Ladies and gentlemen, thank you for standing by, and welcome to the Bloom Energy fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to Suzanne Schmidt with Investor Relations. Thank you. Please go ahead. Thank you, operator. Good afternoon, everyone, and thank you for joining us on Bloom Energy's fourth quarter 2020 earnings conference call. To supplement this conference call, we have filed our Q4 2020 earnings press release with the SEC and have posted it, along with supplemental financial information that we will periodically reference throughout this call, to our investor relations website. The matters we will be discussing today include forward-looking statements regarding future events and the future financial performance of the company. These statements are subject to risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on forms 10-K and 10-Q, which identify important risk factors, including those related to the COVID-19 pandemic, that could cause actual results to differ materially from those contained in the forward-looking statements. These include statements about the effects of COVID-19 on the company's business results, financial position, liquidity, and outlook. We assume no obligation to revise any forward-looking statements made on today's call. During this call and in our Q4 2020 earnings press release, we refer to GAAP and non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with U.S. generally accepted accounting principles and are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation between the GAAP and non-GAAP financial measures is included in our Q4 2020 earnings press release. Joining me on the call today are K.R. Sridhar, Founder, Chairman, and Chief Executive Officer, and Greg Cameron, Chief Financial Officer. K.R. and Greg will review the operating and financial highlights of the quarter, and then we will take questions. I would also like to note that we are all dialed into this call remotely, so we apologize in advance for any audio issues that may occur. I will now turn the call over to K.R. Good day, and welcome to Bloom Energy's fourth quarter and fiscal year 2020 earnings call. Thank you for joining us. I'm delighted to report that because of our efforts in 2020, Bloom Energy is financially strong and even more resilient and transformative than ever before. 2020 was our best year yet on so many dimensions. Here are a few highlights. Our fourth quarter and full-year revenues are a company record. Our annual non-GAAP gross margin is the highest to date. We improved our financial health by retiring the high-interest debt that was coming due. We added four exceptional leaders to our management team with proven records of operational excellence. Our teams in supply chain, manufacturing, installation, and service navigated through the myriad of local and global obstacles to safely manufacture, accept, and service record numbers of Bloom servers, a clear demonstration of dedication and commitment. We announced applications and partnerships that leverage our platform in innovative ways. We are advancing the technology for our hydrogen fuel cells and electrolyzers, biogas power generation, and carbon capture. We also forged a partnership to deploy our fuel cells on ships. The Bloom team's community spirit and contributions are also a highlight of 2020. We refurbished ventilators, provided emergency clean power to pop-up hospitals and hurricane victims, and began co-hosting a COVID testing lab for local companies, schools, and underserved community members. We made deliberate and tough decisions to ensure that we emerged out of the crisis as a stronger company and conserved our cash until we had strengthened our balance sheet. We delayed our manufacturing facility expansion in early 2020. We focused instead on increasing the production and reducing the cost of our current product in existing factories. We were able to sell out our manufacturing capacity for 2021 based on sales in our current geographies. This enabled us to defer market expansion-related expenses and further manage our cash position. We made sure that we kept our innovation team well-funded. Since securing financing, we have initiated a plan to double our manufacturing output by the end of 2021. The new facility is architected and equipped to build our Gen 7.5 product. We are also making the requisite investment to expand to new states and countries. Our product install and service cost reduction now enable us to offer our resiliency solutions in states where commercial and industrial customers pay $0.09 /kWh or more for power. At this price point, we are competitively positioned in a majority of the 50 states, according to the U.S. Department of Energy data. In 2021, we will enter new states by securing orders with both existing and new customers. Outside the U.S., Bloom's head of international growth, Azeez Mohammed, is actively building a strong team to expand our global business. The maritime market is also a large growth opportunity for Bloom, as we discussed during our Investor Day. I'm happy to report that Tim Schweikert, who was the president and CEO of GE's Marine Solutions, has joined Bloom as a Special Advisor. Our collaboration with Samsung Heavy Industries is making good progress. With all these positive developments, we expect robust backlog growth in 2021. That expectation of robust backlog growth is strengthened by several policy and market tailwinds, both nationally and globally. In the U.S., President Biden's energy and climate agenda calls for the extension of existing clean energy incentives like the federal investment tax credit, increased subsidies for carbon capture, and investments in blue and green hydrogen. The President has pledged to deploy billions of dollars to improve infrastructure and improve climate resilience. Bloom is ideally suited to provide the reliable power and clean energy solutions that the administration is looking for. Treasury Secretary Janet Yellen has pledged to pursue pro-market policies that augur well for increased investment in our infrastructure. Energy Secretary nominee, Jennifer Granholm, has called on American companies to partner in the clean energy transformation and create good-paying jobs. She has emphasized the need for carbon capture and sequestration technology, which enable cleaner natural gas power generation and ensure that the clean energy revolution also benefits gas-producing states. Bloom Energy's technology solutions and its American-made products are well-suited to meet these needs and aspirations. We have seen similar bold moves from leaders in Europe and Asia in recent months. These policy announcements, coupled with market pull, create the potential for robust growth in several new areas. Let me highlight one such market opportunity: powering electric vehicles, which are becoming more prevalent. The federal government has recently pledged to convert its entire fleet