Thank you, for standing by. This is the conference operator. Welcome to the Ballard Power Systems First Quarter 2023 Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Kate Charlton, Vice President, Investor Relations. Please go ahead.

Thank you, operator, and good morning. Welcome to Ballard's first quarter 2023 financial and operating results conference call. With us on today's call are Randy MacEwen, Ballard's CEO; and Paul Dobson, Chief Financial Officer. We will be making forward-looking statements that are based on management's current expectations, beliefs and assumptions concerning future events. Actual results could be materially different. Please refer to our most recent annual information form and other public filings for our complete disclaimer and related information. As discuss in our prior earnings call, we are excited to welcome to our analyst and investor communities or capital market's day on June 13, 2023. We will be providing an update on our long-term business plan, incoming revenue growth by vertical, gross margin progression, our technology and product roadmap, product cost reduction, capital expenditures and ESG initiatives I'll now turn the call over to Randy.

Thank you, Kate and welcome everyone to today's conference call. We started 2023 on a strong footing in our core mobility markets in Europe and North America. We reported combined revenues and our bus, truck, rail and green segments up almost 20% compared to the same period in 2022 when excluding revenue from China, we've consistently seen increased revenue diversification throughout 2022 and into 2023 across our verticals, regions and customers, highlighting the resilience of our business model. Order intake momentum continued in Q1 with order backlog of almost $138 million as we ended the quarter. Our power products business is unfolding with power products representing over $100 million of our total order backlog, a figure that's double the amount one year ago. Our 12-month Orderbook has also trended favorably as it grew nearly 30% quarter over quarter to $74 million providing us with support to achieve our 2023 revenue plan. With an increasingly constructive policy backdrop, we continue to see growing customer engagement across our verticals. At Ballard, our strategy is to commercialize PEM fuel cell technology and products that can be applied across multiple market applications, where fuel cell technology provides the strongest value proposition and where the barriers to hydrogen refueling infrastructure are lowest. These markets include bus, truck, rail, and marine as well select stationary power generation, and certain off-road markets will provide a brief update for these applications. As an introduction to our discussion on Ballard's key market verticals are highlighting the change to our revenue segmentation. Effective in Q1, we will no longer be reporting our revenues in terms of technology solutions, and our power base categories of HD mobility, stationary and material handling. In place of our prior segmentation, we're reporting our revenues in line with key end markets of bus, truck, rail,…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] First question is from Aaron MacNeil from TD Cowen. Please go ahead.

Morning, and thanks, for taking my question. Randy, I can appreciate that you're going to get into way more detail on this with the upcoming capital markets day. But I was hoping you could just give us a bit more insights into your pricing strategy. And specifically, I'm wondering, are you pricing your products the way you are to compete just against other fuel cell providers or against a broader menu of zero-emission vehicles? And then I'm also wondering what you view is, sort of a long-term gross margin target for your power products? And what sort of product cost reductions you need to achieve to get there based on the prevailing pricing strategy?

Yeah, Aaron. Great, thank, good questions. Just in terms of the pricing strategy, I would say there are three elements to it, I think you've highlighted two of them. One is, the differences between different technologies that are available, including incumbent technology, and battery electric solutions. So, making sure that we're more competitive, absent, that type of pricing strategy is important. Secondly, we are seeing a more competitive environment in terms of other companies offering fuel cell products, they don't enjoy the same market position we have, and so understandably are being very aggressive in their pricing strategies. But the key one I would highlight Aaron is really the fact that in low volumes today, and where hydrogen supply costs are today, the customers don't have a strong total cost of ownership economic value proposition at the moment. And so, what we're seeing is a timeline, where that TCO crossover occurs, as the availability of low-cost low carbon hydrogen comes online, as our product cost initiatives move into production. And importantly, not just Ballard fuel cell products, but also other parts of the value chain, continue to contribute to cost reduction. What we see then is effectively a TCO crossover that will really be a catalyst, an enabler for high levels of adoption. So, at the moment, with a stretched value proposition and a Delta gap in that value proposition, we think it's important to be pricing to get market adoption, get deployments, get the field experience, and importantly with these customers, whether it's bus, truck, rail, marine, some of these off-road customers as well, we believe once we're in the platforms, we're very sticky. And we have long-term, staying power with these customers. So, we think the pricing strategy is appropriate given where the market conditions are at in…

No, I think that's pretty thorough.

