Q4 2020 Plug Power Inc Earnings Call
Yeah.
Mhm.
Yes.
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John.
[music].
Greetings and welcome to the plug power fourth quarter and year end 2020 earnings conference call. At this time, all participants already listen only mode.
If anyone should require operator assistance. Please press star zero on your telephone keypad. It's now my pleasure to turn the call over to Teal Hoyos Director marketing Communications. Please go ahead teal.
Thank you and welcome to the 2024th quarter and year end update call.
This call will include forward looking statements.
Forward looking statements contain projections of our future results of operations.
Our financial position or other forward looking information we.
We intend these forward looking statements to be covered by the safe Harbor provision for forward looking statements.
Chained infection 2007 day of the Securities Act of 1933 and section 21 E of the Securities Exchange Act of 1934.
We believe that it is important to communicate our future expectations to investors. However, investors are cautioned not to unduly rely on forward looking statements and such statements should not be read the guarantee of future performance or results.
The statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors, including but not limited to the risks and uncertainties discussed under item one a risk factors in our annual report on form 10-K for the fiscal.
The year ending December 31, 2019, or quarterly report filed on form 10-Q for the quarters ended March 31.
June 30, and September 32020, as well as other reports we file from time to time with the SEC.
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 the call or is new.
As a result of new information.
At this point I would like to turn the call over to plug powers CEO Andy Marsh.
Thank you Jill and good morning, everyone and thank you for joining the plug power into the year conference call.
2020, as everyone knows from the World was a very challenging year.
We of plug power had been very fortunate as we participated and witnessed globally the acceptance of hydrogen, especially.
Especially the green hydrogen ex <unk>.
Critical to help lead the world of fossil fuels.
Estimates have been made by experts of hydrogen can represent 18% to 23% of worlds of energy by 2015 and ease of ramping today.
We have plug power has been building our technology set for decades waiting for this moment.
Our points of 10 years old. The described power work then we're positioned us at the right moment.
The work was more than technology.
Building, the first commercial markets of fuel cells.
Our first app the material handling it's not glamorous.
<unk> built the company proved our technology set and watch the full suite of products and new capabilities.
The turnkey solutions that provide end to end solutions, including selling hydrogen the building fueling stations in fuel cells, and providing aftermarket service really positions us to day.
Our relationships with Amazon and Walmart gave us insights into how to improve our offering but also helped us identify the missing links in our portfolios.
One of these insights with the large corporations sustainability goals re and net for the market to expand green hydrogen was the necessity.
Green hydrogen also became practical over the <unk>.
Last couple of years since this is closely linked to the declining cost of renewable electricity.
This insight drove the price to make three decisions in 2020.
We purchased the leading Electrolyzed your technology company <unk> ex that.
That had the Electrolyze your technology, the convert electricity to hydrogen Greg.
Hydrogen.
Two we purchased United hydrogen.
First private company to build of large scale with.
With hydrogen plant.
And finally, we made a commitment to build the first U S nationwide green hydrogen the generation network.
500 tons, a day of capacity by 2025.
<unk> thousand tons per day globally by 2028.
The macro trends to a more sustainable world the.
The recognition of hydrogen in spite of the meeting these goals and plug power is expertise opened many relationship scores from the past year.
Let me name of few.
Brookfield and apex, both partner with plug power to provide sources of low cost renewable electricity to generate green hydrogen.
By the end of 2022, we will have over 70 tons to 100 tons per day of green hydrogen available in the U S by plug power.
We know a leading global auto manufacturer recognized plug power to unique ability to offer full turnkey solutions to the light commercial vehicle market.
From their experience and be the evs, they recognize they need to offer more than the vehicle.
The JV, which will be selling vehicles in fueling stations will be formalized by late second quarter or early <unk>.
SK the SEC.
<unk> largest Korean conglomerate recognize the plug power was the only companies that could offer a complete solution in the hydrogen industry.
We will be building everything from large scale stationary products hydrogen plant Electrolyze yours and other app.
We will build the second Giga factory in Korea at the time.
Line line for this JV has been accelerated and will be formally closed by the mid third quarter.
Also as you may have seen SK finalized through one $6 billion investment in the plug power last night.
And for.
And another step in our global Green hydrogen story plug power announced the deal with Spain's second largest renewable electricity supplier <unk>. The JV plans to build of 100 tons of green hydrogen generation capacity when the Iberian Peninsula.
We'll be announcing more partnerships in 2021.
Now back to 2020.
In 2020, we experience of 42% increase in gross billings.
Achieving $337 million were now generating cash from operations, excluding the need for working capital, which is needed to growth in.
In 2021 will exceed 475 million.
Millions of dollars in gross billings with over 93% already accounted for in our plan.
