Operator: Greetings, and welcome to the Plug Power Second Quarter 26 Earnings Conference Call and Webcast. At this time, participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. it is now my pleasure to turn the call over to Vice President of Marketing Communications, Teal Hoyos. Please go ahead, Thank you.
Teal Vivacqua Hoyos: Welcome to the 2026 second quarter earnings call. This call will include forward-looking statements. These forward-looking statements contain projections of future results of operations or of our financial position or other forward-looking information. We intend these forward-looking statements to be covered by the Safe Harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1.93 thousand and Section 21E of the Securities Exchange Act of 1.93 thousand. 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 for the fiscal year ending 12/31/2025. or quarterly reports on Form 10 Q for the quarter ending 03/31/2026. As well as other reports we file from time to time with the SEC. These forward-looking statements speak only of the day that the statements are made we do not undertake or intend to update any forward-looking statements after this call or as a result of new information. At this point, I would like to turn the call over to Plug's CEO, Jose Luis Crespo.
Jose Luis Crespo: Good afternoon, everyone, and thank you for joining our second earnings call of 2026. And also thank you for your continued confidence in the Plug team. Q2 was a strong step forward. And is giving us real conviction about the rest of the year. We are executing our numbers are moving in the right direction across the board and today we are raising our full year revenue growth guidance as a result. Paul will walk through the financial details in a moment, let me start with why we are excited. Revenue was $178 million in the second quarter. Up approximately 9% sequentially from the first quarter. This is continued proof that our commercial engine is accelerating. Gross margin improved to approximately breakeven It was about -0.9%. Compared to a -30.7% a year ago and a -13% just last quarter. that is a meaningful step in a single quarter and it is the direct result of the operational discipline we have built into Quantum Leap, which is our restructuring program, combined with improving service margins and better plant utilization in hydrogen production. But just as important, our breakeven revenue thresholds keep on coming down. Which puts positive EBITDA in the fourth quarter, is squarely within reach. Operating expenses declined approximately 50% year over year to $62 million Again, a direct reflection of the discipline we have driven through Quantum Leap and our continued asset monetization efforts. And on the cash side, net cash usage improved to $61 million this quarter. A reduction in cash usage of about 58% compared to the first quarter. Our cash burn is coming down and the trend line matters enormously as we head towards profitability. Our priorities for 2026 are clear. And they have not changed. Disciplined execution, profitable growth, and continued improvement in cash utilization and operating leverage. What has changed is our confidence in how the year plays out. On our last call, we guided full year revenue growth of 13% to 15%. Based on our first half results, and the visibility we now have into the second half, we are raising that guidance today to 15% to 16% for the full year. Our business has historically been second half weighted with the fourth quarter benefiting from year end deployment cycles. And everything we are seeing tells us that pattern is expected to hold again this year. With even more strength behind it. Material handling continues to be a genuine bright spot. On the growth story here, the growth story here just keeps on building. Deployed 1.67 thousand GenDrives units in the quarter more than doubled the 39 units we deployed in the second quarter of last year. Service revenue grew 82% year over year to $29.8 million with service margin of 27%. As improving reliability lets our technicians cover more units and drive real overhead leverage. And we are not just growing. We are building a durable recurring revenue base. 2 of our largest material handling customers are planning to refresh more than 20 thousand GenDrives units over the next 3 years. This is a multi year revenue opportunity sitting right in front of us and is exactly the kind of embedded growth that gives us confidence well beyond this year. Our electrolyzer business continues to build real commercial momentum. We announced the FID of the 30 MW Barro Green hydrogen project for Calton Power in The UK. This is part of the 55 MW we were awarded in November 2025 we expect the additional 25 MW to reach FID in 2026. In Q2, we were also selected for the 275 MW feed on the H current project in Quebec. On July 7, we announced that Plug secured a 50 MW Gen Eco electrolyzer order following the final investment decision from Eric for Eric's Hunter Valley Hydrogen Hub, in Australia and this is the largest renewable hydrogen project to reach FID in Australia. As an update on the business, our 100 MW project with Galp. In Portugal and our 25 MW project with Iberdrola MVP in Spain continue progressing positively on the commissioning. I also want to flag something bigger on the horizon here. Because I think it is an important part of the electrolyzer story for the next several years. Europe continues to advance