Plug Power Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 12, 2024

Key Takeaways

  • In Q3, Plug Power reported $173.7 M in revenue, a 37% gross margin QoQ improvement, and a 27% reduction in cash burn, highlighting stronger financial discipline.
  • The company secured a $200 M convertible note deal with Yorkville Capital at a $2.90 conversion price, aiming to minimize shareholder dilution and exploring additional debt and ITC monetization to reduce equity funding needs.
  • Plug Power expects imminent guidance on the production tax credit and remains on track to close the $1.7 B DOE loan, though the regulatory landscape poses timing and execution risks.
  • U.S. hydrogen plants in Georgia and Tennessee are operational and a Louisiana facility is commissioning for Q1 2025, building a secure green hydrogen network to meet growing fuel demand.
  • With 70 MW of PEM electrolyzers deployed in Q3 and an 8 GW global design pipeline, Plug Power reinforced its position as the largest deployer of PEM technology and secured major orders with global energy partners.
AI Generated. May Contain Errors.
Earnings Conference Call
Plug Power Q3 2024
00:00 / 00:00

There are 18 speakers on the call.

Operator

Greetings, and welcome to the Plug Power Third Quarter 20 24 Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Merrill Fritz, Marketing and Communications Manager.

Operator

Please go ahead, Merrill.

Speaker 1

Thank you. Welcome to the Plug Power Q3 earnings call. This call will include forward looking statements. These forward looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated results from operations and developments and other matters that are not historical facts. 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.

Speaker 1

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 based upon the current expectations, estimates, forecasts and projections as well as the current beliefs and assumptions of management and are subject to significant 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, the risks and uncertainties discussed under Item 1A, Risk Factors, in our annual report on Form 10 ks for the fiscal year ending December 31, 2023, subsequent quarterly reports on Form 10 Q and other reports we file from time to time with the Securities and Exchange Commission. These forward looking statements speak only of the day in which these 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 CEO, Andy Marsh.

Speaker 2

Good morning, everyone, and thank you for joining us today. I'm pleased to share Plug Power's results for the Q3 of 2024 and provide an update on the steps we're taking to reinforce our leadership in the hydrogen economy. 2024 has been a pivotal year, a time of strategic consolidation and focused improvement. Through a disciplined approach to operational efficiency, financial management and technological advancements, we're building a foundation that positions Plug for strong growth and resilience as we enter 2025. Our focus remains on executing our mission while staying in line with evolving governmental policy that continue to support the hydrogen plug economy.

Speaker 2

Plug Power has navigated a dynamic government affairs landscape over the years to help shape clean energy policy. We played a critical role in advancing legislation like the investment tax credit under the 1st Trump administration, a key milestone for our industry. We have been deeply engaged in the development of hydrogen policy with the Biden administration and we do expect that there will be a change in the political climate. This landscape is not completely clear. A positive indicator is that political has reported that the new administration is expected to continue to support hydrogen and nuclear power.

Speaker 2

For Plug, an important near term consideration is that we expect guidance on the production tax credit soon with more favorable terms to accelerate hydrogen projects will be announced prior to year's end. Additionally, we remain on track with the DOE loan process. Taken together, these policies underscore a supportive foundation for the U. S. Hydrogen economy.

Speaker 2

In Europe, support for hydrogen remains robust. I recently returned from meetings with European partners who are increasingly committed to hydrogen as a pillar of the sustainable energy transition. These discussions reinforce Plug Power's role as a global leader as our initiatives are aligned with European climate goals and economic vision. Returning to our operations, our hydrogen production infrastructure in U. S.

Speaker 2

Is advancing well. Plants in Georgia and Tennessee along with our joint venture facility in Louisiana are critical to building a secure hydrogen network. Louisiana is currently in the commissioning phase and is expected to be fully operational in the Q1 of next year, further strengthening our supply chain as demand for green hydrogen expands. Globally, Plug's leadership in PEM electrolyzer CAC technology continues to set us apart. With 70 megawatts of electrolyzers deployed this quarter alone, Plug is now the largest single deployer of PEM electrolyzers worldwide.

Speaker 2

Bloomberg recently recognized Plug as the leading provider of green hydrogen solutions outside China. I also want to highlight that in our application business, we installed not yet recognized over 8 megawatts of stationary power systems with Energy Ball. We are seeing new growth and new customers in our material handling business. My recent trip to Europe also offered the opportunity to meet with key partners, including Gap, with whom we'll be deploying the world's largest PEM electrolyzer systems starting in April 2025. With Iberdrol or BP, we're moving forward on a 25 Megawatt order at their Casa Leon refinery, underscoring our ability to deliver at scale in international markets.

Speaker 2

These collaborations, coupled with Plug's 8 gigawatts and basic design and engineering package for the electrolyzer market reflects the strong demand for advanced hydrogen solution and Plug Power's essential role in enabling a global energy transition. EDGAR has been down, but today we announced a $200,000,000 convertible deal with Yorkville Capital. Under the terms of this agreement, Yorkville is committed to a long position with a conversion price of $2.90 and is restricted from shorting plug stock. Our focus remains on minimizing shareholder dilution by partnering with investors who recognize the company's intrinsic value. Additionally, we continue to explore debt financing and the sale of ITC benefits to further reduce future equity based funding needs.

Speaker 2

Q3, we reported revenue of 173,700,000 dollars driven by strong demand for our solutions, particularly within electrolyzer and hydrogen infrastructure. Our gross margins rose by 37% quarter over quarter with gains across our equipment, service and fuel businesses. We've also reduced cash burn by 27% compared to last quarter, demonstrating our disciplined approach to cash management and inventory optimization. These improvements highlight our commitment to building a financially resilient company prepared to grow profitably in a dynamic environment. As we close 2024, we're confident that the foundation we've built this year has positioned us for success.

Speaker 2

With the strength in balance sheet, strategic global expansion and working to ensure supported government policy, Plug Power is poised to capitalize our new opportunities in the year ahead. Thank you, and I'd like to turn the call over to Paul for a few comments.

Speaker 3

Thanks, Andy. 2024 reflects a critical inflection point for Plug and the ongoing transformation of the company. We embarked on a journey a few years ago to significantly broaden our solutions in the hydrogen economy and vertically integrate on our hydrogen supply. We've continued to nurture these offerings while doubling down on optimizing the operations and cash management. During Q3 of 2024, we saw meaningful deployment in sales into the market for many of our new platforms, which has set the stage for continued sales growth in Q4 of 2024 and 2025 onward.

