Teal Hoyos; Vice President, Marketing and Communications; Plug Power Inc
Andrew Marsh; President, Chief Executive Officer, Director; Plug Power Inc
Jose Crespo; Chief Revenue Officer; Plug Power Inc
Bill Peterson; Analyst; JP Morgan
George Gianarikas; Analyst; Canaccord Genuity
Colin Rusch; Analyst; Oppenheimer
Eric Stine; Analyst; Craig-Hallum Capital Group, LLC
Dushyant Ailani; Analyst; Jefferies
Operator
Greetings and welcome to the Plug Power first quarter 2025 earnings call.
(Operator Instructions)
Please note this conference is being recorded.
I will now turn the conference over to Teal Hoyos, Vice President, Marketing and Communications. Thank you. You may begin.
Teal Hoyos
Thank you. Welcome to the 2025 first quarter earnings call. This call will include a forward-looking statements. These forward-looking statements contain projections of our 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 further expectations -- 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 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 one a risk factors and our annual report on Form 10-K for the fiscal year ending December 31, 2024, our quarterly report on Form 10-Q for the quarter ended March 31, 2025, as well as other reports we filed from time to time with the SEC.
These forward-looking statements speak only as of the day in which 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, Andy Marsh.
Andrew Marsh
Good afternoon, everyone. Thank you for joining today. I am here with Paul, Sanjay, and Jose.
I'm happy to report that in Q1, plug met the financial and operational targets we set out, delivering a quarter of solid execution in a still turbulent macro environment.
Revenue came in at $134 million in line with guidance. But more importantly, we made real progress on our path to profitability, improving margins, reducing cash burn, and continuing to strengthen execution across all business lines. We are projecting between $140 million to $180 million in revenue in the second quarter.
Let me start with some business highlights followed by updates on cost actions, capital, tariffs, US policy. And then I'm going to hand it over to Jose to walk through Europe in depth.
With respect to our business performance, we saw a new momentum in our material handling business in the first quarter. One of our largest pedestal customers placed a $10 million initial order tied to over $200 million in future opportunities under a safe harbor structure. We also expanded with new partners, including Stephen Spain, now deploying Plug's hydrogen powered logistics systems at their cold chain facilities.
On the infrastructure front, our hydrogen generation build out is delivering. The 15 tinne per day Louisiana plant was commissioned in Q1 on time. Together with Georgia and Tennessee, we now have 40 tonnes per day in internal production capacity, improving customer economics and availability or shielding margin from third-party volatility.
With respect to cost savings, internally, we launched a major program called Quantum Leap, targeting over $200 million in annualized run rate reductions. I'm pleased to report that most of these savings have already been executed. Program spans, manufacturing, logistics, sourcing, and SG&A, our Q1 cash burn was down nearly 50% year over year. And with Quantum Leap, we expect further reductions in cash burns in future quarters.
This is Plug Power operating with discipline, precision, and a long-term mindset. On capital, we've taken some important steps to ensure financial flexibility. In March, we raised $280 million in equity, bolstering liquidity while reducing risk in a volatile market.
We followed that with a $525 million structure financing facility, part of which was used to retire convertible debt. Combined with the $1.66 billion Department of Energy loan guarantee, these moves provide a strong foundation to support our infrastructure goals.
That said, I want to be forthright. With the change in administration, we're actively working with the DoE to advance the loan process. The underlying program is contracted, obligated, and we believe secure, and we continue to engage closely with the administration.
At quarter end, we held nearly $300 million in unrestricted cash with meaningful additional capacity under the new facility. Our outlook remains unchanged. We do not anticipate raising additional equity in 2025, and we remain committed to that goal.
Turning the tariffs, recent actions from the current administration have increased duties on Chinese imports that impact our core product lines like GenDrive. For some models, this has resulted in increased cost, particularly on ballast assemblies, battery modules, and plates. At the good -- at the moment, a good deal of these items are inventory that will be used in 2025.
With today's announcements, obviously, the pressure is a little bit off us. But we are continuing down our four-pronged mitigation plan. One is that if needed, we will add surged charges for customers based on sourcing mix and inventory timing. Dual sourcing and resourcing which we really had in motion for a number of years, engineer redesigns to reduce tax exposed components, and geographical diversification leading further into APAC and US suppliers. Now with these items, we expect even to reduce our cost in China by 50% in the next six months.
