Plug Power (PLUG) Q4 2020 Earnings Call Transcript

Plug Power (PLUG -1.25%)
Q4 2020 Earnings Call
Feb 25, 2021, 8:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Plug Power fourth-quarter and year-end 2020 earnings conference call. [Operator instructions] It's now my pleasure to turn the call over to Teal Hoyos, director, marketing communications. Please go ahead, Teal.

Teal Hoyos -- Director, Marketing Communications

Thank you. Welcome to the 2020 fourth-quarter and year-end update call. This call will include forward-looking statements. The forward-looking statements contain projections of our future results of operations, or of our financial position or state other forward-looking information.

We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We believe that it is important to communicate our future expectations to investors. However, investors are cautioned not to unduly rely on forward-looking statements and such statements should not be read as a guarantee of future performance or results. Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors, including but not limited to, the risks and uncertainties discussed under Item 1a Risk Factors in our annual report on Form 10-K for the fiscal year ending December 31st, 2019, or our quarterly reports filed on Form 10-Q for the quarters ended March 31st, June 30th, and September 30th, 2020, as well as, other reports we file from time to time with the SEC.

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

Andy Marsh -- Chief Executive Officer

Thank you, Teal. And good morning, everyone, and thank you for joining the Plug Power end-of-the-year conference call. 2020, as everyone knows from the world, was a very challenging year. We at Plug Power have been very fortunate.

As we participated and witnessed globally the acceptance of hydrogen, especially green hydrogen, as critical to help leave the world off fossil fuels. Estimates have been made by experts that hydrogen can represent 18% to 23% of world's energy by 2050 and is ramping today. We at Plug Power have been building our technology set for decades waiting for this moment. At power points, there are 10 years old that described how our work then will position us at the right moment.

The work was more than technology, but building the first commercial market for fuel cells. Our first app material handling, it's not glamorous, but it's built the company, proved our technology set and launched the full suite of products and new capabilities. Our turnkey solutions have provided end-to-end solutions, including selling hydrogen with building fueling stations and fuel cells and providing aftermarket service, really positions us today. Our relationships with Amazon and Walmart gave us insight into how to improve our offering, but also helped us identify and missing links in our portfolios.

One of these insights was that large corporations' sustainability goals are real and that for the market to expand green hydrogen was a necessity. Green hydrogen also became practical over the last couple of years since this is closely linked to the declining cost of renewable electricity. This insight drove us to make three decisions in 2020. We purchased the leading electrolyzer technology company, Giner ELX, that had the electrolyzer technology to convert electricity to hydrogen, green hydrogen.

Two, we purchased United Hydrogen the first private company to build a large-scale liquid hydrogen plant. And finally, we made a commitment to build the first U.S. nationwide green hydrogen degeneration network, reaching 500 tons a day of capacity by 2025 and 1,000 tons per day globally by 2028. The macro trends to a more sustainable world, the recognition of hydrogen is vital to meeting these goals, and Plug Power's expertise opened many relationships for us in the past year.

Let me name a few. Brookfield and Apex, both partnered with Plug Power to provide sources of low-cost renewable electricity to generate green hydrogen. By the end 2022, we'll have over 70 tons to 100 tons per day at green hydrogen available in the U.S. by Plug Power.

Renault, a leading global auto manufacturer, recognized Plug Power's unique ability to offer full turnkey solutions to the light commercial vehicle market. From their experience in these EVs, they recognized they need to offer more than the vehicle. The JV, which will be selling vehicles and fueling stations will be formalized by late second quarter or early 3Q. SK, the second largest Korean conglomerate, recognized that Plug Power was the only company that could offer a complete solution in the hydrogen industry.

We will be building everything from large-scale stationary products, hydrogen plants, electrolyzers, and other apps. We will build a second gigafactory in Korea. The timeline for this JV has been accelerating and will be formally closed by the mid-third quarter. Also, as you may have seen, SK finalized their $1.6 billion investment into Plug Power last night.

And four, and another step in our global green hydrogen story, Plug Power announced the deal with Spain's second-largest renewable electricity supplier, Acciona. The JV plans to build 100 tons of green hydrogen generation capacity on the Iberian Peninsula. We'll be announcing more partnerships in 2021. Now back to 2020.

In 2020, we experienced a 42% increase in gross billings, achieving $337 million. We're now generating cash from operations excluding the need for working capital which is needed to grow. In 2021, we'll exceed $475 million in gross billings, with over 93% already accounted for in our plan. We have never been afraid of tough decisions.

We accelerated warrants at the end of 2020. This decision will have the side benefit and making our GAAP financials more in line with how we operate our business. It caused a large one-time noncash charge but clears the deck for the future and quite a future. With $5 billion in the bag, a thoughtful expansion plan, a unique market opportunity, now it's the right time for Plug Power to invest.

Our goals for 2021 are clear. Gross billings of $475 million. Annual gross margins in the high teens, achieving 20% by the fourth quarter. We view gross margin expansion as a critical indicator that our investments are paying off.

Three, successfully launching our two JVs with Renault and SK. Four, continued expansion of our business via partnerships, acquisitions, and other relationships. And finally, positioning the company to achieve $750 million in gross billings in 2022 which will position us for our $1.7 billion goal for 2020. Paul and I are now available for any questions you may have.

Questions & Answers:

Operator

[Operator instructions] First question today is coming from Eric Stine from Craig-Hallum. Your line is now live.

