Greetings, and Welcome to Plug Power's fourth quarter 2021 earnings conference call. At this time, all participants are in a listening only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Teal Hoyos, Director of Marketing. Thank you. Welcome to the 2021 fourth quarter update call. This call will include forward-looking statements. These forward-looking statements contain projections of our future results of operations or of our financial position or other forward-looking information. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We believe that it is important to communicate our future expectations to investors. However, investors are cautioned not to unduly rely on forward-looking statements, and such statements should not be read or understood as a guarantee of future performance or results. Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors, including but not limited to risks and uncertainties discussed under Item 1A, Risk Factors in our annual report on Form 10-K for the fiscal year ending December 31st, 2001, as well as other reports we file from time to time with the SEC. These forward-looking statements speak only as of the day in which the statements are made, and we do not undertake or intend to update any forward-looking statements after this call or as a result of new information. At this point, I would like to turn the call over to Plug Power CEO, Andy Marsh. Well, thank you, Teal, and good afternoon, and thank you for joining our year-end conference call. Before we take questions, I'd like to make a few comments about the future. In 2021, Plug Power grew revenue over 50% despite the constraints of supply chain and the impact of the pandemic. In 2022, Plug almost doubled revenue. Our position as the first mover in creating the hydrogen economy is our top priority. We've achieved this position because we have focused on customers like Walmart, partnerships like SK, our technologies, our products, and probably what I'm most proud of, foster creative environment for our great staff. Why is our position as a first mover so important? Because hydrogen and fuel cell are a $10 trillion opportunity that will change the energy landscape. Many large financial institutions are predicting that up to 20% of world's energy will come from hydrogen. It is our belief to accelerate that transition to a hydrogen economy requires green hydrogen because it is critical for reaching the global climate goals. To achieve that goal, green hydrogen needs to be ubiquitous. Sometimes I think it's massive that the steps we have taken the past few years have been to achieve this goal. Let me reemphasize, it needs to be green because any other solution is a half step. The focus in green hydrogen is why we are building out the first green hydrogen network in the U.S. We'll have over 500 tons per day by 2025 and are going to duplicate this network around the world with partners like ACCIONA in Spain. It's also why we've acquired companies that know how to build hydrogen plants, generate hydrogen, leveraging electrolyzers, liquefying hydrogen, like our recent acquisition, Joule, and transporting hydrogen. We are also leveraging all the learnings from our own years of experience to make these offerings better. This journey will continue as we explore partnerships for pipelines and storage. Plug can not only provide the green hydrogen, but also the apps. We have built more fuel cells than anyone else in the world. Fuel cells that can be used in a variety of applications, from powering forklift trucks for Home Depot, for on-road vehicles with our JV with Renault, stationary products with SK, and you'll see more and more apps in the future. We believe that green hydrogen creates the possibilities that the business can continue to double for years and years to come. We believe the future is now. Like many, I've been watching the tragedies unfolding in Ukraine. This crisis is highlighting to people and nations that autocratic governments can't be the gas stations to the world. Liberal democracies will be accelerating the energy transition because of this horrible event. Plug is uniquely positioned to create the future as we can help people, companies, and governments transition to a carbon-free solution, not in some distant future, but today. We can do this because in very simple terms, Plug creates and builds real plug products today for this new world. Paul, Sanjay and I are now ready to take your questions. Thank you. We will now conduct a question-and-answer session. If you would like to ask a question, please press star one on your touchtone telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we pull for questions. Our first question today comes from James West of Evercore ISI. Please proceed with your question. Hey, Andy. How are you doing? Okay. Good afternoon, James. Thanks. Good afternoon to you as well. First one for me, I don't think you announced any new green H2 production facilities or any offtake agreements yet. Am I right about that, or should we be expecting some announcements very soon? That's one of the reasons I have Sanjay here with me. Let me- Great. Perfect. Let Sanjay talk on that, James. Yeah. Hey, James. How are you? Good. Thanks. Good. Let me first talk about the plans, right? Again, as we said, you know, we plan to have three plants, you know, built in 2022, and we said that we're actually looking to break ground on many more this year, right? That actually gives you basically- Okay a network here in North America by the end of 2023 and early 2024. As it relates to actually our offtake agreements for this green hydrogen, first off, you know, we talked about this a little bit in our shareholder letter. Our funnel right now, the sales funnel for that is about 600 tons per day, right? It comes from a variety of different markets: mobility market, industrial application, and natural gas blending. Our goal here, as Andy talked about it before, is to secure about 200 tons for that offtake. You absolutely should be expecting to hear more about it as we go into Q2 of this year in terms of new announcement and signing of these deals. Okay. Great. Great. Just a follow-up for me. The gigafactory in upstate, where does that stand today? Are we rolling out production? What's the production ramp look like? Production ramp really starts heavy in early April, James. Okay. We have started making some electrolyzer stacks there. You know, if you go there today, not only do you see the plate stamping equipment, you know, we're well-positioned. I think in May, James, I think we'll be inviting you all up there to Rochester to show off the new facility to the analysts and our investors. We're planning a big day in May to have a real showcase to walk everyone around. Great. Looking forward to it. Thanks, Andy. Thanks, Sanjay. The next question is from Craig Irwin of Roth Capital Partners. Please