Importantly, I think this is really important. Our electropolyzer platform is minimally impacted even with the 145% tariffs and was internally developed with non-Chinese content. This is a team-wide response. It's already helping us protect march and integrity.
Finally, a brief report on US policy. It's clear the transition in Washington has introduced some uncertainty about clean energy programs.
The IRA is under pressure and there's active debate in Congress over the future of Section 45V of the hydrogen tax credit and the long-term direction of decarbonization incentives. That said, we're actively engaged with policymakers both directly and through our leadership in CHEA, which is a fuel cell and hydrogen Energy Association. We're also actively pursuing state and local funding opportunities where momentum continues. We remain focused on execution and will continue advocating aggressively for a stable long-term hydrogen policy framework in the US.
Before I turn it over, let me frame one of the most exciting strategic frontiers, Europe. Between the EU Green Deal, Repower EU, and the UK Energy Act, we're tracking an electrolyzerop opportunity funnel worth over $21 billion across 2025 and 2026. What is different now is not just ambition, but enforceable procurement mandates, funded in incentive schemes, and penalties for non-compliance.
Plug has moved early and decisively in the region, and we're already embedded in some of the most transformative hydrogen projects across Europe. I'll let Jose walk through these specifics, but I'll close with this.
Europe is real, the funnel is live, Plug is in position.
With that, let me turn over to Jose to take you through the European electrolyzer strategy. Jose?
Jose Crespo
Thank you, Andy. As mentioned, Europe today is the most dynamic electrolyzer market in the world, driven by regulation in investment and execution timelines that are accelerating across the region. Plug is at the forefront of that shift.
Let me start with the policy foundation. Under the EU Green Deal and the Renewable Energy Directive 3, the EU sets targets for 42% of industrial hydrogen to be renewable by 2030 and 60% by 2035. The Fit for 55 policy package sets the legally binding framework to decarbonize their energy intensive sectors using green hydrogen. That includes mandates under the Fuel EU aviation and Fuel EU maritime. Fuel standards for aviation and maritime now come with real penalties, creating a direct pool for [saf] and e-methanol, both of which rely on electrolytic hydrogen.
What's different this cycle is that governments are funding real projects with real deadlines. Let's start with aviation. In Denmark, Plug has an opportunity for 300 megawatts of electrolyzer capacity for a SAF project. And the French government recently awarded [$25 million] for pre feed and feed engineering for SAF projects to four companies that Plug is actively working with. This is an anchor example of plug involved at a scale for decarbonizing jet fuel.
Spain is targeting 12 gigawatts of electrolyzer capacity by 2030. Already 2.3 gigawatts have been pre-awarded across seven clusters, covering refining, SAF, methanol, and ammonia. Plug is actively engaged in multiple of these projects where our long-term service model helped lower LCOH versus competitors. These evaluations are real, and they include mandatory procurement scoring which favors OEMs like Plug with full life cycle offerings and domestic engineering teams.
Refining is another major application. Plug is delivering 100 megawatts to Galp in Portugal, a project supported by EUR84 million in operational subsidies from the European Hydrogen Bank. These are 10-year index subsidies covering OpEx, not just CapEx, showing the EU's long-term commitment to green hydrogen viability. We are also delivering 25 megawatts for [IProla] and BP in Castellon in Spain.
Now moving to the UK. The Energy Act of 2023 has created a stable regulatory framework. The government has already awarded GBP2 billion in revenue, support and hydrogen allocation round one, and Plug Technology is well positioned in over 60% of the capacity awarded. For the hydrogen allocation round two, the UK has shortlisted 1.2 gigawatts of new electrolyzer projects, with a works expected later this year.
Plug is actively engaged in both centralized and decentralized proposals with total awards that potentially could exceed 875 megawatts. Importantly, these UK programs come with 15-year price support contracts, the structure, and the low-carbon hydrogen agreement model. These are predictable inflation-linked revenue streams, critical for bankability, and capital deployment.