And then there's my follow-up, on the recent shelf filing, obviously, there's no obligation to go out and raise capital. But based on all the information you have today, like what form of capital DC is most likely, in the event that you would go try to raise capital? And understanding that the shelf covers a 25-month period. Do you think we'll see a return to the, at the market equity program or layering on some debt or some other sort of capital instruments within that time period?

I think the way you should kind of view the shelf file is very much a housekeeping matter. I think it's important to have that capability to access the capital markets quickly. But absent a significant M&A transaction, we're not actively pursuing corporate development as a priority right now. We think it's important to protect the balance sheet. What we see is, it's very unlikely, very unlikely that we will be accessing that shelf during that 25-month period. There'd have to be a very compelling reason for us to do that, which we don't foresee today. So, I do that very much as housekeeping. We have sufficient capital to take us well past that shelf filing. So, if it would be kind of an extraordinary circumstance, in my opinion, we would be accessing that in the near-term.

The next question is from Michael Glen from Raymond James. Please go ahead.

Hi, good morning. Randy, when you work through your opening remarks, you highlight the strong points in Europe, and the U.S. coming around? I'm just going to come back to you on a question that's come up over a few quarters. Now, it's just the investments in China, relative to some of the investment opportunities that might be emerging in Europe and North America. Do you think that, the company could redirect some of that capital into those markets?

So, I think there's, there's a couple of things at play here. One is we still have a very strong conviction on long-term adoption in China. And I think as China, gets this policy sorted, and that market starts to see growth again and particularly scaled growth. We're going to see all three markets contributing, which we're very excited about that. Effectively right now, we're seeing the two markets contribute. But I do think, as you heard in the opening comments, we continue to look at how to strengthen our platform in the U.S. We're seeing a lot of, I would say market opportunities, but also funding opportunities in the U.S. to support manufacturing capacity expansion. We're seeing a similar trend, obviously, in terms of market adoption in Europe, and funding support in Europe as well. So, I think as we look at our local for local strategy, and global manufacturing capacity through 2030, the U.S. and Europe are certainly top of mind.

And then just in terms of the bus order, market in Europe right now and the 500. I think you said it was 500 or potential orders that are open tender that are outstanding? What would you expect or what would be your target for market share on those bus orders relative to what you would have achieved in the past?

We're still seeing a very strong market share in the bus market segment. I would expect us to be in the plus 85%, 90% range for market share, for bus orders that might even be higher in the very near-term. But I do think we're going to see more competitors, with other product offerings coming to market over the next few years. But we're very strongly positioned not just in Europe, but in the U.S. as well.

Okay. And we would see that come through and your order flow, like in your press releases that we will be able to see that market share?

Yeah, so, I think we will be providing some market share commentary during the capital market today. But I think the way to think about it is not so much market share, but in terms of when you see that coming through. You do see publicly announced from transit authorities that they're going to fuel cell buses, or from the OEMs, that they've won awards. So that's one timing data point. For us to keep timing data point is and when that translates to an order to Ballard from the bus OEM. And there's can be a lag time they're anywhere from six, three, six months, up to 12, 24 months we've seen. So, it's very difficult to predict when those public announcements by transit authorities and OEMs translate to orders to Ballard but in terms of market share, will provide more visibility to market share on the capital markets day, but very high market share.

The next question is from Rob Brown from Lake Street Capital Markets. Please go ahead.

Good morning. Just sort of following up on that European bus opportunity, 500 units, but could use context on how that's grown and where that program is going? I know we're, a few years ago, it was much smaller. But where's that program at today?

