Q3 2020 Plug Power Inc Earnings Call
[music].
Hello, and welcome to the plug powers third quarter 2020 earnings conference call. At this time all participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero under telephone keypad.
As a reminder, this conference is being recorded its now my pleasure to turn the call over to kill Goydos Gill. Please begin.
Thank you welcome to the.
Plug power 2023rd quarter earnings call.
This call will include forward looking statements.
These forward looking statements to be covered by the safe Harbor provisions for forward looking statements.
Golden section 47 of the Securities Act of 1933 and section 21 of the Securities Exchange Act of 1934.
We believe it is important to communicate our future expectations to investors. However, investors are cautioned not to unduly rely on forward looking statements because they involve risks and uncertainties and actual results may differ materially from those it's got as a result of various factors including.
But not limited to risks and uncertainties discussed under item one a risk factors in our annual report on form 10-K for the fiscal year ending December 31st 2019, and all the other reports we file from time to time with the FTC.
These forward looking statements speak only as of the day in which the statements are made and we do not undertake or intend to update any forward looking statements. After this call.
Well I would like to turn the call over to plug powers CEO Andy Marsh.
Right you feel and thank you for joining plug powers third quarter conference call.
Just like to provide a few minutes over.
Please refer to our Investor letter for D. A detailed description of the past quarter.
First I'd like to highlight our operational performance.
Okay achieved 126 million in gross billing that's.
This represents a 6% increase from the third quarter a 2019.
Second.
This quarter is really a strong validation of our business model in years to come.
You're going to see many of you know we are targeting 20% EBIT on 2022 here.
We achieved 19% EBITDA on adjusted basis, this past quarter Jeff.
Generating $21.2 billion adjusted EBITDA.
The cost of Barents greatly increased this past quarter, because there are increasing straight current stock price, which inside this significant achievement.
Third.
And just to highlight the acceleration of our business.
In all 20 team we shipped approximately 5000 units versus 4000 Gendrive units delivered the past can you.
We also built 13 hydrogen fueling stations this quarter.
Again another record.
[laughter] is growing as expected.
And we are moving in to one great vehicles and large scale backup power systems.
First on road vehicles, we have deals with lending to sell on enlightening.
We also have a fourth larger OEM, which we are deploying vehicles for testing in Europe.
Our approach to the on road vehicle market is really street they would pop.
Partnerships adventures with larger Oems, which may require some product modifications on airport.
For March scale business.
In standard products, they need graders and low volume applications.
No. The reason we can do is because a high density of our Progen module, which.
Which is 30% to 45% higher power density than our competitors, making our products easier for customers to integrate into existing battery electric vehicles.
Very similar to our approach to electric forklift truck.
The same progen building blocks, we developed for on road vehicles is leveraged into our large scale back up power solution.
We've closed deals for this product will be deploying units at the end of the second quarter 2021.
I'd become increasingly more excited about this opportunity that they datacenter customers and now I'm finding logistics customers.
St restrictions limiting deployment had been internal combustion engines in certain regions for vehicles and now also seen similar regulation impacting the deployment and diesel generators for large scale backup power systems.
Your your cell and hydrogen because they've energy and gravimetric density have the same advantages in the market as on road vehicle personally patterns example, they've been open both the logistic customer and the data center customer that the regional restrictions are real.
Example, California is for me customers that they must prepare to have 96 hours backup power because of the instability of the electrical grid and.
By the way they say you can't use diesel Gen sets we.
We believe that hydrogen fuel cells.
Really the only viable solution to meet this requirement.
It's more I think what's more important in my opinion I think you're.
You're hearing customers say the same.
I also like to highlight our progress in building five green hydrogen plants that will generate 100 tons of green hydrogen like 2024.
We announced partnerships the date pack and Brookfield provided Sears agreed hydrogen in solar wind or hydro power.
During the design phase for two of our new hydrogen plant.
Expect completion by the end of 2022.
We are leveraging our expertise in operating designing plants than our recent United acquisition and the ability to keep those renewables into green hydrogen from our acquisition of gainer yet.
Demand for Green hydrogen is closely tied to our present customers sustainability goals.
Plug power is projecting that by 2024.
Our own internal demand, we approach 100 times per day.
With another note of interest to investors our gigafactory.
Progressing and with the election now over we expect that announcement will be forthcoming for the location.
The equipment to support the Gigafactory is on order and we expect first production in late Q2 2021.
