普拉格能源 (PLUG) 2015 Q1 法說會逐字稿

Greetings and welcome to Plug Power's 2015 first-quarter financial results conference call. (Operator Instructions)

It is now my pleasure to introduce Ms. Teal Vivacqua, Director of Marketing and Communications for Plug Power. Thank you, Ms. Vivacqua. You may begin.

Thank you. Good morning and welcome to the Plug Power 2015 first-quarter financial results conference call. This call will include forward-looking statements, including but not limited to statements regarding our expectations for future business and financial performance, bookings, product shipments, revenue, margin, EBITDAS, geographic end market expansion, and inorganic growth. We intend these forward-looking statements to be covered by the Safe Harbor provisions for forward-looking statements contained in Sections 27A of the Securities Act of 1933 and Sections 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, because they involve risks/uncertainties. And actual results may differ materially from those discussed as a result of various factors, including but not limited to the risks and uncertainties discussed under Item 1A, risk factors, in our annual report on Form 10-K for the fiscal year ending December 31, 2014, as well as other reports we file from time to time with the SEC.

These forward-looking statements speak only as of the day on which the statements are made. And we do not undertake or intend to update any forward-looking statement after the call. At this point I would like to turn the call over to Plug Power's CEO, Andy Marsh.

Thank you, Teal, and good morning, everyone. Paul will delve into the details of the first quarter later in the call.

I would like to highlight how this past quarter set the stage for meeting our 2015 financial projections. The Company will achieve more than $100 million in revenue in 2015, with more than 90% visibility to achieving this goal at the moment. This certainty provides us with a high confidence level, but we were also pleased by the following facts.

One, by the end of the first half of the year, we will have completed four sites with Walmart in 2015, which will increase the number of distribution centers deployed to 10 sites. By year-end we expect to have 14 to 16 sites completed. Without a doubt this eliminates any questions about the viability of fuel cells in material handling applications.

Two, Kroger continues to add sites. After deployments at Compton, California; Louisville, Kentucky; and Stapleton, Colorado, Plug Power will deploy units at Atlanta, Georgia, in the second quarter and Delaware, Ohio, in the third quarter. Three, we recently completed deployment for a new customer: a big-box retailer at their new distribution center in Ohio. This retailer has more than 100 distribution centers in North America, and we are already in discussion for future deployments.

We also signed a Master Sales Agreement with a large footwear manufacturer for three sites. I think most important -- we booked more than $46 million in the first quarter. This will allow us not only to reach our goal of growing more than 50% in revenue in 2015; it will also position the Company for future growth in 2016.

At the end of the quarter, the Company had delivered more than 20% of our year-end shipping target, totaling 670 units. By the end of the first quarter, the Company had completed or started seven hydrogen sites, which represents more than 40% of the hydrogen stations required to meet our year-end shipping.

When you add this all in, we will achieve 35% to 40% of our expected revenue for the year by the end of June. Our operational performance in delivering our products and service, backed by continual growth with old and new customers, support our bullish position for 2015 and beyond.

In summary, with respect to sales, our efforts remain primarily focused on the material handling industry and building a repeat customer base. Customers like Walmart, Kroger, big-box retailers, and large manufacturers across multiple industries -- like P&G and BMW -- remain our primary sales focus. These customers are helping us build a base business that will allow Plug Power to become more predictable quarter by quarter while continuing to grow at 50% per year, a feat achieved by very few industrial companies.

And now I'd like to discuss our longer-term progress at increasing gross margins. We think about our material handling business as four activities: GenDrive, the fuel cells used to power forklift trucks -- this is our oldest product line; GenCare, the aftermarket service for our products; and GenFuel, which consists of two items -- the hydrogen infrastructure as well as the delivered hydrogen through our customers.

Our GenDrive gross margins continue to improve and will achieve close to 30% gross margins by year's end. A few years ago the margins for these products was less than minus 60%. This turnaround can be attributed to simplified designs, a maturing supply chain, and higher volumes. In the coming year we have initiatives to continue to reduce the cost of our products via design simplifications and the deployment of our own stacks.