We've never been in a period of tough decisions, we accelerate warrants at the end of 2020 of.
This decision will have the side benefit.
I'm, making are GAAP financials more in line with how we operate our business the <unk>.
Cost of large one time non cash charge, but clears the deck for the future.
And quite a future of $5 billion from the back.
Thoughtful expansion plan of unique market opportunity now is the right time for plug power to gas.
Our goals for 2021 are clear.
Gross billings of $475 million.
Annual gross margins in the high teens, achieving 20% by the fourth quarter.
We view gross margin expansion is of critical indicator that our investments are paying off.
Three successfully launching our two JV, which were nowhere in SK.
For continued expansion of our business the partnerships acquisitions and other relationships.
And finally <unk>.
The existing the company to achieve $750 million in gross billings in 2022.
It will position us for a $1 7 billion goal for 2024.
Paul and I are now available for any questions you may ask.
Thank you and other conducting a question and answer session.
I would like to be placed in the question queue. Please press star one on your telephone keypad of confirmation tone will indicate your line is in the question queue. You May press star two if he'd like Trimble of your question from the queue for participants using speaker equipment may be necessary to pick up of handset before pressing star one one moment. Please while we poll for questions.
Our first question today is coming from Eric Stine from Craig Hallum. Your line is now live.
Hi, Andy handful.
Hey, good morning, Eric.
Good morning.
So you had mentioned in the prepared remarks share that the.
SK partnership obviously the investment closed.
Overnight, but maybe just some clarity into how it's accelerated.
Of that announcement.
How do you view, the opportunity and maybe which areas do you think the move faster than others.
Sure So Eric.
When we made the announcement I think that I started out by saying I thought we were being conservative.
We have developed actually six work streams in the development of this JV, where the teams are meeting the.
Two to three times a week.
We've identified.
Certain business opportunities.
Quite honestly that are much larger than we even thought initially.
And that.
I think that the first three opportunities will be one large scale.
Power generation.
We would expect we will be shipping products.
Later this year or early next year, that's not in our $4 $75 million plan I think the second liens.
SK has the real commitment to sustainability.
Youll see electrolyze of products to the moving over into SK per usage again early next year and finally, there was a lot of work ongoing with hydrogen generation and the one stations.
Got it.
Okay.
To clarify what I think I heard that thats not in the 475 of the large scale.
Well, that's not in the $4 75.
Okay.
And then the <unk>.
75, as I mentioned in the prepared remark, we of 93% and also at the moment.
Usually with the 75% level at this time.
Got it.
Maybe sticking with that topic or.
Well, so we've got the four pedestal customers the materials handling.
Curious what type of mix.
See from those for the one recently added but thus far in 2021, and then you typically don't give the.
The forward year outlook. This early in the year at least I don't remember that you have so I'd love to hear what the.
The visibility you have is from the four customers you've got potentially some others that you add into that 2022 goal that you've given today.
Sure. So we have between those core customers and others and Eric <unk> for customers, probably represent 80% 80% of our deployments here in 2020.
2021.
That circle and the range that theres already $400 million.
In house.
Thats available for shipment this year.
And.
I think thats one of those four of them represent more like 30% and the rest will be kind of split a little bit either of them.
Got it and then just staying in touch.
A little bit on 2022 net.
Yeah.
Given the forward year, not the current year, but the forward your guide or outlook. This early.
But just curious.
<unk> got better visibility than you typically do into 2021, but what type of visibility do you have into 2022 based on their plans and how does that compare to historical.
Yeah, I mean the.
I mean, I think there is.
Okay.
Three items going on here that helps us with 2020 to be able have the insight into 2022.
Obviously after all these years with many of these material handling customers and I've talked about before.
We're not doing short term planning, we're doing through the five year planning so theres a good deal of insight into their activities.
Oh, the Electrolyze your sales funnel is strong.
And this year.
We will take that business in.
Like we've been in material handling increase of by a factor of seven or eight this year will be in the $40 million plus range and we have of funnel that's close to $1 billion already built up for the Electrolyze of business.
And I think.
And as you know everything in the funnel doesn't happen.
Finally, when I take a look at.
Especially with the play with some of the initial deployment as well, which will probably low.
We're kind of sitting back feeling very very good about.
We achieved the 2021 goals.
Okay. Thank you very much.
Thanks.
Eric.
Thank you. Our next question today is coming from Colin Rusch from Oppenheimer. Your line is now live.
Thanks, So much John good morning, Good morning, Paul.
[laughter] I'm good Andy it's always good to hear your voice.
Can you guys give us an update on where you're at just in terms of specific projects in terms of identifying sites on the renewable side for supporting the hydrogen rollout and then how big the queue is behind that in terms of.
