普拉格能源 (PLUG) 2008 Q2 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Plug Power second-quarter earnings call. At this time all participants are in a listen only mode. A brief question-and-answer session will follow the formal presentation. (OPERATOR INSTRUCTIONS). It is now my pleasure to introduce your host, Ms. Cathy Yudzevich, Manager, investor relations for Plug Power. Thank you. You may begin.

Good morning. Thank you for joining Plug Power to discuss our second-quarter 2008 results. Andy Marsh, CEO and Gerry Anderson, CFO will be on this call today. The call will be archived on our website at PlugPower.com. This conference call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to expectations regarding revenues and product orders for 2008. These statements are based on current expectations that are subject to certain assumptions, risks and uncertainties, many of which are difficult to predict beyond our control and that may cause our actual results to differ materially from the expectations in our forward-looking statements. These risks can include, without limitation, the timing and quantity of orders, shipments and installations of our products, our ability to develop commercially viable energy products, the cost and timing of developing our products, market acceptance of our products and our ability to lower the cost of our products and demonstrate their reliability.

Other risks and uncertainties are discussed under item 1-A risk factors in Plug Power's annual report on form 10-K for the fiscal year ended December 31, 2007 as filed with the SEC on March 17, 2008 and in the reports we file from time to time with the SEC. Plug Power does not intend to and undertakes no duty to update any forward-looking statements as a result of new information or future events.

At this time I would like to turn the call over to Andy Marsh.

Thank you, Cathy, and welcome to everyone on the call this morning. It has now been more than 100 days since my tenure began at Plug Power. I've used that time to gain a deeper understanding of our business by engaging customers, prospects, partners, suppliers and employees. In the ensuing weeks since the last call I, along with my senior staff and the Board of Directors, have continued to chart a strategic course for the company that focuses heavily on sales and marketing, including customer-focused and market-driven product development.

During today's call I will review our second-quarter 2008 operational results, including detail on our current and near-term market activities which will provide insight into our future expectations for commercialization. Corporate milestones for the rest of 2008 and the overall strategic direction of the company. Gerry Anderson will then provide an overview of our financial results for the quarter, after which we will open up today's call to questions.

First, I would like to make it clear if it is not already, that GenDrive is the primary commercial focus for Plug Power in the near to mid term. We remain confident that our motive power business is primed for commercial success. It is critical that we leverage our first mover advantage. We continue to build a full product portfolio in order to fully engage in material handling market with a product and service solution that demonstrably enhances productivity for our customers.

Based on our growing experience with customers, it is clear that GenDrive can deliver real economic value as a replacement for lead acid batteries. Gains in productivity and the potential for lower operational costs, additional usable commercial space and the elimination of toxic materials from the work environment are already creating customer pull at a level which I expect will result in notable orders in the near future. In terms of GenDrive unit orders, we expect to see a strong second half of 2008 continuing into 2009 and beyond.

Further discussion of our motive power business will be tactical in nature, which customers soon gauge which products to bring to market and when. We will also support development of our continuous power business, GenSys, with considerable efforts and resources as we believe that this will lay the groundwork for significant growth in the future. GenSys is expected to provide entry into comparatively large markets, therefore we believe the work we do now will significantly impact the future of our business.

The two promising product lines under development target different market and applications. One is a grid connected combined heat power device, and the other a grid dependent primary power solution. The combined heat and power high temperature system is expected to penetrate the consumer in late commercial market with a drop in replacement for residential heating systems that offer higher efficiency, lower lifecycle costs and a significant decrease in greenhouse gas emission compared with incumbent technologies. Feedback on the latest CHP prototype unveiled at the Hanover Fair continues to be positive, and we are proceeding with our efforts to assemble a user group where specific customer and partner feedback will be sought in order to improve our designs and functionality going forward.

Our development of low temperature unit for remote primary power applications continues. Our efforts are focused on the rapidly growing wireless telecommunication industry in India and the need to provide primary power to cell towers where the electric grid is extremely unreliable or nonexistent. The test we have conducted in India to date have validated the product concept and economics and provided meaningful feedback on system design that is being incorporated into our commercial design efforts.