Speaker 3

In particular, is our launch of a broad range of electrolyzer products. Q3 represents a major inflection point in ramping the electrolyzer business and recognizing the commercial growth in our results. We've continued to optimize the 1st global green hydrogen plant in Georgia, which combined with the Tennessee facility provides us 25 tons per day of capacity and close to half our current annual hydrogen needs. And we have made great progress on the 3rd facility in Louisiana that will provide us an additional 15 tons per day over the coming months. We continue to focus on optimizing the workforce of the company.

Speaker 3

Given the rapid growth over recent years, we had added a lot of resources and this year we've worked at optimizing that resource pool to maximize leverage. Since January 1, we've reduced the global workforce by over 15% to the Q1 restructuring and ongoing attrition where we've not backfilled. We completed many rooftop consolidations and have additional warehouses and facilities we're in the process of consolidating to our 2 main manufacturing sites in Albany, New York and Rochester, New York. We have adjusted pricing across many equipment, fuel and service platforms over which benefits can be seen in our Q3 results, particularly for fuel and service. These pricing impacts will continue to positively benefit results as the year progresses, and we get full periods under these pricing measures.

Speaker 3

We've increased focus on asset levers, particularly targeting inventory. We made a lot of investment over the last 2 years to enable successful launch of these new product offerings. And this year, the focus is on optimizing these resources and we expect meaningful reduction in near term as sales continue to ramp, which will provide a meaningful source of liquidity. Net cash used in operations combined with CapEx is down year from lower CapEx and inventory reductions as well as margin enhancement. We expect the cash burn rate to improve even further over the near term as we continue to curtail CapEx and leverage working capital further and drive additional sales and margin growth.

Speaker 3

Turning to Q4 at 2025, we remain laser focused on growing sales and margins and improving cash flow. Our strategy includes beginning commercial production at our new Louisiana Hydrogen plant and further leverage of our Georgia and Tennessee facilities, driving more equipment sales given our expanded manufacturing capacity, which does not require more investment and provides us an opportunity to readily source 3 to 4 times more volumes, continue driving down costs with further workforce and optimization, completing the targeting roof consolidations, driving additional leverage on our material vendors and driving enhanced fuel network efficiency and service cost profiles. And lastly, leveraging the price increases and yielding full annual benefits as these continue to expand. In terms of liquidity, our unlevered balance sheet provides opportunities for liquidity from a number of different sources. First, our restricted cash balance continues to release quarterly at $50,000,000 at a $50,000,000 rate.

Speaker 3

We've discussed at length the opportunity to leverage inventory. We're targeting additional reduction of $200,000,000 to $250,000,000 in the near term. Sales growth, price increases, improved mix and continued cost downs will continue to improve operating cash flows. And we've been pursuing varied debt facilities and parties interested in equipment findings that we could expand on the platform like we established earlier this quarter with Anthem. Lastly, we're working closely with the DOE to finalize the $1,700,000,000 loan facility.

Speaker 3

We've made tremendous progress and we meet with them regularly. We're targeting to close in the near term and we're extremely clear on the access and the process to successfully close this facility. I'll now turn it back to Andy.

Speaker 2

Well, thank you. I think we're ready for questions.

Operator

Thank you. We'll now be conducting a question and answer session. Our first question today is coming from Colin Rusch from Oppenheimer. Your line is now live.

Speaker 4

Thanks so much guys. Just looking at the balance sheet, guys, can you talk a little bit about how quickly you can start monetizing the inventory here for the balance of the year and into the Q1 of next year?

Speaker 2

Sure, Colin. I'm going to good morning. I'm going to turn that over to Paul.

Speaker 3

Yes. Obviously, one core facet of that is sales. And so you see some of that benefit start to be realized with Q3. And based on our guidance, you can anticipate a much bigger Q4. So we're definitely expecting even more benefit in that reduction in Q4, and we're working with the teams to continue that leverage.

Speaker 3

We have additional reductions and leverage anticipated for the first half of next year. So you should see continued meaningful reduction in that and leverage on that in Q4 and onward.

Speaker 4

Okay, thanks. And then on the restricted cash balances, obviously there's a variety of covenants that I'm sure you guys are working through. Can you just give us a sense of whether any of that restricted cash get loosen up here in the near term or if that is not a real strategy that you guys are thinking about?

Speaker 3

Yes. We definitely work multiple angles on that and there are the routine servicing of those facilities, which has our normal reduction releases. We also have a number of transactions we're closing that will release different pockets of those reserves probably a little bit faster than that, in some cases, that 50 per quarter. But we're also working angles like what we did with Generate a few years ago, where we can actually back lever that because it's effectively a deferred receivable. So it's a meaningful asset that parties like Generate definitely see value in it.

Speaker 3

And we definitely think there's opportunities to factor that deferred receivable effectively similar to what we've done.

Speaker 4

Fantastic, guys. Thanks so much.

Operator

Thank you. Next question is coming from Somaiya Jain from UBS. Your line is now live.

Speaker 5

Hey, guys. Do you see

Speaker 2

Good morning.

Speaker 5

Do you see additional price hikes for the rest of the year in 'twenty five? And I guess what are you seeing as your path to positive gross margins? What could drive that?

Speaker 2

So I'm going to address price hikes and then I'll let Paul talk about driving to positive margins. I would say that we have had significant price increases with many of our customers. Some of the legacy deals, especially in the electrolyzer business are almost completed and all future deals are being priced at a profitable level. I think a wild card in price increase is for the future will be if there is additional inflationary pressure in the U. S.

Speaker 2

Because of tariffs. So we are primarily a U. S. Manufacturing business. It is something that we'll be conscious of aware of if we need to increase pricing because the inflationary environment changed.

Speaker 2

But at the moment, I think the work we're doing to make sure we price everything profitably, we work on cost reductions, well positions the company. I'll let Paul add on to that.

Speaker 3

Yes. And I think Andy touched on a real important point that, as you work through the backlog and you start layering in the new programs that have all been launched at Better Placing, both in material handling, electrolyzers and other businesses, the mix continues to grow and get better and you see more accretion from those events as that happens. But if you look at 2025 and onward, we'll be talking a lot about this tomorrow in the symposium. It's the fundamentals. It's sales volume.