the conversion of the renewable energy directive 3 is called RED 3 into a national law across EU member states. Spain is the latest country to release a draft framework establishing an 11% renewable fuels on non biological origin which is the IFNBOs by 2040. This is backed by a specified non compliance penalty and a system of tradable carbon reduction certificates. Based on our preliminary internal analysis, we believe Spain's framework alone could drive approximately 10 GW of electrolyzer demand by 2030. In addition, the European Commission approved a €780 million Dutch subsidy scheme targeting 400 MW of electrolysis capacity with an option planned for early 2027. And also the European Commission plans on launching a fourth hydrogen auction in December 2026 with a budget of up to €500 million. Now this is the kind of regulatory tailwind that turns a strong pipeline into a durable, multi year growth runway. And we like our position to capture it. Now turning to hydrogen, our fuel business delivered approximately 15% revenue growth year over year to $39.5 million. This is driven by continued growth in hydrogen consumption across our expanding customer base. Fuel gross margin improved to -48.8% from -91% a year ago. On improved plant utilization, production efficiency, and network optimization across our production facilities in Georgia, Tennessee and Louisiana. We still have work to do here obviously, but the trajectory is decisively in our favor. And we expect that progress to continue through the second half of the year. We ended the period with $161.9 million of unrestricted cash. With net cash usage improving to $61 million for the quarter, down approximately 58% sequentially. We are also executing on our asset monetization programs and as an update to the STREAM transaction we announced on July 13, where we indicated approximately $80 million of expected near term liquidity we have already received $47 million. This is a step forward of our initiative to unlock more than $275 million through this asset monetization and non dilutive financing. We expect to keep delivering on this initiative in the coming quarters. So put simply, this was a good quarter. And it sets up an even better second half. Revenue is growing, margins are approaching breakeven. Operating expenses are down 50%. Cash burn is falling. And we are raising our full year guidance to 15% to 16% growth. We remain on track to deliver positive EBITDA in the fourth quarter a milestone that marks a real turning point for the company. We are building Plug into the profitable cash generative hydrogen leader we set out to become. We have work to do, but Q2 is more evidence that we are getting there. And with that, I will turn the call over to Paul for a more detailed review of the quarter, including our liquidity position and financial outlook.
Paul Middleton: Thank you, Jose Luis.
Jose Luis Crespo: Thank you, Paul, and good afternoon, everyone.
Paul Middleton: Building on Jose Luis's comments, I want to leave you with 3 key takeaways from the quarter. First, the margin transformation is real and it is compounding. We exited Q2 at essentially breakeven gross margins roughly a 30% improvement from a year ago. Second, our cost discipline is showing up everywhere it should. including improved margins and reduced OpEx which yield reduced cash use. And third, we believe we have the capital and the levers in place to execute the balance of the year. This stems from current cash balances continued improvements in margins, reduced CapEx, and the ongoing asset monetization efforts. Diving into the details of the quarter, as Jose outlined, net revenue for the quarter was $178 million which was up 9% sequentially. Bringing the first half to $342 million up 11% year over year. The first half is slightly ahead of the range we outlined in May so the shape of the year is playing out slightly better than the way we told you it would. And as Jose Luis outlined, given our traction and pipeline, we are increasing our full year projection to 15% to 16% growth off of 2025. We expect some growth in Q3 2026 sequentially and over the Q3 of prior year but the majority of the volume in the second half of our forecast we expect to unfold in the fourth quarter of 2026. On margins, let me expand a bit because this is where the last 2 years of work really are starting to show off. Gross margin came in at essentially breakeven versus the -31% a year ago as I outlined. Every platform contributed. Equipment margin was positive. Driven from volume leverage, continued manufacturing cost optimization and supply chain leverage. We are also recognizing benefits based on the tariff recoveries and reduced tariff spend. Service margin was 27% positive as unit reliability keeps improving. Our cost of service is down materially and that is letting us expand the tech unit coverage and drive overhead leverage. PPA loss rates improved to roughly -30% from -92% a year ago. Which is driven from cost reductions to service this PPA fleet coupled with the sale leaseback buyback program which reduces our equipment lease cost. Fuel margin improved to roughly -48% from -91% as Jose Luis outlined driven by the increased plant utilization improved network optimization, and benefits of our supply agreements. Still a lot of work to do, but these are structural improvements, not 1 quarter effects, and they keep lowering our breakeven threshold. Just to prelude the second half in