into electric vehicles. General Motors aims to produce only zero-carbon vehicles by 2035, and many global automakers have set similar goals. Increased adoption of electric vehicles will put a greater strain on the aging electric grid. Toyota's president, Akio Toyoda, recently noted that Japan would run out of electricity in the summer if all cars were running on electric power. Even if the generation capacity were increased, the last-mile distribution upgrades in cities like New York, Tokyo, and Mumbai would be cost-prohibitive. Additionally, power grids are often disrupted for prolonged periods of time after natural disasters. In a world replete with electric vehicles, resilient power is vital for safety and security, enabling people to evacuate if needed and for essential aid to be delivered. Bloom Energy offers that resilient solution. Our unparalleled always-on product includes 24/7 baseload power with very high availability, quality, and point of consumption generation. Bloom provides an option for electric utilities to eliminate or mitigate the need to upgrade local distribution or create new generation capacity. This presents an opportunity for Bloom servers to be part of the infrastructure that powers up vehicles at fleet terminals, or more broadly, at a new network of charging stations. Our 400 V direct current output is ideally suited for reliably, rapidly, and most efficiently charging EV batteries, and offers the flexibility to operate on clean and green fuel. I want to stress the significant progress that Bloom Energy has made since the start of last year. We are a stronger company today than we were a year ago. We have balance sheet strength and flexibility. We have a very compelling value proposition, and our message to policymakers is resonating now more than ever. We are at the forefront of innovation in the energy sector. 20 years ago, we laid out a bold vision for energy transformation. We have been developing and delivering solutions based on that vision. We feel immensely encouraged by the momentum that we are generating and are confident in our ability to execute. With a strong leadership team, new solutions, new markets, and multiple pathways to low and zero carbon energy, Bloom Energy is exceedingly well-positioned for this moment. Let me now turn it over to Greg. Thanks, K.R. It's a pleasure to connect with everyone again. Before I jump into the financials, I want to highlight some of the changes we've implemented to our earnings process in order to provide additional transparency in a more standardized format. As you've hopefully already observed, we've increased the information in our earnings release. We will no longer be providing the shareholder letter, but have included the relevant information into the earnings release. We have evolved the supplemental financial information presentation to provide additional insights into our operating environment. We've made these changes based upon your feedback and will incorporate additional input going forward. Let me get into the financial performance for the fourth quarter in the year 2020. I'll be referring to the slide presentation posted to our website. While 2020 was an exceptionally challenging year, we were pleased with the progress we've made to advance our strategy, grow our business, and deliver strong financial results, all while improving our balance sheet. We are well-positioned in 2021 and beyond to enter new markets, evolve our technologies, and build larger operating scale. We ended the year with 450 acceptances in the fourth quarter, up 16.6% versus the fourth quarter of 2019, bringing us to 1,326 systems for the total year, up 11% versus last year. These are record numbers for Bloom, both in the quarter and the total year for acceptances. These acceptances also delivered record revenue for the fourth quarter of $249.4 million, up 16.8% versus the fourth quarter of 2019. Even in this challenging environment, we were able to improve our performance versus 2019, increasing our total year revenue by $9 million, to $794.2 million for 2020. We are proud of our team's effort in a very difficult operating environment. Moving on to our profitability metrics. We continue to see improvement in our margins as we drove a reduction of nearly 17% in our total product costs for the year. In the fourth quarter, our non-GAAP gross margins were 27%, up 11.3 points versus the fourth quarter of the prior year, and 23.1% for the total year, up 4.9 points versus 2019. As you will see in the upcoming analysis on slide five of the presentation, we continue to improve margins through lower product costs and better performance on installations. More to come on this later. The improvement in gross margins translated to improvements in operating income, with non-GAAP operating income of $12 million for the fourth quarter, an improvement of $23.8 million versus the fourth quarter of last year. We improved our total operating income by $29.6 million versus 2019. We delivered adjusted EBITDA of $25.5 million for the fourth quarter and $45.5 million for the total year 2020. With the increase in acceptances and revenue, the fourth quarter was up $24.3 million versus prior year. This resulted in a total year increase of $2.6 million, as the fourth quarter performance was enough to surpass the higher EBITDA profile of the repowerings of the second and third quarter of 2019. These margins and operating income performance, when coupled with a reduction in our debt costs, dramatically improved our adjusted EPS versus prior periods. With respect to our debt and balance sheet, it's important to revisit that in the fourth quarter, we completed the retirement of the 10% senior secured notes due July 2024, and the conversion of the remainder of our 10% convertible notes due December of 2021. This addressed our near-term maturity overhang, and when compared to last year, improved our cash position by $39 million while reducing our debt outstanding $131 million. Overall, we're pleased with our performance in 2020 and encouraged by the fourth quarter, both in our ability to grow revenues and maintain our trajectory on profitability. These are meaningful proof points on our journey to the objectives we shared at Analyst Day. We feel we have a strong franchise with our core product. It's a platform that's flexible and adaptable. As we execute on our growth pillars, we can build additional applications for hydrogen fuel cells, electrolyzers, marine, biogas, and carbon capture technologies. Let's take a look at our bookings and backlog as we only provide this one time each year. Even in a very difficult environment, we're pleased that we were able to maintain our backlog of nearly 2,000 systems. Customers such as hospitals, universities, and retailers were impacted by COVID-19, especially early in the year. As we proceeded through the year, each quarter, we saw an increase in our bookings as customers