Earnings Call: Q4 2020

Feb 25, 2021

Greetings, and welcome to the Plug Power 4th Quarter and Year End 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. It's now my pleasure to turn the call over to Teal Hoyos, Director, Marketing Communications, please go ahead, Teal. Thank you. Welcome to the 2020 Q4 and year end update call. This call will include forward looking statements. The forward looking statements contain projections of our future results of operations or of our financial position or state 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 For 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 as a guarantee of future performance or results. Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors, Including, but not limited to, the risks and uncertainties discussed under Item 1A, Risk Factors, in our annual report On Form 10 ks for the fiscal year ending December 31, 2019, or our quarterly reports filed on Form 10 Q For the quarters ended March 31, June 30, September 30, 2020, as well as other reports we file from time to time with the SEC. These forward looking statements speak only as of the day in which the statements are made, and we do not undertake or intend to update At this point, I would like to turn the call over to Plug Power's CEO, Andy Marsh. Thank you, Teal, And good morning, everyone, and thank you for joining the Plug Power end of the year conference call. 2020, As everyone knows from the world was a very challenging year. We at Plug Power have been very fortunate as we participated and witnessed globally The acceptance of hydrogen, especially green hydrogen, is critical to help weave the world off fossil fuels. Estimates have been made by experts that hydrogen can represent 18% to 23% of world's energy by 2,050 And is ramping today. We at Plug Power have been building our technology set for decades waiting for this moment. I have PowerPoint that are 10 years old that describe how our work then would position us at the right moment. The work was more than technology, but building the 1st commercial market for fuel cells. Our first app, material handling, It's not glamorous. We've built the company, proved our technology set and launched the full suite of products and new capabilities. Our turnkey solutions that provide end to end solutions, including selling hydrogen to building fueling stations and fuel cells And providing aftermarket service really positions us today. Our relationships with Amazon and Walmart gave us insight And how to improve our offering, but also helped us identify the missing links in our portfolios. One of these insights was that large corporations' sustainability goals are real and that for the market to expand, Green hydrogen was a necessity. Green hydrogen also became practical over the last couple of years. This is closely linked to the declining cost of renewable electricity. This insight Drew, for us to make 3 decisions in 2020. We purchased the leading electrolyzer technology company, Geener EOX That had the electrolyzer technology to convert electricity to hydrogen, green hydrogen. 2, we purchased United Hydrogen, the 1st private company to build a large scale liquid hydrogen plant. And finally, we made a commitment to build the 1st U. S. Nationwide green hydrogen degeneration network, Reaching 500 tons a day of capacity by 2025 and 1,000 tons per day globally by 2028. The macro trends to a more sustainable world, the recognition of hydrogen is vital to meeting these goals And Plug Power's expertise opened many relationships for us in the past year. Let me name a few. Brookfield and Apex both partnered with Plumb Power to provide sources of low cost renewable electricity to generate green hydrogen. By the end of 2022, we will have over 70 tons to 100 tons per day of green hydrogen available in the U. S. By Plug Renault, a leading global auto manufacturer, recognized Plug Power's unique ability To offer full turnkey solutions to the light commercial vehicle market. From their experience in EVs, They recognize they need to offer more than the vehicle. The JV, which will be selling vehicles and fueling stations, Will be formalized by late Q2 or early 3Q. SK, the 2nd largest Korean conglomerate Recognize that Plug Power was the only company that could offer a complete solution in the hydrogen industry. We will be building everything from large scale, stationary products, hydrogen plant, electrolyzers and other assets. We will build a 2nd Gigafactory in Korea. The timeline for this JV has been accelerated and will be formally closed by the mid third quarter. Also as you may have seen SK finalized their $1,600,000,000 investment into Plug Power last night. In 4, in another step in our global green hydrogen story, Plug Power announced a deal with Spain's 2nd largest renewable electricity supplier, Axiona. The JV plans to build 100 tons of green hydrogen generation capacity On the Iberian Peninsula, we'll be announcing more partnerships in 2021. Now back to 2020. In 2020, we experienced a 42% increase in gross billing, achieving 3 $37,000,000 We're now generating cash from operations, excluding the need for working capital, which is needed to grow. In 2021, we'll exceed $475,000,000 in gross billings with over 93% Already accounted for in our plan, we've never been afraid of tough decisions. We accelerate