context of our target to achieve positive EBITDA in Q4, will come mainly from increased gross margin and will stem from many factors. Driving more sales as the second half will be 40% higher than the first half. And this will mostly come from equipment volume. Driving more cost downs in manufacturing and supply chain such as ramping our diffusion bonding process for ELX Stacks as an example. Continuing our service reliability improvement trends and driving enhanced tech leverage. Especially given the number of sites in Gendrive being deployed in the second half. Further improving the fuel network leverage given continued growth in fuel sales and focus on network logistics cost and network efficiency. And driving even more improvements in our PPA platform by further service cost reductions and completing more sale leaseback buybacks. GAAP operating expenses were $62 million, down to 50% year over year. But I want to be transparent on the composition. This includes $39.7 million of recoveries of previously impaired assets. Principally the $37 million gain from a resolution of a customer contract dispute we settled in June. Excluding that recovery and the IT sale transaction fees for this quarter and excluding impairment, restructuring and other non cash changes in consideration for example, operating expenses continued to decrease and we believe we remain on the path towards the roughly $75 million a quarter run rate we discussed in May. The OpEx reduction stems from continued scrutiny over headcount, discretionary spend discipline, and from reduced CapEx spend yielding lower depreciation. On the bottom line, GAAP EPS was a loss of $0.14 versus a loss of $0.20 a year ago. I would note that the GAAP result in Q2 of 2026 carries about $104 million of non cash mark to market valuation charges for our convertible debt and warrant liabilities. Driven primarily by our own stock price appreciation in the quarter. Adjusted EPS was a loss of $0.07 versus $0.18 a year ago. And reconciliations on these adjusted EPS numbers are in our tables. The net cash usage for the quarter was roughly $61 million an improvement of 58% over Q1 of 2026. The continued asset monetization efforts contributing to margins and overall reduced cash usage, But even setting those aside, the underlying burn continues to improve and to step down on margin improvement working capital leverage and reduce CapEx spend. Inventory is down about $28 million from year end and we still expect at least $100 million of inventory reduction for the full year weighted to the second half. Capital spending remains light under $9 million in the first half. Ended the quarter with $162 million of unrestricted cash and $510 million of restricted cash which means we have over $670 million in total cash. The restricted cash continue continues to keep coming back to us more than $115 million released in the first half. And roughly $155 million of the remaining balance is scheduled to release over the next 12 months. It is effectively a built in non dilutive funding stream. And subsequent to the quarter end, we announced the transaction expected to generate approximately $80 million of near term liquidity through the sale of our Graham, Texas project and the stage closing in New York Gateway. First phase of these program to unlock more than $275 million through this overall asset monetization and non-dilutive financing program. Out of this initial $80 million in July and August to date, we received already $47 million bringing the total for this endeavor so far to $52 million For the full year, we plan for our sales growth of 15% to 16% and we believe that the first half puts us squarely on that trajectory. We remain laser focused on our Q4 goal of positive EBITDA. The levers are the ones that you have watched us pull on all year and the ones that I have outlined today. We believe we have the balance sheet and clear non dilutive capital opportunities to execute. In summary, we believe we are postured to deliver on our targets, we have set for ourselves this year, and we look forward to sharing more as our progress progresses throughout the year. With that, I will turn it back over to Jose Luis.
Jose Luis Crespo: Thank you, Jose Luis. So now again, thank you for attending the call, and we will go to the questions part of the call.
Operator: Thank you. We will now be conducting a question-and-answer session. Our first question today is coming from Colin Rusch from Oppenheimer. Your line is now live.
Jose Luis Crespo: Hi, Colin.
Colin Rusch: Appreciate the question here. Can you talk about the drivers for the service margins? How much of that is being driven by improved contracting? How much of it is being driven by better performance of the assets out in the field?
Jose Luis Crespo: Colin. Thank for the question. The improvement on the on-services really is driven by several factors. 1 of them is the reliability of the units is improving. The stack performance is improving. And that is leading to us being able to use less techs to actually service the units. The overhead is also improving And adding to that, over the last couple of years, as you know, we went through a process of cautiously, increasing pricing on services to be aligned to the reality of the cost of servicing the unit. So all of that together has contributed to this 27% margin that you see right now and it is actually a structural, it is something that we believe is sustainable.
