Plug Power Q2 2026 Earnings Call Transcript

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Provided by Quartr
August 10, 2026

Key Takeaways

  • Positive Sentiment: Revenue guidance was raised to 15%–16% growth for 2026, from 13%–15%, following first-half revenue of $342 million, up 11% year over year.
  • Positive Sentiment: Gross margin improved to approximately breakeven from negative 30.7% a year ago, while operating expenses fell 50% year over year and quarterly net cash usage declined 58% sequentially to $61 million.
  • Positive Sentiment: Material handling showed strong momentum, with GenDrive deployments more than doubling year over year and service revenue rising 82%; two major customers are expected to refresh more than 20,000 units over the next three years.
  • Positive Sentiment: Electrolyzer demand is advancing through new project milestones, including FIDs for Carlton Power and Orica, while European hydrogen regulations and subsidy programs could support a multi-year growth opportunity.
  • Negative Sentiment: Plug remains dependent on substantial second-half equipment volume to achieve its goal of positive EBITDA in the fourth quarter; fuel gross margin was still negative 48%, and the reported OpEx improvement included a $39.7 million recovery, largely from a settled contract dispute.
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Earnings Conference Call
Plug Power Q2 2026
00:00 / 00:00

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Operator

It's now my pleasure to turn the call over to Vice President of Marketing and Communications, Teal Hoyos. Please go ahead, Teal.

Teal Hoyos
VP of Marketing and Communications at Plug

Thank you. Welcome to the 2026 Q2 earnings call. This call will include forward-looking statements. These forward-looking statements contain projections of future results of operations or of our financial position or other forward-looking information. 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. 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.

Teal Hoyos
VP of Marketing and Communications at Plug

Such statements are subject to 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, risks and uncertainties discussed under Item 1A Risk Factors in our annual report on Form 10-K for the fiscal year ending December 31st, 2025. Our quarterly reports on Form 10-Q for the quarter ending March 31st, 2026, as well as other reports we file from time to time with the SEC. These forward-looking statements speak only of the day that the 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's CEO, Jose Luis Crespo.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Good afternoon, everyone, and thank you for joining our second earnings call of 2026. Also thank you for your continued confidence in the Plug team. Q2 was a strong step forward and is giving us real conviction about the rest of the year. We are executing, our numbers are moving in the right direction across the board, and today we're raising our full-year revenue growth guidance as a result. Paul will walk through the financial details in a moment, but let me start with why we are excited. Revenue was $178.3 million in Q2, up approximately 9% sequentially from Q1. This is continued proof that our commercial engine is accelerating. Gross margin improved to approximately break even. It was about negative 0.9%, compared to a negative 30.7% a year ago and a negative 13% just last quarter.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

That's a meaningful step in a single quarter, and it's the direct result of the operational discipline we have built into Project Quantum Leap, which is our restructuring program, combined with improving service margins and better plant utilization in hydrogen production. Just as important, our break-even revenue thresholds keep on coming down, which puts positive EBITDAs in Q4 squarely within reach. Operating expenses declined approximately 50% year-over-year to $62 million. Again, a direct reflection of the discipline we have driven through Project Quantum Leap and our continued asset monetization efforts. On the cash side, net cash usage improved to $61 million this quarter, a reduction in cash usage of about 58% compared to Q1. Our cash burn is coming down, and the trend line matters enormously as we head towards profitability.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Our priorities for 2026 are clear, and they haven't changed: discipline execution, profitable growth, and continued improvement in cash utilization and operating leverage. What has changed is our confidence in how the year plays out. On our last call, we guided full-year revenue growth of 13%-15%. Based on our H1 results and the visibility we now have into the H2, we are raising that guidance today to 15%-16% for the full year. Our business has historically been H2-weighted, with the Q4 benefiting from year-end deployment cycles. Everything we are seeing tells us that pattern is expected to hold again this year with even more strength behind it. Material handling continues to be a genuine bright spot, and the growth story here just keeps on building.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

We deployed 1,666 GenDrive units in the quarter, more than double the 739 units we deployed in the Q2 of last year. Service revenue grew 82% year-over-year to $29.8 million, with service margin of 27%. As improving reliability lets our technicians cover more units and drive real overhead leverage. We're not just growing. We're building a durable, recurrent revenue base. Two of our largest material handling customers are planning to refresh more than 20,000 GenDrive units over the next three years. This is a multi-year revenue opportunity sitting right in front of us, and it's exactly the kind of embedded growth that gives us confidence well beyond this year. Our electrolyzer business continues to build real commercial momentum. We announced the FID of the 30 MW Barrow Green Hydrogen project for Carlton Power in the U.K.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