warrants at the end of 2020. This decision will have the side benefit and making our GAAP financials more in line with how we operate our business. It costs a large one time non cash charge that clears the deck for the future And quite a future. With $5,000,000,000 in the bank, a thoughtful expansion plan, a unique market opportunity, Now is the right time for Plug Power to invest. Our goals for 2021 are clear. Gross billings of $475,000,000 annual gross margins in the high teens Achieving 20% by the Q4, we view gross margin expansion as a critical indicator Our investments are paying off. 3, successfully launching our 2 JVs with Renault and SK. 4, continued expansion of our business via partnerships, acquisitions and other relationships. And finally, positioning the company to achieve $750,000,000 in gross billings in 2022 We'll position us for a $1,700,000,000 goal for 2024. Paul and I are now Our first question today is coming from Eric Stine from Craig Hallum. Your line is now live. Hi, good morning, Eric. Good morning. Hey, Eric. Hey, so you I had mentioned in the prepared remarks here that the SK partnership, obviously, the investment closed Overnight, but maybe just some clarity into how it's accelerated since that announcement. How do you view the opportunity and maybe which areas do you think move faster than others? Sure. So Eric, when we made the announcement, I think that I started out by saying I thought we were being conservative. We have developed actually 6 work streams in the development of this JV, where the teams are meeting 2 to 3 times a week. We've identified certain business opportunities, Quite honestly, that are much larger than we even thought initially. And that I think that the first Three opportunities will be 1, large scale power generation. I would expect we'll be shipping products Later this year or early next year, that's not in our $475,000,000 plan. I think the second is SK has a real commitment to sustainability. I think you'll see electrolyzer products be moving over into SK for usage Again, early next year. And finally, there's a lot of work ongoing with hydrogen generation and fuel in stations. Got it. Okay. And just to clarify what I think I heard that that's not in the 475 On the large scale, are you? That is correct. That's not in the 4.75. Okay. The 4 75%, as I mentioned in the prepared remarks, we have 93% in half at the moment. Usually, we're at the 75 Got it. And maybe sticking with that topic or Well, so you've got the 4 pedestal customers in Materials Handling. Curious what type of mix you see from those 4, The one recently added, but those 4 in 2021. And then you typically don't give The forward year outlook this early in the year, at least I don't remember that you have. So I'd love to hear what the Visibility you have is from the 4 customers you've got and potentially some others that you add into that 2022 goal that you've given today. Sure. So we have between those four customers and others. And Eric, those four customers probably represent 80% of our deployments here in 2020 2021, That circle in the range that there's already $400,000,000 in house that's available for shipment this year. And I think that one of those 4 represent more like 30% and the rest will be kind of split A little bit easier. Got it. And then just in terms of a little bit on 2022, I mean that Maybe you have given the forward year, not the current year, but the forward year guide or outlook this early. But just curious, you've got better visibility than you typically do into 2021, but what type of visibility do you have into 2022 based Three items going on here that helps us with 2020 to be able to have the insight into 2022. Obviously, after all these years with many of these material handling customers, and as I talked about before, We're not doing short term planning. We're doing 3 to 5 year planning. So there's a good deal of insight into their activities. The electrolyzer sales funnel was strong and this year we'll take that business in Like we've been a material handling increase by a factor of 7 or 8 this year, it will be in the $40,000,000 plus range and we have a funnel that's close to $1,000,000,000 already built up for the electrolyzer business. And I think and as you know everything in this funnel doesn't happen. And Finally, when I take a look at especially with SK with some of the initial deployment As well as with Renault, we're kind of sitting back doing very, very good about How we achieve the 2021 goals? Okay. Thank you very much. Okay. Thanks, Eric. Thank you. Our next question today is coming from Colin Rusch from Oppenheimer. Your line is now live. Thanks so much, guys. Good morning, Paul. How are you? I'm good, Andy. It's always good to hear your voice. Can you guys give us an update on where you're at just in terms of specific projects in terms of identifying sites on the renewable side for The hydrogen rollout. And then how big the queue is behind that in terms of the sites that you could grow into as you start to So very clear, Colin. So We have 4 sites, 3 of them, which are Moving into development stage, 2 in the Northeast, 1 in the Southeast and 1 in California because of, As you know, permitting issues in California can be can take a little bit longer, but we already actually own the land in California 4 gs hot green hydrogen