Eric Stine -- Craig-Hallum Capital Group

Hi, Andy. Hi, Paul.

Andy Marsh -- Chief Executive Officer

Hi, good morning, Eric.

Eric Stine -- Craig-Hallum Capital Group

Good morning. Hey, so you had mentioned in the prepared remarks there that the SK partnership, obviously, the investment closed overnight, but maybe just some clarity into how it's accelerated. Since that announcement, how do you view the opportunity? And maybe which areas do you think move faster than others?

Andy Marsh -- Chief Executive Officer

Sure. So, Eric, when we made the announcement, I think that I started out by saying I thought we were being conservative. We have developed actually six workstreams in the development of this JV, where the teams are meeting 2 times to 3 times a week. We've identified certain business opportunities, quite honestly, that are much larger than we even thought initially.

And that -- I think that the first three opportunities will be, one, large-scale power generation. I would expect we'll be shipping products later this year or early next year. That's not in our $475 million plan. I think the second is, SK has a real commitment to sustainability.

I think you'll see electrolyzer products be moving over into SK for usage, again, early next year. And finally, there's a lot of work ongoing with hydrogen generation and fueling stations.

Eric Stine -- Craig-Hallum Capital Group

Got it. OK. And just to clarify what I think I heard that that's not in the $475 million on the large-scale power --

Andy Marsh -- Chief Executive Officer

That's nort in the -- that's correct. That's not in the $475 million.

Eric Stine -- Craig-Hallum Capital Group

And then --

Andy Marsh -- Chief Executive Officer

The $475 million, as I mentioned in the prepared remarks, we have 93% in half at the moment. Usually, we're at 75% level at this time.

Eric Stine -- Craig-Hallum Capital Group

Got it. And maybe sticking with that topic or while you've got the four pedestal customers in materials handling. Curious, what type of mix do you see from those four, the one recently added, but those four in 2021. And then, you typically don't give the forward-year outlook this early in the year, at least, I don't remember that you have.

So I'd love to hear what the visibility you have is from the four customers you've got and potentially some others that you add into that 2022 goal that you've given today?

Andy Marsh -- Chief Executive Officer

Sure. So we have between those four customers and others -- and Eric, those four customers probably represent 80% of our deployments here in 2020. 2021, that circle in the range that there's already $400 million in-house that's available for shipment this year, and it's -- I think that one of those four would represent more like 30% and the rest will be kind of split a little bit even.

Eric Stine -- Craig-Hallum Capital Group

Got it. And then just, in terms of a little bit on 2022, I mean that -- maybe you have given the forward year, not the current year, but the forward-year guide or outlook this early. But just curious, you've got better visibility than you typically do into 2021. But what type of visibility do you have into 2022 based on their plans and how does that compare to historical?

Andy Marsh -- Chief Executive Officer

Yeah. I mean, the -- I mean, I think there's three items going on here that helps us with 2020 to be able to have the insight into 2022. Obviously, after all these years, with many of these material handling customers. And I've got to talk about the four, we're not doing short-term planning.

We're doing three- to five-year planning, so there's a good deal of insight into their activities. The electrolyzer sales funnel was strong. And this year, we'll take that business, and like we've been a material handling, increase it by a factor of seven or eight this year, it will be in the $40 million-plus range and we have a funnel that's close to $1 billion already built up for the electrolyzer business. And I think, and as you know, Eric, everything in the funnel doesn't happen.

And finally, when I take a look at, especially with SK with some of the initial deployment, as well as, with Renault, we're kind of sitting back feeling very, very good about how we achieve the 2021 goals.

Eric Stine -- Craig-Hallum Capital Group

OK. Thank you very much.

Andy Marsh -- Chief Executive Officer

OK. Thanks, Eric.

Operator

Our next question today is coming from Colin Rusch from Oppenheimer. Your line is now live.

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

Thanks so much guys.

Andy Marsh -- Chief Executive Officer

Good morning, Colin. How are you?

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

Hey, I'm good, Andy. It's always good to hear your voice. Can you guys give us an update on where you're at just in terms of specific projects in terms of identifying sites on the renewable side for supporting the hydrogen rollout? And then how big the queue is behind that in terms of the sites that you could grow into as you start to see demand emerge?

Andy Marsh -- Chief Executive Officer

So, very clear, Colin. So we have four sites, three of them which are moving into development stage, two in the Northeast, one in the Southeast, and one in California because of, as you know, permitting issues in California can take a little bit longer, but we already actually own the land in California for the green hydrogen plant in the Valley around Frisco. We have probably over 15 to 17 renewable sites we're looking at for the ability to generate green hydrogen which are spread widely across the country. I think the first two plants, first two or three plants, you'll see go up.

I think you'll see one in the Northeast, one in the Southwest, and one in Texas.

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

OK. And as you look at those opportunities, is that going to be an opportunity for you guys to also build some sort of regulation or storage-type applications adjacent to those sites to help stabilize the grid. Certainly, that's one of the opportunities for hydrogen in terms of kind of being the connective tissue for some intermittent renewables and the larger power grid, but are those sites being chosen with multiple purposes in mind?

Andy Marsh -- Chief Executive Officer

I'm going to say -- I'm going to give you a wishy-washy answer here. Yes, but not nearly as clearly defined as the generation portion. All these sites are grid-connected, though before the meter, so they're cost or wholesale-type prices. But -- and we've been obviously thinking a great deal about the issue you bring up.

