PLUG Q3 2026 earnings call transcript, November 9, 2026

Got it. That's helpful. So just switching gears for our second question here on the electrolyzer side. How some of the early operating data from some of your initial projects like with GELP and Iberdrola helping you generate and finalize new business on that front. Can you just talk a little about the value that these early projects are providing just as a reference for prospective customers? I didn't hear well the the question. Can you please repeat it? Thank you. Yeah, I mean just looking at the electrolyzer side just some of the early progress you're making with whether that's some of the operating data you're getting just in this commissioning process how that's helping you generate finalize new leads just kind of as a reference for prospective customers. oh no thank you that's a good question very question what number one is positioning really well for second phases on these projects the 25 megawatts for Ibedrola MVP is just a first phase on their refinery in Castellón in Spain the refinery uses much more hydrogen that's just the 25 megawatts so first is positioning us very well for future business the same thing with GALP the first 100 megawatts is what we're doing right now but GALP is also planning another 100 to 200 megawatts in the same site and deployments are going well commissioning is going well so it's really helping is really helping for new business with the same customers but the same thing is happening with other customers I can tell you for example that I've been talking to a another customer in in Greece it is a similar situation as BP and Iberdrola is the local utility company with the local oil

gas company doing a joint venture to produce hydrogen and the reference of Iberdrola is actually similar project 25 megawatts is really powerful when we are talking about a we are already doing this type of projects not only we are planning them we are now commissioning them in the case of the of the Iberdrola and BB project very very close to operation now so very good reference points for future business and thank you for the question. Yeah thank you I'll turn it over. Thank you.

Thanks for that clarification.

And then my second question is on, on the cash burn, and we're sort of getting a little bit of nuance on this, the restricted cash release of that. Do we have sort of an internal expectation as to how fast or what the pace at which you will have the release of restricted cash? I think it has been steadily going down. So that's good, but just wanted to see what the cadence is over the next two, three, four quarters. I'm going to let Paul answer now. So just for context of your question, one thing we've talked publicly about is that we've transitioned the business model away from this legacy. Subscription-based PPA structure. And so we're on the process of converting those legacy customers to buying the equipment and there'll be sales of the equipment and move into service. And so the legacy PPA contracts are winding down and then the bank deals that back those. deals which is what the restricted cash is largely associated with is winding down so there's a natural progression anyway and it's historically been about about 50 million a quarter. It's probably about down to about 40 million a quarter at the moment. We certainly expect that to continue but one other thing that we're doing is is where. We can we're actually buying out a lot of those programs early and that enables us to release that restricted cash which is why you see it coming down probably a little faster than normal and that means we can use that money to pay off the leases and buy the equipment back at very reasonable.

terms and it's helping a lot with the profitability of that line because then we can take those assets over longer periods of time and in some cases we're actually able to sell that equipment to to the customer underlying customer so I'd say. We're expected over you know the majority of it to wind down over the next two years or so but again it you know it's probably 40 million on par for per quarter minimum and then it may go faster as we if we continue to buy out more work more of these bank deals over time. That color was it. Thanks a lot. Maybe I will squeeze one more question here and this is I'm sorry if it has been already addressed but for the product margin the product revenue margins how should we expect that to trend would the fourth quarter be a positive and a significantly positive product sale quarter a margin quarter I mean. Yeah for Q4 we absolutely expected to step a step function improvement and the reason why is if you look at the math and you follow what our projections are and you know we were forecasting the full year you know 15-16 percent it kind of translates out to that 280 million number for Q4 and that's about a 40 percent improvement off of Q2 sales level. Majority of that is material handling equipment so that postures us very well where you should see a very you know strong contribution margin off of that equipment in Q4 and so that means you're going to see you know progression in the margin for equipment as well.

Got it. That is helpful and good luck with the 4Q. It looks like this is going to be an exciting quarter.

Thank you Samir.

