Plug Power Inc. (PLUG) Earnings Call Transcript

Greetings, and welcome to the Plug January Business Update Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to our host, Teal Hoyos, Senior Director Marketing Communications. Thank you. You may begin.

Thank you. Welcome to Plug's January business update conference 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 the Securities 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. Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those disclosed 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 31, 2021, as well as other reports we file from time to time with the SEC. These forward-looking statements speak only as of the date 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.

Thank you, Teal, and thank you, everyone, for joining this call today. I'd like to start out for those who have not been on this call. Every January for about the past decade, at Plug, we've kind of provided an overview of what we expect the next year to be. This is not an earnings call. This is an outlook call for 2023. Like, all these calls, though, it's covered by the safe harbor statement, which Teal shows right here. So let's get on with the story. So every week, I meet with our employees and talk through what are the key initiatives for the coming quarter, for the coming year, and these are our key initiatives for 2023. And I stared at this today and thinking about how to present it, I almost would put this in 3 separate parts. There's a great deal of activity ongoing at Plug associated with hydrogen generation. Everything from building our own plants, to generating hydrogen using Plug electrolyzers for our cells and for customers like New Fortress Energy as well as how do you deliver that hydrogen and how do you take gas to hydrogen and make it liquid, and you'll hear me talk a little bit more about that. But so much of our business revolves around how to make hydrogen readily available, how to make hydrogen cost effective and how to make hydrogen lower and lower carbon intensity. That's who Plug Power is. And I can tell you, one of the challenges in this industry, for the decade and a half I've been involved in it, has been those 3 elements of hydrogen, and Plug has been solving that problem. Then I look at the whole application space, which is a driver for revenue for Plug, and we are an outstanding hardware company. Our newest stationary product, which I'll talk more and more about, is really a -- is 1.8 megawatts of power in a nice 40-foot container, but it's more than that. It's really an accumulation of 25 years' experience. Everything we've learned, how to put 60,000 fuel cells out into the world, how do manufacture MEAs, how to make balance a plant or all captured in this offering. I find this offering unique. And this application, coupled with our material handling, coupled with our on-road vehicle activities with HYVIA, I believe, is another key element of Plug's business and closely tied to everything we're doing to green hydrogen because these products make green hydrogen a continual annuity stream for Plug. On top of that is our commitment to be a world-class manufacturer and to establish world-class relationships in our supply chain. If -- over the last 2 years, much of our discussions have been about JVs with people like Renault, people like SK. I think this year, you're going to hear a lot more about partnerships with our supply chain so that we can deliver quality, strong products to our customer base. And look, we're bringing people and brought in folks to build world-class manufacturing operations for us, not world-class just for the fuel cell and hydrogen business, but world-class for manufacturing in general. I think many of you saw our 155,000 square foot gigafactory in Rochester, New York. Just south of me here, we've built a 400,000 square feet manufacturing plant in under a year, pretty astonishing. I think many of you saw the grand opening. But there is a commitment to manufacturing, the supply chain, construction like our plants, which I believe is unique in the industry. Look, now I'm going to talk a little bit about the quarter. There isn't too much to share today because Paul's still working on it. I guess I would start out by saying, it's been a -- it was a tougher quarter than expected. Yes, the company grew 50% -- 45% to 50% this year. We wanted to grow 80%. We didn't make that. We did grow in the fourth quarter versus the fourth quarter of 2021, 60%. But look, we ran into some hiccups. I think that when you're introducing the whole suite of new products that Plug was introducing, which added, quite honestly, complexity to supply chain. We were pushing forward in December and in mid-December, late December, we still felt we had a chance. We didn't make it. We've written in the items. We've overcome them at this time. It's really not a supply chain issue. It really had to do with the fact that the new products came out a little slower than we hoped. Manufacturing had a few more issues than we hoped, but we feel that those issues have been overcome. So if you really look at it, 2/3 of our revenue missed for the year actually had to do with the new product ramp and its implications, quite honestly, to supply chain and 1/3 actually had to do with our customers' construction. When I look at -- we have sites where the hydrogen infrastructure has already been built and ready to go, fuel cells ready to ship, but the customers' construction, in many cases, did not get completed, though that'll happen in the first quarter. I'd really like to reiterate, and this is an important point. We didn't lose any backlog. We didn't lose any deal. The business keeps on growing. And that's why we remain confident in our goals for 2023 of $1.4 billion in revenue with 10% gross margin. I believe that the activities Plug's doing in green hydrogen, building our electrolyzers, our partnerships, our