Plug Power, Inc. · NASDAQ:PLUG
Plug Power — Investor Day (October 2009)
48 slides from Plug Power's investor day presentation, Oct 8, 2009
Slide 1: Plug Power Analyst & Investor Day
Plug Power Analyst & Investor Day October 8, 2009 COMPANY CONFIDENTIAL PLUG POWER INC. PROPRIETARY: No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means - electronic, mechanical, photocopying, recording or otherwise - without the per
Slide 2: Safe Harbor Statement
Safe Harbor Statement This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding the number of GenDrive and GenSys unit shipments expected for 2010 and our expectations for achie
Slide 3: Plug Power's Path to Profitability
Plug Power’s Path to Profitability Andy Marsh CEO
Slide 4: Agenda
Agenda Introduction Andy Marsh, CEO Plug Power Presentation Erik Hansen, General Manager - Material Handling Mark Sperry, General Manager - Prime Power Gerry Anderson, CFO Q&A Session Andy Marsh Afternoon Program & Tour Plug Power & Guests
Slide 5: Highlights of the Past Months
Highlights of the Past 12 Months We have received 873 unit orders with invoiceable value of $22 million We have reduced the cash burn rate by 40% We have reduced unit cost by an average of 40% We have built sales organizations for material handling and prime power in targeted markets
Slide 6: Frequently Asked Questions
Frequently Asked Questions Why Plug Power? When will the fuel cell industry emerge from the lab? What value are we offering customers? How large are these markets? How and when will Plug Power become profitable? What are your future capital requirements?
Slide 7: Core Competencies
Core Competencies Design expertise in fuel cell systems • PEM fuel cell stacks • Balance of plant • Reformer technology • System integration Ability to meet customer requirements • Breadth of experience • Application knowledge Strength of customer relationships • Direct sales • OEMs • After-market s
Slide 8: Plug Power: Focus on two markets
Plug Power: Focus on two markets Material Handling • Power for forklift trucks Prime Power • Power for cell towers in remote areas
Slide 9: We will ship 1,100 units in 2010
We will ship 1,100 units in 2010 Material Handling Large market with 1.7 million trucks in North America Value: • Increased productivity by 15% • IRR for many customers exceeding 30% • Up to a 90% reduction in carbon footprint
Slide 10: We will ship 1,000 units in 2010
We will ship 1,000 units in 2010 Prime Power Focus on India and the developing world • India alone is an $800 million annual opportunity Value: • 3 times more efficient than generators • Up to 50% lower fuel costs • 90% improvement in carbon footprint • Two year payback
Slide 11: We will achieve profitability in 2012
We will achieve profitability in 2012 Plug Power’s Path to Profitability
Slide 12: Beyond 2012
Beyond 2012 Expanding geographies • Beyond North America and India Expanding applications • Specialty vehicles • Wide scale generator replacements Expanding products • Leveraging the industry leading stack • Hybrid vehicles
Slide 13: Material Handling
Material Handling Erik J. Hansen VP and General Manager - Motive Power
Slide 14: Exceeded more than 1,000,000 operating hours
Exceeded more than 1,000,000 operating hours Material Handling: Highlights of the past 12 months Received over 650 unit orders Operating first greenfield site with 140 fuel cell powered trucks Launching class 2, stand-up reach, product for retail and food distribution Cumulative Fuel Cell Operating
Slide 15: G * Walmart>.< gga
G * Walmart>.< gga Wepmons WOE Guy GsyYSCO Ce Ltrs ) FedEx. MDGESTONE 3 Kimberly-Clark Freght Firestone USS. (he) aan AIR CANADA
Slide 16: Customer Value
Customer Value Class 1 Sit-down Lift Trucks Class 2 Stand-up Reach Trucks Class 3 Rider Pallet Trucks Fuel cell products power an expanding range of OEM lift trucks Products deliver • Increased productivity • Lower operating cost with return on investment • Reduction in carbon emissions and environm
Slide 17: Customer Installation - Central Grocers
Customer Installation - Central Grocers 2 shift operation 360 days per year 800,000 ft 2 facility Greenfield site 140 Class 3 units in present daily operation 80 Class 2 units to be added in Q1 2010 Both dry-good and freezer operations, same performance in both types of operation Service provided by
