Plug Power Inc. Stock

Greetings, and welcome to the Plug Power's Second Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, the conference is being recorded. [Operator Instructions] It's now my pleasure to turn the call over to Vice President of Marketing and Communications, Teal Hoyos. Please go ahead, Teal.

Thank you. Welcome to the 2026 second quarter earnings call.

This call will include forward-looking statements. These forward-looking statements contain projections of future results of operations or of our financial position or other forward-looking information. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

We believe that it is important to communicate our future expectations to investors. However, investors are cautioned not to unduly rely on forward-looking statements, and such statements should not be read or understood as a guarantee of future performance or results. Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors, including, but not limited to, risks and uncertainties discussed under Item 1A Risk Factors in our annual report on Form 10-K for the fiscal year ending December 31, 2025, our quarterly reports on Form 10-Q for the quarter ending March 31, 2026, as well as other reports we file from time to time with the SEC. These forward-looking statements speak only of the date that the statements are made, and we do not undertake or intend to update any forward-looking statements after this call or as a result of new information.

At this point, I would like to turn the call over to Plug's CEO, Jose Luis Crespo.

Good afternoon, everyone, and thank you for joining our second earnings call of 2026, and also thank you for your continued confidence in the Plug team. Q2 was a strong step forward [ and is ] giving us real conviction about the rest of the year. We are executing, our numbers are moving in the right direction across the board, and today, we are raising our full year revenue growth guidance as a result. Paul will walk through the financial details in a moment, but let me start with why we are excited.

Revenue was $178.3 million in the second quarter, up approximately 9% sequentially from the first quarter. This is continued proof that our commercial engine is accelerating. Gross margin improved to approximately breakeven. It was about negative 0.9%, compared to a negative 30.7% a year ago and a negative 13% just last quarter. Thus, a meaningful step up in a single quarter, and it's the direct result of the operational discipline we have built into Quantum Leap, which is our restructuring program, combined with improving service margins and better planned utilization in hydrogen production. But just as important, our breakeven revenue threshold keep on coming down, which puts positive EBITDAs in the fourth quarter as squarely within reach.

Operating expenses declined approximately 50% year-over-year to $62 million, again a direct reflection of the discipline we have driven through Quantum Leap and our continued asset monetization efforts. And on the cash side, net cash usage improved to $61 million this quarter, a reduction in cash usage of about 58% compared to the first quarter. Our cash burn is coming down, and the trend line matters enormously as we head towards profitability.

Our priorities for 2026 are clear, and they haven't changed. Disciplined execution, profitable growth and continued improvement in cash utilization and operating leverage. What has changed is our content in how the year plays out.

On our last call, we guided full year revenue growth of 13% to 15%. Based on our first half results and the visibility now we have into the second half, we are raising that guidance today to 15% to 16% for the full year. Our business has historically been second half weighted with the fourth quarter benefiting from year-end deployment cycles. And everything we are seeing tells us that pattern is expected to hold again this year with even more strength behind it.

Material Handling continues to be a genuine bright spot. And the growth story here just keeps on building. We deployed 1,666 GenDrive units in the quarter, more than double the 739 units we deployed in the second quarter of last year. Service revenue grew 82% year-over-year to $29.8 million, with Service margin of 27%. As improving reliability lets our technicians cover more units and drive real overhead leverage. And we're not just growing. We're building a robust recurring revenue base. Two of our largest Material Handling customers are planning to refresh more than 20,000 GenDrive units over the next 3 years. This is a multiyear revenue opportunity sitting right in front of us and is exactly the kind of embedded growth that gives us confidence well beyond this year.

Our Electrolyzer business continues to build real commercial momentum. We announced the FID of the 30-megawatt Barrow Green hydrogen project for Carlton Power in the U.K. which is part of the 55 megawatts, we were awarded in November of 2025, and we expect the additional 25 megawatts to be -- to reach FID in 2026. In Q2, we were also selected for the 275-megawatt FEED on the Hy2gen Courant project in Quebec. And on July 7, we announced that Plug secured a 50-megawatt GenEco Electrolyzer order following the final investment decision from Orica, for Orica's Hunter Valley Hydrogen Hub in Australia, and this is the largest renewable hydrogen project to reach FID in Australia. As an update on the business, our 100-megawatt project with GALP in Portugal and our 25-megawatt project with Iberdrola and BP in Spain continued progressing positively on the commissioning.

But I also want to flag something bigger in the horizon here. Because I think it is an important part of the Electrolyzer story for the next several years. Europe continues to advance the conversion of the Renewable Energy Directive III its called RED III into a national law across EU member states. Spain is the latest country to [indiscernible] a draft framework establishing an 11% renewable fuels on nonbiological origin, which is the [indiscernible] by 2040. This is backed by a specified noncompliance penalty and a [indiscernible] of Tradable Carbon Reduction Certificates. Based on our preliminary internal analysis, we believe Spain's framework alone could drive approximately [ 10-gigawatts ] of electrolyzer demand by 2030.

In addition, the European Commission approved a EUR 780 million Dutch Subsidy Scheme targeting 400 megawatts of electrolysis capacity with an action plan for early 2027, and also the European Commission plans on launching a fourth hydrogen auction in December of 2026 with a budget of up to EUR 500 million. Now this is the kind of regulatory tailwind that turns a strong pipeline into a durable, multiyear growth runway, and we like our position to capture it.

Now turning to Hydrogen. Our Fuel business delivered approximately 15% revenue growth year-over-year to $39.5 million. This has driven continued growth in hydrogen consumption across our expanding customer base. Fuel gross margin improved to negative minus 48% -- negative 48% from negative 91% a year ago, on improvement plant utilization, production efficiency and network optimization across our production facilities in Georgia, Tennessee and Louisiana. We still have work to do here, obviously, but the trajectory is decisively in our favor, and we expect that progress to continue through the second half of the year.

We ended the period with $161.9 million of unrestricted cash. with net cash usage improving to $61 million for the quarter, down approximately 58% sequentially. We are also executing on our asset monetization programs, and as an update to the Stream transaction we announced on July 13, where we indicated approximately $80 million of expected near-term liquidity, we have already received $47 million. This is a step forward of our initiative to allot more than $275 million through this asset monetization and non-dilutive financing, and we expect to keep delivering on this initiative in the coming quarters.

So put simply, this was a good quarter, and it sets up an even better second half. Revenue is growing. Margins are approaching breakeven. Operating expenses are down 50%. Cash burn is falling, and we are raising our full year guidance to 15% to 16% growth. We remain on track to deliver positive EBITDAS in the fourth quarter and milestone numbers, a real turning point for the company. We're building Plug into the profitable cash-generative hydrogen leader we set out to become. We have work to do, but Q2 is more evidence that we are getting there.

And with that, I'll turn the call over to Paul for a more detailed review of the quarter, including our liquidity position and financial outlook. Thank you. Paul?

Thank you, Jose Luis, and good afternoon, everyone. Building on Jose Luis' comments, I want to leave you with three key takeaways from the quarter. First, the margin transformation is real and it is compounding. We exited Q2 at essentially breakeven gross margin, roughly a 30-point improvement from a year ago. Second, our cost discipline is showing up everywhere it should including improved margins and reduced OpEx, which yields reduced cash use. And third, we believe we have the capital and the levers in place to execute the balance of the year. This stems from current cash balances, continued improvements in margins, reduced CapEx and the ongoing asset monetization efforts.

And diving into the details of the quarter, as Jose outlined, net revenue for the quarter was approximately $178 million, which was up 9% sequentially, bringing the first half to $342 million, up 11% year-over-year. The first half is slightly ahead of the range we outlined in May, so the shape of the year is playing out slightly better than we -- the way we told you it would. And as Jose Luis outlined, given our traction and pipeline, we're increasing our full year projection to 15% to 16% growth off of 2025. We expect some growth in Q3 '26 sequentially and and over the Q3 of prior year, but the majority of the volume in the second half forecast we expect unfolding in the fourth quarter of '26.

On margins, let me expand a bit because this is where the last 2 years of work really are starting to show off. Gross margin came in at essentially breakeven versus the 31% a year ago, as I outlined. Every platform contributed. Equipment margin was positive driven from volume leverage, continued manufacturing cost optimization and supply chain leverage. We're also recognizing benefits based on the tariff recoveries and reduced tariff spend. Service margin was 27% positive as unit reliability keeps improving. Our cost of service is down materially, and that's letting us expand the tech unit coverage and drive overhead leverage. PPA loss rates improved to roughly negative 30% from negative 92% a year ago, which has driven cost reductions to service this PPA fleet, coupled with the sale-leaseback buyback program which reduces our equipment lease cost.

Fuel margin improved roughly negative 48% from negative 91% as Jose Luis outlined, driven by the increased plant utilization, improved network optimization and benefits of our supply agreements. Still a lot of work to do, but these are structural improvements, not 1 quarter effects, and they keep on lowering our breakeven threshold. Just to prelude the second half in context of our target to achieve positive EBITDAS in Q4, this will come mainly from increased gross margin and will stem from many factors. Driving more sales as the second half will be 40% higher than the first half, and this will mostly come from equipment volume. Driving more cost downs in manufacturing and supply chain such as ramping our diffusion bonding process for ELX stacks as an example. Continuing our service reliability improvement trends and driving enhanced tech leverage, especially given the number of sites and GenDrives being deployed in the second half. Further improving the fuel network leverage given continued growth in fuel sales and focus on network lists costs and network efficiency, driving even more improvements in our PPA platform by further service cost reductions and completing more sale-leaseback buybacks.

GAAP operating expenses were the $62 million, [ down 50% ] year-over-year, but I want to be transparent on the composition. This includes $39.7 million of recoveries of previously impaired assets, principally the $37 million gain from a resolution of a customer contract dispute we've settled in June. Excluding that recovery and the IT sale transaction fees for this quarter and excluding impairment, restructuring and other noncash changes in contingent consideration, as an example, operating expenses continued to decrease, and we believe we remain on the path towards the roughly $75 million a quarter run rate we discussed in May. The OpEx reduction stems from continued scrutiny over headcount, discretionary spend discipline and from reduced CapEx spend yielding lower depreciation.

On the bottom line, GAAP EPS was a loss of $0.14 versus a loss of $0.20 a year ago. I'd note that the GAAP result in Q2 of '26 carries about $104 million of noncash mark-to-market valuation charges for our convertible debt and warrant liabilities, driven primarily by our own stock price appreciation in the quarter. Adjusted EPS was a loss of $0.07 versus $0.18 a year ago, and reconciliations on the adjusted EPS numbers are in our tables. The net cash usage for the quarter was roughly $61 million, an improvement of 58% over Q1 of '26. The continued asset monetization efforts contributing to margins and overall reduced cash usage, but even setting those aside, underlying burn continues to improve and to step down on margin improvement, working capital leverage and reduced CapEx spend.

Inventory is down about $28 million from year-end, and we still expect at least $100 million of inventory reduction for the full year weighted to the second half. Capital spending remains light under $9 million in the first half. We ended the quarter with $162 million of unrestricted cash and $510 million of restricted cash, which means we have over $670 million in total cash. The restricted cash continues to keep coming back to us, more than $115 million release in the first half and roughly $155 million of the remaining balance is scheduled to release over the next 12 months. It is effectively a built-in non-dilutive funding stream. And subsequent to quarter end, we announced the transaction is expected to generate approximately $80 million of near-term liquidity through the sale of our Graham Texas project and the stage closing of New York Great Gateway. The first phases of these program to unlock more than $275 million through this overall asset monetization non-dilutive financing program. Out of this initial $80 million in July and August to date, we received already $47 million, bringing the total for this endeavor so far to $52 million.

For the full year, we plan for our sales growth of 15% to 16%, and we believe that the first half puts us squarely on that trajectory, remaining laser-focused on our Q4 goal of positive EBITDAS. The levers are the ones that you watch us pull on all year and the ones that I've outlined today. We believe we have the balance sheet and clear non-dilutive capital opportunities to execute. In summary, we believe we are postured to deliver on our targets. We have set for ourselves this year, and we look forward to sharing more as our progress progresses throughout the year.

With that, I'll turn it back over to Jose Luis.

Thank you, Paul. So now again, thank you for attending the call, and we'll go to the questions part of the call.

[Operator Instructions] Our first question today is coming from Colin Rusch from Oppenheimer.

I appreciate the question here. Can you talk about the drivers for the Service margins? How much of that is being driven by improved contracting and how much of it is being driven by better performance of the assets out in the field?

Colin, thank you for the question. The improvement on the services really is driven by several factors. One of them is the reliability of the units is improving. The stack performance is improving. And that's leading to us being able to use less techs, to actually service the units. So the overhead is also improving. And adding to that, over the last couple of years, as you know, we went through a process of cautiously increasing pricing on services to be aligned to the reality of the cost of servicing the unit. So all of that together has contributed to this 27% margin that you see right now. And it's actually structural. It's something that we believe, is sustainable.

Excellent. And then just thinking about the pipeline of hydrogen projects. You guys have made a nice dent in moving these things forward. Just -- I'm curious about urgency around some of the projects in Europe, starting construction and really starting to see some of the ramp on Equipment orders. How should we think about that as we get through the balance of this year and into next year?

So we have already seen not necessarily in Europe Orica, for example. I think it got lost a little bit in the in the market dynamics but Orica is a 50-megawatt order. First FID project in Australia. And if you think about it, our largest order was 100-megawatts from GALP. This is the second largest order. The award of 55-megawatts from Carlton Power in the U.K. is now becoming FIDs. We saw the first FID with 30-megawatts and we are already manufacturing and getting ready for implementation in the U.K. for those projects. We see even our own projects that we have in Spain with our joint venture with ACCIONA moving towards FID with subsidies being awarded by the European Hydrogen Bank. I think those two projects have the largest per kilogram award in the market. So we see a lot of activity in the European market. We see many projects that are coming along to get to by the end of the year, beginning of 2027. And you will be hearing more news about those projects in the coming quarters.

Your next question is coming from Eric Stine from Craig-Hallum.

So I was hoping we could talk about Material Handling. I'm interested in these two customers, the 20,000 units over 3 years. As I think about how you've talked about the repowering opportunity, it's been something that you've been optimistic about, but it seems like it was off a little ways. So now you're talking about these two customers. I'm curious, I mean, is this -- is it fair to say that this is kind of sped up a little bit versus previous expectations? Or is this more kind of a normal refresh versus they're just proactively deciding to do it for the next-gen fuel cell system?

It is really being driven by the refresh timing. We are going to refresh some of those units in the range of around 2,000 of them already in 2026. And then as the year progresses, we are expecting to start refreshing with the two largest customers in the next 3 years to complete the total fleet. In both cases, what we're seeing is that we're reaching in many of the sites over the next 3 years, the time to refresh the units. And as the units are becoming more reliable and as we are basically coming with all the upgrades and all the improvements that we've done to the units in the field. The new units are going to have that in -- already in the production units. The customers are also interested in doing the refreshes. But mainly, they are driven by the normal natural timing of the refreshes, which is starting now.

Okay. And so these are your two largest customers. Is this -- did you say that this kind of completes their -- I mean, this would be their footprint? Or it would seem like this could be a multiyear beyond that you were talking about for the specific opportunity with these two.

This would be their normal footprint for renewals or refreshes of the units that they have in the field right now. I'm not sure maybe if I didn't understand the question correctly, please.

Well, [indiscernible] add if you think about it like a portfolio, there's more and more sites, and they're adding sites this year as an example. So they go through a normal reset cycle, but this is kind of -- one of them, in particular, is hitting a major refresh cycle starting here now. And the other one, although they've been on refresh, it's starting to grow and build on that. And as they add more sites, it will become bigger and bigger. So we expect a pretty incremental step function in terms of this refresh activity starting from here on out just because of those dynamics.

So I guess it's going to be refreshed on top of the normal growth on those customers.

Our next question today is coming from Sherif Elmaghrabi from BTIG.

Our next question is coming from Chris Dendrinos of RBC Capital Markets.

Maybe just on the fueling margins here and I think pretty solid improvement year-on-year sequentially, call it, relatively flat. Just what are the next big drivers to push -- to fuel, no pun intended, more fueling improvement?

Thank you, Sherif (sic) [ Chris ]. We're going to continue operating more efficiently the plants. We have the three plants, Tennessee, Georgia and Louisiana. So as we continue operating them, we are getting more efficient and and higher utilization of the plants. On the logistics side, we're going to continue also improving our logistics. We are continuously trying to make sure that we deploy and send hydrogen to our customers in the most effective way. and we are implementing systems to be able to do that the most effective way that's possible. And finally, we are working in each one of the sites and also in the plants to make sure that the actual efficiency of the systems is improving over time. So those are the items that we're working on to improve our margins in hydrogen.

Got it. And maybe just as a follow-up to an earlier question on electrolyzer pipeline here, and you highlighted Spain being a potential, I think, 10-gigawatt market by 2030. What are kind of the key markers here? What should we be looking for in terms of I guess, the cadence of when demand potentially pick up for that market specifically?

So RED III, which is the regulation that is being implemented as a law in the different countries, in the different European member states, mandates a certain amount of hydrogen being used in transportation and specifically for refineries to be converted as different percentages in different countries, but there is numbers for each one of the countries before 2030. So what we're going to see -- and 2030 is here. I mean we are right now mid-2026. So we have basically 3.5 years to make those conversions. So we are already seeing some of those projects moving. The projects that we already have, and we are implementing Iberdrola and BP and the project with GALP. And some of the projects that we have smaller projects on the refinery side is a result of this legislation becoming a reality. So as this gets, the draft in Spain, for example, gets aprroved, which is expected to be in the next few months. And it becomes an actual law, we are expecting the company to start actually executing and moving forward with the projects.