reengaged. We are encouraged by the continued commercial momentum and are hopeful to see additional opportunities with the new administration's focus on clean infrastructure. In addition to our system backlog, we have a service backlog of $3.4 billion, in line with the increase in our installed base. When combined with our system backlog, our total backlog is $4.4 billion. As we discussed during the Analyst Day presentation, there is currently enough system backlog for nearly all of our planned acceptances required to support the $950 million-$1 billion of revenue targeted for 2021. Meaning within the U.S. market, we're not dependent upon any new bookings in 2021 to support our projections. For our international business, given the short timeframe between booking and acceptance, we plan 2021 acceptances either identified, in pipeline, or backlog. Given our growth expectations, we've reached a point where we will be making investments to increase our manufacturing capacity. Today, we have capacity to support 200 MW of revenue system stacks. We are securing an additional 200 MW of fuel cell manufacturing line as part of our Bloom 7.5 introduction. This combined capacity will provide 400 MW of fuel cell or nearly 1 GW of electrolyzer capacity that we can allocate based upon market demand. As K.R. mentioned earlier, a significant benefit of our platform is that we can utilize the same manufacturing for all our applications with limited investment or customization. The investments we do make are very efficient. An investment of $50 million-$75 million required to double our capacity has a payback of less than one year when fully utilized. On Bloom 7.5, we completed our first customer installation in December. The unit is functioning as expected, we are gathering performance data. We will operationalize the manufacturing of Bloom 7.5 and increase production throughout 2021. In 2022, Bloom 7.5 will cross over to being the majority of our systems being manufactured. Given the strong performance of our current Bloom 5.0 technology, as demonstrated in our margins, for now, we'll continue to manufacture it at its current levels. The new investments will be made for Bloom 7.5. In the manufacturing facility that we are securing, we'll have the space to triple our capacity of our first line. With 2021 underway, our team is focused on increasing our bookings to support at least 25% growth in 2022. We've made adjustments to our sales force and focused on expanding in the U.S. with additional states, and through new partnerships both domestically and internationally. These expansions, coupled with the technology roadmap of our fuel flexible platform, provide multiple avenues to secure new bookings to support our growth. Moving on to slide five for our margin analysis. Here we've broken down our non-GAAP gross profit and margins by source of revenue. Our overall increase in non-GAAP gross margins is largely driven by improvements to the product margin resulting from continued reductions in product costs. For the fourth quarter, we achieved our targeted 40% non-GAAP gross margin for product. We had a good quarter on our performance on installations where we nearly broke even. For the year, we are roughly the same as 2019. Remember, this is a part of our business where we're targeting breakeven as we pass along the budgeted cost of installation to our customers. Going forward, we are exploring partnerships that would be accretive to our margins, as those partners will perform the installs and earn the revenue, thus reducing the operating complexity and dilution to our margins. For consistency, we have included the dollar per kW analysis that we have historically provided in our shareholder letter. The profit per kW results are similar to the total business, with an increase in profitability in 2020 versus 2019, especially in the fourth quarter of 2020. As we go forward, I would expect that each quarter, there may be some variation in our profitability, depending upon acceptance mix. Our service business lost nearly $7 million for the fourth quarter. We have committed resources to achieve profitability in the near future. If you turn to slide six, we lay out the changes in results to our service business. K.R. referenced this in his opening remarks, so I'd like to share some additional details. We have more than doubled the life of our power module since 2012 and expect our most recent vintages to season with over a 5.5-year life. We've also made changes using data from our systems in the field on how to optimize the fleet by targeting specific power modules for replacement. These changes are important as they reduce the frequency of providing power modules, which is a significant portion of our service cost. In addition, since 2012, we've reduced the cost of each of these power modules by 61%. The combination of all these changes results in less service costs, as we are required to provide less power modules, and those we do provide are at a lower cost. In the second half of 2020, we made an investment to provide additional power modules to increase the power output for our customers, which increased our cost. As part of our pathway to profitability, we plan to make that investment over the course of two years. When additional modules became available, we took the opportunity to accelerate the shipments and move the business towards profitability sooner. At Analyst Day, I committed to the service business being profitable by 2022. Now, with these investments, we are projecting to achieve profitability for the year 2021, earlier than we anticipated. We expect the service revenue to grow and profitability to be sustained over the long term, a very positive development for our overall business. As part of our commitment for increased transparency, we are planning to host an investor event this month to provide additional detail on the economics and processes underlying our service business. We think these focused presentations and the follow-on discussions are a good way to go a little bit deeper into our business and help the financial community understand our approach. I look forward to sharing more on the team's performance as we deliver through 2021. The next slide is an analysis of our cash flows, cash balances, and debt levels. A few highlights from the page. Going forward, we will focus our cash performance on cash flow from operating activities, or CFOA, as this provides insights into the cash generation capability of the business. While we were a user of cash in 2020, I note we reduced our usage in the fourth quarter through an increase in our EBITDA and a reduction in our cash payments for debt interest. These improvements were not enough to offset the needs for working capital within the quarter. Specifically, we secured an additional $22 million in safe harbor inventory to ensure our customers retain the ITC benefits scheduled to be reduced at year-end. While