This is part of the 55 MW we were awarded in November of 2025, and we expect the additional 25 MW to reach FID in 2026. In Q2, we were also selected for the 275 MW FID on the Hy2gen current project in Quebec. On July 7, we announced that Plug secured a 50 MW Giner ELX electrolyzer order following the final investment decision from Orica's Hunter Valley Hydrogen Hub in Australia, and this is the largest renewable hydrogen project to reach FID in Australia. As an update on the business, our 100 MW project with Galp in Portugal and our 25-megawatt project with Iberdrola and BP in Spain continue progressing positively on the commissioning. I also want to flag something bigger on the horizon here, because I think it is an important part of the electrolyzer story for the next several years.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Europe continues to advance the conversion of the Renewable Energy Directive 3, it is called RED III, into a national law across E.U. member states. Spain is the latest country to release a draft framework establishing an 11% renewable fuels of non-biological origin, which is the RFNBOs, by 2040. This is backed by a specified non-compliance penalty and a system of tradable carbon reduction certificates. Based on our preliminary internal analysis, we believe Spain's framework alone could drive approximately 10 GW of electrolyzer demand by 2030. In addition, the European Commission approved a EUR 780 million Dutch subsidy scheme targeting 400 MW of electrolyzers capacity with an option plan for early 2027. The European Commission plans on launching a fourth hydrogen auction in December of 2026 with a budget of up to EUR 500 million.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

This is the kind of regulatory tailwind that turns a strong pipeline into a durable, multi-year growth runway, and we like our position to capture it. Turning to hydrogen. Our fuel business delivered approximately 15% revenue growth year-over-year to $39.5 million. This is driven by continued growth in hydrogen consumption across our expanding customer base. Fuel gross margin improved to -48%, from -91% a year ago, on improvement in plant utilization, production efficiency, and network optimization across our production facilities in Georgia, Tennessee, and Louisiana. We still have work to do here, obviously, but the trajectory is decisively in our favor, and we expect that progress to continue through the H2 of the year. We ended the period with $161.9 million of unrestricted cash, with net cash usage improving to $61 million for the quarter, down approximately 58% sequentially.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

We are also executing on our asset monetization programs, and as an update to the Stream transaction we announced on July 13th, where we indicated approximately $80 million of expected near-term liquidity, we have already received $47 million. This is a step forward of our initiative to unlock more than $275 million through this asset monetization and non-dilutive financing, and we expect to keep delivering on this initiative in the coming quarters. Put simply, this was a good quarter, and it sets up an even better H2. Revenue is growing, margins are approaching breakeven, operating expenses are down 50%, cash burn is falling, and we are raising our full-year guidance to 15%-16% growth. We remain on track to deliver positive EBITDAs in Q4, a milestone that marks a real turning point for the company.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

We are building Plug into the profitable, cash generative, hydrogen leader we set out to become. We have work to do, but Q2 is more evidence that we are getting there. With that, I will turn the call over to Paul for a more detailed review of the quarter, including our liquidity position and financial outlook. Thank you. Paul?

Paul Middleton
Paul Middleton
CFO at Plug

Thank you, Jose Luis, and good afternoon, everyone. Building on Jose Luis's comments, I want to leave you with three key takeaways from the quarter. First, the margin transformation is real, and it is compounding. We exited Q2 at essentially breakeven gross margin, roughly a 30-point improvement from a year ago. Second, our cost discipline is showing up everywhere it should, including improved margins and reduced OpEx, which yields reduced cash use. Third, we believe we have the capital and the levers in place to execute the balance of the year. This stems from current cash balances, continued improvements in margins, reduced CapEx and the ongoing asset monetization efforts. Diving into the details of the quarter, as Jose outlined, net revenue for the quarter was approximately $178 million, which was up 9% sequentially, bringing H1 to $342 million, up 11% year-over-year.

Paul Middleton
Paul Middleton
CFO at Plug

H1 is slightly ahead of the range we outlined in May, so the shape of the year is playing out slightly better than the way we told you it would. As Jose Luis outlined, given our traction and pipeline, we are increasing our full year projection to 15% to 16% growth off of 2025. We expect some growth in Q3 2026 sequentially and over the Q3 of prior year, but the majority of the volume in the H2 forecast, we expect unfolding in the Q4 of 2026. On margins, let me expand a bit because this is where the last two years of work really are starting to show off. Gross margin came in at essentially breakeven versus the 31% a year ago, as I outlined. Every platform contributed. Equipment margin was positive, driven from volume leverage, continued manufacturing cost optimization, and supply chain leverage.

