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Plug Power finally turning the corner?

Thursday, December 12, 2013
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If the trajectory of Plug Power’s closing stock price last week were replicated in an amusement park thrill ride, you’d get a nosebleed from the ascent — a near-vertical climb between Monday and Friday from 82 cents to $2.06 a share.

And that from a company near death earlier in the year, with shares at just 12 cents and executives scrambling to find cash to fund operations.

CEO Andy Marsh admits the Latham fuel-cell maker was in a “very difficult position” when 2013 began. Now, though, he talks up a “blowout” fourth quarter to end the year and the possibility of profit in 2014 — something the 16-year-old business has yet to see.

His outlook, a drumbeat of late, was behind the stock’s run-up last week. At an event billed as an end-of-year business update conference, Marsh said the company expects to book between $30 million and $40 million in orders this quarter and likely would announce revenue-rich “turnkey” deals before year’s end.

The nuggets of news pushed Plug’s stock higher and put the company on many a list of market gainers for several days running.

But as one wag reminded on an investors’ website, Plug has over-promised and under-delivered before.

The company was founded in 1997 with an eye to finding a commercial use for its fuel-cell technology, which combines hydrogen and oxygen to produce energy without combustion. Early on, there was talk of a dishwasher-sized unit that could power homes; later, a home-energy station for fueling cars and heating and lighting residences; still later, off-grid generators to power remote cell towers.

Nowadays, Plug’s focus is GenDrive, its suitcase-sized alternative to battery packs for warehouse forklifts. Big-name customers include Wal-Mart, Sysco, CVS, Lowe’s, Kroger and BMW.

“We believe material handling can be a $400 million market for us in four to five years,” Marsh said at the company’s end-of-year event.

He predicted “a major turnkey deal for multiple sites with one or two of our largest customers” that will include providing fuel cells, service, hydrogen infrastructure and hydrogen gas. A typical turnkey deal will generate $8 million to $12 million in recurring revenue, Marsh said.

“Hydrogen represents a large opportunity for us,” he said, describing a scenario of buying “a lot of hydrogen and then sell it off at small chunks” to make a profit.

Product extensions also are possible, including fuel cells for refrigerated trucks — a market Marsh said “could potentially be larger” than material handling — and units that boost the range of electric vehicle fleets using fuel cells and lithium ion batteries.

The goal for 2014 is $60 million in product revenue and $10 million in service revenue, targets that Marsh said he is “feeling really good about.”

“This is a business that is about to explode,” he added later.

To be sure, orders have picked up: from a meager $1 million early in the year to $11 million in the second and third quarters after a major investment by Air Liquide, a giant industrial gases supplier, drew attention. Now Plug, which after years of losses reported an accumulated deficit of $820.5 million on Sept. 30, is in the midst of a self-described blowout fourth quarter.

Has the company finally turned a corner, or are investors in for just another roller-coaster ride? Only time will tell.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at marlenejkennedy@gmail.com.

 
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