We have -- many of those projects are already in our funnel. This is the $8 billion funnel that we've been talking about. These are not new projects that we're going to basically pick up right now. It's projects that have been -- many of them we've done the engineering phase. They are ready to go. And once this happens, the project will start moving forward, and we hope that by the end of this year, beginning of next year, we will start seeing some of these projects becoming a reality by reaching FID.

Our next question is coming from Saumya Jain from UBS.

Congrats on the quarter. So now that gross margins have approached breakeven, can you provide more color on the primary structural drivers ,whether it's pricing power, product mix or lower input costs that are expected to push margins into the positive territory in the second half of the year?

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

Yes. I think -- so -- the first thing is sales volume. If you think about us with the numbers that we've shared and the forecast of our guidance, as I said earlier, that suggests mathematically that will be up to meet those forecasts, its about 40% growth off of the first half. And that mostly is equipment volume. And that's where we really become very accretive because of the contribution margin since we're already coming the fixed overhead. So that's a big driver.

The second is we still got lots of opportunities on the manufacturing cost. And so we're still very early in the Electrolyzer scale and manufacturing processes and still have a lot of opportunities to optimize that cost structure. We have already driven a lot of cost out of that equipment and continue to put in further cost downs on that as an example. The other two big buckets really is Service you've seen big moves on Service margin. We have seen -- we see continued improvements in reliability which gives us opportunity to leverage more units for tech as we continue to scale. And since we have a lot of units and sites going live in the second half, we're continuing to take advantage of that.

But we continue to invest in more reliability improvement processes. And so that's continued to pay off. And then lastly, as we just talked a few minutes ago, it's about the fuel. And so as we continue to scale volume on our fuel network drive out improved logistics costs and efficiencies of the systems. Those are the themes that you're going to continue to see collectively drive margin. But in the second half, in particular, it's mainly sales volume. It's just such a big big step function in term -- in context of our targets and our forecast.

Great. And then with recent milestones, like the order for Orica and the Carlton Power FID, what is the conversion rate time line for turning feed scope, such as the Quebec project into firm FIDs?

In the case of the project in Canada, we're working right now on the FEED, as we mentioned. And the estimated FID time line is beginning of 2027. It could -- with these big projects, as you know, things are a little bit fluid. So that is the estimated timeline we have right now, it could move to Q3, but we have other projects as well that are going into the same process. And we're seeing projects converting to FID like, as you mentioned, the Orica 50 megawatts and the Carlton 30 megawatts, and we are expecting the next 25 megawatt to become and to convert into FID before the end of the year.

Next question is coming from Sameer Joshi from H.C. Wainwright.

I just wanted to check on the cash management strategy in terms of the balance sheet. The interest rate loan -- would you be -- some of the working capital gains you're expecting from the inventory reductions and of course, gross margins becoming slightly positive. Is there -- and also money coming in from these asset monetization efforts. Is there any effort to reduce the debt?

Thank you, Sameer. I think I'm going to let Paul answer that question.

Yes. So on the debt side, the only thing we really have the convertibles and they're termed out in 8 years from now, there's no amortization of that. It's relatively speaking, a low-cost interest, unsecured facility. So we'll continue to monitor that and see what makes sense if there's the right capital opportunities to do that. But the reality is strength begets strength.

So as we continue to show the progress that we're making in terms of improving growing sales, growing the margins, improving cash flows, we certainly expect in the second half, as we've talked all year, our plan is that we should see not just sales growth and margin enhancement, but continued reductions in the cash burn. And so that puts us in a good position as we start approaching potentially positive operating cash flows that it opens up even more avenues for me, for debt and capital solutions at lower cost options. But we're in a good position right now. We ended the quarter with a pretty sizable cash balance. We subsequent to the quarter end, as we've talked about, we've already brought in $47 million from this data center asset monetization with visibility of another $30 million to $35 million in the short term as that effort continues. And so we're in a good position as we sit now that to kind of fund the balance of the year.

Understood. And then just one, stepping back your outlook for the year. I mean -- I guess your fuel and PPA revenues are sort of more or less predictable. But is this growth -- I mean you did mention this growth has mostly come from equipment sales. What kind of visibility do you have? Are there any takes and puts that may exceed your guidance or cause you to not achieve these levels?

I mean, we decided to raise guidance because of we feel we have good visibility and expecting to meet that guidance. The majority of the second half of the year is going to be associated with execution, which is an important piece of the business. But from a commercial standpoint, we have good visibility on what's going to make the year in terms of midterm guidance.

Next question today coming from Craig Irwin from ROTH Capital Partners.

First, I should say you guys did a great job conveying how Plug is clicking on all cylinders these days. So the prepared remarks, I appreciate those. Most of my questions have been answered. So I'm going to ask a bigger picture question. Over the years, I've sort of followed Plug closely have seen systems in your factory being prepped for delivery for very big technology names, Fortune 50 type names Intel is one that jumps out to me from the last couple of years. And I know you don't always press release these things, but I know you've supplied electrolyzers and other power generation equipment to many of the Fortune 100, Fortune 500 other than the great names like Amazon that are kings of the data center market. What do you see as a potential avenue? Or are you exploring the opportunity for data center participation for Plug? If you had a couple of hundred million dollars of incremental capital, is this something that you would do and that you could do on a relatively fair time line? What would it take for you to make the investment there given that you do have a competitor out there with a market cap in the tens of billions of range that I don't think has technology that's much better than Plug's, obviously, I prefer Plug's.

Craig. Thank you so much for your question and for attending the call, as usual, I appreciate the big picture question, and it's a good hypothetical. We had $200 million of capital to deploy. Obviously, the data center market is a market that everybody is paying a lot of attention to. And as you said, we have many customers of Plug that are data center customers. We did the first test with a 3-megawatt system with Microsoft for backup-power for data centers. Right now, as, Plug as we have said before, we are focused 100% focused on 3 lines of business: One is Material Handling, which is, at this moment, actually performing really well and is bringing a lot of the growth in the company. The other 1 is Electrolyzer. As I went through it before, the European market is about to heat up and to bring some orders to the table. We're expecting that to happen. And then the Hydrogen business, which is also an area of growth, we grew 15% the top line on Hydrogen. And we're expecting it to not only bring growth and eventually profitability. But also we are expecting -- and it is an enabler of our business. Without Hydrogen, none of these things really run.

So those are the areas of the business that we are concentrating on. We are always looking at potential opportunities that we could grab in the market. And obviously, the data center market as being one that we've been looking at from different angles. One of them is to try to create a solution that using electrolyzer and using fuel cells could actually relieve a little the network tension that is created by data centers connected to the grid. Definitely, it's something that we're looking into. It's something that we haven't made any decisions. And right now, at the moment, we are concentrating on the 3 lines of business that I just mentioned, and we are going to push ahead on that, and making sure that with those lines business, we bring the company to profitability.

I like that. So my second question is positive EBITDAS in the fourth quarter. That's obviously something when you achieve it that Wall Street is going to cheer the results. Can you frame out what 2027 and 2028 could look like if maybe continue along this positive trajectory, mid- to upper teens revenue growth continued structural improvements in gross margin. How would you expect budgeting to work on your frictional costs and your prioritization of EBITDAS over the next couple of years?

So we haven't given any guidance beyond 2026, except for, we said that 2027 was going to be operating income positive, in the fourth quarter, and we were going to be in 2028 profitable overall profitability -- EPS in fourth quarter. So I just wanted to share that we restate those, which is what we have given right now as guidance. And at this moment, we're not giving any additional guidance for 2027 and 2028. I don't know if you add anything?

The only thing I would add at this point, Craig, is one thing we have said and we believe true and our baseline is we believe we have the infrastructure, the manufacturing facility, the things we need to do to deliver our plans. So we think there's a lot of leverage opportunity. And we don't really plan on a lot of incremental investment to achieve those -- that growth trajectory. So achieving it in Q4 is going to be a big milestone, but it also postures us as we continue -- and we expect to grow. So maybe it's double digits like you said, but all growth will be variable contribution in that regard and tremendous leverage opportunities. So we're -- I'm pretty excited about the prospects -- and I'm sure as we move forward through this year, we'll be in a position to talk more and more about '27 onward. But we're postured really well.

Your next question is from Sherif Elmaghrabi from BTIG.

I managed to disconnect myself, so I apologize if any of these have been asked before. But Jose Luis, you talked about this 30-megawatt project that FID-ed and the 50-megawatt project that FID-ed. Can you shed a little bit of light on the time line for these bigger products after FID how long before they start up the commissioning process, the handover process. How long does that take? Any variation in time based on the size would be interesting?

So just these [indiscernible] on the project in the U.K. We have already studied delivering some of the balance of plant to Europe, to set it up for the installation. It usually takes about -- depending on the project, obviously, I'm just going to give you high-level time lines 12 months to 15 months to start installation in is a little bit longer depending on the status of the project. And then once the installation happens, which could take a couple of months or maybe a quarter then you start with the commissioning. So it is a process in terms of getting the product out there to be installed and to be commissioned, that is in the 12 to 18 months process.

Now these type of projects because they are larger projects and they require a lot of advanced manufacturing are projects that we structure with milestone payments, and we also structure with percentage of completion accounting in the majority of the cases. So we start seeing revenues and we start seeing money, cash coming in from projects in the earlier stages.

Got it. And then maybe something a little different. Last week, the Governor of Texas announced a moratorium on new data center construction. And I'm wondering if that affects the sale of your Texas assets given the counterparty for that transaction?

That last week, our understanding is -- it was a letter from the governor asking to review the data center projects that were on the list of project that want to be implemented in Texas. We believe there's going to be a review with very specific very specific items that were outlined in the letter just to make sure that the projects are the right projects and that their real projects are not -- no projects that are more speculative. And we do believe that, that process is going to play out, and we continue working with the Stream through that process, and we continue with the effort that we have discussed about the monetization of the assets in Texas and New York. So we'll go through the process. We'll go through the questions and will help the Stream to get through everything that they need to get through and obviously, going through whatever the government in Texas requires that we need to do.

The next question is coming from Skye Landon from Rothschild.

Just a couple on the Electrolyzer business from me. Firstly, just think back to your symposium last year. I think your partner, Allied Green said that they were hoping to gross that project through 2026 and potentially even be at a point where they could submit firm orders to Plug before the end of the year. So just wondering if you could provide an update on those mega projects?

And then second one on the Electrolyzer business. You mentioned the ACCIONA JV in Iberia earlier. Just wondering if you could remind us all how that JV is set up, how big the initial projects are? And then importantly, kind of what funding plans would be for those projects once they took FID. That would be great.

Great. So on Allied Green, we continue working with Allied Green on the progression of [indiscernible] in Australia and in Uzbekistan. We announced both projects. And as I was saying before, these type of projects are complex and they take time. We're still expecting and hoping that we will get the go ahead as as possible from Allied Green in either project. It seems like Uzbekistan is moving a little bit faster. But we keep on working on helping to try to get those projects to FID.

In the Spain JV is a 50-50 JV with ACCIONA Energia. ACCIONA is I think the largest -- and I say, I think I don't want to quote, but I think it's the largest renewable company in Spain, in Iberia for those that know what company is ACCIONA. And this is why we partner with them because they have access to renewables. We have several projects that we are developing with them, but the most advanced projects are a project in the region of Navarre in a city called Sanguesa. That project got [ EUR 2.5 ] from the European Hydrogen Bank, and we have basically all the ingredients to get to FID. We're hoping that it probably will happen at the end of since beginning of 2027. And we will work with ACCIONA to find the funding for the projects.

The same thing goes with the project in Zaragoza, which is the one that just got [ EUR 2.85 ]. I believe those two projects have the highest per kilo subsidies from the European Hydrogen Bank. In the case of Zaragoza, project is a little bit less developed than the project in Navarre. That project right now, we're still working through funding and getting offtake. While in the case of Sanguesa, we already have lined up a potential high probability of taker. So that's the situation with those two projects. Behind that, we have another three or four projects that are in very, very early stages. But those two are the ones that are the main projects that we have on the table. And we'll work with ACCIONA for the funding once we reach FID.

Our next question is coming from Jason Tilchen from Canaccord Genuity.

Apologies if this was already asked, I've been hopping between a few calls. But I believe Paul said that progress towards Q4 EBITDA profitability is going to primarily be driven by gross -- continued gross margin improvement. I noticed there was such a notable step down G&A expense in the quarter. Just hoping to unpack that decline a bit. And then looking forward, is that the right level of sort of fixed corporate costs to think about going forward?

Yes. There's always ebbs and flows and things that have been happening. And what we've been saying and projecting is that our normal run rate, if you will, we expect to be about $75 million a quarter. There was a large recovery via a contract dispute where we got -- we had obviously taken a reserve against that position. Because we got a large amount of money back on that program that resulted in a gain that showed up as an offset to OpEx. There's also some nominal restructuring and other charges in that bucket.

But if you back that out, $75 million is kind of our expected run rate. So we continue to be very thoughtful and disciplined on cost for overhead and discretionary spend, and we're particularly focused in the back half of the year given our goals there. But if you look at it just mathematically to get to the EBITDAS target, it's mainly through gross margin in the back half of the year. So -- and in Q4.

So given the forecast that we've been sharing in what we anticipate for sales, that's about 40% growth off the first half. And most of that is through equipment sales. So it becomes very accretive when you sell incremental equipment -- when you've already covered your fixed cost at base. So that's where that comment came from and let's give you some color on what was going in Q2.

We have reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Okay. So thank you all for the questions and for your continued [ engagement ] and support. Our priorities for the balance of 2026 are still the same as earlier. We're going to execute with discipline, keep converting our commercial pipeline, keep strengthening our liquidities through non-dilutive means and deliver positive EBITDAS in the fourth quarter. Q2 this quarter gives us a strong foundation for the second half. Margins are improving. Cost discipline is holding, our backlog is growing, our cash usage is the way it has been all year, with our near-term liquidity outlook strengthened by the asset monetization process now coming and under regulatory and commercial tailwinds behind our Electrolyzer business are only getting stronger. We have said that before. Now it's about consistent delivery, but with the momentum we are building we are genuinely never more confident in where this business is headed for the rest of 2026 and well beyond it.

Thank you again for your support. We look forward to updating you on the process in the next quarter. Thank you, everyone.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Greetings, and welcome to the Plug Power First Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] It's now my pleasure to turn the call over to Vice President, Marketing Communications, Teal Hoyos. Please go ahead, Teal.

Thank you. Welcome to the 2026 First Quarter Earnings Call. This call will include forward-looking statements. These forward-looking statements contain projections of our future results of operations or of our financial position or other forward-looking information. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act 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 such statements should not be reflect -- should not be rather understood as a guarantee of future performance or results. Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors. including, but not limited to, risks and uncertainties discussed under Item 1A Risk Factors in our annual report on Form 10-K for the fiscal year ending December 31, 2025, or a quarterly report on Form 10-Q for the quarter ending March 31, 2026, as well as other reports we file 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 do not undertake or intend to update any forward-looking statements after this call as a result of new information. At this point, I would like to turn the call over to Plug's CEO, Jose Crespo.

Thank you, Teal. Good afternoon, everyone, and thank you for joining us on our first earnings call of 2026. The first quarter results we announced today represent another important step forward in achieving the objectives we laid out for the year. delivering positive EBITDA in the fourth quarter and sustaining revenue growth directionally consistent with 2025. In the first quarter, revenue increased 22% year-over-year to $163.5 million, with growth across each of our 3 strategic focus areas; material handling, electrolyzers and hydrogen fuel. Gross margin also improved substantially year-over-year, increasing from negative 55% to negative 13%. This represents a 42 percentage point improvement in gross margin. The cost actions initiated under Project Count LEAP are now substantially flowing through our P&L and we expect gross margin to improve sequentially through 2026. This is supported by a combination of volume leverage, mix and continued cost discipline.

In Material Handling, we continue to see a strong customer engagement driven by the combination of proven productivity gains, improved product reliability and reduce dependence on electrical grid. In addition, the reinstatement of the investment tax credit earlier this year has improved the economic attractiveness of hydrogen power solutions for many customers. As a result, we continue to project increasing demand from both Amazon and Walmart through new deployments and fleet refresh programs with activity levels increasing across both existing, including our automotive customers and new customer accounts. Our electrolyzer business continues to demonstrate a strong commercial and operational momentum. Electrolyzer revenue increased significantly growing from $9.2 million in the first quarter of 2025 to $40.8 million in the first quarter of 2026. This reflects the timing of a specific project milestones across our portfolio with multiple large-scale projects now advancing through commissioning and delivery phases.

We're currently in the commissioning phase of the 25-megawatt project with Iberdrola and BP in Spain, and we are finalizing installation activities for the 100-megawatt project with out in Portugal. Two of the largest PEM electrolyzer projects currently under deployment in Europe. In addition, we recently announced the award of the front-end engineering design work for the 275-megawatt project with hydrogen in Canada, further strengthening our global project pipeline. We're also seeing continued advancement from Allied green ammonia on the 2 gigawatt project in Uzbekistan. where several important milestones were achieved during the quarter. In April, Allied Green secured a binding project implementation agreement with the Uzbekistan government establishing the tax and customs incentive framework supporting the project. Just this past Friday, Allied Green signed a memorandum of understanding with Uzbekistan airports to collaborate on SaaS and ESS deployment initiatives. We are seeing increased activity across our approximately $8 billion electrolyzer opportunity funnel. especially within the aviation sector where fuel availability due to the ongoing energy supply constraints and geopolitical instability affecting global fuel markets is renewing the interest in energy security and synthetic fuel production.

