Greetings, and welcome to the Plug Power Fourth Quarter and Year End 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Teal Hoyos, Director of Marketing Communications. Thank you. You may begin..

[Technical Difficulty] and year-end earnings call. I would like to begin by reminding everybody that this call will include forward-looking statements. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

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 because they involve risks and uncertainties, and actual results may differ materially from those discussed as a result of various factors, including, but not limited to risks and uncertainties discussed under Item 1A Risk Factors and our most recent annual report on Form 10-K, as well as other reports we filed from time-to-time with the SEC.

These forward-looking statements speak only as of the date in which the statements are made, and we are not under any obligation and expressly disclaim any obligation to update any forward-looking statements after this call. In today’s call, we will also refer to certain non-GAAP financial measures.

Definitions of these non-GAAP financial measures are available in the presentation accompanying 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 fourth quarter and year-end conference call. My remarks today will be brief since we provided an updated in January, but let me just highlight a few items before Paul and I take questions. The fourth quarter and 2019 were record years for gross billings and EBITDA.

For the fourth quarter, the company had $94.5 million of gross billings; Plug Power achieved $10.9 million in EBITDA. For the year, the company met our gross billings target and far exceeded our EBITDA target of breakeven achieving $9.2 million.

I believe this year's financial results demonstrates the viability of our business call to achieve $1 billion in revenue and $200 billion in EBITDA in 2024. For 2020, we expect $300 million in gross billings and $20 million in EBITDA. Today, as we speak, we have over 90% require backlog to meet the year.

The backlog is supported by our three pedestal customers supported by two large recent orders. Our investor letters provided more highlights for 2019 and [indiscernible] expected 2020 events. Paul and I are now happy to answer any questions the analysts may have..

Thank you. [Operator Instructions] Our first question comes from the line of Chris Van Horn with B. Riley FBR. Please proceed with your question..

Good morning everyone. Thanks for taking my call..

Good morning Chris.

So, I guess since the last time we spoke there has been some news on a macro level around coronavirus and just wondering if you see any impacts to your business or if there’s anything to think about there?.

So a good question, Chris, I was prepared for that to be the first question. Like most companies, we are following the advice of the CDC and the World Health Organization and other appropriate authorities. Now the key issues for us has really been monitoring our supply chain.

We saw a 2-week to 3-week disruption in China, but at the moment, all of our Chinese suppliers are operating, and we see many of them were working over time. We're also tracking our other suppliers that have dependencies in China and their reports are similar to our experience.

We don't see the issues having any impact on the first quarter and we don't expect any revenue impact for the year. We've seen no changes with our customers. Like everybody else, we'll continue to monitor, but to us, the key items has been a supply chain, and it seems to be back up and functioning and beginning to accelerate..

Okay. Got it. Thank you for that color. And then, since we last spoke, you, obviously, announced that you're partnering with Lightning Systems.

Maybe a little bit more detail there and what role you're going to play and anything more about that partnership?.

Sure. So, as you know, Chris, we have a number of pedestal customers and some of them that we have in common with Lightning.

We're working with them to put some Class 4 and some Class 6 products on the road in the coming half year and that – what we'll be providing is the engine for the products that fuel cell modules the stacks, the fueling system, and they will do the truck integration.

They've had a great deal of experience in battery electric vehicles and now they're extending into fuel cell electric vehicles. Of course, customers have identified some of the issues associated with BEVs when you start thinking about range in weight..

Got it. Okay. And then, as we look through 2020, maybe you could remind us of what the pipeline looks like? Obviously, you're going to have – you're guiding for pretty strong growth. And I think, the bulk of that is going to come in the back half of the year.

At least correct me, if I'm wrong there, but just what does the pipeline look like and in the past, you've highlighted, you see certain announcements coming.

Is there any update to that cadence as well?.

Sure, Chris. So, we've never been in a better position. We're sitting here today with 90% of what – the $300 million, we're targeting for the year, already in-house for delivery. So, when we look at this year, I would say that the second and third quarter will actually both be very good, with many of the deployments happening in those quarters.

So, it will be a bit more front-end loaded, especially seeing the second quarter. I would think that coming out of the first half of the year, probably would be close to 37% to 40% of our deliveries for the year, so bigger numbers than we traditionally have seen.