Paul Middleton
Paul Middleton
CFO at Plug

We are also recognizing benefits based on the tariff recoveries and reduced tariff spend. Service margin was +27%, as unit reliability keeps improving. Our cost of service is down materially, and that is letting us expand the tech unit coverage and drive overhead leverage. PPA loss rates improved to roughly -30% from -92% a year ago, which is driven from cost reductions to service this PPA fleet, coupled with the sale-leaseback buyback program, which reduces our equipment lease cost. Fuel margin improved to roughly -48% from -91%, as Jose Luis outlined, driven by the increased plant utilization, improved network optimization, and benefits of our supply agreements. Still a lot of work to do, but these are structural improvements, not one quarter effects, and they keep lowering our breakeven threshold.

Paul Middleton
Paul Middleton
CFO at Plug

Just to prelude the H2 in context of our target to achieve positive EBITDA in Q4, this will come mainly from increased gross margin and will stem from many factors. Driving more sales as the H2 will be 40% higher than the H1, and this will mostly come from equipment volume. Driving more cost downs in manufacturing and supply chain, such as ramping our diffusion bonding process for ELX stacks, as an example. Continuing our service reliability improvement trends and driving enhanced tech leverage, especially given the number of sites and GenDrive is being deployed in the H2. Further improving the fuel network leverage given continued growth in fuel sales and focus on network logistics cost and network efficiency. Driving even more improvements in our PPA platform by further service cost reductions and completing more sale-leaseback buybacks.

Paul Middleton
Paul Middleton
CFO at Plug

GAAP operating expenses were $62 million, down 50% year-over-year, but I want to be transparent on the composition. This includes $39.7 million of recoveries of previously impaired assets, principally the $37 million gain from a resolution of a customer contract dispute we settled in June. Excluding that recovery and the IT sale transaction fees for this quarter and excluding impairment, restructuring, and other non-cash changes and contingent consideration, as example, operating expenses continued to decrease, and we believe we remain on the path towards the roughly $75 million a quarter run rate we discussed in May. The OpEx reduction stems from continued scrutiny over headcount, discretionary spend discipline, and from reduced CapEx spend yielding lower depreciation. On the bottom line, GAAP EPS was a loss of $0.14 versus a loss of $0.20 a year ago.

Paul Middleton
Paul Middleton
CFO at Plug

I'd note that the GAAP result in Q2 of 2026 carries about $104 million of non-cash mark-to-market valuation charges for our convertible debt and warrant liabilities, driven primarily by our own stock price appreciation in the quarter. Adjusted EPS was a loss of $0.07 versus $0.18 a year ago, and reconciliations on these adjusted EPS numbers are in our tables. The net cash usage for the quarter was roughly $61 million, an improvement of 58% over Q1 of 2026. The continued asset monetization efforts contributing to margins and overall reduced cash usage. Even setting those aside, the underlying burn continues to improve and to step down on margin improvement, working capital leverage, and reduced CapEx spend. Inventory is down about $28 million from year-end, and we still expect at least $100 million of inventory reduction for the full year, weighted to the H2.

Paul Middleton
Paul Middleton
CFO at Plug

Capital spending remains light, under $9 million in the H1. We ended the quarter with $162 million of unrestricted cash and $510 million of restricted cash, which means we have over $670 million in total cash. The restricted cash continues to keep coming back to us, more than $115 million released in the H1, and roughly $155 million of the remaining balance is scheduled to release over the next 12 months. It is effectively a built-in non-dilutive funding stream. Subsequent to quarter end, we announced the transaction expected to generate approximately $80 million of near-term liquidity through the sale of our Graham, Texas project and the stage closing in New York Gateway. The first phase of these program to unlock more than $275 million through this overall asset monetization non-dilutive financing program.

Paul Middleton
Paul Middleton
CFO at Plug

Out of this initial $80 million in July and August to date, we received already $47 million, bringing the total for this endeavor so far to $52 million. For the full year, we plan for our sales growth of 15%-16%, and we believe that the H1 puts us squarely on that trajectory. We remain laser-focused on our Q4 goal of positive EBITDA. The levers are the ones that you watch us pull on all year and the ones that I've outlined today. We believe we have the balance sheet and clear non-dilutive capital opportunities to execute. In summary, we believe we are postured to deliver on our targets we have set for ourselves this year, and we look forward to sharing more as our progress progresses throughout the year. With that, I'll turn it back over to Jose Luis.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Thank you, Paul. Now, again, thank you for attending the call, and we'll go to the questions part of the call.

Operator

Thank you. Now conducting a question and answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. We ask you please ask one question and one follow-up, then return to the queue. Our first question today is coming from Colin Rusch from Oppenheimer. Your line is now live.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Hi, Colin.

