Thank you. Good morning, and welcome to the Plug Power 2020 Second Quarter Earnings Call. This call will include forward-looking statements. 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 as predictions of future events. We believe the forward-looking statements on current expectations and projections regarding the future events and trends that may affect our business, financial condition, results of operations and prospects. The outcomes of the events described in these forward-looking statements are subject to risks, uncertainties, and other 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 ended December 31, 2019, and in our quarterly report on Form 10-Q for the first quarter ended March 31, 2020, as well as other reports we file from time to time with the SEC. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements. As a result of these factors, we cannot assure that the forward-looking statements will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. 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. At this point, I would like to turn the call over to Plug Power's CEO, Andy Marsh.

Thank you, Teal, and thank you, everyone, for joining our second quarter's earnings call. I'm sure many of you have read our second quarter investor letter. So my opening comments will be brief, and I would just like to highlight four items that really excite the Plug Power team. First, we had a record quarter in the middle of the pandemic, achieving over $72 million in gross billings and $1 million in EBITDA. The third quarter will be 40% higher in gross billings, and we are projecting between $110 million to $115 million, with EBITDA between $9 million to $10 million. Our factory and service team will build and install over 4,000 GenDrive units and construct 10 hydrogen stations. Through the year, we are on target to achieve our goal of $310 million in gross billings and $21 million in EBITDA. Second item that has me excited is that we took major steps in the second quarter to achieve our goal of producing 40 tonnes a day of green hydrogen by 2024 via the acquisitions of United Hydrogen and Giner ELX. United Hydrogen provides us the platform to build large-scale commercial hydrogen plants, and Giner ELX provides us the in-house capability to build and deploy electrolyzers for those sites. Giner ELX is renowned for their PEM technology, and now coupled with Plug Power's scale and manufacturing, we believe Plug Power will drive the cost of PEM electrolyzer technologies below current alkaline electrolyzer technology. With better technology, better costs and a distribution network across Europe, Plug Power is well positioned to leverage the planned 80 gigawatts of deployment of electrolyzers in Europe and North Africa by 2030. Third item, the success this year with rapid growth in gross billings and EBITDA, coupled with a move into green hydrogen, has provided us a clear path to achieve $1.2 billion in revenue and $250 million in EBITDA in 2024. For years, building customer relationships with Walmart, Amazon, Home Depot, BMW and others, while enhancing our technology and making strategic acquisitions has positioned Plug Power to continue being the leader in building out the hydrogen economy. The big news in our earnings letter is our gigafactory for making PEM stacks for fuel cells and electrolyzers. We are in the process of down-selecting a location for this facility, and we are in discussions with multiple locations across the country. Our plans are that this will be the global showcase of PEM manufacturing in the world. I look forward to telling you more about this during the Plug Power symposium in September when we hope to announce the location of this facility. Now in closing, Plug Power is really unique. We've built the first market for fuel cells in the world, deploying over 35,000 units. And by quarter-end, we'll have 100 fueling stations up and operating by Plug Power. We're a technology leader with our own MEA manufacturing capabilities, the leader in fuel cell and electrolysis technologies, and our scalable ProGen pure cell system can be used to build large-scale backup power systems and on-road vehicles. We have the competencies to build large-scale green hydrogen plants, which can be cost-competitive with faster fuel-based hydrogen via our two latest acquisitions. We plan to be a large provider of green hydrogen, probably doing so with some partners. Ultimately, when I look at it, who will use green hydrogen in the $69 billion hydrogen market today if green hydrogen is available at a competitive price? Now finally, Plug Power is really unique. We're a leader in technology and the new energy economy for hydrogen. But you couple that with a track record of real-life experience, and these two capabilities are a complete fit because they enable Plug Power to provide customers turnkey solutions. Paul and I are now very happy to take anyone's questions.

[Operator Instructions]. Our first question today is from Eric Stine of Craig-Hallum.

