Q2 2024 Plug Power Inc Earnings Call

August 8, 2024

Operator: Hello and welcome to the Plug Power second quarter 2024 earnings call webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero. A question and answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing star 1 on your telephone keypad.

Hello, and welcome to the Plug Power 2nd Quarter 2024 Earnings Call-In Webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero. A question and answer session will follow the formal presentation.

You may be placed into question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Meryl Fritz, Marketing and Communications Manager. Please go ahead, Meryl.

Operator: As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Meryl Fritz, Marketing and Communications Manager. Please go ahead, Meryl.

Meryl Fritz: Thank you. This is the Plug Power Q2 Earnings Call. This call will include forward-looking statements. These forward-looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated results from operations and developments, and other matters that are not historical facts. We intend these forward-looking statements to be covered by the Safe Harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Meryl Fritz: Thank you. Welcome to the Plug Power Q2 Earnings Call. This call will include forward-looking statements. These forward-looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated results from operations and developments, and other matters that are not historical facts.

We intend these forward-looking statements to be covered by the Safe Harbor

provisions for forward-looking statements contained in section twenty seven a of the securities act ofonethousandnine hundredand thirty three in section two thousand and twent of the securities exchange act

Meryl Fritz: 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 or understood as a guarantee of future performance or results. Such statements are based upon the current expectations, estimates, forecasts, and projections, as well as the current beliefs and assumptions of management, and are subject to significant 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 1A, Risk Factors, in our annual report on Form 10-K for the fiscal year ending December 31, 2023, subsequent quarterly reports on Form 10-Q, and other reports we file from time to time with the Securities and Exchange Commission.

of onethousandnine hundredand thirty four we believe that it is important to communicate our future expectations to investors however investors are caution should not to unduly rely on forward-looking statements and such statements should not be read or understood as a guarantee of future performance or results

Such statements are based upon the current expectations, estimates, forecasts, and projections, as well as the current beliefs and assumptions of management, and are subject to significant 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

Meryl Fritz: These forward-looking statements speak only of the day in which these statements are made, and we do not undertake or intend to update any forward-looking statements after this call or as a result of new information. At this point, I would like to turn the call over to Plug Power's CEO, Andy Marsh. Thank you.

Meryl Fritz: the risks and uncertaintiesis discussed under item one a risk factors in our annual report on form ten -k for the fiscal year ending december thirty first two thousand andtwenty three subsequent quarterly reports on form ten -q and other reports we fileed from time to time with the securities and exchange commission

These forward-looking statements speak only of day in which these statements are made, and we do not undertake or intend to update any forward-looking statements after this call or as a result of new information. At this point, I would like to turn the call over to Plug Power's CEO , Andy Marsh.

Andy Marsh: Thank you, Meryl, and good morning, everyone, and thank you for joining us today. I'm here to share the progress and strategic developments Plug Power has achieved in the second quarter of 2024. This quarter marks a crucial phase in Plug Power's journey as we continue to build our leadership position in the hydrogen economy for the long term while remaining focused on operational improvements in the short term. I think this one's important.

Andy Marsh: thank you merl and good morning everyone and thank you for joining us today

Andy Marsh: In the second quarter, we successfully reached the final commissioning stage at 55 megawatts of electrolyzers, representing an expected $70 million in revenue. We weren't able to recognize much of that revenue, but much of that revenue has already been. We've already received the cash, and we're on track to deploy an additional 100 megawatts of electrolyzers by the end of the year. Reinforcing our leadership position in the hydrogen industry and supporting the global shift towards renewable energy power sources.

Andy Marsh: I'm here to share the progress and strategic developments Plug has achieved in the second quarter of 2024.

Andy Marsh: this quarter marks a crucial phase in pluod power journey as we continue to build our leadership position in the hydrogen economy for the long term while remaining focused on operational improvements in the short term

Meryl Fritz: I think this one's important. In the second quarter, we successfully reached the final commissioning stage of 55 megawatts of electrolyzers, representing an expected $70 million in revenue.

Meryl Fritz: We weren't able to...

Meryl Fritz: recognize much of that revenue but much of that revenue has already been much of that future revenue we've already received the cash for

Meryl Fritz: We're on track to deploy an additional 100 megawatts of electrolyzers by the end of the year.

Unknown Executive: Reinforcing our leadership position in the hydrogen industry and supporting the global shift towards renewable energy power sources. Now, when you're working on these final investment decisions for projects that are over billions of dollars, you have to do significant due diligence and engineering. That could exceed $1.5 billion of revenue over the time.

Meryl Fritz: Reinforcing our leadership position in the hydrogen industry and supporting the global shift towards renewable energy power sources.

Andy Marsh: This deployment reflects growing customer demand and our ability to deliver cutting-edge solutions. Our partnership with Owen Corporation is progressing well, with our new hydrogen plant in Louisiana expected to begin producing liquid hydrogen in the fourth quarter.

Meryl Fritz: this deployment reflects the growing customers demand and our ability to deliver cutting-edge solutions

Meryl Fritz: Our partnership with Owen Corporation is progressing well, with our new hydrogen plant in Louisiana expected to begin producing liquid hydrogen in the fourth quarter.

Andy Marsh: Now this project really exemplifies our capacity to enhance hydrogen production capabilities and accelerate the adoption of clean energy solutions across various sectors. And from a future point of view, we've also secured 7.5 gigawatts in a basic design and engineering package contract, and specifically 3 gigawatts with Green Ammonia in Australia. This collaboration underscores our technological prowess and ability to support sustainable projects worldwide. Our electrolyzer technology is among the best performing products we've developed, offering the company a real competitive advantage. Now look, the hydrogen fuel cell market really has not progressed as rapidly as we expected.

Meryl Fritz: now this project really exemplifies our capacity to enhance hydro production capabilities and accelerate the adoption of clean enentergy solutions across various sectors

Meryl Fritz: And from a future point of view, we've also secured 7.5 gigawatts in basic design and engineering package contracts, and specifically three gigawatts with Green Ammonia in Australia.

Meryl Fritz: This collaboration underscores our technology prowess and ability to support sustainable projects worldwide.

Meryl Fritz: Our electrolyzer technology is among the best-performing products we've developed, offering really the company a competitive advantage.

Speaker Change: Now look, the hydrogen fuel cell market really has not progressed as rapidly as we expected.

Andy Marsh: Plug remains committed to strengthening our leadership position and focusing on operational improvement, market development, you know, it's been slowed by government policy ambiguity, impacting the timing of customers' decision making project progress processes. Despite these shadows, we are confident that our strategic initiatives will ensure profitable growth as the market develops. Look, we see it happening now.

Meryl Fritz: A Plug remains committed to strengthening our leadership position and focusing on operational improvements.

Meryl Fritz: Market development has been slowed by government policy ambiguity, impacting the timing of customers' decision-making processes.

Meryl Fritz: Despite these challenges.

Meryl Fritz: we are confident that our strategic initiatives sure profitable growp as the market develop

Andy Marsh: Government policies are maturing, and they will support increased adoption and market penetration of hydrogen. Now, for example, the electrolyzer market in Europe is, you know, you see the demand has started, and the final investment decisions are coming along. When you're working on these final investment decisions for projects that are over billions of dollars, you have to do significant due diligence and engineering, and really, it's part of what our customers are doing today, and we're deeply involved with our basic design and engineering.

Meryl Fritz: Look, we see it happening now that government policies are maturing that will support increased adoption and market penetration of hydrogen.

Speaker Change: nowfor example the electroallyizer market in europe is you see the demand started and the final investment decisions are coming a law

Speaker Change: So, when you're working on these final investment decisions for projects that are over billions of dollars, you have to do significant due diligence and engineering.

Speaker Change: And really it's part of what our customers are doing today. And we're deeply involved with our basic design and engineering packages, which is a key component of their efforts.

Andy Marsh: Packages, which is a key component of their effort. We're actively engaging with partners to navigate these complexities and ensure the successful deployment of our solution. Now, if you really look at that 7.5 gigawatts, even if only one quarter of the activity leads to revenue, that could exceed $1.5 billion in revenue over time, highlighting the substantial potential of this market. Look, I think this is no news to anyone.

Meryl Fritz: We are actively engaging with partners to navigate these complexities and to ensure the successful deployment of our solutions.

Speaker Change: now if you were and look at that seven point five biggera wat even if only one quarter of the activity leads to revenue

Speaker Change: That could exceed 1.5 billion dollars of revenue over the time.

Speaker Change: Highlighting the substantial potential of this market.

Andy Marsh: Financially, we're committed to strengthening our cash management practices and ensuring profitable growth. We have, when we look at our expectations of raising prices, really exceeded our expectations. I think it's due to our strong relationship and seamless integration into many of our customers' operations, which has proven to be beneficial, which makes them willing to accept the price increase. So we are laser focused on cash management. We're focused on profitable sales, operational efficiency, and reducing operational expenses.

Speaker Change: Look, I think this is no news to anyone. Financially, we're committed to strengthening our cash management practices and ensure profitable growth.

Speaker Change: we have when we look at our expectations are raising prices we've really exceed our expectations and i think it's due to our strong relationsh and seamless integration into many of our customers operations

Speaker Change: i've proven to be beneficial which makes him willing to accept the price increase

Speaker Change: So we are laser focused on cash management.

Speaker Change: We're focused on profitable sales, operational efficiency, and reducing operational expense.

Andy Marsh: Now when I take a look back at those statements, it's one of the main reasons I asked Dean to join us. I really want to highlight the appointment of Dean Fulton as our COO. Look, he brings an exceptional track record to Amazon. I've known Dean for almost ten years. He successfully led global engineering services and spearheaded hydrogen economy initiatives at Amazon. His extensive expertise and leadership will be instrumental in advancing our operational efficiency, driving profitability, and executing our strategic goals.

Speaker Change: Now when I take a look back at those statements it's one of the main reasons I've asked Dean to join us.

Unknown Executive: I really want to highlight the appointment of Dean Fulton as our COO. He successfully led global engineering services and spearheaded hydrogen economy initiatives at Amazon. With that, I would like to give Dean a few minutes to share a few words and give a high-level view of his goals and plans for driving our success forward.

Speaker Change: I really want to highlight the appointment of Dean Fulton as our COO.

Dean Fulton: lucky brings an exceptional track record from amazon a've known deem for almost a decade he successfully lla glo engineering services and spearheaded hydrogen contony initiatives have amazon

Speaker Change: his extensive expertise and leadership will be instrumental advancing our operational efficiency driving profitability and executing our strategic goals

Andy Marsh: I'm confident that Dean's vision and experience will greatly benefit Plug as we continue to innovate and lead in the hydrogen economy. With that, I would like to give Dean a few minutes to share a few words and give a high-level view of his goals and plans for driving our success forward. Thank you, Andrew.

Speaker Change: i'm confident that deem's vision experience will greatly benefit plug as we continue to innovate and lead in the hydrogen economy

Speaker Change: With that, I would like to give Dean a few minutes to share a few words and give a high-level view of his goals and plans for driving our success forward.

Dean Fulton: Thank you everybody for joining the call. You know, this is my second week but... I came into this position.

Dean Fulton: Thank you, Andy.

Speaker Change: um

Dean Fulton: thank everybody for joining it call

Dean Fulton: You know, this is my week two, but...

Unknown Executive: came into this position, implementing systems at our customer sites, first of all with a high level of safety and then a focus on on time and making sure that we're doing that cost effectively and profitably.

Dean Fulton: With eyes wide open, know the challenges that we're facing, and the areas that I want to focus on mostly focus around cost efficiency and cost, and several of the areas I plan to focus on are getting my arms around the cost by function. I want to identify the opportunities to reduce costs and wring costs out. I want to assign owners to each of those initiatives and drive those to completion. My focus is going to be on building the green hydrogen plants safely, on time, under budget, and with a high level of quality.

Dean Fulton: I came into this position eyes wide open and know the challenges that we're facing and the areas that I want to focus on mostly all focus around cost efficiency and cost out.

Speaker Change: and several of the areas I plan to focus on are getting my arms around the cost by function. I want to identify the opportunities to reduce costs and wring costs out.

Speaker Change: i want to assign owners to each of those initiatives and drive those two completion

Speaker Change: My focus is going to be on building the green hydrogen plants, do it safely, on time, under budget, with a high level of quality. Another area of focus is going to be producing green hydrogen, again on time and cost-effectively, profitably.