Our fuel business delivered approximately 20% top line growth year-over-year, driven primarily by new material handling site deployments. and with margin improving by 54 percentage points year-over-year. We continue to improve plant performance, logistics efficiency across the network and plant utilization. We still have a lot of work to do, but we are advancing in the right direction. From a liquidity standpoint, we ended the quarter with $223 million in unrestricted cash and $579 million in restricted cash for a total cash of $802 million. We continue to advance multiple asset monetization initiatives, including extreme data centers that are expected to generate more than $275 million in additional proceeds with the first transaction for approximately $142 million expected to close in June.

Our first quarter results represent another important step towards achieving our stated objectives of positive EBITDA in the fourth quarter of 2026 and advancing our broader path towards long-term profitability. The foundation is in place. Our focus is now execution, margin expansion and converting scale into sustained profitability. With that, I'll now turn the call over to Paul, our CFO, for a more detailed review of the quarter financials. Paul?

Thanks, Jose Luis. Let me start by emphasizing a few key of the takeaways for this call. First, demand across our core platforms remained strong, driving 22% year-over-year revenue growth. We continue to drive margin improvement and the year-over-year progress reinforces our belief that we've hit an inflection point. And lastly, we believe we have more than adequate capital to fund 2026 based on our existing cash position through ongoing operational improvements, the varied asset monetization efforts, significant reductions in CapEx and the quarterly restricted cash releases.

Now let me dig a bit deeper into the sales growth. Year-over-year sales growth stemmed from traction across all core platforms reflects strong customer interest, which positions for continued growth throughout '26. Q1 results also stem in part from the timing of program deliveries and our conscious efforts to pull programs forward where possible. We will continue to focus on accelerating programs, but as of today, we think the first half will be in the 40% range for the full year in context of our overall guidance of the full year sales growth of 13% to 15%. More specifically, excluding charges for customer warrants, year-over-year material handling platform grew by 15%. Our electrolyzer platform grew by 343%. And our hydrogen fuel sales grew by 10%. There will be ebbs and flows as we progress through '26. but these results are indicative that we continue to expand our core markets, and we expect all the core platforms to continue growing.

Regarding margins, the improvement we delivered in Q1 stems from a culmination of ongoing efforts to optimize and scale the investments we've made. We've made a conscious effort to focus on margin and cash flow improvement. and that includes the actions undertaken based on our product cost down road maps and conscious efforts to increase leverage on our OpEx cost. And what you're seeing in Q1 is how those efforts are clearly showing up in the underlying economics of the business. On a year-over-year basis, gross margin improved by 71%. The drivers are the same ones we've been talking about. First, sales growth drives operating leverage across the platform. Second, service continues to improve with quarterly per unit GenDrive service costs down more than 30% year-over-year. driven by improved stack reliability and the pricing actions we continue to undertake. Third, our fuel margin rate improved by approximately 54 percentage points. We're getting better leverage out of our hydrogen platform driving enhanced network efficiency and the third-party gas sourcing agreement we signed last year continues to deliver cost downs.

Still a lot of work to do, but these structural improvements are driving the right direction. Equally important to these overall results is the fact that we see continued progression as we drive towards our '26 financial targets. We expect a full year of benefits and the actions undertaken last year and we anticipate continued improvement, incremental leverage from growth in sales given our installed capacity, continued improvements in service cost profile, additional improvements in fuel efficiency and network leverage. and continued scrutiny over OpEx. Given these continued efforts, we expect the margin breakeven threshold to continue to lower given traction in cost downs and our increasing ability to get more out of the platforms we have.

Turning to cash. As a reminder, Q1 has historically been our heaviest cash usage quarter given the seasonality of sales and timing of working capital flows. Q1 of this year is consistent with that pattern. There are 2 things I flagged specifically. First, we made strategic buyouts of certain operating lease liabilities associated with our legacy PPA business during the quarter, which added to outflows, but is a net positive for us going forward. This is based on a conscious effort to accelerate the wind down of the PPA business model and these efforts will be accretive to margins and cash flow going forward and serves as a means to accelerate the release of restricted cash reserves. We expect more of these transactions as we progress through the year. And second, the underlying burn in Q1 tracked moderately better than our internal plan. We ended with over 10% more cash than we initially anticipated. This stem from many factors, including ongoing focus on margin enhancement and working capital leverage. We expect sequential improvement in cash usage across the balance of the year as we move towards our target of positive EBITDAS run rates in the Q4 of '26. CapEx was very nominal in the quarter, only about $7 million, which is consistent with what we said on the last call. our hydrogen production network is built.

We're now in a leverage the asset-based phase, and the CapEx run rate reflects that. It postures us really well because as we talk about getting to an EBITDA positive run rate in Q4 '26, the combination of margin progression and a very low CapEx run rate mathematically puts us in a position where the cash burn for the year is very manageable given our capital resources and liquidity management plans. On liquidity, we ended the quarter with over $802 million in total cash, that's a $223 million in unrestricted cash and cash equivalents and approximately $579 million in restricted cash that is expected to release at a rate of approximately $50 million per quarter over the next several years.

On top of that, we have several specific levers tracking to '26. The first is the asset monetization program we announced in the fourth quarter of last year, which includes the expected stream data centers transactions. We expect approximately $275 million in aggregate proceeds from these hydrogen project monetization efforts. In addition, we are underway with the sale of the Section 48 investment tax credit associated with the St. Gabriel joint venture, the platform we have there in Louisiana. That's $39.2 million in total, currently targeted to close by the end of May. We have an effectively unleveraged balance sheet given the debt restructuring we did in Q4 of last year, which also lowered our cost of capital and extended our maturity profile. So we have optionality.

Our working plan is that the existing capital plus the expected asset monetization proceeds, coupled with the restricted cash release schedule, we believe collectively will provide adequate capital to fund the operating plan for '26. Our adjusted EPS for Q1 '26 was negative $0.08 compared to adjusted EPS in Q1 of '25 of negative $0.17. Excluded from our adjusted EPS in Q1 '26 is approximately $140 million and primarily noncash charges related to adjustments for convertible debt and warrant valuations associated with changes in the stock market and the company's stock price escalation. I think the progression in the adjusted EPS is illustrative of how operationally the company is making real progress.

To wrap up, Q1 was another step on the same trajectory we've been on. We're growing the top line. We're delivering structural margin improvement. We're being disciplined on operational expenses and CapEx, and we have multiple identified levers to fund the operating plan for the year. We continue to be laser-focused on driving margin and cash flow improvement and achieving our fourth quarter goal of positive EBITDAS run rate, which sits within the road map of as Luis described, including positive operating income in '27 and full profitability in '28. With that, I'll turn the call back over to Jose Luis.

Thank you, Paul. So now we can go on the question section of the call.

[Operator Instructions] Our first question today is coming from Colin Rusch from Oppenheimer.

Jose Luis, you cross all these European customers, it's good to see some of the progress that you're seeing on the electrolyzer side. I'm just curious about urgency and what you can comment on that pipeline starting to move towards following investment decisions besides the products that you've talked about and how we could think about that starting to materialize here later this year and next.

We continue working on, as I mentioned, on all the projects that we have in the funnel. These projects are quite complex, as you know, Colin, and they require a lot of different parts of the projects to align to get to FID. I'm just going to give you an example. I have a project in Australia is a 50-megawatt project, and the project is completely approved by the financial committee of the company that I'm working with. And there is 1 permits that they need from a Board. It's an Eastman Permian that is actually holding the FID of the project for a month or so. The product is going to happen, but there is some bureaucracy around it.

So my point is that there is a certain level of complexity, getting all the things aligned on the FID of the projects. And it takes time to get them to the point of final investment decision. We have a lot of projects now in the last quarter in the ESAB industry that have started accelerating. As you can imagine, the situation in Iran has created an issue with the availability of jet fuel in many areas of the world.

But in Europe, companies like Ryanair announced a couple of weeks ago that they will have limited amount of jet fuel available to run their operations, and they could run out of some of that fuel by the end of May, beginning of June. So this is leading to many companies actually pushing towards trying to accelerate these type of projects. energy independence is becoming also -- and security is becoming also, again, an important item in Europe. And we see that these projects are beginning to accelerate a little bit more than what we were seeing a couple of quarters ago.

That's super helpful. Paul, just on the cash, 2 questions just in terms of OpEx run rate on a cash basis. Should we think about this first quarter run rate being stable here going forward? And then secondly, the inventory levels continue to remain relatively high. I'm just curious about how quickly you might be able to start drawing those down in a real meaningful way.

Thanks, Colin. Yes. On the OpEx, there was a few charges in there that won't repeat. So we're targeting roughly $75 million per quarter is where we expect that to land in. And we're working hard to provide a lot of scrutiny over that, so we can keep it contained and not grow that investment base. On the inventory, there was a slight reduction over the quarter, but the reality is where you going to see the big movement this year is over the balance. Each quarter, we expect to grow sequentially and even more so in the second half. And so we're targeting about $100 million reduction minimum this year in overall inventory levels, and we're working hard to beat that target. So -- but I think you'll see the majority of that play out in the second half.

Your next question is coming from Jason Tilchen from Canaccord Genuity.

I think last quarter and even in the prepared remarks, you've talked about the value proposition for the materials handling solutions only getting stronger. -- with rising electricity prices. Just curious, can you talk a little bit more specifically to some of the conversations you've had with the prospective customers, not necessarily some of the core pedicles, but some of the ones that are either smaller current customers or prospective customers and how those conversations have evolved over the past few months?

Jason, thank you for the question. So mainly is the conversations are always around productivity or that's our traditional value that we bring to the table. The addition of ITC or the renewal of ITC, it definitely helps in the business case. But in the latest type of conversations that we're having with customers, there's an addition, which is the reduction of electricity demand on the site, usually in a site with 200 forklifts. you can reduce the demand on the side by 2 megawatts or so. And that is really helpful given the constraints of utility power that we're seeing in the country due to the demand from other industries like data centers.

So that is a huge value for customers, added to our traditional value on productivity gains. it creates an additional tailwind for the business case. That is the main topic that we usually discuss with new customers and even with existing customers.

Right. That's really helpful. And then just 1 follow-up. In terms of the gross margin improvement, I believe you called out specifically the GenDrive service cost reduction. Can you maybe talk to some of the specific operational improvements and blocking of taxing that you've done that are really driving those savings there?

Yes. So it's multifacet because there's lots of elements to it. But if you just think about it Fundamentally, we have equipment. We've got service, we got fuel and equipment. As we continue to grow sales, you're going to get volume leverage. There's a lot of things we're doing in our production processes, especially when you ramp electrolyzers as we have, as an example, we talked last year about a program we rolled out into the year which we call a new diffusion bonding process, that's just a microcosm example of cost reduction opportunities. And that by using a new process, we were able to cut the cost of that component almost in half. and as you scale and you get more of those opportunities with volume, you can do more of those kind of things.

On the service front, we've rolled out a lot of programs, which is driving that per unit cost reduction. with less touches, -- we've actually been able to reduce the labor tax this quarter for -- and increase the unit per labor tech rate. And we've rolled out more programs and continue to expect more that we'll continue to drive increased reliability on that. On the fuel, you've seen over the last 1.5 years, a continued progression in the margin every quarter continues to get better. And that's a combination of leveraging on our plants. taking advantage of the new supply agreement with a third-party provider, driving enhanced delivery -- reducing delivery costs and optimizing that network and driving network efficiency. So we still got a long way to go there, but it's going in the right direction, and we expect those trends to continue. So those are some of the themes that we've been able to take advantage of and certainly consistent with what we're focused on to keep driving in the course of this year.

And on services for GenDrive for material handling, I'm just going to add that the stock life of the product. We've been able to double it and in some type of models even triple. That helps with the cost of parts for services, which is really important, but also because we're doing less changes in the field and less touches, as Paul was saying, we have also been able to reduce the labor in each 1 of the sites. by 1 tech in some cases or even 2 in some cases, which has had an incredible impact on the cost of labor for services.

The next question is coming from Eric Stine from Craig-Hallum Capital Group.

So maybe just on material handling, as we think about 2026 and 2027, just curious thoughts on how we should view the makeup new versus existing customers? And then also, in your prepared remarks, you talked about with Walmart and Amazon that you've got some new sites, but also some refreshes. And so just curious kind of where you see things in terms of that refresh of sites that maybe you did 5 10 years ago.

So thank you for the question, Eric. On material handling for refreshes, we're going to see in the next few years specifically for Amazon, a refresh of the complete fleet. Our first site with Amazon was in 2016, and we are in 2026. And they basically are using the GenDrives for about 10 years. So our first site, as I said, was in October of 2016, we're going to begin to see big refreshes at the end of this year because the following year, we did about 12 sites. So we're going to see a refresh of 12 sites between the end of 2026 and 2027. And then you will see a cadence of around 10 to 12 sites for the next 5 or 6 years or so.

So we're going to get refreshes of around 20,000 units during that time frame. Walmart is similar with Walmart, we have done refreshes in years 5 and 6, and we are right now discussing a substantial refresh of the installed base in 2026 and 2027. So that is going to create an increase on demand for GenDrives and as Paul was saying before, equipment margins are usually healthy. So we will see the impact of that in the next few years.

In terms of new and even growth with other existing customers, what we're seeing is, for example, on the automotive side, we are doing refreshes and new sites with BMW, a couple of new sites in Europe with BMW. We are also seeing some growth with Estelantis and other European automakers. And we are signing either second sites or new sites with other customers. like, for example, this quarter, we signed a brand-new privilege site with South wire with a value of $11 million. So we've seen activity everywhere. We still see, obviously, our 2 main customers, Walmart, Amazon and 2 of the largest companies in the world. So we're going to see a lot of impact on the demand in the next couple of years, but that's just healthy and then we have the diversification in all of our other products. So we see the material handling market moving forward and growing in the next -- in this year, next year and the following years.

[Operator Instructions] Our next question is coming from Sherif Elmaghrabi from BTIG.

Paul, you touched on this, but Q1 saw another big improvement in fuel margins and the new gas supply contract is obviously helping with that. But have all of your legacy contracts with the IGCs rolled off at this point? And I guess, really, I'm trying to understand if there is room to increase utilization at your captive plant will be [indiscernible]

Yes. So the short answer to your question is on the sourcing -- they all -- the portfolio runs at different cycles in some of those contracts, and so they all terminate at different time periods. Today, consciously, it's roughly 50-50 sourcing third-party versus internally leveraging on our plants. And there's a strategic reason why to keep that relationship and good standing and leverage those because our plants are as an example, in the Southeast. And so it can be expensive to truck hydrogen all the way over to California or up to the Northeast. Fortunately, with the agreement that we signed, it put us in a good footing with a substantial reduction in the cost per molecule as well as a means by which to work with them to continue driving, improved efficiencies and network optimization. But the drivers for us as we go forward are leveraging our plants and as we continue to grow sales and more sites, we certainly will do -- and third-party sales. You've seen some smaller announcements recently where we're starting to sell into the merchant market as an example and take an opportunistic -- opportunities there where we can to do that.

So leveraging those plants will continue to grow and scale and leverage that overhead. The second is really optimizing the delivery network, really getting into how you deliver and when you deliver and how you manage that. There's tons of opportunities there and then other efficiencies in the network. We made huge strides on improving efficiencies of our storage systems and our dispensing capabilities, but there's still opportunities there as well. So those are some of the drivers as to what you've seen as to why the margin continues to get better quarter after quarter. And it's certainly the same themes that we've got a daily focus on across all those opportunities that will continue to drive that over the course of this year.

Got it. That's helpful. Paul, I have 1 more for you. I missed how much you're expecting from the monetization of the Louisiana tax credit? And if you could share how that compares with Georgia, that would be helpful.

Yes. So absolute value, it's actually a little bit more on a gross basis. It's like $39.4 million, I think what the number was. And it's -- just to clarify, it's for our joint venture that we have in Louisiana. So that's proceeds that, that joint venture will get for selling that. And we obviously, as you -- I think you probably know, we consolidate that entity. So those results will show up in our consolidated results. And we'll work with the JV partner, whether we use -- believe that $39 million in the JV to fund operations or whether they take their portion and we take our portion. Obviously, if we do take -- if it goes that route, we've got that it's incremental $20 for Plug to fund operations, which is obviously very helpful. But it is -- we actually got better terms on that than we did in Georgia, just because of the passage of time and the learnings that we got out of the Georgia sales. So on a net basis in terms of the gross tax credit, we got a better rate.

Our next question today is coming from Dushyant Ailani from Jeffrey.

Just 1 quick one. I guess, if you're talking about the revenue progression for the year, I think it implies that maybe 2Q might be slightly down quarter-over-quarter. Is that correct. And then maybe what's kind of driving that? Is there -- was there any demand kind of pulling into 1Q? And then also, if 2Q is going to be down quarter-over-quarter. Then how do we think about just the margin progression there in terms of the volumetric leverage that you have shared previously?

Yes. So let me try -- there's many parts to your question, but -- so if you look historically, we're somewhere between 1/3 to 40%. It is slightly on the first half of any year. It varies a lot based on timing of customer programs and sometimes most times, Q1 is lower than Q2. But let me be clear, we expect Q2 to grow sequentially. I think we're giving you guys a directional guidance and using that 40% in relation to our 13% to 15% growth rate for this year. It may only be slight growth off of Q1 but it's definitely going to be slightly better. And then you have the second half and the timing of that, we'll see as we continue to progress through the year, how that's going to play.