Finally, I'd like to highlight that we will be increasing increasing our gross billing target for this year from 310 million to $325 million to $330 million the demand for our products will continue to grow and this will be another record quarter.
Okay, and I are now ready to take questions.
Thank you, we'll now be conducting a question and answer session. If you like to be placed in the question queue. Please press star one under a telephone keypad.
Once again Thats star one to be placed in the question queue. If you have a speaker phone do we just started to pick up your handset before pressing star one one moment. Please what we poll for questions. Our first question today is coming from call a rush from Oppenheimer. Your line is now live.
Thanks, so much and guys congrats on all the progress.
Could you guys comment drew.
Andrew It's always good to your question.
Yeah. It is you're looking at these hydrogen plants, you know can you and I know you've done a lot of work on the financing side can you just give us an update on where you're at the number of partners you are thinking about working with on the finance side and any.
Any sort of detail around deal structure that you guys might be looking at at this point.
So Paul and Oh I'm sure.
Okay I can tell you a little and then I'm going to kind of point when the rig.
The remainder of your question, but just to kind of give some guidance.
We do expect to break ground on two of these plants, one with a pack one by Brookfield.
By the end of the year.
When we look at the finance side, I, probably we'd be thinking about a 30.
30% of the financing being equity and 70% being debt.
We are in discussions with the yeah.
Not only on financial potential financial backing, but often people who are more industrial.
Industrial related.
And I would expect that that will be coming in the future.
Okay, great. Thanks, and then just shifting to the stationary power opportunity for you guys, having a product in the market is meaningful can you talk a little bit about the customer dynamics, how far through the testing process you are well with with any of those folks topic. That's fun. All that said you know a little bit of detail around the fuel adjust.
Thanks for those those trends and I think that you.
No there's really no beginning to do the first deployments in the second quarter second quarter call.
And that said.
We do have both customers in.
The data center space.
Home as well as in the logistics space, which quite honestly.
You know the.
The issues in California, where we accelerated some of that discussion.
No I I think it's a business that.
You probably won't see meaningful revenue to 2022.
From my perspective.
The funnel continues to grow.
You know you see.
Activities, not only Oh, I've I've kind of mentioned the logistic operations with our present customers.
You see activities with the datacenter customers.
You also see activities with people thinking about micro grids.
So.
You know, it's a real interesting opportunity did you actually get one question I've spent a lot of time thinking about is said to how one thinks about the.
The hydrogen for these solutions and no do they become almost the Pope point also to support other customers.
So.
You could see hydrogen related.
Data Center Logistics center being generated on site to buy back up but that also could be a point of distribution.
We actually do a model like that said the southern company a much.
Richa during this past hurricane no weve really demonstrated success.
Yeah, we have 500 small scale backup power system.
With the.
500, no small scale backup power systems for.
Southern company, and we actually service them from a one or what are one or two of our.
Customers for logistics for a large distribution customers, so but that is actually a one to more interesting opportunities and because we have uses for hydrogen so many applications that it kind of fall.
He kind of really yet make sense because yeah.
Yeah, we're system guys and you have to always think about health systems all fit together.
That's a really interesting question.
Yeah, that's incredibly helpful. Andy Thank so much and I'll pass it on.
Okay.
Thank you. Our next question is coming from Craig Irwin from Roth Capital Partners. Your line is now watch.
Hi, good morning, and thanks for taking my questions.
Good morning, Craig.
Hey, Andy Congrats on a really solid quarter here I mean, it's nice to see plug really showing.
But it can deliver.
Well I wanted to ask about is the Evan. This is a really impressive result can you can you maybe talk about.
Well, what's going right for you on the on the earnings side.
Where where do we need to focus too to see whether or not this kind of performance is sustainable.
Over the next couple of quarters I know your guidance is more conservative than you tend to give conservative guidance, but can you talk us through sort of what some of the things you're learning, that's allowing you to live there.
Really strong EBITDA on the bottom line.
I think that that's a good question Greg.
No first.
Yeah, I think PD easy poor that is.
Delivering on.
On this next fourth quarter.
Were are increasing guidance.
But if.
If I then take a step back.
I think one of the critical items is the announcement of the next pedestal customer.
Whose acreage speller he VP of sales.
It's actually working with four customers to when you were two in North America, who.
Who could be that next pedestal customer and if I was monitoring plug.
That's that's a that's.
Thats an item I would monitor.
You know I would Piedmont.