proceed with your question. Good evening, and thanks for taking my questions. Andy, there's a lot of Well, good afternoon. Good afternoon, Craig. Good afternoon. It's definitely good afternoon in the northeast, that's for sure. Yes. Yes, it is. Andy, there's a lot of moving parts at Plug right now, right? You've got so many different initiatives, so many fantastic partners, your product lines, you know, just a lot of things to really work through. Can you help us prioritize the key drivers of improving margins over the course of 2022? In your shareholder letter, you talk a little bit about some of the changes that have been made on the service side to improve the serviceability, reliability and economics of service for both Plug and your customers. You've got the gigafactory coming online with, you know, obviously utilization revenue from the electrolyzer business and everything else that's working. You've got green hydrogen coming on. You know, there's a lot of different things that can really move the margins in a positive way. How would you rank these different initiatives and which ones do you think will make sort of the higher dollar margin contribution to the company, as we exit 2022? I think by far, Craig, the top priority for margins is the green hydrogen network we're building out. That focus and having 70 tons per day of green hydrogen will have a dramatic impact on our margins. That will start to ramp at the end of 2022 and have significant impact on 2023. That will take a business that is negative margins today, to Sanjay, you expect that to be a 30% margin business. Absolutely, Andy. By the end of 2023, we should be in that position, Craig. Then when you think about service, what I'm really thrilled about was the 5,000 units that we put out in the field, which represented our latest technology. Those units, we already have seen a 50% reduction in service costs. I think from a dollar point of view, it won't be as big as green hydrogen, but it will be significant. Look, scale matters and production facilities matter. You know, the work that we're doing in the production facility, we expect to start seeing continual improvements, even with this very difficult supply chain. You know, we've brought in, I think you know, Craig, a lot of the leadership who worked in the Tesla Gigafactory in Reno, Nevada, and they've already identified significant cost savings for our products without changing them, even in this very, very difficult climate we exist in today. Excellent. Thank you for that. As a follow-up, and again, to keep things simple in the context of understanding the levers that are going to drive margins, right? 70 tons per day exiting 2022, what portion of your total production is that? And then what would that be exiting 2022? Or sorry, not production, but customer demand, your sell-through. You know, is it fair to assume those target margins of 30% are what you're probably achieving on some of these early green hydrogen sales? Does that simply mathematically come into the mix? I'm gonna let Sanjay take that since as you know, Craig, he runs that business every day. Yeah. Craig, as you know, right, I mean, I think once we get to, you know, producing 70 tons per day, couple of points to highlight here, right? I mean, look, as you've already pointed out, just by looking at our margin here in the near term, you can actually extract what kind of pricing we're paying for it, and you can also extract what kind of ASP we have, right? We've shared with you all what is going to be that cost of green hydrogen even without first plant, and how that cost continuously goes down with plant number two, plant number three, right? Without even You know, with the similar pricing of what our customers are paying for gray hydrogen today, with our in-house production of green hydrogen, yes, you're absolutely right, you will see that 30% kind of a gross margin in that business, number one. Number two, things only gets better as you go through 2023 and as you go into 2024, right? 'Cause we're gonna keep adding more production capacity. In terms of our internal demand, that number is between 40-50 tons per day, right? That's what our demand is. As we get to 70 tons, as we get to bigger numbers, this will have multiple effects. One, we actually have an opportunity to sell it to additional new customers, additional new markets. Another thing that also allows us to do is, and this is something very important to us, and in our opinion, very important to the entire hydrogen economy, which is help industry get through all these force majeure challenges that it often sees, right? Make sure our green hydrogen is economical, ubiquitous. you know, once this North American network gets built, logistics cost will go down, cost of our green hydrogen continues to go down, and without even changing the pricing structure, we feel very comfortable about the fact that you should see step change in our margins. Fantastic. Thanks for taking my questions. Thanks, Craig. The next question is from Colin Rusch of Oppenheimer. Please proceed with your question. Thanks so much, guys. Can you give us a sense of the applications for the green hydrogen demand and the 1,000 tons per day pipeline? You know, like what percentage is refining, how much of it is material handling and over-the-road transportation? Great. Colin, you're making Sanjay do a lot. Good to hear you, Colin. Yeah. Totally. He needs a workout, man. Yeah. Let me let Sanjay take that one. Yes. Thank you, Andy. Colin, I think when we talk about the 600 tons of sales funnel, right? Call it about 50 or so opportunities, right? Look, I think in that mix, obviously you can imagine that it's some of our existing customers that are transitioning from gray to green hydrogen, which means it's in material handling, which means it's also in new apps like stationary and some of the mobility opportunity, right? That certainly makes up a pretty important chunk of that. You go forward, and you look at some of the recent announcement we made with customers like Certarus, right? Where they're actually buying some of our green hydrogen. We have a 10 tons per day offtake agreement with them, and that is more for blending purposes, right? Where you can actually start to almost like a virtual natural gas pipeline, where you're starting to do green hydrogen blending, right? Beyond that, we have a lot of opportunities surrounding refining industry as well and some of the mainstream industrial application as well, right? It's a pretty broad mix, if you would, Colin, when you really think about it. It's not just your traditional transportation market type application. The funnel is pretty broad. Our goal here is to really get that 600 ton to be more firmer, somewhere around that 200 tons per day by the end of the year, and that's what we're working towards. Okay. That's super