Good morning, and welcome to the Hyzon Motors fourth quarter and full year 2021 conference call. As a reminder, today's call is being recorded. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. At this time, for opening remarks and introductions, I would like to turn the call over to Darla Rivera, Investor Relations Manager of Hyzon. Good morning, and welcome to Hyzon's fourth quarter and full year 2021 earnings call. I'm Darla Rivera, Senior Manager of Investor Relations. On today's call are Craig Knight, our Chief Executive Officer, Pat Griffin, President of Vehicle Operations, and Mark Gordon, our Chief Financial Officer. Hyzon issued our results today in a press release and presentation that can be found on our website at hyzonmotors.com in the investor section. As a reminder, our comments within this call may contain forward-looking statements, which may include expectations and assumptions regarding the company's future operations and financial performance, including the impact of supply chain disruptions and global uncertainties in our customers' performance under product orders in existing and future contracts, and are subject to various risks and uncertainties. For a more complete discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, please refer to our filings with the SEC, including the press release issued this morning, which was furnished on Form 8-K with the SEC. Except as required by law, we assume no responsibility for updating forward-looking statements. During this call, we also refer to certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA. More detailed information about these measures and a reconciliation to the nearest U.S. GAAP measures is contained in the press release issued this morning, which is available in the investor section of our website and was furnished on Form 8-K with the SEC. With that, I am pleased to turn the call over to Craig Knight, Chief Executive Officer of Hyzon. Thanks, Darla, and thank you to everyone for joining us this morning. 2021 was truly a transformational year for Hyzon. The reality of hydrogen-powered heavy mobility has come to the fore through Hyzon's proprietary fuel cell technology. It's remarkable to think that just eight months ago, we made our public debut. During that time, we battled supply chain challenges like anyone else in manufacturing. We are proud of this first chapter. We delivered 87 Hyzon fuel cell electric trucks to customers in Asia and Europe with a total contract value of $19 million, put another eight trucks into trial in the city of Foshan, China, and kicked off fuel cell validation activities in both Australia and the United States. Additionally, we expect to commission our fully integrated U.S. fuel cell system manufacturing facility in the coming months. Hyzon is proud to be the first company in the United States commencing series production of fuel cell stacks that power a Class 8 truck. We are gradually ramping up vehicle production in Europe and China, as well as doing initial local builds in the U.S. and Australia. During the year, Hyzon executed to plan, laying a solid foundation for the creation of long-term shareholder value. We are pleased to observe an increasing consensus that hydrogen will be the solution for high utilization commercial vehicles in the quest to decouple them from fossil fuels. Hyzon continues to work on accelerating the adoption of hydrogen by supporting the build-out of low cost, low carbon intensity hydrogen production and dispensing infrastructure designed to ensure commercial transport can be decarbonized at scale and at pace. We believe the energy transition is paramount. As oil prices continue to be volatile and reaching historic highs at some points, the need for energy independence is at the forefront of the global economy. We see hydrogen as the solution to decarbonize the commercial transport industry and have positioned ourselves as the key to the hydrogen economy through our leading fuel cell technology, first mover status in zero-emission heavy trucks, and pathway to securing low-cost clean hydrogen through partnerships with leading hydrogen proponents around the world. While electric vehicle adoption is accelerating, so too is the demand and dependency on the grid, which creates new challenges, not only with overall demand, but more importantly, with consumption patterns. That is why we remain committed to hydrogen as the long-term solution for commercial mobility, especially in those heavy-duty, high utilization use cases. Hydrogen offers fleet owners the most comparable replacement to their diesel trucks today, enabling them to achieve zero emissions with zero compromise. Achieving a total cost of ownership approaching diesel parity is crucial for fleet owners, and we can get there today through various subsidy programs that are being implemented in European countries and in the U.S., with California leading the way, and more states and jurisdictions to follow. We are seeing increasing demand as evident in our growing backlog, which now stands at $287 million, an increase of well over 200% since our last backlog update was provided as of July 2021. We define our backlog as vehicles with a purchase order or an MOU where we have clear indication of commercial terms. We have a significant number of vehicles under MOU that are pending confirmation of specifications and commercial terms, and therefore are not counted in our backlog. Further proof is on hand through a recently received order to supply 18 Hyzon trucks in Europe for daily operations with a leading global logistics company as the end user, and more details will be shared in a press release in the coming weeks. As well as the successful startup of another of our European customers' first green hydrogen production this week, which will be combined with truck fueling capability in the coming months to fuel their first batch of Hyzon fuel cell trucks. Our near-term focus is getting our vehicles on the road and into customers' hands, letting them experience for themselves the advantages of fuel cell electric vehicles that are available today, with Hyzon gaining highly valuable real-world experience and performance data. After a slow start due to the delays in procuring equipment for our operations, North America is progressing apace. Our first customer demo Class 8 fuel cell truck was recently delivered to TTSI at the Port of Long Beach in California. The truck is being tested in daily drayage over about two months, and we look forward to providing more updates on the performance of the truck as it faces the challenges of long days and long routes within the TTSI operation. TTSI is just the start of our North America trials. There is incredible enthusiasm for hydrogen-powered trucks, and we expect to have 10 to 15 Hyzon fuel cell demonstration vehicles deployed to major fleet trial customers by year-end, and we'll share information on those trials as appropriate in due course. Efforts to decarbonize trucking are experiencing significant tailwinds as government mandates and attractive subsidies enable faster adoption of zero-emission vehicles by fleet operators. Additionally, we are making excellent progress scaling up our U.S. operations. I'm particularly excited by the recent commissioning work occurring on Hyzon's Membrane Electrode Assembly production line, and we look forward to producing the first made in the U.S.A. Hyzon fuel cell system before the end of 2022. Just to remind everyone, the MEA is the most important element of a fuel cell, having an outsized impact on both performance and cost when building what we affectionately call the heart of zero-emission trucks, the fuel cell itself. To support demand as it evolves, we continue to focus on expanding capabilities around the globe with a particular focus on Europe to support the well-publicized building wave of hydrogen investment and adoption there. The Hyzon family continues to grow at a rapid rate. Our global team has grown to over 200 employees. I'm excited for the years ahead and know we are well positioned for success as we build out our team with top global talent, many of whom turned down many other opportunities to come to work at Hyzon, because they sense the dawn of something incredible and feel good working towards something so meaningful, not for ourselves, but for our children and grandchildren. While 2022 continues to bring macroeconomic challenges, and the recent COVID lockdowns in China is just one more example of supply chain difficulties, and the terrible Ukraine situation adds further uncertainty in Europe in particular, we remain optimistic and energized for our journey as we enable the adoption of zero-emission commercial vehicles and broaden our partnerships with like-minded companies to accelerate the transition to hydrogen even further. As some of you may recall, during our last earnings call, we introduced Parker Meeks, Hyzon's Chief Strategy Officer, who is leading our strategy around fueling and hydrogen infrastructure. Parker provided a deep dive into how we are growing the fuel supply side of the equation to make it easy for fleets to convert to zero-emission operations with zero compromise. This quarter, I'd like to introduce Pat Griffin, President of Vehicle Operations, who joined Hyzon last October. Pat brings a wealth of knowledge to truck assembly operations and has been able to leverage that experience from