continued investment in applications will allow Plug to take a considerable share of this market, not only in 2023, but in 2026 and 2030. And by 2030, we see this as a $20 billion enterprise with 22% OI. I want to share with you, based on our present run rate, what a OI breakeven quarter, and notice, I used the word OI. I didn't use the word EBITDA. I mean, Plug is now driving to achieving OI, operating income, breakeven in the next 12 months. A quarter of $600 million, gross margin of 20% will allow Plug to be breakeven with our present run rate. Key to that is scaling our factories. What's interesting is, I usually would say, key to that is driving sales. I'm not really worried about the sales, I'm worried about making sure we ramp our production, ramp our large-scale stationary product, continue to improve the reliability and build out our green hydrogen plant. That's how we achieve this journey. And as time goes on, our breakeven revenue point for a quarter, on an OI basis, will migrate down from $600 million to the range of $350 million to $400 million. That's the roadmap. And if you got a look at hydrogen and the impact of hydrogen, and I take a step back and think about 2023. Plug is -- in 2022, Plug is going to use 65 tons of hydrogen per day, liquid hydrogen, the largest in the world. As we source more and more of that with green hydrogen and some of this will be sourced this year in green hydrogen, the difference between 2022 and 2023, if it all was green, it's $100 million swing. That's why we're investing in green hydrogen, but that continues to grow. But one of the items, if you look at the next slide, we're really clear on how we're getting there. I think many of the analysts on the call today, they understand this roadmap. You got to get land. You've got to get the PPA agreement. You got to construct the plant. You got to commission it. You got to get the full production. I had the wonderful opportunity that be at our facility in Georgia on Monday and walk the plant. The plant is in commissioning. It still has some construction going on, but you walk that plant and you walk in and you see right there, a power substation to support our needs. You see high-voltage transformers feeding the rectifier systems, which are feeding electrolyzers, which are on site. Liquefication, which includes large nitrogen compressors and helium compressors, you see the depots are moving and delivering hydrogen to our customers. You see the on-site storage. This site will start producing hydrogen at the end of March. I -- when I walk there and I walked through the team, not only did I see what we've accomplished to date, but I really saw the roadmap for New York, where a lot of work has been done already for Texas, where work has been done already for expansion with Tennessee and Louisiana work. When I look at it, we have the equation down. We know how to do it, and I think that this positions Plug uniquely in the marketplace. And what's really interesting is how hydrogen equates to our stationary product. Stationary product -- so I don't know if folks remember what the Microsoft product looked like that we showed off in July and August. This is the product today on a 53-foot trailer. That's 1.75 megawatts of power. That product itself is going through final qualification that we will be shipping over 20 megawatts this year. A good deal of that is for green EV charging where people cannot provide -- get the grid. So also for some prime peak power applications, which is a huge market opportunity for Plug as well as backup power, which we believe become peaker plants when we talk to some of our customers. We have strong orders for this product, but the last bullet here is one that when you think about the work we're doing with green hydrogen and you think about this continuous revenue stream and cash stream for Plug, this is using 1.4 tons per day of hydrogen. I think folks can do the math. That's a huge, huge revenue stream. And when I look at this product, that's as important, if not more important, than the margin we'll make on the products. Our focus with this product is deploy as many as possible. But as many as we deploy them, it's become such a huge long-term opportunity for Plug that pays over and over again every month. This product wouldn't have been possible with (sic) [ without ] all the relationships that we've done throughout the years in the material handling business. People like Walmart, Amazon, BMW, people like -- I almost said Tesla folks. Folks like Tesco, this product is really based, that stationary product, on the 60,000 fuel cells we've shipped in the field for material handling. It's based on the 200 fueling stations we've built. And this year, with our pedestal customers, we'll do over 50 sites. In Europe will do 8 sites. We will be increasing our number of pedestal customers by 4 this year. And we're continuing to drive down the cost, which will have benefits to all the applications Plug's involved with, everything from stationary products to on-road vehicles. So this market will grow our business. And then if we move on to the next slide, Teal, you see our electrolyzer pipeline. And I'm going to tell our electrolyzer story a little bit different than folks may be thinking about it. I actually see 2 separate markets here. We've developed and are beginning to ship a 5-megawatt self-contained electrolyzer. If you're a user of our electrolyzer, if you want to take advantage of the IRA, you can buy a product that all you have to do is bring green electricity to and build a pad and have green hydrogen. That product is ideal for folks in concrete manufacturing, glass manufacturing. We already have orders for 34 to be delivered this year of this 5-megawatt platform. That 5-megawatt platform also -- if you look at it, half of those orders for that platform were received in the last 60 days. I think you're beginning to see some of the