Colin Rusch
Colin Rusch
Analyst at Oppenheimer

Thank you very much, guys. Appreciate the question here. Can you talk about the drivers for the service margins? How much of that is being driven by the improved contracting, and how much of it is being driven by better performance of the assets out in the field?

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Hi, Colin. Thank you for the question. The improvement on services really is driven by several factors. One of them is the reliability of the units is improving, the stack performance is improving, and that's leading to us being able to use less techs to actually service the units. So the overhead is also improving. Adding to that, over the last couple of years, as you know, we went through a process of cautiously increasing pricing on services to be aligned to the reality of the cost of servicing the units. So all of that together has contributed to this 27% margin that you see right now, and it's actually structural. It's something that we believe is sustainable.

Colin Rusch
Colin Rusch
Analyst at Oppenheimer

Excellent. Just thinking about the pipeline of hydrogen projects, you guys have made a nice dent in moving these things forward. I'm curious about urgency around some of these projects in Europe, starting construction, and really starting to see some of the ramp on equipment orders. How should we think about that as we get through the balance of this year and into next year?

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

We are already seeing, not necessarily in Europe, Orica, for example. I think it got lost a little bit in the market dynamics. But Orica is a 50 MW order. First FID project in Australia. You think about it, our largest order was 100 MW from Galp. This is the second-largest order. The award of 55 MW from Carlton Power in the U.K. is now becoming FIDs. We saw the first FID with 30 MW, and we are already manufacturing and getting ready for implementation in the U.K. for those projects. We see even our own projects that we have in Spain with our joint venture with Acciona moving towards FID, with subsidies being awarded by the European Hydrogen Bank. I think those two projects have the largest per kilogram award in the market. So we see a lot of activity in the European market.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

We see many projects that are coming along to get to FID by the end of the year, beginning of 2027, and you will be hearing more news about those projects in the coming quarters.

Operator

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

Eric Stine
Eric Stine
Analyst at Craig-Hallum

Hi, Jose Luis. Hi, Paul.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Hi, Eric.

Paul Middleton
Paul Middleton
CFO at Plug

Hey, Eric.

Eric Stine
Eric Stine
Analyst at Craig-Hallum

Hey. I was hoping we could talk about material handling. I am interested in these two customers, the 20,000 units over three years. As I think about how you have talked about the repowering opportunity, it has been something that you have been optimistic about, but it seems like it was off a little ways. Now you are talking about these two customers. I am curious, is it fair to say that this has kind of sped up a little bit versus previous expectations? Or is this more kind of the normal refresh, versus they are just this proactively deciding to do it, for the next-gen fuel cell system?

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

It is really being driven by the refresh timing. We are going to refresh some of those units in the range of around 2,000 of them already in 2026. Then, as the year progresses, we are expecting to start refreshing with the two largest customers in the next three years to complete the total fleet. In both cases, what we are seeing is that we are reaching in many of the sites over the next three years, the time to refresh the units.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

As the units are becoming more reliable, and as we are basically coming with all the upgrades and all the improvements that we have done to the units in the field, the new units are going to have that already. In the production units, the customers are also interested in doing the refreshes, but mainly they are driven by the normal natural timing of the refreshes, which is starting now.

Eric Stine
Eric Stine
Analyst at Craig-Hallum

Okay. These are your two largest customers. Did you say that this would be their footprint, or it would seem like this could be a multi-year beyond the three that you were talking about for this specific opportunity with these two?

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

This would be their normal footprint for renewals or refreshes of the units that they have in the field right now. I am not sure. Maybe if I did not understand the question correctly, please.

Paul Middleton
Paul Middleton
CFO at Plug

Well, I just would add that if you think about it like a portfolio, there is more and more sites, and they are adding sites this year as an example. They go through a normal reset cycle. But one of them in particular is hitting a major refresh cycle starting here now, and the other one, although they have been on refresh, it is starting to grow and build on that, and as they add more sites, it will become bigger and bigger. We expect a pretty incremental step function in terms of this refresh activity starting from here on out just because of those dynamics.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

I guess it is going to be refreshes on top of the normal growth on those customers.

Operator

Thank you. Our next question today is coming from Sherif Elmaghrabi from BTIG. Your line is now live. Our next question is coming from Chris Dendrinos from RBC Capital Markets. Your line is now live.

