Plug Power Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 9, 2023

There are 13 speakers on the call.

Operator

Greetings, and welcome to the Plug Power Q2 Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. Pleasure to introduce your host, Teal Hoyos, Senior Director of Marketing and Communications. Thank you, Teal.

Operator

You may begin.

Speaker 1

Thank you. Welcome to the 2023 Second Quarter 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.

Speaker 1

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 is a guarantee of future performance or results. Such statements are based upon the current expectations, answer session, 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 is a result of various factors, including, but not limited to, the risk factors and uncertainties discussed under Item 1A, Risk Factors, in our annual report on Form 10 ks for the fiscal year ending December 31, 2022. Quarterly results on Form 10 Q and The results we file from time to time with the Securities and Exchange Commission. These forward looking statements is the only 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 is a result of new information.

Speaker 1

At this point, I would like to turn the call over to Plug's CEO, Andy Marsh.

Speaker 2

Thank you, Teal, and thank you, everyone, for joining the Plug 2nd quarter conference call. Plug's in the process of developing an unparalleled hydrogen fuel cell platform. This encompasses a diverse array of products, extensive international collaborations, Backing from government entities, financial partners and our robust infrastructure. Our second quarter outcome reveals noticeable growth in several of our recently launched products, Particularly in our cryogenics sector, which garnered $69,000,000 in revenue, making it more than Threefold rise over the previous year. Our international collaborations are yielding positive results as well.

Speaker 2

Through our joint venture with Renault, the initial product from Frydia garnered positive reviews. Kilometer Magazine, a renowned authority in the realm of commercial vehicles in France, bestowed the heavy commercial vehicle of the year 2023 award upon the Hyvea Fuel Cell Electric Vehicle Master Van. Through our partnership with SK, our joint venture, Hiiverse, achieved a significant milestone As the 1st megawatt scaled electrolyzer to be certified in Korea, Our strong governmental backing spans across key global capitals from Washington D. C. To Brussels, Helsinki, Paris and Seoul, plug its cultivated robust connections with government authorities.

Speaker 2

Given the vital intersection of energy and climate change with governmental policies, we have proven ourselves as trustworthy experts capable of offering insights and impartial analysis on the path towards a carbon neutral world. This strategic policy alignment is reaping rewards in the present. As the American manufacturing company, Plug generated a $10,000,000 increase in gross margin dollars during the 2nd quarter attributed to the Provisions promoting American made products under the IRS. We anticipate further advantages As we tack into manufacturing incentives within the IRA along with the production tax credit for Hybgec. The IRA is starting to pay dividends to Plug.

Speaker 2

Furthermore, we have actively secured Multiple sources of non dilutive capital as we diligently expand our global green hydrogen generation network. President Leads Plugs is in the final stages of the 2nd round of due diligence with the DOE Loan Program Office For a $1,000,000,000 project financing facilities, we have a term sheet, term sheet framework and we're working through final processes to get this structure approved and lost. Simultaneously, we're assessing various options, Including corporate debt facilities for major financial institutions, alternative infrastructure, project financing And solutions for ITC project financings. Lastly, the unmatched nature of our manufacturing infrastructure It's substantiated not only by our internal evaluation, but also by feedback from customers and potential clients. Initially designed to support 2.5 gigawatts of MEAs, our Rochester facility now boasts a scalable potential of up to 7.5 gigawatts as we advance the production process.

Speaker 2

I had the privilege of personally touring our Vista facility, our 400,000 square foot integration factory with a customer This past Tuesday. And quite honestly, they were astonished because they've been at everybody else's facilities. Additionally, our hydrogen plant in Georgia, for which we're hosting an Investor Day on August 23, stand as the largest Green hydrogen plant in North America. Navigating the process of scaling our business presents its own set of challenges And our ability to surmount these challenges serve as a distinct advantage for Plug. Once been our gross margin challenges, what's not readily apparent is that excluding one time charges, Our margins in the Q2 would have been minus 12%, over 20% better than Q1.

Speaker 2

Throughout the rest of 2023, we will see continual margin expansion. An industry leader shared with me recently, The endeavor is truly valuable when it comes with its share of challenges and this in the end provides a differential advantage. The journey of mastering the construction of hydrogen plants, expanding factory capabilities, developing customers And concurrently introducing array of new products has undoubtedly been demanded. However, we firmly believe That the efforts invested in these undertakings will yield substantial benefit for all those vested in Plugged success. At this point, Paul, Sanjay and I are prepared to address any questions you may have.

Speaker 2

I think we're open for questions.

Operator

All right. Thank you. We will now be conducting a question and answer session. And a confirmation tone will indicate your line is in the question for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.

Operator

Our first question comes from Bill Peterson with JPMorgan. Please proceed with your question.

Speaker 3

Hi, good afternoon team. How are you doing this afternoon?

Speaker 2

Okay, Bill, good afternoon. Good afternoon. Lots of digest been released, so forgive me if

Speaker 3

we missed some things here. But I wanted to talk about The upcoming guidance from the U. S. Treasury related to the IRA. And I know you've expressed confidence in the past.

Speaker 3

And it seems like there may be some positive No news forthcoming. But first of all, when should we get some resolution on the distality and matching things? And I guess if it was going to be unfavorable, I guess, about this PTC, how would the economics compare between a U. S. Hydrogen plant and a plant in Europe?

Speaker 2

Really good questions, Bill. And if I was going to let me answer the first part of your question. It's our assessment and is the assessment of many people that we will see guidance in September. And I think that from what we can tell from the guidance, there was a good article by Bloomberg, which is consistent with Discussions we've had with many senators, with people in the White House that I think that The regulations will be, I think, very reasonable in the end. We look at these plants today.

Speaker 2

So there are differences between the energy costs in Europe Versus the energy cost in the U. S. So if you take, for example, green hydrogen itself, If you think about a and I'm going to talk about generation without liquefaction and transportation. I think at $0.03 a kilowatt hour, you're talking probably around $2.50 in the U. S.

Speaker 2

To generate at a spot like Texas. If you think about Europe, and that would include the cost of production And the cost of depreciation bill would not include the cost of liquefaction or transportation. The liquefaction probably adds that facility is $0.75 just to kind of give you a gauge. In Europe with the PTC, obviously, the PTC was structured to make sure That hydrogen was cost competitive with natural gas. So when you start adding on liquefaction, transportation, You're really probably talking about costs around, call it, dollars 4.50 to $5 at a For the best case, which would be Texas, which really puts hydrogen in the realm of natural gas.

