Welcome to today's presentation. Your call will begin momentarily. Should you require operator assistance, please press star zero on your telephone. For today's question and answer session, please press one four on your telephone to register your question. We thank you for your patience and ask that you please remain on the line. Your call will begin momentarily. Greetings, everyone, and welcome to the Plug Power first quarter earnings call. During today's presentation, all participant lines will remain in a listen-only mode. Afterwards, we will conduct a question and answer session with instructions to follow. If at any time during today's presentation you need to reach an operator, please press star zero on your telephone. As a reminder, please note today's conference is being recorded Tuesday, May 9, 2023. It is now with pleasure that I turn today's conference over to Teal Hoyos, Senior Director of Marketing and Communications. Please go ahead. Thank you. Welcome to the 2023 first quarter earnings call. This call will include forward-looking statements. These forward-looking statements contain projections of 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 based upon the current expectations, estimates, forecasts, and projections, as well as the current beliefs and assumptions of management, and are subject to significant 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 the risks and uncertainties discussed under Item 1A, Risk Factors in our annual report on Form 10-K for the fiscal year ending December 31, 2022. Subsequent quarterly reports on Form 10-Q and other reports we file from time to time with the SEC. These forward-looking statements speak only as of the day which the statements are made, and we do not undertake or intend to update any forward-looking statements after this call or as a result of new information. At this point, I would like to turn the call over to Plug CEO, Andy Marsh. Good morning. Thanks, thank you, everyone, for joining the call and thank you, Teal. Before I begin the conference call, I want to talk about two items. One is that we had a filing this morning where we made a mistake with the date. Thank you. Hope you enjoyed the video. It really showcases our Georgia plant, and you can find more detailed information on the status in the investor letter. Really to summarize, our plant's already producing gases hydrogen for our customers, and we expect it to achieve full production by the end of June. Although we always strive for greater speed, it's really worth noting we accomplished what we've accomplished since issuing full notice to proceed under our EPC contract to full production in just 48 weeks. This is a remarkable feat considering that conventional gas companies, I was sitting at CERAWeek listening to one CEO talk about six years. They usually estimate four years of a project of this scale. Additionally, by the end of June, our Georgia plant will be the largest green hydrogen plant in the world that utilizes electrolyzers. That's a significant achievement. We plan to commission more plants, Texas, New York, and Louisiana this year. This year, our focus is really to execute. Our primary goal is to achieve revenue of $1.4 billion, and that's in 2023, which is supported by several activities, including learning to scale our 5 MW electrolyzer systems in partnerships with our fabricators, scaling our stationary products to facilitate 20 MW in shipments. One of the real competitive edge is the infrastructure we've established in Rochester and Vista, which enables us to support our business growth. Our customers really do recognize our ability to deliver our promises thanks to the tools and facilities we possess. Our ability to construct green hydrogen plants is evident in Georgia, and we plan to further demonstrate this in Texas and New York, which will eliminate any doubts about our capabilities. I'm gonna be walking Georgia today. I'm excited. These plans have garnered interest from both equity and debt investors. Moreover, Plug has a range of non-dilutive solutions that can eliminate the necessity for future equity investments at the present level, based on the current business plan. Look, this year we remain focused on government policies. This is an energy company, and energy and government policy go hand in hand, including the IRA and the European Renewable Energy Directive. Although these policies have been helpful, Plug has the opportunity to shape their development further. We have built this chart to show the lower and expected case for Plug in 2023. In the expected case, Plug will achieve $1.4 billion in revenue and $140 million in gross margin dollars. Look, there's really just a couple key ingredients in meeting that goal. It's shipping our 27 MW electrolyzer systems, which we have orders for, as we learn to build them more efficiently in coordination with our three fabricators around the world. We're close to closing out about 500 MW of a large electrolyzer plant system order, and there's many more behind that. In those opportunities, we recognize revenue on an ongoing basis. Selling 60 tons of liquefiers in the next three months. I'm sure Sanjay will be happy when the Q&A comes around to talk about that. Also to that, we have the opportunities beyond those listed above to achieve $1.4 billion. If all of these items do not come to pass, revenue would be about $1.2 billion and gross margin be approximately $50 million, still at 80% increase in revenue for the year. Finally, I'd like to highlight, this is really important. Our application business, when you look at that slide, has very little variability since it's more established. During the early years of our application business, we did experience some of those challenges of predictabilities, and some years we exceeded and others we missed our projections. The methodology we just shared gives us a high