Good day and thank you for standing by. Welcome to the Hylian Holdings Q1 '21 Business Update Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, There will be a question and answer session. I would now like to hand the conference over to your speaker today, Louis Baltimore, Senior Director of Investor Relations at Hylian.
Thank you. Please go ahead.
Thank you, and good morning, everyone. Welcome to the Hylian Holdings Q1 20 21 Business Update Conference Call. With us today, we have Thomas Healy, our Chief Executive Officer and Jerry Baker, our Chief Financial Officer. During today's call, we will make certain forward looking statements regarding our future business expectations, which involve risks and uncertainties. Forward looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and as a result are subject For more information about factors that may cause actual results to materially differ from forward looking statements, please refer to the press release we issued yesterday after the market closed.
Forward looking statements speak only as of the date they are made. You are cautioned not to put undue reliance on forward looking statements. We undertake no duty to update this information unless required by law. With that, I will now hand the call over to our CEO, Thomas Healy.
Good morning, everyone, and welcome to Hylian's Q1 2021 business update call. 2021 is off to a great start for Hylian as we've achieved some major milestones, most notably around the formation of our Hyper Truck Innovation Council, which I'll talk more about today. During the quarter, we continue to make meaningful progress on our mission to bring electrified powertrain solutions to the Class 8 commercial semi truck space. I'd like to start off by turning to Page 3. There are a few key topics that I'd like to cover today.
I'll be discussing the growth of our team, our continued progress with our hybrid product, including the shipments of additional units and our improvements to the product, Our continued progress towards the commercialization of the HyperTruck ERX and some of the key milestones we've achieved. I'll highlight our innovation council and how critical this is for the success and launch of our product and conclude with some important facts and figures around both renewable natural gas and our battery technology. I'll then turn it over to Sherry to address the restatement of our 2020 10 ks. One of the key focuses at Hylian is continuing to grow our talented team. And over the past quarter, we've added an additional 43 employees That span in skill sets from automotive engineering, advanced algorithms and controls engineering to supply chain and operations and other core business functions.
I'm continually impressed by the level of talent, enthusiasm and dedication our entire team has demonstrated as we all work to achieve our key milestones. Since we are growing our team at an ever increasing rate, we are also expanding our headquarters in Austin, Texas and doing a facility redesign to meet both the headcount and anticipated customer demand growth. This facility will allow us the production and install space we need to launch both our products as well as handle the significant employee growth planned for the years ahead. We will share more on these improvements in the coming months. Now turning to Page 6.
Let's shift to some important updates on the hybrid product. Our goal for this past quarter was to continue to ship out early low volume units of our hybrid system, and I am pleased to share that we did this by installing our hybrid electric product on an additional 10 trucks during the quarter. By continuing to shift these hybrid products to fleet, We are laying a strong foundation to be able to ramp up our product volumes. Through our deployment of units, we are refining our assembly process, Improving our installation methods both internally and with 3rd party mod centers and growing our field service knowledge and improving our customer experience. This is giving Hylian an advantage of actually having a product out in the field and is allowing us to carry the learnings forward not only into our hybrid systems, but also into our ERX development.
As we've previously discussed, Hylian is continuing to improve the hybrid solution. As I mentioned in our last earnings call, we have experienced delays on the development of the hybrid improvements because of learnings that came from the design process and added testing and validation to the development cycle. One key testing and development milestone accomplished in Q1 was taking our hybrid unit for cold weather testing at a proving grounds in Minnesota. The learnings from this and other testings will allow us to make our current and future products even stronger and more reliable for delivery to customers. The same method of testing will take place on the HyperTruck ERX next winter.
We'll be implementing major enhancements to the hybrid product beginning in the second half of this year followed by future rolling improvements. Once we start deploying an improved iteration of the hybrid system, we expect to ramp our quarterly volumes and begin recognizing revenue in the second half of this year. We will continue to take key learnings that will enable Hylian to maintain our research and development momentum with the hybrid from both our system and the actual truck, and then we transmit select data to the cloud. Our team of software engineers use this data continuously improve our proprietary control algorithms onboard the trucks to optimize its performance. We believe all of this data we collect, store and analyze will give us a truly competitive advantage and help us maintain and grow our lead in the Class 8 electrification space.
