Good morning and welcome to Chart Industries, Inc. Specialty Investment Update Call. All lines have been placed on mute to prevent background noise. As the speakers remarked, there will be a question-and-answer session. A telephone replay of today's broadcast will be available following the conclusion of the call until Thursday, April 8th, 2021. The replay information is contained in the company's press release. Before we begin, the company would like to remind you that statements made during this call that are not historical fact or forward-looking statements. Please refer to the information regarding forward-looking statements and risk factors included in the company's latest SEC filings. The company undertakes no obligation to update publicly or revise any forward-looking statements. I will now turn the conference call over to Jillian Evanko, Chart Industries CEO.
Thanks, Shannon, and good morning, everyone. Thanks for joining us for a quick update on the Transform Materials which we completed yesterday. Starting on slide three, the supplemental deck which was issued with press release, let's revisit how the investment in commercial MOU with Transform fits with our inorganic investment principles. As shared on numerous occasions previously, we look for investments or acquisitions that fit with our high-growth areas of the clean energy specialty markets and repair and service aspects of our process and product offering. The investments not only must fit those targeted end markets but also bring access to customers, commercial projects, and geographies that otherwise could not easily or quickly be accessed organically. Additionally, these investments add optionality to our full solution plus equipment offerings for our customers to choose and have essentially an à la carte menu.
But most importantly, and as I've said numerous times before, we believe the clean energy transition and destination will be a hybrid of molecules, producers of those molecules, and end users and users of those molecules. Our cryogenic equipment is molecule and process agnostic, and each of our investments, including Transform, adds another way for our equipment to play in the hybrid of solutions, types, and users of next-generation power solutions. So, as important as anything on this deal is our commercial MOU to provide equipment to the facilities and end users of the process. Keep in mind, we are not producing or owning the molecule. We're providing equipment to the end users that are doing so using this particular process, just like we do when we sell our equipment to large or small-scale production facilities or end users setting up stations or building heavy-duty trucks.
This brings another avenue for us to have equipment content regardless of the molecule and how the molecule is generated. As you can see at the bottom of the slide, we have full solution and component choices for natural gas, LNG, carbon capture, hydrogen, helium, and water treatment as built out with our recent investments and acquisitions. Transform Materials gives us another access way for our equipment to play for those who choose their process option to be hydrogen and acetylene. In many cases, customers that want hydrogen as the energy source but also use acetylene in their production of their product, an option that, through our commercial arrangement, brings our existing equipment offering, offers high energy efficiency at low cost, and does not generate any CO2 as part of the process.
Before we get into the specifics about how Transform and Chart will work together, let's step back to take a look at the burgeoning hydrogen market on slide four. As a key part of the hydrogen value chain, our processes and equipment are used at production sites to transport the molecules and in the end-use applications. 2020 was a meaningful year for hydrogen, and even in nine short months, the increase in investment is significant. Not only have 31 countries put out hydrogen strategies, private companies are investing significant dollars into this industry. Recently, five conglomerates in South Korea, Hyundai, SK Group, Hanwha, POSCO, and Hyosung, announced a $38 hydrogen fuel investment, including harnessing hydrogen for steel production, and this is just one of dozens and dozens of announcements that come out each week.
Perhaps most staggering is the $345 billion of hydrogen-related investment planned in the next 10 years, with production and end-application investment comprising over 85% of it, which will benefit our business significantly as we provide processing equipment to both of those ends of the value chain. Again, using it in the end-use infrastructure. Today's investment is the same as the others we have done, furthering penetration of our equipment into each aspect of that value chain. In the coming slide, I will discuss how this growth in the planned hydrogen infrastructure, coupled with our expanded full solution offering, adds to our addressable hydrogen market. Slide six provides additional specifics, and who doesn't love pictures of our equipment and liquefaction systems for hydrogen? As we add more options into our hydrogen processing equipment offering, it's important to remember that many pieces and parts have to play together to create H2 infrastructure.
