Q1 2021 Plug Power Inc Earnings Call
Greetings and welcome to the plug power first quarter 2021 earnings conference.
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It is now my pleasure to introduce your host Ms. Teal Hoyos director of marketing Communications. Thank you. Please go ahead.
Thank you and welcome to the 'twenty 'twenty, 1 first quarter on the call.
How will include forward looking statements. These forward looking statements and projections of our future results of operation or on our financial position or state and other forward looking for furniture.
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Result of new information and then.
This point I would like to turn the call over to plug powers CEO Andy Marsh.
Well, Thank you Joe and good morning, everyone and thanks for attending our first quarter conference call.
We issued our Investor letter this morning, which covers our performance for the first quarter.
And like to comment on a few items before we take your questions.
First item I'd like to highlight is the importance of the resilient green hydrogen network and your company's constructing across the United States.
We are presently targeting to have 500 tons and green hydrogen and available by 2025, and an additional 500 tonnes globally by 2028.
The network and the U S will go coast to coast with sites already targeted for Camden, Georgia.
Specifically, Florida.
The site outside Lancaster, Pennsylvania, the site West of Fort Worth Texas.
The site and upstate New York and Genesee County.
And the 45 ton, playing and Genesee County, New York.
Feedstock will be clean electricity generated from Niagara Falls.
This will be the largest green hydrogen plant and the world.
And what's important about our plans and Sears and up demand for green hydrogen solution among our customers a day.
Over the last few years our value proposition.
And it beyond improving our customer operations and now tightly intertwined with companies achieving their C. O..2 reduction goals. There are many applications beyond material handling like stationary power on road vehicles and other industrial offerings that can only be.
Decarbonize with hydrogen.
Truly decarbonize green hydrogen is required or.
That work will down on where your office and revenue and margin opportunity.
But what I really think about it and excel regular bore products.
And with fuel cells and Electra launchers.
Customers want Green hydrogen Inc.
Plug power's, making that commitment to deliver.
1 of our distinct advantages and building out our network is unlike the industrial gas companies, we do not have existing fossil fuel base assets.
We don't have to worry about stranding multibillion dollars of investments. This is an impediment to some companies as they seek to decarbonize their corn and the middle supporting Glu Gray were blue hydrogen assets, which are not wanted by companies governments or the environmental community.
Our network is the hydrogen network for the 21st century and it just started.
And not only will we be delivering green hydrogen, but we will be deliberate and vehicles that operate from green hydrogen and plug.
Plug power by the way fuel cells and those vehicles.
Another subject I'd like to highlight is that plug has become a global company overnight.
Obvious examples are our joint ventures, which were no idea and our relationship and the joint venture being established with SK and.
Another example of our global efforts is our funnel for the Electrolyze your business is already and the billions of dollars with over 80% of the opportunities outside North America.
Bundle for vehicles and is also similar distributed and our activity is material handling is rapidly growing and New York.
The 2020 the company was almost exclusively and American company.
And both sales and opportunities, but over the past 6 months. The company has been transformed into a global enterprise.
And.
To piggyback questions, you're going to ask and finally, we're almost at the end of the second quarter and we can provide some insights on our progress.
Investors should expect a $115 million to $120 million of gross billings for the quarter.
Approximately 40% per target revenue of 475 million per year.
Usually at this point and the second quarter were about 33 per cent of Iran. You'll revenue who had been achieved.
Where our run rate there is higher from both a revenue and growth rate level, and we've experienced and the task.
We also foresee a very strong third quarter.
We're pleased with this level of progress so far this year.
We're now ready Paul and I are now ready to take your questions.
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Our first question is coming from Colin Rusch of Oppenheimer. Please go ahead.
Thanks, So much guys can you talk a little bit on the.
The contract.
And Andy it's always great to hear your voice.
You talk a little bit about the sales process for the green hydrogen and obviously, there's a lot of moving pieces.
Yeah on the demand side from the truck.
Building perspective, and and availability plus you know route.
Codification and whatnot, but can you talk to us about where you're at with your customers in terms of preparation to really rollout bleach and and.
Moved towards a zero emissions.
Structure for their businesses.
Sure. So collyn I think the first item and it said to 1 of the unique advantage plug hands.
Is that we have demand for hydrogen products today.
The qualification process for.
The purity hydrogen is relatively straightforward and we don't see that as an impediment at all as you know we're already in the hydrogen delivery business and logistics business and.
And.
And we will have by the beginning of October 10 tons of our own capacity. So that's really not an issue. So when you start taking a look at it.
I think during the second half of this year.
