PLUG - Earnings call transcript Q3 2017

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Operator

Greetings, and welcome to the Plug Power’s Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Cococcia. sir. ahead go Please

John Cococcia

our of morning earnings to will conference but sites statements statements, further by in We cash Good revenue, margins. important year third of ProGen, electric statements Safe Act deployments the include Plug quarter including to flow our GenKey the and about Securities vehicle Europe, to, limited Exchange investors. opportunities XXXX call. not regarding and you. provisions contained road full Securities the covered XXXX and service welcome gross Power forward-looking expectations XXE intend testing Harbor XXXX, Thank This and our believe XXA derived and for growth, collections these We and Walmart expansion including usage, to of on GenDrive the is bookings, outlook from positive XXXX. impact Section expansion the revenue and cash in that including of gross forward-looking the and Section margin, applications forward-looking be those it communicate market relationships Act and statements relationships of achieving and the XXXX for of expectations units, for be future to reductions, cost liquidity of in the future in call to Amazon

and proxy XA, on on factors, XX-K forward-looking reports are year Form would ending XX, point, call. to fiscal and the like on Power’s limited after Andy to and under but differ which speak including from our as not factors, May statements materially update statements statement those the However, forward-looking our in on for any statements statements to the a forward-looking rely results Plug may this risks the with of we definitive to only do made uncertainties At cautioned unduly These call various we Report SEC. XX, over intend investors Annual other XXA because I this are and XXXX filed on from of CEO, discussed to not discussed XXXX, as day risk undertake or actual time-to-time Schedule the uncertainties they the item involve the with file and risks not as result well Marsh. as SEC December turn

Andy Marsh

and quarter call. Thank you, earnings. John Power's everyone our joining thank announced for you third quarter morning, Plug third we This conference

Just highlights remainder insights the the of management XXXX. performance Most earnings reminder, the detail shareholder and approach this we provides as other a last in investors believe will provides answers. of was second and transparency the structure the this shareholder review into quarter in we first received year. of outlook for is used the as well first as technology format the and outlook The earnings greater quarters. the release of will letter as This a our to and well quarter, and changed one third questions by our to the calls, be letter. and management’s devoted quarter companies the company’s two by the for Like for call remainder

at previous stacks. We units, over manufacturer quarter. increase nine customer In GenDrive from The we quarter, these Power XXXX the quarter, deployed Plug of XXX% our of units and first Walmart with XXXX started shipped we on unit our deals stations focused on in XX% a third utilize deals Amazon. sites. the half was and those major Over closing of executing past hydrogen

improve bringing from new Asko a cost of handling Norway. million, and in compared to adjusted previous the number of with in The results prior total as via deployments. across companies equipment wins million Toyota new Material from term two finance exceeding you to the The give PPA has margin our structure streams $X.X nearly to these margins new new in approximately completed four an over an reduce to for programs. and quarters, revenue to focus generate of from approximately year. bookings, utilized material XXX% demonstrating fueling the year. revenue of experienced almost in employed X% improve to over gross with modifying $XX We revenues automotive our prior also our $XXX date gross increase year by We stations recurring stations from Handling consumer structure the million. costs gross Power gross XX% many the Just US. the of versus Plug all the had Plug continued perspective, company margins PPAs improvement continued We $XX.X some saw increase twice customer, proceeds the million financing quarter, to to long GAAP

On our in is enhance believe the with efforts chain of continual improve ramp the accelerate impacted organization, by approximately We our future. margins the will of rapid of service efficiency run product positive but to this a our side, product our from rate, trend for the gross future our margin X% improvements company. the expected design, supply this indicator

over Q&A, No recent ever cell fuel Plug to a the to company call like traded turning executed quarter. I'd to anywhere Power’s quarter publicly Before fact. highlight close one

applications and When such autonomy fast considers megacities, beyond utilization. electric as vehicles range, to economy, and electrification the hydrogen product one in some commercial demanding develop asset fueling talk to demonstrated carbon requiring for most infrastructure potential fuel To quarter is transportation, cells Plug’s ideal to customers the grade trends cell market critical how fuel the This heavy it are of ability a partners. to scale, sharing deliver source world. for know reductions fuel for and ship when evolving we in of and cells power the

electric in five cell market. material Our years electric just laid near successful, X,XXX the and day. first are start. every area vehicles Paul that They ago on trucks into fuel accumulated growing are our now will over I this Their thoughtfully beginning were road, Dongfeng are FedEx and out take the kilometers as to our applications for we and with with and just projects handlers focus, develop other over having forklift questions. vehicle are broader vision mid-term foundation

