Plug’s financial performance in 2023 has faced significant headwinds due to extraordinary challenges in the hydrogen supply network across North America. However, this appears to be a temporary setback. The anticipated full-capacity production at the company’s facilities in Georgia and Tennessee by the end of the year is likely to mitigate these issues. The experience gained from scaling up the Georgia green hydrogen facility, along with the expansion in manufacturing, a broadening product portfolio, and securing new key customers, are pivotal factors that underscore Plug’s ongoing dominance in the global green hydrogen market. This situation presents a crucial test of Plug’s operational resilience and its strategic response could further solidify its market leadership.
Plug Power Inc. reported earnings results for the third quarter and nine months ended September 30, 2023. For the third quarter, the company reported sales was USD 20.07 million compared to USD 9.52 million a year ago. Revenue was USD 198.71 million compared to USD 188.63 million a year ago. Net loss was USD 283.48 million compared to USD 170.76 million a year ago. Basic loss per share from continuing operations was USD 0.47 compared to USD 0.3 a year ago. Diluted loss per share from continuing operations was USD 0.47 compared to USD 0.3 a year ago.
For the nine months, sales was USD 44.14 million compared to USD 30.73 million a year ago. Revenue was USD 669.18 million compared to USD 480.7 million a year ago. Net loss was USD 726.44 million compared to USD 500.54 million a year ago. Basic loss per share from continuing operations was USD 1.22 compared to USD 0.87 a year ago. Diluted loss per share from continuing operations was USD 1.22 compared to USD 0.87 a year ago.
Plug’s press release and highlights follow:
- The liquid hydrogen market in North America has been severely constrained by multiple frequent force majeure events, leading to volume constraints which has delayed Plug’s deployments and service margin improvements: Plug continues to manage through a historically difficult hydrogen supply environment by leveraging our logistics assets and team members to transport hydrogen across the US to support customer operations as well as implementing contingency plans in various regions of the country. Despite this challenging industry environment, we have achieved 21% sequential gross margin improvement in 3Q 2023 compared to 2Q 2023 in our fuel business.
- Despite hydrogen supply challenges impacting overall company gross margin, we have seen margin expansion in certain new products: Reported GAAP gross loss of (69%), was impacted negatively by equipment sales mix, service contract loss accruals, and continued negative fuel margins. Despite these factors, the Company saw margin expansion across certain new product platforms.
Georgia green hydrogen plant nearing major milestone: We are completing the final step of the commissioning process for the liquefiers/cold box. Liquid production is anticipated between November 15th and year-end. Also, developments at Louisiana, Texas, and New York are expected to provide an additional step change in our fuel margin expansion. Our gas plant in Georgia has now been operating for almost a year supporting high-pressure tube trailer filling for Plug as well as other customers. Unprecedented hydrogen supply challenges in the US only further reinforce our vertically integrated strategy and need for a resilient generation network to support multiple applications.
- Electrolyzer sales grew greater than three times quarter over quarter. Multiple large-scale orders validate Plug’s position as a go-to electrolyzer supplier for industrial scale projects: Since our second quarter 2023 call, Plug has line of sight to an additional 1 GW of electrolyzer orders to our backlog, including 550 MW for Fortescue in Australia and 280 MW for Arcadia e-Fuels in Denmark.
- Liquefier and cryogenics business continue rapid growth – sales pipeline now exceeding $1.1B: Plug’s cryogenics and liquefier business revenue increased approximately three times year over year (YoY), while margins have expanded by an even greater improvement in the same period.
- Average sales cycle continues to accelerate in our material handling business given the value proposition of our product and increased market awareness of our solutions. Recently, Plug has added multiple global customers including Tyson, Ryder, STEF, and others.
- Large-scale stationary manufacturing is ramping up, with first units operating at customer sites: Stationary power manufacturing lines are commissioned, with customer orders increasing across EV charging, data centers, and microgrid opportunities. Plug is on track to deliver multiple units in the fourth quarter of 2023, with expected substantial growth in 2024 and beyond.
Service accrual charge reflects higher near-term cost projections, which have been impacted by delay in the roll-out of certain reliability investments: In the third quarter of 2023, the Company has incurred a non-cash charge of $41.6 million. This charge reflects the projection for future costs to service our existing fleet through the remainder of their service contract. The severe hydrogen shortages have negatively affected direct cost of service as well as the timing for implementation of fleet upgrades into customer-operated equipment. These factors have been compounded by certain cost increases from inflation impacts on labor, materials, and overhead. The Company is continuing to monitor the current cost trends and hydrogen market dynamics. If these trends continue, the Company may have to record additional service loss provisions in future periods.
Plug’s Gigafactory and Vista facilities represent global manufacturing excellence that we believe will create a sustainable competitive advantage and industry cost leadership: Plug has increased our manufacturing footprint from 50 thousand sq. ft. to nearly 1 million sq. ft. With minimal additional capital investment, Plug believes it can significantly expand our manufacturing capacity to meet anticipated demand while delivering continued manufacturing cost reduction. As Plug manages through short-term hydrogen supply disruption, we are focused on operational scale, in-house hydrogen generation, and policy tailwinds to further the Company’s position as a global leader in the green hydrogen industry. We believe four key business accelerators position the Company to dramatically change our operations and financials in coming quarters, following what have been unprecedented challenges that have arisen from hydrogen supply disruptions in 2023.
Read the entire quarterly report HERE
Read the most up to date Fuel Cell and Hydrogen Industry news at FuelCellsWorks
