Status Update

Jun 22, 2020

Slides

Greetings, and welcome to the Plug Power Business Update. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note that this conference is being recorded. I will now turn the conference over to our host, Andrew Marsh, Chief Executive Officer. Thank you, sir. You may begin. Well, good afternoon, everyone. It's a pleasure to speak with you all today. This gives investors an opportunity to learn more about Plug Power's plans to execute and really demonstrate Plug Power's plans to execute on our hydrogen strategy. I just want to remind those listening on the phone that all the statements today are covered by the forward looking statement, which is shown here on Slide 2. Now let's get into the meat of the presentation. In September of 2019, Plug Power laid out our 5 year plan and vision for expansion of our business. And part of that plan included the generation of at least half of the hydrogen our customers use. As many of you know, Plug Power's business model has been to buy and resell hydrogen. During that presentation, we outlined our business model was changing that half the hydrogen we expect to be generated by Plug Power by 2024, which would be in excess of 85 tons and more than half of that would be green hydrogen that we sell and deliver to our customers. And by acquiring United Hydrogen and Giner ELX, we're combining that capability together. United is United Hydrogen is rather unique. It's the only company that ever built a large scale liquid hydrogen plant, which was not a traditional industrial gas company and built one of the really few successful plants that have been established in the last 25 years. Conner EOX is a technology leader with broad channels in New York. And by coupling these 2 together, we have outlined a plan to really meet the plan to meet our goals that were set forth in 2020 for 2024. But as we've been working through this, our vision became broader. We saw there was a huge need for green hydrogen, not only in our traditional markets, but for long road vehicles, for industrial applications, as well as for building power. So because of that, we felt very comfortable and very confident to change our guidance to $1,200,000,000 in revenue in 2024, a 20% increase in what we presented back in September, as well as an increase for EBITDA of over $250,000,000 a 25% increase. So, on the next slide, let me tell you a little bit about United Hydrogen and what we have today. So United Hydrogen operates today in Charleston, Tennessee, a 6.4 ton liquid hydrogen plant, which we will be expanding very shortly to 10 tons of liquid hydrogen. And just to give the audience an understanding, by year's end, Plug Power expects the sale of liquid hydrogen that we have will be approaching 40 tons a day. Let me tell you how this plant works as well as mention how future plants will work. So this plant here receives a chlor alkali speed from Olin Chemical, which is right beside this plant. Olin puts in the air, which it usually burns, hydrogen from their process. We actually take that hydrogen instead of wasting it and process that hydrogen into clean hydrogen, which is then liquefied. And liquefaction is a critical capability that United has at this plant. Liquid hydrogen is the only way to transport hydrogen for distances over 100 miles cost effectively. And also really the only way to store large quantities of hydrogen in many, many locations. With this acquisition, we acquired delivery network of liquid tankers, gas trailers, I think it's probably more important internal capabilities with logistics software drivers and others to really deliver hydrogen to our customers. We expect to fully fill this plant and more during the coming 6 months. With this acquisition, we also acquired capabilities to generate gases hydrogen as well as a fueling depot port in Palm Springs, California. But you know if you go to the next slide, to me the real benefit always comes down to people. And when we're looking at acquisitions, we're always looking for talented, capable, motivated individuals. And this company started from scratch and built the first, as I mentioned before, liquid hydrogen plant in the world that was not done by industrial gas company. We're quite knowledgeable and plugs plan is to leverage these capability to expand our business. As many of you know, plugs model today is to sell and resell hydrogen at very little margins. It's going to be different now in the future. We see United Hydrogen as a revenue opportunity for Plug Power to expand our total available market as well as an EBITDAX generator. And by 2024, we expect that United Hydrogen will add $25,000,000 of EBITDAS. Some of that is EBITDAS associated with selling to Plug's own customers today, but some of that EBITDA is new customers and new businesses. And at that time, I would expect revenue from this application to be about $50,000,000 So that's the United story. I'll tell you a little bit more