We expect the majority of the Class-3 products in the second half of the year will be Plug Power stacks. We are not new to the stack business, with more than 2,500 stacks deployed in the stationary market. If one studies the gross margin improvement road maps for our GenDrive over time, a similar trend is developing for our service activity. Our service business saw a 50% improvement in the past year. Our unit uptimes are in excess of 98%, and the number of stack failures has been reducing as we make continual improvements to our designs. Long-term, we expect the gross margins of the service business to equal our product offering.

With our hydrogen infrastructure, which is less than one year old, gross margins are also continuing to expand. A major step in the first quarter was the introduction of the in-house build of the hydrogen infrastructure. Today, what was done in the field over a month period is being built in-house at Plug Power on a skid. This gives us greater quality control, lower product cost through bulk purchases, and lower installation costs. Plug Power also builds in-house the indoor fueling stations that support our business.

In summary, with respect to gross margin and sales, I'd like to highlight: we demonstrated the Company can book and ship products. Our goal of 50% growth this year is clearly achievable. Our GenDrive products demonstrate that we can transition an offering from low-volume production to a commercially viable offering with growing gross margins.

And finally, our GenFuel infrastructure and GenCare products are on the same cost roadmaps that we have established GenDrives. The steps we are taking will allow us to build a very profitable $400 million to $500 million business in material handling in the next 4 to 5 years.

We entered the material handling market because it could allow Plug Power to build a successful market segment for PEM fuel cells, the first in the industry. We believed this market was viable because there is an economic value proposition and a large potential, since more than 6 million forklift trucks are operating every day.

Our initial focus has been North America, but we are becoming more active internationally -- primarily driven by our present customer relationships and our JV with Air Liquide in Europe. Also, we believe that volume production from selling fuel cells in material handling would help drive down our costs and allow other segments, like ground support equipment and range extenders, to become viable markets. We have become increasingly convinced that reducing the cost of hydrogen infrastructure and the molecule, along with simplifying delivery of hydrogen fuel, can assist in expanding our present market and open new opportunities.

Internally, we are focused more and more on hydrogen. We know how to design fuel cells, and we are becoming experts at building infrastructures. More than seven tons a day of fuel will go in our products, with much of that fuel being delivered by Plug Power fueling stations. Car companies dream of using this level of fuel in the next 5 to 10 years. We know hydrogen can deliver it today.

We've been thoughtful about our approach to hydrogen. We found a strong molecule partner, Praxair, and we are improving the quality cost and performance of our fueling stations while continuing to investigate longer-term solutions for generation and delivery of hydrogen. We are making substantial progress in building our hydrogen strategy, which is being seen in our products today.

In the coming year, as our strategy evolves, it will become clear that making hydrogen simpler to use as a fuel represents the opportunity for Plug Power to grow well beyond $500 million. Tim Cortez, our VP of Hydrogen, will be presenting our strategy in greater detail during the upcoming Plug Power trip. I'd now like to turn the call over to Paul to discuss in greater detail our first-quarter results.

Thank you, Andy, and good morning, everyone. I would like to start off by sharing some financial highlights from the first quarter. We ended the quarter with over $9.4 million in revenue, representing a 69% growth over the first quarter of 2014. This growth stems primarily from our GenKey solution, introduced in 2014, and the continuing commercial traction we are gaining in the marketplace.

First-quarter 2015 represents continued sales momentum -- and even more important -- a quarter of field activity preparing for the number of GenKey programs slated for the second quarter and the balance of the year. In addition to the 265 GenDrive units recognized in revenue for the quarter, Plug shipped 419 GenDrive units and made construction progress on seven hydrogen installations.

Looking at the gross margin, total gross margin as a percentage of sales was negative 22% for the first quarter of 2015 as compared to the total gross margin of negative 41% for the first quarter of 2014. This significant continued operating improvement is indicative of our ongoing progress, both in terms of volume and cost down initiatives.