Operator

question [Operator Rodman from today is Instructions] first from Sameer coming Joshi & Renshaw. Our

Sameer Joshi

as for capability continued do affected you and gear up investment manufacturing the or additional the against in Amazon -- the expect orders, XQ results you Walmart to your So that level? deliver any gross on

Andy Marsh

gross look expediting talk, results the level, on -- the the mentioned was When the probably I we approximately supply margins really really I that issue result at chain. impacted real going by XQ gross think a really was X% in the and of as was that it our margin

And end of the and in products. XXXX we've the the XXXX. third between then April recall, quarter, you If Amazon were orders received of delivered

of challenge. So, the was the ramping think really supply our chain biggest I

quarters, As future to more have our assembly but impact margins. would far type impacted manufacturing be as the really requirements over results, it capital operation, gross progressive the was We've I can't requirements increased we our to the that past not say will but say a our manufacture I facilities more ability manufacturing goes, or streamlined stacks. capital

facility. As fuel the in Latham have I capacity cells XX,XXX shareholder at noted earnings to our letter, year actually a we manufacture

Sameer Joshi

you executed for XXX on. the I common As do far provision expect you do worth expect the play for of mean, what timeline words, over out, what period as stock to these warrant for to goes orders, be million other this in the orders

Andy Marsh

timeline, be I managed. talk think how before, that activity. probably mean, and the is we've Paul will this to we the about let I think, a X-year I'll I warrants X type mentioned think Paul?

Paul Middleton

those Yeah. it’s against of revenues. I – probably goes, kind it’s imagine, allocated I would it just guess add can as you

XXX have million we’ll will them, So recognized a duration amount being for hit mark each of that proportionate Amazon. Walmart in and they that that be until

Sameer Joshi

Okay. non-material already handling that talks I you expect Toyota or do them have is division? for a Toyota the growth, just order totally on Material road wondered are with might or or you separate this in handling opportunities

Andy Marsh

Material Handling. Toyota owns about of XX% Structurally, Motors Toyota

operation. it a quite in So separate division is

Sameer Joshi

last for guidance. for to outlook China be to included ProGen or that your you this that that make XXXX, sure they’re One would in from units shipping Is XXX me, that just right? so wanted or not the one guidance

Andy Marsh

I the China. to your sure when two it's we'll We could going the term property today, long put to advisors I through China position thoughtfully really what put been on hired position but about Plug’s market. us for going that help the to from and I've out road company's business could, it make I'm to now. into be a, the move protect and cautious thinking have partner you about believe, long think units to is if China XXX That I pick we this is we've intellectual also want big a term. for three secure means And years and correct. right to I believe

Operator

you. Thank

from Our Eric next Craig. from question is Stine coming today

Eric Stine

the majority on been an Handling quick this caught more with eyes and OEM you is just So what has to follow-up I wanted working I point, Materials order, to the guess, Toyota closely retrofit. my

some foresee So, more kind of just there. customers that going thoughts Do our Walmart interest mainstream that Amazon, and that has as that OEM were up with this evolves that you and picked forward? goes

Andy Marsh

I of right, have think being closely we’ll and products in really five OEMs States through become we it really said, the company work there, think closely think working actually our for term. and service now, term as sure forklift And to truck been, think to seven the suspect open why the we forklift believe sales and long I with engine, from envision more talking the better I'm when about that been number at states continue OEMs, we've some with year. Look, engines but I with the perspective. we I the in smaller on about trend and and well will four lot in we think a in done cells models new channels more forklift I ProGen can the because continue to directly systems, fuel that's really large have of a when trucks, and items similar we've each in Eric we trucks will leveraging and think especially done three area informal into position make want this do years where out up we That’s infrastructure hydrogen to here basis, Europe, sold one channels old it. there's will work their that in manufacturers. long manufactured our I I and provide hydrogen was this I be appropriate our hydrogen put to retrofit the That a ones or

