Plug Power Annoucnes Q1 2008 Results

Plug Power today provided a progress update and reported its financial results for the first quarter of 2008.

Revenue for the first quarter of 2008 was $3.7 million. This compares with revenue in the same period in 2007 of $2.6 million.

Net loss for the first quarter of 2008 was $20.7 million, or $0.24 per share on a basic and diluted basis, compared with $11.2 million, or $0.13 per share, for the first quarter of 2007.

Much of the increase in net loss is attributable to the operating costs associated with Plug Power Canada, formed from the Cellex Power Products, Inc. and General Hydrogen Corporation businesses, which were acquired during 2007 and a $2.8 million other than temporary impairment charge associated with auction rate securities included in the available-for-sale securities portfolio.

“Overall, growth in the first quarter of 2008 was modest compared to the prior year’s first quarter, but we have seen considerable interest as we engage new customers and partners across all of our products,” said Andy Marsh, recently appointed president and CEO of Plug Power. “As we work our way through this transitional phase, my expectation is that sales, shipments and installations will grow throughout the year for our backup power and motive power markets.”

Plug Power continues to experience significant customer pull for GenDrive™, its motive power solution for the material handling industry. In addition to the upcoming Wal-Mart deployment, during the first quarter the Company received follow-on orders from Bridgestone Firestone North American Tire. Also, initial deployments with Sysco Foods and Ace Hardware Corporation are proving the value proposition of the GenDrive fuel cell solution.

“Taken together all of this activity in the motive power market points to the widespread interest in a hydrogen power solution by operators of large warehouses, distribution centers and manufacturing facilities,” commented Marsh.

During the first quarter, the Company initiated follow-up trials of its GenCore backup power solution with existing customers in new regions. Furthermore, Plug Power expects increased market engagement once the details of the FCC rule on backup power becomes clear.

Plug Power also unveiled its latest technology solution for residential combined heat and power applications. Designed as a drop-in replacement for existing furnaces and boilers, the high-temperature GenSys® fuel cell system is expected to create value for consumers through lower utility bills and a smaller carbon footprint. Going forward, Plug Power has engaged several utility partners in Europe and North America to drive product refinements based on their respective market requirements.

Product Installations, Shipments and Backlog

Total (GenCore, GenDrive and GenSys® products) shipments in the first quarter were 61 units.

During the first quarter of 2008, Plug received 54 total new unit orders. Total product backlog at March 31, 2008, was 298 units. Product orders include firm orders, stocking orders and orders that require certain conditions or contingencies and certain redesign elements to be satisfied prior to shipment, some of which are outside Plug Power’s control. The time periods from order receipt to shipment date and from shipment date to installation vary widely and are determined by a number of factors, including the customer contract terms and deployment plan as well as siting, permitting and construction.

Revenue

Product and service revenue was $0.9 million for the first quarter of 2008, while research and development (R&D) contract work contributed $2.9 million to the quarter’s revenue total. These amounts compare to $0.5 million of product and service revenue and $2.2 million of R&D contract revenue for the first quarter of 2007. Plug Power defers recognition of product and service revenue and recognizes revenue on a straight-line basis over the service period of each sold system. Deferred revenue was $3.7 million at March 31, 2008. Plug Power expects to recognize substantially all of this deferred product and services revenue over the next 24 months.

Operational Results

Total cost of revenue for the first quarter was $6.6 million, comprised of $1.6 million for product and service cost of revenue and $5.0 million for R&D contract cost of revenue. This compares to total cost of revenue of $4.3 million in the first quarter of 2007, which was comprised of $1.7 million of cost of product and service revenue and $2.6 million of cost of R&D contract revenue.

R&D expenses for the first quarter of 2008 were $10.0 million compared with $9.3 million for the first quarter of 2007.

Selling, general and administrative (SG&A) expenses were $6.5 million for the first quarter of 2008 compared with $4.1 million for the first quarter of 2007.

Cash and Liquidity

Net cash used in operating activities for the quarter ended March 31, 2008, was $15.5 million and an additional $0.6 million was used for capital expenditures. On March 31, 2008, Plug Power had cash, cash equivalents and available-for-sale securities of $146.8 million and net working capital of $145.5 million, compared with $251.4 million and $257.5 million, respectively, at March 31, 2007.

Included in available-for-sale securities and working capital at March 31, 2008 was $60.1 million of auction rate debt securities. The recent disruption in the financial markets has resulted in reduced liquidity for these types of securities and recent auctions for such securities have not been successful. Accordingly, the Company expects to hold these securities until there is a successful auction or the Company sells them in the open market. Securities similar to the auction rate debt securities held by the Company are currently trading at a discount on the open market.

Given the risk of continued failed auctions for auction rate securities and the discounted trading for such securities in the open market, the Company concluded that the estimated fair value of these securities has become lower than the cost of these securities and that this difference represents a decline in fair value that is other than temporary. Accordingly, the Company recorded an other than temporary impairment charge of $2.8 million as of March 31, 2008.

Source: Fuel Cell Today