These advances in software are all directly translatable to our HyperTruck ERX, allowing our platform to be able to build upon itself. Shifting to Slide 9. Now I'd like to turn to the HyperTruck ERX.
For those of you
who may be new to the Hylian story, this is our game changing powertrain that is fully electric and uses an onboard generator to recharge the batteries. The producing electricity locally on the truck through a natural gas generator can be less expensive than charging from the grid and can be cleaner too. Additionally, we eliminate the downtime associated with waiting for a conventional plug in BEB to charge and with a range of over 1,000 miles of our HyperTruck ERX, range anxiety is not a concern here. Let's start off by talking about where we are in the HyperTruck ERX development process and the upcoming milestones you can watch out for on our path to commercialization. We announced last quarter that we had selected Peterbilt as the truck manufacturer for the initial demonstrator units that will be going out to members of our innovation council and others.
On Slide 10, you'll see that we've since taken delivery of these first units of Peterbilt and we had the natural gas tanks and generator installed by Peterbilt and an adjacent mod center. The trucks are now undergoing the design and systems integration process for the rest of the Hylian component. After the installation is complete, which we expect to be done towards the end of this summer, we will begin the testing and validation process on these units. We will then utilize these as demonstrator units to showcase the technology with our innovation council partners and others. This is the first stage to the multi phase product development approach we are using to ultimately reach commercialization of the HyperTruck ERX.
While many of you have seen the photos and videos of the HyperTruck ERX prototype on the road, we plan to take these initial demo units to major trade shows later this summer and into the fall to showcase our technology. We are full steam ahead on the development of the HyperTruck ERX and we have engaged in our leveraging numerous outside firms to assist us with this development. Most notably, we've engaged FEV, one of the industry leading automotive engineering consulting firms to assist us through this commercialization process. While we have made significant progress over the last quarter and some of this is beginning to be seen with the demo trucks Currently being built and the strong customer interest that we've highlighted, we have encountered some challenges along the way. The commercialization development plan is requiring additional time.
We've added incremental testing and validation to our plan. We've implemented a more formal phased rollout approach and we have been faced with some supply issues and constraints, which I'll cover later. That said, with where we stand today in the development cycle, we are still on track for showcasing demo trucks with fleet later this year and we will carry this into mid-twenty 22. We will then provide initial units to fleets in 2022, but it will be towards the latter of the year. This will then be followed by commercialization volume ramp up of the HyperTruck ERX powertrain.
On Slide 11, you'll see that in early April, we were thrilled to announce the formation of the Hyper Truck Innovation Council, a select group of fleets, logistics and transportation industry leaders that will actively support the development of Hylian's hypertruck powertrain solution. This council is committed to leading the industry towards 0 emissions commercial transportation, while working to build a more sustainable future. We are thrilled to have been able to pull together some of the industry's top and leading fleets, including Anheuser Busch, Penske, Ryder, Werner and others. These fleets represent over 100,000 Class 8 Commercial Semi Trucks globally, and the council will collaborate closely with Hylian to provide key user insights in the development of Additionally, this council is a major step for us along the path to commercialization as council members have committed to be among the first to have access to put real world miles on the HyperTruck ERX demonstrator units, providing valuable fleets and driver feedback. We believe the best way to generate interest and demand for our HyperTruck ERX Is to let fleets experience it firsthand in their operations.
We believe our Hyper Truck Innovation Council, along with others outside the council, is the most professional and reliable way to generate demand for our powertrains. Councils like this are used by large established reputable players across the transportation industry, and we believe that this is the right path for Hylian as well. Overall, our long term goal is to generate demand that leads to long term partnerships and orders from these fleets as we scale up volume production. I'd like to point out that numerous fleets on the council are current users of our hybrid solution. This demonstrates not just the importance of the hybrid on its own, But also the ability of our hybrid product to drive demand for our game changing hyper truck platform.