What sets Plug apart in this market is our full stack offerings, proven systems, integrated plant engineering, long-term service, and a strong European and execution teams. This is why we are strategically positioned against competitors in both RFP scoring and LCOH evaluations.
To summarize, Europe is a fully active electrolyzer market and Plug is in the pole position on project visibility, regulatory fit, and delivery readiness. We expect Europe to be a multi-gigawatt contributor to bookings and revenue over the next 18 to 24 months with meaningful margin contribution as projects move from backlog to commissioning.
Andrew Marsh
Thank you, Jose. And Paul, Jose, Sanjay, and I are ready for your questions.
Operator
(Operator Instructions)
Bill Peterson, JP Morgan.
Bill Peterson
Yeah, good afternoon, everyone, thanks for taking the questions. I'm sure you've seen, Andy and team, the, I guess, initial proposal for the tax bill. And my question is really around the 45V, and maybe a few full questions.
First of all, assuming this does get written into law, what are the potential impacts for your tax facility or the DoE loan? I presume you're going to try to accelerate and begin construction before the end of the year in order to qualify. And more broadly, how should we think about the impacts to the nascent green hydrogen industry in the US? Clearly, with ample fossil fuels, the cost structure for green, is not in a way to compete well without this tax credit. And I appreciate the comments from Jose on Europe. Does this -- would this presumably mean you'd be focusing on markets such as Europe and Australia rather than the US? Thank you.
Andrew Marsh
Good question, Bill, and, let me -- I think you -- first, I'm going to take a step back. I was happy that 45V was continuing through 2025, and it would be even in the first draft safe harbor provision for construction that would start this year. My first reaction was we're going to have to work to start construction this year to make sure that that plant would qualify under 45V.
I was also pleased because I think we're probably the only fuel cell company that can leverage 48V, and that seems like it's time to [31], so that would give us time again to continue to grow the fuel cell business. I think, look, Jose and I worked on this presentation for today. Prior to the announcements, we have become more and more focused on Europe, because we see that the biggest opportunities for expanding the hydrogen industry today resides in Europe.
When you look at it, the only part of our products which are actually American manufacturer will be the stacks, the rest we are leveraging integrators across the EU and the Middle East for our products. So look, there's a lot to go on Congress. I've been around a long time. I was just happy to build with 45V. It was mentioned and that it wasn't completely cut out like I've heard threats for the whole IRA.
So I can't say I was thrilled with the announcement, but I wouldn't give it -- it's not -- there's a way to work through what's been announced. So I'll just have one last item, not to ramble on, Bill, I think it'll be really interesting, because there seems to be very strong support for hubs in red districts and, look, the hubs don't work without the production tax credit, and I think that's well known. So I think there's a lot to go, lot still going on in DC. Hope that helps.
Bill Peterson
Yeah, I know it was helpful. I'm sure you and others will probably be working to see if there's any way to massage the existing, draft. But my second question is somewhat related, but looking at your [BDP] pipeline, shortly after last earnings, you had close to 8 gigawatts of electrolyzer orders set to FID within this year. Just want to get a sense, did you close each of these orders you had expected in the first quarter? Are you on track thus far in the second quarter? And again, most of these are outside of the US to begin with.
Andrew Marsh
Most of these projects, I mean, are really -- we have about $200 million in backlog for this year with electrolyzers. Most of these projects, we expect 2 gigawatts will go to FID by year end. But I would just caution, Bill, these projects -- the electrolyzers and many of these projects are $1 billion investments and the plants themselves can be $3 billion to $4 billion. Probably, I want to be cautious and say, yes, a lot of them may close this year, but some of them certainly will fall into '26.
Bill Peterson
Understood, thanks for the taking the questions. Good luck navigating this this environment. Thank you.
Andrew Marsh
Alright, thanks, Bill.
Operator
George Gianarikas, Canaccord Genuity.
George Gianarikas
Hi, good afternoon and thank you for taking my question.
Andrew Marsh
Hi, George.
George Gianarikas
Hi, sort of had a question on the cost cuts and the business rationalization. So are there other things that could be done whether inorganic sort of maybe selling parts of the business that could maybe accelerate your path to profitability? Thank you.