You'll see a number of commitments.
4 on green hydrogen plants, and I would expect by the end of the year.
About 40% to 50% of the demand by 2025 will already add and the sales funnel and most of that'll be tied to president applications.
Perfect. That's incredibly helpful. And then you know.
And with the Inc.
The aerospace opportunity here, it's the first time with Shane and some real articulation of on time frames and opportunities here, but obviously, that's a very large opportunity that's incremental to what you've got and your your guided plans.
You stated in the past you know could you talk a little bit about potential partnerships and strategic positioning.
And on that opportunity as you go forward and how we should think about the cadence of news flow coming out.
Yeah, So I'm going to give you a long answer call and I'm sorry.
And I got it.
And I kind of positioned aerospace and the kind of 3 buckets.
1 I think very very short duration flight.
Batteries will be.
And interesting choice for customers.
I think for the majority of flights where regional flights and.
And transcontinental flights category falls and I think.
Hydrogen, albeit and interesting solution, both with fuel cells and using president internal combustion engines and I think when you start talking about long range.
You know I think.
Our sustainable aviation fuel.
And we'll have a place and the market.
And with plug and.
And when 2025 with universal hydrogen.
And we'll be doing the first deployments of the converting regional planes per power prop planes to fuel cell power.
No I think that's a real interesting opportunity I think we think a lot about.
And we're talking with many of the major players who were.
Thinking about how they go about deploying.
Deploying both the small players and many of the new emerging companies about how they can source screen entrepreneur.
I think that.
Many people would conclude that.
The pathway for aviation, which represents 3% and the C O 2 reduction.
Hydrogen will be the most significant player.
In that industry, I think it'll grow gradually between 2020.5 and 2035, and then I think by 2035 and May start having certainly a dominant position for.
All new planes coming off the line.
And then I'm going to have 1 last item power.
To me it's also.
My technology deployment.
Technology development.
Development.
Platform.
If you think about what a plane needs lightweight high power density.
Simple storage.
All of those are applicable to 1 road vehicles.
And.
That also is it's more to me than just the market is.
And also how we develop technology.
Simultaneously as we develop new markets.
Perfect. Thanks, So super helpful. Thanks, so much and Oh.
Okay.
Thank you. Our next question is coming from James West of Evercore.
Please go ahead.
Good morning, Dave Good morning, Andy.
Hey, Andy how are you how are you.
Okay.
Doing well and some of your pedestal customers like Amazon and Walmart have announced a pretty aggressive de carbonization plans and and I suspect that's driving a nice pickup in your activity with them could you.
<unk> describe kind of how how those plans are playing into your business and their greater adoption and further adoption or further penetration.
And to their various facilities.
Sure so.
And many of these activities are starting today as you mentioned James.
And I guess I'd like to start out by.
Just kind of discussing.
And what's what's the future distribution center look like which is not too far from being a reality because were doing work very well these items today.
1 of the real advantages and by the end of the year, we'll have over 170 fueling stations and hydrogen storage at customer sites at the hydrogen already is there which is a huge advantage and when you look at the different applications from material handling.
From power and robots leveraging the same platform we have for drones.
And from fueling stations and we are modifying.
The outdoor dispensers, we average some of our customer sites for on road vehicles today.
Obviously those on road vehicles will be using.
Plug power green hydrogen to fuel their vehicles.
Coupled with the fact that.
When you go and look at things like how do you back up the facility and we'll be doing some backup deployments this year.
And our backup stationary products do backup distribution centers again since the hydrogens. There. So you start thinking about all of that and then even going further back in the chain, we have the ability to generate that green hydrogen and so obviously.
The discussions with our customers have intensified.
We are working through some rather large plans with many of our major customers have to be deploying green hydrogen.
Not as some long term goal, but it has some near term goal to help them support through de carbonization.
Bridge.
Okay. Okay. That's very helpful and then and when you and I were talking late.
Last year as you kind of alluded to in your opening comments you were more of a domestic company and now your global So I'm curious, how you and the rest of the team thinks about.
This global rollout and the execution of becoming a.
And what's going on I think for your very very large.
Global Company, how do you think about it from a personnel standpoint from a logistics standpoint from a facility standpoint, I mean, there's all kinds of things to think about.
And how are you guys are planning for this.
Sure. So you know.
That's a long question and.
And so James I'm going to try to use right.
I'm going to try to use Europe as an example, okay.
In Europe.
I think we had 2 efforts or 2 efforts, we're working to do some activities with partners and we're working to do some activities alone.
If you think about it the 2 largest economy and economies and the EU.