So I was hoping to just chat first on the gigafactory. That certainly is quite noteworthy, as you said in your remarks. Just any thoughts on what type of revenue level that supports and what type of investment? And I know it's early, but it sounds like it's quite advanced as well. But what type of investment do you think you may need to make to make that happen?

Eric, I think there are some variables there. When I look at what revenue this will support, this will support well past our $1.2 billion target for 2020, as I would expect somewhere around $2 billion in revenue from this facility. Now we're obviously in discussions with different localities to help support funding for this facility. I would tell you, we've already made some initial purchases of equipment and we have a fairly clear layout for the facility. I think a good deal of it depends on how much unity cost Plug Power will have, which will have a lot to do with the negotiations we've had going on with different states across the country.

Got it. Okay. I guess I'll stay tuned on that one. Maybe just turning to the guide. I mean, I know in the release you said you reaffirmed it. But in your commentary, it sounds like you are -- I mean, is it right that you're including United Hydrogen now and saying $310 million in revenues or, I'm sorry, in billings, and then $21 million in EBITDA? Curious if it's United Hydrogen's inclusion or if there may be something else that you are including in that number?

No. Eric, when we announced the acquisitions, that was when we increased the targets, and that was included in the increased targets.

Okay. Yes. And I guess, on the last -- yes, when you made those acquisitions to me, at least, it was a little unclear whether you had officially done that or not. So that's helpful. Maybe the last one for me. I know, obviously, as the hydrogen strategy takes shape, your goal with United has been to in-source as much of that hydrogen as possible. So just -- I know it's still early, but I'm curious on what that looks like and what the potential margin uplift will be as you continue to do that?

Looking at where we are, Eric, I would -- if you take a snapshot a year from now, we’ll be about 40 tonnes of hydrogen usage. With United Hydrogen, we expect by the middle of the second quarter of 2021, about 8 tonnes of hydrogen, with our expansion in that facility, will be used in the Plug Power network. If you take a look at that, it moves essentially about 20% of our hydrogen from a buy-resell model to a sell model. It puts margins for that portion in the 35% range. So it's a big step in improving the hydrogen margins. We are obviously looking at building green hydrogen plants in the near future utilizing either hydropower, wind, or solar, or all three.

The next question is from Stephen Byrd of Morgan Stanley.

I hope you all are doing well.

Stephen, it's good when you're shipping a lot of product and business is going in the right direction. So I'm doing well.

Excellent, excellent. Pretty exciting updates. And obviously, the gigafactory is a really interesting development. I guess I wanted to explore the positives related to that as well as just sort of addressing some of the questions on risk that we may get on the positive side. I guess I wondered if you could address -- as I was thinking, if you're the first to achieve very large scale, just in terms of the cost advantage you see from reaching the scale that we're talking about, really quite massive. But on the flip side, wondered if you could also address sort of your latest thinking on there are a number of players out there who would like to produce hydrogen and there are a variety of technologies. Some do look to be fairly low cost. Just -- I know you've talked about this before, but just wanted to get your latest thinking on sort of your competitive advantages relative to others?

Sure. I think there's a couple of items when it comes to green hydrogen. First and foremost, the experience in building a plant is actually very limited around the world at scale. And that's something that United Hydrogen has achieved. Two, it is clear to me that as the cost of renewables continues to go down, hydrogen generated from renewables will be on a variable basis cost-competitive with natural gas-generated hydrogen, which is a real distinct advantage. And my view is that I've looked at many of the carbon capture technologies, and I fundamentally believe that the basic cost structure and simplicity of using renewables, such as wind, solar, and hydro power to create hydrogen is a much more cost-effective approach, especially over the next decade. So when we look at that market and we see many opportunities -- we've actually looked at over 20 sites for places where we can build plants, with partners as well as on our own. If we can source renewables at $0.04 a kilowatt-hour, we're extremely competitive with green hydrogen today.