The monitoring.
Or they make an announcement for large scale backup power systems and a one day vehicles that yeah.
Could be meaningful to 2024 revenue so that would kind of be another guide post I would use and.
Then I then I wouldn't.
I wouldn't look at our success you know look on I'm, saying, you're breaking ground by the end of year when to site I know why we'd be looking for some meaningful announcements in more details about those two sites with oxygen. So that's you know that's kind of my Powerpoint.
Powerpoint for the next 90, 450, and 450 days than the kind of things I'm looking for that make sure we're on track.
Thank you. Thank you for that so usually when when plug has such a strong quarter like this that the stock.
Responds very favorably very positively, but if the stock is maybe a little bit more tepid thin than many of us would have expected.
It seems like your guidance the raised gross bookings gross billings guidance.
Implies 84 to 89 million in Europe in the fourth quarter and consensus is out there at 90 million can you maybe tell us if there was something pulled forward in the third quarter and the fourth quarter is there something seasonal where some of your pedestal customers can't take delivery.
Yes in me Thanksgiving Christmas holiday period, because it interrupts their sales what's going on there with the sequential revenue progression given given that you've had such a strong quarter now and it doesn't read as strong is this just conservative.
Are you just giving us numbers that you're very costly.
Yeah, Hi, you know Craig I've learned to be.
Oh, no I've done this for a dozen years and.
I've been less rule recently than I've been in the past. So I am can it's taught me to be conservative in that.
That being said I think you also make another really ballast point.
Yes, my major customers are in the.
Logistics business, Oh associated with the alcohol and they're big pieces. This season is the holiday season and.
During the holiday season.
They don't want to change everything they spend all year preparing and no. So I think you see the mix of customers in the fourth quarter.
Different and this happens every year you see more activity in the auto space in manufacturing in the fourth quarter and we generally see earlier in the year and less than the logistic space. So.
I think you know again, let's quarters Bobby.
Incredibly stronger in the fourth quarter 2019.
And.
We see the first quarter 2021.
Increasing dramatically from the first quarter of 2020.
So yes, we're seeing the progress all.
Okay. Thank thank you for that color.
Our next question is about.
You each Gi and the Tennessee plant. So can you just give us a little bit of color [laughter] I guess color is a good pipeline do you consider this a green Graeme balu hydrogen plant.
Given that you are using waste hydrogen off one of Olin chemicals plants.
And can you maybe comment about the carbon intensity of that plant on a relative basis versus the other plants that produce hydrogen for for transportation and fuel cells and North America.
Sure so one.
What do I consider I think it's fair to consider a new hydrogen plant.
No just you know I think.
Yeah, Craig you mentioned on Conservative Bob.
Definitions.
Hi definition.
And.
And I you know yes.
I think a pure green hydrogen plant is one that.
It was coming from hydro power.
Coming thing when coming from so I you know, we even though look play in Tennessee that hydrogen just be turned off in the air we were using it.
See I score.
We're actually doing a deep deep dive at the moment.
And you.
Our goal is this high school for that plant that we get to about 50, C. I score.
And.
At at the pump and now where the goal is that the Greg.
We're looking to no ultimately deliver.
That hydrogen using.
Fuel cells in green fuel cells are green hydrogen to bring it to the customer so.
Well there is less.
Less of an impact than wheel wells to wheels.
[music].
Look forward to telling you more about that.
Maybe a detailed study going on at the moment.
Hello.
Thank you. Our next question from Eric Stine from Craig Hallum. Your line is a lot.
Hi, Andy.
Hi, Eric how are you.
Doing fine how are you.
Right.
Good so I jumped on a little late I apologize if I'm going to cover some things you already have but.
Yes, so curious on the I know you've talked about for on road programs, you're targeting mid 21.
Or we could see some movement, there and where it could start to contribute to revenues, but I know you're also talking about a large OEM in Europe. So im curious is this a is that one of those or is this a new customer.
Our partner and then maybe what we can look for as part of that relationship.
Sure so.
Hi, It is one of the four Eric.
Eric and.
Now before you joined the call I'd mention we have no.
Deals going on with Lindy, good son, and lightning at the moment.
We have the fourth OEM.
No I think about this market I think about that there's going to be too.
Channels, mainly to market for us one is partnerships or ventures with large Oems and another one is leveraging our standard products.
To the integrators.
Hey, you know what I don't want to be there was four programs are ongoing to in Europe too in the U.S.