On the margin progression, again, just to be direct, we absolutely expect the margin rate to continue to improve sequentially quarter-over-quarter. We're doing -- all the cost down and things that we're doing, we're going to continue to -- should continue to drive incremental benefit. So we expect that margin rate to improve in Q2 and then continue to ramp from there. Volume makes a big difference. And so the fact that the second half is using my math of roughly 60% of the sales, means there's even more equipment sales in that second half. So that means it's even more accretive. But I think what you're going to see is quarter-over-quarter, you're going to see growth in the sales number and you're definitely going to see growth in well, I should say we expected to see growth in the margin rate.

And I just want a state what you just said, Paul, will be progression in terms of top line compared to Q1.

Next question is coming from Chris Dendrinos from RBC Capital Markets.

I just wanted to circle back to Europe a little bit here. And I'm curious, looking at some of these refineries and the customer base there. Are they kind of ultimately settling out on a long-term partner here and picking tech, I guess, just looking back over some of these competitors out there, it looks like there have been testing of different technologies, et cetera. And so I'm just kind of curious what you're seeing on that front?

We're seeing, specifically with the companies that we're doing business in the refinery side, the largest ones that I mentioned during the call, we're seeing that they are -- looking at expansions in the sites that we have done and in other sites, we are seeing that the progression that we're making on the commissioning of the product is very satisfactory. and we are looking with them about working together for some of those expansion projects. So given the directives that the EU is pushing through every country, through a process that they call transposition, which is as simple as a European law converted into allow in each 1 of the countries that are members of the EU. They have a mandate to convert a percentage -- a certain percentage of the hydrogen they use into green hydrogen. And this is what's driving these projects. And they are committing to do it, and we are working with them to satisfy those needs.

Got it. And then I guess maybe as a follow-up here, just on the opportunity with Allied Green in Uzbekistan and maybe in Australia as well. Can you speak to the potential timing of this and how you see that kind of trend, I guess, playing out over the course of the year?

Yes. I mean, I can speak to the timing that I've discussed with Alfred Vernal green in the last discussions I had with him as last week, right? Now these timings, as I said before, because of the complexity of these type of projects, usually change. But right now, the idea is to -- the objectives will be to do a BDP on the Usbekistan project in the BDP is the basic engineering and design package. -- in the second half of 2026. And then his target is to get to FID in the following months. with a potential notice to proceed to Plug earlier than that. So it is a project that could and I insist, I don't want to create an expectation that I cannot leave up to because there are so many things that are outside of my control in these projects, right? But in the last conversation, it's a project that should be moving forward in the next 12 months with BDP happening before with a long notice to proceed also in that time frame.

Next question is coming from Craig Irwin from Roth Capital Partners.

It's Andrew on for Craig. I've been hopping across a couple of calls, so I apologize. This has been asked early, let me now I can ask something else, but has called out expansion with Amazon and Walmart with material handling. But can you guys kind of talk to any new logo pipeline expansion? And then just overall, kind of the mix between site expansion with the existing customers versus new customer wins that would be great.

We are -- our team was in Molex. Molex is the largest event for manufacturing and supply chain in April. And our team met with a large amount of companies, new companies, new logos that were interested in the material handling business case given the points that I made before, mainly associated with productivity with ITC and also the advantages associated with reducing the grid demand. At this moment, the majority of the growth that I see in 2026, are related to existing customers. As I said before, mainly in Amazon, mainly Walmart and also associated with automotive. We have new projects with BMW. We have projects with Stellantis and with other European automakers.

We closed another second site with software as I mentioned before, that's not a new name, but it's a second site that we close with them. And we have a fairly healthy pipeline of new names and new customers. At this moment, I'm not in position to tell you right now that we're going to get orders for certain specific names. But I can tell you that the team is working in a few new potential accounts that could be added between now and the end of the year for projects in 2027.

Great. Well, I really appreciate the color there. And then second for me kind of in the same vein. I noticed the GenDrive cost per unit was down 30% year-over-year. Can you just kind of talk about the potential to leverage -- leveraged cost reduction throughout your installed base?

Yes. I think our anticipation is that, that unit cost will continue to come down. And it's really -- it comes from 2 key drivers. One is, well, I'd say 3. First is the parts cost continues to go down as we get the units to continue to run longer. So you just need less parts to keep them up and running. Second is, as that happens, you need less touches of the units throughout the year. So when you need less touches and you can manage the fleet with less labor tax. And so we're able -- as Jose said earlier in the call, we were able to reduce in some cases, 1 tech per site, in some cases, even 2 techs per site. And so we expect that leverage continues as we and continue to grow in scale.

And then the third is you sell more units and you grow your sales base, you can leverage the overhead for that service business. So that continues to scale and grow and ramp as well. So we expect that rate per unit will continue to go down in the course of the year. And we expect that to continue to drive in the right direction.

We reached the end of our question-and-answer session. I'd like to turn the floor back over to Jose Luis for any further closing comments.

Well, thank you, everyone, for the questions and for your engagement and your support. The first quarter results that we just announced provide a solid foundation for the balance of the year. Our priorities for 2026 are the same. They remain unchanged, drive continued sales growth, execute with discipline, continue improving our cost structure, reduce cash usage and delivered positive EBITDA in the fourth quarter. The underlying business fundamentals continue to improve, demand drivers across our core markets are strengthening and now it's just about consistent delivery. We, again, we appreciate your continued support and look forward to updating you on our progress in the next quarter. Thank you, everyone. Have a nice evening.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

Greetings, and welcome to the Plug Power Q4 and Year-End 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to Teal Hoyos, Vice President, Marketing and Communications. Please go ahead, Teal.

Thank you. Welcome to the 2025 Fourth Quarter Earnings Call. This call will include forward-looking statements. These forward-looking statements contain projections of our future results of operations, of our financial position or other forward-looking information. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934.

We believe that it is important to communicate our future expectations to investors. However, investors are cautioned not to unduly rely on forward-looking statements, and such statements should not be read or understood as a guarantee of future performance or results. Such statements are subject to risks and uncertainties that could cause actual results, or performance, to differ materially from those discussed as a result of various factors, including, but not limited to, risks and uncertainties discussed under Item 1A Risk Factors in our annual report, on Form 10-K for the fiscal year ending December 31, 2024. For quarterly reports on Form 10-Q for the quarters ended March 31, 2025, June 30, 2025, and September 31, 2025, as well as other reports we file from time to time with the SEC. These forward-looking statements speak only as of the day in which the statements are made, and we do not undertake or intend to update any forward-looking statements after this call, or as a result of new information.

At this point, I would like to turn the call over to Plug Power's new CEO, Jose Luis Crespo.

Good afternoon, everyone, and thank you for joining us. As many of you know, today is my first earnings call as CEO. I would like to begin by acknowledging the foundation I am inheriting. Andy led this company for almost 20 years with vision and determination, building Plug into a global leader in the green hydrogen ecosystem. That is a platform a few CEOs are fortunate to inherit and I am grateful for it.

My mandate is clear. I will work to convert this leadership position into sustained profitable growth. I have been part of building this company, setting and executing on its strategy. I deeply understand both the opportunity in front of us and the discipline required to realize it.

We entered 2025 focus on these objectives. Grow the top line, improved margins, targeting margin neutral in Q4, reduced cash usage, expand hydrogen production, including commissioning the Louisiana plant all while strengthening liquidity. We deliver against those objectives. In 2025, we achieved approximately 30% revenue growth while turning gross positive margin in the fourth quarter. Gross margin improved by 125 points, from negative [ 1.25% ] in Q4, 2024 to positive 2.4% in Q4, 2025. A 125 percentage point improvement in gross margin is a meaningful milestone in strengthening our operating performance.

The results we delivered were not accidental. They reflect ambition there with discipline, focused execution and the hard work of the entire Plug team. 2025 was a defining year for Plug. In a highly uncertain macroeconomic environment, we grew revenue at double-digit rates and achieved positive margin. A combination has been challenging for many companies in our sector. We believe this represents an inflection point.

Now that said, we are not done. We still have work to do to achieve sustained profitability while maintaining growth. My responsibility now is to build on this momentum and continue progressing toward profitability. In 2026, our focus remains on advancing toward profitable growth. We currently expect revenue growth in 2026 to be directionally comparable to 2025, driven primarily by our material handling and electrolyzer business.

In material handling, favorable conditions have emerged. The reinstatement of the investment tax credit in January, combined with increased demand from [indiscernible] customers such as Amazon and Walmart position us for renewed growth in this segment. We are seeing new developments and [ fleet refresh ] programs at key customer sites, activity increased across both new and repeat customers.

Our electrolyzers business continues to develop and expand globally. Today, the company has shipped over 300 megawatts of our [ Genco ] electrolysis globally, and are now deployed on 6 continents, demonstrating significant operating experience across multiple markets. In 2025, we delivered equipment for major projects, including a 25-megawatt project with Ibedrola [indiscernible] in Spain, and a 100-megawatt project with [indiscernible] in Portugal, resulting in a record $ 188 million in electrolyzers revenue.

Europe's regulatory mandates and funded incentive programs provide structural support for hydrogen adoption. We see significant opportunity in refinery decarbonization and in the production of [indiscernible] [ e-methanol ], synthetic jet fuel and ammonia. We estimate that meeting European mandates just for transportation could require 4 to 6 gigawatts of electrolyzer capacity by 2030, and we intend to compete for a meaningful portion of that opportunity. We remain focused on converting as much as possible of our approximately $8 billion electrolyzer funnel into revenue-generating projects that will support Plug's long-term growth.

In 2026 we expect to begin executing projects with [indiscernible] in the U.K., and we will continue progressing with [indiscernible] towards FID on the 3 gigawatt project in Australia, and the 2 gigawatt project in Uzbekistan. As an example of the activity in the market, over the last 2 months, we executed 350 megawatts of new basic engineering design packages agreements.

In 2026, we expect to see full year benefit of the [indiscernible] initiatives launched in 2025. These improvements are expected to be further supported by continued cost reductions and optimization efforts across the business. Together with revenue growth, these actions position us to achieve positive EBITDA in the fourth quarter of 2026, consistent with our previously stated targets.

We also intend to continue reducing cash usage in 2026. We ended 2025 with $368.5 million in unrestricted cash. We currently expect continued improvement in cash usage similar to the reduction achieved in 2025. With ongoing cash flow improvements and the planned $275 million proceeds from the monetization of assets, and associated rights announced in Q4, 2025, which we expect to close in the first half of 2026, we believe we are well positioned to support our operation plans through 2026.

In conclusion, we continue our journey towards profitability. 2025 was about margin progression, optimizing the platform we have built, enforcing cost discipline, strengthening infrastructure control, improving liquidity and sharpening our strategic focus. 2026 will be about continued sales growth and advancing the financial milestones outlined in our road map, including our target of achieving positive EBITDA in Q4, 2026, a milestone within our road map towards positive operating income in 2027, and full profitability in 2028.

With that, I will now turn the call over to Paul for a detailed review of the fourth quarter and full year financial results. Paul?

Thanks a lot, Jose Luis. Let me first expand on the margin results. The significant improvement we achieved stems from a culmination of efforts over the last 2 years to optimize and scale the investments we have made. We've made a conscious effort to really focus on margin and cash flow improvement. And this includes multiple actions undertaken within [ Project Quantum Leap ] and our overall product cost down road maps. More specifically, in Q4, the results benefited from significant improvements in the unit service costs, achieving rates almost half of what they were over -- a little over a year ago, ramping our hydrogen platform through our 3 facilities, including Louisiana that was turned on and scaled up this year. Scaling sales volumes increased sales provides tremendous incremental overhead leverage, and continued discipline and scrutiny over discretionary spending.

Equally important to these Q4 results is the fact that we see this progress as a platform to continue driving towards our 2026 financial targets. Regarding cash usage, we saw improvements throughout the year, and these actions were associated with [ Project Quantum Leap ] and included targeted price increases, labor optimization, rooftop consolidations, improvements in production costs and leveraging our hydrogen platform, and clear focus on reducing our OpEx resource investment. We expect 2026 to include a full year of benefits from these activities undertaken last year. In addition, we see significant upside to continue this optimization effort to drive even more leverage as we grow sales.

We anticipate continued improvement, incremental leverage from growth in equipment sales, given our capacity, continued improvements in our service cost profile, additional improvements in fuel efficiency and network leverage, and continued scrutiny over OpEx of resources. We continue to be laser-focused on driving growth in margins and cash flows in near term in achieving our Q4 goal of positive evidence.

Despite the progress we made as conveyed in our filing, we determined it was prudent for Plug to record a net $763 million in various charges associated predominantly with noncash charges asset impairments and the capital transactions we undertook in Q4. The impairment charges stem from multiple factors, including overall market conditions, resulting in slower growth and anticipated for certain products. In terms of impairments, this relates to property, plant and equipment, intangible assets, and assets associated with power purchase agreements and fuel. As a result of these impairments, it will reduce our future amortization depreciation '26 and onward.

In terms of liquidity, as Jose mentioned, we ended with over $368 million in unrestricted cash. We recently executed the first of 3 transactions associated with monetizing the $275 million for the data center project sales. We have an effectively unleveraged balance sheet, given our debt restructuring we undertook, which also lowered our cost of capital and extended the maturity. We have also significantly curtailed our CapEx expenses, and we believe we have the platform we need to deliver our financial goals, so we anticipate even lower CapEx rates in 2026. These factors, coupled with the focus on improvement in margin cash flows put us in a strong position to achieve our near-term and midterm financial goals, and fund our operating plan for '26.

GAAP EPS for Q4 '25 was $0.63 negative, compared to GAAP EPS of negative $1.48 for Q4 '24. But if we exclude the unusual charges in each period, adjusted EPS for Q4 '25 was negative $0.06, versus adjusted EPS for Q4 '24 of negative $0.29. And the progression is just another illustration of how operationally the company is making progress holistically in growing overall sales and margin profiles.

I'll now turn the call back over to Jose Luis.

Thank you, Paul. We will now open the call for questions.

[Operator Instructions] Our first question today is coming from Colin Rusch from Oppenheimer.

Congratulations on the progress here. So as you look at 2026 from a revenue growth perspective, can you just give us a bit more color around which drivers are actually moving the needle from a growth perspective? It looks like you're talking about low double-digit growth overall. I'm just curious if there's one part of the product business that's actually making an outsized impact on that growth?

So for 2026, as I mentioned, we are projecting similar growth as we saw in 2025. And the main drivers for that growth are going to be material handling. What we're seeing in material handling is our pedestal customers are going back to growth. We are also seeing refreshes. Some of the sites that we have with some of the [indiscernible] customers are sites that have been running between 5 and 6, 7 years, time to refresh. So we see an uptick on that.

We also see new customers. As you know, we signed [ Floor & Decor ] last year, but we see other customers coming online in 2026. And also the value proposition is just getting stronger when -- and I think we mentioned this during the symposium. Our customers are beginning to see also that the material handling fuel cell solution allows them to reduce their utility demand on their sites, which is really valuable for customers in days where we all know that utility and electricity availability is becoming more challenging.

But that's not the only area that we're going to see growth. As I mentioned, in the electrolyzer business, we also see growth and opportunities. We just signed, at the end of 2025, we announced that the agreement with [ Carlton Power ] for 55 megawatts. And we are looking at, in the next couple of months or so, signing a similar agreement from another project in Australia. We have -- a lot of the projects that we have in the funnel are beginning to move further into FID. So we are expecting to see also growth in the electrolyzer business. So those are going to be two main drivers for growth in 2026.

Excellent. And [indiscernible], when you look at the fuel margins and the cost of that fuel, I know you're getting better at optimizing some of the production costs, and timing around that. But I'm curious about how quickly you can start driving some of those margins closer to breakeven on the fuel side?

Yes. Thanks, Colin. I think just to clarify, if we kind of look back and we think about some of the things we've done, I mean, obviously, turning on these 3 plants and vertically integrate and puts us in a great position and we've seen that in the benefits in our results. We see that continuing to trend upwards. We've been on this maturity curve of optimizing those facilities. We hit all-time records in the Georgia plant for many of the months in 2025. And we've seen a progression in the utilization and efficiency of the newer plant in Louisiana, as we've turned that on this year and scaled that up. So one thing we expect for 2026 is obviously better leverage on those facilities now that we can take those learnings and run those plants even more efficiently.

Second thing is, obviously, we're adding, as Jose mentioned, more sites, more material handling customers. And a lot of that we're going to feed through those plants and so you get greater volume leverage, which is important. We've shown progression in our logistics network and how we can drive greater efficiency through that.

And then the last one of the other challenges we've been focused on and really made tremendous progress is the efficiencies at the sites in terms of how the systems offer, the recapture the gas, how do you make sure that you minimize any losses of the molecule through the system? So the combination of those things, coupled with the new agreement we signed with the third-party gas company last year that's reduced prices, but also put us on a platform of working with them to optimize the network with which sites were sourced from which plants. All of those factors are what's been driving the improvement and we're going to see additional improvement this year.

So I think we're going to directionally be moving there as we progress through the year. And part of it will be tied to -- the [indiscernible] timing of turning on some of these volumes and additional leverage out of those facilities as the year progresses. But we expect that we're -- we have been, and we expect that we're going to continue to move in the right direction in that regard for the course of the year.

Next question today is coming from Craig Irwin from ROTH Capital Partners.

So first one I wanted to ask about is just an update on the cash needs this year. So you guys did a great job last year, $368 million in restricted -- in unrestricted cash exiting the year. You got your cash burn down dramatically year-over-year. You've put in place the [ $275 million ] in asset sales. You're obviously continuing to execute on the restricted cash for your PPAs, your historical PPAs as those roll off? And I guess as you make new sales, which is good.

But can you maybe help us understand the tempo of cash needs across this year now that we don't have some of these big construction projects, and that you've taken all these other steps to put in place, the actions to get to positive EBITDA?

