Plug Power Inc (NASDAQ:PLUG) CEO, Andy Marsh, is optimistic that he will steer the energy solutions company into profitability in 2019. The company’s management has already initiated cost-cutting measures and adopting efficiencies aimed at turning in more profits. Also among the management’s strategic plans is to sign up big new customers to breakeven and in the long run generate profits.
In a show of utter optimism, Plug Power has projected its 2019 revenue between $235 million and $245 million.
Speaking about the same during the Wednesday Conference call to investors, Marsh noted that “If you look at trends, we’re starting to routinely breakeven. You look into 2019; we expect that to be routinely positive and those trends to continue to be positive. I have never been more optimistic about the possibilities.”
Stock Dropped despite the hype
Contrary to the norm, this news caused the company’s shares to plunge 12.5%. The possible interpretation could be that investors read between the lines and concluded that the company would not drive meaningful results given that increased adjusted EBITDA does not necessarily mean profits. Considering that increased EBITDA is what the CEO is promising for the New Year indicate the possibility that the company could be far from profitability.
As of Thursday, the stock closed at $1.45 representing a 3.97% fall. The stock’s opening price was the highest for the session; shares nose-dived thereafter to a low of $1.42. The company scored a market capitalization of $338.41 million.
Source: Stockcharts.com
As the company prepares to release its 4Q2018 fiscal year alongside full annual financial report for the same year, Marsh gave out a glimpse of what to expect.
Estimated Annual revenue 2018
The company’s boss hinted that revenue for the FY2018 would come in between $182 million and $185 million. This is well over its annual guideline of $175 million representing a 40% year over year increase. In 2017, the company posted annual revenue of $103.26 million.
Based on Marsh’s rough estimates, the projected Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) revenue will come between $60 million and $63 million.
Breaking Even
If Plug Power can generate a quarterly revenue of $60 million, the company is sure to breakeven. On an even brighter note, if the company generates figures adjusted EBITDA of over $60 million then it will as well be in the profitability lane.
Under Marsh’s leadership, Plug Power expects to be breakeven for all its 2019 quarters, better yet turning profitable from the third quarter henceforth.
Plug Power’ is popular for manufacturing hydrogen fuel cells used to power forklifts. Major companies like Amazon, Walmart, and Nike are ditching lead-acid batteries for fuel cells.
In the past decade, Plug power has sold over 25,000 Fuel cell units to the companies mentioned above and other retail consumers.
Diversification efforts
Lately, it appears like the company’s CEO is keen on diversifying from Plug Power core business. Marsh is looking to delve into on-road delivery vehicles; onboarding telecommunication companies given that their crucial infrastructure relies on battery power, getting a share of the potentially lucrative driverless vehicles space and forging Strategic partnership with Chinese Firms.
Plug Power has already begun working on one of its strategies. The company together with the Workhorse Group has delivered the first Progen Fuel cell-powered electric delivery van currently serving the Albany region.
The class 5 zero-emission van, first of its kind, was built by Workhorse group and fitted with Plug power’s ProGen hydrogen Engine. The vehicle is designed to perform all the daily delivery tasks saves on delivery companies’ fuel and general operational costs.
In its recent endeavors, it is evident that the company is focused on transforming the way material handling is done.