Q1 2026 Plug Power Inc Earnings Call

May 11, 2026

Operator: Greetings, and welcome to the Plug Power Q1 2026 Earnings Conference Call and Webcast. It's now my pleasure to turn the call over to Vice President of Marketing Communications, Teal Hoyos. Please go ahead, Teal.

Speaker #2: A question and answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star one on your telephone keypad.

Speaker #2: We ask that you please limit yourselves to one question and one follow-up, and return to the queue. As a reminder, this conference is being recorded.

Speaker #2: If anyone should require operator assistance, please press star zero. It's now my pleasure to turn the call over to Vice President of Marketing and Communications, Teal Hoyos. Please go ahead, Teal.

Speaker #2: Thank you. Welcome to the 2026 first quarter earnings call. This call will include forward-looking statements. These forward-looking statements contain projections of our future results of operations, of our financial position, or other forward-looking information.

Teal Vivacqua Hoyos: Thank you. Welcome to the 2026 Q1 earnings call. This call will include forward-looking statements. These forward-looking statements contain projections of our future results of operations or of our financial position or other forward-looking information. 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. 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, as such statements should not be read or understood as a guarantee of future performance or results.

Speaker #2: We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking Section 27A of the Securities Act. It is important to communicate our future expectations to investors.

Speaker #2: However, investors are cautioned not to unduly rely on forward-looking statements as such statements should not be reflect should not be read or understood as a guarantee of future performance or results.

Speaker #2: Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors including but not limited to risks and uncertainties discussed under item 1A risk factors in our annual report on Form 10-K for the fiscal year ending December 31, 2025.

Teal Vivacqua Hoyos: Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors, including but not limited to risks and uncertainties discussed under Item 1A, Risk Factors in our annual report on Form 10-K for the fiscal year ending 31 December 2025, or quarterly report on Form 10-Q for the Q1 ending 31 March 2026, as well as other reports we file from time to time with the SEC. These forward-looking statements speak only as of the day in which the statements are made. We do not undertake or intend to update any forward-looking statements after this call as a result of new information. At this point, I would like to turn the call over to Plug Power's CEO, Jose Luis Crespo.

Teal Vivacqua Hoyos: Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors, including but not limited to risks and uncertainties discussed under Item 1A, Risk Factors in our annual report on Form 10-K for the fiscal year ending 31st December 2025, or quarterly report on Form 10-Q for the Q1 ending 31st March 2026, as well as other reports we file from time to time with the SEC. These forward-looking statements speak only as of the day in which the statements are made. We do not undertake or intend to update any forward-looking statements after this call as a result of new information. At this point, I would like to turn the call over to Plug Power's CEO, Jose Luis Crespo.

Speaker #2: Or quarterly report on Form 10-Q for the quarter ending March 31, 2026. As well as other reports we file from time to time with the SEC.

Speaker #2: These forward-looking statements speak only as of the day in which the statements are made. And we do not undertake or intend to update any forward-looking statements after this call as a result of new information.

Speaker #2: At this point I would like to turn the call over to PLUG's CEO Jose Luis Crespo. Thank you Teal. Good afternoon everyone. I'm thank you for joining us on our first earnings call of 2026.

José Luis Crespo: Thank you, Teal. Good afternoon, everyone, and thank you for joining us on our first earnings call of 2026. The Q1 results we announced today represent another important step forward in achieving the objectives we laid out for the year, delivering positive EBITDA in the Q4 and sustaining revenue growth directionally consistent with 2025. In Q1, revenue increased 22% year-over-year to $163.5 million, with growth across each of our 3 strategic focus areas: Material Handling, Electrolyzers, and Hydrogen Fuel. Gross margin also improved substantially year-over-year, increasing from -55% to -13%. This represents a 42 percentage point improvement in gross margin. The cost actions initiated under Project Quantum Leap are now substantially flowing through our P&L, and we expect gross margin to improve sequentially through 2026.

José Luis Crespo: Thank you, Teal. Good afternoon, everyone, and thank you for joining us on our first earnings call of 2026. The Q1 results we announced today represent another important step forward in achieving the objectives we laid out for the year, delivering positive EBITDA in the Q4 and sustaining revenue growth directionally consistent with 2025. In Q1, revenue increased 22% year-over-year to $163.5 million, with growth across each of our three strategic focus areas: Material Handling, Electrolyzers, and Hydrogen Fuel. Gross margin also improved substantially year-over-year, increasing from -55% to -13%. This represents a 42 percentage point improvement in gross margin. The cost actions initiated under Project Quantum Leap are now substantially flowing through our P&L, and we expect gross margin to improve sequentially through 2026.

Speaker #2: The first quarter results we announced today represent another important step forward in achieving the objectives we laid out for the year. Delivering positive EBITDAs in the fourth quarter and 1934.

Speaker #2: consistent with We believe 2025. In the first quarter revenue increased 22% year over year to $163.5 million. With growth across each of our three strategic focus areas: material handling, electrolyzers, and hydrogen fuel.

Speaker #2: Gross margin also improved substantially year over year, increasing from negative 55% to negative 13%. This represents a 42 percentage point improvement in gross margin.

Speaker #2: The cost actions initiated under project Quantum Leap are now substantially flowing through our P&L and we expect gross margin to improve sequentially through 2026.

Speaker #2: This is supported by a combination of volume, leverage, mix, and continued cost discipline. In material handling, we continue to see strong customer engagement driven by the combination of proven productivity gains, improved product reliability, and reduced dependence on the electrical grid.

José Luis Crespo: This is supported by a combination of volume leverage, mix, and continued cost discipline. In material handling, we continue to see a strong customer engagement driven by the combination of proven productivity gains, improved product reliability, and reduced dependence on electrical grid. In addition, the reinstatement of the Investment Tax Credit earlier this year has improved the economic attractiveness of hydrogen power solutions for many customers. As a result, we continue to project increasing demand from both Amazon and Walmart through new deployments and fleet refresh programs, with activity levels increasing across both existing, including our automotive customers and new customer accounts. Our electrolyzer business continues to demonstrate a strong commercial and operational momentum. Electrolyzer revenue increased significantly, growing from $9.2 million in Q1 2025 to $40.8 million in Q1 2026.

Speaker #2: In addition the reinstatement of the investment tax credit earlier this year has improved the economic attractiveness of hydrogen power solutions for many customers. As a result we continue to project increasing demand from both Amazon and Walmart through new deployments and fleet refresh programs.

Speaker #2: With activity levels increasing across both existing including our automotive customers and new customer accounts. Our electrolyzer business continues to demonstrate a strong commercial and operational momentum.

Speaker #2: Electrolyzer revenue increased significantly, growing from $9.2 million in the first quarter of 2025 to $40.8 million in the first quarter of 2026. This reflects the timing of specific project milestones across our portfolio, with multiple large-scale projects now advancing through commissioning and delivery phases.

José Luis Crespo: This reflects the timing of a specific project milestones across our portfolio with multiple large-scale projects now advancing through commissioning and delivery phases. We're currently in the commissioning phase of the 25 MW project with Iberdrola and BP in Spain, and we are finalizing installation activities for the 100 MW project with Galp in Portugal, two of the largest PEM electrolyzer projects currently under deployment in Europe. In addition, we recently announced the award of the front-end engineering design work for the 275 MW project with Hy2gen in Canada, further strengthening our global project pipeline. We're also seeing continued advancement from Allied Green Ammonia on the 2 GW project in Uzbekistan, where several important milestones were achieved during the quarter. In April, Allied Green secured a binding project implementation agreement with the Uzbekistan government, establishing the tax and customs incentive framework supporting the project.

Speaker #2: We're currently in the commissioning phase of the 25-megawatt project with Iberdrola and BP in Spain, and we are finalizing installation activities for the 100-megawatt project with GALP in Portugal.

Speaker #2: Two of the largest PEM electrolyzer projects currently under deployment in Europe. In addition, we recently announced the award of the Front End Engineering Design work for the 275-megawatt project with Hydrogen in Canada.