Dean Fulton: Another area of focus is going to be producing green hydrogen, again, on time and cost effectively and profitably. Implementing systems at our customer sites, first of all, with a high level of safety and then a focus on on time and making sure that we're doing that cost effectively and profitably, with a high level of quality. And then the last area that I want to focus on is reducing our inventory. Our inventory level, as everyone knows, is too high, and we need to focus on getting that cost down as well. All of this with a focus on reach and profitability. That's really my immediate focus for Join & Plug, and I believe that we will achieve that.

Speaker Change: Implementing systems at our customer sites, first of all with a high level of safety and then a focus on on time and making sure that we're doing that cost effectively and profitably.

Speaker Change: with a high level of quality.

Speaker Change: And then the last one area that I want to focus on is reducing our inventory. Our inventory level, as everyone knows, is too high, and we need to focus on getting that cost down as well. All of these with a focus on reach and profitability.

Speaker Change: as really my immediate focus in joint and plug and i believe that we will achieve that

Unknown Executive: Thanks Andy. A few comments from the finance team here. The first half for Plug reflects a critical inflection point in the ongoing transformation of the company. As we've discussed, we embarked on a journey a few years ago to significantly broaden our solutions in the hydrogen economy and vertically integrate our hydrogen supply with the added ambition of doing it based on green hydrogen. Given multiple market dynamics which have tempered growth in 2024, we have continued to nurture these offerings while doubling down on optimizing operations and cash management.

Andy Marsh: Thanks Andy. A few comments from the finance team here. The first half of the plug reflects a critical inflection point in the ongoing transformation of the company.

Unknown Executive: As we discussed, we embarked on a journey a few years ago to significantly broaden our solutions in the hydrogen economy and vertically integrate our hydrogen supply with the added ambition of doing it based on green hydrogen. Given multiple market dynamics which have tempered growth in 2024, we have continued to nurture these offerings while doubling down on optimizing operations and cash management. Including a broad range of electrolyzer products, hydrogen storage and distribution solutions, and high-powered stationary systems, to name a few.

Speaker Change: As we've discussed, we've embarked on a journey a few years ago to significantly broaden our solutions in the hydrogen economy and vertically integrate on our hydrogen supply with the added ambition of doing it based on green hydrogen.

Speaker Change: given multiple market dynamics which have tempered growth in 2024, we have continued to nurture these offerings while doubling down on optimizing the operations and cash management.

Unknown Executive: In the first half of 2024, we scaled up numerous product offerings that culminated in meaningful deployment and sales into the market and set the stage for continued sales expansion in the back half of 2024 and beyond. Including a broad range of electrolyzer products, hydrogen storage and distribution solutions, and high-powered stationary systems, to name a few.

Speaker Change: In the first half of 2024, we scaled up numerous product offerings that have culminated into meaningful deployment and sales into the market and set the stage for continued sales expansion in the back half of 2024 and 2025 onward.

Speaker Change: including a broad range of electrolyzer products, hydrogen storage and distribution solutions, and high-powered stationary systems to name a few.

Unknown Executive: We commissioned and have scaled up the first green hydrogen plant, which, combined with the Tennessee facility we recommissioned, provides us 25 tons per day of capacity and close to half of our current annual hydrogen needs, and we have made great progress on our third facility in Louisiana that will provide us an additional 15 tons per day by year-end. We focused heavily on optimizing the workforce for the company. Given the rapid growth in recent years, we have added a lot of resources, and this year, we have worked at optimizing that resource pool to maximize leverage. Since January 1, we've reduced the global workforce by over 15% through the Q1 restructuring and ongoing attrition, where we've not backfilled.

Speaker Change: the commissioned and have scaled up the first dgreen hydrogen plant which combined with the tennessee facility we recommissioned provides us twenty five tons per day capacing close to half of our current annual hydrogen needs which we have which we have made great progress on our third facility louisiana

Speaker Change: that will provide us an additional fifteen tons per day by your -end

Speaker Change: We focused heavily on optimizing the workforce for the company. Given the rapid growth over the recent years, we have added a lot of resources, and this year we have worked at optimizing that resource pool to maximize leverage.

Unknown Executive: Since January 1, we've reduced the global workforce by over 15% through the Q1 restructuring and ongoing attrition where we've not backfilled. Another significant accomplishment in the first half is the remediation of material weakness which will be reflected in our second quarter 10Q violence. Looking at Q2 more specifically, we have made progress on our sales, cost-down, and cash management initiatives, and I would highlight, as an example, the level of electrolyzers deployed, which represents a clear inflection point on this ramping activity.

Speaker Change: Since January 1, we've reduced the global workforce by over 15% through the Q1 restructuring and ongoing attrition where we've not backfilled.

Unknown Executive: We've adjusted pricing across many equipment, fuel, and service platforms, the impact of which can be seen in our Q2 results, particularly for fuel and service, and these pricing impacts will be even greater as the year progresses, as we get full periods under these structures and launch additional pricing. We have completed many rooftop consolidations and have additional warehouses and facilities we are in the process of consolidating to our two main manufacturing sites in Albany and Rochester, New York. We've increased our focus on asset leverage, particularly inventory.

Speaker Change: we've adjusted pricing across many equipment fuel and service platforms which the impact can be seen in our q two results particularly for fuel and service and these pricing impacts will be even greater as the year for the restes as we get full periods under these structures and launch additional pricing measures

Speaker Change: We have completed many rooftop consolidations and have additional warehouses and facilities we are in the process of consolidating to our two main manufacturing sites in Albany and Rochester, New York.

Unknown Executive: We've made a lot of investment over the last two years to enable the successful launch of many new product offerings, and this year, the focus is on optimizing these resources, and we expect a meaningful reduction in the second half as sales continue to ramp and provide a meaningful source of revenue. Another significant accomplishment in the first half was the remediation of material weakness, which will be reflected in our second quarter 10Q final.

Speaker Change: we've increased focused on asset leverage particularly inventorywe've made a lot of investment overthe last two years to enable the successful launch of many new products offerings that this year the focus is on optimizing these resources and we expect meaningful reduction in the second half as sales continue to ramp which will provide a meaningful source of liquidity

Speaker Change: another significant accomplishment in the first half is the remediation of the material weakness which will be reflected in our second quarter ten q viiling

Unknown Executive: Being a growing, nascent new enterprise has made it challenging for the company to be sure we have the right processes and controls as we scale, and we have made significant investments in resources and systems to improve our controls and accounting processes, and this has enabled us to address the residual issues to resolve that material we. Looking at Q2 more specifically, we have made progress on our sales, cost-down, and cash management initiatives, and I would highlight, as an example, But these new nascent offerings with nuanced commercial contracts and products being used in much larger customer project deployments make it challenging for the timing of revenue records.

Speaker Change: Being a growing, nascent new enterprise has made it challenging for the company to be sure we have the right processes and controls as we scale, and we have made significant investments in resources and systems to improve our controls and accounting processes, and this has enabled us to address the residual issues to resolve that material weakness.

Speaker Change: Looking at Q2 more specifically, we have made progress on our sales, cost down, and cash management initiatives, and I would highlight, as an example, the level of electrolyzers deployed, which represents a clear inflection point on this ramping activity.

Speaker Change: But these new nascent offerings with nuanced commercial contracts and products being used in much larger customer project deployments makes it challenging on the timing on revenue recognition.

Unknown Executive: On a positive note, as Andy mentioned, for the majority of the programs deployed where revenue will be recognized in the second half, we've already delivered, we've transferred the title, and collected most of the cash via milestones, so this is truly a factor of timing. In addition, this large number of programs provides a substantial base of experience and insight to accelerate deployments based on learnings and the ability to constructively improve commercial terms to benefit the company financially and to enhance the accounting of these activities. Net cash used in operations combined with CapEx is down year-over-year by 30% from lower CapEx and inventory reductions.

Unknown Executive: On a positive note, as Andy mentioned, for the majority of the programs deployed, where revenue will be recognized in the second half, we've already delivered, we've transferred the title, and collected most of the cash via milestones, so this is truly a factor of timing. Net cash used in operations combined with CapEx is down year-over-year 30% from lower CapEx and inventory reductions. Driving more equipment sales given our expanded manufacturing capacity, which does not require more investment and provides the opportunity to readily source three to four times our current volume.

Speaker Change: on a positive as any mentioned the majityof programs deployed where the revenue will be recogn in the second half we've already delivered we've transfer the title and collected the most of the cash be a milestone so this is truly a factor of timing

Speaker Change: in addition this large quantity of programs provides a substantial base of experience and insight to accelerate deployments based on learnings and the ability to constructiveably improve commercial terms to benefit the company financially and to enhance the counting of these activities

Speaker Change: Net cash used in operations combined with CapEx is down year-over-year 30% from lower CapEx and inventory reductions.

Unknown Executive: We expect the cash burn rate to improve even further over the second half as we continue to curtail CapEx and leverage working capital further with sales and margin growth. Turning to the second half, we are laser focused on growing sales and margins and improving cash management. Our strategy includes many initiatives, such as expanding our hydrogen network with Louisiana and leveraging Georgia and Tennessee while taking advantage of the PTC. Driving more equipment sales, given our expanded manufacturing capacity, which does not require more investment and provides the opportunity to readily source three to four times our current volume.

Speaker Change: We expect the cash burn rate to improve even further over the second half as we continue to curtail CapEx and leverage working capital further with sales and margin growth.

Speaker Change: Turning to the second half, we are laser focused on growing sales and margins and improving cash management.

Speaker Change: Our strategy includes many initiatives such as expanding our hydrogen network with Louisiana and leveraging Georgia and Tennessee while taking advantage of the PTC.

Speaker Change: Driving more equipment sales, given our expanded manufacturing capacity, which does not require more investment, and provides the opportunity to readily source three to four times our current volumes.

Unknown Executive: Continue driving down costs with further workforce optimization, completing targeted rooftop consolidations, driving additional leverage on our material vendors, driving enhanced fuel network efficiency and service cost profiles, and leveraging recent price increases and yielding full annual benefits of these continued expansions. In terms of liquidity, I would say that we have a strong, effectively unlevered balance sheet that we can lean on for liquidity and provide opportunities from a number of different sources.

Speaker Change: Continue driving down cost downs with further workforce optimization, completing targeted rooftop consolidations, driving additional leverage on our material vendors, and driving enhanced fuel network efficiency and service cost profiles.

Speaker Change: and leveraging recent price increases and yielding full annual benefits as these continue to expand.

Speaker Change: In terms of liquidity, I would share that we have a strong, effectively unlevered balance sheet that we can lean on for liquidity and provide opportunities from a number of different sources.

Unknown Executive: Our plan is to lean on the balance sheet for incremental capital needs in the near term. Sales growth, price increases, improved mix, and continued cost downs will continue to improve operating cash. Based on the new transfer rules, with a well-known significant market participant, this will yield around $31 million for the ITC associated with the liquefier at the Georgia plant.

Unknown Executive: Our plan is to lean on the balance sheet for incremental capital needs in the near term. First, we have a substantial pool of restricted cash backing past project financings that is released quarterly at $200 million per year. We've discussed at length the opportunity to leverage inventory reductions, and we're targeting an additional reduction of $200 to $250 million by year-end. Sales growth, price increases, improved mix, and continued cost downs will continue to improve operating cash, based on the new transfer rules. We are about two weeks away from closing our first significant ITC transfer. With a well-known significant market participant, this will yield around $31 million for the ITC associated with the liquefier at the Georgia plant.

Speaker Change: Our plan is to lean on the balance sheet for incremental capital needs in the near term.

Speaker Change: First, we have a substantial pool of restricted cash backing past project financings that releases quarterly at $200 million per year.

Speaker Change: We've discussed at length the opportunity to leverage inventory reductions and we're targeting an additional reduction of $200 to $250 million by year end.

Speaker Change: Sales growth, price increases, improved mixed, and continued cost downs will continue to improve operating cash flows.

Speaker Change: based on the new transfer rules.

Speaker Change: We are about two weeks away from closing our first significant ITC transfer.

Speaker Change: with a well-known significant market participant this will yield around thirty-one million for the ipc associated with a liqubarire at the georgia plan

Unknown Executive: And we've been pursuing varied debt facilities and working with a party interested in equipment financing that we think can close in the next four weeks, and it is targeting a large facility platform with a meaningful first draw. And lastly, we're working closely with the DOE to finalize the $1.7 billion loan facility. We've made tremendous progress. We meet with them regularly and are meeting again in two weeks to continue their final due diligence and move the process along.

