price target: $5.00 systems poised for rapid growth initiation:...

Clean Technology

Plug Power Inc.

Equity Research Initiating Coverage

www.cowen.com Please see addendum of this report for important disclosures.

January 21, 2014

Price: $3.48 (01/20/2014)

Price Target: $5.00

OUTPERFORM (1)

Initiation: Fuel Cell Material HandlingSystems Poised for Rapid Growth

Robert W [email protected]

James Medvedeff, [email protected]

Key DataSymbol NASDAQ: PLUG

52-Week Range: $4.90 - 0.12

Market Cap (MM): $391.3

Net Debt (MM): $(4.0)

Cash/Share: $0.25

Dil. Shares Out (MM): 130.0

Enterprise Value (MM): $386.8

ROIC: NA

ROE (LTM): NA

BV/Share: $0.02

FCF Yield: NA

Dividend: NA

Short Interest: 14.4%

FY (Dec) 2013E 2014E 2015E

Earnings Per Share

Q1 $(0.13)A $(0.04) $0.01

Q2 $(0.10)A $(0.01) $0.02

Q3 $(0.09)A $(0.01) $0.03

Q4 $(0.08) $0.01 $0.04

Year $(0.39) $(0.05) $0.11

P/E NM NM 31.6xExcludes one-time items and non-cash warrant liabilities

Consensus EPS $(0.57) $(0.17) -Consensus source: Thomson ReutersIncludes non-cash warrant liabilities

Revenue (MM)

Q1 $6.4A $7.8 $25.9

Q2 $7.5A $16.1 $32.3

Q3 $4.6A $18.8 $37.0

Q4 $7.4 $24.7 $44.8

Year $26.0 $67.4 $140.0

The Cowen InsightFuel cell power systems boost customer productivity (vs. lead-acid batteries). Risingpenetration of a 1MM+ unit U.S. and European SAM and a new turnkey servicemodel, plus new applications, should drive a 68% 2013-18E sales CAGR. Expansioninto Asia could drive upside. We project profitability by Q4:14 and net marginsapproaching 14% in 2017-18E. Initiating with Outperform (1), PT $5.00.

Currently Addressing About 37% of 2.9MM Unit TAM in U.S. and Europe

Initial targets have been distribution and manufacturing locations with multi-shiftoperations and large numbers of forklifts and pallet trucks to spread the hydrogeninfrastructure cost. Customers gain productivity from fast refueling and stable poweroutput, save space by eliminating battery rooms, and reduce emissions. Low-cost H2

stations may be developed, allowing smaller sites to enjoy similar benefits.

Marquis Customer Base, New Turnkey Offering Should Drive Repeat Sales

PLUG has about two dozen customers in food distribution, retail and industrialsegments, including Walmart, Sysco, Kroger, Ace Hardware, Lowe's, Coca-Cola, CVS,P&G, BMW and Mercedes. Penetration into their installed base of 250K materialhandling units is about 2%. A new turnkey offering, including systems, hydrogeninfrastructure, fuel and 5-year service contracts should aid multi-site deployments.HyPulsion, a JV with Air Liquide, has recently started initial deployments in Europe.

New Applications In Trials in 2014, Should be Material in 2015

Transport refrigeration units offer reduced noise, emissions, and operating cost fora market of 300K trailers in the U.S., and could leverage hydrogen infrastructure atdistribution centers. Ground support equipment (~58K units in U.S. and Europe) couldhelp airports meet tighter emissions rules for diesel units. A $3MM, DOE-funded trialwith FedEx will develop range extenders for battery-electric delivery vehicles. FedExand UPS operate 150K+ trucks, and other retailer customers have expressed interest.

Strong BL Entering 2014; Scale and New Sourcing Should Drive GM

Following a May 2013 strategic investment by Air Liquide, orders began to ramp.Q4:13 bookings were $32MM and PLUG expects its 2014 target ($70MM productand service) to be in hand by the end of Q1. We model 2014E sales of $67.4MM(+160%), growing to $350MM by 2018E. Cash looks sufficient, due to two recentofferings and exercise of warrants. Greater scale, dual sourcing, and internal stackdevelopment should expand GM from 17.2% to 34.6%. A new partnership for Asiacould be announced this year. From a loss of 5c in 2014E, we project EPS to reach 31c(fully taxed) in 2018E.