level, very high level of confidence in the range of outcomes in the next seven months. Be clear, this is really important because this sometimes gets lost in the chatter. Plug is leading the way in terms of building actual products, real things every day, and constructing plants. No other company is doing what we're doing in the field. Our Georgia plant is exceptional, and we're excited to showcase it to analysts in the coming months. The feedback we receive from our customers has been overwhelmingly positive. When it comes to the application business, we have a remarkable stable business model compared to other companies in the fuel cell industry. This is due to our focus on pedestal customers. Lastly, our range of energy products is unparalleled in the industry, and we're rapidly learning how to scale more efficiently than any of our competitors. More important, our customers really like our products. Finally, I don't want to shy away from the facts. Once again, no one is building real products and building plants like Plug. It really separates us. Paul, Sanjay and I are now available for your questions. Thank you. We will now start the question and answer session. To register your questions, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered or you would like to withdraw a registration, please press one three. Again, we do welcome all questions or comments. To register, please press one four on the telephone. One moment, please, for the first question. Our first question comes from the line of Andrew Percoco of Morgan Stanley. Please proceed with your question. Great. Thanks so much for taking my question here. Just, you know, first I wanna ask a question around the IRA and some of the treasury interpretations around hourly matching and deliverability and additionality. What might that mean for some of your first few plans that you're bringing online? You still think you'll qualify for the full $3 per kilogram, and what might that mean for your 2025 and 2028 green hydrogen ecosystem targets? Andrew, I've spent a lot of time, especially in the last two months in D.C., talking to folks in the administration. Remember, the primary purpose of the IRA is jobs, climate, and national security. That really is driving the thinking of the folks in the administration. From my discussions, I believe that when you look at the European Renewable Energy Directive, that certainly has had a great deal of influence on those in D.C., which, you know, if you interpret that, you can see it's very, very favorable to the approach Plug thinks is important. You know, when I look at it, I'll give you two examples where I think that resonates with administrators. In my house in Saratoga Springs, I buy power from Green Mountain Power. Vermont Power, every time I buy electricity, is generating more renewable energy. Doesn't matter that the electrons that comes through my house come from NYSERDA, comes from National Grid. That's really what's going on. That's, you know, fundamentally, Plug supports generating more renewables. Plug supports generating electrolyzers. I believe from my discussions that's in line ultimately what the administration will do. Great. That's some helpful context. Maybe just switching over to the OpEx trends in the quarter. I think, Paul, you had mentioned $125 million of OpEx per quarter is the right run rate for 2023. You came in a little bit above that in the first quarter. How should we think about that trending through the rest of the year? Do you still feel comfortable with your operating income guidance for 2023? You know, I think what we had been talking about was like in that $125 million-$130 million, but the biggest delta in the quarter had to do with our acquisitions. I mean, they continue to do better than we expected. As you can see, we had to accrue more of consideration in terms of the earn-out structures that we set up. Should they be successful, it would only pay when and if that happens. That's a high-class problem and it was, you know, the primary delta for the quarter. I think in the balance of the year, if you look at it, the $125 million-$130 million is just the right run rate. Great. Thank you. I'll take the rest offline. Thank you. Thank you. Who we got next, Teal? One moment please for the next question. Mute a second. Sorry. Our next question comes from the line of James West of Evercore ISI. Please proceed with your question. Morning, James. Hey, Andy. Good morning. How you doing? Okay. Andy, I wanted to talk about hydrogen hubs for a minute. Given that we're really close to the commission that's, you know, gonna advise the DOE on or make recommendations to the DOE on what's been submitted so far, the DOE should start allocating capital, I believe, at some point in the late third or fourth quarter, and there'll be a big build-out. We've got, of course, applications from Texas, from California, from Los Angeles, and then obviously the Northeast, as you know full well. What role does Plug play in that process? I know we have to establish, you know, production of green hydrogen and an end market for green hydrogen, so I'd love to hear your thoughts on that. James, and I have to watch because everybody keeps on reminding me I'm covered by NDAs on the hydrogen hubs. Right. I can say that every site that you mentioned, every hub, Plug has been engaged in at different levels. Okay. Some of them, such as, you know, the New York hub, our name has been mentioned publicly, West Virginia, the activity going on there with Senator Manchin. Mm-hmm. I would tell you that things like expansion of our hydrogen plants are engaged in many hubs. Leveraging our hydrogen plants are engaged in hubs. Our products, both our stationary, especially our stationary for peaker plants, are involved in many hubs. You know, like you, I expect some money to start filtering out in November, December timeframe. I really don't