We recorded in excess of $46 million in orders in the first quarter of 2015 and ended the quarter with approximately $165 million in backlog. Our backlog is a combination of units and installations planned for the near-term as well as the service and hydrogen delivery commitments for the next few years. The growth in overall backlog is indicative of our success in the market and provides a strong base as we focus on delivering on 2015 forecasts.

We used $13.6 million in operating cash for the first quarter of 2015 to fund the ongoing commercial efforts as well as required working capital investments. We ended the quarter with $131.5 million in cash and $155.7 million in working capital, which we believe is more than ample to support our growth in 2015 and beyond and strongly positions us to continue strategically investing in the right paths to accelerate long-term growth.

Breaking out product revenue for the first quarter, the Company recognized revenue of $4.1 million associated with 265 GenDrive units. Overall this compares to $3.2 million in product revenue and 165 GenDrive units in the first quarter of 2014. The first quarter of 2015 results reflect growth in overall volume but comparatively a higher concentration of Class-3 units, which impacts the sales mix. In addition, the first quarter of 2015 includes stationary power revenue stemming from our ReliOn acquisition, which only occurred in the second quarter of 2014. And this also impacts mix.

Gross margin for product revenue for first quarter of 2015 was $0.2 million positive or 6% of sales. This compared to $0.3 million loss or 9% of revenue in the first quarter of 2014. Volume certainly contributed to the improvement, but the Company's continued focus on product design improvements, supply chain leverage, and manufacturer process streamlining continued to drive margin enhancement.

Service revenues for the first-quarter 2015 were $5.3 million compared to $2.1 million in the first-quarter 2014. This growth stems primarily from the new GenKey solution and the hydrogen installation revenue in first-quarter 2015 with no comparable hydrogen installation revenue in the first-quarter 2014. The growth also stems from the growing number of GenCare service contracts and fuel delivery agreements, both associated with the success of the GenKey offering.

Gross margin for the service revenues in the first-quarter 2015 was negative in the amount of $2.3 million or 44% negative as a percentage of revenue as compared to a total negative gross margin of $2 million or 95% negative as a percentage of revenue in the first-quarter 2014. The margin rate improvement on service revenue stems mainly from tremendous improvements in our installed GenDrive base performance and cost to support them. The Company continues to make great strides in product design and resource leverage, the key drivers that will enable our service business to achieve our longer-term margin profiles.

Research and development costs for the first quarter of 2015 were $2.9 million as compared to $1.3 million in the first-quarter 2014. The incremental investments are commensurate with the Company's growth, including our investments associated with ReliOn and our ongoing staff development.

SG&A and amortization expense for the first quarter of 2015 was $7.8 million as compared to $3.8 million in the first-quarter 2014. The majority of the incremental cost is associated with tremendous sales growth and acquired resources to support and drive future growth. Net operating loss for the first quarter of 2015 was $12.8 million as compared to the net operating loss for the first quarter of 2014 of $7.4 million.

Turning briefly to our view on the full year of 2015, our confidence continues to build in the projections we previously shared of total revenue for 2015 exceeding $100 million, and we still see year-over-year growth in shipments and installations as we proceed through the quarters. We believe we will ship over 3,300 GenDrive units and complete over 15 new hydrogen infrastructure sites in 2015 as compared to shipping in excess of 2,600 GenDrive units and completing 10 hydrogen infrastructure sites in 2014.

As previously disclosed in our January business update, we anticipate in total approximately 35% to 40% of these revenues in the first half of 2015. Also consistent with what we previously shared, the majority of the first-half programs are rolling out in the second quarter.

In terms of total administration expenses, as we had previously shared, we believe we have approached the required critical mass level and will only need to invest incrementally to support continued growth. Therefore we see tremendous leverage opportunity in our 2015 forecast, where we believe the fourth-quarter 2015 total administration cost run rate will approach 23% of revenue.

In regards to margin expectations, we still anticipate sequential improvement through the year across all our product and service businesses. Overall, gross margin and EBITDAS margin rates are moving in the right direction.