That's a great update. In terms of the gigafactory, I know you, at this point, really can't give very much detail on the financing. But I'm guessing that there are a variety of incentives that are possible, approaches to financing, such as the end usage of your net balance sheet is probably lower than folks might be concerned about it. Is that fair to say that just generally, there are probably a lot of tools in your toolkit in terms of how you think about financing that?

Absolutely, Stephen. I mean, if you look around the world, here in New York, you've had the Cree factory that went out in Rochester. You have activities, obviously, with the different facilities Tesla has built. Hydrogen, as many of you know, is being recognized as critical to the long-term clean energy economy, which is much dependent on customer demand. Companies like Amazon are positioning to meet their 2040 sustainability goals, and there are many applications where hydrogen is the only solution. I think a company like Plug, that built the first market, is very attractive to different jurisdictions who would want to support the building of such a facility.

Great. And maybe just very quickly, one last question. We do get questions just on the long-haul transportation and long-haul trucking market in terms of the relative advantages of fuel cells versus battery systems. And I know you've talked about that in great depth on numerous occasions. I just wondered if you could give us your latest thinking on sort of the reasons you see advantages in terms of fuel cell systems for long-haul transportation?

Sure, Stephen. I view this as an asset utilization play. If you look at it -- one of my fundamental beliefs is that electric motors eventually will be a better cost solution than internal combustion engines. That's a question of how you power them. And as many people know, fuel cells have three advantages. One is fast fueling, which can be at least 5 to 6 times faster than electrical charging. The second area is that ranges of up to 500 miles are certainly doable and possible with Class A trucks. And third is that -- and this is the point that when you sit with people in the vehicle industry, it's the packaging density. I have a chart that DHL put together that shows that essentially, after about 100 kilometers, the density of fuel cells and batteries is about the same in terms of the physical space they take up. But from that point on, batteries grow at a 10x rate. So even if there are improvements in batteries, there will also be improvements in fuel cells. And DHL believes, for any trucking beyond 120 to 130 miles, that fuel cells are a distinct advantage because they just don't take up as much space as batteries will in a truck.

The next question is from Jeff Osborne of Cowen & Company.

A couple of questions for me. Good to hear from you. Andy, can you just talk about the cadence of the year? I mean, certainly, the third quarter looks phenomenal relative to the trends of the past third and fourth quarters. Is that an impetus of retailers having to shift to more online versus in-store business? Or I'm just trying to understand the cadence between 2Q to 3Q, the uptick of 40% that you talked about and then the downtick in 4Q.

Sure. So, Jeff, on the first item, when I spoke about the second half of the year back in January, I said 40% of the business, 35% to 40% of the business would be in the first half, the rest would be in the second half. There hasn't -- there has been some switches where I saw a slowdown in the auto market, where we support companies who manufacture cars, but I did see a corresponding uptick in retail. When I look out to the fourth quarter, I've been doing this for a dozen years now, and I've become very cautious about upping those numbers until I'm 100% guaranteed. This quarter, I'm 100% guaranteed in the fourth quarter what I have today in-house. I think in November, we may give some additional guidance there. But I really think what happened here with COVID will impact 2021. We're still working through our numbers for 2021, but our visibility in the retail sector for both food retail and Internet retail will only strengthen next year. So I would think in the November time frame, I'll be able to provide really good guidance then.

Okay. That sounds great. And then can you just touch on what you're seeing in the trucking market? I think in the past, you had talked about working with four potential partners, one in earnest. You've obviously announced Lightning Systems. I didn't see much of an update in the shareholder letter on motive applications in general. Can you just broadly touch on that?

Sure. When I look at it, Jeff, we have -- as I mentioned previously, it’s probably early next year or mid-next year when we will be working with the four manufacturers for scale manufacturing, and we expect to make an announcement. We expect to put vehicles on the road at a small scale this year at two sites in Europe and additional sites in the United States. So the business is evolving and growing. I'm quite confident about one of the partnerships that I would expect that we will have more to tell you about sooner rather than later.

