Plug Power Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. The filing, dated May 13, 2021, also presents restated fourth-quarter 2020 results. Amounts below are in U.S. dollars; financial statement figures are converted from thousands to millions where applicable.
Business context and reporting period
Plug Power develops hydrogen fuel-cell systems and related infrastructure, fuel delivery, and maintenance services, primarily for material-handling fleets, with additional stationary-power and emerging on-road vehicle markets. Its 2020 acquisitions of United Hydrogen Group and Giner ELX expanded its hydrogen production, distribution, and electrolyzer capabilities. The company operates as one segment.
Financial performance and liquidity
| Metric | FY2020 | FY2019, restated |
|---|---|---|
| Revenue | $(93.2) million | $230.0 million |
| Gross profit (loss) | $(469.4) million | $10.6 million |
| Operating loss | $(584.2) million | $(47.6) million |
| Net loss attributable to common stockholders | $(596.2) million | $(85.6) million |
| Loss per share, basic and diluted | $(1.68) | $(0.36) |
| Cash used in operating activities | $(155.5) million | $(53.3) million |
| Cash used in investing activities | $(95.3) million | $(14.2) million |
| Cash provided by financing activities | $1,515.5 million | $327.0 million |
Margins and costs: Gross margin was negative 503.5% in 2020 versus 4.6% in 2019; the 2020 figure was heavily distorted by customer warrant charges and negative reported revenue. Total operating expenses were $114.8 million, including $27.8 million of R&D, $79.3 million of SG&A, and $6.4 million of long-lived asset impairment. Net interest and other expense was $60.5 million, partly offset by a $17.7 million gain on extinguishment of debt and a $30.8 million income-tax benefit.
Fourth quarter: Restated Q4 revenue was $(309.1) million, gross loss $(431.1) million, operating loss $(477.8) million, and net loss attributable to common stockholders $(484.1) million, or $(1.35) per share. The Amazon warrant charge was the principal unusual driver of the quarter.
Liquidity and debt: At year-end, cash and cash equivalents were $1.312 billion, restricted cash $321.9 million, working capital $1.381 billion, total assets $2.251 billion, and stockholders’ equity $1.467 billion. Total liabilities were $784.4 million. Disclosed debt and financing obligations included $175.4 million of long-term debt, $181.6 million of finance obligations, and $85.6 million net carrying amount of convertible notes. The Generate Capital term loan balance was $165.8 million, with a 9.5% interest rate and maturity extended to October 2025. The company reported compliance with, or waivers for, its debt covenants.
Financing supported the cash build: 2020 registered equity offerings generated approximately $1.3 billion net, and the company issued convertible notes. After year-end, it reported approximately $1.8 billion net proceeds from a further equity offering and approximately $1.6 billion from the SK Holdings share purchase. These transactions materially increased the share count and should be considered when assessing dilution.
Material changes versus prior periods
- Reported revenue moved from $230.0 million in 2019 to negative $93.2 million in 2020, principally because the company waived remaining Amazon warrant vesting conditions on December 31, 2020 and recorded a $399.7 million revenue reduction. Total 2020 warrant provisions recorded as reductions to revenue were approximately $425.0 million; the Amazon-related provision was reported as $420.0 million.
- Excluding the warrant accounting impact, operating activity expanded: the company recognized revenue on 9,418 GenDrive units versus 6,058 in 2019, and 27 hydrogen infrastructure sites versus four. PPA revenue increased to $26.6 million from $25.6 million, while the average number of units under PPAs rose to 15,469 from 10,478.
- Profitability remained weak across offerings. The company recorded a $35.5 million 2020 service-contract loss provision, versus a $0.4 million benefit in 2019, and the year-end loss-contract accrual was $24.0 million. Management cited slower-than-expected cost reductions, higher service estimates, and increased customer unit use during COVID-19.
- Operating cash use increased to $155.5 million from $53.3 million. The company funded operations and growth largely through equity and debt issuance; financing cash flow was $1.516 billion.
- 2019 and 2018 annual statements and earlier interim statements were restated. Restatement corrections included a $112.7 million overstatement of 2019 operating-lease right-of-use assets, improper classification of R&D costs, service-contract loss accrual errors, and a 2019 deemed dividend. The filing states the corrections did not materially affect revenue, cash and cash equivalents, or the economics of commercial arrangements.
Outlook, commentary, risks and unusual items
- Outlook: No specific revenue, earnings, or margin guidance is provided in the supplied filing text. Management expected year-end working capital, together with the subsequent equity offering and SK investment proceeds, to fund operations for at least one year after the financial statements were issued. It planned to invest in manufacturing capacity, acquisitions, partnerships, and capital projects.
- Orders: Orders at December 31, 2020 were approximately $367.4 million, with delivery timing ranging from near term to multiple years. Orders may be contingent and are not guaranteed to ship, install, or convert to revenue.
- Potential future losses: The filing estimates losses of approximately $120 million over the remaining terms of certain PPA arrangements, including about $75 million of non-cash depreciation and warrant charges. No provision was recorded for those expected future PPA losses because the arrangements were treated as executory contracts. A 10% increase in estimated service costs would raise the extended-maintenance loss accrual by approximately $7.1 million.
- Restatement and controls: Management concluded disclosure controls and internal control over financial reporting were ineffective at December 31, 2020 due to a material weakness involving staffing and controls over expense presentation, leases, impairments and accruals, deemed dividends, and interim inventory adjustments. KPMG gave an adverse opinion on internal control, while issuing an unqualified opinion on the consolidated financial statements. Management described remediation steps, including additional technical accounting resources and stronger risk assessment and review processes.
- Other risks and contingencies: The company remains loss-making, uses substantial restricted cash to support customer financing and sale/leaseback arrangements, and depends on a small number of customers and suppliers. Other risks include hydrogen availability and cost, execution of green-hydrogen expansion, customer financing, competition, component reliability, and dilution. The filing describes product-liability litigation related to a 2018 forklift accident and securities and derivative lawsuits filed in 2021; the company reported no accrual for legal matters.
- COVID-19: The company said it had not observed material supply impacts as of the filing date, but noted supply-chain uncertainty and higher service costs from increased customer equipment use.
Important facts for investors to verify
- Use the restated statements in this 10-K—not the company’s previously issued statements or releases—for the affected 2018–2020 periods.
- Review the accounting, assumptions, and non-cash effects of the Amazon warrant waiver, including its impact on reported revenue and the exceptionally weak Q4 results.
- Track remediation and auditor assessment of the material weakness, and monitor resolution of outstanding SEC accounting and disclosure comments.
- Test whether service-cost reductions and PPA economics improve; compare actual costs with the $24.0 million service-contract accrual and the disclosed estimated future PPA losses.
- Assess cash burn, restricted-cash availability, debt and finance-obligation repayment needs, covenant compliance, and the extent to which operations remain dependent on external funding.
- Confirm subsequent share issuance, convertible-note conversions, warrant exposure, customer concentration, order conversion, and the status or potential financial impact of litigation.