ITC was extended for two years in December, it occurred so late in the year that we were unable to significantly adjust these inventory levels. Over the course of 2021, we expect to utilize these inventories while avoiding additional investments, thus reducing our working capital. Our cash balances have increased since last year. Total cash increased by $39.3 million to $416.7 million, and the unrestricted component grew by slightly more, up $44.1 million versus prior year to reach $246.9 million. The reduction in unrestricted cash from the third quarter was driven by the payoff of the 10% senior secured notes due July 2024 for approximately $79 million. We have reduced our recourse debt by $117 million, both by paying off high coupon notes and the exchange to equity of our legacy convertible debt. These reductions, and the decrease in comparable interest rate for the convertible green bonds issued in August, have reduced our annual debt service cost by $44 million since the first quarter. These savings place Bloom in a much stronger liquidity position than we were just nine months ago and provide us with the opportunity to further invest in growth. On slide eight, we revisit the outlook we provided in December, and we are reaffirming all of our 2021 targets. For revenue, based upon the visibility of our backlog and pipeline, we expect to be between $950 million and $1 billion. Non-GAAP gross margins are targeted at around 25%, and we expect to deliver a positive non-GAAP operating income of roughly 3% of revenue. With the extension of ITC, we should be able to reduce our inventory levels, creating less need for working capital, providing an opportunity to improve on the cash metric. As CFOA is a new metric for us to forecast, I've left the outlook as approaching positive. As we proceed through the year and gain more visibility, I will provide updates on this expectation. While we are not providing quarterly guidance, each earnings call we plan to provide an update on performance and expectations versus our 2021 framework. I'll endeavor to highlight anomalies, while incorporated in our internal plan, may not be apparent in the total year framework. One example, just as in prior years, we expect the second half revenue to be greater than the first half. Like most product companies, we expect to be a user of cash in the first half of the year as we build inventories for the second half deliveries. In summary, we had a very strong operating performance in the fourth quarter, and given the environment, it was a really good year for us in 2020. We are gaining momentum in our commercial operations and are expanding our footprint in the U.S. and internationally. We continue to have great relationships and growth opportunities in South Korea and are focused on new market opportunities and geographies, as well as partnerships both domestically and internationally. Our service business outlook is improving, and we now expect to be profitable a year sooner. Our liquidity position has strengthened versus a year ago, with increased cash and reduced debt. Lastly, we are reaffirming our 2021 framework. Bloom Energy is well-positioned and has a roadmap to create significant shareholder value. With that, operator, let's open up the line for questions. Your first question comes from the line of Stephen Byrd from Morgan Stanley. Your line is open. Hi, good afternoon. Hope you all are doing well. Great, Stephen. How are you? Doing well, thank you. I wanted to explore a couple of technology and product developments, if I could. Maybe first, just on carbon capture, I'm just interested in your latest thoughts in terms of both the technical product feasibility as well as sort of the commercial interest in the product and sort of your general views on the progression. K.R., you noted there certainly is potential support here at the federal level, but I was just curious for your thoughts on your own product development and sort of commercial rollout. Stephen, great question, and this is extremely important. If you look at whether it is the Department of Energy, whether it's the IPCC, whether it is the IEA, they all talk about carbon capture being essential in this transformation as we go forward and a bridge to decarbonizing, which is the most important thing for climate change. The beauty of our technology here, there is a change since we last talked to you of connecting the hydrogen demand and carbon capture together. That makes this even better. Really, one plus one being greater than two kind of an example here, right? Which is, with our server, we can now bring in natural gas and we can produce blue hydrogen, electricity, and carbon capture. We can dial between the amount of blue hydrogen we produce and the electricity we produce. If you remember our old technology flow diagram from the hydrogen analysis that we showed you, coming out of our system, we can separate out hydrogen and carbon dioxide. We can either send the hydrogen back into the fuel cell to produce electricity, or we can supply that hydrogen for hard-to-decarbonize industrial uses, which becomes a premium product. Being able to work in 20 MW, 50 MW, 100 MW chunks, where we can produce trigeneration, if you want to think about it that way, of electricity, hydrogen, and carbon dioxide together. This is a technology that's being rapidly developed in the lab. We are working on it, and I think given what you're seeing in the federal government and the interest in seeing all of the above to decarbonize as a technology, I'm very bullish about it. Did you understand the ability to combine carbon capture and blue hydrogen? Yep, that makes sense, and the ability to sort of toggle and flex makes sense. I guess I would have thought the energy sector broadly would be highly interested in this product and interested in rollout. Is that fair to say that there is interest in the energy sector for this? There is interest in the energy sector for this. We are building our lab demonstrations and working very hard to demonstrate it. The beauty with our system that, again, I want to emphasize, is unlike many technologies that you develop in the lab in small scale, but when you scale it, you have scaling issues. Because of the modular architecture that we have, we can build this add-ons to the platform and demonstrate it at a power module level, and the scaling is not a scaling issue for us, unlike anybody else. That's one advantage. The second advantage here is also, while we are focused on CO2, let's also remember that this is the only technology that does not bring about the air pollution and does not require water and does not need that big land use you need in some other cases, and easy to permit. You put those things together, it becomes a very compelling value proposition. That makes sense. Then maybe just for my other area of focus, EV charging, and this, I guess, K.R., links to the power density point you