Plug Power(PLUG) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited interim financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the period Item 1. Interim Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited interim condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, for the three months ended March 31, 2023 Condensed Consolidated Balance Sheets This section details the company's financial position, showing total assets of $5.65 billion and total liabilities of $1.73 billion as of March 31, 2023 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $474,861 | $690,630 | | Inventory | $775,649 | $645,636 | | Total current assets | $2,977,324 | $3,305,298 | | Property, plant, and equipment, net | $874,659 | $719,793 | | Total assets | $5,654,093 | $5,764,276 | | Liabilities & Equity | | | | Total current liabilities | $677,540 | $635,275 | | Total liabilities | $1,732,443 | $1,704,062 | | Total stockholders' equity | $3,921,650 | $4,060,214 | | Total liabilities and stockholders' equity | $5,654,093 | $5,764,276 | Condensed Consolidated Statements of Operations This section presents the company's financial performance, reporting a net loss of $206.6 million on $210.3 million in net revenue for the three months ended March 31, 2023 Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net revenue | $210,286 | $140,804 | | Gross loss | $(69,396) | $(35,349) | | Operating loss | $(209,799) | $(139,161) | | Net loss | $(206,561) | $(156,489) | | Net loss per share (Basic and diluted) | $(0.35) | $(0.27) | Condensed Consolidated Statements of Cash Flows This section details cash movements, showing net cash used in operating activities of $276.9 million and a net decrease in cash of $215.8 million for the three months ended March 31, 2023 Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(276,919) | $(209,919) | | Net cash provided by investing activities | $95,796 | $273,914 | | Net cash provided by (used in) financing activities | $7,181 | $(18,241) | | (Decrease)/increase in cash and cash equivalents | $(215,769) | $14,345 | Notes to Interim Condensed Consolidated Financial Statements This section provides detailed accounting policies and disclosures, including information on segment reporting, customer concentration, and ongoing legal proceedings - The company operates in one reportable segment: the design, development, and sale of fuel cells and hydrogen-producing equipment[175] - For Q1 2023, two customers accounted for 25.5% of total consolidated revenues, a decrease in concentration from Q1 2022 where five customers accounted for 67.0%[157] - The company has several ongoing legal proceedings, including securities class actions and derivative lawsuits, primarily related to past accounting and internal control disclosures, for which no accruals have been recorded[137][138][139] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's financial performance and condition for Q1 2023, highlighting revenue growth, widening gross losses, and liquidity Q1 2023 vs Q1 2022 Performance (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net Revenue | $210,286 | $140,804 | | Gross Loss | $(69,396) | $(35,349) | | Gross Margin | (33.0)% | (25.1)% | | Operating Loss | $(209,799) | $(139,161) | | Net Loss | $(206,561) | $(156,489) | - Revenue from sales of equipment and infrastructure increased 67.3% YoY to $182.1 million, primarily due to higher sales of hydrogen site installations, liquefiers, cryogenic equipment, and electrolyzer stacks[207] - The provision for common stock warrants, which reduces reported revenue, increased significantly to $14.2 million in Q1 2023 from $1.9 million in Q1 2022, primarily impacting the PPA and Fuel Delivery segments[202][203] - The company experienced a ransomware attack in March 2023, which caused temporary disruption but is not believed to have had a material impact on the business[193] Results of Operations This section details the drivers of revenue growth and the factors contributing to the decline in gross margin and increase in operating expenses Disaggregation of Revenue (in thousands) | Product/Service Line | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Sales of fuel cell systems | $28,852 | $37,528 | | Sales of hydrogen infrastructure | $48,868 | $27,089 | | Sales of electrolyzers | $40,032 | $4,059 | | Services performed on fuel cell systems | $9,097 | $8,240 | | Power Purchase Agreements | $7,937 | $10,037 | | Fuel delivered to customers | $10,142 | $13,429 | | Sales of cryogenic equipment and other | $56,589 | $18,203 | | Total Net Revenue | $210,286 | $140,804 | - Gross margin for 'Sales of equipment, related infrastructure and other' decreased to 13.1% from 18.4% YoY, due to ramp-up costs on new products like high-power stationary units and electrolyzers[213] - Gross loss on 'Fuel delivered to customers' widened to (437.4%) from (192.5%), driven by higher fuel costs, system inefficiencies, and a significant increase in the provision for common stock warrants[219] - R&D expenses increased 29.7% to $26.5 million, and SG&A expenses increased 28.6% to $104.0 million, reflecting investments in new markets, product lines, and increased headcount[220][221] Liquidity and Capital Resources This section assesses the company's liquidity position, highlighting cash reserves, restricted cash, and available-for-sale securities, alongside significant financial obligations Liquidity Position (in millions) | Item | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $474.9 | $690.6 | | Restricted cash | $898.4 | $858.7 | | Available-for-sale securities | $1,028.4 | $1,332.9 | | Total Liquidity Sources | $2,401.7 | $2,882.2 | - Net cash used in operating activities increased to $276.9 million in Q1 2023 from $209.9 million in Q1 2022, mainly due to increased spending on inventory[228] - Significant obligations as of March 31, 2023 include $375.8 million in lease liabilities, $342.8 million in finance obligations, and $194.3 million in convertible senior notes[230] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes to the company's market risk disclosures since the prior annual report - There has been no material change from the information provided in the Company's 2022 Form 10-K regarding market risk[272] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of March 31, 2023, due to un-remediated material weaknesses in internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2023, the company's disclosure controls and procedures were not effective[274] - The ineffectiveness is due to material weaknesses in internal control over financial reporting described in the 2022 Form 10-K, which have not been remediated as of March 31, 2023[274] - There were no changes during the quarter ended March 31, 2023, in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal controls[275] PART II. OTHER INFORMATION This section covers legal proceedings, updated risk factors, and a list of exhibits filed with the report Item 1. Legal Proceedings This section details ongoing legal proceedings, including securities class actions, derivative lawsuits, and a new trade secret misappropriation claim - Several securities class action and shareholder derivative lawsuits filed in 2021 and 2022 remain ongoing, with most stayed pending resolution of a motion to dismiss in the lead securities action[138][142][146] - A new securities class action was filed on April 12, 2023, alleging materially false statements about the company's ability to manage its supply chain and manufacturing between August 2022 and March 2023[152] - A lawsuit filed on May 2, 2023, alleges misappropriation of trade secrets; the company believes the allegations lack substance and intends to defend itself vigorously[154] Item 1A. Risk Factors This section updates risk factors, emphasizing information technology dependence, cybersecurity threats, and financial industry instability - An updated risk factor details the company's dependence on information technology and vulnerability to security breaches, referencing a ransomware attack in March 2023 that encrypted systems and exfiltrated limited data[279][281] - The company identifies a new risk related to adverse developments in the financial services industry, such as bank failures (e.g., Silicon Valley Bank), which could affect liquidity, counterparty performance, and access to capital[285][286][287] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate documents, agreements, and required certifications - The exhibits filed include certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[292] - A Separation Agreement, dated April 1, 2023, between Plug Power Inc. and Dirk Ole Hoefelmann is listed as an exhibit[292]