Speaker #2: Further strengthening our global project pipeline. We're also seeing continued advancement from Ally Green Ammonia on the two-gigawatt project in Uzbekistan. Where several important milestones were achieved during the quarter.

Speaker #2: In April, Ally Green secured a binding project implementation agreement with the Uzbekistan government, establishing the tax and customs incentive framework supporting the project. Just this past Friday, Ally Green signed a memorandum of understanding with Uzbekistan Airports to collaborate on SAF and ESAF deployment initiatives.

José Luis Crespo: Just this past Friday, Allied Green signed a memorandum of understanding with Uzbekistan Airports to collaborate on SAF and eSAF deployment initiatives. We are seeing increased activity across our approximately 8 billion electrolyzer opportunity funnel, especially within the aviation sector, where fuel availability due to the ongoing energy supply constraints. Geopolitical instability affecting global fuel markets is renewing the interest in energy security and synthetic fuel production. Our fuel business delivered approximately 20% top-line growth year over year, driven primarily by new material handling site deployments, and with margin improving by 54 percentage points year over year. We continue to improve plant performance, logistics efficiency across the network, and plant utilization. We still have a lot of work to do, but we are advancing in the right direction.

Speaker #2: We're seeing increased activity across our approximately $8 billion electrolyzer opportunity funnel, especially within the aviation sector, where fuel availability due to the ongoing energy supply constraints and geopolitical instability affecting global fuel markets is renewing the interest in energy security and synthetic fuel production.

Speaker #2: Our fuel business delivered approximately 20% top-line growth year over year, driven primarily by new material handling site deployments, and with margin improving by 54 percentage points year over year.

Speaker #2: We continue to improve plant performance logistics efficiency across the network and plant utilization. We still have a lot of work to do but we are advancing in the right direction.

Speaker #2: From a liquidity standpoint, we ended the quarter with $223 million in unrestricted cash and $579 million in restricted cash, for a total cash balance of $802 million.

José Luis Crespo: From a liquidity standpoint, we ended the quarter with $223 million in unrestricted cash and $579 million in restricted cash, for a total cash of $802 million. We continue to advance multiple asset monetization initiatives, including the Stream Data Centers, that are expected to generate more than $275 million in additional proceeds, with the first transaction for approximately $142 million expected to close in June. Our Q1 results represent another important step towards achieving our stated objectives of +EBITDA in Q4 2026 and advancing our broader path towards long-term profitability. The foundation is in place. Our focus is now execution, margin expansion, and converting scale into sustained profitability. With that, I'll now turn the call over to Paul, our CFO, for a more detailed review of the quarter financials.

Speaker #2: We continue to advance multiple asset monetization initiatives, including a stream of data centers that are expected to generate more than $275 million in additional proceeds, with the first transaction for approximately $142 million expected to close in June.

Speaker #2: Our first quarter results represent another important step towards achieving our stated objectives of positive EBITDA in the fourth quarter of 2026 and advancing our broader path towards long-term profitability.

Speaker #2: The foundation is in place. Our focus is now execution margin expansion and converting scale into sustained profitability. With that I'll now turn the call over to Paul our CFO for a more detailed review of the quarter financials.

José Luis Crespo: Paul?

Speaker #2: Paul. Thanks Jose Luis. Let me start by emphasizing a few key of the takeaways for this call. First demand across our core platforms remains strong driving 22% year over year revenue growth.

Paul Middleton: Thanks, Jose Luis. Let me start by emphasizing a few key of the takeaways for this call. First, demand across our core platforms remains strong, driving 22% year-over-year revenue growth. We continue to drive margin improvement, and the year-over-year progress reinforces our belief that we've hit an inflection point. Lastly, we believe we have more than adequate capital to fund 2026 based on our existing cash position through ongoing operational improvements, the varied asset monetization efforts, significant reductions in CapEx, and the quarterly restricted cash releases. Now let me dig a bit deeper into the sales growth. Year-over-year sales growth stemmed from traction across all core platforms and reflects strong customer interest, which positions for continued growth throughout 2026.

Speaker #2: We continue to drive margin improvement in the year over year progress reinforces our belief that we've hit an inflection point. And lastly we believe we have more than adequate capital to fund the 2026 based on our existing cash position through ongoing operational improvements the varied asset monetization efforts significant reductions in CapEx and the quarterly restricted cash releases.

Speaker #2: Now, let me dig a bit deeper into the sales growth. Year-over-year sales growth stems from traction across all core platforms and reflects strong customer interest, which positions us for continued growth throughout '26.

Speaker #2: Q1 results also stem in part from the timing of program deliveries and our conscious efforts to pool programs forward where possible. We will continue to focus on accelerating programs but as of today we think the first half will be in the 40% range for the full year in context of our overall guidance of the full year sales growth of 13 to 15%.

Paul Middleton: Q1 results also stem in part from the timing of program deliveries and our conscious efforts to pull programs forward where possible. We will continue to focus on accelerating programs, but as of today, we think the H1 will be in the 40% range for the full year in context of our overall guidance of the full year sales growth of 13% to 15%. More specifically, excluding charges for customer warrants, year-over-year material handling platform grew by 15%. Our electrolyzer platform grew by 343%, and our hydrogen fuel sales grew by 10%. There will be ebbs and flows as we progress through 2026, but these results are indicative that we continue to expand our core markets, and we expect all the core platforms to continue growing.

Speaker #2: More specifically, excluding charges for customer warrants, year over year, our material handling platform grew by 15%. Our electrolyzer platform grew by 343%. And our hydrogen fuel sales grew by 10%.

Speaker #2: There will be ebbs and flows as we progress through '26, but these results are indicative that we continue to expand our core markets, and we expect all the core platforms to continue growing.

Speaker #2: Regarding margins the improvement we delivered in Q1 stems from a culmination of ongoing efforts to optimize and scale the investments we've made. We've made a conscious effort to focus on margin and cash flow improvement and that includes the actions undertaken based on our product cost down roadmaps and conscious efforts to increase leverage on our OPEX cost.

Paul Middleton: Regarding margins, the improvement we delivered in Q1 stems from a culmination of ongoing efforts to optimize and scale the investments we've made. We've made a conscious effort to focus on margin and cash flow improvement, and that includes the actions undertaken based on our product cost down roadmaps and conscious efforts to increase leverage on our OpEx cost. What you're seeing in Q1 is how those efforts are clearly showing up in the underlying economics of the business. On a year-over-year basis, gross margin improved by 71%. The drivers are the same ones we've been talking about. First, sales growth drivers operating leverage across the platform. Second, service continues to improve with quarterly per unit GenDrive service costs down more than 30% year over year, driven by improved stack reliability and the pricing actions we continue to undertake.

Speaker #2: And what you're seeing in Q1 is how those efforts are clearly showing up in the underlying economics of the business. On a year-over-year basis, gross margin improved by 71%.

Speaker #2: The drivers are the same ones we've been talking about. First, sales growth drives operating leverage across the platform. Second, service continues to improve, with quarterly per-unit GenDrive service cost down more than 30% year over year.

Speaker #2: Driven by improved stack reliability and the pricing actions we continue to undertake. Third, our fuel margin rate improved by approximately 54 percentage points. We're getting better leverage out of our hydrogen platform, driving enhanced network efficiency, and the third-party gas sourcing agreement we signed last year continues to deliver cost downs.

Paul Middleton: Third, our fuel margin rate improved by approximately 54 percentage points. We're getting better leverage out of our hydrogen platform, driving enhanced network efficiency, and the third-party gas sourcing agreement we signed last year continues to deliver cost downs. Still a lot of work to do, but these structural improvements are driving the right direction. Equally important to these overall results is the fact that we see continued progression as we drive towards our 2026 financial targets. We expect a full year of benefits in the actions undertaken last year, and we anticipate continued improvement, incremental leverage from growth in sales given our installed capacity, continued improvements in service cost profile, additional improvements in fuel efficiency and network leverage, and continued scrutiny over OpEx.

