Plug Power Tightens Its Belt: Plans Massive Cost Cuts & Cash Burn Control In New Strategy

Plug Power, Inc. PLUG shares are trading lower premarket on Tuesday after the company reported fourth-quarter results.

The company reported revenue of $191.5 million, missing analyst estimates of $263.2 million.

The company reached a pivotal milestone in electrolyzer deployments, expanded its hydrogen network, and enhanced the utilization of its manufacturing facilities.

Electrolyzer revenue escalated 583% Y/Y, aided by 5-MW system sales and a large-scale order deployment.

Customer warrant charges stood at $22.7 million, impacted by updated forecasts and the timing of customer programs.

In the fourth quarter, operating cash flow improved 46% year over year (Y/Y), led by margin expansion and better working capital efficiency.

Read: Plug Power Stock Nears Oversold Territory: Will Q4 Earnings Be The Turning Point?

In the quarter, the company reported a gross margin loss of 122%, reflecting a strategic deceleration in investments for mobility, high-power stationary applications, and product development.

Despite the significant improvement in cash burn, the company said it determined that the strategic actions to temper the investment pace on certain platforms, coupled with the fact that certain markets are developing slower than expected, collectively resulted in accounting conclusions to record varied non-cash impairments of certain long-lived and intangible assets.

The company recorded $971.3 million in non-cash charges for asset impairments and bad debt provisions in the fourth quarter on strategic shifts and market demand pushouts.

These impairments are expected to lower future depreciation and amortization by an estimated $55 million – $60 million in 2025.

Plug CEO Andy Marsh said, ”While we made great strides in improving cash flows in 2024, it is clear based on market dynamics that we have to make additional strides, therefore we are initiating Project Quantum Leap to further position Plug for success in the near and long term by continuing to leverage the platforms we have built while further optimizing the Company.”

Plug Power expects Project Quantum Leap to reduce annual expenses in the range of $150 million to $200 million.

These measures are expected to include additional reductions in the workforce over the coming weeks, furthering its rooftop facility consolidations, additional reductions in discretionary spending, additional reduction and leveraging of inventory, and limiting capital expenditures to near-term critical requirements.

The company expects that taking these actions will further improve margins and cash flows and accelerate the path to profitability.

As of 2024, unrestricted cash stood at over $200 million. The company expects cash burn in 2025 to continue to significantly improve.

Investors can gain exposure to the stock via ProShares S&P Kensho Cleantech ETF CTEX.

Price Action: PLUG shares are down 2.00% at $1.47 premarket at the last check Tuesday.

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