When it comes to announcements, a good deal of the work we're doing today is associated with hydrogen and we would expect not only hydrogen, obviously as we outlined in our five-year plan. We're targeting another pedestal customer in our material handling business, and we expect to see expansion for on-road vehicles in the coming year..

Okay. Thank you so much for the time this morning..

Great, Chris..

Thank you. Our next question is from Eric Stine with Craig-Hallum. Please proceed with your question..

Hi, Andy..

Good morning, Eric..

So, I just wanted to start with the third, I guess you call it pedestal customer or mega customer. And I know speculated to be Home Depot here, but you're starting to give more details on that. Just wondering, how we should think about that in the context of a Walmart and Amazon? I mean, do you see them, clearly you gave the number you expect in 2020.

Do you view this in terms of the overall either per year overall opportunity kind of in the same light as those two other customers?.

Great question, Eric. And the answer very simply is yes. Like Amazon or Walmart, we have plans with – shared plans with them about how our products will roll out over the next three to five years and the same goes for the third pedestal customer. And they will be in the same range as Walmart and Amazon on an annual basis..

Got it. Okay. Maybe just turning to on-road a little bit StreetScooter, you mentioned that program on pause and I know there – they've been in the press talking about, trying to figure out kind of what their strategy is going forward.

You mentioned that you've got big, big plans, seeing a lot of interest, is that something you think revives and that it is going forward with StreetScooter or do you expect to go after that opportunity with some other party?.

No, we're sorry about – we're sorry to see that StreetScooter is encountering financial difficulties with their battery electric vehicle program. We'll continue the remaining contact and work with them, but look, I think that the press has been pretty clear that they’re really stepping back to kind of understand what their next steps are.

And so, we have no choice, but to continue to work with others and look at opportunities for the same end customers. So, we do have Eric, the number of vehicles and other activities ongoing. Just to step back, we have ProGen testing going on with for 4 large OEMs and with one of them were rather detail system negotiations discussions.

I think, the first question today was about our recent announcement with Lightning Systems and we're looking at how to leverage that with – especially with our is pedestal customers and we are continuing to pursue other areas maybe not to – how you think about it in one row, but ground support equipment.

When I left my office today, saw a notice about another ground support equipment deployment. We're looking at. We have activities going on aviation, which are more long-term and some large scale back power.

I would like to emphasize that we're really disappointed about the StreetScooter activity at where it stands in the pause, but it does have no impact on this year's performance. And with all the other activities going on, we see no impact for 2024 and beyond..

Good. Okay. Maybe last one for me, just an update, I know you've been targeting something with in industrial gas player or just an expansion of your hydrogen strategy.

So, maybe if you could just kind of give us some updated thoughts there that'd be great?.

Yes. So, it is, as you know, Eric, at the Plug Power Symposium, we were pretty clear that by 2024, we'll be selling 85 tons a day. We look to be generating half of that ourselves and we're looking to do have more than half of that being green hydrogen.

We're engaged with many stakeholders and that includes industrial gas companies, as well as electrolyzer companies and others.

And I'll just say that probably the – more I spend more time on hydrogen with the team that we have engaged with that, led by Tim Cortes, then I actually do with fuel cells today and I expect that over the coming year, it will be really clear how we will be in position to generate more than half the hydrogen ourselves and have more than half the hydrogen green..

Got it. Thanks for that..

You're welcome..

Thank you. Our next question is from Colin Rusch with Oppenheimer & Company. Please proceed with your question..

Thanks so much guys..

Good morning, Colin..

Hi.

We're excited about the over-the-road opportunity for you guys, but in shorter term, with the material handling, I appreciate the color on that, but can you talk a little bit about the pipeline of activity you're looking at, and obviously you have these high profile concentrated customers, but would love to understand a little bit better, what the next layer down of smaller customers that could supplement that growth look like and how you see that flowing through the order book and into revenue?.

Good question, Colin. We've never had a stronger demand for the products. And I think, when you have customers like Amazon and Walmart being really so positive about the technology, but that information builders down to other customers.

