On Wednesday, July 23, Plug Power ($PLUG) held it’s annual shareholder meeting in New York. We attended, as well as some other new and long-time shareholders. During the meeting, Andy Marsh, the CEO, gave a presentation that reaffirmed our bullish view on the long-term prospects of the company.
In a nutshell, PLUG is currently in the material handling business (i.e. forklift truck batteries). Specifically, PLUG built an industry to deliver GenKey and GenDrive, the turnkey solutions that can have a site up and running in a month flat. PLUG provides the units, a service contract, and a source for hydrogen that makes the sales decision easy for the customer. Andy gave two anecdotes that speak to the traction PLUG is gaining with customers. First, $WMT announced earlier this year a 3 year deal to deploy PLUG products to 6 distribution centers. They just deployed their second in July and have plans to deploy the third, originally slated for 2015, in September, more than 3 months ahead of schedule. So WMT is moving fast to deploy PLUG products. Second, Andy indicated that the sales department has started to receive in-bound calls from large competitors to WMT. So success at WMT is making the sales decision easier for other potential new customers.
GenKey by itself is a $40Bn business total opportunity worldwide. Expansion to Europe and Asia will be primarily through JV’s. In Europe, HyPulsion (JV between PLUG and hydrogen producer Air Liquide) is driving success. In Asia, PLUG is working with Hyundai to break into that market.
Beyond offering the GenKey solution, as we have all known for some time, there are other businesses that PLUG has on its horizon. This year they completed a test run of airport tuggers powered by hydrogen for FedEx. They are going live in Memphis during the 4th quarter. That is about a $500k to $1Bn market in the US. A test of Transportation Refrigeration Units (TRU’s) powered by hydrogen is scheduled for the fourth quarter of this year at the Sysco facility located on Long Island. That is a $5Bn to $10Bn opportunity in the US.
In addition, Andy discussed his blueprint to expand the GenKey offering to a large network of retail stores and small distribution centers. Under the current model, a site needs about 100 forklift trucks or more to make a PLUG solution economical. However, leveraging the hydrogen supply and distribution route provided by a nearby hydrogen powered distribution center, PLUG can bring hydrogen to a single truck at the store level. This opens up the market tremendously within the material handling area.
We still believe it is day 1 for the premier global hydrogen system integrator.
We are looking forward to the earnings release on August 14.