Notes on The Conference Call, 8-14-2014
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Record $17.3 Million in Quarter. Triple Revenues of Qtr 1. 687 units.
Backlog of 2600+ units plus infrastructure & servicing.
Growing Revenue contribution from GenFuel & GenService elements of Genkey Systems.
Completed Walmart Pottsdale Site installation in 13 weeks.
Walmart Johnstown NY Site about to be completed.
Due to this, 7th Walmart in Sterling Hts Ill, has already begun. Deployment in Sept 2014.
5-10 additional Walmart Sites in next year, then eventually ALL of Walmart's Distribution Centers.
VW Site is a new structure on the VW campus, expandable to other building on site, just like done at BMW.
3rd Qtr shipments = BMW, Kroger, Mercedes, and others.
PLUG has closed 11 GenKey deals already.
Honda is a brand new customer in 2014.
UK, Germany, Spain & Mexico auto plants are also coming.
Air Liquide, Hypulsion European partnership has started initial deployments, and PLUG plans to acquire control of Hypulsion in 2015, ahead of schedule. European market is larger than U.S.
Hyundai Hysco: Will partner for China ventures. Includes development of new stacks. Not a full JV in this year, but may be thereafter. Will continue to partner to develop products & markets.
October 2014 = Memphis airport materials handling finalization. First 15 units in October.
Hydrogen generation & distribution = focus of new Investor Relations & Strategy Sr. Exec.
Margins on resale of hydrogen are now single digits, but approaching double-digits, good revenue enhancements for PLUG.
Customers have expressed strong desire for GenKey at retail store level, so focus on hydrogen supply is a main PLUG focus.
Expect GenDrive gross margins in mid-20's in Qtr 4.
Reiterate $70 Million in 2014 Revenues & $150 Million in bookings.
Service business will become profitable itself early 2015.
PLUG has $169 Million in cash on hand.
Q&A: Roth Capital.
Q: What are Q 3 & 4 service margins forecast for break even?
A: Break even for service in Qtr 1 2015.
Q: Bookings update? Monthly run-rate?
A: Q-2 was at $87 Million, end of Sept should be $115-120 range.
Q: Quality issue for high-power stacks?
A: Had some "premature" failures of high-power stacks, addressed by some improvements by Ballard.
FBR Capital:
Q: Contrast discussions with top customers today vs a year ago?
A: A large customer expressed concern about PLUG's small # of service people; PLUG is addressing it by hiring more
and has demonstrated it's fixed, with Walmart experience on multiple sites. Also, Honda was convinced by visiting
Walmart facility and seeing it work. Much easier to sell concept now. Planning globally with customers vs local,
.now
Q: Hydrogen distribution initiatives?
A: Having retail-level PLUG systems greatly enhances serviceable market for PLUG by 30%, increases productivity
for PLUG's customers..
Q: Target Gross margin for service business?
A: 30 % is goal, probably 15-20% by Qtr 4 2015.
Q: Capital on hand for hydrogen distribution joint ventures, how will you utilize?
A: Will look at Capital plus debt going forward, for these. Probably would be a $20 million or so expenditure.
Q: Is that per distribution site?
A: No, total expenditure of about $40 million anticipated, for all sites.
Q: Problems with units?
A: Newer units are much more reliable. Ballard stacks in older units really the problem. Not going to be a problem
going forward. Challenge ramping service staff up as well, to handle these issues. Addressing it.
Mentioned closing the NASDAQ today at Bell.
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