Speaker #2: Still a lot of work to do but these structural improvements are driving the right direction. Equally important to these overall results is the fact that we see continued progression as we drive towards our '26 financial targets.

Speaker #2: We expect a full year of benefits from the actions undertaken last year, and we anticipate continued improvement. We also expect incremental leverage from growth in sales, given our installed capacity.

Speaker #2: Continued improvements in service cost profile, additional improvements in fuel efficiency and network leverage, and continued scrutiny over OPEX. Given these continued efforts, we expect the margin breakeven threshold to continue to lower, given traction and cost downs and our increasing ability to get more out of the platforms we have.

Paul Middleton: Given these continued efforts, we expect the margin breakeven threshold to continue to lower given traction in cost downs and our increasing ability to get more out of the platforms we have. Turning to cash, as a reminder, Q1 has historically been our heaviest cash usage quarter, given the seasonality of sales and timing of working capital flows. Q1 of this year is consistent with that pattern. There are two things I'd flag specifically. First, we made strategic buyouts of certain operating lease liabilities associated with our legacy PPA business during the quarter, which added to outflows, but is a net positive for us going forward. This is based on a conscious effort to accelerate the wind down of the PPA business model, and these efforts will be accretive to margins and cash flow going forward, and serves as a means to accelerate the release of restricted cash reserves.

Speaker #2: Turning to cash as a reminder Q1 has historically been our heaviest cash usage quarter given the seasonality of sales and timing of working capital flows.

Speaker #2: Q1 of this year is consistent with that pattern. There are two things I'd flag specifically. First, we made strategic buyouts of certain assets with our legacy PPA business during the quarter.

Speaker #2: Which added to outflows but is a net positive for us going forward. This is based on a conscious effort to accelerate the wind down of the PPA business model and these efforts will be accretive to margins and cash flow going forward and serves as a means to accelerate the release of restricted cash reserves.

Speaker #2: We expect more of these transactions as we progress through the year. And second, the underlying burn in Q1 tracked moderately better than our internal plan.

Paul Middleton: We expect more of these transactions as we progress through the year. Second, the underlying burn in Q1 tracked moderately better than our internal plan. We ended with over 10% more cash than we initially anticipated. This stemmed from many factors, including ongoing focus on margin enhancement and working capital leverage. We expect sequential improvement in cash usage across the balance of the year as we move towards our target of positive EBITDA run rates into Q4 2026. CapEx was very nominal in the quarter, only about $7 million, which is consistent with what we said on the last call. Our hydrogen production network is built. We're now in a leverage the asset base phase, and the CapEx run rates reflects that.

Speaker #2: We ended with over 10% more cash than we initially anticipated. This stemmed from many factors, including ongoing focus on margin enhancement and working capital leverage.

Speaker #2: We expect sequential improvement in cash usage across the balance of the year as we move towards our target of positive EBITDAs run rates in the Q4 of '26.

Speaker #2: CapEx was very nominal in the quarter, only about $7 million, which is consistent with what we said on the last call. Our hydrogen production network is built.

Speaker #2: We're now in a leverage-the-asset-base phase, and the CapEx run rates reflect that. It postures us really well because, as we talk about getting to an EBITDA-positive run rate in Q4 of '26, the combination of margin progression and a very low CapEx run rate mathematically puts us in a position where the cash burn for the year is very manageable given our capital resources and liquidity management plans.

Paul Middleton: It postures us really well because as we talk about getting to an EBITDA positive run rate in Q4 2026, the combination of margin progression and a very low CapEx run rate mathematically puts us in a position where the cash burn for the year is very manageable given our capital resources and liquidity management plans. On liquidity, we ended the quarter with over $802 million in total cash. That's $223 million in unrestricted cash and cash equivalents, and approximately $579 million in restricted cash that is expected to release at a rate of approximately $50 million per quarter over the next several years. On top of that, we have several specific levers tracking through 2026.

Speaker #2: On liquidity, we ended the quarter with over $802 million in total cash. That's $223 million in unrestricted cash and cash equivalents, and approximately $579 million in restricted cash that is expected to release at a rate of approximately $50 million per quarter over the next several years.

Speaker #2: On top of that, we have several specific levers tracking through '26. The first is the asset monetization program we announced in the fourth quarter of last year, which includes the expected Stream data centers transactions.

Paul Middleton: The first is the asset monetization program we announced in the Q4 of last year, which includes the expected Stream Data Centers transactions. We expect approximately $275 million in aggregate proceeds from these hydrogen project monetization efforts. In addition, we're underway with the sale of the Section 48 investment tax credit associated with the St. Gabriel joint venture, the platform we have there in Louisiana. That's $39.2 million in total, currently targeted to close by the end of May. We have an effectively unleveraged balance sheet given the debt restructuring we did in Q4 of last year, which also lowered our cost of capital and extended our maturity profile. We have optionality.

Speaker #2: We expect approximately 275 million in aggregate proceeds from these hydrogen project monetization efforts. In addition we're underway with the sale of the Section 48 investment tax credit associated with the St.

Speaker #2: Gabriel joint venture the platform we have there in Louisiana. That's 39.2 million in total. Currently targeted to close by the end of May. We have an effectively unleveraged balance sheet given the debt restructuring we did in Q4 of last year.

Speaker #2: Which also lowered our cost of capital and extended our maturity profile. So we have optionality. Our working plan is that the existing capital plus the expected asset monetization proceeds, coupled with the restricted cash release schedule, we believe collectively will provide adequate capital to fund the operating plan for '26.

Paul Middleton: Our working plan is that the existing capital plus the expected asset monetization proceeds, coupled with the restricted cash release schedule, we believe collectively will provide adequate capital to fund the operating plan for 2026. Our adjusted EPS for Q1 2026 was -$0.08 compared to adjusted EPS in Q1 2025 of -$0.17. Excluded from our adjusted EPS in Q1 2026 is approximately $140 million in primarily non-cash charges related to adjustments for convertible debt and warrant valuations associated with changes in the stock market and the company's stock price escalation. I think the progression in the adjusted EPS is illustrative of how operationally the company is making real progress. To wrap up, Q1 was another step on the same trajectory we've been on.

Speaker #2: Our adjusted EPS for Q1 of '26 was negative $0.08 compared to adjusted EPS in Q1 of '25 of negative $0.17. Excluded from our adjusted EPS in Q1 of '26 is approximately $140 million in primarily non-cash charges related to adjustments for convertible debt and warrant valuations associated with changes in the stock market and the company's stock price escalation.

Speaker #2: I think the progression in the adjusted EPS is illustrative of how operationally the company is making real progress. To wrap up Q1 was another step on the same trajectory we've been on.

Speaker #2: We're going the top line we're delivering structural margin improvement. We've been disciplined on operational expenses and CapEx. And we have multiple identified levers to fund the operating plan for the year.

Paul Middleton: We're growing the top line, we're delivering structural margin improvement, we're being disciplined on operational expenses and CapEx, and we have multiple identified levers to fund the operating plans for the year. We continue to be laser-focused on driving margin and cash flow improvement and achieving our Q4 goal of positive EBITDA run rate, which sits within the roadmap Jose Luis described, including positive operating income in 2027 and full profitability in 2028. With that, I'll turn the call back over to Jose Luis.

Speaker #2: We continue to be laser-focused on driving margin and cash flow improvement and achieving our fourth quarter goal of a positive EBITDA run rate, which sits within the roadmap Louise described.

Speaker #2: Including positive operating income in '27 and full profitability in '28. With that, I'll turn the call back over to Jose Crespo.

Speaker #1: Thank you both. So now we can go on the question section of the go?

José Luis Crespo: Thank you, both. Now we can go on the question section of the call.

Speaker #3: Thank you. We're now conducting a question and answer session. If you'd like to be placed in the question queue please press star one on your telephone keypad.

Operator: Thank you. We'll now be conducting a question and answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove yourself from the queue. As a reminder, please ask 1 question and 1 follow-up, then return to the queue. Our first question today is coming from Colin Rusch from Oppenheimer & Co. Inc. Your line is now live.