While going green is at the forefront of many trucking fleets mines, both our hybrid and HyperTruck ERX products should enable fleets to reduce costs while doing so. This combination of performance, abundance of filling infrastructure, reductions in carbon emissions and reduction in total cost of ownership will make Hylian's products appealing to fleets. While there is so much excitement and demand for electric trucks, today's lack of heavy duty commercial charging stations infrastructure is a major problem and our ability to generate power onboard is a major advantage for Hylian. If we think about the North American commercial truck natural gas filling station infrastructure, there are over 700 stations, which is about where Tesla's North American passenger car supercharging station infrastructure was in 2019, Meaning we are starting with an already existing and robust fueling infrastructure across the U. S.
In last quarter's earnings call, We began discussing some of our roadmap for the HyperTruck and we'd like to continue to expand on this discussion. We expect our HyperTruck ERX powertrains will be customizable from a vehicle range of both the BEV and total mileage along with different payload capacity and horsepower options. This will allow us to truly deliver a solution that is refined to a fleet's needs and to match their operations. Shifting to Slide 12, while our HyperTruck ERX has the ability to evolve with the changing transportation fuel dynamics both at home in the U. S.
And abroad. While many see hydrogen as the energy carrier of the future, we are developing our HyperTruck platform with the flexibility to utilize hydrogen fuel cells to ultimately power the battery electric drivetrain. However, to accommodate the time required to complete the hydrogen infrastructure build We are also developing a clean fuel agnostic solution, which will provide our customers the flexibility to use hydrogen or natural gas depending on fuel availability. This fuel agnostic power source represents an attractive value proposition in the medium term hydrogen fuel cell, our future fuel agnostic solution or our natural gas generator that we are first releasing, Our hyper truck will continue to utilize the existing battery electric drivetrain, which provides this platform with a very long runway for future growth and relevance. We believe this multistage approach to leveraging an existing fuel in natural gas today and evolving hydrogen in the future is a key differentiator for Hylian.
It allows us to start deploying viable solutions in the near term and to Systems. We will have more to share on these programs with you throughout 2021. As one of our innovation council members told us, This is truly an exciting time and they can't wait to get their hands on a truck and get it out on the road to be able to experience them firsthand. Now I'd like to shift to Slide 13 and talk about some of the updates on renewable natural gas. As many of you know, An important part towards driving net carbon negative emissions is having access to renewable natural gas.
Last month, We received some impressive numbers from the U. S. Department of Energy and the Coalition of Renewable Natural Gas in partnership with NGBA America about the usage and production of renewable natural gas here in the U. S. Along with its impacts on reducing the carbon footprint of the U.
S. Transportation Sector. In 2020, we were impressed to see that just over half of all of this on road fuel used in natural gas vehicles was renewable natural gas. This is up from 40% of the total in 2019 And up 25% in absolute volumes. More impressively, RNG used in transportation fuels has grown 2 67% over the past 5 years.
RNG is a pipeline spec purified form of natural gas captured rather than emitted from organic material in agriculture, wastewater, landfill or food waste that can produce carbon negative results when fueling on road vehicles like our Hylian hybrid or hyper truck powertrains. To put this into context on how important this is for climate change and reducing emissions, RNG as a transportation fuel in 2020 lowered greenhouse gas emissions equivalent to eliminating 8,800,000,000 passenger car miles driven by the average car. Said another way, this RNG use has sequestered carbon equal to growing almost 58,000,000 tree seedlings for a decade or 4,300,000 acres of U. S. Forest for 1 year.
As of April 1, 2021, There are over 157 RNG production facilities in operation with another 155 under construction or in the development stage. So this production should continue to grow considerably in the future. As renewable natural gas continues to gain momentum here in the U. S, Hylian is a beneficiary of and well positioned to capitalize on this megatrend. Before turning it over to Sherry to talk more about the recent SEC announcements regarding warrants and our path to revenue recognition, I'd like to talk some more about the battery technology and our supply chain.