Speaker 2

And I think that's the goal of the IRA. If you look at Europe, the support will be different. It's really more geared to support if you really look at the total dollars That Europe is putting towards hydrogen fuel cells. We think those numbers sit around 870,000,000,000 But much more how you work the government grant process. That's why our international collaborations is real important I know this is a long answer, Bill, but if you take, for example, our JV with HIVEA, we've been able to leverage Over €200,000,000 in government grants to support the development of that business.

Speaker 2

Does that help, Bill?

Speaker 3

Yes. No, that's super helpful. Maybe the second question for me is, It sounds like you're moving into that stuff and some potential good promising outcome maybe with the DOE Loans Program Office. But I guess, what remains to

Speaker 4

be done? It sounds like you're in

Speaker 3

the 2nd stage of due diligence. And what would be the timing assuming you successfully pass that bar?

Speaker 2

I'm going to hand that off to Paul, Bill.

Speaker 5

Yes. Hey, Bill. So there's a couple of things. Well, 1st and foremost, The good news is that we've come together, as Andy alluded in his comments, with an outline of the term sheet that we think will work for us and that they can get past. So that's a big hurdle.

Speaker 5

And they're in the final now they're off to the races doing the final due diligence around Market studies and technical studies and things that they just got to kind of finish that process. But I and then once we get through that, There's a little bit of more polishing to finalize the term sheet in a format that they can submit Through their process that they've got to go through the government agencies to get approved. So at this point, our best guess is that We would have something approved and be able to announce something hopefully mid November to early December. We're all they are equally Motivated to get it done fast as we possibly can. So we've got weekly meetings and efforts to try and push over those final hurdles.

Speaker 5

So We'll see how it plays, but that's kind of the timeline and where we're at in that process.

Speaker 2

Helpful. Thanks a lot guys. Thanks Bill.

Operator

Thank you. Our next question comes from Eric Stine with Craig Hallum. Please proceed with your question.

Speaker 2

Hi, everyone. Hey, good afternoon. Hey, good to hear you, Eric.

Speaker 6

Good afternoon. Yes, you too.

Speaker 3

Good afternoon. So I have not well, I haven't been able to Digest the entire letter here, so I might come back to some questions. From your Investor Day, so you had talked about $4,000,000,000 in overall electrolyzer opportunities that you saw over the next 12 months. I'm curious whether that Still holds, whether that's accelerated and maybe what areas of the market where you are seeing the most traction with that business?

Speaker 2

Eric, I'm going to turn it over to Saje. Saje?

Speaker 7

Thank you, Andy. Hey Eric, how are you? So since we last talked about that, The number is actually, if anything, gone up a bit. We are actually tracking about 7.5 gigawatt of opportunity, as much as $5,000,000,000 of potential revenue opportunity for us in that business. And by the way, Eric, one of the things we've done is rather than talk about this is a big funnel, We have actually identified project by project, right?

Speaker 7

And these are the projects we believe could actually get to FID, final investment decision over the next 18 months. Now look, some of them might not materialize, some of them move faster than expected, but that's what the funnel sits at right now. And the mix is really when you really think about sort of the mix, a lot of opportunity here in the U. S. Actually quite sizable project.

Speaker 7

We're actually very, very far along with some of the sizable opportunity here. There is actually and you guys all Saw that we announced this pretty big opportunity with a major oil and gas company in Europe, which we had talked about on our last earnings call. And there's lots of those opportunity in Europe As well as broadly speaking in the Asia Pacific market as well. So again, we are certainly looking to close several more large electrolyzer deals Here, before the year is over and that's where the funnel sits right now.

Speaker 3

Got it. And maybe Sanjay, probably this is yours as well. I know a big topic a few months back was in terms of green hydrogen and although you've got very extensive Plans, whether that actually is going to end up being enough. And also kind of the open question of how much do you Keep for your customers and how much do you keep open that you might sell in the market. So maybe some updated thoughts on that would be great.

Speaker 7

Yes. Sure, Eric, right. I mean, a couple of things. Look, I mean, our bringing our green hydrogen plants online is a key to Really expanding and improving our fuel business margin. We've talked about that again and again, right?

Speaker 7

I think once we start to produce internally, That actually reduces our cost of green hydrogen by 1 third versus what we're having to pay right now in the market. So it's a step And the way the cadence of that is really Georgia, then Louisiana, then Texas, then New York, right, and obviously our Plants in Tennessee. So once we have Texas up and running, that's when you actually start to see our fuel business turn profitable. That is still buying from the 3rd party under some of the existing contract right now. So our primary goal is to really make sure that we're supporting our customer in our Existing application business to make sure that the resiliency is there, we're supporting them 20 fourseven.

Speaker 7

It's a mission critical and for them and simultaneously expand our fuel margin. Now from the 3rd party opportunity perspective, Eric, mean the funnel is actually bigger than 500 tons opportunity, but near term focus is really how do we make sure that we have enough for our material handling business, How do we make sure we have enough for our application business so that the application business in terms of your stationary product ends up really having a good total cost of ownership for our end Then we really start to think about swap opportunity. No real change in the view. We still want to have about 20% reserve capacity to be able Support all the force majeure that we've seen here in this liquid hydrogen market in North America, but that's really where we are right now, Eric. Andy, Andy, would you like to add anything?

Speaker 2

No, I think you covered it, Sanjay. All

Speaker 3

right. Thank you very much.

Speaker 2

Thanks, Eric.

Operator

And thank you. Our next question comes from James West with Evercore ISI. Please proceed with your question.

Speaker 5

Hey, good afternoon guys.

Speaker 2

Hey, James. How are you?

Speaker 8

I'm doing all right. How are you doing, Andy?

Speaker 2

Okay.

Speaker 8

So curious how you guys are thinking about green hydrogen production in Europe. We obviously know the strategy In the U. S, you've got a variety of projects in Europe, but I suspect there's more to come. What's the I guess, what's the broader strategy to attack the European market with green hydrogen?

Speaker 2

Yes. Good question, Erika. Let me take a step back. We believe that when you look at the cost of energy and the availability of green molecules, Most of that's going to exist in the Northern Cone and the Southern Cone of Europe. As we mentioned in the letter with Acti owner, we're looking to have the first 15 ton plant Commissioned by the end later half of twenty twenty four.

Speaker 2

The Port of Antwerp We'll support a good deal of our activities, which are going on in France as well as supporting some activities in Germany, Which will be a 35 ton plant, which initial hydrogen production 2025. As we've talked about, Finland is an area we're spending a good deal of time where we feel we'll be able to support Up to 10% of European internal goals by 2,030 with FID in 2026. So that's a big focus. There are smaller activities going on for smaller plants In France and Germany, to support especially our material handling and stationary customers. But that's kind of I think you'll see most of the activity and we have land we own now in Denmark and other places, which provides opportunities that we've looked at, which could become sites for building out large hydrogen plants.