Speaker #3: A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove yourself from the queue and as a reminder please ask one question and one follow-up then return to the queue.

Speaker #3: Our first question today is coming from Colin Rush from Oppenheimer. Your line is now live.

Speaker #4: Thanks so much guys. You know Jose Louise you're close to all these European customers. You know it's good to see some of the progress that you're seeing on the electrolyzer side.

Colin Rusch: Thanks so much, guys. You know, Jose Luis, you know, you're close to all these European customers. You know, it's good to see some of the progress that you're seeing on the electrolyzer side. I'm just curious about, you know, urgency and what you can comment on that pipeline starting to move towards, you know, final investment decisions besides the projects that you've talked about and how we could think about that, you know, starting to materialize here later this year or next.

Speaker #4: I'm just curious about urgency and what you can comment on that pipeline starting to move towards file investment decisions besides the projects that you've talked about and how we could think about that starting to materialize.

Speaker #4: Here, later this year or next.

José Luis Crespo: We continue working on, as I mentioned, on all the projects that we have in the funnel. These projects are quite complex, as you know, Colin, they require a lot of different parts of the projects to align to get to FID. I'm just gonna give you an example. I have a project in Australia, it's a 50-MW project, 50. The project is completely approved by the financial committee of the company that I'm working with. There is one permit that they need from a port. It's an easement permit that is actually holding the FID of the project for 1 month or so.

Speaker #5: We continue working on as I mentioned on all the projects that we have in the funnel. These projects are quite complex as you know Colin.

Speaker #5: And they require a lot of different parts of the projects to align to get to FID. I'm just going to give you an example I have a project in Australia it's a 15 megawatt project.

Speaker #5: Five zero. And the project is completely approved by the financial committee of the company that I'm working with. And there is one permit that they need from a board.

Speaker #5: It's an Eastman permit that is actually holding the FID of the project for a month or so. The project is going to happen, but there is some bureaucracy around it.

José Luis Crespo: The project is gonna happen, but there's some bureaucracy around it. My point is that there is certain level of complexity getting all these, all the things aligned on the FID of the projects, and it takes time to get them to the point of final investment decision. We have a lot of projects now in the last quarter in the ESAS industry that have started accelerating. As you can imagine, the situation in Iran has created an issue with the availability of jet fuel in many areas of the world.

Speaker #5: So my point is that there is certain level of complexity getting all the things aligned on the FID of the projects. And it takes time to get them to the point of final investment decision.

Speaker #5: We have a lot of projects now in the last quarter in the ESAF industry that has started accelerating. As you can imagine the situation in Iran has created a issue with the availability of jet fuel in many areas of the world.

Speaker #5: But in Europe companies like Ryanair announced a couple of weeks ago that they will have limited amount of jet fuel available to run their operations and they could run out of some of that fuel by the end of May beginning of June.

José Luis Crespo: In Europe, companies like Ryanair announced a couple of weeks ago that they will have limited amount of jet fuel available to run their operations, and they could run out of some of that fuel by the end of May, beginning of June. This is leading to many companies actually pushing towards trying to accelerate these type of projects. Energy independence is becoming also, and security is becoming also, again, an important item in Europe. We see that these projects are beginning to accelerate a little bit more than what we were seeing a couple of quarters ago.

Speaker #5: So this is leading to many companies actually pushing towards trying to accelerate this type of projects. Energy independence is becoming also and security is becoming also again an important item in Europe.

Speaker #5: And we see that these projects are beginning to accelerate a little bit more than what we were seeing a couple of quarters ago.

Speaker #4: That's super helpful. Thanks guys. Paul just on the cash two questions. Just in terms of OpEx run rate on a cash basis should we think about this first quarter run rate being stable here going forward and then secondly the inventory levels continue to remain relatively high.

Colin Rusch: That's super helpful. Thanks, guys. Paul, just on the cash, you know, two questions. Just in terms of OpEx run rate on a cash basis, should we think about this first quarter run rate being stable here going forward? Secondly, you know, the inventory levels continue to remain relatively high. I'm just curious about how quickly you might be able to start drawing those down in a real meaningful way.

Speaker #4: I'm just curious about how quickly you might be able to start drawing those down in a real, meaningful way.

Speaker #1: Thanks Colin.

Paul Middleton: Thanks, Colin. On the OpEx, there was a few charges in there that won't repeat. We're targeting roughly $75 million per Q is where we expect that to land in. We're working hard to provide a lot of scrutiny over that so we can keep it contained and not grow that investment base. On the inventory, there was a slight reduction over the Q. The reality is, where you're gonna see the big movement this year is over the balance. Each Q, we expect to grow sequentially, and even more so in the H2.

Speaker #6: Yeah. On the OpEx, there were a few charges in there that won't repeat. So we're targeting roughly $75 million per quarter is where we expect that to land.

Speaker #6: And we're working hard to provide a lot of scrutiny over that so we can keep it contained and not grow that investment base. On the inventory, there was a slight reduction over the quarter, but the reality is where you're going to see the big movement this year is over the balance.

Speaker #6: Each quarter we expect to grow sequentially. And even more so in the second half. And so we're targeting about 100 million dollar reduction minimum this year in overall inventory levels.

Paul Middleton: We're targeting about a $100 million reduction minimum this year in overall inventory levels, and we're working hard to beat that target. I think you'll see the majority of that play out in H2.

Speaker #6: And we're working hard to beat that target. So but I think you'll see the majority of that play out in the second half.

Speaker #3: Perfect. Thanks so much guys.

Colin Rusch: Perfect. Thanks so much, guys.

Speaker #1: Thank you. Colin.

José Luis Crespo: Thank you, Colin.

Speaker #3: Thank you. Next question is coming from Jason Tilton from Canaccord Genuity. Your line is now live.

Operator: Thank you. Next question is coming from Jason Tilchen from Canaccord Genuity. Your line is now live.

Speaker #7: Good afternoon, everyone. Thanks for taking my question. I think last quarter, and even in your prepared remarks, you've talked about the value proposition for the materials handling solutions only getting stronger with rising electricity prices.

Jason Tilchen: Good afternoon, everyone. Thanks for taking my questions. I think last quarter, and even in prepared remarks, you've talked about the value proposition for the materials handling solutions only getting stronger with rising electricity prices. Just curious, could you talk a little bit more specifically to some of the conversations you've had with the prospective customers? Not necessarily some of the core pedestals, but some of the ones that are either smaller current customers or prospective customers, and how those conversations have evolved over the past few months? Thanks.

Speaker #7: Just curious, could you talk a little bit more specifically to some of the conversations you've had with the prospective customers—not necessarily some of the core pedestals, but some of the ones that are either smaller current customers or prospective customers—and how those conversations have evolved over the past few months?

Speaker #7: Thanks.

José Luis Crespo: Hi, Jason. Thank you for the question. Mainly is, the conversations are always around productivity or that's our traditional value that we bring to the table. The addition of ITC or the renewal of ITC, it definitely helps in the business case. In the latest type of conversations that we're having with customers, there's an addition, which is the reduction of electricity demand on the site. Usually, in a site with 200 forklifts, you can reduce the demand on the site by 2 MW or so. That is really helpful, given the constraints of utility power that we're seeing, you know, in the country due to the demand from other industries like data centers. That is a huge value for customers.

Speaker #5: Hi Jason. Thank you for the question. So mainly is the conversations are always around productivity or that's our traditional value that we bring to the table.

Speaker #5: The addition of IDC, or the renewal of IDC, definitely helps in the business case. But in the latest type of conversations that we're having with customers, there's an addition, which is the reduction of electricity demand on the site.

Speaker #5: Usually, in a site with 200 forklifts, you can reduce the demand on the site by two megawatts or so. And that is really helpful, given the constraints of utility power that we're seeing in the country.

Speaker #5: Due to the demand from other industries like data centers. So that is a huge value for customers. Added to our traditional value on productivity gains it creates an additional tailwind for the business case.