One of the drawbacks of conventional BEVs, both in terms of cost and environmental impact, is the degradation of their large lithium ion batteries that may need to be replaced during the lifecycle of a long haul Class 8 truck. This is not the case with Hylian's batteries as we anticipate them to outlive the truck. Coupling this with the extremely high power density and improved general stability and safety aspects of our batteries, our battery solution is a strong competitive advantage for us and also reduces the environmental impact. Pending on the ERX customer configuration, The battery can be as small as a 20th to the size of a conventional Class 8 BEV battery, which means that ours is also less during the resource extraction process. As we think about shortages at various stages of the supply chain that many different industries, including ours, Our batteries are orders of magnitude smaller and lower cost than a conventional lithium ion truck battery, which should allow us to get more trucks onto the roads with fewer battery cells than our competitors can.
Once we have our solutions fully commercialized in our own products, we will explore opportunities of selling these modules into other applications as well. Lastly, our supply chain and supplier base is a critical part to being able to scale up volumes. We do see supply risk with some of the components that are utilized in our hybrid and hypertruck solutions. Thus, we have been working closely with these suppliers to either match their lead time constraints or identify alternative suppliers or components that could be utilized. Some of these alternate components are undergoing or about to begin a validation process within Hylian.
Some of these sourcing issues have also contributed to the timing and availability of the hybrid and hyper truck that we mentioned previously. Overall, we are working diligently on mitigating any issues that are forthcoming with our suppliers as it is paramount to the success and scale up of volumes. As I said leading into this call. It is an unbelievably exciting time at Hylian right now. We've made significant progress during the quarter, including organizational developments, facility expansion, generating customer interest and improved testing and validation, all supporting our commercialization efforts.
We have a number of key milestones ahead, which include implementing hybrid improvements and beginning to ramp up volumes later this year, in addition to showcasing demo Hyper Truck ERX units with fleets starting later this year. With that, I'd like to
Thank you, Thomas, and good morning, everyone. As you've likely seen, in mid April, the SEC released A public statement highlighting the potential accounting implications of certain terms common to warrants issued in SPAC transactions, especially related to the balance sheet classification of these instruments as equity or an asset or liability. In response to this guidance, Similar to nearly 80 other SPACs, we are in the process of restating our 2020 financial statements to change the accounting treatment of our warrants. Consistent with previous practice amongst facts, these warrants have been accounted for as equity. Hylian now plans to restate its Q4 and full year 2020 financial statements to account for the warrants as liabilities that will be mark to market with non cash fair value adjustments.
On November 30, 2020, Hylian redeemed its public warrants for cash, leaving no outstanding warrants at year end 2020. The impacts of these one time restatements are expected to be entirely non cash and have no material impact on Hylian's ongoing business operations, future plans or the information that we will now turn to. We expect to file the amended Form 10 ks for 2020 and the Form 10 Q for the Q1 of 2021 by May 24, 2021. Now let's talk about revenue recognition. During the Q1, while we shipped 10 hybrid units we did not yet recognize revenue.
At this stage in Hylian's lifecycle, we are working with to continually refine and improve our hybrid product offering. It's still a bit of an iterative process as the real world on road use by our customers is the best way to truly understand how these powertrains perform in various conditions on the roads. As we incorporate the learnings from our customers into future designs, we are getting closer to the point where we will have a commercially viable product. As it relates to ASC 606, we have outlined in our recent 10 ks filed in February the five steps that we take to recognize revenue from contracts with our customers. The most relevant steps here to revenue recognition involve the satisfaction of performance obligations in our contracts.
Based on our extensive work in building detailed commercialization plans that incorporate key learnings from our current hybrid offering. We expect to begin delivering units of hybrid product with rolling improvements that will begin to generate recognizable revenue in the second half of this year. This concludes our prepared remarks. And now I would like to turn the call back over to the operator to open the line up for
Your first question comes from the line of Paul Coster with JPMorgan.