First and foremost, and we are committed to green hydrogen and providing our customers green hydrogen. And I can tell you when -- not surprising when we look at the wind farm activity, that we're looking at in Texas. And by the way, the wind farm user we work with actually was very successful doing the recent Texas storm. We certainly are looking the wind energy, how we put wind back on the grid at the right time and how to use it at the right time.

But we are also -- and that's really clearly defined, but certainly, storage and generation is in the back of our mind, especially after what we see going on around the world. I think, by the way, Colin, I think if that's the case, it's going to help us a great deal in those earnings.

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

Yeah. That makes sense. I appreciate it and we'll take the rest offline.

Andy Marsh -- Chief Executive Officer

OK.

Operator

[Operator instructions] Our next question is coming from Jeff Osborne from Cowen. Your line is now live.

Jeff Osborne -- Cowen and Company -- Analyst

Hey, good morning, guys. Congratulations on all the success so far. You've got a lot of irons in the fire for 2021 and I was just wondering, if you can give us a sense of the operating expense trends and capex for modeling purposes as you gear up for the very heavy growth you've got for '22 through '24 that you talked about, Andy?

Andy Marsh -- Chief Executive Officer

Sure. So, Jeff, I would from the capex area, I would probably circle somewhere around $750 million with most of that going to support the expansion of these hydrogen plants. We've done capex modeling for the next five years and we still see a significant surplus on our balance sheet, even with our aggressive plans to build out these hydrogen plants. So to reach the 500 tons a day and to achieve everything we're looking to do, it's probably somewhere in the $2 billion to $2.5 billion range long-term.

As far as op expense, Paul, you may want to comment on that. Jeff, I would expect our op expense may be up to 30% higher this year. Paul, do you want to add to that?

Paul Middleton -- Chief Financial Officer

Yeah. I think, uh --

Andy Marsh -- Chief Executive Officer

Paul?

Paul Middleton -- Chief Financial Officer

Yeah, I'm sorry, Andy, can you hear me?

Andy Marsh -- Chief Executive Officer

Yup.

Paul Middleton -- Chief Financial Officer

The signal is not so great where I'm at. I apologize. But, yeah, I think that's right, Andy. I mean, I think in that 30% to low 30% range per quarter is a good number.

And I think one of the key things, Jeff, for this year, is you're going to see definite growth in sales and gross margins and there's a strong focus there. And as Andy alluded, we're going to be investing in capex and some opex to -- for all these growth platforms because there's a lot in the fire and a lot of things happening. And we see the opportunity to really accelerate the growth even further, and so you will see some of that this year.

Jeff Osborne -- Cowen and Company -- Analyst

Got it. And then the -- is the 30% comment, is that off of the fourth-quarter run rate or the aggregate number for all of 2020?

Andy Marsh -- Chief Executive Officer

Yeah. I would -- go ahead, Paul. Paul? Jeff, can you hear me?

Jeff Osborne -- Cowen and Company -- Analyst

I can hear you, Andy. Just given the fourth quarter was up quite sharply. I just want to make sure I'm using the right dataset.

Andy Marsh -- Chief Executive Officer

Yeah. No, no. I would use the annual basis, Jeff.

Jeff Osborne -- Cowen and Company -- Analyst

Got it. And then how are we proceeding along just given the pretty heavy capex there over the year, as well as, the upcoming years for these facilities. Are we at a point in time now where these sites can use leverage? Or is this all going to be straight out of the cash balance?

Andy Marsh -- Chief Executive Officer

I'll let Paul -- so I think the answer to your questions, yes. Paul, are you there? OK. I guess I'm going to have to take it, Jeff. I think you're going to see leverage coming into play and I think, you hit on a good point, Jeff.

When I -- we've done modeling to make sure we have sufficient cash balances during the -- to do it all on our own, but I think you're going to start probably seeing leverage in the second half of the year as we start doing the build-out. So there has been work going on there. And I think they'll see probably -- on a conservative basis, we've said to ourselves what if we did it with all equity. We can do that, we're in a position to do that now, but we don't expect that to be the path.

Jeff Osborne -- Cowen and Company -- Analyst

Got it. And my last one for you, Andy, is just the two joint ventures. Are we at a point in time, where we can -- you can confirm that the results of those JVs will be consolidated in terms of revenue? Or will these all be below the line? That might be more of a question for Paul, but just in terms of the accounting treatment of the joint ventures themselves.

Andy Marsh -- Chief Executive Officer

Yeah. I know we're working in the negotiations to make sure we can consolidate. And I think it's -- I think we're getting there. I think that both partners understand the criticality of that for Plug.

As you know, Jeff, there's a a lot of accounting that goes into that. A lot of legal work that goes into that, but our team has been working there.

Jeff Osborne -- Cowen and Company -- Analyst

All right. Great to hear. That's all I had.

Andy Marsh -- Chief Executive Officer

All right. Thanks, Jeff.

Operator

Thank you. Our next question today is coming from Craig Irwin from ROTH Capital Partners. Your line is now live.

Craig Irwin -- ROTH Capital Partners -- Analyst

Hi, good morning, and thanks for taking my questions. I'll also say congratulations for --

Andy Marsh -- Chief Executive Officer

Good morning, Craig. How are you?

