Plug Power Inc. (PLUG) Earnings Call Transcript & Summary

Greetings, and welcome to the Plug Power Business Update Call. [Operator Instructions]. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Teal Hoyos. Please go ahead.

Thank you. This call will include forward-looking statements. These forward-looking statements contain projections of our future results of operations 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. 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 31, 2024, or quarterly report on Form 10-Q for the quarters ending March 31, 2025, June 30, 2025, and September 30, 2025, and as well as other reports we file from time to time with the SEC. These forward-looking statements speak only as of the date in which the statements are made, and we do not undertake or intend to update 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.

Well, good morning, everyone, and good afternoon to those in Europe, and good evening to those in Asia. I want to thank you for joining the call today. And you can put questions in the portal. I think we've explained that earlier. And look, I'll take business questions today. Business questions, I can't comment on the fourth quarter, but I'll be happy to come in on any other items. I also want to talk about the vote and especially proposal to which is the increase in number of authorized shares. And I'd like to start off when it comes to Proposition 2. I want to thank those who voted yes. And if you know someone who is a shareholder who hasn't voted yet or voted no any help you can to persuade them to go vote, I greatly appreciate it. For those who voted no or abstain who were on this call, thank you for joining the call and listening to our message. Now, I want to be kind of really clear about the increase in authorized shares. If you vote no on Proposition 2, you are still voting for an increase in authorized shares as well as a reverse stock split. If you vote, yes, you're only voting for an increase in the number of authorized shares. An increase in authorized shares doesn't mean we're going to issue those shares. Those shares are in place to help grow the business of needs, for example, with maybe a merger or an acquisition with shareholders would get a vote on. And as I think many of you know, we've taken some pretty significant step with the Project Quantum Leap to really drive down our cash burn as well as monetization of electric utility, electric rights, utility electricity rights, the data centers. So I think I really want to be clear to you, authorizing shares and issuing shares are completely different. Look, I put out regardless of whether it mathematically makes sense or logical, the outcome of reverse stock split is a decrease in the stock price. And I think some of the pressure on the stock since last Thursday, probably people emotionally believing we're going to do a reverse stock. But the outreach we're doing is having an impact. The Broadridge was down for voting on Thursday and most of Friday. And we've already seen the 15% reduction in the amount of shares we have to get to vote. So it is having an impact, and there's a plan to get there, and I spent a good time doing time with our proxy solicitator, with Roberto, who I know many of you know, to really work through how to get the remaining vote, and there is a pathway. It may take -- look, we may have a German on Thursday, but I think that -- I think we're going to get there looking at the road map. And look, if I didn't think we were going to get there, we wouldn't be working so hard in talking to you so much about it. And the success will be beneficial to shareholders, be beneficial to the company. So I really -- one folks who really think about when they vote, if they vote no or abstain, how they're really voting and they're voting for an increase in authorized shares and they're voting for a reverse stock split. You haven't voted where you like to vote. I really would ask you and I'll give you another run on this later in the call today to reach out to our proxy Solicitor Sodali, Sodali and company ,(833)924-7453 at (833)924-7453. They can help you or you can go to Plug at investor.sodali.com. information's about how to vote. And look, you really can have an impact on making sure this company is successful as we go into the future. So Teal, I'm happy to take questions which are up there.

Okay.

[Operator Instructions]. Over to you, Teal for the Q&A session.

Thank you. Okay. And to your first question, why the European shareholders, why are they being excluded from casting the vote? Do you have any update there?

So, first and foremost, Plug has nothing to do with preventing European shareholders from [indiscernible]. Unfortunately -- and I'm going to give you a fortunate part after this. So it's not all unfortunately. But unfortunately, the brokers in Europe charge shareholders to vote, which seems reminiscent of 19th century times. But -- so that is problematic. We are talking to some of the larger brokers in Europe to help facilitate voting and see what the company can do to help. Look, if the European shareholders could vote easily, we would not be having this call because this would have easily passed. So we'll put out blocks, and we'll be putting up even press releases to keep European investors informed if we find the pathway to allow you to vote simpler. But it is a challenge. We have some really good ideas that we've worked through with our lawyers and our proxy solicitator. We're feeling confident. So I would ask the European shareholders to stay tuned. And I am so sorry that you have to work through such a difficult process to be able to move.