Yes. Thank you very much for taking my questions. A few quick ones, please. First of all, when you start to scale this the products. How quickly do you believe you will be gross margin positive?
Yes. So good to hear from you, Paul. I'll address the scaling of the products first here. So as we mentioned, on the hybrid side, later this year, we're incorporating some pretty big improvements to the product, which will then allow us to really be able to take that solution and scale it up As well as we'll continue for the years ahead here to continue to iterate and improve that solution. But you're going to see that scale up start to happen later this year.
One of the things that I think is also key to that story is even in the Q1 here, we already started utilizing mod centers to assist us with the installs on those vehicles. And so that allows us really to And so that allows us really to have those partnerships in place that allow us to be able to scale. So That's on the hybrid side. You're going to start to see that scale up happen later this year, obviously, following into next year. And then on the hyper truck side.
We're going to make the first units available to the fleet in 2022, but it's going to be towards the latter part of that year. And then after that is when we'll start that scale up. And one of the big things there is that we'll carry forward a lot of those relationships Mod center installs and working with the OEMs, specifically Peterbilt on the hyper truck, that will be carry Forward with what we're doing today into that hyper truck solution.
And in terms of I mean, just from a variable and fixed cost perspective, you believe you'll be gross margin profitable for A1 or Well, initially the absorption cost be so high that you'll be negative gross margins on launching 1 or either of these products?
I think upon the initial launch, it would be gross margin negative. But as we are starting to scale up to higher volumes that we would expect to start to see us getting to that As part of building out the commercialization plans, we're also building out very detailed bill of materials for our products. So once we reach that scalable level we would expect to be getting to that gross margin positive.
Got you. Okay. The other thing, so we're seeing quite a lot of demand for gas powered engines, I guess, in emerging markets, developing nations, Eastern Europe, India, even China. I mean, I know that your primary focus is North America, but do these does the international market figure into your thinking at all?
It definitely does. And in some ways, the international market has some aspects that are even more attractive than the U. S. Market, right? You've got higher fuel prices, diesel fuel prices overseas.
You also have some areas that are more focused on emission reductions than maybe we are here in the U. S. And so I'll give you an example to it. I was meeting with a fleet that and it's an international fleet. And the first question they ask you is, what are the emission savings from these solutions?
And then the second question is, what are the cost savings versus Here in the North America, U. S, there's more of a focus on that cost savings also being coupled with the emission savings. So International is definitely a strong focus, but we are going to launch the product here in North America and the U. S. First because that's where we have the most experience.
We have The strongest success for being able to have a robust and successful launch of the product. And then from there, we'll scale international.
And my last question is you talked about the battery supply constraints and that it clears than others because you're using A much smaller battery, and you're using different chemistry, so you're kind of in a different part of the supply chain. But The question I've got really is what about the rest of the supply chain? I'm thinking semis And metals and probably other stuff as well, which I can't even think of at the moment. But it feels like everything is starting to get a bit ugly out there. Do you have problems beyond the battery constraint that you referred to?
Yes. So it's a pretty interesting time on the supply chain side. I mean, we've seen even over this past quarter, some of the major automotive or truck manufacturers have even had to slow down or shut down their I've seen the lead times of some of the components we're using outside of batteries start to push out. And we've also seen some of the other components that we were planning on using. We've had to shift and start sourcing other components just because of the inavailability of those solutions.
Overall, yes, supply chain is an interesting time right now, but I think we've got a good grasp on it and we're definitely taking into account as we're going Rolling up these volumes here, making sure that we have those strong connections and lead times planned out with the supply chain base.
Okay. Thanks so much.
Your next question comes from the line of Steven Fisher with UBS.
Thanks. Good morning. Wondering if you could just give a little more color on the revenue recognition. I know it's going to be still pretty small numbers as we get started here, but should we assume more Q4 than Q3 in the context of that second half? And then I guess just maybe bigger picture, how does that revenue recognition evolve as the units start to grow on the Will there be an ongoing lag between delivery and recognition?