Chris Dendrinos
Chris Dendrinos
Analyst at RBC Capital Markets

Yeah, good afternoon. Maybe just on the fueling margins here, and I think pretty solid improvement year-on-year, sequentially, call it relatively flat. What are the next big drivers to push or to fuel, no pun intended, more fueling improvement? Thanks.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Thank you, Sherif. We're going to continue operating more efficiently the plants. We have the three plants, Tennessee, Georgia, and Louisiana. As we continue operating them, we are getting more efficient and higher utilization of the plants. On the logistics side, we're going to continue also improving our logistics. We are continuously trying to make sure that we deploy and send hydrogen to our customers in the most effective way, and we are implementing systems to be able to do that the most effective way that's possible. Finally, we are working in each one of the sites and also in the plants to make sure that the actual efficiency of the systems is improving over time. Those are the items that we're working on to improve our margins in hydrogen.

Chris Dendrinos
Chris Dendrinos
Analyst at RBC Capital Markets

Got it. Thanks. Maybe just as a follow-up to an earlier question on the electrolyzer pipeline here, and you had highlighted Spain being a potential, I think, 10 GW market by 2030. What are the key markers here? What should we be looking for in terms of, I guess, the cadence of when demand would potentially pick up for that market specifically? Thanks.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

RED III, which is the regulation that is being implemented as a law in the different countries, in the different European member states, mandates a certain amount of hydrogen being used in transportation, and specifically for refineries to be converted as different percentages in different countries. But there are numbers for each one of the countries before 2030. What we're going to see, and 2030 is here. We are right now middle of 2026. We have basically three and a half years to make those conversions. We are already seeing some of those projects moving. The projects that we already have and we're implementing, Iberdrola and BP and the project with Galp, and some of the projects that we have, the smaller projects on the refinery side, is a result of this legislation becoming a reality.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

As the draft in Spain, for example, gets approved, which is expected to be in the next few months, and it becomes an actual law, we are expecting that companies start actually executing and moving forward with the projects. Many of those projects are already in our funnel. This is the $8 billion funnel that we've been talking about. These are not new projects that we're going to basically pick up right now. It's projects that have been, many of them we've done the engineering phase. They're ready to go, and once this happens, the project will start moving forward, and we're hoping that by the end of this year, beginning of next year, you will start seeing some of these projects becoming a reality by reaching FID.

Operator

Thank you. Our next question is coming from Saumya Jain from UBS. Your line is now live.

Saumya Jain
Saumya Jain
Analyst at UBS

Hi, team. Congrats on the quarter. Now that gross margins have approached breakeven, can you provide more color on the primary structural drivers, whether it's pricing power, product mix, or lower input costs that are expected to push margins into the positive territory in the H2 of the year?

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

I'm going to let Paul take that one.

Paul Middleton
Paul Middleton
CFO at Plug

Yeah. The first thing is sales volume. If you think about us with the numbers that we've shared in the forecast of our guidance, as I said earlier, that suggests mathematically that we'll be up to meet those forecasts. It's about 40% growth off of the H1. That mostly is equipment volume. That's where we really become very accretive because of the contribution margin, since we're already covering the fixed overhead. So that's a big driver. The second is, we still got lots of opportunities on the manufacturing cost. We're still very early in the electrolyzer scale and manufacturing processes and still have a lot of opportunities to optimize that cost structure. We have already driven a lot of cost out of that equipment and continue to plan further cost downs on that as an example. The other two big buckets really is service.

Paul Middleton
Paul Middleton
CFO at Plug

You've seen big moves on service margin. We see continued improvements in reliability, which gives us opportunity to leverage more units per tech as we continue to scale. Since we have a lot of units and sites going live in the H2, we're continuing to take advantage of that. But we continue to invest in more reliability improvement processes. That's continued to pay off. Then lastly is, we just talked a few minutes ago, it's about the fuel. As we continue to scale volume on our fuel network, drive out, improve logistics costs and efficiencies of the systems, those are the themes that you're going to continue to see collectively drive margin. But in the H2, in particular, it's mainly sales volume. It's just such a big step function in context of our targets and our forecasts.

Saumya Jain
Saumya Jain
Analyst at UBS

Okay, great. Thank you. Then with recent milestones like the order for Orica and the Carlton Power FID, what is the conversion rate timeline for turning FEED scopes such as the Quebec project into firm FIDs?

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

In the case of the project in Canada, we're working right now on the FEED, as we mentioned, and the estimated FID timeline is beginning of 2027. With these big projects, as you know, things are a little bit fluid. So that is the estimated timeline that we have right now. It could move to Q3, but we have other projects as well that are going into the same process. We're seeing projects converting into FID like, as you mentioned, the Orica 50 MW and the Carlton 30 MW, and we are expecting the next 25 to become and to convert into FID before the end of the year.

Operator

Thank you. Next question is coming from Sameer Joshi from H.C. Wainwright. Your line is now live.