power of the IRA. Our goal there is how to fabricate faster. The second big market opportunity, like what we're doing with NFE, New Fortress Energy, H2 Energy, is building large-scale plant. Who's better to help you build a 10 large-scale plant for electrolyzers than the company that's done it already. I can't wait, and we actually had -- I know, Sanjay, one of the major oil companies at our plant in Georgia yesterday, are reviewing what we're doing. So that plant not only becomes a demonstration of our electrolyzer technology, show people our trailers, show people, ultimately, our liquefiers. That's what those plants show. No one else in the world has the ability to take someone to a site and say, you want to see an electrolyzer? Here you go, made by Plug. You want to see our trailers and how to fill it? This is how you do it. Not only is it an incredible opportunity for us to generate green hydrogen, it helps us scale this industry, make hydrogen ubiquitous, help us in our own applications. And the plant's unique, and I know, Teal, we are planning, in the second quarter, to bring lots of analysts down there to show off this facility. And this facility, if you move to the next slide, Teal, shows a great deal of our cryogenics capability. And hydrogen's tough. Hydrogen becomes a liquid at 25 -- around 25 degrees Kelvin. It's almost absolutely 0. That capability though is important to move in transport and store hydrogen. We look at our work and our liquefiers themselves, we believe, are the most efficient. We look at them, and we believe they're incredibly cost effective, because we can use Plug-scale building plants to help others. Our trailers, we're beginning to ship trailers at a faster and faster rate. Those trailer technology, we're also beginning to leverage for each -- to mobile refuelers as well as building our own on-site hydrogen tanks. Cryogenics is key, not only for the next 15 years in this industry, but for the next 50 years. And Plug has this capability, which we've added to our portfolio in the last 12 to 13 months, which we believe separates us from the competition. I think the fact that we sold over $150 million of -- took orders for $150 million worth of liquefiers in the last 60 days of the quarter speaks volumes about what we're developing with this product line. We also have joint ventures, and we're excited about our joint venture with HYVIA. I've driven the vehicle. Folks at one of if not the largest last-mile of vehicle delivery tells me they believe 35% to 65% of last-mile will be hydrogen fuel cell vehicles that look like our HYVIA. We'll ship 500 to 1,000 this year, targeting 100,000 by 2030. Our JV with ACCIONA, we will be deploying our first hydrogen plants within in 2024. They've been incredibly aggressive finding sites for green hydrogen generation. We couldn't find a better partner for Southern Europe than ACCIONA. I think many of you know about our Olin relationship using their chlor-alkali stream, this plant with Olin, which we have parts available, will be deployed by the third quarter. And SK, I was at the show with SK in Vegas over the first week in January at CES. I haven't been talking a lot about SK, but you walk in their booth and this was a tremendous booth. They spent probably $10 million on this booth. A good 25% of it was committed to hydrogen and a lot of afterwork with Plug. With SK, we're building hydrogen fueling stations in South Korea as we speak. With SK, we're going to be doing over 1,000 buses over the next 18 months. With SK, by 2025, we'll have 400 megawatts of stationary products deployed. With SK, we'll have a gigafactory in place. SK has become a wonderful partner. And I think any of you who had the opportunity to go through that booth would say yes, got a sense of how close we are. And finally, I'd like to end by showing you, I think this is a detail that many of you, who are our analysts were looking for throughout the year. This gives you a diagram of the mix of revenue between our different entities. If I take a look at this, what you see is that by the end of this year, the material handling business and electrolyzer business will be of equal size and the hydrogen business of the pie will continue to grow. To end this, I'd like to reiterate that we have the right plan for building out these green hydrogen plants. I think we got there ahead of everyone else. We saw where the world was going, and Sanjay and his team are in construction of plants that -- 5 plants, including our plant in Antwerp to allow us to be the leader to be the first one to market with large-scale green hydrogen and 500 tons per day by the end of 2025. Our application knowledge and the breadth of products we're offering is unmatched. It's -- when I look at the stationary product, I think many of you understand, I'm an engineer. When I go -- I am amazed by the improvement in technology from where we were in July to where we are today. So credit to the depth of engineering capability at Plug. But probably more important to investors and analysts, when I talk to customers, they really want this product. And finally, we're developing and continue to invest in world-class manufacturing capability. So electrolyzer stacks, electrolyzer products can be easily built and shipped to customers in 16 weeks. Nobody can do that. That to Plug is -- Plug created the first market for hydrogen fuel cells and now is creating the -- accelerating this market faster than anyone else. Now as my final note, as my folks in George said, all the suppliers want to be part of the Plug team because they see we're the ones moving this industry. On that note, I appreciate everyone's indulgence. I usually give you a quick 1, 2 minute, but today, I really want to share with you, as I do every year in January, the grander vision for Plug. So on that note, I'd love to take -- Paul and Sanjay are here with me, and we'd love to take your questions.