Over the past four, five months we've actually expanded our sales force almost double the size mainly because all the inbound interest and being able to manage and help convert these customers. We have not only looking to sell directly, but to the smaller customers we've been positioning our products to go through channels. We've talked about ENGIE.

We've talked about some of the activity in Europe for positioning the products, but here in North America, even we've – there are a number of independent dealer networks that across the country. And specifically in areas like Chicago and Detroit, we've been setting up partnerships with some of them to help position our products.

We have rather ambitious goals for 2021 also and we need to add an additional pedestal customer, but we do see – I think that over the coming year, you will see lots of smaller customers beginning to help fill in that book.

I also, though, should add Colin that – and we haven't touched on it today is our activity in Europe, so a few of our pedestal customers have positions in Europe. And we're in much better position, because of the success we've had here in the U.S.

We've been starting to do deployments outside the United States, which will also help grow this business..

That's incredibly helpful. And then I guess just one for Paul. One of the things that it seems like you guys are in a position to do is, optimize your cost of capital on the structured finance side, given some of the PPA agreements and some of the other sources of capital.

Can you just give us an update in terms of progress on that, especially given the rate environment, how soon or how close you might be to being able to refinance some of those pieces of paper and reduced cost of capital?.

Yes. Thanks, Colin.

I agree, I think, closing the year with positive EBITDAs and closing the year with close to $140 million on my balance sheet in liquid cash that I can use to fund this year's pipeline, and guidance this year that we're solidly moving into positive EBITDAs for all factors that are driving – strengthening our position and increasing the availability of options to us.

I have more inbound calls from capital players that are kind of moving up the scale of optionality to us than we've ever had before. And it's – I'm focused on it full-time and I think you should see something in the near term, in terms of the structures and improvements as we move through that scale in the course of the year.

And good news success begets success. And so, we certainly envision that translating into leverage and power to reduce that cost of capital here in the near-term..

Great. I have some follow-ups. I'll take them offline. Thanks guys..

Thanks, Colin..

Thank you. Our next question comes from the line of Jed Dorsheimer with Canaccord Genuity. Please proceed with your question..

Hi. Thanks for taking my question..

Good morning, Jed..

Good morning. So, I guess first question, just on the market for material handling.

Now that you have – you're starting to make decent penetration with the main players in the market, I'm curious, what do you estimate your penetration, or I should say the penetration of fuel cells into that market is? And then do you define the market is just distribution centers with 15 or over or 50 or over forklifts, or do you also include sort of the last mile stores?.

Good question, Jed. So, when we look at the penetration rate, we still have a large, large market opportunity. So today, there is approximately 6 million forklift trucks in the world, which – based on the energy source of those forklift trucks it’s kind of a turnaround time of about every four years.

Our penetration rate is relatively minor, compared to the overall opportunity. So, when you look at, it's under 1% today. So, there is a huge, huge market opportunity for the company to continue to expand. We do focus on distribution centers and in manufacturing facilities. And I think over the next three to five years that will be the market.

As hydrogen becomes a more ubiquitous fuel, there'll actually be certain advantages that you could have at stores, you take a lumbers – a company that may sell lumber and add five or six forklift trucks.

Having used batteries often to create issues, especially when you're hiring 16, 17 year old young adults and not remembering to charge the batteries and items like that. So, long term, we do see opportunities there, but the main focus over the coming three to five years will be in distribution centers manufacturing facilities.

And that's a huge market that we can continue to penetrate. It's one of the reasons that on an earlier question, I talked about now that we have the larger customers we’re beginning to spend time, thinking about developing distribution centers to reach smaller customers..

Got it. So, if we, if I just take what I – thank you, by the way, so if I just repeat back what I heard. If I look at the total penetration still relatively low, but most of that is tied up in sort of the retail stores.

Where you might have like a Home Depot for example, when I go up to my local Home Depot, they probably have 10 or 15 stackers that have the lead acid, but their distribution center is going to have 50 with the hydrogen. Of those distribution centers, if you will, where the value proposition is very clear.

What percentage of those have you now penetrated?.

So, again, if you kind of look at the math, call it, again less than 1% or 2%..

1% or 2% of the main disty center?.