plant in the Cali, in the valley around Frisco. We have probably Over 15 to 17 renewable sites we're looking at for the ability to generate green hydrogen, Which are spread widely across the country. I think the first two plants, first 2 or 3 plants you'll see go up. I think you'll see 1 in the Northeast, 1 in the Southwest and 1 in Texas. Okay. And as you look at those opportunities, is that going to be an opportunity for you guys to also build Some sort of regulation or storage type applications adjacent to Those sites to help stabilize the grid, certainly that's one of the opportunities for hydrogen in terms of kind of being the connective tissue for some intermittent Nobles and the larger power grid, but are those sites being chosen with multiple purposes in mind? I'm going to say, I'm going to give you a wishy washy answer here. Yes, but not nearly as clearly defined as The generation portion, all these sites are grid connected, though before the meter. So that costs are wholesale type prices. But And we've been obviously thinking a great deal about the issue you're bearing up. 1st and foremost, we are committed to green hydrogen and providing our customers green hydrogen. And I can tell you one, not surprising when we look at the wind farm activity That we're looking at in Texas and by the way the wind farm user we work with actually was very successful during the recent Texas Dorm, we certainly are looking at the wind energy, how we put wind back on the grid at the right time and how to use it at the right time. But we are all set and that's really clearly defined, but certainly storage and generation is in the back of our mind, Especially after what we see going on around the world. Thanks so much, Andrew. I'll take the rest of it offline. By the way, Collyn, I think SK is going to help us a great Our next question is coming from Jeff Osborne from Cowen. Your line is now live. Hey, good morning guys. Congratulations on all the So far, you've got a lot of irons in the fire for 2021. And I was just wondering if you can give us a sense of the operating expense Trends and CapEx for modeling purposes as you gear up for the very heavy growth you've got for 2022 through 2024 that you talked about, Andy? Sure. So Jeff, I would from the CapEx area, I would Probably circle somewhere around $750,000,000 with most of that going to support the expansion of these hydrogen We've done CapEx modeling for the next 5 years and We still see a significant surplus on our balance sheet even with our aggressive plans to build out these hydrogen plants. So to reach the 500 tons a day and to achieve everything we're looking to do, it's Probably somewhere in the $2,000,000,000 to $2,500,000,000 range long term. As far as Op expense, Paul, you may want to comment on that. Jeff, I would expect our op expense may be up to 30% higher this year. Paul, do you want to add to that? Yes. I think, yes, I'm sorry, Andy, can you hear me? Yes. The signal is not so great, Wermatt. I apologize. But yes, I think that's right, Andy. I mean, I think in that 30 to low 30 Range per quarter is a good number. And I think the one of the key things, Jeff, this year We're going to see definitely growth in sales and gross margins and there's Strong focus there. And as Andy alluded, we're going to be investing in CapEx and some OpEx For all these growth platforms, because there's a lot in the fire and a lot of things happening, and we see the opportunity to really accelerate The growth even further, and so you will see some of that this year. Got it. And then the Is the 30% comment, is that off of the 4th quarter run rate or the aggregate number for all of 2020? Yes. I would use this go ahead, Paul. Paul? Jeff, can you hear me? I can hear you, Andy. Just given the Q4 was up quite sharply, I just want to make sure I'm using the right basis. No, no. I would use the annual basis, Jeff. Got it. And then how are we proceeding along just given the Pretty heavy CapEx there over the year as well as the upcoming years for these facilities. Are we at a point in time now where these sites can use leverage? Or is this all going to be straight out of the cash balance? I'll let Paul. So I think the answer to your questions, Yes. Paul, are you there? Okay. I guess I'm going to have to take it, Jeff. I think you want to see leverage coming into play. And I think you hit on a good point, Jeff. When I we've done modeling to make sure we have Sufficient cash balances during the to do it all our own, I think you're going to start probably seeing leverage in the second half of the year as we start doing the build out. So there has been work going on there. I think you'll see probably on the conservative basis, we've said to ourselves, what if we did it with all equity, We can do that. We're in a position to do that now, but we don't expect that to be the path. Got it. And my last one for you, Andy, is just the 2 joint ventures, are we at a point in time, where we can you can confirm that the results of those JVs will be consolidated? That the results of those JVs will be consolidated in terms of revenue or will these all be below the line? That might be more of a question for Paul, but Just in terms of the accounting treatment of the joint ventures themselves? Yes. I know we're working in the negotiations to make sure we can consolidate. And