Plug Power’s (PLUG) stock has hung on to hope given the expectations for improving revenues, but profits have eluded the name. Let us begin with shipments. They were up year-over-year. The company shipped a total of 1,357 GenDrive units, up from 1,204 a year ago. In addition, three GenFuel site were installed as opposed to five last year.

What we see as one strength is growth in the positive margin services side of the business. Factoring in the activity over the last year, there are now over 16,600 GenDrive units under service or PPA contracts, up from 11,000 a year ago. It is here that the company has a chance to push back toward breakeven. We side with the bulls who argue that this is why the company is eating losses, to get those units sold and deployed, and start making money on the back-end service agreements. It is our belief however that the company has got to be significantly more aggressive in cutting costs, as the company is burning cash.

Total revenue for the quarter was $33.7 million, up just 3.3% year-over-year. The bears may cite that this isn’t all that impressive relative to two years ago when the company was seeing continued double-digit increases in revenues. We realize that timing of contracts and deals impact what we see quarter-to-quarter, as back in Q3 revenues were over $60 million. This is why we prefer to look at annual performance. On an annual basis, we see revenues did rise 55% over last year to $133 million. However, 2018 sales from management’s view point are going to grow, but at a reduced pace.

Management has guided $155 to $180 million for 2018 sales. At the high end of these expectations, the top line will rise 35%. Look, that’s definitely positive, but below the growth we saw last year. Let us also curb our enthusiasm. Just a few weeks ago, the general consensus from analysts (and from ourselves) was that 2018 revenue growth would be on par with 2017.

We were looking for at minimum $200 million, with a range of $200 to $225 million, based on managements’ expectations and the trajectory of sales. So, when the company surprised us with a guidance revision to present levels, we grew very bearish. This is because the top line is what is keeping investors in this stock. We suppose the guidance is more realistic. Long-time investors can attest, while past performance is no guarantee of future performance, management historically overpromised and underdelivered.

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