Craig Irwin -- ROTH Capital Partners -- Analyst

Hey, Andy. How are you?

Andy Marsh -- Chief Executive Officer

OK.

Craig Irwin -- ROTH Capital Partners -- Analyst

I need to say congratulations, too. You guys had an absolutely phenomenal 2020 and let's continue that in 2021, so congrats.

Andy Marsh -- Chief Executive Officer

My board agrees with you, Craig.

Craig Irwin -- ROTH Capital Partners -- Analyst

Good. They should. So Andy, one of the things we haven't talked about much, but there is actually tremendous appetite for it out there is fuel cell trucks, right? Investors really want to see companies be successful in this market given the opportunity in the way to move away from oil and the potential for long-term economics even on green hydrogen to be really interesting. Can you maybe update us on what's going on in green in the fuel cell trucks for you right now? Are there new partnerships sort of percolating out there? What's the status with the different customers you've disclosed to date?

Andy Marsh -- Chief Executive Officer

Sure. So, Craig, I think that the model that we've used for Renault in Europe is one that we're looking to duplicate and I can tell you that a good deal of our forward-looking thinking at the moment has to do with how to address that market. I think there's a couple of items we concluded and I think the big one is we don't want to just be a first-tier auto parts supplier. And the JV with or no was structure that we're jointly selling vehicles because we have seen what happens in the world if you're just a part supplier to the auto industry.

And I also don't know if you just go about doing the old way of just building cars and vehicles, like the auto industry has done traditionally. That you end up in a purchasing office instead of a CEO office. We do have discussions going on in the United States and elsewhere, especially with a focus on heavy-duty vehicles. One of our -- two of our big customers we'll actually be doing pilots very shortly.

We also have already done work with folks who are kind of Tier 2 players like Nissan. But I think, finally, on top of that, we're -- with Renault, we have a fairly aggressive plan to really start rollouts by the fourth -- in the fourth quarter, early first quarter, with some initial deployments in the light commercial vehicle space where there are apps where it makes sense. When it comes to green hydrogen, I think like most people, we believe that electricity under $0.04 a kilowatt-hour makes green hydrogen, especially as a fuel, very competitive with grey hydrogen today. And as you know, Sanjay has spent an incredible amount of time thinking through how we can offer a better product than grey hydrogen with green hydrogen at similar pricing and make margins for Plug Power.

And I think, you've been around this a long time, Craig. That's what our customers want. I mean, they'll pay a slight premium for green, but nobody is looking to pay a huge, huge premium to be green.

Craig Irwin -- ROTH Capital Partners -- Analyst

Understood. That makes a lot of sense. My next question is about the infrastructure to fuel trials, potential small fleets of fuel cell trucks. So last year, you did mention that Plug had done some work with its existing partners, retrofitting some of the fueling infrastructure that serves their forklift fleets, so that they could start with potentially doing fuel cell truck trials, maybe distribution to -- distribution center to distribution center-type work.

Can you maybe update us on that? And then more importantly, Tesla gets $400 million a quarter basically in credits and a large chunk of that $400 million comes from the installation of their supercharger network. They're charging infrastructure out there under the California incentive programs. Can you talk about the potential to pull down some of these incentives just by building out the network for your customers? Have you already got applications in? When do you expect that to potentially be achievable?

Andy Marsh -- Chief Executive Officer

So, you know, if I look at -- I'm going to use two examples for you, Craig. When we look at the LCFS credits in California, we look at where we believe we can come with CI scores, especially since, we are looking to be moving hydrogen with green hydrogen trucks that, at the pump, we believe the credit can be up to $4 a kilogram. So for those who are listening here who don't -- who may not understand, I mean that makes our cost, depending on how you split the green hydrogen. That almost makes the green hydrogen and probably does make it very, very less than fossil fuel diesel energy significantly.

We also -- there is also bills beginning to circulate around Congress associated with the Biden green climate plan which is suggesting up to a $2 credit per kilogram for green hydrogen, that makes the choice between green hydrogen and grey hydrogen, incredibly competitive. So I think that once Sanjay has his first 100 tons up that there'll be a great deal of government supports and credits, and a real huge opportunity to increase the margin for Plug Power long-term.

Craig Irwin -- ROTH Capital Partners -- Analyst

Excellent. Thank you, Andy. Thanks again for taking my questions.

Andy Marsh -- Chief Executive Officer

Thank you, Craig. Take it easy.

Operator

Thank you. Our next question today is coming from Jed Dorsheimer from Canaccord Genuity. Your line is now live.

Jed Dorsheimer -- Canaccord Genuity -- Analyst

Hey, thanks, Andy. Thanks for taking my questions.

Andy Marsh -- Chief Executive Officer

Hi, good morning, Jed. How are you?

Jed Dorsheimer -- Canaccord Genuity -- Analyst

I'm doing well. Thanks.

Andy Marsh -- Chief Executive Officer

I'm going to do a quick check here. I just want to know if my partners back on the line with me.

Jed Dorsheimer -- Canaccord Genuity -- Analyst

OK.

Andy Marsh -- Chief Executive Officer

Paul, are you there?

Paul Middleton -- Chief Financial Officer

Yeah. Andy, I'm here. I'm so sorry. Yeah, I'm here, Andy.

I don't know why this thing got out, but I'm back.

Andy Marsh -- Chief Executive Officer

OK. All right, Jed.