day one to help us scale Hyzon global operations. Pat will provide some details on our path to commercial production and an update on our U.S. operations. Thanks, Craig, and thanks to everyone on the call. As we scale our operations from prototyping to commercial production, I'd like to provide some color around our path forward. We are keenly focused on development and completion of our core differentiating technologies. When coupled with our modularized designs for assembly, we expect it will provide rapid and synergistic vehicle commercialization across our global locations. A key enabler to this initiative is the Hyzon Innovation Center located in the Chicagoland area. Comprised of approximately 100,000 sq ft, it will produce our domestic proprietary fuel cell systems. Just this past month, we achieved a significant milestone and validated important stages in the Membrane Electrode Assembly line, which is the heart of our fuel cell stack. We expect to be producing Hyzon fuel cell systems in the United States by the end of 2022, supporting our global vehicle build. Our Rochester facility is also progressing to plan. Having already completed prototype and demonstration vehicle builds, it will continue to scale and provide various subassembly modules, such as the vehicle's hydrogen storage system as example. Utilizing both U.S. facilities allows us to support selected subassembly modules for both U.S. and European production. As we ramp production in the U.S., final vehicle assembly will initially be performed via third-party upfitters such as Fontaine Modification, which has the capacity to build tens of thousands of vehicles per year. Our vehicle production in China follows a similar model in which we utilize OE vehicle assembly partners during early stages until vehicle volume supports dedicated Hyzon facilities. This approach to scale production allows us to be nimble while aligning with our capital-light model. Once vehicle demand reaches a tipping point, we plan to build dedicated production lines by region, strategically positioned to meet the increasing demand. For trucks in Europe and Australia, we currently have our own facilities to assemble vehicles through our ventures and our partnerships to meet early but growing demand in those regions. Due to strong interest in Australia, we already have plans to increase our production capacity there. Based on Europe's demand for hydrogen-powered vehicles, we've established a path forward, taking advantage of existing facilities and reconfiguring our operation to provide production capacity of 1,000 vehicles per year on a two-shift basis. We believe our global footprint and multi-region platform offerings will enable us to meet customer demand where the adoption of hydrogen fuel cell vehicles is accelerating to get our trucks on the road, gaining real use case experience. We are pleased with the progress our teams have made in just a few short months and look forward to providing updates as we begin to scale production. Now I'd like to hand the call over to Hyzon's Chief Financial Officer, Mark Gordon. Thanks, Pat, and thanks everyone who joined the call today. Since our last quarterly call, the security of energy supply has become a paramount issue. It is imperative that this unfolding crisis be addressed immediately with a viable path toward a long-term sustainable solution. Before the Ukraine conflict, oil, natural gas, and coal prices had all steadily increased, driven by compounding years of low investment. Climate change concerns forced the energy industry to cut capital spending, lowering supply before the energy transition could lower demand. The Ukraine conflict has now exposed the fragility of the global energy system in a way that will not be forgotten. While the IEA has called for emergency measures to curb energy demand, a comprehensive and revolutionary energy solution is called for. The global rollout of waste to hydrogen has the potential to replace a large portion of oil demand by converting municipal waste to a clean, green hydrogen. This has the important additional benefit of solving the overflowing landfill issue. Even plastics and biohazard waste can be used as a feedstock. The conversion process advocated by Hyzon is non-combustion, so it avoids adding pollutants to the atmosphere. According to calculations based on the Raven system, converting all municipal waste to hydrogen could theoretically offset 25% of oil demand. This percentage could be substantially increased if agricultural waste were included as a feedstock. Most importantly, the process can generate its own electricity using a fuel cell or microturbine. This means the hydrogen production process can be completely grid independent. Already in Europe, electricity prices have made a grid-based solution to the energy transition impossible and misguided. With coal and natural gas making up the majority of electricity generation globally, grid independence is a problem for the energy transition from both a security of supply and a decarbonization perspective. It is imperative that the energy transition have a grid-independent path forward. Hydrogen has multiple infrastructure advantages. Most importantly, hydrogen can be produced off-grid. A large-scale expansion of the grid is ill-considered given the massive infrastructure investment required and the unknown of availability of natural resources such as copper. More specific to Hyzon. The charging or fueling infrastructure needed for long-haul heavy trucks could be eight times greater for battery electric vehicles versus fuel cell vehicles, as estimated by the Clean Air Task Force. Finally, hydrogen will be produced locally. This avoids dependency on imported energy and allows virtually any region of the world to be energy independent. When looked at from the perspective of a complete transition away from fossil fuels, hydrogen is the only viable path forward. We believe mass conversion of vehicles to battery electric will not work. Cobalt, nickel, copper, and lithium are scarce resources with prices already increasing despite minimal BEV penetration. All of these resources have their own security of supply issues. For fuel cell electric vehicles, platinum is a modest percentage of the total vehicle cost, and platinum resources will free up as fewer catalytic converters are built for internal combustion engines. From an infrastructure perspective, BEV requires a much greater investment than fuel cell, and that investment is often not included in the total cost of ownership calculations. The frequently cited efficiency argument for BEV does not take into account energy economics. For example, at $0.22 a kWh, electricity prices in California are currently trading at $360 per barrel of oil equivalent when the BTU basis of the energy is considered. In Western Europe today, where electricity prices are now double California, electricity is more than $700 per barrel of oil equivalents. It does not matter if a BEV vehicle is two and a half to three times more energy efficient if the input energy is three to seven times more expensive. Never before has the need for a hydrogen economy been greater, and only now is it possible, thanks to advancements in fuel cell technology. Hyzon's market-leading fuel cell and our thought leadership make us the key to the hydrogen economy. A rapid transition is critical, not only to meet decarbonization goals, but also to provide energy security in an increasingly unpredictable world. Turning to the financials, I will discuss our 2021 full year results and 2022 business outlook. Hyzon finished the year with $445 million in cash on the balance sheet, as the company continues to manage its expenses prudently with an eye to making every dollar count. We are in line with the cash forecast we laid out when we went public. Full year revenues were $6 million. Total operating expenses were $107 million. We took the full charge to the cost of sales for vehicles sold in China, which was only partially offset by the collected revenues for those sales in 2021. We expect another large portion of cash for the vehicles delivered in China during 2021 to be collected in 2022. Once this customer has a longer operating history, we anticipate booking more revenues up front. As we have discussed previously, the end user of those vehicles is one of the largest steel companies in the world. Truly a great validation of Hyzon's heavy-duty trucks. Operating expenses for the year were comprised mainly of $16 million in research and development costs and $70 million for SG&A. Within SG&A were charges totaling $33.5 million, which were essentially one-time in nature relating to foundational equity grants for senior executives and expense related to retirement of our former CTO, as well as transaction costs. For the full year, we recorded a net loss attributable to Hyzon of $14 million. Hyzon also reported a negative EBITDA of $13 million due to changes in the fair value of earn out and private placement warrant liabilities. Adjusted EBITDA for the full year was negative $64 million after backing out the one-time charges, as well as non-cash items primarily related to the change in fair value of the earn out and private placement warrant liabilities. For Hyzon's 2022 business outlook, we expect to deliver 300 to 400 commercial vehicles with deliveries heavily weighted towards the back half of the year. In 2022, we