Plug Power Inc.

August 9, 2023
ENERGY TRANSITION EQUITY RESEARCH

(PLUG, Buy, $14 PT)

Gregory Lewis, CFA
Revenue Better Than Expected, Higher Costs Keeping a Lid on Margin (212) 588-6543 glewis@btig.com
Improvement. Sherif Elmaghrabi
(332) 400-5177 selmaghrabi@btig.com
WHAT YOU SHOULD KNOW: PLUG reported Q2 earnings (AMC) with revenue of ~ Company Data
$260M which was ~9% above consensus' (~$238M), with the beat driven primarily by Closing Price $10.75
equipment sales of ~$216M which was ~9% above consensus. Revenue was up ~19%
Price Target $14.00
sequentially and ~86% Y-Y. And while gross margin improved ~300bps sequentially to
-30%, it was below the negative ~9% consensus estimate. Management noted that Market Cap (M) $6,429.07
the hydrogen production ramp in Georgia expected over the next two quarters should Shares Out (M) 598.05
drive ~33% improvement in fuel costs. We note the Georgia plant faced more delays Avg Daily Vol-3 Months (M) 25.99
during Q2, and is now expected to reach ~15tpd of liquid hydrogen production later this Dividend / Yield $0.00 / 0.0%
quarter. Management noted the construction delays were driven by weather. Bigger
Revisions
picture, PLUG continues to target 200tpd of liquid hydrogen capacity commissioning
or under construction by the year-end, and management reiterated that learnings Previous Current
from Georgia should accelerate future production growth. Bottom Line: despite margin Rating Buy Buy
challenges during the quarter, PLUG continues to build out its hydrogen network, which Price Target $14.00 $14.00
should drive significant margin improvement as PLUG starts to source fuel internally. FY23E EBITDA (285.44) (331.15)
■ Hydrogen Production. Running through PLUG's other hydrogen projects, PLUG FY24E EBITDA (13.62) 0.21
continues to move forward with New York (65-75tpd) and Texas (~45tpd), but FY23E REV 1,246.60 1,221.60
these are not expected to reach full production until 2024. Additionally, the FY24E REV 1,781.63 1,809.98
commissioning of the Louisiana JV (~15tpd) has been pushed to 1Q24 while the
EBITDA (Adjusted)
Tennessee plant adds ~10tpd. We expect PLUG to also look to increase its footprint
potentially in the Southwest, Midwest, or Texas with an announcement of at least FY Dec 2022A 2023E 2024E
40-50tpd of incremental capacity in the next few quarters. Q1 (85.28) (141.90)A (26.24)
Q2 (93.57) (152.36)A (2.35)
■ Building the Business. While the nascent nature of the hydrogen market has
resulted in PLUG funding growth with cash, management expects to secure debt Q3 (93.42) (30.21) 8.28
from the DOE loans program (think a maturing capital structure beyond the $200M Q4 (127.57) (6.69) 20.51
convert due in 2Q25). Additionally, on the back of increasing revenue and backlog, FY EBITDA (399.84) (331.15) 0.21
we expect PLUG to start to layer in green financing as it looks to ramp its hydrogen Revenue (M)
production and equipment manufacturing in the US and Europe.
FY Dec 2022A 2023E 2024E
■ Electrolyzer Sales Momentum. Electrolyzer stack production at Rochester crossed Q1 140.80 210.29A 405.26
the ~100MW/month in Q2 (we expect production to continue to melt higher). And Q2 151.27 260.18A 448.71
while some customers remain in a holding pattern awaiting IRA guidance, PLUG
Q3 188.63 341.07 466.88
secured a 100MW order in July from a European oil company lifting its electrolyzer
backlog to 2GW+. Given our expectations of improving electrolyzer demand which Q4 220.74 410.06 489.14
should push PLUG's backlog higher, we expect Rochester to ramp to ~2.5GW of FY REV 701.44 1,221.60 1,809.98
capacity in 2025 (in-line with management's previous comments). FY P/S 9.2x 5.3x 3.6x