Speaker 2

No, the key item in Denmark and Finland is that both of them are looking to put hydrogen pipelines into Central Europe. So that is the real focus of Plug.

Speaker 8

Okay. Okay. That's very helpful. That definitely does. Yes.

Speaker 8

Thanks, Andy. And then do you guys see a scenario playing out in the EU or Europe broadly that's similar? I mean, they have the green industrial plan, which is kind of the counter to the IRA, but there's not a ton of detail out there. But do you see something similar to what the IRA is doing for There could be something similar to what the IRA is doing for green hydrogen in the U. S, it's kind of supercharging the market?

Speaker 2

We do, Eric. And we do, James. And when we look at it, and I'm going to say on paper, It appears to us the dollars that have been allocated in Europe are larger than the dollars allocated in the U. S. The advantage the U.

Speaker 2

S. Has is the fact that it's a much more of a public markets activity, so that Since it's based on tax credits, it's easier to navigate. But We do see in Europe that the overall dollars between now and 2,030 could exceed the U. S. And look, that's why we have partners like Acteon.

Speaker 2

That's why we partner very closely with the Port of Antwerp. Now we're you really need the right for a company like Plug, you really need the right European partners to really leverage that expansion.

Speaker 5

Got it.

Speaker 2

And I think everything is right.

Speaker 3

Okay. Great. Thanks, Andy.

Operator

Thank you. Our next question comes from Manav Gupta with UBS. Please proceed with your question.

Speaker 9

Hi. So Sanjay kind of alluded to this, but refining is a massive market opportunity as it relates Replacing gray hydrogen, you actually announced an order in Europe, one of the bigger ones to replace gray hydrogen with green hydrogen. Do you see this segment end market growing and someday even U. S. Refiners looking to source green hydrogen and replace their gray hydrogen?

Speaker 9

I'm not sure if you saw yesterday, but there's a public independent refiner who basically on their earnings call said, we are looking for electrolyzers to make Green hydrogen to support our staff. So as an end market for U. S. Refining or Europe refining, how are you thinking about that?

Speaker 2

I'm going to let Sanjay take that. We would ask for that. So

Speaker 7

So a couple of comments, Manav, right? Short answer is yes. We certainly see that as a pretty meaningful opportunity. It absolutely makes a lot of sense. And frankly, this is where production tax credits really play a major role to make it a level playing field as Andy was talking about it from a Competitive standpoint versus gray hydrogen and green hydrogen in some of these markets, right, where the economics start to make sense, pricing start to Economic value proposition for the customers that are looking to be decarbonized makes a lot of sense.

Speaker 7

So and as you know from the industrial The refining industry is actually a very large user of gray hydrogen and existing opportunity today. We do see this as a major electrolyzer sales opportunity, number 1. 2nd, it could even lead into something like a build own operate model for us. And we do have several of those discussions going on, not just in Europe, but also in the U. S.

Speaker 7

Market. Hard to say exactly when they materialize and end up becoming a opportunity, but we have multiple of those opportunity. And these are gigawatts and gigawatts of electrolyzer that, that industry is going to need in terms of really going from gray to green hydrogen. And one thing that's actually somewhat very unique for Plug, if you would, right? And this is what we talked about as our enterprise sales opportunity and really trying to serve to the customers' need.

Speaker 7

If they want to buy hydrogen, we can certainly approach it as a build own operate model where we own the electrolyzer, supply them hydrogen behind the fence, if you would, we can do that. And If you're just looking to buy it as a capital equipment, of course, we are the company that has the scale and the Gigafactory that can support the kind of the demand and the needs that they have. But rest assured, we got a lot of those discussions going on both in U. S. As well as in Europe, and we certainly see this being a big opportunity.

Speaker 9

Thank you. I have one quick follow-up. Recently, you introduced your HL-fifteen hundred, the market's first portable hydrogen refueler. Wanted to follow-up on it. How are the conversations with potential customers going with that product?

Speaker 9

Do you see that product making an impact to your top line in 2024 and 2025? Thank you.

Speaker 2

I'm going to hand that one over to Sanjay also. Sanjay?

Speaker 7

Thanks, Andy. Again, Manav, so we're actually sold out with our product for this year. So that's how the demand is. We have transit companies that are super interested in it. We actually have that even opens up some of the traditional existing Market for us even on a smaller size because of that mobile refueler, it actually has a lot of application for fuel cell electric vehicle that are looking to launch Class 7 and Class 8 truck before the whole infrastructure gets built out, right?

Speaker 7

So we're completely sold out. It's a very good margin business us as well within our cryogenic business. You will see a big impact in Q4 of this year with that revenue. We see substantial growth coming out of that business both in 2024 As well as 2025 and this product already has a gross margin that is within our corporate target that we have articulated in the past.

Speaker 9

Thank you so much. And this is all very positive. Thank you.

Speaker 2

I would just add, Sanjay, it is so critical to transition Because if you're thinking about going with 5 or 6 buses to start or you're trying to think about using 4 or 5 vehicles, This is a tailor made product that really supports the development of the industry and It is really a unique offering. Thank you.

Speaker 8

Thank you.

Operator

And thank you. Our next question comes from Colin Rusch with Oppenheimer. Please proceed with your question.

Speaker 3

Thanks so much, guys. Afternoon college. Good to hear your voice, Andy.

Speaker 9

Appreciate the

Speaker 3

time. As you guys look at some of the challenges in and around interconnection for renewables and some of the larger power systems, can you talk a little bit about What you're seeing in terms of incremental project development demand on the stationary power side, but also how folks are thinking about potentially diverting some of that power Into hydrogen to avoid some of the interconnection challenges?

Speaker 7

It is

Speaker 2

So Jose, who's not with us today, is we are seeing Substantial demand and activities associated with especially powering EV vehicles For folks who want fleets for delivery vans, people want buses which are electric vehicles, Where the availability of the grid just is not there. No, we have orders that we could ship up to 17 megawatts this year. Next year, our internal forecasts show 50 to 75 megawatts. I think everywhere we go, That is the challenge and that the Seychari product really helps people overcome that challenge. I really like that market because it's really to me like the work we're doing with SK And for Hi verse, it's really to us the future peaker plan that we're getting all this learning, Developing these products, which eventually will replace gas turbines and will fit side by side with solar and wind Generating hydrogen during the off when the wind is blowing, using the stationary to back up wind and solar farms, As well as ultimately how nuclear rolls out, there's really a close correlation for peakers.

