Plug Power (NASDAQ:PLUG) just reported its second quarter earnings figures. It was one heck of a quarter which has triggered a small short squeeze as shares are up 7% at the time of this writing. The company saw total revenue for the second quarter come in at a record of $17.3 million. This revenue was made up of $12.6 million of product revenue, $4.4 million of service revenue and $0.3 million of research and development contract revenue. This compares to total revenue of $7.5 million for the comparable 2013 quarter, which was comprised of $5.6 million of product revenue, $1.5 million of service revenue and $0.4 million of research and development contract revenue. What is more, the company shipped 687 units of its GenDrive system during the second quarter of 2014 compared to 246 units in the second quarter of 2013. However, the company is still spending a lot of money, but it is nearing profits. Net income for the quarter was $3.8 million, or $0.02 per share. But, this includes a gain related to the change in fair value of previously issued common stock warrants of $9.6 million. Excluding this item, adjusted net loss was $5.8 million, or $0.04 per share. Still this is a substantial improvement.
In my January article, I argued that Plug Power stock had significant upside as I believed that the company was finally getting its act together. I argued that the company would make significant strides in acquiring contracts to sell and service its GenDrive products and related components. Given that the company shipped nearly 700 of these units in the quarter, nearly three times as many as the comparable 2013 quarter, I would argue this earnings release has strengthened and reinforced my thesis. In the article I stated:
"There are numerous benefits to the system. One huge issue is that traditional battery life for machinery is short. Batteries can't keep up with the demand for usage. This can limit industrial productivity. This is where GenDrive fuel cells come in. They provide continuous power at all times, running superior to a lead-acid battery even in freezer environments as low as -22°F. GenDrive-powered lift trucks continuously run at full speed and never require changing. Truck operators can conveniently refuel the units themselves at compact hydrogen fueling stations set in strategic locations on the floor of production facilities in a process that takes under two minutes. This allows more goods to be moved and increases productivity. This is why orders are expected to ramp up in 2014."
Thus far my call to get into the stock has been correct. When I originally opined on Plug, the stock was trading at $1.90. The stock now trades at $6.27, good enough for a 230% gain. That's not too shabby. The present earnings report was certainly better than I had expected. I predicted that the company would have significantly higher revenues, but was surprised to see it report in-line earnings and beat on revenues. Looking ahead, I expect to see growth in the company's shipments of its GenDrive systems and sustained revenues that are $15-$20 million in the next few quarters, and certainly expect substantial year-over-year improvement. The company also has sufficient cash to last many quarters. Since Plug is performing well, I predict that the company will turn a real profit by year end. I maintain my "buy" rating on the stock but given the trading action, try to wait for a pullback to initiate a position if you are on the sidelines.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.