helpful. You know, in some of these products where you're bidding in electrolyzer capacity, you know, I'm just curious what the competitive landscape is and how aggressive it is. You guys have talked about the fact that you're actually building things, which is a competitive advantage, but I'm curious how vicious the competition is at this point, you know, from a cost perspective, and just a technology performance perspective. Colin, like many businesses, the first gate with customers are these people capable of designing a system that can meet their needs? I think in that area, when you think about the hydrogen ecosystem we built out, the kind of companies we acquired, you know, we walk through that first gate, I think, cleaner than our competition in most cases. I think when I look at that's a real differential advantage. Then the second gate is, we have a factory that can build stacks for electrolyzers. That's a big differential advantage. I think the combined fact that we're experienced, that we can build the product, we make decisions and, you know, my first criteria with our sales force and electrolyzer is really us screening the customers. Not to be pretentious about it, but we screen, and my first question to the sales team is always, are we working with people who actually can build a plant? That they understand the basics. Can they fund their projects? You know, do they have an application, knowledge of an application where it can be used? In many ways, the screening process is the other way around. You know, you take what we're doing with the Orascom over in Egypt. You know, you're dealing with people who really know how to build plants. You're dealing with folks who are well-funded. You're dealing with folks who have an application of green ammonia, which you can substitute green hydrogen today for gray hydrogen. The screening process is actually the other way around for Plug at the moment. I would say, when you start looking at a $13 billion funnel, you're really beginning to screen through who really can execute. Okay. That's super helpful. Thanks so much. The next question is from Greg Lewis of BTIG. Please proceed with your question. Yes. Thank you, and good afternoon, everybody. Hi, Greg. Hey, Andy. Always a pleasure to talk to you. You know, I was hoping for a little color. This morning, you know, I guess there was an announcement that a company is looking to move forward with a green hydrogen project in Houston, I believe a 100 MW project. Realizing that, you know, Plug is a first mover, was never gonna be the only supplier of green hydrogen in the U.S. As we think about that, are projects like that something the company is actively going after with their integrated solution? Is it at this stage in the game, you know, we have a couple big key customers we're looking to supply, obviously in Australia and elsewhere, as well as building out your existing hydrogen network in the U.S. Just trying to understand if as we see more projects like these are opportunities for Plug. Yeah. Greg, I know that project quite well. Good to hear. I'm well familiar with it, and Plug's well familiar with it. Okay. Just so we It's a very interesting project and, you know, you know, we're really. We know it. Okay. I guess really what I'm trying to understand is as we think about your manufacturing capacity across your business lines, you do have excess capacity to kind of be a supplier to some of these new to a potential wave of projects beyond just what the company is targeting for its own capacity. That is absolutely correct, Greg. Look, we're looking to increase capacity in ways that go beyond just putting more equipment in. You know, when you're at this stage of a business, you can improve capacity by making enhancements to the product. You know, a lot of work going on, you know, with the electrolyzer MEA, you know, how to up the power of the same MEA by 50% and having the same takt time. You know, we feel well-positioned with our present factory. The other item I'd like to highlight is, you know, if you go, you know, look at that factory, there is, I think today, 300+ pieces of equipment that have been specified and have been designed and integrated so that we can take that model and duplicate it again. You know, I feel we have plenty of capacity for 2023, but we are, Greg, looking at, and one of our items for this year is, you know, where do you build the next gigafactory? Okay. Super helpful, Andy. Always a pleasure. Have a great night. You too. The next question is from Eric Stine of Craig-Hallum. Please proceed with your question. Hi, everyone. Thanks for taking the questions. Hey, Eric, how are you? Hey, doing well. Good to chat. So maybe just on materials handling, I know you've got the five pedestal customers. You mentioned in your write-up that you've got three near-term, two in the E.U., one in North America. You know, just curious how we should think about those maybe playing out in terms of announcements throughout this year. Then curious, you know, as you think about your 2025 expectations or outlook, is there a number you have in mind for the ultimate number of materials handling customers? That's a good question, Eric, and let me step back from the question and highlight the fact how important Europe's becoming to Plug Power. Europe, when you start looking at the pure play hydrogen and fuel cell players, Plug probably has the largest staff or the second-largest staff in Europe. We have the facility in the Netherlands. I'm about to go to the grand opening to our facility in Germany in mid-March. You know, we are well-positioned in Europe. When I look at Europe, you know, Joseph has about five or six customers on his list to reach the level of pedestal customers for Europe, all who we've been doing business with. In the U.S., I think the announcement will come first. There's one customer that you know we're in final stages of to announce. I think ultimately you know I like to think about it like Jose. I think you know Jose's outlined for 2030 what we as a business have to do to achieve $4 billion in revenue in that sector. That's really our target. I think you'll probably also see as the products become simpler, as the hydrogen systems become simpler, there'll probably be more work on channels also, and that will become more important for the business. I don't know if there's a ultimate number for potential customers. I think there's a goal for market share that we believe penetration rates can be in the 20% level by 2030. Gotcha. Well, that's a good segue. Actually, I was curious. I know years ago you'd acquired a, I mean, as a small acquisition, but it was a reformer company, and the thought was that potentially, you know, how do you expand the market into sites with fewer forklifts? You know, just curious, given what you're building out on the green hydrogen side and the cost