Earnings Call: Q2 2020

Aug 5, 2020

Greetings, and welcome to the Plug Power Second Quarter Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Teal Hoyos, Director of Marketing. Thank you. Good morning, and welcome to the Plug Power 20 22nd quarter earnings call. This call will include forward looking statements. We intend that 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 about the future events and trends that may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward statements is 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 ks for the fiscal year ended December 31, 2019, and in our quarterly report on Form 10 Q for the Q1 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 2nd quarter's earnings call. I'm sure many of you have read our 2nd quarter investor letter, so my opening comments would be brief. And I would just like to highlight 4 items that really excite the Plug Power team. 1st, we had a record quarter in the middle of the pandemic, achieving over $72,000,000 in gross billings and $1,000,000 in EBITDA. The Q3 will be 40% higher in gross billings and we are projecting between 110 dollars to $115,000,000 with EBITDA between $9,000,000 to $10,000,000 Our factory and service team will build and install over 4,000 GenDrive units and construct 10 hydrogen stations. For the year, we're on target to achieve our goal of $310,000,000 in gross billings and $21,000,000 in EBITDA. 2nd item that has me excited is that we took major steps in the Q2 to achieve our goal of producing 40 tons a day of green hydrogen by 2024 via the acquisitions of United Hydrogen and Geener ELX. United Hydrogen provides us the platform to build large scale commercial hydrogen plants and Getere ELX provides us the in house capability to build and deploy electrolyzers for those sites. GEDAR EOX is renowned for their PENN technology and now coupled with Plug Power Scale in Manufacturing, we believe Plug Power will drive the cost of PEN electrolyzer technologies below current day alkaline electrolyzers technology with better technology, better cost 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 2,030. 3rd item, the success this year with rapid growth in gross billings and EBITDA, our move into green hydrogen has provided us a clear path to achieve $1,200,000,000 in revenue and $250,000,000 in EBITDA in 2024. For years, building customer relationships with Walmart, Amazon, Home Depot, B and W and others, while enhancing our technology and making strategic acquisitions as well positioned Plug Power to continue to be the leader in building out the hydrogen economies. The big news in our earning letter is our Gigafactory for making PEM stacks for fuel cells and electrolyzers. We're 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 pen manufacturing 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 1st market for fuel cells in the world, deployed over 35,000 units and by quarter end we'll have 100 fueling stations up and operating by Poelig Power. We're a technology leader with our own MEA manufacturing capability, a leader in fuel cell and electrolyzerics technologies Our scalable ProGen fuel 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 that can be cost competitive with fossil fuel based hydrogen via our 2 latest acquisitions. We plan to be a large provider of green hydrogen, probably doing with some partners. Ultimately, when I look at it, who will use green hydrogen in the $69,000,000,000 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. Thank you. At this time, we will be conducting a question and answer Our first question today is from Eric Stine of Craig Hallum. Please proceed with your question. Hi, Andy. Hi, Paul. Hey, Eric. Good morning. Good morning. 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 well, it's early, but it sounds like it's quite advanced as well, but what type of investment you may need to make so that that to make that happen? Eric, I think there is some variables there. When I look at what revenue this will support, this will support well past our $1,200,000,000 target for 2024. I would expect somewhere around $2,000,000,000 in revenue this facility will support. Now we're obviously in discussions with different localities to help support funding of this facility. I would tell you we've already have made some initial purchases of equipment and that we have a fairly clear layout for the facility. And I think a good deal of it, how much ultimately it will cost Plug Power will have a lot to do with the negotiations we have going on with different states across the country. Got it. Okay. I guess 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 including I mean, is it right that you're including United Hydrogen now and saying $310,000,000 in revenues or I'm sorry, in billings and then $21,000,000 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 made the announcement of the acquisitions was when we increased the targets and that was included in the increased targets. Okay. Yes, 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 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 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 at year end, we'll be about 40 tons of hydrogen usage. And that United Hydrogen, we expect by the middle of the Q2 of 2021, about 8 tons of hydrogen with our expansion in that facility will be used in the Plug Power network. And you take a look at that, that moves essentially about 20% of our hydrogen from a buy, resell model to a sell model and puts margins for that portion in the 35% range. So it's a big step in improving the hydrogen margins. And obviously, we're looking at building green hydrogen plants in the near future with either hydropower, wind or solar, they're all 3. Okay, got it. Thanks. Okay. Thanks, Eric. The next question is from Stephen Byrd of Morgan Stanley. Please proceed with your question. Hey, good morning. 