I think it's I think we're getting there. I think that both partners understand the criticality of that for Plug. As you know, Jeff, there's a lot of accounting that goes into that, a lot of legal work that goes into that, but Our team has been working together. All right. Great to hear. That's all I had. Thank you. All right. Thanks, Jeff. Thank you. Our next question today is coming from Craig Irwin from ROTH Capital Partners. Your line is now live. Good morning and thanks for taking my questions. I'll also say congratulations for Good morning, Craig. How are you? How are you? Okay. I need to say congratulations too. You guys had an absolutely phenomenal 2020 and Good. They should. So Andy, One of the things we haven't talked about much, but there is actually tremendous appetite for out there is fuel cell trucks, right? Investors really want to see companies be successful in this market given the opportunity to move away from oil And the potential for long term economics, even on green hydrogen to be really interesting. Can you maybe update us on what's going on In green, in fuel cell trucks for you right now, are there new partnerships Sort of percolating up out there, what's the status with the different customers you've disclosed to date? Sure. So Craig, I think that the model that we've used for Renault In New York is one that we're looking to duplicate. And I can tell you that a good deal of our forward looking thinking at the moment Has to do with how to address that market. I think there's a couple items we concluded. And I think the big one is, we don't want to just be a 1st tier auto parts Supply and the JV with your know was structured that we're jointly selling vehicles Because we've seen what happens in the world if you're just a part supplier to the auto industry. And I also don't know if you just go about doing it the old way of just building cars and vehicles like The auto industry has done traditionally that you end up in a purchasing office instead of a CEO office. We do have discussions going on in the United States and elsewhere, especially with a focus on Heavy duty vehicles. 2 of our big customers will actually be doing Pilots with very shortly. We also have already done work with Folks who are kind of Tier 2 players like Kusan, but I think finally on top of that, We're with Renault, we have a fairly aggressive plan We really start rollouts by the 4th quarter in the Q4, early Q1 with some initial deployments, More in the light commercial vehicle space where there are apps where it makes sense. When it comes to green hydrogen, I think like most people, we believe that electricity under $0.04 a kilowatt hour makes green hydrogen, especially as a fuel, Very competitive with great hydrogen today. And as you know, Sanjay has spent an incredible amount of time thinking through how we can offer a better product And create hydrogen, we bring hydrogen at similar pricing and make margin for Plunt Power. And I think you've been around this a long time, Craig. That's what our customers want. I mean, they'll pay a slight premium for green, But nobody is looking to pay a huge, huge premium to be green. Understood. That makes a lot of sense. My next question is about the infrastructure to fuel Trials, potential small fleets of fuel cell trucks. So last year, you did mention that Plug had done some work With its existing partners, retrofitting some of the fueling infrastructure that serves their forklift fleets, So that they could start with potentially doing fuel cell truck Trials maybe distribution to distribution center to distribution center type work. Can you maybe update us on that? And then more importantly, Tesla gets $400,000,000 A quarter basically in credits and a large chunk of that $400,000,000 comes from The installation of their supercharger network, their charging infrastructure out there under the California Incentive programs, can you talk about the potential to pull down some of these incentives just by building out the network For your customers, have you already got applications in? When do you expect that to potentially be achievable? So, if I look at I'm going to use 2 examples for you, Craig. When we look at the LCFS credits in California, we look at where we believe we can come with CI scores, Especially since we're looking to be moving hydrogen with green hydrogen trucks that At the pump, we believe the credit can be up to $4 a kilogram. So for those who are listening here who don't under You may not understand. I mean that makes our cost depending on how you split the green hydrogen, That almost makes the green hydrogen and probably does make it very, very Less than fossil fuel, diesel energy significantly. We also and there is also bills beginning to circulate around Congress associated with the Biden Green Climate Plan, Which is suggesting up to a $2 credit per kilogram for green hydrogen. That makes the choice between green hydrogen And great hydrogen, incredibly competitive. So I think that once Sanjay has his 1 100 tons up that there'll be a great deal of government supports and credits And a real huge opportunity to increase the margin for Plug Power long term. Excellent. Thank you, Andy. Thanks again for taking my questions. Thank you, Craig. Take it easy. Our next question today is coming from Jed Dorsheimer from Canaccord