We look forward to that. My last question was on the Asda deal. Can you just touch on that? And there was reference to the initial site; I didn't know how many sites they might proceed with maybe next year, what the potential was there relative to Walmart and other partners on the domestic side?

Sure. We are working with Walmart now much more on a global basis. In the U.K., there are between 10 to 20 opportunities. They have about a 15% food retail market share. But you have to think about our business today with Walmart not just in the domestic North America business but in global activities. Walmart has facilities around the world, and I think our ability, especially during this pandemic, has helped the Asda deal. I would expect that the expansion of our relationship, not only in North America but globally.

And just a quick follow-up. Can you use the same financing structure globally? Or does it have to be domestic because of the tax equity?

The financing strategy with Walmart globally will look more like our normal customer relationships.

The next question is from Jed Dorsheimer of Canaccord Genuity.

Congratulations on another good quarter and some great milestones. I guess, first, I just want to dig in, Andy, on -- you mentioned in terms of '21 in COVID, although the way that you're speaking about COVID is actually the inverse of what most other companies are referring to. So maybe if you could just dig in and unpack a little bit sort of how this is -- you see this helping the business and kind of accelerating and pulling things in?

Sure. So, Jed, when you think about our value proposition, especially in material handling, it translates into other applications. It has a lot to do with moving goods faster and more productively. When you look at my base business in those areas, it's with food retail and Internet retail. Given how many more people are eating at home and how many people are buying packages online, I believe you've seen growth in my biggest customers. We are in the right segment for the future. We're involved in segments that are associated with future logistics. We're partnered with two of the biggest players: the largest Internet retailer in the world and the largest food retailer in the world. Both recognized during this crisis that in many cases, they would have found it very difficult to meet their customer's needs without fuel cells moving products around. The difference in performance between the facilities that had fuel cells and those without has been clear. That’s to me the underlying reason why we've been successful.

That's helpful to -- thanks for outlining the value proposition. As we think about customers that are installing on-gen or on-prem generation for material handling, could you update us on where you stand with Class 2 through Class 6 trucking applications? Should we expect to see an existing customer leverage the on-prem first in there, or do you think that it may happen differently?

I can tell you that we are making modifications to fueling stations as we speak with one of our present customers to enable outdoor refueling of Class 6 and Class 8 trucks. We certainly plan to participate in that for the on-road vehicle sector. We’ve built and operate now over 100 fueling stations, which can take you from Lewiston, Maine all the way out to the West Coast of California. There are fueling stations built and operated by Plug Power along that entire path. We see that as an opportunity to leverage and assist us in the vehicle market as well as build our green hydrogen business. So I think there are many positives in those areas. We are well positioned with our present customers to proceed with those types of deployments.

Great. One last high-level question for me. If we look at the Asda deal, congratulations on establishing that footprint in the U.K. If I assess how the narrative has shifted over the past year or so, you are now focusing significantly more on green hydrogen, and it seems that you are making inroads into European markets here. Is this indicative of further expansion into Europe? How much of this is accounted for in the $1.2 billion projection, or does it pertain more to the $2 billion number you mentioned today?

I think when you look at our plan that we rolled out in the past year, September was relatively quiet regarding Europe. We have spent a significant amount of time building relationships in Europe over the last 5 years with players like BMW, Daimler, IKEA, now Asda and Carrefour. This has given us visibility in Europe. One of the exciting aspects of our activities with Giner ELX is that they have built key partnerships across Europe for the future of the hydrogen economy. We are exploring ways to leverage those, both on the green hydrogen side and the vehicle side. There are numerous discussions occurring with potential European partners. So Europe is a key focus, and green hydrogen is one of the big items I spend my day on, along with the opportunity presented by the gigafactory.

[Operator Instructions]. Our next question is from Colin Rusch of Oppenheimer.

I guess I have two around the revenue. So one, you talked about $290 million of bookings in place previously. Can you provide an update on that number as we think about the full year? And then secondarily, as you look at the 3Q guidance, how much of that is hydrogen sales separate from the soft consumption of hydrogen with the United Hydrogen acquisition?

