Plug Power(US:PLUG)2024-11-12 21:05PART I. FINANCIAL INFORMATION Item 1 – Interim Condensed Consolidated Financial Statements (Unaudited) The unaudited interim condensed consolidated financial statements reveal continued net losses, decreased assets and liabilities, and improved but still negative operating cash flow, supported by significant financing activities Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $93,940 | $135,033 | | Total current assets | $1,634,021 | $1,786,965 | | Total assets | $4,724,874 | $4,902,738 | | Liabilities & Equity | | | | Total current liabilities | $786,945 | $964,800 | | Total liabilities | $1,695,541 | $2,004,613 | | Total stockholders' equity | $3,029,333 | $2,898,125 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share) | Income Statement Item | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $198,711 | $198,711 | $437,344 | $669,179 | | Gross loss | ($100,025) | ($137,965) | ($390,355) | ($285,504) | | Operating loss | ($273,971) | ($273,971) | ($720,250) | ($717,612) | | Net loss | ($211,073) | ($283,479) | ($769,277) | ($726,438) | | Net loss per share | ($0.47) | ($0.47) | ($1.03) | ($1.22) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($597,402) | ($863,919) | | Net cash (used in)/provided by investing activities | ($358,529) | $460,488 | | Net cash provided by financing activities | $779,175 | $14,447 | Notes to Interim Condensed Consolidated Financial Statements The notes detail significant accounting policies, including a clean hydrogen tax credit, debt extinguishment, substantial equity financing, and a restructuring plan - The company qualifies for the clean hydrogen production tax credit (PTC) under the Inflation Reduction Act (IRA) starting in Q2 2024, reducing cost of revenue by approximately $1.6 million for the three months and $2.9 million for the nine months ended September 30, 20242324 - In March 2024, the company exchanged $138.8 million of 3.75% Convertible Senior Notes for $140.4 million of new 7.00% Convertible Senior Notes due 2026, resulting in a $14.0 million debt extinguishment loss4849 - During the nine months ended September 30, 2024, the company sold 189.4 million shares under its At-Market (ATM) agreement for gross proceeds of $611.5 million, and a public offering yielded $191.0 million in net proceeds from 78.7 million shares6970 - A restructuring plan approved in February 2024 incurred $8.2 million in costs for the nine months ended September 30, 2024, primarily from severance expenses, with completion expected in Q4 2024163164165 - Subsequent to quarter-end, on November 11, 2024, the company entered into a Debenture Purchase Agreement to issue a $200.0 million unsecured convertible debenture for $190.0 million in cash170 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a significant revenue decline due to slower hydrogen economy development, widening gross losses from inventory adjustments, and negative operating cash flow, offset by sufficient liquidity from recent equity financing Results of Operations Net revenue decreased significantly due to lower sales volumes in key segments, while gross loss worsened from inventory adjustments and reduced production, partially offset by decreased operating expenses Revenue by Product/Service Line (in thousands) | Product/Service Line | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Sales of equipment, related infrastructure and other | $252,224 | $543,510 | (53.6)% | | Services performed on fuel cell systems | $40,205 | $27,088 | 48.4% | | Power purchase agreements | $58,437 | $44,135 | 32.4% | | Fuel delivered to customers | $77,964 | $47,391 | 64.5% | | Total Net Revenue | $437,344 | $669,179 | (34.6)% | - Revenue from sales of equipment for the nine months ended Sep 30, 2024, decreased by $291.3 million (53.6%) year-over-year, primarily due to declines in hydrogen infrastructure, cryogenic equipment, and fuel cell systems sales, reflecting a slower hydrogen economy development203 - Gross loss from sales of equipment, related infrastructure and other was (64.5%) for the nine months ended Sep 30, 2024, a significant decline from a 7.1% gross margin in the prior-year period, driven by inventory valuation adjustments, customer mix, lower margins on new products, and reduced production volume226 - For the nine months ended Sep 30, 2024, R&D expenses decreased by $19.5 million (23.4%) and SG&A expenses decreased by $55.9 million (18.0%) year-over-year, mainly due to headcount reductions from the 2024 Restructuring Plan and lower stock-based compensation expense237240 Liquidity and Capital Resources Despite negative operating cash flow, the company maintains sufficient liquidity for the next 12 months, bolstered by significant equity financing and an amended ATM agreement - The company believes its working capital of $847.1 million and cash position, along with its right to direct B. Riley to purchase shares under the Amended ATM Agreement, will be sufficient to fund operations for at least 12 months from the financial statement issuance date275 - Net cash provided by financing activities increased to $779.2 million for the nine months ended Sep 30, 2024, up from $14.4 million in the prior year period, primarily driven by proceeds from the At Market Issuance Sales Agreement269 - The company raised significant capital through equity offerings in 2024, including selling 189.4 million shares for $611.5 million in gross proceeds under its ATM agreement and an additional $191.0 million in net proceeds from a public offering in July279280 - Subsequent to the quarter, the company amended its ATM agreement to increase the aggregate gross sales price to $1.0 billion and entered into a Debenture Purchase Agreement to sell a $200 million convertible debenture for $190 million in cash271272 Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk disclosures were reported from the prior fiscal year's Annual Report on Form 10-K - There has been no material change from the market risk disclosures provided in the Company's 2023 Form 10-K339 Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2024341 - There were no changes during the quarter ended September 30, 2024, in the company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, such controls342 PART II. OTHER INFORMATION Legal Proceedings The company is involved in multiple legal proceedings, including consolidated stockholder derivative actions and securities class actions alleging misstatements about operations and financial performance - A consolidated stockholder derivative action related to the dismissed 2021 Securities Action is pending in Delaware, with a motion to dismiss argued on November 4, 2024124 - The company is defending a consolidated 2023 securities class action in Delaware (In re Plug Power, Inc. Securities Litigation, No. 1:23-cv-00576-MN) alleging false and misleading statements about revenue goals, supply chain, and hydrogen plant construction, with a motion to dismiss pending125 - A new securities litigation was filed in March 2024 in New York (Adote v. Plug Power, Inc. et al.) alleging misstatements about hydrogen production capacity and supply chain management between May 2023 and January 2024130 Risk Factors Updated risk factors emphasize potential delays or non-occurrence of a $1.66 billion DOE loan guarantee and the significant costs and business impact of ongoing legal proceedings - An updated risk factor highlights that the funding of the up to $1.66 billion loan guarantee from the Department of Energy (DOE) is conditional and may be delayed or not occur if the company fails to satisfy all technical, legal, environmental, or financial conditions345346 - The company emphasizes that it is subject to legal proceedings and compliance risks that could harm the business, noting that litigation outcomes are challenging to predict and could have a material adverse effect on financial results, even if resolved in the company's favor347 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or specific uses of proceeds were reported for the period - The report indicates no unregistered sales of equity securities or use of proceeds during the period348 Other Information No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the third quarter of 2024 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the third quarter of 2024348 Exhibits Key exhibits include an amended At Market Issuance Sales Agreement, a Debenture Purchase Agreement, and required CEO and CFO certifications - Exhibit 10.1 is Amendment No. 2 to the At Market Issuance Sales Agreement, dated November 7, 2024349 - Exhibit 10.2 is the Debenture Purchase Agreement, dated November 11, 2024, with YA II PN, Ltd349 - Exhibits 31.1, 31.2, 32.1, and 32.2 contain the required CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act349