later. Let's talk a little bit about GEAER ELX. And as many of you know, I've been in this industry for a dozen years. And over the last 3 years, as we've continued to expand our vertical integration capability, Electrolyzers have been of interest and they're of interest primarily to start because our customers like Amazon are interested in electrolyzers. But I would go around and talk to electrolyzer companies, the DOE and others. And people would often say to me, the company with the broadest patent portfolio and the greatest technical capability was Geener ELX. The folks this company has had 4 decades of experience in this technology, working with people like NASA, like General Motors, like Google. And when we step back and looked at their technology, one of the key items, I think this kind of tells it all, when you start talking about Penn Electrolyzer Technology, the key item is current density to drive down cost. And when we look at the current density of dealer products, using plugs processes, we expect next year at this time to have twice the current density of the European goals for 2,030. As many of you know, Europe is the big market opportunity for PEM electrolyzers in the near term as well as Plug's own customers today. When you step back, what does Plug bring to this equation? I think many of you know electrolyzers are fundamentally fuel cells running in reverse. And what we believe is that we can leverage our manufacturing scale in PEM fuel cells to dramatically decrease the cost of PEM electrolyzers. We will be manufacturing the MEAs in our facility in Rochester, New York, building our stacks there. We will be building the systems And these systems, when you think about it, are very much like our hydrogen infrastructure system that we build today. And I think most important, beyond the customers we bring to the table, we have the leverage in the supply chains to dramatically change and accelerate this industry. And so, moving to the next slide. So, let me step back and make sure everybody understands why electrolyzers make sense. First, it's not just Plug Power saying it. If you look at the European market, the European Hydrogen Council and the European plans call for 80 gigawatts of electrolyzers installed by 2,030. We've seen numbers that by 2025 presented by McKinsey, which shows this market could be 70 times larger. I think when you take a step back though, can electrolyzer green hydrogen compete with dirty brown fossil fuel hydrogen? And this is a question and this is how Plug has always approached markets. We've always wanted to approach them by creating knowing we're creating value for customers. And when we look at the low cost of renewables today and at $0.04 or $0.05 a kilowatt hour and this is a number that many, many folks are talking about, electrolyzers generate green hydrogen is comparable to hydrogen generated by natural gas. Now this is happening today. It's not far fletched and fetched and it's really an opportunity for Plug not only to provide customers greener hydrogen, but very cost effective hydrogen, which increases both the revenue for Plug Power and the margin for Plug Power. Let me touch briefly on the deal. As I outlined in our May conference call, Plug was going to acquire United Hydrogen and an electrolyzer company who you now know who it is, with a combination of cash stock and assumption of debt as well as future earnouts. And this slide shows the details of the acquisition costs. So let me take finally a step back and make sure everyone understands how these pieces fit together. And I'm going to start at the end and the beginning. In the end, what Plug Power brings to the table is demand for this hydrogen and demand for green hydrogen with the likes of Amazon, Walmart, Kroger and others. What Plug Power now also brings to the table is the ability to build large scale plants. Those are the 2 key characteristics that we have via this acquisition in combination with Plug. When you look at the 4 steps here, the hydrogen generation assets and the ability to generate green hydrogen, that's provided by Geener EOX. The ability for liquefaction and logistics as we talked about, United Hydrogen has become an expert in this area. They deliver a plug power today. And you think about customer equipment. So, where do they deliver it? With some of the 120 mission critical fueling stations that Plug Power will have by the end of 2020. As many of you know, over 30% of the retail food in the U. S. Have moved through Plug Power's products during the recent COVID crisis. If we move to the next slide, we have a clear vision of how this market how we will build out these plants. Many of you know, about a year ago, I brought Sanjay Shreston onto the team who's been involved in large scale solar projects and wind projects. We've been talking to hydro producers, nuclear producers and we've built a model before this acquisition how we could build 5 plants initially scaled at 10 