expect the geographic mix will continue to be weighted to regions with lower margins. We expect the geographic mix to shift towards regions with more favorable margins in 2023. While demand for our trucks is stronger than ever, as our backlog increase testifies, we anticipate the supply chain issues to persist through 2022. We expect to commence assembling vehicles using our high-powered, high power density proprietary fuel cell made in our U.S. facilities during the second half of 2022. We have made solid progress on this front, and we anticipate showcasing our facilities later in the year. We also expect an increasing number of North American trials of our Class 8 trucks as our facilities ramp. Trials continue to increase in the rest of the world. We expect our backlog to grow as we progress towards ongoing commercial discussions and as demand for zero-emission vehicles grows exponentially. By year-end, we expect the first Hyzon-Raven gas-to-hydrogen hub and waste-to-hydrogen hub to be online. We intend to drive innovations and increase the Hyzon content within our vehicles. Bringing the manufacturing of our fuel cells in-house is just one step in this direction. Our continuous innovation efforts are expected to deliver both vehicle CapEx and fuel operating savings, which lowers the total cost of ownership even further. We reaffirm our medium-term EBITDA margins in excess of 15% by 2025. With that, I'd now like to turn the call back to Craig for closing remarks. Thanks, Mark and Pat. In closing, I'd like to reinforce Hyzon's role as the key to the hydrogen economy as it pertains to commercial vehicles. We are the hydrogen technology company that decouples heavy mobility from fossil fuels and facilitates energy independence in the process. The world is at an inflection point, and a new energy infrastructure is needed. Hydrogen is emerging as a highly versatile, clean solution for high utilization commercial vehicles. The advances in Hyzon's technology and the visible momentum in hydrogen adoption through government mandates, expanding subsidy availability, and significant investment in green hydrogen production underscore the phenomenal opportunity for our company in the coming years. Our purpose is clear: We won't rest until we have made a significant positive impact in this world, as underscored by our recent announcement that Hyzon joined The Climate Pledge, which commits over 300 leading corporations to reaching net zero by 2040, a full decade ahead of the Paris Agreement on climate change. Thank you all again for your time and attention. With that, let's open up the line for questions. Ladies and gentlemen, if you'd like to ask a question at this time, you will need to press the star then the one key on your touchtone telephone. You may press the pound or hash key to withdraw your question. Our first question coming from the line of Jerry Revich with Goldman Sachs. Your line is open. Yes. Hi, good morning, everyone, and congratulations on the strong deliveries this quarter. Thank you, Jerry. Thanks, Jerry. Craig, I'm wondering if you could talk about your anticipated vehicle mix over the course of 2022. What proportion do you expect to come from China versus Europe and Australia? Just to help us understand the picture from a high level standpoint and touch on the ASPs that you expect as a result as well, if you don't mind. Sure. Obviously we're all very keen to see the geography and product mix move to a more favorable balance. Frankly, 2021 was somewhat disappointing in that regard. Supply chains were just so challenging, especially in Europe, where we had expected to build more momentum. We're very focused on validating the early vehicles we've got out in the field, and we aim to work hard towards a stronger Europe delivery and Australian delivery mix within the next 12 to 18 months, and to really ramp U.S. activities as well, once our various customer trials are proven successful. It would also, however, be, you know, overly ambitious or irresponsible of us to pretend that the business at the moment is highly predictable. That's why we prefer not to give, you know, too granular guidance around vehicle type, you know, vehicle specification, vehicle ASP, and markets and customers and markets. The business is still lumpy. You know, it's still driven by activities such as, you know, customers successfully accessing rebates and policy support, et cetera. Therefore, we remain cautious and say that we expect that mix to be a lot more favorable once we're into 2023. The rate at which becomes more favorable is still a little unpredictable. We see very encouraging signs in Europe. You know, we mentioned in the prepared remarks about a new order for another 18 trucks in Europe. We also mentioned that one of our customers that we've, you know, got vehicle supply agreements with has successfully commissioned their green hydrogen production this week, which will, in the coming months, turn into a dispensing capability that can be used to deploy their first Hyzon trucks. It's these activities that will see that geography mix shift over the next 12 to 18 months dramatically in the favor of higher margin markets. I'm sorry to disappoint you with a lack of very specific details, but the business is still lumpy and somewhat unpredictable, so the exact timing of some of these things are difficult to predict. No, I appreciate that. In terms of the free cash flow outlook over the course of 2022, Mark, I wonder if you'd just update us on your CapEx outlook. You know, given the moving pieces that Craig spoke about, how should we think about free cash use over the course of 2022 as you folks ramp up? As I said in my prepared remarks, where we ended the year with cash is where we had anticipated to be when we went public. That is how we feel that 2022 will unfold as well. Sorry, Mark. Just so I'm on the same page with you. The outlook that you folks have previously laid out for cash for year-end 2022 still holds is your point? Correct. Okay. Super. Thanks. Thank you, Jerry. Our next question coming from the line of Courtney Yakavonis with Morgan Stanley. Your line is open. Hi, good morning, guys. Can you give us an update on where, you know, the Bolingbrook and Rochester facilities are? I think originally, you were anticipating them to be online by the end of the first half of 2022. Now it sounds like the target has moved towards the second half of 2022. I think you were awaiting some equipment because of supply chain issues. Is that in place? And, you know, are we now just—j ust give us an update on what kind of the hurdle is to get those facilities online and what the expectation for the timeline is. Sure. Thanks, Courtney. Thanks for the question. I'll take that one. Bolingbrook is definitely making some great leaps in being built out. We've been testing our MEA, some of our MEA facilities. It's a multi-stage process to make a fuel cell system. That first and very important part of it, making the multi-layered MEA, the Membrane Electrode Assembly, this is being commissioned at the moment. We've been running some tests on MEA equipment in the last four to six weeks. We will start making fuel cell stacks here in the next, you know, four to six weeks, and we will be able to make complete systems, you know, sometime during the second half, probably much closer to the middle of the year than the end of the year, to be honest, but just during the second half of the year. As for system build, the subsystems for the vehicle include hydrogen storage, electric propulsion, you know, the fuel cell system itself, et cetera. Some of these subsystems have some capability already being set up in Rochester, for example. There's also vehicle prototyping going on in Rochester now as well. We also have some vehicle prototyping activities in Bolingbrook as well. We expect to see that internal hydrogen fuel cell production, in-house hydrogen fuel cell production, feeding the Hyzon vehicle assembly requirements before the end of the year. That's the most important thing because that back integrates us right back through that fuel cell production and improves the gross margins, as Mark was alluding before. Whenever we have to buy fuel cells from Horizon, we're buying from the market at a commercial rate, and it greatly improves our margins when the most expensive part of the vehicle is made in-house. Great. Thanks. Just on the back of the earlier question about the mix, understanding that it's tough to predict. Can you at least give us some of your thoughts on the HongYun contract? Do you anticipate a higher production for them next year relative to this year? Because I think Mark alluded to the full cost will be flowing through, but you should start to get some incremental sales— Mm-hmm. —flow through from the order or from the deliveries from this year. I'm just trying to understand how much more the P&L will be labored by costs associated with that next year. Right. And then, what is the timeline until you would start to see those revenues flow through at a full rate? You kind of mentioned they need to have a long enough operating history. Is that two or three years, or just— Yeah. —more like six or seven? Okay. If I can touch on the first part of that question, just in relation to the business how we expect the business in China to materialize, and then Mark can speak a little bit about some of the efforts to and some of the