Eric Stine

to turn just I'll Maybe bookings.

the and fourth that reiterated? confidence number you you kind for date you’ve of got the number in to just have So confident, that got that, into secured a it’s maybe you’ve you've visibility you quarter it, gives reiterated what you reached that's then big what XQ, that but

Andy Marsh

that put is are letter And engaged number We caveat I shareholders’ some plans, we're think and Paul on a know of small caveat be the customers, customers order in December, them only expectations there I big so. with would we put know is today. that will it that, it believe built a the of are I they're

order but that Some high. our could order flows slip confidence that coming is is into January,

Eric Stine

Maybe just talk size about auto last in you mentioned the new manufacturers eventual see you to able I maybe their you're give customers, the one sector, initial two maybe for you names, the but and doubt plans the as them? me, could

Andy Marsh

and facilities with orders, year meets these we eight to most, are seven, we deployed. one later, a sure These demonstrate needs. Amazon's conversion started actually perfect I of later, of like customer's a or site the really then I and that -- months technology that example. Both make portions think

to have that post would, it we've they with no believe expect like that outs other they won’t roll seen I would customers would reason and similar be point. We

Operator

from Company. from and coming Our is next [indiscernible] question Cowen

Unidentified Analyst

the that up at looking to cash, recognized how quarter, warrant of guys particularly of restricted the or of they into if can cash flow through does million, you on unrestricted? get that is fourth kind XX XX the kind Just exactly cash the walk free payments, you are to become how flow of cash kind kind million inventory and

Andy Marsh

you that? do take Paul, to want

Paul Middleton

Yeah.

we in positive is I talked the impact example obviously mean, that be I fact which that going Most the we quarter. for have did of the mean, that volume third amount the an gets collections. fourth biggest such in is collected all a substantial of number, So quarter. the to about that Amazon to Andy as

just we've is substantial answer short a the got So, amount.

I you the with million receivables. results, end quarter over look mean, third the in we If quarter XX ended at

quarter we're -- to most actually the doing going year terms and the But So in that's big the We're net. into building delivered for things of in the happen some collected be delta of volume quarter the is QX. that is capital. collection the we’ve working this that, will

Unidentified Analyst

make there, that into far quarter quarter quarter? that as moved the fourth then pull of seasonality Walmart and that the just to from would it around Has from And a as get if how we took up wanted kind sense the of I but think of of the idea holidays, first guess moved second an Amazon going kind back of forward there? have should shipments is ’XX? break the the

Andy Marsh

want you take do to Paul, that?

Paul Middleton

it's It's not pushed the pulled into from year. forward actually share; back next

originally to combination to So as QX we pulled in up this with on we've ready A from these events of to anticipated. deployments customers done up that XXXX, earlier get pulled their we work have the year, longer the those be to desire have closer than we the programs. for And those long-term term programs holidays. closer excitement of the it's

be we're forward. a going that lot at forward obviously as keep have for look fourth to means January, we're these live good opportunity the that and ready have if pulling go it. they’re and to work and programs class of I excited ready quarter problem we a early to as be it So, do pushing those we in to high

Unidentified Analyst

over to the And as that of margins, look be quarter or as, kind of then going do is by evolving how kind kind know, that. how treatment of you influenced guys of gross guys forward looking you next kind of on far CPA couple do the thing that of the

Andy Marsh

take to want you do one? Paul, that

Paul Middleton

obviously foremost great deal. helps and a first think I Well, mix

which favorable profile most margin is continue margin. has positive a we equipment, our to very that obviously on sell as more impact So

teams infrastructure groups traction, ops great the the that to continue efforts towards to teams and Second cost. service and make great reducing

programs we to of And rolling so and to out further our in lines. equipment margins out, will fuel that number been continue our our we've a service, that improve have got continue roll

you're progression in better we with service improving are see given dollars equipment of the expect run rates we're the you're we terms those going so, see of continued And rolling going total and lines. that because each and have mix both higher to product a that programs to out

Operator

from Our Driscoll coming next Instructions] B. [Operator FBR. is Riley from Carter question

Carter Driscoll

a of clarification. My first question, just point

but did the you one So, read that in I if correctly, PPA I from there in read deployment what script, multiple deployments, quarter, is Walmart were correct? the

Andy Marsh

I’ll Paul, let you handle that.

