Plug Power (PLUG) 9 Aug 182018 Q2 Earnings call transcript

Ladies and gentlemen, greetings and welcome to the Plug Power second quarter 2018 earnings call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. It is now my pleasure to introduce your host Teal Vivacqua, Director of Marketing. Teal. you, Thank

begin. You may

for Harbor service reductions, our including Good XXXX We statements forward-looking morning of XXA include the you. investors. be sites to XXE statements welcome testing of statements, opportunities in revenue, year is further market that for deployments of and quarter the intend and earnings and Power GenKey forward-looking about covered to ProGen, second limited and the it Securities XXXX. on-road Securities will and be Safe to Amazon but Plug statements including collections Section relationships and XXXX, contained by the applications regarding gross call. usage GenDrive and full expectations electric vehicle including, XXXX for to Thank bookings, our derived the and the cash XXXX cash expansion margins. Act gross and our not margin, in to in to from future positive Exchange Walmart and relationships believe these those of impact expectations This forward-looking outlook units, revenue cost future liquidity in call expansion Europe, of achieving of the growth, Section provisions of We communicate and Act flow the important

and XX, Report on on fiscal may various because they for the on definitive Factors, not XA, statements the which of statements uncertainties that on as uncertainties forward-looking our March would are well limited made year made Power's statements to XXXX results but call. These we unduly Annual update from we any reports call involve file Risk point, are or forward-looking proxy to a SEC Andy actual our CEO, as the I time-to-time the risks they XXA over filed statement from only under Plug undertake like differ materially item the as the this intend However, XXXX, rely after investors XX-K day those and other this SEC. to XX, Schedule including and with cautioned to forward-looking statements are and turn do ending the with December and discussed discussed Marsh. factors, speak Form not not At in to result risks as

and morning good Teal you Thank everyone.

We of developed capabilities Plug relationship set a unique and at Power. have

starting believe for it's the other As but provide market future. the fuel developing our a become statements the and financial to we times are in been commercial pioneer in some in results dividends struggle the mobility visible work markets in our cells, will of we

labor continued our demonstrate sales to first really Plug sourcing our costs we for XXXX, the Power and of our quarter in service showing have the to Amazon to and of as compare XXXX. in-house Hydrogen XX% of relationships products ability second up our global margins. and look our the and and When performance. quarter and margins you quarter of have The and performance. improving $XX.X stack margins XXXX, X.X% of ability the of X.X% increase Walmart a Gross positive, gross second at reliable. has Just gross versus negative continue you see and with can million become benefit is over those were revenues numbers, take developed reduce improved quarter-to-quarter our over the in gross utilization in an more adjusted look second

the third with our application MEA we opportunities developed projecting in our service up and the revenue value addresses will in hydrogen range a Plug projecting the revenues are a market leveraged quarter, material half. and million believe applications. with $XX and relationships the will unique a and unparalleled handling of remain and With capabilities jump six the market. we fueling which fuel customer know XX% the focused that are station for cell reach, There these range forklift have we proposition Power we in over and zero stacks, million for leadership $X million fuel are second to dollars. of year product can capabilities over with designed a in position on We of cells, network reach be million building other EBITDAS million in the market EBITDAS are $XX an XX% minus market these We industry. across building trucks that broad improvements breakeven between In we for

selective the in the will us market next our allow success in first and Our be market choosing partners. opportunity to future

vans interest seeing for delivery globally. are support and in our equipment solutions ground We

that to-date operating that used harsh suggest been Example products ability deployments running as applications much are are delivery Our has to benign we FedEx in more application vans is these changing environmentally for our spectacularly. new our offer rapidly of and to in environments.