Genuity. Your line is now live. Hey, thanks Andy. Thanks for taking my questions. Good morning Jed. How are you? I'm doing well. Thanks. So, I'm going to do a quick check here. I just want to know if my partner is back on the line with me. Okay. Yes, Andy, I'm here. I'm so sorry. Yes, I'm here Andy. I don't know why this thing cut out, but I'm back. Okay. All right, Jed. All right, perfect. So a couple of questions. I guess just one on the material handling side, And this might be better served for Paul because it kind of gets into warrant structure a little bit. But if I look at 2 of your 4 major customers, I've actually in 20 years, I've never seen this. I mean, it's actually a fantastic situation where Your customers are literally getting paid to take the product based on the kind of the warrants in 2017 because your sock has been so strong. So with the expiration of Amazon, I'm just wondering how and now only Walmart, how does that Change the visibility in terms of how do you, Paul, kind of think about the bookings When this starts to pivot away, because I'm assuming here that Walmart would also exercise the expiration here too. I'm going to take that just a question and I'm going to hand it off to Paul. So Jed, The warrants have not most of the warrants have not been exercised. Walmart and Amazon Both have significant interest in the success of Plug Power Financially, it's and obviously, I'm sure it wouldn't strike anybody surprising. They're quite pleased with what happened. They are and I'm going to hand it off to Paul, but they are committed So both companies view that hydrogen is critical for a long term To meet their long term climate goals and that they have a partner with Plug Power that goes well beyond financials That has proven that we can deliver the product sets they need and they continue to help us, Both of them to find new opportunities for fuel cells in green hydrogen. I can tell you one of them actually introduced me to 2 of their other investments in the last 3 weeks to help us grow and propel this business Beyond just direct business with them. On that note, Paul, I hand it off to you. Yes. Thanks, Andy. And I guess, the main comment that I would make is that By the fact that these are all the expenses for the one customer have been all reflected and reported at this point. There won't be additional charges for those in the future and that would significantly make it easier And more simple in terms of interpretation on the results as we go forward. And I expect We've been using gross billings as a means by which to communicate the revenue and operating sales activities Without those charges, but I think going forward that number should be a lot closer to the GAAP Revenue number, which will make it easier as well as we move forward. Got it. And just to be clear, I mean, I'm not challenging their Commitment, but if I just look at it, if their strike price is at 13 and to buy product And your stock is at $50,000,000 They are being paid a significant amount of money to actually take your product. And so it does change kind of the relationship a bit once that expires. I guess that was really the core of My question, I think you and to be clear, Amazon is done and Walmart isn't. Yes. And to be clear, Jed, and I'm not going to name Specific customer name, they still own those companies own a lot of warrants that have not been exercised. Got it. Amazon as well? Yes, Amazon as well. Amazon owns a lot of warrants that have not been exercised. Got it. Just Andy, just pivoting a little bit to the upstream and I was wondering if I We kind of look at the electrolyzer side of the business and by the way, congratulations on the SK deal. I agree. I mean, Using methane versus that of green, one of the main differences is kind of The natural companies on the methane reformation would Logically be kind of a nat gas or chemical that have experienced in the downstream Complex Plumbing Systems. I'm just wondering on the green side of things With Windmill Companies, is it are the discussion I'm assuming the discussions, but how are those companies Thinking about sort of the risk profile in terms of do you see more partnerships where pulling in, I guess, a downstream or midstream refiner and you see that kind of wind market that starts to look More like driving through Trenton, New Jersey, for example, without the flaring. I'm just wondering how that shapes out, I guess, if you will. Yes. So I think you're at a real ask an interesting question, Jed, about The evolution of how hydrogen will be Distributed, especially hydrogen that meets the quality and standards you need for fuel cell engines. And there is a slight difference in how one goes actually about generating that hydrogen. But initially, most hydrogen that's green Will be transported in liquid form via trucks and much like it is today. Ultimately, you're going to see more and more and I think we had an earlier call, which was talking about storage. You're going to see more and more one site storage with hydrogen being generated. Some of that will be in Hatterings for very, very long term storage. And like natural gas is done today and like hydrogen is done in the And finally, I think that maybe sooner when you see some work going on in Europe, You're going to see that and we've been already thinking about this, how