[Operator Instructions] Our first question comes from James West with Evercore ISI.

So as we think about -- I guess a couple of questions for me. One is on -- with natural gas prices having come down and so input cost into the green hydrogen that you still source coming down, when does that start to flow through in your numbers? When do you get the benefit of that?

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

Fair question. You will start to see the benefit of that as early Q1 of this year, right? You'll certainly see benefits of that meaningfully in 2023. And look -- and I think one of the things, James, when we talk about our full year of 2023 at that 10% gross margin target and $1.4 billion in revenue, the modeling that we did, from a natural gas standpoint, was that natural gas gets to about $450,000 by the end of the year. Obviously, I have to tell you this, right? The prices are much lower than that. And just to give you one sense, every dollar change in the natural gas price, from an MMBTU perspective, ends up positively impacting hydrogen cost by about $1.35 per kg, okay? So if you think about that, that's the delta. And by the way, I just want to remind everybody, there is a 3-month lag before you see the full benefit as the price comes down, and we end up actually getting repricing from some of our suppliers. But that is, hopefully, the tailwind that we'll get to enjoy here in 2023.

Right. Okay. Got it. And then perhaps, on the supply chain. There were, I guess, some hiccups during the year and the fourth quarter. Can you talk about strengthening partnerships? So what's -- how should we envision that? What kind of form or shape will those partnerships take?

I think, James, there's a good chance soon, you'll see us doing actually having suppliers in our factory actually manufacturing products hand-in-hand with us. So that we won't be -- and certainly, the IRA has encouraged that. One of the big ingredients of the IRA is American manufacturing. And being one of the -- being the leader, we've been -- over the last 6 months since the IRA got packaged, we've been talking, and I think you'll see sooner rather than later us having some joint capabilities where we, with partners, have manufacturing on-site jointly with us. And those partners we select to do that with will be folks who are not only good in manufacturing, but technology leaders themselves, which allow us jointly to do work together. I think I'm really excited about that next step in the Plug journey. We become really good partnering on the sales side, and now we're really working through how to partner on the supply chain side.