In the fourth quarter of 2015, we still anticipate that we will exceed 29% gross margin on our GenDrive units, driven from our increased volume leverage; supply chain cost downs; and product design improvements. In regards to overall service margins, we still foresee substantial improvements which will stem from many factors, including growth in our hydrogen infrastructure revenues; a continued positive blending in the run rate of the newer, more reliable GenDrive unit designs; and our continued significant progress in addressing uptime issues of involved fleet.

We still expect overall growth in revenue and profitability to enable us in the fourth-quarter 2015 to approach a breakeven rate on EBITDAS. Beyond 2015 we see tremendous additional market opportunities in adjacent spaces -- opportunities that could double or triple our existing addressable markets.

And to capitalize on these opportunities, they will require a range of prudent strategic actions and investments. As we progress in 2015, we will have better line of sight of how this translates into near-term profitability trends.

In conclusion, we celebrate with all our stakeholders another successful quarter for Plug Power, given sales growth and build activity. As we move further into 2015 we look forward with great excitement to continued building on our strong platform, sharing with you all our continued success as we go through the year.

We will now open the line up for questions.

(Operator Instructions) Matt Koranda, ROTH Capital Partners.

So I just wanted to clarify on shipments for the quarter -- or, actually, units recognized as revenue. The 265 units that were recognized in Q1, is that primarily the site of about 238 units that you guys had shift in Q4?

Yes.

Okay. And then what made up the balance of the units recognized during the quarter? Was it just replacement or new units at existing sites?

Yes. It's a common trend we see across many of our sites as they launch and deploy. They tend to add units as time goes on, so those largely reflect additional units in existing customer programs.

Okay. Got it. And then for the 419 units shift in Q1, just to be clear, the 238-unit site that you recognized in Q1 was not counted as shipments in Q1. Is that right?

That's correct.

Okay. Got it. And then just in terms of the 419 units that shipped during Q1, could you just provide a little bit of color on why those weren't recognized as revenue during Q1? Is it the financing issue again, or what's going on there?

Yes, it's really a factor of timing with the commissioning of the sites. It's relatively consistent with what we started the year in terms of the deployment planning. And one of them is a big-box retailer; the hydrogen site is coming online here in the second quarter.

Other factors that affect timing are things like weather that happened to be in the North. So obviously this was a pretty brutal winter in terms of snow. So varied factors. But the good news is they are, again, relatively consistent with our deployment planning schedule. And both the coming online in the second quarter.

I would like just to add this, Matt. One of the items we've done with some of the customers who we have longer-term plans with is that we are beginning to talk through how to schedule doing deployments in the winter in the South and deployments in the summer and the fall in the North to help balance out the load.

Okay. Great. That's helpful. And then I think one of things -- well, that you guys highlighted from the Q4 call was that third-party finance units can sometimes slip, just depending on when you guys receive the payment from the financing partner. It seems like you guys have the balance sheet to do some sort of in-house financing product, but I was wondering if you could comment on your latest thinking around this -- and whether you may have additional stuff to say on the POWERTrip tour that you guys are doing? Or maybe just provide some color for us there?

Well, to be clear, our commercial model is that we will have customers buy the systems from us. A lot of them choose to leverage via financing institutions to lease the programs. So that's our -- they can either pay us upfront, which -- those are the kind of customers we love; or they work with financing institutions and lease the solution, which is driven from a variety of reasons. But that's really the one of two models that you will see on new programs as things roll out.

Okay. But no comment at this point in terms of whether or not you guys could provide some of those financing solutions in-house?

It's not our strategy, and we do not have plans to do that.

Okay. Got it. And then just a couple more for me here: for Q2 it seems like implied in your commentary is about $26 million to $31 million in revenue for Q2. Could you just help us understand how that breaks out between product revenue and service revenue?

Okay. So I'll give you a quick rundown, Matt. I would expect that -- I'm staring at the numbers here -- about 75% -- actually, a little bit more than that; probably more like 80% will be product-related. That includes both GenDrive and hydrogen infrastructure.

Okay. Got it. And then last one here from me in terms of bookings, cadence for the year -- I was wondering if you could share with us your thoughts on what to expect for the remainder of 2015? I mean, it looks like Q1 implies kind of relatively steady. But are there any large customers that are in the pipeline that could create a bulge in any one particular quarter?