We're unique in our one-stop shop, ranging from FCEV stations, storage tanks, to the metering systems and flow valves needed to liquefy hydrogen. In addition to our 800-plus field-installed liquid hydrogen tanks, we offer a variety of sizes of gaseous and liquid hydrogen trailers. Recently, as you may have seen on social media, we collaborated with Air Liquide on their first-of-a-kind short hydrogen trailer design. So now we add another way for our equipment to play, which will be a hybrid solution of ways to get there. This additional commercial avenue for our equipment, which will be utilized on Transform Materials or the end-user's plants, is covered in our MOU that was completed in conjunction with our investment. Our equipment that will go into these facilities ranges from pumps to downstream liquefiers to storage and distribution. Transform uses microwave plasma to convert natural gas into acetylene and hydrogen.
It's highly selective, cost-effective, net carbon-negative process converts the methane and natural gas into high-value products suitable for direct-use or downstream reactions. You can see the details on slide nine. When compared with other power sources, Transform's process costs less and is greater than 99.7% purity of hydrogen and acetylene based on actual results from a continuous pilot program. As we have said previously, the important aspects of whatever molecule is being produced for the clean energy sector are pressure, temperature, cost, and purity. The first two relate directly to safety, while the second two address the level of green and cost competitive to other power sources. With Transform's patented technology, microwave plasma reactors are used to generate high-purity hydrogen and acetylene with a lower cost point.
An important benefit of Transform's technology is that it repurposes the carbon that methane, a potent greenhouse gas, contains so that it doesn't enter the atmosphere. With no oxygen involved in the reaction, no CO2 is generated as part of the process, so turning to slide 10 to take a compare and contrast look at the process itself and linking back to cost, purity, and output, you can see the various energy sources and costs on the left-hand side of the slide. One of the most unique parts of this process is that customers who want clean power but also need acetylene can get both as a result of this. Clean is the hydrogen part and acetylene another high-volume molecule that's frequently used in welding, cutting, and a variety of special chemical applications, including the synthesis of vitamins.
One of Transform's customers is DSM Nutritional Products, one of the world's leading producers of essential nutrients like vitamins, carotenoids, and nutritional lipids, as well as solutions for the feed, food, pharmaceutical, and personal care industries. DSM plans to utilize patented Transform technology to produce certain vitamins and nutritional ingredients. In addition to DSM, Transform has multiple other commercial pipeline opportunities this year in both North America and Europe. Given this level of interest, Transform and its customers expect to begin construction of two or three plants in the next year, with the end user of the production and molecule owner participating in the build. The investment and commercial supply agreement with Transform that we have will help facilitate opportunities to expand equipment presence both geographically and across global customers, with per-plant potential content in the multi-million-dollar range.
And I'll come back to that in a minute when we get to addressable market. As with all of our investments, we're very cognizant of the need for a strong, dedicated leadership team. So flipping to slide 11, this one was an easy check-the-box on that. Dr. David Soane, the founder and chairman of Transform Materials, is amazing. I knew the first time I met him that we would want to collaborate with him. And that perspective has only strengthened as we've gotten to know the process and the team. I'm not sure where to start to explain the innovative nature of Dr. Soane. Perhaps his numerous patents, his PhD in chemical engineering, or his prior successes in advanced materials and surface science. But regardless of which you choose as to why, know that David is a proven problem solver and innovator.
Coupled with his partner and Transform CEO, Stuart Jara has significant operational experience in the industrial gas industry, ranging from executive roles at key industrial gas players as well as private equity businesses. We really believe that this team is a powerhouse. And we continue to expect to have our net leverage ratio below two by the middle of this year, even when considering the first quarter of 2021 in organic investments in Svante, Cryo Technologies, and Transform, as well as our organic working capital needs. As we stated on our first quarter earnings call, the first quarter of our year is expected to be typically seasonal and our lowest financial quarter of the year.