Paul Middleton

Walmart four have quarter just primary was we happened financing in the funding of July. sites. those the QX, funding Three program our done Fargo timing agreement closed what getting of the and it's for the closed So, in been closed, with and but getting bank Wells in

funded only on So sites. But and there a we operationally close just four - was site. one

other go fund in three PPA of as And still a we'll and those well. that close happened earlier. sites number live had The QX. will We on

Carter Driscoll

was past but I of close there any change basically it’s just all timing get cash that was Amazon financing still sales. that the to Walmart, just out to when trying it’s you from not the being necessarily installs

Andy Marsh

That's right, that's right. yeah

Carter Driscoll

draft back happy at for must you obviously legislation extended - reform be least of sales. be ITC in for tax the about to talk federal You fuel the initial

So, can going potentially expectation assuming do this passing about what that potentially your to talk of some could does it you and discussions forward pass? of your

Andy Marsh

out Sure, like don't understand will exactly happen Carter, there. of in I most variables lots what mean Congress, I there's people

Republicans of over value the not fairness, that really house co-sponsors type look legislation is American ways it's means had senate. understands quite the members but the of fact only though and the in the the house the you is these XXX for this important. bill. The that jobs at eight co-sponsors, than a supported were the resistance credits higher honestly think to which I in tax the important when that fact And rebuild

think path has there this that forward, I talk being in probably is this it. with credit paths happen, much being improved, two tax if associated reform it's one trying legislation obviously does fact of into is likelihood I the the that dramatically easier to included yourself than think

you to December aspect post more issue government is know second for know come being the bus. where funding get an there's to a think terms, not XX path but that able with an that omni there the of second if I think I you there's to

bill, I has with - the but Washington. kind look, that our think I be were too much better think anything we're ago, among high, likelihood this bill could we democrats the We're position in that a of than it's support involved could significant month happen.

tax I a the I who it if probably customers think over. think And revenue next held the over either coming business bill passes. have the a had back the year. and be your the have could or brighten I significant could margin the chipped few impact really would outlook accelerator for credit years to either deal

Carter Driscoll

about improve, other units getting units there's certainly there particular share has better talk I more one personnel there. service anything in us leverage in than in are and more mean field out else spreading of expectations? margins you – terms your the can that service you helped Can Is with your particular across, having the obviously

Andy Marsh

we the you look rolling One we line. this expect think tax with basic electrochemistry. and other can life and personnel over formulations I the efficient - years our plates And just coming doing life of items the at of And stacks, equation we at little next really a at design my of becomes the making really it we've significantly. been bit one early of of Those and think the XX% it's two it’s game those formulations been in formulations the down item, are a fact looking look stack run two stack longer the of hidden that to the stacks and have really stack the have And as dramatically the it's some performance healthier really we're work. two stacks service of is into think I And going back when out the And probably the combination the skills. use shown I I business labor. system. the have think is, cost. some service cost, start lot extended that more year. items, important really that Probably replacements. really if of us And experiments longer. for controlling values comes And come and development change you

Carter Driscoll

You I comfortable identified really guess your partner with. one know, publicly touched Chinese on, you your that's

the the in process where of You you talk are of some vetting about other.