At A GlanceOur Investment Thesis

PLUG is the leading provider of fuel cell power systems for material handling, offeringsuperior productivity compared to batteries. We model a 68% 2013-18E sales CAGR,driven by rising penetration of a 1MM+ unit SAM in the U.S. and Europe and a newturnkey service model, plus new applications. Expansion into Asia could drive upside.We project profitability by Q4:14 and net margins approaching 14% in 2017-18E.

Forthcoming Catalysts

■ Updates on second sourcing andinternal stack development

■ Q1:14 orders above Q4:13■ News on new applications■ European orders; partner for Asia

Base Case Assumptions

■ Product revenue $250MM by 2017■ New applications ~ 40% of products■ Service revenue ~$100MM (27%)■ GM ~34%, net margins ~14%

Upside Scenario

■ Product revenue $350MM by 2017■ New applications >50% of products■ Service revenue >30%■ GM high 30s, net margins high teens

Downside Scenario

■ Product revenue $200MM by 2017■ New applications ~25% of products■ Service revenue >25%■ GM ~30%, net margin ~10%

Price Performance

Jan-14Oct-13Jul-13Apr-13

$5

4

3

2

1

0

Source: Bloomberg

Company Description

PLUG designs and manufactures GenDrive fuel cell power systems for Class 1, 2, and3 forklifts and rider pallet trucks. Replacing lead-acid batteries improves productivitywith rapid refueling and steady power output, saves space by eliminating batterycharging rooms, and reduces emissions. GenFuel hydrogen infrastructure and fueland GenCare five-year maintenance contracts complete the GenKey turnkey offering.Second sourcing and internal stack development should help drive down cost.It serves three market segments, food distribution, retail, and manufacturing;customers include: Walmart, Kroger, Sysco, Wegmans, Ace Hardware, Lowe's, CVSPharmacy, CocaCola, P&G, Carter's, BMW, Mercedes, Ikea, and Stihl. HyPulsion, a JVwith Air Liquide, is developing the European market, and a partner for Asia could beannounced in 2014.New applications in development are: transport refrigeration units, ground supportequipment, and range extenders for battery-electric delivery vehicles.

Analyst Top Picks

Ticker Price (01/20/2014) Price Target RatingPlug Power Inc. PLUG $3.48 $5.00 OutperformCapstone Turbine Corporation CPST $1.73 $1.90 Outperform

www.cowen.com2

Cowen and Company

Equity ResearchPlug Power Inc.

January 21, 2014

Extended Company Summary

PLUG was founded in 1997 and is headquartered in Latham, NY. A 150,000 square

foot facility houses engineering, sales, customer support and manufacturing, with

sufficient capacity to produce 10,000 units per year. It has over 150 employees.

The GenDrive® material handling power systems comprise a complete suite of

products: Series 1000 for sit-down counterbalance trucks, Series 2000 for Class 2

stand-up reach trucks, and Series 3000 for Class 3 rider pallet trucks. Each is offered

in multiple configurations to match the requirements of various OEM models.

Figure 1 - PLUG: Cowen vs. Street Estimates

Source: Cowen and Company, Thomson

Q4:13E Q1:14E 2013E 2014E Q4:13E Q1:14E 2013E 2014E Q4:13E Q1:14E 2013E 2014E

R evenue $ 7.4 $ 7.8 $ 26.0 $ 67.4 $ 7.5 $ 7.9 $ 26.1 $ 60.0 -1% -1% 0% 12%

growth 160% 130%

Gross Profit (2.0) (0.4) (10.0) 11.6 (0.8) (0.2) (9.0) 6.2 132% 148% 12% 88%

Gross M argin -26.3% -4.8% -38.7% 17.2% -11.2% -1.9% -34.3% 10.3%

Expenses 4.6 4.2 17.5 17.7 4.8 4.8 17.6 19.2 -4% -14% -1% -8%

% of Sales 61.6% 53.3% 67.2% 26.2% 63% 61% 68% 32%

Operat ing Inco me ($ 6.5) ($ 4.5) ($ 27.5) ($ 6.0) ($ 5.6) ($ 5.0) ($ 26.6) ($ 13.0) 16% -9% 3% -54%