Jed Dorsheimer -- Canaccord Genuity -- Analyst

All right. Perfect. So a couple of questions. I guess just one, on the material handling side and this might be better served for Paul because it kind of gets into warrant structure a little bit.

But if I look at two of your four major customers, I've actually -- in 20 years, I've never seen this. I mean, it's actually a fantastic situation where your customers are literally getting paid to take the product based on the kind of the warrants in 2017 because your stock has been so strong. So with the expiration of Amazon, I'm just wondering how -- and now only Walmart, how does that change the visibility in terms of -- how do you, Paul, kind of think about the bookings when this starts to pivot away? Because I'm assuming here that Walmart would also exercise the expiration here, too.

Andy Marsh -- Chief Executive Officer

I'm going to take that, Jed, on question, and I'm going to hand it off to Paul. So Jed, the warrants on that, most of the warrants have not been exercised. Walmart and Amazon, both have significant interest in the success of Plug Power financially. It's, obviously, the -- I'm sure it wouldn't strike anybody surprisingly.

I'm quite pleased with what happened. They -- they are and I'll then I'll hand it off to Paul, but they are committed to -- both companies view that hydrogen is critical for long-term -- to meet their long-term climate goals and that they have a partner with Plug Power that goes well beyond financials. That has proven that we can deliver the product sets they need and they continue to help us, both of them, to find new opportunities for fuel cells in green hydrogen. I can tell you one of them actually introduced me to two of their other investments in the last three weeks to help us grow and propel this business, beyond just direct business with them.

On that note, Paul, I hand it off to you.

Paul Middleton -- Chief Financial Officer

Yeah. Thanks, Andy. And I guess, the main comment that I would make is that by the fact that these have all -- the expenses for the one customer have been all reflected and reported at this point. There won't be additional charges for those in the future and that should significantly make it easier and more simple in terms of interpretation on the results as we go forward.

And I expect we've been using gross billings as a means by which to communicate the revenue and sales activities without those charges. But I think going forward, that number should be a lot closer to the GAAP revenue number which will make it easier, as well as, we move forward.

Jed Dorsheimer -- Canaccord Genuity -- Analyst

Got it. And just to be clear, I mean, I'm not challenging their commitment. But if I just look at it, if their strike price is at $13 to buy product and your stock is at $50, they are being paid a significant amount of money to actually take your product, and so it does change kind of the relationship a bit once that expires. I guess that was really the core of my question.

I think you -- and to be clear, Amazon is done and Walmart isn't.

Andy Marsh -- Chief Executive Officer

Yeah. And to be clear, Jed, and I'm not going to name specific customer name. They still own -- those companies own a lot of warrants that have not been exercised.

Jed Dorsheimer -- Canaccord Genuity -- Analyst

Got it. Amazon as well?

Andy Marsh -- Chief Executive Officer

Yes, Amazon as well. Amazon owns lots of warrants that have not been exercised.

Jed Dorsheimer -- Canaccord Genuity -- Analyst

Got it. Just, Andy, just pivoting a little bit to the upstream. And I was wondering if I -- we kind of look at the electrolyzer side of the business -- and by the way, congratulations on the SK deal. I agree.

I mean, looks like a fantastic deal. If you kind of look at the difference between reformation using methane versus that of green, one of the main differences is kind of the natural companies on the methane reformation would logically be kind of a nat gas or chemicals that have experience in the downstream complex plumbing systems. I'm just wondering on the green side of things with windmill companies. Is it -- are the discussion, I'm assuming the discussions, but how are those companies thinking about sort of the risk profile in terms of -- do you see more partnerships where each pulling in, I guess, a downstream or midstream refiner, and you see that kind of wind market that starts to look more like driving through Trenton, New Jersey, for example, without the flaring.

I'm just wondering how that shapes out, I guess, if you will.

Andy Marsh -- Chief Executive Officer

Yeah. So I think you're at a real -- ask an interesting question you had about the evolution of how hydrogen will be distributed, especially hydrogen that meets the quality and standards you need for fuel cell engines and there is a slight difference in how one goes after about generating that hydrogen. But initially, most hydrogen that's green will be transported in liquid form via trucks. And much like it is today.

Ultimately, you're going to see more and more and I think, we had an earlier call which was talking about storage. You're going to see more and more on-site storage with hydrogen being generated. Some of that will be in caverns for very, very long-term storage and like natural gas has done today and like hydrogen has done in the refinery industry today. And finally, I think that maybe sooner, when you see some work going on in Europe, you're going to see that -- and we've been already thinking about this, how to build plants close to pipelines, so that you can start injecting hydrogen directly into the natural gas pipeline, initially a few percentage and gradually increasing.

So all that's going into our thought process. Having grown up in Philadelphia and knowing what their smokestacks look like. I don't think we'll see anything like that.

Jed Dorsheimer -- Canaccord Genuity -- Analyst

Good. One last question, I'll jump back in the queue. Just as a reminder, the split of the business, if we kind of look this year, the vast majority is still going to be material handling and selling the fuel cells into the -- as well as, the equipment to support that market. Can you just give us a reminder of the '24 guide in terms of the breakdown of the business, please?

Andy Marsh -- Chief Executive Officer

Sure. And I think you hit an interesting point, Jed, that we expect somewhere in 2023, there's actually a transition where the other businesses are bigger than material handling. Then 2023 we expect that about $750 million will come from material handling between hydrogen and electrolyzers. We would expect to be in the $500 million range and the rest will be involved in large-scale stationary and on-road vehicles.