profile coming down, you know, maybe some thoughts about where that process stands and how you see that playing out going forward, getting into those smaller sites. Yeah. Good question, Craig. When I think about it, and we've been doing some work already. We are developing a 50-kg-per-day system, which is much smaller, which looks more like gas delivery, which can be done either through Sanjay's hydrogen plants or actually through, you know, think about Walmart as a depot point. We actually do this today, where we pick up gas at Walmart and may move it to another customer when it makes sense. What we're designing are smaller systems, much lower cost. Essentially that, you'll have a 40-foot container, pick it up, drop it off, come back three days later, put a new container in place. Which, not to divert, but I will a little, but it also is very similar to, you know, how we will maintain units at smaller sites. We have a universal engine we're calling it that comes out by the end of this year. Not only those sites will not require service people, but we'll be able to deliver hydrogen, take care of any issues that are on-site when we drop by. The modules will be able to be picked up and taken back to a centralized center if they need any work. You know, that's really clear, and both of those projects are being done, and they're really closely linked together, will be finished by year's end. We expect to ship, probably 1,500-2,000 of our universal engine by year's end, which reduces both the product cost but also the service cost. Eric, if you wanna call me another time, I'll be happy to give you more of a detail on that one because it is interesting. Yep. No, I'll take you up on that at some point. I didn't do it justice. All right. Thanks, Andy. Thanks, Eric. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from P.J. Juvekar of Citi. Please proceed with your question. Yes, good afternoon, Andy and Sanjay and Paul. Good afternoon, P.J. You know, my first question is on Hyvia. You know, I think the sales should ramp up in that joint venture in 2022. How many vehicles you think you can make this year, given sort of these difficult supply chain backdrops and chip shortages? Just tell us about how do you see this JV ramping up. Yeah. First, let me take a step back and say I am thrilled with the work at the JV. We have people who are Plug people in France. Every week, I think we have folks from France who's been coming to Plug. I reviewed it this morning. We expect that we will be shipping approximately 250 vehicles this year, probably to a list of about 20 different customers. It's a wide variety of customers. That Renault Master product can be leveraged to deliver goods by people like Amazon, and it is a real attractive offering. You know, by 2030, we expect to deliver about 250,000 of those units. I know that. It's another facility. I think I'm going to a grand opening March 14, 15, Teal. March. For a grand opening of the Hyvia manufacturing facility in France. You know, it is a, you know. You know, I've been around a long time. You know, outside, you know, back at other companies like Lucent, it is a really well-run, very thoughtful product development cycle that we're just really pleased. You know, the Master van will be on the road. We'll have the people mover that'll come by year's end. There's work going on with taxis. There'll be a next generation platform where there's work going on for two to three years out. P.J., I'm really pleased. I think 2023 it'll with all the seeding we're doing with customers this year, I think 2023 will continue to grow and ramp. Great. Thank you. My second question is maybe for Sanjay. As you ramp up your hydrogen production, what kind of investments do you need in logistics, like trucks and liquefaction tanks and all that kind of stuff, storage tanks? Do you have that built out as well? Great question, P.J., right. Let's take a step back, right? Typically, how we think about it is like when you talk about a 15-ton plant, you need about 7 liquid tankers to deliver that hydrogen, right? That number could go down as the network really gets built out through the U.S., right? You can actually leverage plants even better than one-off plants, if you would, right? As you know, as you've seen, right, with the acquisition of Applied Cryo, now we can build our own tankers. We can build our own on-site storage, we can do the vaporizer. It really puts us in a position where we can not only control the delivery timeline, we can also reduce the cost and really think about building it faster, and that's totally in our control as a part of our vertical integration strategy, right? Also in Q1 of this year, you saw that we made an acquisition of Joule Processing, right? That gets us into the liquefaction business. When you now take a step back and think about our capability in the green hydrogen generation business, we have our own electrolyzer, we're the largest user of it, and we're looking to sell it to third parties, right? We now have our own liquefaction capabilities. We're using it ourselves, and we believe it will actually rival some of the energy efficiency, kilowatt hour per kilogram of electricity uses versus some of the, you know, better liquefiers out there in the market out of the gate. We see a path where the energy consumption could even get better as you go forward. That's very important to continue to reduce the cost of green hydrogen. Finally, from a logistics perspective, now we're able to make it all ourselves. Really puts us in a very unique position where we buy renewable power and we do everything else. If customer is looking for gaseous hydrogen, we can provide that. They're looking for component; we can provide that. They're looking for liquid hydrogen; we can provide that. They're looking for liquefiers or the tankers; we can provide that as well. We feel very, very good about the team that has now become a part of Plug Power, and we see a lot of great things coming out of it. Great. Great work. Thank you. Thanks, P.J. The next question is from Bill Peterson of JP Morgan. Please proceed with your question. Yeah. Hi, good afternoon, Andy and team. Hi, Bill. How are you doing today? Yeah. Doing great. It's been a great day. The first question I have is related to the DOE held an event last week. It's kind of an RFI, request for information phase with feedback due by the end of March. You had the Section 816 for electrolyzers, 813 for hubs. You know, look, I know you guys are aiming for coverage in most of the country in your projects. At least your first set of projects are ahead of when any hubs that arrive. But I guess my first question is Plug doing anything in terms of engagement or I guess, is it important to kind of steer the direction? Secondarily, what are your expectations, if there are any, in terms of benefits from some of these announced