tons and growable up to 40 tons a day to service our customers around the United States. We won't do this all alone. We're already in discussions with traditional IGC, untraditional individuals in the hydrogen market to really build out this business. So one of the items I want the listeners to know today that Plug is a company that actually has proven how you can build a business in the fuel cell industry. It's not a company that's talking about the future only because we execute today and this plan is thought out, the costs are thought out and there is ability to expand our business rapidly not only to serve our traditional customers, but some untraditional customers. And why are we excited about this? It's a $2,500,000,000,000 opportunity as outlined by the Hydrogen Council. And I think many of you seen this slide before where you've talked about material handling, electric vehicles and stationary power. I think that what's been unique about Plod is that we've always thought about and this has really been driven by listening to customers that you had to provide customers not a fuel cell product, but a system that helps reduce their costs and help them meet their corporate sustainability goals. We've done that in material handling. We've learned to build fueling stations and now we're the largest we have more fueling stations we've built than anyone else in the world. We've shipped 34,000 gen drivings. We've figured out aftermarket services, leveraging advanced tools like the Internet of Things and artificial intelligence. And now we bring this system the ability to generate cost effective green hydrogen for our customers. So we can sell these parts individually, but no one else can deliver to a customer and put all these parts together. That's what we've learned in these new industries customers demand and plug and plug power can do that. And as we think about more than our traditional market, I just want to talk about who are the markets not only are we focusing in on for Gynor ELX, but also for United Hydrogen. When you think about power and utilities, we're really talking about storage here. And those who were at the Plug Power Symposium, Doctor. Jack Brower from UC Irvine laid out that for over 11 hours of storage, the only feasible solution from both the density and performance point of view is hydrogen and that hydrogen will require electrifiers and in many cases, liquefaction to store that hydrogen at high quantities, Plug Power can do it. Plug Power in the transport sector has built more fueling stations than anyone else and is well positioned to do that for many, many different commercial applications. One of the really interesting part about the European sales channel for Geener ELF is activities in Europe for industrial application like concrete manufacturing, like steel. When people think about when people think about cleaning up their hydrogen footprint or their carbon footprint using hydrogen, a good deal of the Tresco is the transport. The good deal of the long term benefit of how you reduce your carbon footprint has to do with cleaning up industrial processes. And finally, I have buildings here. I think many of you know, people like National Grid in the UK are talking about converting their natural gas pipelines by 2,040 to hydrogen pipeline to provide heat and power to homes. And the only way to do that is with hydrogen is via using electrolyzers and wind power and solar power during excess time. So we see not only an opportunity to grow Plug Power's business in the traditional markets, but into power industry and building. So kind of it's a close, which why we feel I'm going to take a step back and remind folks that they look at the last 3 to 4 years. Plug Power has met our public revenue target. We've met our public EBITDA target. And I would tell you today, I believe these targets for 2024 are conservative and we're looking aggressively to continue to build this market and build this company more rapidly. So on that note, Teal, I'm open to take Q and A. Thank you. At this time, we'll be conducting a question and answer Our first question comes from Craig Irwin with ROTH Capital Partners. Please state your question. Good afternoon. Thanks for taking my questions and congratulations on the acquisition of both Unit Hydrogen and ELX, exciting. Andy, you're only going to do this, right, if it makes sense, right? So both United Hydrogen and ELX have a nice runway in front of them for bringing down your cost of hydrogen as the largest buyer of hydrogen or reseller of hydrogen in the market, you're obviously going to have some pretty interesting intelligence from your history buying and in partnership with United Hydrogen. Can you frame up for us the potential cost improvement per kilogram of hydrogen over the next few years? And as a second part of that, you say green hydrogen a lot and I like that word because it makes me think of the California Low Carbon Fuel Standard. Have you