Slide 18: Financial Model - Fuel Cell versus Battery Powered Fleet
Financial Model - Fuel Cell versus Battery Powered Fleet Business Metrics Economic Value Conversion of typical high throughput distribution center Stand-Up Pallet Total Number of Units Purchased Differential in initial Capital Cost ($292,000) Differential in Annual Costs ($580,000) Differential in A
Slide 19: Carbon Emissions Reduction: 90% compared to LPG
Carbon Emissions Reduction: 90% compared to LPG. 75% compared to grid charging. Environmental Value Reducing Carbon Footprint Fuel Supply: Wide liquid H 2 distribution network in North America Fuel Costs: Typically H cost between $4 and $6 / kg, plus operating costs Greenhouse Gas Emissions LPG / Gr
Slide 20: We can economically operate in 380,000 trucks today
We can economically operate in 380,000 trucks today North American Market 1.7 million trucks installed Market is addressable because customers have … • Product requirements • Fleet usage • Availability of hydrogen …that allow Plug Power to provide a positive return on investment 380,000 trucks serva
Slide 21: Market Engagement
Market Engagement Strategic Accounts • Top 10 national accounts represent more than 260 distribution centers in North America • Other key accounts Channels - Sales and Service • Direct • OEM truck national accounts • OEM dealer network Business model replicates the lift truck market • GenDrive warra
Slide 22: GenDrive Regional Sales and Service Strategy
GenDrive Regional Sales and Service Strategy Truck OEM Sale OEM Service Dealer
Slide 23: GenDrive Regional Sales and Service Strategy
GenDrive Regional Sales and Service Strategy Sver 3 g d 3 5.
Slide 24: GenDrive Regional Sales and Service Strategy
GenDrive Regional Sales and Service Strategy Truck Sale Sale OEM OEM Service Dealer
Slide 25: Plug Power has the Products
Plug Power has the Products 2009 2010 2011 2012 Commercially Pallet Trucks Available (Class 3) Including freezer Stand-Up Reach Turret & Commercially Counter Balance Available (Class 2 & 1) Stock Pickers Commercially (Class 2) Available Three and Four Wheel Sit Down Commercially Counter Balance Avai
Slide 26: We will ship 1,100 units next year
We will ship 1,100 units next year GenDrive Summary Valuable Offering • Improve productivity • Achieve IRR • Reduce emissions Increase market penetration • Expansion of product offerings • Leverage OEM channel and dealer network
Slide 27: Prime Power
Prime Power Mark Sperry SVP and General Manager, Continuous Power
Slide 28: Prime Power: Highlights of the past months
Prime Power: Highlights of the past 12 months $7 million anchor order from TATA (WTTIL) for 200 units and associated 5 year service contract to be delivered by 3/31/10 Reduced GenSys direct material cost by > 50% Established and staffed Plug Power Energy India • Sales and service organization Finali
Slide 29: Customer Value
Customer Value GenSys Fuel cell system fueled by liquefied petroleum gas (LPG) Designed specifically to penetrate cell tower markets where grid quality is poor Displacing incumbent diesel generator technology by offering the customer a 20 to 30% decrease in power generation expense
Slide 30: Indian telecom market is accelerating
Although the Indian telecom market is accelerating, 6 out of 10 Indians still do not have a cell phone India Telecom Growth Market for alternative power generation THE fastest growing telecom market in the world… ~470 million 2nd largest telecom market by subscriber base (behind China) Has added an
Slide 31: GenSys business case is strongest in rural areas
GenSys business case is strongest in rural areas Rural area > Low grid quality >DG Replacement India Telecom Growth Trend Urban teledensity: 81.4% Rural teledensity: 12.6% Rural areas represent: • 70% of total Indian population (812 million people) - untapped market of 700 million • 64% of national
Slide 32: 250,000 new cell towers is a conservative estimate
250,000 new cell towers is a conservative estimate of infrastructure growth in the next 5 years - GenSys is a candidate for 135,000 sites thru 2012 Addressable Market To support this growth, tens of thousands of new cell tower constructions are being planned annually Existing Retrofit Sites Opportun
Slide 33: Basic System Architecture
