December 14, 2018

By Paul Middleton, CFO

A Seeking Alpha article was published today from a blogger expressing many opinions and making certain statements – we thought it important to address the incorrect conclusions and assertions.

“Amazon may only be Experimenting with the Solution”
The Facts: I guess I would be surprised if Amazon would experiment with their overall supply chain in such a significant way – their lifeblood to fulfilling orders.  They have put fuel cells at every new major US big box facility since late 2016; over 20 facilities.  I wish more customers would experiment this big.


“Basically, Plug only has Amazon & Walmart as customers”
The Facts: We have deployed over 25,000 units and half of those are at customers outside of Amazon and Walmart; these are important customers, but we have many including top industry leaders across all verticals.


“10% Improvement in Gross Margin still Yields Negative Operating Margins”
The Facts: Mathematically true – Glad you can add.  However, your math does not assume growth in volume.  As we have stated publicly many times, with our growth year over year at 40 to 50%, while keeping operating expenses in check, our ebitdas breakeven point currently is ~ $60 to 65 million in quarterly sales.  As evidenced by our current year performance and guidance to 2019, we are getting to that critical point.


“Value proposition to our customers is narrow”
The Facts: The analysis is not comprehensive and inclusive of many key factors nor does it accurately reflect how our customers think about the value they get out of our solution.  The analysis leaves out factors like recovery of critical floor space in limited capacity buildings, ability to reduce overall vehicle fleets and operators while increasing throughput, and in the case of new facilities, avoid expensive electrical infrastructure to accommodate batteries.  Our solution enables our customer to think strategically long term; for every six sites they convert with fuel cells, they can do with one less distribution center; hence they can grow while maximizing asset utilization and curtail capital requirements.  As most of our customers have  20 to 150 distribution or manufacturing centers and these are quite capital intensive, Plug’s solution becomes critical to their logistics strategy.  Guess I put a lot of confidence in the smart people running the biggest companies in the world who are rapidly expanding their leverage on Plug’s solution.


“Only enough liquidity for 11 months – absolute Need to raise Equity”
The Facts: As in last few years, our business is seasonal, and we do over 65% in second half; as in years past this business is beginning to turn volume into cash collections in fourth quarter and we will end the year 2018 with significant cash balance.  This coupled with limited corporate debt position (less than $15 mil on over $120 mil of current assets); we have ample debt capacity to fund working capital requirements and short-term cash needs.  This coupled with continued sales growth and margin enhancement, 2019 will be a milestone year for Plug.


This rebuttal highlights a few of the incorrect assertions made. If the author would like to discuss these or the others, Plug Power is always happy to get the story straight.