Plug Power, Inc.

Greetings and welcome to the Plug Power first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to Tila Hoyos, Vice President, Marketing, and Communications. Thank you. You may begin.

Thank you. Welcome to the 2025 First 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. 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 and our annual report on Form 10-K. For the fiscal year ending December 31st, 2024, our quarterly report on Form 10-Q for the quarter ended March 31st, 2025, 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, 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 CEO, Andy Marsh.

Good afternoon, everyone. Thank you for joining today. I am here with Paul, Sanjay, and Jose. I'm happy to report that in Q1, Plug met the financial and operational targets we set out, delivering a quarter of solid execution in a still turbulent macro environment. Revenue came in at $134 million in line with guidance. But more importantly, we made real progress on our path to profitability. improving margins, reducing cash burn, and continuing to strengthen execution across all business lines. We are projecting between $140 to $180 million in revenue in the second quarter. Let me start with some business highlights, followed by updates on cost actions, capital, tariffs, U.S. policy, and then I'm going to hand it over to Jose to walk through Europe in depth. With respect to our business performance, we saw a renewed momentum in our material handling business in the first quarter. One of our largest pedestal customers placed a $10 million initial order tied to over $200 million in future opportunities under a safe harbor structure. We also expanded with new partners, including Steph in Spain, now deploying plugs hydrogen-powered logistics systems at their cold chain facilities. On the infrastructure front, our hydrogen generation build out is delivering. The 15 ton per day Louisiana plant was commissioned in Q1 on time. Together with Georgia and Tennessee, we now have 40 tons per day in internal production capacity, improving customer economics and availability while shielding margin from third-party volatility. With respect to cost savings, internally, we launched a major program called Quantum Leap, targeting over $200 million in annualized run rate reductions. I'm pleased to report that most of these savings have already been executed. The program spans manufacturing, logistics, sourcing, and SG&A. Our Q1 cash burn was down nearly 50 percent year over year, and with quantum leap, we expect further reductions in cash burns in future quarters. This is plug power operating with discipline, precision, and a long-term mindset. With capital, we've taken some important steps to ensure financial flexibility. In March, we raised $280 million in equity bolstering liquidity while reducing risk in a volatile market. We followed that with a $525 million structure financing facility, part of which was used to retire convertible debt. Combined with the $1.66 billion Department of Energy loan guarantee, these moves provide a strong foundation to support our infrastructure goals. That said, I want to be forthright. With the change in administration, we're actively working with the DOE to advance the loan process. The underlying program is contracted, obligated, and we believe secure, and we continue to engage closely with the administration. At quarter end, we held nearly $300 million in unrestricted cash with meaningful additional capacity under the new facility. Our outlook remains unchanged. We do not anticipate raising additional equity in 2025, and we remain committed to that goal. Turning to tariffs, recent actions from the current administration have increased duties on Chinese imports that impact our core product lines like GenDrive. For some models, this has resulted in increased costs, particularly on ballast assemblies, battery modules, and plates. At the moment, a good deal of these items are in inventory. That will be used in 2025. With today's announcements, obviously the pressure is a little bit off us, but we are continuing down our four-prong mitigation plan. One is that if needed, we will add surge charges for customers based on sourcing mix and inventory timings. dual sourcing and resourcing, which we've really had in motion for a number of years, engineering redesigns to reduce tax-exposed components, and geographical diversification, leading further into APAC and U.S. suppliers. With these items, we expect even to reduce our costs in China by 50% in the next six months. Importantly, I think this is really important, our electrolyzer platform is minimally impacted, even with the 145% tariffs, and was internally developed with non-Chinese content. This is a team-wide response, and it's already helping us protect margin integrity. Finally, a brief word on U.S. policy. To clear the transition, Washington has introduced some uncertainty about clean energy programs. The IRA is under pressure. and there's active debate in Congress over the future of Section 45B of the Hydrogen Tax Credit and the long-term direction of decarbonization incentives. That said, we're actively engaged with policymakers, both directly and through our leadership in FICHEA, which is a fuel cell and hydrogen energy association. We're also actively pursuing state and local funding opportunities where momentum continues. We remain focused on execution and will continue advocating aggressively for a stable, long-term hydrogen policy framework in the U.S. Before I turn it over, let me frame one of the most exciting strategic frontiers, Europe. Between the EU Green Deal, Repower EU, and the UK Energy Act, we are tracking an electrolyzer opportunity funnel worth over $21 billion across 2025 and 2026. What is different now is not just ambition, but enforceable procurement mandates, funded incentive schemes, and penalties for noncompliance. PLUG has moved early and decisively in the region, and we're already embedded in some of the most transformative hydrogen projects across Europe. I'll let Jose walk through these specifics, but I'll close with this. Europe is real. The funnel is live. Plug is in position. With that, let me turn it over to Jose to take you through the European electrolyzer strategy. Jose.