Right. When I look at all the distribution centers. Now, if somebody like Walmart is much higher. So, with Walmart that number is over 30% and others obviously Amazon, it's a higher number, but even with them, I mean, I think one of the beauties of this business model is that there is a recurring aspect.

So, you can see these customers buying new fuel cells every six years or so. And then you have the continuous revenue streams associated with hydrogen, as well as aftermarket service..

Got it.

And so as we start thinking about new applications and segmentation such as the Class 3 through 6 medium-duty trucks, should we expect that, where you’ve had success and the infrastructure is already there at Walmart, at Lowe's or Home Depot, for example, that we should start to see that business grow at a faster rate than the addition of other distribution center customers?.

Let me – I hope I answered your question, Jed, right. Re-ask if I don't..

Okay..

When I look – when I look at some of our large customers, this whole issue, hydrogen infrastructure versus fuel cells where you're going to get the fuel. We've actually are addressing with them.

So, if you look at this year, literally with a couple of our pedestal customers you could drive across the country, maybe get lost and low in West Texas, stopping at distribution centers and refilling the units up. And to me that when we look at, we're adding 35 more this year, you see that continuous growth.

The obvious target for fast growth in these markets, but with customers we have today who have hydrogen infrastructure who understand the value of hydrogen and that we view, and from our discussions view is a key target for expanding this marketing business.

And I think it's one that integrators and OEMs respect when they understand the breadth and depth of what we've done with hydrogen..

Got it. That's useful. I'll take the rest offline. Thank you so much..

Thank you, Jed..

Thank you. [Operator Instructions] Our next question comes from the line of Amit Dayal with H.C. Wainwright. Please proceed with your question..

Hi. Good morning everyone. Thank you for taking my questions..

Thank you, Amit..

Hi, Andy. Good morning.

So, in the context of your $1 billion revenue guidance for 2024, how are we planning for the infrastructure build out to support these levels of revenues? And how much of this will Plug have to shoulder?.

So – and that, let me yeah, I think there is a combination. I think that Plug has not really shoulder the infrastructure that we've done for Walmart and Amazon. And I do not expect this shouldering a large – much of that infrastructure build-out. So, I would say that, no, I don't see that as a large cost to us.

I think what my point on hydrogen, Amit, is that we're sitting here having build-out infrastructure for five years having really turned it into a product and that our customers today have the infrastructure.

And we have – yes, access to the hydrogen that makes it work, and because we're looking at more fleet type vehicles, in distribution, distribution centers, the cost of infrastructure to put vehicles on the road is much lower than if someone was starting from scratch. I hope that answers the question..

Yeah. And I can follow-up on that offline as well..

Okay..

But it's helpful. Thank you.

And then in the context of customer additions, more volumes coming through now deployments continuing at a faster pace, what is the trajectory of lowering for the ProGen engine and other solutions as you scale? Will you be able to capture margins a little faster than maybe how people are thinking about it? Any color on that would be helpful..

So, I'll talk the cost and I'll let Paul kind of talk about margins. If you look at, we've been on a learning curve of 25% every time we've doubled the number of units in the field. So, the interesting question is do you remain on that learning curve.

And if you take a step back, I think the work we've done, especially in stacks, bringing our own MEAs in-house, the work on the metal plate stacks, the simplification electronics, I think through now through to 2024 our product roadmap and technology roadmap continues to support those kind of cost declines.

I think I'll let Paul answer, Amit, your question about margins..

Sure. And the good news for Plug is the themes are consistent. I mean, we've talked in the past, we're still only using – utilizing this manufacturing capacity around 25%, 30%. So, as we grow volumes again this year that's tremendous leverage opportunities.

As we grow scale, we continue to get greater leverage on our supply chain and some of the things Andy talked about, as well as other vertical integration things we're doing are having very impactful contributions to our margin levels. And other dynamics, including more sites give us greater leverage on our service techs and our resources there.

So, you're going to continue to see real strong margin progression, this year, as we saw last year and we're going to keep focus to make sure we keep that margin train moving in the right direction..

Thank you, Paul.

Just maybe one last one from me, with respect to the StreetScooter news, would there be any interest from you guys to just acquire it at throwaway prices and may be take more control of your on-road strategy?.