We will continue to support our GenCore backup power product and believe it can deliver great value as a backup power solution for telecommunication and other mission-critical communication applications. We believe our product developments to substantially complete and that GenCore is the most reliable backup power product on the market. Accordingly, we have reduced R&D expenditures. We are still putting resources into customer service and sales. But with the uncertainty around the FCC ruling on backup power for telecom sites, we think it is best to let the market dictate the level of resources we dedicate. When significant orders come in, we will be prepared to meet that demand.

Now I will turn to our operational results. As you are probably aware, we've implemented dramatic cost control measures during the second quarter. We've reduced our workforce by approximately 20%. Though difficult on a personal level, this was necessary as we reorganized the Company and prioritize our business objectives. We have also instituted other measures to control spending, such as rationalizing the use of contract and professional service and bringing work in house where possible.

Additionally, we continue to examine our supply chain to implement cost-down measures and scale productions. Cost reductions have been realized through alternate vendor selection, volume and negotiation and cost driven design modifications. Our efforts continue as we investigate Asian sourcing of components for our volume production.

Although our cash burn is higher in the second quarter than the first due to one-time restructuring charges, we are beginning to see results as we bring Plug Power's operating costs back in line with our resources. We remain confident in our ability to successfully commercialize our product offering and become a sustainable company. For 2008 we expect cash use and operating activities to be in the range of $55 million to $60 million inclusive of working capital needed to ramp inventory to meet future sales orders.

On the GenDrive side of the business we had our best quarter thus far for new product shipments with 39 units delivered to the customers. Pleased to report this includes initial deliveries to Wal-Mart, which has begun the next phase of its trials with our GenDrive motive power solution. Given our focus on reorganization and supply chain logistics last quarter, we did not book any new orders for GenDrive, but we continue to work and build our sales funnel, and I expect that we will see significant orders within the next 13 weeks.

We are currently building out our GenDrive sales organization, which will be based on our regional approach with support through our channel partners. By year end we expect to book 150 to 200 new GenDrive unit orders. As we mentioned in our last call, we did experience a minor disruption in class three GenDrive production caused by a supplier issue. At this point production is back online as expected. We are making steady progress and qualifying a product from an alternate battery supplier and are working through the steps needed to ensure a smooth transition of suppliers. Battery suppliers are working through the steps to assure a smooth transition. We are confident that we will be able to secure enough batteries from our existing suppliers to satisfy customer orders through the cut in the new supplier.

We've also strengthened our relationship with Ballard by extending our supplier relationship for the Mark9 SSL fuel cell stack through 2010. As two of the leading fuel cell companies, Plug Power with its strong customer relationship and fuel cell integration expertise, and Ballard with its outstanding design and cost reduction initiatives, we will be better positioned to drive fuel cell adoption through greater alignment of our goals and resources.

Turning to continuous power, we remain optimistic about our future of our high temperature GenSys program. As I mentioned earlier, we are establishing a user group and major international utilities that can test our commercial prototypes that combine heat power for systems in order to drive product refinements that we believe will position us to meet the unique demands of several geographical markets. We remain convinced that we can offer consumers in our largest markets a reduction of approximately 30% on their annual utility bills.

To that end, we've received $500,000 in funding through the New York State Energy Research and Development Authority to focus on accelerating engineering and product refinement through the integration of a peak burner into the fuel cell system. The new design will enable rapid startup time, allowing the system to meet the customers' immediate heating demands while maximizing the fuel cell's electrical utilization. By decoupling electrical and thermal functions the single box solution can distinguish and separate the home's required heating needs from the electrical needs. This improved feature allows for lower integration costs into residential and small commercial applications.

As you are aware, our efforts to complete a low-cost high-volume design for off-grid primary power solutions have been partially funded by the Department of Energy. We are incorporating the important lessons from our numerous field trials, including those in India in the current design and expect to complete the first phase of the DOE program this year. The second phase of this program will involve building, testing and validating prototypes of the low-cost high-volume design.

In the backup power business we received 40 new GenCore orders during the quarter. We also shipped 53 units, installed 28. We continue to believe the lack of clarity around the potential FCC rules is gating orders. We expect 50 new orders through the end of the year. As part of our restructuring, we shifted engineering resources from the stable commercial GenCore product to other corporate priorities. But we continue to engage in sales, marketing and customer service activity in the backup power market.

I will now turn the call over to our CFO, Gerry Anderson, to present an overview of Plug Power's second quarter 2008 financial results.

