Greetings, and welcome to the Plug Power 2011 Fourth Quarter and Year-End Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Cathy Yudzevich, Manager of Investor Relations for Plug Power. Thank you. Ms. Yudzevich, you may begin.

Good morning. Thank you for joining Plug Power to discuss our 2011 fourth quarter and year-end results. Andy Marsh, CEO; and Gerry Anderson, CFO, will be on this call today. This call will also be archived on our website at plugpower.com in the Investors section under Presentations. This conference call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, expectations regarding revenues and product orders for 2012. These statements are based on current expectations that are subject to certain assumptions, risks and uncertainties, any of which are difficult to predict, are beyond our control and that may cause our actual results to differ materially from the expectations in our forward-looking statements. We encourage our listeners to review our SEC filings for a complete recital of our Safe Harbor statement, as well as other risks and uncertainties discussed under Item 1A Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2010, filed with the SEC on March 31, 2011. Plug Power does not intend to and undertakes no duty to update any forward-looking statements as a result of new information or future events. At this time, it is my pleasure to turn the call over to Andy.

Thank you, Cathy. Good morning, everyone, and thank you for joining our call. Plug Power exited 2011 with a record setting year for product orders, shipments, improvement in gross margins and market growth. Though we've fallen short in some of our annual projections, I firmly believe 2011 will prove to be one of the most critical growth years in Plug Power's history. Last year, we proved we were a commercial organization capable of shipping volume production. We proved can enhance our product performance and simultaneously significantly reduce cost. We proved we can smart -- target smart international market expansion without burdening our balance sheet. And with record demand for our systems last quarter, we proved the viability of a profitable business opportunity. I'd like to begin today's call with a discussion of our record orders. Last year's new customers complemented Plug Power's growing customer list. New 2011 customers included Air Liquide, Newark Farm Market, Kroger, P&G and Associated Wholesale Grocers. We also saw significant repeat orders from Walmart, Sysco, BMW, Wegmans and Coca-Cola. Overall, in total last year, Plug Power saw a significant increase in orders from $12.1 million in 2010 to $46.1 million in 2011, representing over 2,500 units sales. In the fourth quarter, Plug Power booked $18.1 million in orders with customers such as Walmart, Associated Wholesale Grocers and BMW. Last quarter, we closed the deal with Walmart for a follow-on order for 254 systems, including service representing $5.2 million. This full fleet conversion followed a success deployment and operation of the initial 63 systems fleet for use in their Washington Court House facility in Ohio. We also closed a deal with BMW for a follow-on order for 139 systems and service, representing $3.8 million. This order will expand the fleet operating at the Spartanburg, South Carolina facility…

Thank you, Andy, and good morning, everyone. Since Andy has covered quite a bit of our 2011 performance already, I will be as brief as possible on 2011 comments, provide some guidance on 2012 expectations, and then move to any questions that call participants may have. While we are disappointed in our 2011 shipment performance, it is important to point out that it was not a result of not having the order flow or production capacity to deliver, but rather the timing of our execution of our goals. We ended 2011 with $36 million in the backlog, including 2/3 of the shippable value we need to deliver our 2012 plan. We also ended the year with over $10 million of inventory in preparation to ship many of the units we had planned to ship in quarter 4 of 2011. Turning to our operating results for quarter 4 and full year 2011. Our revenue for quarter 4 was $11.9 million and for the full year was $27.6 million, of which $23.2 million or 84% was from products and services. This is a 48% increase over the prior year product and service revenue. We expect to improve upon this growth rate in 2012 with approximately $40 million from product and service revenue to be realized. R&D contract revenue for quarter 4 was $544,000 and $3.9 million for the full year or an 8% increase year-over-year. In 2012, our focus will remain on growing our commercial business, but we will have some continuing work on existing government programs. However, we do expect full year R&D contract revenue to drop to about $2 million in 2012. Our cost of revenue for products and services in quarter 4 was $11.5 million, resulting in a negative 1.6% gross margin, and for the full year was $30.7…

[Operator Instructions] Our first question is coming from Eric Bruhl [ph] of Per Mine Capital.[ph]

Yes. It's actually Aaron Fewkes from Mine[ph Capital. I just wondered if you can give a little more detail. You mentioned there are problems in the supply chain to China. Is this something that's sort of one-off, like is this something that we've heard of labor inflation there? Is it something that makes you bring some of those supplies back on shore? Or what are the some specific lessons learned there?

I think, Eric, that it has -- it does not have anything to do with the cost of goods from China, with the quality of goods from China. I think the primary issues we ran into was shipping issues and initial product ramp with our designs. As I've mentioned during the call, our product designs -- our execution on our product designs were a bit late, which slowed down the initial modeling and initial units for us to approve out of China. And then when we looked at the timeframe from those initial samples until units could be shipped to Plug Power cost effectively, it added to probably 5 to 6 weeks to our supply chain that we were not projecting. But we're aggressively continuing to search for the right country -- the right geographical region to buy our components. And some of that is North America, some of that is China. Most of our China activity are associated with electronics and with metals and sheet metal type components.