Our next question comes from Colin Rusch with Oppenheimer & Company.

So I know you guys are still in process of ramping in a couple of these big hydrogen facilities, but can you talk a little bit about how yields are trending so far compared to expectations? And how you see that playing out over the next couple of quarters?

Yes. I'm going to let Sanjay take it. And I think -- why don't you take that one, Sanjay.

So Colin, I just want to make sure. So the question is on how are we ramping up all of our green hydrogen plants, right?

No, I'm talking about the actual yield and performance of the equipment, right? So as you go through the testing process and qualification and start turning things on, how are things performing relative to expectations? And how much problem-solving are you doing in real-time with the process?

Sure. Sure. Sure. Got it. So again, I think, Colin, one of the key things, right, so when it comes to the liquefaction piece of the business, you know that we have an existing liquid plant in Tennessee, right? And the person who actually has moved to run our plant in Georgia ran our plant in Tennessee, and he's one of the best plant operators we have now. So from a liquefaction ramping, tuning, doing the things, we feel pretty good about that. And again, I just want to remind everybody, we strategically made a decision on, in fact, building a gas plant in Georgia first. Why did we do that? So that we can actually do a lot of testing, a lot of learning, a lot of debugging, if you will, of our 5-megawatt electrolyzer so that when we're commissioning and ramping up 40-megawatt electrolyzer as a part of the 15-ton plant, we've gone through that process. There are a lot of learning that we can leverage as we're doing that. And Colin, when it relates to, like, commissioning a transformer already in place, we're actually commissioning the PDCs. We're starting to commission all the different compressors that Andy talked about. Helium compressor, nitrogen compressors, right, we're doing the water flushing. So look, I mean, there's always things that can come up that you don't anticipate, but so far, as Andy said, things are going as planned. We feel pretty good about it. Team's doing a great job. We're very happy with how our EPC partner is working. Colin, one thing I want to highlight here, which I think is probably a bigger and more important point, which I think Andy earlier touched on, what this does for us in Georgia is not just about how we're going to be able to produce liquid in Georgia, how we're going to be able to ramp this plant up. This really helps us industrialize as we now start to build our 45-ton plant in Texas, 75-ton plant in New York. We have almost a bit of a blueprint. We know how to use that. Like, for example, in Texas and New York, we're going to do a turnkey EPC, right? We're -- not only that this plant is going to have a Plug electrolyzer and liquefier, we're now in a position where we can go to some very large global EPC companies and say, submit the bid, we'll pick one out of the top players, and that's how we're going to be able to get these plants built.

Perfect. That's super helpful, Sanjay. And then for Paul, the '23 guidance around OpEx spending shows a pretty sharp slowing of growth there. Can you talk a little bit about the staffing, and how that OpEx spend, where it's being allocated? Is the growth coming primarily in R&D? Or are you looking more around some of the overhead functions? Just so we have a proper sense of how to break that out.

Yes. I think a couple of things. One, we were pretty public last year about making investments in the business to support the growth on a CapEx and an OpEx standpoint. We feel like we've gotten a lot of that scale invested in platform. And so to that degree, it should slow. The other dynamic is, if you look in the numbers last year, there are a lot of acquisition accounting. So a lot of that doesn't necessarily repeat. So as that abates, it affords us to use those dollars in other ways. So that helps kind of mitigate what you might see in some escalation. And I think -- so that's -- I think the mix will probably be relatively consistent to what we did last year from an R&D and admin standpoint. But it's those 2 dynamics that I shared, that's why that it should be softer in terms of growth this year versus last year.

Our next question comes from Bill Peterson with JPMorgan.

My first question is related to the visibility you have, and I guess, how we should think about the growth for the year. Obviously, the fourth quarter came in below expectations, and obviously, probably, like, $100 million or so kind of below the expectation in the quarter. So as we think about the year with $1.4 billion as your goal, I guess, how much visibility you have into that so far? How much is booked versus how much needs to be booked? And how should we think about the half-over-half dynamics?