Speaker 3

It's driving down material cost. It's continuing to optimize the workforce. It's all the things that we've done really in material handling and we're now doing in these new platforms that those themes will continue to see continued progression in margin and we expect that to see we definitely going to see that we certainly expect we'll see that in Q4 and we expect you're going to continue to see that in Q1 onwards.

Speaker 2

And Paul, you saw 37 we saw 37% improvement in Q3.

Speaker 3

Exactly. Yes. And that's a combination of volume, price increases, leverage at the PTC, a lot of factors that

Speaker 5

are

Speaker 3

working towards our benefit and you'll see those themes continue into Q4.

Speaker 5

Got it. Thank you.

Operator

Thank you. Next question today is coming from George Georgiouis from Canaccord Genuity. Your line is now live.

Speaker 2

Good morning.

Speaker 6

Hey, good morning, everyone. Thank you so much for taking my questions. Maybe as a first question, I'd love to ask a little bit about your views on the changing regulatory landscape in the United States and how that impacts the way you think about the company sort of at an existential level? In other words,

Speaker 5

do

Speaker 6

you see opportunities to maybe grow in other parts of the world as they kind of push the company forward into more into Europe and maybe other parts of Asia? Thank you.

Speaker 2

So I'm going to touch on 2 layers here. Let me talk about U. S. Policy. And there was a you probably saw the political article about hydrogen nuclear power SAF, people expect that to be continue to have support in the new administration.

Speaker 2

If you kind of look at the issues, first there are what I'll call the regulation landscape with PTC, we expect it to lighten up before President Trump takes office. But also when you look at the Loper decision and you think about what it really what the law really says, we expect that there could be greater opportunities with the PTC. Look, oil and gas likes hydrogen and that has sometimes been a disadvantage for Plug and sometimes been a benefit to Plug. I think when you look at the DOE loan, we have a clear path with the DOE to close that out before change in administration. I'm not going to go into specifics here, but we know the details and the plan.

Speaker 2

I think when you look at grants, we had a good deal of grants last year. And most of those contracts where I think with the contracts where we are the prime, were closed by October 1 for the manufacturing grants. And look, we help create jobs. I also think that we are a U. S.

Speaker 2

Manufacturer who is competing against China around the world. And regardless of one's views of whether there should be a trade war or not, Our relationships with the opportunities that being American made, building American products, hiring American people, work no matter what administration you're part of. When I expand the world, if you look at our electrolyzer deployments, most of the activities happening in Europe and Australia. And parts of our we have built for our electrolyzer business worldwide capabilities with integrators to build our electrolyzer products as well as you can see easily our stationary products and even our hydrogen infrastructure. That kind of that whether it's a Biden administration or whether it is a Trump administration, localization is important.

Speaker 2

And look, most of those stacks will come from the United States, but we really do have a international footprint, primarily in Australia. If you look at the 8 gigawatts of basic design and engineering drawings we're working on, most

Speaker 5

of

Speaker 2

that works in Europe and Australia. So that's a I'm not naive to think that there aren't going to be challenges, but we worked with President Bush's administration, we worked with President Trump's administration, we worked with Republican Congresses, we worked with Democrat Congresses and we will continue to do that.

Speaker 7

Thank you. And maybe as

Speaker 6

a follow-up, can you possibly share some more details on the convert that you referenced during the call that you filed? Thank you.

Speaker 2

Yes. Paul, you want to give the breakdown? Sure.

Speaker 3

And we're working on getting it posted on our websites for more information and hopefully the hedge our system gets up quickly that you'll begin to be public in that form. The net of it is, it's a $200,000,000 unsecured convertible with a fixed conversion price at $2.90 which is close to 46% premium off of where the share price is now. It's 24 months at 6% interest rate. And what's I think really equally important is that the fund has a long view on Plug and has agreed not to short the stock because they certainly have a very positive outlook that Plug you can tell from the premium they expect where things are going to go with us over this duration. So more details to follow, but those are some of the key details of the deal.

Speaker 6

Thank you.

Operator

Thank you. Next question today is coming from Eric Stine from Craig Hallum. Your line is now live.

Speaker 2

Hi, Neil. Hi, Paul.

Speaker 5

Good morning, Eric. Good morning.

Speaker 8

Good morning.

Speaker 9

Hey, so when I look at

Speaker 10

the 4th quarter guide, it seems to me that it's a little wider than maybe it would typically be. Just curious, can you talk to kind of what's in there for the low end? What gets you to the high end? And then I guess my follow-up would just be, I know you had electrolyzer sales in Q2, which a good portion of those were not recognized, were in Q3. Just curious how much of that is left and will impact Q4?

Speaker 2

So in many ways, Eric, we're moving now we're doing the for the electrolyzer products, most of that's been recognized from Q2. There may be some final commissioning activity, which may represent about 15%. Yes. And maybe one deal that maybe hasn't been, but most of that's been recognized. And Eric, we expect that the electrolyzer business will be higher in the Q4, just because we're now doing the commission integration and commissioning of products that most products which were manufactured in the Q3 and being shipped.

Speaker 2

So that's so when you take a step back about what we expect in the Q4, I think 3 items come to mind. One is that the liquefier world is a one-zero world. And one-zero world, we don't really know for the probability of event happening is either $40,000,000 or $0,000,000 So that kind of drives a certain range in that business. The second item that I if you really look at it, the electrolyzer funnel was strong, but as we learn to how we go about recognizing revenue as we get into Q2, that is not as large as we thought, even though the activity associated with preparing for the Q1 2025 is pretty large. We expect again the electrolyzer business to continue to grow.

Speaker 2

And in the apps business, look, material handling is improving when I look at what we have coming in the Q4 and we expect that we'll be on that 20% to 30% growth path come 2025. That's kind of a summary of what I see, Eric.

Speaker 10

All right. That's very helpful. Thanks a lot.

Speaker 2

Okay.

Operator

Thank you. Next question is coming from Bill Peterson from JPMorgan. Your line is now live.

Speaker 2

Good morning, Bill.