Operating M argin -88% -58% -106% -9% -75% -63% -102% -21.7%

Other Income (Exp) (0.1) 0.0 (0.4) 0.0 (0.2) (0.1) (13.4) (0.5) -50% -100% -97% -100%

P retax Inco me ($ 6.6) ($ 4.5) ($ 27.9) ($ 6.0) ($ 5.8) ($ 5.1) ($ 40.0) ($ 13.5) 14% -11% -30% -55%

% of Sales -89% -58% -107% -9% -77% -65% -153% -22.5%

Taxes and Preferred dividends(0.1) (0.1) (0.5) (0.2) - - (0.4) - NA NA 33% NA

% of Pretax Income 0.8% 1.1% 1.9% 3.4% 0.0% 0.0% 1.0% 0.0%

N et Inco me ($ 6.7) ($ 4.6) ($ 27.6) ($ 6.2) ($ 5.8) ($ 5.1) ($ 39.6) ($ 13.5) 15% -10% -30% -54%

Net M argin -90% -59% -106% -9% -77% -65% -152% -22.5%

EP S ($ 0.08) ($ 0.04) ($ 0.39) ($ 0.05) ($ 0.07) ($ 0.06) ($ 0.57) ($ 0.17) 13% -41% -32% -73%

Street VarianceC o wen

PLUG has more than 150 issued U.S. patents

GenDrive® is offered in over 40 different models

www.cowen.com 3

Cowen and Company


January 21, 2014

Revenue Buildup and Gross Margin

Figure 2 - PLUG: Expansion Markets (Transport Refrigeration Units, Ground Support Equipment, Fleet Range Extenders) Grow to 34% of Sales by 2018E

Source: Cowen and Company

Figure 3 - PLUG: Annual Revenue Buildup ($MM) and Gross Margin

Source: Cowen and Company, company reports

$19

78%

$5

22%

2012

Material Handling

Service

Expansion Markets$92

67%

$24

17%

$22

16%

2015E

$132

38%

$94

28%

$118

34%

2018E

P ro duct R evenue 2012 2013E 2014E 2015E 2016E 2017E 2018E

M aterial Handling 19.0 17.9 53.5 92.3 107.2 119.5 131.8

Transport Refrigeration Units 0.0 0.0 0.0 7.0 20.0 30.2 40.1

Ground Support Equipment 0.0 0.0 0.0 5.0 9.7 15.4 19.5

Range Extender 0.0 0.0 0.0 5.0 20.4 36.6 43.8

Hydrogen Infrastructure 0.0 0.0 1.5 5.5 8.8 12.0 14.6

T OT A L $ 19.0 $ 17.9 $ 55.0 $ 114.7 $ 166.0 $ 213.7 $ 249.8

R evenue ($ M M )

Product 19.0 17.9 55.0 114.7 166.0 213.7 249.8

Service 5.4 6.4 10.8 23.7 42.4 65.9 94.2

HyPulsion M arkup 0.0 0.0 0.0 0.0 0.0 0.0 5.5

R&D Contracts 1.7 1.6 1.6 1.6 1.6 0.4 0.4

T o tal R evenue $ 26.1 $ 26.0 $ 67.4 $ 140.0 $ 210.0 $ 280.0 $ 350.0

R evenue Gro wth Y/ Y

Product 0% -5% 207% 109% 45% 29% 17%

Service 28% 18% 69% 119% 79% 55% 43%

R&D Contracts -61% -4% -2% 0% 0% -75% 0%

T o tal -5% 0% 160% 108% 50% 33% 25%

R evenue M ix

Product 73% 69% 82% 82% 79% 76% 71%

Service 21% 25% 16% 17% 20% 24% 27%

R&D Contracts 6.5% 6.3% 2.4% 1.1% 0.8% 0.1% 0.1%

P ro duct unit co sts (est imated)

M aterial cost/product sales 80% 75% 67% 58% 57% 57% 57%

Labor cost/product sales 10% 25% 9% 6% 6% 6% 6%

C ash Subto tal 90% 100% 76% 64% 63% 63% 63%

T o tal 101% 111% 79% 66% 65% 65% 65%

Gro ss P ro f it ($ M M )