Yes.
Look forward to making more announcements.
As soon as possible, but there.
<unk>.
These discussions are always.
Always take slightly longer than I expect that I can tell you I expect it to the now to United deal in early March and I announced in early June or late June So I.
I've learned to be a little cautious, but no meaningful discussions in plants are ongoing and it'd be telling you more about it soon.
Got it.
Okay, and then last one for me just on Pentacel customers.
Yes, you've talked about that you hope to sign one by the end of 2020 curious if that's still the.
If that's still the outlook and then I mean is it still I think you said in the past that to get to your 2024 goals.
You know that you target six to seven and total wondering if that's still the number as well.
Yes, I think the numbers six.
And so earlier in the car I mentioned that.
Jose's working with who is a correct pillar he VP of sales is working with.
Two potential pad.
At school store customers in the United States, two in Europe, and we still expect that to.
We will have one.
Done by year end.
Uh-huh.
Okay, and you said six is kind of the number you're targeting for 2024.
That's cool okay. Thanks, a lot.
Okay. Thanks, Eric.
Eric.
Thank you. Our next question today is coming from Christopher seller from B. Riley. Your line is now live.
Okay.
Hey, guys. Thanks for taking the question first Steve I wanted to see if you could walk through some of the warrant mechanics.
As of the second quarter about half of the war Amazon warrants vested and small portion of the Walmart one time.
I thought these were typically more paid in installments as those charges. It was this just a matter of very large orders during the quarter.
Third exercising some of those warrants could you kind of remind us how the math works on that.
Sure I would tell you I'm going to start off and then I'm going to hand, it off to.
Paul Kris.
So oh, the warrants actually get charged off.
Again.
Jordan.
So.
Hey, I know this may be hard for folks to understand a higher warrant charging which is a non cash is that.
It's actually a real positive.
One of our patents to customers.
In the third quarter.
Actually exceeded the.
You know the traunch, where the one price gets reset.
And you.
No they weren't prices reset at a rate that is actually 10 x.
Oh in a cost and the original ones, which is a real good items engage warrant strike prices over $13 versus the original strike breaking the dollar 19.
Yes, what it really says with these increasing warring charging me if you've see increased purchases.
Of our products.
And I think on the last thing I would highlight the fact that the stock is doing so well.
And the fact that all go.
Straight crates for the warrants is now yes, yes.
11, 12 times, how it ultimately means less dilution for shareholders. So no.
So its somewhat hard to seeing maybe in GAAP financials. All the time. This less dilution is really really good and something we negotiated three years ago to protect shareholders and its really proven now so.
So Paul would you like to add to.
Discriminate accounting point of view.
Yeah I think.
You covered it Andy the truly two factors in terms of the jump in the red the cost rate from a GAAP basis, which is increased purchases and.
Then moving into the to the final tranche, which now the price has been set and because its 10 X. you know we use a black shoals methodology, which is the proven accounting approach to to the U.S.
And you know those are those are worried about.
About the cost value is higher so you just get a book effect, which as Andy said is non cash but those are the two drivers that drove that increase and a you know.
And that's that's why you see that the delta change but.
In the quarter.
Got it and then on the on.
The opportunity within backup power stations, you had targeted that as a portion of the 250 million by 2024.
Okay, maybe just from a high level.
Do you see that progressing similar to material handling where several kind of key customers that are going to be doing kind of a line share and how many customers do you think you'd need to kind of hit those longer term targets.
It can be kind of announcements like that that give visibility just wanted to get an idea of what the ramp in pipeline should look like there.
Terrific.
Chris I think.
Good question and I think there are some differences.
One I think you're absolutely right that.
The initial ramp in that business will.
It will be more associated with large customers or.
Large you know large areas of Oh.
The data centers.
Yes, I think you know some of those names.
And I.
I think that'll be the initial success.
Success.
But.
You know as well as maybe with some of our president logistic customers like.
Thanks.
Ultimately.
No.
Large scale diesel generators are.
Going to are going to have newer more I'll say a policy pressure.
And customer pressures and that.
I think that you will see.
More more enterprise opportunities.
Hey, guys, who tell where you may have a large scale diesel.
Diesel generator set today in a city that won't allow it anymore and no biggie.
Thank you three those models and how to go to market.
Probably is approved 2024 activity.
I do think it's a.
It's a really a large market opportunity, which will first take off with big customers.