Speaker Change: And we've been pursuing varied debt facilities and are working with a party interested in equipment financing that we think can close in the next four weeks, and it is targeting a large facility platform with a meaningful first draw.

Speaker Change: And lastly, we're working closely with the DOE to finalize the $1.7 billion loan facility. We've made tremendous progress. We meet with them regularly and are meeting again in two weeks to continue their final due diligence and move the process along.

Unknown Executive: We're extremely clear on the actions and the processes to successfully close this facility. And equally important, the DOE is clear in their interest and support to get this closed quickly. This facility is anticipated to provide immediate liquidity and enable us to accelerate the Texas Green Hydrogen Facility build-out. I'll now turn it back to Andy.

Speaker Change: We're extremely clear on the actions and the processes to successfully close this facility.

Speaker Change: and equally important in the deal we have clear and their interest and support to get this close quickly

Andy Marsh: This facility is anticipated to provide immediate liquidity and enable us to accelerate the Texas Green Hydrogen Facility build-out. I'll now turn it back to Andy. Great. Thank you, Paul. Thank you, Dean. And Kevin, we're ready for questions.

Andy Marsh: Great. Thank you, Paul. Thank you, Dean. And Kevin, we're ready for questions.

Operator: Thank you, sir. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. One moment, please, while we poll for questions, and once again, that's star one to be placed in the question queue. Our first question is coming from James West from Evercore ISI. Your line is now live.

Speaker Change: thank you ir when i be conducting a question-and answer session if you like to be placed in the question q be please press star one on your telephone key pad a confirmation tone will indicate your line is in the question q you may press start two if youd like to remove your question from the q

Speaker Change: One moment please while we poll for questions and once again that's star 1 to be placed in the question queue. Our first question is coming from James West from Evercore ISI. Your line is now live.

James West: Hey, good morning, morning team. Good morning, Andy. Good morning.

Andy Marsh: Good morning, James.

Speaker Change: Hey, good morning team, good morning everybody. Good morning, James.

James West: So if I'm reading the financials correctly and your commentary correctly, it looks like there were some 50-ish million dollars of electrolytes in our sales that were not recognized in revenue during the quarter, despite being delivered. And so I wanted to just, you know, one just kind of confirm that that was the case, because if that was the case, and you would be handling our expectations on revenue. And then two, on hydrogen fuel sales, the margin had a very significant improvement.

James West: So, if I'm reading the financials correctly and your commentary correctly, it looks like there were some 50-ish million dollars of electrolytes in our sales that were not recognized.

James West: in revenue during the quarter despite being delivered. And so I wanted to just kind of, one, just kind of confirm that that was the case, because if that is the case, then you would be handling our expectations on revenue. And then

Speaker Change: Two on the hydrogen fuel cells, the margin.

Speaker Change: had a very significant improvement. And of course, that's, that's, I think a lot of that's driven by

Speaker Change: The startup of your two and soon three facilities here, producing green hydrogen for your own internal

Speaker Change: your customer supply and what how should we think about those margins were hydrogen

Unknown Executive: Thank you very much.

Speaker Change: fuel as we kind of get into the second half of this year that's two two kind of questions or as kind ofaround thequter ' towards the back halfof this year but i think they they make up a pretty important inflection point or improvement here that we're going to see here in the second half

Andy Marsh: So James, I'm going to let Paul take the first one, and I'll talk a little bit about the second one. I'm sure Paul chirped in there too.

James West: So, James, I'm going to let Paul take the first one, and I'll talk a little bit about the second one. I'm sure Paul chirped in there, too.

Paul Middleton: Yeah, your math is right. It's just over 50 million. It's a meaningful number that reflects such a step function change in the deployment of electrolyzers and how big that activity is to launch that. And yes, that would have been part of the Q2 numbers and will be recognized in the second half.

Paul: Yeah, and your math is right. It's just over 50 million. It's a meaningful number that reflects such a step function change in the deployment of electrolyzers.

Speaker Change: How big that activity is to launch that, and yes, that would have been part of the Q2 numbers and will be recognized in the second half.

Andy Marsh: You know, I think one of the important items there, Paul, is these systems are producing hydrogen. Right, it's really, you know, we're really kind of on the back end of the documentation and training process. And because of the accounting rule, not to get too technical, is it 605? 606.

Unknown Executive: You know, I think one of the important items there, Paul, is these systems are producing hydrogen. And some of the impact of Georgia and Tennessee, you know. Since July here, Tennessee and Georgia have been operating 93% of the time, which will have a significant, and that's a really good number. You know, you have, you know, for example, the storm came through yesterday and the other day; we turned the power off for 24 hours to make sure employees were safe.

James West: Now, I think one of the important items there, Paul, is these systems are producing hydrogen.

Speaker Change: Right? It's really, you know, we're really kind of on the back end of documentation and training process.

Speaker Change: and because of, I think it's county rule, not to get too technical, is it 605? 606, yeah. 606? That from a contractual point of view, you know, that's just a final step, but the level of activity and work that's required.

Andy Marsh: 606, that from a contractual point of view, you know, that's just a final step. But the level of activity and work that's required, Pretty Mano, so it's a big deal.

Andy Marsh: And James, you're right about hydrogen, but it's only really the start. We're beginning to see the impact of price increases and some of the impact of Georgia and Tennessee. You know, since July here, Tennessee and Georgia have been operating 93% of the time, which will have a significant impact, and that's a really good number. You know, you have, you know, for example, the storm came through yesterday, and the other day; we turned the plant off for 24 hours to make sure employees were safe.

James West: is pretty minimal.

James West: So it's a big deal. And James, you're right about the hydrogen. But it's only really the start. We're beginning to see the impact of the price increases.

Speaker Change: And some of the impact of Georgia and Tennessee, you know, since July here, Tennessee and Georgia has been operating 93% of the time, which will have a significant, and that's a really good number.

Speaker Change: you have for example the storm came through yesterday the other day we turn the plan off for twenty-four hours to make sure employees were sayfe

Andy Marsh: But I think you're going to see continuous improvement in margins driven by the price increases. And there's still a little bit more that you're going to see, coupled with the fact that you're going to have increased output out of Tennessee and Georgia. And then when St. Gabriel's comes online, we're in a much, much better place. OK.

Unknown Executive: But I think you're going to see continuous improvement in margins, driven by the price increases, and there's still a little bit more that you're going to see, coupled with the fact that you're going to have increased output out of Tennessee and Georgia. And then when St. Gabriel's comes online, we're a much, much better company.

Speaker Change: But I think you're going to see continuous improvement in margins.

Speaker Change: driven by the price increases. And there's still a little bit more that you're going to see, coupled with the fact that you're going to have increased output out of Tennessee and Georgia. And then when St. Gabriel's come online, we're in a much, much better position.

Andy Marsh: Okay, I got it. That's perfect. Thanks, guys.

Speaker Change: Okay, got it. That's perfect. Thanks, guys. Thanks, James.

Colin Rusch: Thank you. The next question today is coming from Colin Rusch from Oppenheimer. Your line is now live.

Speaker Change: Thank you. Next question today is coming from Colin Rusch from Oppenheimer. Your line is now live.

Unknown Executive: Thanks so much, guys. As you have seen the timeline adjust for some of the industry growth, can you talk a little bit about what's happening with your suppliers and the supply chain and whether any of those folks are backing away from some of the commitments that they've made to you?

Colin Rusch: Thanks so much, guys. As you have seen the timeline adjust for some of the industry growth, can you talk a little bit about what's happening with your suppliers and the supply chain and whether any of those folks are backing away from some of the commitments that they've made to you?

Colin Rusch: Thanks so much guys. As you have seen the timeline adjust for some of the industry growth, can you talk a little bit about what's happening with your suppliers in the supply chain and whether any of those folks are backing away from some of the commitments that they've made to you?

Unknown Executive: Yeah, that's good, you know, it's a, and Colin, I especially see the challenges more on the fuel cell side of the market. But on the electrolyzer side, it's clear this market's growing, expanding, and it's really geared towards more industrial applications. You've heard me mention green ammonia, concrete, steel.

Andy Marsh: Yeah, that's a good, you know, it's a, and Colin, I especially see the challenges more on the fuel cell side of the market. I think on the, and it's not really with the suppliers backing away yet, but look, this has been challenging for all suppliers. I, you know, I spent some time in Europe about two weeks ago and had some discussions with other people in this industry. But on the electrolyzer side, it's clear this market is growing, expanding, and it's really geared toward more industrial applications. You've heard me mention green ammonia, concrete, and steel.

James West: yeah that's a good you know it's a and Colin I especially see the challenges more when the fuel cell side of the market

James West: I think on the and it's not really with the suppliers backing away yet but look this has been challenging for all suppliers I you know I spent some time in Europe about it two weeks ago and had some discussions with other people in this industry

James West: but when the electctoralizer size it's this markets growing expanding

Andy Marsh: I think on the fuel cell side, I think, you know, people believe it's coming. But just like we're managing, for example, our stationary product to make sure the investments we're making, where we ultimately believe that it will be our dominant product in time, that we're just managing the speed of that activity. As far as investments go, because we believe in the 2030s, that's the revenue driver for plug-in cars, both for fuel cells and hydrogen. So I haven't seen anyone say, we're not going to do it. We're not engaged.

Unknown Executive: I think on the fuel cell side, I think, you know, people believe it's coming. But just like we're managing, for example, our stationary product to make sure the investments we're making, where we ultimately believe that it will be our dominant product in time, that we're just managing the speed of that activity. You look at, you know, I didn't mention the fuel cell business much, but we can see, for example, our material handling business getting stronger in the second half of the year. So it's painful, Colin. And, you know, it's discussions you have to have, but

James West: And it's really geared towards more industrial applications. You've heard me mention green ammonia, concrete, steel.

James West: I think on the fuel cell side, I think, you know, people believe it's coming.

James West: But just like we're managing, for example, our stationary product to make sure the investments we're making, where we ultimately believe that's our dominant product in time, that we're just managing

Speaker Change: The speed of that activity, as far as investments go, because we believe in the 2030s, that's the revenue driver for Plug, both for fuel cells and hydrogen.

Speaker Change: so i haven't see anyone say we're not going to do it we're not engaged i mean three months ago i was at a conference a hydrogen conference in rotder damn which had six thousand folks and every supplieror wanted to talk to me

Andy Marsh: I mean, three months ago, I was at a hydrogen conference in Rotterdam, which had 6,000 people, and every supplier wanted to talk to me. I think everybody's, you know, we're hoping that this would accelerate faster. That being said, you look at that 7.5 gigawatts of basic design engineering work we're doing. You look at, I didn't mention the fuel cell business much, but we can see, for example, our material handling business getting stronger in the second half of the year.

Speaker Change: i think everybody's a we're hoping that this would accelerate faster that being said you look at that seven point five giggle watts a basic design engineering work we're doing

Speaker Change: You look at, you know, I didn't mention much of the fuel cell business, but we can see, for example, our material handling business getting stronger in the second half of the year. So, it's painful, Colin, and, you know, it's discussions you have to have, but...

Andy Marsh: So it's painful, Colin. And, you know, it's discussions you have to have, but we have not, I haven't had anybody come to me and say, we're going to increase prices, we don't want to do business with you. That really hasn't been the tenor.

Colin Rusch: We have not, I haven't had anybody come to me and say we're going to increase prices, we don't want to do business with you. That really hasn't been the tenor.

Colin Rusch: That's incredibly helpful, Andy. And then just on the demand side for hydrogen, can you talk a little bit about the diversity of customers you're working with and the trend lines in terms of offtake sizes? You know, it seems to me that there's some incremental diversity of industries that are taking hydrogen and, you know, maybe starting with smaller deals and growing into larger deals. And that's it for me. Thanks.

Colin Rusch: That's incredibly helpful, Andy. And then just on the demand side for hydrogen, can you talk a little bit about the diversity of customers you're working with and the trend lines in terms of offtake sizes? You know, it seems to me that there's some incremental diversity of industries that are taking the hydrogen and, you know, maybe starting with smaller deals and growing into larger deals. And that's it for me, thanks.

Andy Marsh: Colin, I'm going to go ahead and turn that over to Sanjay.

Sanjay Shrestha: Hey Colin, how are you? So, again on this question, right, as we've talked about in the past, our primary objective has been how do we drive the cost of hydrogen down?