Possibly, Matt. I would say that -- expect -- I think our investors should expect the cadence will be fairly steady. But I would not be surprised if one quarter was significantly higher than others, just because how deals may get done. If that make sense to you -- so I would not be surprised if we had a $75 million quarter followed by a $40 million quarter.

Okay. All right, understood. Just to follow up on that really quickly, I mean, is there a particular quarter where that is more likely to occur than not? (laughter) If you can provide any color on that, that's great. But if not, then I'll jump back in queue.

Good question, Matt. Probably I'll take -- you know, those sort of activities, I would say I think I'll take a pass on that one.

Okay. Fair enough. I'll jump back in queue. Thanks, guys.

(Operator Instructions) Aditya Satghare, FBR Capital Markets.

So firstly, on a very high level there, Andy, could you maybe talk about -- as you look at your high-potential customers, how many sites do they have? How many sites are you going after? And if we think about current penetration rates, what kind of discussions are we having with your customers about penetration rates on their site -- say, two, three years from now?

Let's talk about the first three I mentioned today. One was Walmart, one was Kroger, one was Home Depot. I think that Walmart had 100 distribution centers. Kroger has 30 distribution centers, and the big-box retailer has 100 distribution centers.

At the end of 2016 I would expect that one could potentially see that 25% to 30% of the sites could be cut over for customers like Walmart and Kroger that we've been doing business with for a long time. For a new customer who is a big-box retailer, I would say that we could be in -- you know, we probably could be in the range where we have 6% or 7% of their sites cut over.

Now, there are in the manufacturing side a good deal of push going on with -- especially with some of the large auto companies, some of which have over 80 sites. One of them -- we actually have activities going on with five of their sites at the moment. So I think that with our long-established customers, we could be at that 25%, 30% range at the end of 2016; and for some newer customers, in the 10% range. Does that help, Aditya?

Very helpful, Andy. Thank you. Second question was: I wanted to make sure I understood -- you mentioned that half of the low-power stacks would be your internal stacks -- I firstly wanted to confirm that.

And secondly, what I wanted to understand was: as you incorporate more of the internal stacks into your product, what kind of effect will that have on the service business? Does it give you more predictability? And does that cause a bigger improvement in the overall service business?

That's actually a good question. I would say this -- so, yes, it brings down the rebuild cost significantly. So that will have a huge impact. And our service cost is dominated by stack replacements, representing about 70%.

But both our internal stacks and Ballard stacks we're continuing to make improvements with. So we see a roadmap where we are looking for, in the next two to three years, stacks to last a lifetime of a lease, which could have a significant uptick in our stack business. So instead of focusing a great deal on rebuild, which we are spending time on, the key item is to push the life of the stack so that the total cost of ownership is lower, and our margins are higher. What we are seeing with our own stack -- and, actually, with improvements we see Ballard making -- we are seeing real lifetime improvements with the designs as we go through in the past year.

Got it. Last question for my side is: Paul, you mentioned that most of these are -- you know, we should expect a lot of operating leverage as you go forward, right? Could you maybe help us understand, as you look at sort of 2015/2016, especially the back half, what are some of the key areas -- maybe it's sales; maybe it's support infrastructure -- that you may have to add some more resources and capability?

To be honest, I think we are pretty well structured. I look about the different functions of the Company -- I mean, we've made very prudent investments in a lot of disciplines. And as you know, running a $100 million business in itself requires a certain level of investment. And we've kind of hit that critical mass. And I don't see any gaping holes in any kind of functions of our Company.

I think there could be some nominal incremental investments, but the bigger investments, as they come, probably would come from pretty critical strategic ideas and thoughts that we have -- whether it's expansion to Europe or looking at hydrogen solutions in other places. And those are yet to be defined and determined. And if they do develop into something more meaningful in size, we'll have better visibility in terms of what that looks like. And we'll share that with you guys as that unfolds.

