There’s been a lot going on with Plug Power over the past few days, and there’s still a lot more to come. Nonetheless, I’ll take this opportunity to step back and to look at the information and perspective I gathered this week.
Latham, NY
I hopped on over to Plug’s Latham, New York facility on Tuesday to experience the first day of their six-city Plug POWERTrip. I was immediately impressed with size of the crowd. I attended last year’s shareholder meeting in July, where there was only a sparse group. In contrast, Tuesday’s event drew a packed house. . . more seats had to be brought in to accommodate the more than sixty guests. The day began with a presentation, but the main draw for me was the factory tour (big thanks to Dan Connelly for showing us around).
During the tour, I made sure to ask the employees way too many questions (a trend that continued during Thursday’s annual shareholder meeting). I gathered a lot of good information throughout the event, and here are my main takeaways:
- Plug just finished a multi-week renovation of their manufacturing facility, reorganizing the plant to better accommodate their current suite of products (including the skid I’ve been so excited about)
- Currently, the facility is putting-out twenty GenDrive units per eight-hour shift (they’re currently only running one shift per day)
- Two years ago, the plant could handle 10,000 units per year; last year the plant could handle 12,500 units per year; this year the plant can handle 15,000 units. . . process improvements continue to increase the existing plant’s capacity without requiring expansion
- Plug can currently produce one hydrogen GenFuel skid every two weeks
- P&G approached Plug and asked them to make a >40kW GenDrive for their ‘claw’ trucks, and Plug gave them the new product in less than six months (so Plug has proven that they can now go from a concept to an entirely new fuel cell product within six months)
- Companies are finally adopting Plug products without asking for trial/test periods. . . companies are now doing full roll-outs for the initial site, followed by multi-site deals
- The new GenFuel dispensers are leaps-and-bounds better than the hydrogen dispensers Plug rolled-out for Honda a decade ago
- All GenDrives and Plug Power fueling stations utilize the same hydrogen fuel connectors currently used by fuel-cell cars
- Plug currently has the rights to discretionally utilize any hydrogen infrastructure deployed at customers’ distribution centers
We finished the day off with a quick story-time. Dan told us a story about a partial trial deployment at an early customer site. On the first day, employees came to work and saw that half of the forklifts had been equipped with fuel cells. Workers were weary to try-out the new technology, so they rushed to sign-out the battery lifts. The late-comers were forced to use Plug’s fuel-cell lifts. As the day wore on, the fuel-cell-lift operators began challenging the battery-lift operators to races, winning each time. At the end of the day, each fuel-cell lift operator moved more palettes than the battery-lift operators. More than pride was at stake in this competition, though, since each lift-truck operator at that facility was paid per palette moved. So the fuel-cell-truck operators brought home more money that day than battery-truck operators. The next day, employees got to work early to sign-out the fuel-cell trucks.
New York City, NY
On Thursday I traveled to New York City to attend Plug Power’s annual shareholder meeting and POWERTrip presentation. If you listened to the webcast, I’m the guy who asked Andy Marsh a lot of questions. I’ll provide a run-down of the questions I asked, why I asked them, and what I took away from the answers.
Question 1: Are Plug’s hydrogen GenFuel fueling stations currently being manufactured to easily accommodate cars in the future?
Why I asked this question: I wanted to find out if the company is taking easy steps to make their GenFuel product desirable to the budding fuel-cell-car industry. Plug is always talking about vertical market expansion within material handling, but fuel-cell cars are the way to make Plug a household name. Cars are not a vertical market for GenDrives, but cars ARE a vertical market for GenFuel, so I was hoping that the company is taking the steps necessary to eventually realize this vertical market.