Jed Dorsheimer -- Canaccord Genuity -- Analyst

Great. I'll jump back in the queue. Thanks.

Andy Marsh -- Chief Executive Officer

Thanks, Jed.

Operator

[Operator instructions] Our next question today is coming from Amit Dayal from H.C. Wainwright. Your line is now live.

Amit Dayal -- H.C. Wainwright -- Analyst

Thank you. Good morning, Andy. Good morning, Paul.

Andy Marsh -- Chief Executive Officer

Good morning, Amit. How are you?

Amit Dayal -- H.C. Wainwright -- Analyst

I'm good, Andy. How are you doing?

Andy Marsh -- Chief Executive Officer

Very good.

Amit Dayal -- H.C. Wainwright -- Analyst

So, Andy, you've secured pretty solid partnerships on the downstream side in terms of distribution with Brookfield, SK, Renault, etc. Do you need partnerships sort of on the upstream side with some of these renewable energy companies as well to just complete this value chain, if you will?

Andy Marsh -- Chief Executive Officer

Help me with that, Amit, because I may not understand completely. Because I think, kind of Brookfield is providing us the renewable electricity. I'm probably missing some things.

Amit Dayal -- H.C. Wainwright -- Analyst

OK. So, do we need others like Brookfield as well? Or should some of those technical partnerships come to play for you guys?

Andy Marsh -- Chief Executive Officer

Sure. Yeah. I think you'll see more of those partners. Yeah, so the answer to your question is there will be additional renewable partners even here in the United States and I think you'll probably see announcements in the foreseeable future.

Amit Dayal -- H.C. Wainwright -- Analyst

OK. Thank you. And then just moving on to the 4Q '20 results, maybe this could be for Paul. It looks like there could be between $43 million to $44 million in one-time costs in the fourth quarter, and within this, you talk about some hydrogen supplier issues.

If you could just provide us any color on what this is and whether these are one-time costs that are out of the way? Or is there any other one-time costs that may come into play in the next few quarters?

Paul Middleton -- Chief Financial Officer

Sure, Amit. Yeah, I think there's a number of things going on. I would say we had a force majeure issue close to year-end with one of the hydrogen producers at one of the facilities that we worked through. Whenever those events happen, there's some cost that you incur to kind of navigate through it.

It doesn't happen frequently, so I would agree with your comment there. Like a lot of companies, even though we've had great success and growing the business and new platforms and doing a lot of things. There are some challenges of COVID in terms of navigating through that from operational side and we saw some of those events. But then the other thing that's important to note is there was a lot of strategic joint ventures and new business development activities announced in the last couple of months.

And obviously, we've been working extensively on that in fourth quarter to prepare for those and some of those were announced early in January, as an example. So there's a lot of investment to accommodate that. So those are the big themes, and yes, I would say we, obviously, don't do those every quarter and I don't expect that to happen routinely.

Amit Dayal -- H.C. Wainwright -- Analyst

Understood. Thank you for that. And then just from a margin perspective, going into, say, '22, '23 time frame, as per Andy's comments, if material handling is going to start becoming a smaller portion of revenues, what kind of impact on the margins should we see from this shift in revenue mix?

Andy Marsh -- Chief Executive Officer

Paul, do you want to take that?

Paul Middleton -- Chief Financial Officer

You know, one thing is proven. Yeah, can you hear me?

Andy Marsh -- Chief Executive Officer

Yup.

Paul Middleton -- Chief Financial Officer

One thing we've proven is scale matters. And so -- and because, as Andy said, I think in the past, we're actually using a lot of the core technologies and resources that we have to go into these other markets. It's not like they're completely new business channels that take their own resources and own technologies and completely independent. So there's a lot of leverage capability.

And our forecast and plans are to keep moving north. So I think you're going to see a progression over the course of this year for the full year should be in the high teens. And then even in the year, we may be approaching 20% or north on a run rate basis and I think, you're going to see that continue on into 2022. And all of these businesses will be accretive holistically as we continue to grow and scale from there.

Amit Dayal -- H.C. Wainwright -- Analyst

Got it, Paul. Thank you, guys. That's all I have. I appreciate it.

Andy Marsh -- Chief Executive Officer

All right. Great. Take it easy Amit.

Operator

Thank you. Our next question is coming from Tristan Richardson from Truist Securities. Your line is now live.

Tristan Richardson -- Truist Securities -- Analyst

Hey, good morning, guys.

Andy Marsh -- Chief Executive Officer

Good morning, Tristan. Hiw are you today?

Tristan Richardson -- Truist Securities -- Analyst

Doing well. Thanks, Andy. Justto -- I got a question on the data side. I think on the update call, you talked about a potential data customer this year.

Do you still see that as the case? And then can you talk about scale here, either with the opportunity set with this customer? Is it possible you could see a data customer elevate to the level of a pedestal customer? Or is this kind of more of an early days pilot type of deployment for now?

