Plug Power tempers sales forecast to manage investor expectations

By Darshana Sankararaman and Tanvi Mehta

(Reuters) - Fuelcell maker Plug Power Inc tempered its sales forecast for 2015, saying it had decided to issue numbers "people could rely" on after receiving "a lot of criticism for under-delivering."

The company's shares fell as much as 10 percent to $2.86 on Wednesday, after Chief Executive Andy Marsh said Plug Power now expected sales "in excess of $100 million."

The company had earlier forecast full-year sales of $130 million. Analysts on average estimated sales of $123.7 million, according to Thomson Reuters I/B/E/S.

Plug Power, which makes fuel cells to power forklifts and other material handling devices and counts Wal-Mart Stores Inc as its biggest customer, will report full-year 2014 results next month.

The company's sales have soared over the past few quarters on strong demand for its flagship GenKey product, an integrated suite of GenDrive fuel cells and services.

But, the company has sometimes had to contend with choppy revenue recognition as some customers delayed payments to work out third-party financing to buy the company's fuelcell systems.

Also, the fuel and service part of the GenKey contracts are multi-year revenue streams, making it difficult for the market to ascertain in which quarter revenue from a certain sale is recognized.

" ... The impact of third-party financing and the impact on revenue recognition timing was a factor that investors had not anticipated," Cowen & Co analyst Jeffrey Osborne said.

"Any leasing business has these issues, especially leasing of a new technology. They are coping with it by tempering investor expectations."

Osborne added that he expects Wal-Mart to be Plug Power's biggest driver of repeat bookings this year. He cut his price target on Plug's stock to $4.00 from $6.50.

Plug Power's GenDrive fuelcells are expected to generate about half of 2015 sales, the company said, with gross product margins from these cells expected to cross 29 percent in the last quarter of the year due to cost cuts.

GenDrive gross product margins were 12 percent in the third quarter of 2014.

Shares of the fuelcell maker were down 8.8 percent at $2.90 in late afternoon trading on the Nasdaq.

(Editing by Simon Jennings and Savio D'Souza)