expectations around improving the revenue recognition treatment of those deployments in China. We have a number of significant project and vehicle deployment opportunities in China. It's not only the HongYun activities for the steel company end users, but also we've announced initial trials with Foshan, which is one of the UN Hydrogen Demonstration Cities in China and receiving a lot of support from federal government, et cetera, down there. We expect to be able to share information on at least, you know, one or two interesting vehicle deployment opportunities beyond, you know, the HongYun heavy duty truck deployments. Now, in terms of how that flows through to the bottom line, to earnings, et cetera, I'll let Mark comment and just, you know, provide a bit of information about when we expect revenue recognition treatment to maybe change. Sure. Thanks, Craig. So Courtney, I think it's important to think through how we will be receiving revenues for the trucks delivered this year with no costs, you know, over the next few years. The bulk of those revenues for the trucks delivered last year will come in 2022. That will effectively be, you know, pure margin. It's a little strange accounting treatment, but what we're waiting for is for HongYun to have more operating history. We plan to reevaluate this method of accounting for their revenues in the fourth quarter of this year. At which point, we hope that we'll be able to account for their revenues more normally. Thank you. Thanks, Courtney. Our next question coming from the line of Rob Wertheimer with Melius Research. Your line is open. Hi, Rob. I'm so sorry. Good morning, everybody. Craig, I wonder if you could talk a bit about how your expectations for 2022 have evolved over the last couple of months. I think you were still expecting a little bit higher number of truck deliveries. Maybe your backlog even implies you could do more. I don't know whether the 300 to 500 is production limited or whether orders have been percolating, but slower than you expect. I wonder if you could just talk about the evolution there. Yeah, thank you, Rob. Great question. We would love to deliver more trucks, but you're absolutely right. The 300 to 400 vehicle range from our standpoint is a reflection of supply constraints in a couple of the markets that are really starting to build momentum, and that is Europe and Australia in particular. We've been cautious in our outlook for how many vehicles we think we'll deploy in those two markets, even though customer orders are building and customer interest is building, and we continue to sign vehicle supply agreements. We're tending to commit to only a very small portion of the contracted quantities by the end of 2022, with a much larger portion of those contracts falling into 2023. We're not doing that to pump up 2023. We're simply doing that because it's still a reality that that supply chains are still very constrained and unpredictable. If things improve dramatically by the middle of this year, say in the next three to four months, we will be able to do better on deliveries than our, you know, kind of more conservative estimations. But at the moment, we're still very much tempering the forecast and expected deliveries with those supply chain factors, which continue to be quite challenging. Okay. I think that's clear. Could you walk through what makes the outlook so back-end loaded? You talked a little bit about U.S. production. What is a similar kind of story in Europe and, you know, what kinda gets better in order to drive those deliveries in the back half? Kinda what needs to happen in order to, you know, to hit as opposed to even— Mm-hmm. —raise the guide? Sure, sure. There are two factors that play into the delivery timing. One is all of those supply considerations coupled with our own ability to get the vehicles assembled once we have all the necessary materials and parts and components, and then have these vehicles you know prepared for and certified for on-road use, et cetera. The second thing is that deliveries in China which will still make up a fair portion of deliveries for this year deliveries in China will always inevitably be loaded towards Q4 because this is just the way the contract cycle works in that market. You know, we were able to take advantage of that last year. Even though we were only really starting to work on the vehicle assembly towards the end of the year, we were still able to deploy dozens of vehicles, you know, even in December, for example, in China. There's a contract dynamic, contracting and delivery dynamic in the China market, you know, more generally, but also there's a dynamic there around supply of all the parts and components and what that means in terms of our ability to then subsequently build the vehicles. You know, as we take delivery of all the important stuff for the vehicles, you know, we still obviously then need to go through the process of building, testing and certifying. In Europe for this year, what is the source of the fuel cell stack? I'm sorry for the last one. I'm just trying to think about what gets you to the numbers this year. Do your customers need— Yep. Do they all have sources of hydrogen? Do they need to, you know, to build out sources? Could that be any kind of delay if they don't have their setup right? I'll stop there. Thanks, Craig. Okay, Rob. A couple of questions in there. The first one in relation to the supply of the fuel cells. Our plan is to substitute Horizon-sourced fuel cells for in-house Horizon-produced fuel cells out of the U.S. once that production is fully validated. I can't give you an exact date, but certainly before the end of this year, we would expect to be starting to substitute supply of fuel cells for European assembly with in-house production. Then the second question around sources of hydrogen. We continue to have options for deploying trucks in Europe, but by the same token, the supply of hydrogen is still the rate-determining step. There are some customer opportunities that still have hydrogen supply lead time factors associated with them. So what we sometimes do is work with a customer on, you know, a certain scope for a project and then define the phase one, you know, as the place where the hydrogen's most, you know, most imminently available, knowing that the phase two is dependent on, for example, a new station to be built by TotalEnergies or somebody else, right? You know, there are still timing factors involving availability of hydrogen, but Europe is improving all the time in terms of availability of heavy vehicle filling stations. No doubt you would have witnessed from some of the, you know, publicity and news flow around events in Europe that, you know, many parties are active and engaged in building hydrogen infrastructure, which does include those very important filling stations. Thanks, Craig. Thanks, Rob. Our next question coming from the line of Bill Peterson with JP Morgan. Your line is open. Hi, good morning, and thanks for taking questions. I have a few questions at first related to the U.S. market. You mentioned that TTSI just started. It feels like that may have been delayed. It kind of felt like this should have been earlier in the year. I wonder if there's any reason for that. Maybe looking ahead, when could we expect to get a vehicle CARB certified? I guess the last one related to North America, you said 10 to 15 fuel cells. You know, I guess compared to three to six months ago, how many vehicles would you have thought you could get in North America at that time? Thanks. Fair, Bill. Three questions there. One around the U.S. market and whether the TTSI trial was in fact delayed. Yes, we had expected to put the truck into operation around the end of the year. Frankly, we ended up spending a lot more time with truck validation and all that sort of thing than we had intended. There were a few things with our first road validation, road certification activities that just took longer than planned. Not surprising that when you do something for the first time, you don't necessarily have all the answers right off the bat. That was in fact a little delayed. Happily, the truck's in the Long Beach port now. As for CARB certification, I'm gonna let Pat comment on that in a moment, but I will make a comment on your third question around the number of trucks we were anticipating in the U.S. I believe that we had originally anticipated somewhere around 20 Class 8 trucks for 2022. I think that was kind of where we were looking to target. We've said 10 to 15 is our expectation to be in trial by the end of this year. You know, we still feel quite good about that because we've been validating the vehicles and the performance pretty heavily. And we've had a number of customers come to witness track testing and some of this sort of thing. We're seeing increasing interest and engagement by major fleet operators in the U.S., for our trucks, and we kick off those engagements with the trials we were talking about. I'm just gonna turn over to Pat, so he can comment on CARB certification. I think he's a little closer to it than I am. Sure. Thank you, Craig. Thank you, Bill, for the question. As Craig mentions, you know, interest in testing and validation is strong relative to customer-demonstrated trials. Of course, CARB certification always at the key forefront of what we're working towards for the support in California. You know, it