raised, and I think it's an important point that, as we think about fast charging, it is challenging for utilities to put in place the infrastructure needed for very high voltage, very fast charging. I see the potential advantage here of what you offer. Could you maybe speak a little bit more to the path to sales for this and how you might approach this? I'm just curious everything from likely types of customers to any certifications or just other sort of qualifications needed to sort of have your product be a viable option here for fast charging. Sure, there are three or four things that I want to talk about and for people to appreciate, which I am sure you do, but for everyone to understand, right? Just imagine a significant double-digit adoption of electric vehicles happening very soon. We don't have to imagine, it's going to happen. Right? When you see this happen in metro areas, if every family has an electric car and they need to charge this, the increase in the amount of electricity needed in any one ZIP code is going to be so large that that last-mile transmission distribution upgrade that needs to happen. Imagine having fleets of vehicles, whether it is delivery vehicles, warehouse vehicles, all those things. If they had a fleet of vehicles that need to be charged, if there are bus depots that need to get charged, school buses that need to get charged, significant amount of power that needs to come in. That now poses a very good option for the utility to consider. Am I going to invest in transmission distribution last-mile issues that are very difficult to permit, or do I want to put resilient power right where I can charge, and the efficiency of not having the transmission distribution losses, the efficiency of not converting power from DC to AC and then back to DC to charge a vehicle, to get that high voltage right where you need it, to not create instability in the grid, is a huge advantage. The question you asked there is, with all these advantages, who is an ideal customer? That's a great question. It could be, depending on the locations and depending on the customers, it could be very different. In many places, I would imagine the utility would want to own that asset and be able to provide that power and rate base it because they can defer T&D costs, and it's a win-win for the customer and the utility, and for the local ratepayer. In some other cases, it could be the fleet vehicle owners that want to offer not only the fleet vehicles, but also the charging as a service. In that case, it'll be the fleet owner that'll be the customer. In some cases, it could be the large corporations that own these, very similar to them buying the PPA electricity from us, would also want us to be part of this. In some other cases, it could be the charging infrastructure people that would want to not only provide the charging infrastructure, but also have the generation so they can avoid the demand charges and standby charges that come from the utility. It could be all of the above. That's really helpful, thanks so much. Your next question comes from the line of Michael Weinstein from Credit Suisse. Your line is open. Thank you. you. Hi, guys. Hi. Hey, I know that in the past, you've been limiting the backlog updates to once a year. I think that's because of the lumpiness of bookings over the course of a year, it could make it a highly volatile statistic to be updating. I wonder if in this case, for this year, maybe it might make sense that maybe a mid-year update on it. You've said you expect a pretty good year for bookings this year, and I know you're going to get asked a lot about this stuff for the rest of this year. Yeah. Hey, Michael, it's Greg. Listen, we went through and got a lot of feedback, especially around Analyst Day, on what the expectation was from folks and how they think about it. In overwhelming, for sure, no one was encouraging us for every quarter to put that out just because of the volatility, some of our large bookings, and the distraction that may create from our operating performance. I think though, going forward, rather than maybe doing it quarterly or even semi-annually, what I'll endeavor to do is similar how we're approaching our total year framework in not providing specific guidance on each quarter. I think there's insight that we can give on each one of these calls on how we're doing without providing you the number, right? Are we making progress? Are we seeing activity internationally? Are we getting into the additional states that we thought we would? Are we getting interest there? Is that leading to bookings, and are we establishing the partnerships we want? Feedback well taken, and going forward, I'll take it on personally to make sure I'm providing some transparency on that, even if we don't publish a number. Great. Also on service profitability, I think you mentioned it'll be coming in earlier than expected. Is that this year, you think it'll be profitable on a run-rate basis by the end of the year? Yeah. Glenn and the team there has done an amazing job of positioning that business, both in driving cost out of the individual power modules as well as the cost to provide service. We fully expect that business to be profitable for the total year 2021. On top of that, we expect revenues to grow in line with the install base and to maintain that profitability on a go-forward basis. You'll remember that that was a business that, from a profitability standpoint, struggled and incurred some big losses in the past. We feel like we've turned the page on that business, and we're really encouraged to see that to be a contributor to our gross margins and a net positive to our operating income. Hello, l et me underline. Michael, this is K.R. Let me underline what Greg just said. Ever since the first time, I think, you were asking me questions. This was one of the big concerns in the industry and for all of you, on service and what does this mean for our long-term contracts and things like that. The key point that Greg made, and I will emphasize again, we will break even and get to profitability this year, but every year we expect that margin to grow. This is going to be a huge, good annuity business for us. This is what we believe in, this is what we built the infrastructure for, and we can see a clear pathway to that. When do you think you'll get to 20% gross margins? I think that was the original goal, right? We're pricing at that today. Those deals go in, and as we continue to mix, and as well as it's continued to take the cost down in our current contracts, it'll move towards profitability. I wouldn't commit to you, it's not a 2021, it's not a 2022. As we forecast it out, it's probably more in the 2023 range till we get to that level of profitability. Maybe 2024 on the outset. We will definitely be profitable, and we'll move up to that 20% as we continue to price at that level and book new deals at that level. Again, the