Andrew Marsh
George, we don't --and Paul, I'll let you, we have no plans and we're doing no work for selling portions of the business at the moment.
George Gianarikas
Thank you. As a follow up, to just talk about the momentum in Europe. I'm curious as to any additional steps you're taking from a people power perspective to reallocate resources to that part of the world instead of others that may be seeing a little bit of a slowdown in the momentum? Thank you very much.
Andrew Marsh
So I'll start, then I'll let Paul add on. We've invested significantly in Europe over the past three years. We have a major development facility for electrolyzers actually resides in the Netherlands. We have a strong business development sales operations with centers in France. We have activities in Spain. We have integrators across Europe that we work with. Europe, this is not a new focus for plug. It has been investments that we've been making over three to four years.
Jose, would you like to add to that?
Jose Crespo
No, you're right. I mean, we have activities all over the European Union, namely, the facility in the Netherlands. But as you said, we have a commercial operations in the UK, in Spain, Germany, in France. And this is not a new focus as Andy said, and the relationships that we have over there are have been built over the last three, four years. So it's -- there is a good amount of resources to face the opportunities that we have in in Europe in the next.
Andrew Marsh
And I would say it was a for real products in the ground using pen technology, nobody has more.
Jose Crespo
I agree.
George Gianarikas
Thank you.
Andrew Marsh
Thanks, George.
Operator
Colin Rusch, Oppenheimer.
Colin Rusch
Thanks so much guys. Can you give us an update on how the hydrogen production facilities are operating? What you're looking at from a yield perspective versus expectations and how the ramp is going in Texas at this point?
Andrew Marsh
I think you probably mean Louisiana, Colin?
Colin Rusch
Yeah, exactly. Thank you for that.
Andrew Marsh
Yeah, so I think Georgia, we had our best month ever.
Jose Crespo
Yeah, April was a record in terms of production and yield.
Andrew Marsh
Yeah, so I think how many tons was it? 300 tonnes out Georgia and --
Yeah, so Georgia is beginning to run without too much management involvement, Colin. And it turns on and runs every day. Louisiana, boy, it's probably, I think what I've been most impressed with is it look -- it's our third time around. It's a much cleaner design in Louisiana and then Georgia and Tennessee. We really have learned how to build plants which is really important for Jose in building out the electrolyzing market. So we're quite pleased with the progress we're seeing at all three sites. We -- I think the question is, we need to get Texas started by year's end, and I think that's a real focus of the business.
Colin Rusch
Thanks so much. And then from a material handling standpoint, there's been kind of some mixed demand not just for you guys but broadly speaking around warehousing, automation and capacity building. I guess at this point are you seeing folks, outside the US start to expand capacity at all? Are there some green shoots that we can be thinking about as you get into the back half of this year and and prepare for 2026?
Andrew Marsh
What's interesting, I have one of my major pedestal companies that have kind of suggested to me that automation may not be working as well as we're hoping, which is good for our material handling business. Do you want to touch on material handling for Europe, Jose?
Jose Crespo
Yeah, so in Europe, we have made some inroads, and I think we announced this a few weeks ago with BMW in Europe with two new facilities that we're going to be deploying there. And we also -- Andy also mentioned Steph, which is the largest freezer, company in the European market, I think. We've also done a couple of facilities with them, one in Madrid and one in France. So we've seen some activity and some new opportunities happening in the European market as well.
Colin Rusch
Thanks, guys.
Andrew Marsh
Okay, thanks, Collin.
Operator
(Operator Instructions)
Eric Stine, Craig Hallam.
Andrew Marsh
Hey, everyone. Hey Eric.
Eric Stine
Good afternoon. Colin, I know, was just talking about kind of geographic mix of material handling. But I'm curious if you could just talk about what you're seeing today, and I know part of this is because you've transitioned to the direct sales model away from PPA. You've also put through price increases for margins. I, as a result, does that mean that the business today is for expansion with current customers? Or I mean you did mention a new customer, but just curious, the economics are different. It may take a little bit more time to get people up to speed on that. Just how should we think about that?
Andrew Marsh
Do you want to take that, Jose?
