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Friday, May 09, 2014 8:37:26 AM
Plug Power released news this morning of receiving a 182 GenDrive order from Central Grocers. Central Grocers first committed to Plug Power back in 2009, and there fleet of more than 100 units has clocked in more than 2 million hours of use! Talk about reliability. The quality of production going on at Plug Power is second to none, and I can vouch for that, having taken a tour of Plug Power in March of 2014 which you can read about here and here.
The units will be in use at central grocers in the third quarter of 2014, so this shows that Plug is really speeding up production and will have the ability to shorten its sales cycle over time, as clearly shown by this announcement.
Central Grocer's commitment to Plug Power's GenDrive offering highlights a key point I think many investors don't realize. While Plug will be obtaining recurring revenue from the GenKey product offering, providing the hydrogen and infrastructure (usually a 5 year contract), there is also the fact that GenDrive units DON'T LAST FOREVER. The senior production manager at Plug Power informed me during the tour of their state of the art production facilities that the GenDrive units on average last about 5 years (GenDrive's that run around the clock at 24/7 distribution centers last around 3 years, not as much usage lasts 6 years. Again these are high quality products).
What does that mean? Expect Wal-Mart to replace their single 1700+ unit order come 2019 or so. But even more so, expect Plug Power to receive a number of recomitment orders from companies that purchased their GenDrive units back in 2009.
Customers who purchased GenDrive units from Plug Power back in 2009 include:
Nestle
Coca-Cola
Whole Foods
Mercedes Benz
Wegmans
Sysco
While some of these orders were small test units (around 40 units), others were for more than 100.
I wouldn't be surprised if we see some repeat customers knocking on Plug Power's door soon.
Shares of Plug are 8% in pre-market trading, 20 minutes after the announcement was made. Keep in mind a large chunk of Plug shares are sold short, so a volatile ride may be instore for Plug Power investors over the coming days, especially with earnings next week.
From the Press Release:
"This is a success story for Plug Power, as nothing validates our solution better than a satisfied customer who orders more," said Andy Marsh, CEO at Plug Power. "Central Grocers was an early adopter that has been reaping the benefits of GenDrive fuel cell solutions, and will now see additional benefits through our GenCare services."
"Hydrogen fuel cells run longer and maintain consistent power as they operate and are refueled more quickly than batteries," said Ken Nameth of Central Grocers. "Our operators are pleased with the lift trucks powered by GenDrive, and management has been impressed by the high levels of productivity within our facility." http://www.thewallstreetfox.com/2014/05/central-grocers-commitment-to-plug.html
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