got anything you can share with us about the ability for green hydrogen to maybe participate there? Is that something you're pursuing? And would you expect it to be superior to some of these flat starts that others have had in green hydrogen pursuing the LCFS carbon market? Yes. Good questions, Craig. So let me talk about how we think about hydrogen. Today, we I'm going to give a range. We buy hydrogen somewhere between $5 to $7 a kilogram. A kilogram is equivalent to those who are listening to about 2 gallons 2 gallons per kilogram. When we look at this, a big part of this is it's a margin play for Plug Power that we'll be able to bring our customers and be able to improve our value propositions, works at this kind of price structure. And by having these assets ourselves, we're in a strong position to increase our margins. During the presentation, I mentioned that we see the United acquisition adding $25,000,000 per year of EBITDA to Plug Power as we expand more plants to reach 40 tons a day to really help strengthen this business. We are familiar quite familiar with the low carbon credits available in California. We're not in a position today to lay those plans out extensively. But as you saw on one slide, we already have a foothold in California for the ability to store green hydrogen in California in Palm Springs and we're looking at opportunities to expand our reach into California. There was a slide that I showed during the presentation, which shows 5 potential sites for us to generate green hydrogen at. And one of those sites you may have noticed circles was in the California Nevada region. Thank you for that. So another thing you've been saying for a while, Andy, it just makes complete sense, is that as you get into the trucking market, the longer distance you have to go, if you're going to use a battery electric truck, you need a bigger battery, batteries weight reduces cargo. Fuel cells with hydrogen obviously have an ideal ratio in their favor superior to gasoline. You have said now twice in public that Plug will have a fuel cell truck on the road with partners by the end of the year. Can you maybe frame out for us, is this likely something that would use your GenDrive 100 kilowatt blocks or other similar blocks that you've designed and would fit in in existing relationships, maybe with existing customers? Or is this potentially a plug only solution? Can you maybe just give us a little color so we can maybe project ourselves what this truck could look like and the potential future economic benefit to plug? Sure. So first, I think I'm going to take just a step back and you were right, Craig. We are leveraging our ProGen engines, which range in power from 1 kilowatt to up to 125 kilowatts, which can be operated in parallel to generate more power. And from an architectural point of view, it's actually the most reliable, lowest cost approach. We will be putting vehicles on the road this coming year. And I think one of your assumptions there, and I think is correct that we've established these relationships with people like Amazon, Walmart, Home Depot, BMW, Lowe's. I would expect that those are the type of folks who will be using and demonstrating our first products. But it also touches in on hydrogen strategy, because I can tell you we're already modifying stations to support at our material handling site, hydrogen that can be used for on road vehicles for trucking. So it's not only that we're looking to position to go into the vehicle market, but we're also positioning to have them use plug power fueling stations and plug power hydrogen. Great. And then last question, if I may. Elon Musk is known as being an opinionated guy and a really demanding CEO, but not against reevaluating his prior positions or opinions. The writing is on the wall as far as fuel cells and the relative importance for semi trucks going forward. Is there anything that would prevent you plug the company with an order of magnitude more experience supplying units into any transportation market and fuel cells? Is there anything that would prohibit you from supplying GenDrive units to a company like Tesla? Look, I would love to be a supplier of fuel cells to Tesla and I agree with you. There is a look, Elon Musk has done some remarkable has made some remarkable products and Plug has made some remarkable products. And you don't do that without questioning every day what you're doing and where you can improve. And I think as your question outlined, Craig, when you look at long haul transportation, anywhere from Class 1 to Class 8 truck, fuel cells have unique advantages because of range, fast flowing and are better and you can better utilize your asset. Thanks again. Congratulations on these two acquisitions. Pretty exciting. Thank you, Craig. Thank you. Our next question comes from Colin Rusch with Oppenheimer. Please state your question. Thanks so much, Andy. Can you talk about the capital needs for building out this network