to build plants close to pipelines, So that you can start injecting hydrogen directly into the natural gas pipeline. Now initially, a few percentage Few percentage and gradually increasing. So all that's going into our thought process. Having grown up in Philadelphia and knowing what those smoke That's look like. I don't think we'll see anything like that. Okay. Good. One last question, I'll jump back in the queue. Just as a reminder, The split of the business, if we kind of look this year, the vast majority is still going to be material handling and selling the fuel cells into the as well as the equipment to support that market. Can you just give us a reminder of the 'twenty four guide in terms of the breakdown of the biz, Please. Sure. And I think you hit an interesting point, Jed, that we expect somewhere in 2023, There's actually a transition where the other businesses are bigger than Material Handling. In 2023, We expect that about $750,000,000 will come from material handling Between hydrogen and electrolyzers, we would expect to be in the $500,000,000 range And the rest will be involved in large scale stationary and on road vehicles. Great. I'll jump back in the queue. Thanks guys. Great. Thanks Jed. Our next question today is coming from Amit Dayal from H. C. Wainwright. Your line is now live. Thank you. Good morning, Andy. Good morning, Paul. Good morning, Amit. How are you? Good, Andy. How are you doing? Very good. So Andy, you secured pretty solid partnerships on the downstream side in terms of distribution with Brookfield, SK, Renault, Etcetera. Do you need partnerships sort of on the upstream side with some of these renewable energy companies as well to Just complete this value chain, if you will? Help me with that, Amit, I may not understand completely, because I think it's kind of Brookfield as Providing us to renewable electricity, I'm probably missing some point. Okay. So do we need others like Brookfield As well or should some of those technical partnerships come to play for you guys? I think you'll see more of those Partner. So the answer to your question is, there will be additional renewable partners even here in United States. And I think you'll probably see announcements in the foreseeable future. Okay. Thank you. And then just moving on to the 4Q 'twenty results, maybe this could be for Paul. It looks like there could be between $43,000,000 to $1,000,000 in one time costs in the Q4. And within this, you talk about some hydrogen supplier issues. If you could just That may come into play in the next few quarters. Sure, Amit. Yes, I think There's a number of things going on. I would say, we had a force majeure issue Close to year end with 1 of the hydrogen producers at one of the facilities that we work through, whenever those events happen, there's some Costs that you incur to kind of navigate through it, it doesn't happen frequently. So I would agree with your comment there. Like a lot of companies, even though we've had great success in growing the business and new platforms doing a lot of things, There are some challenges with COVID in terms of navigating through that from an operational side, And we saw some of those events. But then the other thing that's important to note is, there was a lot of strategic Joint ventures and new business development activities announced in the last couple of months and obviously we've been working extensively on that In Q4, to prepare for those and some of those were announced early in January as an example. So there's a lot of investment to accommodate that. So those are the big themes. And yes, I would say, we obviously don't do those every quarter and don't expect that to happen Routinely. Understood. Thank you for that. And then just from a margin perspective going into say 20 20 2023 timeframe, as per Andy's comments, if material handling is going to start becoming a smaller portion of What kind of impact on the margins should we see from this shift in revenue mix? Paul, you want to take that? Yes. Can you hear me? Yes. One thing we've proven is scale matters. And so and because as Andy said, I think in the past, We're actually using a lot of the core technologies and resources that we have to go into these other markets. It's not like they're completely new Business channels that take their own resources and own technologies and completely independent. So there's a lot of leverage capability. And our forecast and plan are keep moving north. So I think you're going to see a progression over the course of this year. For the full year, it should be in the high teens and then even in the year, we may be approaching 20% or north On a run rate basis, and I think you're going to see that continue on into 2022 and all of these businesses will be accretive Holistically as we continue to grow and scale from there. Got it, Paul. Thank you, guys. That's all I have. Appreciate it. Okay. Take it easy, Amit. Thank you. Our next question is coming from Tristan Richardson from Truist Securities. Your line is now live. Hey, good morning guys. Good morning, Tristan. How are you today? Doing well. Thanks, Andy. Just a question on the data side. I think on the update call, you talked about a potential data customer this year. Do you still see that as the case? And then can you talk about Scale here either with the opportunity