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 kind of 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'd like to produce hydrogen. There are a variety of technologies. Some do look to be fairly low cost. So 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. I think, 1st and foremost, the experience of building a plant is actually very limited around the world scale. And that's something that United Hydrogen has achieved. 2, it is clear to me that the cost of renewables as they continue to go down that hydrogen generated from renewables will be on a variable basis cost competitive with natural gas generated hydrogen, a real distinct advantage. And my view is that I've looked at many of the carbon capture technologies and I fundamentally believe the basic cost structure and simplicity of using renewables such as wind, solar and hydropower 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 have looked at over 20 sites for places we can build plants with partners as well as on our own. And if we can source renewables at $0.04 a kilowatt hour, we're extremely competitive with great 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 sort of incentives that are possible, approaches to financing such as sort of 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 Absolutely, Stephen. I mean that's it's a like many of these, if you look around the world, here in New York, then you've had the Cree factory that went out in Rochester. You have activities obviously to different facilities Tesla has built. Hydrogen, as many of you know, people are recognizing as critical to the long term clean energy economy, which is much dependent on customer demand and companies like Amazon positioning to meet their 2,040 sustainability goals. And there's many applications that hydrogen is the only solution. So I think a company like Plug that built the 1st 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, 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 longer long haul transportation? Sure, Stephen. I view this as an asset versus an asset utilization plan. And if you look at it and I guess 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. And as many people know, fuel cells have 3 advantages. 1 is fast fueling, which can be 5 to 6 times at least 5 to 6 times faster than electrical charging. I think 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 one that when you sit with people in the auto in the vehicle industry, it's the packaging density. I have a chart that I show that was put together by put together by DHL that shows that essentially after about 100 kilometers, the density of fuel cells and batteries is about the same, about the physical size they take up. But from that point on, batteries grow at a 10x rate. So even if there's improvements in batteries, there also will be improvements in fuel cells. And DHL for any trucking beyond 120, 130 miles, for example, is a clear believer that because their business isn't moving batteries around, it's moving packages for customers 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 and Company. Please proceed with your question. Hey, good morning, guys. Couple of questions on my end. Good to hear from you. Good morning, Andy. Hey, Andy, can you just talk about the cadence of the year? I mean, certainly the Q3, it looks phenomenal relative to the trends of the past, the 3rd Q4. 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, I guess on the first item is that when I spoke about the second half of the year back in January, this I said 40% of the business, 35% to 40% of the business will be in the 4th in the first half. The rest would be in the second half. There hasn't been 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 Q4, I've been doing this for a dozen years now, Jeff, and I've been very, very I've become very, very cautious about upping those numbers until I'm 100% guaranteed. This quarter, I'm 100% guaranteed. In the Q4, what I have today is all in house. So we're I think in November, we may give some additional guidance there. But I really think what happened here with COVID, I think you're going to see an impact in 2021. We're still working through our numbers in 2021. But our visibility in the retail sector for both food retail and Internet retail, the business will just get stronger next year. So I would think in the November timeframe, I'll be able to give you really good guidance for them. 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 4 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. So when I look at it, Jeff, we have as I mentioned previously, it's probably early next year, mid next year where the 4 manufacturers we're working with for scale manufacturing, we expect to have announcement. It's possible, quite honestly, that there could be 1, a good deal sooner than that. When I as I said before, we expect to be putting vehicles on the road. It's small scale this year. I know at 2 sites in Europe and additional site in the United States. So the business is evolving and growing. And I have to say 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. 