Thank you for the question, Craig. Paul, do you want to cover that?

Yes. Thanks, Craig. A couple of things. One, if you look at the progression in the last couple of years, just the improvements in margin and just overall profitability, and how that's been playing, as well as our leverage of our working capital, you've seen the reduction in operating cash flows and cash burn in general. You've also seen a big reduction in the CapEx.

I mean -- I think if you look at the Q4 rates, one of the lowest CapEx rates we've had in a long time. So it postures us really well because we expect certainly, as we talk about our financial targets this year and getting to EBITDA breakeven to positive in Q4, we expect a similar reduction in the cash burn that we've experienced the last couple of years. And so if you just look at that mathematically, coupled with a very nominal CapEx rate, it mathematically puts you in a position where the opening cash position we have is almost enough to cover it all, but obviously, the [ $275 million ] puts us in a great position to fund the year. So we sit today and our working plan is that we've got more adequate existing, capital and access to that capital that's coming in through those projects to fund this year without needing incremental capital.

I do have optionality. I have an unleveraged balance sheet. So it's not my preference to go out and get debt. But obviously, and now that we've restructured the debt, I've got an incredibly low cost of capital structure in place right now, that 7% range. And so I'm in a good spot overall, in terms of lots of other factors.

There's other positive things that are happening like we've gotten past through some of the acquisitions and the earnouts, and we've got some of those things behind us. We've really tempered the JV investments. A lot of things have just been very -- put us in a good position where just the overall cash needs have dropped substantially. So I guess in conclusion -- and if you look at seasonality of the sales, with the 1/3, 2/3, you can expect probably a little bit heavier burn in the first half. And as the volume grows in the second half when we convert those into collections, and leverage even more inventory, it will even be better in the second half.

And as we sit today, given the working capital position, for me, [indiscernible] as kind of a proxy of cash flows. So you could almost I think there's a decent chance we might even get to breakeven to positive cash flows in the Q4, not just the [ EBITDA's ] KPI as well. So I think, hopefully, that helps, Craig.

Fantastic. That's very helpful. So along the -- a similar theme, right. Your new project, new sales commitments that you're making today, obviously made with a different discipline than you than you had in the market a few years ago with the pricing changes and the complete focus on profitability now at Plug. Can you maybe just give us a little bit more color on the 750 megawatts new engineering design package agreements you signed in the quarter?

Are customers paying for these engineering packages upfront now? What do we see as a potential time line for some of these fresh new orders to come through and potentially materialize as bookings? And then revenue how do we look at these opportunities? And is this mostly a new set of customers? Or has this got significant overlap with the existing customer base?

Thank you. Just going to clarify is, focused on profitability through growth. So growth is a very important part of our strategy. And yes, the 750 megawatts of BEDPs that we have signed and started working in the last few months are all new projects. Some projects are in North America, a couple of them are in North America. We also have projects in Europe. The time line is a little bit different for each one of them. A couple of them are, at least at the moment, the FID time line is into [ 2017 ], but there is one project that actually we are replacing, an existing -- a prior electrolyzer company that is no longer going to be doing this project, and they have picked us to do this BEDP for them, you can infer probably what the company is. And that project is already pretty advanced. And what we're doing right now is basically doing a very quick BEDP. And that project has probabilities to be FID in 2026.

So a little bit of a different time line for the different projects, but all of them are in the next 12 to 24 months, in the current planning for the FIDs.

[Operator Instructions] Our next question is coming from Eric Stine from Craig Hallum.

This is Luke on for Eric. So first one here, just how do you expect activity on the hydrogen pipeline front in Europe to progress after last month's delivery announcement in the Netherlands? Is that -- should we expect to see further inroads there in 2026?

Luke, you mean like the deployment, or the development of the actual pipeline in the European market?

Yes. And just potential inroads that Plug might be making there in '26 and beyond.

So if I understand correctly the question, the pipeline that you're referring to is in the Netherlands, which was announced a couple of years ago that we're continuing to do the deployment in that pipeline. What Plug, and in general, the industry benefits from is that having a pipeline allows us to basically have a [ uptake ] for generation. And what we see, for example, in the Netherlands, we have several projects that we are discussing of companies that are looking to generating to put into that pipeline in particular. So it's a positive development in the industry, and it will help with projects going FID given that they can they can deliver hydrogen to that pipeline.

I don't know if that answers your question, Luke?

No, I think so. That's helpful. And just as a quick follow-up here. So just quickly on the data center opportunity. I mean you pointed out last quarter as having potential for hydrogen based backup power. Obviously, [indiscernible] is very early stages. Just wondering if you had any updated thoughts on potential use cases in this market?

For the particular case of the data center opportunity, we agreed with [indiscernible] that we were going to be working on potential applications. We have been concentrating with them right now on closing the deal itself, but open discussion on what we could use fuel cells for. So at this moment, we are concentrated in closing the deal. And in terms of applications, we're going to start discussing with them about what stationary applications we could -- we could launch together once the deal is closed.

Your next question today is coming from Jason [indiscernible] from Canaccord Genuity.

With regard to material handling, I think in the last call, you said this is a $14 billion opportunity overall. And you've only really started to scratch the surface with this. Obviously, the price and availability of hydrogen is clearly a major gating factor. I'm curious beyond that, what are some of the other things within your control that the company can do to sort of help capture an incrementally greater share of that opportunity going forward?

Well, we're working with all of our main customers [indiscernible] customers like Amazon and Walmart, making sure that they can extract as much value of the technology as possible. One of the things that we are seeing, I think I mentioned that before, is that many of our companies are seeing the value of the utility advantages of using fuel cells. For many of our customers, they need between 1 and 2 megawatts to power batteries, if they use batteries in their distribution centers. But when you use fuel cells, you open up that capacity for other uses or actually just to be able to reduce consumption and connection to the grid.

Those types of things are the type of things that little by little, we are [ decovering ] and working with customers, to understand better how they can take advantage of the technology and to make sure that the business case can be expanded to as many applications within material handling as possible. And we believe that as time goes by, we will be able to unlock further markets within the material handling business.

Great. That's very helpful. And one follow-up. In the release, you talked about launching multiple follow-on actions to continue reducing costs and improving cash flow in '26? Wondering if you could share little bit more about specifics of some of those initiatives?

Do you want to go over that, Paul?

Yes. I think we are constantly looking at things like our [indiscernible] of materials or designs. We have opportunities to look at our manufacturing processes and think about how to streamline those. We're thinking about how we -- where we deliver from a distribution standpoint, a [indiscernible] standpoint, our network for electrolyzers as an example. There's just -- we -- if you look at the last 10, 12 years, the things that we've done and from looking at -- working with vendors on the supply cost to structures that we have with how we manage the supply chain to our manufacturing processes, to even additional ways to optimize facilities as we continue to reduce inventory. We need less warehouses as an example.

So we look at it holistically. And there's -- we just -- we believe we're still very early in the curve of opportunities over the next couple of years. So those are just some of the examples and ideas of things that we have active efforts around. We've had some very conscious efforts in the last 2 years to deliver these specific targets and improvements. And we think that it's just themes that we can continue to optimize the overall company to continue driving the margin profile.

Next question is coming from Chris Dendrinos from RBC Capital Markets.

Maybe just to echo the congratulations on the positive EBIT -- positive gross margins this quarter. Following up on the last question, the press release, I think, also says that you're potentially looking at other asset monetizations that have been impaired. Can you maybe discuss what those might be potential time lines on those opportunities?

You want to?

Well, let me say it this way. If you think -- if you go back the last couple of years, the themes that we've been talking about in some of these markets, haven't kind of developed as fast as we thought. And so from an accounting standpoint, you do -- you go through your accounting exercises and then kind of you land on the conclusions of what you can include in your forecast and so forth that may or may not create those impairments. But we still -- we have incredible portfolio of assets and opportunities that we can either look for alternative ways to monetize it, like the data center sales, or we still have opportunities in the pipeline in these different markets that can manifest. And -- and as they start to manifest -- and we really believe it's a question of win.

I mean, I don't think anybody doesn't believe markets like mobility and high-power stationery, just to pick a few aren't going to happen. It's just a question of when. And so as those things start to unfold, we still have all of these assets that we can really, truly leverage. And so it could be a combination of sales in those spaces, or it could be a combination of alternative uses that we look at. So it happens. It's just one of the ways that we're really centering in with how do we think get the best value of this big asset portfolio in the short term.

Got it. And then I guess maybe as a follow-up here. You've got the $8 billion pipeline. And just trying to think through, maybe how much of this year's outlook is secured by that pipe, or maybe what's in the backlog? And just how you're thinking about, I guess, overall kind of confidence in the year, given kind of existing commitments?

So for the year, on the outlook that we just discussed, which it is a growth similar to what we saw in 2025, we have very high confidence of probably close to 80% of that revenue amount. And also high confidence that -- we were confident that we will be able to close the additional 20%. So entering the year with that high backlog, if you want to call it that way, it is a very good position to be able to project where we think we're going to end the year.

Obviously, years advance as they go. But at this moment, we feel pretty confident on the projection that we just gave on similar growth as 2025.

Our next question today is coming from Sherif Elmaghrabi from BTIG.

When you think about a potential hydrogen plant with New York versus the liquidity opportunity that presents, any insight you could share to how you balance that cash with your hydrogen fuel demand 2 years down the road, 5 years down the road?

Sherif, thank you for the question. So we have looked very carefully at our hydrogen needs and the potential, or the probability, or the possibility to monetize the assets like we did -- that we're planning to do in New York. We mentioned this also in the prior earnings call. What we have been able to is -- we have been able to get to an agreement with one of the largest [indiscernible] to provide hydrogen for us at reasonable cost, much better cost than we were getting before. And that added to the current capacity that we have right now, which is [ about 40 tons ] at a nominal capacity. And added to the possibility that we have also -- and we are discussing with some customers that are planning to do liquefaction to take some offtake from those potential projects. We're comfortable that we have a good path for -- to cover the demand in the next few years based on our projections for growth, especially in the material handling market.

So we found that the capability to be able to monetize those assets was something that it was more valuable for Plug at this moment than making the investment of building a plant in New York. We have not -- we put all those [ plans ] for growth for production on hold at this moment. That doesn't mean that in the future, we may not pick up some of these plans when we are able to show that we can perform financially, and maybe able to finance these projects in a much more efficient way. But at the moment, monetizing those projects, and with the hydrogen availability that we have visibility for, we feel that this is the best solution and the best path for growth for Plug.

Got it. And then the One Big Beautiful Bill Act reinstated tax credits, but it also introduced stricter requirements for eligibility, and that's something that's been a supply chain headache for some renewables players. So I'm wondering if Plug Power has had to retool its supply chain meaningfully?

So for the ITC, the investment tax credit, what we have seen is that the requirements to be able to take advantage of the tax credit were meaningfully simplified from what they were before the past -- last year in Congress. So at this moment, actually, this 30% tax credit has become even a simpler way for our customers to take advantage of. And we've been discussing with many of our customers on this and they agree on this point. So it's actually been an improvement on the credit process for our customers.

Your next question is coming from Sameer Joshi from H.C. Wainwright.

Congrats on the new role, officially the new role. So, I think, I just wanted to hit on two broad categories on revenues from material handling. Are we looking to add additional [ pedestal ] customers just like the flooring something that was at the symposium? And then how -- on the electrolyte plant -- electrolyzer front, the 8-gigawatt pipeline that you spoke about, how is that plan to be converted into orders?

So -- thanks Sameer. On the material handling side, we are talking to many new potential customers. I think we're going to see some new customers being signed. And some of them, like you mentioned, [indiscernible] can be multi-side, or what we call pedestal customers. So there is an open door for new pedestal customers in 2026 and beyond.

On the $8 billion funnel for electrolyzers, we continue working with many of the companies that we have in that funnel towards FID, towards the financial investment decision, final investment decision. What we're seeing in many cases is with some -- especially in the European market, but also, as I said, we saw -- we're going to see some new opportunities closing in Australia, and we closed the opportunity in the U.K. with [ Carton Power ] [indiscernible] at the end of last year, which will be executed this year.

What we're seeing in the European market is that the [ RED III ] regulation is being converted into law in many of the countries in Europe, which requires certain -- especially for the transportation sector, which requires a certain percentage of the hydrogen use for transportation purposes, including refineries, to convert to green hydrogen at a rate of about 1% by 2030. This means that refineries like [indiscernible] or other refineries in Europe are looking to ways to meet that -- those requirements. And this is what is accelerating the investment decision in many of these projects.

What we're going to see is in the next 12 to 24 months, as the mandate becomes law, we're going to see these projects coming to fruition, and we're expecting to take a [indiscernible] of that funnel. So that is kind of the time line that I'm looking at right now for conversion of the funnel.

And then on the margin front, I mean, really congratulations on the success on bringing margins down, especially on the services and also on the equipment. On the equipment sales going forward, should we continue -- like should we see what you -- positive gross margins, or because of lower revenues expected seasonally margins will be still in sort of negative teens?

Do you want to cover...

For equipment and specific...

Yes. Sameer, it's Paul. Yes. I would say if you just look at it mathematically with how Q1 typically is in relation to our annual sale in a seasonality standpoint and you kind of apply that to the math that Jose shared with looking at sales projections next year, I think we would see sequentially, it's coming down from Q4. It should be probably better than in that range of that same percentage from last year's Q1. But just sequentially with the lower volume equipment really is tied to leverage.

So -- and most of it is just timing of those sales. And so without that incremental volume in the quarter, comparatively speaking, it's definitely going to affect margin. So you probably see a bit of a dip on the absolute and on the equipment margin in particular. But there are some favorable events. We definitely -- all the rooftop consolidations, all the things we've been doing next year that play well in terms of mitigating some of that. So on the whole, yes, but probably directionally better -- certainly better than Q1 last year.

You're going to see progress both on sales and margin quarter-over-quarter -- I'm sorry, year-over-year on each quarter. So you probably -- but if you look at 1/3 of sales happen in the first half of the year, and 2/3 in the second half, a lot of it is tied to volume. And when you look at what we've talked about for Q4, in particular, getting to that EBITDA positive range with kind of a $300 million sales proxy, it just gets you a tone of how that might play for the year. So hopefully, that helps.

Yes. No, that is really helpful. And I wanted to reconfirm that you're still targeting -- or from where you sit right now, you still are seeing 2/3 of the sales in second half, right?

Yes.

Yes.

[Operator Instructions] Our next question is coming from [ Chris Sung ] from Wolfe Search.

Congrats Jose, on first day on the job. Yes, so most of my questions has already been asked. But I guess if you were to just provide some sort of guidance on your outlook for '26, are you able to share the segment mix? You're assuming across materials handling, electrolyzers fueling, et cetera?

So it's going to be similar to what we've seen in 2025. Probably we're talking in the -- I will have to get the numbers a little bit more detail in there. But probably material handling will be in the 30% to 40% of revenues, right?

Yes.

And then you're going to see a similar amount, probably a little bit less on electrolyzers, and then the rest is going to be our fuel and [indiscernible] business. So that's kind of the mix that we're going to see. Material handling is still going to be the largest revenue generator for the company in 2026.

Right. And that makes sense. And just a follow-up on one of your responses earlier about 80% of '26 kind of like firm, or high confidence in the other 20%. Is that kind of -- is the right way to think about that, the 20% are external factors for customers that are -- that need to hit like specific milestones? Or like outside of your control? Or how do you think about that?

That 20% is projects that we are in the process of closing right now. Probably we're looking into closing them in the next few months that will secure the revenue for 2026. The other 80%, 77% to 80%, is what I calculated that we have in high probability are projects that we either have a firm commitment from the customer, or it's being finalized the commitment. So that 20% is projects that are right now being negotiated, and we're expecting to close them. We think the year to be able to realize renew within the year as well.

Our next question today is coming from Ameet Thakkar from BMO Capital Markets.

Just one quick one for [indiscernible] congrats. Just you mentioned kind of momentum in kind of growing with your existing pedestal customers. One of your larger [indiscernible] customers, Walmart, you executed a release event license agreement with them earlier in this year. I was just wondering with your larger pedestal customers, to the extent they want to add more sites with you, do you anticipate kind of executing similar agreements with them before kind of doing so, and throughout 2026?

Yes, you're referring to the licensing agreement? No, that was a very specific agreement with Walmart that we executed. An agreement that actually will help us to continue building and growing the relationship with Walmart, but I'm not expecting any similar agreements with any of the customers in 2026.

Okay. And just maybe one quick follow-up on a different topic. I know [indiscernible] in Spain and [indiscernible] kind of green lit a fairly large electrolyzer project today. I was just wondering if you guys have any kind of role in that project, [indiscernible]

No, that was a project that was announced earlier in 2024. So it's been a project that has been out there for a while. It seems like when FID this week, today. And as far as I know, and I will have to kind of look at that, it is an alkaline project. It's a 300-megawatt alkaline project, and we are not part of that project.

We are talking to other -- and we're talking to refineries in Spain about projects as well, but that project, in particular, is a 2024 project that seems to be going FID at this moment. But I think it's good news in terms of the conversion that we're going to start seeing, as I was saying before, of projects to FID. These are projects that have been hanging for the last 24 months, and now they're coming to fruition. This is kind of what we're expecting to see in the near future with the projects that we have in our funnels.

We reached the end of our question-and-answer session. I'd like to turn the floor back over to Jose Luis for any further or closing comments.

Well, thank you, everyone, for the thoughtful questions and for your continued engagement, and for joining us on, my first, earnings call as the CEO. Let me leave you with this. 2025 mark a structural turning point for Plug. We demonstrated that we can grow revenue while restoring margin discipline, and that combination matters.

