WEBVTT - Plug Power CEO Talks Hydrogen Power Market

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Shares of the green

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<v Speaker 1>hydrogen company plug Power closed two and a half percent

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<v Speaker 1>lower last Tuesday, that was the first day of trading

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<v Speaker 1>after the company reported net revenue for the second quarter

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<v Speaker 1>that came in above estimates, but the bottom line was

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<v Speaker 1>the issue. EPs missed the average analyst estimate. Plug provides

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<v Speaker 1>hydrogen products including electrolizers, hydrogen transport, storage and dispensing solutions,

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<v Speaker 1>and more to a variety of customers including Walmart, Amazon,

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<v Speaker 1>Home Depot, Airbus, at and T, Kroger, FedEx Pgeni, Coca Cola,

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<v Speaker 1>and more. We've got back with us Andy marsh, the

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<v Speaker 1>CEO of plug Power. He joins us from just outside

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<v Speaker 1>of Albany. Andy, always good to have you on the program.

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<v Speaker 1>I want to start with your customers. I mentioned just

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<v Speaker 1>about ten of them. The list goes on, what are

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<v Speaker 1>you hearing from them in a world where green energy

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<v Speaker 1>is no longer sort of the buzz phrase buzzword, there's

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<v Speaker 1>not the same government incentives for this stuff that there

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<v Speaker 1>was in the last administration. What are you hearing from

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<v Speaker 1>them right now?

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<v Speaker 2>So the last part of that, Tim's that true. The

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<v Speaker 2>incentives for forty eighty, which is the tax credit for

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<v Speaker 2>fuel cells, and the last bill is actually much better

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<v Speaker 2>than it was.

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<v Speaker 1>Well, I was talking about green energy as sort of

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<v Speaker 1>a monoliths, just to be clear.

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<v Speaker 2>Yeah, So when I look at first globally, the incentives

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<v Speaker 2>for hydrogen and fuel cells and green energy remains robust.

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<v Speaker 2>And if you look at our business in the second quarter,

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<v Speaker 2>our revue in Europe for electoralizers and all of it's

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<v Speaker 2>really primarily Europe, actually tripled to forty five million dollars

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<v Speaker 2>from what it was a year ago. And here in

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<v Speaker 2>the United States, you know, when we look at the

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<v Speaker 2>tax lands, the credit landscape, we actually see it better

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<v Speaker 2>today than it was a year ago. So why was happy? Well,

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<v Speaker 2>I think because when you looked at the tax credit

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<v Speaker 2>for fuel cells, it was not well structured or positioned

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<v Speaker 2>in forty eight eight. And we see an extension of

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<v Speaker 2>what was essentially the ITC, which was extended the last

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<v Speaker 2>time under President Trump in twenty eighteen, in the latest bill,

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<v Speaker 2>which extends a credit for fuel cells which is used

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<v Speaker 2>by Amazon, Walmart and many of the customers you mentioned

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<v Speaker 2>through twenty thirty two. So we're actually pretty thrilled with

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<v Speaker 2>what happened for hydrogen, especially in the last bill.

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<v Speaker 3>When you look at plug Power's earnings, the margins are

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<v Speaker 3>still negative, but they have improved from the last year.

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<v Speaker 3>What are your thoughts on just how much more runway

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<v Speaker 3>you guys need before plug power is consistently profitable.

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<v Speaker 2>So you know we I think you hit on the point.

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<v Speaker 2>We moved gross margins from a year ago by over

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<v Speaker 2>sixty percent and we are targeting it to be gross

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<v Speaker 2>margin zero by the fourth quarter. And there's a clear

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<v Speaker 2>map with our hydrogen plants and the improvements we've seen

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<v Speaker 2>in service and more importantly, selling more and that really

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<v Speaker 2>helps us a great deal. And we're targeting being EBODOS

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<v Speaker 2>positive by the end of next year. And I think

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<v Speaker 2>with our project Quantum Leap, where we really focus on

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<v Speaker 2>cost and selling, that we are on the right track.

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<v Speaker 2>And I think you're beginning to see it in the financials.