So, thank you, Colin.

you know, in Q1, we will see that cash release. So, you know, slower than we were expecting. We're still working very hard with the stream to see how we can move the projects forward, and in the meantime, we're concentrating on trying to get the PPA restricted cash. Okay. That's perfect, guys. And then, you know, just from a cost perspective, you know, I'm just thinking about, you know, the next 15 to 18 months and some of the kind of volatility in the supply chain, kind of broadly speaking, in commodity prices. Just want to get a sense of how you're managing some of those inputs and how we might think about. But that getting potentially passed through from a pricing perspective.

There's a couple of different elements to your point, your comments, but let me talk about the supply chain and the cost side. Yeah, I'd actually say I'm super excited because, you know, the last couple of years we've been really focused on. driving inventory levels down, and that's created a challenge of, you know, working with the supply chain of driving additional leverage. But we've made a lot of progress, and even though we have additional opportunity there, the shift is coming to a point where with the growth of sales, we can actually work with suppliers with next generation. of improvements, next generation of price downs. And so we're actually seeing, you know, resurgence, if you will, of opportunities where we're actually getting more leverage on that supply chain scope and working with our partners. And obviously sales growth helps a lot in that. So, and, you know, things, there's, you know, volume. Helps a lot in terms of, you know, being able to optimize your manufacturing process from a scrap and standpoint. You know, so there's no dynamics, but we actually haven't seen tremendous pressure at a point where some of the, you know, we don't have the same reliance on things like copper and other precious. metals at that level that, you know, create that kind of dynamic. So we haven't really felt that. You know, there's always some levels of it, but, you know, I'd say it's more on the positive side in terms of the leverage of the volumes and so forth. And, you know, on the pricing side, I guess I'll turn to Jose Luis in terms of, you know, pricing strategy.

And so forth with working with customers. But they're pretty astute. They pay attention to what's going on in the market. They're pretty astute to what's going on with us. And so, you know, pricing is more of a holistic conversation with them. But, you know, I don't know that I necessarily see the need or the opportunity to kind of, you know, focus. Specifically on commodities in terms of pushing those kind of pricing points through to the customer base. Yeah. We went through price adjustments, as you know, over the last couple of years, especially on the hydrogen side. We continue every year reviewing, you know, hydrogen because that's specifically the one that is affecting more on a year. Over a year basis. I always think about pricing with customers associated to the value the solution provides. We believe that material handling brings a lot of value to our customers. And this is why, you know, we are able to hold prices over time. The other thing is that over time. Also, we discover more value that the technology brings to customers. For example, in the environment that we live in today with utility power constraint, our solutions actually bring an advantage to our customers in terms of managing better the utility power that they use. We discuss this. In past calls. So as we evolve, the technology evolves and the use of it evolves, the value that we provide to customers also evolves and increases. So from that point of view, we believe we are well positioned to keep the pricing what it is. And in the case of the hydrogen side, we review price.

As needed, based on the cost of production.

Thanks so much, guys.

Thank you, Jason.

Good question. I'm going to let Paul read it out. My favorite question I get to answer all the time, and I think I'm excited because... You know, we're knee-deep in the quarter, and we're seeing it unfold. There's still a lot of work to do and a lot of things we've got to accomplish. But at a high level, I guess, you know, what I would share with you is, what I have shared is that, you know, if you look at our guidance that we reaffirmed today in context of where we're at to date, it would, you know, mathematically, it gets you to roughly... about 280 million of sales in Q4. And that's about, you know, 40% growth off of Q2. Majority of that is equipment sales, and most of that's material handling, which we've actually, you know, we've really ramped the margin profile on that. If you ever have the luxury of coming to see our plant here, one thing you... notice is that we have a tremendous amount of opportunity to, you know, scale volume and get even greater operating leverage. So every incremental piece of equipment in dollar for sales, especially on the equipment side for material handling, offers significant contribution margin. It can be in the upward range of 30 to 40 percent. So... That's going to be super powerful. We talked about fuel to date, and I'm knocking on wood. We've been running our plants very well this quarter by avoiding rebalancing the sourcing mix. You know, we think that could be five to seven million dollars of opportunity to to improve.