And then how we think about the revenue recognition on the hyper truck?
Yes, I'll take those in the individual components. So from a timing perspective, we'll be launching product as we move throughout the quarter and the scale up of that will depend on the timing of that launch. So it will essentially ramp up as you're moving throughout the Q2. From a hyper truck perspective, we Back to be delivering the demo units in 2022 to our customers and then revenue recognition would follow after we complete the launches of those demo units.
Okay. And then in terms of the cash burn, How should we think about that over the balance of this year and the next year? I guess sort of a
bit of a slower ramp up,
How does that cash burn evolve? When do you envision being cash positive? And what's your confidence you don't need to raise more capital?
Yes. At this point, just due to the fact that we have the pending restatement of our 2020 financials, I'm Unable to really comment on any of the financials at this point in time, but once we are able to restate both the 2020 financials and file our 10 Q later this month, We'll be able to provide more color commentary in there.
Okay. And then just lastly, nice to see the team growing. How did that 43 people you've added to the team compare to what you're hoping for? Obviously, the COVID times, it's still Maybe not the easiest for hiring, but how does that compare to what you were targeting and what do you hope to achieve in the Q2 and the rest of the year?
Yes. So the 43% number was slightly less than what we were hoping to achieve. I mean, I think it's still a significant growth for the organization. And From my aspect, it's been fun to see just with how many people coming into the organization, how much that's been able to accelerate the development of what we're doing, Which is obviously the goal and it's great to see that taking place. But the hiring continues to ramp up and continues to step on the gas there.
There's no Slowing down of hiring, we're still trying to scale out the team. And I think in the Austin market here, we're seeing it be a really great place to have the As I'm sure you've been following, I mean, there's a lot of organization moving headquarters here, the Austin area, a lot of people moving to this area. And I think as people look at Hylian, this is a really exciting opportunity and one that is on the cutting edge and forefront of A new technology, a new changing the landscape of trucking. So we've seen that on the recruiting side, we've been able To be able to bring in top talent individuals into the organization.
Thanks very much.
Your next question comes from the line of Brian Johnson with Barclays.
Yes, a couple of questions. Thank First, just in terms of the milestone for revenue recognition on the hybrid trucks that are out there on the roads, can you give us a sense of How many trucks are out? And then what specific as you can be, the technical milestone they have to achieve to Have revenue recognition? And then I guess finally, was there already cash put upfront for those trucks from the potential customers and It's an event that will just bring it into GAAP revenue or will there actually also be payments for the trucks cash coming in for the customers?
And Brian, just to clarify, were you referring to hybrid or hyper truck? Hybrid. Hybrid. Hybrid. So at this stage, it's going to be those units that we start shipping in the second half of this year, which will be the ones that we start recognizing revenue on.
And the reason for that is really around there's been some pretty significant product advancements and improvements that we're rolling in there. And as Sherry mentioned, that's what's kind of Classifying it as those units being able to recognize revenue on those. And then going forward, obviously, we'll continue to recognize revenue on those hybrid systems. So It's really the second half of this year where you're going to see those new shipments starting to take place, which will be the ones that, we'll have rev rec on.
Okay. And are those already orders, firm orders? And secondly, is there any kind technical hurdle to shipping those other than just the normal production ramp in terms of, for example, fuel economy levels they have to hit or other metrics that make the customer payments contingent?
Yes. So in terms of the orders first, so What we've actually started doing is even in the Q2 here, we started kind of pulling back on some of the deliveries of units and actually pushing those out so that We're incorporating them into the improved version of the hybrid system in the second half of this year. So we're kind of Slowing down and building up that demand for that improved hybrid, then we have a jump start to those units that are going to have revenue recognition So in terms of the second part of that question, though, the technical hurdles, some of these units are going to be going to fleets that Have already been experiencing the technology and then other ones are going to be going to new fleets as well. And what we've seen taking place is a significant of interest in the CNG hybrid solution. And that's very easy for a fleet to be able to experience that benefit, right?