Jose Crespo
So the -- we are growing in both sides. With existing customers, and they mentioned one of our largest customers having Safe Harbor $200 million of potential business at the end of 2024. But we are also talking and expanding with new customers opportunities. The customer I just described in Europe is a brand new customer. So we do see expansion in both sides. The economics, given that we will be looking at the 48V possibility still there, and we keep on pushing the market.
Eric Stine
Got it. That is helpful. And then maybe could you just remind us. I know you gave us the Q2 guide, so I'm not trying to dial this into too specifically in terms of annually. But I mean, do you expect this to be a similar year in terms of the breakdown first half, second half?
Andrew Marsh
I would say this, Eric, we are trying to be very clear to investors of our performance, quarter after quarter. Look, it's no -- as you know that, we've had a couple of years where we've missed. So we want to make sure that we don't mislead folks and. And this quarter, we have a clear plan how to get the $140 million to $180 million. We're focusing on becoming gross margin break even by the end of the year. That is the focus and that's -- we're trying not to provide any additional guidance.
Eric Stine
Yeah, no, understood. Worth asking, but I get it. So thank you very much. Bye.
Andrew Marsh
Okay. Bye, Eric.
Operator
Dushyant Ailani, Jefferies.
Dushyant Ailani
Thanks for taking my question, guys. I just wanted to follow up on the 45V real quick. I know that there are some Safe Harbor rules, right, 5% spend, or if you start construction. Could you kind of remind us how much have you already spent on Texas and then how much what the CapEx looks like?
Andrew Marsh
We've spent $250 million, the CapEx is $800 million. The DOE loan is approximately $400 million. And we've been working with an equity investor for the rest. So we've already spent $250 million of $800 million to about 37%.
Dushyant Ailani
So do you think it the Texas project is largely safe harbored with the 45V, since you've already --
Andrew Marsh
I would say this, this is going to be a interesting time as these rules, laws are finalized. And I think the initial the fact that 45V is in the mix and that there is a safe harbor aspect, I take it as a real positive for Texas. That being said, I know this will go through gyrations in both the House and ultimately the Senate, and then ultimately in reconciliation between the two bodies. So I'm not -- I don't want to. What we think it is today, there's one thing I can promise you. It won't be the same whether it's the end of May, whether it's before the August recess, before December. This is going to -- it's going to be sorted out. This is kind of the first written [vowy].
Dushyant Ailani
Fair enough, fair enough, I agree there. And then just my follow up. I think it, mentioned in your prepared remarks around conversations with customers to on tariffs, just maybe adding surcharges. How have those conversations been? Have you started those conversations with your customers yet?
Andrew Marsh
One of our -- there has been some initial conversations. At the moment, we're pretty much -- so we had unfortunately inventory that we're trying to burn down, and we have goals to reduce that significantly during this year. So we are protected on the inventory level which actually has not really caused our costs to go up yet.
And If I look at again at the tariffs which -- the tariffs truce that went into effect, it really doesn't impact us. And on the electrolyzer business, as we mentioned, the products were just designed not looking to have Chinese content. So when you put all that together, we feel -- I don't know if that's going to be a requirement, quite honestly.
Dushyant Ailani
Got it. Thank you.
Andrew Marsh
I mean, I think that's one of the challenges at the level of uncertainty remains.
Dushyant Ailani
Fair enough, thank you.
Andrew Marsh
You're welcome.
Operator
Thank you. And there are no further questions at this time, so I'll hand the floor back to Andy Marsh for closing remarks. Thank you.
Andrew Marsh
Well, thank you, everyone. Look, this quarter, we met the numbers we said we were going to meet. We're clear about our expectations for the second quarter for revenue. We expect continuous improvements. One item site gross margins in the second quarter. We've proven -- and unlike anyone else in the world that who's not a large industrial gas company, we actually know how to build hydrogen plants. And finally, there's a huge market opportunity for Plug and electrolyzers in Europe, UK. I guess UK is still part of Europe and Australia. So thanks, everyone. I appreciate your time and looking forward to talking to many of you soon. Bye now.
Operator
This concludes today's conference. All parties may disconnect. Have a good day.