think real dollars start ramping till late 2025 or early 2026. My government affairs person sitting with me here, James, and he's shaking his head yes. That's kind of our Okay. Understood. Okay, good. Okay. You as long as you'll be involved there. Then, well, maybe a follow-up for me, not related to the hubs, part, but your. You know, the startup of Georgia is, you know, it got pushed now. It's going extremely well. What are the kind of the key learnings that you guys have achieved from that startup that you think will make the startups of the additional facilities, you know, more efficient, faster, you know, to keep the timeline in check? we probably have 100 learnings, James. Okay. I think the most important one, you see that it's going on in Texas. You know, in Texas, we've been able to sign an EPC contract where the EPC contractor is willing to sign up ahead of time for price and performance. That's, you know, I think a statement that what people have seen, you know you can repeat. I think that when we look at scaling, this plant itself, we'll expand it to 30 tons. I don't think we'll be doing too much. It'll be less than 50 tons per day just from a, the cost. You know, it kind of follows a typical cost curve that going from 15 - 30 probably only increases your construction cost by 40% and your overall cost by 40%. I think we're much more focused on plants like Texas and New York that are large. There could be some smaller plants like Golem where the infrastructure is really kind of much simpler. I think that's really one of the key learnings we've had. I probably could go on and on. Sure. That's really the heart, I think, of what we found important. Sanjay, you wanna add anything? No, I agree with that, Andy. James, that's really it. I think we understood that scale has a tremendous benefit and. Right ... all the components you gotta manage and think through it, right? Learnings of Georgia, as Andy said, is now allowing us to really go into a turnkey EPC rather than time and material contract. Okay. Got it. Got it. Thanks, Sanjay. Thanks, Andy. Thank you. Our next question comes from the line of Manav Gupta of UBS. Please proceed with your question. guys, I have two questions, and they're kind of related, so I'm gonna ask them right up front. Okay. Good morning. Good morning, sir. Your press release states something very interesting. It says that you are in final stages of negotiating large-scale project opportunities in U.S., Europe, and Asia Pacific, representing potential backlogs of 1 GW. If we can get some more details on that. Second is, on a March announcement, you won a contract to build a 100 MW electrolyzer with Uniper. As I understand, this was a competitive bidding process, and you were selected versus your competitors. It kind of indicates you have a very good product out there. If you could talk a little bit about the March 7 announcement with Uniper. Thank you. Go ahead, Sanjay. Yes. Yes. Again, thank you for that question. First off, you know, when we talk about this over 1 GW of booking opportunity on the electrolyzer side of the house here in the near term, we're looking at 500+ MW opportunity in Asia Pacific. We're looking at 500+ MW opportunity here in North America. We're looking at another 100 MW of opportunity in Europe. You know, please stay tuned. Obviously, in some cases, we're in the contract negotiation. In some cases, we're actually having a lot of discussion about it. We certainly plan to actually close on one, two, or all three of them here over the course of the next 90 days. That's really what we're referring to when we talk about that gigawatt+ of bookings outlook in the near term in our electrolyzer business. Any details on the Uniper contract? Go ahead, Sanjay. Yeah. Again, I think... Look, one of the key things- Well, let me- You wanna talk about it? Yeah, I'm gonna start. You know, one of the key items, Plug is really focused on customers, not competitors. That, when people look and see that Plug knows how to scale, Plug knows how to engage with customers, Plug knows how to do projects, I think that separates us from our competition. When we take customers, and we have been taking many customers to our Georgia plant to show them, it really provides us a significant differential advantage versus any of the other competitors. When you walk our factory in Rochester, you actually see people making electrolyzer stacks and MEAs. You can't really see that scale anywhere else. That's really why we win deals. We're focused on what this big market. We're focused on what we can provide, what we can offer. We don't get too worried about competition at the moment. We worry about us and our customers. Thank you, guys. Okay. Thank you. Our next question comes from the line of Greg Lewis of BTIG. Please proceed with your question. Yeah. Hi. Thank you. Morning, Greg. Hey. Good morning. Thank you for taking the time to get me in here. Andy, you know, or, you know, I guess, you know, recently you made that announcement around the Korean JV with SK with startup in 2025. You know, I was hoping maybe for some, you know, maybe for a little bit of color around, you know, the CapEx build of that and then really, you know, kind of is this, could we see incremental projects from this initial joint venture? Sure. Greg, we've been working with SK now for over two years, the JV was finalized last year at this time with the final IP agreement done on December 31, 2022. We're focused on our stationary products. In the investor letter, I highlight the fact that there will be a good deal of activity for the stationary products for areas where the grid doesn't exist today. In Korea, because of the high electrical cost, our plans with SK, starting in 2025, 2026, is to build 400 MW of stationary products and then every year to 2040, 200 MW. In itself, this factory, which, between the both of us will probably