set with this customer. Is it possible you could see a data customer elevate To the level of a pedestal customer or is this kind of more of an early days pilot type of deployment for now? Good question, Tristan. So we'll be doing our 1st large scale stationary backup deployment With one of the largest data center customers in May and That shipment the work on that shipment is happening as we speak and That customer could be one of our largest pedestal customers and There are plans to how this business can roll out in 2022, 2023 and 2024 As our customer has come to the conclusion that fuel cells and hydrogen Over the next few years, we'll be very, very cost competitive with large scale on-site diesel generation. On top of that, you have additional value of the sustainability aspects of green hydrogen, Coupled with the fact that a lot of these large data centers, noise pollution is a big, big issue. That's helpful. Thanks, Andy. And then just going back to the margin question, I think talking about Accelerating margins through the year, kind of exiting with a 2 handle instead of a team handle. Thinking, Is this purely a function of scale or I think we thought of fuel supply As being margin accretive at some point on the timeline, curious if that is a driver or the fuel supply Potential is more out into 2022 and beyond. I'll give you my quick answer and then I'll hand it off to Paul. It won't be until late 2022 that the hydrogen margins We'll significantly increase until we have our sites, bigger sites online. There will be some improvements in this year. We're expanding our own site in Tennessee, plus we're beginning to take over about 15 to 20 of our traditional sites with our plan in Tennessee, which will help our margins, but the real margin growth Will happen out in 2023. Paul, you may for the hydrogen business. Paul, you may want to comment on that. Yes, I think that's right, Andy. And across all the businesses, it's similar themes that we've shared in the past. I mean, There's overhead leverage, there's supply chain leverage, there's design enhancements going on, there's vertical integration opportunities that we've made that We're starting to leverage and scale. So those themes are paying dividends in all our businesses from a margin enhancement and even see some of those themes even in our current fuel business as We grow at scale, but from so we're going to get that margin appreciation or accretion largely from Those core themes, but as Andy said, in terms of a significant contribution from the fuel side, it will be Middle of 'twenty two on into 'twenty three is that starts to pay off. That's really helpful. And then one just last one, if I could. I think on the update call, you mentioned the auto industry with respect to materials handling May actually be more intensive on a unit basis per site. Is that still the case? Is the I think 500 to 700 units Per site is still a good high level way to think about the opportunity and is it the 4 sites is still kind of the near term potential for your 4th pedestal customer? So, I think that's a I think in general, I think Obviously, different sites can be different size, Tristan, but I'll give you an example. Our BMW facility in Spartansburg has well over 700 units. Some of them may not immediately be 700 fuel cells or either can be because the way auto factories are structured, there can be some Gradual deployments in some of those facilities, but that's not a bad number to be thinking about. And I think I would add on top of that, I think there is an opportunity with the new Pedestal customer That the expansion could go quicker. That's great. Andy, Paul, thank you guys very much. Thanks Tristan. Thank you. Our next question is coming from Moses Sutton from Barclays. Your line is now live. Hi, Andy and Paul. Great to catch up. Good morning. Good morning, Moses. How are you? Good morning. Good morning. In the 2024 guidance, the $1,700,000,000 can you break out specifically third party hydrogen? I know you group them together with extra larges. And how do you expect to sort of see the long term offtake on those contracts? As you complete the plans, you'll have some rolling contracts or do you expect to have more spot price exposure? So there's actually a reason I was One of the items we think about all the time is, there's opportunities in the electrolyzer space and why Put them kind of together, we're working through whether we sell equipment or whether we sell green oxygen. So that's why I'm a little bit hesitant to just pull it all out today. I'm thinking of one deal specifically that could be huge and it could go either way and could be a really great Offcake for our green hydrogen. So that's kind of Moses, we've been trying to work these deals going both ways with people because of our Capabilities. When you think about the spot price and I think I'm going to give both an input and output side answer. On the input side, Sanjay has really done an incredible job in the negotiation of these contracts to really have a mixture That's how one thinks about grid power, how one thinks about REX for renewable content, how one thinks about Any third parties that can help bridge any power gap. So we have been negotiating set price contracts On the output side, some of our customers, I. E, the big material handling customers, It will