José Luis Crespo: Added to our traditional value on productivity gains, it creates an additional tailwind for the business case. That is the main topics that we usually discuss with new customers and even with existing customers.

Speaker #5: Those are the main topics that we usually discuss with new customers, and even with existing customers.

Speaker #7: Great. That's really helpful. And then just one follow up. In terms of the gross margin improvement I believe you called out specifically the gen drive service cost reduction.

Jason Tilchen: Great. That's really helpful. Just one follow-up. In terms of the gross margin improvement, I believe you called out specifically the GenDrive service cost reduction. Can you maybe talk to some of the specific operational improvements and blocking and tackling that you've done that are really driving those savings there?

Speaker #7: Can you maybe talk to some of the specific operational improvements and blocking and tackling that you've done that are really driving those savings there?

Speaker #4: You want to go with that?

José Luis Crespo: You wanna go with that?

Speaker #6: Yeah, so it's multifaceted because there's lots of elements to it. But if you just think about it fundamentally, we have equipment, we've got service.

Paul Middleton: Yeah. you know, it's multifaceted 'cause there's lots of elements to it. If you just think about it fundamentally, you know, we have equipment, we got service, we got fuel. On equipment, you know, as we continue to grow sales, you're gonna get volume leverage. There's a lot of things we're doing in our production processes, you know, especially when you ramp electrolyzers as we have as an example. We talked last year about the, a program we rolled out at the end of the year, which we called a new diffusion bonding process that's just a microcosm example of cost reduction opportunities. In that, by using a new process, we were able to cut the cost of that component almost in half, you know.

Speaker #6: We've got fuel. On the equipment, as we continue to grow sales, you're going to get volume leverage. There's a lot of things we're doing in our production processes, especially when you ramp electrolyzers, as we have as an example.

Speaker #6: We talked last year about a program we rolled out at the end of the year, which we called a new diffusion bonding process. That's just a microcosm example of cost reduction opportunities.

Speaker #6: And that by using a new process we were able to cut the cost of that component almost in half. And as you scale and you get more of those opportunities with volume you can do more of those kind of things.

Paul Middleton: As you scale and you get more of those opportunities with volume, you can do more of those kind of things. On the service front, you know, we've rolled out a lot of programs which is driving that per unit cost reduction. With less touches, we've actually been able to reduce the labor techs this quarter and increase the unit per labor tech rate. We've rolled out more programs and expect more that will continue to drive increased reliability on that. On the fuel, you've seen over the last, you know, year and a half, you know, a continued progression in the margin.

Speaker #6: On the service front, we've rolled out a lot of programs which is driving that per unit cost reduction. With less touches, we've actually been able to reduce the labor tax this quarter and increase the unit per labor tech rate.

Speaker #6: And we've rolled out more programs and expect more that will continue to drive increased reliability on that. And on the fuel you've seen over the last year and a half a continued progression in the margin every quarter continues to get better.

Paul Middleton: Every quarter it continues to get better. That's a combination of leveraging on our plants, taking advantage of the new supply agreement with the third-party provider, driving enhanced delivery, reducing delivery costs, and optimizing that network and driving network e-efficiency. We've, you know, still got a long way to go there, but it's, you know, going the right direction. We expect those trends to continue. Those are some of the themes that we've been able to take advantage of and certainly consistent with what we're focused on to keep driving in the course of this year.

Speaker #6: And that's a combination of leveraging on our plants taking advantage of the new supply agreement with the third party provider driving enhanced delivery reducing delivery costs and optimizing that network and driving network efficiency.

Speaker #6: So we've still got a long way to go there but it's going the right direction. And we expect those trends to continue. So those are some of the themes that we've been able to take advantage of and certainly consistent with what we're focused on to keep driving in the course of this year.

José Luis Crespo: Well, on services for GenDrives, for material handling, I'm just gonna add that the stack life of the product, we've been able to double it and in some type of models, even triple. That helps with the cost of parts for services, which is really important. Also because we're doing less changes in the field and less touches, as Paul was saying, we have also been able to reduce the labor in each one of the sites by 1 tech in some cases, or even 2 in some cases, which has had an incredible impact on the cost of labor for services.

Speaker #5: And on services for GenDrive for material handling, I'm just going to add that the stack life of the product—we've been able to double it and, in some types of models, even triple it.

Speaker #5: That helps with the cost of parts for services which is really important. But also because we're doing less changes in the field and less touches as Paul was saying we have also been able to reduce the labor in each one of the sites.

Speaker #5: By one tech in some cases or even two in some cases which has had an incredible impact on the cost of labor for services.

Speaker #7: Great. That's very helpful. Thanks very much.

Paul Middleton: Great. That's very helpful. Thank you very much.

Speaker #5: Thank you.

José Luis Crespo: Thank you.

Speaker #3: Thank you. Next question is coming from Eric Stein from Craig Allen Capital Group. Your line is now live.

Operator: Thank you. Next question is coming from Eric Stine from Craig-Hallum Capital Group. Your line is now live.

Speaker #8: Hi Jose Luis. Hi Paul.

Eric Stine: Hi, Jose Luis. Hi, Paul.

Speaker #1: Hi Eric.

José Luis Crespo: Hi, Eric.

Speaker #9: Hey Eric.

Paul Middleton: Hey, Eric.

Speaker #8: Hey, so maybe just on material handling, as we think about 2026 and 2027, just curious—thoughts on how we should view the makeup: new versus existing customers. And then also, in your prepared remarks, you talked about, with Walmart and Amazon, that you've got some new sites but also some refreshes.

Eric Stine: Hey, maybe just on material handling, as we think about 2026 and 2027, just curious, thoughts on how we should view the makeup, new versus existing customers. In your prepared remarks, you talked about, you know, with Walmart and Amazon that you've got some new sites but also some refreshes. Just curious kind of where you see things in terms of that refresh of sites that, you know, maybe you did 5, 10 years ago.

Speaker #8: And so just curious kind of where you see things in terms of that refresh of sites that maybe you did 5, 10 years ago.

Speaker #5: So thank you for the question, Eric. On material handling for refreshes, we're going to see in the next few years, specifically for Amazon, a refresh of the complete fleet.

José Luis Crespo: Thank you for the question, Eric. On material handling, for refreshes, we're gonna see in the next few years, specifically for Amazon, a refresh of the complete fleet. Our first site with Amazon was in 2016, and we are in 2026. They basically are using the GenDrives for about 10 years. Our first site, as I said, was in October 2016. We're gonna begin to see big refreshes at the end of this year because the following year we did about 12 sites. We're gonna see a refresh of 12 sites between the end of 2026 and 2027. You will see a cadence of around 10 to 12 sites for the next 5 or 6 years or so.

Speaker #5: Our first site with Amazon was in 2016, and we are in 2026. And basically, we have been using the GenDrives for about 10 years. So our first site, as I said, was in October of 2016.

Speaker #5: We're going to begin to see big refreshes at the end of this year because the following year we did about 12 sites. So we're going to see a refresh of 12 sites between the end of 2026 and 2027.

Speaker #5: And then you will see Acadance of around 10 to 12 sites for the next 5 or 6 years or so. So we're going to get refreshes of around 20,000 units during that time frame.

José Luis Crespo: We're gonna get refreshes of around 20,000 units during that timeframe. Walmart is similar. With Walmart, we have done refreshes in years 5 and 6, and we are right now discussing a substantial refresh of the install base in 2026 and 2027. That is gonna create a increase on demand for GenDrives. As Paul was saying before, equipment margins are usually healthy, so we will see the impact of that in the next few years. In terms of new and even growth with other existing customers, what we're seeing is, for example, on the automotive side, we are doing refreshes on new sites with BMW, a couple of new sites in Europe with BMW.

Speaker #5: Walmart is similar with Walmart we have done refreshes in years 5 and 6. And we are right now discussing a substantial refresh of the install base in 2026 and 2027.