I'll take portions of it and then I'll pull it off to Paul. And it has to do with kind of the different businesses, and then I'll let Paul go into more. If you think about electrolyzers, we're sitting with electrolyzers pretty much at 80%, 85%, Bill, of what we need to meet the numbers. In the material handling market, it's about 70%, call it, 75%. In the cryogenics area, the trailers, I would probably put it in the 60% range just because the trailers are much more -- much faster. The liquefier itself, really, really clear visibility, probably close to 100% of what we're expecting. And on hydrogen plants, obviously, we can sell everything we can make with hydrogen at the moment, so that's kind of how I look at it. Paul, you want to talk from a more higher level?

Yes. Well, I just would say a couple of things. One, if you look at it on a whole a high-level basis, you're probably going to see -- well, I'm confident you'll see similar to what we've had in the past, with the first half being kind of 1/3 of our sales and the second half being 2/3 of our sales. Part of that is the continued seasonality that we continue to experience with a business like material handling. And part of it is just some of the dynamics. When we're turning on the green plants in the course of the year and we're continuing to scale up electrolyzers and a lot of these large-scale projects are really starting to take -- ramp-up, they'll be even in greater capacity and spreading of scale in the second half. So all of that combined is how you see it kind of driving out of that kind of 1/3 to 2/3 framework for the first half versus second half.

I appreciate that color. Maybe there's an earlier question about the benefits of lower nat gas prices, but you didn't really raise your margin, I guess, outlook for the year. And I believe back -- when you did a symposium, nat gas prices were actually quite a bit higher, I believe. So I guess with that in mind, can you walk through the puts and takes on how we should think about margins? Again, you didn't raise it. So what are the challenges you have in terms of meeting the target? And what are the, let's say, the tailwind as you move through the year?

Yes. I guess I want to make sure it's clear, Bill. The numbers we showed today was -- for 2023, were exactly the same as the symposium.

That's right, but nat gas prices are actually better than what it was as we saw back in that symposium.

Yes. I understand. But, yes -- so, Paul?

So I'll use my phrase I used at the symposium, which customers don't want me to ever talk about making money and vendors don't want us making money and investors want us making money. It makes it hard to forecast. What I would say is, when you look at trends with the nat [ gas ] price being lower today than what we've just shared in terms of our -- what Sanjay conveyed that's in our plan, that tells you that there's upside there, right? And we feel pretty good, both in terms of the volume upside, which as I sell more product holistically, potentially it could be -- it will help on the margin front. And there's also more upside on the cost-down initiatives, which includes nat [ gas ] price and other initiatives that we got going on. So I think it's something we're going to continue to monitor. We have another call coming up first quarter. We'll be able to continue to give you guys more upside -- more insight and updates as we move through the year. But coming off the quarter we just did and with some of those challenges, I think it's a balanced approach right now to kind of keep those targets as we sit today.

Our next question comes from Manav Gupta with UBS.

A quick question here. First, we have seen a lot of positive news on the liquefier front, Nikola, TC Energy. I'm trying to understand how you look at this business. Can this business grow as the need for mobile hydrogen increases? And one of your competitors has a 30% gross margin in this business. Is there any reason you can't hit that 30% gross margin as we expand in this business?

I'll let Sanjay take that one. Sanjay?

I think the answer to that is -- maybe I'll just keep it brief and say yes, but let me elaborate. So great question, by the way, a couple of points. Number one, we also benefit from supply chain quite a bit with our liquefier. One, we're using it for our own purposes and also selling it to the third party, right? And second thing -- and I think Andy has touched on it during his prepared remarks, we had one of the major oil company touring our plan, so you can imagine that we are actually having discussions with folks like that as they are looking to get into this business, right? So when you think about kind of the 30 -- sort of we have one of the best energy efficiency from a pricing standpoint. We believe we have the best pricing in the market. From a supply chain and a cost perspective, we can drive that cost down faster. So to your point of why we should not have the kind of the margin you talked about, yes, you're right, we should. That's the right way to think about it, and this is a business, right? As Andy said, it becomes quite chunky in terms of 30 -- 3 liquefiers bringing about $150 million in revenue opportunity, and our funnel is substantially larger than that. Obviously, we're doing a lot of work with a lot of different parties and hopefully, more to come.