Take off because of policy so the customers policies in government policy.
And.
Yeah.
It's a real real interesting opportunity.
That's helpful. And then just last one I wanted to see if you could walk through some of the moving pieces on the fuel margin. Obviously the sales are up a big gross margins were down I assume.
During the dilution there.
I'm just curious is there any kind of one time items or how should how we should think about kind of the ramp in margins over the next few quarters. There as you start to make it that with some of the integration of green hydrogen strategies.
Oh do you want to talk about the margins because I think the margins probably your better on a.
On a non-GAAP basis.
Yeah. If you look you know on a non-GAAP basis, it was effectively breakeven for the quarter and.
I think what you're saying is the benefit of the United hydrogen starting to kick in and.
As Weve talked publicly we're actually investing to ramp.
Additional capacity out of that existing facility and as that starts to kick in and were able to utilize that you will see continued progression and.
I think as we move into next year, we're actually thinking.
I mean, we're continuing to invest and increased efficiencies in the systems, making big strides. So I think directionally, you're going to continue to see great leverage in that product line as we start to leverage the existing facility. We have leverage existing capacity, we have invested inefficiencies and then you know.
As early 23, when the new capacity comes online they'll be again, another big step function. So we're pleased with the direction that we're making and the efforts and I think you're going to continue to see that that country.
Continue to play out.
Understood. Thanks for the color I'll hop back in the queue.
Thank you. Our next question is coming from Jed Dorsheimer from Canaccord Genuity. Your line is our life.
Hi, Jay Thanks, Hey, guys.
Couple of questions I guess, Andy first.
If I just kind of read between the lines you sound a lot more bullish and optimistic that I've heard then I've heard in the past. So can you just maybe you.
No me misunderstanding, but around backup power and so I guess I just wanted to unpack that a little bit and Im curious.
Is your optimism a it's more market dynamics in terms of what you've seen.
Unfold over the past 90 days or so or you know.
His it have more to do with.
Your two acquisitions, because you know I would think that you know maybe United and.
And I know we've got a.
Is that what changed it or or have you always been this bullish and I've just died I wasn't paying attention to that.
Jay I think you read me is correct.
HM.
You would have sat down with me a year and a half ago you would never.
Heard me the so.
Positive about the backup power market.
And.
No I think what primarily changed is that.
Yeah, I'm hearing it from customers.
People, who would be users of these products.
So I you know so no.
Given the example, you know.
When national hydrogen day, which I'm sure everyone here celebrated no I was on a panel with Microsoft.
And Microsoft explain to.
Why hydrogen was the right solution for data centers in the future.
And they are believing that oh.
Will it be cost competitive with internal combustion engines by 2024.
I think it's yes, there was so we're bullish notions.
I also hear from our logistic customers.
And then.
Finally, I think you hit on another point that to.
Our ability to provide a school system solution.
Well with Electrolyzers as well as bill will be now distribute hydrogen, which I think is going to be important for large scale back up power.
As Oh.
The combination of both of them have made me more bullish about this more.
Got it.
You know I I wonder.
I think one of the challenges for you and other companies in that space is changing the conversation.
You had just mentioned in terms of compared to.
Traditional internal combustible, but.
But it seems like.
The efficiency compare is well is even the negative externalities really isn't the competition. So for example in the battery.
Backup and this is why I asked the question and in particular the euro.
Your acquisition of United the.
The fact that when you look at the complexity of the grid and the fact that in California.
Utilities are actually shutting off solar in the middle of the day.
Got to keep from sub stations blowing up did that.
Generation and those electrons could be used.
Somewhere more to gain some value.
Value versus just shuttering it.
Therefore your comparison is is is to you know I would think akin to driving through Trenton and in looking at.
The flaring of of refineries that energy is just going into the sky and in the same way hydrogen seems like that's the lowest hanging fruit. So you don't get in this.
Really physics, ending conversation comparing the storage.
To that of lithium ion or or others storage solutions, where hydrogen has a a lower down conversion in the round trip of that energy.
Yeah, I think there's an interest in.
Interesting interesting point Chen.
When I think about it said so let's take it I'm going to answer your question too first I think you hit on it very.
Very valuable point.
So.
Two other.
One.
On.
When one thinks about stones.
There's been.
Significant work done by people like Jack per hour you see your y.
By the REO, we that kind of shows that from a energy density point of view from.
From a cost point of view.
After about 11 hours hydrogen is the best storage meeting in a place like California.