Speaker 11

Hey, good morning, Andy and team. Thanks for providing all the details here. Maybe following on the question on the range of outcomes, I guess within your base case and assuming mix, how should we think about the exit rate of gross margin in the 4th quarter? Maybe also take into account any sort of cost reductions you're able to provide? And then specifically, how should we think about gross margins in your fuel business?

Speaker 2

Go ahead, Paul. Yes.

Speaker 3

Appreciate that. So tomorrow, we'll be giving a lot more detail, Bill, on kind of what we see for 2025 and onward and give you more color. But specific to Q4, I would say this, we definitely, as you can tell, expect more sales volume. That helps a lot. We have a lot of capacity and leveraging that will drive better product margins and as we continue to ramp that up.

Speaker 3

I think I wouldn't be surprised if it wouldn't be directionally consistent with the kind of improvement you're seeing from Q4 I mean, I'm sorry, from Q3 to Q2 in terms of directional improvement quarter over quarter. Could be better at the upper end of that guidance. And specific to fuel, you can see in the numbers that we've disclosed that it's continuing to progress in the right direction. So we still have opportunity to leverage even more out of our facilities that we have. And we're also looking at mix opportunities where we can even sell more into the direct merchant market, even better pricing.

Speaker 3

So we're looking and we're driving even enhanced efficiency measures. And so you should see the combination of additional pricing benefits being that have come off over the last 3 months, being recognized in Q4 as well as the benefits and efficiency and leveraging the plants and some of that mix on the fuel side. So it should continue to improve meaningfully in Q4 and then onwards.

Speaker 11

Yes. Thanks for that, Paul. And then I might have missed it, but I guess, to the extent that you can speak to it, how much is left to be done on the DOE loan closing conditions? Is there any sort of long poles, I guess, in particular for Texas? It seems like repo is going well, but or maybe on the capital side, is there any additional capital on top of what you just announced today or has a DOE looking at further contingency reserve requirements?

Speaker 11

Just trying to get a sense of what is remaining to be done and what timing you're thinking as of now?

Speaker 2

Yes. So Bill, I know I'm going to let Paul talk about a process we have going on looking for equity partners, but that is not tied to the DOE loan. And I know everybody would like me to provide detail by detail. All I can say to you is that we know we don't see any tall pole in the tent. We know how to execute against it.

Speaker 2

We've worked with the DOE on making sure there's a clear schedule of events. And certainly, the election in some ways help to structure a schedule that allows us to get there. I'll let Paul talk about the process. We're not dependent upon it, but the process we're using to look to bring in an equity investor also sit side by side with us at the project level.

Speaker 3

Yes, we've kicked off. I think we've talked about a parallel process that looking at strategic and project finance funds and others that could be interested in participating in the capital stack for our pipeline. That's going very well. We've had a number of partners express interest and we're engaging in those dialogues. Actually, some of those partners will be at our symposium tomorrow to learn more about the company and learn more about what we're doing there.

Speaker 3

So I would say the theme is that they look at the commercial proposition of what we're doing in Georgia and what we're forecasting to do out of Texas and that's very attractive. In addition to the fact the DOE is postured with this facility to provide incredibly low cost capital for the majority of that pipeline. So those factors, in addition to the success of us executing on delivering on Georgia, all bode well and is what's driving a lot of interest in this to move forward. So very encouraged and we're working hard at bringing all those things to fruition and more to come in the near term.

Speaker 11

Thanks, Andy and Paul. Look forward to seeing you tomorrow.

Speaker 2

Great. Looking forward to it,

Speaker 5

Bill. Thank

Operator

you. Next question is coming from Craig Irwin from ROTH Capital Partners. Your line is now live.

Speaker 9

Thank you. Good morning, guys. Good morning, Craig. Hey, Andy. So I'm going to ask a tough question because I know a lot of the investors out there are really looking at it from the standpoint.

Speaker 9

And I guess it's best to answer these questions in public when we can, right? So Andy Sure,

Speaker 5

Craig. I hate to be

Speaker 9

the one that brings this, but it hopefully lifts the dark cloud, right? So in the event that we do not see the DOE loan funded, how much flexibility do you have to sort of restructure the operations and pivot versus the business plan you've been working on this last year? You guys have shown a continuous ability to raise capital. So congratulations on the $200,000,000 this morning. You still have substantial cash tied up from the PPAs.

Speaker 9

What do you feel about the flexibility to take a slightly different path than what you've already laid out for us?

Speaker 8

Yes.

Speaker 2

Craig, we've obviously looked at different roadmaps. And we if you think about the business in 2025 and most of 2026, whether Texas is online or not is not going to impact our financials. And I can say that there are European funds, people who I worked with for a long time, who would be interested in being joint equity providers in Texas with us. And look, if you look at Texas, we have the equipment already. It's essentially building out the plant.

Speaker 2

From a project point of view, it would be much better to have the DOE loan, but there would just be an increased effort and activity to bring in an equity partner if Texas doesn't happen. And look, it doesn't dramatically change the next 2 years. I think if you take a step back and look where the business growth was this quarter, if I look at over the last 18 months, I've been in Europe for 10 years and I doubled the number of installations in Europe for material handling in the last 18 months. If you look at most of the electrolyzer revenue, it's flowing from international activity. If you look at the growth possibilities, much of it's outside the U.

Speaker 2

S. And much of it is planned outside the U. S. And I mentioned on the call earlier, I don't think anyone has the integration capability that Plug has established through our acquisition of folks in the oil and gas industry. We have top notch integrators in Vietnam.

Speaker 2

We have top notch integrators in Dubai. We have top notch integrators in Europe. So I think that the pivot will probably have more of an international flavor if the U. S. Policy is more negative than we expect.

Speaker 2

I think I mentioned on the call to the Trump administration was helpful the first time around. I think the overturn at Chevron is certainly helpful. So I guess, been watching elections since 1968 when I was a young kid and it's how life plays out is usually in America things tend towards the middle.

Speaker 9

I would definitely agree with that. Thank you. So my next question, if we look back in history of Plug, right, to your success, your early success with Walmart, you would never have been able to have the tremendous success, tens of thousands of forklifts operating every day, unless you were able to save your customers money with these products, deliver reliably in a more environmentally sound package and save them money. Now in the last several years, we've looked at different pieces of the business model and you've invested a lot of capital in some of these opportunities. Do you still see the same opportunity to save your customers money in things like electrolyzers, in things like heavy transport trucking, and some of these other applications that we've talked about on and off in this last 10 years.

