Plug Power: Q4 & Full Year Results
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LATHAM, New York - Plug Power Inc. (PLUG), a leader in providing clean, reliable energy solutions, announced its financial results for the fourth quarter and full year ended December 31, 2015. Plug Power achieved record-breaking numbers with revenues of $38.4 million in the fourth quarter and $103.3 million for the full year of 2015. For the fourth quarter, EPS was a loss of $0.14 per share, and adjusted EPS (described below) was a loss of $0.05 per share.
The Company also realized dramatic improvements in GenDrive margins, significantly exceeding the Company’s aggressive expectations for 2015. GenDrive achieved gross margin of 25% by year end 2015 and 21% for the full year. Before deferred profit (described below), the GenDrive product line achieved adjusted gross margin of more than 35% for the fourth quarter, and more than 26% for the year.
Plug Power also met or exceeded all of its other targets set for 2015, delivering $205 million in contract bookings, completing 16 GenFuel infrastructure installations, and adding eight new customers. “I’m excited about the results shown this past quarter and year,” said Andy Marsh, CEO for Plug Power. “Customer adoption continues to accelerate with both new customers and follow-on sales to existing customers, and our margin expansion initiatives have exceeded our expectations as we drive towards overall profitability.”
Marsh continued, “Every quarter of every year, Plug Power continues to see increased customer adoption of its hydrogen and fuel cell technology, globally. We are well positioned to meet our targets outlined for 2016.”
Total revenue for the fourth quarter of 2015 was $38.4 million, as compared to $21.5 million of total revenue in the fourth quarter of 2014. For the full year of 2015, total revenue was $103.3 million, compared to $64.2 million in 2014. On a year-over-year basis, total revenue increased 79.1% and 60.8%, for the quarter and full year, respectively, and is driven by more GenDrive units sold, more hydrogen infrastructure installations, and increased GenCare service revenues.
Plug Power achieved these revenue totals despite deferring $3.6 million of revenue in the fourth quarter of 2015 on certain GenKey sales that were done as sale-leaseback transactions. Generally accepted accounting principles (GAAP) require that any gross profit on sales-leaseback transactions be deferred and recognized over the life of the related lease term. This is a direct result of the increased profitability of Plug Power products, specifically GenDrive, in the fourth quarter.
The Company recognized revenue on sales of 1,256 GenDrive units in the fourth quarter of 2015 compared to 719 GenDrive units recognized in revenue in the fourth quarter of 2014. The Company recognized revenue associated with hydrogen infrastructure at eight customer sites during the fourth quarter of 2015, versus eight sites in the fourth quarter of 2014.
In regard to GenCare services, the Company had approximately 8,700 GenDrive units and 23 hydrogen infrastructure sites under service contracts as of December 31, 2015, as compared to approximately 5,200 GenDrive units and eight hydrogen infrastructure sites under service contracts as of December 31, 2014.
For GenFuel contracts, which obligate the Company to provide hydrogen fuel to customers as part of its GenKey offering, the Company had 22 customers under contract contributing revenue in the fourth quarter of 2015, as compared to seven customers under contract in the fourth quarter of 2014.
During the fourth quarter of 2015, the Company recognized a $10.1 million provision for loss contracts related to GenCare service. Prior to December 31, 2015, the Company was experiencing losses on certain extended maintenance contracts, primarily due to premature stack failures. However, management did not anticipate future losses over the remaining lives of these contracts due primarily to ongoing and continued improvements in stack life, labor leverage and design improvements.
During 2015, management determined the main cause of periodic stack life degradation, and worked with its supplier to address the issue. All new stacks being produced and shipped from the fourth quarter of 2015 and later include the new design solution. Based on testing performed and in-field performance to date of the new stacks, management believes the resolution to this matter will significantly improve the longevity of stack lives.
As of December 31, 2015, the Company had 53 extended maintenance contracts with customers, covering approximately 8,700 GenDrive units. Thirty of those extended maintenance contracts, covering approximately 5,400 GenDrive units, were projected to have expenses exceed revenue over their remaining terms, which resulted in the accrual of $10.1 million. These extended maintenance contracts have remaining terms ranging from 1-9 years, however, a majority of this incremental cost is expected to be incurred over the next two years as the Company refurbishes the stacks in the installed base.