Sameer Joshi
Sameer Joshi
Analyst at H.C. Wainwright

Hey. First to you, Paul. Good afternoon. Thanks for taking my questions. I just wanted to check on the cash management strategy in terms of the balance sheet load, the interest rate load, some of the working capital gains you are expecting from inventory reductions and of course, gross margins becoming slightly positive. Also money coming in from these asset monetization efforts. Is there any effort to reduce the debt?

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Thank you, Sameer. I think I'm going to let Paul answer that question.

Paul Middleton
Paul Middleton
CFO at Plug

Yeah. On the debt side, the only thing we really have is the convertibles. They're termed out in eight years from now. There's no amortization of that. It's relatively speaking, a low-cost interest unsecured facility. We'll continue to monitor that and see what makes sense if there's the right capital opportunities to do that. But the reality is strength begets strength. As we continue to show the progress that we're making in terms of improving yield, growing sales, growing the margins, improving cash flows. We certainly expect in the H2, as we've talked all year, our plan is that we should see not just sales growth and margin enhancement, but continued reductions in the cash burn.

Paul Middleton
Paul Middleton
CFO at Plug

That puts us in a good position as we start approaching potentially positive operating cash flows, that it opens up even more avenues for me for debt and capital solutions at lower cost options. We are in a good position right now. We ended the quarter with a pretty sizable cash balance. Subsequent to the quarter end, as we have talked about, we have already brought in $47 million from this data center asset monetization with visibility of another $30 million-$35 million in the short term as that effort continues. We are in a good position as we sit now to fund the balance of the year.

Sameer Joshi
Sameer Joshi
Analyst at H.C. Wainwright

Understood. Thanks for that. Just one, stepping back, your outlook for the year. I guess your fuel and PPA revenues are more or less predictable. Is this growth and you did mention this growth is mostly going to come from equipment sales? What kind of visibility do you have? Are there any takes and puts that may exceed your guidance or cause you to not achieve these levels?

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

We decided to raise guidance because we feel we have good visibility and expecting to meet that guidance. The majority of the H2 of the year is going to be associated with execution, which is an important piece of the business. From a commercial standpoint, we have good visibility on what is going to make the year in terms of meeting that guidance.

Sameer Joshi
Sameer Joshi
Analyst at H.C. Wainwright

I will just step back. Thanks.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Thank you, Sameer.

Operator

Thank you. Next question today is coming from Craig Irwin from Roth Capital Partners. Your line is now live.

Craig Irwin
Craig Irwin
Analyst at Roth Capital Partners

Good evening, Jose Luis and Paul. Thanks for taking my question. First, I should say you guys did a great job conveying how Plug is clicking on all cylinders these days. The prepared remarks, I appreciate those. Most of my questions have been answered, so I am going to ask a bigger picture question. Over the years, many of us that have followed Plug closely have seen systems in your factory being prepped for delivery for very big technology names, Fortune 50 type names. Intel is one that jumps out to me from the last couple of years. I know you do not always press release these things, but I know you have supplied electrolyzers and other power generation equipment to many of the Fortune 100, Fortune 500 other than the great names like Amazon, that are kings of the data center market.

Craig Irwin
Craig Irwin
Analyst at Roth Capital Partners

What do you see as a potential avenue, or are you exploring, the opportunity for data center participation for Plug? If you had a couple hundred million dollars in incremental capital, is this something that you would do and that you could do on a relatively fair timeline? What would it take for you to make the investment there, given that you do have a competitor out there with a market cap in the tens of billions range, that I do not think has technology that is much better than Plug's. Obviously, I prefer Plug's.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Well, Craig, thank you so much for your question and for attending the call as usual. I appreciate the big picture question, and it's a good hypothetical. If we had $200 million of capital to deploy. Obviously, the data center market is a market that everybody is paying a lot of attention to. As you said, we have many customers of Plug that are data center customers. We did the first test with a 3 MW system with Microsoft for backup power for data centers. Right now, as Plug, as we have said before, we are 100% focused on three lines of business. One is material handling, which is at this moment actually performing really well and is bringing a lot of the growth in the company. The other one is electrolyzers.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

As I went through it before, the European market is about to heat up and to bring some orders to the table. We're expecting that to happen. Then, the hydrogen business, which is also an area of growth. We grew 15% the top line on hydrogen, and we are expecting it to not only bring growth and eventually profitability, but also we are expecting, and it is an enabler for our business. Without hydrogen, none of these things really run. So those are the areas of the business that we are concentrating on. We are always looking at potential opportunities that we could grab in the market. Obviously, the data center market is being one that we've been looking at from different angles.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

One of them is to try to create a solution that using electrolyzers and using fuel cells could actually relieve a little bit the network tension that is created by data centers connected to the grid. Definitely, it's something that we're looking into. It's something that we haven't made any decisions, and right now, at this moment, we're concentrating on the three lines of business that I just mentioned, and we're going to push ahead on that and making sure that with those lines of business, we bring the company to profitability.