key point here is the contracts we are writing today, over the life of the contract, will be at that or better margins than what we expected. Right? Okay. Hey, another question. Do you think we'll see a cash flow positive situation for 2021, especially since no safe harbor purchases are going to be needed? Yeah. We've spent a lot of time on that metric, and I tried to give you the context how I see it. It's a new metric for us to forecast. We've obviously been publishing our CFOA and investing financing components for a long time. As we forecast that number, it is not the easiest number to forecast. It has a bunch of different variables across the business that all come into that. I would agree with you that not having the ITC and the safe harbor, it's the $22 million that we invested in 2021, and then there was probably that number in again, some that was originally in our 2021 plan. Those should be good tailwinds. I want to get through a quarter or two on it, but we are targeting on being cash flow positive, and we are much more confident and are approaching positive, and I'm hopeful that I can update that outlook for folks in a quarter or two as we just get some more operating experience under our belt, if that makes sense. I would agree with you, based on the changes to ITC, based on the improvements that we expect in our EBITDA, based on the reductions in our debt service cost, all those are big tailwinds to getting us from being a cash user to a cash provider. Got it. Hey, one more question just to get it in the record. What's the service life of a Gen 5.0 module now, and where do you think Gen 7.5 is going to come in at? I'll give you on five, There's a little bit, there's always what we're observing versus what we're seeing. From the things that are out in the field that are at that median life, they are observed now right at about the five-year, if not a little above that. The ones that we are forecasting, the Bloom 5.0s that have gone out last year as well as will go out this year, are well over 5.5, and continuing to push forward. Our expectation as we roll out Gen 7.5 is that we'll continue to extend that life towards six years as we get more experience in operational capability in our manufacturing. Our goal is to be moving towards that six-year life. Great. Thank you very much. Your next question comes from the line of Paul Coster from JPMorgan. Your line is open. Thanks very much, thanks for taking the question. It sounds like you are growing at the pace at which you are investing capacity this year. Is that a true statement? Are you essentially leaving money on the table? Could you be growing faster? What is the growth rate that you think the market can support? Yeah. It's a great question, Paul, now that we've got the balance sheet into place and given us a lot more flexibility, we're very happy that we've secured this manufacturing space for our stack manufacturing. We're going to put our first line in for 200 MW. There's 160,000 sq ft there. We can put three lines in place, and it's relatively capital efficient. For the 50-75 that we put in for another $150 million, we could get to a total 600 MW of stack of fuel cells capacity, and that'll get us towards 2 GW of electrolyzer capacity. I don't think that for our current list of orders and where we're at, that we are limiting our acceptances based on our manufacturing capacity. It is my full expectation that I will be back to K.R. and the board sometime through the course of the year in timing when we add that additional capacity, so we don't run into that situation. Is it conceivable too that you could do upside to 2021 revenues? Is it just simply, you've locked in now? Yeah. I think, Paul, we've got the space. We're putting it in place. We've ordered the long lead items, but they're really not going to be fully operationalized towards the back end of the year. We are a bit limited on that. As you start to move into 2021 and we build the order book like we expect, that capacity will come online and support growth that year. Got it. Okay, just a little bit on the international markets, which still mystify us because so much of it is Korea and little else at the moment. You've talked of other parts of Asia, you've got a team now that's focused on it. You haven't mentioned Europe at all, which seems to be a hotbed of hydrogen. Can you just give us some sense of what's happening, where you think your best prospects are, and are you going to build it and then they will come, or are you going to follow your customers into the markets? It's a little bit of a little different strategy depending upon the geography you're in. I was on the phone this morning at 7:00 A.M. bright and early with Azeez Mohammed 's extended team. He's done a really good job of finding some industry expertise in market, especially in Europe, for some people that can help advise as we look for partners to build out. As you know, Paul, the amount of euros that are being invested, especially in Europe, especially around hydrogen, is a huge opportunity around our electrolyzer. We think there's opportunities for our fuel cell technology there as well. Maybe not everywhere where there is strong resiliency in the grid, but there's definitely opportunities for it. I think as you think about Europe, the countries that you think about are the ones you'd expect us to be working on, France, Germany, Italy, Spain, the U.K., and we're putting resources on ground there to begin to engage. I think the Middle East is incredibly attractive, and I think parts of Asia are attractive as well. I'm very hopeful that the resources that Azeez has been building out will be bringing opportunities for us, and I would expect you to be hearing about those over the course of the year. I think it's a huge opportunity. Just one last question? Paul, just to add to the two questions that you asked. They are the right questions you should be asking us, and I think we made it very clear until we secured our balance sheet and stabilized financially, we were prudent in the use of our cash, and we made sure that we sweated as much of the assets that we had already invested in the factory and got the maximum out of it. We reduced our product cost heavily. We invested in the future, and built to that. As soon as we secured it, starting in Q4, we have green-lighted both the factory expansion, as well as you're seeing very visibly, put money into market expansion. This is a long lead market expansion, so expect starting this year to see expansion both in the 50 United States as well as internationally. Got it. My last question is, you've seen one of your competitors really sort of go for gold. Every opportunity that's coming along of any scale, they're grabbing, they're unafraid of entering into joint venture partnerships and accepting third-party cash to scale fast. You could easily build another. If it's only $50 million-$75 million to build