Colin Rusch: Excellent. And then just thinking about the pipeline of hydrogen projects, you guys have made a nice dent in moving these things forward. Just I am curious about urgency around these projects in Europe starting construction and really starting to see some of the ramp on equipment orders. How should we think about that as we get through the balance of year and into next year?
Jose Luis Crespo: So we are already seeing not necessarily in Europe or in GAAP example, I think it got lost a little bit in the market dynamics, but Eric is a 50 MW order, first FID project in Australia. And if you think about it, you know, our largest order was a 100 MW from Galp. is the second largest order They are a part of 55 megawatts from Carlton Power in The UK is now becoming FIDs. We saw the first FID with 30 MW. And we are already manufacturing and getting ready for implementation in The UK for those projects. We see even our own projects that we have in Spain with our joint venture with Axiona moving towards FID with subsidies being awarded by the European Hydrogen Bank. I think those projects have the largest per kilogram award in the market. So we see a lot of activity in the European market. We see many projects that are coming along to get to FID. By the end of the year, beginning of 2027. And you will be hearing more news about these projects in the coming quarters.
Operator: Thank you, question is coming from Eric Stine from Craig Hallum.
Analyst: Your line is now live.
Jose Luis Crespo: Hi, Eric.
Paul Middleton: Hi, Eric.
Jose Luis Crespo: Hi, Eric.
Paul Middleton: Hi, Eric.
Eric Stine: Hey. So I was hoping we could talk about material handling Interested in these 2 customers, the 20 thousand units over 3 years. As I think about how you have talked about the repowering opportunity, it is been something that you have been optimistic about, but it seems like it was off a little ways. So now you are talking about these 2 customers. I am curious. I mean, is it fair to say that this is kind of sped up a little bit versus previous expectations Or is this more kind of the normal refresh versus they are just proactively deciding to do it for the next gen fuel cell system.
Jose Luis Crespo: It is really being driven by the refresh timing. We are going to refresh some of those units in the range of around 2,000 of them already in 2026. And then as the year progresses, we are expecting to start refreshing with the 2 largest customers in the next 3 years to complete the total fleet. In both cases, what we are seeing is that we are reaching in many of the sites over the next 3 years, the time to refresh the units.
Analyst: And as the units are becoming more reliable and as we are basically coming with all the upgrades and all the improvements that we have done through to the units in the field, The new units are going to have that in already in the production units. The customers are also interested in doing the refreshes, but mainly they are driven by the normal natural timing of the refreshes which is starting now.
Eric Stine: Okay. And so these are your 2 largest customers.
Analyst: Is this did you say that this kinda completes their I mean, this would be their footprint? Or it would seem like this could be a multiyear beyond the 3 you were talking about for this specific opportunity with these 2.
Jose Luis Crespo: This would be their normal footprint for renewal or refreshes of the units that they have in the field right now. I am not sure maybe if I did not understand the question correctly, please-- Well, I would add that there is if you think about it like a portfolio, there is more and more sites and they are adding sites this year as an example.
Paul Middleton: So they go through a normal reset cycle, but this is kind of you know, 1 of them in particular is hitting a major refresh cycle starting here now. The other 1, you know, although they have been on refresh, it is starting to grow and build from that. And as they add more sites, it will become bigger and bigger. So we expect a pretty incremental step function in terms of this refresh activity starting from here on out just because of those dynamics?
Jose Luis Crespo: So I guess going to be refreshes on top of the normal growth. On those customers.
Operator: Thank you. Our next question today is coming from Sherif Elmaghrabi from BTIG. Your line is now live. Our next question is coming from Christopher Dendrinos from RBC Capital Markets. Your line is now live.
Chris Dendrinos: Yes, good afternoon. Maybe just on fueling margins here and I think pretty solid improvement year on year. Sequentially, call it relatively flat. Just what are the next big drivers to push to fuel, no pun intended, more fueling improvement? Thanks.
Jose Luis Crespo: Thank you, Chris. We are going to continue operating more efficiently the plants. We have the 3 plants Tennessee, Georgia, and Louisiana. So as we continue operating them, we are getting more efficient and higher utilization of the plant. On the logistics side, going to continue also improving our logistics. We are continuously trying to make sure that we deploy and send hydrogen to our customers in the most effective way and we are implementing systems to be able to do that the most effective way that is possible. And finally, we are working in each 1 of the sites and also in the plants to make sure that the actual efficiency of the systems is improving over time. So those are the items the items that we are working on to improve our margins in hydrogen.
