What to look for in the Q2 report
There are several items that investors will be watching when Plug Power reports earnings on Thursday:
- Revenue growth. Analysts are expecting $16.7 million, which would represent a 123.2% rise from Q2 2013. The company expects to ship approximately 650 GenDrive units in the second quarter to customers including Wal-Mart (NYSE:WMT), Procter & Gamble (NYSE:PG), Volkswagen (OTCQX:VLKAY), Central Grocers and Ace. I believe that management has been conservative and I expect 700 to 750 unit shipments in Q2. Another reason I am optimistic is Ballard Power's Q2 report. Ballard reported 209% revenue growth in its materials handling segment. The growth is primarily due to growing fuel stack orders by Plug Power. This should provide enough upside to revenue estimates, along with continued ramp in services revenue. I expect revenue in the $17 million to $18 million range. Revenue might be lower if the company shifts some of its shipments to Q3 or Q4.
- Backlog and bookings. The company has increased its year-to-date backlog by 1,439 units to 3,719 units as of mid-April, which is almost triple the backlog from 2013. Plug Power has closed a significant number of GenKey deals, eight of them in Q1, while the Wal-Mart deal extension should further boost the backlog and we should see continued growth in backlog and bookings, which were $80 million at the end of Q1. The company is targeting $150 million in bookings for the year, and management stated in the Q1 conference call that they see about two-thirds of bookings on the way at the end of Q2. So, anything below $100 million in bookings would be a major disappointment, and I am targeting bookings at around $105 million to $115 million, and a potential $10 million to $15 million increase in full-year bookings target.
- Full-year revenue guidance. Management expects full-year revenue around $70 million. Given the recent developments and the expectations stated above, full-year guidance should be raised, and anything short of a $5 million increase would be a disappointment. I expect full-year revenue above $80 million, but management might not necessarily guide $80 million or higher in the second quarter announcement.
So, the Q2 report is of great significance for Plug Power's short and medium-term share price movement, as it will show if the company is benefiting from the momentum in its business since the expectations are already quite high, and management has set a high bar with recent announcements and previous goals. I believe that an in-line report would be a disappointment unless the full-year guidance is raised, along with a significantly higher backlog and bookings.