Speaker #5: So that is going to create an increase in demand for GenDrives. And as Paul was saying before, equipment margins are usually healthy, so we will see the impact of that in the next few years.

Speaker #5: In terms of new and even growth with other existing customers, what we're seeing is, for example, on the automotive side we are doing refreshes and new sites with BMW—a couple of new sites in Europe with BMW.

Speaker #5: We are also seeing some growth with Stellantis and other European automakers. And we are signing either second sites or new sites with other customers like for example this quarter we signed a brand new pretty large site with Southwire with a value of 11 million dollars.

José Luis Crespo: We are also seeing some growth with Stellantis and other European automakers. We are signing either second sites or new sites with other customers. Like, for example, this quarter we signed a brand new pretty large site with Southwire, with a value of $11 million. We've seen activity everywhere. We still see, you know, obviously, our two main customers, Walmart and Amazon, and two of the largest companies in the world. We are gonna see, you know, a lot of impact on their, on their demand in the next couple of years, but that's just healthy. We have the diversification of all of our other products.

Speaker #5: So we're seeing activity everywhere. We still see, obviously, our two main customers, Walmart and Amazon, and two of the largest companies in the world.

Speaker #5: So we're going to see a lot of impact on their demand in the next couple of years. But that's just healthy. And then we have the diversification of all of our other products.

Speaker #5: So we see the material handling market moving forward and growing in the next in this year in the next in the following years.

José Luis Crespo: We see the material handling market moving forward and growing in this year and the following years.

Speaker #3: Okay. I appreciate it. I'll leave it there. Thanks.

Eric Stine: Okay. I appreciate it. I'll leave it there. Thanks.

Speaker #5: Thank you.

José Luis Crespo: Thank you.

Speaker #3: Thank you. As a reminder if you'd like to be placed into question queue please press star one on your telephone keypad. Our next question is coming from Sharif Amagrabi from BTIG.

Operator: Thank you. As a reminder, if you'd like to be placed into question queue, please press star one on your telephone keypad. Our next question is coming from Sherif Elmaghrabi from BTIG. Your line is now live.

Speaker #3: Your line is now live.

Speaker #8: Hey. Good afternoon. Thank you. Paul you touched on this. The Q1 saw another big improvement in fuel margins. And the new gas supply contract is obviously helping with that.

Rachel Smith: Hey, good afternoon. Thank you. Paul, you touched on this, Q1 saw another big improvement in fuel margins. The new gas supply contract is obviously helping with that. Have all of your legacy contracts with the IGCs rolled off at this point? I guess really I'm trying to understand if there's room to increase utilization at your captive plants, Louisiana, Georgia, and Tennessee.

Speaker #8: But have all of your legacy contracts with the IGCs rolled off at this point? And I guess, really, I'm trying to understand if there's room to increase utilization at your captive plants in Louisiana, Georgia, and Tennessee.

Speaker #9: Yeah. So the short answer to your question is on the sourcing they all the portfolio runs at different cycles and some of those contracts.

Paul Middleton: Yeah. The short answer to your question is on the sourcing, you know, the portfolio runs at different cycles in some of those contracts, they all terminate at different time periods. Today, consciously, it's, you know, roughly 50/50 sourcing third party versus internally leveraging on our plants. You know, there's strategic reason why to keep that relationship in good standing and leverage those because our plants are as an example are in the Southeast. It, you know, it can be expensive to truck, you know, hydrogen all the way over to California or up to the Northeast.

Speaker #9: And so they all terminate at different time periods. Today consciously it's roughly 50/50 sourcing third party versus internally leveraging on our plants. And there's strategic reason why to keep that relationship in good standing and leverage those because our plants are as an example are in the Southeast.

Speaker #9: And so it can be expensive to truck hydrogen all the way over to California or up to the Northeast. Fortunately with the agreement that we signed it put us in a good footing with a substantial reduction in the cost per molecule as well as a means by which to work with them to continue driving improved efficiencies and network optimization.

Paul Middleton: Fortunately, with the agreement that we signed, it put us in a good footing, with a substantial reduction in the cost per molecule, as well as a means by which to work with them to continue driving improved efficiencies and network optimization. You know, the drivers for us as we go forward are, you know, leveraging our plants, you know, and as we continue to grow sales in more sites, and third-party sales. You know, you've seen some smaller announcements recently where we are starting to sell into the merchant market as an example and take an opportunistic opportunities there where we can to do that. Leveraging those plants will continue to grow and scale and leverage that overhead.

Speaker #9: But the drivers for us as we go forward are leveraging our plants and as we continue to grow sales and more sites we certainly will do and third party sales.

Speaker #9: You've seen some smaller announcements recently where we're starting to sell into the merchant market as an example and take an opportunistic opportunity there where we can to do that.

Speaker #9: So leveraging those plants will continue to grow and scale. And leverage that overhead. The second is really optimizing the delivery network really getting into how you deliver and when you deliver and how you manage that.

Paul Middleton: The second is really optimizing the delivery network, really getting into, you know, how you deliver and when you deliver and how you manage that. You know, there's tons of opportunities there. Then, the efficiencies of network. We've made huge strides on improving efficiencies of our storage systems and our dispensing, you know, capabilities, but there's still opportunities there as well. Those are some of the drivers as to what you've seen as to why the margin continues to get better quarter after quarter. It's certainly the same themes that we've got a daily focus on across all those opportunities, that will continue to drive that over the course of this year.

Speaker #9: There's tons of opportunities there. And then efficiencies in network. We've made huge strides on improving efficiencies of our storage systems and our dispensing capabilities.

Speaker #9: But there's still opportunities there as well. So those are some of the drivers as to what you've seen as to why the margin continues to get better quarter after quarter.

Speaker #9: And it's certainly the same themes that we've got a daily focus on across all those opportunities that will continue to drive that over the course of this year.

Speaker #8: Got it, that's helpful. Paul, I have one more for you. I missed how much you're expecting from the monetization of the Louisiana tax credits.

Rachel Smith: Got it. That's helpful. Paul, I have one more for you. I missed how much you're expecting from the monetization of the Louisiana tax credit, and if you could share how that compares with Georgia, that'd be helpful.

Speaker #8: And if you could share how that compares with Georgia, that'd be helpful.

Speaker #9: Yeah. So absolute value it's actually a little bit more. On a gross basis it's like 39.4 million I think the number was. And it's just to clarify it's for our joint venture that we have in Louisiana.

Paul Middleton: Absolute value, it is actually a little bit more. On a gross basis, it is like $39.4 million, I think what the number was. It is just to clarify, it is for our joint venture that we have in Louisiana. That is proceeds that that joint venture will get for selling that. We obviously, as you I think you probably know, we consolidate that entity, so those results will show up in our consolidated results. We will work with the JV partner whether we leave that $39 million in the JV to fund operations or whether they take their portion and we take our portion. Obviously, if it goes that route, we have got the it is incremental $20 for Plug, to fund operations, which is obviously very helpful.

Speaker #9: So, that's proceeds that that joint venture will get for selling that. And we obviously, as you I think you probably know, we consolidate that entity.

Speaker #9: So those results will show up in our consolidated results. And we'll work with the JV partner on whether we leave that $39 million in the JV to fund operations, or whether they take their portion and we take our portion.

Speaker #9: Obviously, if we do take—if it goes that route—we've got that. It's incremental $20 million for Plug to fund operations, which is obviously very helpful.

Paul Middleton: We actually got better terms on that than we did in Georgia just because of the, you know, passage of time and the learnings that we got out of the Georgia sale. On a net basis, in terms of the gross tax credit, we got a better rate.

Speaker #9: But it is we actually got better terms on that than we did in Georgia just because of the passage of time and the learnings that we got out of the Georgia sale.

Speaker #9: So on a net basis in terms of the gross tax credit we got a better rate.

Speaker #8: Great. Thanks again.

Rachel Smith: Great. Thanks again.

Speaker #5: Thank you.

José Luis Crespo: Thank you.

Speaker #3: Thank you. Our next question. Today is coming from Deshawn n O'Leary from Jeffrey. Your line is now live.