■ Guidance Bull and Bear Case. Management reiterated guidance of ~$1.4B in Source: FactSet, BTIG Estimates and Company
revenue (~$470M in 1H23) and ~10% gross margin, with a low case of ~$1.2B Documents reported as $ currency.
FY = Fiscal Year CY = Calendar Year
in revenue and ~4% gross margin. Management noted the delta around revenue
guidance will be the pace of equipment orders (equipment drove ~85% of 1H23
revenue). Additionally, management has been consistent in expecting roughly two
thirds FY23 revenue to come in the back half of the year. We lower our FY23 revenue
to ~$1.22B (from ~$1.25B) to account for potential deliveries slipping into next year.
■ Valuation: PLUG is currently trading at ~5x consensus' 2023 sales estimate of ~
$1.3B (we are ~4% below consensus). Our $14 PT is based on a 3-stage DCF with
revenue growth of ~45% through 2025, dropping to ~30% through 2030, and ~20%
through 2040 as the hydrogen industry matures (~20% CAGR from 2023-2040).
PLEASE READ: IMPORTANT DISCLOSURES AND ANALYST’S CERTIFICATION APPEAR IN APPENDIX WWW.BTIG.COM
 Investment Thesis
ENERGY TRANSITION EQUITY RESEARCH

PLUG is positioning itself as a leader in hydrogen with an integrated product offering across the hydrogen economy. We expect
PLUG to put its cash balance to use with additional bolt-on acquisitions, along with additional JVs to diversify and grow PLUG's
market share in the rapidly expanding hydrogen economy.

Upcoming Catalysts Price Performance

■ Onboarding New Customers $35
■ Improving Material Handling Revenues $30
■ Additional JVs
$25
■ Additional Bolt-On Acquisitions
■ Passing the Inflation Reduction Act into Law $20

$15
Base Case Assumptions: $14 Price Target $10

PLUG is currently trading at ~5x consensus' 2023 sales estimate of ~$1.3B (we are $5
~4% below consensus). Our $14 PT is based on a 3-stage DCF with revenue growth of

May-23
Mar-23
Nov-22

Aug-23
Dec-22
Sep-22

Feb-23

Apr-23
Oct-22

Jun-23
Jan-23

Jul-23
~45% through 2025, dropping to ~30% through 2030, and ~20% through 2040 as the
PLUG
hydrogen industry matures (~20% CAGR from 2023-2040). S&P 500 (rebased)
Source: FactSet

Upside Scenario Company Description

Our upside scenario is that hydrogen adoption is faster than anticipated and that PLUG Plug Power, Inc. designs, develops,
is able to grow (both organically and inorganically) more quickly. We expect material manufactures and commercializes fuel
handling to continue to be the core driver of the business. cell systems for electric lift trucks
and materials handling equipment. The
Company offers its products globally to
retail, grocery, and institutional food
distribution centers, as well as to
Downside Scenario manufacturing facilities.
Our downside scenario is that hydrogen adoption remains a niche market, failing to
reach mass market appeal as other solutions, such as electric propulsion, take market
share.

BTIG, LLC Gregory Lewis, CFA (212) 588-6543 www.btig.com

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 PLUG Income Statement
ENERGY TRANSITION EQUITY RESEARCH

Source: Company Data, BTIG Research Estimates

BTIG, LLC Gregory Lewis, CFA (212) 588-6543 www.btig.com

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 BTIG Covered Companies Mentioned in this Report
ENERGY TRANSITION EQUITY RESEARCH

Plug Power Inc. (PLUG, Buy, $14 PT; Closing Price: $10.75; Analyst: Gregory Lewis)

BTIG, LLC Gregory Lewis, CFA (212) 588-6543 www.btig.com

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 Appendix: Analyst Certification and Other Important Disclosures
ENERGY TRANSITION EQUITY RESEARCH

Analyst Certification
I, Gregory Lewis, hereby certify that the views about the companies and securities discussed in this report are accurately
expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific
recommendations or views in this report.

I, Sherif Elmaghrabi, hereby certify that the views about the companies and securities discussed in this report are accurately
expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific
recommendations or views in this report.