Andy Marsh -- Chief Executive Officer

I -- good question, Tristan. So we'll be doing our first large-scale stationary backup deployment with one of the largest data center customers in May and that shipment, the work on that shipment is happening as we speak, and that customer could be one of our largest pedestal customers. And there are plans to have this business can roll out in 2022, 2023, and 2024, as that customer has come to the conclusion that fuel cells and hydrogen over the next few years will be very, very cost-competitive with large-scale on-site diesel generation. On top of that, you have additional value of the sustainability aspects of green hydrogen, coupled with the fact that in a lot of these large data centers, noise pollution is a big, big issue.

Tristan Richardson -- Truist Securities -- Analyst

That's helpful. Thanks, Andy. And then just going back to the margin question. I think talking about accelerating margins through the year, kind of exiting with a two-handle instead of a team-handle thinking.

Is this purely a function of scale or I think we thought of fuel supply as being margin-accretive at some point on the timeline? Curious, if that is a driver or the fuel supply potential is more out into '22 and beyond.

Andy Marsh -- Chief Executive Officer

I'll give you my quick answer and then, I'll hand it off to Paul. Yeah, you know, it won't be until late 2022 that the hydrogen margin will significantly increase until we have our sites, bigger sites online. There will be some improvements in this year. We're expanding our own site in Tennessee, plus we're beginning to take over about 15 to 20 of our traditional sites with our plan in Tennessee which will help our margins, but the real margin growth will happen out in 2023.

Paul, you may -- for the hydrogen business. Paul, you may want to comment on that?

Paul Middleton -- Chief Financial Officer

Yeah. I think that's right, Andy. And across all the businesses, it's the similar themes that we've shared in the past. I mean, there's overhead leverage.

There's supply chain leverage. There's design enhancements going on. There's vertical integration opportunities that we've made that we're starting to leverage and scale. So those themes are paying dividends at all our businesses from a margin enhancement and even see some of those themes, even in our current fuel business as we grow at scale.

But from -- so we're going to get that margin appreciation or accretion largely from those core themes. But as Andy said, in terms of a significant contribution from the fuel side, it will be middle of '22 on into '23 as that starts to pay off.

Tristan Richardson -- Truist Securities -- Analyst

That's really helpful. And then one just last one, if I could. I think on the update call, you mentioned the auto industry with respect to materials handling may actually be more intensive on a unit basis per site. Is that still the case? Is that -- I think 500 to 700 units per site is still a good high-level way to think about the opportunity? And is it -- the four sites, is it still kind of the near-term potential for your fourth pedestal customer?

Andy Marsh -- Chief Executive Officer

So, uh, I think that's a -- I think in general, obviously, different sites can be different size, Tristan, but I'll give you an example. Our BMW facility in Spartanburg has well over 700 units, some of them may not immediately be 700 fuel cells or either can be -- because the way auto factories are structured. They can be some gradual deployments in some of those facilities, but that's not a bad number to be thinking about. And I think, I would add on top of that, I think there is an opportunity with the new pedestal customer that the expansion could go rep quicker.

Tristan Richardson -- Truist Securities -- Analyst

That's great, Andy, Paul. Thank you guys very much.

Andy Marsh -- Chief Executive Officer

Thanks, Tristan.

Operator

Thank you. Our next question is coming from Moses Sutton from Barclays. Your line is now live.

Moses Sutton -- Barclays -- Analyst

Hi, Andy and Paul. Great to catch up.

Andy Marsh -- Chief Executive Officer

Good morning, Moses. How are you?

Moses Sutton -- Barclays -- Analyst

Good morning, good morning. In the 2024 guidance, the $1.7 billion, how -- can you break out specifically third-party hydrogen? I know you group them together with electrolyzers and how do you expect to sort of see the long-term offtake on those contracts? As you complete the plants, you'll have some rolling contracts or do you expect to have more spot price exposure?

Andy Marsh -- Chief Executive Officer

So there's actually a reason I was a -- one of the arms we think about all the time is there's opportunities in the electrolyzer space. And why I put them kind of together, where we're working through, whether we sell equipment or whether we sell green hydrogen. So that's why I'm a little bit hesitant to just pull it all out today. I'm taking one deal specifically that could be huge and it could go either way.

And it could be a really great offtake for our green hydrogen, so that's kind of -- Moses, we've been trying to work these deals going both ways with people because of our capabilities. When you think about the spot price and I think, I'm going to give both an input and output side answer. On the input side, Sanjay has really done an incredible job in the negotiation of these contracts to really have a mixture of how one thinks about grid power. How one thinks about for recs for renewable content.

How one thinks about any third-parties that can help bridge any power gap. So we have been negotiating set price contracts on the input side. On the output side, some of our customers, i.e., the big material handling customers, it will be a set price, but we also have a set price of electricity. So it's very, very well controlled.

The spot market is probably a real opportunity for us to sell and have significant margin enhancement upside when we look at some of the spot pricing going on. Our main concern, though, is making sure we provide customers, who are especially commercial customers, green hydrogen that's cost-competitive with grey hydrogen, cost-competitive with diesel. So that they accelerate the deployment of their fleet, be it material handling, be it on-road vehicles, be it backup power generation by using green hydrogen at a price they can count on.

Moses Sutton -- Barclays -- Analyst

That's very helpful. Thanks. And Paul and Andy, you both discussed margin expansion. I don't see adjusted EBITDA guidance or reconciliation in the investor letter.

Is the metric no longer going to be provided? What would a general range look like for '21 and even an update on the 2024 from the $1.7 billion?