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<v Speaker 2>Even the miss when EPs was right downs, which were

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<v Speaker 2>non cash right downs associated with our plants. That really

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<v Speaker 2>align the business for the future to be successful.

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<v Speaker 1>What's the US market right now for green hydrogen that's

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<v Speaker 1>hydrogen made from water using clean electricity to power the

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<v Speaker 1>electrolysis process.

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<v Speaker 2>So straight it is a bit slower than what you

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<v Speaker 2>see in Europe and other places. You know, our primarily

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<v Speaker 2>focus for electroalizers are really Europe Australia where the climate's right.

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<v Speaker 2>But we actually operate the largest green hydrogen liquid hydrogen

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<v Speaker 2>plant in the world at the moment in Georgia. And

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<v Speaker 2>when I looked I reviewed this morning our demand for

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<v Speaker 2>hydrogen from the second quarter of the fourth quarter, we

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<v Speaker 2>actually see that our daily usage go up from fifty

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<v Speaker 2>five tons per day to about sixty seven tons per

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<v Speaker 2>day by the end of the year. So we're using

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<v Speaker 2>our plants, we're creating green hydrogen, we're involved in some

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<v Speaker 2>blue hydrogen projects, so we feel comfortable about the long

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<v Speaker 2>term trajectory and even your term trajectory for hydrogen in

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<v Speaker 2>the United States.

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<v Speaker 3>Talk a little bit more about that demand and where

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<v Speaker 3>it's coming from. Are you seeing customers, you know, pivoting

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<v Speaker 3>from other sources of energy or are you seeing you know,

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<v Speaker 3>just increasing need for more sources of energy and that's

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<v Speaker 3>what's really driving your growth here.

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<v Speaker 2>That's actually a real good question because when we look

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<v Speaker 2>at the world the United States, with what we've deployed

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<v Speaker 2>already about it's you know, two hundred and seventy five

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<v Speaker 2>sites in our material handling business across the US. We've

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<v Speaker 2>actually taken off the grid approximately five hundred megawatts of electricity,

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<v Speaker 2>and as I think everybody knows, it has become more

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<v Speaker 2>and more challenging to bring electricity to you know, there's

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<v Speaker 2>over a three and a half year backlup log to

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<v Speaker 2>get electricity to facilities no typical distribution center. We take

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<v Speaker 2>off two to three megawatt off the grid, which can

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<v Speaker 2>then be used to things increasing freezer capabilities. So if

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<v Speaker 2>you think about if you're a fuel food retailer and

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<v Speaker 2>you want to sell more frozen goods, which is a

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<v Speaker 2>growth area, one way you can one way you can

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<v Speaker 2>increase the size of your freezer and not have to

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<v Speaker 2>worry about the power needs is actually use fuel sales

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<v Speaker 2>and hydrogen from plug Power.

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<v Speaker 1>We're speaking with Andy marsh, the CEO of Plug Power,

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<v Speaker 1>joining us from just outside of Albany. Andy, I want

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<v Speaker 1>to go back to regulatory issues, tax credits and that

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<v Speaker 1>sort of thing, because you did say that demand is better.

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<v Speaker 1>We were in a better position than you were a

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<v Speaker 1>year ago. Our own will wide and team reporting that

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<v Speaker 1>a year ago credits were expected to help lead about

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<v Speaker 1>one point two million metric tons of annual green hydrogen

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<v Speaker 1>production by twenty thirty that's according to bn F or

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<v Speaker 1>in house Bloomberg New Energy Finance. Now, projects with just

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<v Speaker 1>one hundred and fifty thousand tons of production capacity are

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<v Speaker 1>expected to qualify for the incentives, dramatically reducing anticipated US output.

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<v Speaker 1>This is after the Trump administration's tax and spending legislation

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<v Speaker 1>significantly limited tax credits to produce the fuel. How is

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<v Speaker 1>that affecting you?

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<v Speaker 2>Well, when I take a when I look at I'm

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<v Speaker 2>already using the tax credits. We expect to have online

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<v Speaker 2>our additional Texas plant by twenty twenty eight before they fire,

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<v Speaker 2>which allows us to use those credits through twenty thirty two.