Craig Irwin
Craig Irwin
Analyst at Roth Capital Partners

I like that. Thank you. My second question is, positive EBITDA in Q4. That's obviously something when you achieve it, that Wall Street's going to cheer the results. Can you frame out what 2027 and 2028 could look like if maybe we continue along this positive trajectory, mid to upper teens revenue growth, continued structural improvements in gross margin? How would you expect budgeting to work on your frictional costs, and your prioritization of EBITDA over the next couple of years?

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

We haven't given any guidance beyond 2026, except for we said that 2027 was going to be operating income positive in Q4. And we were going to be in 2028, profitable. Overall profitability.

Paul Middleton
Paul Middleton
CFO at Plug

EPS in Q4, yeah.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

EPS in Q4. I just wanted to make sure that we restate those, which is what we have given right now as guidance. At this moment, we're not giving any additional guidance for 2027 and 2028. I don't know if you want to add anything, Paul.

Paul Middleton
Paul Middleton
CFO at Plug

The only thing I would add at this point, Craig, is one thing we have said, and we believe is true in our baseline is we believe we have the infrastructure, the manufacturing facility, the things we need to do to deliver our plans. We think there's a lot of leverage opportunity, and we don't really plan on a lot of incremental investment to achieve that growth trajectory. Achieving it in Q4 is going to be a big milestone, but it also postures us as we continue, and we expect to grow. So maybe it's double digits, like you said, but all growth will be variable contribution in that regard and tremendous leverage opportunity.

Paul Middleton
Paul Middleton
CFO at Plug

I'm pretty excited about the prospects, and I'm sure as we move forward through this year, we'll be in a position to talk more and more about 2027 and onward, but we're postured really well.

Operator

Thank you. Our next question is coming from Sherif Elmaghrabi from BTIG. Your line is now live.

Sherif Elmaghrabi
Sherif Elmaghrabi
Analyst at BTIG

Hi. Thanks. I managed to disconnect myself, so I apologize if any of these have been asked before. Jose Luis, you talked about this 30 MW project, a MW project that FID, and a 50 MW project that FID. Can you shed a little bit of light on the timeline for these bigger projects after FID? How long before they start up, the commissioning process, the handover process, how long does that take? Any variation in times based on the size would be interesting.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

So, just these two examples on the project in the U.K., we have already started delivering some of the balance of plant to Europe, to set it up for the installation. It usually takes about, depending on the project, obviously, I'm just going to give you high level, timelines, 12-15 months to start installation. In some cases, it's a little bit longer, depending on the status of the project. Then, once the installation happens, which could take a couple of months or maybe a quarter, then you start with the commissioning. So it is a process in terms of getting the product out there to be installed and to be commissioned, that is in the 12-18 months process.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Now, these type of projects, because they are larger projects and they require a lot of advanced manufacturing, are projects that we structure with milestone payments, and we also structure with percentage of completion accounting in the majority of the cases. So we start seeing revenues, and we start seeing money, cash coming in from the projects, in the earliest stages.

Sherif Elmaghrabi
Sherif Elmaghrabi
Analyst at BTIG

Got it. Then, maybe something a little different. Last week, the governor of Texas announced a moratorium on new data center construction. I'm wondering if that affects the sale of your Texas assets given the counterparty for that transaction.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

That, last week, our understanding is, it was a letter from the governor asking to review the data center projects that were on the list of projects that want to be implemented in Texas. We believe there is going to be a review with very specific items that were outlined in the letter, just to make sure that the projects are the right projects and that they are real projects and not projects that are more speculative. We do believe that that process is going to play out. We continue working with Stream through that process, and we continue with the efforts that we have discussed about the monetization of the assets in Texas and New York.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

We will go through the process, we will go through the questions, and we will help Stream to get through everything that they need to get through and obviously, going through whatever the government in Texas requires that we need to do.

Sherif Elmaghrabi
Sherif Elmaghrabi
Analyst at BTIG

Okay. Super helpful. Thanks for taking my questions.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

No, thank you, Sherif.

Operator

Thank you. Next question is coming from Skye Landon from Wall Street. Your line is now live.