Chris Dendrinos: Got it. Thanks. And maybe just as a follow-up to an earlier question on the electrolyzer pipeline here, and you had highlighted Spain being a potential, I think 10 gigawatt market. By 2030. What are kind of the key markers here? What should we be looking for in terms of I guess, the cadence of when demand would potentially pick up for that market specifically? Thanks.
Jose Luis Crespo: So RED III, which is the regulation that is being implemented as a law in the different countries in the different European member states mandates a certain amount of hydrogen being used in transportation and specifically for refineries to be converted as different percentages in different countries, but there is numbers for each 1 of the countries before 2030. So what we are going to see on 2030 is here. I mean, we are right now mid of 26. So we have basically 3.5 years to make those conversions. So we are already seeing some of those projects moving. The projects that we already have and we are implementing Iberdrola and BP and the project with Galt. And some of the projects that we have, the smaller projects on the refinery side is a result of this legislation becoming a reality. So as this gets the draft in Spain, for example, gets approved, which is expected to be in the next few months and it becomes a natural law. We are expecting that companies start actually executing and moving forward with the projects. We have many of those projects are already in our funnel. This is the $8 billion funnel that we have been talking about. These are not new projects that we are going to basically pick up right now. it is projects that have been many of them we have done the engineering phase. They are ready to go and once this happens, the project will start moving forward and we are hoping that the end of this year, beginning of next year, will start seeing some of these projects becoming a reality by reaching FID.
Operator: Our next question is coming from Manav Gupta from UBS. Your line is now live.
Analyst: Hi, team. Congrats on the quarter. So now that gross margins have approached breakeven, can you provide more color on the primary structural drivers, whether it is pricing power, product mix, or lower input costs that are expected to push margins into positive territory in the second half of the year?
Jose Luis Crespo: I am gonna let Paul take that 1.
Paul Middleton: Yes. I think so the first thing is sales volume. If you think about us with the numbers that we have shared and in forecast of our guidance, as I said earlier, that suggests mathematically that we will be up to meet those forecasts. it is about 40% growth off of the first half. And that mostly is equipment volume. And that is where we really, you know, become very accretive because of the contribution margin since we are already covering the fixed overhead. So that is, you know, a big driver. The second is we still got lots of opportunities on the on the manufacturing cost. And so you know, we are still very early in the electrolyzer scale and manufacturing processes and still have a lot of opportunities to optimize that cost structure. And we have already driven a lot of cost out of that equipment and continue to plan further cost downs on that as an example. The other 2 big buckets really is service. You have seen big moves on service margin. We have seen we see continued improvements in reliability which gives us opportunity to leverage more units per tech. As we continue to scale. And since we have a lot of units and sites going live in the second half, We are continuing to take advantage of that. But we continue to invest in more reliability improvement processes. So that is continued to pay off. And then lastly is we just talked a few minutes ago, it is about the fuel. And so as we continue to scale volume on our fuel network, drive out improved logistics costs and efficiencies of the systems, those are the themes that you are going to continue to see collectively drive margin. But in the second half, in particular, it is mainly sales volume. it is just such a big you know, big step function in term in context of our targets and our forecast.
Analyst: Okay, great. Thank you. And then with recent like the order for Eric and the Carlton Power FID, what is the conversion rate timeline for turning FEED scopes such as the Quebec project into firm FIDs?
Jose Luis Crespo: In the case of the project in Canada, we are working right now on the FEED as we mentioned. And the estimated FID timeline is beginning of 2027. It could with these big projects as you know, things are a little bit fluid. So that is The estimated time line that we have right now. It could move, you know, to Q3. But we have other projects as well that are going into the same into the same process. And we have seen projects converting into FID like as you mentioned, Eric 50 megawatts and the Carlton 30 MW and we are expecting the next 25 MW to become and to convert into FID before the end of the year. Thank you.
Operator: Next question is coming from Sameer Joshi from H. C. Wainwright. Your line is now live.
Sameer Joshi: First of all, good afternoon. Thanks for taking my questions. I just wanted to check on the cash management strategy in terms of the balance sheet load the interest rate load would you be some of the working capital gains you are expecting from inventory reductions and of course gross margins becoming slightly positive. Is there and also money coming in from these asset monetization efforts is there any effort to reduce the debt Thank you.
Jose Luis Crespo: I think I am gonna let Paul answer that question.