Yeah, Rob, thanks. There basically are tenders out for circa 470 buses, fuel cell buses in Europe right now. And what's interesting to me is we used to talk about, deployments of, and I'll contrast this with Canada for a second where we have Edmondson now with two fuel cell buses. So, this would be the type of deployment you would typically see in Europe, two, five, 10. We're now seeing, larger deployments. There are a number of cities that are still adopting 10, 16, seven, etc. But now we're starting to see these much larger orders. So, 25 for a city, in Poland, for example, and 31 for a city in Germany. And you're seeing now this 52 for another city in Germany and two cities in Europe that will be ordering over 100. Moving to the U.S., you have Foothill Transit with over 30 and you've got, you know, Phoenix and Okta and Las Vegas and other cities that have large orders that are coming through. So, I would say what we're seeing is situations where transit operators have typically trialed both fuel cell buses and battery electric buses in low volumes. They've made a determination based on their range requirements, the total cost of ownership, the duty cycles access to energy in whatever form that is whether it's molecules or electrons, and we're seeing cities deploy larger fuel cell buses after having gotten comfortable with the availability time the uptime, and are now moving to larger orders. And I think this trend will continue not just through 2023 but 2024 and 2025, particularly as the number of bus OEMs offering a fuel cell bus offering continues to expand

And then I know you talked about the IRA, and I know it's working through kind of the treasury process. But what have you seen in terms of OEM response to that and getting vehicles sort of planned and developed in your interaction with them in the U.S.?

What I would say is that whether it's the bus OEMs, truck OEMs, even rail, we're just seeing a lot of eyes that previously were focused outside of the U.S. turning to the U.S., and very much focusing on the U.S. market. And I think you're going to see a number of OEMs announcing fuel cell activities, whether it's development programs or deployments, we have two or three, that we're making very promising progress on, that have North American exposure. And we expect to have some announcements on that later this year.

The next question is from Rupert Merer from National Bank. Please go ahead.

Hi, good morning. Randy, you talked a little about some competition you see in the market and some aggressive pricing from competitors. Can you give us a sense of how your competitive position is evolving any competitive threats, you see? And is that leading to changes in your long-term strategic plan?

To me, I would say the big change that was impacted in our strategic plan occurred when we acquired BMS. What we were seeing on a competitive front is that a number of companies that aren't just looking at the fuel cell engine market opportunity, they had capabilities at the powertrain level. So, think about companies like Bosch, for example, and comics. And so, for us, the ability to provide OEM customers with powertrain integration capabilities is very, I think game-changing for us and really helps us enable us on a competitive positioning front. When we look at the safety record, reliability, uptime, availability, durability, field experience, kilometers driven, no one comes close to Ballard in these verticals in our core markets here in Europe and the U.S. market. So, we're very far position and so I do think that the entrants are looking at pricing as a way to secure customers, when they're not able to point to some of the other key metrics. The only other thing I would comment on is that, again, the stickiness with a platform wins. We've invested a lot with these customers over a long period of time, I'll just use again, the Siemens example where for six years, they worked on a fuel cell train. We worked on the fuel cell engine, they've now launched that train, we have an LOI for 200, a purchase order for 100 engines. A lot of stickiness and an expected preferred slash exclusive position based on the investments that have been made by both of us during that period of time. It's the same in the bus market where we've been working with some of these bus OEMs for years. And they have gained confidence in their deployments. And I would say the truck market is a newer one, but we're very excited by some of the progress we're seeing, and in that market there. Durability is a very significant differentiator. And I don't think any company can show durability numbers that come close to Ballard.

The next question is from Mac Whale from Cormark. Please go ahead.

Hey, Randy. You talk about that tender increasing in the bus space. Is that in general leading or lagging the hydrogen infrastructure? I'm just wanting to try to get a sense of whether the infrastructure getting to the point where it's translating to larger orders.