Thank you, Andy. As mentioned, Europe today is the most dynamic electrolyzer market in the world. Driven by regulation, investment, and execution timelines that are accelerating across the region. PLAC is at the forefront of that shift. Let me start with the policy foundation. Under the EU Green Deal and the Renewable Energy Directive 3, the EU sets targets for 42% of industrial hydrogen to be renewable by 2030 and 60% by 2035. The FIT55 policy package sets the legally binding framework to decarbonize their energy intensive sectors using green hydrogen. That includes mandates under the Fuel EU Aviation and Fuel EU Maritime. Fuel standards for aviation and maritime now come with real penalties creating a direct pool for SAF and e-methanol, both of which rely on electrolytic hydrogen. What's different this cycle is that governments are funding real projects with real deadlines. Let's start with aviation. In Denmark, PLAS has an opportunity for 300 megawatt of electrolyzer capacity for a SAF project. And the French government recently awarded 25 million for pre-feed and feed engineering for SAF projects to four companies that PLAC is actively working with. This is an encore example of PLAC involved at a scale for decarbonizing jet fuel. Spain is targeting 12 gigawatts of electrolyzer capacity by 2030. Already, 2.3 gigawatts have been pre-awarded across seven clusters, covering refining, SAF, methanol, and ammonia. PLAG is actively engaged in multiple of these projects, where our long-term service model helped lower LCOH versus competitors. These evaluations are real, and they include mandatory procurement scoring, which favors OEMs like PLAG with full lifecycle offerings and domestic engineering teams. Refining is another major application. PLAG is delivering 100 megawatts to GALP in Portugal, a project supported by 84 million euros in operational subsidies from the European Hydrogen Bank. These are 10-year index subsidies covering OPEX, not just CAPEX, showing the EU's long-term commitment to green hydrogen viability. We are also delivering 25 megawatts for Iberdrola and BP in Castellon in Spain. Now moving to the UK, the Energy Act of 2023 has created a stable regulatory framework. The government has already awarded £2 billion in revenue support under Hydrogen Allocation Round 1, HAR1, and plug technology is well positioned in over 60% of the capacity awarded. For the hydrogen allocation round two, the UK has shortlisted 1.2 gigawatts of new electrolysis projects, with awards expected later this year. PLAG is actively engaged in both centralized and decentralized proposals, with total awards that potentially could exceed 875 megawatts. Importantly, these UK programs come with 15-year price support contracts structured under the low-carbon hydrogen agreement model. These are predictable inflation-linked revenue streams critical for bankability and capital deployment. What sets PLAC apart in this market is our full-stack offering, proven PEM systems, integrated plant engineering, long-term service, and a strong European and execution teams. This is why we are strategically positioned against competitors in both RFP scoring and LCOH evaluation. To summarize, Europe is a fully active electrolyzer market, and PLAG is in the pole position on project visibility, regulatory fit, and delivery readiness. We expect Europe to be a multi-gigawatt contributor to bookings and revenue over the next 18 to 24 months, with meaningful margin contribution as projects move from backlog to commissioning.

Thank you, Jose. And Paul, Jose, Sanjay, and I are ready for your questions.

Thank you. And at this time, we will conduct our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, to ask a question, press star 1. And our first question comes from Bill Peterson with JP Morgan. Please state your question.

Yeah, good afternoon, everyone. Thanks for taking the questions. I'm sure you've seen, Andy and team, I guess the initial proposal for the tax bill. And my question is really around the 45V and maybe a few full questions. First of all, assuming this does get written into law, what are the potential impacts for your Texas facility or the DOE loan? I presume you're going to try to accelerate and begin construction before the end of the year in order to qualify. And more broadly, how should we think about the impacts to the nascent green hydrogen industry in the U.S.? You know, clearly with ample fossil fuels, the cost structure for green is not in a way to compete, you know, well without this tax credit. And I appreciate the comments from Jose on Europe. Would this presumably mean you'd be focusing on markets such as Europe and Australia rather than the U.S.? Thank you.

Uh, good question, Bill. And, uh, let me, I think you, uh, summer first, I'm going to take a step back. Uh, I was happy that 45 V was continuing through 2025. And it would be even in the first draft, uh, you know, a safe Harbor provision for construction that would start this year. Uh, My first reaction was, we're going to have to work to start construction this year to make sure that that plant would qualify under 45B. I was also pleased because I think we're probably the only fuel cell company that can leverage 48E, and that seems like it's timely at 2031, so that would give us time again, to continue to grow the fuel cell business. I think, look, you know, Jose and I worked on this presentation for today. Prior to the announcement, we have become more and more focused on Europe because we see that the biggest opportunities for expanding the hydrogen industry today resides in Europe. When you look at it, the only part of our products which are actually American manufactured will be the stacks. The rest we are leveraging integrators across the EU and the Middle East for our products. So, you know, look, you know, there's a lot to go on Congress. I've been around a long time. I was just happy to build a 45B was mentioned and that it wasn't completely cut out like I've heard threats for the whole IRA. So I can't say I was thrilled with the announcement, but I wouldn't give it, you know, it's not, there's a way to work through what's been announced. So I'll just add one last item, not to ramble on, Bill. I think it'll be really interesting because there seems to be very, very strong support for hubs in red districts. And look, the hubs don't work without the production tax credit. And I think that's well, well known. So I think there's a lot to go. Lots still going on in D.C.

