Some Perspective on Plug Power’s Q3 Update

Plug Power released their Q3 results. . . and people went mad. Looking at the StockTwits stream, you’d think that a Plug-Power fuel cell catastrophically exploded or that the company was under investigation for fraud. Neither of those things happened, yet people were out for blood. . . and I just don’t understand why. I saw the same report as everybody else, and I heard the same conference call as everybody else, but I just couldn’t find anything to be worried about. I even tried to re-read the report and conference call from the perspective of a downtrodden shareholder, but I still couldn’t find anything to be sad about. On the contrary, re-reading the conference call transcript got me even more excited, and here’s why:

  • Plug continues to spend money where it matters. They continue to ramp-up production and increase their workforce (even tripling their sales team). In spite of the costs attributed to this expansion in Q3, the company was only a $5-million late payment and a $2.8-million court settlement away from beating analyst estimates and breaking even for the quarter.
  • Coca-Cola was added to the growing list of repeat customers.
  • Over the past few months, Plug received inquiries from companies in Australia, China, and Singapore. Executives from other companies continue to ask for tours of current customers’ facilities. To me, it sounds like Plug is getting worldwide recognition for their hydrogen fuel cell value proposition.
  • Companies are definitely interested in hearing about Wal-Mart’s growing hydrogen infrastructure. However, companies are even more interested in the work being done in Europe (HyPulsion). We don’t hear much about HyPulsion, except that Plug intends to take majority ownership in that venture next year. I’m just imagining all the good info and PR that will trickle in from Europe once Plug takes that majority stake.
  • ReliOn might actually generate revenue for Plug, even though they were acquired solely for their stack tehnology.
  • As a matter of fact, Plug recently created a GenKey proposition based on ReliOn’s stationary power units.
  • Even more, Plug already has their first customer for the ReliOn GenKey package. . . a multi-site, $20-million deal.
  • Plug customers use six tons of hydrogen daily, and that number is quickly growing. According to the conference call, Plug still has a large hydrogen generation plan up their sleeves. The Praxair deal was only an option for stability and diversification until Plug’s hydrogen generation plan is ready and proven.
  • Plug is currently deploying their first outdoor hydrogen fueling station for FedEx in Memphis. Perfecting an outdoor fueling station sets the company up nicely for entering a mass consumer hydrogen market. Plug is quickly becoming the worldwide experts in hydrogen fueling, and if hydrogen cars take-off, somebody will need to build outdoor hydrogen fueling stations across country.
  • People seem to have misheard Plug’s projections for eventual profitability. The company never mentioned a projected EBITDA breakeven point during the call. They only mentioned that service-related operating margins will be break-even by the end of 2015. Even so, in my eyes, Plug Power is a start-up company that launched this past spring (after their $116-million secondary public offering). To be this close to profitability and to have their list of customers as a start-up in the hydrogen industry is impressive.

I’m really wondering how everybody missed this stuff from yesterday.