It's neither. So, these typically are situations where you have on-site refueling, transit depots. And so rather than having a diesel refueling station, they're having hydrogen refueling. So just to be clear, what I'm indicating is this has nothing to do with the rollout of public refueling infrastructure, whether that's for past car, for trucks, and or other market applications. And so again, that's one of the, we think the key, I would say, risk mitigation on our strategy is initially focusing on these markets where you have centralized people refilling and tethered vehicles. So, I do think the funding though, is probably the piecing item for these deployments. And the funding is both for buses, and for the refueling infrastructure. So that's typically what's the kind of lagging item in terms of when these deployments actually moved from concept, to order book and deployment. I don't want to comment, a number of the countries that we're seeing, I would say, elevated activity in at this time, Germany, Italy, Poland, Spain, many of them also have very robust programs around hydrogen.

So, when you look at that, can you actually use that as a tool for forecasting? Like, can you look at what they're investing and say, okay, this these orders they've put out, there's excess fueling capability like they're going to have or they will likely buy more over time? Or I'm trying to get an idea of which if it actually helps you knowing where the next orders are likely to come from?

Yeah, the way I would characterize it is that the availability of low-cost low carbon hydrogen in all three markets, China, Europe, and the U.S. is the big unlock that will occur, including for the bus market, because some of the economics on the bus market are stretched with current hydrogen costs, particularly last year, when you had elevated natural gas prices and a number of the supply lines in Europe are still based on natural gas reforming, but as you have renewables generating into low cost, low carbon hydrogen, we think that's the big unlock. And I think all of these markets in Europe are expected to see pretty significant scale up in hydrogen supply between 2025 and 2030.

And then when you look at that, I'm wondering in the context of increasing numbers of engine makers talking about using hydrogen in the ICE type architecture. What are your thoughts on that as a threat? Or is it or is it helping adoption? Do you think of hydrogen in any way? I'm just curious to your high-level thoughts on that?

Yeah, the way you would view that right now, it's a topic that you're hearing from different parties about the ability to use existing Internal Combustion Engines have them run on hydrogen fuel. It's a topic, it's not actually an offering. So, you know, you'd be hard pressed to point to any deployment of a hydrogen ICE at this time. And I don't see that changing in the very near-term. And as you look to the mid and long-term, the reality is that you are completely eliminating all emissions by using a fuel, and you have much higher efficiency levels. So, from an economic value proposition, we believe fuel cells are an absolute winner.

And just lastly, if I may, one more related. You were asked about competition, and you talked about some of these other players. Some of those players you've been competing with in the market for some time now, like decades in some cases, and yet you still have this lead on all those metrics that you talked about. What do you point at that to sort of for those people that want to understand better your capabilities? What do you point at as the reason for maintaining that leadership?

Yes. Fuel cell technology is complicated. And it does require a sustained investment over a period of time to understand the failure modes and worst possible failure modes, you have high uptime, high availability, and high durability. And a number of those companies have been investing but and more modest levels, historically, their investments are cycling up, as you would expect, given the market opportunity. But they still have to put in the time to develop the products, test and validate them, find the failure modes, and work from there. I think the encouraging thing, and this applies to everyone, not just Ballard is supply chain is really advancing as well. And so, the materials available, whether it's for catalysts, gas, diffusion, layers, membranes, ionomers, whether it's for plate materials, whether it's for balance and plant components. The supply chain is going through a C change, that's going to really have much higher reliability components that today really, if you look at where we do have field issues, almost invariably, its balance of plant components, not the fuel cell Ballard fuel cell technology. And so, these components are we're going to see much higher reliability, which will lead to higher uptime, higher durability for the long-term, and a better TCO. All of us are going to benefit from this, but I think we're leading the tip of the spear in terms of working with a supply chain on these material sets.

The next question is from Ameet Thakkar from BMO Capital Markets. Please go ahead.

Hi, good morning. Thanks for taking my question. Just one real quick one for me. I believe the plan was to invest about 47.5% of $130 million, you were planning and investing in the MEA facility in China. And look like there was anything in the cash flow statement for that quarter. I was just wondering if you could update us on kind of that sort of plan and what they came to that would be throughout the year?