France, and Germany, we're really where we're focusing a good deal of on retention.
On the Renault J B.
Provides us an opportunity.
2.
Have a home and France.
That's a much broader.
Then just the.
Calls, we're putting on the road, but we will be building the infrastructure and providing the hydrogen sport those activities in France.
And that JV, we have a number of plug power employees, who.
Happily you're volunteering to go to France, the support that activity and really help build up that enterprise as rapidly as possible.
We're opening a.
A business center and induce outside Dusseldorf, Germany to support the German market.
Which will primarily be focused on our electrolyze your business.
Because of the huge opportunities there were.
And we're staffing we have a pretty fairly strong sales team in Europe, and where service staffing service and application engineers to really support that effort to grow that business and then when you go down to the Iberian Peninsula.
We have a nice position as you know with the <unk>.
And that's the owner and we expect to close that J D and the third quarter, we were targeting 20% and the green hydrogen which will support both are renaud activities and other activities, we have and material handling elsewhere going on in Europe I.
And I think 1 of the key items as you know.
It's really kind of a mix of how you successfully leverage partners, how you successfully leverage relationships.
And we.
Obviously, you can't do it alone.
And to grow this rapidly, but finding the right partners right relationships and deciding which items we will up.
We will pursue on a room and so that's really how we're thinking about and if you look globally.
From a facilities point of view.
And there certainly will be a giga factory in France, supporting the JV as well as maybe some other activities as well as and South Korea with SK.
Okay makes sense thanks, Andy.
Thanks James.
Thank you once again, ladies and gentlemen that is star 1 to register any questions. At this time. Our next question is coming from Craig Irwin of Roth Capital Partners. Please go ahead.
Hi, good morning, and thanks for taking my questions.
Good morning, Craig how are you today.
Absolutely fantastic.
Let me ask you are you in London.
I am not in London, and I am still on the U S. A and we're doing our virtual London This week, but.
Hopefully, we'll see you in London next year, Andy as we did 2 years ago. So.
Busy busy day, looking and looking forward to the on the meetings with you later on today. So thank you.
Yes.
And my question right is.
And the last year, it became really obvious to the market the broader market.
That customer and government interest.
And support for the adoption of a hydrogen economy and.
It's really it's really taking place right. We've seen many different layers of the story develop considerably.
You're even talking more in your release and on the call today about the aviation market, which is 1 that I'm personally a fan of given how dirty aviation fuels, our and the potential.
Is there any still left.
For you to pursue.
Is there is there is there anything that you see as low hanging fruit you got trucks, you got data center and she got you've got cell site. She got you guys.
Future and aviation.
And where can you fill out the portfolio.
Wow, that's a good question Craig.
You know what I think you know.
Let's move with the channel.
Yes.
Moving to the hydrogen front and and I do believe that.
There is real opportunities and.
Green hydrogen.
For Decarbonising.
Helping to Decarbonize and natural gas pipelines, we're getting lots of request for injecting hydrogen and the pipelines I think that there is.
No.
<unk> seen and industrial applications like steel and concrete.
Where the hydrogen market could be not the sexiest markets, Greg that the hydrogen mark it could be really interesting.
No.
<unk> point of view.
I think that.
If you think about areas like we talked about airports and ports and general I think there's large opportunities across the board to.
And to Decarbonize our airports.
Which of these ground support equipment, which is airplanes, which are there.
The band's running around the airports and I see most of our activity and expansion really as to do with that how to think through fleet vehicles or.
Echo systems around airports and ports and other areas, where all plug power products and capabilities can be deployed.
That's kind of how I look at it and I kind of use it as an example on the back of my mind is that are you know.
At distribution center were beginning to think about as I explained to a per.
Poor and it's kind of a mini and mini system, where we can do everything to meet customers' needs.
And.
For those applications, where fuel cells make sense and there's many where batteries makes sense will.
And we'll be able to decarbonize so.
That's how I'm thinking about it.
And you know what.
And there'll be people, who will think if there'll be apps and opportunities that pop up and talking to customers that are quite honestly I haven't even considered yet.
Okay.
That makes a lot of sense.
My second question is.
It's about margin right.
And most investors look at companies like plug power companies with aggressive growth potential he could go on first.
And they look at the longer term margin potential later. So you know you did a really good job and your shareholder letter laying out some of the issues and the hydrogen market.
The force majeure events.
Can you maybe describe for us what the longer term potential of green hydrogen and offers to your margins.
And overall customer profitability not just the environmental footprint, which is what a lot of people and I've been considering.
Yeah, I think thats a good.