You not only have to think about.
Inter day storage, but a long term seasonal storage.
I think the other point I would make.
Is that when you take that think about short term storage and you're creating it to afford to hydrogen for example in California.
No the value of that hydrogen.
Yes, a few.
Which really need it.
It's actually more valuable than.
Going back into the grid.
Being pumped into the natural gas line. So I think when you think about fuel cells in hydrogen for long Sturtz turn stored hydrogen is really clear.
But for sure turned storage it actually make create more value using hydrogen as a fuel piece to be using hydrogen just creating impact electricity and putting on the grid.
Got it.
So I guess, where I'm going with all this is is you think of the business and you think of the you know you've provided targets in 2024 that was.
Largely based on a model that was primarily data fuel cells with.
Slight contribution in terms of hydrogen production.
Are you rethinking that in the context of bees.
This increased optimism with respect to you.
Hydrogen production.
Which seems to.
Backup what seems to be skewed heavily.
More heavily to two data of the production as you just mentioned in terms of.
Short term and the value of that fuel that's being created and then I do have two more follow ups.
Sure.
Yeah.
Hi, Jed.
We think and.
Every day.
About how to.
Accelerate the growth of the business.
And.
Having done this for dozen years, no we try to make sure we.
Oh.
Focus on you put numbers out there that we feel comfortable with that we can bid so that I don't have a bad earnings call.
That being said.
I think we're just beginning to touch on.
The value of hydrogen in the marketplace.
And.
Yes, when I think about it it's almost like a.
I think this is going to be a player market, where folks who like wireless networks, you build out the hydrogen generation.
It's green.
We'll get it fastest will get a unfair share of the market.
And our goal is to get an unfair share of the market.
Got it so.
So I had two questions for Paul.
Thank you Andy by the way are you working on it up.
Our first question.
It's just how to think of you you're beating on billings as well as increasing outlook on billings, but revenues in line and I'm. Just wondering should we think about this quarter is.
Indicative in terms of the ratio between.
Revenue racking and billings or was this an anomaly.
Well gross billings for us as gross revenue equivalent or that's just the term that we use so the only difference is the warrant charges in terms of how that's reflected in the financial.
So the gross billings reflects the really the commercial revenue recognized in the quarter. So the traction that you're seeing is directly correlated to the activity underlying the business. So.
So I think from a modeling standpoint.
We can go.
Talk about for.
Percentage of sales and stuff like we've done in the past how that might play out in the future, but from a underlying business perspective, and then just understanding the dynamics.
You know think about.
That being a true reflection of the shipments and deliveries that we made in the quarter and and as we progress I think.
We'll continue to be correlated I hope.
Thats helpful did.
Yes got it my mistake on that so second question and last one for me.
So Paul you were quoted in terms of saying that I think in a publication one of the most important things.
For plug would be that if the ITC Tam.
Tax credits.
For vendor financing and you know with the administration change, which would seem to put into a scenario analysis of more favorable spin to your outlook I'm just wondering if you could.
Just expand upon that because it seems like you know for me. It was the first time that I heard that from you guys in them.
And I'm just wondering how you.
How if you could articulate I'm assuming that that's.
For your customers financing.
The equipment, but I was wondering if you could just speak to that a little bit.
Yeah, I think it was many factors in general I mean, I think it's one is as opposed to maybe the most important but I would say you know the most efficient place to monetize the tax benefits and finance the projects in the traditional bank market, where our customers.
Often go to for those that use traditional models I mean, a lot of customers lease there their trailers and their forklifts and there are other operation that asset.
And they all into they often lease therefore, the fuel cell systems and so because its eligible for the investment tax credit that goes traditional market attritional banks, but what you've seen this year is in the market in general this is true for solar and wind and and others is that you know.
A lot of the banks have had losses from from Covidien other effects going on in the market and obviously when you reduce your taxable income you kind of impact the available investment tax.
Passively in market. So I think as we go forward.
Yes.
I think my discussion previously when the quotes I think were around.
Ways that things could it could be beneficial.
Obviously, you know first.
First foremost economy picks up the banks will have more more income secondly, you know things like the 63 grants if they were to reinstate that that's a that's a big change and.
In terms of benefits enable access to market not dependent on having the taxable income that we have the credits you know so it's more about just making it easier to access the base and for productive for club customers in general and those.
Those things can be enablers, but fortunately, we've got enough traction.