Sure. So the hydrogen sales -- a lot of hydrogen sales help me on the margin front now since I have been moving hydrogen already to Plug Power. Know, Colin, we have everything in-house this year to achieve the $310 million and are looking at opportunities to expand that. We're also well positioned for next year to continue the growth rates we've had. I expect that in the November call, we'll be able to share more projections, but that aligns with our goals to reach $1.2 billion. Hydrogen itself would probably comprise about 6% to 7% of our revenue in the third quarter, including, of course, the additional hydrogen we normally use that is in line with our usual run rate.

Excellent. And can you give us a sense of where your fuel margins are going to end up here in the third quarter? Speaking about that, through the balance of the year. That's been a drag on overall profitability, but I'd love to understand the magnitude of the impact?

I'm sorry, Colin, I didn't hear your question.

The hydrogen fuel margins with the hydrogen integration, can you give us a sense of the immediate impact and how much more we’ll see in the next couple of quarters?

I'll let Paul take that one. Paul, do you want to take that question?

Yes. I think you're definitely going to see improvement -- accretive improvement, Colin. Because of the acquisitions and the roll-in. As Andy outlined, the big progression and accretion will start to kick in next year as we begin to really leverage United Hydrogen internally and grow the electrolyzer platform. I think it will be directionally consistent with the first half, but -- you will see some improvement in Q2, and you'll have continued improvement in Q3 and Q4 as we progress through the year.

The next question is from Craig Irwin of ROTH Capital Partners.

Andy, congratulations on some really impressive results here. So when I looked up the Palm Spring California refueling station for United Hydrogen, it's obvious that the infrastructure credits are financially beneficial to you. They also have the right to incorporate low-carbon fuel standard credits from the sale of green hydrogen. Would it be logical to expect that the refueling facilities for trucks that you're working on would likely be in markets where they would be eligible for similar credits? What do you think about the potential for your truck product to be eligible for ZEV credits when you sell those commercially to your customers?

I think that's a good question, Craig. When I speak with our large customers today, they’ve recognized that because of ZEV credits and LCFS credits, hydrogen generation with those credits could cost less than $1 a kilogram, which makes it extremely attractive when you start thinking about it even versus electricity. That site we own could serve as a combination of refueling station, complementing distribution centers in California, as well as a depot to drop off liquid hydrogen for Southern California. So both are points of focus for us. I'm impressed you found out about that.

Excellent. And just from a per-kilowatt basis, is it fair to assume that your fuel cell trucks will have much greater ZEV credits per unit, even on a per-kilowatt basis than trucks? Is that a fair assumption?

That's a fair assumption, Craig.

Great. So most of my other questions have been answered. So I apologize for one that almost feels backward-looking. Although it's important in terms of trajectory, your pedestal customers, Andy, I mean, most people are focused on the trucks now, right? But you've talked about adding a few more pedestal customers in electric forklifts. I think your business there is very well validated at this point. Can you update us on the breadth of potential customers you could add? Are we still really talking about two or three or maybe more now? And how are those conversations going now that those potential customers have seen 40% of the groceries in the United States moved on your forklifts in the first half?

No, Craig. We will announce another pedestal customer this year. There are discussions going on with six or seven of those customers. There’s an interesting mix between North America and Europe. As you know, all the interest in fuel cells' in Europe is significant, along with the fact that we don't have as many units in Europe that customers saw similar results. I haven't forgotten about someone like Amazon, where there are large opportunities across a variety of applications. The key is to continue providing them good products and values in material handling. That's what's built our credibility. As you can see, no one has the demonstrated credibility that Plug has today as a pure player in the fuel cell space. We've done it over the years, which really positions us uniquely.

The next question comes from Sameer Joshi of H.C. Wainwright.