Speaker 2

Okay. I've let my buddy Sanjay not have to speak during this call. I'm going to give him an opportunity to speak up. All I can say is I'm going to touch on electrolyzers and I will let you expound. I mean to me, electrolyzers is all about efficiency of the stacks and construction costs.

Speaker 12

And price of electricity.

Speaker 2

And the price of electricity. So I'll let you run on this one, Saket. So Craig, I think your question is

Speaker 12

the right one, right? There's many instances where we're working on some pretty large mega deals as Andy referred to on our 8 gigawatt of basic engineering design packet. And the electrolyzer offering is in pretty large scale. And by the way, we're being able to talk and have a very healthy discussion with some of these customers because it's basically for a lot of different kind of hydrogen derivatives, if you would, sort of like things like e fuels, ammonia, where electrolyzer combined with the right source of power, combined with right efficiency, yes, does allow them to provide a very, very attractive economic value proposition, right? That's item number 1.

Speaker 12

Item number 2 is when you you touched on this a little bit, but let me elaborate on this a bit. So when you talk about sort of the heavy duty mobility market, we have actually introduced this mobile refueler product, which is a perfect solution because the entire infrastructure of hydrogen fueling actually gets built, right? So it's almost like hydrogen wheels, if you would. And that's a product that

Speaker 5

allows them to do a lot of testing faster, allows

Speaker 12

them to really roll out a lot more vehicles faster, testing faster, allows them to really roll out a lot more vehicles faster even before the entire infrastructure kind of comes into play, right? Then when you start thinking about our liquefier business, while it's been slower, we haven't lost any opportunity really. It's just that project haven't moved faster. And even with that offering, we have one of the best energy efficiency solution in the market. So even from that perspective, as you go from gaseous hydrogen to liquid hydrogen, we're really providing a better economic value proposition for our customer, right?

Speaker 12

And Craig, one final thing that I think we'll be able to do here, what we kind of think of this as like a facility sales where by providing a combination of our electrolyzer, our liquefaction technology, our hydrogen fueling solution, whether it's hydrogen trucks or the storage, by giving all that entire offering as an enterprise sales and a facility sales, we can do a lot of optimization from a design standpoint, really continue to drive the cost and increase economics and benefit for our customer, right? So I think there's a lot of situation where it's really cost savings and a better value proposition for our customer and that's what's going to drive the growth for us.

Speaker 9

Excellent. Then last question if I may. There have been some really interesting things that have come across my desk in the last 25 years, right? So green hydrogen is interesting and it looks like it could be a phenomenal business over the next number of years. But something that probably has a much longer gestation period is the use of small nuclear reactors for direct production of hydrogen.

Speaker 9

Now you guys get approached by pretty much everybody in the market since you are the market leader. Do you see any potential breakthrough hydrogen production technologies that could be available in the next decade that could bring down the cost of energy production by an order of magnitude?

Speaker 2

So that's a interesting question. I'm going to let Sanjay take a shot at it and maybe I will add on when you

Speaker 12

get done, Sanjay. So Craig, when you start to think very further out, if you would, right? So when we start to even before I come to your small modular reactor question, obviously, that's become a bit of a topic to draw here in the near term, right? When you really think about our electric grid, the challenges with our electric grid, right? The electric grid, right, the amount of the renewables that's already on the electric grid and how we're going to keep adding more of that, right.

Speaker 12

The pathway to really getting to a grid that keeps becoming more and more renewable is really going to have to go through hydrogen, right, because

Speaker 5

I think hydrogen can be an energy carrier, it can be an energy carrier, it can be an energy carrier, it can be an energy carrier, it can be an energy carrier, it can be

Speaker 12

an energy carrier, it can be an energy hydrogen, right? Because I think hydrogen can be an energy carrier, it can be an energy storage. Then all of a sudden, when you think about some of the stranded renewables, potentially even at negative clearing price, you've used that to produce hydrogen. Then you put that hydrogen via pipeline or in salt cavern, which by the way from a cavern perspective is not that expensive to store that hydrogen and you can store a lot of it, right? Then you can turn around and use that hydrogen in terms of our stationary product, if you would.

Speaker 12

And by the way, our working view right now is electrolyzer drives a tremendous growth for our company till the end of this decade. And somewhere in that timeframe, our stationary product will start to have a major inflection point of growth, right? So this is where you can actually envision a world where we can really head down the path of almost that 100% renewable electric grid here in North America. Hydrogen plays a major role. Our stationary product starts to play a major role, not just for the data center or the EV charging opportunity, but even for the peaker plant, right?

Speaker 12

Even ends up becoming a base load with the right cost of hydrogen where grid ends up becoming a backlog, where it starts to become super exciting. But as it relates to the small modular reactor, Craig, I mean, you know this quite well. From the levelized cost of hydrogen perspective, it's really all about levelized cost of that electricity, right? As scale grows, as there is more and more of that and as the installation becomes larger, scale becomes larger, if the LCOE of that small modular reactor ends up becoming attractive, then certainly could be a very big and an attractive combination between that as well as producing green hydrogen is how we would think about it. Would you like to add anything?

Speaker 2

Yes. I would just add, Sanjay, I kind of have a view very similar to you with the world where hydrogen is being generated when loads when they need to put that load on the grid. Stabilizing the grid. Stabilizing the grid. Or have you start thinking about where the then it becomes a capital cost issue and an efficiency of the stack issue.

Speaker 2

And we do have roadmaps to continue to drive towards that peak maximum efficiency of 37 kilowatt hours per kilogram. And there's lots of R and D and a lot of the work our team does is really how to improve the efficiency of the stack. The other is how do you make systems which are Legos so that there's very, very little construction on-site. So I think you'll see learning curves of 20%, 25% for electrolyzers from a total offering when you put construction in site and improvement in efficiencies and then couple it with how to generate hydrogen off hours. Coupled with that, Craig, and I mean Sanjay is dreaming a little here is that driving stationary products efficiency up is also that whole efficiency gain is really the heart of what make electrolyzer work and what make fuel cells work to improve the value proposition to all potential customers.

Speaker 9

Understood. Well, thank you for that and I look forward to tomorrow. Thanks.