commercial building a business material and We starting financial see the real-world Plug's far reemphasize. me big leader let Finally, in applications. by in to benefits. the handling were

operated XXX Our have hours. products million over GenDrive

and questions. the starting moving grow, I are are the Power position will Hello? cells markets. will take Paul as fuel We is available for segment to in future. Plug other And your could now for to leverage be appropriately mobile our expertise and

please. line we open Adam, for questions, can the now

open while questions, line to waiting me successes have for or we a we had. be So the just few are that let highlight

with quarter. added we deployed our new we first customer, this example, units For

One deployment, had of in retailer exciting. U.S. the quite the XXX largest unit

the systems markets they and reached are had also be have India global products. to products our We and deploying China, Plug and Power's backup power utilizing be Africa they in qualified a will for looking of one system which integrator

and both wins very positive. Teal, Q&A? recent quite for both Teal? business the that are ready applications excited looking are We we about is and note, On

Yes.

with We are Andy. our connect just operator, trying to

We our operator. lost Just more moment. one may have

Instructions]. [Operator

first Our comes Chris from Souther of question the line Cowen. from

Your live. line is

morning. Good Hi.

Good morning Chris.

what quarter? you and us walk the through could of if some and guys are I through levers you there? takes walk to the for the quarter margin you gross are just Can wanted fourth puts looking improving to third see

question? take do answer Paul, you to want that that,

absolutely. Yes,

a it's think combination. I

a all, of have mix margins make second equipment are sales favorable we in increased as our talked and lot. half. really we sell First the on good as more benefiting we from We equipment

the have half. past, do talked business about XX% we second As XX%, about in the we of our in

So that volumes margin should overall and we nicely expect nice to the contribute mix.

we Secondly, cost push heavily continue to down. on

of that part then on fuel burn on reducing the a progress so as we we leverage made we that sustain cost in have in units to labor things units And continue go you contribute. continuing those making as service in and expect that rate, second our And the terms the as of well field the doing and those we seen, are improvements on half. improvement have into lot

going So the really benefits those and second those combination half enjoy going to next the continued really should drive of should into we year. operating more and into leverage

I the helpful. And the are It's What that wondering program. That's road. vehicle is looking great the see you kind if could then of was on there? maybe to on touch FedEx timeline for guys

Sure. I one. take will that

and actually operating has with the interaction XX van Plug running the FedEx road. So Power on filling days, the been and FedEx last on a no keeping truck and we it between have been for

presented be the the scheduled we at able FedEx with but solution meeting one quarter, of and honestly, a to FedEx third units should are with a of provide presented talk at to the DoE have XX rollout the the Workhorse. about more with beginning competitors presentation August of And There the happy next unit. with the quite and their insight to end We and quite of they the a discussions FedEx was cells. fuel and

have is even working same yet. program We The at time. the not integration for the stage been on the competitor

has And Plug made, in of which you forklift operations a one like of it's the really, capabilities is where used about So XXGs a working the think, is of I developed. vibration. and is to program you I in think that. critical Plug think trucks statement I see shock on when statements

freezers these developed so because XX have much, Quite it simpler in is have of a the XX and over degrees, out vans we all working shock at is dream it's the application drive operating time. because in, these minus stable units And And a are on environment delivery absorbers. stay capabilities at consistent. degrees. honestly, much You

cash know positive next I Thanks. And one. should think the like How about liquidity? second we looks last cash the in half overall guys of burn a move then year were kind into and year to you the of looking flow.

here? So you you I say the that think wondered, half back about just how for guys can

you Paul, that take want one? do to

And turn this we operating are year cash starts and were of And you if look for all that in actually actually, The quarter substantial year volumes up. half as and up Actually, that and second to overall margins improved benefit. obviously build saw we It terms certainly the first as half cash well. that turn a lot the the half absolutely. helped at fourth be we expect flows similar effect. flow in helps free flows should the convert, EBITDAS second volume, Sure, cash of positive in improved in our year. we will a in free the positive forecasting last

very a we good are think I So position. in

those by the which actually asset we well. facility. those improved value. our two have amount half that serviced as of under first and given gets It's the substantial Green as today, ITC. second structure the we will make in in economically restricted the struck reinstatement this overall programs and That's we really that us Bank And which greatly year. the have our half, will $XX second lot released a this as enterprise of of stronger about new as closed of the providing XXX% of we and well cash PPA sit is been tremendous spread, don't expect also release We debt add a only real to compared And finance we of of in has both be as more million overall cash year close the have liquidity those transactions.

