5 million due at the end of 2024 and the remaining $8 million in January of 2026. Turning to guidance. We are not providing annual net cash flow guidance for 2024 at this time, but are currently reviewing our assumptions for the full year. And to a large extent, the timing of any capital raise can impact our outlook. However, we do want to provide insight on our first quarter. We are targeting a net cash burn range of approximately $24 million to $27 million in the first quarter, not including the impact of the $8.5 million SEC payment in January. We have also not included the impact of approximately $3 million from the sale of our Rochester facility in this range given that the timing of that payment could fall through either the end of Q1 or the beginning of Q2 2024.

Excluding these onetime items, we believe that this range is representative of how we are operating at the moment below $10 million in average recurring monthly net cash burn. We are anticipating that our Q1 2024 SG&A will likely come in a range of $22 million to $24 million and that our R&D expenses will likely come in a range of $12 million to $14 million. We continue to remain focused on raising capital. We will provide updates as appropriate. I’d also like to point out that should we need to, we have identified levers to reduce our cash burn and extend cash into 2025 as financing activities continue. We are keenly focused on maintaining financial flexibility while ensuring that we are well positioned to achieve our near-term growth objectives.

Something that investors have raised in our discussion over the past quarter is as we look to exercise financial discipline in 2024, what is our priority. The answer clearly is that our fuel cell IP is foundational to our technology and strategic value. We will continue to prioritize our fuel cell development efforts, and having Christian joined as the CTO at this time, clearly demonstrates our ongoing commitment to our technology and its strategic value. Thank you for listening. And now I will hand the call back over to Parker.

Parker Meeks: Thank you, Steve. I’m incredibly excited for 2024 as it promises to pave the way for our long-term growth. Our seasoned management team and Board provide us with the right mix of expertise, experience and governance enabling us to concentrate fully on our streamlined, refocused and centralized business model with a clear vision for the future, centered in technology and driving commercialization in 2024. We are confident in the capabilities of our technology and our differentiated asset-light business model. We anticipate substantial commercial progress and minimal capital spending requirements to achieve center production of our 200-kilowatt fuel cell system in the second half of 2024, positioning us favorably as we push to capture critical capital and to expand our large fleet customer commercial agreements and activations, strengthening the balance sheet, while maintaining our early mover advantage in a growing movement to the carbonized trucking.

The addition of the fuel cell refuse vehicle as an international platform with a significant performance and economic advantage versus battery electric alternatives is yet another example of heavy-duty industry requiring hydrogen fuel cell technology to do the work it needs to do. We look forward to a growing set of major U.S. refuse fleets experiencing that leading technology and truck platform in the first half of this year. I would like to thank all of my colleagues here at Hyzon for their dedication and execution throughout 2023. Finally, we appreciate your ongoing engagement as we collaborate with customers and partners to bring Hyzon’s cutting-edge, hydrogen fuel cell technology to the forefront of the trucking industry today and various other applications in the future.

Now I’ll hand it back to the operator for any questions. Operator?

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Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Steven Fox with Fox Advisors. Your line is open.

Steven Fox: Hi. Good morning. I guess I had two questions. First off, I was wondering if you could talk a little bit about any learnings from the trials that you did throughout 2023 into ’24 that maybe either help you to engage with other fleets or applications or just maybe speed up the trialing process? And then I had a follow-up.

Parker Meeks: Hi Steve. Good morning. Thanks so much for the question, and we’re always excited to talk about the process of trialing learning and improving the fuel cell technology and the powertrain. So — as we’ve noted in previous calls, we have been in trial for quite some time. We launched our Class 8 trial program in March 2022. We’ve completed 20 major trials just in North America as one example since March of ’22, 14 trials in 2023 calendar year. And we’re excited that, that’s expanding, right? We have 24 total trials planned in 2024 across both the Class 8 truck and the refuse truck in the U.S. alone. And the learnings have been significant over that, Tom. What’s exciting is we still have the first trucks that we put together, of course.

When you look at those Class 8 trucks, the first trucks and trial side by side with the latest technology, so much has changed from the powertrain from the integration approach, even the look and feel of the truck to the driver, where the steps are positioned, how they get in and out of the truck, how they operate the truck. And the learnings, frankly, for us have been as much about the performance of the truck and optimizing and upgrading that as it has, how we interact with the fleet, how we improve the experience for the driver. And I’ll give a couple of examples of that. One, when we launched the first ever fuel cell trucks in commercial operation in Texas at Port Houston, in December of 2022, which we did to show the U.S. fuel cell trucks are ready to do drayage, not just in California, but across the country which we’re excited, hopefully to expand through the Zero Mission Port equipment funding coming out shortly in the Inflation Reduction Act.

That trial was a next step in our testing of various weather environment. So we tested the trial through its paces in cold weather in Edmonton, Canada starting in that winter of 2022 with the truck showing up in minus 20, minus 30-degree temperatures, which went through learnings on preheat and other things. Now have run for two consecutive winters up in Canada. We’ve done hot weather testing in the L.A. Basin and in Central Texas in the summer with up to 105-degree Fahrenheit temps. Had a lot of earnings are going to keep the truck and the technology cool through that experience in Houston, I call it our wet weather trial test because I’m from Houston originally, the monsoon season comes through in Houston. When we launched that trial, the first day, there was a significant rain storm than before.

We always tell our drivers of our fleet customers take that truck anywhere it needs to go. We need to really test it and learn. So long story short, there’s a foot of standing water on the feeder road in South Houston near the fourth driver takes it to 45 miles an hour. And when you do that, through a pot of standing water that want to permeate every crevice of that truck. It actually found a high-voltage full safely shut the truck down. We get it back to the Service pay, drying out because into operation about 24 hours later and complete the rest of that trial very successfully. We found the water prufault source swapped that out in the design and haven’t seen that issue come back since. So we’re very transparent about the learnings from trials and our customers see that appreciate that.

And we’re very thankful to have tremendous customers like Performance Food Group that we’ve been working with now for over two years since their trial. And in the Port of Houston, who ran that trial for us and it’s been a great quarter to us since. And these leaders, these customer leader fleets who really are motivated to not just get going, but learn and help everyone improve are why we’ve been able to get the experience. We have the tens of thousands of miles and kilometers globally on our powertrain and while we’re so confident in the powertrain that we’ve developed and are launching now.

Steven Fox: Great. Great. That’s helpful. Just from a funding/regulatory standpoint, like you mentioned a bunch of opportunities where the technology could be advanced through new funding in the U.S. But — how would that sort of relate to maybe direct funding or your ability to have a more pronounced position in the supply chain as hydrogen develops. Is there anything you could point to that we should be watching closely for ’24. That will be sort of, if not a game changer or an incremental positive on Nexon? Thank you.

Parker Meeks: Absolutely, Stephen. Thank you for that as well. We are very excited by the tailwinds that have continued to grow globally, in particular here in the U.S. for subsidy to deploy and start to decarbonize trucks. We see a clear 3-step pathway for subsidy here. For us to scale with our customers in line with our production capacity and in line with their appetite over a three to four scaling plan. The first step is active today and is very deep, which is California, right? The State of California still has over $300 million available right now for Class 8 servicing trucks with the $240,000 per truck base voucher for large fleets that can go up to over $400,000 for small fleets and duration certain other applications stacking various subsea sources on top of the HVA card voucher.