Plug Power announces expanded collaboration with Walmart
Walmart to expand use of hydrogen fuel cells in its distribution center material handling fleet by $80 million.
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Plug Power, a leader in fuel cell technologies for forklifts, has announced a new collaborative agreement with Walmart to provide its hydrogen fueling station and fuel cell energy solutions to up to 30 additional Walmart sites in North America over the next three years, with 10 sites already under contract and scheduled to be finished by the end of 2017.
The value of these 2017 commitments is expected to be around $80 million.
The new agreement includes revised deal terms with Walmart that allow Plug Power to access project financing at a lower cost of capital and no restricted cash, making Plug Power’s future distribution transactions with Walmart cash flow positive up front. On average, Plug Power has deployed a new Walmart site every six weeks since 2014, resulting in a deployed fleet of 5,500 Plug Power fuel cells at 22 of Walmart’s U.S. distribution centers as of the end of 2016.
“Our expanding relationship with Walmart validates Plug Power’s advanced capabilities in fuel cell products and systems, allowing the world’s largest retailer to maintain its leading position as an industry innovator,” said Andy Marsh, CEO of Plug Power. “Walmart’s long-term supply agreement is a great example of our strategy in action, as it enables us to improve both our revenue visibility and cost structure, all while allowing our customers to experience improved productivity and operational cost savings. We see a growing market opportunity for our power and fueling station technologies within the material handling segment, as well as new mobility applications worldwide, positioning us for long-term success and shareholder value creation.”
As part of the agreement, and as an incentive to align Walmart’s future business with Plug Power’s growth and success, Plug Power has granted Walmart warrants to acquire up to 55,286,696 of Plug Power’s common shares.
The new agreement is a milestone in a longstanding relationship with Walmart, which has been at the forefront of fuel cell technology adoption and commercialization in material handling, becoming Plug Power’s first GenKey customer in 2014. Plug Power supplies the retail giant with fuel cells, hydrogen fueling stations, and ongoing maintenance services. Today, Walmart operates the largest fleet of hydrogen fuel cell powered electric vehicles in the world, totaling more than 6,600 units in distribution centers across North America. Plug Power’s hydrogen fuel cell technology replaces traditional lead-acid batteries, helping customers increase warehouse productivity while reducing the costs and sustainability issues related to traditional battery maintenance.
“Plug Power’s material handling solutions represent a critical component in our supply chain,” said Jeff Smith, senior director of logistics maintenance and purchasing services for Walmart. “Plug Power’s hydrogen fuel cell technology, coupled with their innovative fueling stations has proven to be a reliable, cost-effective alternative to traditional energy solutions.”