And the position so with end we nominal fairly a year there. will

have us. of options a available have So we pretty wide we range to good,

the sit the as year year. And so, next on we we and in good spot navigate of a into balance

will in hop guys. the Thanks queue. I

Thanks Chris.

you. Thank

Our B. next from FBR. Riley question from Carter comes Driscoll of line

are now You live.

Good morning Carter.

Good summer morning morning having. Good we lovely morning the Hopefully are Good surviving Andy. Paul. Teal.

the retailer talk a can continued their strong you engagement the maybe in Amazon year? the the that contribution the the you I XQ? XXX performance half is, about have and just for of and second expectations Walmart few highlighted, follow-ups. the in from of units, revenue question First

will I So question are half and Paul, I of and the in take you Paul let part. the different will spots. the first take second I

So here. are coordinate trying we to

well in that and I during has assets, there the over moment, no large Walmart's XX have improving profile. this validating we to we the know working, usage when retailers, years. And we working and It's This months, on has the the very, for at I customer new their them six their a been that found, improving productivity about operations will of proposition. large customer. on So very at at customers, And one with can't had and you that, Amazon, again case, five we freezers. what centers. next fleets, with would know in the me prove believe we be with distribution honestly, for expect Walmart the results or This working is that's heavy reason of six Walmart similar as going value deployment retailer they both quite

into really bring to it fold. are we excited the So

That's good to hear.

Amazon like deal products. and that when first are think a you I take about that, Walmart want the with to certainly do we the positioning question? helps of part think Paul, relationships when you

Sure Andy.

quarter. add when able look award, we being and as incremental nice won more. Amazon Just had Walmart, an for as from sites. actually the QX we out to we growth three the first And benefiting volume from continues little are programs context, outside Walmart so and sites a and the that well was of at Amazon. as year, achieved them in there QX their the then in deployments third in in two did spread we the in bulk sites with quarter traction. year, to and XXXX Last of actually example, we additional quarter working We This the

with do continue We been programs have revenue under increase recognition. see there. the not we to Today, most recent them

traction. an and it much do those terms PPA see Amazon see from don't expect of statements you the both these other on you But GAAP you the of the customers our some second other So as and in payments the momentum but half. as we in of continue to impact customer into increase of

new customers PPA the be just talking right? Walmart, about I adopted not am clear, PPA have sorry, you just structure? structure are to The is the

yes. Right,

Sorry, yes.

China, consistent Andy, the changes? you And any Has have a it the important, very of date right sounds talked and finding scope partner. in all there to Okay. had the what's All think a bit discussions and more be maybe on in I partner such been But like it's right. that as in back tariff remarks, year-end you trying prepared forth that question. find right changing as you find about little the twofold are of or so a you as have the though timeline said you to Is a consistently, able partner? at now? impact might

think China. question, have I Carter. good that's really a balanced a continued approach to as I very take And to

Power's So have there many of the [indiscernible] invested Plug issue shareholders heavily the in. press quite about in

an that two values past relationships. have progressing. least, down are companies So is The we of engaging process Western their we discussions moment been at believe have we the at and with appreciation similar, business from partners with to

where just where be business the knowing market. having be have just understanding am legal that saying and I going am at saying today taken, I is at to steps going are the am to entering the Plug that point partner this not steps be Just and would we this the I I point not is to of am and

expect So this not anything would I year.