The size of that you could grow into at the start to see demand emerge.
Okay.
So.
Very clear colon so.
We have.
Four sites.
Three of them.
Sure.
Moving into.
The development stage.
Two in the northeast one in the southeast.
And one in California because of the.
As you know permitting issues in.
California can be.
Kent plagued the little bit longer, but we've already actually on the land in California for the top green hydrogen plant in the.
The.
Yes.
Caliber in the valley around the crest Chriscoe.
We have probably a.
Over 15% to 17 renewable sites, we're looking at for the.
The ability to generate green hydrogen.
Which are spread widely across the country.
I think.
I'll take the first two plants first two or three plants, you'll see go up I think the C.
One in the northeast one in the southwest from one of them classes.
Okay and as you look at those opportunities is that going to be an opportunity for you guys to also built.
You know some.
Some sort of regulation of storage type.
Applications adjacent to each of those those sites to help stabilize the grid certainly that's one of the opportunities for hydrogen in terms of kind of being the connective tissue for some intermittent renewables and the the larger power grid, but are those sites being chosen with multiple purposes of mind.
Okay.
I'm going to say.
I'm glad to give you a wishy washy answer either.
Yes, but not nearly as clear.
Clearly defined.
The.
The generation portion all of these sites are grid connected.
So before the meter so that cost or.
Wholesale type price.
But the.
And we we have been.
Obviously, we're thinking of a great deal of about the issue of hearing that.
First and foremost.
We are.
Commit at the green hydrogen and providing our customers green hydrogen.
And.
I can tell you one.
Not surprising when we look at the wind farm activity.
Net we're looking at in Texas and power.
The way to wind farm, usually we work with actually with very successful during the recent Texas storm.
We certainly are looking at.
The wind energy, how we put wind back when the grid at the right time and how to use it at the right time, but we are all set and that's really clearly define but certainly storage and generation is in the back of our minds, especially after what we see going on around the world.
Thanks, So much Andrew I'll take the rest of it off line, but by the way call I call. Greg clearly is going to help us a great deal in terms of learnings.
That makes sense I appreciate it and we'll take the rest of off line.
Okay.
Thank you as a reminder, that star one to be placed in the question queue.
Our next question is coming from Jeff Osborne from Cowen. Your line is now live.
Hey, good morning, guys.
Congratulations on all of the success so far you've got a lot of irons in the fire for 2021 and I was just wondering if you can give us a sense of the.
The operating expense trends and Capex for modeling purposes.
<unk> gear up for the.
Very heavy growth you've guided for 'twenty two through 'twenty four of that you talked about Andy.
Sure so.
So Jeff I would add from the Capex area.
I would.
Probably circle somewhere around $750 million.
With most of that going to support the expansion of these hydrogen plants.
We've done Capex modeling for the next five years.
And.
We still see.
Significant surplus on our balance sheet.
Even with our aggressive plans to build out these hydrogen plants.
The reached the 500 tonnes a day and to achieve everything we are looking to do with property somewhere in the two the two $5 billion range.
Long term.
As far as the.
Op expense, Paul you may want to comment on that.
Yes.
Jeff I would expect our op expense may be up to 30% higher this year, Paul do you want to add to that.
Yeah, I think Paul.
Yeah, I'm sorry, Andy can you hear me yes.
Yes.
The signals not so great amount of apologize, but yeah, I think that's right Andy I mean I.
I think in that 30% of low 30 range per quarter is a good number.
And.
I think the.
One of the key things Jeff for this year.
As we.
We're going to see definitely growth in the in sales and gross margins and there is a strong focus there and as Andy alluded.
Going to be investing in and the Capex and some opex too for all of these growth platforms, because theres a lot in the fire and a lot of things happening and we see the opportunity to really accelerate the.
The growth even further.
So you will see some of that this year.
Got it and then the.
Is the 30% comment is that off of the fourth quarter run rate or the aggregate number for all of 2020.
Yeah, I would use the go ahead Paul.
Paul.
Yes can you hear me.
I can hear you Andy just given the the fourth quarter was up quite sharply I just want to make sure im using the.
No no.
I would use the annual basis GAAP.
Got it and then how ROE.
Proceeding along just given the pretty heavy capex there over the year as well as the upcoming years for these facilities are we at a point in time now where the.
Sites can use leverage or is this all kind of be straight out of the cash balance.
I'll, let Paul day, So I think the answer your questions.
Yes, Paul are you there.
Okay, I guess I'm going to have to take the jet.
[laughter].
I think you're going to see leverage coming into play and I think you hit on a good point Jeff.
We've done modeling to make sure we have sufficient cash balances.
During the.
Okay.
The do it all of our own.
