Mitch Vine

Mitch Vine
Contributor since: 2011
Company: Greenvestor Research
Jim,
I have stopped trying to forecast Plug's shipments. For now I am primarily interested in seeing proof that the quality issues are solved. The blue chip customers who have been their biggest asset have to show they are satisfied with the product and the value proposition. Only then will i need to make sense of the financials.
Thrifty
Something did change. The company was previously on a stronger order growth trend and gross profit margin improvement trend that looked like the company might reach cash flow positive territory before needing more cash. Or at least if they did get more cash they might get a better deal from the financiers. With recent poorer than expected performance, it looks more like they will have to raise cash sooner, and probably for less favorable terms, hence the likely dilution.
I would say there is an apparent reason - the last two quarters have seen tepid orders and shipments, and potential for more dillution. I am not sure why order rates have fallen off, as the company still seems to be on a winning strategy (in my opinion). Could just be just a delay while initial customers digest what they have already ordered.
It is an ugly balance sheet, and it should be at least a cautionary reminder to anyone investing in early stage companies that the risks are high. However, the amount that PLUG and other companies like Ballard lost getting to where they are now is, in my view, somewhat irrelevant to people making an investment today. The buckets of lost cash were the result of a completely different strategy, by a different management team, at a different time. At that time the company was pursuing a much broader set of objectives with a much higher burn rate, and less developed products.
Your points will be relevant in the discussion as it relates to outdoor transportation (although I've heard the hydrogen costs today are about 2x, not 4x gasoline/diesel costs). In Plug's case, the comparison is not against diesel, but against the electricity and battery charging/battery replacing costs. You can't run gasoline/diesel lift trucks indoors.
I can't agree with you. Their lift truck strategy seems to be working so far. They are the dominant player in a new business that has huge growth potential. They have gold plated customer references proving the concept every day. Few startups are in a better position, (especially in the fuel cell category), and I wouldn't want them to change direction at this point.
I'm assuming that one more common stock offering (via institutional investors) is likely. How dilutive will it be? It will depend, I believe, on the progress PLUG makes in the next few quarters. If they can reduce the cash burn rate the next cash injection could be the last before they emerge into cash positive world, and that could entice the institutional investors to buy in at a higher (less dilutive) price.
Plug does help their customers compare the lifetime cost of a Plug technology versus an installation using conventional lead acid batteries. The pricing of their equipment is only a component of that analysis. Significant benefits for Plug include the higher productivity of lift truck operations using hydrogen as fuel, and reduced greenhouse gas emissions. I've wondered if they could increase their prices - based on the reduced greenhouse gases benefit. Large companies have shown a willingness to spend a little more to get the environmental benefits.
If you want to follow and write about Ballard, feel free. Their business model doesn't interest me. That doesn't mean they are a bad company. This is an article about Plug Power.
I haven't updated my research on AMRC, but I follow their releases and I haven't seen anything to change my mind. Still holding some shares I bought back around the time of the article, and they are up about 15%.
I don't see this as new news. Just the usual cataloging of every possible risk that can be stuffed into a prospectus. They forgot to mention solar flares, and the prediction for the end of world in December 2012.
There is no doubt that governments are a factor in helping this industry grow. With $5 a gallon gasoline looming, I don't expect governments to entirely back off the encouragement of alternate fuels.
Thanks. It's hard to like a stock when the price is dropping. However, I haven't seen any fundamental change in the value of the company since the 4th quarter earnings release. They had already told us need cash to get through this year at their stated gross margin target of 10% for 2012. Although 10% is hugely improved from 2011 it isn't enough to get cash flow positive. It will be a volatile ride because they won't be able to show a profitable quarter in 2012 and investors are nervous. Best hope in 2012 is to see continued good bookings, and consistent improvements in gross margins.
With the absence of any other relevent news, my guess is a reaction to dulution. FCEL also took a beating on news that they were raising cash, so there might be some cross-over effect. Investor's reactions are interesting, when you consider that it was pretty obvious they were going to need more cash.
I don't have any details on employees. They cut back when they went to the strategy of primarily focusing on building for the lift truck market, and they are trying to keep the expenses down until the revenues catch up with expenses. I'd be more worried at this point if I saw the number of employees creeping up.
I guess other big players could be waiting in the wings for Plug to "pave the way" as you say. However I am betting that the time for others to play catch up will leave them far behind the market share leader. I believe there is a lot more value to the complete package that Plug sells besides the fuel cell stack. Plug has to provide software, energy and water management systems, sales support, service support, and battery pack compatible wiring and physical packaging. OEM's could decide to do this, but like automakers that buy tires from third parties, I expect that most will outsource the power source, or leave it up to their dealers to choose the power source. Also, there is the replacement market.
