Greetings, and welcome to Plug Power's 2014 Second Quarter Financial Call. At this time, all participants are in a listen-only mode. If you have not already done so, please close all other programs on your computer. (Operator Instructions) It is now my pleasure to introduce your host, Teal Vivacqua, Director of Marketing Communications. Please go ahead.

Thank you. Good morning, and welcome to the Plug Power 2014 second quarter earnings 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, EBITDA, geographic and 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 Section 27A of the Securities Act of 1933 and in Section 21E of the Securities Exchange Act of 1934. We believe that it is important to communicate our future expectations to our investors. However, investors are cautioned not to unduly rely on forward-looking statements because they involve risks and 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 and in our annual report on Form 10-K for the fiscal year ending December 31, 2013, 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 statements after this call. At this point, I'd like to turn the call over to Plug Power's CEO, Andy Marsh.

m: EBITDAS in the quarter however was impacted by unanticipated $785,000 additional loss in our service business. We'll discuss items that affect this issue later in this call, so let's get started. I'm pleased to report that we had a record $17.3 million in revenue in the second quarter based on shipments of more than 680 GenDrive fuel cells. This is a threefold increase versus the first quarter of 2014. Plug Power has also recorded a positive 17% gross margin for our GenDrive units. This is a result of scale production of our business. We've also started to see a growing revenue contribution from our GenFuel and GenCare product lines. One of the deployments in the second quarter was with Walmart. The Walmart distribution center in Pottsville, Pennsylvania was the first of our Walmart GenKey sites to be deployed. We had 298 GenDrive units up and running in the Class-2 and Class-3 lift truck fleet thereby May. The outdoor GenFuel infrastructure was completed in less than 13 weeks, after Walmart placed the order; and six GenFuel dispensers were installed indoors for fast refueling. : The anticipated value proposition for the warehouse has been completely demonstrated. Even while the Pottsville GenKey installation was underway, we initiate deployment of Walmart's second GenKey site, its distribution center in Johnstown, New York. Deployment on that site was completed in July and it currently has 264 GenDrive units in place. Due to Walmart's satisfaction with the successful Pottsville site deployments, Walmart issued a follow-on purchase order in the second quarter that added a seventh GenKey site, their warehouse in Sterling, Illinois. Development at the Sterling site has already begun with construction at the outdoor fueling infrastructure now proceeding. Complete deployment at this GenKey site is expected in September of this year. Walmart is a critical…

Thank you, Andy, and good morning, everyone. Before I jump into the second quarter numbers, I want to provide a few financial highlights. Our cash balance at the end of June was $168.6 million. As of June 30th our working capital was 190.4 million compared to our working capital at March 31st of 72.6 million. During the second quarter of 2014 we shipped out 687 GenDrive units compared to 165 units during the first quarter of 2014. As of June 30th, our backlog was comprised of 2,659 unit orders for the value of 36.6 million. Those backlog numbers are GenDrive units only and don't include orders for service hydrogen infrastructure and hydrogen molecule delivery. Total product and service revenue for the quarter was 17.0 million with a positive gross margin of 4% compared to 7.1 million at a negative 26% gross margin for the second quarter of 2013. Breaking out the total revenue, product revenue for the second quarter was 12.6 million with a gross margin of 17%, an improvement compared to product revenue of 5.6 million at a 4% gross margin for the second quarter of 2013. Service revenue for the second quarter was 4.4 million with a gross margin of negative 34%, again an improvement compared to service revenue of 1.5 million at a negative 134% gross margin for the second quarter of 2013. Research and development contract revenue for the quarter was 328,000 compared to 368,000 during the second quarter of 2013. In our operating expense categories, selling, general and administrative expenses were 4.8 million for the quarter compared to 3.2 million in the second quarter of 2013. The increase in SG&A primarily relates to the acquisition and integration to rely on as well as the expansion of our sales force. Research and development expense for the…

Thank you, Dave. I understand that during the video that we lost the audio portion. And what you were seeing during that video was our tugger units being pulled by our partner Charlotte 40,000 pounds, which is the requirement for cargo, airports and supporting facilities. The unit is 20 kilowatt which is much larger and our fuel cells for material handling. And as you could tell we were actually working -- we have to work in outdoor environments in the rain. We will be deploying the first 15 of these units for the new market in Memphis, alongside with the first GenFuel outdoor hydrogen dispenser. We will be delivering these units in October of 2014. At this time, Dave and I are open to take any questions.

Thank you. (Operator Instructions) Our first question comes from Matt Koranda with ROTH Capital. Please state your question. Matt Koranda – ROTH Capital: Good morning, Andy. Thanks for taking my questions.

Hey, Matt. Matt Koranda – ROTH Capital: So congrats on the gross margins, the positive gross margins, things look pretty good there. Service margins are still negative but improving here, could you give us a sense for what you expect in Q3 and Q4 as you deploy the additional sites? Can we expect some improvement on higher utilization of the service staff? And longer term, when you think we reach breakeven or even positive service margins?