Thank you youre going to start probably seeing leverage in the second half of the year.
As we start doing the build out so there has been work going on the.
And I think you'll see probably.
Yes.
On the Conservative basis, we've said the ourselves forward, if we did it with all equity.
We can do that we're in a position to do that now, but we don't expect that to be the path.
Got it and my last one for you Andy is just the two joint ventures are we at a point in time.
Where we can you can confirm that the results of those JV will be consolidated in terms of revenue or will these all be below the line that might be more of a question for Paul but just in terms of the accounting treatment of the joint ventures of themselves.
I know, we're working in the negotiations to make sure we can consolidate.
I think it said.
Bob.
I think we're getting there I think that both partners understand the criticality of that the plug.
As you know Jeff there is a.
A lot of accounting that goes into that a lot of the legal work that goes into that but the most.
And working together.
Alright, great to hear that's all I had thank you alright, thanks, Jeff.
Thank you. Our next question today is coming from Craig Irwin from Roth Capital Partners. Your line is now of life.
Good morning, and thanks for taking my questions.
I'll also shaping the correlation of our group.
[laughter] crowd.
Yes.
Okay.
I need to say congratulations to you guys had an absolutely phenomenal 2020, and let's let's continue that in 2021. So congrats.
Okay.
My Board agrees with you Craig.
Good Thanks John.
[laughter].
So Andy.
One of the things, we havent talked about much but there is actually tremendous appetite for out there is fuel cell trucks right investors really want to see companies to be successful in this market given the opportunity the way to move away from oil.
And the potential for long term economics.
Moving on green hydrogen to be really interesting can you maybe update us on what's going on.
In Green.
Fuel cell trucks for you right now.
Are there new partnerships sort of percolating up out there what's the status with the different customers you've disclosed to date.
Sure so.
Greg I think.
I think that.
The model that we've used for Reno.
In Europe.
Is one that we're looking.
Can you duplicate.
And.
I can tell you that.
A good deal of our forward looking thinking at the moment has it has to do with had two of congrats to that market.
I think theres a couple of items, we conclude.
And I think the big one is we don't want to just be a first tier auto parts supplier.
And the JV with you know with structure that we are jointly selling vehicles.
Because we we.
We have seen what happens in the world If you will.
Just the parts supplier to the auto industry.
And I also don't know.
If you just go about doing it the old way of just going building cars and vehicles like the auto industry has done traditionally.
Got you.
You ended up in the purchasing office instead of the CEO of office.
We do have discussions.
Going on.
In the United States and elsewhere, especially with the focus on heavy duty vehicles.
No.
One of our two of our big customers will actually be doing pilots with.
Very shortly.
We also have.
Already done work with the.
The folks who are kind of tier two players like <unk>.
I think finally on top of that.
We're.
With her no we have a fairly aggressive plan.
Really start rollouts by the fourth quarter in the fourth quarter of early first quarter with some initial deployments.
More in the light commercial vehicle space, where there were of apps, where it makes sense.
When it comes to the Green hydrogen.
I think like most people we believe that.
No electricity.
The <unk>.
Sense of kilowatt hour makes.
It makes green hydrogen.
Especially as the fuel.
Very competitive with the great hydrogen and Ben.
And the.
As you know Sanjay has spent an incredible amount of time thinking through how we can offer a better product and great hydrogen with green hydrogen.
Similar pricing.
And make margin for plug power and.
I think you've been around this a long time, Craig that's what our customers want and they'll pay a slight premium per green, but nobody is looking to pay a huge huge premium to be Greg.
Understood that makes a lot of sense.
My next question.
Is about the infrastructure to fuel.
The trials potential small fleets of.
Fuel cell trucks. So last year, you did mention that plug had done some work with its existing partners.
Retrofitting some of the the.
The fueling infrastructure that the church their forklift fleets.
So the so that they could start with potentially doing fuel cell truck Ah trials, maybe distribution to distribution distribution centers of distributions.
Type work.
Can you maybe update us on that and then more importantly.
Cash flow gets $400 million $400 million of quarter basically in.
In credits and a large chunk of that $400 million comes from the.
The installation of the supercharger network there they are charging infrastructure out there.
Under the California.
Incentive programs can you talk about the potential to pull down.
Some of these incentives jumps by building out the network for your customers have you already got applications in.
When do you expect that to potentially be achievable.
So.
If I look at that.
I'm going to use two examples for you Craig when we look at the Lcs ex credits in California.
We look at where we believe we can come the Ci scores, especially since we're looking to be moving hydrogen with the green hydrogen trucks.
That the.
At the pump, we believe the credit can be up to $4 of kind of agreement.
We're listening here, who don't Andrew he may not understand I mean that makes sense.
Our cost.