When you think about the full margin picture, Greg the number that are.
I think sure.
Tell investors we're on the right track is the margins for products and the first quarter.
For 38%.
With all the challenges of transportation and the World is C wonder.
On the hydrogen front.
We believe green hydrogen and will be a 30% plus gross margin business.
And that.
The long term when you look at it.
It's really the cost is really tied to the cost of renewables.
Folks have done a great job like Sanjay finding low cost renewables that make it attractive versus natural gas today.
Do you have a better product than they have a better offering and with the deployment of our networks.
And especially the resilient network we're building.
And we're in a much much better position.
To support.
And much higher margins for hot.
And I would like to add which probably gets lost is.
We're actually really good.
When I look at.
The force matures logistically.
We actually were able to manage that without impact and customers.
Using our own logistic network and asset.
To make sure that customers are taken care of.
To me that was a significant achievement, so I think margins and green hydrogen will be.
And in line with our product margins and the service business actually perform.
Up to our expectations for the quarter and were beginning to see continual improvements so that business should become a 30% plus gross margin business and look we expect to be there across the board by 2024.
Great.
And last question if I may.
It's about the Doe loan guarantee and share applying for such really nice to have and department of energy that once again is willing to lean in and support business transformation.
And the transformation of energy.
Can you maybe talk to us about the process.
And you are and the process and if there may be potential for.
Other capital projects that plug will proceed over the next few years I'm too.
Typically you would ship in or at least applied for similar financing.
Yeah, So Greg Craig.
And the beginning of the phase 2.
With the program.
Got a lot of work actually folks who've told me, we're about halfway through phase 2 and I think when we're looking at this.
It's just not for 1 project and it's actually the application is looking at 3 or 4 projects to deploy across North America to support her on all our networks. So we're looking to do it at stages.
But our thought process is somewhere between 500 million to $1 billion and support the build out these networks and low cost loans.
Okay.
Understood. Thanks again for taking my quick questions. Congrats on all right. Thanks, great pleasure.
Thank you. Our next question is coming from Eric Stine of Craig Hallum. Please go ahead.
Good morning, Andy.
Good morning, Eric how are you today doing well and doing well thanks.
So just wanted a quick come back on the margins and obviously with the Green hydrogen network here.
And we're putting plans in place for the long term, but just in the near term.
Any thought I know you've been asked this in the past, but any thought on on potentially owning your own tanks. So.
You don't have day necessarily switch.
Hydrogen providers or and that you're able to buy hydrogen more cost effective rather than from 1 source.
Yeah, that's a good question.
Mark we actually do probably on.
Glen and Paul why do you think a third of our tanks at the moment.
Probably even 2 thirds, Andy we've been buying banks on our own and even his transition we move towards.
And installing their own tanks and so.
We haven't rented and thanks, and 1 of their providers and years and so I'd say on a very short order will be.
The majority majority of our locations on our own bank.
Yeah, but I would say Eric that that's great, but also you need to be and contractual relationships with the with your partners, which.
The expectation is that they filled this tanks.
No I think that.
Wipe and thinking more about Eric is actually our ability to pick up hydrogen at the sites at at there.
Facilities, which can help also drive down the cost of hydrogen and so if I think about our near term containment.
Our plan and Tennessee is expanding and will be expanded on October 1.
The supply issue has been relieved with the addition of <unk>.
35 tons of capacity coming online, which is highlighted in our investor louder.
And look where we're obviously and negotiations to try to reduce our cost.
It was.
Some of the severe conditions.
It was it was a tough tough quarter.
And making sure customers got their hydrogen and it caused the price to go up on.
That being said prices are going down again, which is helpful. I think probably more important as we built out our network and I think the fact that we're geographically spreading that that work.
We will have really positive impacts for us to control.
And the next 12 months.
White becomes a much easier as a more and more of our own capability comes on line.
Got it and and I would assume that makes it easier to.
<unk> got some leverage on the contract side.
I think that would be fair to say arc, Okay, and then maybe last 1 for me and just on the SK agreement I know, you're working towards a joint venture and finalizing that and the second half, but just curious.
And the significance of that market, what the pipeline looks like any any work that you've done in advance of closing that and and then I would I guess, specifically on the utility scale power side.
Wondering the type of traction or the outlook you have there going forward.
So you know 1 of the.
Real advantage of the SK relationship.
Is.
We expect.
That to be a by 2025 to add.
Over 400 megawatts deployed.
S K alone at their facility.
So it's.
Yeah.
We have built and customer with the JV partnership, which is really advantageous. So you know if you'd think about 400 megawatts.