Okay. And then the receivables. Is the fact that it shipped late due to the problems from China? And are those receivables from your end customers? And are they likely to be collected?

Yes, it's largely again due to the fact that most of our units that we get out in the fourth quarter, as Andy noted, over 300 that went the last 2 weeks and our normal terms are 30 days upon invoicing. These are all Fortune 500 companies. Most of these receivables have already been drawn in, in quarter one. But again, it was a much higher carry balance than what we had originally projected.

Our next question is coming from Ali Motamed of Robeco.

I was wondering if you could talk a little about the order guidance. I mean, we have a backlog pretty much covering this year's sales, and we've had a lot of ramp in orders. Obviously, it seems like certain of these delays have been impacting us. But what would you expect going into next year for the orders?

Okay. So we had a wonderful year in the past year with orders increasing by 368%. We won't see that kind of increase in 2012. If I was -- we have internal goals to have orders increased by 50% to 75% during the coming year.

Okay. And so going into next year, that would basically hopefully be the 12-month translation. And this year, you talked about China maybe strengthened that balance sheet. Any alternatives besides the equity market? I mean, obviously, we probably have some capacity. Maybe some of your other investors do. But it seems like with the interest that's out there and the growth that's coming, that there could be other alternatives to capital raising maybe that are not dilutive?

Right. I would say this, Ali, we are continually monitoring our balance sheet. And as we did last year, we were able to leverage our debt facility with Silicon Valley Bank. One of our challenges always remains, when we look at our balance sheet, is the type of customers we have, which are Fortune 500 customers, which would like to see a strong combination of both equity and debt on our balance sheet. So we're continuously looking at it. And we're looking to make the best decisions for our investors to minimize dilution.

Our next question is coming from Mitch Vine of Vine Security Journal.

I guess my question is around your expectations for gross margins, sort of as 2012 rolls out and maybe some idea of how you see getting beyond the 10% gross margin number you mentioned earlier.

Well, Mitch, first, when we look at activity we have going, first, I think that a large opportunity is this business has become more sophisticated. I think the example of how we partner with Air Liquide in Europe that we have been in discussions with all the large U.S. industrial gas companies to really work with them through their business models where they can be the most successful in pricing hydrogen for our customers. And when we look at our products, pricing and total cost of ownership model, the price of hydrogen is really one of the largest challenges we face. And so I know that, I'll probably explore more of this on future calls, but we are making some progress with the IGC to look at regions where they can compete, look at some set pricing, which is more competitive than what we see today. And we believe that will have -- will allow us to price our units in a way that our margins can increase by 5 to 10 points. We also though -- see -- remain -- when I look at our products, I think about early electronic design products I worked on in the '80s. And so there was cost decrease by 300%, 400%. We are still on a learning curve with our material costs. And it's our strong belief that material cost will continue to decrease annually at clip rates between 10% to 20%. And as we become more sophisticated on our manufacturing process that those costs will continue to go down also.

All right. One other question. Just related to the ability to ship the backlog in the next couple of quarters. Do you see the constraints being more related to the lead time for customers to be ready to take delivery? Or do you see it more component availability?

Customer lead times. Roughly, yes. I think that as we were going through that introduction, new design set, Mitch, there's some tension and some tension between driving the supply chain and completing the design. So you have a high reliability product. And we're through that. So now it's really working with customers and be more rapid in having -- more rapid in deploying the infrastructure to support the fuel cells, I think, are the key. I mean, one of exciting events that occurred this week was that we had Kroger, which we've talked about on the call. They've actually deployed all their units this week and they have over 160 fuel cell trucks running as we speak on the phones and a 24/7 distribution center. And that when we were able to turn in 9 months. So there are some opportunities we're able to turn quicker. We just have to -- we just have to work closer with the IGCs to make these deployments more seamless to drive down that lead time.

[Operator Instructions] We do have a question coming from John Spatz of RBC Capital Markets.

Just a real quick one on the European customers that you mentioned. What percent of those are existing and what percent would be from new inquiries coming in?

Good question, John. I would circle that about 40% are existing North American customers.

There are no further questions at this time. I'd like to hand the floor back over to Andrew Marsh for any closing remarks.

Thank you for your questions. I'd like to reiterate that though we fell short in some of our 2011 projections, we cannot lose sight of the tremendous progress this company has made year-over-year. Just compared to last year alone, we achieved a 361% increase in orders, we realized a 44% margin improvement in the fourth quarter, we completed the design work on 2 platforms and we have reduced our material cost by 30%. We demonstrated our operational capability of shipping $200 million annually from our current facilities. We formed a JV with a major European hydrogen gas company without shareholder money to expand our business in Europe, and we currently have 67% of our expected 2012 shipments booked due to a record quarter of orders. 2012 will build on our successes in 2011 and move this company closer to profitability. Thank you, everyone, for your time today.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you all for your participation.