But we do expect free cash flow revenue and to continue to increase sequentially quarter over quarter throughout the year, which is different than typically where we would have Q2 and Q3 be the highest and Q4 drop off. This year, we'll see sequential step up each quarter of the year. And you can see the net leverage ratio as shown on slide 12. Our specialty markets continue to grow. Total addressable market size is now just under $6 billion of opportunities as shown on slide 12. The macro trends in the public and private sectors towards sustainability and ESG are making multiple buckets on this page more and more active. For example, just yesterday, President Biden's American Jobs Plan was announced, with spending toward the aging water systems, upgrading and modernizing America's drinking water, wastewater, and stormwater systems, tackling new contaminants, and supporting clean water infrastructure.
Our water treatment process, through our recent acquisition of BlueInGreen and Chart's equipment, are well suited to address these needs. Also, in the infrastructure plan, our 10 carbon capture facilities retrofitted into large steel, cement, and chemical production facilities. The plan expands the 45Q tax credit for carbon capture with the intent to make it refundable and easier to claim. We're very excited about that, given our recent investments in SES, as well as Svante, and our air-cooled heat exchanger product offering that goes into carbon capture post-combustion as well as direct air capture. Another example is two days ago when the New York State Senate and Assembly approved a bill that would legalize marijuana for use, which we anticipate will contribute to increasing demand for our supercritical PSI tanks used in cannabis applications.
So I just would like to take a minute here and just talk about the fact that there's so many different levers for our equipment, so many different end-market applications. And I want to point out that the investment thesis we have organically and inorganically around gaining access to geographies, customers, and commercial projects, regardless of process, molecule, etc., is really yielding a variety of different ways to play in what are specialty markets, the various different clean energy ways, clean water, clean food, clean industrials, you name it. And that's one of the most unique parts of our business. And we're going to continue to take advantage of that.
So I'm going to give you, without going into first quarter financials at all, given that we're about to head into a quiet period here, but I'm going to give you an anecdotal point around how the broad spectrum of projects, customers, and geographies, as well as end markets, are starting to play for us. Yesterday alone, we booked orders, each with just one customer, $6 million in hydrogen storage tanks, $4 million in rail cars, $2.5 million in ISO containers in China, $2 million plus in compact fueling stations in Europe, and a $1 million order for a space exploration customer. That's a really wide range of applications for our existing cryogenic equipment and expertise. And the breadth of the aspects and the geographies that we're able to get access to is just getting stronger and stronger. And we're really excited about that.
And to start April off, this morning, we received a letter of intent for the design and supply of two hydrogen trailers for an Australian customer. And that's no April Fools' joke. Had to get April Fools in there somehow. So finally, let's get to the last slide here. Slide 14, let's talk about hydrogen and the addressable market. We thought we'd lay this out for you guys to walk through where we started six months ago with the near-term, kind of three- to four-year addressable market for hydrogen. And this is the first time we've laid this out to this level of detail of the way that the pieces and the parts of the market and how our existing equipment play is built up from the bottoms up. And I think it's important for everyone to understand that these numbers, these are not pie-in-the-sky numbers out there.
These are really legitimate and could be very much by the middle of the decade a lot larger than this. But these are real commercial opportunities and the bandwidth of our bidding pipeline that we really think are realistic for our existing equipment offering to achieve. So today's commercial MOU with Transform does offer us access to equipment sales for what we believe to be 10 to 15 plants in the next four years. And as I mentioned earlier, each plant for Chart content is expected to be high single- to double-digit millions range. Unrelated to the Transform deal, but related to increasing bidding and order activity on the hydrogen liquefaction side of the house, we've increased our hydrogen transport TAM to include 100 transports or trailers, as each liquefaction facility results in increased needs for distribution of the molecule.
