Plug Power (NASDAQ:PLUG) is a name rife with controversy. The history of this stock is quite interesting. Bundles have been made and fortunes lost in this stock. But from an operational standpoint it is the healthiest it has ever been. I have to give the company that. The company has also just released preliminary 2016 numbers and 2017 guidance. What is going on here?

Well, first we already did learn that the company has indeed surpassed its annual guidance for deployment of GenDrive units for 2016. Guidance called for 3,800 to 4,000, but the company delivered 4,010 units in 2016. That is a plus. Many of these went to high-profile names like Home Depot (NYSE:HD), Wal-Mart (NYSE:WMT), BMW (OTCPK:BMWYY) and more, as discussed throughout 2016.

We also know that Plug has shipped its very first production of ProGen engines for electric vehicle range extenders. This product greatly extends the life of electric vehicles making them a reality for commercial applications. This includes serving governments, transportation companies and shipping companies. So what about the finances?

Well we only got a small taste of the results. We know that for the year revenue was $85.9 million, well below initial guidance. There were $66 million in systems deployed was well as contract bookings of $280 million which is a plus. Overall GAAP gross margin is now positive, and was 4.5% on the year.

But the investments being made, while helping grow the company, are burning cash as well as pressuring the stock. Net cash used in 2016 was another $29.6 million. This leaves the company with $46 million in unrestricted cash as we enter 2017. Additional financial details will not be made available until the full earnings details.

So when I first learned of this announcement it seemed to me that the company was going to first pre-announce a bad quarter, and then soften the blow with positive 2017 news. Well the quarter was not strong, but wasn’t terrible either. I am concerned with cash going forward, a recurring concern over the years.

As we look to 2017, guidance was strong. Historically guidance is not met, but I think guidance here is realistic. It calls for $130 million in sales which is 50% above 2016’s results. GenDrive shipments will spike 40% to 5,600. GenFuel sites will total 25, while ProGen Modules will total 100.

What is even more positive is the gross margin expansion we are set to see. Gross margin will at least double 8% to 12%. The key indicator is cash. The company estimates it will burn $25 to $35 million in cash. This means unless earnings start exploding positive, more financing will have to occur in late 2017 early 2018.

While the company has turned around, it needs to make a big push toward that breakeven mark financially or the stock will continue to suffer. The debt is worrisome. The rise in the stock from penny status was spurred by some hope of new customers being on board but this game is about expectations.

What do you think?

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