But today I think we've got real opportunity to leverage both our manufacturing overhead as well as our administrative cost overhead. And we've seen that. Even in the second quarter, you see the big dip in the chart as we progress and get the sales recognition that we see in the balance of this year. I think you are going to see tremendous leverage as we go forward.

Thank you, guys. Thanks for the update.

Jeff Osborne, Cowen and Company.

Good morning. Just a couple of questions on my end. I was wondering, Paul, if you can update us on the units not shipped. You have mentioned 3,300 for the year, but units that you expect to recognize revenue on? That would be helpful.

Until 2015? The total would be in excess of 3,300.

So that's shipped, or actual revenue recognition for it? I'm just trying to get a sense of if --.

Yes, sorry. So it would be revenue recognition.

Okay. And then the -- you mentioned 29% gross margins exiting the fourth quarter for the forklift shipments, the GenDrive shipments. But how do we think about, as the ReliOn units ramp up for the utility customer that you have and some of the other product revenue, what would be a good product gross margin to use for the year, given there's a mix issue there?

I don't have the number in front of me. I can get that back to you.

But I think, just so you have some perspective, GenDrives in total -- as we look at the total of $100 million that we forecasted this year, it's probably going to be 55%, 60% of that total number. So a total of $100 million in sales.

So that's a pretty big blend in terms of mix as we continue to grow sales through the course of the year. So I think you are going to see -- and if you look at it comparatively, ReliOn is going to show good progress this year, but it's still going to be kind of 6% to 8% of sales. So I think you are going to see a dilution of its impact, even though it's getting -- you know, we are showing margin leverage on that business line as well. I think you are going to see the overall margin mix being heavily concentrated on GenDrives.

Got you. Is there still an intent to design-in the ReliOn product into your units this year? I think you had originally talked about sometime in the spring.

Yes. So as Andy had said, if we look at the back half of this year, that stack development that we've been working with with that team is going to be about half of the low-power stack in the balance of the year. So we're going to start to see the impact and benefit of that pretty immediate as we progress into the year.

Okay. Do you happen to have what the -- when does that Southern Company contract start? And what was the ReliOn revenue this quarter, in particular for the first quarter?

I believe the ReliOn was about $0.5 million for the first quarter. And we should see about $2.5 million in the second quarter, Jeff.

And that's affiliated with the telecom rollout?

That's actually mostly affiliated with the utility rollout.

The utility -- okay.

With the Southern rollout, Jeff.

Right. Got you. And then, Andy, can you just -- I'm curious on the hydrogen strategy that you kind of first alluded to six to nine months ago, mentioned in passing today. Give us a sense of what your thoughts are there. And any update on the Praxair partnership that you announced several months ago would also be helpful.

Sure. Well, I would say this, Jeff: Prax is -- for our new deals this year -- is almost our exclusive partner. And Prax is treating us as their distributor to the material handling market. And Prax has about half the hydrogen capacity for liquid hydrogen in the US. And I have to say the relationship grows stronger and stronger every day. We're really pleased with that.

On the hydrogen strategy, we've been being steady, Jeff. I have not -- we're spending a good deal of times working behind the scenes on how to work through generation distribution and infrastructure. And I think the first -- not surprising, we're trying to make sure that the first efforts are really associated with reducing the cost of our hydrogen infrastructure as well as making the products of higher quality.

And that movement of the hydrogen infrastructure, to move most of the build in-house, gave us greater control over the product quality; and greater control over cost; and, really, it's the first step in building out our product offering for hydrogen infrastructure. We have a few small sites. We have a reduced version of our infrastructure that will be rolled out. So that's in place.

John Cococcia and Tim Cortez have been spending an extended period of time really surveying the market, talking to potential partners for reformers, potential partners for items like compressors, and really kind of refining what we should be doing ourselves; where we should be partnering; and how these decisions can help us grow immediately our material handling market -- but also could help us to leverage into other markets.

We're going to -- in Dallas -- I think it's May 29 in Dallas? May 29 in Dallas we are actually going to present. And there will be a call-in number, Jeff, where actually Tim is going for 25 or 30 minutes really providing greater detail on not only our hydrogen plans today but for the future.