And actually, there be do that And in of opportunities, to me, the we it those position cases. won't think part will I to some know it is a take the who work near-term at I with and I better five are we to of But really pursue are the have Carter, unique believe company I I ground most a are think this that those broad. going people helped But in have engage on the has that I globally, year. XXXX, breadth kind something. with discuss the at XXXX, am I active don't the opportunities. North think FedEx support or in handling in I especially But and talking really want the market, Europe we other I us look And with look America. material opportunities, equipment, done discussions ready to the at I opportunity I China. people XXXX, seen haven't in I and think I continue yet. look deal four have

the trying old terms is you the clarification, more are because wanting it of to for? issues in up, more the of agreement or get them what willing economics, little sense a a of China maybe some than the are here. the just And Just of you isn't to scope IPs give discussion aren't hoping

IP I would say of and requests. the the breadth

Okay.

So is big concern. IP

and new move infrastructure perspective? you least Can least positive side an grow? that will and the plate maybe No in as well side, cost directionally about the which grow possible on territory some only technology because downs, talk in big at from margins should service And continue the equipment you side, positive gradually maintain broadly expect on maybe or at doubt. territory? fuel about then margins we talk Yes. fuel on Do as obviously, the you positive continuing progress cost

Great.

So good with it me let hydrogen. hydrogen, start was with And quarter.

and progress three liquid made in by hybrid in have which number two of two by novel systems the we improving systems the the include hydrogen like reformers systems, tweaking our Now quarter. efficiency of and did in deploying the our we past first our number margins tanks

sale, price. year, reformers variations, is the with a down, resale we control up over think few hydrogen But mix based on sites I general, some having have today just which hydrogen the and in business usage. coming and today, we customer will a

the these help that the sale, margin. out down in always The in margin. relationships business leverage the you XXXX, their gas that think time it's and be the I from X% because is portion fixed lower. to will that resale Plug is system generates our of a opportunity the but systems in XXXX, opportunity And significantly real you hybrid grow to basis, variable in consider in think when I cost think an drive have cost for

a resale that was for few treat sale, I years, would if the like business So least. I at it typical margin, modeling next

base Any about talked return doing territories on to in Okay. different model? couple production of potentially centralized update a a the Northeast. You maybe

Yes. large not for actually Actually people, we we are putting rather spoke Chicago know, model. hub lot we people about there have facility, where distribution area and don't our large, but square have, most with generation XX,XXX of some probably and a a onsite we considered it's in facility foot have

that especially is Power. small believe center So work Plug profit a system ongoing, provide for backup and and that could for customers customers support help become large we really

me. just now for from two all Are ones Rochester? Maybe MEAs more you shipping quick

Carter, to off the I the one the for XXX actually line. expect range first would this to as own So of with us we stacks in XXX our speak, are somewhere do coming MEAs.

Okay. Got it.

exciting really though. it's think I

So the impact on-road process, XX% the stacks you but XX%. that By be have we to see of we to added by not XXX our other I thought a asked Rochester, our with think is are developing to they seeing see how as to all it's statements. us have GM been once prices our mobility own about our Plus own helpful overnight in benefit products. reduce and MEAs, that we directly that folks cost start X,XXX year of should engineers our financial we X,XXX mentioned using the using applications. cost in this MEAs, structure and look, what extremely for hire address before, our to units I our stack represent get of we about scales And going can to

could ground know I the discussion discussed? basis. Thanks. progress And Carrefour that and what and vans maybe call support about wrap out as Maybe well? territories with Europe? the in in talk made a maybe maybe with you talk haven't about of have environment for in some inroads a on just group delivery You you we Europe interest global

Yes.

two I progress for in So quarter mentioned will to doing the with leadership of pleased quarter. in And and Carrefour small talk I the we proposition us has studies are I both At going like been been the and deployments the and weekly France look with at customers, I next new the third we be second mean to steps. really going end previous have thing did well. Europe here, value the them in about retail we to-date. reports

they pleased, are think I pleased. we are So

equipment, happy are going our that are there. are delivery in on like new have are we we and the opportunities present van, Europe We the of have in as two with ground we to we we a looking And the work also, few with companies products also in engaging with mobile of on sites. main with one U.S, continents, Europe activity. one support actively The China, three customers actually

the I back. all will get you. taking Okay. Appreciate questions. Thank

Sure, Carter.

and Ladies Eric the next Craig-Hallum. gentlemen, line Stine our from comes of question from

Your is line now live.

