Plug Power Incurs Wider-than-Expected Q4 Loss, Shares Fall - Analyst Blog

Alternative energy technology provider, Plug Power Inc. 's PLUG shares dropped 5.1% yesterday after it reported a wider-than-expected fourth-quarter 2014 loss.

Plug Power incurred a fourth-quarter adjusted loss of 8 cents per share, double the Zacks Consensus Estimate of a loss of 4 cents. The quarterly loss was however flat year over year.

Including a gain associated with the change in fair value of formerly issued common stock warrants, the company's net loss per share was 4 cents compared with 28 cents a year ago.

A loss of 24 cents incurred in 2014 was also broader than the Zacks Consensus Estimate of a loss of 19 cents. Yearly loss narrowed from the prior-year loss of 34 cents.

Plug Power Inc. - Earnings Surprise | FindTheCompany

Total Revenue

In the quarter under review, Plug Power's total revenues of $21.5 million missed the Zacks Consensus Estimate of $25.6 million by 16%. The top line, however, increased by a whopping 167.1% from $8 million in the prior-year quarter.

The rise in sales of products (up 115% year over year) and services (up 299.4%) primarily led to the surge in reported revenues. Revenues also improved due to higher research and development contract revenues (up 227.3%).

Plug Power reported 2014 revenues of $64.2 million, escalating 141.5% from $26.6 million in 2013.

Highlights of the Release

Plug Power shipped 957 GenDrive units in the fourth quarter, up 243% year over year. During the quarter, the company provided GenDrive units to customers like Wal-Mart Stores Inc. WMT , The Kroger Co. KR , Honda Motor Co., Ltd. HMC and Newark Farmers Market.

The company had a strong order booking of over $150 million in 2014 compared with $100 million in 2013. In 2014, the company also recorded sales associated with GenFuel installations in eight sites compared with an absence of similar sales in 2013.

Plug Power's cost of revenue for the fourth quarter jumped 106.3% year over year to $23.1 million primarily due to higher cost of both product and service revenues, and research and development expenses. In addition, selling, general and administrative expenses increased 152.5% year over year.

The company reported an operating loss of $13.2 million in the fourth quarter, compared with a loss of nearly $8 million a year ago.

Financial Update

As of Dec 31, 2014, Plug Power had cash and cash equivalents of $146.2 million compared with $5 million as of Dec 31, 2013.

Net cash used in operating activities in 2014 was $40.8 million, up from $26.9 million in the year-ago period.

Our View

Despite Plug Power's numerous efforts to improve the top line, its loss for the fourth quarter and full year was wider than expectations on account of rising costs.

Plug Power's other peers in the fuel cell industry also reported in the red in their recent earnings releases. Fuel cell technology is still some years away from being extensively used on a commercial platform. Since these companies are working on cutting-edge technologies that can potentially reduce the use of fossil fuels in the energy space, a considerable amount needs to be spent on R&D. This explains the losses incurred by these fuel cell makers.

Plug Power aims to follow a four-way strategy in 2015. These include - revenue recognition of over $100 million, gross margin expansion, order bookings over $200 million and finally continued investments in its hydrogen offering.

Plug Power currently has a Zacks Rank #4 (Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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