takes generally four to six months to walk through the certification process. We've received the Executive Order through CARB, and so once we have that allows us to go on trial in California. Things are progressing well through CARB. Okay. Yeah, thanks for that. You noted that you're developing power management, vehicle control, eAxle and so forth. I guess the current trucks are obviously using your fuel cells, but what is the timing of that development? When will we see more of your proprietary content show up in vehicles? Is this a 2023 thing, or is this really more longer term? Just curious on the timing of these enhancements. Yep, you can pencil that down as the 2023 thing, as you mentioned. There's a lot of work going on to validate some of these internal innovation and development activities. We expect that between now and the end of this year and first quarter next year, a lot of that work is done. And so sometime during 2023, w e expect we'll be able to report various elements of the increasing Hyzon content in the vehicles, which gets us to those higher gross margins that Mark is always looking for. Okay, thanks for that. If I could sneak one more in. Nice to see progress on, you know, with the Raven SR. Can you remind us, I guess, what are the economics? What do you benefit from, in terms of the sales, and should we assume that the sales of your fuel business starts to take off, I guess, early next year? Anything on the economics would be helpful. Thanks. Okay. I'll just introduce our relationship in there and how it works with our early engagement with Raven, giving us access to their producer economics on our fuel, which we take from them, which is up to half of the output for the hubs in which we participate together with Raven. It gives us nice access to the economics on the hydrogen. Then I'll let Mark speak more specifically on the economics coming out of those first two hubs in California. I think first it's good to point out that each of these hubs is gonna produce about 4.5 tons a day of hydrogen. When you think about that's enough You know, if all the hydrogen were going to our vehicles for heavy-duty Class 8 trucks, that's enough for each hub to do 100 trucks. With those two hubs, there would be enough hydrogen for 200 trucks, and that'll be on, you know, by year-end. The first hub is a gas to hydrogen hub. I think Raven's still debating the actual location with Chevron. It's gonna go on a Chevron field, and it's between someplace in Bakersfield or a field in Colorado near Denver. Once that's determined, you know, we'll look to have trials in those vicinities. The economics now are low teens unlevered. We do anticipate being able to debt finance the hubs in the future after we've demonstrated that they work, so that we'll get levered returns on them. We also think that the costs for those hubs will come down over time. The first couple are expensive, but the nice thing is that Raven is manufacturing the majority of the equipment in-house. You know, as they sort of streamline their process, we can see some cost savings coming. Importantly, the economics of the hydrogen coming out, Mark. Let's just talk about that for a minute. The hydrogen, you know, when I gave us the low- teens IRR, that's assuming that we're selling at around $5 now. There's a great subsidy program in California for the first hubs, and most likely a large percentage of the hubs will be in California, or at least will be in states with the LCFS credit. It's a little hard to answer what the exact economics are because the credit can range from between $3 and $9 a kg, depending upon the feedstock. You know, as you can imagine, you know, my unlevered IRR calculation gets substantially better if we move to dairy waste as a feedstock. I'm just assuming municipal waste in my calculation there. No, that's super helpful. Really exciting progress on that front. Thanks. Thank you, Bill. Our next question coming from the line of Jed Dorsheimer with Canaccord. Your line is open. Hi. Thanks. I guess first question on the electrolyzer. Have you moved off platinum? If not, what's the expectation from a supply chain procurement perspective? Well, we're gonna assume you're talking about our MEAs rather than the electrolyzer. Actually, the MEA we make can be used in electrolyzers, by the way, but we're using them in fuel cells, obviously. The platinum is indeed the key cost determinant for the fuel cell. The nice thing is that the platinum doesn't degrade or get destroyed in the use of a fuel cell. At the end of life, if the fuel cell's kind of worn out, like an engine eventually worn out after a lot of driving, we're very happy to take those fuel cells back and reuse the platinum and put refurbished fuel cells together, or essentially rebuilt fuel cells after we strip out the platinum and put it into, you know, coat new membranes with it. Fuel cells are very much a cradle-to-cradle technology on that basis. You don't throw anything away. Now, for a comment on, you know, the platinum, expected platinum economics and how we see that kind of happening here in the next couple of years, I might defer to Mark. We've thought and talked a lot about not only the platinum issue but the chemistries and the metals relating to batteries, because we still use batteries in our vehicles. Now, we use LFP batteries, so there's no nickel or cobalt in those batteries. But we still are very, you know, interested and concerned for the supply of lithium, for example. Mark, do you wanna make a comment about platinum and how we see some of that playing out? Yes. We don't give out the exact amount of platinum that we use per vehicle. But what I will say is it's modest. While everyone focuses on platinum as you know the key material for fuel cells, you know, we're talking low single, you know, let's say about $12,000 per vehicle. We expect that to drop, the amount of platinum used as well over time in our new iteration of the fuel cells. This is not something that is gonna pose an ultimate constraint. If you look at platinum prices, I mean, they're up from a year ago, but they're not exorbitant. Well, I guess I was asking just given where most of the platinum is procured with respect to Russia, the Ukraine invasion, war, whatever you wanna call it right now, atrocity, I guess. You know, what your strategy is from a procurement with a critical element that's going to be constrained. That's where I was coming from that perspective. Yeah. Okay, I got you. Most platinum comes from South Africa. South Africa is the major source. Okay, you're not seeing any issues with that? No, no. We don't buy anything from Russia. Got it. Great. If I think about sort of the relations, the relationship you have with different, you know, geographical locations, Tesla's done a really effective job of, quite frankly, making vehicles in Shanghai that are, you know, being shipped to Europe. Now they're starting up a localized manufacturing. Why the limitations, I guess, in terms of fuel cells? Is it just a demand issue that the demand in Europe and the U.S. is not there? You know, I guess I'm just curious why you wouldn't follow a similar path there in terms of where you're manufacturing versus where you're selling. Yeah, I'll take that one. Jed, for us, as a U.S.-based company, it's important to us that we have a manufacturing base in North America and that we have also operations base in Europe, for example, 'cause these are our two key markets of focus in the coming, you know, say, five to 10 years. We had always intended to have U.S.-based production of fuel cells as the core of our upstream operations. You know, the very, you know, IP intensive part of our operations. We believe that that'll serve us well over time. We've had concerns about geopolitical stability, you know, for a while, and we think that it's gonna be very important to have this dependable domestic supply within the U.S. of fuel cells. If you think about the heavy lift that's ahead of the whole industry to get from fossil fuels to clean alternatives, we view, you know, heavy vehicles as naturally going to hydrogen. I think for, you know, the security of supply and for the benefit of the industry generally, transport industry generally, I think domestic U.S. supply is very important. It's not a heavily labor-intensive activity to make fuel cells, and if you come and see, you know, our MEA line, you'll see it's basically, you know, a lot of fancy machines as opposed to a lot of humans. It's very different to building a complete car, which is, you know, a very involved process with lots and lots of robots and lots and lots of steps and also quite a few people. The process of building fuel cells is not that labor-intensive, and we feel local production is very good for long-term stability and surety of supply. Got it. Great. One last question, just to sneak this in. The first Raven hub, and I recognize that you spent a decent amount of time talking about our market, but the first Raven hub's working with Chevron, is on a gas to hydrogen. Is that a biowaste to hydrogen or is that a methane to hydrogen conversion? It's actually gonna be flare gas, I think is the most likely— Okay. — source of the gas. The nice thing— If it's— Yeah, go ahead. I was gonna say, so if it's flared gas, that would be curtailed energy. Is that gonna be intermittent or is that continuous? No. These details are being worked out and