Depending on how you split the green hydrogen.
You know that that almost makes the green hydrogen and probably does make it very blurry.
Less than.
Fossil fuel diesel energy.
The significantly.
We also in there, it's all say bills began to circulate around.
Longer is associated with the binding green climb of plant.
Which is suggesting up two of $2 credit per kilogram per green hydrogen.
That makes the choice between green hydrogen.
And great hydrogen incredibly competitive.
So I think that once the.
Sanjay Hasnt Theres 100 tons up that the.
There'll be a great deal of the government supports and credits.
And a real huge opportunity the <unk>.
The increase the margin for plug power long term.
Excellent. Thank you Andy and thanks again for taking my questions.
Thank you Greg take it easy.
Thank you. Our next question today is coming from Jed <unk> from Canaccord Genuity. Your line is now live.
Hey, Thanks, Andy Thanks for taking.
Taking my questions.
Good morning, Jeff how are you.
I'm doing well thanks.
I'm going to do a quick check here I just want to know if my partners back on the line with me Okay.
Yes, and yes.
Yes Im here.
I, just think of cut out but I'm back.
Okay, all right John.
Alright, perfect. So.
So a couple of questions I guess, just one on the material handling side.
At Amazon.
Both have a.
Significant interest in the <unk>.
Success of point power.
Financially.
You know it's.
And obviously.
The you know.
I am sure it wouldn't strike of anybody surprising they are quite pleased with what happened.
They are.
Yeah.
They are at.
Hey, Andrew off the par, but they are.
Did it.
To both companies do the hydrogen is.
It's critical to the long term.
To meet their long term climate goals.
Net.
They are a partner with plug power that goes well beyond financials that has proven that we can deliver the product sets of need.
They continued to help us.
Both of them.
New opportunities for fuel cells from green hydrogen.
I can tell you one of them actually introduced me to two of their other investments in the last three weeks.
To help us grow and propel this business.
Beyond just direct business with them.
Well not know Paul Andrew off the U.
Yeah, Thanks, Andy and I guess you know.
No.
The main.
Comment that I would make is that.
By the fact that these are all of the expenses for the for the one customer then.
Reflected in reported at this point.
There wont be additional charges for those in the future.
And that would should significantly make it easier and more simple in terms of interpretation on the result of as we go forward.
And and I expect we've been using gross billings as a means by which to communicate.
The.
The revenue from sales activities.
Those charges, but I.
I think going forward that number should be a lot closer to the GAAP revenue number, which which will make it easier as well as we move forward.
Got it and just to be clear I mean, im not challenging their commitment, but if I just look at it.
Their strike price is at 13.
And the by product and your stock is at 50, there they are being paid.
A significant amount of money to actually take your product and so it does change kind of the relationship of Beth.
Once that expires.
Yes that was that was really the core of my.
My question I think you and it's been clear of Amazon and Walmart Jayson.
Yes and to be clear Jed.
And Mark one.
The specific customer names.
They still are they still owe all of those companies on a lot of ones that have not from exercise.
Got it Amazon as well.
Yes, Amazon as well.
Amazon owns the lots of warrants that have not been exercised.
Got it.
Just Andy just pivoting a little bit to the upstream and I was wondering if I.
We kind of look at the electric Electrolyze her side of the business and and by the way congratulations on the SK DLA I agree I mean, it looks it looks like a fantastic deal.
If you kind of look at the difference between Reformation.
Using methane.
Versus that of of Green.
One of the main differences is kind of the.
<unk>.
The natural companies on the.
The methane re formation.
Would logically be kind of a nat gas or chemicals that have experienced in the downstream.
Complex plumbing systems I'm, just wondering on the on the green side of things with.
With.
Windmill companies.
Is it are the discussion of I'm, assuming the discussions, but how are those companies thinking about sort of the the risk profile in terms of do you see more partnerships where.
Pulling in.
I guess of downstream or midstream refiner and you see that kind of wind market that starts to look.
More like.
Driving through Trenton, New Jersey for example, without the flaring I am just wondering how of that.
How that shapes out I guess, if you will.
Yes so.
I think youre right a real interest.
Asking interesting questions you had about the.
The evolution.
The power.
<unk> will be distributed especially hard the gene.
The quality and standard you need for fuel cell engines.
And there was a slight dip in the Eagle.
How one goes option of about generating.
That hydrogen.
But.
Initially.
The most hard the gene that screen well.
Be transported in liquid form the.
Yeah.
Much like it is today.
All of the medley youre going to see more.
More and more and I think.
We had an earlier call, which was talking about storage youre going to see more and more on site storage with the hydrogen being generated some of that will be an average per very very long term storage.
John.
And then like natural gas has done today and like hydrogen has done in the refining industry today.