So as a result of these two items, our hydrogen addressable market increases to $2.3 billion. I'm not going to turn it over. I'm now going to turn it over to Shannon, our operator, for Q&A, and just would point out that we ask you to use this time to ask your questions, especially given that it's the first of April and we're headed into our quiet period. We'll take your questions now. And Shannon, please open it up.
Thank you. To ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Ian MacPherson with Simmons Energy. Your line is open.
T hanks. Good morning, Jill. Hey, Ian. So congrats on this deal.
I thought it was interesting that the first project that's identified here is on the nutritional product side. I just wanted to ask, the pipeline beyond that, does it also skew a little more differently than the other end markets that we typically think about with hydrogen? And really, maybe if you could just expand on what that microwave IP looks like in terms of optimizing the use of this process. Do you need to have an adjacent use for the acetylene? Or what should we think about as the best applications for this process moving forward?
Absolutely. Great point. And that's a really important part of our investment here is that it is a different type of end user that would like both of those molecules. They want a clean power source, but they also have use for the acetylene.
So similar to sometimes when we describe the post-combustion carbon capture concept where you're utilizing the CO2 into steel making or into cement and concrete curing because there's an actual use for that CO2 molecule, this is similar. There's a use for acetylene in the production. And so the nutritional product area is definitely one that's a user of this. In terms of the 20-plus other commercial opportunities that are very specific, there's a handful that are what I would call traditional in the sense of being specialty chemical applications. And then there's a handful that are a little bit different in terms of the end markets because they're using, like you said, you're using the acetylene. We find in our work on the actual Transform Microwave Plasma technology, there's the ability to do other things with cracking of the molecules.
I'm not going to go into a lot of detail around that, but there's ways that you can utilize the molecules into different forms through the Transform process. Therefore, you don't absolutely need an end user for acetylene because you can do something else with the molecule if chosen to do. Take, for example, there is a way to, and I don't want to go into too much IP here, but there is a way to take certain aspects of the molecules coming out of the process and create other molecules that could be used for ammonia applications, which might be a way to transport hydrogen from a marine perspective. Different markets and opportunities because it's a different type of molecule application that you're getting through the acetylene.
Acetylene also can be used to produce plastics, can be used to produce graphene, which is used in electronic components, batteries, fuel cells. Graphene's lightweight and really strong. You see that used fairly frequently in the manufacture of carbon fibers to add strength to products. A variety of different types of end markets, which I think was the point of your question. Again, it's just another option in the various different hybrid of types of ways industrial end users are looking to solve the green challenge and the climate challenge, but also get value-added molecules into their process. Our cryogenic equipment just plays so well in, regardless of the process, it just plays so well in these applications. It's such a broad-based equipment from brazed aluminum heat exchangers to the storage to the distribution to the valves and the metering systems.
Got it. Well, good.
Thanks for all that description. Look forward to seeing how this develops. That's it for today. Thanks. Talk to you soon.
And James West with Evercore ISI. Your line is open.
Hey, good morning, Jill.
Morning, James.
So how should we think about the content per plant for your equipment for Transform? And should we expect orders this year?
Good point. I was pretty nebulous in the kind of mid to mid-single digits to double digits there. So a mid-size plant generally is going to be in totality of cost, $30-$50 million. And we would typically, for this type of application, get around 30% would be Chart equipment. So typically for this, kind of $10-$15 million per plant. And we definitely expect this year one equipment order for a plant within the next nine months. Okay. Okay. Makes sense.
And then, Jill, while I have you, because it seems like every day now we're getting a new CCUS announcement, whether it's Biden, whether it's a Canadian company last night, whether it's Baker Hughes or Schlumberger announced new projects. I mean, they're hitting rates that are unbelievably fast. Can you talk a little bit about the bidding you're seeing on the carbon capture side?
Absolutely. So your point's spot on. We're seeing that evolution. At the first quarter earnings call, I commented that I felt like carbon capture was about a year behind how hydrogen evolved at the beginning of 2020. And that trend is certainly continuing. And we're seeing a broader set of types of customers. So really three buckets. We're seeing industrial customers. We're seeing pure play, which is more direct air capture.