at this point? Obviously, you've gone through a real transformation on the balance sheet, but a real transformation on the balance sheet, but want to get a sense of the order of magnitude on the cash flowing up the CapEx on an ongoing basis? So kind of 2 items, Collin, is that I would think about for a new fully utilized 20 ton plant, which includes trucking, logistics, land, it's probably somewhere in the $100,000,000 range. When you think about how you finance that, I think it will be done in combination with partners. Certainly projects like this, especially when you have demand offtake, I think, as you know, are much easier to fund through financiers. And I think the fact that we're in a unique position that we have demand and we have interesting partners who come from the industry that I think there's sources of capital which may be nontraditional for Plug Power. Okay. And then in terms of thinking about the geographic footprint for this business and priorities, obviously, there's a lot of activity in Europe, notably with Germany's new targets and programs around green hydrogen as well as real demand in different geographies, including the U. S. And your existing customers. How should we think about targeted markets, short term versus medium term in terms of the geography? So I kind of would separate it, calm into 2 areas. I think when you think about United Hydrogen and Building Plants, at least during the next year year and a half, that will be North America centric. It could expand into Europe and we're looking to see where there are opportunities. I think when you think about our electrolyzer business, Giner ELX already has sales channels into Europe. And as you know, as we talked about during the presentation today, there's a large build out plan for Europe of over 80 gigawatts between now and 2,030. We're looking not only to looking to expand our sales reach into Europe with their present channels. And I think that business for sales outside the plug network will primarily be in Europe. When I take a step back and think about how much Plug will bring to the table, I look at 2024, I expect Plug will bring about a third of the revenue we expect from DN or ELX and that will be more North American based. Hope that answers your question, Collyn. It does. I'll take a few more offline. Thanks a lot. Our next question comes from Eric Stine with Craig Hallum. Please state your question. Hi Andy. I was wondering if we could just talk about the both of the acquisitions maybe from a historical point of view in terms of growth rates. And I know you mentioned their contribution in 2024, but details you can share on what it may mean here or both may mean for the remainder of the year would be helpful. Sure. So when I look at both companies, Geaner ELX, up to about 3 years ago, it was probably early. If anything, remind me of Plug when I joined in 2,008. A lot of great scientific capability. And at that time, they began to start focusing on how to build markets. And quite honestly, one of the items that they ran I think that they looked at and realized that they had more demand for their products that they could accept orders for and they really need to find someone who could actually build their products at scale. United is a company that's about 10 years old. It has originally started as a supplier of as you could see, they have some assets that can generate hydrogen from natural gas. They eventually migrated into a building out liquid hydrogen plant. Before our acquisition, they already had on the table plans to expand to 30 tons additional 30 tons a day elsewhere, plans which we plan to leverage. And so both of these companies have had growth spurt. So in the coming year, we expect for the rest of the year, these acquisitions to add about $10,000,000 in 2020, about $50,000,000 in 2021. It actually could be more in 2020, but we have to ramp Geener's manufacturing capability. And I think probably more interesting is that we expect that this acquisition will add $5,000,000 to $7,000,000 of EBITDA in 2021, expanding up to $50,000,000 by 2024. Got it. So in 2020, though, just to read between the lines there, I mean, that $10,000,000 plus in revenues, that is United Hydrogen for the 1st quarter. Yes, this yes, that's good. That's a decent way to look at this year. Our numbers will be $310,000,000 in 'twenty one, dollars 310,000,000 in gross billings, dollars 21,000,000 in EBITDA. Call it half and half between Geener ELX and United for the second half of the year. Okay. Next year, Geeter E, OS will be a much more significant part of that revenue stream. Got it. Okay. All right. No, that's great. And then maybe my last question, I noticed at Giner that they did within the last few months get a contract for Schickler fueling stations in Germany. So I'm curious how you see the opportunity there. Is and you mentioned the channels, are they aligned with the right companies or people? And I assume this is for