Hope that was helpful. Yeah, it was helpful. I'm sure you and others will probably be working to see if there's any way to massage the existing drafts. My second question is somewhat related, but looking at your BEDP pipeline shortly after last earnings, you had close to eight gigawatts of electrolyzer orders set to FID within this year. Just want to get a sense, you know, did you close, you know, each of these orders you had expected in the first quarter? Are you on track thus far into the second quarter? And again, most of these are outside of the U.S. to begin with.

Most of these projects, I mean, are really, you know, we have about $200 million in backlog for this year with electrolyzers. Most of these projects we expect, you know, called, you know, two gigawatts will go to FID by year end. But, you know, I would just caution, Bill, you know, these projects, you know, the electrolyzers in many of these projects are billion-dollar investments. and the plants themselves can be $3 to $4 billion. I want to be cautious and say, yes, a lot of them may close this year, but some of them certainly will fall into 26.

Understood. Thanks for taking the questions and good luck navigating this environment. Thank you.

All right. Thanks, Bill.

And your next question comes from George Giannourakis with Canaccord Genuity. Please state your question.

Hi, good afternoon, and thank you for taking my question.

Hi, George.

Hi. I just sort of had a question on the cost cuts and the business rationalization issue. Are there other things that could be done, whether inorganic, sort of maybe selling parts of the business that could maybe accelerate your path to profitability? Thank you.

George, we don't, and Paul, I'll let you, we have no plans and we're doing no work for selling portions of the business at the moment.

Thank you. And maybe as a follow-up to just talk about the momentum in Europe, I'm curious as to any additional steps you're taking from a people power perspective to reallocate resources to that part of the world instead of others that may be seeing a little bit of a slowdown in momentum. Thank you very much.

So I'll start, then I'll let Paul add on. We've invested significantly in Europe over the past three years. We have a major development facility for electrolyzers actually resides in the Netherlands. We have a strong business development sales operations with centers in France. We have activities in Spain. We have integrators across Europe that we work with. Europe, now this is not a a new focus for PLUG. It has been investments that we've been making over three to four years. Jose, would you like to add to that?

No, you're right. I mean, we have activities all over the European Union, namely the facility in the Netherlands. But as you said, we have commercial operations in the UK, in Spain, Germany, in France. And this is not a new focus, as Andy said. And the relationships that we have over there have been built over the last 34 years. So there is a good amount of resources to face the opportunities that we have in Europe in the next.

And I would say, Jose, for real products in the ground using PEM technology, nobody has more.

I agree. Thank you. Thanks, George.

Your next question comes from Colin Rush with Oppenheimer. Please state your question.

Thanks so much, guys. Can you give us an update on how the hydrogen production facilities are operating, what you're looking at from a yield perspective versus expectations, and how the ramp is going in Texas at this point?

I think you probably mean Louisiana, Colin.

Yeah, exactly. Thank you for that.

Yeah. I think Georgia, we had our best month ever.

Yeah, April was a record in terms of production and yield.

Yeah, so I think, how many tons was it? 300 tons out of Georgia in April? Yeah, so Georgia is beginning to run without too much management involvement, Colin. It turns on and runs every day. Louisiana, boy, it's probably... I think what I've been most impressed with is, look, it's our third time around. It's a much cleaner design than Louisiana, than Georgia and Tennessee. We really have learned how to build plants, which is really important for Jose in building out the electrolyzer market. So we're quite pleased with the progress we're seeing in the at all three sites. I think the question is, we need to get Texas started by year's end, and I think that's a real focus of the business.

Thanks so much. And then from a material handling standpoint, there's been some mixed demand, not just for you guys, but broadly speaking around warehousing automation and capacity building. I guess at this point, are you seeing folks outside the U.S. start to expand capacity at all? Are there some green shoots that we can be thinking about as you get into the back half of this year and prepare for 2026?

What's interesting, I have one of my major pedestal companies that have kind of suggested to me that automation may not be working as well as they were hoping. which is good for our material handling business. Do you want to touch on material handling for Europe, Jose?