The Company’s gross margin loss in the fourth quarter of 2015 was $9.4 million, or 24.5% of total revenue, compared to a gross margin loss of $1.7 million, or 7.7% of total revenue in the same period of 2014. Excluding the $10.1 million provision for loss contracts related to service taken in the fourth quarter of 2015, and including the gross profit of $3.6 million that was deferred during the fourth quarter of 2015, adjusted gross margin for the fourth quarter of 2015 was $4.2 million or 10.0% of total revenue, compared to adjusted gross margin loss of $1.7 million or 7.7% of revenue during the comparable quarter of 2014.
Gross margin loss for full year 2015 was $9.9 million, or 9.6% of total revenue, compared to a gross margin loss of $4.9 million, or 7.6% of total revenue in 2014. Adjusted gross margin for full year 2015 was $3.7 million, or 3.5% of total revenue, compared to adjusted gross margin loss of $4.9 million, or 7.6% of total revenue in 2014. Fourth quarter and full year adjusted gross margins reflect continued substantial margin improvement and stem from leverage of higher volume and continued product cost reductions.
Total administrative costs (including research and development and selling and general administrative) for the fourth quarter of 2015 were $14.7 million, as compared to total administrative costs of $11.6 million for the fourth quarter of 2014. The increase in these costs stems from incremental investments in sales and varied business functions to support continued growth, investments in product design and performance enhancement programs.
Net loss attributable to common shareholders for the fourth quarter of 2015 was $25.2 million, or $0.14 per share on a diluted basis. This compares to a net loss attributable to common shareholders in the fourth quarter of 2014 of $7.2 million, or $0.04 per share on a diluted basis. Adjusted net loss for the fourth quarter of 2015, which is net loss attributable to common shareholders adjusted for the provision for losses on service contracts of $10.1 million, the deferred gross profit of $3.6 million, the change in the fair value of the common stock warrant liability of $942,000, and other miscellaneous adjustments totaling $801,000, was $9.9 million, or $0.05 per share on a diluted basis. This compares to an adjusted net loss in 2014 of $13.3 million, or $0.08 per share on a diluted basis.
Please see the tables at the end of this press release for a reconciliation of GAAP to Non-GAAP amounts.
Cash and Liquidity
Net cash used in operating activities for the fourth quarter and full year of 2015 was $8.4 million and $47.3 million, respectively, which stems from the ongoing investment in our increased commercial activity, and the incremental investment in working capital. Operating cash flows for the fourth quarter and full year 2015 included approximately $6.3 million and $12.1 million, respectively, of deposits and prepaid rent associated with the Company’s sale leaseback transactions. As of December 31, 2015, Plug Power had total cash of $111.8 million, including cash and cash equivalents of $64.0 million and restricted cash of $47.8 million. The Company’s net working capital was $88.5 million at December 31, 2015.
As previously disclosed, the Company closed a $30.0 million loan facility on March 2, 2016, the proceeds of which will be used for general working capital purposes, and will support lease transactions for certain customers. This financing and the related strategic partnership with the lender is the first step towards developing a more robust project financing platform for Plug Power and its customers.
About Plug Power Inc.
The powerhouse in hydrogen fuel cell technology, Plug Power is revolutionizing the industry with cost-effective solutions that increase productivity, lower operating costs and reduce carbon footprint. Its signature solution, GenKey, provides an all-inclusive package for customers, incorporating GenFuel hydrogen and fueling infrastructure, GenCare aftermarket service and either GenDrive or ReliOn fuel cell systems. GenDrive, a lead-acid battery replacement, is used in electric lift trucks in high-throughput material handling applications. With more than 10,000 GenDrive units deployed with material handling customers, GenDrive has been proven reliable with more than 107 million hours of runtime. Plug Power manufactures tomorrow’s incumbent power solutions today, so customers can POWERAhead. Additional information about the Plug Power brands is available at www.plugpower.com.