audioundwerbung/iStock via Getty Images Note: I have covered Plug Power Inc., or “Plug Power” ( PLUG ), previously, so investors should view this as an update to my earlier articles on the company. Earlier this month, Plug Power reported better-than-expected fourth-quarter results, with both sales and profitability coming in ahead of consensus estimates: Company Press Releases / Regulatory Filings...
audioundwerbung/iStock via Getty Images Note: I have covered Plug Power Inc., or “Plug Power” ( PLUG ), previously, so investors should view this as an update to my earlier articles on the company. Earlier this month, Plug Power reported better-than-expected fourth-quarter results, with both sales and profitability coming in ahead of consensus estimates: Company Press Releases / Regulatory Filings Net sales of $225.2 million represented a new multi-year high for the company. Regulatory Filings However, outperformance was almost solely the result of an unexpected increase in service parts sales, which caused service revenue to more than double on a sequential basis. For my part, I would consider this more of a one-time benefit and firmly expect service revenues to come down substantially in Q1. Sales also benefited from the recognition of long-delayed electrolyzer revenues. However, the company failed to replace these deployments with new orders, thus resulting in electrolyzer backlog dropping to new multi-year lows: Regulatory filings More importantly, Plug Power made substantial progress on the margin front, with product revenues finally approaching break-even levels. Regulatory Filings Please note that major sequential improvements in the service and leasing segment appear to be mostly the result of the above-discussed parts sales and, based on disclosures made in the company's annual report on Form 10-K, a " cumulative catch-up adjustment " resulting from the modification of a leasing agreement with an undisclosed customer. But even without these sizeable one-time benefits, Plug Power has made progress on the service front in recent quarters. In the 10-K, the company lists several reasons for the improvements: pricing adjustments improved stack reliability reduced part costs increased labor utilization As a result, the company decided to release a whopping $18.3 million from its previously established provision for money-losing service contracts. Without the rele...