That's not our approach at the moment, Amit. We believe that the real value is in our technology and that we're not looking to become a system integrator..

Understood. That's all I have guys. Thank you so much..

Okay..

Thank you. Our next question comes from Stephen Byrd with Morgan Stanley. Please proceed with your question..

Hi. Good morning..

Good morning, Stephen..

Most of my questions have been addressed. I just had a high-level question on green hydrogen, there's certainly, I think it's fair to say surging interest in the topic, a lot of fairly exciting developments.

At a high level, do you have any observations that you could share in terms of progress down the cost curve technology improvements, scale improvements, other drivers that just feels that as you start to deploy green hydrogen that could open up a greater sales growth, more clients will be interested in deploying hydrogen-based solution when it's completely different by renewable energy, but just any high-level observations from what you're seeing?.

Sure. Stephen, I would agree that our customers across the board are interested in reducing their carbon footprint. And I think obviously there's commitments from stakeholders from investors to employees that's driving – and customers that's driving that desire.

So, when we look at there is demand, I think that the key item than becomes how you generate green hydrogen, and ultimately what the economic value is. Now, I would say that some customers may be willing to pay a slight premium for green hydrogen because it aligns with their corporate sustainability goals.

So, when we look at – when we think about hydrogen green, we think about both electrolyzers and renewable natural gas. As you know that the availability, especially, you know curtailed renewable energy from solar or wind in certain areas of the world can be quite attractive if you're generating that hydrogen through electrolyzers at the right spot.

We see that at $0.04 to $0.05 a kilowatt hour. You can start making hydrogen, which is competitive with the cost of generating hydrogen from natural gas. When the renewable natural gas, it's probably a little bit more complicated, I think mainly because of availability.

Availability I think that the benefits in the subsidies from renewable natural gas in certain areas is quite high, which makes the price look more competitive.

Ultimately, I think that there will be a mixture of both, but I think that over the next two to three years as the cost for electrolyzers continue to decline that the competitiveness of green hydrogen with green hydrogen with the traditional hydrogen becomes much more interesting.

I guess I would also add, I almost look at it like I look at electric vehicles. Ultimately, whether it's today or whether it's four, five years out, the cost of electric vehicles going to be lower cost in internal combustion engine.

Just fundamentally simpler, and I think you see the same kind of, when you start looking at electrolyzers versus reformers you can actually see that become even a simpler when you look at the face of cost structure, it's just fundamentally going to be lower in cost because it's less complicated. And so, I think there was same path.

I think in many ways even though there are different technologies, the roadmap for cost downs are very, very similar.

Hope that was helpful?.

Yes. That was very helpful.

It sounds like, as you mentioned, over the next year you do expect to see some fairly significant further improvements in the cost of electrolyzers and the resulting hydrogen that comes out, and if that's achieved, it sounds, like, if I'm understanding your comments that, that could put green hydrogen in a position to be truly competitive, is that possible or do you think it could take a longer period of time?.

It's not only my position. There is the McKinsey hydrogen cost roadmap that was issued in January, and if you go to the hydrogen council website, which was put together by over 80 companies and that their view and the view of Plug Power coincides.

I think that the position I kind of outlined, I think more of an industry view, and an industry view coupled with Plug Power's daily work on subjects. So, I don't think what I'm suggesting is outside the norms of views of many people..

That's all I had. Super helpful. Thank you very much..

You're welcome Stephen..

Thank you. [Operator Instructions] Our next question comes from the line of Craig Irwin with Roth Capital Partners. Please proceed..

Good morning, and thanks for taking my questions..

Good morning, Craig..

First I should say, congratulations on that EBITDA, nice chunky big number, it's good to see Plug making money..

Craig, it is. We concur..

Excellent.

So, there's a couple of things that haven't been covered, but most of the issues that I was interested in discussing have been covered at this point, but the first is the potential from Engie, right? So, I know that there are a bunch of things that you are changing with them and they're a fantastic partner in markets where it would be expensive for you to put in a sales force and develop a support network, but can you make of frame out for us, the potential with Engie over the next couple of years, could it possibly end up looking similar to one of your, I guess, we're not calling them anchor customers? We're calling them pedestal customers, could Engie resemble a pedestal customer over the next couple of years?.

