Plug Power Inc. (NASDAQ:PLUG) Q2 2023 Earnings Call Transcript

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Chris Dendrinos: And then I guess maybe just on my follow-up here, and I apologize because I think my phone or Kashy’s might have cut out during his last question. But in the letter here, there’s — I think you mentioned $45 million of incremental investment costs kind of in the quarter for growth. Is that like investments that are going to have sort of pay dividends going forward or is that sort of things that you had to do in the quarter to true things up and I guess get infrastructure where it needed to be? I guess, how should we think about the benefits of that incremental spend?

Paul Middleton: Well, I mean, the short answer to your question is absolutely yes. I mean, when we think about — just to put some context. Sales of our electrolyzers will be 4 times the size in volume than we did in the first half. And as we grow into next year, the volume is growing dramatically. And this is a product that’s very quickly generating profitable product margin that is incredibly attractive. And it’s one of the many areas that we have opportunities for this ASP management, so because of our unique position in this space. So the short answer to your question is this absolutely has value in helping us propel these incredibly significant platforms that can be incredibly accretive to the company, and you’re going to see the benefits of that. So hopefully, that helps provide the color you’re looking for.

Operator: Our next question comes from Andrew Percoco with Morgan Stanley.

Andrew Percoco: I’ll just squeeze one quick one in here, most of my mine have been asked. But it seems like you’re pushing pretty hard against additionality. And I’m just curious, what — in a world where additionality is required, what does that mean for your business and margins in the near term? Maybe just ask it slightly differently. What are you currently assuming in your margin guidance in 2024 and 2025 as it relates to the hydrogen tax credit?

Andy Marsh: So Andrew, let me take a step back and remind folks, the plant that Sanjay has rattled off Georgia, Texas, New York, Louisiana, all that work started and start moving forward before the IRA. I’ll let Paul answer the second part of that question. But we have real demand for that hydrogen regardless of how the regulations are written. I think the reason, I take such a strong opinions about the IRA, Plug along with people like Cummings, Air Liquide, we’re actually deeply involved in helping architect what the language was. And I can tell you, it never came up. And so maybe that’s why I might be — feel quite strong about it, because it really shouldn’t even be a debate at the moment. But let me let Paul talk about the margins profiles and how he thinks about.

Paul Middleton: I didn’t hear the complete context of your question though…

Andy Marsh: What was the margin impact, Paul, if we don’t get the production tax…

Paul Middleton: Well, $3 — I mean, the way it’s phrased is holistic, $3 a kilogram is meaningful. We’re not going to not get it all. We’re going to get a substantial portion. And if we don’t qualify who will. So I think we’ve got a unique position in terms of all of the relationships we have in Washington to help shape this in a meaningful way for all the things that Andy talked about. And so this year, you talk about Georgia coming on, we’re expecting to start accruing that benefit right away. And so it’s going to have impact this year. And as we move into next year and turn on additional facilities, it will have even substantially more impact. And so when you talk about $3 a kilogram the majority of that, if not all of it, in the short term and midterm, the majority of it, we get to recognize and appreciate. So that’s incredibly impactful for the near term.

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