Plug Power (PLUG, Financial) fell short of consensus estimates on both revenue and earnings last quarter. However, it managed to sell more GenDrive units to material handling customers across the world. It shipped approximately 857 GenDrive as compared to 155 GenDrive shipped in the same quarter last year.
The Latham, New York based company for the third-quarter posted revenue of $19.9 million as against $4.9 million in the same quarter last year. However, its revenue failed to meet consensus estimates of $24.4 million for the quarter. Its net loss for the quarter has improved to $9.4 million or loss of $0.04 per share as compared to net loss of $15.9 million or loss of $0.19 per share in the corresponding period a year earlier. The consensus was estimating loss of $0.03 per share for the quarter.
Impressive new orders
Plug Power should benefit from the outstanding new orders. Its existing customer such as Newark Farmer Market has recently ordered additional 110 GenDrive fuel cell units. Newark utilizes this fuel cell to run folk lifts in a new refrigerator meat warehouse in Newark, New Jersey. Also, the new customers including Mercedes-Benz, Coca-Cola, BMW, Wal-Mart and Kroger ordered handsome amount of GenDrive fuel cell. It has approximately $25.6 million in bookings from these customers.
In addition, the company expects eight additional prospective customers, who could soon avail its comprehensive offerings. Looking ahead for the fourth-quarter, Plug Power is expected to ship approximately 900 to 1000 GenDrive fuel cell units. This is pretty impressive numbers and should boost its sales performance in the fourth-quarter.
On the same pitch, its Chief Executive Officer, Andy Marsh said, “Plug Power continues to exhibit growth and record numbers, quarter after quarter.” He further commented that its products are creating value for current customers as they keep refreshing their existing GenDrive fleets by reinvesting in new products from Plug Power, which is true validation.
Partnership to strengthen its GenDrive supply
Plug Power is consistently working on supply chain diversification to meet rising demand from its customers across the world with quality products. Therefore, the company has taken a step forward and built a non-exclusive partnership with Ballard Power System. This non-exclusive agreement will assist Plug Power to obtain fuel cell stakes to utilize in its GenDrive systems. This deal is also expected to provide a favorable pricing to Plug Power and an additional reduction in pricing in the future. Plug Power will certainly exploit this opportunity to secure more of fuel cell stakes and fulfill customer orders with incremental sales opportunity.
Hydrogen business a new growth opportunity
The company is aggressively exploring its hydrogen business as a new growth opportunity for its top line growth and margin improvement. At present, Plug Power is working on production and disposition of GenFuel hydrogen infrastructure at various sites. Its GenFuel hydrogen offerings assist its customers with enhanced cost efficiencies and eco-friendly sustainability. Plug Power has deployed GenFuel at five sites in just one year. Also, it remains quite upbeat to start proceedings at another five sites by the end of this year.
In addition, Plug Power has couple of weeks before announced a long-term agreement with Praxair in order to supply the liquid hydrogen for its GenFuel Customers. Its GenFuel offerings now look resurrected from this deal. Praxair is one of the leading industrial hydrogen companies and largest liquid producer in North America. In fact, Praxair has of late announced that it is constructing a steam methane reformer at its liquid hydrogen plant in Niagara Fall. This plant is expected to increase its liquid hydrogen production capacity by up to 50% upon completion in fiscal 2015.
With this agreement, Plug Power will be in a better position to serve its growing demand for its GenFuel offerings. Also, it will certainly enhance its hydrogen fueling infrastructure solutions.
Combo to add value to its existing product portfolio
Apart from these, the company should benefit from its most recently launched turnkey solutions known as GenKey. GenKey includes various solutions such as GenDrive fuel cell units, GenFuel infrastructure and GenCare aftermarket service and support. These turnkey solutions facilitate a one-stop-shop for Plug Power’s customers. Plug Power is pleased with the initial adoption of this combo and expects this combo to gain traction in the market.
Conclusion
Plug Power is executing various smart moves. Growing adoption for its GenDrive fuel cell units will certainly enhance its growth in the future. The analysts have anticipated its earnings to grow at CAGR of 44.10% this year and 42.10% by next year respectively. This is indeed a solid short term return on the stock. Its balance sheet carries total cash of $156.46 million and has total debt of $3.28 million.