Basic System Architecture GenSys has been designed specifically for the Indian telecom cell tower application GenSys Product Overview Power output: 1 to 6 kW @ 54.5 V Water independent operation Continuous duty Noise: < 65 dBA @ 3 meters Primary fuel: LPG (Propane / Butane Mix) Economic life: 5 year
Slide 34: Demonstrated Suitability for Telecom Application
Demonstrated Suitability for Telecom Application GenSys is proven in commercial use and has been fully qualified by TATA (WTTIL) after operating flawlessly throughout a 3-month field trial The fuel cell system provided power to: • BTS equipment • Variable air conditioning (indoor cell tower site) •
Slide 35: GenSys offers up to a 3x efficiency improvement over the DG
GenSys offers up to a 3x efficiency improvement over the DG Incumbent Technology: Diesel Generators Mismatch for the cell tower application that typically draws 1 kW to 6 kW Excessive turndown ratio Minimum industrial size: 15 kVA (12 kW)
Slide 36: Value Proposition
Value Proposition Offers economic and environmental benefits Half the fuel expense Offers a 20 to 30% decrease in power generation expense at cell towers over 5 years GenSys offers a 90% reduction of carbon dioxide over diesel generators
Slide 37: Total Cost of Ownership Model
Magntude of fuel savings dwarfs the difference in the initial capital investment, offering a payback period of ~ 2 years Total Cost of Ownership Model Higher Efficiency > Lower OpEx > Lower Total Cost of Ownership Note: All TCO model inputs are based on customer supplied data
Slide 38: Market Engagement
Market Engagement Focused approach to serve • Service providers - TTSL, Idea, Bharti, Reliance, etc • Infrastructure providers - WTTIL, Indus, Essar, etc • Integrators / full service providers - GTL, Spanco, TVS, etc Channels • Direct sales • Partners Flexible business model based on customer needs
Slide 39: Prime Power Summary
Prime Power Summary Addressable market of 45,000 units annually in India for the next 4 - 5 years Anchor order in hand - TATA (WTTIL) Plans to double the business year over year from 2010 - 2012 Costs will continue to come down New applications and geographies to follow Shipments to begin later this
Slide 40: Financial Metrics
Financial Metrics Gerry Anderson CFO
Slide 41: Unit Shipment Targets - GenDrive & GenSys
Unit Shipment Targets - GenDrive & GenSys 10,000 9,500 Double shipments annually 9,000 • Both GenDrive and GenSys 8,500 product families 8,000 7,500 Market application focus 7,000 6,500 • North American lift truck 6,000 - High throughput DC’s 5,500 • Indian Telecom 5,000 - Remote prime power 4,500 4
Slide 42: Shipment Mix Over Forecast Period
Shipment Mix Over Forecast Period 10% 19% 40% 31% GenDrive Class 1 GenDrive Class 2 GenDrive Class 3 GenSys Prime Power
Slide 43: Product Revenue Targets
Product Revenue Targets Double revenue annually $220.0 • Consistent with doubling of shipments $200.0 $180.0 $160.0 Early stage commercial ramp $140.0 • Approximately equal revenue contribution from GenDrive and $120.0 GenSys product families $100.0 $80.0 Key success factors $60.0 • Stand-up Reach T
Slide 44: Gross Margin Targets
Gross Margin Targets 30.0% Driving down product cost • Designing cost out 27.5% • Leveraging the supply chain • Low cost manufacturing 25.0% • Improving system reliability 22.5% Demonstrated economic value 20.0% to the customer • Value of productivity increases 17.5% • Fuel savings payback 15.0% 201
Slide 45: EBITDA Targets
EBITDA Targets $20.0 Profitable in 2012 $15.0 • Exiting run rate in 2011 is $10.0 positive $5.0 $- Long range goal of 30%+ GM $(5.0) and at least 10% EBITDA $(10.0) • Both GenDrive and GenSys $(15.0) markets $(20.0) Continue to capture $(25.0) opportunities and work through $(30.0) 2010 2011 2012 th
Slide 46: Operating Cash Targets
Operating Cash Targets $20.0 Operating cash positive in $15.0 2012 $10.0 $5.0 Working capital management $- for high growth business $(5.0) • Inventory turns improvement $(10.0) • Growth in A/R • Revolving line of credit $(15.0) - By 2012 $(20.0) $(25.0) $(30.0) 2010 2011 2012 Year
Slide 47: Summary
Summary Plug Power will be profitable by 2012 Early commercial adoption phase with high growth ramp • Double shipments each year from 2010 to 2012 • Comparable doubling of revenues over same time frame Continue to drive toward 30%+ gross margins Positive cash flow by 2012
Slide 48: Q & A Session
Q & A Session