all STOMs, just ongoing fuel cell train deployments that are happening? Boy, that's good work. So Craig, I don't know what I can say publicly about that, but that is I think what you spit on is absolutely correct. And that when you start thinking about it, and I think that this actually highlights another advantage that Plug Power has is that we can build those fueling stations. We know how to build it more than anyone else in the world and you can couple that with a gainer, EOLAC, not only in our traditional markets, but new markets. Okay. Thank you. Our next question comes from Jed Dorsheimer with Canaccord Genuity. Please state your question. Hi, thanks. And let me echo the sentiments and congratulations on the closing of these two deals. Andy, I guess first question on the generating side. If I look at the efficacy of the different technologies, whether petrochemical, hydrogen or battery electric, And I look at the generating side of things, distributions is one of the other than electrolysis is the greatest area of opportunity or greatest losses. And so you had mentioned the fleet of trucks, etcetera. I'm just curious about thoughts on pipelines is that seems to be a great way to drop those losses and therefore drop costs on the now that you're in the generating side of the business? Yes. I think that's an interesting question. And I think as you mentioned the logistics, I showed a few graphs or slides that showed where we were looking to build 5 plants over the coming 4 or 5 years. And those plants, what do they all have in common? First and foremost, they're located very close to our customers, so that we'll be able to deliver hydrogen cost effectively. The second item is that they're in regions where you can purchase low cost renewables. So the cost of generating that hydrogen is low. And I think you couple all that then with the fact that we now have all this capability to build those plants, to have the trucks, the logistics network, plus it's close by. We think it's a very powerful combination to help us build out this hydrogen market. So not only is this hydrogen market complementary to what we do for a living every day, but also offers opportunities to expand well beyond as the last question where they talked about their train refueling. So it gives us an the It sounds like some opportunity for cost reduction there. I guess, in the vehicle, any updates on the 40% to 50% energy losses in the conversion from hydrogen to electricity? I would assume that there's been some development activities to reduce that, but I'm curious, any updates there? Yes. You know, Jen, I always look at this as, it's easy to do that. How you do that cost effectively is critical. And it's also how you measure it is critical. We always think about things as total systems, not just one item in a loop. When you think about that about 2 years ago, we acquired a number of highly capable engineers who started a company called AFC, who worked at General Motors, who are experts in developing high efficiency, low cost MEAs. And with EATER ELX, we also add that capability for electrolyzers. So I think that when we always look at this, you're always balancing the total cost of ownership of efficiency, hydrogen use, initial cost. So, we can push that efficiency up, but one always has to look at the total cost of ownership, just not one element in the link. Got it. And then one financial question and then I'll jump back in the queue. So if HireGen starts to transform as you see it and the signs are there, which I guess the take up of the bump up of the $1,000,000,000 to $1,200,000,000 in 2024. Is the read through in terms of the EBITDA largely a function of just your perspective to or messaging to us that there's also a focus on costs. And the reason that I ask that is, if in fact, where is the beginning of a true disruption at least in the heavy transport sector of the market and material handling. It almost seems like that could be like where standard oil was in 1900, for example. And I would think that there would be a greater opportunity for acceleration on the top line that might come at some of the expense on the operating side of things. So I'm just curious whether or not my read through is correct or I'm missing something there? Thanks. When I think about it, Jed, there's opportunity by moving to a vertical integration model, there is opportunities to lower our cost while simultaneously increasing, lowering giving customers a cost effective product. We believe you're right. I mean, we believe a revolution is going on. And much like I think I've used before the wireless revolution that I was involved with. So, we do see that there's great opportunities to continue to lower our costs and the customers' costs and continue to enhance our margins. What I Standard Oil is actually kind of interesting analogy because I believe that 5 years from now, the last thing you'll want to own is fossil fuel assets generating hydrogen. Green