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Plug Power CEO 'very confident' despite investor concerns

Plug Power (PLUG) shares plunged amid investor concerns over the hydrogen company's financial situation. In response, CEO Andy Marsh tells Yahoo Finance's Akiko Fujita Plug Power has explored solutions to sustain operations over the next year despite recent headwinds. Marsh notes Plug Power is currently operating well with "zero debt" and a "$5 billion unleveraged balance sheet." However, slowing plant construction could reduce capital needs if required.

Plug Power has dealt with hydrogen shortages impacting operations, though Marsh hopes the upcoming Georgia plant coming online will ease supply pressures. However, he stresses Plug's strong cash position and potential levers to manage spending if challenges persist.

"For about 6 months we've been telling the world we will be looking at different solutions to allow us to get through the next year," Marsh tells Yahoo Finance, adding: "We feel very very confident that we'll be successful."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

JULIE HYMAN: Shares of Plug Power extending their losses today after plunging 40% on concerns about the hydrogen fuel cell company's future. The firm warned about a going concern last week, saying there was substantial doubt about its ability to continue. But CEO Andy Marsh brushed those concerns aside today, telling Yahoo Finance's Akiko Fujita, investor concerns are overblown.

ANDY MARSH: First, we have over $500 million of cash available to us. We have a balance sheet that has $1 billion of restricted cash. And we have a balance sheet that has $1 billion of inventory that's really there to support our growth in the fourth quarter.

For about six months, we've been telling the world, we will be looking at different solutions to allow us to get through the next year. When I look at it, you know, we feel very, very confident that we'll be successful. And look, you know, it really is the company that came out and said, hey, this is a going concern-- this could be a going concern, not the auditors. The companies did an analysis of how much we expect to spend the next 12 months. You know, we saw a gap probably somewhere around 500 million, but that's 500 million if we do everything we say we're going to do.

We feel pretty confident when we look at everything, when we look at our ability to manage through this, that we're going to be fine. And I can tell you, there has been, you know, I've had term sheets which are well over that amount of money. And we're talking to folks about opportunities to raise cash much larger than what we need. And we're just trying to do it prudently, so that our investors are in a good position in the long run.

AKIKO FUJITA: Andy, when you say you're looking at different options, different solution, you mentioned a potential capital raise. How much capital do you need to raise?

ANDY MARSH: So, Akiko, a capital raise could be debt, too, right? So as I mentioned, you know, our analysis would show that in the next 12 months, we probably need to bring in $500 million. Some of that, you know, I have actually different ways to raise that money. And you know, I feel very, very confident. Some of that $500 million, when I look at our partners, who are looking to leverage ITCs, could cut that number in half. And when you look at our restricted cash of $1 billion, you can almost say, hey, I have people who are willing to lend us money against our restricted cash.

AKIKO FUJITA: Andy, let's talk about how Plug Power got here. As we've talked about in the past, this is-- you're talking about a state that is very capital-intensive. And I wonder how much of this is about the debt load you took on exacerbated by the higher rates, how much of it is about the volume constraints you've been facing.

ANDY MARSH: So, Akiko, I have zero debt. I have a $5 billion unleveraged balance sheet. I think that puts us in a unique position to be able to raise debt. So, you know, we may slow down some of our plant activities. You know, past-- we have Georgia coming online. We have Louisiana coming online. We may slow down other plants after that, but you know-- and which would reduce our capital needs. So you know, that's how we look at it.

And look, the market was growing a little bit faster, it would be easier. But also, Akiko, I want to be really clear, we've been dealing with a hydrogen shortage. And I made this clear during our earnings call that, you know, there has not been enough hydrogen in the US to support our needs. And we've done an extraordinary job that makes sure our customers have hydrogen all the time.

And we've been moving hydrogen from the West Coast to the East Coast. And we really expect that, as our plant in Georgia come online, that relieves a lot of the pressure that Plug is facing.

AKIKO FUJITA: What does that timeline look like right now?

ANDY MARSH: I expect and I've been really clear by the end of the year. And I'm on calls every day. And we're making great progress in '23. Yeah.

AKIKO FUJITA: Having said that, Andy, we saw shares plunge to levels we haven't seen in nearly a decade. What do you think investors are missing right now? If you're so optimistic that this can be resolved, why do you think the market sees it differently?

ANDY MARSH: Well, I've talked to three large firms that I deal with every day. And I said to them, sometimes people overreact to good news, sometimes people overreact to bad news. And the truth is usually somewhere in the middle. And I don't think people have really focused on-- and I've seen mistakes where people don't realize that there's $500 million of cash and liquidity on our balance sheet today.

I've seen analysts miss that. I've seen investors miss that. And I think that maybe folks have been reading headlines instead of really digging deep into the details.

AKIKO FUJITA: So the long-term demand for hydrogen, as you've laid it out very clearly publicly, does that still hold? Does that vision still remain unchanged for you?

ANDY MARSH: So, Akiko, absolutely. And look, if you look at the world, you know, if you have a fundamental belief that the world has to get to net zero, there's not a model around that doesn't suggest hydrogen needs to be at least 14% of world's energy, if not 24% of world's energy. so you know, will we-- you know, is this a bump on the road? I'd be disingenuous if I didn't say this has been a bump on the road.

But we have strong demand. You know, my major customers have been more asking me how they can help me and when I explained to the situation we're in. And I think people who are close to Plug, which quite honestly are customers more than investors, because customers see what a difference our products make in their operation, they're confident that this hydrogen economy is going to grow. And they're confident that Plug is going to be a leader in it.

Nobody has the facilities we have. Nobody's build out the product lines we have. Nobody's building plants like we've done. So I-- you know, I just think that the market will catch on. I think the clean energy sector, obviously, has taken a huge hit. I think ultimately the market will come back. And we'll be-- we continue to be in position. And we can continue to be laser-focused on how to build out this hydrogen economy.

And look, Akiko, we're going to do it prudently. But we are laser focused on being successful.

AKIKO FUJITA: Finally, Andy, just to clarify here, when you talk about the volume constraints that you highlighted in your earnings release, you're saying that this Georgia plant coming online will largely resolve much of that?

ANDY MARSH: Yes. It will resolve.

AKIKO FUJITA: Andy Marsh, Plug Power CEO, really appreciate you joining us today. Thanks so much.

ANDY MARSH: Well, thank you, Akiko.

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