And then we're seeing some of the bigger international oil companies and those types of players that are looking to start moving to beyond just demonstration or discussion. And I think it's combined with, like you said, the government stimulus money that there's private motivation and then there's money and credits and the programs are starting to come together. If you looked at our pipeline of the bidding activity at various different stages, anywhere from initial contact NDA to we're getting pretty close to moving ahead into an actual order, we had about 20 that we were working on at the end of 2020. And we just went through the pipeline last evening and we have 80 that we're working on in that bidding pipeline. So just to give you a sense.
Again, I don't want to say all 80 aren't going to become orders in the next three months, but it's pretty fascinating to see the type of interest. Right. Great. Well, Jill, that's it for me. Thank you. Thanks, James. Our next question comes from Martin Malloy with Johnson Rice. Your line is open. Good morning. Just the first question, I was wondering, Jill, could you give us some more background in terms of how this investment came to be? Was this a customer-driven introduction or how did it come together? So it was an industry-driven introduction. It has been in the works for a couple of quarters now, understanding how our equipment would play, ensuring that the thesis of pull-through for our equipment was important to us. We also were really interested in understanding we're not placing bets on what the winning process is going to be.
We think that there's going to be processes around renewables. We think there's going to be electrolysis. We think Transform's process is going to be a part of the total solution. And so this was another avenue for our equipment to play in the variety of choices as companies make decisions around how they're going to solve their climate emission challenges and targets. So we were introduced to Dr. Soane and very, as I said, just amazing, amazing innovator. And through understanding how the process would work with cryogenic equipment, their intent for further pipeline and where the commercial aspect. This is beyond a pre-revenue business. This business has customers. And that was really important to us as well because we weren't just betting on something that could happen or we're waiting and seeing it's a real business out there. So great, again, industry introduction and didn't need to involve bankers.
No offense to all the bankers on the line.
Great. And just looking at the Transform Materials, the energy cost that you've got in one of the slides there, how should we think about the economics of this versus maybe an SMR plant with carbon capture? Is this scalable that they potentially could compete with that down the road?
It's definitely scalable. And the modular nature of Transform's process makes it easy to scale. So certainly could be competitive there. I think what you're going to see, though, Marty, is that there's going to be a variety of ways to play. And each aspect, whether it's carbon capture through SMR and traditional fossil fuels or whether it's solar and wind and electrolysis to green hydrogen or Transform's process, everybody's targeting the same thing, which is the cost and the scalability.
And so I think you're going to see innovations and improvements in all of those areas, but certainly Transform's process is in where its energy cost sits today in its current state. But our belief is that all of these are going to play in the total hybrid of solutions.
Great. Thank you. Congratulations.
Thank you.
Our next question comes from Connor Lynagh with Morgan Stanley. Your line is open.
Yeah. Thanks. I know we've talked about this before, but it's a question that we get a fair bit on this. And given that you provided a lot of extra detail on the slide here, I was wondering if we could look at that addressable market walk that you lay out here. And basically, could you level set again what sort of market share you're assuming to hit these kind of numbers for the different clean tech opportunities?
Absolutely.
We feel like we're very well positioned in the fueling station, the transports, the liquefiers, and the tanks. That gives us—and part of it, as you know, Connor, we've talked about the broad set of our equipment offering and the way that it works together creates the ability for us to have efficient economics. You don't have to come and say, "I'm going to buy one component from Chart and then I got to go to 10 other places to make my total project." That's a key part of our assumption in market share. Kind of the 60%-70% is where we're thinking. Again, I can't go into details on the Q1 financials, but we're comfortable the way that these numbers are trending out in the marketplace.