Speaker 2

We think it's the perfect product. I always like to say to our team, this is generation number 2 at the moment. It's quite a product. I expect that this will go through learning curve after learning curve and there'll be generation after generation. But that demand is real And that is a real headache to the development of EVs and the real head and which we think is important For climate change, but it is a real, real problem.

Speaker 2

It's also this connection issue Is why this debate going on with additionality really doesn't make any sense to us. And that it is It's something that we know that the White House and others know it is a huge problem. When you sit with Senator Manchin, We talk a lot about interconnect and permitting and what it means for electric vehicles as well as what it means for How you meet the 2,050 U. S. Climate goals.

Speaker 3

Great. Thanks so much. And then if you guys Continue to scale and look at shorter time frames on some of these projects. Can you talk a little bit about the evolution of your Supply chain and their willingness to invest in incremental capacity to support your growth.

Speaker 2

I spent that's actually why I spent my whole afternoon on. And we have We've announced obviously one critical supplier, Jonathan Mathew, who is moving forward with us. We have others in the electrolyzer business. If you think about, let's take an electrolyzer, what do I worry about? I worry about items like invert I worry about rectifiers and making sure suppliers Are well positioned to support our own internal needs.

Speaker 2

I worry about control panels. I worry about Fabricators and for all those 3 items, I think plug and I think we should probably publicly go more about who those partners are, probably can't do one on this call. We need to kind of clear it with them. We have been developing relationships and we do see people making investments. And I think what you'll see Is that we've been trying to think through a campus approach at facilities like our Rochester facilities, leveraging our government relations They're really helping companies into places like New York and West Virginia to support our future needs.

Operator

And thank you. Our next question comes from Jeff Osborne with TD Cowen. Please proceed with your question.

Speaker 3

Yes. Thank you. Just had a couple of questions on that. Thanks for taking the time, Andy. On that, The Georgia facility, I was wondering if you can give us an update on how the commissioning process is going.

Speaker 3

I've seen or recall that I was Expecting that to be up and running, I thought in early August or July. Now it still seems like you're making gaseous hydrogen. So just curious, have you actually liquefied anything at this point or run it at full steam? Is there any comments you can give us on utilization or capacity factors on How it's performing?

Speaker 7

Yes, sure, Jeff. So again, I think we're fairly look, we feel pretty confident that we're going to be producing liquid in Q3. Right now, we're essentially going through ramping up electrolyzer, right? We've actually turned electrolyzers on. You know that we've been producing gaseous hydrogen there with our gaseous hydrogen plant.

Speaker 7

We're in a process of actually ramping up our liquefiers in a process of cooling down the liquefaction frames. So again, that's why we're hosting our Analyst Day there on August 23rd, right, so that we can actually show to you all exactly what's happening there and what's going on. So at the moment here, are we producing liquid? We're not producing liquid But we are essentially ramping up the electrolyzer on path to be able to produce that liquid. And Jeff, one of the key things here, right, I do want to Address this one particular point is, obviously, look, and I'm just going to take the point that's elephant in the room, if you would.

Speaker 7

We clearly that within 3 to 6 months behind than what we originally wanted it to be. But having said that, this plant is still coming online in 12 months Since we actually issued the EPC contract, number 1. And number 2, we also wanted to make sure this is a first of a kind integrated electrolyzer, liquefier Our on-site storage, so there are steps we want to make sure that we're taking from a safety standpoint from the long term operational benefit of the plant. So long story and a quick comment. We are going to be producing liquid here in the month of August.

Speaker 7

We're very much looking forward to hosting you all on August 23 and we're essentially ramping up the plant

Speaker 2

and filling trailers. Absolutely.

Speaker 3

Look forward to being there in person. Just one quick on Georgia and then a second question. Is this your in the release, it says 2.5 tons a day. Have you run it full steam on the electrolysis side?

Speaker 7

Yes, that is correct. Jeff, we actually have built high pressure tube trailers for 3rd party customers many times at that site. And the way we wanted to do that, right, and this is very important for us to do, make sure that we're running that first gas plant, optimize the gas plant, get the learnings from that Yes, plan so that we can take all of that learnings from a control perspective, ramp up the electrolyzer perspective, all the safety perspective when you actually are now ramping up the entire 40 megawatt of electrolyzer to support 15 ton of liquid production. And Jeff, to a point where we've actually initiated expansion 15 ton now to a 30 ton liquid plant at the site because of how we felt about what has gone so far from a 15 ton production perspective.

Speaker 2

The electrolyzers Aren't really anything we're really thinking much about. We know they work absolutely.

Speaker 5

Sorry, go ahead.

Speaker 3

Just on the hydrogen hubs, how are you positioned for that? And what do you think the timing of the awards are from the government process there?

Speaker 2

Jeff, I think the Hydrogen Hub and the IRA are really closely connected. There was a letter which was released by the State of New York, the State of Massachusetts, State of Connecticut, State of Maine that To make this a nationwide hydrogen hub, the IRA regulations need to be For the PTC needs to be phased in over a long period of time. I spoke to the New York Governor about that actually just yesterday. And it is I think we see More activity come the Q4 for some initial grants, but for this to become a nationwide network, It's not just the hubs. It's the hubs coupled with the IRA.

Speaker 2

And this is something that if you read the Letter that State of New York and the other states put in, the Treasury really makes clear that If they really limited the IRA regulations, which I don't think will be the case that The impact will be much more modest because the $9,000,000,000 quite honestly is a good deal of money, but it's not really What's going to drive a hydrogen economy? It's kind of like I look at it $50,000,000,000 per Ship facilities seem like a lot of money, but you really need large support from other elements to make that successful. The same thing holds true for hydrogen. We expect some announcements in the 4th quarter, But it will be a little bit of dollars and more and more will start flowing out.

Speaker 3

Thanks so much, Andy. Go ahead. Okay, Jeff.

Operator

And thank you. Our next question comes from Amit Thacker with BMO Capital. Please proceed with your question.

Speaker 3

Hi, good afternoon. Thanks for taking my questions.

Speaker 2

Hello, Amit. Just real quick, just thinking about kind

Speaker 3

of the cadence of kind of cash needs for the balance of the year, it looks like Between kind of cash flow from operations and your CapEx to date, you've kind of earned about $1,000,000,000 in cash. And I know You guys mentioned maybe $1,000,000,000 from the DOE program. Would that be funded all at once and then kind of cover Your kind of your Georgia, New York and Texas plants, is that how we should think about it?

