Plug Power, Inc.

Greetings and welcome to PLUG's second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to our host, Teal Hoyos. Senior Director, Marketing and Communications. Thank you. You may begin.

Thank you. Welcome to the 2022 Second Quarter Update 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 Provision 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, and such statements should not be read or understood as a guarantee of future performance or results. 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, 2021, as well as other reports we file from time to time in the SEC. These forward-looking statements speak as only as of the day on which the statements are made, and we do not undertake or intend to update any forward-looking statements after this call or as a result of new information. At this point, I would like to turn the call over to PLUG's CEO, Andy Marsh.

Thank you, Teal, and thank you, everyone, for attending PLUG's second quarter conference call. The last week has been a monumental week for the world, the U.S., the fuel cell and hydrogen industry, and PLUG with the passing of the Inflation Reduction Act through the Senate. The recently passed bill would enact a Clean Hydrogen Production Tax Credit, the PTC, to incentivize the production of clean hydrogen, providing a major inflection for the world to achieve net zero by 2050, and for hydrogen, especially green hydrogen, to provide 20% of the world's energy. This bill provides a trifecta effect. It's good for climate, it's good for jobs, and it's good for national security. Our electrolyzer business has benefited from the push in Europe to become energy independent from corrupt regimes. We are seeing the benefit as our orders already have exceeded by 50% our projection for the year. with most of that coming from Europe. Now the momentum will grow rapidly here in the States with the PTC, as demonstrated by our deal with New Fortress Energy, a 120-megawatt order, which was announced last week, which can grow to 500 megawatts. With the passage of the act, we expect a boom for our electrolyzer and green hydrogen business. All applications that use gray hydrogen today such as fertilizing manufacturing, will now be able to buy green hydrogen at a competitive price with gray. Applications that are looking to move to hydrogen, like steel and concrete manufacturing and natural gas heating, will have a path to dramatically reduce their carbon footprint cost competitively. Everyone wants green hydrogen. Now there is a path that always makes it competitive. We believe the first big markets for green hydrogen will be these industrial applications where it's simpler to substitute green hydrogen for other feedstocks. And remember, these applications represent 26 percent of the world's CO2 footprint. But cost-effective green hydrogen will also help us to expand our application business more rapidly. As hydrogen becomes more plentiful, and cost-effective all of our applications, like our Microsoft stationary product offering, Hy-Vee Avans, and, of course, powering material handling equipment becomes more attractive. This bill is good for all our stakeholders, including customers, shareholders, our employees, and the communities. For our shareholders, as mentioned in our investor letter, we'll move up our path to profitability by six months. Finally, before Q&A, I'd like to highlight PLUG's priorities beyond our revenue goals of $900 to $925 million in 2022 and $3 billion in 2025. First and foremost, our path to profitability in 2024. This includes the following key initiatives. One, commissioning 70 tons of green hydrogen in 2022 and 500 by 2025 in the U.S. and 1,000 tons globally by 2028. Our hydrogen business will reach more than 30% plus gross margins in 2024. The math is quite simple via a combination of vertical integration and the PTC. Obviously, we're reviewing the possibilities of building more plants sooner, than later to leverage our leadership position. Two, and you can see it, our service business will be gross margin break even by year's end and growing to 30% gross margin by the start of 2024. We are already experiencing significant improvements with the latest versions of our products. And look, scale matters. So our goal is sell more electrolyzers, sell more green hydrogen, sell more fuel cells, especially for our stationary products, Hy-Vee, and of course our material handling business. And four, full deployment of our highly optimized and automated Gigafactory and Vista site that will drive down our costs of our manufacturing and improve our quality. These are showcase manufacturing sites, not just for the fuel cell industries, but across all industries. And finally, success with our four JVs, SK, Hy-Vee, Axiona, and Foreskew. Executing on these strategies alone will allow us to continue and expand upon our industry leadership position. Of course, we won't stop here, but my team knows executing the above is our top priority. Paul, Sanjay, and I are now open for your questions.