So for example, the fueling station number, this is going to be California alone in our estimation. And so I think that it's very safe to say 60%-70% for Chart content on this number. And then should that number be higher is really the next question that we have to answer. And we're not seeing enough yet to feel like we need to up that number. Transport is another good example where there's just a few players out there. And so this is going to come down to capacity and lead times and also the variety of different players of what they're looking for and what are those designs. But we feel really well positioned there. Liquefaction was something that we had hesitated to increase the liquefaction size of the addressable market because it was still really embryonic of who was going to do liquefiers.
And now we're seeing just quite a bit of increased activity with a move toward liquefaction versus gaseous. And I think that's also just the evolution of the number of projects out there. I don't necessarily think there's a natural shift from one to the other. I think it's just the growing size of the market opportunities. And through Cryo Technologies that brought us one of our competitors on liquefaction, we brought into the Chart family. So that gives us more confidence there. The areas that I think are less easy to say we're going to have a significant portion of the addressable market is around the onboard liquid hydrogen tanks. While we'll be a really unique solution in that, it's what is the adoption rate going to be. So that's probably a little less clear in terms of if I were breaking down the addressable market.
So hopefully that gives you a sense of how we think about it. And the order activities and the rates that we saw in the second half of 2020, if that trend continues, certainly we'd be tracking pretty quickly here to a significant portion of this.
Yeah. Got it. And I'm not sure if this is the right way of thinking about this or not, but if I go back to the slide where you basically highlight the fact that you've got now alliances or own process technology on a lot of things and then have the content, which is agnostic. Basically what I'm wondering is how much of this addressable market that you're planning to hit do you count on being through these process technologies where you have an alliance or an advantage versus where you're just part of somebody else's project?
I'm not sure if that's the right way of thinking about it, but maybe you can help me with that.
Yeah. No, I understand. I understand what you're asking there, and do you want me to answer it specifically to hydrogen versus all the various different? Yeah. Let's just stick with hydrogen here. Yes, so the way to think about it is on the 20 liquefiers, that's 100% Chart content, so we don't need to go through the partnerships on the liquefiers, but some of our partners where we have supply arrangements with would be the users or the purchasers of those liquefiers, so it's a little harder to just say we don't need a partner because the partner's actually the customer for that, but we don't need the partner in order to have the process itself around liquefaction in that scenario.
But for example, the onboard liquid hydrogen tank, we added that into our addressable market as a result of our joint development partnership with Ballard Power. The 10-15 Transform plants is as the result of the commercial agreement through our investment in Transform Materials. So kind of breaking it down like that, I think that the way I think about it is Transform, liquid hydrogen, and a portion of the liquefaction would be through the partnerships. And then the rest is much more of a traditional manufacturer supply arrangement.
Got it. But on that latter portion where it's traditional Chart content, how much pull-through are you expecting from these channel partners? Or is that not yet? That's effectively what I'm sort of targeting here is how much of these sales are reliant on the channel partners versus just sort of through your traditional sales networks?
I'd say that it's probably about 30% that would be pull-through from the partners at this point. Expected to grow. But if that 30% grows, then the addressable market in turn grows.
Got it. Thanks very much.
Thank you.
Our next question comes from Rob Brown with Lake Street Capital. Your line is open.
Morning, Jill.
Hey, Rob.
On the sales process for the Transform plants, is it Transform that leads it or do you guys lead it with your current customer base and sales channels and then they pull through behind you? I guess just wondering how that kind of process works.
It's Transform that leads that process with their pipeline and their customers. Some of their pipeline overlaps with some of our existing customers, but the majority are newer and different types of end markets. So where the combination of the hydrogen acetylene goes together.
In those cases, Transform leads that and pulls through Chart equipment.
Okay. Okay. Great. Then kind of the use of the capital that you're putting into Transform, are they adding? Will they need to build capacity or what's the use of capital on their side?
So the use of their capital is around further capacity on the demonstration plant side of things and then a little bit on additional resourcing for further R&D and innovation.
Okay. Thank you. Congrats.
Thanks, Rob. Thank you.