I think we're just giving geopolitical context. Obviously, we're delaying and pushing that cash spend out. But total year CapEx will be consistent with guidance, and we'll see some of that getting picked up later this year.

The next question is from Chris Souther from B. Riley. Please go ahead.

I understand that kind of new segments and structure makes sense that the technology solutions continue to kind of wind down. Can you give us a sense as to what the overall formerly TS revenue was in the quarter? I just wanted to frame what the contribution was just this we have kind of a clean, kind of go forward? And then maybe on the backlog as well. Curious, if you can kind of break that down by the new segments and geographies and if there's any technology solution still in there.

Yeah, it's a call. Yourself a $13 million of revenue roughly 30% of the revenue was in the TS business with the balance, of course, being in Ballard products. That represents, we've seen a reduction over time. We've had the Audi contract that you've talked about in prior quarters, it was winding down now. And then our activity with Weichai is also less. We're looking to add another TS contract with, with Weichai potentially this year. We'll have to see how that goes. But the emphasis is clearly on the power products. We think there's a lot more long-term value in power product sales, repeat orders, service revenue as well, from power products versus the TS type of business.

Chris, this is really what we're hoping for looking for a long time at Ballard, where we're moving from a market where you have large OEMs that want to trial and option, have optionality on fuel cell technology by making some investments. They didn't have the capabilities in-house, so they use Ballard. So, Audi is a great example where we develop a fuel cell stack for an Audi passenger car. Now, what you're seeing is a transition in the markets. First of all, a clear recognition of the value proposition is strongly resonant in the medium and heavy-duty motive applications. And also, you're seeing vehicle OEMs, looking for a supplier of engines, not looking for supplier of services to develop a product for in-house capabilities. So, this is what we're seeing a pretty significant shift. And this is where the value always was contemplated in our business.

That certainly makes sense. And maybe just a breakdown on kind of the backlog between the new segmentation as well as geography, we just wanted to get a sense. Sounds like it's very Europe and North America kind of heavy, but by segment would be appreciated as well.

Yeah, just in terms of geography, it's probably around 55% for Europe, and about a third for the U.S., and China and rest of the world would be the remainder. And what's really interesting is, when you look at it by application, it's very diversified. It's actually showing up in our revenue, showing up in our order book, showing up in our sales pipeline. This diversification that we talked about that we want to see in 2030 and to get out to 2030, and even 2035 times tables, where we have high revenue being contributed from a number of different verticals, key geographic regions, a number of different customers with a lot of resiliency in our business model. And so, you're about a third in the bus market segment, about a third probably added together for truck and rail. And another third, let's call it for the remaining segments.

The next question is from Craig Shere from Tuohy Brothers. Please go ahead.

The breakout of quarterly breakout of revenue by bus, truck, rail, and marine I think is very helpful. And it kind of raises the question we've talked about before about timing for breakout and different categories. If I kind of envision a breakout in a category as consistent comfortably in the double-digit quarterly revenue area. Would it be reasonable to think that in for buses, we might see that at some point next year? And then how's that look maybe for truck and rail? Is it the following year and the year after that? How do you think about this?

We'll provide a little bit more color on this capital market today, including kind of profiling some of the platform wins we have and how we see that translating, moving forward. The way to get think about is we've talked about bus, truck, rail and marine in that order, for a long period of time, we picked that order, because that's the order of market adoption that we forecasted. So, bus, first truck second, rail third, marine fourth. And what's been interesting is that, candidly, I think the bus and truck market have taken a little bit longer than we've expected. But rail and marine have probably been faster than we expected, if you go back three, four years ago. I do think that all for those market segments are going to see nice growth rates moving forward. So, we're very excited about that. The one thing I want to highlight is that rail, marine stationary off road, these are larger power applications. And you can see much lumpier orders in those market segments. So, I think we could see a lot of variability in revenue from those segments quarter-to-quarter, but overall, the trend will be for growth. So, I think we'll see more of a steady growth in bus and truck and then rail and marine stationary off-road, we'll see lumpiness quarter-to-quarter.