And finally I think that.
Maybe sooner when you see some work going on in Europe.
I'm going to see that we've been already thinking about the how.
How to build plants close the pipelines. So that you can start injecting hydrogen directly into the natural gas pipeline.
Initially you percentage of it.
The percentage and gradually increasing.
So the all of that is going into our thought process.
Having grown up in Philadelphia, and knowing what the smokestacks look like I don't think well see anything like that.
Okay. One last question I'll jump back from the Q, just as a reminder of Roth.
The split of the business, if we kind of look this year. The vast majority is still going to be material handling and selling the fuel cells into the.
As well as the equipment to support.
That market can you just give US a reminder of the the 24 guide in terms of the breakdown of the bis. Please.
Sure.
I think you hit the interesting point Chad.
We expect so we're in 2023.
Akshay transition where.
The other businesses are bigger than material handling.
Thanks, Good morning 2003.
We expect that the.
About <unk>.
750 million will come from material handling.
Between.
Hydrogen the Electrolyze yours.
We would expect to be in the $500 million range.
And the rest will be involved in the large scale stationary and on road vehicles.
Great I'll jump back in the queue. Thanks, guys great. Thanks Jess.
Thank you as a reminder of that star one to be placed in the question queue. One moment. Please while we poll for further questions. Our next question today is coming from Amit Dayal from H C. Wainwright. Your line is that of life.
Thank you good morning, Andy Good morning, Paul the morning admit how are you.
The good Andy how are you doing.
Very good.
So Andy you secured pretty solid partnerships on the downstream side in terms of distribution. The Brookfield, the SKU et cetera, do you need partnerships sort of one of the upstream side with some of these renewable energy companies as well to just complete this.
The value chain, if you will.
Okay.
Help me help me with that of niche because.
Understand completely.
Because I think the kind of Brookfield as a.
Providing us the renewable electricity I'm probably missing from.
Okay. So do we need the others like Brookfield.
Will or some of those types of partnerships the blue a few ways.
I think youll see more of those partner so.
So the answer to your question is there will be additional renewable partners even here in the United States and I think youll, probably see Andy.
Announcements in the foreseeable future.
Thank you.
And then just moving onto the <unk> plenty of results maybe this could be for bulk of it looks like there could be between 43 to 44 million in one time costs in the fourth quarter and within this you talk about some hydrogen supplier issues. If you could just provide us any color on the web. This is and you know whether these are onetime costs.
That are out of the way or is there any other one time costs that may come into play in the next few quarters.
Yes.
Sure of it yes.
Yeah, I think there's a <unk>.
Number of things going on I would say we have.
The force majeure issue or close to year end with one of the hydrogen producers of one of the facilities that we worked through whenever those events happen Theres some <unk>.
Cost of that you incur the kind of navigate through it.
It doesn't happen frequently so.
I would agree with your comment there.
Like a lot of companies, even though we've had great success in growing the business and new platforms of doing a lot of things.
There are some challenges of COVID-19 in terms of navigating through that from the.
The operational side.
We saw some of those events, but then the other thing Thats important to note is there was a lot of strategic.
Joint ventures, and the new business development activities announced in the line.
A couple of months and obviously, we have been working extensively on that in the fourth quarter to prepare for those and some of those were announced early in January as an example.
So theres a lot of investment.
To accommodate that.
Those of the big themes and yeah, I would say.
We obviously don't do those every quarter.
I don't expect that to happen routinely.
Mr. Thank you for the.
And then just from a margin perspective growing interest rate for <unk> to 'twenty three time frame.
As Andy has grumman's material handling is going to start becoming a smaller portion of revenues what kind of impact on the margins.
Should we see from the shift in revenue mix.
Well you want proven.
Yeah can you hear me.
One thing we've proven at scale matters and so.
Because as Andy said I think in the past.
We're actually using a lot of the core technologies and resources that we have to go into these other markets. It's not like they are completely new.
As the channels to take their own resources of the old technology.
You can put the independent so theres a lot of leverage capability.
And you know are our forecast and plan.
Keep moving north so.
You're going to see of progression over the course of this year.
For the full year should be in the the high teens and then even in the year, we may be approaching 20% of north on a run rate basis, and I think youre going to see that continue on into 2022 and in all of these businesses will be accretive holistically as we continue to grow and scale from there.
Got it. Thank you guys. That's all I have appreciate it.
Take it easy of MIT.
Thank you.
Our next question is coming from Tristan Richardson from true of Securities. Your line is now live.
Hey, good morning, guys.
Good morning shifts and how are you today.
Doing well thanks, Andy just the question on the data side.
I think on the update call you talked about a potential data customer this year.
