We would have been even more focused in the first quarter, but boy, we’re not — we actually expect we’ll be naming names over the coming year. So the answer to your question is yes, Craig. And, look, while I look at our business, if you want to take a step back. Sanjay’s activity in electrolyzers will become our dominant business probably in ’25. And that — because when you look at the growth rate and the amount of activity has going on, and the material handling will become — will remain a substantial portion of our business and it will remain a driver of our hydrogen business. As I mentioned earlier in the call, by the end of the year, we expect to be using 30% more hydrogen than we did at the end of last year. So there is growth luckily because of — part of what we’ve gone through here, we’ve been able to see the value proposition stronger.
And not only is there growth, but we think with hydrogen, we’ll be close to breakeven by the end of the year. And so we see significant expansion of the business.
Craig Irwin: Excellent. And then just two quick questions around green hydrogen. Do you maybe have a cumulative tonnes or some other metric that you can share on the production from Georgia and Tennessee? That would be really helpful for people to frame out how that ramp has gone. And then on green hydrogen, $18 a kilogram, I’ve talked to different people in the market, and there are suggestions that you can get quite a lot more than that for green hydrogen. So there may still be a little bit of an arbitrage if you can sell that in the open market. Can you maybe help?
Andy Marsh: I’m going to take the first part, and I’m going to let the analysts here beside me, take the second part of that question. So as an operation guy, we’re running Tennessee and Georgia at about 80%, 85% at the moment. When I look at — we’ve been ramping — we can get to 100% capacity out. Logistically, you’re probably just from an optimization point of view and delivery and logistics we’ll probably be running that 85%, pretty much the 90% all quarter. That’s how we’re kind of looking at it, Craig. We’re not looking at 100% capacity. But when I look at the flows the last three or four weeks, that’s about where we are. So Sanjay maybe you can talk about the arbitrage opportunity and how you’re thinking about that?
Sanjay Shrestha: So Craig you’re absolutely right about that, right, given I think what we have done here in Georgia. So — but look, our mission always has been to make sure that you keep driving the price of hydrogen to a level where it’s a great value proposition for our end customer and not try to be more opportunistic if you would, right? Having said that, given our production capacity, given some of the discussion we’re having, so there is clearly an opportunity for us to do a spot sale. We are having those discussions, live discussion with many players in the industry as we sit here right now, given that Georgia is now, as Andy talked about it, at the capacity that it is. Tennessee is running at that 80%, 85% capacity, and we got Louisiana coming online.
We know what we need internally. We know what’s available. And those discussions are having. And logic there is absolutely a right one. And on this call, I probably don’t want to quite get into the exact pricing number. But your point is very well taken. And yes, there is an arbitrage opportunity and that should absolutely help, especially as you think about Q4 of this year, really helping margin, growth, revenue and everything for our fuel business.
Craig Irwin: Great. Well, congratulations guys on some significant progress in a difficult period. You made a big difference in a number of items.
Andy Marsh: Thank you, Craig.
Operator: Thank you. Our next question is come from the line of Chris Senyek with Wolf Research. Please proceed with your questions.
Chris Senyek: Hey, good morning guys. Thanks for taking my question.
Andy Marsh: Good morning, Chris.
Chris Senyek: I wanted to just follow up, Andy, on a previous question clarifying the DOE loan. You don’t need an equity investor for conditional commitment. But would you need investors or partners to reach a financial close?
Andy Marsh: No. That’s an easy one. I’m sorry Chris.
Chris Senyek: Yes. No, that’s helpful. And then can you perhaps remind us on the timing for receipt of proceeds from the DOE loan on receipt of the conditional commitment?
Andy Marsh: Chris, when I look at it, we want to keep you really informed about what’s going on and the exciting development of ahead. It’s important to recognize we have ongoing progress since — we’ve really been teaming well with the DOE. And as I said earlier, we’re really — we have great forward momentum. And on all this, we’ve really hope to share more information soon.
Chris Senyek: All right. Fair enough. And I guess my final question is on the volumes or spot volumes that you could probably sell into once Louisiana comes along. Can you perhaps quantify how much you would be able to sell? Thanks.
Andy Marsh: Maybe take a shot at that, Sanjay?
Sanjay Shrestha: Based on our ongoing discussion right now, we anticipate it could be somewhere in that 10 tonnes per day kind of a neighborhood.
Chris Senyek: All right. Thank you, guys. I’ll turn it over.
Andy Marsh: Okay. All right, Chris.
Operator: Thank you. Our next questions come from the line of Jordan Levy with Truist Securities. Please proceed with your questions.
Jordan Levy: Good morning all and appreciate all the details. Maybe for Sanjay here. On the electrolyzer sales side, I think you touched on this, and I appreciate there’s a lot of complexity in the sales process and shipment process there. But maybe just to take a step back, given some of the commissioning delays and that sort of thing. Can you just comment on sort of the overall visibility of that segment? And what might give you confidence in that visibility improving through the next quarter and the remainder of the year?