Paul Middleton: Yes. So on the debt side, only thing we really have is the convertibles. And they are, you know, termed out in 8 years from now. there is no amortization of that. it is relatively speaking a low cost interest unsecured facility. So you know, we will we will continue to monitor that and see, you know, what makes sense if, you know, the if there is know, the right capital opportunities to do that. But the reality is strength begets strength. So as we continue to show the progress that we are making and terms of improving, growing sales, growing the margins, improving cash flows, We certainly expect in the second half, as we have talked all year, our plan is that we should see not just sales growth and margin enhancement, but continued reductions in the cash burn so that puts us in a good position as we start approaching potentially positive operating cash flows that it opens up even more avenues for me for debt, you know, and capital solutions at lower cost options. But we are in a good position right now. We ended the quarter with pretty sizable cash balance. We Subsequent to the quarter end, as we have talked about, we have already brought in $47 million from this data center asset monetization with visibility of another $30 million to $35 million in the short term as that effort continues. And so we are in a good position as we sit now that to kind of fund the balance of the year.
Sameer Joshi: Understood. Thanks for that. And then just 1 stepping back your outlook for the year, I mean, I guess your fuel and PPA revenues are sort of more or less predictable, but is this growth I mean, you did mention this growth is mostly going to come from equipment sales What kind of visibility do you have? Are there any takes and puts that may exceed your guidance or cause you to not achieve this That is We I mean, we decided to raise guidance because of we feel we have good visibility and expecting to meet our guidance.
Jose Luis Crespo: The majority of the second half of the year is going to be as with execution, which is an important piece of the business. But from a commercial standpoint, we have good visibility on what is going to make the year in terms of meeting that guidance. Understood.
Sameer Joshi: I will step back. Thanks. Thank you, Sameer.
Operator: Thank you. Next question today is coming from Craig Irwin from ROTH Capital Partners. Your line is now live.
Jose Luis Crespo: Hi Jose Luis and Paul.
Craig Irwin: Thanks for taking my question. First, I should say you guys did a great job conveying how, plug is clicking on all cylinders these days. So the prepared remarks, appreciate those. Most of my questions have been answered. So I am going to ask a bigger picture question. Over the years, many of us that have followed data center type names, Intel is 1 that jumps out to me. From the last couple years. And, you know, I know you do not always press release these things, but I know you have supplied electrolyzers and other power generation equipment to many of the Fortune 100, Fortune 500 other than the great names like Amazon that are obviously, kings of the data center market. What do you see as a potential avenue? Or are you exploring the opportunity for data center participation for Plug? You know, if you had a couple $100 million in incremental capital, is this something that you would do and that you could do on a relatively, you know, fair timeline? What would it take you to make the investment there, given that you do have a competitor out there with a market cap in the tens of billions range, that I do not think has technology that is much better than plugs. Obviously, I prefer plugs.
Operator: Well, Craig, thank you so much for your question and for attending the call as usual.
Jose Luis Crespo: I appreciate the big picture question and it is it is a good hypothetical. We were if we had $200 million of capital to deploy. Obviously, the data center market is a market that everybody is paying a lot of attention to. And as you said, we have many customers of Plug that are data center customers. We did the first with a 3 megawatt system with Microsoft for backup power for data centers. Right now, as Plug as we have said before, we are focused, 100% focused on 3 lines of business. 1 is material handling, which is at this moment actually performing really well and is bringing a lot of the growth in the company. The other 1 is electrolyzers. As I went through it before the European market is about to, to heat up and to bring some orders to the table. We are expecting that to happen. And then the hydrogen business, which is also an area of growth, we grew 15% the top line on hydrogen and we are expecting it to not only bring growth and eventually profitability, but also we are expecting it is an enabler for our business with our hydrogen, none of these things really run. So those are the areas of the business that we are concentrating on. We are always looking at potential opportunities that we could grab in the market. And obviously, the data center market is 1 that we have been looking at from different angles. 1 of them is to try to create a solution that using and using fuel cells that could actually relieve a little bit the network tension that is created by data centers connected to the grid. Definitely, you know, it is something that we are looking into. it is something that you know, we have not made any decisions. And right now, at this moment, we are concentrating on the 3 lines of business that I just mentioned. We are going to push ahead on that. And making sure that with those lines of business we bring the company to profitability.