Product -0.2 -1.9 11.3 39.0 58.7 75.5 87.6

Service -13.1 -7.3 1.1 5.9 12.8 19.8 28.2

Product and Service -13.3 -9.2 12.4 44.9 71.5 95.3 115.8

HyPulsion 0.0 0.0 0.0 0.0 0.0 0.0 5.5

R&D Contracts -1.1 -0.9 -0.8 -0.8 -0.8 -0.2 -0.2

T o tal Gro ss P ro f it ($ 14.4) ($ 10.0) $ 11.6 $ 44.1 $ 70.7 $ 95.1 $ 121.1

Gro ss M argin

Product -0.9% -10.5% 20.5% 34.0% 35.4% 35.3% 35.0%

Service -240.5% -113.8% 10.4% 24.9% 30.1% 30.0% 29.9%

Hypulsion 100.0%

R&D Contracts -64.9% -52.4% -50.0% -50.0% -50.0% -50.0% -50.0%

T o tal Gro ss M argin -55.0% -38.7% 17.2% 31.5% 33.7% 34.0% 34.6%

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January 21, 2014

Risk Factors

History of Losses

PLUG has never been profitable. Achieving profitability will require scale and an

improved cost structure. This hinges on successful execution in early adoption

markets, hydrogen infrastructure development and cost efficiency, improved product

reliability and performance, and successful reaction to competitive threats. Rapid

growth in production volume and service contract commitments could lead to product

quality control or staff management and training challenges.

Limited Manufacturing Experience; Early Product Quality Issues

After eleven years of R&D, commercialization began in H2:2008. Initial stationary

products were not well received. Next generation GenDrive mobile products were

introduced in October, 2011. Component quality issues on early units led to increased

warranty reserves, delayed order momentum, and drove high service costs.

Development of efficient, low cost manufacturing processes while meeting requisite

quality standards is critical for meeting commercialization targets.

Highly Competitive Markets

Relative cost, and the pace of technology development could affect the attractiveness

and/or viability of PLUG products. Larger competitors may have greater R&D,

manufacturing, marketing, and sales capabilities. Included are major electric, oil,

chemical, natural gas, battery, and specialized electronics firms, as well as universities,

research institutions and foreign GSEs. Competing technologies include reciprocating

engines, micro turbines, advanced batteries, and other fuel cells.

Customer and Supplier Concentration

Until the customer base is significantly broadened, any decline or unanticipated large

fluctuation in business with certain customers could have a material adverse impact

on operations and profitability. Moreover, large customers may leverage purchasing

power to demand lower prices and less favorable payment terms. Concentration of

accounts receivable represents an additional risk. PLUG is exposed to development

cycles, production schedules, cost, and quality of its key suppliers. Certain critical

components are single-sourced. To the extent suppliers use proprietary technology,

replacing them on short notice, if necessary, may present a challenge.

Potential Need for Additional Capital

In the 2012 10-K, the auditors cited recurring losses and declining working capital as

conditions that raise substantial doubt about the ability to continue as a going

concern. However, the financial condition has been much improved by a strategic

alliance in May, 2013, and equity placements in September 2013 and January 2014.

Nonetheless, the revenue ramp will likely require a significant working capital buildup.

If additional capital is needed for W/C or capex, this may be dilutive. There is no

guarantee that such capital will be available on attractive terms, or at all.

Risks Related to Intellectual Property

The ability to compete effectively partly depends on protecting proprietary system-

level technologies, systems designs, and manufacturing processes. PLUG relies on

patents, trademarks, and confidentiality agreements. Applications may not yield

additional patents, existing patents could be challenged, or PLUG could be accused of

infringing the IP of others. Loss of IP protection could lower competitive advantage;

litigation could be costly and distractive, and may not be successful.

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January 21, 2014

Ramp, Margins, New Markets Should Drive Shares

In early 2013, we believe the share price was under pressure due to liquidity concerns,

which had also hampered order intake. Following a $6.5MM strategic investment by

Air Liquide in May 2013, orders began to ramp, reaching $32MM in Q4:13. The

January 7, 2014 announcement of a $3MM, DOE-funded project with FedEx and Smith

Electric Vehicles to develop range extenders for electric delivery trucks highlighted the

potential to develop adjacent markets for fuel cell power systems.