Andy Marsh -- Chief Executive Officer

So I think during the call for '21, and Paul, I'm going to let you jump in after, I did. I mean, we're targeting -- revenue and gross billings almost now are equal, Moses, with the acceleration of the warrants. So we're looking at $475 million revenue at margins in the high teens for gross margins and expense is about 30% higher than the run rate of last year. Paul, would you like to add to that? Yeah.

OK.

Moses Sutton -- Barclays -- Analyst

Got it. OK. And last one for me. On the Walmart GenDrive, I noticed in the letter, you quote 9,500 or above 9,500 in operation.

I think you've noted like 10,000 or more operational as recent as last May. Were any ticking out of operations? Or am I not looking at an apples-to-apples metric there?

Andy Marsh -- Chief Executive Officer

I can tell you, I've deployed more units, so I'll say this. We're going to -- so the answer is a number of units that Walmart increased in this year, as we've noted, were actually beginning to move into other applications in their Internet centers. There are net distribution centers where we have, I think, three sites already moving and more coming. So, Moses, we'll be happy to help you reconcile that.

But I can tell you, we've sold more units and the business is growing.

Moses Sutton -- Barclays -- Analyst

Got it. Thanks. OK. Great.

I'll take that offline. Thanks.

Andy Marsh -- Chief Executive Officer

OK.

Operator

Thank you. Your next question is coming from Paul Coster from J.P. Morgan. Your line is now live.

Paul Coster -- J.P. Morgan -- Analyst

Yeah. Thanks, good morning, thanks for taking my question.

Andy Marsh -- Chief Executive Officer

Good morning, Paul. How are you?

Paul Coster -- J.P. Morgan -- Analyst

I'm good. Thanks, Andy. So first off, I noticed in the press release that the -- you're looking to deploy about $125 million of expense in New York state to build out the gigafactory which I'm sure is very welcome there. That sounds high relative to what my prior understanding was for the cost of the gigafactory at around about $45 million, $50 million.

Am I just misreading that?

Andy Marsh -- Chief Executive Officer

I think part of that, Paul, and I'll let you add in. I think part of that's expense dollars over the coming years as far as personnel.

Paul Coster -- J.P. Morgan -- Analyst

OK, good. Should we though, assume that the gigafactory is capex only are still in that $50 million range as you start to drop them in?

Andy Marsh -- Chief Executive Officer

Yeah, it's $50 million. That's right, Paul.

Paul Coster -- J.P. Morgan -- Analyst

OK. Gotcha. And it seems quite a fairly modest capex which is great, except that it also suggests that the barriers to entry for others are fairly low. Now, obviously, there's IP and know-how of all kinds involved, but how do you respond to that thought, Andy?

Andy Marsh -- Chief Executive Officer

It's actually a very -- things you may not think about is electrical generation required for a facility. And I can tell you, we -- first, we went into a building and selected a building because it was an old Alstom switchgear factory. That has incredible levels of power provided into the building that allows us to build large-scale electrolyzer systems to test all these stack. I think future buildings we won't be as lucky.

And that I think you'll probably see costs being 25%, 30% higher.

Paul Coster -- J.P. Morgan -- Analyst

What about the argument that it's not a very high barrier to entry for others with competence in their technology to get into the gigafactory business?

Andy Marsh -- Chief Executive Officer

Well, I would step back and say that first, you have to have customers. Actually, I should start by saying, Paul, first, you have to have the technology and we have folks who have actually been working on MEA development for over 30 years when you look at their background even before Plug. I think then you have to take a step back and have people who've been developing fuel cell stacks and making enhancements for 25 years, and have thought through the manufacturing process and roll-to-roll process to stamping in place. I look at -- there's both the -- as you mentioned, IP, there's also the issue of what I always kind of refer to as travel knowledge which I think people always underestimate.

I think there is the issue of having the capital wherewithal to make the right investments to build out the factory at the right place. I mean when you look at the facility itself, we've been able to get incredibly low rates for electricity that to support this effort. And the fourth item, I think that -- I think people often have an issue with is you've got to have the demand and I'm already at Plug Power, thinking about, as you could see, building the next gigafactory in Korea to really help the build-out.

Paul Coster -- J.P. Morgan -- Analyst

Gotcha. Thank you very much.

Andy Marsh -- Chief Executive Officer

Thank you, Paul.

Operator

Thank you. We've reached end of our question-and-answer session. I'd like to turn the floor back over to Andy for any further or closing comments.

Andy Marsh -- Chief Executive Officer

Well, thank you, Kevin, and thank you, everyone, for joining the call today. Looking forward to speaking with everyone in our first-quarter update call. So thanks again, and talk soon. Bye now.

Operator

[Operator signoff]

Duration: 64 minutes

Call participants:

Teal Hoyos -- Director, Marketing Communications

Andy Marsh -- Chief Executive Officer

Eric Stine -- Craig-Hallum Capital Group

Colin Rusch -- Oppenheimer & Co. Inc. -- Analyst

Jeff Osborne -- Cowen and Company -- Analyst

Paul Middleton -- Chief Financial Officer

Craig Irwin -- ROTH Capital Partners -- Analyst

Jed Dorsheimer -- Canaccord Genuity -- Analyst

Amit Dayal -- H.C. Wainwright -- Analyst

Tristan Richardson -- Truist Securities -- Analyst

Moses Sutton -- Barclays -- Analyst

Paul Coster -- J.P. Morgan -- Analyst

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