Do you still see that is the case and then can you talk about scale here either with the opportunity set with this customer.
Is it possible you could see of data customer elevate to the level of of pedestal customer or is this kind of more of an early days pilot type of deployment pronounce.
Oh.
Good question interest and so.
We will be doing our first large scale stationary backup deployment.
One of the largest data center customers.
In may.
And that that.
Of that shipments of the worst from that shipments happening as we speak and that the.
That cash here.
Yeah.
That comes from it could be in.
One of our largest pedestal customers.
The plan to how this bill.
<unk> can roll out in 2022, 2023 and 2024.
Is that customer.
It's come to the conclusion that.
Oh fuel cells in the hydrogen.
Moving to <unk>.
Next few years will be very very cost competitive.
With large scale on site diesel generation.
On top of that you have additional value of the two.
Sustainability aspect of the Green Green hydrogen.
Coupled with the.
Back that a lot of these large data centers news noise pollution is the big Big issue.
That's helpful. Thanks, Andy and then just.
Going back to the the margin question I think talking about accelerating margins through the year kind of exiting with a two handle when instead of a team handled thinking.
<unk>.
Is this purely a function of scale or I think we thought of fuel supply.
As being margin accretive at some point on the timeline curious if that is the driver or the or the fuel supply potential as more out into 'twenty two and beyond.
I'll give you my quick answer and then I'll hand, it off the Paul.
It won't be until late 2022 that the hydrogen margins will significantly increase until we have our sights bigger sites on line there will be some improvement in this year.
Standing of our own site in Tennessee.
Plus we're.
Beginning to add.
Hey, Gabriel debt.
15 to 20 of the traditional sites with our plant in Tennessee, which will help our margins, but the real margin growth will happen out in 2020 degree.
Paul you made for the hydrogen business, Paul you may want to comment on that.
Yeah, I think that's right Andy.
Across all of the businesses.
Similar themes that we've shared in the past I mean, there is overhead leverage the supply chain leverage does design enhancements going on Theres vertical integration.
The opportunities that we've made the we're starting to leverage and scale. So those themes are paying dividends and all of our businesses from a margin enhancement and even see some of those themes even at our current fuel business as we grow in scale, but from so we're going to get that margin appreciation or accretion.
Largely from those of those core themes, but as Andy said.
Terms of a significant contribution from the fuel side it'll be.
The middle of 'twenty two on into 'twenty three is that the stores start to pay off.
That's really helpful. And then one just last one if I could I think on the update call you mentioned the.
The the auto industry with respect to materials handling.
I actually be more intensive on a unit basis per site is.
Is that still the case is the.
Inc. Five to 700 units per site is still a good high level way to think about the opportunity and is it. The four sites is still kind of the near term potential three or fourth pedestal customer.
Okay.
So I think that's it I think in general that's the.
Obviously different sites can be different sized Christian but I'll give you. An example, our BMW facility and the Spartans per well.
Well over 700 units.
Some of them may not immediately the 700 fuel cells or there can be because the way auto factories or structure there can be some gradual.
Deployments in some of these facilities.
But.
That's that's not a bad number to be thinking about and I think I would add on top of that.
I think there is an opportunity with the new products or customers.
The expansion could go.
Uh huh.
Great Andy Paul Thank you guys very much.
Thanks Tristan.
Thank you. Our next question is coming from most of the sudden from Barclays. Your line is now live.
Hi, Andy and Paul.
To catch up the morning, good morning modes of how long the Warren and good morning.
In the 2024 guidance the $1 7 billion, how can you break out specifically third party hydrogen I know you group them together with the extra loggers.
And how do you expect to sort of.
See the long term off take on those contracts.
As you complete the plants Youll have some rolling contracts would you expect to have more spot price exposure.
Okay.
There was actually the reason I wish.
One of the items.
We think about all the time is.
There's opportunities in the electric wiser space and white with them kind of together.
We're working through whether we sell equipment or whether we sell green hydrogen.
So that's the.
So that's why on the.
A little bit hesitant to just pull it all out to day.
I'm, taking one deal specifically that could be huge and it could go either way.
It could be really great.
Cake for Green hydrogen so thats kind of most of US we've been trying to work these bills going both ways with people because of the capabilities.
When you think about the spot price in.
And.
I think I'm going to give both and importantly, the output side the answer.
John.
When the input side.
Jay has really done an incredible job in the negotiation of these contracts.
To really have a mixture of.
How one thinks about grid power kind of when things about Rex.
The renewable content.
How one thinks about the.
Any third parties that can help the.
The region empowered GAAP.
So we have been negotiating set price contracts on the input side.
On the output side of <unk>.
Some of our customers I E. The big material handling customers it will be a.
A set price.