Thank you, Andy, and good morning everyone. Our second-quarter financial performance was challenged by the restructuring activities and our focus on realigning the strategic direction of the company. With that said, we are confident that the company's performance over the latter half of the year will benefit from the completion of these activities.

For the quarter, our total product shipments was 92 units, comprised of 39 GenDrive and 53 GenCore systems. This represents a 42% increase over prior year second-quarter shipments, which was our first operating period with GenDrive in our product portfolio. As Andy has already noted, new orders acquired during the quarter amounted to 40 units, all of which were GenCore systems. More importantly, as we continue to build the sales organization and the order pipeline, we have stated our expectation to book between 200 and 250 new unit orders during the latter half of 2008 with an estimated invoice able value upon shipment ranging from $3.5 million to $5 million. Our backlog at the end of quarter two stood at 244 units, 141 GenCore and 103 GenDrive units.

Turning to our statement of operations, total revenue for the second quarter was $4.8 million of which $1.1 million was derived from products and services and $3.7 million from research and development contracts. Product and service revenue represented a 67% increase over 2007 quarter two and is favorably impacted by our growing installed base of GenCore and GenDrive systems, which totaled 522 units as of June 30, 2008.

Due to our continued development stage status, we defer recognition of product and service revenue and recognize revenue on a straight line basis over the service period of each sold system. At June 30 our deferred product revenue stood at $4.4 million, a $726,000 increase over our quarter one total. We expect to recognize substantially all of this revenue over future periods as the service contracts for these shipments are fulfilled.

At $3.7 million quarterly R&D contract revenue represents an 11% increase over the prior year second quarter, and the $6.6 million year to date total is a 20% improvement over the prior year. We presently have 26 contract engagements underway and expect our 2008 full year revenues to be modestly better than 2007 results. Our total cost of revenue for the second quarter of 2008 was $8.6 million and was comprised of $2.8 million for product and service revenue and $5.8 million for R&D contract revenue.

As we have noted in previous calls, our cost of revenue for products and services includes the direct material costs for fuel cell systems shipped during the period combined with the labor and materials associated with servicing all of the installed base, whereas our cost of revenue for R&D contracts is a fully burdened, materials, labor and overhead amount.

Our product cost of revenue decreased from the prior year comparable quarter by $1.6 million. However, please recall that our 2007 quarter two was impacted by a one-time $2 million charge for certain service and warranty related costs associated with the installed base. On a 2008 quarter-over-quarter basis product cost of sales increased $1.2 million from quarter one to quarter two due to both mix of shipped product and a 50% increase in shipped units. Cost of revenue for R&D contracts was 156% of revenues for the quarter, which is primarily driven by the mix of cost sharing arrangements on our current book of 26 contracts.

Research and development expenses, costs incurred for internally funded R&D programs were $8.9 million for the second quarter of 2008. This represents a 1% increase over the prior year quarter, which included only a partial quarter for our acquired Canadian operations and is a 12% decrease from our first-quarter results. The quarter-over-quarter decline resulted from continued lower materials consumption on internal projects and slightly lower personnel costs associated with the reduction in force that took place in the middle of June.

Selling, general and administrative expenses were $8.4 million for the second quarter of 2008, representing a $3.4 million increase over the comparable prior year quarter. The increase is associated with $3.6 million in restructuring charges taken during the quarter. Our net loss for the quarter ended June 30 was $22.9 million or $0.26 per share, approximately $0.06 of the loss per share resulted from the restructuring charges taken during the quarter and an additional $1.7 million write-down in our available for sale securities portfolio.

Weighted average shares outstanding were 88.1 million for the quarter. Net cash used in operating activities for the second quarter was $16.4 million inclusive of cash paid restructuring costs amounting to $1.1 million. Additionally, $538,000 was used for capital expenditures. On June 30, 2008 the company had $127.9 million in cash, cash equivalents and available for sale securities and $124.7 million in working capital. Year-to-date the company has consumed $31.9 million in cash for operating purposes. Based on the impact of the cost savings initiatives implemented in the second quarter, net of expected working capital usage to ramp up inventory for future orders, we expect to finish the year with an operational cash usage of $55 million to $60 million.

One last point I would like to note is that the restructuring implemented in quarter two has reduced our quarterly expense run rate by approximately $3 million. Included in available for sale securities and working capital at June 30, 2008 was $58.4 million of auction rate debt securities. As noted in our previous quarter, the disruption in the financial markets associated with auction rate securities has resulted in reduced liquidity for these types of securities and recent auctions for such securities have not been successful.