So Matt, our internal models and our service business in the fourth quarter being approximately minus 15%, and we feel that by the first or second quarter of next year we should be able to drive it to be breakeven. I think that we know what needs to be done to reach those goals. As I mentioned I'm spending a little bit more money this year in the third and fourth quarter to drive those improvements, so that we will breakeven early next year in the first half in the service business. Matt Koranda – ROTH Capital: Okay, that's helpful. And then just touching on bookings for a moment, I didn't see anything in the release, but I remember last time you guys provided an update. They were kind of at 18 million probably through May. Can you give us an update on where things stand currently and what the run rate is maybe on a monthly basis right now?

Yes. So Matt, the end of Q2 we were at 87. We do expect some lumpiness. I would expect that by the end of September we will be in the 115 range -- 120 range. We could do a big deal which could accelerate it much faster. Matt Koranda – ROTH Capital: Okay, I understand.

Just to give you a feel, a deal could move the needle $30 million instantly overnight. Matt Koranda – ROTH Capital: Okay, that's helpful. And then just last one from me here before I jump into queue. Andy, you did mention a small quality issue, can you just provide some color on the nature of the problems that the high power stacks we're experiencing? And are they at one particular site or is it spread across multiple customer deployments, just kind of get a sense for what's going on?

Yes. I'd say, Matt, it is spread across sites and it's -- I'd say it's not -- they are not instantaneous failures or premature failures. We've taken a number of steps to improve the products. One of them was relatively simple where we captured the water coming out of the stack a little bit differently to allow because we are seeing more water than was expected. And it was causing some premature failures. We've also been changing some filtering to keep particulates out of the stacks and additionally there has been a number of improvements made by Ballard that were having some benefits. I think, Matt, I think in the third and fourth quarter we will see improvements. As I mentioned the margins will improve, but it is quite honestly when we look at our service business really the biggest headache we have at the moment. Matt Koranda – ROTH Capital: Okay, Andy. That's fair, and thanks for taking my questions.

Good.

Thank you. Our next question comes from Aditya Satghare with FBR Capital Markets. Please state your question.

Good morning all. Thanks for taking my questions. So, I had two here.

I'm okay. How are you? Good morning, Aditya.

Good morning, guys. How are you?

Okay.

Good. So, two questions at least from my side; the first one is, can you sort of -- in a high level, can you contrast the discussions you are having with your top customers today versus what you were having at the start of the year? And what are some of the things that customers are looking for today before they progress into making some high volume contracts here?

I think that's a real good question, Aditya. I can tell you that and you may have caught some of that at the end in my portion to talk about more resources. And one of my large customers and you maybe able to get to -- came to me and said, we could do a lot more and we are worried about the number of people you have to support us. And it's one of the reasons that in the third and fourth quarter I think that you will see us having more product, more project managers in line, and for some of these large customers almost having installation teams that can move site to site. That is a key discussion point that we've been having, because we've been -- I think you take a look at how well we've executed Walmart Pottsville, Walmart Johnstown, about to execute Walmart Sterling. And we have four sites we are going to be doing this quarter. We have one customer comes in and once they do four in a quarter, we are going to need more people and we need to show them ahead of time how we will have them in place. So that's actually -- I take that as positive discussions, and I think with our present customers. That's where the discussions are. I think that with new customers, I'm thinking of a few now and that's I think the issues are convincing and certainly -- I think it's much easier to convince them. When you take people to BMW, you take kind of really taking them to a Walmart facility is what convince them. But with new customers it's I think it's just making sure that they become comfortable that this is conversely viable product, and obviously all the reference customers, all the reference sites, quarters like this just help demonstrate that we can deliver. It's much nicer now that I can walk into customer sites and say and show them this factory, I know you have been here and people can say that we've days that's in 12 hours we put out 35 units. So it's showing them that we can actually do what we say we are going to do. I know I have one at the Pottsville looking at our hydrogen infrastructure sales. That's really where we are in the sales process. And so it's -- I think internationally it's a fact that these auto companies that we are sitting down with them in Germany and planning global activities with companies instead of local.

Understood. That's very helpful. And my second question actually ties into your comments on the hydrogen infrastructure. Could you -- is there a way to quantify, when you look at your top customers, the number of forklift units on the distribution side versus the retail centers and how much could that potentially increase your total market opportunity?

Sure. That's a great question, Aditya. So if I think about a distribution center, take a Walmart site with 264 units. If you move that into the store, you are talking about 300 units in the stores. So it's a huge, huge increase, and as well as an increase in service and hydrogen. And the reason that we'd do this is actually twofold. One is that it really simplifies the logistics both in the store and for deliveries. Often these trucks in stores, the batteries are left uncharged, truck comes for delivery where they place like loads, a customer comes to pull units off the top shelf, and a 17-year-old kid running to work in the backroom didn't charge the truck that grows the logistic delivery schedule off by 30 minutes, or worse yet, a customer doesn't get their goods and goes across the street. The second item is that the overcharge of batteries; and I've been told that by many retailers that often every year they have to buy batteries because of damaged batteries in their retail centers. So, we really believe that moving into the retail market can increase our servable addressable market in the U.S. by 30%.