Craig Irwin: I like that. Thank you. So my second question is, positive EBITDA in the fourth quarter. that is obviously something when you achieve it that Wall Street is going to cheer the results. Can you frame out what 2027 or 2028 could look like if maybe we continue along this positive trajectory? Mid to upper teens revenue growth, continued structural improvements in gross margin. How would you expect budgeting to work on your frictional costs and your prioritization of EBITDA over the next couple of years?
Jose Luis Crespo: So we have not given any guidance beyond 2026, except for we said that 2027 was going to be operating income positive in the fourth quarter. And we were going to be, in 2028, profitable. Overall profitability.
Paul Middleton: Yeah.
Jose Luis Crespo: EPS in fourth quarter. So just wanted to make sure that we reinstate those, which is what we have given right now as guidance. And at this moment, we are not giving any additional guidance for 2027 and 2028. I do not know you want to add anything.
Paul Middleton: The only thing I would add at this point, Craig, is 1 thing we have said and we believe is true in our baseline, is we believe we have the infrastructure, the manufacturing, facilities, things we need to do to deliver our plans. So we think there is a lot of leverage opportunity. And we do not really plan on a lot of incremental investment to achieve those that growth trajectory. So you know, achieving it in Q4 is going to be a big milestone, but it also postures us as we continue and we expect to grow. So maybe it is double digits like you said, but all growth will be variable contribution in that regard and tremendous leverage So we are I am pretty excited about the prospects I am sure as we move forward through this year, we will be in a position to talk more and more about 2027 and onward. But we are postured really well. Thank you.
Operator: Our next question is coming from Sherif Elmaghrabi from BTIG.
Sherif Elmaghrabi: Your line is now live. Hi, thanks. I got disconnected, so I apologize. If any of these have been asked before. But Jose Luis, you talked about this 30 MW project that FID would and a 50 MW project that FID would Can you shed a little bit of light on the timeline for these bigger projects after FID? How long before they start up the commissioning process, the handover process? How long does that take? And any variation in times based on the size would be interesting.
Jose Luis Crespo: So, just these 2 examples on the project in The UK, we have already started delivering some of the some of the balance of plant to Europe. To set it up for the installation. It usually takes about, depending on the project, obviously, I am just gonna give you high level timelines you know, 12 to 15 months to start in some cases, it is a little bit longer depending on the on the status of the project. And then, you know, once the installation happens, which could take a couple of months or maybe a quarter, then you start with the commissioning. So it is a process in terms of getting the product out there to be installed and to be commissioned that is in the 12- to 18-month process. Now, these type of projects because they are larger projects, and they require a lot of advance manufacturing approaches that we structure with milestone payments and we also structure with percentage of completion accounting in the majority of the cases. So we start seeing revenues and we start seeing money cash coming in from the projects in the earlier stages.
Sherif Elmaghrabi: And then maybe something a little different. Last week, the Governor of Texas announced a moratorium on new data center construction And I am wondering if that affects the sale of your Texas assets given the counterparty to that transaction?
Jose Luis Crespo: That last week, our understanding is it was a letter from the governor asking to review the data center projects that were on the list of projects that want to implemented in Texas. We believe there is going to be a review with very specific items that were outlined in the letter. Just to make sure that the projects are the right projects and that they are real projects and not projects that are more speculative. And we do believe that process is going to play out and we continue working with the stream through that process and we continue with the efforts that we have discussed about the monetization of the assets in Texas and New York. So we will go through the process, we will go through the questions and we will help stream to get through everything that they need to get through. And obviously, you know, going through whatever the government in Texas requires that we need to do.
Sherif Elmaghrabi: Okay. Super helpful. Thanks for taking my questions.
Jose Luis Crespo: Thank you, Sherif.
Operator: Thank you. Next question is coming from Skye Landon from Rothschild. Your line is now live.
Analyst: Hi, guys. Just a couple on the electrolyzer business from me. Firstly, just thinking back to your symposium last year, I think partner Allied Green said that they were hoping to progress that project through 2026 and potentially even at a point where they could submit firm orders to plug before the end of the year. So just wondering if you could provide an update on those mega projects And then the second 1 on the electrolyzer business. You mentioned the Axione JV In Iberia earlier. Just wondering if you could remind us or how that JV is set up, how big the initial projects are, and then importantly, kind of what the funding plans would be for those projects once they take FID, that would be great. Thanks.