things from the Bipartisan Infrastructure Law? Bill, I will say this first. If there's a hub in the U.S., every one of them will use Plug Power products in my opinion. We have been deeply involved in all the hubs that are going on across the country, but specifically here in New York. I think if you look, there was a press release put out by Senator Schumer right after the RFI came out, where Senator Schumer highlighted Plug Power three times in the press release, and we've been working very closely with the folks at NYSERDA and other folks in the Northeast in thinking through how you make New York the green hydrogen hub for the country. We are actively involved. I'm sitting here with Gerry Conway, who's my government affairs person, is here with me. We meet, they meet daily. I meet twice a week with them on the work with the hubs. My view of the hubs and a successful hub is one that builds the foundation for the future. I don't view the hubs as a single government grant that allows you to build something. I view it as how do you build a hydrogen pipeline that many people can put hydrogen in and many people can take hydrogen out. That's how we're trying to help folks think through this, is that this is not a one-time, $8 billion opportunity. This is an opportunity in four places or maybe more across United States to build the foundations for the hydrogen economy that really can help grow not only our business, but this entire industry. Okay, thanks for that. Second question is, I guess, somewhat related, but it's also related to a few other earlier questions. You know, when we think about your sort of merchant business for electrolyzers as well as captive for your green hydrogen production, I guess, you know, you have I know you've been on some projects in the U.S., but I guess how important is it to also, let's say, you know, I don't know, say, gain share or sell outside of your captive business, or would you expect these opportunities to be addressed by competitors? I guess, really holistically, what is your win rate? You kind of talked earlier about you being somewhat selective on this, but just, you know, curious? Obviously, you have Australia and Egypt and other things overseas, but curious on how you view other hydrogen projects in the U.S. that are, let's say, not your own sort of captive production. I would say, Bill, our win rate, the ones that have come to the finish line, it's probably close to 50%. I know if you talk to our team, they would say higher, but probably close to 50%. We're not—we want to make the pie big. We've been selling, you know, we're selling to people who could be competitors to Sanjay. We're leveraging our technology. We believe that a huge pie helps the hydrogen economy. You know, we're winning deals, and I think we're winning the kind of deals we want. I think that we haven't spoken much about government policy during this discussion, but it could really accelerate here in the United States. We know, you know, we've seen previews of the State of the Union tonight. In the State of the Union, the President's going to address, you know, the need for the climate change legislation, where there's a $3 tax credit for green hydrogen, which several remains in supports. We think that for the election, there will be a climate bill, and we believe there will be a climate bill that's very, very friendly to hydrogen. That portion of the bill in Build Back Better Act has not been controversial. Okay, thanks for that, and good luck. Thanks, Bill. The next question is from Stephen Byrd of Morgan Stanley. Please proceed with your question. Hey, good afternoon. Thanks for taking my questions. Hey, Stephen. How are you today? Doing great. Doing great. How are you doing? Good. Good. Well, thank you. You know, I wanted to explore the U.S. Green Hydrogen Hub opportunity more. I guess as I understand it, you know, I mean, obviously, the Infrastructure Bill that did pass does include quite a bit of money for these, and we could see, you know, I guess as many as eight or more of these hubs. I guess it's unclear. Would you mind just talking a little bit to at least as you understand it, the process for determining the allocation of this money? I just building on what you mentioned earlier, I wasn't completely sure sort of how dependent you felt you were on that money. I mean, you guys are doing so much anyway, but I'm just curious how kinda your work ties into that federal money that's available for hubs. First, I wanna make it clear, Stephen, my business plans through 2025 is not dependent upon those hubs. Yep. That being said, the hubs are a great opportunity. You know, if you're asking me a process question, as you know, the RFI went out. I think it's due March eighth, Gerry, the response to the RFI. Pretty general, the RFI. There's, what, 20 questions, Gerry? Yes. About 20 questions, which are rather generic, but I think helpful for the DOE to start formulating. We expect the formal RFP, I'm hearing late May. That, you know, I think you would start seeing awards and directions by the end of the year. It may start out with smaller projects that grow, and that's, I think, the process that's going on at the moment, Stephen. Look, you know, we're working closely, as I mentioned, with all the folks. You know, I think there's still, quite honestly, a lot not known about the process. One who can lead a hub is one of those debates and discussions that hasn't been clarified yet. I think the DOE in this RFI is trying to get that clarification. From a Plug perspective, I just see it as an additive. Anything that helps grow the hydrogen economy, makes hydrogen more attractive, is just good for Plug Power because we have all the capabilities to meet people's needs. Well, that's helpful. It does sound like a good opportunity. I wanted to also just talk about the green hydrogen generation network in Europe. You know, you've given some updates in the past, the 3Q letter gave some context there. Could you just maybe expand a little bit on your latest thinking on the expansion and the size of the E.U. Hydrogen, you know, network that you mentioned in the 4Q letter as well? Just any additional color would be greatly appreciated. I'm gonna give that to Sanjay. Hey, Stephen, how are you? Great, thank you. Great. Again, look, I think, given some of these unfortunate events here, right? I'm sure you've seen, you know, what the LNG prices have done in Europe, right? I mean, it's touching the levels where all of a sudden, I think, you know, hydrogen is getting into parity even before anything else, even from a BTU content standpoint, right? Look, our business plan is not contingent upon what the commodity prices do from a short-term perspective, right? We've been thinking a lot about it, and our focus in Europe really has been, you know, the electricity price in Europe, as you very well