We also have a set price of electricity.
So it's very very well control.
You know the spot market is.
Probably a real opportunity.
For us the sell and have significant.
Significant margin enhancement upside.
When we look at some of the spot pricing going on.
Our main concern now is making sure we provide customers who were especially commercial customers green hydrogen that's cost competitive with Greg hydrogen.
Cost competitive with diesel so that the.
They accelerate the deployment of their fleet the of material handling the on road vehicles the.
The backup power generation the by.
By using green hydrogen at a price they can count on.
That's very helpful. Thanks.
And Paul any bulk discussed margin expansion I don't see adjusted EBITDA guidance of reconciliation in the Investor letter is the is the metric no longer going to be provided what would the general range look like for 'twenty, one and even an update on the 2024 from the from the $1 7 billion.
So I take the day.
Paul through 'twenty, one and Paul I'm going to let you jump in after all I did I mean, we're targeting.
Revenue and gross billings almost now are equal.
Moses.
With the with the acceleration of the warrants.
So we're looking at $4 $75 million revenue.
The margins in the high teens, the gross margins and expenses of about 30% higher than the run rate of last year.
Oh God I don't like the triage of that.
Yep Okay.
And.
Last one from me on the Walmart Gen drives I noticed in the letter.
You quote 9500 or above 9500.
Operations I think you've noted by 10000 or more operational as recent as last may.
Reni ticking out of operations or am I, not looking at an apples to apples.
The metrics there.
I can tell you of deployed more units so.
Okay.
Yeah.
I will say this.
Uh huh.
We are going to the so.
So the answer is the number of unions of Walmart's increase in this year.
As we've noted we're actually beginning to move into other applications in the Internet centers.
The net distribution centers.
We have I think three sites already moving them more coming so so moses.
Yes.
We'll be happy to help you reconcile that.
But I can tell you we've sold more units in the business is growing.
Got it thanks, Okay, great I'll take that offline. Thanks.
Yes.
Thank you. Your next question is coming from Paul Coster from JP Morgan. Your line is now live.
Yeah. Thanks, Good morning, Thanks for taking my question.
Good morning, Paul how are you.
True.
So first of all I noticed that the in the.
Press release for the.
You're looking to deploy about $125 million of expense in New York State to build out the the Giga factory, which I'm sure was very welcome the the.
The the.
That sounds high relative to what my prior understanding was for the cost of the Giga factory at around about 45 $50 million I might just misreading that.
I think part of that Paul and I'll, let you add and I think part of that's the.
The expense dollars over the coming years.
As far as the personnel.
Should we.
Assume the the Giga factories, you know cash.
Capex only are still in that $50 million of engines, you start to drop in the middle.
The the $50 million from the call.
Okay got you and it seems quite a fairly modest capex, which is great except the it also suggests that the barriers to entry for all of those are fairly low now obviously the I T.
Mohair of claims involved but how do you respond to that the Andrew.
It's actually a very things you may not think about the.
Uh huh.
The electrical generation required for facility.
Uh huh.
I can tell you.
We are.
We went into one building in selecting the building sales. It was an old awesome switch gear factory that has incredible levels of power provide the into the building.
That allows us to build large scale Electra riser systems first of all of the stack.
I think future buildings, we won't be as the lucky.
And that.
I think youll, probably see costing 25, 30% higher.
What about the argument that its not very high barriers of entry for all of those was competent of sometime technology to get into the the Giga factory business.
Well.
Yeah.
I would step back and say that.
Of course, you at the half customers.
Actually I should start by saying call.
First you have to have the technology.
And we have folks who have actually been working on the MAA development.
Per Rover.
The 30 years, when you look at their background, even before Covid.
I think then you have to take a step back in.
Have people who've been developing fuel cell stacks of making enhancements for 25 years of thought through the manufacturing process from roll to roll process.
The two stamping in place.
I look at there is both the.
As you mentioned in IP.
There is also the.
Oh issue of the.
What I always kind of referred to as travel knowledge, which I think people always underestimate.
I think there is the issue of the having.
Having the capital wherewithal to make the right investments to build out the factory at the right place.
When you look at the facility itself.
We've been able to get incredibly low rates for electricity that day.
To support the taxes.
And the fourth line I think that the.
I think people often have an issue with it is you got to have the demand.
The already of plug power of thinking about as you could see building it.
The next Giga factory in the.
Korea, the really helped the build out.
Gotcha. Thank you very much.
Thank you Paul.
Thank you we reached the end of our question and answer session I would like to turn the floor back over to Andy for any further of closing comments.
Well, thank you Kevin and thank you everyone for joining the call today.
Looking forward to.
Speaking with everyone in our first quarter update call.
Thanks, again and talk soon find out.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.