Accordingly, the company expects to hold these securities until there is a successful auction where the company sells them in the open market. Securities similar to the auction rate debt securities held by the company are currently trading at a discount on the open market. At the close of our first quarter we concluded that the estimated fair value of these securities was lower than the cost of these securities and that this difference represented a decline in fair value that is other than temporary. The company has recorded an additional other than temporary impairment charge of $1.7 million during the second quarter, bringing the total impairment to $4.5 million as of June 30, 2008.

I will now turn the call back over to Andy for some concluding remarks before we open the call to questions.

Thank you, Jerry. There has been a lot of changes at Plug Power over the first half of 2008. We focus our efforts on planning and restructuring to create a customer and market focused organization, which emphasizes sales and marketing. Based on our reorganization, the continual dedication of our employees and the market readiness of our commercial products, we expect to show strong results in the second half of 2008.

At this point I will restate our milestones for the second half of 2008. We expect 150 to 200 GenDrive orders, 50 GenCore orders and total net cash used in operating activities to be $55 million to $60 million. Now I would like to open up the call to your questions.

(OPERATOR INSTRUCTIONS) Steve Sanders, Stephens Inc.

Just a couple of questions on the restructuring. It sounds like most of the changes were on the G&A side. Can you just comment a little more specifically on what you are doing in manufacturing, R&D and sales and marketing?

Let me talk a little bit about the organization. When I joined Plug the organization was structured as very much a functional-based organization. And to align the organization closer to the customer we've really built an organization which is sales and marketing based. And we have aligned the motive power division under Chris Reid, formerly of Cellex, to have responsibility for sales, for product development for that organization, as well as product management.

The same today holds true for our continuous power business. The operations under John Gartner is responsible for manufacturing supply chain as a core activity for the business. Most of the -- for the backup power business is presently being managed directly by me. So essentially we've moved from a functional organization to a customer based organization. Most of the reduction of the 20% occurred for cuts in our GenCore power unit, as well as by consolidating G&A and manufacturing here in our Latham facility. Steve, does that answer your question?

Yes, that is helpful. And then I think Gerry said the restructuring would give you about a $3 million a quarter benefit. So as we think about the burn going into 2009, is that a good way to think about it relative to '08 or is it still a little early given that you may make some incremental investments here over the next quarters as you move forward?

A couple things we do need to do is make some investments in inventory that we need to build for forward orders that we are expecting. But I guess the best way to look at this if you look at the net change in our cash and cash equivalents, available for sale securities in the quarter and you back out the one-time restructuring cash charge, you look at the net change in our working capital exclusive of cash, which is about $1.9 million we would have been around $14 million. If you load in the full run rate expected for those cost savings of about $3 million, that would put us somewhere in the $11 million to $12 million range, which could put us in the low to mid 40s which is about where we would expect to be once we get to 2009.

Okay, all right. Thanks. And then on the GenDrive side you've obviously got several high profile customers testing the product. What is your current read in terms of what you need to do on product changes, cost reductions etc., based on the feedback you have so far?

Steve, a critical item is the availability of the F1 product. And that availability is scheduled for full production at the start of October. The demand and interest on the manufacturing side of this market has been strong and that is a critical element for success. When I look at the other areas where we have been putting a good deal of effort, we have put a good deal of our staff associated with providing support to the gas companies for hydrogen infrastructure for that industry. That is a critical element having that readily available for our customers. We are looking at a cost reduction targeting approximately 7.5% reduction in material costs per quarter for the next year. So those are activities which when we view the business by moving in that direction, one will see the products becoming more and more profitable.

When I think about it a good deal of the cost reduction activity, if you take a look at our F1 product, 96% of the costs are associated with 29 components and about 80% of the costs are associated with 15 components. So we are really targeting those suppliers and working with them and understanding how we can help them as we drive scale production to bring the cost down.

Okay, and just comparing GenDrive to kind of the early days of GenCore I think fairly early on in the GenCore commercialization, the product was at least cash positive going out the door; meaning you were covering your direct materials, labor and other direct costs. Can you say that about GenDrive today?