It's you put this hybrid On a CNG truck, overnight you're taking it from an underpowered vehicle to one that has power levels that are much more comparable to a diesel truck, And it's much easier for a fleet to be able to kind of validate those improvements very quickly. And so from that standpoint, while we will still have some new fleets coming into the mix A lot of new fleets coming into the mix, that will want to experience the technology kind of first before being able to recognize revenue on it. We see that on that CNG application. It is a quicker process to do that.
Okay. And it almost sounds like what's given then be the difference between the customer Taking you're implying they're going to take an existing CNG truck and you'll retrofit it with a hybrid solution. I'm trying to understand that and The future hybrid truck, which will actually have the CNG engine from the get go.
Yes. So on the Hybrid side, we can either do it as a retrofit to an existing truck that a fleet operates or a brand new vehicle, right? So we can do either Versus the hyper truck will be more focused on brand new vehicles. And when you compare the differences between the 2, The hyper truck brings forward a series of additional benefits and improvements for the fleet, right? You've got significantly more horsepower and torque performance On a diesel truck, you've got the ability to drive that vehicle on purely EV, so you have 0 tailpipe coming out of that truck.
So if it's operating in cities or in port applications, you can have that 0 emissions standing. And that's what we see really being the attractive side of the hyper truck. And I think over this past quarter, especially With the announcement of the fleet council and pulling in some of the industry leading fleets, you've got the Anheuser Bushes, the Penske is the riders of the world that are saying they're going to be the 1st to really experience this hyper truck solution. We've really seen the interest increase Fleets over the past quarter, and I don't envision that slowing down at all. I think the market sees this as a really And we're very pleased with the execution of the company.
And we're very pleased with the execution of the company. And we're very pleased with the execution of the Within their operations in order to deploy it. So a lot of strong customer interest has been coming forward over this past quarter.
Okay. Thank you. Your next question comes from the line of Mark Delaney with Goldman Sachs and Company.
Yes, good morning and thanks
very much for taking the questions. First question was on the operational
milestones for the hybrid product. Thank you for the update about doing the cold weather testing and having moved past that issue. Maybe you could talk about what additional The hybrid product still needs to go through in order to meet that second half of this year delivery timeline for the next generation product.
Yes. So it's really continued validation internally and getting some miles on the system to really make sure that it is Fully vetted before we're going to be putting it out into customers' hands. And one of the things that we highlighted during this call is to be implementing also a rolling improvement to that hybrid system. So we got a bunch of improvements that are going to be coming forward in the second half of this year, And then those will carry forward to the years ahead of further improvement. So in terms of what further validation needs to happen, There's a myriad of things, right?
More on road testing, software bring up and validation, the cold weather I think that we mentioned, great learnings came from that. And at this stage, I think the team has a very high confidence that the second half of this year, we are going to be in a good shape to be able to launch that improved hybrid version and then from there continuing to make improvements going forward.
Understood. That's helpful. And then Second question, trying to better understand the spending commentary. I believe the company had previously guided for about 100 I know you're not giving quantitative guidance at this point, but maybe you can talk a little bit more qualitatively how to think about what's Changing if anything and you talked about a number of hires and but also some timing changes for certain products. So just trying to think some of the puts and takes relative to how The company is perhaps managing its operating expenses for this year.
Thanks.
Yes. So as I alluded to earlier, just due to the pending restatement, I'm really unable to provide any of the financial metrics that we would typically cover. However, we will have all of those metrics and the color commentary provided in the queue that we will be filing here in a couple of weeks.
Okay. All right. Thank you.
There are no further questions. I will now turn the call over to Thomas Healy, Founder and CEO, for closing remarks.
Well, terrific. Well, I appreciate everyone taking the time today to join us on our business update call. As I hope you saw throughout the presentation, a lot of exciting things Within the organization right now, a lot of great progress being made towards bringing these electrification solutions forward and Look forward to much more exciting times to come and continue to have you be a part of this journey and we'll chat again next quarter. Thank you.
This concludes today's conference call. Thank you for