And similar question was asked about Asia. Would you give the same answer for Asia shareholders at this time?

Tougher. So I'm probably giving out more information than I should. But a lot of the shares in Europe are the custodian city and a lot of those shares are out on loan. So even though you're a retail investor in Asia, your shares may be [indiscernible] and you have no idea they are. And there isn't really -- it's really much more difficult. I see a pathway for Europe, Asia I haven't heard anything that made me confident that we can help Asian shareholders. But thank you for being shareholders.

Andy, another question, how does an investor who already voted and wishes to change their vote accomplish this?

So actually, they -- thank goodness they put this in front of me. You can contact our proxy solicitator, Sodali and company at (833) 924 7453 or at Plug at investor.sodali.com. Now there's a blog I put out on Friday, and I actually really write these to the lawyers don't really like it exactly that I write it like a real person. But if you look at Friday's vote, at Friday's blog, you can have -- for example, if you're with Fidelity, when you vote yes, we're vote no. The for the reminder of the shares, they'll proportionately vote. So the impact of your share voting may be much greater than you think. So if you voted no, please reach out to proxie solicitators and change it to a yes. Teal, let's give a business question.

Business question, okay. This one has been asked several times, Andy, I think people really care what is the status of AGA in the FID and AGA.

Yes. So talked to AGA last week. So here's -- if I was going to give you a road map today. I was in -- December, I was in Uzbekistan. And with folks from Abu Dhabi and who are going to be looking to really help facilitate this deal also. And I believe that one will be the first to go to FID when I talked of for [indiscernible]. The second one is that there is another project we're looking at in Abu Dhabi that I believe will be the second and third will be Australia. I think Australia is probably '27. I think good chance Uzbekistan will be in the first half. The second half, I think, the Abu Dhabi. These are huge, huge projects. If you think about used be, it's probably a $10 billion project overall that these things take time. But I've been in Uzbekistan. I've seen -- I've been to the train line, where products will get delivered. I've been to the -- I've been to the land, which is -- which will -- where the project will be built. I've been through the river where the water will come from to provide the feedstock for the electrolyzer. So lots and lots of work has been done. I've met with the governor in the province. It's a cool project. It's one of the coolest projects in the world, and it will be used to create SaaS and ESA. So pretty excited about all 3 projects that we're engaged with, with our folks there in AGA. And I'll continue to help Jose on this point.

Andy, if we could go back to the meeting questions. A couple of different variations of the next question. Why is increasing authorized shares critical now and what are the specific uses for the additional shares?

Yes. So they're critical now is because we have contractual obligations associated with the deal that we did where we sold warrants and the company was able to pull in $300 million as well as the convert deal that we did in November. Both of these have underlying them shares. But let me be really clear. The shares for the deal, which was the warrant sale, they're not going to -- they would not be issued until the stock price is above 7.75% based on the terms of that deal. And look, if they do get exercised, that would bring $1.2 billion into the company. The convert deal is a long-term deal. Over 7 years, Gerry, I think the right number is? It's a 7-year convert. Those shares aren't coming to the market. And look, usually, what happens with converts is that there'll be -- that deal will probably be redone 3, 4 years from now and for better terms for the company. And I would not expect to be seeing those shares in the market. But there are contractual obligations to make sure those shares are available. Now if the stock jumps to $10, there's a chance $775 million will get exercised, bring $1.2 billion to the company. So that's why they need to be there. But the number of shares which are floating, which people are trading every day, isn't going to change at the end of the month when the increase in number of authorized shares occurs one way or another. It's just not how it will work. We have -- in the flow today, about $1.39 billion. I don't expect that number to dramatically change at all in the coming months. The other reasons you want shares, you could think about mergers and acquisitions. The company merged with [ Samsung One], and we're driving the merger, which would go out for vote by shareholders to the shareholders. we may need shares for that. But we're looking at -- that's why we need authorized shares. You need it to run the business.