That helpful. On the question, you mentioned two or three times about useless tensions and that you're trying to conserve cash and delay some of the originally front-loaded CapEx in your latest China investments? Are you still committed to what you had announced in China? And as far as similar investments would you be potentially in a position where you might make similar size announcements somewhere in the U.S. or Europe? Or do you feel as it sounded like some quarters ago that your global manufacturing is pretty covered? With your needs through late decayed just with mostly Canada and China?

I do think Craig that there's clearly deglobalization decoupling occurring. And there's much stronger impetus in the U.S. to see U.S. manufacturing product, similarly in Europe. And of course, China has local policies that effectively require several parts of the value chain to be localized to avoid import duties. So there does seem to be a bifurcation occurring among these different markets. There are some areas where we see the need for additional investment. One of them will currently invest in quite a bit in part of our announced CapEx plan is on next-generation bipolar plate manufacturing to dramatically lower the cost on bipolar plates. So, we've done a lot of important work over the last number of years on MEA cost reduction that we'll see moving into production in the next number of years. We're doing the same thing on the bipolar plates side. And so, where we scale production on bipolar plate, manufacturing, and meeting U.S. manufacturing requirements are all something that we're looking at and top of mind for us. In terms of to make an investment in that market, this is something we're studying very carefully, both Europe and the U.S. market, looking at different opportunities in these markets, including what type of investment size. I don't envision a scenario where the investment size is similar to what we've profiled for China, just given the different, number of different variables. And then in terms of just addressing your question, we still committed the China market. We continue to push forward and see a very large market in China, certainly between 2025 and 2030. We think this is going to be the largest global market for fuel cells. But every week, of course, there are dimensions to this and we track it very carefully.

The next question is from Kashy Harrison from Piper Sandler. Please go ahead.

So maybe using Europe and U.S. as frame of references, can you speak to what the delivered liquefied fuelling cost of hydrogen would need to be to make the TCO map work in your various segment’s bus, truck, rail, and Marine?

Yeah, the way to think about it is that when you have a total cost of hydrogen delivered, this isn't just hydrogen production, but delivered to the vehicle US$5 per kilogram, or €5 per kilogram effectively unlocks 50%, half of the global market. So that's a target the industry is moving towards, I think, with the subsidy support both in the U.S. market and increasingly, I would say aggressive policy posture in Europe you have a similar type of outcomes that the U.S. is going to experience. We expect to see hydrogen fuel cell, hydrogen availability below $5 with that $3 PTC. So, I think this aligns up very well, with a hydrogen price that unlocks the markets that we're focused on.

Got it. That’s very helpful. And then maybe just circling back to your prepared remarks on the guidance. You've indicated, the first half would represent 30% of full-year revenues. How should we think about Q2 revenues? And then does your guidance contemplate a return to growth this year in China? Or do you assume a return to growth occurs in subsequent years?

Yeah, so I think, Q2, I don't think we're going to see, a significant leg up in Q2, it is very back end loaded in our revenue, kind of plan for 2023 doesn't contemplate significant additional activity in China. So, there's no risk on China market adoption in a material way for our 2023 plan. There's a small amount of revenue contemplated there, but it's very manageable.

But I think also, I would just add that as we as we look forward to Q2, Q3, and Q4, we look at what's in the order book in the backlog, we were fairly confident we should see some increasing revenue, certainly in the near-term, and that's going to have an effect on the gross margin. So, part of our gross margin reduction in Q1 is because it's a lower amount of revenue spread over a fixed overhead cost was revenues rise that'll have a that'll naturally have an impact on the gross margin rising as well. And so that's what we would expect to see. Again, a bit more color on that probably in our capital markets today.

Got it. That’s helpful. Thanks. And it actually was a segue to my final question, which is, so effectively, the gap between the actual gross margins, and your expectations, in the last call that 4Q would be the trough is really just the lower revenues, and less fixed costs the absorption on that front?