Sanjay: Colin, I'm going to turn that to Sanjay. Hey Colin, how are you? So again, on this question, right, as we've talked about in the past, our primary objective has been how do we drive the cost of hydrogen down for our existing customers?

Unknown Executive: https://www.plugpowerinc.com www.plugpowerinc.com www.plugpowerinc.com

Speaker Change: areright

Speaker Change: The Plants That Accumulate.

Speaker Change: comment online.

Speaker Change: georgia tenn cy a once we get to that forty s of productionthe way you should think about the c ence things un ld we will like also some of the industrial gas customer from perspectivethose discussion to go onasyou said will start with a small volume but could golo to bigger second piece of the opportunity were seeing with some of the mobility application different folks talking about that the numbers could actually grow and grow pretty substantially when you look few out and that's really one of the things 're also trying to do right is how do you make sure off agreements orare going to get a lot more ban able so that you can also start to think about capital souring of financing the build up the new plans going forward again ts of discussion going on lots of conversation happening from a priorization stand point get cost

Speaker Change: down to what we need to do for our existing customer and do spot agreement with some that are in the need of hydrogen on a short term and an immediate basis and really start to structure a contract in a way where this becomes a lot more bankable deals and we can start to think about a lot of different sources of capital.

Unknown Participant: Perfect. Thanks a lot, guys.

Craig Irwin: Thank you. The next question is coming from Craig Irwin from Ross Capital Partners. Your line is now live.

Speaker Change: perfect thanks likea

Colin Rusch: Thanks, Colin.

Speaker Change: Thank you. Next question is coming from Craig Irwin from Ross Capital Partners. Your line is now live.

Craig Irwin: Good morning, Craig. Hey Andy, thanks for taking the question. So I should start off by saying congrats on the PTC for Georgia. It's a nice milestone to see the company, you know, collecting that very important subsidy. So, can you maybe talk about, you know, the or get precise about the level of PTC you're able to collect, there has been uncertainty in the language, and then can you talk about other plants that are eligible for this, or that you think should be eligible for this, that are, you know, in construction, on the drawing board? How should this take shape? Yeah.

Speaker Change: Good morning, Craig. Hey Andy, thanks for taking the questions.

Craig Irwin: So, I should start off by saying congrats on the PTC for Georgia. It's a nice milestone to see the company, you know, collecting that very important subsidy.

Craig Irwin: So, can you maybe talk about, you know, or get precise about the level of PTC you're able to collect?

Speaker Change: There has been uncertainty in the language.

Speaker Change: And then can you talk about other plants that are eligible for this or that you think should be eligible for this that are, you know, in construction on the drawing board? How should this take shape?

Unknown Executive: Yeah, good question Craig, and let me I'm probably going to say a little bit too much here, but let me kind of step back and say that we would be able to receive the PTC. And Paul, I think it amounts to about $2.60 a kilogram once you think about the cost.

Andy Marsh: Yeah, good question Craig, and let me I'm probably going to say a little bit too much here, but let me kind of step back and say that for Georgia, we work diligently to think through how one can leverage renewable energy credits, how we measure electricity, how we measure the hydrogen coming out, and we've worked with consultants and lawyers and others to make sure, with the present policy guidelines, which are more strict than anything anyone expects to come, that we And Paul, I think it amounts to about $2.60 a kilogram once you factor in the cost.

Speaker Change: Yeah, good question, Craig. And let me, I'm going to, I'm probably going to say a little bit too much here, but let me kind of step back and say that

Speaker Change: For Georgia, we worked diligently to think through

Speaker Change: how one can leverage renewable energy credits

Speaker Change: How we measure the electricity, how we measure the hydrogen coming out.

Speaker Change: and we've worked with consultants and lawyers and others to make sure with the present policy guidelines which are more strict than anything anyone expects to come.

Speaker Change: that we would be able to receive the PTC.

Speaker Change: And Paul, I think it amounts to about $2.60 a kilogram.

Unknown Executive: And Sanjay and Paul are both shaking their heads in agreement, Craig. So that's how we were able to do it. And look.

Andy Marsh: And Sanjay and Paul are both shaking their heads in agreement, Craig. So that's how we were able to do it. And look.

Paul: once you think about the cost set and sij paul both shaking their head agreements at craig so that's how we were able to do it and look

Unknown Executive: You know, for the second part of your question, I think it's really clear that the regulations on the three pillars are going to become much looser. We're working really closely and making sure we understand in a very systematic fashion how, But it is, it is certainly evolving. Luckily.

Andy Marsh: You know, for the second part of your question, I think it's really clear that the regulations on the three pillars are going to become much looser. We won't be surprised if there's some announcement after the Democratic Convention and a further announcement after the election. But you see people who were strong supporters of the three pillars, like Heinrich in New Mexico, who've backed off significantly. And there's a lot of engagement between the Senate, who really wrote the bill, and the executive branch to make sure that congressional intention is met in the regulations.

Speaker Change: for the second part of your question i think it's really clear

Paul: that the regulations on the three pillars are going to become much looser.

Speaker Change: we won't be surprised at there's some announcement after the democratic convention and a further announcement after the election

Speaker Change: You see people who were strong supporters of the three pillars, like Heinrich in New Mexico, who's backed off significantly, and there's a lot of engagement between the Senate

Speaker Change: who really wrote the bill and the executive branch to make sure that congressional intention is met in the regulations and certainly chevront has helped in that evolution

Andy Marsh: And certainly Chevron has helped in that evolution. We're working really closely and making sure we understand in a very systematic fashion how, You know, and we're not, I'm not going to say you were definitely sure, but how we bring Texas and New York in, for example, to make sure both of those facilities would be eligible for the PTC. I'm optimistic, but... But it is, it is certainly evolving. Luckily, we've been able to engage with folks who are on the legal side, on the technology side, and that gives us a great deal of comfort that we'll figure it out.

Speaker Change: We're working really closely and making sure we understand in a very systematic fashion how

Speaker Change: You know, and we're not, I'm not going to say you were definitely sure, but how we bring Texas and New York in, for example, to make sure both of those facilities would be eligible for the PTC. I'm optimistic, but...

Speaker Change: But it is certainly evolving. Luckily...

Unknown Executive: You know, we've been able to engage with folks who are on the legal side, on the technology side, which gives us a great deal of comfort that we'll figure it out. But the looser regulations. I'm going to use the word looser. What I'm really saying is regulations that match the law will certainly help grow this economy, even the hydrogen economy, much, and that message is really coming strongly from senators to the executive branch.

Speaker Change: We've been able to engage with folks who are on the legal side, on the technology side,

Speaker Change: gives us a

Andy Marsh: But the looser regulations, I'm going to use the word looser. What I'm really saying is regulations that match the law will certainly help grow this economy, even the hydrogen economy, much, and that message is really coming strongly from senators to the executive branch.

Speaker Change: A great deal.

Speaker Change: comfort that will figure it out but the louser regulations i'm going to use the word louser while i'm really saying is regulations that match the p the law will certainly help grow this economy even hydrogen conomy much quicker

Speaker Change: and that message is really coming strongly from senators to the executive branch today.

Craig Irwin: So my second question is about the balance sheet, right? So I know every day you think about, you know, how, what can we do different? What can we do to lower costs? But I know you also think cash every day, right? Cash has been something important for you to manage over the last, you know, couple years, and you're doing a really good job at this point. 950 million in restricted cash on the balance sheet, you know, that is coming off, as you said, this year. Can you maybe talk about whether or not there might be a way to bring this off faster?

Unknown Executive: So my second question is about the balance sheet, right? So I know every day you think about, you know, how, what can we do different? What can we do to lower costs? But I know you also think cash every day, right? Cash has been something important for you to manage over the last, you know, couple years, and you're doing a really good job at this point. 950 million in restricted cash on the balance sheet, you know, that is coming off, as you said, this year. Can you maybe talk about whether or not there might be a way to bring this off faster?

Speaker Change: Thank you for that, Andy.

Speaker Change: So my second question is about the balance sheet, right. So I know every day you think about, you know, how, what can we do different? What can we do?

Speaker Change: to lower costs but i know you also think acts every day right cash has been cash has been something important forre to manage over the last couple years and you're doing a really good job at this point

Craig Irwin: Is this something that, you know, we're stuck waiting for the turnover of these PPAs that are, you know, underlying the commitment to keep this as restricted, or do you have maybe a little more flexibility in there, hopefully, than what was originally calculated?

Unknown Executive: Is this something that, you know, we're stuck waiting for the turnover of these PPAs that are, you know, underlying the commitment to keep this as restricted, or do you have maybe a little more flexibility in there, hopefully, than what was originally calculated?

Speaker Change: The

Speaker Change: nine hundred fifty million in in restricted cash in the balance sheet that is coming off as you said this year

Speaker Change: Can you maybe talk about whether or not there might be a way to bring this off faster?

Speaker Change: is this something that you know we're stock waiting for the the turnover of these pas that are underlying the commitment to keep this is restricted or do you have maybe a little more flexibility and there hopefully than what was originally calculated

Unknown Executive: Thanks, Craig. That's a good question.

Speaker Change: thanks crag 's a good question

Speaker Change: And yes, it's something I think about 24 hours a day. I spend a lot of time thinking about liquidity and how we can best source liquidity for the company.

Speaker Change: and that certainly has a meaningful pool i mean effectively it's like a deferred receivable right and so we have leveraged that in the past as you probably remember with generate capital as we've factored effect that we' factored that receivable in the past

Unknown Executive: And yes, it's something I think about 24 hours a day. I spend a lot of time thinking about liquidity and how we can best source liquidity for the company. And that certainly is a meaningful pull.

Speaker Change: So, that could be a solution as an example, as a potential opportunity, as well as...

Speaker Change: You know, I always say success begets success, and so as we continue to grow and scale and we show improvement, you know, certainly one of the things that we'll do, you know, probably won't be in the next quarter, or maybe not before year-end, but could be early next year as we show progress, is start approaching...

Speaker Change: The institutions that hold that and say, do you really need that kind of coverage on your outstanding exposure?

Unknown Executive: I mean, effectively, it's like a deferred receivable, right? And so we have leveraged that in the past, as you probably remember, with Generate Capital is that, you know, we effectively factored that receivable in the past. So that could be a solution as an example, as a potential opportunity, as well as, you know, I always say success begets success. And so as we continue to grow and scale, and we show improvement, you know, certainly one of the things that we'll do, probably won't be in the next quarter, or maybe not before you're in, but could be early next year, as we show progress, is start approaching the institutions that hold that and say, Do you really need that kind of coverage on your outstanding exposure?

Unknown Executive: So there are a lot of ways that we can approach that. But it is an incredibly meaningful asset that we continue to think about how to best leverage and how we can, you know, access liquidity off of that asset base.

Speaker Change: there's a lot of ways we can approach that but it is an incredibly meaningful assetts that we continue to think about how to best leverage and how we access to liquidity off of that asset base

Speaker Change: Thank you. Well, congrats on the operating progress. I'll go ahead and hop back in the queue. Thanks, Craig.

Speaker Change: Thank you. Next question today is coming from Manav Gupta from UBS. Your line is now live.

Craig Irwin: Thank you. Well, congratulations on the operating progress. I'll go ahead and hop back in the queue. Thanks, Craig.

Manav Gupta: Thank you. The next question today is from Manav Gupta from UBS. Your line is now live. Morning guys, I just wanted to focus on revenue. Good morning, Madam. Good morning, sir. So the revenue guide

Manav Gupta: Morning guys, I just wanted to focus on the... Good morning Madam.

Manav Gupta: Good morning, sir. So the revenue guidance 825 to 925,

Manav Gupta: I just wanted to focus on the revenue guidance, 825 to 925, trying to understand what could drive you towards the top end of that range, you know, in a good environment, what drives you towards the top end of that range. I'm going to give you a quick overview of this, and then I will let Paul add more.

Manav Gupta: trying to understand what could drive you towards the carend of that range you know in a good environment what drives was the top end of that range

Unknown Executive: I'm going to take a quick overview of this and then I will let Paul add on. I think that if you look at our business, I would say there are three items. You know, the third item is that the demand for the material handling industry is stronger than it appears.