Speaker 2

I'm going to turn the cash Questions over to Paul here.

Speaker 5

Paul? Hey, thank you. Thanks for the question. I guess a couple of things I would share with you 1st and foremost. When you look at the volume that we're projecting, it's almost double or more in the second half.

Speaker 5

So It was a pretty heavy investment in working capital preparing for all of these new offerings, scaling up electrolyzer, scaling up stationery, scaling up mobility solutions, Pretty heavy investments in inventory. We actually expect that to come down. So I expect to have that From an impact standpoint, either flat to actually generating cash for us in the second half. Second thing is, when you look at, as Andy shared, all of the tracks We're making with growing volume as well as the cost downs, that's going to impact our operating Our margin profile, so that helps as well. So you should see a softening of that in the second half.

Speaker 5

The short answer to your question is on the DOE program, we're until it's done, it's not done, but The timing of exactly how that will play will be to be determined in terms of the inflow. We are actually working again, as Andy mentioned, with other solutions as well. I think if you look at the next couple of years, there's going to be a combination of debt Solutions from corporate debt to project finance to enhanced ITC financings and all of those things you will see more of from us in the coming months as we start to enroll some of those solutions. And so it's going to come from one of those programs in the short term, mid Term and long term as we roll all of those solutions out.

Speaker 3

Okay. And just one quick housekeeping question. In the investor letter, I know you guys reiterated The revenue guide for the year, didn't see that for the gross margins. I was just wondering if you kind of level set us on that for the year. Thank you.

Speaker 5

Yes. We didn't necessarily give specific updates on the full year margin profile. But I think when you look at the second half, you're going to see tremendous sequential progress. I mean, it's going to be really You're going to see big step function in Q3, the volume growth and then even more substantial step function in Q4 As we deliver the back half, it's probably in the 30%, 40% range of sales for The back half in Q3 and then kind of the 50%, 60% range, given the rough ranges there in terms of volume in the 4th quarter. And when you get to that high level of sales, it's very accretive and especially when you think about the complement of equipment programs that are in there.

Speaker 5

So We expect sequential growth and you're going to see strong performances and strong growth in the margin profile as we progress through the year. Thank you.

Operator

Thank you. Our next question comes from Amit Dayal with H. C. Renweit. Please proceed with your question.

Speaker 4

Thank you.

Speaker 2

Amit, how are you? Good to hear. Good

Speaker 5

to hear.

Speaker 4

Very good. So Ali, you highlighted moving selling prices higher in your investor letter. Can you talk a little bit about which Product offerings you're targeting first for this effort and then how this translates into the rest of the portfolio?

Speaker 3

Yes. So

Speaker 2

I will let me I'll highlight one platform that we think there's real opportunities Because we have our capabilities far exceed the competition. We know and we've seen that as we tested the market That there are real opportunities in the electrolyzer business. And that's a platform that we've seen that Based on the fact that the demand is there and the supply, When you really look at people's infrastructure doesn't exist, we think there is Good opportunity to raise prices. And we know that because we have been and we've been winning orders. So that's one area that's clear to me that there's real opportunities.

Speaker 2

I think that we've seen across all of our segments, again, because I think because of our unique position And our experience that there are more opportunities than we've Been able to take advantage of the past. And look, it's really closely tied To all the investments we've made in infrastructure with facilities, with our hydrogen plants, With our resources around the world that We sit at the table with a great deal of credibility that we can deliver, which I think uniquely positions us and which creates Additional value for Plug.

Speaker 4

Understood, Andy. Thanks so much. And then maybe for Paul, I know you are anticipating significant improvements on the margin side in the second half. The cadence of this, are we looking at sort of breakeven levels in 3Q and then moving to Was it gross margin in the 4th quarter or how should we think about this, Paul?

Speaker 5

Yes. I don't know if will be quite breakeven in Q3, but it should be low teens kind of range. And I think you're going to you absolutely will see positive in Q4 And pretty meaningful accretion on the rate in Q4 as these cost downs continue to kick in And equally more important, the sales volume that we're talking about and how substantial it is, that will be very accretive since it's the composition of equipment.

Speaker 4

Longer term as your infrastructure comes online, I mean, is there a possibility where gross Cost of goods sold will actually begin declining for you guys. So just trying to see from a modeling perspective, how we should think about it As you know, the infrastructure around all of these products comes online?

Speaker 5

Yes. I mean, I'll give you an analogy. When we built and designed the Rochester facility, we thought we could do kind of 2 gigawatts of various products between GenDrive product and Stacks and electrolyzer products. The learnings we've gone through, we now think we could do anywhere from 4 to 5 times that volume through that facility. I mean, you can only imagine that the Overhead levers that you can get out of that, that's by leveraging that up.

Speaker 5

So and we think that's going to happen very fast. So we're to your point, the infrastructure we've built and scaling the range of things that we're doing, It's going to be substantially accretive as we continue to ramp up the business just in overhead levels. That doesn't even account for Supply chain cost reductions. I mean, Andy mentioned today, we spent 3 hours today just as we do all the time working on operational enhancements, focus on things. And so You got supply chain cost downs, you got overhead leverage.

Speaker 5

And then as Andy mentioned before, there's various products that we're looking Price management around and ASP management. So all those things combined is what's going to drive that margin profile in the coming quarters.

Speaker 4

Understood. That's all I have. Thank you so much.

Speaker 7

Thanks, Amit.

Operator

Thank you. Our next question comes from Greg Lewis with BTIG. Please proceed with your question.

Speaker 3

Yes. Hey, thanks. Good afternoon. Yes. Thanks.

Speaker 3

My first question was And how we should be thinking about the cadence of electrolyzer orders as we kind of go forward from here? I mean, I guess projects are going to continue to be big and lumpy, but is the are kind of the more Smaller projects building a base that could kind of maybe smooth out the cadence of orders here over the next 12 months or I mean what's kind of what are we seeing out there in the market?

Speaker 2

Greg, I'm going to turn that over to Sanjay.

Speaker 7

Thank you, Andy. So Greg, I think here is how you should think about it, right? So I think it's going to be a mix of 3 key things, One is our continued strategic stack sale, which actually carry good pricing and good margin for us. 2nd piece of that is our 5 megawatt containerized Turnkey product, which really makes electrolyzer easy for our customer, right? Now with the 5 megawatt product versus stack, there Sort of your site assessment tests and things like that, fabrication management, that's a piece we're continuing to refine and continue to get better at.