In 2026, our focus and targets are clear. Execute with discipline, reduce cash usage and deliver EBITDA positive in the fourth quarter. The foundation is in place. The cost structure is improving, and the demand drivers are strengthening. We really appreciate your support and look forward to updating you on our progress next quarter. And also, you are -- Friday, I'm going to be [ closing the bell ] at [ NASDAQ ]. So you can go to our website, and you're going to have a link to see me and a big part of the Plug team that has made the results this year in 2025 possible, closing the bell with me. Thank you, everyone. Really appreciate your time.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

Greetings, and welcome to the Plug Power Business Update Call. [Operator Instructions]. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Teal Hoyos. Please go ahead.

Thank you. This call will include forward-looking statements. These forward-looking statements contain projections of our future results of operations of our financial position or other forward-looking information. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

We believe that it is important to communicate our future expectations to investors. However, investors are cautioned not to unduly rely on forward-looking statements, and such statements should not be read or understood as a guarantee of future performance or results. Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors, including but not limited to risks and uncertainties discussed under Item 1A Risk Factors in our annual report on Form 10-K for the fiscal year ending December 31, 2024, or quarterly report on Form 10-Q for the quarters ending March 31, 2025, June 30, 2025, and September 30, 2025, and as well as other reports we file 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 do not undertake or intend to update forward-looking statements after this call. or as a result of new information. At this point, I would like to turn the call over to Plug's CEO, Andy Marsh.

Well, good morning, everyone, and good afternoon to those in Europe, and good evening to those in Asia. I want to thank you for joining the call today. And you can put questions in the portal. I think we've explained that earlier. And look, I'll take business questions today. Business questions, I can't comment on the fourth quarter, but I'll be happy to come in on any other items. I also want to talk about the vote and especially proposal to which is the increase in number of authorized shares.

And I'd like to start off when it comes to Proposition 2. I want to thank those who voted yes. And if you know someone who is a shareholder who hasn't voted yet or voted no any help you can to persuade them to go vote, I greatly appreciate it. For those who voted no or abstain who were on this call, thank you for joining the call and listening to our message.

Now, I want to be kind of really clear about the increase in authorized shares. If you vote no on Proposition 2, you are still voting for an increase in authorized shares as well as a reverse stock split. If you vote, yes, you're only voting for an increase in the number of authorized shares. An increase in authorized shares doesn't mean we're going to issue those shares. Those shares are in place to help grow the business of needs, for example, with maybe a merger or an acquisition with shareholders would get a vote on. And as I think many of you know, we've taken some pretty significant step with the Project Quantum Leap to really drive down our cash burn as well as monetization of electric utility, electric rights, utility electricity rights, the data centers.

So I think I really want to be clear to you, authorizing shares and issuing shares are completely different. Look, I put out regardless of whether it mathematically makes sense or logical, the outcome of reverse stock split is a decrease in the stock price. And I think some of the pressure on the stock since last Thursday, probably people emotionally believing we're going to do a reverse stock. But the outreach we're doing is having an impact. The Broadridge was down for voting on Thursday and most of Friday.

And we've already seen the 15% reduction in the amount of shares we have to get to vote. So it is having an impact, and there's a plan to get there, and I spent a good time doing time with our proxy solicitator, with Roberto, who I know many of you know, to really work through how to get the remaining vote, and there is a pathway. It may take -- look, we may have a German on Thursday, but I think that -- I think we're going to get there looking at the road map. And look, if I didn't think we were going to get there, we wouldn't be working so hard in talking to you so much about it. And the success will be beneficial to shareholders, be beneficial to the company. So I really -- one folks who really think about when they vote, if they vote no or abstain, how they're really voting and they're voting for an increase in authorized shares and they're voting for a reverse stock split. You haven't voted where you like to vote. I really would ask you and I'll give you another run on this later in the call today to reach out to our proxy Solicitor Sodali, Sodali and company ,(833)924-7453 at (833)924-7453. They can help you or you can go to Plug at investor.sodali.com. information's about how to vote. And look, you really can have an impact on making sure this company is successful as we go into the future.

So Teal, I'm happy to take questions which are up there.

Okay.

[Operator Instructions]. Over to you, Teal for the Q&A session.

Thank you. Okay. And to your first question, why the European shareholders, why are they being excluded from casting the vote? Do you have any update there?

So, first and foremost, Plug has nothing to do with preventing European shareholders from [indiscernible]. Unfortunately -- and I'm going to give you a fortunate part after this. So it's not all unfortunately. But unfortunately, the brokers in Europe charge shareholders to vote, which seems reminiscent of 19th century times. But -- so that is problematic. We are talking to some of the larger brokers in Europe to help facilitate voting and see what the company can do to help.

Look, if the European shareholders could vote easily, we would not be having this call because this would have easily passed. So we'll put out blocks, and we'll be putting up even press releases to keep European investors informed if we find the pathway to allow you to vote simpler. But it is a challenge. We have some really good ideas that we've worked through with our lawyers and our proxy solicitator. We're feeling confident. So I would ask the European shareholders to stay tuned. And I am so sorry that you have to work through such a difficult process to be able to move.

And similar question was asked about Asia. Would you give the same answer for Asia shareholders at this time?

Tougher. So I'm probably giving out more information than I should. But a lot of the shares in Europe are the custodian city and a lot of those shares are out on loan. So even though you're a retail investor in Asia, your shares may be [indiscernible] and you have no idea they are. And there isn't really -- it's really much more difficult. I see a pathway for Europe, Asia I haven't heard anything that made me confident that we can help Asian shareholders. But thank you for being shareholders.

Andy, another question, how does an investor who already voted and wishes to change their vote accomplish this?

So actually, they -- thank goodness they put this in front of me. You can contact our proxy solicitator, Sodali and company at (833) 924 7453 or at Plug at investor.sodali.com. Now there's a blog I put out on Friday, and I actually really write these to the lawyers don't really like it exactly that I write it like a real person. But if you look at Friday's vote, at Friday's blog, you can have -- for example, if you're with Fidelity, when you vote yes, we're vote no. The for the reminder of the shares, they'll proportionately vote. So the impact of your share voting may be much greater than you think. So if you voted no, please reach out to proxie solicitators and change it to a yes. Teal, let's give a business question.

Business question, okay. This one has been asked several times, Andy, I think people really care what is the status of AGA in the FID and AGA.

Yes. So talked to AGA last week. So here's -- if I was going to give you a road map today. I was in -- December, I was in Uzbekistan. And with folks from Abu Dhabi and who are going to be looking to really help facilitate this deal also. And I believe that one will be the first to go to FID when I talked of for [indiscernible]. The second one is that there is another project we're looking at in Abu Dhabi that I believe will be the second and third will be Australia.

I think Australia is probably '27. I think good chance Uzbekistan will be in the first half. The second half, I think, the Abu Dhabi. These are huge, huge projects. If you think about used be, it's probably a $10 billion project overall that these things take time. But I've been in Uzbekistan. I've seen -- I've been to the train line, where products will get delivered. I've been to the -- I've been to the land, which is -- which will -- where the project will be built. I've been through the river where the water will come from to provide the feedstock for the electrolyzer. So lots and lots of work has been done. I've met with the governor in the province. It's a cool project. It's one of the coolest projects in the world, and it will be used to create SaaS and ESA. So pretty excited about all 3 projects that we're engaged with, with our folks there in AGA. And I'll continue to help Jose on this point.

Andy, if we could go back to the meeting questions. A couple of different variations of the next question. Why is increasing authorized shares critical now and what are the specific uses for the additional shares?

Yes. So they're critical now is because we have contractual obligations associated with the deal that we did where we sold warrants and the company was able to pull in $300 million as well as the convert deal that we did in November. Both of these have underlying them shares. But let me be really clear. The shares for the deal, which was the warrant sale, they're not going to -- they would not be issued until the stock price is above 7.75% based on the terms of that deal.

And look, if they do get exercised, that would bring $1.2 billion into the company. The convert deal is a long-term deal. Over 7 years, Gerry, I think the right number is? It's a 7-year convert. Those shares aren't coming to the market. And look, usually, what happens with converts is that there'll be -- that deal will probably be redone 3, 4 years from now and for better terms for the company. And I would not expect to be seeing those shares in the market. But there are contractual obligations to make sure those shares are available. Now if the stock jumps to $10, there's a chance $775 million will get exercised, bring $1.2 billion to the company.

So that's why they need to be there. But the number of shares which are floating, which people are trading every day, isn't going to change at the end of the month when the increase in number of authorized shares occurs one way or another. It's just not how it will work. We have -- in the flow today, about $1.39 billion. I don't expect that number to dramatically change at all in the coming months. The other reasons you want shares, you could think about mergers and acquisitions. The company merged with [ Samsung One], and we're driving the merger, which would go out for vote by shareholders to the shareholders. we may need shares for that. But we're looking at -- that's why we need authorized shares. You need it to run the business.

Thank you, Andy. Next question. Has Plug engaged large institutional shareholders on the current proposals?

Yes, absolutely. So we -- the effort we made to have especially the funds which are index funds, in many cases, recall their shares on loan provide a lot of voting power. We would not be here if there wasn't a recall shares that were alone, and that brought in over 150 million shares. That was a effort that between Gerry, myself our proxy solicitators, who is really important to make this possible. Going through the list there is about 60 million institutional shares, which have not been voted yet. And there is a very extensive effort going on as we speak for me to speak within this week.

Doing my math, if we even got a 1/4 of them to come in, we'll be in pretty good shape. And not only are we engaged in the proxy solicitors bankers I've reached out to and other folks, I know to help get them voted. But I would say that I think it's fair to say, Gerry, I don't know if one institution who voted no. Every institution who voted, voted yes. ISS and Glass Lewis, all voted yes on all three proposals. So anyone who's kind of studied this has supported this and understands the company's needs for authorized shares understands that if the shares aren't authorized by this Proposal 2 that we will increase the number of shares with a reverse stock split.

So it is clearly understood by institutions that these shares are going to be needed to meet our contractual obligations and it's why we're doing it now. How about business question, Teal?

Okay. Andy can you tell us about the hydrogen economy in the U.S., the successes you've seen in 2025?

Yes. So I'm probably more optimistic in the -- in general, as many of you know, I've been around this industry for a long time, seeing the ups. I've seen the downs. But if I really take a look at it, I think the perception that the U.S. hydrogen economy is down. Is it really, I think, a fair view of the world. I think if you take a real look at the bill the pass in July increase through 2032, the fuel cell tax credit was the 30% tax credit was included in the bill. That's a big deal. I've developed a great deal of -- and that really has helped us with our traditional material handling customers.

It's also giving us ideas about how we can move the business into other sectors, which makes it attractive. That Bill also provided through '27 for anything that's constructed a tax credit for generation of hydrogen and our Georgia plant will have it through 2032. So I'm not nearly -- and we have deals floating in the U.S. And I can tell you, Jose and Company was AB with me here today, but he's been working hanging out with the sales force and many of the deals are here in the U.S. So I'm not nearly as negative about the U.S. I think that people at the Department of Energy or Sirius Energy people have established a lot of respect for the folks I've dealt with there.

And I may not always agree with it, but that's okay. But I don't think -- I think when you think about the U.S. being energy dominant, which is the U.S.'s goal, hydrogen matters green hydrogen matters because customers around the world want it. And the U.S. is in a better position to do that than most other regions of the world. Maybe in the best position to do that. And the people at the DOE understands the vast advantages to U.S. has in the energy world and want to continue it for the future.

Andy, if I can ask a follow-on question to that. What milestones have been achieved in scaling plugs hydrogen production in your U.S. plants?

Yes. I love the plan in Georgia. When I go there, it's kind of remarkable and cost money to build. But between there, the site that we did with Owen, which I have to say lots of the learnings from the first hydrogen plant we pushed on to the second hydrogen plant in Louisiana. Look, I don't expect to do it this year, but we are thinking about the future. And not only providing hydrogen and building plants with our sales and partners, but how you think about, for example, the space industry, when you kind of look at our deal with recent deal with NASA.

So I'm excited about where the plants could be. We have some really kind of interesting thoughts going on with plants and maybe data centers and coupling them together. So there's a lot of fascinating work going on make those plants continue to grow the plants. Georgia is the best-selling tool we have. And I got to remind people that those stacks are made in the premier PEM electrolyzer staff facility in the world. in Rochester. And the systems here in the U.S. are made in our state-of-the-art facility here in outside Albany, New York. So I think the future of the plants for our electrolyzer business, I think where Jose will help take us is really, really exciting.

Back to meeting question?

Yes, I'll take another. I like those question better, but go ahead, [indiscernible] questions.

We have a couple more on the meeting. So the next question how much shares are needed to get proposal #2 passed?

Yes. It looks like to me it's below $40 million at the moment. And I mentioned the institutions $60 million. So the last time I looked, 2% of the shares, I think I got that number right, Gerry, a little over 52%. So there's 48% that haven't voted, which represents, if you do your math quickly, about 670 million shares. So we need about $38 million of those to vote. The institutions -- as I mentioned, I've looked at, have about 3 million shares that we're talking to, a lot if we can crack the European just a bid to make life easier it will be really, really good.

I found people who haven't voted who actually are -- who didn't even know they didn't vote. So it is important that you vote every -- as I mentioned, if you, for example, have shares and fidelity, you could almost count twice. So that's kind of the mathematics to get there.

Okay. And another business -- excuse me, meeting question. If the February 5 meeting is adjourned to provide more time to get the recorded vote, when is the latest date, the special meeting will close for good.

I think if I was going to say probably around the 16th or 17th is probably a fair date.

Okay. And another meeting question. What reverse split amount would be necessary, if unfortunately, Proposal 2 is not approved?

Yes. So the minimum -- minimum if I say I could do is a 1 to 5, which would authorize 1.2 million shares. So that's the minimum. 10:1 would -- 1:10 would actually free $1.35 billion. So just to let people know, that's kind of numbers we're talking about today. I may sound -- what's wrong, Joe? It may sound strange, but that's really -- we have the authority to do that, and we have to do that.

I did have a question by someone who questioned why we would do this at this time. It's a really, really clear. The reason we're doing it now is because we have to. We don't have any other choice. So I really -- I put out my blog this morning. I really don't want to do reverse stock, but I think there's some anticipating reverse stock flow in the market because that's kind of what you see in the stock over the last couple of days. I can tell you that there is a road map here. There's a lot of shares to get people to vote. I think that Gerry and I proxy solicitator, Paul, we're all taking this as our personal mission to make sure we get those.

Now I found an employee in the hallway who had about 100,000 shares and didn't vote. So if you haven't voted, please vote. Paul is sitting here with me also, Paul has about 2 million shares. And he voted right. Thank goodness. So that's kind of where we stand. Other business one, Teal.

Another business, okay. What gives you confidence Plug can survive and scale long term?

That's not hard because I know the land. So let's start with the premise. Hydrogen is going to be important to the world. I don't know if it's going to be 10% of world's energy. I don't know if it's going to be 20% of world's energy. But Europe wants to be energy independent. -- is going need hydrogen. The U.S., if it wants to be continued dominate globally is going to need hydrogen. The world is going to solar and wind and geothermal and nuclear, and hydrogen plays very well with nuclear. Regardless of how folks may think about the short term.

And then knowing this -- I know folks pretty well folks or my competitors or friends, folks who our partners unfriendly with seeing lots of the world. And can honestly say, first, no company would fuel cells next and maybe Toyota and Honda. Have had the real world experience that plug is that. And I would even say Toyota has never run an operation 24/7 at minus 25 degrees celsius and driving out the 25 degrees celsius. Experience matters. And we've learned so much building our fuel cell products, but actually living with real customers day in, day out. In our electrolyzer business, no one's built more PEM electrolyzers in Plug. And there, we have a unique advantage by running our own plants, find out what's good, we find out what's bad, and we make improvements when we find out what's bad.

And then I've been to many factories. No one the world can match Rochester. No one in the world can match here. This company will remain dominant. If we continue to innovate -- and I have people like Luke Wentlent, who leads my product development organization that's probably -- I worked at Bell Labs. And some folks on this call maybe remember what [indiscernible] but I worked with people who have worked with [indiscernible] last. The -- change the work and Plug has those kind of fool continue to innovate, and we'll continue to innovate working with customers.

And if we continue that equation, there's no doubt in my mind, we will win this game. And it's why I'm staying on as Chairman because I want to help Jose continue to go out and win this game. And we want to be the winners. Let me be clear. And quite honestly, it's one of the reasons that yes, on Prop 2 and all the propositions really, really help. So you can help us strong stock price and it will be stronger if you voted on Prop 2 as I outlined in the blog today.

Where do you want to go next, Andy? Business question or meeting questions?

Give me another business.

Another business question, okay. What concrete steps are being taken to reduce cash burn and debt?

I think we've knocked out a lot of debt here. That's why we did the convert deal for -- to get rid of the term loan and the high interest rates. I think we moved the interest rate call down from 13%, 14%? Down to 7. So on the convert, so we knocked a lot of debt down there. I think par cash used probably dramatically reduced by at least 50% last year. And with Project Quantum Leap, we're seeing improvements in the first 3 quarters in gross margins. We're seeing increase in revenue. So we are laser-focused to achieve EBITDA breakeven by the end of 2026. I hear Jose pushing people hard towards that goal. And there is a laser-focused issue, buyer focused on reducing cash burn.

But we also have to continue to grow the business. because if you look at the business itself, it's highly leveraged. So if you highly leverage with sales, more sales covers fixed costs and -- that is why we have to control expenses, and we have to grow. And also, we have to do both because we do want to be the ultimate big winner in this industry.