Speaker Change: sure I'm going to take a quick overview of this and then I will let all add on I think that if you look at our business I would say there's three items

Andy Marsh: I think that if you look at our business, I would say there are three items. One is the Electrolyzer business and making sure we commission and get the fulfillment of every item in the contract on time, with some of the challenges we had here in the second quarter with the final I's and T's, you know, that we need to make sure that Sanjay, I know, is a laser focus on making it happen. The orders are there, and the products are being built. We feel very comfortable about that.

Speaker Change: One is the electrolyzer business and making sure we commission and get the fulfillment of every item in the contract on time.

Speaker Change: with some of the challenges we had here in the second quarter with the final I's and T's.

Sanjay: that we need to make sure that Sanjay, I know, is a laser focus on making it happen. The orders are there, the products are being built.

Andy Marsh: But it's the recognition of revenue, which has been a we wanted to be cautious on because of what we experienced on this course. I think the second item is that there's a one in a zero world with our electrifiers. Sanjay has been, I'm going to let him kind of add on to this after I get done, but in that one and zero world that can swing things $50 million with one order, that's, you know, there are some real good projects he's working on, but, you know, he sits back and wonders, is it third quarter? Is it fourth quarter? Is it the first quarter?

Speaker Change: We feel very comfortable about that, but it's the recognition of revenue, which has been a, we wanted to be cautious on because of what we experienced this quarter.

Speaker Change: I think the second item, there's a one in zero world with our liquefiers.

Speaker Change: Sanjay has been, I'm going to let him kind of add on to this after I get done.

Sanjay: But in that 1 and 0 world, that can swing things $50 million with one order. That's a, you know, there's some real good projects he's working on. But you know, he sits back and wonders is it third quarter is it, fourth quarter is it first quarter? And

Andy Marsh: Anger, You know, the third item is that the demand of the material handling industry is stronger than indicated. We've changed the business model for our customers by moving away from using the PPA and setting them up with leasing partners. We've made some really good progress there, and we have customers who are now using their own third-party leasing partners. It's an industry where leasing is common. I can tell you there's one customer where there are 300-400 units in the auto industry who is now using a third-party to help finance the project.

Speaker Change: The demand of the material handling industry is stronger than reflective.

Unknown Executive: We've changed the business model of our customers by moving away from using the PPA and setting them up with leasing partners. We've made some really good progress there, and we have customers who are now using their own third-party leasing partners. It's an industry where leasing is common. I can tell you there's one customer where there are 300-400 units in the auto industry, which is now using a third-party to help finance the project.

Speaker Change: But we've changed the business model.

Speaker Change: One of our customers by moving away from using the PPA.

Speaker Change: Setting them up with leasing partners. We've made some really good progress there and we have customers who now are using their own third party leasing partners is an industry where leasing is common.

Speaker Change: I can tell you there is one customer where it's three 400 units in the auto industry, which.

Speaker Change: It is now.

Speaker Change: Using a third party to help finance the project.

Andy Marsh: How that evolves over the second half of the year, I'm looking at material handling and think it's... call 165-175 and it could be over 200 if we're successful with that activity. Sanjay, would you like to add to that?

Speaker Change: How that evolves.

Speaker Change: Volumes over the second half of the year.

Speaker Change: Im looking at material handling.

Speaker Change: <unk> 65 to $1 75, and it could be over 200.

Sanjay: We're successful with that activity Sanjay would you like to add to that I think Andy you summed it up very well, but just up manav on the local fire side right our industry position, we feel pretty good about based on all of the customer feedback as Andy said right. What's really happening here is these are big ticket items.

Unknown Executive: I think, Andy, you summed it up very well, but just, Manav, on the liquefier side, our industry position is one we feel pretty good about based on all the customer feedback. As Andy said, right, what's really happening here is these are big-ticket items, and, you know, we're very active in a lot of different areas. From our 15-ton liquefier to our 30-ton liquefiers, we believe we have one of the best energy efficiency in the market.

Sanjay Shrestha: I think, Andy, you summed it up very well, but just, Manav, on the liquefier side, our industry position is one we feel pretty good about based on all the customer feedback. As Andy said, right, what's really happening here is these are big-ticket items, and, you know, we're very active in a lot of different areas. From our 15-ton liquefiers to our 30-ton liquefiers, we believe we have one of the best energy efficiency in the market. Our pricing seems pretty attractive, you know. We are also actually deploying this liquefier even in our Texas plant.

Speaker Change: We're very active in a lot of different areas. Our 15 ton liquefied July 30 ton local hires we believe we have one of the best energy efficiency in the market.

Unknown Executive: Our pricing seems pretty attractive, you know. We are also actually deploying this liquefier even in our Texas plant, so the learnings and the value, everything we can bring to the customer is bar none. Having said that, as Andy said, right, do they get to FID in Q3, does it end up becoming an opportunity in Q4? And we've seen some of those FIDs get pushed to the right by a quarter or two, right? We do believe some could come home here in Q4, but if it doesn't, then it ends up becoming really a 2025 opportunity, right?

Speaker Change: Pricing seems pretty attractive. We also are actually deploying this liquefy it even in our Texas plant. So the learnings and the value everything we can bring to the customer is by not having said that as Andy said right do they get to FIV in Q3 does it end up becoming an opportunity in Q4 and there was some we've seen some of those get pushed to the right by a quarter.

Sanjay Shrestha: So the learnings and the value, everything we can bring to the customer is bar none. Having said that, as Andy said, do they get to FID in Q3? Does it end up becoming an opportunity in Q4? And we've seen some of those FID get pushed to the right by a quarter or two, right? We do believe some could come home here in Q4, but if it doesn't, then it ends up becoming really a 2025 opportunity, right?

Speaker Change: There are two right. We do believe some could come home here in Q4, but if it doesn't it ends up becoming really a 2025 opportunity rather than to positive in 2020 opportunity and when you think about liquid fire side, Jay It is really a north American event. So yes.

Andy Marsh: And when you think about LIQUIFIER Sanjay, it's really a North American event. So far. Yeah, and so far. Clarity in the Regulations. You know, people don't want to do the projects, but they also don't want to leave money on the table. And that is so this final, Clarification of the regulations, I think is really important to accelerate the market. 100%.

Speaker Change: Yes.

Speaker Change: So far and.

Jay: Clarity in the regulations.

Unknown Executive: You know, people don't want to do the projects, but they also don't want to leave money on the table. And that is why this final project.

Jay: People do people want to do the projects, but they also don't want to leave money on the table.

Jay: And that is so.

Jay: So this final.

Jay: <unk> of the regulations I think is really important to accelerating the market 100% absolutely.

David: Thank you David.

Jay: Okay.

Manav Gupta: Thank you. The next question today is coming from Bill Peterson from J.P. Morgan. Your line is now live.

Speaker Change: Thank you. Your next question today is coming from Bill Peterson from Jpmorgan. Your line is now live.

Bill Peterson: Yeah, hi, good morning, Andy and Gene. Good morning, Bill.

Bill Peterson: Yes, hi, good morning, Andy <unk>.

Speaker Change: Bill.

Bill Peterson: So the first question I'd like to ask is about the sort of your core materials handling business. We've seen revenues kind of come in light if we think about like a first half 24 versus first half 23 or even the prior year. I know you said what an ASP uplift maybe that and some recent you know demand has been shifting on that, but our customers have been to deploy more equipment now doing because of this, I don't know, price increase?

Bill Peterson: So first question I would like to ask about.

Bill Peterson: The sort of your core materials handling business, we've seen we've seen revenues kind of come in light. If we think about like a first half 'twenty four versus first half 'twenty three are in the prior year.

Speaker Change: I know you talked about ESP uplift, maybe some recent demand has been shifting on that but our customers hesitant to deploy more equipment now doing because of this.

Bill Peterson: Or are there concerns about the company given the going concern from earlier in the year? Or is it really more of a matter of the markets just limited warehouse activity, things like that? So And then just tie it in, like, do we still see the season off in the back half of the year? What contributions do you see in the back half? And how should we think about growth in 2025? Yeah

Speaker Change: Price increase or is there concerns about the company given the going concern from earlier in the year or is it really more of a matter of the market just limited warehouse activity things like that so.

Speaker Change: And then just heightened like do we still see the seasonal uplift in the back half of the year what contribution do you see in the back half how should we think about growth in 'twenty five.

Andy Marsh: Yeah, so Bill... Look, uh... You know, I'm back on it. I kid you that the price increases, and the, Activities associated with the going concern, certainly represented a shot to the I, you know, I have, As many of you know, I am at heart. Believer and you deal with the cards you have and think how you can get better, but in many ways it actually opened up the engagement with customers, and it allowed us to start having the serious discussions about how to change the business, and we have moved away from PPA, which is good, which has impacted the initial growth of those customers because, you know, as I mentioned in the previous question, we've had to move to third-party providers of leasing for the customers, you know, almost like dealerships and cars, but we've had to work through that with third-party providers who also had tax appetite.

Unknown Executive: Yeah.

Bill Peterson: Yes, so bill.

Speaker Change: Look.

Speaker Change: I'm not going to <unk>.

Speaker Change: <unk> you that the price increases.

Speaker Change: In the.

Speaker Change: Activities associated with the going concern.

Speaker Change: Certainly represented a shock to the system.

Speaker Change: I have.

Unknown Executive: and the As many of you know, I am at heart. I'm a believer in you dealing with the cards you have and thinking how you can get better. But in many ways, it actually opened up the engagement with customers. You know, it's been a

Speaker Change: As many of you know I am at.

Speaker Change: Heart believer.

Speaker Change: Believer in.

Speaker Change: You deal with the cards, you have and think how you can get better.

Speaker Change: But in many ways it actually opened up the engagement with customers.

Speaker Change: It allowed us to start having the serious discussions about how to change the business model.

Speaker Change: And we have moved away from Ppas.

Speaker Change: Which is good which has impacted the <unk>.

Speaker Change: Initial growth with those customers because as I mentioned in the previous question. We've had to move to third party providers of leasing for the customers almost like Dr. Shifting cars, but we've had to work through that with third party providers, who also had tax appetite.

Andy Marsh: We've made great progress. We expect the second half of material handling to be at least, you know, in the range of 1.75 to 2 times higher than the first half of the year. You know, we spent a lot of time looking at those numbers for customers. In the past 2-3 weeks, Sanjay, I think we've had 2-3 new customers, some of them with rather large deployments. We think the growth rate for material handling in 2025 will come back to normal.

Speaker Change: We've made great progress there.

Speaker Change: We expect the second half the material handling.

Speaker Change: To be at least in the range of $1 75 to two times higher than the first half of the year.

Speaker Change: We spent a lot of times looking at those numbers and customers.

Speaker Change: Over the past.

Speaker Change: Two to three weeks Sanjay I think we've had two to three new customers some of them with a rather large deployments.

Sanjay: We think the growth rates for material handling in 2025 comes back to normal.

Andy Marsh: So, Bill, it's been a challenging exercise, but it actually has taught us in many ways the meaning of our value proposition. I've had one of our larger customers tell us the value proposition breaks down at $11 a kilogram for hydrogen. That's a really great data point because when you think about that $11, you know, we're out there about $8.50 today. And that shows that there's value being created, and customers recognize it. But look. There's a lot of discussions when you have those two big issues you mentioned, but I feel that We've really been able to overcome those challenges.

Bill Peterson: So bill.

Speaker Change: It's been a.

Bill Peterson: It's been a challenging exercise.

Unknown Executive: But it actually has taught us in many ways the meeting of our value proposition.

Speaker Change: I've had one one of our larger customers tell us they value proposition breaks down at $11 a kilogram for hydrogen that's a real great data point, because when you think about that $11.

Speaker Change: We're out there about 850 today and that shows that there is value being created and customers recognize it but.

Bill Peterson: Look.

Speaker Change: There's a lot of discussions when you have those two big issues you mentioned.

Bill Peterson: But.

Speaker Change: I feel that.

Speaker Change: We've really been able to overcome those challenges.

Unknown Participant: Sanjay Shrestha, Craig Irwin, Andrew Marsh, Andrew Middleton, Bill Peterson, Steven Fleishman, Manav Gupta, Teal Hoyos, Aaron Spychalla, Tim Cortes, Gregory Lewis, Aaron Spychalla

Andy Marsh: Sanjay there Andy.

Sanjay: Thanks Bill.

Dushyant Ailani: Thank you. Our next question today is coming from Dushyant Ailani on behalf of Jeffrey. Your line is now live.

Josh <unk>: Thank you. Our next question today is coming from Josh <unk> from Jefferies. Your line is now live.