And by 2025, Youre deploying and 24.
And that's in the range of $400 million and revenue.
We also have.
Not surprising a good deal of activity going on and the Electrolyze your business.
But also with hydrogen fueling stations with SK because of their position and.
White.
And I know SK has a huge huge ambitions are.
We've had teams over there.
Positioning material handling equipment already.
Working with some.
Bus manufacturers and positioning pro Gen.
With the S K itself and and as you know it's a.
As we're talking here I'm actually on the South Korean conference also are going to present at 930.
This is really a hot topic and South Korea.
And we're deeply engage and with S. K to really make this a big mark.
Okay. Thanks, a lot.
Thanks, Eric.
Thank you. Our next question is coming from Jeff Osborne of Cowen. Please go ahead.
Hey, good morning, guys a couple questions on my point, yes.
Good morning, a couple questions here on the electronic side, great to hear you were quoting billions of business I think he said and 80% outside of the U S. I was wondering Andy if you could give us an update on when you thought some of those rfps would come to a closure.
When you might be awarded any businesses and event that you think will happen this year or more next year.
I can tell you.
And Jeff I believe it will happen this year and.
And mainly because.
There are.
You know there are big opportunities, but theres, probably for opportunities and I think we're and 8.
Leadership position and that are you.
You know I would expect that.
Very very possible.
That.
They could close either at the end of third quarter early fourth quarter and I I would think we are we have an opportunity to close 500 megawatts.
This year.
And with most of the deployments next year, so no I'm really.
I'm really pleased I think that.
Mehdi I think the combination of the fact that.
<unk> technology can work for them.
Variable energy sources.
And the fact that.
And the fact that.
Of course, we will.
And are coming down will coming down, especially since we can leverage our giga factory I think that they're all really promising signs force.
That's great to hear and this would be leveraging that group and dusseldorf that you referenced earlier I assume or no no no actually.
No.
We.
And the Giga factory, she knows and Rochester.
But we will you know the.
For the European market.
We do have a partner and I think you'll hear more about who will.
Be supporting building the systems for within Europe.
Look we also have opportunities.
And places like Australia, and New Zealand, India.
Across the world to support different activities were engaged in.
Got it that's great to hear.
Just a couple of other housekeeping questions.
I saw the.
And the units sold for revenue, but can you give us a total units which would include the leased units per jindra for Paul I think you have and I called I think it's 13.80 isn't and Paul.
I'll, let you take this 1 Paul.
Yeah for the first quarter. It was a 13 O 8 was total that got deployed and the quarter.
Got it and.
And then.
What's the Capex plan for this year and next just given the announcements you've had I just wanted to make sure. We've got the right expenditure profile for 'twenty, 1 and 'twenty 2.
That's you again Paul.
Yeah, well I would say some of these long lead items are a little tough to plan exactly when the money will be spent but I would I mean, just I think $750 million this year and sort of on 15 million next year is probably a pretty good proxy.
Got it and last 1.
And the stationary power well, we have our first deployment of that and live and the third quarter I think that was your prior target for a data center back weighted.
And I'll say this Jeff Mike we better so yes, okay. Good day.
Okay.
All right.
Great. Thanks, Jeff.
Thank you. Our next question is coming from Paul Coster of Jpmorgan. Please go ahead.
Good morning, Andy.
Morning call I think I'll be talking and later today right I believe for Ya busy man.
And they are starting off with the near term.
And obviously the.
<unk> gardens is pretty encouraging and free to I think you said, there's very strong whatever that means it sounds like it's incrementally better over to Q. So perhaps you can elaborate but what what's driving and it's well what is driving and they had some demand is it the pedestal business or is it all those stoffel and perhaps you can just give us some color there.
So I think the answer to that is that primarily the.
And that has stalled business and.
I think and the third and fourth quarter, you'll see.
The Electrolyze your business pick up significantly.
But if I look at it.
There are today.
And <unk>.
5 customers, who really are driving the material handling business. The biggest point is actually Amazon and Theres, a lots of new deployments with Amazon.
Amazon's not only buying fuel cells.
But electrolyzed hears from us so that's a.
That's a huge.
That's a big part of our funnel Walmart home depot G M and we actually have a.
Fifth customer, which I'll tell you more about to assume when they let me now that.
We'll.
And we will do over $25 million of second half of the year with so.
We're feeling the business is.
No.
Is really healthy I mean, the factory is power.
And.
I think that's really the I think the nice item is.
We're beginning to spread that revenue across a larger and larger customer set.