Speaker 7

Then you got large scale projects, Which goes under percent of the completion revenue accounting. And as you keep adding more and more of those, that gives you that stable base, right? But obviously in 2023, you've seen Q1 versus Q2 be a lot more lumpy, but you will see that pick up in Q3 As you start to see more contribution from some of the I mean some project business, some incremental electrolyzer business as well as some of this 5 megawatt project business, You will see that step change again in Q4. So from the bookings cadence standpoint, if you're looking next 12 months out, you should see a lot of 5 megawatt containerized product booking. You should see a lot of stacked sales opportunity booking and you should really see substantial large scale project bookings So we've talked about right on our last earnings call, we said we're actually at the very final stages of our major project announced one.

Speaker 7

Clearly, there's 2 more that we're going through legal documentation right now. So these are the type of the things you should see, which will make 2024 smoother. And as more and more of this project goes into the backlog and the bookings, then you actually will have that stable base with 5 megawatt and the That's still kind of adding on top of that. That's how you should think about the stack of how that revenue should unfold for that business.

Speaker 3

Super helpful. Thank you very much.

Speaker 2

Thanks, Greg.

Operator

Thank you. Our next question comes from Cassie Harrison with Piper Sandler. Please proceed with your question.

Speaker 6

Hi, Cassie. Hi, good evening. Hey, Andy. Good evening, team and thanks for taking the questions. So I wanted to yes, thanks.

Speaker 6

I wanted to ask about The timing and then value of any and all financing transactions that we're discussing here, specifically, How much capital do you think you're going to raise either in the second half of twenty twenty three or twenty twenty four from Pick your source, DOE, corporate bonds, ITC, monetization, infrastructure funds, like what is the absolute amount that we're 4 here, is it $500,000,000 $1,000,000,000 $2,000,000,000 just trying to get a sense of that?

Speaker 2

I'm going to let Paul take that one. Yes.

Speaker 5

I guess, what I would tell you is, when we look at debt capital and I think about it in kind of like the next 18 month Timeframe and across the various sources that you've made reference to, I'm targeting $1,000,000,000 to $1,500,000,000 That's where I'm targeting. So in that timeframe and exactly the timing of when it rolls in and how that should be determined, but We're pretty confident. I mean, we could go get debt today. I mean, it's not that we don't have access to debt capital. We just want to we're being very opportunistic in Thinking about the best terms, best cost, best all the different dynamics, there's debt available.

Speaker 5

It's just I've had Term sheets from lots of players. It's just we're trying to be very thoughtful about what we do and when we do it. So, but in that timeframe, that's Roughly kind of what I'm thinking about in terms of magnitude.

Speaker 6

That's helpful, Paul. Thanks for that. And And then maybe just a quick follow-up question for Sanjay on Georgia. As you indicated, it's taken a little bit longer to hit The targeted capacity. Can you walk us through exactly what the gap has been more recently between the Analyst Day back in June and what's actually happened.

Speaker 6

And then when Georgia is online, will that just is the output for that facility earmarked for materials handling or is it earmarked for

Speaker 7

Let me take the second part of the question first, right. It's obviously a part for our internal use and for both of those applications, right. So that's the first piece. Now in terms of the timeline here as to again, I think From last we met versus where we are right now in the month of August here, we are fully planning to produce liquid here this quarter and certainly this month and hosting the Analyst Day on the So we've actually as we continue to make sure that what is the most optimal way to run the plant, there are learnings that we're having, right? Now we have Choice to make, do you keep running or do you actually implement some of those learnings?

Speaker 7

So there are things that we found out that we could do better from a rectifier energization perspective. There are learnings that we have from the stack perspective that we're actually going to make the operation of the plant better, right? So as we look to implement some of those changes, learnings from our gas Glenn, that certainly has had some additional time impact here, right? And again, one of the things we want to make sure, right? So for us, getting Georgia up and running and getting production in Georgia, it also has to be done the right way and really leverage that learning as we start to think about building our plant in Texas, As we're building our plant in New York as well, right?

Speaker 7

So that's essentially what I would say. And also another thing you need to kind of keep in mind, right, is We've been pushing, just so you guys know, in order to be able to get this plant built in 12 months versus what the industry average of 48 months is, We've actually been pushing folks, but it's in it's the month of July August. And on some level, the productivity does go down because it's 100 degrees outside And people have to actually take break and really be able to cool down and then go back on-site. And just to give you a sense, the team was on-site at 4:30 am Today, right, just to make sure that things were happening. So that's another factor.

Speaker 7

There is nothing anyone can really do about that, reduce productivity in the month of July August in Georgia, and that you have played a bit of an impact here as well. Would you add anything to that?

Speaker 2

I would just wear shorts to the Investor Day at that event.

Speaker 6

Thanks for that. If I could sneak one more in. Andy, In the prepared remarks, you talked down 13%. I was wondering if you or Paul, I could go into some details on what these are exactly and then how should we think About those items over the course of the year.

Speaker 2

Great. Kashy, I'll hand it over to Paul. Yes.

Speaker 5

So I mean, I guess what I would say is, I'll just give you a microcosm example. When you're designing something that's new, that's never been done for, then you're trying to manufacture and scale it in mass quantities. Obviously, you're going through an And scale it in mass quantities. Obviously, you're going through an incredible learning curve real fast. So sometimes we learn like certain materials In terms of how they perform and the product and when we turn, we have fortunately, we've got a great Broad platform to be able to test the products between the customers we're selling them to as well as in the case of electrolyzers, Our own green hydrogen plant, so we're able to accelerate that learning curve.

Speaker 5

But when you run it through the range of things that we're launching And the scale of pace and all those things, you kind of compound those things. So some of it's material sometimes in Sometimes it's the manufacturing processes in terms of how it works, your learnings there. It's those kind of learning curves that you go through. The good news is we feel like In particular, many of these things we've kind of gotten through those humps and curves and they're not lessons that you learn again, right? So We're able to kind of course correct and go through those learnings quickly and redirect.

Speaker 5

So that's that just gives you a microcosm example of some of the kind of things This is included in those costs.

Speaker 6

Thank you.

Operator

And thank you. Our next question comes from Sam Burrow with Jefferies. Please proceed with your question.

Speaker 2

Hi, Sam.

Speaker 5

Good afternoon, Andy.

Speaker 2

How are you doing?

Speaker 10

I'm doing well. Thanks for squeezing me in. I'll make it quick. You guys obviously put out letter on the 45V to the powers that be recently and laid out your case convincingly, But it seems like the debate or like the conflicts, the inter corporate conflict, if you will, is on additionality with the next of the world wanting it, you obviously don't for reasons that make a lot of sense. But with that as a backdrop, like what do you guys consider to be a win on like it being put to rest forever or is it still a win if additionality is a requirement that gets phased in Over the next like 5 plus years.