Sanjay Shrestha: I mean, Jordan, as we touched on this a bit, right, for 2024, this is really about executing on our existing backlog, right? So we are executing on over 25 5-megawatt system. We have over 25 1-megawatt system. We are executing on multiple 100-megawatt large-scale projects. So it’s really execute, execute and execute again, right. So that’s the team for electrolyzer business for 2024. Now another piece here also is, look, I mean, we are doing a lot of installation. We’re operating in so many different countries and continent, if you would. And specification, requirements, all the different things that goes on from the site acceptance tests tend to vary from location to location. And this is something we’re learning along with our customers.
And frankly speaking, as we’re launching the product, getting into this rapid ramp mode, there’s been a lot of learnings and some of these have taken a bit longer than we anticipated, which is why we’ve got the Q1. Some of that is shifting into Q2. Some of the Q2 likely goes also into Q3. But as we get enough systems installed here in Q2, this also helps us from being able to actually do a transfer of the title to the customer even before we complete the entire site acceptance test, makes it even easier from the revenue recognition perspective, right? So that’s why from a cadence standpoint, we feel pretty good about it. Look, there’s a lot of work that the entire team is doing, very proud of everything that they do on an everyday basis to make sure that this is all happening.
You should expect that there is going to be a pretty big sequential growth in Q2 and another one in Q3, and it should really be a pretty meaningful year for our electrolyzer business in 2024. Beyond that, you should also expect based on this BEDP new bookings materializing setting the stage for ’25, ’26 and beyond as all this BEDP work that we’re doing with our customers working hand-in-hand gets into that final investment decision.
Jordan Levy: Got it. Appreciate that. A separate topic, a quick follow-up. On the $40 million in write-downs, you referenced in the release, I know we’ll get more details on that in the Q. But just wondering if should expect those to kind of continue through the year or anything on that?
Paul Middleton: Yes. A lot of that is labor and overhead in the plants. When you have a lower level of production activities and sales activities, you just don’t get the opportunity to absorb as much. And so there may be a little bit of that in Q2 as we continue to ramp and scale. We expect it to dissipate tremendously in the second half as we move towards substantially more sales activity and more production. There are also another favorable counter to that is that the continued progress in the cost down. And so you have both effects happening, which is we’re reducing costs and we’re increasing absorption by producing more and selling more. So I think that you’ll see that trend down substantially as we move through the year.
Jordan Levy: Got it. Thank you all.
Operator: Thank you. Our next questions come from the line of Ameet Thakkar with BMO Capital Markets. Please proceed with your questions.
Unidentified Analyst: Hey, good morning, everyone. You’ve got Ryan on here for Ameet. Thanks for taking our questions.
Andy Marsh: Good morning.
Unidentified Analyst: So I was just wondering if you guys would be able to provide an update on where the cash balance is today? And sort of along those lines like if you’re planning to provide an interim update on the issuance under the ATM program since the last update at the end of February? Just if you tap out at all this current quarter. Thanks.
Paul Middleton: Yes. Obviously, we’re going to be filing our Q today. So there’ll be 100 pages of detail that will have a lot of that in there. But I’d say roughly — what you’ll see is roughly $150 million that we raised as disclosed in the Q. And that’s where we sit through today. We — I will share with you — this wasn’t part of your question, but I’ll share this. We’re laser-focused on debt solutions. I mean we’ve been working that conversation for a long time. We’ve got a couple of parties that we’re closer to that than we’ve ever been under terms that are things that — our biggest challenge today is it’s just been in finding terms that we feel like are meaningful and helpful for us, where we’re going. But these are two parties that we feel extremely well about and have done a lot of diligence and know them very well, and we’ll see whether that manifests into conclusion.
But that’s our primary — it has been and it continues to be my primary focus is finding debt solutions that could fund the balance of our burn, which if you do math, it means we in terms of the total context of the 70% reduction of the last year, in terms of what we need, we’re more than halfway of that capital sourcing. So the need will start to dissipate a lot, which is helpful. But and progress that we continue to show is putting us in a better and better position for sourcing that capital. So hopefully that helps provide a little bit of color on how we think about it.
Unidentified Analyst: Yes, that’s great. Thank you so much.
Operator: Thank you. Our next questions come from the line of Andrew Percoco with Morgan Stanley. Please proceed with your questions.
Andrew Percoco: Great. Thanks so much for taking the question this morning. I guess my first question is a little bit higher level and coming back to I think Colin’s question before on just power procurement strategies. And I think I’ve asked this before, but the market seems to be evolving pretty quickly. AI power demand, there’s a lot of demand for clean power. It seems like we’re pretty constricted in terms of how much supply we can bring to market, at least in the US. And your business is very much dependent on low PPA prices. So that supply demand imbalance has been pushing up PPA prices at least in the US. I’m just curious, can you just provide a little bit more context in terms of how you’re thinking about power procurement for your additional green hydrogen facilities in the US beyond Texas and New York, which obviously already have offtake agreements signed?