Gotcha, and you're you mentioned electrolyzed and so it sounds like some of the and material handling sites will have electric alliances carload cases and.
Is that a correct statement and more broadly as you look at that I think you said billions and the funnel for Electrolyzed as well can you give us some color on geography on customer type is it centralized decentralized how big are the the probable deployments and in terms of you know.
On a run.
And.
Kilograms per day or whatever.
So some kind of color would be helpful.
Sure. So Paul if I, if I step back and this is a point that I probably should have made earlier on the call.
And.
We're becoming better and bundling the offerings.
Really the total system solution now Inc.
Incorporates our Electrolyze your technology and.
And.
I think about how we go in and sell today.
We can provide you the electrolyze or we can provide you.
Fueling stations are we can provide you the material handling equipment and and.
And the vehicles, especially in Europe and.
That that ability to bundle is actually probably what attractive both Renault and S. K to work so closely with plug power.
Now when I look at the deals.
If I was going to spread out geography.
Many of the sites or call it 250 megawatts and above range a lot of the sites or.
And they are the big projects are really centralized sites.
But often centralized sites, which may be spread around 3 or 4 different locations net add up to a gigawatt.
And if you think about 250.
Megawatts of electricity.
You know you're talking plants, which are.
And the 500 ton good side no.
Good sized tonnage and hundreds and hundreds of tons of hydrogen so.
I think very attractive and you know.
I think that's it.
And that's really the mix of sites and from a geography point of view.
You see in Europe, we're seeing it in Australia.
We're seeing activity and India.
We're seeing obviously south Korea, so, it's really kind of a mixture across the board.
1 last question please.
You said 35 tons of hydrogen is coming on line to supplement that which was previously available and you've seen disruptions. What why wouldn't is this gray or blue hydrogen and is it subject to the same kind of variability and risks and so it's as the hydrogen you previously consuming domestically.
Good question, Paul It is great hydrogen and obviously, we want to transfer eventually the green, it's not plug power.
But it is coming.
Coming off.
It's getting cleaned up versus the pipelines.
Which are tied to large scale storage with caverns. So I think the variability of that hydrogen is much much lower.
Gotcha. Thanks, so much.
Okay Paul.
Thank you. Our next question is coming from Jed <unk> of Canaccord Genuity. Please go ahead.
Hey, how are you Andy.
Good morning Jed.
Good morning.
So.
Just 2 questions I guess sought.
It sounded like the.
Contribution of revenues by end market is changing you know today kind of first time here and you talk.
A bit more on aerospace or it sounds like that.
So a bit of shift. So I was just wondering does that change any of the projections I think on May 10, and you talked about and started the $4.75 to 750.
1.7 billion are those numbers still.
Solid day is it just whats kind.
Kind of the moving parts underneath to support the top line.
And then I have a follow up I yeah Jed.
They are our numbers today.
475 is rock solid.
And.
And where we're continuously looking at.
We're now on the 750 feel great about.
I think we're spending a.
And I think when we have the put will have a plug power symposium and.
In September and hope you can attend.
And I will give you not only.
We will give you a much broader outlook.
Not only what we expect for 2024 and 2023.
But also kind of what the geographical and product mix will be.
Great I hope at the symposium on you should have and at the at the Electrolyze or.
The Giga factory that'd be great.
I think at the moment, we're scheduling NASDAQ, but I think we're.
We're debating that and so you're voting on put it at the Giga factory and nasdaq's not all not nearly as exciting as being at the Giga factory.
I agreed yet that's my vote too.
So just as I do have a follow up though and I E.
And here, it's interesting in terms of the European, particularly Germany, and France, which.
Rarely have a paradoxical views on energy production, so I'm wondering how that.
And those conversations, particularly France, being pro nuclear and and Germany being quite against Germany's electricity price as being the highest of.
Of any first world nation, and I'm I'm curious.
How does hydrogen play into that discussion and how are the 2 countries thinking about.
And plug and hydrogen production is there a difference and yes do you see a difference and scalability.
Yeah, I think when you first I think that.
In both countries as well as the EU.
<unk>.
I think.
There is a general.
Acknowledgment that.
And that to Decarbonize hydrogen required.
And.
And fuel cells are required.
It's why.
Jed that Oh.
Which were no.
And that was it.
C O and Luca Renault tells me.
And every time he talks to administer and France. The first questions why are you doing with fuel cells and hydrogen.
I think from a feedstock point of view I think youre right I think France is thinking a lot about how to leverage there.
Carbon free nuclear assets to be.
And the electrical stock for feedstock for hydrogen.
In Germany, I think folks are thinking more about your renewable curtailment.