frankly I'm not right in the thick of those conversations. The Raven system can take, you know, flare gas or it can take, you know, casing head gas, which means you don't have to strip out the NGLs and stuff. It's like a more robust system. Frankly, there's a, you know, a number of large energy companies looking at it to solve the flare gas problem out there. No, it would run consistently. The 4 tons a day would be consistent gas. This system can run on RNG. It can run on biogas as well, which an SMR cannot do. Got it. Well, great. That's it for me. Yeah, Jed, you can think— Thanks, guys. I Thanks, guys. I really appreciate it. Yeah. You can think of that Raven process as just a more flexible version of a traditional SMR. A traditional SMR, steam methane reforming process, takes methane and then— Oh— — converts that into hydrogen. This is a much— —sorry, you just jogged another question on that. This is more of a— So Craig— Yep. —will that be considered blue? Are you gonna be capturing the carbon at the exhaust to sequester that? Is that considered gray hydrogen? If that was to use just natural gas out of a pipe, it would be considered gray hydrogen. Mm-hmm. When you use gas that's being flared or is otherwise, you know, off gas, et cetera, then it's got obviously a whole different treatment, and it's got a rating of green attached to it. If it was just using a natural gas pipe and it wasn't certified RNG, it would be gray. If it's using certified RNG, it would be green. But I don't believe that it's got a carbon capture directly on that process. Right, Mark? There are a few— How is it considered green if you're emitting the carbon? No, if it's RNG. Yeah, yeah. It's RNG and also, right, methane, like it's 25 times worse for the environment than the— Mm-hmm —CO2. If you capture RNG instead of letting that emit and while there's some CO2 that comes out of the process, your net carbon economics are positive. Yeah. While we're on the subject— The carbon accounting. Yeah, the carbon accounting. Yeah. Yeah. Yeah. While we're on the subject, you know, obviously we're doing a whole bunch of waste to hydrogen projects with Raven as well. In that scenario, this is you get a very large negative carbon intensity score. This would be more green in our opinion than doing solar with electrolysis because you're actually, you know, offsetting methane that would be emitted from landfills. You're cleaning up the environment and you're putting less, you know, like it's not carbon, but less methane into the atmosphere. You get a— Not from a carbon perspective though, guys. I mean, I'm very familiar with the molecular structure of RNG— Yeah. —which is gonna be a CH4. It's not gonna change— Correct. —whether you're fracking or whether you're getting it from Carbon accounting. Yeah, yeah. —a landfill. No, but carbon accounting. Yeah. This is kind of the technicality associated with blue or green. If you're getting CH4 and we're using an SMR or some type of hybrid SMR process, if you're not capturing when you break the atomic bond, if you're not capturing the carbon, then that's being emitted, and I'm just wondering how that could potentially be considered green. That's why I was asking if there's some capture mechanism. Yeah. We'll just— Can you hear me? We'll take this offline, but the one thing I will say is just that, when we sort of adjudicate, you know, how green something is, we go by the CARB methodology because we think that they're the ones in the best place to understand this. CARB sees the process as very carbon negative on their scoring process, and we could probably have a two-hour debate about how to think about this. I'll take it offline. I appreciate it, guys. Yeah. It is something I wanna follow up on, though. Thanks. Yeah, sure. Thanks, Jed. Now our next question coming from the line of Mike Shlisky with D.A. Davidson. Your line is open. Hey, good morning, guys. Before I get to my question, I wanna follow up on your comment just now, Mark, about waste to hydrogen. Sure. Do you know if Hyzon will be able to get a piece of the tipping fees that come into Raven— The answer is— —on those? —yes. If you look at any one of these systems, you know, we will share in our proportionate amount of the economics. In every hub, you know, our share will be slightly different depending who the other partners are. It could be Raven and Chevron, it could be Raven and ITOCHU, it could be, you know, Raven and someone else. But for our percentage of the ownership in that hub, we will share in all the economics and the Raven systems. The first one in Richmond is not getting a tipping fee, but Republic Services or Waste Management or any other dump knows that Raven expects a tipping fee. That's just something that was negotiated on the very first one. Okay, got it. Now onto my question I had earlier. If the supply chain issues are resolved at some point during 2022, whether it's tomorrow or December, is it fair to say that any amount that you've lowered your 2022 outlook by should be able to be made up for in 2023? Let me take that one, if that's okay, Craig. The answer to that is unequivocally yes. Sure. When you look at our backlog, I mean, part of the reason why it's sort of growing quickly is because we're having supply chain issues delivering. You know, the backlog will continue to grow as we, you know. Well, it's gonna grow just because of sales, but it's also gonna grow because we're not delivering what we could be delivering because of the supply chain. So there's absolutely no issue in sales, and sales that aren't being met this year are being put into the following year. We've said consistently since the beginning that we have no issue with sales and, you know, frankly, that's the way it, you know. There's definite acceleration and momentum and excitement on the sales side, and this is all a matter of logistics and us working up the global supply chain and us working with, you know, our suppliers to get, you know, various pieces of equipment to us as fast, as quickly as possible. All right. Thank you for that. Another question I wanted to ask was about some of the performance characteristics of the current product. As soon as you get Bolingbrook up and running and the full Hyzon-owned production system up and running, how different will the specs be and the performance be of those trucks from that point onward than they are today? Also, what customers are testing today, does that include maybe some kind of hand-built version of what it's gonna look like at the end of this year? Or is it whatever you can get from Horizon that's in those trucks today? I'll take that. Mike, the fuel cells that are currently going into the trucks are the same fuel cells that we've in you know Hyzon trucks in the U.S. and in Europe and Australia are the same as the fuel cells we put into the trucks for delivery for the steel customers in China, for example. Those fuel cells are the same designs. That design of fuel cell is being updated slightly for the higher power applications, the higher power requirements, but it's very, very similar, and it's not made in a drastically different manner, whether it was to be built by Horizon and purchased by Hyzon or whether it was to be made you know by Hyzon in-house production. The fuel cell itself won't be noticeably different. Okay. Just to clarify, the difference then will only be on your margins and your ability to capture— Yeah. —more of the value chain. Yeah. That's all it is. Cost of— Okay. Yeah, we get cost of production price instead of, you know, instead of, a customer price. Got it. I'll leave it there, guys. Thanks so much. Thanks, Mike. Operator, are there any more questions? Yes, sir. Our next question is coming from the line of Steven Fox from Fox Advisors. Your line is open. Hi. Good morning. I'll try to stick to the standard two questions here. First of all, Craig, versus 90 days ago, have you done anything or had any progress in terms of controlling your own destiny on the supply chain a little bit better, or would you still describe it as sort of a fistfight every day? Secondly, Mark, you made a lot of good arguments for why, you know, the secular benefits to hydrogen, especially given current events. I'm just curious, like, versus, you know, say, the beginning of February to now, you're not seeing much in terms of, like, public opinion from government leaders emphasizing hydrogen as much. Are you seeing anything that's changed in your conversations? Eit her on the government front or with corporates that's, you know, because of the Ukraine war? Thanks. Thanks, Steven. I'll touch on the supply chain factors. Naturally, and I mentioned this even in our prior Q3 call, you know, we had moved fairly quickly to put as many things on order as we could around the middle of 2021 to be able to build as many vehicles as we could approaching the end of the year. Unfortunately, that wasn't even aggressive enough because, you know, lead times of things that are normally a five or six-week delivery schedule, those lead times went out to, you know, unknown numbers of months and typically 9+ months. I'm happy to say we've taken delivery of a lot more parts and components and vehicle chassis in Europe than we were able to get last year. This year's definitely looking better. Whether or not we took a lot more actions in the last 90 days, I don't think we took a lot more in the last 90 days. I think