Perfect. Thing with sell side is we always want more.

I understand.

And now that you have given us this wonderful chart for 2023 sales mix, the obvious question is, can you help us understand a little bit better how that mix could be looking in 2026 or 2025 in terms of how much bigger could electrolyzers be by then versus the material handling as we look 3 to 4 years out?

I think 3 to 4 years out, material handling is probably our fourth biggest business that -- I think what you'll see is, our biggest -- I'm going to separate. I think our biggest margin business is probably hydrogen generation. I think our biggest revenue business is electrolyzers. I think that stationery products is probably #2 if not, #1, depending upon certain -- how the SK ramp occurs, #3, I would put hydrogen and #4, material handling. Still important to us, but it was the baseline of everything we've learned, but these other businesses and the opportunities and the chunks, just to give you a feel, probably one of my 5-megawatt electrolyzer boxes generates more revenue than 1 distribution center.

Our next question comes from Alex Kania with Wolfe Research.

So just maybe kind of a sort of a follow-up question, I guess, on that is just thinking since the October meeting, I'm kind of wondering, and we've seen a couple of these chunky liquefier sales announcements. Obviously, some are a little bit further dated. But just, how is that revenue mix that you gave in the slides evolved over the last 3 or 4 months? I'm just -- and thinking about, obviously, going to this meeting and thinking about -- feeling good about $1.4 billion, but just I'm wondering kind of how the moving parts have moved. And then maybe related to that, just thinking about some spillover from Q4 in terms of revenue and deliveries. Is -- are there kind of offsets that we should think about relative to October?

Yes. I'm going to turn it over to Paul first, Alex. We purposely did not want to go over aggressive on this call. I would say that we are presently surprised by the growth of the liquefier business and the activity going on there. And I think as we learn more and we have more customer engagement and close more deals, it may change. I'll let Paul answer the rest of it, but look, I'm going to add one item. Three years ago, people would say, you're totally dependent upon Amazon and Walmart. That dynamic has changed significantly. Both of them are critical customers to Plug, but the liquefier business, the electrolyzer business, the trailer business, all that has provided us a great deal of diversity, which actually makes the prediction, especially as these new product launches now are becoming cleaner and cleaner, the prediction for the business becomes a bit easier this year. But on that note, Paul, I'll let you kind of follow up.

Yes. I guess, Andy said earlier, the good news, really good news is, it's -- we -- when you look at 2022, and in particular, Q4, it wasn't that the volume and the sales and the opportunities weren't there. They didn't go anywhere. That -- obviously, all of that rolls into '24. So as we sit today, that gives us a lot -- just even higher confidence than we even -- in any year we've ever started given what that rollover effect does. And so that is a good -- and that really helps, really going to kick off the first half even stronger potentially than historically. But as we said today, we feel really good about the $1.4 billion. We've got the pipeline, and there are a lot of positive factors, including the diversity of mix, which gives us a lot of platforms to -- and all of them have tremendous upsides on that. So we feel really good about that, and that rollover really helps increase our confidence level in terms of our outlook.

Great. And just last question I have is just any sense that you're getting from treasury in terms of finalizing rules around the PTC provisions or any other important ones within -- for you and making sure that all of those are going to kind of come out and hopefully, similar to what your expectations are?

I would say this, Alex. I think treasury -- look, I don't -- the number of comment letters -- I forget the number of comment letters on the IRA. How much, Gerry?

1,700.