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<v Speaker 2>I think when we look at our own needs, you know,

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<v Speaker 2>we're looking at other expansion opportunities, you know, we think

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<v Speaker 2>that we'll be able to generate the hydrogen to meet

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<v Speaker 2>our customers' needs and be able to take tax credits

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<v Speaker 2>through twenty thirty two. So, you know, quite honestly, I'm

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<v Speaker 2>very comfortable with the present legislation.

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<v Speaker 3>Back in January, there was a Bloomberg News story about

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<v Speaker 3>the White House confirming a one point six billion loan

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<v Speaker 3>guarantee for plug power to build hydrogen plants. How have

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<v Speaker 3>you guys received that that loan yet and how crucial

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<v Speaker 3>is support like that to continue to grow plug power.

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<v Speaker 2>It's important, but it's not you know, we will still

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<v Speaker 2>move ahead with building plants. Ultimately, we're focused and I've

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<v Speaker 2>been down to the DOE recently, uh and we're working

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<v Speaker 2>on details to make sure we can pull down funding

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<v Speaker 2>for the plant in Texas, which is a plant that

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<v Speaker 2>gets very very low cost electric electric electric energy from

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<v Speaker 2>a next era wind farm. When we take a look

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<v Speaker 2>at that, we're working through the final details to start

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<v Speaker 2>being able to pull down funding from the DOE. I

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<v Speaker 2>know they've canceled many projects. We haven't been on the

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<v Speaker 2>cancel list, and we have a good relationship. I think

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<v Speaker 2>the Trump administration and their goals of being energy dominant.

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<v Speaker 2>You know, the world's going to one green saff the

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<v Speaker 2>world's going to one green pneumonia. The US is well

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<v Speaker 2>positioned to be the leader in providing those fuels in

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<v Speaker 2>green hydrogen is critical the becoming energy dominant for the

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<v Speaker 2>long term. Additionally, hydrogen generation is really important for national security.

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<v Speaker 2>I mean, next to SpaceX, all the vehicles use hydrogen,

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<v Speaker 2>so we really think about the long term benefits. And

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<v Speaker 2>then on top of that, when you think about hydrogen,

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<v Speaker 2>over thirty percent of detail food moved through a plug

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<v Speaker 2>power fuel cells. Boy, you don't want that disrupted overnight.

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<v Speaker 1>No you don't. Andy, We only have about a minute

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<v Speaker 1>and a half left, and I want to talk about

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<v Speaker 1>the stock price. It's down about ninety seven percent since

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<v Speaker 1>the twenty twenty one highs. Even though you're a relatively

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<v Speaker 1>small company, you're still among at least today the most

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<v Speaker 1>actively traded stocks, with fifty four point seven million dollars

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<v Speaker 1>or million shares rather trading today. It's massive. The volume

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<v Speaker 1>this year has been massive. You've got twenty eight percent

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<v Speaker 1>of your shares floated. What's your message to investors and

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<v Speaker 1>traders right now.

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<v Speaker 2>Well, I think I would tell them it's a great

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<v Speaker 2>opportunity to come in. You you can look at the financials,

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<v Speaker 2>revenue growing at twenty percent, gross margin improving dramatically. The

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<v Speaker 2>deployments in Europe, where the electoralizer industry is really happening today,

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<v Speaker 2>has tripled in the past year. You know, I think

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<v Speaker 2>this is the opportunity to successfully enter the stock and

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<v Speaker 2>it's one of the reasons. Our CFO has made significant

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<v Speaker 2>investments and I'm putting about twenty five percent of my

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<v Speaker 2>salary to work buying stock, actually fifty percent of my

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<v Speaker 2>salary to work buying stock every week.

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<v Speaker 1>Andy, thanks for coming on. Appreciate you taking the time

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<v Speaker 1>this afternoon. Always get to check in with you, and

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<v Speaker 1>it has been quite a few months since we last spoke,

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<v Speaker 1>so don't be a stranger. Come back soon. Andy Marsh,

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<v Speaker 1>CEO of Plug Power, joining us from just outside of Albany,