we took a lot a little prior to that, a lot of actions to buy quite a bit of inventory for deliveries in 2022. Still, the challenge for us is that the customer appetite's growing much faster than the ability of the supply chain to catch up with it, as Mark kind of indicated before. The orders are coming in, but we simply can't, you know, get the vehicles out at the rate that we would like and at the rate the customers would like. We are looking at a, you know, much better, Q2, Q3, for example, in Europe than what we have endured in the last, you know, 90 to 120 days. It's been pretty tough. I'd say Q2 and Q3 in Europe will be much, much better for us and we look forward to making a lot of customers happy, because they've been waiting a while for trucks, frankly. Now if you don't mind, I'll turn over to Mark on, you know, the questions about some of the secular benefits, as you called them, around hydrogen. I'll just make a comment about interactions with some of the customers and some of the government agencies and reflect on the, you know, the burgeoning interest, frankly, in hydrogen as a solution for heavy vehicles. It's not just Hyzon's view anymore that hydrogen is gonna be so important for these heavy vehicles that operate many hours every day. It's not just our view or our wish that hydrogen's important in those sectors. It's now, you know, become a well accepted mantra amongst government agencies, policymakers, and corporations generally. We have, you know, a high level of confidence, a much higher level of confidence than we had going back 12 months when we were, you know, promoting the vision of what Hyzon could be and could do, and we feel extremely confident that the thesis we laid out around hydrogen and the fact that hydrogen would prove to be the secret source to unlocking zero emissions for these hard to abate mobility sectors, you know, that thesis is definitely in very good shape and in fact, it's has far more of a tailwind now than we ever would have imagined 12 months ago. Do you wanna comment on that at all, Mark? Sure. I mean, Steven, you might have seen that yesterday, I mean, Reuters is reporting that China set a target to produce 100,000 to 200,000 tons of green hydrogen by 2025. I mean, obviously, you know, they get it. They're very focused on security of supply. I didn't read his comments, but this morning, Jamie Dimon was talking about how we need a new Marshall Plan for energy. When I think about a Marshall Plan or, you know, a way to sort of march the whole economy to something beyond oil and gas. It really only can apply to hydrogen. That was sort of the point to my remarks on the call. We do need a Marshall Plan, and we need, you know, a massive revolution of the energy infrastructure. It would be in our opinion a sort of dead end to try to move it all to battery electric because, of course, that depends upon the grid. If we rolled out, you know, massive waste to hydrogen, you know, all across America, I mean, there's garbage produced everywhere. I mean, it's a great local source of hydrogen. I mean, this would be something that would create energy independence and it would be sustainable. It would clean up the environment. I mean, you know, the landfill issue is a real issue. I mean, you might know that, you know, New York City ships its garbage to Rochester, Wyoming ships its garbage to Utah, Singapore ships it to Malaysia, and so forth and so on. All that could get fixed, and at the same time, we could create energy independence. Part of the purpose to my comments in the call is to, you know, get this message out there that we do have, you know, a plan, and we do see a future here, and we can, you know, if needed, if there's gonna be. If oil's gonna go to 200 as many people are calling, you know, we have a way to, you know, get the whole world to be energy independent and stop relying upon imported oil. Whether it's imported from, you know, Russia or imported from the Middle East, you know, this is a positive for everyone because you get security of supply and, you know, at the same time, you clean up the garbage situation. Great. I appreciate all those comments. Thank you. Thank you, Steven. Our next question coming from the line of Donovan Schafer with Colliers Securities. Your line is open. Hey, guys. Thanks for taking my questions. My first question is just for the unrecognized sort of portion of the 87 vehicles, you know, that you sold this year. Because it's spread over this kind of five-year period, I'm just curious just from like, you know, just how you think through this and combine this with your reporting on the backlog. I liked to see how you broke out the backlog in terms of binding, non-binding. You've got about $60 million binding. Is the remainder of the $19 million kind of contract value, is the unrecognized part of that counted in the binding backlog or the non-binding backlog, or are you leaving that out of backlog altogether? Craig— That's a fair question. Yeah. Yeah, take that, Mark. Yeah. There's a slide in our presentation that was put out this morning in an 8-K that actually addresses your comment exactly. The remaining— Oh, great. —is actually not in backlog. We show the backlog in a bar chart, and then beside that, we show the backlog plus that remaining bit. It's an incremental. I think it's like $14 million that you know— 13.4 I think still. Yeah. Yeah. $13.4 million. Yeah, that's right. $13.4 million appears as a— Okay. —yeah, uncollected revenue. Oh. And it's a fair question— Okay. U h, because it is— Yeah. — it is a payment obligation for the customer. We do expect to receive it, but it doesn't quite fit backlog definition, so we added it separately. Oh, that's fair. I like that treatment. To follow up on that same thing, just for trying to understand spreading it out over the five years, you know, this sort of, you know, for lack of a better word, you know, you talk about it being tied to operating history. I'm curious, you know, if there's what the specific sort of GAAP provisions are, maybe like what we might Google to find that. 'Cause I could think of it as being like when I think about GAAP and the Public Accounting Oversight Board or whatever that puts that together, it could be kind of in the spirit of two lines of thinking, where one, you can talk about operating history. It makes me think of kind of a similar line of thinking to the sort of like allowance for doubtful accounts type thing or bad debt, you know, just in the spirit of it. Or the other one being like the nature of the contract, almost like a, you know, year-to-year, rental agreement or something. So just, you know, what would you sort of Google in terms of keywords to understand what this falls into? What we can do on this— Donovan, yeah. Yeah. What we can do is answer a specific question— I was gonna say the main factor— Go ahead, Craig. Sorry, Mark. I was just gonna say what we can do— Well, I was just gonna say the main factor here was the treatment of collectibility, the assessment of collectibility by our auditors. Mm-hmm. They're saying we just don't have enough, you know, kind of enforcement power to go out and make sure that money gets collected. Now, the end user of the zero-emission vehicle services is one of the largest steel companies in the world, and we think it's highly unlikely they'll default or stop using trucks anytime soon. We don't find it an unacceptable business risk. From an accounting treatment standpoint, because there's a new intermediary involved in the provision of the service for the vehicles, then it's considered, you know, a collectibility risk. As that company has more operating history, then the collectibility would become clearer. I'm sorry, we both tried to answer the question at the same time there. Mark, do you want to add anything? I think you did a good job answering it there, Craig. I'll just add now that, if you want, we're happy to have you speak with our Chief Accounting Officer. She is— Okay — far in the weeds in all this and can explain it to you. Okay. Great. I'll ask the last question— I also just want to say, Donovan. Donovan, I just want to say that it's really a short-term issue. It really doesn't affect the viability of, you know, the trucks. It doesn't affect the attractiveness of those deployments and the extent to which we learn from the operations and from all the data we get out of all the vehicle operations. It's getting us where we need to be, which is in the market with a whole lot of trucks validated by a whole lot of customers, right? It's a short-term issue. Whether we recognize the revenue next year or the year after, frankly, it's not a huge deal. It's unattractive to have shipped vehicles that you haven't recognized all the revenue on. It doesn't make us feel good, but at the end of the day, it's a very minor pain point. Sure. Okay, that's great. Just my last question, kind of taking a stab at the green, blue versus gray hydrogen. I don't know. I'm actually not familiar with the specific breakouts, but you know, as someone I used to be a petroleum engineer, you know, the whole flaring process and vapor-sealed and stuff. Correct me if I'm wrong, but just at the kinda high level logic, my understanding is something like that at least conceptually would be seen as green because, you know, as an oil and gas producer, you're required to flare those methane emissions. You know, you're making