Commentary on the response: It appears the company is taking the necessary steps to address the fuel-cell-vehicle market. Plug Power’s current GenFuel fueling stations include connectors that can accommodate fuel-cell cars right now. The company is also building a roadmap for the GenFuel business, and that roadmap includes eventual expansion outside of material handling and into the automotive industry. Just like the material handling fuel cell market, eventual GenFuel expansion will occur in circles, starting around existing customer distribution centers. Plug has multiple GenFuel sites in California, the North-American birthplace for fuel-cell cars. So in my opinion, the company is currently positioned well to expand their GenFuel business into the automotive fueling industry.
Question 2: When Plug talks about ‘clear visibility into 90% of this year’s revenue goal,’ what is meant by this. . . is this based on talks with potential customers, assumptions, or actual deals signed?
Why I asked this question: I wanted to see just how solid and justified their $100 million revenue prediction for this year was.
Commentary on the response: Marsh said it best, so I’ll quote him here: “Yes, we know what we have. It’s about 92% to be exact. It changed last night.” So the company is already sure about $92 million of their $100 million goal. They have seven months to sign the remaining $8 million in deals. . . and if they can sign $92 million within the first five months of the year, the final $8 million should be a walk in the park.
Question 3: Being such a customer driven company, have customers asked for any new GenDrive product applications that Plug has had to turn down because the product would not be practical/profitable at the moment?
Why I asked this question: I wanted to see how much customers trust Plug to handle all of their fuel-cell applications. . . and to see just how much Plug comes to their customers’ minds.
Commentary on the response: Plug customers have asked for numerous GenDrive applications that the company has had to turn down at the moment. I think it’s a valuable fact that customers immediately think of Plug (instead of shopping around) whenever they dream-up a new potential fuel-cell application. Plug’s name is becoming synonymous with quality within the fuel-cell industry, and you can’t put a price on how valuable that company image is. Customers trust Plug and Plug products. You can doubt Andy Marsh when he says that the company is the world’s leading experts in hydrogen fuel cells, but you can’t doubt it when the customers say it.
Question 4: How have the TRU and range-extender trials been going, and how has GenDrive performed in outdoor applications?
Why I asked this question: I’ve heard a lot about GSE recently, but haven’t heard much from the company about TRU’s and range extenders over the past few months.
Commentary on the response: It sounds like we’ll see a good deal more about range-extenders later this year, but the TRU-market has hit a bit of a snag. While Plug had no problem developing the TRU units from the ground-up within a few months, Plug hasn’t developed a means to provide enough hydrogen to keep the TRU’s filled at customer sites. TRU’s are a huge market that will be ready to roll immediately only after Plug develops their large-scale hydrogen generation/distribution plan later this year.
Question 5: How and when does Plug plan to take a majority stake in HyPulsion?
Why I asked this question: Europe is an enormous market that currently has no impact on Plug’s bottom line, and I wanted to know when Plug would begin reaping the benefits/publicity from this market.
Commentary on the response: Marsh provided a quick, but powerful answer when he said, “Stay tuned.” To me, it sounds like an announcement is imminent. . . so my guess is that we’ll get a PR about HyPulsion sometime soon, possibly when the company talks about global sales in Chicago on June 2nd.
Other takeaways from the annual meeting:
Thanks to other people’s questions, we all got some more noteworthy topics to think about, and here’s my rundown of those topics:
- Customers are currently running Plug Power’s GenDrive units within autonomous vehicles
- Later this year, the company will become the world’s leader in hydrogen dispensing. . . and it’s only taken them a year to achieve this milestone
- The company is selling hydrogen for $5/kg and netting 10% of that money (doing the math, that’s $0.50/kg)
Plug Power’s growth potential is mind-boggling, and I have no doubt that this company will be enormous some day. The company can expand in so many directions, and they are laying the groundwork for that expansion today, all while improving their bottom-line and their customers’ bottom-lines. I firmly believe that Plug is providing tomorrow’s technology today, and I’m excited/privileged to be a part of this journey. Customers are realizing the value of the Plug Power name, and with that customer trust, the company is poised for massive growth. Things are getting exponentially more exciting very fast.