Valuation Looks Similar to Peers on Traditional Metrics

Fuel cell and alternative power generation comparable companies are mostly at an

emerging growth stage and not yet generating earnings. PLUG trades at the high-end

on EV/Sales, which we believe reflects substantially faster revenue growth. The P/E on

2015E EPS is in line, as is P/TBV, reflecting a business not yet at full earnings power.

Figure 4 – PLUG: Comparable Valuations

Cowen and Company Ratings: 1 = Outperform; 2 = Market Perform; 3 = Underperform; NR = Not Rated

Source: Cowen and Company, Thomson

Five-Year DCF Supports Our Price Target

We use a 12.5% discount rate, reflecting an established base of marquis customers,

strong backlog, and dominant market share. The $5.00 per share suggested equity

value is based on 150.5MM shares, which includes 20.5MM for options, restricted

stock, warrants and conversion of preferred shares. The implied P/E on 2018E EPS

discounted back to 2015 is about 23x, equating to a PEG ratio of <1x.

Figure 5 – PLUG: Five-Year DCF Analysis


Triggers from New Applications and Markets, Partner Selection for Asia

In addition to strong shipment growth for material handling systems in 2014, we

expect further developments in new applications (TRUs, GSEs, range extenders), more

evidence of European market potential with orders from HyPulsion, and likely

formation of a strategic partnership to begin developing Asian markets.

17-Jan-14 P rice R ating M kt C ap

($ ) ($ M M ) 2014E 2015E 14-13 15-14 2014E 2015E 2014E 2015E 14-13 15-14 2014E 2015ET B V ($ ) P / T B V

Active Power Inc 3.55 NR 69 67 NA 9% NA 0.9 NA ($0.35) NA NM NA NM NA 1.21 2.9

Ballard Power Systems 2.33 NR 232 80 96 29% 19% 2.9 2.4 ($0.11) ($0.05) NM NM NM NM 0.18 12.9

Capstone Turbine Corp 1.73 1 536 180 217 32% 20% 2.9 2.4 ($0.01) $0.05 NM NM NM 35.4 0.12 14.8

FuelCell Energy Inc 1.40 NR 269 205 262 9% 27% 1.2 0.9 ($0.15) ($0.12) NM NM NM NM (0.12) NM

Hydrogenics Corporation 22.75 NR 204 54 74 27% 38% 3.6 2.6 ($0.18) $0.36 NM NM NM 63.2 0.35 64.2

Power Solutions Int'l 71.72 NR 736 322 408 36% 27% 2.3 1.8 $1.38 $2.04 55% 48% 52.0 35.2 5.00 14.3

P lug P o wer Inc 3.48 1 452 67 140 160% 108% 6.1 2.9 ($ 0.05) $ 0.11 N M N M N M 32.1 0.25 13.9

C Y R ev ($ M M ) P / EC Y EP S ($ )EV/ SalesR ev Gro wth T angible B o o kEP S Gro wth

Intrinsic Value (D C F ) 2014E 2015E 2016E 2017E 2018E T .V.

Free Cash Flow $5 $37 $37 $40 $55 $1,075

PV of FCF $5 $29 $26 $25 $31 $597

Enterprise Value (Sum of PVs) $712

+ Net Cash (Q1:14) 41.0 discount rate 12.5% 2018E EPS $0.31

Suggested Equity Value $ 753 terminal growth rate 7.0% 2018E discounted to 2015 $0.22

per share $ 5.00 terminal FCF multiple 19.5 Suggested P/E (cross check) 22.7

We model positive EBITDAS in Q3:14

and GAAP profitability in Q4:14

The market for transport refrigeration units could

be as large as the material handling opportunity

www.cowen.com6

Cowen and Company


January 21, 2014

Serving About 37% of 2.9MM Unit TAM in N. America and Europe

We estimate the total addressable market in North America and Europe is about

2.9MM units. Of these, we estimate the type of sites served by PLUG may account for

about 37% on a combined basis (40% plus in N. America and about 30-35% in

Europe). Experience and penetration are greater in large and medium-sized sites,

where larger populations of lift trucks can better support the cost of hydrogen

infrastructure and where multi-shift operations increase productivity savings.