be a set price, but we also have a set price of electricity. That was very, very well controlled. The spot market is probably a real opportunity For us to sell and have significant margin enhancement upside When we look at some of the spot pricing going on. Our main concern though is making sure we provide Customers who are especially commercial customers, green hydrogen that's cost competitive with gray hydrogen, Cost competitive with diesel, so that they accelerate the deployment of their fleets, be it material handling, Be it on road vehicles, be it backup power generation by using green hydrogen at a price they can count. That's very helpful. Thanks. And Paul and Manny, you both discussed margin expansion. I don't The adjusted EBITDA guidance reconciliation in the investor letter, is the metric no longer going to be provided? What would a general range look like for 2021 and even an update on the 2024 from the 1,700,000,000? So I think during this call, for 2021, and Paul, I'm going to let you jump in after I did. I mean, we're targeting revenue and gross billings almost now are equal, Moses, with the acceleration of the warrants, so we're looking at $475,000,000 revenue, and margins in the high teens for gross margins And expense is about 30% higher than the run rate of last year. Paul, do you like to translate that? Yes. Okay. And last one for me. On Walmart Genderize, I noticed in the letter, You quote 9,500 or above 9,500 in operation. I think you've noted like 10,000 or more operational as recent as last May, were any ticking out of operations or am I not looking at an apples to apples metric there? I can tell you I've deployed more units. So I'll say this, we're going to so the answer is the number of units of Walmart's increased and this year As we've noted, we're actually beginning to move into other applications in their Internet centers. We're in the Internet distribution centers where we have, I think, 3 sites already moving and more coming. So, Moses, we'll be happy to help you reconcile that. But I can tell you we've sold more units and the business is growing. Got it. Thanks. Okay, great. I'll take that offline. Thanks. Okay. Thank you. Next question is coming from Paul Coster from JPMorgan. Your line is now live. Yes, thanks. Good morning. Thanks for taking my question. Good morning, Paul. How are you? I'm good. So first up, I noticed in the press release that the you're looking to deploy about $125,000,000 of expense in New York To build out the Gigafactory, which I'm sure is very welcome there. That sounds high relative to what my Prior understanding was for the cost of the Gigafactory at around about $45,000,000 $50,000,000 Am I just misreading that? I think part of that, Paul, and I'll let you add in, I think part of that's expense dollars over the coming years As far as personnel. Should we though assume that the Gigafactory's CapEx only are still in that $50,000,000 range as you start to drop them in. The $50,000,000 is right Paul. Okay. Got you. And it seems quite a fairly modest CapEx, which is great, except that it also suggests that the barriers to entry for others A fairly low. Now obviously, there's IP and know how of all kinds involved. But how do you respond to that thought, And it's actually a very things you may not think about Is electrical generation required for a facility? And I can tell you, we First, we went into a building and selected a building because it was an old Ostrom switchgear factory That has incredible levels of power provided into the building that allows us to build large scale electrolyzer systems, Test all these, Darren. I think future buildings, we won't be as lucky. And that I think you'll probably see cost being 25%, 30% higher. What about the argument that it's not very high barrier 3, for others with competence in PEM Technology to get into the Gigafactory business? Well, I would step back and say that, first, you have to have customers. Actually, I should start by saying, Paul, first you have to have the technology. And we have folks who have actually been working on MEA development for over 30 years when you look at their background even before Claude, I think then you have to take a step back and We have people who've been developing fuel cell stacks and making enhancements for 25 years and have thought through The manufacturing process from roll to roll process to stamping and plate, I look at there's both the, as you mentioned IP, There is also the issue of what I always kind of refer to as travel knowledge, which I think people Always underestimate. I think there is the issue of having the capital wherewithal to make the right investments to build out I mean, when you look at the facility itself, we've been able to get incredibly low rates for electricity To support this effort. And the 4th item, I think that's, I think people often have an issue with is you got to have the demand. And I'm already at Plug Power thinking about as you could see building the next Gigafactory in To read, to really help the build out. Got you. Thank you very much. Thank you, Paul. Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over to Andy for any further or closing comments. Well, thank you, Kevin, and thank you everyone for joining the call today. Looking forward to Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.