Thank you, Andy. Next question. Has Plug engaged large institutional shareholders on the current proposals?

Yes, absolutely. So we -- the effort we made to have especially the funds which are index funds, in many cases, recall their shares on loan provide a lot of voting power. We would not be here if there wasn't a recall shares that were alone, and that brought in over 150 million shares. That was a effort that between Gerry, myself our proxy solicitators, who is really important to make this possible. Going through the list there is about 60 million institutional shares, which have not been voted yet. And there is a very extensive effort going on as we speak for me to speak within this week. Doing my math, if we even got a 1/4 of them to come in, we'll be in pretty good shape. And not only are we engaged in the proxy solicitors bankers I've reached out to and other folks, I know to help get them voted. But I would say that I think it's fair to say, Gerry, I don't know if one institution who voted no. Every institution who voted, voted yes. ISS and Glass Lewis, all voted yes on all three proposals. So anyone who's kind of studied this has supported this and understands the company's needs for authorized shares understands that if the shares aren't authorized by this Proposal 2 that we will increase the number of shares with a reverse stock split. So it is clearly understood by institutions that these shares are going to be needed to meet our contractual obligations and it's why we're doing it now. How about business question, Teal?

Okay. Andy can you tell us about the hydrogen economy in the U.S., the successes you've seen in 2025?

Yes. So I'm probably more optimistic in the -- in general, as many of you know, I've been around this industry for a long time, seeing the ups. I've seen the downs. But if I really take a look at it, I think the perception that the U.S. hydrogen economy is down. Is it really, I think, a fair view of the world. I think if you take a real look at the bill the pass in July increase through 2032, the fuel cell tax credit was the 30% tax credit was included in the bill. That's a big deal. I've developed a great deal of -- and that really has helped us with our traditional material handling customers. It's also giving us ideas about how we can move the business into other sectors, which makes it attractive. That Bill also provided through '27 for anything that's constructed a tax credit for generation of hydrogen and our Georgia plant will have it through 2032. So I'm not nearly -- and we have deals floating in the U.S. And I can tell you, Jose and Company was AB with me here today, but he's been working hanging out with the sales force and many of the deals are here in the U.S. So I'm not nearly as negative about the U.S. I think that people at the Department of Energy or Sirius Energy people have established a lot of respect for the folks I've dealt with there. And I may not always agree with it, but that's okay. But I don't think -- I think when you think about the U.S. being energy dominant, which is the U.S.'s goal, hydrogen matters green hydrogen matters because customers around the world want it. And the U.S. is in a better position to do that than most other regions of the world. Maybe in the best position to do that. And the people at the DOE understands the vast advantages to U.S. has in the energy world and want to continue it for the future.

Andy, if I can ask a follow-on question to that. What milestones have been achieved in scaling plugs hydrogen production in your U.S. plants?

Yes. I love the plan in Georgia. When I go there, it's kind of remarkable and cost money to build. But between there, the site that we did with Owen, which I have to say lots of the learnings from the first hydrogen plant we pushed on to the second hydrogen plant in Louisiana. Look, I don't expect to do it this year, but we are thinking about the future. And not only providing hydrogen and building plants with our sales and partners, but how you think about, for example, the space industry, when you kind of look at our deal with recent deal with NASA. So I'm excited about where the plants could be. We have some really kind of interesting thoughts going on with plants and maybe data centers and coupling them together. So there's a lot of fascinating work going on make those plants continue to grow the plants. Georgia is the best-selling tool we have. And I got to remind people that those stacks are made in the premier PEM electrolyzer staff facility in the world. in Rochester. And the systems here in the U.S. are made in our state-of-the-art facility here in outside Albany, New York. So I think the future of the plants for our electrolyzer business, I think where Jose will help take us is really, really exciting.