that margin profile by by not having to do so many pickups. And then there's a handful of other dynamics, you know, warrants we expect to be slightly down because of the mix with with, you know, higher sales to Walmart is an example. And there's, you know, other operational efficiencies we're driving. But the key is really fundamentally sales, volume and mix. That's the key driver for the quarter and will be one of the biggest bridge factors as we look to achieve our targets for Q4. Yeah, so we are lesser focused on on on executing. As Paul said, there's mix, there's, you know, all the things that we need to actually get done in the quarter. There are a couple of commercial items that we also need to close. We have a line of sight. It's going to take work. And but we are, as I said, focus on on on getting to EBITAS positive in Q4.

Thank you very much.

Thank you. Thank you.

Hey, Jose, Luis, how are you? I wanted to just ask. about the 8 gigawatt NBDP pipeline. How much of that is still active? How much has it grown? How much could you realistically contribute that, say, 27 revenue? So that, most of it is active. Some of it is what you're already seeing converting. For example, the 200. 280 megawatts with Arcadia. And a couple of the projects that we have with Arcadia, specifically one in Texas, another 280 megawatts, very similar to the one in Denmark, are part of those eight gigawatts. So you're seeing already some of those projects either. Moving towards FID, signing agreements with pending notice to proceed. You will see other projects that we're going to hopefully announce before the end of the year. But out of the eight gigawatts, most of it is still at play. Most of it are still moving ahead. Some of the revenue... ...we already seen, as I said, Orica is already in percentage of completion revenue recognition, and we're going to see a little bit of it in Q4 and the majority of it in 2027. The Carlson Power projects are the same thing. As we get the notice to proceed for the projects with Arcadia, you will see some... ...revenue and the revenue will start very quickly because the majority of these projects, being so large, are projects that are set up for percentage of completion. I would also say that we always talk about the 8 gigawatts funnel of qualified projects and opportunities. In reality, we have a much larger funnel on electrical...

We just, and I think I've mentioned this before, we try to pick the projects that we feel are better qualified to convert into FID in that funnel and in that part of the funnel. Some of them come in, some of them come out, but as a total, we believe that we have, you know, a good opportunity to keep converting. those projects into reality. And as I mentioned before, the legislation in Europe is becoming a reality. In countries like Spain, in France, there's also a big push for that. In countries like in Germany, we are seeing some of those projects becoming more and more feasible. And more and more bankable. We were going to talk a lot about that during our symposium. We have some of our customers like Arcadia coming to the symposium. We have a couple of bankers. We have HI24 and we have Societe Generale also coming to the symposium to talk about how these projects are moving and are advancing to FID. So I recommend that you... If you join the symposium, then we can talk a little bit more about how these projects are becoming financial. Yeah, fantastic.

Thanks for sharing.

I'll definitely attend. And just on maybe the refresh cycle, I know you talked about that 20,000 unit number. I believe that's over for three years and you gave the data... the point of 2,000 to 2,504 Q. Are you able to share sort of cadence for the rest of the remaining refresh cycle? I mean, we could, but just, you know, so you get the idea is we did our first project with Amazon, and I think I mentioned this in a prior call. In October of 2016, and after that, we started basically deploying, you know, in large numbers, sites every year. So 2017, 2018, 2019. One of the years, I remember, we deployed probably about 30 sites with around 200 and 50 to 300 units per site. So that's going to be the cadence that we're going to see. And that's going to be, you know, just with the Amazon site. With the Walmart site, as I said, we start the kind of the new wave of refreshes in Q4. With Walmart, we've been doing refreshes for several cycles already. But the new wave of refreshes starts now with 2,500 or so units. And next year, we'll see some more as well. So it's going to be, the cadence is the same cadence as when we installed them originally. Fantastic.

Thank you so much.

Thank you.

Thank you.