1,700 comment letters. Probably it's not helping them get through, and we're looking at probably late second quarter before Treasury comes out with its announcement. I think you look at a couple of elements that make us feel comfortable. Look, we're American in May. We're American, that's important to the rules and regulations, whatever happens. Now you look at our plan in Texas, we're the wind farm that -- our support is already there, which was built. No doubt that's green energy. So we're feeling -- look, I'm not going to say we're not going to be monitoring and talking to folks that make sure that our views of Plug and the industry are highlighted, but it'll take a while for the treasury to get the regulations done. And I guess I would add this. There always will be back-and-forth for treasury, even after the rules are written on interpretation. We've lived that in the material handling the industry. I've lived that world here at Plug since 2008, and that -- there will always be some back-and-forth.

Our next question comes from P.J. Juvekar with Citi.

How much of your green hydrogen in 2023, the 65 tons per day on average that you expect will go to your pedestal customers? And then I keep asking the same question to Sanjay is, how would you price this hydrogen? Because your customers are large customers that have huge balance sheets, amazing market caps. Hydrogen will be a small cost for them, but it's a big deal for you. So how would you really price this green hydrogen?

So P.J., unfortunately, I'm going to let Sanjay answer that question for you.

P.J., I think we're going to have to take you in some of these customer negotiations. Look, point very well taken, right, but again, I think for -- as Andy mentioned, for 2023, as a part of driving our margin expansion and obviously, continue to drive the cost of hydrogen down, we are going to be allocating a meaningful amount of this near-term production to our various customers, right, and the list is obviously larger. It's not just our 2 pedestal customers as we talked about, our demand being at least 65 tons per day for the full year of 2023. Now from a pricing standpoint, P.J., it depends a bit, right? And one of the things that we've always said is, what is Plug's mission. We're trying to make green hydrogen economical, ubiquitous and easy, right? So with that in mind, we want to make sure that we're getting the return on our plants. So the return on this invested capital is attractive, but we're also not here to maximize what that price is going to be for everybody. We're not trying to play this game. I mean, look, we've suffered that. We don't want somebody else to suffer that as we have done for the last several years given all the challenges and the dynamics we've seen in this hydrogen industry, right? But having said that, as Andy said, despite all these pricing dynamics with the production tax credit in place, I do believe that this is going to be a business that'll probably have a higher margin than some of our equipment business. So in light of that, I think that's probably the best I can give you here in terms of how we're thinking about pricing as well as margin profile for our green hydrogen business. But just to add one last comment here, there are some customers, right, that are obviously paying fully substantial price for this. And I think on a case-by-case basis, there was a scenario where pricing could actually be meaningfully higher than what we're giving to our pedestal customers.

Okay. And then you didn't take down your 2023 target of 200 tons per day by end of the 2023.

Right.

That confidence come from these EPC contracts that you'll be giving out that you think they can execute and you can keep that target?

Yes, P.J., that's a great question, right? I think when we're talking about now commissioning -- and by the way, one another thing we did highlight, right, from commissioning to full product production, it's anywhere between 3 to 6 months. So what we have learned here in Georgia really allows us to sort of talk about why we can, in fact, get Texas done in the timeline we're talking about, because we've kind of done, right? It's not a PowerPoint kind of a presentation, hey, these are the things we need to do. We're actually doing it on the site, on the ground. So we know what are the challenges we've faced, we know how we've mitigated them, and that gives us the blueprint to take that to global EPC companies and ask them for a turnkey EPC contract. That's what's going to happen in Texas. That's what's going to happen in New York. That's what's going to happen in multiple other plants that we're going to continue to build. So short answer to your question is, learning what we've learned in Georgia is going to actually be a huge value add, not to get Georgia up and running by the end of March here in the end of Q1 and early Q2, but really how we execute on many projects going forward.

Our next question comes from Jordan Levy with Truist Securities.

As my first time on the call, I appreciate the -- all the details. I just wanted to hit quickly on the stationary business. You all -- you obviously talked to the work you did with Microsoft last year. Just curious how you're thinking about the other 2 avenues for that business being EV charge and prime power and how those develop or mature over the next year and then maybe over the next 3 or 4 years, and how you see that playing out?