be in the $150 million type range, $150 million-$200 million, which will be jointly split, is really just the beginning of the deployment of the JV. We're already doing with the JV, we're shipping cryogenic trailers this year from Plug. We're shipping ProGen modules for uses in buses in Korea, which we think ramps to over 1,000 units shortly. We're engaged in electrolyzer projects, and our first electrolyzer projects are being shipped. On a wide range of bases, this is going to be a very, very powerful JV. Take a little bit of time, but, you know, we're together, really, accelerating. I think that if you went to the event... Look, I was in Australia working on deals, and our chairman was nice enough to go for me, but our chairman was with the president of South Korea. I think that says a lot about the relationship. Okay, great. I did wanna touch a little on the, you know, the green hydrogen, you know, the network. You know, last week was ACT, the Advanced Clean Transportation conference. Clearly, it seems, you know, not surprisingly, California is gonna be really the epicenter of hydrogen demand in the U.S., it seems like for the foreseeable future. It just seems like a lot of money's going in there. A lot of vehicles on hydrogen are gonna be going there. As you think about the network and realizing that, you know, green electricity or green renewable power is key to, you know, servicing that, should we be thinking about more hydrogen production plants in and around the California area versus where... You know, I get we have a diversified footprint in New York, Southeast, Texas, but just as it seems like there's just coming more demand from California, could or is it or is it really we're just gonna be shipping a lot of product there? I'm gonna let Sanjay answer that, but I'm gonna make one comment, that should not be overlooked, Greg. The demand for hydrogen itself in applications, like creating e-fuels, like mixing with natural gas in the pipeline, with industrial applications like ammonia, probably will be nationwide and probably ramp and be much larger than California. That being said, I'll let Sanjay talk about our California plan. Yeah. Other activities we have going on. I mean, Greg, you're spot on, right? That is gonna be where a lot of demand is gonna come for some of the mobility application and things like that. This is how we're looking at it. One, you know, we already do have a location that we have identified, that we're going through all the permitting process, going through PG&E, going through CAISO to move that project ahead, right? One of the dynamics as you think about California is, while it's a demand center, but you also have a very high price of electricity, and you also have a situation where the permitting actually ends up taking longer than many other states. That's a bit of a dichotomy that you gotta deal with when you think about how many plants and how do you really build in California. Having said that, we actually are looking at multiple projects. I mean multiple, okay? In the neighboring state to be able to support California. We're even looking at some of the opportunity that eventually might even end up making it all the way to California, even in the West Texas area, 'cause we've done that before. It really comes down to what is that lowest possible renewable electron we can get? What is that spigot cost of the hydrogen? Does it make sense to build a plant even with that delivery distance and ends up making it a lower cost as it gets into the California market, right? Neighboring states, even our project in California and other location is really how we plan to actually support, as you rightfully pointed out, the meaningful demand that we see coming from the state of California. Okay. Hey, super helpful, Andy, Sanjay, thanks for the time. Thanks, Greg. Our next question comes from the line of Bill Peterson of J.P. Morgan. Please proceed with your question. Morning, Bill. Yeah. Hi. Good morning, guys. Good morning, Andy and team. Nice to speak with you this morning. I wanted to go to the guidance for the year, just to make sure I understand. I think you said it was largely energy solutions, but, you know, in the last quarter, you talked about, you know, 55%, you know, kinda current business. You know, I think 30%+ electrolyzers, $100 million in stationary. I think the rest you call it fuel cryo and so forth with that 13%, which I think is around $200 million. What is the difference? Where does it come in at $1.2 billion, and where does it come in at $1.4 billion? Is it electrolyzers primarily or fuel? If you could help us understand, you know, kind of what's changed in the, in the guidance? Bill, I want to be really clear. What I try to say is, look, our ability to predict obviously hasn't been perfect. We've spent lots and lots of time after last quarter working through to make sure we, you know, enunciate to the street where the risk is in the $1.4 billion. If you look at, and it's been filed. I think it's going to be refiled with 2023, Jared. If you look at the chart, I wrote, Bill, with the team here, kind of four key items. One of it is, we're shipping 27 5 MW electrolyzers containers this year. That's probably around, call that circa $100 million. Look, we have the orders for it. It's making sure if. You know, we've spent a lot of time on execution there, and that's a big part of it. You know, if you look at another big difference, Bill, is, you know, associated with our electrolyzer plants. The electrolyzer plants, you probably can circa-circle another $30 million in revenue. Between those two, you know, you're $30-$50. You're probably talking three-quarters of the difference. Sanjay has a lot of liquefiers he's looking to ship and looking to sell in late negotiations, and that'll get us to the $770. Also on the slide, I did highlight the fact that, you know, there's other