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 that they might proceed with maybe next year or what the potential was there relative to Walmart and other partners on the domestic side? Sure. So we are working with Walmart now much more on a global basis. In the UK, there's between 10 to 20 opportunities. They have about a 15% food retail market share. And but I think that how you have to think about our business today with Walmart is not just the domestic North America business, but global activities. So there are Walmart has facilities around the world and I think our ability, especially during this pandemic and I think the pandemic helped the Aasta deal that I would expect an 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? We the finance strategy with Walmart globally will look more like our normal customer relationships. Excellent. Thanks so much. Okay. The next question is from Jed Dorsheimer of Canaccord Genuity. Please proceed with your question. Hi, thanks and congratulations on another good quarter and some great milestones. Thank you, Jed. You're welcome. I guess, first, I just want to dig in, Andy, on, you mentioned in terms of 2021 and 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, but it certainly translates into other applications. It has a lot to do with moving goods faster and moving goods more productively. And when you look at my base business in those areas, it's with food retail and it's with Internet retail. And if you think about how many people now or more eating at home and how many people now are buying packages online. I think you've seen the growth that my biggest customers have had. And I think across the board, we are in the right segment for the future. We're involved in segments which are associated with the future logistics. And we're with 2 of the biggest players, the largest Internet retailer in the world and the largest food retailer in the world. And both of them recognized during this crisis that in many cases and I think that it would have been very difficult for them to meet their customers' needs if they didn't have fuel cells moving products around. And they saw the difference in the facilities that had fuel cells versus the performance of facilities without fuel cells. So I think that's really the underlining reason, Jed, why we've been successful. That's helpful to thanks for outlining the value proposition. And I guess maybe as a segue or continuation, as we think about those customers that are installing on gen or on prem generation for the material handling. As we think about that $1,200,000,000 in the context of kind of getting into the next application, could you maybe update just on where you stand for sort of that Class II through Class VI trucking application? And whether or not we should expect to see an existing customer that leverages the on prem first in there or 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 be able to do out fuel outdoor refueling of Class 6 and Class 8 trucks. We certainly plan to participate in that for the on road vehicle section 2. So we're really unique. We've built and operate now over 100 Q1 stations, which can take you can drive from Lewiston, Maine all the way out to the West Coast of California. And there's fueling stations built and operated by Plug Power along that whole path. And we just see that as an opportunity to leverage and help us in the vehicle market as well as help us in our quest to build out our green hydrogen business. So I think there's a lot of positives in those areas. And I think we're well positioned with our present customers to do those types of deployments. Great. One last high level footprint in the UK. If I look at how the narratives somewhat shifted over the past year or so here, You really are talking a lot more about green hydrogen and we see the sort of the beach hold into the European markets here. I'm wondering if this is a harbinger of more things to come with your expansion into Europe and how much of that is baked into that one $200,000,000 or whether or not that has more to do with the $2,000,000,000 number that you threw out today? I think when you take a look at our plan that we rolled out in the past year in September was relatively light when it came to Europe. And I think we see we spent a good deal of time building relationships in Europe over the last 5 years with people like BMW, Daimler, IKEA, now Asda and Carrefour. And we are that has given us viability in Europe. One of the exciting aspects of the activities with the Geeter ELX is that they have built interesting partners across Europe for the future hydrogen economy. And we're thinking through ways of leveraging that, Plus, both on the green hydrogen side and on the vehicle side, there are a good deal of discussions going on with potential European partners. So Europe is a what do I spend my day on? Green hydrogen certainly one of the big items, but the opportunity in Europe and the Gigafactory are right up there. Great. Thank you. Our next question is from Colin Rusch of Oppenheimer. Please proceed with your question. Thanks so much, guys. I guess I have 2 around the revenue. So one, you talked about $290,000,000 of bookings in place previously. Can you give us an update on that number as we think about the full year? And then secondarily, as we look at the 3Q guidance, how much of that is hydrogen sales separate from the soft consumption of the hydrogen with hydrogen acquisition? Sure. So the hydrogen sales, a lot of the hydrogen sales helped me on the margin front now since I have been moving already hydrogen to plug power. Colin, we have everything in house for this year to achieve the 310,000,000 dollars and looking at opportunities to expand that. We're well positioned for next year to continue on the growth rates we have had. And we as I