Outside of that that is not the sole factor I guess the best way to think about is just one of many dynamics and we had many customers who sign on adult type of tax credits and still yield tremendous benefits and and the programs and so.
It is as I said, it's just one of many dynamics that we think about in terms of opportunities.
Thank you as a reminder, that star one to be placed into question queue are.
Our next question today is coming from amid though from HC Wainwright. Your line is not a lot.
Hi, Mike how are you.
Morning morning, Andy Thank you for taking my questions Congrats.
Congrats on a strong quarter by the way.
Now for the two plants, Andy you are breaking ground on could you give us a sense only sort of a completion timeframe and then how should we think about the utilization levels ramping up these facilities.
Sure. So no two plants, one which will be in the northeast and one which you will be in the southwest.
And maybe to come on line in the.
Second half of 2022.
Probably a fourth quarter 2022, and no we would expect that to those play into it.
The fully utilized I would say by Oh.
Early.
Only a 2024.
Understood. Thank you for that and do you have a sense of maybe sort of the margin impact from these plants, you know getting to full utilization in the 2024 Peter.
Yeah, so full utilization.
We expect these plants to.
That being one with the 30% to 35% gross margin.
Well thank you.
Yes.
And just sort of you know.
When we look at these warrants are made previously.
It seemed to be a little bit of an overhang, but do you feel these are now sort of a little bit of an edge you know predicting or has protected the business from maybe competitors et cetera. Given that these are large potential customers were tied to just not going to be able to go to anybody else, but you guys.
You know I think the key item is that we need to perform for our customers every day.
And focus on a.
Providing our customers value.
Oh and you.
You know, it's a better ROI.
No no next to preparing for calls like this.
Admit I don't spend a lot of time thinking about the boards I think about how to keep on making sure that plug power is delivering value for our customers.
Understood just one last one ill with respect to some of your bringing 24 25 guidance.
You know, what's the contribution from Europe expected to be towards the guidance.
Yeah, I would expect you are.
You know.
It will take a look at the next year, you know I think your country.
Contributes 10% of our revenue and I would think by a 2024 you can expect is being the 15% to 20% range.
Understood.
That's all I need. Thank you so much already take it easy admit.
Thank you. Our next question today is coming from Moses Sutton from Barclays. Your line is now live.
Yes, a congressional Moses execution, Yeah, hi, how is it going to be say, hi, Kerry bove that you're last but not least Moses.
Oh, Thank you very much [laughter] in here.
Apologies if I missed this before but did you provide 2021 adjusted EBITDA target or just even if you could speak more generally is it is the EBITDA margin going to be above 15% are we looking at 60 70 million range off of the 450 million in billings any sort of directional view there would be quite helpful. Thanks.
Paul you there.
Yeah, I'm, sorry, I wasn't sure if you own your response.
Yeah, we haven't given that guidance Moses I mean, I think I.
I guess at this point, what I, what I can tell you is it will definitely be higher but we haven't really provided that we know.
We see the pipeline.
Sales are going to be higher and we see.
Continued progression in margin profiles for all product lines. So we're very confident it will continue to.
The accretive and go up but we haven't given a specific range yet.
Well, we have a busy grant.
Bore scheduled for January end of January as we do every year and at that point, we might be in a better position to give you more specificity.
Great looking forward to that and maybe that I guess in the call here on this really out there question.
Would you ever consider integrating some ownership of solar and wind assets truly controlling the full integration from electricity generation hydrogen production and its use maybe there could be some synergies. There. These assets are easy to operate with third parties why not control the very full process ultimately one day, but I know that's an out there question.
[laughter] well Moses.
I think we Didnt know often no.
With our plans at the moment.
And when you have such good partners I gave Pacsun Brookfield.
I don't know.
See any need to go.
Get into their business.
Okay. So no plan at the moment is to Oh.
Work with partners and you know I think.
Yeah. As you know this is this activity is being driven by Sunday treats to.
And sign Jason really it's been really I've been working with folks think that make sure we have great, which allows us to generate competitive green hydrogen.
Great great exciting stuff. Thanks again.
Okay. Thank you Megan.
Thank you Weve reached end of our question and answer session I, let's turn the floor back over to any for any further or closing comments.
Well all.
Thank you everyone I.
Really enjoyed or discussion today.
It really pleased with the quarter, it's going to be another great fourth quarter and.
Look forward to talking to many of you in the near future.
Thank you.
Thank you that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.