opportunities in the works. That's really where it will all reside. If you look, for example, in the application business, our traditional business, the variation's really about $20 million from expected to the lower case. In that lower case, it really has to do with the timing of a couple projects, whether they happen in the fourth quarter or first quarter. I wanted to do this chart because I wanted to make sure investors knew how all the numbers lined up. I hope that was helpful, Bill. Bill? Uh-oh. Yeah, sorry about that. Sorry about that. You talked about raising additional, you know, potentially raising additional financing. You talked about the DOE loans and the ABL and probably, you know, you mentioned more to come in the second half of the year. Is there a preferred means of raising... You know, I guess presumably you're looking at the most non-dilutive capital as possible. What is the preferred means at doing this as you look at the second half of the year or into next year? I'm gonna take a step back. I'm gonna hand it to the experts, Paul and Sanjay here. We also may have people invest in the plants themselves, Bill. We have lots of people who wanna take a share, for example, in Georgia. Go ahead, Paul. I think you touched on it. I mean, obviously, first and foremost, it's non-dilutive. Second is cost of capital. Third is flexible capital. You know, when... Again, as Andy said, there's a lot of parties that are interested. When you look at the breadth of what we're doing and the pace and the, and the ambition we have to grow and invest and scale, you know, it'll probably be a combination of solutions as we continue to move forward. The good news is we have an incredibly strong balance sheet that's basically unlevered, and we've got this portfolio of plants unfolding that are, you know, a profitable portfolio to leverage up and recirculate that capital. It puts us in a great position of optionality. you know, that's when Andy referred we're, you know, we're working toward the second half. You know, you're gonna hear more and see more as we work through that in the months to come. Okay, thank you. Thanks, Bill. Thank you. Our next question comes from the line of Alex Kania of Wolfe Research. Please proceed with your question. Great. Thanks. Good morning. Good morning, Alex. Morning. Maybe I could take another run at the kind of the IRA guidance and maybe what that means. Or would you be able to characterize, there a bit of, you know, decent amount of pent-up demand or anything like that once you get, you know, the kind of guidance either way in terms of, you know, matching or additionality or something like that? I'm just wondering if, you know, as you've talked about these incremental opportunities you're seeing over the next 90 days, how much of that would play into just getting resolution on the IRA rules? Even more beyond that, could you see, you know, kind of a ramp-up in kind of announcements just once we have that clarity? Alex, I think clarity probably comes August, September, just to kind of frame it. Any time you have uncertainty, you have folks waiting. You know, if the policy is defined. Similar to the European Directive, I think there'll be a flood. I think that flood will be important because it'll create more and more jobs and allow United States to scale, allow companies to export. I think that'll be the outcome. If they're very, very restrictive, I still think there will be more activity. I think a lot of the focus, you know, for many companies will be more European-focused than US-focused. You know, I think, if the regulations are too tight, quite honestly, the IRA would defeat its purpose. I don't think that's going to be the outcome. I know of, you know, good deal. I've had fortunate enough to know people in D.C. People are concerned about jobs, people are concerned about the economy, people are concerned about the climate. There's concern about America growing this industry and not handing it over to the Chinese, which quite honestly is a big hot button. I think, when the regulation comes in, everybody's gonna be who's sitting here at the table with me is gonna be quite happy. Great. Thanks. Maybe just thinking about margins for the, you know, balance of the year, I guess. You know, certainly gas prices have come down incrementally even since the previous earnings report. Is that, is that kind of a decent incremental tailwind for numbers as kind of an upside? Have you seen any kind of, you know, offsets to maybe the momentum that we've seen on the gas side? I'm gonna let Sanjay take that one. Yeah. You're right. I mean, I think, look, there's a quarter lag, as Sanjay was said, right? You will start to see that benefit as we go into Q2, Q3, and Q4 this year. There is gonna be some incremental benefit. Obviously we're spending a lot of time making sure that the gas price being used by our supplier actually matches that with how we're looking at it as well, right? The short answer to your question is yes, that's an incremental benefit. Great. Thanks very much. Thanks, Alex. Thank you. Our next question comes from the line of Ameet Thakkar of BMO Capital Markets. Please proceed with your question. Good morning, Ameet. Good morning. Good morning. Can you hear me? Yes, we can. Okay, great. Just real quick, I just wanted to kind of level set on CapEx, since you will be bringing on a lot more production online. I think you guys had said about $1 billion for the year, looks like for the first quarter was a little bit less than that from a ratable standpoint. I just wanted to make sure that $1 billion number was kind of still the right number to think about for CapEx for the year. Yes, that's our target. I think the good news is the big manufacturing plants are pretty close to done in terms of the spend. The balance of it is predominantly, if not all, around the green hydrogen platforms. As you