Speaker 2

So Sam, I'm going to take a step back and say, I stand with Senator Carper, Senator Manchin, where Senator Carper wrote the bill, Those additionalities was not included. So I'm going to stand by that. I will just add, the longer additionalities pushed out, the better it should be. But When people ask me that question, we've done a lot of work and you may have seen some of the work. But essentially, it's bad for U.

Speaker 2

S. Jobs, it's bad for climate And it's bad for national security. And one item that people don't really talk a lot about, And I think you'll start seeing articles about this. This is really at heart. I know Senator Manchin took me aside and said, Andy, At heart, this is a national security decision.

Speaker 2

Will United States continue to be energy independent? And to put requirements on the hydrogen industry, which the government has not put on their own buildings as they drive to be Net 0, just doesn't make sense. So the longer it's out, the better. But Yes. I see no reason for Plug to publicly take a compromised position.

Speaker 10

Okay, got it. That's all for me. Thanks.

Speaker 2

Okay. Thanks, Dan.

Operator

And thank you. Our next question comes from Chris Dendritos with RBC Capital Markets. Please proceed with your question.

Speaker 11

Hi, yes. Thank you. I guess maybe just to start here. So in the investor I think you guys all kind of mentioned that you had pushed out some of the timing on some of these other facilities maybe 6 months or so. Can you just provide, I guess, some additional commentary on that?

Speaker 11

Is it really just kind of level setting and And then giving yourself some more cushion or are there some maybe delays in construction that we should be thinking about? Thanks.

Speaker 2

I'm going to let Sanjay answer that one, Chris.

Speaker 7

Yes, sure. Chris, so look, I'm glad actually you asked that question and give us an opportunity to talk about exactly what's going So in case of Texas, we wanted to make sure that we were going to get a lump sum EPC contract. That was very important because that allows you to go and get bankable deals done, make the project bankable. It really starts opening up project financing and we got to do that with a partner like Right. Now that contact negotiation, and again, this is a first of a kind, hasn't been done in the green hydrogen industry.

Speaker 7

It took about 6 to 9 months instead of probably a typical 3 to 6 months, right? So we have not executed the contract. EPC is going to start to kick off. So instead of actually EPC is in the month of March, it is now in the month of July. So that's really what has happened here.

Speaker 7

So instead of that plan coming online in Q2 of twenty twenty four, that was second half of twenty twenty four. That's what happened here. And by the way, we felt like that after 3 to 6 months is well worth It is the right thing to do from basically being able to get a contract like this so that it sets the template and the standard of how this Project needs to be executed otherwise working and doing all the things that we did in Georgia, all that learning, we would not have taken advantage of that. In terms of New York, it all comes down to substation. We've been having fantastic collaboration with NYPA as well as National Grid.

Speaker 7

But as it stands right now, that substation is probably going to get energized only in Q3 of 2024. Until the substation is energized, we cannot bring the liquid We have procured all the long lead time items. This is our electrolyzer. This is our liquefier. So those issues aren't the bottleneck.

Speaker 7

Permitting is not the bottleneck. There's nothing else like that, right, which is why we just wanted to make sure that we articulated why Texas is And second half twenty twenty four, why New York is second half twenty twenty four? And as it relates to Louisiana, we just wanted to make sure that we're being also thoughtful about What that right structure of the EPC contract needs to look like? We've been working hand in hand with our partner, Olin. And instead of that plant also being End of 2024, based on where we are today realistically, end of 2023, it is now going to be Q1 of 2024.

Speaker 7

That's really what has happened here.

Speaker 11

Got it. Okay. Yes, thanks for that. And then I guess maybe just on my follow-up here and I apologize, I think my Conor Akashi might have cut out during his last question. But in the letter here, there's I think you mentioned $45,000,000 Of incremental investment costs kind of in the quarter for growth.

Speaker 11

Is that like investments that are going to have Sort of pay dividends going forward or is that sort of things that you had to do in the quarter to true things up and I guess get infrastructure Where it needed to be, I guess, how should we think about the benefits of that incremental spend?

Speaker 5

Yes. Well, I mean, the short answer to your Question is absolutely yes. I mean, when we think about just to put some context, sales of our electrolyzers will be 4 times the Size and volume that we did in the first half. And as we grow into next year, the volume is growing dramatically. And this is a product that's very quickly generating a profitable product margin that is incredibly attractive.

Speaker 5

So and it's one of the many areas that we have opportunities for this ASP management. So because of our unique position in this space. So the short answer to your question is, this absolutely has value in helping us propel these incredibly significant platforms Can be incredibly accretive to the company and you're going to see the benefits of that. So hopefully that helps provide the color you're looking for.

Speaker 11

Yes, appreciate it. Thank you.

Operator

Thank you. Our next question comes from Andrew Pericocco

Speaker 11

Doing well, doing well. I'll just squeeze one quick one in here. Most of my mind have been asked, but it seems like you're Pushing pretty hard against additionality. And I'm just curious what in a world where additionality is required, what does that mean for your business and Margins in the near term, maybe just ask it slightly differently. What are you currently assuming in your margin guidance in 2024 2025 as it relates to the hydrogen tax Thanks.

Speaker 2

So Andrew, let me take a step back and remind folks The plants that Sanjay has rattled off in Georgia, Texas, New York, Louisiana, All that work started and started moving forward before the IRA. I'll let Paul answer the second part of that question. But we have real demand For that hydrogen regardless of how the regulations are written. I think the reason I take such Strong opinions about the IRA. Plug along with people like Cummings, Air Liquide, who are actually deeply involved In helping architect what the language was and I could tell you it never came up.

Speaker 2

And so maybe that's why I might be feel quite strong about it because It really shouldn't even be a debate at the moment. But let me let Paul talk about the margins profiles

Speaker 5

And how he thinks about it? I didn't hear the complete context to your question though.

Speaker 2

What was the margin impact Paul if we don't get the production tax?

Speaker 5

Well, dollars 3 a kilo I mean, the way it's phrased is holistic, dollars 3 a kilogram is meaningful. We're not going to knock it at all. We're going to get Substantial portion. And if we don't qualify, who will? So I think we've got a unique position in terms of all of the relationships we have in Washington to help shape this in a meaningful way for all the things that Annie talked about.