Well as the offshore wind is the feedstock for.
Electrolyze yours, so I think both of them or very committed to fuel cells and hydrogen.
There is a different view on what the feedstock should be.
Based on their own internal infrastructure.
Does that have a different economic and I would think the impact.
I have a baseload.
And versus curtailment.
While and 1 on solving a problem.
Subsidized technology being the Intermittency for the renewables.
And the other though.
And it would be lower cost.
Electricity prices.
Does that change the dynamic in terms of the value proposition for green hydrogen or do you see it is not the same.
Yeah.
We see it net.
That Tim.
Yes.
Underlying everything is.
Where the cost of renewables a gallon.
And that.
I think you know like the U S.
Europe has.
And what has to be.
Thoughtful about numbers that are put out there and.
And I think both Europe and the U S.
<unk> seal.
At hydrogen generate for renewables.
Can be lower costs and hydrogen generated by natural gas and certainly it's a.
It's a journey.
But.
It's a journey that Tim.
And.
I think both nations, France, and Germany feel that.
It's the best source.
It will be the best source of energy for many many applications.
I mean, I think commercial vehicles.
Large scale stationary.
And how you support these networks like ports.
No I think May I think if you look and you hear these numbers, 20% of world energy from hydrogen.
Roy thank hydrogen.
Is really the solution to meet those needs.
That's it for me Thanks, Andy.
Thanks Jed.
Thank you once again Thats star 1 if you do have a question. Our next question is coming from Amit Dayal of H C. Wainwright. Please go ahead.
Thank you and good morning, Andy Good morning Bose.
Good morning, and Mitch how are you today.
And good Andy how are you doing.
Very good.
And so Andy you mentioned 500 megawatts.
Essentially closing for Electra lasers are this year and deployments next year.
Is any of this and the current guidance for this year next year.
And would this be incremental.
I would say some of it is and the present guidance for next year.
For next year yet.
Yep.
Okay. It is and this.
Your guidance for this year.
Okay. Okay.
And you indicated another large customer.
And is this a pedestrian level customer and maybe you know just in that context are there any of the traditional level, but that's the level of customers and the pipeline.
So yes. This is a pedestal customer.
And the auto industry, and I, and it's a and <unk>.
A global auto manufacturer.
And.
The answer your question is yes.
Yes, especially in Europe, we have a number of the pet.
Pedestal customers, which are pending.
And you and.
And with the recent increases in commodity costs supply chain challenges et cetera, how has that impacted your capex expectations.
Yes, that's a good question Paul do you want to take a crack at that I mean, I I look at our product margins at.
And they've seen.
Relatively very healthy and Oh, maybe you want to comment on.
I think some of the construction.
Construction work, we're doing for the Giga factory.
I think it's such a modest proportion of what we're doing that it hasnt been that impactful, but maybe you have some thoughts on that Paul.
Yeah, if you look at.
Our history.
And even our projections.
Outside of Green hydrogen and investments.
It's a fairly nominal percentage of sales and so.
But yet.
The Giga factory will be pretty impactful from a margin standpoint.
For many different facets so.
I don't expect it hasn't had a major impact on our product margins and I don't anticipate it will as we go forward and fab.
Correct.
The depreciation obviously.
On a GAAP effect, but the margin enhancement will more than offset the.
And the depreciation impact because of the such a small percentage of Capex and sales.
Respectively.
Understood.
And maybe just a high level question and I don't know if you have and answer but you know once.
Why is that.
Solutions for you from you guys you know we need to look for lasers and all the other components. So those are just buying sort of 1 set of solutions like how much does that impact our customers.
You know IRR on these types of restaurants day in May.
Yeah.
Wow.
I think that.
You know what I think that.
It really.
I think simplifies the process for them and it.
The day gable to go to 1 place and that's someone put the whole solution together for them.
I think that's probably the most attractive part of this.
And I think in the application and Stacey.
Healthy <unk> and then you kind of compounded with the fact that there.
And theyre doing activity that are.
Really supports their long term mission to Decarbonize.
<unk> $2035.20 cord and.
Right.
I think.
Being able to go to 1 person say take care of all of this and having somebody who's an expert and all of these technologies.
It's a real differential advantage.
Yeah.
Understood.
Thank you and do you think you're probably right back from it.
Thank you. Our next question is coming from Chris <unk> of B Riley. Please go ahead.
Hey, good morning, guys.
Good morning, Chris.
Awesome.
The first piece I wanted to touch on was the fueling margin you talked about improvements there and the second half and into 'twenty, 2 and some of these.