Back to meeting question?

Yes, I'll take another. I like those question better, but go ahead, [indiscernible] questions.

We have a couple more on the meeting. So the next question how much shares are needed to get proposal #2 passed?

Yes. It looks like to me it's below $40 million at the moment. And I mentioned the institutions $60 million. So the last time I looked, 2% of the shares, I think I got that number right, Gerry, a little over 52%. So there's 48% that haven't voted, which represents, if you do your math quickly, about 670 million shares. So we need about $38 million of those to vote. The institutions -- as I mentioned, I've looked at, have about 3 million shares that we're talking to, a lot if we can crack the European just a bid to make life easier it will be really, really good. I found people who haven't voted who actually are -- who didn't even know they didn't vote. So it is important that you vote every -- as I mentioned, if you, for example, have shares and fidelity, you could almost count twice. So that's kind of the mathematics to get there.

Okay. And another business -- excuse me, meeting question. If the February 5 meeting is adjourned to provide more time to get the recorded vote, when is the latest date, the special meeting will close for good.

I think if I was going to say probably around the 16th or 17th is probably a fair date.

Okay. And another meeting question. What reverse split amount would be necessary, if unfortunately, Proposal 2 is not approved?

Yes. So the minimum -- minimum if I say I could do is a 1 to 5, which would authorize 1.2 million shares. So that's the minimum. 10:1 would -- 1:10 would actually free $1.35 billion. So just to let people know, that's kind of numbers we're talking about today. I may sound -- what's wrong, Joe? It may sound strange, but that's really -- we have the authority to do that, and we have to do that. I did have a question by someone who questioned why we would do this at this time. It's a really, really clear. The reason we're doing it now is because we have to. We don't have any other choice. So I really -- I put out my blog this morning. I really don't want to do reverse stock, but I think there's some anticipating reverse stock flow in the market because that's kind of what you see in the stock over the last couple of days. I can tell you that there is a road map here. There's a lot of shares to get people to vote. I think that Gerry and I proxy solicitator, Paul, we're all taking this as our personal mission to make sure we get those. Now I found an employee in the hallway who had about 100,000 shares and didn't vote. So if you haven't voted, please vote. Paul is sitting here with me also, Paul has about 2 million shares. And he voted right. Thank goodness. So that's kind of where we stand. Other business one, Teal.

Another business, okay. What gives you confidence Plug can survive and scale long term?

That's not hard because I know the land. So let's start with the premise. Hydrogen is going to be important to the world. I don't know if it's going to be 10% of world's energy. I don't know if it's going to be 20% of world's energy. But Europe wants to be energy independent. -- is going need hydrogen. The U.S., if it wants to be continued dominate globally is going to need hydrogen. The world is going to solar and wind and geothermal and nuclear, and hydrogen plays very well with nuclear. Regardless of how folks may think about the short term. And then knowing this -- I know folks pretty well folks or my competitors or friends, folks who our partners unfriendly with seeing lots of the world. And can honestly say, first, no company would fuel cells next and maybe Toyota and Honda. Have had the real world experience that plug is that. And I would even say Toyota has never run an operation 24/7 at minus 25 degrees celsius and driving out the 25 degrees celsius. Experience matters. And we've learned so much building our fuel cell products, but actually living with real customers day in, day out. In our electrolyzer business, no one's built more PEM electrolyzers in Plug. And there, we have a unique advantage by running our own plants, find out what's good, we find out what's bad, and we make improvements when we find out what's bad. And then I've been to many factories. No one the world can match Rochester. No one in the world can match here. This company will remain dominant. If we continue to innovate -- and I have people like Luke Wentlent, who leads my product development organization that's probably -- I worked at Bell Labs. And some folks on this call maybe remember what [indiscernible] but I worked with people who have worked with [indiscernible] last. The -- change the work and Plug has those kind of fool continue to innovate, and we'll continue to innovate working with customers. And if we continue that equation, there's no doubt in my mind, we will win this game. And it's why I'm staying on as Chairman because I want to help Jose continue to go out and win this game. And we want to be the winners. Let me be clear. And quite honestly, it's one of the reasons that yes, on Prop 2 and all the propositions really, really help. So you can help us strong stock price and it will be stronger if you voted on Prop 2 as I outlined in the blog today.