Dushyant Ailani: Good morning. Thank you for taking the time to answer my questions. Dean, coming up on the new role, maybe this is for you. I know you have been there for two weeks now, and you have kind of talked about some of the areas of cost efficiency and cost outs. Maybe, could you talk a little bit about what some of the low-hanging fruits are, where we could see that come from? And then, secondly, you know, what do you guys think about, you know, the margin cadence of the second half of 24? And I'll leave it be.

Josh: Good morning, Thank you for taking my questions. Congrats on the new role. Maybe this is for you I know you've been there for two weeks now and you've kind of talked about some of the areas of cost efficiency and cost outs.

Speaker Change: Maybe could you talk a little bit about what some of the low hanging fruit, where we could see that come from and then secondly.

Unknown Executive: How do you guys think about that.

Unknown Executive: The margin cadence.

Speaker Change: For the second half of 'twenty four.

Unknown Executive: and I'll leave it there. Thank you.

Speaker Change: But there thank you.

Dean Fulton: So I'll let Dushyant, good morning, I'll let, you say Andy, I'll let Paul take the second part of that, and I'll let Dean take the first part. Yeah.

Speaker Change: So I'll, let just shy good morning, I'll, let you.

Speaker Change: Sandy I'll, let Paul take the second part of that I'll, let <unk> take the first part.

Dean Fulton: yeah I think it's a little too early to provide any details on this call but you know I've talked with Andy and many people a couple months before joining I've been aware of where the challenges are and, My first two weeks I've been digging into that, and as I mentioned, a lot of it's around manufacturing, it's reducing our inventory, it's getting cost-effective when it comes to producing green hydrogen and implementing our fuel cells and our systems in the field, and that's really where my focus is going to be, is diving deep into those cost structures, identifying where we can wring those costs out and lower those costs and get to the point where we'll be profitable in each of these lines of businesses, and a lot of it is going to be around identifying those opportunities and the rigor and the discipline with managing through each of those projects and tracking those to the point of profitability. This isn't going to happen immediately, but to your point, there's definitely low-hanging fruit and short-term things we're going to focus on, and then there's obviously bigger monsters that are going to take a longer-term view of.

Speaker Change: Yes, I think it's a little too early to provide any details.

Josh: On this call but.

Josh: I've talked with Andy and many people a couple of months before joining.

Unknown Executive: I've been aware of where the challenges are,

Andy Marsh: I have been aware of where the challenges are.

Unknown Executive: My first two weeks I've been digging into that.

Josh: And as.

Speaker Change: As I've mentioned a lot of it is around manufacturing units, reducing our inventory, it's getting cost effective when it comes to producing green hydrogen.

Josh: And implementing our fuel cells and our systems in the field and Thats really where my focus is going to be as diving deep into those cost structures.

Unknown Executive: Identifying where we can wring costs out and lower those costs and get to the point, where we will be profitable in each of these lines of businesses.

Josh: And a lot of it is going to be around identifying those opportunities and the rigor and the discipline with managing through each of those projects and tracking those to the point of profitability isn't going to happen immediately but to your point theres definitely low hanging fruit in the short term things, we're going to focus on and then there.

Andy Marsh: Obviously bigger monsters that are then it takes a longer term view of.

Paul Middleton: Yeah, and I would just, I guess on the margin progression, you know, as you guys have seen, historically, we've always had this phenomenon of the two-thirds, one-third, where there are two-thirds and a half of the sales in the second half. That's certainly what we're seeing this year.

Speaker Change: And I would just I guess on the margin progression.

Speaker Change: As you guys have seen historically, we've always had this phenomenon of the two thirds, one third where there is two thirds in the half of the sales in the second half, but certainly what we're seeing this year.

Josh: That implies doubling the sales in the second half and plug has tremendous volume leverage opportunities so that has.

Andy Marsh: Big impact for us.

Josh: In addition to the.

Speaker Change: Getting full quarter benefits of all of these cost downs and price increases that we've been rolling out.

Paul Middleton: That implies doubling sales in the second half. And Plug, you know, has tremendous volume leverage opportunities. So that has a big impact for us. In addition to the, you know, getting full quarter benefits of all of these cost downs and price increases that we've been rolling out, and on the fuel side, Andy talked about Georgia and Tennessee being up and getting a full quarter impact of those, as well as us making real good strides on fuel efficiency measures.

Speaker Change: And on the fuel.

Josh: Syed.

Speaker Change: And you talked about Georgia, and Tennessee, being up and getting a full quarter impact of those as well as we've made real good strides on fuel efficiency measures and that's really going to be impactful as well as we move through the balance of the year. So you will see continued you'll see certainly.

Unknown Executive: Positive and continued progress in Q3, and even more progress in Q4, as we move through the balance of the year.

Paul Middleton: And that's really going to be impactful as well as we move to the balance of the year. So you will see continued, you'll see certainly positive and continued progress in Q3, and even more progress in Q4. As we move to the balance of the year.

Unknown Executive: Yeah.

Speaker Change: Thank you.

Sherif Elmaghrabi: Thank you. As a reminder, that's star number one to be placed in the question queue. Our next question is coming from Sherif Elmaghrabi from BTIG. Your line is now live.

Speaker Change: Thank you as a reminder, that star one to be placed in the question queue.

Speaker Change: Our next question is coming from <unk> <unk> from BTG. Your line is now live.

Sherif Elmaghrabi: Hey, good morning team. Thanks for taking my call. Good morning, Sheriff. I've got a couple of questions on Louisiana. First off, can you tell us how hydrogen production is going to be divvied up there? Is it a straight 50-50 split between yourselves and Olin?

Unknown Executive: Hey, good morning team. Thanks for taking my questions. Good morning Sherri.

Sanjay Shrestha: Yeah, so I'm going to let Sanjay handle this. Sanjay sits on the board of the Joint Venture, so I'm going to let him handle that question. Yeah, so Sherif, on that...

Unknown Executive: I've got a couple of questions on Louisiana. First off, can you tell us how hydrogen production is going to be divvied up there? Is it a straight 50-50 split between yourselves and Olin?

Andy: Good morning, Andy.

Speaker Change: Got a couple on Louisiana, I guess first off can you tell us how hydrogen production is going to be divvied up there straight 50, 50 split between yourselves and Nolan.

Sanjay: Yes, so I'm going to let Sanjay takes us Sanjay sits on the board of the joint venture So I'm going to let him handle that question, yes. So sure if on that so obviously, it's a 50 50 JV from an ownership standpoint, but plug is responsible for marketing all that hydrogen right. So that's what would happen we would actually consolidated as plug number one number.

Sanjay Shrestha: So, Sherif, on that, you know, obviously it's a 50-50 JV from an ownership standpoint, but Plug is responsible for marketing all that hydrogen, right, so that's what would happen. We would actually consolidate as Plug, number one. Number two, we'll be responsible for marketing, pricing, strategy, and everything else. So access to that hydrogen between the partners, Plug will take a leading role in terms of how it gets priced, how it gets marketed, and who it goes to.

Unknown Executive: So, Sherif, on that, you know, obviously it's a 50-50 JV from an ownership standpoint, but Plug is responsible for marketing all that hydrogen, right, so that's what would happen. We would actually consolidate as Plug, number one. Number two, we'll be responsible for marketing, pricing strategy, and everything else. So access to that hydrogen between the partners, Plug will take a leading role in terms of how it gets priced, how it gets marketed, and who it goes to.

Unknown Executive: Two will be responsible marketing pricing strategy and everything else. So the access of that hydrogen between the partners plug would take a leading role in terms of how it gets priced how it gets marketed pencil it goes too.

Sherif Elmaghrabi: Okay, that's helpful. And then for my follow-up question, do you need to further refine the output of the chloroalkali process at Louisiana to produce 15 tons of liquid? And if so, is there a margin benefit there? What is the margin benefit there relative to your other projects?

Unknown Executive: Okay.

Speaker Change: That's helpful. And then for my follow up do you need to further refine the output of the Chlor alkali process that Louisiana to produce 15 tons of liquid.

Speaker Change: And if so is the margin benefit there what is the margin benefit there relative to your other projects.

Sanjay Shrestha: Yeah, sure. Keep in mind, we've already done something like this before with Olin, right? We have an existing plant in Tennessee. So we know exactly what exactly has to happen, even though we own 100%.

Speaker Change: Yes, sure keep in mind, we've already done something like this before withholding right. We have an existing plant in Tennessee. So we know what exactly has to happen, even though we own 100 per se, we own 100% of Tennessee. So there was a period that yes, you have to purify and you also have to increase the pressure based on what the pressure that hydrogen comes out from the OLED side almost think of this like.

Sanjay Shrestha: We own 100% of Tennessee. So there's a pure, yes, you have to purify it, then you also have to increase the pressure based on the pressure that the hydrogen comes out from the Olin side. You can almost think of this like a pipeline coming into our liquefier, you know, not a whole lot different than, you know, the PEM electrolyzer. It's a slightly different kind of an electrolysis process, So yes, you have to purify that you have to increase the pressure as it goes into the liquefier.

Speaker Change: Our pipeline coming into our local fire not a whole lot different than the Perm electrolyze. It it's a slightly different kind of an <unk> license process right. So yes, you have to purify that you have to increase the pressure as it goes into the local fire look the reason we're doing this partnership is because we both believe that economic value.

Andy Marsh: Look, the reason we're doing this partnership is because we both believe that the economic value of, you know, them just selling gaseous hydrogen versus Olin also getting into the liquid hydrogen market is a win-win situation for them. And we see this as being a low cost opportunity for us. So it's a win-win situation for us as well. And look, and rather not get into the specifics of exactly what that cost looks like and everything else, as we'll continue to do the pricing negotiations, but similar to Tennessee, and frankly, if anything, maybe even marginally better than the cost profile in Tennessee, we feel pretty good about what this is going to bring to the table for us from cost reduction, as well as expanding the market opportunity for Anything you want to add, Andy?

Unknown Executive: Then just selling the gaseous hydrogen versus all and also getting into the liquid hydrogen market is a win win situation for them. We see this being a low cost opportunity for us. So it's a win win situation for us as well and look and rather not get into the specifics of exactly what that cost looks like and everything else. As we're continue to also do the pricing negotiation, but similar to Tennessee.

Unknown Executive: And frankly, if anything maybe even marginally better than the cost profile in Tennessee, we feel pretty good about what this is going to bring to the table for us from a cost reduction as well as expanding the market opportunity for that high.

Sanjay Shrestha: Yeah, I would just say, if only the picture in your head, Sharif. The hydrogen coming out, you know, is, as Sanjay mentioned, purified before it goes into the liquefier. But that waste stream hydrogen and purification system essentially replaces the electrolyzer, rectifier, and substations, and the rest of Louisiana is exactly a duplicate of Georgia. So it's, you know, so it's very straightforward. It's just essentially doing that one block differently, and I use the word differently, as Sanjay said, exactly how we do it.

Speaker Change: Anything you want to add yes, I would just say if just a picture in your head sheree.

Unknown Executive: The hydrogen coming out, you know, is, as Sanjay mentioned, purified before it goes into the liquefier. But that waste stream hydrogen and purification system essentially replaces the electrolyzer, rectifier, and substations, and the rest of Louisiana is exactly a duplicate of Georgia.

Unknown Executive: The hydrogen coming out.

Unknown Executive: As Sanjay mentioned purified before it goes in the liquefied.

Unknown Executive: With that Windstream hydrogen purification system essentially replaces.

Sanjay: Electrolyze or.

Unknown Executive: And.

Unknown Executive: Rectifier in Substations and the rest of Louisiana.

Sanjay: Exactly a duplicate of Georgia.

Speaker Change: So it's so it's a very straightforward, it's just essentially doing that one velocity differently.

Speaker Change: And I use the word differently as Sanjay said exactly how we do in Tennessee.

Unknown Executive: Yes.

Sherif Elmaghrabi: Okay, that's helpful. Thank you. Thank you both.

Speaker Change: Okay. That's helpful. Thank you, but thank you both.

Unknown Executive: Okay.

Chris Sung: Thank you. The next question is coming from Chris Sung from Wolf Research. Your line is now live.

Speaker Change: Thank you next question is coming from Chris Hung from Wolfe Research. Your line is now live.

Chris Sung: I want to thank you for taking my question. Good morning, Chris. Hey, good morning, Andy. I'll start with, I saw at least one competitor announce capacity reservations agreements with the electrolyzer developers developing the hydrogen hubs. Is that something you're also pursuing, and maybe any updates on your participation in the three hubs that have officially been announced?