know, right, in some location can be very, very high, whether it's renewable or just the standard electricity prices. That's why the partnership with ACCIONA is a very important one, cause in Spain, given the solar resources that you have, you can really get a very attractive price of that solar energy. That's why we're working with them. We have about five sites that we're evaluating that we're gonna hone in into two. That is gonna lead to about two of the 15 tons per day plant that we're looking to have operation by the end of 2024. That's with the ACCIONA, the JV, right? We're looking at location where you have the right wind resources, right? Where you can actually have a right LCOE from a wind power perspective. How do you bring that hydrogen into the demand center, right? That's another area where we're spending a lot of time. We're even looking at. We almost think about, Stephen, from a triangle perspective, how do you bring that lowest possible green hydrogen in Europe, right? As a part of our 500 tons by 2025, then go into 1,000 tons by 2028, Europe is absolutely a very important and a big part of that. We have said that with ACCIONA. We wanna have about 100 tons per day in the medium term, and we're working with several other partners. As we sit here right now, we can kind of soft circle, if you would, visibility on what we might be building over the next several years to about 200 tons per day. Got it. Thank you so much. I'm gonna add one item, Sanjay, is that in Europe, because of what's happening in Ukraine, I really strongly believe is. You know, I was sitting with a natural gas pipeline operator, one of the largest yesterdays in New York, and both of us spent a little time, he explained to me how natural gas will get to Europe. What the real discussion was about, this will accelerate the transition. You know, Europe is not going to want to be dependent on Russia for natural gas in the future, and all the focus is on how do you accelerate this climate change goals in sync with also improving national security, and hydrogen is one of the solutions. Super helpful. Thank you very much. Thanks, Stephen. Thank you. The next question is from Alex Kania of Wolfe Research. Please proceed with your question. Great, thanks. Hi, Alex. Hi there. How are you? Okay. I have a question for Paul, just to throw something his way. You know, given the cash position, how is the accounting end up working for the investment portfolio as we think about kind of earnings over the course of the year? If you're talking about the cash investments we made and the portfolio we've invested in? Yeah, that's right. Yeah. That's all short-term. Just given how volatile things are. Yeah. Well, I mean, the market that we're in, as you probably know. In short-term instruments, you're not getting a lot of yield anyway, so we're just trying to squeeze what we can out of that. There's actually some very strange rules that given the particulars of. We have so much cash, it's actually a problem for me. I can't. It limits the amount of cash I can invest. You know, that's an interesting problem I've never had before. You know, I don't think that's gonna be a huge unfortunately, not a huge contributor because of those limitations, but it's also not a huge impact because of the markets where there's just not a lot of yields to begin with. You know, our focus is really preservation. It's the big things that we're invested in, where we're gonna get the big yield between the hydrogen platform and the different acquisitions we made and growing those and things like that was where our primary focus is of investment. Hopefully that answers your question. Yeah. Great. Thanks. The other one, just kind of going back to Europe. You know, just trying to think about, you know, there's certainly a lot more kind of focus on networks there from some of the network operators, probably more seriously or in more advanced stages than we're seeing kind of in the United States. Kind of how do you see, you know, as you're developing this hydrogen network, you know, how could you kind of integrate with that and maybe kind of differentiate yourself maybe versus some of the other peers that, you know, that are active on kind of pure hydrogen and electrolysis or whatever in the continent there? Sure. Fair question, right? I think the way we're looking at it is obviously Europe so far has really been mostly a gaseous market, right? Now, given what we just touched on with what we're trying to do with ACCIONA is we're actually gonna be building two liquid plants out of the gate, right? Because we think liquid is gonna have to be a part of the mix. But you brought up a really important and a good point. What we're doing here, right, Alex, is we're working with some of the renewable developers in the right location, where they either have secured the land or they're working on securing the right PPA. I think what ends up happening here in some of these locations, right, you might actually end up. Europe actually has a better, you know, network, as you pointed out, even from a hydrogen delivery perspective. From a pipeline standpoint, Europe has been mostly a gaseous market. The way I think, this is such a big market, I'm sure there'll be many players that'll be successful. The way we see it, we're gonna work with a renewable developer in the right location where we can really secure the lowest possible cost of electricity. That's the first thing, right? Whether it's Denmark, whether it's Spain, whether it's even thinking about North Africa, if you were bringing hydrogen via pipeline into the European market. The second piece that you will see here is for the, you know, sort of that 100, you know, 100+ mile delivery, it is almost gonna be like a last mile liquefaction, if you would. That's the capability we bring to the table, and we'll work with the right partners on that front, right? That's basically how we see it. Look, there'll be many players that are gonna be successful. I think given what Andy just touched on, that this energy transition is gonna have to be even happening faster, becoming even more critical given this recent environment, this market probably moves very fast. That's why we're being very thoughtful and strategic about who are all the right developers that we can work with so that we're actually putting our flag post, if you would, in terms of really being able to secure this right source of renewable in the right location to serve that market. Great. Thank you very much. Thanks, Alex. The next question is from Amit Dayal of H.C. Wainwright. Please proceed with your question. Thank you. Greetings everyone. It's so good to hear from you. Thank you, Andy. Hope you're doing well. Just a quick question on the outlook, Andy. You know, for revenues for 2022, what portion of that do you think, you know, comes from the international markets for