Industrial gas partners are expanding capacity and then the longer term targets of about 30%. So maybe you can just discuss.
When and where we see those breakeven levels as far as kind of positive gross margin is that the only once on the first 3 facilities are coming on line will start to see that.
Net.
That kind of switchover.
I think that.
Chris I think we will see gradual improvements and you'll see I mean.
And we'll have some.
Improvements were their own additional capacity coming on line in October.
I think.
And you'll start seeing that transitioning called mid 2022.
Okay.
And then you mentioned Amazon now buying Electuary and then you can see it's great to hear and that 80% of the electrical wiser opportunities are coming from abroad.
You may be walk through the customer decision and youre seeing between buying their own intellectual risers versus signing up for long term.
Hydrogen off take agreements with the facilities you guys are building out now it sounded like home depot Southern company, we're more kind of and the off take and I'm curious is it really site specific geography specific customer specific how the how everybody is kind of looking at that kind of build it themselves versus buying it from you guys over time.
Yeah, I think that's it.
If you look at it.
As you mentioned I think it's a real mix.
I think that.
Uh huh.
There are companies that are.
Building hydrogen networks.
And the other.
Parts of the World and.
Which.
They're looking at their main business is selling hydrogen.
I think that.
And when Youre looking at the smaller deployments now I have some activity going on and in New Zealand and for example, which is smaller.
There you know.
People are more inclined to buy small scale electrolyzed versus port.
I think most.
Large enterprises.
Or.
Coffee, Amazon and Walmart so the world.
I think their primary focus will be.
I don't want to buy green hydrogen per mass.
And I think there'll be opportunities where their facilities already have a renewed low cost renewable energy feed which makes sense.
And to use Electrolyze yours, but I think those who were in the <unk>.
Those who were.
There are companies that we deal with who were.
Primarily users of hydrogen and I think they will want to buy hydrogen from us and.
And there are companies, which are primarily.
What I'll call.
Wanna be Jed.
Generators of hard suppliers of hydrogen and I think there'll be more of our Electrolyze your base.
And you know and then I think along the way you'll have a mixture mix.
Mixture of the 2 but I think from a primary space point of view, that's how I think of our lineup.
Okay No that's very helpful. Thanks, guys.
Thanks, Chris.
Thank you. Our next question is coming from Tristan Richardson, who will be our final question for today and he is with <unk> Securities. Please go ahead.
Hey, good morning, gentlemen, thanks for squeezing me in.
Good morning, Tristan.
Just quickly and Andy on on stationary power I appreciate the update on the order book or opportunities you are seeing this year, but curious about how that trends throughout the back half of the year and into next year could we see.
A stationary power customer become a pedestal customer overtime or Conversely, could you see a pedestal customer and become a stationary power customer overtime.
Yes, and yes and.
And.
No.
Yeah.
You know boisterous and you asked a question and youre going to get and our into the core and you're going to get a new way answer.
We have we have over 100 customers and the funnel for the state sorry products.
And they range from large scale data center customers, which grew it could become.
Store customers.
And 2 you know folks are.
[laughter] folks who are present customers today.
Which are looking to back up their distribution centers with hydrogen since it's already available.
So.
And there is a.
I had no.
Every Monday like most businesses.
Do a review and you know of a week each.
Each week of the quarter I do each week of the month I do a different market and it was a.
Stationary product and.
And the funnel for that.
And.
You know, it's astonishing and many many of those customers could become pedestal customers.
California, Andy. Thank you and then just quick follow up I appreciate all the commentary on on Electrolyze or opportunity Youre seeing and just specifically in your letter you noted deployments this year and in New York, George and Europe, but just thinking is there a way to think about how much of that is third party versus.
<unk> deployments for your own internal needs.
Oh so those.
So I guess, you're talking about trust and the green hydrogen plants.
Building.
Hum.
Ultimately.
And you use a word our own internal needs.
The more that.
Captured by our own internal needs for on road vehicles and other applications that become significant.
I would think that the.
By 2025.
75% of that will be consumed by our own internal needs, if not more and when I say that it's hydrogen that we're selling to pedestal customers per all the applications that were developing.
Yeah.
It's Greg <unk>.
Thank you guys very much.
Alright, well. Thank you everyone for joining our call today I really appreciate it.
Everyone's attention and.
I really look forward to it.
Talking to everyone for the second quarter.
Which should be a law.
July early August so thank you everybody bye now.
Ladies and gentlemen, thank you for your participation. This concludes today's event you may disconnect your lines or log off the webcast at this time and have a wonderful day.
Yes.
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And then.
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