That's a great question. And I, I think I'm going to start calling them that because I think that absolutely, yes.

I think that the work Jose Crespo, our Executive VP of Sales is doing with them, outlining our business plans, and I've never really presented it that way, but that is our goal and ambitions when it comes to – I think it's our goal and ambitions, and probably more important it's Engie's goals and ambitions and their reach is obviously, way more significant than Plug's reach today, where we’ll be in three or four years..

Excellent. That's good to hear. So, then again another big picture question, right. Where we're standing today your guidance 300 million plus in revenue in 2020, that obviously factors your $172 million customer ramping in the back half of the year.

So, let's just may be annualize that for the full year, we're basically halfway there for your $700 million goal for the lift truck market in 2024.

As we look down in the runway, the four or five customers that you mentioned on your last call, potential pedestal customers, can you maybe frame out for us what you need to do to convert those customers? How many of them have existing installations? What their experience is with the product and are these the customers that you think gets you to $700 million or is it possible that others come on to the list and one or two might drop off over the next couple of years to get us to that 2024 goal?.

So, I think that, so anyone who has done this over years of – there will be new customers that come to the list, and there will be customers we're dealing with that because of business conditions that they will – there could be something in their business that Plug can't control, but if I take a step back, I would say, that especially over the past holiday season when I talk to especially our pedestal customers, the question of the value of this technology that they saw during the ramp and we have some customers who are moving 10%, 15%, 20% more product out of their distribution centers and they're telling me they could have never done it without fuel cells, and I think that validation, those – that market chatter actually really helps expands and is a recognition to success and the success we've had with them, we're having with these targeted pedestal customers.

We obviously internally, Craig, are driving to add more to that list of five, and we also are driving to convert quicker and that's the goal and I think the key to us is that as you – these decisions they could decide, I'm going to do everything, don't happen overnight.

I think we're in position with many of them to convert quicker over the next year than we've ever been..

Excellent.

And then another question if I may, Lightening Systems is a particularly interesting partner, given that you both worked extensively with Amazon, then on the electric truck side you obviously, on the shifts on the lift truck side, can you say whether or not the experience that both of you have serving one of the most demanding customers brings you sort of closer and corporate culture where maybe there is an alignment here that you might not sign with others in the industry and a mutual understanding of how to reach those targets at some of these customers are looking at, I mean, is there anything else you could share with us in a relationship that you think makes this really special?.

Yes. That's the – you don't, Craig, I think when you're dealing with customers like Amazon, they are demanding, but they also are extremely technically capable and understand challenges along the way.

What they expect to people like Plug and Lightening is that you are continuously looking for ways to improve your product, and help them improve their business. And culturally Lightening matches well up for Plug.

Now, Plug culturally is a company that raises its hand when we're doing something, as well as we should and put all efforts to be successful. I think Lightening is the same way, and both companies are very technically astute, have done really interesting work.

So, I think that the customer focus, the technology focus understanding that the cost focus needs to be there to develop their realistic business model is why it's a nice match..

Great. Well congratulations on maintaining that relationship. I'll hop back in the queue..

Alright. Great. Thanks, Craig..

Thank you. Our next question comes from the line of Jeff Osborne with Cowen and Company. Please proceed with your question..

Hi. Good morning, guys.

A couple of questions on my end, I was hoping, you could touch on the progress you've made in end-sourcing, Andy, is that something you could give an update on and what the cost reductions you've achieved in 2019 because of that?.

Yes, Jeff. I'd be happy to talk about. So, the fourth quarter more than – so let me take a step back. The key item we focused on – in 2019 has been really in sourcing our MEA manufacturing, so as well as stacks. So, in the fourth quarter, stacks represent about 20%, 25% of our product cost.

And in the fourth quarter, we manufactured for new products well over 95% of new products went out with Plug Power stacks and well over 50% of the products went out with Plug Power MEAs. We'll continue to work with others for MEAs to diverse, keep the diversified supply chain, but that activity itself has reduced our cost about 30% in 2019.