you? Oh, that's a good question. I think the international market will be about 25%. Paul? Yeah. Yeah. About 25%. Okay. Thank you. You know, as we get into 2023, with all of these partnerships you have in those markets, you know, does that portion grow to, towards like 30%, 40% or maybe even higher, you know, in the next few years? I think the answer to that question is yes, Amit. I think part of it'll have to do with. I think I would say yes. I would think by 2025, you're probably talking 40%. Okay. Thank you for that color, Andy. Yeah. Just, you know, with respect to the new units, you know, the ones with this enhanced technology that you have been deploying, is that now the standard units that are going to all the customers? Yes. Okay. Got it. All right. Are you getting a higher sales price for these offerings as well? I mean, you know, obviously on the service side, you're saving costs on those. Is the price point also supporting the margins on this? I would just say this, that, you know, you really hate discussing pricing strategies on calls like this, Amit. You know, let me just say that we try to get the best price for the value we create with our customers. Okay. Understood. I'll take my other questions offline, Andy. Thank you. All right. The next question is from Joseph Spak of RBC Capital Markets. Please proceed with your question. Thanks so much. I was wondering if you could spend just maybe a minute on the SK E&S JV that was completed this past quarter. You know, just a little bit more maybe on the ambitions. What are some of the near-term goalposts we should look for in that venture? What exactly is each partner contributing? And maybe it's also on the capitalization. Like, that SK investment you got, you know, a while back, is that earmarked for this JV? No. That is Plug Power's money to spend as Plug Power pleases, Joseph. Okay. Let me take a step back. I was actually on a board call for the JV this morning, and you know, the JV's top priority is the development of the South Korean market with a real focus on stationary products. By this year, we will be shipping stationary products to the JV, the initial offering. That'll grow and continue to grow through 2024. The JV also has won some mobility opportunities for buses, which could be about 750 GenPro gens per year. But Korea is the first and main focus. There is a good deal of activity going on in South Vietnam, I'm showing my age. In Vietnam and that is another area. One of the areas that I'm trying to make sure the, you know, the JV is really focused on, cause a huge opportunity is putting power on the grid in South Korea, which could help us meet our 2025 goals, and most of the focus, most of the people working on that product are in that JV at the moment are focused on that product. From a capital point of view, Paul, I think, I would probably put the number over the next three years in the $100 million type range. Yeah. That's about right. Okay, thanks. Thanks for all that color, Andy. Maybe just next question, just really more housekeeping. The 1 GW electrolyzer backlog target by the end of the year, can you just remind us where that stands right now? Sorry if I missed that. Also, is that captive and external, or maybe just the breakdown there and how you're thinking about that. All that's external. What we provide Sanjay is not part of our numbers. I mean- Okay. Sanjay's business is just a transfer within the business itself. You know, as I mentioned earlier in the call, Joseph, you know, we have today a $13 billion funnel for that business, which is, you know, rough numbers is probably 17-18 GW of opportunity. Our ambitions, you know, as I mentioned earlier in the call, we're really focused on folks who we feel can execute, that they understand, folks who have the money and folks who have real applications. One of the really interesting parts of this market is that there's this huge opportunity to substitute. The plant we're doing in Egypt, you know, the offtake for that green hydrogen is really just. Sorry, everyone. I don't know. There we go, Teal. The offtake. Sure. The offtake for that green hydrogen, that offtake is actually the feed for an ammonia plant that exists today that uses gray hydrogen. I keep on finding more and more of these opportunities, which I really like, where it's an easy substitution that assures that the revenue and the business model actually works. That's where a good deal of that funnel is and a good deal of the growth opportunity exists. I hope that helped, Joseph. Yeah. Thanks for the color. Sorry about the phone. The next question is from Tom Curran of Seaport Research Partners. Please proceed with your question. Good afternoon. Hi, Tom. As I zero in on the gross margin ambitions a bit, this might be another rare one for Paul. So for services, I know that you set a target of reducing costs on a per unit basis by 30% by the end of this year. Could you confirm or update that goal of 30%? Then, you know, now that we are two months into the year with presumably better visibility, give us some idea of what the quarterly progression toward that year-end level should look like. Yeah. Well, there's multiple initiatives that we're working on. You know, one, the mix of the units that we put in last year just perform better out of the gate, and so you're gonna see that element in the mix. Second is that we're actually retrofitting a number of those initiatives back into the fleet. That's happening at different stages at different customers at different timelines. You're gonna see a progression in that regard as well. You know, the upside percentage that you quoted is still our target. It's what we're working towards. You're gonna see, you know, probably more of the benefits starting to really feed in in the second half, just because of timing in terms of how it works. You know, basically, at the end of the day, these initiatives extend the life of these parts, extend and cause less touches. As we make these improvements, you start to feel that in what would've been the previous cycles that happened in that second half and onward, right? That's why you're gonna start to see the big benefits in the latter part of this year. I think it's gonna be a step function change as we continue to make these improvements, continue to ship new units with the new technology. Then, of course, you've got, as we move forward, a lot of customers that refresh sites and units, and so that helps and provides benefits as well. You will definitely see, you know, more progression in the second half towards those goals and then more of a step function change next year. That was a helpful summary. Thanks, Paul. Andy, what does last month's announcement about your strategic collaboration with Atlas Copco and Fives tell us about your strategy for H2 liquefaction plants and equipment? Do you remain open to and expect to