Good morning Eric.

most Well, going with am call, everyone. have maybe I the two. been in morning to questions but asked early Good here stick

the stands? to customer, about you been five it maybe six you quite talking maybe third the have on years on in an a are Just same you so level one. and this took confidence been has retail on boat that past update mega But talked that You that customer, You where the one. about in

Yes.

large dealing hope, So you customers. longer with unfortunately negotiations. are about XX been always to especially you than take months it nine It's when

really this And that included. am want to positive. emphasize not in I the I when year that are for is provided moving guidance quarter, we We ahead.

I phone you the ones And the no the the sign, our impact be on know, So shareholders. it here, will guidance. first has to guys Eric, once on people

the on Maybe Right. just metal stack. second one

characteristics? really it fiscal it a are you get little going about just benefits geared start bit it of as so a XXXX? across in will you to given the ideal like Is impact materials So in you but things know end the Obviously stack year, talk XXXX. thinking platform, handling, to I use into that the towards of it's that's application? impact that how got on-road, maybe sounds more just this fiscal is but it's

Sure.

shown designed for since more is as the industry. we into is applications. think But it the before, in is big a our us same it all I to help have First, on-road applications aggressively power the step best-in-class density,

we Kind beneficial with So weight cost in value were Those able case example, it were and previous of higher of and units a had actually to XX%, value one tank the very strengthened to compelling. quarter, interesting down some able we units our an eliminate material improving work XX% even makes in add large packaging have Walmart the increase been OEMs to in the handling the our and our with put driving which deal, density are and in of proposition. our more deployed we size by the the of proposition. great really

be next is line, of Our second years. plates will cost. And the handling to across the using all MEAs is products of lower too by and material thought of product drive it our going is in volume couple metal our the the that cost during develop structure to

for So the I always everyone It's a will leverage and Plug across easy you, and there. design with think developed that's up kilowatt Plug. it I knows applications most my to tell for has the on-road product, thought have really process product And for us it be plate which economy business. scope tenure. it XXX your as vehicles technology, interesting to push during opens that, the better, got best really most reach is

back others and jump line Thanks. Thanks the in will for that. questions. Good. I ask let

[Operator Instructions].

next Amit with Our Dayal line the question from comes Wainwright. of H.C.

is now live. Your line

morning Good Amit.

the for question the asked. have just on of around are from questions year. you my commentary guys call, been like, looks tracking a It guidance. the Just all the other Most well

guidance wondering little down bit am narrowed been more? why a I hasn't So the

for exceed handling six a for in It's having been this years, that one or industry around have five Well, material our we business now, guidance that certain. of that's good house question. actually this low the orders end

hit of pushes positioned anyone that are can guide at to know that they the guidance we and and sure really and something end not Now be make low number. if when out somebody look our first to we the at to Power numbers but we be at a well that Plug a people want don't the then trust the quarter, position give disappoint that they to

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and million, at the am $XX far math, $XX another quarter. million would done we have I if this about saying so suspect you I look

So quarter, both the strong. think quarter will I third and fourth

questions guess all my have and follow-up most Thank I will that's were asked. offline. it. other Got I I of you.

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after think talking to that's cell to the We come that's industry. PEM the are folks fuel And customers really partners and in awes really other the potential I in them our industry. what paid when unique facility,

quarter. your time look third the thank you forward and to today So for

does and Ladies this our for gentlemen, conclude Thank today. teleconference you.

have line Thank computer. at You this may time wonderful now day. and log disconnect off and a participation you for your your