Speaker Change: Hi, Good morning, Thank you for taking my questions.

Chris: Morning, Chris.

Unknown Executive: Hey, good morning, Andy I'll start with my saw at least one competitor announced capacity reservations agreements with Electrolyze developers developing hydrogen hopes is that something you're also pursuing and maybe any updates on your participation in the three hubs that has officially launched.

Sanjay Shrestha: I'll let you take the feedstock, and then I'll talk about the...

Unknown Executive: I'll let you take the feedstock, and then I'll talk about the...

Unknown Executive: Okay.

Speaker Change: Well I'll, let you take the feedstock and then I'll talk about the pubs so.

Sanjay Shrestha: So again, I think as a part of this seven gigawatt basic engineering design packet, right? We are starting to have conversations with the customer, you know, some of these opportunities are multi gigawatt opportunities, right? So it's a megaproject for them, and obviously, it's a megaproject for us, as Andy talked about it. Even if we actually do one quarter of that, it's a substantial revenue opportunity. But we're going to need to make sure that we're planning the capacity the right way, right?

Unknown Executive: So again, I think as a part of this seven gigawatt basic engineering design packet, right? We are starting to have conversations with the customer. You know, some of these opportunities are multi gigawatt opportunities, right?

Speaker Change: I think as a part of this seven gigawatt of basic engineering design package right. We are starting to have conversations with the customer.

Speaker Change: Some of this opportunity our multi gigawatt opportunity right. So it's a mega project for them, obviously, it's a mega project for us as Andy talked about it even if we actually do one quarter of that is a substantial revenue opportunity, but we're going to need to make sure that we're planning the capacity the lightweight right. What does that reservation look like what the cadence of staff production needs to look like and Thats one.

Sanjay Shrestha: What does that reservation look like what the cadence of staff production needs to look like? And that's one area that has been talked about You know him and I are going to be working very closely together to make sure that it's being planned properly We're thinking to the reservation, right? You know, how do we manage that? It's a win-win for both parties Now there is some discussion going on that We're having with other customers that are not a part of this seven and a half gigawatt of basic engineering design packet where they're talking about Potentially doing a reservation as they are looking at mega opportunity in the European market So some of those discussion are happening as well But one another thing we also try to be very very careful about in this market is there are projects and there are projects, right?

Unknown Executive: So it's a mega project for them. Obviously, it's a mega project for us, as Andy talked about it, even if we actually do one quarter of that, it's a substantial revenue opportunity. But we're going to need to make sure that we're planning the capacity the right way, right? What does that reservation look like? What does the cadence of staff production need to look like?

Unknown Executive: And that's one area that has been talked about, you know; him and I are going to be working very closely together to make sure that it's being planned properly. We're thinking to the reservation, right? You know, how do we manage that? It's a win-win for both parties.

Speaker Change: The area that's been talked about human Io then be working very closely together to make sure that it's being planned property, we're thinking to the reservation right. How do we manage that it's a win win for both parties now there is some discussion going on that we're having with other customers that are not a part of this seven five gigawatt of basic engine.

Speaker Change: <unk> designed packet, where they're talking about potentially doing a reservation as theyre looking at Mega opportunity in the European market. So some of those discussions are happening as well, but one another thing. We've also tried to be very careful about in this market as their projects and there are projects, we're really trying to make sure we're aligning with customer in terms of helping them.

Unknown Executive: Now, there is some discussion going on that we're having with other customers that are not a part of this seven and a half gigawatt basic engineering design packet where they're talking about potentially doing a reservation as they are looking at a mega opportunity in the European market. So some of those discussions are happening as well. But one other thing we also try to be very, very careful about in this market is that there are projects, and there are projects, right?

Sanjay Shrestha: We're really trying to make sure we're aligning with customers in terms of helping them with what we bring to the table, but also making sure that the projects are in fact going to eventually get to that final investment decision criteria. But there's a lot of things that have to happen; funding has to come in place, so We do have some of those opportunities brewing as well, which could be pretty meaningful and substantial, and that is not a part of the It would be incremental.

Unknown Executive: With what we bring to the table, but also making sure that the projects are in fact going to eventually get to that final investment decision criteria because theres a lot of things that has to happen funding has to come in place. So we do have some of those opportunities is growing as well it could be pretty meaningful and substantial and that is not a part of the seven five gigawatt of basic engineering design.

Unknown Executive: We're really trying to make sure we're aligning with customers in terms of helping them with what we bring to the table, but also making sure that the projects are in fact going to eventually get to that final investment decision criteria. But there's a lot of things that have to happen; funding has to come in place. So we do have some of those opportunities brewing as well, and those are not a part of the seven and a half gigawatt of basic engineering design packet that we're talking about right now. It will be gradual.

Unknown Executive: <unk>.

Unknown Executive: Thinking about right now it would be incremental to that.

Andy Marsh: Yeah, on the hubs... First, I don't want to get ahead of Hub's announcements as far as what they want to say about the details. But, as we've talked about before, every hub in the U.S., Plug is participating, including the announcement about West Virginia, where they have details, so we're pleased that they're moving ahead. I think over the next year, even with the hubs which have come to agreement, there's still a great deal of planning and work to continue.

Speaker Change: On the hubs.

Speaker Change: First I don't want to get ahead of pumps announcements as far as what they wanted to say about the details.

Unknown Executive: But.

Speaker Change: As we've talked about before every hub in the U S plug is participating in <unk>.

Unknown Executive: Including the announcement of West, Virginia, where they have details.

Unknown Executive: So.

Speaker Change: We're pleased that they are moving ahead.

Andy Marsh: And I can tell you there's a team at Plug, on the business side, that, as well as the technical side, that's working with the key decision makers at all the hubs to make sure that they, Abov, you know, Abov. And that, look, we're there. We're at the table.

Speaker Change: I think over the next year, there's even with the hubs, which have come to agreement. There is still a great deal of planning and work to continue and I can tell you there is a team of plug.

Unknown Executive: On the business side, as well as the technical side, that's working with the key decision makers at all the hubs to make sure that they There's still lots of work to go on to really capture that vision. On top of that, there's the technology investment, where Plug was a leading company in receiving grants from the DOE, where about 20-25% of that revenue or activity investment Plug is involved with. A lot of it is associated with our plant in Rochester where there are technology improvements for both electrolyzers and fuel cells built in.

Unknown Executive: On the business side.

Unknown Executive: As well as the technical side, that's working with the key decision makers at all.

Unknown Executive: Make sure that the.

Unknown Executive: Bob.

Speaker Change: Look we're there we're at the table and Thats a key that's a key item.

Andy Marsh: And that's the key. That's the key item. I think people have to realize, and I've said this before...

Unknown Executive: I think people have to realize that.

Unknown Executive: Said this before.

Andy Marsh: The PTC and the DOE lowlands are really short-term vehicles for the U.S. government to drive hydrogen production. In the long term, hydrogen hubs across the United States are really important for building this industry. That's still lots of work to go on to really capture that vision. On top of that, there's the technology investment where Plug was a leading company in receiving grants from the DOE, where about 20-25% of that revenue or activity investment Plug is involved with.

Unknown Executive: PTC and the Doe loans are really the short term vehicles for the U S government to drive hydrogen production.

Unknown Executive: Long term the hydrogen hubs across United States are really important for building this industry and look.

Unknown Executive: That said, there's still lots of work to go on to really capture that vision on top of that there is a technology investment where plug with a leading company in receiving grants from the Doe.

Unknown Executive: We're about 2025% of that revenue.

Unknown Executive: Activity investment plug is involved with.

Andy Marsh: A lot of it is associated with our plant in Rochester where there are technology improvements for both electrolyzers and fuel cells built in. So those two won't be overnight, but they're really important for the U.S. from a national security point of view, from a jobs point of view, as well as from a clean climate point of view.

Unknown Executive: A lot of it is associated with our plant in Rochester, where there's technology improvements for both electrolyzed using fuel cells filter.

Unknown Executive: Those two won't be overnight, but they are really important for the.

Unknown Executive: The U S.

Unknown Executive: Having.

Unknown Executive: From a national security point of view from a jobs point of view.

Unknown Executive: As well as for clean climate point of view.

Chris Sung: Thanks, and just for a follow-up, I think Dean touched on this, and the high inventory levels are one of his priorities, but are you able to provide some context on what's in inventory broken up by product line?

Speaker Change: Thanks, and just for it that's really helpful color and just for a follow up I think you touched on this at the high end between levels as one of his priorities, but our EBIT provide some context on whats in inventory broken out by product line.

Andy Marsh: You know, I think that Paul, I don't think we make that, do we make that public? No. Yeah, and I think that probably, you know, I would just say... Probably. A lot to support our energy build out this year, and we do have goals that we can reduce that inventory down to about 700 million by year end, supporting all the products.

Unknown Executive: I think that Paul I don't think we'd make that do we make that public.

Speaker Change: And I think that probably.

Speaker Change: I would just say.

Unknown Executive: Probably.

Unknown Executive: A lot, you know, there's probably a lot to support our energy build out this year, and we do have goals that we can reduce that inventory down to about $700 million by year end, supporting all the products.

Speaker Change: There is probably like to support our energy build out this year and we do have goals that we can reduce that inventory down to about $700 million by year end.

Unknown Executive: Supporting all the product lines.

Chris Sung: Alright, fair enough. Okay, thanks, Chris.

Speaker Change: Alright fair enough. Thanks, so much for your time I turned it over okay. Thanks, Chris.

Skye Landon: Thank you. The next question is coming from Skye Landon from Redburn, Atlantic. Your line is now live.

Speaker Change: Thank you next question is coming from Sky Linden from Redburn. Your line is now live.

Unknown Executive: Yes.

Unknown Executive: Yeah.

Skye Landon: Hi, thanks, guys. You mentioned that you're potentially expecting some news on the 45B rules after the Democratic Convention and that you'd expect a further announcement after the election. I mean, I appreciate the timing is perhaps uncertain on this, but perhaps you could talk us through your current thinking on how quickly this could come through and if you still think it's a 2024 event. And then, related to this, from your conversations with industry and customers, how quickly after the clarification on the rules do you expect to start seeing green hydrogen FID start flowing?

Speaker Change: Hi, Thanks, guys, you mentioned that youll potentially expecting some using the.

Unknown Executive: The rules after the Democrats.

Unknown Executive: Convention and that you'd expect a further announcement after the election. I mean, I appreciate timing is perhaps uncertain on this, but perhaps you could talk us through your current thinking on how quickly this could come through and if you still think it's a 2024 event. And then related to this, from your conversations with industry and customers, how quickly after clarification on the rules do you expect to start seeing green hydrogen FID start flowing?

Unknown Executive: Convention that you'd expect further announcement after the election.

Speaker Change: I mean I appreciate the comment.

Speaker Change: <unk> thoughts on that.

Unknown Executive: Perhaps you could talk us through your current thinking on how quickly this could come through and and if you still think 2020 for them.

Unknown Executive: And then related to that from your from your conversations with industry and customers how quickly after the clarification on the rules do you expect to start seeing green hydrogen and that's why they stopped flying.

Skye Landon: And then a second question, sorry, and a second question on OPEX costs perhaps. Dr. Prasad, expectations will slightly beat again in 2Q after they also beat in 1Q. Maybe you could run through the work that's been done here and talk about if there's any more costs to come out going forward. Thanks.

Unknown Executive: Yes.

Speaker Change: Sorry, I got a second question on Opex costs, perhaps.

Unknown Executive: Expectations were slightly beat again in 2Q after they also beat in 1Q. Maybe you could run through the work that's been done here and talk about if there's any more costs to come out going forward. Thanks.

Speaker Change: Expectations will slightly be again in <unk>. They also would be in <unk>, maybe you could run through the work that's been done here.

Unknown Executive: And talk about if theres any more cost to come out going forward. Thanks.

Andy Marsh: I'll let Paul handle the second part of that question, Skye. I think where you will see potential changes after the convention probably has to do with the three pillars, and I know you're well versed in the three pillars, Skye.

Unknown Executive: I'll, let Paul handle the second part of that question Scott.

Unknown Executive: I think where you will see potential changes after the convention. It probably has to do with the three pillars, and I know you're well versed in the three pillars, Skye.

Speaker Change: I think where you will see potential changes after the convention.