stay competitive in bidding on projects where the customer wants to use a rival of Atlas Copco or Fives for the liquefier components? Just trying to parse this out. You know, you chose to do all in-house, but have opted for collaboration when it comes to what those two do. What do you expect your strategy to be for distribution and storage, you know, where, for example, you know, a company like Williams, the midstream company expects to play a role? Just trying to parse where you'll be expecting to actually own it or have a piece of it in the vertical integration strategy and where you'll be partnering, and if so, the extent to which that partnering will be exclusive. Tom, I am going to let Sanjay answer that question because he worked on that strategic deal with his team. Yeah. Tom, again, I think, as you know, right, one of the, I mean, Atlas Copco, as you know obviously from the turbo expander standpoint, obviously is a very big player in that market, right? The reason to do that is sort of they have the visibility on what our needs are, right? We have a visibility from a lead time perspective, right? With Fives being the fabrication house that has been around for such a long time. What this consortium really brings to the table, right, is now, you know, we obviously have the design, right, capabilities within Joule in terms of making the liquefier with hopefully the best possible energy efficiency. Now, we have a partner in the turbos, right? Compressors. We have a partner in the fabrication, right? When you put that consortium together, one, for our internal uses, it's a cost savings opportunity for us. It's controlling the channel. It's basically also controlling and making sure that there is no supply chain challenges that is beyond our control, that we can manage it ourselves, right? That's what comes to the table. Second thing is similar to our electrolyzer business, right? Look, this is a massive market. If we have, parties and partners that are looking to buy liquefier or electrolyzer from us, you know, this consortium obviously will be able to supply to the third party as well. Because as Andy said, our goal is to basically grow the pie here. Hydrogen is a massive market. Green hydrogen is going to be a massive industry. We really want to make sure that we're providing to our customers. If they want to capital equipment from us, we're prepared to do that. If they're looking for a hydrogen molecule from us, we're also able to supply to them as well. That's really what that consortium is. Got it. Thanks for taking my questions. Thank you, Tom. The next question is from Ameet Thakkar of BMO Capital Markets. Please proceed with your question. Hello, Ameet. Hi, Andy. Thanks for squeezing me in. Sure. Real quick from me, just it looked like there was a pretty big sequential increase in R&D and SG&A to like 60%-70% versus the third quarter. Just kind of thinking about how we should think about that for kind of the upcoming year or kind of next quarter. Is there some lumpiness associated with that at the end of the year? Or how do we think about that going forward? Some of that's R&D associated with building out the first big stationary plant. I do think that there's probably $6-$7 million I would call it lumpiness, where it's kind of just R&D material to build out the, you know, the engineering model for the first products. I take that portion of it, Paul. Yeah, there's also, Will mostly go away. We also, as you know, we announced three acquisitions, and so there was some legal cost. Yeah. Kind of one-time legal cost. You know, a lot of that work would have been done prior to year-end. Other specialty firms that help us with diligence and accounting and things like that's all in there. Definitely some lumpiness. I think, you know, rough numbers, you know, kind of that $90 million bucket per quarter is probably a good proxy. Great. That's super helpful. Then, just going back to the hydrogen supply business and kind of, you know, thinking back from the start of the year, there was obviously some of the force majeure issues that you guys have highlighted kind of throughout 2021. Kind of going forward, like you guys mentioned kind of prices as well as kind of impacting the margins on that business. As we kind of exit 2021, like there are no additional force majeure that you've kind of encountered in the second half of 2021. You guys have mentioned that a couple of times, I think, you know, just kind of getting out of that force majeure cycle. Has that been like a problem you've incurred a lot? What drives that, besides kind of gas supply related to weather kind of being disrupted? Go ahead, Sanjay. Ameet on that. Right? Couple of factors in play. When it strictly relates to our hydrogen molecule cost from our suppliers, right? Natural gas has a pretty big impact to that. The price goes up as a function of increase in the natural gas prices. You saw some of that in Q4, right? That's what happens. Now in terms of the force majeure, right? That's why, you know, we think about this as, you know, not only supporting Plug Power customer, right? We think the network that we're building is so critical for also the entire hydrogen industry, because what has often happened is, you know, you've had either plant maintenance, where the plant went down for longer than expected sometimes, right? You had a supply curtailment of feed gas that was supposed to go into some of these hydrogen plants, right? We have had to deal with situations last year where there were like a couple of plants that were being down at the same time, right? We've managed through that, which is why logistics costs went up to make sure that our customers' mission-critical applications are maintained. We're supporting that. Going forward, it's difficult to say that there's not going to be force majeure. As we go into second half of this year and really think about 2023 and as our network is built, I think it's going to be very beneficial for the entire hydrogen economy because we'll be able to step up and really deal with this force majeure and even support some of our suppliers, frankly, as we have some of this plant come online as well as our customers. Great. Thanks for that, guys. Thank you. I think that is our last call for the day. I'd like to kind of end it where my personal remarks ended. You know, Plug is creating the new world today with our real products. The energy transition is going to happen faster than people thought, even just a week or two ago. I would tell you there's no one in a better position because of all the years of experience, because of our hydrogen ecosystem we've built to take advantage of this change. That's who Plug is, and really looking forward to talking to you more throughout the year. Thank you, everyone. This concludes today's conference. 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