Thank you. Thanks (indiscernible).

Okay.

(Operator Instructions) Our next question comes from Jeff Osborne with Cowen & Company. Please state your question.

Hey, good morning, Andy. Thanks for taking the question. I had a couple; I want to explore the expense trajectory for the company, you had mentioned several initiatives in R&D, international sales as well as ramping up the service. I just want to know if you could either use 2Q as a baseline or give us a sense -- a flavor what the quarterly OpEx trajectory should be, both exiting year and early '15.

Yes. So, Jeff, I'd expect on the OpEx line, let me make sure I read this right here, Jeff, that in the fourth quarter we'll be -- I'm sorry, Jeff, I got to make sure I grab the right numbers here. I expect that we'll be exiting the year I'd say Jeff approximately 15% higher than we presently are.

Does that get you enough in terms of some of those initiatives to get them kick started in those four or five international markets that you highlighted, as well as the service personnel for the existing 11 sites that you have?

The service personnel, Jeff, would actually go into COGS.

Okay.

Okay? So, they'd be yelling directly into COGS. On the OpEx front, they'd there be moving into -- there is activities with the sales team and others will be hitting the expense line.

Excellent. And then, I heard you on the service kind of breakeven in the early '15 versus second quarter, what do you think looking out a year or two, what do you think your target gross margin for the service business is – what's your aim to achieve over time?

Over time, Jeff, we aim to achieve 30%. And I think that -- yes, this one is not a commitment, but I think that by the fourth quarter 2015 we can be in the 15% to 20% range. It almost feels like the product to me as it was a bit ago, that were just so close, we have a few loose ends to tie up, and we can dramatically change the performance of this service business.

That's great to hear. Just two other; one is a question from me is, one, more bigger picture just as you evaluate your hydrogen strategy for '15 or '16, whenever that kicks off, how do you think about your current balance and other kind of adjacent areas that you could go into relative to the hydrogen strategy? And in particular, how much capital are you willing to potentially commit, being a joint partner with someone that seems like it would be quite expensive?

Yes. That's a good question, Jeff. I'd say that there is a possibility we could look at both equity and debt to pay for a capital expense of that nature. I think the company is a much different position, I think we closed the quarter with over a $168 million on our balance sheet. I'm not -- I think you look at the ReliOn acquisition, you can see that at least on paper, I underpay for the asset. I'm not going to go spend money unless there is a clear path that can support the growth of the business and help makes us more profitable. So, I'd think it just kind of give you a gauge. I think the extreme would be somewhere in the 20 type million dollar range. And I don't foresee us having to spend that type of money. One thing even in these -- only a portion of our plant are working with an industrial gas company. One thing I can bring is volume. And that makes me very, very attractive as a partner.

That makes perfect sense. And would that be 20 million per side? I'd assume you'd need these kind of distributed around the country.

I think, Jeff, it depends. So, I'd say if you -- I think the most you'd do for liquids generation plant, it maybe two sites, geographically placed in regions where we could really impact the margins the most then you probably would be talking $40 million.

Okay, excellent. And just one last question, sorry to come back to this, but just the nature of the high power failures; could you give us a flavor on how old some of these systems were? I know you've moved from air cooled to liquid cooled device, the vice versa, I forget, but with some of these units, were these several iterations ago that were shipped three, four years ago or were they something more recent that had technology issues that you were unanticipating?

That's actually a real good question. First, Jeff is that -- I know you just joined back with us here recently, that our low power units which are the Class-3 actually use an air cooled stack, and we're actually quite pleased with the fuel performance in the air cooled. On the liquid cooled, I'd say primarily many of the issues have been with our older GenDrive units. Some of those issues I'd say were caused by Plug Power, some by our supplier. I see some with the newer units. Mostly when we look at many events it's because of environmental conditions. And I think you did hit on a very important point, part of the improvement as we ship more and more newer units, the newer units have worked so much better than the older units. I've had days -- I've received letters from customers saying that customers who have hundreds of units having days where they didn't see units go down at all. So, the newer units are far, far superior and part of the projections of how you reach double-digit service margins are really associated with the fact that as we put more and more new units in the field, we see less and less drops. : :

Excellent. I appreciate all the details for that question. It gives me a sense of comfort. Thank you.

All right. Thank you, Jeff.

Thank you. There are no further questions at this time. I'll turn the conference back over to management for closing remarks.

I like to thank everyone for joining the call today, and additionally Plug Power team will be at the NASDAQ today closing the NASDAQ at 4'O clock this afternoon. Hope, many of you can catch us on TV. So, have a great day.