Operator: Thank you. Our next question today is coming from Dushyant Ailani from Jefferies. Your line is now live.

Speaker #10: Yes. Thanks for taking my question. Just one quick one. I guess if you're talking about the revenue progression for the year I think it implies that maybe two Q might be slightly down.

Dushyant Ailani: Yes, thanks for taking my question. Just one quick one. I guess, if you're talking about the revenue progression for the year, you know, I think it implies that maybe Q2 might be slightly down quarter over quarter. Is that correct? Then maybe, you know, what's kind of driving that? Is there, was there any demand kind of pulling in, into Q1? Then also, if Q2 is gonna be down quarter over quarter, then how do we think about just the margin progression there in terms of, you know, the volumetric leverage that you have shared previously?

Speaker #10: Quarter over quarter, is that correct? And then maybe, what's going to be driving that? Was there any demand kind of pulling into one quarter? And then also, if Q2 is going to be down quarter over quarter, how should we think about the margin progression there in terms of the volumetric leverage that you shared previously?

Speaker #9: Yeah. So let me try there's many parts to your question. But so if you look historically we're somewhere between one third to 40 percent.

Paul Middleton: Yeah. Let me try. There's many parts to your question, you know, if you look historically, we're somewhere between one-third to 40%. you know, on the first half of any year, it varies a lot based on timing of customer programs and, you know, sometimes Q1 is lower than Q2. you know, let me, let me be clear. We expect Q2 to grow sequentially. I think, you know, we're giving you guys a directional guidance and using that 40% in relation to our 13% to 15% growth rate for this year. you know, it may only be slight growth off of Q1, but it's, it's definitely gonna be, you know, slightly better.

Speaker #9: It's slightly, and in the first half of any year, it varies a lot based on the timing of customer programs. And sometimes Q1 is lower than Q2—most times Q1 is lower than Q2.

Speaker #9: But let me be clear. We expect Q2 to grow sequentially. I think we're giving you guys a directional guidance and using that 40 percent in relation to our 13 to 15 percent growth rate for this year.

Speaker #9: It may only be slight growth off of Q1. But it's definitely going to be slightly better. And then you have the second half and the timing of that we'll see as we continue to progress through the year how that's going to play.

Paul Middleton: You know, and then you have the H2, and the timing of that, we know, you know, we'll see as we continue to progress through the year how that's going to play. On the margin progression, you know, again, just to be direct, we absolutely expect the margin rate to continue to improve sequentially quarter over quarter. All the cost down and things that we're doing, you know, should continue to drive incremental benefits. We expect that margin rate to improve, you know, in Q2 and then, and then continue to ramp from there.

Speaker #9: On the margin progression again just to be direct we absolutely expect the margin rate to continue to improve sequentially quarter over quarter. We're doing all the costs down and things that we're doing are going to continue to should continue to drive incremental benefits.

Speaker #9: So we expect that margin rate to improve in Q2 and then continue to ramp from there. Volume makes a big difference. And so the fact that the second half is, using my math, roughly 60% of the sales means there's even more equipment sales in that second half.

Paul Middleton: Volume makes a big difference, the fact that the H2 is, you know, using my math, of roughly 60% of the sales, you know, means there's even more equipment sales in that H2, that means it's even more accretive. You know, I think what you're gonna see is quarter-over-quarter, you're gonna see growth in the sales number, and you're definitely gonna see growth in the, or I should say, you know, we expect it to see growth in the margin rate.

Speaker #9: So that means it's even more accretive. But I think what you're going to see is quarter over quarter you're going to see growth in the sales number and you're definitely going to see growth in the well, I should say we expect it to see growth in the margin rate.

Speaker #5: Yeah. And I just when I reinstate what you just said Paul Q2 will be progression in terms of top line compared to Q1.

Dushyant Ailani: Yeah. I just want to restate what you just said, Paul. Q2 will be progression in terms of top line compared to Q1. Got it. Thank you.

Speaker #10: Got it. Thank you.

Speaker #3: Thank you. Next question is coming from Chris Dendrinos from RBC Capital Markets. Your line is now live.

Operator: Thank you. Next question is coming from Chris Dendrinos from RBC Capital Markets. Your line is now live.

Speaker #11: Yeah. Thank you. I just wanted to circle back to Europe a little bit here. And I'm curious looking at some of these refineries and the customer base there are they kind of ultimately settling out on a long-term partner here and picking tech I guess just looking back over some of these the competitors out there it looks like there have been testing of different technologies etc.

Chris Dendrinos: Yeah. Thank you. I just wanted to circle back to Europe a little bit here. I'm curious, you know, looking at some of these refineries and then the customer base there? Are they kind of ultimately settling out on a long-term partner here and picking tech? I guess just looking back over some of these, you know, the competitors out there, it looks like there have been, you know, testing of different technologies, et cetera. I'm just kind of curious what you're seeing on that front. Thanks.

Speaker #11: And so I'm just kind of curious what you're seeing on that front. Thanks.

Speaker #5: We're seeing specifically with the companies that we're doing business in the refinery side the largest ones that I mentioned during the call we're seeing that they are looking at expansions in the sites that we have done and in other sites.

José Luis Crespo: We're seeing specifically with the companies that we're doing business in the refinery side, the largest ones that I mentioned during the call, we're seeing that they are looking at expansions in the sites that we have done and in other sites. We're seeing that the progression that we're making on the commissioning of the product is very satisfactory, and we are looking with them about working together for some of those expansion projects.

Speaker #5: We're seeing that the progression that we're making on the commissioning of the— that is very satisfactory. And we are looking with them about working together for some of those expansion projects.

José Luis Crespo: Given the directives that the EU is pushing through every country, through a process that they call transposition, which is as simple as a European law converted into a law in each one of the countries that are members of the EU, they have a mandate to convert a certain percentage of the hydrogen they use into green hydrogen, and this is what's driving these projects. They are committing to do it, and we're working with them to satisfy those needs.

Speaker #5: So, given the directives that the EU is pushing through every country—through a process that they call transposition, which is as simple as a European law converted into a law in each one of the countries that are members of the EU—they have a mandate to convert a certain percentage of the hydrogen they use into green hydrogen.

Speaker #5: And this is what's driving these projects. And they are committing to do it. And we're working with them to satisfy those needs.

Speaker #11: Got it. Thank you. And I guess maybe as a follow-up here, just on the opportunity with Allied Green and Uzbekistan, and maybe in Australia as well, can you speak to the potential timing of this and how you see that trend, I guess, playing out over the course of the year?

Chris Dendrinos: Got it. Thank you. I guess maybe as a follow-up here, you know, just on the opportunity with Allied Green in Uzbekistan and maybe in Australia as well, you know, can you speak to the potential timing of this and how you see that kind of trend, I guess, playing out over the course of the year? Thank you.

Speaker #11: Thank you.

Speaker #5: Yes, I mean, I can speak to the timing that I've discussed with Alfred from Allied Green in the last discussions I had with him, as of last week, right?

José Luis Crespo: Yes. I mean, I can speak to the timing that I've discussed with Alfred from Allied Green in the last discussions I had with him as last week, right? Now, these timings, as I said before, because of the complexity of these type of projects, usually, you know, change. Right now the idea is to or the objective would be to do a BDP on the Uzbekistan project in H2 2026. And BDP is a Basic Engineering Design Package. His target is to get to FID in the following months with a potential loan notice to proceed to Plug earlier than that.

Speaker #5: Now these timings as I said before because of the complexity of this type of projects usually change but right now the idea is to or the objective will be to do a BDP on the Uzbekistan project in the second and BDP is the basic engineering design package.

Speaker #5: In the second half of 2026. And then his target is to get to FID in the following months. With a potential loan notice to proceed to PLUG earlier than that.

Speaker #5: So it is a project that could and I insist I don't want to create an expectation that I cannot live up to because there are so many things that are outside of my control in these projects, right?