know, we've, you know, The answer is yes, that's our target, and we're continuing to advance that agenda. Okay, great. I think Andy had mentioned earlier that, like, the, I guess, the big dollars under the DOE program wouldn't start flowing through till 25 or 26. Should we think about, like, some of the other options you're looking at, you know, in terms of kind of the ABLs or selling down equity in the individual plants as kind of like a, kind of a bridge till we get there? Or is that something you always contemplated? Yeah. I don't think, and I'll let Paul comment. I don't equate the hydrogen hubs to our own plants being built out. You know, they're really separate activities. You know, our view is that we want as much hydrogen as available as rapidly as possible, as green as possible. You know, so, you know, having investors in plants, like people who dig big oil wells, they do that, you know, you know, who are in that industry. You know, our business model is that, we're gonna be really, really big. We're gonna do some of it with folks. We're gonna do some of it independently. We're gonna make sure we get the most attractive finance deals we can. There's really no correlation you can meet between the hubs and the loans. You wanna add, Paul? Just to clarify, you know, there's multiple things going on at the same time, right? We're working the hub conversation processes, you know, with industry partners as well as the DOE. Apart from that, and separate from that, and specific to Plug, we're also working a conversation around a specific DOE loan that, you know, could very well fund this year. You know, we talk about all of our capital options in the past that we're working, you know, you mentioned ABL and DOE is two of them. There's multiple different capital sources. With the strength of our balance sheet and the portfolio we're building, you know, we've got lots of parties that are interested that will be this year activities, not 2025, 2026. Just wanna make sure that's really clear. Understood. Thank you so much. Thanks, Ameet. Thank you. As a reminder, to register questions or comments, please press the one followed by the four on your telephone. Our next question comes from the line of Eric Stine of Craig-Hallum. Please proceed with your question. Good morning, Eric. Eric? Hello, hello. Pardon me, Mr. Stine, your line is open. Please verify your mute function. Lift your handset, please. Mr. Stine, your line is open. Please verify your mute function. Lift your handset. I think- We will proceed with the question-and-answer session. Our next question comes from the line of Colin Rusch of Oppenheimer. Please proceed with your question. Good morning, Colin. Hey, Andy. Yeah, as you guys are working through the potential ABL finance providers, can you talk a little bit about what sort of feedback you're getting on the operational metrics you need to meet and then the duration you need to run these facilities before folks will close on one of these deals? The good news is scale matters. When you look at how big our balance sheet is, it affords us that opportunity to leverage that up without, you know, meeting necessarily traditional metrics. Having said that, as we've publicly talked about, you know, given the path that we're on, the trajectory we're on, you know, we're strongly, you know, very confident that, you know, early next year, we're moving into positive operating cash flows, given the growth and margin trajectory. We haven't had a lot of constraints put on us in terms of those traditional metrics, you know. We have such a big balance sheet and such a big green hydrogen portfolio, that affords that backing. I think the real key for us is as we bridge that, leverage it into that next year, then move into the positive operating cash flows, that opens up, as you know, traditionally more, you know, significantly more institutional opportunities as we move. So far so good and, you know, lots of opportunities without having to worry too much about that in the short term. Okay. Then just, you know, on from a working capital perspective, as you guys ramp up manufacturing, just wanna get a sense of, you know, what the working capital needs are gonna be and how much finished goods are in that inventory number that you posted this quarter? As we've talked publicly, we've specifically been ramping very quickly our electrolyzer and our stationary product platform. The delta this quarter was specifically associated with that. you know, we've talked about the fact that we're gonna be doubling the production out of our electrolyzer program in second quarter from first quarter. We're starting to ship our first stationary products, large scale stationary products this quarter. you know, Well, we will see that level out. As we move through the balance of the year with the leverage we anticipate, we expect it actually to go down. For the balance of the year, we don't actually expect, on a whole that we're gonna be a relatively flat, year-over-year, if not slightly down from a working capital standpoint. That's incredibly helpful. Thanks, guys. Thanks. Come on. Thank you. Our next question comes from the line of Chris Dendrinos of RBC Capital Markets. Please proceed with your question. Yeah, good morning, guys. Thank you. Good morning, Chris. Yeah, you kinda just mentioned, Morning. Paul, you just mentioned some positive free cash flow beginning maybe early next year, and I think you all have a target for ops breakeven later this year, maybe fourth quarter. Can you maybe talk about kind of the drivers of what takes you there, I guess versus where you are today? You know, I guess just pointing out, you know, some of the margins and maybe the PPA area looks kind of particularly soft this quarter. You know, what gets you from where you are today to ops breakeven end of the year and then positive free cash flow next year? Yeah. I guess, you