Excellent. And we have a couple of meeting questions.

Okay, sure.

If we voted yes, do we need to vote again?

No. If you voted yes. But if you voted yes. I would ask you to -- I have a long-term investor, I've spoken to for 18 years. He sent me a list of folks that haven't voted yet. So if you vote yes and if you know another shareholder who either voted no or seen or has them voted, please reach out and ask them to vote yes.

Okay. Andy, if Prop 1, proposal 1, gets the required votes to pass to change the votes needed to pass Proposal 2 or will the reverse split still have to go through?

Yes. So let me take a step back. So the answer to that question is Proposal 2 has to pass for Proposal 1. Regardless of Proposal 1. But also from a -- this is a little bit maybe more details. But Proposal 2 is a routine proposal, and the lawyer shake is head yes, and I'm saying it right, and needs 50% plus one vote of all outstanding shares to pass. In that way, when that one, the brokers can vote proportionately. Proposal on is not a routine proposal and requires people to vote in the affirmative. And that's much, much higher hurdle.

So I don't think that's going to happen. My suspicion is Proposal 1 will also be on the June out for the Annual Shareholders Meeting. But look, a strong showing in Proposal 1 actually helps us in many ways with the regulators and maybe make it have another discussion about Proposal 1 with them.

The next question, this is a long one, so bear with me. The company implemented a series as nearing preferred stock with the [indiscernible] for the July 3, 2025 stockholder meeting to reflect the preference of holders of common stock of [indiscernible] reverse stock slip. As a holder of Plug common shares since 2020, my questions are, why was this not used to reflect the preference of the holders of common stock at both on the proposal to increase the authorized shares that was also on the July 3 ballot instead of the reverse split or in addition to reverse proposals?

It would have made my life much easier if we would have done that. I've been on the phone with lawyers, NASDAQ for 6 months. The reason we didn't just do the reverse stock split. So the common shareholders voted 61% back in July. June, July, July for a reverse stock split. They voted 90 -- almost 90% for an increase in authorized shares. Because the rules and regulations we could not use the super preferred for the authorized shares. What we heard though was the people who voted.

And if you really think about 90 to 60, we were 50% more people who voted for an increase in authorized shares that voted for a restock split. When the company looked at those numbers, we felt an obligation to the common shareholders to go the extra effort to increase the number of authorized shares. So by having this vote and by pushing so hard, what we're doing is really listening to the will of the voters. If it would have been the other way around, I wouldn't be having this meeting, but that's what has driven why this happening.

How about the business question?

Yes.

What is the market potential for Plug wood data centers?

So I don't want to over -- we have been thinking about this a great deal. And there's a road map where you could think about combination of electrolyzers and stationary products. where data center, you could actually bring through good provide peak that you could provide power during peak load times when the you could be a, say, at 3:00 in the morning when the grid has extra power, you could be creating hydrogen. And that hydrogen could be used for our customers in material handling like Walmart and Amazon or could be used to power the stationary products during peak time.

So there's a lot of effort going on, a lot of modeling, a lot of work going on to really think about what the ecosystem at a data center using hydrogen should look like. and how to leverage our unique position being the largest user of liquid hydrogen. And let me be clear in the world, bigger than asset.

We have another meeting question, Andy. How confident are you that we won't need a split in 12 months anyway?

Look, not a here. I feel really confident with -- look, we have stabilized the business over the past year and continue to grow it I'm really confident that we're creating value for shareholders and that if we execute our plan and quite honestly, if we execute on 60%, 70% of our plan, I am not worried that, that's a possibility. And look, voters would have a say. So it would not be something voters wouldn't have a choice to participate in because we're not going to have a reverse stock split if Proposal 2 passes between now and July 1 when the next shareholder meeting would be.

And at that time, the right to do a reverse stock split goes away. So I'm not exactly -- I don't expect that. I really believe in our plan. I believe we've taken the right steps with our focus quite honestly, is one of the reasons I feel comfortable stepping back just to be the Chairman because I believe the business is well positioned to grow as the other question that came up allow us to really be a dominant player in the market.

[Operator Instructions]

Thanks, Kevin. Kevin and I have been doing this for 18 years too.

Teal, any further questions?

Yes. We have just a couple of more, Kevin. Andy someone asked, since shares -- excuse me, since share votes are tied up in other countries couldn't the court system offers some assistance.

I don't know what the core system is to you, Gerry.

The court.

Oh, the court. Of course, Look, this is February 1. I have to have the authorized shares ready by February 28. I don't think the court systems going to help us. And look, that I don't think that's it's just not the speed of government, the speed of the business when it comes to like this don't really line.

Okay. And it looks like you have gone through your questions. We don't have anything else in on the line.

So I'm going to do my pitch one more time. I want to again thank those who voted yes on Proposition 2 and Proposition 1. If you voted, yes, and you know someone who hasn't voted, I asked them to vote. And if you know someone who voted no, please try to abstain, please try to persuade them that it's in their interest. Because if Proposal 2 fails to pass, and I, quite honestly, have a lot of confidence, it will, when I count votes and know where they're coming from, that we will do we would have to do a reverse stock plant. We would increase the number of authorized shares. So by voting for Prop 2, you are voting for an increase in authorized shares also. But you're also voting for reverse stock split.

And a lot of you told me in back in July, you didn't want that and that's why we continue to talk to you. made great improvements over the past 4 days. And I expect that I have a pretty aggressive call schedule today, where I'll be reaching out to people personally and institutions, some retail holders to vote. So please vote. But you also can contact the company's proxy soliciator, Sodali and Company and they'll help you through it. They're really good. be proxy solicitator I've dealt with and their numbers 833 924 7453, 833 924 7453, they will help you. And if you don't like talking on the phone, I know a lot of young people don't like talking on the phone. You can actually reach out to them at Plug at investors.sodali.com; at Plug at investor.sodali.com. And hey, look, thank you for taking the time this morning. Thank you for being Plug shareholders. And I'm sure you'll get to hear me again on Thursday. So thanks again. Bye now.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

Greetings, and welcome to the Plug Power's Third Quarter 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions]

It's now my pleasure to turn the call over to Teal Hoyos. Please go ahead.

Thank you. Welcome to the 2025 Third Quarter Earnings Call. This call will include forward-looking statements. These forward-looking statements contain projections of our future results of operations or of our financial position or other forward-looking information. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

We believe that it is important to communicate our future expectations to investors. However, investors are cautioned not to unduly rely on forward-looking statements, and such statements should not be read or understood as a guarantee of future performance or results.

Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors, including, but not limited to, risks and uncertainties discussed under Item 1A Risk Factors in our annual report on Form 10-K for the fiscal year ending December 31, 2024, or subsequent quarterly reports on Form 10-Q as well as other reports we file from time to time with the SEC.

These forward-looking statements speak only as the date in which the statements are made, and we do not undertake or intend to update any forward-looking statements after this call or as a result of new information. At this point, I would like to call -- turn the call over to Plug's CEO, Andy Marsh.

Good afternoon, and thank you for joining us. Plug delivered a strong third quarter, one that reflects continual growth, improving margins and disciplined execution across our global hydrogen business. For the quarter, we reported $177 million in revenue with balanced strength across our core businesses. Our GenEco electrolyzer business generated about $65 million, up 46% sequentially and 13% year-over-year.

Clear evidence that Plug technology continues to gain traction globally as customers scale hydrogen production. I think just as important, we're improving the quality of the growth. Operation cash burn improved by more than 50% from the prior quarter, driven by pricing discipline, better execution and tighter working capital management. These results show the tangible impact of Project Quantum Leap, which is transforming Plug into a leaner, more efficient and more profitable enterprise.

Quantum Leap is about focus, simplifying the business, aligning investment to near-term profitability and resolving legacy issues that have limited performance. The noncash charges we recognized this quarter reflect that effort, cleaning up the past while sharpening our strategic priorities. As a result today, Plug is more streamlined, more focused and better positioned to deliver continued margin improvement and cash flow gains.

Operationally, we continue to execute at scale. To date, Plug has more than 230 megawatts of GenEco electrolyzer programs underway across Europe, Australia and North America. A real highlight this quarter was delivery of our first 10-megawatt electrolyzer, the Galp project in Portugal, the first phase of a planned 100-megawatt installation, a clear validation of Plug's ability to deliver complex world-class hydrogen infrastructure.

Our hydrogen production network also continues to improve. In August, our Georgia Green Hydrogen Plant produced 324 tons with 97% uptime and 92.8% efficiency, underscoring the strength and reliability of our operating platform. Earlier today, we announced a strategic initiative to monetize our electricity rights in New York and one other location in partnership with a major U.S. data center developer. This transaction is expected to generate more than $275 million in liquidity through asset monetization and the release of restricted cash.

It also positions Plug in the rapidly growing data center market where our fuel cell systems can deliver resilient zero-emission backup power to mission-critical facilities. This initiative is directly linked to our new global hydrogen supply agreement with one of the world's leading industrial gas companies and potential purchases from some of our North American electrolyzer companies as they deploy hydrogen site.

The agreement secures competitively priced long-term hydrogen supply for Plug and our customers, a major strategic milestone that reduces the need for near-term self-development of new plants. As a result, we have suspended activities under the DOE loan program, allowing us to redeploy capital towards high-return opportunities across our hydrogen network. Together, these actions strengthen our balance sheet, expand our reach into dynamic new markets and reinforces our disciplined approach to capital allocation. Finally, I want to touch on leadership. As announced last month, Jose Luis Crespo will become Chief Executive Officer on March 1.

Jose has been instrumental in driving Plug's commercial growth and building our customer relationships worldwide. This transition represents continuity and strategy, not change. The road map we've built together remains in place, focused on growth, profitability and disciplined execution. But also, look, the world changes. It gives Jose the flexibility to resolve -- to evolve our strategy as the hydrogen market mature.

He is the right leader for this next chapter, and I am confident Plug will continue to thrive under his direction. In summary, Plug's progress this quarter demonstrates a company that is executing, improving and building momentum. Our technology, people and strategy are delivering results and the fundamentals of our business have never been stronger. With that, I'll turn the call over to Jose, who will discuss our commercial performance and marketing activities in more detail. Jose?

Thank you, Andy. Good afternoon, everyone, and thanks for joining us today. This is my first earnings call as President and incoming CEO of Plug. And I have to say I'm both excited and honored to take on this role. I've been with Plug for 12 years, helping drive our commercial growth and making sure customers are always at the heart of what we do, and that won't change. My focus will continue to be on growth, profitability and disciplined execution.

As Andy mentioned earlier, we delivered $177 million in revenue in the third quarter, and we're seeing solid momentum across our core markets. Let's start with material handling. This business continues to perform well, and our customers are really seeing the productivity and energy benefits that come with the fuel cell technology. More than ever, customers are recognizing how fuel cells free up utility power in their distribution centers, power that they can use elsewhere or simply save by reducing peak demand.

And the investment tax credit for fuel cells has been reinstated, which makes the financial case for our customers as stronger than ever. We are having great conversations with our major pedestal customers, Amazon, Walmart, about their 2026 plans, and we are expecting to continue growth there. And we are also excited about new customers like Floor & Decor, where we deployed our GenDrive fuel cells, GenFuel hydrogen systems at their Frederickson, Washington facility. Floor & Decor has a strong potential to grow into one of our next pedestal customers.

Now I'm going to turn it into our GenEco electrolyzer business. We have delivered $124 million in revenue year-to-date. This is up 33% year-over-year and is putting us on track for a record year in the electrolyzer business with around $200 million in expected sales. We continue to see big opportunities for green hydrogen, particularly in replacing gray hydrogen in refineries like Galp and BP and in the reduction of e-fuels -- sorry, in the production of e-fuels such as e-methanol, synthetic jet fuel and ammonia.

Our $8 billion electrolyzer funnel remains very active, and the quality of the projects we are pursuing right now is the best that we have ever seen. The probability of many of these projects reaching final investment decision, FID, has never been higher. In Australia, government support remains strong. Andy spent time there recently, and we are very encouraged by the progress on the 3-gigawatt Allied Green Ammonia project as it moves towards FID. We're also happy to have Alfred, Allied Green's CEO, speak at our Symposium next week, November 18.

In Europe, we are seeing policy clarity finally take hold as the Green Deal and RED III mandates are being transposed by the EU member states and becoming law. This is giving our industrial customers more certainty around their green hydrogen targets and time lines.

We're also seeing subsidy programs like those from the European Hydrogen Bank to start outlook real projects, many of which should reach FID in the next 12 to 18 months. And we are already executing at a scale in Europe. We delivered our first 10-megawatt electrolyzer array to Galp in Portugal, part of the 100-megawatt project we have in there and 25 megawatts of containerized systems to Iberdrola and BP in Spain.

These are flagship projects that demonstrate Plug's ability to deliver large, complex systems globally. Here in the U.S., we announced a new partnership with Edgewood. Plug will provide engineering, plant design and commissioning for a facility that will convert waste streams into sustainable aviation fuel, renewable diesel and biomethanol.

If you want to hear more about that, Steve, Edgewood's CEO, will join us at the Symposium November 18, so I encourage you to come. Edgewood is a great example of how we are adapting to market conditions. The U.S. continues to support blue hydrogen, and we're using our deep experience with more than 20% of our team coming from oil and gas backgrounds to capitalize on those opportunities as well.

Our path to profitability will be powered by growth. We have built real scalable capabilities. We know how to produce, deploy and operate hydrogen solutions, and we have an $8 billion funnel of opportunities ahead of us that gives Plug a unique position to lead as the hydrogen economy accelerates globally. Thanks again for joining us today, and I'm looking forward to sharing more at our Plug Symposium on November 18 and to continue this journey towards sustainable, profitable growth. Back to you, Andy.

Okay. It's question time. Teal?

We are open for question, Kevin please.

[Operator Instructions] Our first question today is coming from Colin Rusch from Oppenheimer.

You've got Andre Adams on for Colin. I got a couple of questions for you. So first, could you just speak to the cadence of fuel margin improvements and when we might expect margins for that business to turn positive?

You want to take that, Paul?

Which business did you ask about, Andre? Was there a specific one you mentioned?

Fuel. Fuel.

Yes. So I'd say what you see as the progression in the margin even in Q3. We had some plant issues in the network from the suppliers and from ours. But despite that, you see a progression because of the strategic agreement we struck that we're starting to see the benefits from that. You'll see even incrementally more benefits from that in Q4 given the leverage of that. And there's certain aspects of that agreement that allow us to work with them and collaborate to navigate the network more efficiently as we move forward.

So again, it will start to build. Plus Plug is continually investing in its own infrastructure and our own networks and how we distribute and manage our plants. And so there's just this continual building process. So I expect to see another big step function improvement in Q4. And I think in the course of next year, kind of -- targeting kind of middle of the year, moving to that breakeven target, if not sooner. So we're laser-focused in it, and we've postured with the right cost structures between what we have in our supply and the supply agreement of the new arrangement that we can continue focusing on all the levers that drive it that direction.

Great. And then I appreciate the color on the electrolyzer pipeline. And just hoping you could give us some expectations on the cadence of growth on an annual basis that you would expect for that business?

Do you want to take that, Jose? I'm going to just add. We, we're not yet providing any guidance for 2026. But there is a good deal of activity in the electrolyzer business. We would expect growth next year, and our plan is for the business to continue to grow. We've been very cautious about guidance because 1 quarter slip on a project developing can change the results.

But as you could see, we grew 43% versus the last quarter. We have a strong quarter coming up. I think most of Galp will be deployed by the fourth quarter. And that were shipped by the fourth quarter. So I think you'll continue to see, I think, some good announcements coming out and good progress, especially later this quarter and the beginning of next quarter with announcements.

You're right. We will see some good progress in the next few weeks on projects that we're going to be able to deploy in 2026. So we will be able to see revenue from those projects in 2026. We've been working in many of the projects that we have in the funnel for years now. These projects take a long time to materialize and to go to FID.

But we are seeing that many of these projects are going to come to FID in 2026 and 2027 because they are very large projects. It will take time to also deploy them once they go into execution mode. In many of them, we have the project-based revenue recognition in the contracts. So we will see some revenue. And as Andy said, we will see growth in 2026. And as time goes by and more projects go FID, we're going to continue to see that growth into the following years.

One thing I would add, Jose, is our sales team has said, the quality of the engagements are so much higher than we've ever had.

100%. I mentioned a little bit of that in the introduction, we are seeing the quality of projects and projects that have high probability to go FID in the funnel compared to a few years ago where we had a lot of projects that had not so many chances to actually materialize.

Next question is coming from Manav Gupta from UBS.

I just wanted to focus a little bit on the news announcements today morning. I think you signed a nonbinding letter of intent with -- improvement of asset through monetizing of electricity as the data center. So help us understand a little bit your leverage to this entire data center and AI revolution and the various ways in which Plug can benefit from it. I'm assuming through power would be the primary ways. If you could help us elaborate on those.

Yes. I think it's -- we've taken a step back. And first, I want to -- want to make a note, we expect this transaction will close in the first quarter. It's been far along. So we think it's mid-first quarter when this closes. This will provide the liquidity on the balance sheet which part of Project Quantum Leap has been about. And Plug next year is going to be sitting there with a strong balance sheet, which will have a complementary improvement to our income statement.

So it's really about liquidity to start. And the second item that's driven a good deal of this is -- and I touched on in my opening remarks about not only our relationship with a large industrial gas company but relationships with people who are going to build hydrogen plants who want our electrolyzers. So we looked at the world and said, we know how to do a combination of sourcing competitive hydrogen and generating competitive -- generating hydrogen to balance those two out.