I would like to see someone besides Mitch talking about it too.
Anyone can submit articles to SeekingAlpha for another opinion. Feel free.
Clark could enter the field, but they are just one lift truck maker. It is a very big potential market and there is room for several power cell suppliers. In North America alone there are about 1 million existing battery powered lift trucks that could be upgraded Plug and Ballard together have a multi year head start, have great experience and credibility, can sell to multiple fork lift OEM's, as well as the aftermarket. Plus who knows, maybe being bought out by a big fork lift maker could be a good strategy for Plug?
It is unlikely profitability will be reached this year, given the company has said that the gross margin target for the year is 10 percent. Look for order growth this year, and profitability in 2013 or 2014.
Ballard ships the fuel cell stacks component to Plug, and Plug builds the stacks into complete power systems. The complete unit is a hybrid combination of fuel cell and lithium battery storage. Plug also provides the field service which is becoming a significant part of the revenue stream.
The company has consistently said that the biggest shipment issue is getting the customers (and their gas distribution partners) ready to install them. This is the long term challenge. In the short term, they might have been struggling to ship everything they could in the last few weeks of the year. The company has stated that they have the manufacturing capacity to support their 2012 sales targets, but when a manufacturer is in a position that they have to ship a large chunk of their sales in a small window of time, there will often be supplier and capacity issues. Also the company was switching to the new lower cost air cooled stacks from Ballard in the quarter, which may have complicated things temporarily.
Battery enthusiasts often point out they can get by on 50 or 60 miles per day. More power to them (pun intended). However I believe few will choose to live with that limit, and also won't choose to spend the money required for a 300 mile battery car. Not for the next several years anyway.
I doubt any alternative technology will beat out internal combustion for decades. But it is quite possible the cost to buy a fuel cell car will be significantly lower than a similar sized battery car within 5-10 years, have twice the range, and be re-fillable within a few minutes.
Good to hear from an actual owner, and especially one in a northern state that will require regular use of a heater. Could you estimate the difference in range with heaters on in the middle of winter versus no heater? Also do you have air conditioning and if so what is the impact on range?
For purposes of the discussion, there are 5 minute rests stop where people want to fill the tank, maybe grab a coffee and visit the rest room. A hydrogen fill-up could do do this. I doubt it would be much more expensive for the infrastructure than today's gasoline equipment, as the hydrogen would probably be delivered by truck, just as it is today with gasoline. The time to fill each car is roughly the same as is required with today's ICE cars.
For an battery electric car, there is about a 30 minute fast charge requirement. Lets go with an assumption that people would put up with this? Perhaps they can grab a hamburger. However for a largish highway rest stop - restaurant with perhaps 100+ cars in the parking lot, lets say in some futuristic world, with 30 of those cars trying to charge up at lunch, the requirement is 30 x 50 kwatt = 1.5 Mwatt continuous output. That is about the average requirement for about 750 large homes? Not impossible, but local generators for that sort of capability cost how much?
LOL A new feature for battery vehicles! They gradually reduce power so that you can gracefully pull off the road out of traffic.
Thanks for the link vfx. I note that the authors seem fairly confident about supporting home based charging, with techniques to load level the users, but with concerns about specific neighborhoods overloading local infrastructure.
My point which has gotten lost in the debate is about supporting long distance trips - where people will want to recharge at a highway rest stop. Consider the example of a 30 minute charge to a Leaf requiring 60 Kw, (compared to 1.92 kW for a Level I charger) with many BEV's all wanting to charge while they grab a hamburger. The study doesn't address that scenario.
Sorry, but i have seen no evidence that the techniques and the infrastructure to effectively recover and reuse the materials in BEV batteries exists, or will exist any time soon. Few will find it acceptable to just put them into low value uses like construction materials. The proposal that these batteries could somehow be given a second life as grid storage is interesting but doesn't solve the ultimate problem, it just postpones the problem for a few years.
Unlike some, I do think BEV's and a growing BEV infrastructure will continue to expand. I also think there will also be lots of room for FCEV's. It's a big market, and people buy stuff for a lot of different reasons.
And your credibility to make these firm statements about grid design is ..... ?
I don't know what part you think an ICE car cannot meet. The $5,000 and the weight refers to the battery component if that is what you were referring to.