Speaker 5

And so this year you talked about Georgia coming on, we're expecting to start accruing that benefit right away. And so, it's going to have impact this year. And as we move into next year and turn on additional facilities, it will have even substantially more Impact. And so when you talk about $3 a kilogram, the majority of that, if not all of it, in the short term and mid term, the majority of it, we To recognize and appreciate. So that's incredibly impactful for the near term.

Speaker 5

So I think it's fair to say, Paul, Even without the IRA, our costs go down to 1 third of what they are today. Yes. And as most of you guys know, we started our green hydrogen endeavor even before the IRA got passed because it is so incredibly economically Impactful and accretive to us to produce this at such a much substantially lower cost. So Overall, we're on the right path and right footing and this will be impactful and this is going to be incrementally accretive and additive to the overall equation.

Speaker 11

Okay. Thank you. I'll leave it there.

Speaker 2

Thanks.

Operator

Thank you. Our next question comes from Avi Sinha with Northland Capital. Please proceed with your question.

Speaker 5

Hi, Abhi here. Hi, thank you for squeezing me in. Just one quick one. So Overall,

Speaker 12

I keep getting this lot of news here from like, whether it's from different projects in Australia, Europe and whatnot. So I mean, I feel like we have a lot of incremental additive value to the existing guidance here. But of course, there's no change in guidance, Not less 2023, but even for longer term. I'm just wondering, at least if you look at 2024 or 2025, What projects you could point to that is materially materialized could really skip the scale on the hiring of the back I've

Speaker 2

been doing this for 15 years and I've been pretty good Pretty good on revenue over the years. And I think we're going to stick by the guidance we provided already. And If something really good happens and we're certainly engaged around the world and Sanjay talked about the Sales funnel for electrolyzers, which are real. We're driving every day to make the number bigger. But What we've said in the past for next year and what we've said for 2025, I

Speaker 7

think we'll just stand behind that today.

Speaker 2

Good try though. All right, fair enough. Thank you. Okay. All right.

Operator

And thank you. Our next question comes from Tom Curran with Seaport Research Partners. Please proceed with your question.

Speaker 3

Good afternoon, guys. Thanks for running so much later here to allow some of the rest of us to ask questions.

Speaker 2

No problem, Tom. And you were last but not least. Just made it.

Speaker 5

Sorry, Mylan.

Speaker 3

Sorry, Mylan. Just two quick ones. First, Andy, Paul, Just what are some of the main factors that have obstructed the Services division's ability to get closer To achieving a breakeven gross margin by this point. And how has each of those challenges negatively surprised you either Just in terms of its nature that the fact that you didn't see it coming or maybe its severity. And then given that, What really undergirds your confidence from here that services will nevertheless be on track for your new profitability improvement timeframe?

Speaker 2

Yes. So Tom, let me tell you why when I look at the challenge And the challenge is really comes down to I'm going to give you the technical challenge and then I'm going to give you the Our view of why we believe we have good solutions. The technical challenge Is really associated with the customers and this is good or taking more power out of our unit Than they originally did. And that means we need to put more power into the box to be successful. And most of this is And Bob with material handling.

Speaker 2

The second item is fuel cells don't like to start and stop all the time. And we understand and have demonstrated that we know how to manage that, which should be Another differential advantage long term for Plug. We have about 5 or 6 sites that we've now I'm going to talk about The old fleet and the new fleet. We've taken about 5 or 6 sites, which we have implemented, all the knowledge we've how to add more power, how to manage all these starts, stops. And we see that The data shows it works.

Speaker 2

And our biggest challenge has been how to implement these changes rapidly. It takes people and that's actually been one of the challenges to get that right. The second one is with our metal stack and with what we've done, we can pack so much more power into a unit That we will never run into this issue again. So I feel very, very confident. And I this is not a commitment, but I said in a meeting yesterday during a review, I see no reason long Term, the service business can't be more profitable than the product.

Speaker 3

Great. And then my follow-up would then be Sticking with gross margin, turning to the equipment division, where are gross margins currently for each of the major product lines? So By major, I mean, material handling, electrolyzers, on road mobility, cryogenic storage and transportation and stationary power. Just What are the run rate targets for each that when as you hit them on a blended basis Or what you expect to enable you to get to that target division average gross margin goal?

Speaker 5

Yes, there's a lot packed in your question given the range of things that we do. 1st and foremost, we have historically in my public financials, you can look back and see, we've hit 30% plus gross margins in material handling. So And when you look at the breadth of what we're doing there, it's all about continuing to drive that leverage and that will continue to be accretive as we grow that. Electrolyzers is the early phase of what we're doing there. As I mentioned, we're going to do 4 times the sales in the second half, but it's already in the 20s and will quickly grow To that 30% plus, when you look at our long tenured, our long term margin goals of 30% going up to 35%, We expect all the equipment business to get there just to give you some context.

Speaker 5

And so they're all at different phases, especially some of the newer stuff like Stationary is an example. We're selling our first systems as we speak. So those are very early in that process. The good news is it's all about scale. When you look at how fast we're going to ramp these different businesses, it provides that opportunity to scale them from a volume standpoint, from a supply chain standpoint Across those board.

Speaker 5

So cryogenic, the trailer and the tank business, I mean, those are existing businesses that are in the mid-20s to high upper 20s. So as we're launching and as we're launching new products like mobile refuelers and hydrogen trailers, those are actually incredibly accretive in the market and they'll be north 30 yard out of the gate. So don't want to get too discreet because I'm sure there's customers listening to a lot of these calls, but I would just say, We have a mix of products today that some more mature that are already in that range and many that are poised if they're not there yet, we'll get there very quickly. So that's It gives you a little bit of color and context. Very helpful, Paul.

Speaker 3

Go ahead, Andy.

Speaker 2

I'm sorry. No, please go ahead, Tom.

Speaker 3

That was a very helpful overview. I was just going to thank you for taking the same marathon approach To your call that the boss does to his shows.

Speaker 2

That's funny, Tom.

Speaker 3

On that note,

Speaker 2

let me tell the analysts that We're really looking forward to seeing you at in Georgia on August 23. It should be you'll be able to see and using the Boston analogy, Tom, you'll be able to see a plant Like nowhere else in North America. So it's well, well worth coming to. And on top of that, Very shortly, you will be getting a letter about our Plug Power Symposium, which will be held at our Vista facility. Again, as I mentioned, it's astonishing facility that we have about 10 minutes south of us here in Latham.

Speaker 2

So thank you everyone for staying on and I look forward to seeing all the analysts down in Georgia. Bye now.

Powered by Quartr
Earnings Conference Call
Plug Power Q2 2023
00:00 / 00:00