No, I would say today with GenDrive, the direct material cost in price are about equal and actually direct material costs may be slightly higher than market price. Though it is clear by when we hit production in January timeframe that that equation will change and material costs will be lower than the price to customers. And we see a continual downward trend. I guess I wasn't here at the start of GenCore, and when I look and certainly market prices may be different, but the equation with GenCore is really not substantially different today.

And it sounds like the funnel; the pipeline on GenDrive is obviously gaining some momentum. Of the unit orders you expect in the back half of the year, just a rough split on follow-ons with existing customers versus new customers. How are you thinking about that?

Good question. And you know, it is actually probably about 50-50 when I look at it, Steve. And a good deal of my effort and thought process has been how to develop a larger funnel. And that is why we are looking by September 30 to significantly increase the size of our GenDrive sales team.

Okay.

So the effort, the sales funnel is quite strong at the moment, but I expect to make it significantly bigger over the next three to four months.

Okay, thanks very much.

Walter Nasdeo, Ardour Capital Investments.

I have just a couple of questions, and if you could just give me a little bit of granularity on when you say you are focusing more as a sales and marketing, what are some of the initiatives that you are putting in place to kind of execute on that strategy?

I think the first big item, Walter, and it may seem trivial, but we moved the company from a functionally organized company to one which is market and customer focused. And so we've moved all the R&D folks, all the product management under one leader in each of our targeted markets to make sure that there was alignment along the organization.

Second item is that we have given each of those organizations clear sales goals for the year and are actually bonusing not only the sales team, but the design team and product management team on the results of the sales organization.

Third, we are actually adding resources -- in the motive power business we will be adding four (inaudible). Today we actually have essentially two regional sales centers, one based in the Ohio Valley, one based in the Tennessee Valley and we will be actually adding three additional regional centers in the next 60 to 90 days. And additionally we are adding folks to be direct OEM sales folks. So in the motive power there has been a real clear refocusing of our sales activity and alignment of the organization.

In continuous power we have been focusing a good deal of our efforts in India. We believe that approximately 50% of the market for off-grid power solutions is actually the India market. We've hired consultants and sales folks who have had success in India in the past, and they are actually helping lead our efforts to be successful there.

Okay, good. Now as far as the GenDrive goes, and in your future development there are you guys working with any actual lift truck design manufacturing types of companies to understand what the next generation of lift trucks are going to be. So it is not necessarily trying to design a retrofit for an existing 40-year-old design that was originally meant for a lead acid battery power system?

The answer is yes, and when we look -- first if you look at the composition of our sales team, their experience has actually been working for the major forklift companies in the US. If you take a look at the VP of sales for our motive power business his previous position was VP of sales for Crown, which is one of the largest forklift companies in the US. Our head of product management for that business actually worked at Raymond in a similar product management role. So we have actually been actively engaged with all or many of the major forklift companies in the US, not only focusing on today, but tomorrow.

In that industry it takes about five to seven years for a new product to come out the door. So we have been actively engaged in qualifying and testing our replacement product today in their trucks to have the appropriate BS 1956 certifications, but also have begun discussions on what is the future of forklift truck. And how does that really help improve the performance of the truck and just a big huge battery replacement product.

Okay and just as a follow up on that, and as far as the integration between General Hydrogen and Cellex goes, is that essentially done now, and we are down to the core group of guys that are going to be continuing on there and continue to develop the products?

Not only is that I would say that I have one advantage, Walter. I have never thought of us as three different companies, and we not only are closely engaged with, closely engaged with the Vancouver team, but it is really one organization. Chris Reid who runs that business actually has individuals here in Latham that report to him; individuals in Ohio and Tennessee, individuals in Vancouver. And I was on the phone with the lead General Hydrogen salesperson last night in Tennessee, and he was commenting to me about how much he has enjoyed engaging with our operation folks in the planning and that -- I listened to him and I thought to myself we are way past the point where you start thinking of us as three different companies.

Thank you very much. I appreciate it.

Brian Gamble, Simmons & Company.

I wanted to just kind of clarify something you just made, Andy. You talked about working with the lift truck companies in creating a battery that essentially could be used in rather than retrofitted in. You mentioned a five to seven year new product cycle. How far do you think you are into that cycle, and what are the preliminary products coming back in engineering? What do they look like? What are you having to do to your existing product to modify it for that next generation lift truck?