the capacity in this big chunk, then you could easily double, triple, quadruple your capacity with the help of third parties in other regions. Is this a strategy that you are open to, o r is there seem to be the embodiment in the space to understand? Look, I don't think given that we went out and our investor base, our management team, our leadership, our employees, for 10 years, worked on a technology that nobody could make happen in 100 years and said, "We know how to do it." I don't think anybody can question whether we have the appetite for risk. We have the appetite for risk, and we take the most prudent risks that we need to take. We think the market opportunity is so large, it's not the first person who comes to the market and grabs something up there. This is the transformation of an energy industry that's multi-trillion dollars. The factories we are building, unlike what other people do, are flexible to build fuel cells, to use any kind of fuel, to be able to do carbon capture, to either produce hydrogen for the automotive market or electricity for the automotive market. If you look at transportation, we cover both ends of it. If you look at electricity generation, we can do it at small utility scale with carbon capture. We can do it right at the site for resilience. If you look at industrial heat being replaced by electricity, we can electrify. We are building factories that build these platforms where we don't have to wait for one market to develop within a time or not have our capacity. We can use that capacity for all these other features. We think we are building a very prudent approach to how we build for the future, and we are marching to that and very comfortable with it. As Greg pointed out, now that we are focusing on the top line, we are going to make sure that we are not going to leave money on the table, to answer your question earlier, when the opportunity arises. We want to be prudent about watching when the market develops as opposed to what people think it'll develop into. Got you. Thank you, very helpful. Thanks, Paul. Your next question comes from the line of Colin Rusch from Oppenheimer. Your line is open. Thanks so much, guys. Can you give us a sense of how much of the backlog and your expected 2021 revenue is coming from the international markets? Yeah. On the backlog, it's hard because they all, not price the acceptance timeframe is different. I think the way I'd answer it, we broke out how our revenues are today kind of internationally on that percentages. I would say going into next year, the total year will look very similar to what the total year this year looked like on it. I would say early in the year, my expectation is there's some large deals that'll get shipped, that ratio may be a little bit tilted internationally. As we go through the course of the year and complete some of our U.S. installations based on their size, I'd expect to get very close back to the ratio we had for this year. Okay, thanks. From a project level capital perspective, can you give us a sense of where project capital is pricing out, and what you're doing with kind of the available pricing power that that enables? It seems to me that with interest rates where they're at right now, there's an awful lot of give in terms of the pricing model out to your customers. Yeah, we're in that process now. We're working with a couple providers on it. We definitely expect it to price inside of where it's been traditionally, that's partly driven by some of the improvements in our own credit outlook as well as we continue to work with new providers to provide that capital. I'd tell you that the biggest issue remains not the quantity of capital. The biggest issue in the marketplace remains the tax capacity that's there. While we were all very encouraged to see ITC extended, and I understand there's some bills out that would not only but extend, but increase. The most hope that I would ask from our friends who are in decision-making places was to help us create the capacity on that. We're doing very well on our process as we go through it, but it's an effort to make sure that we are securing that for the behalf of our customers. Given the amount of capital that's out there, bringing in more tax capacity would definitely, for the whole industry, make it easier. Okay. Thanks so much, guys. Yeah. Your next question comes from the line of Noel Parks from Tuohy Brothers. Your line is open. Good afternoon. Hey, Noel. Hi, just a couple things. As you're in the process of making the transition from the Bloom 5.0 to the 7.5 modules, just curious, could you just sort of talk a little more about how the manufacturing transition happens? I know you said that the 5.0 volumes would probably be relatively unchanged while you ramp up the 7.5. I was just curious, as far as actual implementation of the 7.5, does it make a difference or are there advantages to rolling them out as upgrades in place to existing installations versus going into a brand-new installation just with all the 7.5s? Yeah. Noel, it's a great question. How we're operationalizing manufacturing of 7.5, that is part of the new facility that we're securing in California. We are tooling that. All the tools we're buying are specific to the 7.5. We're doing it in a way in which we're not going to disrupt 5.0, because it's a great product. We continue to find ways to take costs out of it. It does what we need. We'll operationalize 7.5. Once we figure out all the process of that, we can expand from one line to two, and ultimately to three lines within that space. Listen, the plan is we always are backward compatible and everything around our different rollouts of our technologies. For the most part, I'd say for the complete part, our customers are indifferent on which technology that we ship. It'll be, for us, we can continue to supply the 5.0. As 7.5 comes on, we'll begin bringing that into our installation process, and that'll be really just part of our new installations to start with. At some point, that'll be the predominant technology out there, and that'll be part of our replacement power modules that we'll bring into the fleet as part of our service offering. Great, thanks for that clarification. Just to touch, again, a little bit more on international expansion. You've talked about having good success in hiring with your new international business chief having come on. Any thoughts as far as what that might mean for sales cycles? I'm sure it wouldn't move the needle on the full company's numbers. Also, is there a point that we're going to be seeing a pretty distinctive ramp-up in sales and marketing expenses? Maybe in advance of realizing the revenues from new partnerships and so forth. No. Hopefully you saw, we included a page, I didn't reference it in my comments, but it was posted on. We're making investments, not only to our R&D and our technology, but to our sales and marketing team. As part