Figure 6 – PLUG: Material Handling Market Size and Segmentation

Segment Experience Hydrogen Solutions Market Size

percent (units)

Market Size

USD

N. America Large 6 years

(1 year on-site

generation)

Delivery, on-site liquefied storage

Large on-site generation,

gaseous storage

15% (~180K) $4.2B

Medium 6 years

(1 year on-site

generation)

Delivery, on-site liquefied or gaseous

storage

Small on-site generation, gaseous storage

25% (~300K)

Small 1-3 Years Delivery with gaseous storage

Small on-site generation,

gaseous storage

20% (~240K)

Retail Under development Under development 40% (~480K)

Europe All 1 Year Air Liquide

advanced hydrogen fueling stations

100% (~1.7MM) $5.7B

Japan & China All N/A N/A $7.8B

ROW All N/A N/A $2.1B

Source: PLUG presentation

Lower-Cost Hydrogen Solutions Key to Expanding Into Smaller Sites

At larger sites, customers benefit from productivity savings (up to 15%), because of

reduced refueling time (less than 3 minutes) compared to changing batteries (10-20

minutes) and uniform operating performance (battery powered lift trucks lose about

14% of their speed over the last half of a charge). Personnel and space required for

battery charging rooms can also be eliminated. At retail sites which may have a few

units that are used infrequently, a common problem is that batteries are not properly

charged, so lift trucks may not be operable when they are needed. PLUG is developing

simple, low-cost, refueling solutions to address this segment.

Figure 7 – PLUG: Types of Hydrogen Infrastructure Solutions

Large On-Site Liquid Storage On-Site Generation Small Retail Solutions


Opening channels for Asia and ROW could

roughly double the potential market

In 2014, Ace Hardware will deploy Nuvera

on-site generation to fuel 65 GenDrive units

at a new retail support center in Wilmer, TX

www.cowen.com 7

Cowen and Company


January 21, 2014

Target Segments: Food Distribution, Retail, Industrial

PLUG serves three market segments, food distribution, retail, and manufacturing;

customers include: Walmart, Kroger, Sysco, Wegmans, Associated Wholesale Grocers,

Ace Hardware, Lowe's, CVS Pharmacy, CocaCola, P&G, Carter's, Bridgestone, BMW,

Mercedes, Ikea, and Stihl. The current customer base operates 250,000 forklift trucks.

GenDrive deployments (approximately 5,000 units) represent about 2% penetration.

Figure 8 – PLUG: Customer Installation Examples

P&G

Deployed in CA, PA, LA, and NC

342 GenDrive units

Operates 34 U.S. plants and nearly

100 WW

Modified products for P&G fleet

strengthening relationship for

future sales

Sustainability initiative announced

in 2010, targeting 100% renewable

energy for plants

Kroger

Deployed 160+ units in

Compton, CA for over a year

New contract for Stapleton, CO;

will deploy 200+ units in 2014

Long-term service contract for

both sites

First customer for GenKey

turnkey offering

Mercedes-Benz

Tuscaloosa, AL

2012:

72 units for vehicle assembly plant

2013:

123 units for new warehouse

Vance, AL

2013: 100 units

BMW

Spartanburg, SC

205 units in assembly hall

118 units in logistics, body, and

paint shop

World’s largest users of fuel

cells on a single site

Walmart

Deployed in Ohio, Alberta and

Ontario; more than 500 units total

Operates 100+ distribution centers

with close to 20K forklift trucks

and 15K units in stores

PLUG designed and built hydrogen

piping and dispensing system;

generating service revenue

GHG reduction up to 72% in OH vs.

batteries charged from the grid

Sysco

Three sites on 100% hydrogen

in 2011: Houston, Front Royal,

and Philadelphia

Multi-site commitment

Opportunity to deploy fuel cells

for transport refrigeration units

Operates 100+ distribution

centers with over 11,000 forklift

trucks

Source: PLUG presentations

GenDrive can reduce the customer’s material

handling carbon footprint by up to 80%

www.cowen.com8

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January 21, 2014

GenDrive Suite Includes Over 40 Different Products

GenDrive fuel cell units are configured as drop-in battery pack replacements to match

the size, weight, and power requirements on various OEM models. Weight must often

be added to fuel cell designs, which serves as a counterbalance. The 1000 series

covers Class 1, 3- and 4-wheel, sit-down models. The 2000 series covers Class 2,

stand-up reach, stand-up counterbalanced, and turret trucks. The 3000 series covers

Class 3, end- and center-rider pallet trucks, man-up order pickers, and tow tractors.