mentioned, I would expect that in the November call, we'll be able to share more of those projections, but it's in line with our goals to get to $1,200,000,000 Hydrogen itself would probably between Geener and United probably represents about 6%, 7% of our revenue in the Q3, plus we'll have of course the additional hydrogen we normally use and it'll be in line with our normal run rate. Excellent. And can you give us a sense of where your fuel margins are going to end up here in the Q3? And then as we can wrap that through the balance of the year, that's been a drag on the overall possibility, but I'd love to understand this order of magnitude of the immediate impact. I'm sorry, Colin, I didn't hear your question. The hydrogen fuel margins with hydrogen integration. Can you give us a sense of immediate impact and how much more we'll see how much more benefit we'll see over 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, Collin, because of the acquisitions and the roll in. As Andy outlined, the big progression and accretion really start to kick in next year as we start to really leverage United Hydrogen and internally sourcing as well as growing the electrolyzer platform. So I think it will be directionally consistent with the first half, but you know, which you see some improvement in Q2 and you're going to see some continued improvement in Q3 and Q4 as we progress through the year. Great. Thanks so much guys. Thanks, Collyn. The next question is from Craig Irwin of ROTH Capital Partners. Please proceed with your question. Hi, good morning and thanks for taking my questions. Andy, congratulations on some really impressive results here. Thank you, Greg. Greg. 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. And then they have the right to generate 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? And 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 real good question, Craig. And I think like when I talk to our big customers today, obviously because of both the ZEV credits and the LCSS credits. I've seen numbers that the cost to generate the hydrogen with those credits could be lower than $1 a kilogram, which makes it extremely attractive when you start thinking about even versus electricity. So that site we own there, I think could be a combination of fueling station that could complement the distribution centers in California, as well as a depot to drop off liquid hydrogen for Southern California. So both of them, but I really am amazed you found out about that. Both of them are kind of items we're focusing on today. Excellent. And just from a per kilowatt basis, is it fair to assume that your fuel cell trucks will obviously have much greater ZEV credits per unit, even on a per kilowatt basis than truck. Is that a fair assumption? That's a fair assumption, Craig. Excellent. So most of my other questions have been answered. So I apologize for one that almost feels backwards looking, although it's important for the revenue trajectory, right? Your pedestal customers, Andy, I mean most people are focused on the trucks now, right? But you've talked about adding 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 2 or 3 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? Craig, we will announce another pedestal customer this year. And there are discussions going on with 6 or 7 of those customers, an interesting mix between North America and Europe. I think, as you know, all the interest for fuel cells in Europe, along with the fact that that we don't have as many units in Europe that customers saw similar results. I have not forgotten that you take someone like Amazon where there's a large opportunities across a variety of applications. But the key is to make sure we continue to provide them good products and good values in material handling. That's what's built our credibility. And look, if you go around, I mean, this is it is to brag. I don't think anyone has the demonstrated credibility who is a pure player in the fuel cell space that Plug has today is because we've done it over the years. And I think it really does uniquely position us. Great. Well, congratulations on this progress and thanks again for taking my questions. Great. Thanks, Craig. The next question comes from Sameer Joshi of H. C. Wainwright. Please proceed with your question. Hey, good morning, Andy, Paul. Thanks for taking my question. Good morning. Most of the questions were answered, but just one question. We noticed nicely that the Giner deal includes a lot of earnouts and that had led us to believe that there will be some technological improvements and earnouts based on that. But it seems from the commentary that most of the benefits you're planning to derive is from scale that you bring to Ginner. Are there any membrane improvements or catalyst improvements that are in the R and D phase at Wiener that should help you in the future? Absolutely. And I see that we have a real clear roadmap for Gaynor. First, there's process improvements, which will help dramatically reduce costs, but it also helps us to increase the amps per centimeter squared. EATER is a leader in that today or Plug is a leader in that today. By 2024 with the work that the folks there are doing, we would expect that it would be twice as good as the European goals for 2030s. So I mean, if you look, I would encourage people to go look at dealers history with NASA, with General Motors, with the DOE, I think I have $10,000,000 of development projects, mostly associated with GEAER, with the DOE. We continue to improve electrolyzer stats. I think we I can tell you when I go around talk to people