hydrogen from renewables not only is going to be more attractive from a sustainability point of view, but more attractive from a price and cost point of view. And so not only is there a disruption going on in the energy market, I think there's a disruption going on to all players who have fossil fuel assets and aren't accepting the new reality that low cost solar, low cost wind, low cost hydropower can dramatically reduce the cost of hydrogen using electrolysis. Great. Thank you. Okay. Thanks, Jed. Thank Our next question comes from Amit Dayal with H. C. Wainwright. Please state your question. Thank you. Hi, Congratulations on the raised guidance. Not seeing that from many companies. I just had it's been a strange year. It's been a good year for Plug Power. It's been a tough year for lots of folks, but we've been fortunate to be in the right place at the right time. No, I understand. Go ahead, Meta. Just one question for me, sort of a higher level, more strategic type question. Now that you've cemented yourselves as end to end solution provider for hydrogen consumption, I was wondering if there is a path to some sort of a subscription model, if that type of model lends an opportunity to improve margins? No, I guess that's a really good question. I don't feel that it's not the plan today. It certainly would be something we continue to look at. But you have to look at how you finance such a model, how you build the business from here. It's not something that today we plan to do soon. Understood. I'll take my other questions offline. Most of my questions for this call are coming. Okay. Thanks, Amit. Bye now. Our next question comes from Jeffrey Osborne with Cowen and Company. Please state your question. Hi, this is actually Chris Sutter from B. Riley FBR. How is it going guys? Okay, Chris. How about yourself? I'm doing all right. Thanks. Just both the questions have been asked, but I just wanted to check-in on what is incremental on the new targets versus what has kind of already been baked in. Could you kind of break out, it seems like the United Hydrogen piece, a lot of that might have been already in those 2024 targets with the electrolyzer business being incremental. Is that kind of a good way to think about that or just the vertically integrated company has more potential kind of few years out here? Yes. I think that's a fair way to look at it, Chris. We're probably more bullish on United Hydrogen than we were back in September when we started looking to numbers. So I think it's fair to say it's probably about 3 quarters electrolyzers, the additional revenue and about 1 quarter United Hydrogen potential United Hydrogen sales. Got it. And then, when And Chris, we don't plan to stop here. That's good to hear. And then when you're looking at kind of those long term targets, what percent of the fleet that's deployed by then can you service with these 5 sites versus kind of what percent you think would use traditional ways that you've been doing things and what percent would be kind of on-site generation, just figuring out kind of a long term model here? Yes. Chris, we will not invest in anything that is not low carbon or green. We believe those assets have limited value in life and that the demand for green hydrogen, especially as green hydrogen becomes cost on cost parity with fossil fuel hydrogen, customers like Amazon, Walmart, Nike, you go across our list of customers, they're going to want their Hydrogen Green and there'll be great value in the fact that we can deliver and have a network and not providing fossil fuel hydrogen, base hydrogen. Got it. So is it still kind of evolving what you think the on-site electrolyzer versus this kind of 5 large plants that you'd be kind of supplying to customers from? Good question, Chris. And I might have misunderstood a little. I think you're going to have some customers that may put a large scale electrolyzer on-site that we'll actually use as a distribution point for hydrogen to other sites they have as well as to other customers. I think for as I said, I think that if I look out come 2024, I would expect probably 20% to 25% of our material handling customers will be using electrolyzers on-site. Others, because of scale and other issues, other reasons we'll be looking for plug power to deliver hydrogen from our larger scale hydrogen plants. Understood. And then you discussed a 20 ton plant having $100,000,000 in CapEx give or take. Does that include kind of the CapEx for the electrolyzer business scaling up at Rochester? Or how does that kind of play in? What would the CapEx expectations be there? Sure. Sure. So it's actually not huge. And when we look at expansion of business, I would circle that, call it, in the $10,000,000 to $15,000,000 range. But we obviously we're a very good New York company and have been in discussions with the State of New York on how we can work together in that expansion. Thank you. Our next question comes from Jeff Osborne