Andy, Paul, most of my questions were answered. But just one question, we noticed nicely that the Giner deal includes a lot of earn outs. That led us to believe that there will be some technological improvements, and based on that. But it seems from the commentary that most of the benefits you're planning to derive are from scale that you bring to Giner. Are there any membrane improvements or catalyst enhancements in the R&D phase at Giner that should help you in the future?

Absolutely. We have a clear roadmap for Giner. First, there are process improvements which will dramatically reduce cost, but also increase the amps per centimeter squared. Giner is a leader in that today -- and Plug Power also excels in that area. By 2024, with the efforts of the team, we expect that it will be twice as effective as the European goals for 2030. If you look at Giner's history with NASA, General Motors, and the DOE, they have several development projects with the DOE, which have totaled approximately $10 million. We continue to improve electrolyzer stacks. When I speak with people in Europe, everyone knows Giner as the top provider of stacks. They have a well-defined roadmap for the next 4 to 5 years to double current density, improve efficiency, and maintain that leadership position, supported by our capabilities and a strong relationship with the DOE and National Labs over the years.

Thanks for the commentary. It's really helpful. One of the other clarifications we would like is on United Hydrogen expansion. Is there any -- for the immediate expansion, is there any green aspect to that plan?

Sure. We're working on that -- if you look at that plant today, it's fed by a waste stream. You're taking waste hydrogen from an Olin plant, which would just be burned off into the air. Additionally, we're looking to convert the liquefaction to renewable electricity via TVA. That's not a major change. Just for clarification, we think CI scores for this plant can be below 70. The plans we're considering for expansion will deliver hydrogen using trucks that can allow us to get CI scores down to zero, if done right.

Next question is from Christopher Souther of B. Riley FBR.

I just had a few here. On one-time items. Could you break down that $8.3 million? It looks like it was mostly SG&A related to the acquisitions, but I'm curious how much the COVID impact was there on the cost of revenue and what costs we should expect to remain for the either cost of revenue or SG&A for the rest of the year related to that?

Paul, do you want to take that?

Sure. I would say in terms of the amount within that charge, it's probably 10% or less. It's -- the bulk of it really associates with all the acquisitions and the debt restructuring we did. There were indeed a lot of events there, which incurred costs.

Got it. Okay. And then on the systems and infrastructure margins, which were down sequentially, is that just related to the larger mix of infrastructure? Is that kind of a sub-30% run rate something we should consider for the rest of the year? Or do you think it will return to above 30%?

Yes. I think what I've talked about in the past is when you look at the different product lines on the fuel cells, routinely, we've disclosed that we've been 35% or higher gross margin on the infrastructure. We're currently in the mid-teens. We've completed 100 of them, and it's hard to get that to where it needs to be with that limited number, but getting to mid-teens is impressive. We expect that to continue progressing north and could get up into the 20% in the back half with volume and leverage. So I anticipate that overall rate will continue to improve in the rest of the year and onward into next year.

Understood. The last one on the stationary and backup power end market. It seems like the focus is on data centers. What has the traction been like with new customers there? Are there any existing customers that might be looking at the product? And can you just discuss how that particular end market is going?

Sure, Chris. It's interesting -- one of my largest customers today is a leader in the data center space. They've been very helpful in the design and development of that product. Our offering is unique. The interest in business is very high. I've actually appointed a VP of Sales for that division, who has extensive experience in data centers. If you named a major data center provider, both in terms of infrastructure companies and operators, I believe we're in discussions with all of them regarding our activities. The products are impressive, and the development of our ProGen stack has been effectively leveraged to build out our megawatt-style plant. One last point -- very few people can provide these large data center providers a turnkey solution, allowing them to focus on their hydrogen fuel. I believe as we move more, and we’re already moving hydrogen extensively even before our acquisitions, we will be in a unique position to support their needs. I’d like to highlight that the Plug Power Symposium is coming up. There's a registration link available. This is open for everyone and is a virtual event that is likely to be incredibly informative. We are lining up some interesting speakers, and you'll have the opportunity to hear more details about our business from my coworkers. I encourage everyone to register and look forward to discussing this further.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.