know, really there's a number of things, but first and foremost, we make positive margin on equipment. When you look at Q1 as an example, you know, it's accretive, so every incremental dollar I sell of equipment, it's positive. The majority, if not 90% of that growth is coming from equipment sales. That coupled with the fact that we're gonna be ramping the leverage of those plants and those investments and scaling those new products, will drive margin profile. Of the balance of the year at $1.2 billion, you know, roughly $1 billion or so is going to be products and equipment sales. When you look at the, you know, scaling margin, which we've traditionally hit in that 25%-30%+ range, you know, that gets you a pretty substantial step function change in margin and accretion. Second piece is fuel. We've talked a lot about the things that we're doing there in terms of turning on these green hydrogen plants, the abatement of the natural gas, you know, working with our partners on the distribution networks and field logistics to drive efficiencies. You know, we've talked publicly about ending the year on a break even run rate on fuel and moving into next year, you know, quickly changing the paradigm. Those two are the sole biggest drivers, you know. Last, second, I guess third to that, I would just say, you know. Continue to make big strides on service and reliability investments, and we have a very concentrated effort. However, that will be, you know, more and more a smaller PPA and service will be a smaller percentage of what we do as we scale. You know, the growth and the curve that we're talking about. You know, it's predominantly gonna be product and fuel, and more so product in that equation as we move forward for the balance of this year. Got it. Thanks. I guess maybe as my follow-up here. You should hold on a second, Chris. Paul, maybe you should mention PPA is down just because of the warrant charges. Yeah, we have a lot of non-cash charges. You know, that's up year-over-year, was $2 million or so in Q1 2022 and was $14 million this year, Q1. That's, you know, a non-cash charge. It particularly affects PPA and fuel, you know, just in terms of the association with the customer associated with it. On the whole, just, you know, just so everybody has some context, we're running about $60 million-$70 million a quarter of non-cash charges holistically. You know, that's why I feel I'm incredibly excited and confident about the growth, the margin leverage, backed with that non-cash run rate that gives me confidence to get to those, to get to those numbers as we move on into the next year. Got it. Okay. Thank you. Then yeah, I guess just as my follow-up here, you know, reading kind of the front page of the shareholder letter here, it looks like you maybe added a qualifier on the 200 TPD of build out to maybe include under construction. Can you maybe talk about, you know, A, I guess, is that true? Are you kind of maybe delaying that a little bit? Then what are the drivers? I think you mentioned, you know, some ABL loan, the DOE loan coming in later this year. There's some treasury clarity coming, the hub announcements earlier this year. Is that a function of just, I guess, timing, or are you maybe slowing things down just to see how these, I guess, announcements that are coming later this year might impact your plans? Thanks. Andy, let me take that. Yeah, go ahead. Chris, no, we're not changing anything at all, right? I mean, if anything, we just wanted to actually try to provide more granularity after what we've learned from Georgia in terms of how long it takes to go from construction, commissioning to full production, right? There is no change in plans. as Andy said, right, we're not waiting for any particular thing to materialize for us to continue down the path of getting to that 200 tons number. All we tried to do was try to actually provide you guys with more granularity based on what we learned from Georgia. What does it take, construction, commissioning, full production, and that's really the tweak that we made there. Nothing more than that. Yeah. Okay. Thank you. Thank you. Our next question comes from the line of Kashy Harrison of Piper Sandler. Please proceed with your question. Good morning, everybody. Thanks for taking the questions. Morning, Kashy. Good morning, Andy. I wanna go back to the multiple financing options. Can you give us a sense of what milestones, if any, need to be met from a project perspective before you can get financing? Should we be thinking about a transaction as a 2023 or 2024 catalyst? Want to go, Sanjay? Yeah. Maybe, Paul, I can take this on the product side on hydrogen plans. Couple of things, right? As Paul talked about our loan guarantee program, as Paul talked about our ABL opportunity, and as we talked about, project level financing. Here, here is really what we're looking at, Kashy, right? First off, I think once our plant is running, let's say for 12 months, then there is a stable cash flow that we can highlight to any lender, right? Once we can do that allows us to really go even down the path of the debt market, thinking about what is that right debt service coverage ratio is going to be, piece number one. Piece two, now that these plants are coming online, we are also looking at how can you really, you know, sort of like ring fence the plant, if you would, thinking about it from a PPA perspective to is there a way to think about floor pricing on the hydrogen, which will also open up a lot of different kinds of financing solution to really support the build out of these plants, right? I think the way I encourage everybody to think about this is really what happened in the solar and the wind space, right? When you actually had beginning of the solar and the wind industry, it was 100% equity financed. We had PTC, then we had ITC. That really let the financing market to open