Regulatory Disclosures
Ratings Definitions
BTIG LLC’s (“BTIG”) ratings, effective June 12, 2017, are defined as follows:
BUY – A security which is expected to produce a positive total return of 15% or greater over the 12 months following the
recommendation. The BUY rating may be maintained as long as it is deemed appropriate, notwithstanding price fluctuations that
would cause the target to fall outside of the 15% return.
SELL – A security which is expected to produce a negative total return of 15% or greater over the next 12 months following the
recommendation. The SELL rating may be maintained as long as it is deemed appropriate, notwithstanding price fluctuations that
would cause the target to fall outside of the 15% return.
NEUTRAL – A security which is not expected to appreciate or depreciate meaningfully over the next 12 months.
NOT RATED – A security which is not rated or covered by BTIG.
UNDER REVIEW – Effective immediately, coverage of the following securities is Under Review. Ratings, price targets, disclosures,
and estimates for the companies listed below are suspended and should no longer be relied upon.

Distribution of Ratings and Investment Banking Clients

BTIG must disclose in each research report the percentage of all securities rated by the member to which the member would
assign a “buy”, “neutral” or “sell” rating. The said ratings are updated on a quarterly basis. BTIG must also disclose the percentage
of subject companies within each of these three categories for whom the member has provided investment banking services
within the previous twelve months.

Current Rating Distribution (as of August 9, 2023):

Coverage Universe Count Percent Inv. Banking Relationships Count Percent

Buy 259 61.5% Buy 75 29.0%

Neutral 157 37.3% Neutral 22 14.0%
Sell 5 1.2% Sell 0 0.0%
For purposes of FINRA ratings distribution rules, BTIG’s stock ratings of Buy, Neutral and Sell fall into Buy, Hold and Sell
categories, respectively.

Company Valuation and Risk Disclosures

Plug Power Inc. (PLUG, Buy, $14 PT)
Valuation: PLUG is currently trading at ~5x consensus' 2023 sales estimate of ~$1.3B (we are ~4% below consensus). Our $14 PT
is based on a 3-stage DCF with revenue growth of ~45% through 2025, dropping to ~30% through 2030, and ~20% through 2040
as the hydrogen industry matures (~20% CAGR from 2023-2040).
Risks: Risks to our Rating are two-fold, those specific to the company and industry risks. Company risks include: 1) failure to
execute, 2) dilutive transactions, 3) poorly timed acquisitions, 4) loss of a key customer, 5) project cost overruns on any of the
company’s slated projects, which include the Gigafactory, Green Hydrogen production facilities, and its co-investments with its
BTIG, LLC Gregory Lewis, CFA (212) 588-6543 www.btig.com
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 joint-venture partners, 6) competition from existing and new entrants, 7) competing hydrogen fuel cell technologies, 8) disruptive
ENERGY TRANSITION EQUITY RESEARCH

technologies, and 9) loss of a strategic partner or joint venture.Industry-specific risks for hydrogen include: 1) competition
from alternative power sources like batteries and natural gas, 2) changes in government policies towards hydrogen or a lack of
incentives focused on green hydrogen, 3) reduced commitments by countries and companies around net-zero emissions that
could reduce demand for green hydrogen, 4) new disruptive technologies, 5) higher renewable energy costs that make green
hydrogen more expensive, and 6) failure of green hydrogen to gain market share.

Plug Power Inc. Rating History as of 08/08/2023

I:B:$40.00 B:$35.00 B:$25.00 B:$14.00
05/27/2021 08/09/2022 11/08/2022 05/09/2023
$80
$70
$60
$50
$40
$30
$20
$10
$0
Oct 20 Jan 21 Apr 21 Jul 21 Oct 21 Jan 22 Apr 22 Jul 22 Oct 22 Jan 23 Apr 23 Jul 23

Closing Price Price Target

B:Buy N:Neutral S:Sell NR:Not rated UR:Under review I:Initiation of Coverage D:Dropped Coverage

Company–Specific Regulatory Disclosures

BTIG LLC expects to receive or intends to seek compensation for investment banking services in the next 3 months from: Plug
Power Inc. (PLUG)

Other Disclosures
Additional Information Available Upon Request

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