Speaker 2

Great. See you then Craig. Thanks Craig.

Operator

Thank you. Our next question is coming from Dushyant Alani from Jefferies. Your line is now live.

Speaker 5

Good morning.

Speaker 1

Good morning.

Speaker 8

Just wanted to quickly ask on the planned maintenance for Georgia and Tennessee. Just given the recent start up, could you just share a little bit about what the maintenance involved and how do we think about maintenance cadence going forward?

Speaker 2

Yes. I think nothing astronomically surprising. I think like most plants of this nature will have and I think we had a shutdown in early October for general maintenance, which lasted about a week. And we'll have, like most folks running facilities of this nature, shutdowns that will last 7 to 10 days during a year, probably twice a year. We just got done through 1 in Tennessee.

Speaker 2

It was pretty much normal routine. I think the important item is to make sure that we and we did this during the Georgia and Tennessee is make sure we maximize local storage during that time. And so that the storage on-site will provide a sufficient backup during the time we're going down for outages.

Speaker 8

Got it. That's helpful. And then just the second one on the IDC transfer monetization. I think you guys have previously talked about roughly $31,000,000 and then I think a total of roughly $70,000,000 Just wanted to check on the timing of that and how do you see that shaking out?

Speaker 2

You want to take that, Paul?

Speaker 3

Yes, sure. So we're working diligently on it. It's difficult because it's never like a lot of things plugged out, it's the first time, it just has taken longer than we'd hoped. But we actually have multiple parties that have expressed interest and we're nurturing those conversations. I think there's still a relatively good chance we can get it done in the coming weeks.

Speaker 3

And there's meaningful additional buckets of opportunity there on the heels of this first one. And we've got one of the top tier broker firms in the U. S. Engaged who handles tax equity monetization for many, many companies that's working with us. So I'm very optimistic that we could do it potentially even for year end, if not even sooner.

Speaker 8

Got it. Thank you.

Speaker 2

Thank you.

Operator

Thank you. Next question is coming from Chris Sung from Wolfe Research. Your line is now live.

Speaker 2

Good morning, Chris.

Speaker 13

Hey. Good morning, Andy. How are you? Okay. Good.

Speaker 13

I wanted to just ask about the DOE on another way. Just given the pending change in administration, I wanted to get your thoughts on perhaps like the durability of the loan. Like, do you need to reach financial close in order for it to be considered safe? Or is the conditional commitment like, can the conditional commitment be canceled?

Speaker 2

Yes. I would just say we are laser focused with the DOE to close before the change in administration. And from my discussions with the DOE, I feel quite comfortable, but I'll let Paul add anything he thinks we should add.

Speaker 3

Yes. I guess I would just say, so the way and this is in the words of them, with the commitment that the federal government has committed the money to the program. So this is more about execution of the document. It's not necessarily something that it's absolute that we have to do it before, but it obviously would be a lot easier and good for everybody to get this behind us. And so it's a meaningful thing for Flog.

Speaker 3

It's a meaningful for them program for them. And everybody is focused on getting this done as quickly as possible. And it just be in some ways more simplistic for us to get it done quickly. But the critical thing for me is that we're really clear on all of the final steps here, and there's a pretty good alignment. And as Andy said, we've got a really good detailed plan with all the final things that have to happen, and they're really engaged.

Speaker 3

I mean, the amount of energy and support that they're providing to help us get this over to finish line is magnified and support really helpful. So I'm excited and optimistic we're going to get this done beforehand, and we'll continue to provide updates as we see that unfold.

Speaker 13

Okay, thanks. And just one more for me. I know it's probably the last time we're going to hear from you guys before the 45 rules are finalized. On April 29.

Speaker 2

So you'll hear from me tomorrow.

Speaker 9

Yes. We look forward to

Speaker 13

seeing you tomorrow.

Speaker 2

Yes. We actually have some real experts that will be there tomorrow who are Republican lobbyists and Democrat lobbyists and you'll get to hear from them. But sure, what's the question?

Speaker 13

Just like what would like plug's ideal final rules be? Is it loosening additionality, time matching, regionality? What would you guys want?

Speaker 2

Well, we believe as many of the senators who wrote the bill that additionality is not in the legislation and additionality should not be part of the rules and regulations. I think on time matching, we'd be very comfortable looking like Europe where it's 2030, 2,032, where it fully takes in. I think that again time matching, it's really questionable whether that was part of the legislation. And I think regionally, we like to see about 4 or 5 regions across the United States and that probably would be the ideal situation. I think our view all along has been the administration should follow the law instead of interpreting positions which were not part of the congressional intent.

Speaker 2

So that would be the ideal situation for Plug. And I got to tell you, that's probably one of the reasons I mentioned that because of Loper, we think anything that's different probably will be challenged by others.

Speaker 13

All right. Appreciate the color. Thank you.

Speaker 2

All right. See you tomorrow.

Operator

Thank you. Next question is coming from Amit Dayal from H. C. Wainwright. Your line is now live.

Speaker 11

Thank you. Good morning, everyone.

Speaker 2

Good morning, Amit.

Speaker 14

Yes, Amit. So with respect to this 8 gigawatt BEDP contracts that you have, what's the delivery timeline for these contracts? Is it like next 12 to 24 months or maybe longer?

Speaker 2

I'm going to let Sanjay take that, Amit.

Speaker 3

Yes. So

Speaker 12

I mean it all varies, right? So I think what you should expect, however, though, and out of that 8 gigawatt, we certainly believe there is more than a gigawatt that likely gets to FID and goes from being basic engineering design packet to actual new orders and booking sometime in 2025. And keep in mind, we're going to keep adding to this 8 gigawatt. This number is not going to stay stagnant, right? And I'm sure there'll be some that are going to drop out as well.

Speaker 12

But that's how you should think about it in terms of how this goes from sort of like the front end study to getting to full FEED study, detailed engineering design, then getting to final investment decision. And we've actually identified quite a few of those opportunity that we believe talking to our customer get to FID in 2025 and becomes a bookings opportunity.

Speaker 14

And Sanjay, is that 8 gigawatts? I know it's early stage overall, but is that dependent on any sort of regulatory incentives etcetera to materialize in complete manner?