Our next question comes from Eric Stine with Craig-Hallum. Your line is open.
Morning, Jill.
Hey, Eric.
Maybe a lot of questions have been or my questions have been asked, but maybe just on the addressable market, back to that. The one area I know you're not including is hydrogen pumps. And maybe you could just remind me what the current thinking is.
Is that something that you're looking to develop organically or is that something that you may be looking for on the acquisition side?
Th at is an organic development, which is pretty far underway. We had our first pumps go through testing a few weeks back, and we're going back around on some of the areas that we see improvements. Our intent is to have that in commercial production later this year. So that's 100% organic.
Okay. And is that something that I would think would be pretty broad applicability to various end markets? Is that something that potentially expands the addressable market, the $2.3 billion that you've got now? Could expand that meaningfully?
Absolutely. You're spot on. I mean, the liquid hydrogen pump we're developing goes into so many different applications across that value chain that it will definitely expand the addressable market. Okay. Thank you. Thank you.
You're now on a reminder to ask a question. You will need to press star one on your telephone. Our next question comes from Craig Shere with Tuohy Brothers. Your line is open.
Morning, Jill.
Hey, Craig.
So slide 14 suggests a $200 million increase in hydrogen TAM, only reflecting the transport, which I guess isn't related to late yesterday's news, and then the Transform plants. But wouldn't each plant also drive liquefaction and other downstream opportunities?
That is captured in the Transform plant number there. So in our $10 million-$15 million per plant, we capture some of the downstream opportunities as wel l.
Okay. And then I want to piggyback a little on James and Eric's questions. You started out in prepared comments talking about weekly announcements on global mega hydrogen projects. And also there's been some discussion on mega carbon capture projects.
You still don't, as was just discussed, you still haven't incorporated your newly developed hydrogen pump into the TAM. And the American Jobs Act supporting both water and carbon capture only just came out. It doesn't seem like anyone could conceivably expect your TAM to reasonably adjust real-time to all these rapid developments. But I guess I want to dig into it. Is it conceivable in your mind that all these things combined could add maybe 10% to the three- to four-year outlook?
I think that is conceivable. And you know, Craig, that we tend to try to show the level of detail on slide 14 so that people can understand.
You can agree or disagree with the numbers that build up into it, but at least you understand how we think about the elements of that addressable market and whether and then you can apply your own kind of filter as to, "Hey, that number should be a lot bigger," or, "Wow, that's probably going to be hard to achieve." But yes, I think. I would not disagree with your statement, and I wouldn't say it's out. I don't think it's out of the realm of near-term possibility. We're just trying to continue to understand and see customer trends, customer behavior trends versus kind of spotty announcements. And for us, we have a better line of visibility with the bidding pipeline. The internet, everybody puts announcements out, and it could be six years until something starts construction.
And so we try to temper that with what we see in the commercial bidding pipeline from the near-term opportunities. But yes, I think that this is going to take off in lots of aspects. I tried to give anecdotally yesterday's variety of different types of orders from single individual customers around the globe. And I think that these are just starting to run. I think they've been baby steps to date, and there's going to be a lot of explosive growth in some aspects of these specialties.
Thanks. And if I could kind of take a diversion here, a lot of questions about third wave LNG and big LNG and how much it will be and how soon it will be. But you seem to be percolating a lot of things below the surface that in total add up to one or two large LNG projects by themselves.
Maybe you can generally address that point and specifically, how repeatable do you think the initial $44 million New Fortress Fast LNG order might be?
Now, a good point around, I was thinking about what you just said this morning around, "Okay, you have these few projects that add up to one big LNG project, and we're seeing those become more frequent," and I really like that trend in the business. Around similar like the Fast LNG, I certainly expect New Fortress does more than one of those and the whole concept being that this is a fast project, hence the name, and a standardized type of approach, so you're not redesigning every time. You're able to get the efficiencies and keep the cost down as you produce standard equipment in multiples.