Yeah, so in Europe, we have made some inroads, and I think we announced this a few weeks ago with BMW in Europe with two new facilities that we're going to be deploying there. And we also, Andy also mentioned STEF, which is the largest freezer facility company in the European market, I think. We've also done a couple of facilities with them, one in Madrid and one in France. So we're seeing some activity and some new opportunities happening in the European market as well.

Thanks, guys.

Okay, thanks, Colin.

And a reminder to the audience, to ask a question at this time, press star 1 on your telephone keypad. Once again, to ask a question now, press star 1 on your telephone keypad. Your next question comes from Eric Stein with Craig Hallam. Please take the question.

Hey, everyone. Hey. Hey, Eric. Good afternoon. Hey, so Colin and I were just talking about kind of geographic mix and material handling. But I'm curious if you could just talk about, you know, what – you're seeing today, and I know part of this is because you've transitioned to the direct sales model away from PPA. You've also put through price increases for margins. You know, as a result, does that mean that the business today is more expansion with current customers or, I mean, you did mention a new customer, but just curious, the economics are different. It may take a little bit more time to get people up to speed on that. Just how should we think about that? Do you want to take that, Jose?

So, we are growing in both sides with existing customers. Andy mentioned one of our largest customers having safe harbor, $200 million of potential business at the end of 2024. But we are also talking and expanding with new customers and opportunities. The customer I just described in Europe is a brand new customer. So, We do see expansion in both sides, and the economics, you know, given that we will be looking at the 4080 possibility is still there, and we keep on pushing the market.

Got it. That is helpful. And then maybe, could you just remind us, I know you gave us the Q2 guide, so I'm not trying to dial this in too specifically in terms of annually, but I mean, do you expect this to be a similar year in terms of the breakdown first half, second half?

I would say this, Eric. We are trying to be very clear to investors of our performance quarter after quarter. Look, it's no, as you know, that we've had a couple years where we've missed. So we want to make sure that we don't mislead folks. And this quarter, we have a clear plan how to get to 140 to 180. We're focusing on becoming gross margin break even by the end of the year. That is the focus. And, you know, that's, you know, we're trying not to provide any additional guidance.

Yep. So understood. Worth asking, but I get it still. Thank you very much. Okay.

Bye. Bye, Eric. Thank you. And your next question comes from Dushyant Ailani with Jefferies. Please state your question.

Thank you for taking my question, guys. I just wanted to follow up on the 45V real quick. I know that there are some, you know, safe harbor rules, right, 5% spend or if you start construction. Could you kind of remind us how much have you already spent on Texas and then how much what the capex looks like?

We've spent $250 million. The CapEx is $800 million. The DOE loan is for approximately $400 million. And we've been working with an equity investor for the rest. So we've already spent $250 over $800 is about 37%.

So do you think that the Texas project is largely safe, how about with the 45V, since you've already, you know?

I would say this. This is going to be an interesting time as these rules, you know, laws are finalized. And I think the initial, you know, You know, the fact that 45V is in the mix and that there is a safe harbor aspect, I take as a real positive for Texas. That being said, I know this will go through gyrations in both the House and ultimately the Senate and then ultimately in reconciliation between the two bodies. So I don't want to, you know, what we think it is today, There's one thing I can promise you. It won't be the same whether it's the end of May, whether it's before the August recess, before December. It's going to be sorted out. This is kind of the first written volley.

Fair enough, fair enough. I agree there. And then just my follow-up, I think you had mentioned in your prepared remarks around conversations with customers on TARDIS, just maybe adding surcharges. How have those conversations been? Have you started those conversations with your customers yet?

You know, one of our – there has been some initial conversations. You know, at the moment, we're pretty much – so we had – Unfortunately, inventory that we're trying to burn down, and we have goals to reduce that significantly during this year, but we are protected on the inventory level, which actually has not really caused our costs to go up yet. And if I look at, again, at the tariffs, which the tariffs truce that went into effect, it really doesn't impact us. And on the electrolyzer business, as we mentioned, the products were designed not looking to have Chinese content. So when you put all that together, we feel, you know, I don't know if that's going to be a requirement, quite honestly.

Got it. Thank you.

I mean, I think that's one of the challenges at the level of uncertainty.

Fair enough.

Thank you.

You're welcome.

Thank you. And there are no further questions at this time, so I'll hand the floor back to Andy Marsh for closing remarks. Thank you.

Well, thank you, everyone. Look, this quarter, we met the numbers we said we were going to meet. We're clear about our expectations for the second quarter for revenue. We expect continuous improvements on item site, gross margins in the second quarter. We've proven, and unlike anyone else in the world who's not a large industrial gas company, we actually know how to build hydrogen plants. And finally, there is a huge, huge market opportunity for plug and electrolyzers in Europe, UK. I guess UK is still part of Europe. and Australia. So thanks, everyone. I appreciate your time. I'm looking forward to talking to many of you soon. Bye now.

This concludes today's conference. All parties may disconnect. Have a good day.