Unknown Executive: Probably has to do with it with the three pillars that I know youre well versed in the three pillars, Scott I think you will see.

Andy Marsh: I think you'll see relaxation associated with additionality, and I think that nuclear power as well as hydropower and maybe states with renewable energy programs will get, receive relaxation on additionality. I think when you look at post-election, you may see that the regulations associated with time matching will start looking more like Europe, and I think the regionality issues will be slightly less restricted. And I think that's probably what will happen. And I, and when you look at it, obviously, I think, I think we may have talked before the Chevron announcement, and I told you Chevron was going to have a dramatic impact, especially on those two other items, and I think you'll start seeing.

Unknown Executive: I think you'll see relaxation associated with additionality, and I think that nuclear power as well as hydropower and maybe states with renewable energy programs will get, will receive relaxation on additionality. I think when you look at post-election, you may see that the regulations, the, And I think that's probably what we'll... Special on those two other items, and I think you'll start seeing. I think from a decision-making point of view for FID, you know, I think many of these programs

Unknown Executive: Relaxation.

Unknown Executive: Associated with Additionality, and I think that nuclear power.

Unknown Executive: As well as hydro power.

Unknown Executive: And may be states with renewable energy programs getting receiving relaxation on additionality.

Unknown Executive: I think when you look at post the election.

Unknown Executive: You may see that the regulations.

Unknown Executive: Regulations associated with time matching.

Unknown Executive: We will start looking more like Europe, and I think the regionalisation issues will be.

Unknown Executive: Slightly less restrictive and I think thats, probably what will happen.

Speaker Change: And when you look at it obviously I'd say I think we may have talked before.

Speaker Change: Chevron announcement and I told you is chevron was going to have a dramatic impact.

Unknown Executive: Especially on those two other items and I think youll start seeing that.

Andy Marsh: I think from a decision-making point of view for FID, you know, I think many of these programs take probably 18 months to get the FID. I think in many of the U.S. programs, companies, I know some significant programs where work's being done, but I think it's a year for the big projects, I mean the gigawatt-scale projects, after the announcements to get to where you're actually issuing POs So I think that's probably the time frame, and this is especially true for the electrolyzers. I think there may be smaller deployments, which will happen more rapidly than that, but when you're talking about investing $2 to $3 billion, it's going to take time.

Unknown Executive: From a decision making for <unk> D.

Unknown Executive: I think many of these programs.

Unknown Executive: It takes probably 18 months to get there.

Unknown Executive: I think in many U S programs companies.

Speaker Change: I know some significant programs where work is being done by <unk>.

Speaker Change: It's a year.

Speaker Change: Big projects I mean, a gigawatt scale project after the announcements to get to.

Unknown Executive: Actually issuing Ceos, so I think that's probably the timeframe once the rig and this is especially with the Electrolyze. There's I think there may be smaller deployments, which will happen more rapidly than that but when you are talking about investing $2 billion to $3 billion.

Unknown Executive: It's going to take time.

Paul Middleton: Paul? And on the OpEx, you know, as you've made reference, I mean, we've been able to demonstrate that we've, you know, the benefits of our actions of curtailing and optimizing the workforce. Some of the rooftop consolidations obviously are, you know, some of the, most of the impact is in operations, but there's certainly a piece of that that benefits the OPEX as well, and I would tell you as we move forward to the balance of the year, we're going to maintain our discipline and focus on making sure that we're, you know, where we can continue to optimize, that we're doing that, and that we're not investing in incremental costs in the near term on things that aren't benefiting the short term, you know, so we're really being scrutinous in the things we're doing and trying to keep that curtailed and down, and we expect that to continue.

Unknown Executive: Paul.

Unknown Executive: Paul? Yeah, and on OPEX, you know, as you made reference, we've been able to demonstrate that we have, you know, the benefits of our actions of curtailing and optimizing the workforce.

Unknown Executive: And on the Opex side.

Paul: You've made referenced.

Paul: We've been able to demonstrate that we have.

Paul: The benefits of our actions of curtailing.

Paul: Optimizing the workforce.

Paul: Some of the rooftop consolidations, obviously are some of the most of the impact is in operations, but there is certainly a piece of that.

Unknown Executive: Benefits.

Paul: The opex as well.

Paul: And I would tell you as we move forward through the balance of the year, we're going to maintain our discipline and focus on making sure.

Speaker Change: That were where we can continue to optimize that we're doing that.

Paul: We're not investing in incremental cost in the near term on things that.

Paul: Our benefit in the short term. So we are really being scrutiny and the things we're doing in trying to keep that curtailed and down and we expect that to continue.

Skye Landon: Great. Thanks, Andrew. Thanks, Paul.

Paul: Alright Thats helpful.

Paul: Thanks Scott.

Jordan Levy: Thank you. Our final question today is coming from Jordan Levy from True Securities. Your line is now live.

Unknown Executive: Thank you. Our final question today is coming from Jordan Levy from true Securities. Your line is now live.

Henry: Hi y'all, it's Henry on for Jordan here. Appreciate you squeezing me in at the end.

Unknown Executive: Hi, Al It's Henry on for Jordan I. Appreciate you squeezing me in at the end.

Andy Marsh: Hi Henry. Hi Andy, you touched briefly on this earlier. I just want to get anything more you have on how production has gone at Jordan Tennessee over the last quarter. So any kind of big operational items or learnings that have come up that you plan to take away for future plans? Yeah.

Andrew: Hi, Andrew.

Unknown Executive: You touched briefly on this Andy before I just wanted to get anything more you have on how production has gone at Georgia, Tennessee over the last quarter, so any kind of big operational items of learnings that have come up.

Paul: We plan to take away for future future plants.

Unknown Executive: Yeah, I think... It's really controlling. You have to remember, this is the first plan in the world that this is happening. A hurricane came through or the really rain came through that facility, and we had to shut everything down for a day, and that's just kind of, and that's going to happen.

Andy Marsh: Yeah, I think... Jordan, one of the big learnings, and this is really important, and it has dramatically improved the efficiency of the plant. It's really controlling.

Paul: I think.

Jordan: Jordan one of the vehicle learnings and this is really important.

Unknown Executive: It has dramatically improved the efficiency that plan.

Unknown Executive: It's really Mac is really controlling the you have to remember this is the first plant in the world that this is happening.

Andy Marsh: You have to remember, this is the first plan in the world that has had control the interaction between the output of the electrolyzers with the liquid. And we have seen from the month of May, from the month of May to today, just a dramatic improvement in our control loop, and it's been great work by one of our engineers about making sure the output of the electrolyzers is always in sync with the production output of the liquefiers. And if you put too much hydrogen in, you're going to be wasting hydrogen.

Speaker Change: Is controlling the interaction between the output of the Electrolyze, there's with the liquefied.

Unknown Executive: We have seen from the month of May from the month of May to today, just the dramatic improvement that.

Speaker Change: In our control loop and it's been great work by one of our engineers about making sure the output of the Electrolyzed as always are in sync with the.

Speaker Change: Production output of the liquid fires and if you put too much hydrogen in youre going to be wasting hydrogen and that has been a learning that I think is.

Andy Marsh: And that has been a learning that I think is a uniquely positioned plug as we fine-tune that control. We've had some, you know, there's been, you know, the plant itself, I think in May or June? I think June was up 93% of the time.

Speaker Change: Uniquely positioned plug as we fine tune that controllers.

Andy Marsh: So we feel really good about that plant, and I think a lot of it has to do, as I mentioned, the hurricane came through or the really rain came through that facility. We had to shut everything down for a day, and that's just kind of, uh, and that's going to happen. But, you know, I think we're probably. You know, the fellow who built the plant, who came from one of the leading oil companies, told me it takes six months to burn coal in a plant right. And I think we're about at the stage where that plant is burnt in right.

Speaker Change: We've had some.

Unknown Executive: The plant itself I think in.

Unknown Executive: In May or June I think June was up 93% at the time, so we feel really good about that plan.

Unknown Executive: And I think we take a lot of it has to do as I mentioned.

Unknown Executive: As I mentioned.

Unknown Executive:

Unknown Executive: Hurricane came through where they're really rain came through that facility. We have shut everything down for a day and thats, just kind of and that's going to happen.

Unknown Executive: But.

Unknown Executive: I think we're probably.

Speaker Change: The fellow who built the plant.

Speaker Change: He came from one of the leading oil companies told me it takes six months to burn in a plant right.

Unknown Executive: And I think we're about at the stage where that plant's firmed in right.

Henry: Thanks for that. I'm going to set a quick one on the balance sheet follow-up. Can you just remind us again on the cadence for that restricted cash flow release? That kind of $200 million annual. Is there any seasonality that we should be aware of for that?

Unknown Executive: Thanks for that. And then just a quick one on the balance sheet follow-up. Can you just remind us again on the cadence for that restricted cash flow release? That kind of $200 million annual. Is there any seasonality that we should be aware of for that?

Speaker Change: Okay. Thanks for that and then just a quick one on the balance sheet follow up.

Speaker Change: You just remind us again on the cadence for that restricted cash flow release that kind of $200 million annual is there any seasonality that we should be aware of for that.

Unknown Executive: There are some fluctuations, but I think using $50 million as a proxy is a pretty good estimate.

Speaker Change: There is some fluctuations, but I think using $50 million as a proxy is a pretty good estimate.

Unknown Executive: Yes.

Henry: per quarter. Thank you all.

Speaker Change: Per quarter well, thank you all.

Unknown Executive: Okay.

Andy Marsh: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Andy for any further closing comments.

Unknown Executive: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Andy for any further closing comments.

Unknown Executive: Thank you we've reached end of our question and answer session I would like to turn the floor back over to Andy for any further closing comments.

Andy Marsh: Thank you, Kevin. I like to remind people of the short term and the long term, and the short term is really driving this company to be operational, efficient, and profitable, but the long term is critical, and you look at the activities going on with the basic design engineering work. You look at the activities and the deployments of electrolyzers. Nobody's doing what we're doing with PEM electrolyzers anywhere in the world. You look, and I haven't spoken much about our stationary products.

Andy: Thank you Kevin.

Unknown Executive: Yeah.

Unknown Executive: I like to remind people of the short term and the long term, but the long term is critical. Nobody's doing what we're doing with PEM electrolyzers anywhere in the world. One of the leading data center operators came to me and said, "We have visited 14 people who have talked about building stationary products. They tell us we're far ahead in the race."

Andy: I'd like to remind people the short term and the long term.

Unknown Executive: In the short term is really driving this company to be operational efficient and profitable.

Unknown Executive: But the long term is critical.

Unknown Executive: And you look at the activities going on with the basic design engineering work.

Unknown Executive: Look at the activities into deployments, we electrolyze theirs.

Unknown Executive: Nobody is doing what we're doing with Tim Electrolyze use anywhere in the world.

Unknown Executive: You look and I haven't spoken much about our stationary products.

Andy Marsh: One of the leading data center operators came to me and said we have visited 14 people who have talked about building stationary products. They tell us we're far ahead in the race, and Plug's goal is not only to be operationally efficient and profitable but to continue to grow at a rapid pace, and I believe in our electrolyzers, and I believe in our ability to build hydrogen plants. And on top of that, with our fuel cells, we continue to strive to make improvements and develop products which are unique and will be valuable for the development of the hydrogen economy. I look forward to talking to many of you at investor conferences as well as on the next earnings call. So, thank you, everyone.

Unknown Executive: One of the leading data center operators came to me and said we have visited 14 people who have talked about building stationary products.

Speaker Change: They tell us.

Speaker Change: <unk> added in the race.

Speaker Change: And plug skoal is not only to be operational efficient and profitable, but continue to grow at a rapid pace.

Unknown Executive: I believe between our Electrolyzed.

Unknown Executive: I believe between our ability to build hydrogen plants.

Unknown Executive: Top of that.

Unknown Executive: Our fuel cells.

Unknown Executive: Continue to strive to make improvements and develop products, which are unique and will be valuable for the development of the hydrogen economy.

Unknown Executive: I look forward to talking to many of you at investor conferences, and as well as at the next earning call. So thank you everyone.

Operator: 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.

Unknown Executive: Yes.

Speaker Change: Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.

James West: And of course, that's, I think a lot of that's driven by the startup of your, you know, two and soon three facilities here, producing green hydrogen for your own internal, your customer supply. And what should we think about those margins for hydrogen?

Q2 2024 Plug Power Inc Earnings Call

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