in Europe, everybody in Europe knows who makes the best stacks. And it's GEDAR from a technology point of view. And they have a roadmap clearly spelled out over the next 4, 5 years, how we're going to double the current density, improve the efficiency and continue that leadership position and supported by our own capabilities as well as look, this I think that the relationship that they've developed with the DOE and National Labs over years and NASA really well positions our technology for continuing improvement. That was a good question. Thanks for the commentary. That was really helpful. One of the other clarifications we would like is on United Hydrogen Expansion. Is there any kind of for the immediate expansion, is there any green aspect of that for that plan? Sure. So we're working so if you look at that plant today, it's actually fed by a waste stream. So right off, you aren't really you're taking waste stream from an Olin plant, which is just waste hydrogen, 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 that's really just clarification. So that plan itself we think can have CI scores which are below 70. The plans we're looking to grow past that. And just so I should mention also, we've also been thinking about how we deliver hydrogen and you could expect the liquid hydrogen that Plug Power will provide, ultimately will be delivered with hydrogen trucks that again the combination of 2 can allow us to get the CI scores into 0 if done right. Understood. Thanks for that clarification as well. We'll take our questions offline. All right. Thanks, Sameer. The next question is from Christopher Souther of B. Riley FBR. Please proceed with your question. Hey, good morning guys. Good morning, Chris. Thanks for taking my questions. I just had a few here on one time items. Could you break down that $8,300,000 looks like it was mostly SG and A related to acquisitions, but 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 and A for the rest of the year related to that? Go on, Jim, can you take that? Sure. I would say in terms of the amount that's within that charge, it's probably 10% or less to be honest. The bulk of it is the majority of it is really associated with all the acquisitions and the debt restructuring that we did. There was a lot of events there and that was there was a lot of cost associated with those things. Got it. Okay. And then on the systems and infrastructure margins down sequentially, is that just related to the larger mix of infrastructure? Is that kind of a sub-thirty percent kind of run rate, something that we should consider for the rest of the year? Or do you think that should go back 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 at 35% or higher gross margin on the infrastructure. We're in the mid teens. We've done 100 of them and it's hard to get that to where it needs to be with only 100, but getting to mid teens is pretty impressive and we expect that to continue to progress north, could get up into the 20% in the back half with volume and leverage. And so I think you're going to see directionally that overall rate continue to improve in the balance of the year and onward into next year. Understood. And then the last one on the stationary and backup power end market, it seemed like the focus is going to be 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 talk about how that end market is going? Sure, Chris. It's interesting, 1st and foremost, one of my largest customers today is a leader in the data center space and it's been very helpful in the design and the development of that product. I think our offering is really unique and that the business is doing so business interest is so high. I've actually named the VP of Sales for that division who has extensive experience in data centers. And I would say that if you name a major data center provider, both an infrastructure company as well as the operators, I think we're in discussions with all of them with our activities. The products are really cool. And I think the work we've done developing our ProGen stack has really been leveraging building out our megawatt style plant, which and I think one last item I like to add and people may not think about it, but I always think about systems And how you support hydrogen for backup power in these systems, one really needs to think about. And the fact that we're beginning to be able to move and we move more we move a great deal of hydrogen around already even before our acquisitions. And I think there's very few people who could actually provide these large data center providers, a turnkey solution so that they wouldn't have to worry about how they feel. So, yes, I would encourage people to when they think about large scale backup power, you have to always think about hydrogen and plug is uniquely positioned to support the hydrogen needs for these kinds of applications. That's very helpful. I appreciate the color. Thanks. Great. Well, thank you, Chris. I believe that's the last question. And I would like to highlight the Plug Power Symposium is coming up. There's a registration. This is open forever. It's a virtual event. I think it'll be incredibly informative. I know we're lining up some interesting speakers plus you'll have opportunity to hear more details about our business from some of my coworkers and that we this is open to all. So there's a link in the investor letter you can click on as well as there's an online registration at our website. So please take the opportunity to register and look forward to talking to everybody then. Thank you now. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.