with Cowen. Please state your question. Yes, thanks for letting me on. A couple of questions on my end, Andy. I was wondering in terms of the capital cost to go from the 6 point 4 to the 10 tons per day. Can you talk about what that would be? It sounded like that was more imminent. Yes, that's probably about $5,000,000 Jeff. Got it. And then how do we think about in terms of Geener's history, some of the challenges with the electrolyzer companies have been scaling or crossing the megawatt threshold. Can you give us a sense of where they are in terms of installed base, in terms of megawatts or units? And then what percentage of those have been in the megawatt size? So you're talking, Chris, talking, Jeff, approximately they've got a lot of small scale, so which I don't count. They've got about 30 systems, which are in the range of, call it, 165 kilowatts to a megawatt. The megawatt deployments are in the range of 2 to 3 at the moment. We'll actually be doing a number of the deployments with Gene or ELX using their 1 megawatt electrolyzer this year. We're pretty comfortable with it. Got it. And then at the 5 sites that you had on the map, what's the power needs of those and how many megawatts of electrolyzers would you have per site? Sure. So if you think about a 10 ton site, you're going to require about let me do my math right here, Jeff, Oh, probably about 30 megawatts of electrolyzers to support a 10 ton plant. Got it. And obviously, you would do them just like you do fuel cells or power systems for telecom, a lot of that equipment operates in parallel. Right. And then do you envision those 5 all being done in 2024? And will you update us on the progress of permitting and PPAs? These things can take 2 years to or longer to get permit. Sure. Sure. Jeff, we there's been some work that's been done by United prior to this acquisition. And I would think about breaking ground on a plant per year between now and 2024. And certainly, I expect there will be a big part of our future calls. Got it. And then my last question and follow-up to Chris' question earlier was on the 20% to 25% of your electrolyzer on-site. Can you just talk about, 2 part question? 1, I assume the bulk of them also have a transportation focus on that fuel and wouldn't be just for using it for forklifts on-site. Is that a fair assumption? I think that's a real fair assumption. And Jeff, I would take that even customers who have liquid hydrogen on-site. I think earlier in the call, I mentioned we're already beginning to upgrade some of the hydrogen fueling stations we have at customer sites so that they can use that to fill vehicles. So I think I've spoken about before that we've developed the network. You really look at if you work at Walmart, you could go from Lewiston Maine to California and stop at your own fueling station. So I think some of our large customers like Amazon and Walmart get that vision. Got it. That's great to hear. Good question. Huge opportunity to sell lots of hydrogen and other fuel cell devices. Definitely. And then maybe just can you update us on one of the hidden benefits of this, I think is that right now for a typical distribution center, you're maybe making $5,000,000 $6,000,000 in product sales at the time of installation. But remind us, what is it, dollars 3,250,000 to $1,000,000 of fueling revenue per site per year and right now your negative gross margin. So how do you think about that improving? How much of that improvement is baked into the 2024 guidance? So, Jeff, I think I would look at a number of more like $400,000 a year, dollars 400,000 a year as far as revenue per site for hydrogen. And if you think about that as 0%, and if you think about that as 35%, obviously the more we do, the better the margins get. And we expect that at least half the sites will be using Plug Power Fuel, which could dramatically improve our margins on that line. Got it. That's all I had. Thank you. All right. Well, I appreciate everyone taking the time today to join this call. Think you can tell we're obviously very excited about this acquisition, these acquisitions. As you think about it, it's a journey to Plug Power. We know it's not 1 year or 2 years. We start talking about how to provide full systems solutions to customers about 7 years ago. And now we have customer demand, we have the technology, we have the breadth of capability that's I think unmatched in the industry to make this total system solution possible, obviously for our material handling customers, but also in other applications for on road vehicles. You heard today about commercial fueling stations that Geener ELX is involved with. This is a big deal. And but it's not one that came overnight. It's one that's been developed over years. So I want to thank you today for joining the call and looking forward to talking to you all more in the future. Bye now. Thank you. This concludes today's conference. All parties may disconnect. Have a good afternoon.