Where do you want to go next, Andy? Business question or meeting questions?

Give me another business.

Another business question, okay. What concrete steps are being taken to reduce cash burn and debt?

I think we've knocked out a lot of debt here. That's why we did the convert deal for -- to get rid of the term loan and the high interest rates. I think we moved the interest rate call down from 13%, 14%? Down to 7. So on the convert, so we knocked a lot of debt down there. I think par cash used probably dramatically reduced by at least 50% last year. And with Project Quantum Leap, we're seeing improvements in the first 3 quarters in gross margins. We're seeing increase in revenue. So we are laser-focused to achieve EBITDA breakeven by the end of 2026. I hear Jose pushing people hard towards that goal. And there is a laser-focused issue, buyer focused on reducing cash burn. But we also have to continue to grow the business. because if you look at the business itself, it's highly leveraged. So if you highly leverage with sales, more sales covers fixed costs and -- that is why we have to control expenses, and we have to grow. And also, we have to do both because we do want to be the ultimate big winner in this industry.

Excellent. And we have a couple of meeting questions.

Okay, sure.

If we voted yes, do we need to vote again?

No. If you voted yes. But if you voted yes. I would ask you to -- I have a long-term investor, I've spoken to for 18 years. He sent me a list of folks that haven't voted yet. So if you vote yes and if you know another shareholder who either voted no or seen or has them voted, please reach out and ask them to vote yes.

Okay. Andy, if Prop 1, proposal 1, gets the required votes to pass to change the votes needed to pass Proposal 2 or will the reverse split still have to go through?

Yes. So let me take a step back. So the answer to that question is Proposal 2 has to pass for Proposal 1. Regardless of Proposal 1. But also from a -- this is a little bit maybe more details. But Proposal 2 is a routine proposal, and the lawyer shake is head yes, and I'm saying it right, and needs 50% plus one vote of all outstanding shares to pass. In that way, when that one, the brokers can vote proportionately. Proposal on is not a routine proposal and requires people to vote in the affirmative. And that's much, much higher hurdle. So I don't think that's going to happen. My suspicion is Proposal 1 will also be on the June out for the Annual Shareholders Meeting. But look, a strong showing in Proposal 1 actually helps us in many ways with the regulators and maybe make it have another discussion about Proposal 1 with them.

The next question, this is a long one, so bear with me. The company implemented a series as nearing preferred stock with the [indiscernible] for the July 3, 2025 stockholder meeting to reflect the preference of holders of common stock of [indiscernible] reverse stock slip. As a holder of Plug common shares since 2020, my questions are, why was this not used to reflect the preference of the holders of common stock at both on the proposal to increase the authorized shares that was also on the July 3 ballot instead of the reverse split or in addition to reverse proposals?

It would have made my life much easier if we would have done that. I've been on the phone with lawyers, NASDAQ for 6 months. The reason we didn't just do the reverse stock split. So the common shareholders voted 61% back in July. June, July, July for a reverse stock split. They voted 90 -- almost 90% for an increase in authorized shares. Because the rules and regulations we could not use the super preferred for the authorized shares. What we heard though was the people who voted. And if you really think about 90 to 60, we were 50% more people who voted for an increase in authorized shares that voted for a restock split. When the company looked at those numbers, we felt an obligation to the common shareholders to go the extra effort to increase the number of authorized shares. So by having this vote and by pushing so hard, what we're doing is really listening to the will of the voters. If it would have been the other way around, I wouldn't be having this meeting, but that's what has driven why this happening.

