What happened
Shares of hydrogen fuel cell star Plug Power (PLUG +1.09%) jumped 4.7% through 11:45 a.m. ET Tuesday morning after the company secured a long-term supply agreement with British hydrogen technologies company Johnson Matthey (JMAT +0.60%).
Under the terms of the agreement, Johnson Matthey will supply Plug with components for membrane electrode assemblies and specifically with "catalysts, membranes, and catalyst coated membranes (CCM)" -- essential parts for building fuel cells.
NASDAQ: PLUG
Key Data Points
So what
Plug says that partnering with Johnson Matthey will "strengthen its supply chain and help meet the growing demand for fuel cells and electrolyzers." More than just selling Plug the parts it needs, Johnson Matthey will help Plug set up a CCM manufacturing plant -- the world's largest -- in the U.S., with production set to begin in 2025.
Plug noted that having this secure access to the parts it needs will "support" the company's goals of generating $5 billion in revenue by 2026 and $20 billion by 2030.
Now what
These aren't new numbers, of course. In fact, Plug tried to inject some optimism into its stock last week when, in the course of warning investors that it will miss revenue estimates for 2022 (growing sales only 45% to 50% instead of the promised 80%), Plug management tried to shift investor focus away from the looming earnings miss -- and toward growth prospects in the future.
Plug told investors to expect it to finally break even on earnings in the final quarter of 2023, implying that full-year profitability might be reached as early as 2024. By 2026, management is forecasting $5 billion in sales (as Plug reminded us today), with 30% gross profit margins and 17% operating profit margins. And by 2030, sales will hit $20 billion -- with a 35% gross margin and a 22% operating margin.
Impressive numbers, to be sure, and Plug seems to think that partnering with Johnson Matthey to secure its supply chain in 2025 will help it achieve promised levels of profitability in 2026. Maybe that will be the case. As for me, I'm much more curious to see whether management can deliver on its promise to just break even in Q4 2023.
To me, delivering on that promise will be the clearest evidence that Plug will be able to deliver on its other promises far down the line.
