Plug Power has logged over $970m worth of non-cash impairments as it introduces further cost reduction measures due to slow hydrogen market development.
The US green hydrogen tech player said it was having to temper its investment pace on “certain platforms,” make more job cuts and limit its CAPEX to near-term “critical investments.”
The $971.3m in non-cash charges stem from asset impairments and bad debt provisions recorded in OPEX. Plug attributed these impairments to strategic shifts following weaker-than-expected market demand, impacting assets like plants, equipment and power purchase agreements.
These impairments are expected to ease future depreciation and amortisation expenses by $55m to $60m in 2025.
While Plug says the measures could save between $150m and $200m annually, they also underscore the financial pressures Plug is facing. This was evident in the company’s Q4 2024 results, which, despite showing revenue growth and improved cash flow, also revealed ongoing financial hurdles.
Reporting Q4 revenues of $191.5m, a 46% year-over-year cash flow improvement and a 52% reduction in CAPEX, the improvements were caveated by a gross margin loss of 122%.
This was primarily attributed to $104.2m in inventory write-downs – deemed necessary “given the strategic slowdown of certain market investments” and $22.7m in customer warrant charges.
“While we made great strides in improving cash flows in 2024, it is clear based on market dynamics that we have to make additional strides,” said Plug CEO, Andy Marsh, who stressed the measures would position the firm for success.
The substantial measures come around 12 months after Plug announced a cost reduction plan, which included job cuts, business unit consolidation and spending limits.
Read more:Plug Power confirms job cuts as part of $75m cost reductions
Having secured a $1.66bn US Department of Energy (DOE) loan guarantee for up to six US hydrogen plants in January, the company has been facing increasing pressure to shore up its finances and head towards profitability.
In a bid to bolster its cash position, the firm sold a $30m investment tax credit from its 40MW plant in Georgia.
Failure’s not on the cards for us: Plug CEO on $1.66bn DOE hydrogen loan guarantee
Andy Marsh believes Plug Power’s recently closed $1.66bn loan guarantee from the US Department of Energy (DOE) will signify the beginning of hydrogen projects being funded like adjacent wind and solar developments.
The CEO told H2 View the guarantee, which acts as a financial backstop for prospective investors, is not only important for the future of the US hydrogen tech firm but also for the hydrogen industry as a whole.
“We’re going to bring equity investors in; there’s going to be an equity flip at one time; we’re looking to do the first project that really looks like a typical solar and wind project,” Marsh said…
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