this— Yes. —CO2 no matter what. Like, it doesn't matter. Yes. Everything else aside, the CO2, it's just happening because you're under laws probably going back a couple decades. You're being required to just combust that methane for absolutely no benefit. You know, to convert it— Right. —from methane to carbon dioxide. The logic of the green would be, well, it's happening no matter what. If instead of just having that be waste heat going off into the ether, like essentially a campfire with nobody around it, you might as well capture it. Then if you're capturing that and it's creating a vehicle that is being powered, and that vehicle is displacing a vehicle that would otherwise be powered by fossil fuels. Exactly. That would also have carbon tailpipe emissions, that's. Is that the logic? Just wanna— That's the logic for this. That's it. Donovan, yeah. Yeah, exactly. You hit on it. And it's because it's an end-to-end carbon accounting consideration. It's what is the feedstock and where did it come from, as well as, you know, what happens through the process and what's the output of the process. It's end-to-end carbon accounting that CARB looks at when they assess the carbon intensity. And you're absolutely right. It's also the reason why when you, for example, take dairy waste and make hydrogen from it, you get a really massive negative carbon intensity score because what you're abating is straight methane. And you just mentioned that the conversion of CH4 to CO2 has been mandated for many years in a lot of countries because the ozone depletion effect of CH4 is so much worse than CO2. That's why they're forced to burn it. If you're abating CH4, you get a hugely negative CI score. If you're abating CO2 being released without displacing fuel, then you're getting a negative CI benefit. If you're actually carbon capturing, then that's blue, even if it's just natural gas, for example. It would also be a negative CI green if the methane was from a renewable source. Sorry, Mark. Okay. Yeah, I was just gonna say it's the same logic for waste to hydrogen and the negative CI score there. I mean, flared gas would be going up into the environment, you know, no matter what, and same with the methane produced from a landfill. What we really need is a color for this type of hydrogen, a color to describe, you know, garbage to hydrogen. But what we would argue with the help of CARB is that this is more green than electrolysis, you know, using solar or wind because that CARB score or carbon intensity score is like close to zero, and we're now dealing with negative scores, in some cases, very negative scores. All right. Thank you, guys. Thanks, Donovan. Now our last question coming from the line of Noel Parks from Tuohy Brothers. Your line is open. Hi. Good morning. Hey, Noel. How are you? Good, thanks. Just a couple things. You know, I noticed that you talked earlier about your cash burn was essentially on track with your original projections for the end of 2021. Just looking at the expenses, I just noticed that it seems that your R&D run rate is pretty far below or last year was pretty far below maybe the original projections you had, I think, which were five-year projections. Just looking for a little insight as to maybe if and if so, where you cut back on that and just what where we might see the ramp-up on that expense line going forward, whether it's this year or more, or more 2023, frankly. Sure. R&D, I think what we had provided as an outlook for kind of major buckets of expenses, we're looking forward over several years. Our spend on CapEx and R&D, you know, generally in 2021 have been on the lower side because it's been very slow to procure equipment to do things like lab work, et cetera. In fact, we are a little slower investing in some of that than we probably would have preferred, to be honest. It meant that we ended the year with, you know, cash position fairly consistent with what the outlook had been, even given, you know, revenue recognition and cash collectibility of some orders, et cetera, or cash collection of some orders, et cetera. We do expect to continue a healthy spending on R&D, and we do expect to be spending more on capital equipment, you know, in the coming, you know, one to two years. Simply because we're going from these low volume validation vehicle type assemblies to, you know, more trucks on the road doing more work. We are also expanding that Hyzon content in the vehicles, and we go from the front end of the R&D processes through much more involved and slightly more expensive parts of the R&D stack engineering, where we validate, you know, designs and validate R&D developments. I do expect that we need to keep investing, but that's consistent with everything we're trying to do right now, which is laying a foundation for, you know, a five to 10 year outlook, which is gonna be very widely full of lots of hydrogen trucks going to lots of countries around the world. Frankly, we have to invest in this base. We have to invest in the core capabilities, and we have to maximize the Hyzon content in the vehicles we deploy so that we realize both the higher sustainable margins, but also a business which is more stable, predictable and vehicles which are more reliable and dependable and have good long-term service characteristics for our customers. We will continue to invest fairly heavily in R&D. Yeah, it is a little slow to get started, especially given equipment purchases have been so slow, frankly. Great. Thanks. You did mention earlier that you did have a customer, I believe in Europe, who successfully started their green hydrogen production. Green hydrogen. Yeah. Delivery is gonna be on the way. If we look at them as maybe sort of an early-ish adopter, wondering if they're sort of useful as a case study for what you might see in other potential customers. If you happen to know, I'm just wondering if you had a sense whether there were significant incentives involved in their achieving that or something they did more on their own. Yeah, that's a good question, Noel. If anyone, you know, had kind of seen our original kind of investor materials, then you might have remembered that we characterized the early adopters kind of in two buckets. They were the type of companies that had made a commitment and were aggressively investing in their own green hydrogen capabilities, such as, you know, Fortescue in Australia, such as, you know, this company in Europe that's built, you know, electrolyzers to run off renewable electricity. It's these types of customers are early buyers of vehicles because they are committed to hydrogen strategically. There's another type of customer which is more like the typical customers in Europe and a lot of customers in China, where they know they can access available hydrogen from, you know, from a public station or it might be from a, you know, a chemical plant that's got waste hydrogen or whatever. Uh. We see the European customer as a bit of a case study, as you say, of one of these kind of behind the fence, make my own hydrogen and displace diesel in my operation without any substantial subsidy support. We saw Fortescue do something similar in Australia, where they committed to purchase coaches and those coaches are now in Australia and doing, you know, all their validation work and all the rest of it. This customer in Europe has, you know, just commissioned their electrolysis, and now they'll build their filling station and then in a couple months when they get their Hyzon trucks, they'll be, you know, able to tell the world about it. I think that those behind the fence green hydrogen projects are underappreciated as a commercial weapon for some of these companies. Becoming independent of diesel and removing that volatile cost element in your operation, which is also a very high kind of variable cost element. It's not something that you don't get a lot of scale benefit of doing more trucks 'cause you just gotta buy more diesel. Whereas when you make green hydrogen and you put more trucks onto the green hydrogen, you get this fantastic scaling effect, right? You get this improving marginal cost of adoption. That European customer, we're not talking about them yet in detail because they wanna, you know, they wanna talk about their project a little later. It is a good example of a behind the fence type of initiative. We believe that over time they will receive you know government support simply because they've been so progressive and pursued these initiatives. It will ultimately result, I believe, in support, for example, for them to scale vehicle deployments. That's yet to be revealed. You know, I believe that that's an inevitable development once they prove that they have this green hydrogen available at strong economics. There still will be, I believe, support for scaling vehicle adoption around that green hydrogen. Great. Thanks a lot. Operator, do we have another question? Thanks, Noel. That was gonna be the last question. I think we're pretty much out of time. I'm showing no further questions. Great. I think we're pretty much — Thank you very much. —out of time anyway, so. Yeah. Yeah. Yeah. Thank you very much. We look forward to, you know, speaking with you on the next quarterly call. We'll leave it at that. Thanks, operator. Thanks, everyone. Ladies and gentlemen, that does end our conference for today. Thank you for your participation. You may now disconnect.