That's a certainly big part of it. So, the gross margin from Q1 last year as minus one versus minus 42. The lower revenue just over the same amount of fixed costs and fixed costs, fixed overhead costs are roughly the same. So that of that 41-point difference, 16 points to that is just from that alone. And then as we talked about the change in the product mix more in favor of power products. The pricing strategy to get more platform wins, as well as we did have a few other adjustments for higher material costs, slightly higher material costs, and some inventory adjustments, which we don't expect to be reoccurring. But those things really was what drove that. But there's revenue increase, we do expect that gross margin is going to increase. And for the full year, roughly in line with where it was last year, probably within a range.

The next question is from Jordan Levy from Truist Securities. Please go ahead.

Thanks for taking my question. On a high level one for me. Just thinking as you kind of continue to shift toward products from tech solutions. Just thinking if there's any strategic change and how you're thinking about your sales and marketing efforts there and any sort of strategic priorities on that front as you move through 2023?

I wouldn't say there's any change in how we're thinking about our sales and marketing efforts for these verticals. The big change, in my opinion, really is the ability for us to have offer powertrain integration. And so, that's something that we're adding to the discussion. That's kind of the significant change that we've seen in how we've been offering, not just our product, but now our product and integration of that product. And then I think also, as you look out a few years, you're going to see our product evolve with different components coming into the product, again, to make it a more comprehensive product that offers simplification for integration for customers.

Next question is from Greg Wasikowski from Webber Research. Please go ahead.

Hearing a lot of momentum in the EV charging space and using hydrogen and other alternative fuels for other similar off-grid or micro-grid type solutions. I know you guys aren't in the business of hydrogen production, but most of those solutions would require a fuel cell. So just curious, what are the inbounds been like there? And how do you ultimately think about that within your plans for stationary power?

Hi, Greg. Great question. We profiled a little bit earlier, the order for 3.6 megawatts. And this type of order is reflective of exactly what you're talking about. So off-grid opportunities, micro-grid opportunities, opportunities, where you've got recharging, connected to the grid, but there's grid congestion, unreliability. So, we are seeing a number of different applications whether it's data centers, EV, charging requirements, construction sites, all as examples where fuel cell -- PEM fuel cell in particular are going to offer a very compelling value proposition. And I think we're going to see a growing sales pipeline, translating to order book over the coming years in this in this category.

Great. Thanks, Randy. And then for the follow-up, I know we've talked about competition and more fuel cell stack and fuel cell providers out there. But I guess I'll add on to that with a little two-parter here. So, I think it's clear that, Ballard's main competitive differentiator is quality, reliability and durability of the tech proven miles and hours of operations, right over X number of years. But with the new entrance, has it been easier or harder for you guys to demonstrate that? I could kind of see it going both ways. And then just part two of that is more of an industry question. Is there a risk or should there be concerns over either faulty or inferior tech out there that may end up reflecting poorly on the industry as a whole as adoption scales? Just kind of quality standard issues?

Yeah, I think when you have early market adoption, and new players in the market, you always run the risk of safety issues or reliability issues in the field. And I think most companies are very conscientious about their brand. And certainly, the vehicle OEMs are, with their badge on the front of these buses and trucks, etc, care deeply about safety and reliability, and uptime. And that's why Ballard is so well positioned. So, I do think that many of the companies that you see entering the market and have been starting to offer products, I'll use Cummings and Bosch, and Toyota and high-end AI as examples. You know, don't expect to see those types of issues from those types of suppliers. I think you can expect to see a product that has high safety and high reliability coming to market. Durability might be another question. But there are smaller companies that come to market. And it's not just, we've seen this in the battery space as well, right, where you've seen a number of battery packs that have had, either safety or quality issues. So as a smaller one come to market, I think it'd be very important for customers to really qualify who they're working with. And for us, we think there's a very clear contrast with our track record.

This concludes a question-and-answer session. I'd like to turn the conference back over to Randy MacEwen, CEO for any closing remarks.

Thank you for joining our call today and we look forward to speaking with you in June at our capital markets day.

This concludes today's conference call you. May disconnect your lines. Thank you for participating and have a pleasant day.