You talk Dong different that in maybe would synergistically Fang business bring than of line relationship with a separate characteristics or markets and partner what work different to about advisor. types and/or the Talk they potentially. Fang retaining end maybe is you about different you of Dong just would be it a could

Andy Marsh

When there was the I I has Carter, market York McKenzie the fuel think about going when think at, City. defined Report New first the in Council look know, electric presented cell in - market you for the that Hydrogen you vehicles, and by is are, been where this

real delivery as Forklift trucks, viewed viable duty buses, trucks. business are vans and the light commercially first

So those at they we're to, in who categories. four talking look fall all if you of

But and work and as And we're management talking with business do we right have the will so agenda we're find rather is supply the looking We're set who who and kind to we I And look six to But partners team have folks engagements. folks term. long are us mentioned for they're trucks If set I that talking business, are chain. manufacture a in the Plug manufacture which with. in term the a we we'll Plug how going right understand we well buses before, or to really say, as work I are do are continue can this schedule, the logistics and months isn't And there in it. we to and some as set board long for China of to opportunities, not grow mean conclude important. it. now, partner, has I work from this find to it

Carter Driscoll

any it of are it the you would you well. or think them. do me, I about customer, foremost, you for this realized which find a signed maybe when blockbuster centers, was focus but of competitors last type one also similar any talk piece, lot fulfillment have work from quarter have additional work other was just - with not you was some very as the you on Maybe to so Amazon, not but but begun collaboration you you, color another very of know, that probably tech Can then first of type with obviously a talk about, done, helpful. valuable trying talk and know them, I development about the be I you what And [indiscernible] have

Andy Marsh

bring. and you versus world, And little win for I applications a probably you really to the cells here Where the fuel obvious batteries. is Carter, at cells mile, But about have, respectful. you fuel range. can fuel fuel advantages be think energy know, have if last cells lithium look, look the cells density if And the

think they're internally, about about cells you the to they of with And at things looking partners greatest of kind them sense. to those if So talking fuel like the not develop there delivery applications only engage products. how key we are are vans, our applications but the make where kind

Operator

Capital coming next ROTH today question from Irwin Our Partners. from Craig is

Craig Irwin

for fair would expect potential impact reinstatement your a you can shipments ITC you previously them the and question, see accrued that contracts Is customers. that trucks the you negotiated about discussed or us that fuel piece? legacy my the ITC to Can is So of is how you something Amazon with as process with And maybe understanding your this of part the for you had of Andy, is the the encouraging go for obviously sales something to clarify to historically and it’s benefit back had really comment in in Walmart. corrected the need you’ll for ITC to this second cells. ask of of Plug profitability

Andy Marsh

in, Power. you And us significant that Craig, ITC is to of move of can they the the Plug a have of some it would half ITC, know, to accruing Plug. think that with been established, accrue real that of product customers that a some the perspective included. for about the incorporated to ITC almost that rights - So the to is is that we from a contracts other that's In benefit you have think

that's we’d half. the baby split why So in

customers new really price going really is we our going sell impacts forward; new deal For the for. forward, it can a products

Craig Irwin

comment question ask Do a marquee the Walmart something pre-existing you to Amazon, with the on have and your the would the I this if or can reinstatement. need that way. be this arrangement benefit potential to split customers of negotiated you Maybe is ITC

Andy Marsh

With some it’s in place, with others it's not.

Craig Irwin

for Then the uncertainty year bookings for of us, expectation grant for discussed large no potential year, there things there is of the back-end you grant would potential that the quantify positive I given there. of are you before know you can bookings you you’ve the expect large out us the But were warrant a again warrant that for agreements not back-end confirm lot just customers? that contracts. Can in the being that pursue as said

Andy Marsh

Craig. again, I that confirm That is will true,

Operator

Andy any like our reached turn end I’d closing of over comments. for session. We've to question-and-answer the the further to back floor

Andy Marsh

talking Well, time shipped forward team now. everyone done to today. and XXX% you quarter. Plug prior deployed and hydrogen thank stations. what just you Bye would design your everyone. like reiterate past And I from accomplished No team again, soon. nine look X,XXX company units, this one's quarter. ever I manufacturing We everyone to Thank appreciate

Operator

teleconference. you. concludes Thank That today’s

Plug Power (PLUG) 8 Nov 172017 Q3 Earnings call transcript