of what we lay out our financial model here, we're going to improve our gross margins each year to get to from the 25%-30%, like we laid out at Analyst Day. We're going to increase our investment, that will show up as expense, not only in our R&D, but in our sales and marketing. A big part of that will be building out our presence internationally. Listen, I think the right model to have will be one through partners, similar to what we use with SK in South Korea. That team is focused on finding partners for us to distribute our products through. I wouldn't expect to build out a direct sales force internationally. These are very senior people that are very steeped in their geographies and can be very helpful to us to not only make introductions, but to build the types of partnerships that we're going to need. Great. Thanks a lot. Thanks. Your next question comes from the line of Ben Kallo from Baird. Your line is open. Hey, guys. Great job. Just a question about SK, because I get it from investors. I'm trying to differentiate between the difference between what you're doing with them and what Plug's doing with them and their investment. Just a second question is minutia. With the CO2, is there another revenue stream you can get from capturing that? Like maybe bricks or soda or something like that? What do you do with CO2 when you capture it? Sure. So Ben, let me answer that question and I'll keep it fairly short, because we are running over time. First question on SK. Look, they are a large Korean conglomerate. They were in energy before they formed a partnership with us, and they have many lines of their energy business. And each one of those business units operates as independent businesses. SK E&C, with whom we have the partnership, is different from SK E&S that Plug signed the deal with. We, with SK E&C, are working on stationary power generator scale here in Korea, and also with our hydrogen electrolyzers and hydrogen fuel cells. And that relationship is strong, going forward very well. We are not exclusive to them, they are not exclusive to us, but it's a very strong partnership. The fact that they are signing up other deals shows that they are completely committed to this energy transformation. There are many other areas like the automotive where it is not a play for us and they need other players and partners. With respect to CO2, there is a 45Q federal subsidy that our understanding is the administration is going to improve upon for capturing carbon. That carbon being provided for use in so many industrial cases is definitely an application. It'll definitely, for the early applications of CO2 capture, it'll be there. Once CO2 capture becomes ubiquitous, the amount of CO2 generated will be very large. At that point in time, you would have to sequester it rather than just utilize it. In the early days, for at least a few years, there'll be lots of uses for that carbon dioxide to be utilized in industrial processes. Thank you very much. We have time for one last question. Your final question comes from the line of Pavel Molchanov from Raymond James. Your line is open. Thanks for taking the question. I'll ask just one. This one's kind of high level. Cost of capital, as we see across clean tech, is extremely low. You have moved away from the Bloom Electrons model many years ago. I'm wondering, would there be any appetite for reviving the recurring revenue nature of the business in terms of leasing out assets on your own balance sheet? Hey, Pavel. It's good to hear you. As an ex-GE Capital person who had a $100 billion balance sheet of leasing in his last job, it's definitely something we think about. Listen, I think as we prioritize our capital today, where we really want to make sure we're using it is for investing in our manufacturing capacity and investing in our technology and investing in our brand and product management. I think there'll probably be a few areas, especially where we can't find sources of capital at a competitive basis, that I'd be willing to use some of our own balance sheet there, to help facilitate maybe a new technology or a new application. For the most part, given the amount of capital that's out there and where there's great expertise on that, I'll leave it for there. Our cost of capital wouldn't be one in which would look attractive, given where other providers would be in the space. If anything, what we're finding as we line up with some of our future providers is they can take on some of the operating complexity that we've had here, right? We've had our teams that have been built over time to help build different structures and things for our customers. I'm anxious to find people who we can leverage the partnerships to do that, and need to take that talent and work with them to apply them on some other opportunities that we have in the company. Sure way of saying it's not something I don't think about, especially given my background. I think given our priorities, we're going to focus on growing the business from there and leave the leverage to people who have it. Thanks very much. Thanks, Michael. That concludes Q&A for today. I now turn the call to CEO, K.R. Sridhar, for closing remarks. Thank you very much. I know that we're running way over time. I'll keep this very short. To our employees, to all our stakeholders who helped build 2020 into a tremendous year under these challenging circumstances, I want to say thank you. To our shareholders, thank you for your continued support. If you just look at where we are as a company, we are so much stronger today. In any place where commercial customers are buying electricity for $0.09 or higher, we can economically compete with them. Think about the strength of that value proposition. With resilient power, you don't have to worry about natural disasters. You don't have to worry about future costs of electricity coming from your grid. You don't have to worry about sustainability because we are future-proofing you. You can start with natural gas. You can go to biogas. You can get carbon capture. You can use hydrogen. If you electrify your vehicles, we offer the best option for you. That combined value proposition with not polluting the air, not using water, having electricity where you need it so you can control your electricity destiny, means that with our existing customers and with our new customers, we can at least approach a majority of the 48 contiguous U.S. today. That is room for growth. In addition to that, what we're doing internationally helps us grow. When we look to 2021, we are excited to be building more capacity. We're excited for our top-line growth and optimistic that we will have a great year and a great future going forward. We are extremely well-positioned and couldn't be more thrilled with the momentum we are experiencing. Thank you very much. Thank you everybody for joining today. That concludes today's conference call. You may now disconnect.