As part of this program, we've been exploring with our product management team and development team, opportunities to provide levels of backup power using hydrogen to support the data center deployments. It will make sense in some applications. And so that is a real, real focus that Jose and the team will continue to be engaging in next year.

So it's not going to be primary power, but at least in 2026, I think when you get in out years, us here in North America are not always aware of activities going in Europe, including hydrogen pipelines. And in that case, Plug fuel cells become a real viable solution even for primary power.

So we're excited. I'm primarily excited that Jose and Paul next year will have -- not be spending as much time worrying about where is the cash going to come from. Paul, I think your cash usage last quarter was -- operational cash usage was $90 million, and that was a 50% improvement. And so we're going to have a good balance sheet to really position ourselves to achieve being -- achieving the goal of being cash flow neutral as soon as possible, and that is the goal. I hope that helped.

Next question is coming from Eric Stine from Craig-Hallum.

So just sticking with the data center opportunity. I remember several years ago, you had a -- I think it was a pilot project with Microsoft to some degree. And so I'm curious, I know that over the last, I don't know, year to 2 years, you've been prioritizing some other growth initiatives. But curious kind of how that product offering has evolved or does the technology has evolved because clearly -- certainly sensing a higher level of confidence that, that potentially is something near term, at least in terms of announcements, whether that means near-term deployments or not, I guess, remains to be seen.

Yes. I would say we've gained a lot of experience, Eric, both in providing -- we have sites where we're actually powering electric vehicles. We have done some smaller backup power deployments. We do see opportunities there. I don't want to overstate the opportunities, but the products work.

We have confidence in the products. We think a lot about hydrogen all the time. And we're working with people who actually get things done. So I would just say that I don't want to -- the big growth opportunities for us is certainly electrolyzer projects that's going on around the world. Material handling next year will be core to this company's success. But I think you'll keep on seeing more and more activities associated with data centers and hydrogen as you think through how you can provide sensibly cost hydrogen to provide that critical backup.

Okay. And then maybe last one for me. Just it sounds like you've obviously got a lot of confidence in getting to that gross margin positive or neutral level exiting the year. But I guess I'm unclear whether you're sticking with that. And then I also noticed in your commentary...

So let me be clear. We're sticking with that.

Okay. Good. All right. That's good to hear. It seemed like it, but I'm just clarifying. And then on EBITDA positive, that previously had been an end of '26 goal. And I noticed in your release that it looks like that may now be a mid-'26 goal. So maybe -- or I'm sorry, let's see target in the second half, but potentially before the end of the year. So maybe some of the drivers that are leading to that increased confidence as well?

I think I'll let Paul answer to that one.

Yes. And I think we -- maybe terminology, we're focused on the second half, just given our projections and thoughts on cadence of sales and volumes and cost downs and things that we're doing. I'd say the good news is it doesn't take much movement of the needle on sales to have a meaningful effect. So our focus is to keep doing the prudent things and driving costs down and doing all the different cost initiatives we have and trying to ramp those as fast as possible.

But we definitely see continued strength in the pipeline and the efforts that we've got going on in the sales channels. And so our focus is to continue trying to pull as much of that forward as we can. So more to come, I guess, as we unfold in the next couple of quarters and see how it's tracking, but it's definitely in the art of the possible to go sooner.

But that's -- we're laser-focused on driving volumes and driving cost downs and maintaining headcount, not growing the overall resource base so that we can achieve those goals as fast as possible.

Next question is coming from Craig Irwin from ROTH Capital Partners.

The thing you said in the prepared remarks that got me the most excited is that your pedestal customers are moving again. Can you unpack that a little bit for us? Can you maybe explain what they're seeing or what's changed for them that has these very important customers saying it's time to buy again, grow our fleets and use more fuel cells going forward?

So I want to start off. I think that the customers, Craig, have always loved the solution. I mean, we do help the Walmarts and Amazons move more goods, and that's the business they're in. I think that what they have seen over the past, and I can tell you with one of these customers I had deep discussions with over the last 3 months, what they have seen that Plug is actually on the right track and financially much stronger.

And third, when you look at policy, and I think all of us were presently surprised that the bill that passed in July extended the investment tax credit through 2032, which Republicans have always supported. If you go back to the last time it passed, it was under President Trump in 2018.

So they like the application. They can see that Quantum Leap is actually working. The government supports it. And they -- basically, what's always driven was they save money by using fuel cells and not using batteries. So that's why we're -- that's why they're growing. It's never been a loss of desire to use the product. I think us getting our financial house in order has dramatically changed our relationship with these customers who want to do business with us.

So my next question is really one of clarification. And I may be reading the tea leaves a little bit here, but your Galp commentary in the press release, 10 megawatts on the 100-megawatt project, it sounds like you could probably ship the rest of that pretty quickly. Is it possible that we see the rest of Galp shipped in the fourth quarter? Or is this something that's going to go out over the course of '26?

We are going to ship the majority of it before the end of the year. There's going to be -- a portion of it that is going to be shipped in Q1, mainly stacks because the stacks, we want to get them there when -- as close as possible to installation and commissioning. So you're correct. We are aiming at shipping the majority of Galp in the next couple of months.

Jose, I think this is probably the largest real deployment in Europe.

The largest and real deployment in Europe right now, yes.

[Operator Instructions] Our next question today is coming from Sherif Elmaghrabi from BTIG.

First on the electricity rights, are those permanently being signed over? Or some years down the road, do you have the ability to come back and use that power to produce green hydrogen?

We are permanently signing them over. It doesn't mean that there couldn't be other relationships established, but we are permanently signing them over. And look, as I mentioned before, by showing we can build plants, we dramatically changed the competitive environment for purchasing hydrogen.

And that our goal is to continue to work with these folks and look for opportunities to deploy hydrogen where it makes sense. So -- and look, I think when you look at what this will do for our balance sheet and the fact that we're taking care -- we'll take care of a good deal of the debt overload -- overhang. I think it will be -- I think investors will see this is really will be a real good decision for the company long term.

And then on the equipment side, for these plants reaching FID over the next 12 to 18 months, it sounds like mostly in Europe. Can you tell us a little more about the different sectors they're in, like oil refining, for example? And really here, I'm just hoping to get a sense of the revenue opportunity for downstream equipment.

So Sherif, we're getting the majority of the opportunities on green hydrogen right now on transformation from gray hydrogen in industry, especially in Europe to green hydrogen. This is the directive from the European Green Deal. So given that, what we're seeing right now is opportunities, as you mentioned, in refineries. There's a lot of opportunity there.

There's a lot of hydrogen that needs to be converted. The laws at the members' levels, at the country levels are being finalized right now, if not final already in many of the countries, and they determine the pace and the quantities of hydrogen that needs to be converted into green. So that's going to drive adoption.

Also, when you think about the same kind of concept, you have the EU moving or pushing industries like aviation and maritime towards e-fuels. So we see a lot of the opportunities also on sustainable aviation fuels and ammonia or e-methanol. So we are seeing the majority of the projects at scale in those areas in Europe and really globally. Same thing in Australia. We are working with Allied Green for an ammonia project, which is kind of the same logic. And the majority of the large projects are in that -- in those markets.

Our next question today is coming from Sameer Joshi from H.C. Wainwright.

Jose, first of all, congratulations for the new role. Looking forward to working with you. Just a sort of follow-ups on some of the earlier questions. Of course, we have Portugal 10 megawatts and maybe a majority of the 100 megawatts going before the end of the year. And then Australia is also emerging. Given the international exposure, are you planning to deploy resources? Like are you increasing your sales presence in Europe and Australia and other regions?

Yes. So Sameer, we have a big presence, especially in Europe already. We have probably close to 300 people in Europe -- Paul. So we have -- if you look at our product development activity, a good deal of that happens in Alphen aan den Rijn, Netherlands. If you start thinking about how we build an electrolyzer product, the products that are going to Galp, the system portion of it are actually built with one of our fabricators in the Middle East, and it's sent to Portugal and our stacks are married at the site.

We have activity in Vietnam. We have a large integrator. We have large integrators in Europe. So we do have a relatively large international footprint, both with fabricators and our own people to support the business. So we have people in the Middle East today, for example. So there's -- that footprint, we've been able to build this business because we do have a sales team in Europe. We do have a sales team in Australia. We do have salespeople in the Middle East.

So that -- we don't expect -- there may be some strategic decisions to make some expansion, but we are there already. And I think -- and more important, we can make products there already. So if you think about Galp, what we're using doesn't really have -- the Trump tariffs have almost 0 impact on us at Galp.

Yes. No, it makes sense. On the cash and balance sheet front, of course, this transaction will provide additional cash or free up additional cash. I think when the last capital raise was completed, there was talk about paying down some of the Yorkville loan. Given all these dynamics, how long do you have a runway? I think -- is it going to extend beyond 2026 with your current cash on hand? Or how should we look at your cash burn over the next 12 to 18 months?

Yes. It's a good question. I guess I'd just put context that if you look over the last 2 years, the fact that each consecutive year, we continue to reduce the burn by 50% to 60%, directionally, it's going the right way, right? So when you look at next year, I mean, we haven't given exact guidance and thoughts on next year, but I would tell you, I certainly expect that trend to continue, and it should be a much more nominal amount.

And when you look at the combination of the capital that we had on our balance sheet at the end of the third quarter plus the capital raised from the recent equity transaction from an existing investor. And then you look at the $275 million targeted on this data center deal, we feel like we have more than ample capital accessible to us to bridge through that positive cash flows. So we're in a great position. And that -- we even have more if we wanted to deleverage some of that, we could. So -- and probably will work with our lenders to do that. So it's just a question of timing, but we feel like we're in a great position to navigate through that bridge and to get to a point when we get that positive cash flows.

Next question is coming from George Gianarikas from Canaccord Genuity.

So maybe this is for Jose Luis. I'm just curious, first, congratulations on the new role coming next year. But also, if we look to March of 2028, 2 years after you having taking the position, how do you think Plug will look different? What are the metrics by which we should sort of judge the performance of the company by then? Obviously, profitability is a big milestone, but what growth drivers do you think we should look forward to over the next couple of years that may be underestimated by us on this side of the table?

First, George, thank you. It's exciting to take over this new role. And on the question, 2028, well, from -- two years from now...

I gave you 2 years.

We're only giving him a few months.

Well, number one, the financials of the company will be in line to what we've been discussing, profitable company now being able to probably think about growth in other areas of the hydrogen market and have access to be able to finance that type of growth. We will concentrate on -- still on ELX. ELX has a lot of room to grow all the way to the end of this decade, if not beyond, and we will keep on being the leaders in that market.

And the more we deploy, the more profitable we will become. Our volumes will go higher and the profitability of the company will improve. On material handling, we will keep on growing. We were looking today at what is the available market for material handling and it is over $14 billion. And obviously, we have only started to scratching the surface on that market, right?

So as more hydrogen is available, the cost of the technology goes down, we will go deeper into that market as well. And then as you said before, and we were talking before, we kind of put a little bit of a pause on high-power stationary. But by that time, probably we will be thinking about taking a gain on that product line and thinking about growing it for applications like what we were talking before, the data center market once we understand and find solutions for the hydrogen equation on that market, and there will be a pretty substantial opportunity for growth in that market as well. So those are some of the things that you may have on the year 2028..

Yes. I would just say a strong balance sheet, strong revenue growth in our core markets will give you opportunities to explore new applications for hydrogen and fuel cells as they evolve. It's clear that hydrogen needs to be part of the global energy solution, whether as a substitute in things like ammonia or methanol production, oil refineries. But execution over the next year will open up a whole new array of opportunities. And I'll be cheering for you as a Chairman.

And maybe as a follow-up, there's clearly a thawing or an increase in activity from an electrolyzer perspective in Europe. When you go into these competitive bids, what's the, I guess, top couple of reasons that you're winning? And who are you seeing from a competitive perspective?

So the other day, somebody asked exactly the same question to one of our customers. And the way that the customer answer was when we look at other electrolyzer companies, there is no other electrolyzer manufacturer that actually has deployed their own technology and operates the technology the way that Plug does.

That is incredibly valuable for companies that have not deployed before electrolyzers, knowing that the OEM, the partner that they're working with, in this case, Plug has done it, is doing it and is operating those plants. That is a competitive advantage that no other electrolyzer company can put on the table.

On top of that, we have deployed at scale. We are -- we've been in this market for almost three decades, and that's also really valuable. And when we start and -- when we have started to show that we can turn around the company and our financials are beginning to improve, this makes a very strong partner for anybody that is looking to deploy an electrolyzer project anywhere in the world really.

Next question is coming from Chris Senyek from Wolfe Research.

I wanted to just clarify on Texas. Like about the DOE loan with activities pause, is that the other location for the electricity rights that was sold?

Chris, I would love to answer the question, but I've been asked not to as part of the LOI.

Okay. All right. Understood. All right. And then maybe just as you continue to shore up your balance sheet, which is starting to look better and better, could you potentially look to divest or monetize your Georgia asset or maybe even your Tennessee and Louisiana liquefaction sites?

I don't expect to. We're going to keep operating. Those facilities give us first cost competitive hydrogen. But look, it lets people know we can deliver hydrogen ourselves and produce cost-effective hydrogen. So I think it's a healthy -- it gives us a healthy negotiating position. The fact we know how to build -- okay go ahead, Chris.

Next question today is coming from Ryan Pfingst from B. Riley Securities.

Ryan, you're going to be my last question ever as a CEO on an earnings call.

So for the electricity rights monetization, are there other opportunities to complete similar transactions based on the assets that you have today? Or will this likely be the only announcement of this kind?

The first question is we do have other asset. And I noticed I didn't use plural. And I don't know if it will be the last one, but we have been engaging in another asset.

Understood. Appreciate that. And then for 2025 guidance, not sure if I missed it, but are we still targeting $700 million in revenue for this year?

Yes.

Our next question is coming from Bill Peterson from JPMorgan.

Actually, probably a few sort of clarifiers or follow-ups to some of the prior questions. Maybe first on the quarter, you just reiterated that $700 million is a target. Maybe within that, sort of the puts and takes amongst the various segments you have. On the comment -- and then on gross margin neutral, I think you're probably saying that's coming off the adjusted loss of $37 million, not the GAAP loss of $120 million. So I guess, similarly, amongst your various segments, what are the puts and takes that gets you there? That's my first question. And then I'll save the last one for Andy on the second one.

Okay. You want to go, Paul?

Yes. And there's three elements, Bill. One is, if you think about the math on the volume, that means it's higher volume in Q4 than Q3. So volume, particularly in equipment sales is incredibly lucrative for us. So that -- every incremental dollar of equipment sales means a lot.

Number two is we've already been making a lot of traction on service. We're trying to be prudent and thoughtful about that progression, but we expect that to continue, and that will actually provide meaningful margin enhancement in Q4 and onward just from that continued progression. It helps us in many different ways. But that's another step function change as we continue to enjoy that positive trend.

And then the last, as I talked about earlier, is fuel. We saw certainly progression in Q3. We expect to see a lot more progression in Q4 as we leverage that new platform, and we really continue to drive improvements off of our efficiencies. So those are the biggest drivers that kind of drive the levers here for Q4.

Terrific. And then again, somewhat similar to some earlier lines of questions. But in the last year or so, you've been focusing primarily on materials handling. It sounds like data center is now maybe back to being an emerging application. So -- can you speak to when you may actually need to make investments to bring on new hydrogen capacity?

Would you prefer to still pursue Texas or maybe expand your supply agreements with the third parties under renegotiated terms? I guess I'm trying to get a sense at this stage, would you need to pull the trigger around Texas at some point? Or maybe it is your second site you're talking about? Or is there any other types of funding you could be considering, if not the DOE loan, which is off the table?

So Bill, I -- when I take a look at our new agreement with the industrial gas company, when I look at opportunities Jose has been developing for folks who are looking to build plants, we're going to be strategic and thoughtful about when we build next. I don't foresee a need in the immediate future. We've spent a lot of time looking at this, and we sat down and we thought about it from a financial performance point of view.

It feels -- quite honestly, Bill, it feels really good to hand off to Jose and Paul a balance sheet that works. We've discussed a lot over the last year about Quantum Leap being improving the income statement. But look, Jose is going to be and Paul are going to have essentially 0 debt. We -- between the $150 million we ended with the $360 million, the $350 million we raised this activity, we're going to focus on let's get our debt down.

And I look in and I want to position them. So -- and we want to position because we're doing this as a team, be position that next year, when Jose goes to see customers, he can say to them, look how strong my balance sheet is, look how strong my income statement is. And as I mentioned earlier in the call, people want to buy from us.

And a strong balance sheet will make it a lot easier. And for every electrolyzer dollar Jose sells, it really contributes $0.30 to $0.40 to the bottom line every dollar. So I think the company is much healthier. And with Jose's leadership, I think the company will continue to expand. And I think growth is tied very, very tightly to this balance sheet. And now it's going to be a much, much better balance sheet.

I appreciate that, Andy. I appreciate the dialogue in the past several years. I look forward to following the progress and look forward to hearing more about the strategy in a few weeks -- or actually next week.

Good end for us, Bill, because I need to remind folks, you can register for digitally for the listening to the Plug Symposium. It's an exciting event. We have many -- what customers are going to be here, Teal?

Probably a lots of customers. We'll be showcasing our electrolyzers with customers like Arcadia. We have customers like Amazon and Uline presenting on customer panels. So we'll have lots of customer showcase throughout the different panels we're excited about that.

I am excited, and I know the team has put a lot of effort in, and we really want to show folks all the great progress Plug has made to date, but probably more important, where Jose is going to take us in the future. So thank you, everybody.

Thank you.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.