How about the business question?

Yes.

What is the market potential for Plug wood data centers?

So I don't want to over -- we have been thinking about this a great deal. And there's a road map where you could think about combination of electrolyzers and stationary products. where data center, you could actually bring through good provide peak that you could provide power during peak load times when the you could be a, say, at 3:00 in the morning when the grid has extra power, you could be creating hydrogen. And that hydrogen could be used for our customers in material handling like Walmart and Amazon or could be used to power the stationary products during peak time. So there's a lot of effort going on, a lot of modeling, a lot of work going on to really think about what the ecosystem at a data center using hydrogen should look like. and how to leverage our unique position being the largest user of liquid hydrogen. And let me be clear in the world, bigger than asset.

We have another meeting question, Andy. How confident are you that we won't need a split in 12 months anyway?

Look, not a here. I feel really confident with -- look, we have stabilized the business over the past year and continue to grow it I'm really confident that we're creating value for shareholders and that if we execute our plan and quite honestly, if we execute on 60%, 70% of our plan, I am not worried that, that's a possibility. And look, voters would have a say. So it would not be something voters wouldn't have a choice to participate in because we're not going to have a reverse stock split if Proposal 2 passes between now and July 1 when the next shareholder meeting would be. And at that time, the right to do a reverse stock split goes away. So I'm not exactly -- I don't expect that. I really believe in our plan. I believe we've taken the right steps with our focus quite honestly, is one of the reasons I feel comfortable stepping back just to be the Chairman because I believe the business is well positioned to grow as the other question that came up allow us to really be a dominant player in the market.

[Operator Instructions]

Thanks, Kevin. Kevin and I have been doing this for 18 years too.

Teal, any further questions?

Yes. We have just a couple of more, Kevin. Andy someone asked, since shares -- excuse me, since share votes are tied up in other countries couldn't the court system offers some assistance.

I don't know what the core system is to you, Gerry.

The court.

Oh, the court. Of course, Look, this is February 1. I have to have the authorized shares ready by February 28. I don't think the court systems going to help us. And look, that I don't think that's it's just not the speed of government, the speed of the business when it comes to like this don't really line.

Okay. And it looks like you have gone through your questions. We don't have anything else in on the line.

So I'm going to do my pitch one more time. I want to again thank those who voted yes on Proposition 2 and Proposition 1. If you voted, yes, and you know someone who hasn't voted, I asked them to vote. And if you know someone who voted no, please try to abstain, please try to persuade them that it's in their interest. Because if Proposal 2 fails to pass, and I, quite honestly, have a lot of confidence, it will, when I count votes and know where they're coming from, that we will do we would have to do a reverse stock plant. We would increase the number of authorized shares. So by voting for Prop 2, you are voting for an increase in authorized shares also. But you're also voting for reverse stock split. And a lot of you told me in back in July, you didn't want that and that's why we continue to talk to you. made great improvements over the past 4 days. And I expect that I have a pretty aggressive call schedule today, where I'll be reaching out to people personally and institutions, some retail holders to vote. So please vote. But you also can contact the company's proxy soliciator, Sodali and Company and they'll help you through it. They're really good. be proxy solicitator I've dealt with and their numbers 833 924 7453, 833 924 7453, they will help you. And if you don't like talking on the phone, I know a lot of young people don't like talking on the phone. You can actually reach out to them at Plug at investors.sodali.com; at Plug at investor.sodali.com. And hey, look, thank you for taking the time this morning. Thank you for being Plug shareholders. And I'm sure you'll get to hear me again on Thursday. So thanks again. Bye now.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.