Speaker 12

Yes. In that entire 8 gigawatt of basic engineering design packet, I mean, a lot of that as Andy referred to earlier, right, majority of that is really in Europe and Australia where so the policy here in the U. S. Doesn't really have any interplay with that. We do, however, have about 300 megawatt of opportunity related to the U.

Speaker 12

S. Market that could actually get pushed to the right or that could actually need some further clarity. But out of that 8 gigawatt, for example, there is a 3 gigawatt opportunity in Australia. There's another 1.5 gigawatt opportunity again in Australia. There's 500 megawatt opportunity out of that 8 gigawatt that's in Europe, right?

Speaker 12

So most of this mix is really Europe and Australia, if you would, in terms of what makes that up.

Speaker 14

Thank you. And maybe Andy, just last one for you for me. Yes. Do you see nuclear as a competing energy source relative to hydrogen? Or should we think about how hydrogen and nuclear can power sort of different applications and be designed for different purposes?

Speaker 14

How do we see because it's going to take time for nuclear to come about as well. So it's not a near term threat obviously, but longer term, how do you see nuclear and hydrogen sort of coexisting?

Speaker 2

I actually see it as a good thing. I kind of view them as complementary. Sanjay talked a great deal about how to use nuclear power to generate hydrogen when demand is low. Even though with the new nuclear power devices, you were able to ramp up and down. Certainly, you want to generate as much electricity as you can to support the network.

Speaker 2

And I think you have a combination of hydrogen being generated at all powers, which was important for us to drive down equipment costs as well as construction costs to make sure that hydrogen is low cost as possible, beating stationary products, which replaced gas turbines to put power on the grid during peak hours. We did a lot of work with one of the leading consulting firms in the world. We really believe electrolyzers are the big market opportunity for Plug today and during the rest of this decade. But as those electrolyzers get deployed and as stationary products become more and more efficient, they are the replacement for gas turbines. And I think we have some activities going on kind of in the 20 28 type timeframe, which can tap into hydrogen pipelines at data centers.

Speaker 2

And actually, I think that'll be kind of the first view of what that world will evolve into. So during the next 5 years, it's electrolyzers for generating hydrogens for substitution in ammonia markets, in refineries, in concrete manufacturing, all work that we're doing today. But ultimately, I'm a real believer in nuclear. It's really nuclear and hydrogen and fuel cells and solar and wind, which make the grid up ultimately.

Speaker 11

Thank you, Andy. That's all I

Speaker 8

have. I appreciate the

Speaker 2

color. All right.

Operator

Thank you. Next question is coming from Jordan Levy from Truist Securities. Your line is now live.

Speaker 15

Hi, Henry on for Jordan here. Thanks for squeezing me in.

Speaker 2

Hi, Henry.

Speaker 15

Hi, Andy. Maybe to start with just on the near term outlook for the Materials Handling business.

Operator

Can you just talk

Speaker 15

to the improvements you're seeing around kind of customer receptiveness to some of the price increases from the beginning of the year?

Speaker 2

Yes. Always tough to increase prices and we had increased prices pretty dramatically. But you will see an uptick in material handling business in the Q4. We review it actually twice a week and feel real good about that. And we see a growth of 20% to 30% next year, which Jose and others will roll out during the symposium tomorrow.

Speaker 15

Thanks for that. And then just

Speaker 11

I should

Speaker 2

actually add this. We found during this difficult process that our value proposition was stronger than we knew and has been shared with our spike customers. And for many of our customers, look, there really isn't an alternative. They move goods more rapidly, bring electricity to buildings, I think everybody knows challenging. The backlog on the grid is 3.5 years.

Speaker 2

The resiliency of our value proposition, material handling, after a tough year, we got rid of PPAs. We got our revenue probably would have been $100,000,000 higher this year if we would have kept the PPAs in place. But the value proposition is much, much stronger quite honestly than we thought.

Speaker 15

Thanks. That's helpful. And then just looking at the path to gross margin positive here, and then maybe this is more of a question for next year, but other business lines you all have looked at or could look at to divest of in the future to kind of further improve cash flow and the margin profile here?

Speaker 2

We're always looking at the businesses and we've sat down and we've looked at the value and we don't see when you look at the whole spectrum and Sanjay, myself and Paul spend a lot of time on this over the months. And so the answer to your question directly is no to that.

Operator

Thank you. Next question is coming from Tim Moore from Clear Street. Your line is now live.

Speaker 7

Good morning. My DOE conditional loan and Good morning. Good morning. I'm actually at the airport coming to your symposium, but my DOE conditional loan and 45 production tax credit questions were to be answered. But I wanted to ask based on the election outcome last week, when would you maybe start marketing or targeting oil and gas customers?

Speaker 2

Well, if you look at our electrolyzer business, I think our biggest customers are oil and gas customers.

Speaker 12

Absolutely. Yes.

Speaker 2

We already are. So I mean, Gap, Iberdrola BP, MOL, they're all oil and gas companies and probably a good deal of that 8 gigawatts in backlog is oil and gas. And hydrogen derivatives. And hydrogen derivatives.

Speaker 7

Hydrogen derivatives.

Speaker 2

So that's our so there has been a big, big focus. And I think you touched on a point that the market for hydrogen and green hydrogen today is really and this is a positive. You don't have to change your whole way of doing business. It's really a substitution of gray hydrogen versus green hydrogen. And in Europe, there's a goal of 42% green hydrogen by the replace gray hydrogen by 2,030.

Speaker 2

And whether it happens by 2,030 or 2,033, that's really the push.

Speaker 7

Understandable. Yes, I was just wondering if you're going to target them more because we keep reading about their appetite for blue hydrogen. I'm just wondering if you're really going to step it up and try to substitute it ahead of blue hydrogen when you've

Speaker 2

Yes, we are and we're doing it today.

Speaker 7

Good. And the other question I had was on your BEDP of the 3 gigawatts with Australia, the Allied Green Ammonia, you put out that nice press release last month about the binding framework agreement that talked about late 2026 or early 2027 for system delivery. Do you think there'd be a sizable amount of revenue recognition that could flow through your income statement in the first half of twenty twenty six given that it's complicated design package deal with milestones?

Speaker 2

I'll let Sanjay take that once and see where this is part of what he does every day.

