Detailed Narrative
Military Progress and Strategic Engagements
Hyliion secured its largest military contract to date, a $41.7 million award from the U.S. Navy to scale Carno power modules into multi-megawatt systems. This contract, along with an expected $7 million award from another service branch, is set to bring total new military contracts for 2026 to nearly $50 million. The company has engaged Abdul Sabani as a strategic advisor to build relationships within the U.S. Army and broaden awareness of Carnot technology, leading to increased engagements across all military branches and participation in key defense summits.
Product Development and Customer Deployments
The company is nearing initial customer site deployments, completing design enhancements for improved durability, performance, and power. The first commercial customer unit with these upgrades is ready for deployment, with approximately 10 Carno cores (early adopter units) expected to be completed this year. Initial customer site deployments are planned for the next quarter, followed by a data center deployment, and the balance of units are Navy assets, including an 800-kilowatt system for the USX-1 Defiant autonomous Navy ship. Hyliion also successfully demonstrated multiple Carno power modules functioning together as a scalable unit and expects to reach its 200-kilowatt target by year-end.
Data Center and Military Market Demand
Commercial interest remains strong, particularly from data centers and the military. Data centers represent the largest opportunity, driven by AI-related power demand, with non-binding LOIs for approximately 750 Carno cores, representing around $400 million in potential revenue. Discussions are ongoing for deployments ranging from tens to hundreds of megawatts and even gigawatt scale, with strong interest in the system's native 800-volt DC capability. Military opportunities span autonomous vessels, base power, and forward operating installations, including both R&D programs and future production systems.
Additive Manufacturing Scaling and Capital Efficiency
Significant progress has been made in improving additive manufacturing speed and throughput, with initiatives expected to increase overall printer speed by up to three times. A beta machine agreement with Calibrium Additive (a GE Aerospace company) is in place for next-generation systems. The existing fleet of 30 printers is estimated to produce up to 15 megawatts per year of Carno core capacity. The company estimates that $1.5 million in printer and manufacturing equipment investment can support 1 megawatt of annual production capacity, representing $2.5 million to $3 million in annual revenue.
Financial Performance and Outlook Improvement
Q2 FY26 revenue was $4.9 million, primarily from R&D services for the Navy, contributing to H1 FY26 revenue of $7.8 million. The company finished the quarter with $132.4 million in cash and investments. Lower cash spend, reduced capital spending, and anticipated equipment financing have improved the year-end cash outlook to $115 million to $120 million, with net cash spending for the year projected at $30 million to $35 million. An at-the-market equity program is being established for additional financial flexibility.