Jose Luis Crespo: Great. So on Alight Green, we continue working with Alight Green on the progression of the projects in Australia and in Uzbekistan. We announced both projects. And as I was saying before, these type of projects are complex and they take time. We are still expecting and hoping that we will get the go ahead as soon as possible from Alight Green either in either project. It seems like Uzbekistan is moving a little bit faster. But we keep on working on helping to try to get those projects to FID. In the Spain JV, is a 50-50 JV with Axiona. And here Axiona is I think, the largest and the say, I think do not want to quote, but I think it is the largest renewable company in Spain, in Iberia. For those that do not know what company Acciona is, And this is why we partner with them because they have access to renewables We have several projects that we are developing with them The most advanced projects are a project in the region of Navara, in a city called Sanguesa. That project got €2.5 million from the European Hydrogen Bank. And we have basically, you know, all the ingredients to get to FID We are hoping that it probably will happen at the end of 26 beginning of 2027. And we will work with Axiona to find the funding for the project. The same thing goes with the project in Zaragoza, which is the 1 that just got to euros and 85¢. I believe those 2 projects have the highest per kilo subsidies from the European Hydrogen Bank. In the case of Zaragoza, that project is a little bit less developed than the project in Navarro. That project right now we are still working through finding and getting offtake. While in the case of Sanguesa, we already have lineup a potential high probability offtake. So that is the situation with those 2 projects. Behind that we have another 3 or 4 projects that are in very, very early stages. But those 2 are the ones that are the main projects that we have on the table. And we will work with Acciona for the funding once we reach a FID. that is great. Thanks.
Operator: Thank you. Thank you. Next question is coming from Jason Tilchen from Canaccord Genuity. Your line is now live.
Jason: Good afternoon, everyone. Thanks for taking my question. Apologies if this was already asked, but I have been between a few calls. But I believe Paul said that progress towards Q4 EBITDA profitability is going to be primarily driven by continued gross margin improvement. Noticed there was such a notable step down in G&A expense in the quarter. Just hoping to unpack that decline a bit. And then looking forward to the right level of sort of fixed corporate cost to think about going forward. Thank you.
Paul Middleton: Yes. If you know, there is always ebbs and flows and things that have been happening and what we have been saying and projecting is that our normal run rate, if you will, we expect to be about $75 million a quarter. There was a large recovery via a contract dispute where we got-- we had previously taken a reserve against that position. Because we got large amount of money back on that program that resulted in a gain that showed up as an offset to OpEx. there is also some nominal restructuring and other charges in that bucket. But if you back that out, $75 million is kind of our expected run rate. So we continue to be very thoughtful and disciplined on cost and for overhead and discretionary spend, and we are particularly focused in the back half of the year given our goals there. But if you look at it just mathematically, to get to the EBITDA target, it is mainly through gross margin in the back half of the year. So and in Q4. So, given the forecast that we have been we have been sharing and what we anticipate for sales, you know, that is about 40% growth off the first half. And most of that is through equipment sales. So it is, you know, becomes very accretive when you sell incremental equipment when you already covered your fixed cost your fixed cost at base. So that is where that comment came from, and that is to give you some color on what was going on in Q2. Very helpful.
Jason: Thank you very much.
Jose Luis Crespo: Thank you.
Operator: Thank you. We reached the end of our question-and-answer session. I would turn the floor back over for any further or closing comments.
Jose Luis Crespo: Okay. So thank you all for the questions and for your continued engagement and support. Our priorities for the balance of 2026 are still the same and are clear. We are gonna execute with discipline. Keep converting our commercial pipeline, keep strengthening our liquidity through non dilutive means, and deliver positive EBITDA in the fourth quarter. Q2 this quarter gives us a strong foundation for the second half. Margins are improving cost discipline is holding, our backlog is growing, our cash usage is the lowest it has been all year, With our near term liquidity outlook strengthened, by the asset monetization process now coming in, and the regulatory and commercial tailwinds behind our electrolysis business is only getting stronger. We have said that before, now it is about consistent delivery. But with the momentum we are building, we are genuinely never more confident in where this business is headed. For the rest of 2026, and well beyond it. Thank you again for your support We look forward to updating you on our progress in the next quarter. Thank you everyone.
Operator: Thank you. That does conclude today's teleconference webcast. You may disconnect at this time and have a wonderful day. We thank you for your participation today.