Speaker 12

Yes. So first half twenty twenty six, probably not a big revenue rec opportunity. It's probably second half twenty twenty six and twenty twenty seven. Just given the size of the project and the scale of the project, there's a decent amount of work that we both kind of have to do, right? So given where we are today, it's probably more second half rather than first half of that year.

Speaker 7

Great. Thanks and I'll see you tomorrow at the symposium.

Speaker 2

See you tomorrow. Safe journey.

Operator

Thank you. Next question is coming from Andrew Percoco from Morgan Stanley. Your line is now live. Good morning, Andrew.

Speaker 16

Thanks for taking the question. Good morning, Andy. Thanks for taking the question. I have a higher level and maybe more longer term strategy question here. And it's just kind of it's around the thoughts around some of these new markets like stationary power, on road vehicles.

Speaker 16

Obviously, it's been somewhat of a challenge to scale those businesses. The unit economics of green hydrogen has kind of ebbed and flowed depending on prices of renewable electricity, which obviously has stripped it higher here over the last 2 years. I'm just wondering, is there a scenario where you would be okay just kind of going back to your roots and providing the material handling units and maybe meaningfully reducing your exposure to some of these newer fuel cell markets just in order to kind of get your business and your company back to a point of financial strength?

Speaker 2

I think Andrew, you're missing the huge in that question, the huge opportunity outside the United States to substitute green hydrogen for gray hydrogen today as well as derivatives like ammonia that and methanol that Sanjay mentioned. That market in electrolyzers, just take a look at, we did $56,000,000 in the Q3. It's going to be higher in the Q4. And that to me is the huge market opportunity. When it comes to the hydrogen plants, nothing works if we become dependent on 2 companies to provide hydrogen.

Speaker 2

You're already seeing the value of the hydrogen plants in the financials as the gross margins improve. That's we need those plants to make material handling and stationary ultimately work. So I know that may sound interesting, but when you get down to where the markets are growing and the fact that electrolyzers and hydrogen are bigger markets and material handling today and you look at the margin improvements in hydrogen and just going to continue to improve, that's not a path we're going down.

Speaker 16

Understood. And maybe if you could just elaborate on what global markets do you see the most attractive unit economics for electrolyzers and maybe some of your fuel cell technologies? I mean, I think we've seen obviously in the U. S. Some challenges.

Speaker 16

But even in Europe, there's been a number of some fairly high profile green hydrogen projects get canceled or pushed to the right a little bit. So I'm just kind of curious where that bullish commentary or thought comes from? What global markets are you seeing next rank?

Speaker 2

So Sanjay, you want to take it. I think the 8 gigawatts of BEDPs piece is one example.

Speaker 12

So Andrew, again, I think if you just start to even think about our funnel, right, that number will be much larger than that 8 gigawatt of basic engineering design packets. So some of the project getting potentially canceled, some of the project getting moved to the right. Frankly speaking, given where the state of this industry is, that's not a surprise. But the way we're looking at it is, who are the customer, have they secured offtake, are they going to be able to get financial close, are they going to get to FID, right? And that's the approach we've taken.

Speaker 12

So when you really look at our pipeline on the electrolyzer side, right, that 8 gigawatt probably continues to grow, some probably will fall off, but we feel pretty good about as I just briefly mentioned earlier, right, like 2025, we certainly expect a pretty big booking year for that electrolyzer business and that mix is going to be Europe and more likely Australia. That's the mix at this point in time.

Speaker 2

I know one customer told us yesterday, Sanjay, that we've been underselling our capabilities when it comes to electrolyzers and hydrogen plants. I mean, it was a large global player. I have another large global player that's in our Rochester facility today. So if anything, we probably I think when folks see Georgia, see Rochester, see our integrators in Vietnam and Dubai and Europe, I think they step back and say, who else has the infrastructure and capabilities to support this market growth.

Speaker 16

Understood. I'll take the rest offline. Thank you guys.

Speaker 2

Okay.

Operator

Thank you. Next question is coming from Kashy Harrison from Piper Sandler. Your line is now live.

Speaker 2

Good morning.

Speaker 17

Hey, good morning all and thank you for taking my question. I just have one, want to be mindful of the time here. I had a question about the fuel cell ITC. It expires at the end of this year. And I was wondering if you expect your fuel cell products to qualify for the tech neutral ITC or PTC?

Speaker 17

And if not, just how are you approaching the expiration of ITC in your pricing discussions with customers for 2025? Thank you.

Speaker 2

Yes. Good question. We're probably the only fuel cell company that can really leverage tech neutral. It was challenging because the regulations are a mishmash at the moment. But because we have our green hydrogen platform, it puts us in a much better position than any other fuel cell company.

Speaker 2

So it's almost like going back to the last question. Our hydrogen plants and green hydrogen plants are really important. That being said, we are working and have been working. We think it's good for the entire fuel cell industry for the ITC to continue. And that there is work that I know there's over 18 Republicans who have signed up, many of them who sit on House Ways and Means to extend the ITC much like they did in 2018 under President Trump before.

Speaker 2

So important, yes, but we're probably in the only company that in the fuel cell industry that because of what we've done with plants have work arounds.

Speaker 12

Thank you.

Operator

Thank you. Next question is coming from Amit Thakkar from BMO Capital Markets. Your line is now live.

Speaker 2

Amit, last but not least. So what you got?

Speaker 16

I don't know about the lease part, but 2 quick ones. Just wanted to follow-up on the convert real quick. So the buyer of the convert, they do have the ability to convert into common shares, I guess monthly. Is that correct? And what are the conditions that they have to have to kind of convert on a monthly basis?

Speaker 2

Go ahead, Paul. Yes.

Speaker 3

So they have the option if they'd like over the term to amortize a portion. It's a limited amount per month. If they do elect that option, we have the option to pay them back in cash. If we choose to, we can provide shares. It's not automatic that they get shares.

Speaker 3

So they have a long view of FLUG and where the stock will go and then they're certainly with the no shore position, a clause that reasserts that. We think this will continue to show progress with the gross margin and the growth of the company. And but they would like that amortization capability as we for the duration of the loan. So it's not a foregone conclusion they will ask for that, but they have that optionality.

Operator

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

Speaker 2

So, thank you for taking the time today and I look forward to seeing many folks either online or in person to plug Symposium tomorrow. So thank you everyone. Bye now.

Operator

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.

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