Probably, Brian, it wouldn't be fair for me to comment for the OEMs where they are in their new offerings. What I can say is that there have been -- I think there is going to be an evolution that looks like this. I think the first evolution of this business is battery replacements. The second evolution is products that look like battery replacements but take advantage of some of the capabilities of fuel cells, which allow for simplification of the electronics in forklift trucks. And I think the third product looks more like a product where all the capabilities of fuel cell products are distributed in the truck.

I think that the first is clear, and again, what may not be clear, Bruce, is that for us to be successful we've had to work very closely with the OEMs to date. The second is being defined as both of us learn more about the design of forklift trucks and how fuel cells interact. And I think the third where it is a distributed fuel cell in a truck is probably, the work is really very, very preliminary at this time.

You talked a lot about the restructuring and being focused more on the sales and marketing. How should we view that in regard to actual deliveries as opposed to orders? Should we think that the general sales cycle obviously trying to increase on the front end to get orders in the door, but then are you also focused on the back end and getting those orders out in a timely fashion? And how should we think about what that means for the recognition of backlog and what that is going to look like going forward?

I guess, Brian, you're right. My first objective is to fill the sales funnel. Some of the orders will -- I think it is fair to say some of the orders will ship in 2008. A high majority will ship in 2009. We are looking at some exciting greenfield activities, which may even orders we take in the fourth quarter will be for the third quarter 2009.

I think a fair estimate would be that the delivery time will be somewhere between 13 to 30 weeks after receipt of order. A good deal of that actually has not associated with production capability, but putting the hydrogen infrastructure in place at our customers' sites.

And then you mentioned -- I think Gerry might have mentioned it, modest improvement in revenue this year over last year on a total full-year basis. Is 10% a modest increase to you?

We expect to be low double digits. I know again where the analysts have us at consensus. And again due to some of the visibility and challenges on getting the shipments out the door, and the issues around development stage accounting it is hard for us to give you a prediction of what that revenue number will look like, but I would say we expect to be low double-digit improvement over what we had last year.

Thank you very much.

Jeff Osborne, Thomas Weisel Partners.

Just a question on the OpEx run rate. You talked about a $3 million savings per quarter. Is that off of the $17 million in Q1, should we be thinking about $14 million going forward? And I just wanted to kind of reconcile that with the comments about hiring more salespeople for GenDrive.

That's probably a fairly good way to look at it, Jeff. And again, keep in mind that we are still evaluating other ways to reduce our costs and our spend going forward. So again, we expect even as we add salespeople to find other opportunities to reduce our spend. The one caveat I would still put in there again that we've mentioned is networking capital usage depending on what we need to do to ramp inventory. You may see some timing effects of having to carry higher inventory balances to be ready for some of these shipments.

Just the visibility of the 150 to 200 GenDrive units for the year, can you talk about what the rough mix is of class 1, 2 and 3?

Sure. Jeff, we only have available today class 3 products. Class 1 entered production in October, and the class 2 product our initial estimates are early 2010. With the class 1 and class 3 I would expect that the fourth quarter and next year will be approximately 65% class 1 and approximately 35% class 3.

And then would you happen to have the stock comp for the quarter?

The shares outstanding?

No, total stock compensation.

Stock compensation, sorry, that was about $1.6 million for the non-cash stock, and if you needed the total for amortization and appreciation it was $1.7 million.

1.7, great. And then the last question I had is can you just update us on where the FCC is with their decision-making process? And you mentioned the stalling there but I was just wondering if you could provide an update.

Sure. We talk often in Washington our clarity is probably not much better than yours, Jeff. But as you know, the FCC's action has been sent to the office of management and budget for review. So no steps can be taken until that comes out of the office of management and budget. My other assumption on this industry is that I expect that any ruling that there will be debates among the carriers and the FCC about how it is implemented.

Understand. Thanks much.

I have to say this, Jeff. I say this without a doubt that this GenCore product we have from the testing, from the deployments we have, is by far the most reliable fuel cell product under five kilowatts in the world. It is a great product.

(OPERATOR INSTRUCTIONS) Thank you, ladies and gentlemen, there are no further questions at this time. I would like to turn the floor back to Cathy Yudzevich for closing comments.

I would just like to thank everyone for their time today and their interest in Plug Power. And we look forward to talking to you on the third-quarter conference call. Thank you.

Ladies and gentlemen, this concludes today's teleconference, and you may disconnect your lines at this time. Thank you for your participation.