Skye Landon
Analyst at Redburn-Atlantic

Hi, guys. Just a couple on the electrolyzer business from me. Firstly, just thinking back to your symposium last year, I think your partner, Allied Green, said that they were hoping to progress their projects through 2026 and potentially even be at a point where they could submit firm orders to Plug before the end of the year. Just wondering if you could provide an update on those mega projects. Then second one on the electrolyzer business. You mentioned the Acciona JV, in Iberia earlier. Just wondering if you could remind us all how that JV is set up, how big the initial projects are, and then, importantly, what the funding plans would be for those projects, once they took FID. That would be great. Thanks.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Great. So on Allied Green, we continue working with Allied Green on the progression of the projects in Australia and in Uzbekistan. We announced both projects. As I was saying before, these type of projects are complex, and they take time. We are still expecting and hoping that we will get the go ahead as soon as possible from Allied Green, in either project. It seems like Uzbekistan is moving a little bit faster. But, we keep on working on helping to try to get those projects to FID. In the Spain JV, is a 50/50 JV with Acciona Energía. Acciona is, I think the largest, and when I say, I think, I don't want to quote, but I think it's the largest renewable company in Spain, in Iberia, for those that don't know what company is Acciona.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

This is why we partner with them, because they have access to renewables. We have several projects that we are developing with them, but the most advanced projects are a project in the region of Navarra, in a city called Sangüesa. That project got EUR 2.5 billion from the European Hydrogen Bank. We have basically all the ingredients to get to FID. We're hoping that it probably will happen at the end of 2026, beginning of 2027, and we will work with Acciona to find the funding for the projects. The same thing goes with the project in Zaragoza, which is the one that just got EUR 2.85. I believe those two projects have the highest per kilo subsidies from the European Hydrogen Bank. In the case of Zaragoza, that project is a little bit less developed than the project in Navarra.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

That project, right now, we're still working through finding and getting offtake, while in the case of Sangüesa, we already have lined up a potential high probability offtaker. So that's the situation with those two projects. Behind that, we have another three or four projects that are in very early stages. But those two are the ones that are the main projects that we have on the table, and we will work with Acciona for the funding once we reach FID.

Skye Landon
Analyst at Redburn-Atlantic

That's great. Thanks.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Thank you.

Operator

Thank you. Next question is coming from Jason Tilchen from Canaccord Genuity. Your line is now live.

Jason Tilchen
Jason Tilchen
Analyst at Canaccord Genuity

Good afternoon, everyone. Thanks for taking my question. Apologies if this was already asked. I have been hopping between a few calls, but I believe Paul said that progress towards Q4 EBITDA profitability is going to primarily be driven by continued gross margin improvement. Noticed there was such a notable step down in G&A expense in the quarter. Just hoping to unpack that decline a bit, and then looking forward to the right level of fixed corporate cost to think about going forward. Thank you.

Paul Middleton
Paul Middleton
CFO at Plug

Yeah. There is always ebbs and flows and things that have been happening, and what we have been saying and projecting is that our normal run rate, if you will, we expect to be about $75 million a quarter. There was a large recovery via a contract dispute where we had previously taken a reserve against that position. Because we got a large amount of money back on that program, that resulted in a gain that showed up as an offset to OpEx. There is also some nominal restructuring and other charges in that bucket. But if you back that out, $75 million is kind of our expected run rate. We continue to be very thoughtful and disciplined on cost and for overhead and discretionary spend, and we are particularly focused in the H2 of the year, given our goals there.

Paul Middleton
Paul Middleton
CFO at Plug

But if you look at it just mathematically, to get to the EBITDA target, it is mainly through gross margin in the H2 of the year, and in Q4. Given the forecast that we have been sharing, and what we anticipate for sales, that is about 40% growth off the H1, and most of that is through equipment sales. It becomes very accretive when you sell incremental equipment when you have already covered your fixed cost at base. That is where that comment came from, and that gives you some color on what was going on in Q2.

Jason Tilchen
Jason Tilchen
Analyst at Canaccord Genuity

Very helpful. Thank you very much.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Thank you.

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 closing comments.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

Okay, so thank you all for the questions and for your continued engagement and support. Our priorities for the balance of 2026 are still the same, are clear. We're going to execute with discipline, keep converting our commercial pipeline, keep strengthening our liquidity through non-dilutive means, and deliver positive EBITDAs in Q4. Q2, this quarter, gives us a strong foundation for the H2. Margins are improving, cost discipline is holding, our backlog is growing, our cash usage is the lowest it has been all year. With our near-term liquidity outlook strengthened by the asset monetization process now coming in, and the regulatory and commercial tailwinds behind our electrolyzers business are only getting stronger. We have said that before. Now it's about consistent delivery.

Jose Luis Crespo
Jose Luis Crespo
CEO at Plug

But with the momentum we are building, we are genuinely never more confident in where this business is headed for the rest of 2026 and well beyond it. Thank you again for your support. We look forward to updating you on the process in the next quarter. Thank you, everyone.

Operator

Thank you. That does conclude today's teleconference 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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