Thanks, and I look forward to that. Just a couple of other quick ones.

One, Paul -- I was wondering if you could break out the SG&A and amortization? In the past you have had a little bit more disclosure in the press release itself about the actual OpEx levels. And I think on the call you just kind of lumped those together. Is there a way you could split those up?

Absolutely. And because we are trying -- we are going to be filing our Q here shortly, we tried to provide a little bit more crisp information in the press release to focus -- to provide information where the questions tend to circle around as well as the things that are highlights. But amortization is roughly $600,000 for the quarter, and that will be delineated in the Q filing. And it's pretty consistent from last -- from Q4.

Excellent. And then any trends as it relates to ASPs? You called out the mix of the Class-3 units, but how do we think about just GenDrive ASP trends as a whole?

They are holding in there, Jeff. And I think because so many of our customers have seen the value, that pricing pressure has not been great at the moment. I think that the average selling price -- we don't see any significant decline in the next year.

Good to hear. And the last one I had is just -- with Heister's acquisition to get into the space, how is that impacting the sales funnel and discussions that you've had? Anyone taking a pause to investigate their offering over time as it's introduced? Or is it accelerating orders, just given the tax credit expiration next year? I'm just trying to get a sense of what the moving factors are as you look at some of -- the pipeline of orders that you have.

I have -- look, they will be a tough competitor when the time comes. But you have to go through product offering. You have to -- you know, we -- to be quite frank, Jeff, we really haven't heard much --

I understand.

-- in the marketplace from our customers. And I think that whether it helps, or the acceleration, I can't say. I can't say it's been a prime focus of discussion. I have got a lot of respect for the people there. And I'm sure that we will have our battles to come. For all of us, what we are doing is making a bigger and bigger pie.

I understand. And just last quick one: does the tax credit come into discussion with these customers? I mean, it's only a couple thousand dollars in the grand scheme of things, but how important is that deadline for you in signing deals?

Our plan has been to be successful without the tax credit. To be honest, we really don't talk to the customers about the tax rate going away. It's not a driver at the moment.

Our goal is -- if you really think about it, our goal is continue to show more value to our customers. A good deal of our customers lease, so as the technology becomes more mature, the residual values will increase. The risk factors will decrease, and we'll continue to drive down costs.

So our goal is to operate this business and continue to grow well beyond 2016, and -- if the tax credit remains in effect, which from my discussions in DC, I believe it will. But we are not -- our focus has been the same since I joined the Company in 2008: build a viable business without government support. If the support is there, great.

Good to hear. Thanks much.

(Operator Instructions) Matt Koranda, ROTH Capital Partners.

Just a quick follow-up for me. I thought I heard you mention Home Depot as a customer, Andy, and just wanted to clarify -- did you say 6 to 7 sites potentially cut over the next 2 to 3 years? Just could you kind of talk about the cadence of the potential deliveries there? That would be great. Thank you.

There may have been a little slip of the tongue, Matt. So what I said I probably maybe should've been a little less straightforward with. But that is correct, Matt. I would say 6 to 7 over the next 2 to 3 years.

Okay. Great. Thank you, Andy.

Thank you. There are no further questions at this time. I will turn the conference back to Andrew Marsh for closing remarks.

Well, I'd like to thank everyone for joining the call today. I'd like to finish up by inviting folks to the POWERTrip. And we are excited about visiting six cities in the coming weeks and speak directly with our investors. We hope our big investors come, and small investors, and everyone in between. Every presentation is going to be unique. And just like I mentioned to Jeff, that we will dig more into hydrogen in Dallas -- we are going to have investors have a chance to really meet our management team to discuss important topics like gross margin, sales, hydrogen, and policy.

I think also I'd like to mention to everyone -- those of you especially who are close to Albany, New York -- next Tuesday is going to be the first Trip. And we are offering people not only to hear from myself and Keith to talk about gross margins, but to get a tour of our facility, both our manufacturing line and R&D center. And I'd love to have you all there.

So thank you for the time this morning. Bye, now.