So, from a cost of goods sold point of view for the products, overall the impact was 5% to 6%. We are looking to go deeper into MEAs. And I think that over the coming year, you'll probably hear more news about that, but that has been a real, real focus for the company.

I also think that in the coming year, especially in 2020, you will probably hear more about in-sourcing some of the hydrogen generation and how we do that to help reduce the COGS there..

Got it. That's very helpful. I appreciate the detailed response.

And so as you look at sort of quadrupling your revenue between now and 2024 in broad strokes, what's the CapEx requirement to get there? I know, Paul touched on the 25%, 30% utilization, my guess is that's a figure more on your test and assembly there in Latham, but not on the MEAs and stack assembly, but a, can you put that in context and then to get from here to there, what the cadence of CapEx would be?.

I'm going to let Paul take that one..

Yes. So, I think we've been trending around 3% to 4% of sales, I guess, I think about the math.

I think there might be some lumpiness as we go forward as you start thinking about the step functions with that adding manufacturing capacity for MEA's production and middle point stamping and some of the other things that we're talking about, but on a trend basis, I don't expect it to be wildly different.

So, if you think about kind of in the upper end 5%, on a trend basis that's probably the max that I would assume as we go forward..

That's helpful.

And then you mentioned Paul the 37% and 40% in the first half for revenue and you've got your new customer ramping in the second half, can you give us any indication given that there's only a few weeks left in Q1? What the mix between Q1 and Q2 would be, I assume a slow start to the year, is it pretty linear between Q1 and Q2?.

I would say, I'm going to take that one. I would say, if I look at the year, I would say that, call it, 40% for the year, Jeff, call it, the second quarter is probably be two times higher than the first quarter, second quarter is a big quarter [versus expectations]..

Okay. That makes sense..

Yes..

And then you touched – the last question I had, is you touched in detail on the green hydrogen and electrolyzer cost coming down, which was helpful narrative and putting in context, but one of the challenges that we've heard about over the past couple of quarters is the lack of compression in price and tanks, is that something that you're seeing and what's your outlook there, just as you see greater adaption for fuel cell applications, in particular, in transportation?.

Yes. That's actually, Jeff, so for us, we have our supply chain secured to meet our needs for the quarter. That being said, when I look at where there's opportunities to drive down cost in hydrogen infrastructure. Let me take a step back on compressors, Jeff, we use a lot of liquid pumps, and which is different than the mechanical compressors.

And we use liquid pumps because one, they are lower cost; and two, they rapidly bring up hydrogen in case you need, if there is any inner rush in that, the amount of hydrogen a pump can generate in an hour, and gas is poured from liquid is much higher and it compress it.

That being said, there is many applications where mechanical compressors are required, and I think that there's a huge opportunity, I think to cost reduced mechanical compressors to make this industry continue to be more competitive. And I think that's a real area, I think most of us in the industry has spent a great deal of time thinking that.

On the liquid tanks side, I think the issue there is, you need to have a view, it's a six, seven month supply chain issue.

So, you need to work closely with the suppliers, you need to make sure, we provide them the ramp, but we – I can tell you we've spent a lot of time at Tim Cortes with liquid tank providers to make sure that we have sufficient to meet was customer needs.

And let me finally take a step back, good deal of our focus is thinking about fleets and thinking about contained vehicles. You don't need as many liquid tanks for that kind of app as if you wanted to build retail fueling stations..

Got it. That's helpful. Real quick, any last comments on FedEx, I heard all about you other customers there, but just any update you can offer on the FedEx program would be helpful..

I would say Jeff that's nothing that's exciting. We're certainly talking and working with FedEx. And it's – I think that we view our relationship with Lightening as an opportunity to think about how better to serve FedEx's needs..

Makes sense. Appreciate it. Thanks, guys..

Okay. Thank you, Jeff..

Alright. Ladies and gentlemen, we have reached the end of our question-and-answer session. So, I'd like to pass the floor back over to Mr. Marsh for any additional concluding comments..

I appreciate everyone attending the call today and we look forward to talking to many folks off-line over the coming days. So, thank you everyone..

Ladies and gentlemen, this does conclude today's teleconference and webcast. We thank you for your participation and you may disconnect your lines at this time..