Plug Power, Inc.

Greetings and welcome to the Plug Power Second Quarter Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation, and you may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Teal Hoyos, Vice President, Marketing and Communications for Plug Power. Please go ahead, Teal.

Thank you. Welcome to the 2025 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. 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, 2024. our quarterly report on Form 10-Q for the quarter ending 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's CEO, Andy Marsh.

Good afternoon, and thank you for joining us. As we begin, I want to reaffirm the business priorities we set forth under Project Quantum Leap, priorities that continue to guide every decision we make. Item one, drive gross margin improvements through operational efficiencies, cost reductions, and improve pricing disciplines. Two, streamline our operations by consolidating facilities, optimizing our manufacturing footprint, and accelerating productivity gains. Three, strengthening the reliability and performance of our service business, combining unit-level improvements with better pricing models. Four, expand our hydrogen generation network while improving the cost structure of hydrogen supplies. Five, advance our electrolyzer business by building a robust sales funnel and securing early-stage agreements ahead of customers' final investment decisions. And six, maintain strict cash discipline to bridge the positive EBITDAs in the fourth quarter of 2026. This quarter marks another important step forward to delivering on these commitments, both operationally and financially. Our team continues to execute with discipline, and the results we're sharing today reflect meaningful progress towards the long-term goals we've outlined. We closed the second quarter with $174 million in revenue, up 21% year-over-year, driven by strong demand across our GenDrive, GenFuel, and GenEcho platforms. Electrolyzer sales more than tripled from a year ago, reaching roughly $45 million in the quarter, underscoring the growing role of GenEco as the preferred choice for industrial-scale applications. Gross margins improved dramatically, moving from negative 92% in Q2 of last year to negative 31% this quarter. The improvement is the result of deliberate action. better service execution, competitive hydrogen pricing, and product cost reductions. Service performance is being driven by a combination of unit-level improvements and pricing adjustments, and we see a clear path for continual progress in the quarters ahead. Project Quantum Leap remains central to these gains as we streamline our operations, consolidate facilities, and drive efficiencies across the business. We remain on track for gross margin neutrality by Q4, with tangible steps in place to get there. Our hydrogen plants in Georgia and Louisiana are performing well, and a recently executed hydrogen supply agreement will deliver substantial and certain cost savings in the second half of the year. Pricing adjustments, particularly in service, for adding resilience to our margin profile while maintaining strong customer relationships. On the sales front, we were on pace for approximately $700 million in revenue this year. Looking further ahead, our electrolyzer pipeline is robust. Some additional deals are expected to close this year, while several major contracts are moving towards final investment decisions in 2026. We are also actively pursuing pre-FID agreements to secure value earlier in the process. In material handling, we added new customer sites this quarter, and our refreshed value proposition is more compelling than ever. A little-known fact, we have already removed the equivalent of a medium-sized power plant from the grid as customers have transitioned to hydrogen. Many applications today require significant electrical power, such as a large-scale refrigeration system, and our solution succeeds in either removing that demand from the grid entirely or time-shifting it to periods when the grid is less stressed. This not only lowers operational costs from customers but also enhances energy reliability and sustainability. From a policy standpoint, Recent congressional legislation has provided long-term clarity on the 45V production tax credit and the 48E investment tax credit. This is a meaningful tailwind that aligns perfectly with our strategy to expand hydrogen production and leverage tax credit monetization to improve capital efficiencies. On the DOE loan, we continue to work constructively with the loan program office to align with evolving priorities. We remain confident in our ability to begin construction on DOE-supported projects before the end of the year, accelerating the expansion of our hydrogen generation network. We've also maintained strong cash discipline in the quarter. Net cash in operating and investing activities declined over 40 percent year over year. We ended the quarter with over $140 million in cash and have access to more than $300 million in additional debt capacity. Stepping back, Plug Today is executing with focus, delivering measurable results, and building the foundation for profitable growth. Our product portfolio, from electrolyzers to fuel cells to our hydrogen network, position us as a leader in a hydrogen economy that is gaining real momentum. The work we're doing now isn't just about meeting quarterly targets. It's about ensuring PLUG is the premier hydrogen solution provider for years to come. I have with me Paul, Sanjay, and Jose, and we're now open to take questions.