José Luis Crespo: It is a project that could, and I insist I don't wanna create an expectation that I cannot live up to because there are so many things that are outside of my control in these projects, right? In the last conversations, it's a project that should be moving forward in the next 12 months, with a BEDP happening before, with a loan notice to proceed also, in that timeframe.

Speaker #5: But in the last conversations it's a project that should be moving forward in the next 12 months with a BDP happening before and with a loan notice to proceed also in that time frame.

Speaker #11: Got it. Thank you very much.

Chris Dendrinos: Got it. Thank you very much.

Speaker #5: Thank you.

José Luis Crespo: Thank you.

Speaker #3: Thank you. Next question is coming from Craig Irwin from Roth Capital Partners. Your line is now live.

Operator: Thank you. Next question is coming from Craig Irwin from Roth Capital Partners. Your line is now live.

Speaker #12: Hey guys, it's Andrew on for Craig. Thank you for taking my questions. I've been hopping across a couple of calls, so I apologize if this has been asked already—just let me know.

[Analyst] (BTIG): Hey, guys, it's Andrew on for Greg. Thank you for taking my questions. I've been hopping across a couple of calls, so I apologize. If this has been asked already, just let me know. I can ask something else. You guys called out expansion with Amazon and Walmart with the material handling, but can you guys kind of talk to any new logo pipeline expansion? Just overall kind of the mix between, you know, site expansion with the existing customers versus, you know, new customer wins, that would be great.

Craig Irwin: Hey, guys, it's Andrew on for Greg. Thank you for taking my questions. I've been hopping across a couple of calls, so I apologize. If this has been asked already, just let me know. I can ask something else. You guys called out expansion with Amazon and Walmart with the material handling, but can you guys kind of talk to any new logo pipeline expansion? Just overall kind of the mix between, you know, site expansion with the existing customers versus, you know, new customer wins, that would be great.

Speaker #12: I can ask something else. But I just called out expansion with Amazon and Walmart with the material handling. But can you guys kind of talk to any new logo pipeline expansion, and then just overall, kind of the mix between site expansion with the existing customers versus new customer wins?

Speaker #12: That would be great.

José Luis Crespo: Our team was in MODEX. MODEX is the largest event for manufacturing and supply chain in April. Our team met with a large amount of companies, new companies, new logos that were interested in the material handling business case, given the points that I made before, mainly associated with productivity, with the ITC, and also the advantages associated with reducing the grid demand. At this moment, the majority of the growth that I see in 2026 are related to existing customers. As I said before, mainly Amazon, mainly Walmart, and also associated with automotive. We have new projects with BMW, we have projects with Stellantis and with other European automakers. We closed another second site with Southwire, as I mentioned before.

Speaker #5: We are our team was in MODEX. MODEX is the largest event for manufacturing and supply chain in April. And our team met with a large amount of companies new companies new logos that were interested in the material handling business case given the points that I made before mainly associated with productivity with the ITC and also the advantages associated with reducing the grid demand.

Speaker #5: At this moment, the majority of the growth that I see in 2026 is related to existing customers—as I said before, mainly Amazon, mainly Walmart, and also associated with automotive.

Speaker #5: We have new projects with BMW. We have projects with Stellantis. And with other European automakers. We close another second site with Southwire as I mentioned before.

Speaker #5: That's not a new name but it's a second site that we close with them. And we have a fairly healthy pipeline of new names and new customers.

José Luis Crespo: That's not a new name, but it's a second site that we closed with them. We have a fairly, you know, healthy pipeline of new names and new customers. At this moment, I'm not in position to tell you right now that we're gonna get, you know, orders for certain, specific names, but I can tell you that the team is working in a few new potential accounts that could be added between now and the end of the year for projects in 2027.

Speaker #5: At this moment I'm not in position to tell you right now that we're going to get orders for certain specific names. But I can tell you that the team is working in a few new potential accounts that could be added between now and the end of the year for projects in 2027.

Speaker #12: Great. Well, I really appreciate the call there. And then second for me kind of in the same vein I noticed the Gendrive cost per unit was down 30% year over year.

[Analyst] (BTIG): Great. Well, I really appreciate the color there. Second for me, kind of in the same vein, I noticed the GenDrive cost per unit was down 30% year over year. Can you just kinda talk about the potential to, you know, leverage cost reduction throughout your install base?

Craig Irwin: Great. Well, I really appreciate the color there. Second for me, kind of in the same vein, I noticed the GenDrive cost per unit was down 30% year over year. Can you just kinda talk about the potential to, you know, leverage cost reduction throughout your install base?

Speaker #12: Can you just kind of talk about the potential to leverage cost reduction throughout your installed base?

Speaker #5: Yeah, I think our anticipation is that that unit cost will continue to come down. And it really comes from two key drivers. One is—well, I'd say three.

Paul Middleton: Yeah. I think, Our anticipation is that that unit cost will continue to come down, and it comes from two key drivers. Well, I'd say three. First is the parts cost continues to go down as we get the units to continue to run longer. You just need less parts to keep them up and running. Second is, as that happens, you need less touches of the units throughout the year. When you need less touches, then you can manage the fleet with less labor techs. We're able, as Jose said earlier in the call, we're able to reduce, in some cases, 1 tech per site, in some cases even 2 techs per site. You know, we expect that leverage continues as we continue to grow and scale.

Speaker #5: First is the parts cost continues to go down as we get the units to continue to run longer. So you just need less parts to keep them up and running.

Speaker #5: Second is, as that happens, you need fewer touches of the units throughout the year. So when you need fewer touches, you can manage the fleet with less labor tax.

Speaker #5: And so we're able to as Jose said earlier in the call we're able to reduce in some cases one tech per site in some cases even two techs per site and so we expect that leverage continues as we get and continue to grow and scale.

Speaker #5: And then the third is you sell more units and you grow your sales base you can leverage the overhead for that service business. So that continues to scale and grow and ramp as well.

Paul Middleton: The third is you sell more units and you grow your sales base, you know, you can leverage the overhead for that service business. That continues to scale and grow and ramp as well. You know, we expect that rate per unit will continue to go down in the course of the year. You know, we expect that to continue to drive in the right direction.

Speaker #5: So we expect that rate per unit will continue to go down in the course of the year. And we expect that to continue to drive in the right direction.

Speaker #12: Understood. I appreciate the detail and congrats on the continued progress.

[Analyst] (BTIG): Understood. Appreciate the detail and congrats on the continued progress.

Craig Irwin: Understood. Appreciate the detail and congrats on the continued progress.

Speaker #5: Thank you so much.

José Luis Crespo: Thank you so much.

Speaker #3: Thank you, we appreciate it. That concludes our question and answer session. I would now like to turn the floor back over to Jose Luis for any further closing comments.

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

Speaker #12: Well, thank you, everyone, for the questions and for your engagement and your support. The first quarter results that we just announced provide a solid foundation for the balance of the year.

José Luis Crespo: Well, thank you everyone for the questions and for, your engagement and your support. The first quarter results that we just announced, provide a solid foundation for the balance of the year. Our priorities for 2026 are the same. They remain unchanged. Drive continued sales growth, execute with discipline, continue improving our cost structure, reduce cash usage, and deliver positive EBITDAs in Q4. The underlying business fundamentals continue to improve. Demand drivers across our core markets are strengthening and now are just about consistent delivery. We again appreciate your continued support and look forward to updating you on our progress in the next quarter. Thank you, everyone. Have a nice evening.

Speaker #12: Our priorities for 2026 are the same. They remain unchanged. Drive continued sales growth, execute with discipline, continue improving our cost structure, reduce cash usage, and deliver positive EBITDAs in the fourth quarter.

Speaker #12: The underlying business fundamentals continue to improve. Demand drivers across our core markets are strengthening. And now it's just about consistent delivery. We again we appreciate your continued support and look forward to updating you on our progress in the next quarter.

Speaker #12: Thank you everyone. Have a nice evening.

Speaker #3: Thank you. That concludes today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Operator: Thank you. That does conclude today's teleconference webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.