up in conjunction with also driving the cost of that capital down. I think you're gonna see something like that here in the hydrogen space as well. We're having, as Paul said, multiple different discussion with only sole focus in mind. What is the best and the lowest cost of capital to continue to drive the growth that we have ahead of us and substantial growth that's coming down the road. That's how we're looking at it. Thanks for that, Sanjay. Maybe a question for Paul. Can you refresh us on what's the driver behind the high restricted cash balance on the balance sheet and whether you would expect a release to unrestricted cash in coming quarters or years? Thank you. A lot of long-term followers probably remember, for a lot of the equipment deals that we do in the material handling space, we monetize the benefits to the banks for those programs. A lot of times we have to post cash to back those deals. We've actually been successful in getting customers. The biggest customer we have as an example, who signs into. early order commitments. We get, you know, 70%, 80% of the cash up front. What you're looking at now is the layers that are adding are kind of the balance of that residual. The good news is, we are starting to see the benefits of the new IRA on the ITC front. We've actually closed our first 40% deal. This quarter, we're targeting our first 50% ITC deal. You know, that really yields two benefits. One, that we get more value on the project, and then secondly, we pay the bank less, right? 'Cause they give us the majority of those tax benefits in the deal structure. You know, we're moving from, you know, $0.70, $0.80 on the dollar, in some cases $0.50 on the dollar of kind of payback on the deal structures. Now that we don't have any debt, all of that cash releases to us. We've probably about, you know, 20%-25% per year that it's released into us, that we can use to fund our current operations as well as our near-term operations. I expect that to change, you know, as we just talked earlier, as we continue to work through and move towards positive cash flows. I think you'll see more and more of that, you know, scale down and get released and move towards more traditional institutional financing in the near term. Okay. Thank you. Our next question comes from the line of Sam Burwell of Jefferies & Company. Please proceed with your question. Morning, Sam. How are you? Beat me to it. Doing well. Thanks for squeezing me in at the end. Wanted to unpack something on slide four, the financial projections on the expected case and the lower case. Yep. Looks like there's a $200 million delta on the revenue line, $90 million delta on the gross margin line. That implies like a 45% incremental margin, let's say. Is that the margin that's associated with the key items that you call out on the right, namely the electrolyzer containers, the liquefiers, and then I guess the larger electrolyzer plant? Or am I thinking about that incorrectly? I would think about those on the right, on a variable basis, somewhere around 40% gross margin, and the rest of it is associated with, Sam, inefficiencies in our operations. Okay. Understood. That's certainly helpful. One last one on financing. I mean, is there any way you can quantify, like, the difference in cost of capital between the DOE project financing and maybe the ABLs? I think you guys at least had called out low single digits, that was a few Fed rate hikes ago. Is the DOE loan gonna be something that costs the overnight risk-free rate? Is it a spread to that? Is it below that because the DOE wants to subsidize green hydrogen? Yeah. I mean, nothing's done till it's done, you know, it's hard to give you an exact answer. I would tell you know, high single-digit is not out of the question, if not mid single-digit, you know, in that range. I would also add, Paul, the ABL and the project financing are really two separate acts, right? Yeah. They're not necessarily exclusive, right? It could be, certainly could be both. Got it. Thanks for the color, gents. Okay. Thank you. Thank you. Our final question comes from the line of Brett Castelli of Morningstar. Please proceed with your question. Good morning, Brett. Yeah. Hi. Last but not least. Thanks, Andy. I'll leave it at one, just in the interest of time. With respect to the 2023 guidance and the 60 tons per day of liquefaction in there, is that all third-party sales or is any of that for Plug sort of internal use? I just wanted to clarify. It's all third party. Sanjay, do you wanna add to that? No, absolutely, Andy. It's all third party, Brett. We have multiple live discussions as we speak right now. Okay. Anything else, Brett? Nope. I'm all set. Thank you. All right. I do appreciate everyone joining our call this morning. I would like to take a step back and remind everybody that we expect to do $1.4 billion in 2023, and I hope you clearly see the roadmaps and where we have challenges and opportunities. I also, I hope folks watch that video and watch Steve Baker, our Plant Manager, again, talk about what we built in Georgia. There's a reason the Wall Street Journal has gone to Georgia to see that plant, because they had nowhere else to go. There's a reason The Economist went to Georgia to see that plant, because there's nowhere else to go. We are doing real things today, whether it's building electrolyzers, whether it's building large scale stationary projects. Let me tell you, that's an amazing project and product that we only talked about briefly. We've built factories, we've scaled. We're ready for this explosion in the hydrogen economy. I wanna thank you for listening today. This year is our execution year and a huge inflection point for the company. Thank you, everyone. That does conclude today's presentation. We do thank you for your participation and ask that you please disconnect your lines. Have a great rest of the day, everyone.