And so I think that I would expect the concept that they have to be multiples just from them. But I also think that there will be others, and I know that there will be others that do variants of that, obviously not the same concept, but similarly sized types of projects on the LNG side. And I certainly think that there's a lot of opportunity in the US for those particular projects. So I'm expecting that to not just be a one-time individual order.
Great. Thank you.
Okay. Thank you. Our next question comes from Mark Bianchi with Cowen. Your line is open.
Hey, thank you. I wanted to ask first on the cost that you have here. It looks like slide 10 with the $1.50-$2.10 per kilogram. I think Marty kind of got at this, but I wasn't quite sure on the response.
Is that the cost today of the current technology, or is there some anticipation of cost reduction and, I don't know, supply chain sourcing and automation and other sorts of things to kind of get to that cost number?
That's the cost today. And I'm sorry if I wasn't clear on my answer to Marty's question. My comments were just around, I think that all the other options out there around producing hydrogen, whether it's through various renewables and the different colors of hydrogen, are going to continue to reduce costs in those processes. And so I don't think you can just say, "Yeah, you say today that this is certainly the lower answer around cost," but choices of electrolysis, etc., also are driving their cost down. And so we expect some of those to converge upon themselves over the course of time.
And so my comments were just around that there's evolution in the processes and innovation in the processes that will make others more cost competitive as time goes on.
Okay. And you mentioned the mid-size plant, sort of $30-$50 million type size. How much hydrogen comes off of a plant like that? In terms of tons per day? Yeah. Per day, per year, however you want to describe it. Yeah. So I think that would be a net size, let's just say on the mid-size plant, and let's say it's the $30-$40 million size would be a 6 ton per day of hydrogen. Okay. Okay. Cool. And are there limitations?
It doesn't sound like there's you can scale up, but I'm just curious. Could you get to 10-20 times this size, or am I thinking too aggressively with the capability of scaling this up? Maybe there's other limiting factors like gas supply or things like that.
No, I don't think you're thinking about it too aggressively. We've had that exact conversation with Dr. Soane and the team, and it is a scalable technology. The higher end, I think what I saw, if I remember correctly, in the materials was kind of the scaling of times 10. So that was the element that we saw. I don't know the exact technical answer to that, though, Mark, so I'd have to follow up to get specifics at the high end.
Y ep. Okay.
And then the last one I had. You made a comment earlier about this is the last chance to ask questions before the quiet period. So I'm going to give it a shot. But first quarter, or I should say overall for the year, it looks like consensus is pretty much in the midpoint of the guidance range. And first quarter, it is what it is. It's below for the year, and then it builds from there. But second quarter consensus is up quite a bit from first quarter, but you have Calcasieu rolling off. I mean, I know previously you said you expected to grow, but I'm just curious if that gives you any heartburn kind of where that second quarter number sits right now.
Yeah. And let me clarify too.
If there are strategic questions that investors have or you guys have, feel free to reach out to Wade and me. We'll just be very distinct in not getting into financials in the next couple of weeks, so I didn't mean to shut the door completely if you did have a question like that, and with respect to the consensus, yeah, I said Q1 we expected to be lower than Q4 to step down and then step up sequentially throughout the year with the back half being a stronger half between first half and second half, and a lot of that goes toward the way that these larger medium-sized projects and larger projects, the medium-sized projects like the liquefaction projects that we recently announced, how the timing of that revenue rolls out, and so I think your point is valid.
I think the way we look at our forecast is it steps up incrementally to Q2, but there's a more significant step up to the back half of the year and fairly evenly spread between Q3 and Q4.
Yep. Great. Thanks so much, Jill.
Thanks, Mark.
Thank you, and I'm currently showing no further questions at this time. I'll turn the call back over to Jill Evanko for closing remarks.
Thanks, everybody. I don't have anything further, and we'll talk to you very soon. We appreciate your time.
This concludes today's conference call. Thank you for participating. You may now disconnect.