ASP Varies by Class, Mix of Lift Truck Classes Depends on Type of Customer Facility

Class 1 and 2 units are higher power (8kW and 10kW), with an ASP around $28K.

Class 3 units are smaller (1.8kW and 3.2kW), with an ASP around $12K. At a typical

food distribution or retail customer, two-thirds of units are Class 3, while at industrial

customers, 90% tend to be higher-power units. Our model assumes a 50/50 mix of

high/low power units, with a blended 2014E ASP of $20K and 2.5% annual erosion.

Figure 9 – PLUG GenDrive Models Cover Class 1, 2, and 3 Forklift Types

Series 1000 Series 2000 Series 3000


New GenDrive 1900 Expands 1000 Series with Highest Capacity Fuel Cell

In 2013, the 1000 Series was extended to offer double the power capacity and output

for six-ton, counterbalanced forklifts. It is the first unit to feature an optional, second

hydrogen tank, with storage up to 3.4kg of hydrogen and 50kWh of energy capacity.

The target application is for manufacturers such as P&G, who need to handle very

heavy loads. This is a niche product, but should command an attractive ASP and

rounds out the series to cover all types of Class 1 lift trucks.

We model a blended 2014E ASP of $20K

and 2.5% annual erosion

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January 21, 2014

Figure 10 – PLUG: GenDrive Series 1000 Product Specifications

Model 1500 1600 1700

Nominal Voltage (VDC) 36 36 48 36 48

Maximum Continuous Power (kW) 8 8 10 8 10

Dimensions (inches) 38.3 x 24.7 x 22.6 38.5 x 27.2 x 22.75 38.6 x 32.82 x 23.0

Weight (pounds) 2,150 2,250 3,000

Operating Temperature (°F) -22 to 104 -22 to 104 -22 to 104

Connector SB 350 SB 350 SB 350

Hydrogen Storage (kg) 1.5 1.6 1.8

Pressure (bar) 350 350 350

Fill Time (minutes) <3 <3 <3

Source: PLUG product literature


Model 2300 2400

Nominal Voltage (VDC) 36 48 36 48

Maximum Continuous Power (kW) 8 10 8 10

Dimensions (inches) 38.3 x17.75 x 30.75 48.1 x 19.6 x 30.7 38.3 x 20.25 x 30.75

Weight (pounds) 2,300 2,736 2,600

Operating Temperature (°F) -22 to 104 -22 to 104

Connector SB 350 SB 350

Hydrogen Storage (kg) 1.2 1.2

Pressure (bar) 350 350

Fill Time (minutes) <2 <2



Model 3300 3300-D

Nominal Voltage (VDC) 24 24

Maximum Continuous Power (kW) 1.8 3.2

Dimensions (inches) 12.9 x 31.0 x 30.8 12.9 x 31.0 x 30.8

Weight (pounds) 590 590

Operating Temperature (°F) -22 to 104 -22 to 104

Connector SB 175 SB 175

Hydrogen Storage (kg) 0.72 0.72

Pressure (bar) 350 350

Fill Time (minutes) <1.5 <1.5


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January 21, 2014

GenKey Turnkey Solution Adds Service, Hydrogen Infrastructure, and Fuel

PLUG launched GenKey as a branded solution in January 2014. However it has already

been offering turnkey service at selected sites for some time. A turnkey deal with

Kroger was booked in Q4:13 to deploy over 200 units in Q2:14. Two more GenKey

deals should be booked in Q1:14 with two customers. By managing the entire solution,

lead time for hydrogen infrastructure can be reduced to less than four months (vs. 6-7

months previously). We conservatively model hydrogen infrastructure growing from

3% of material handing product sales ($1.5MM) in 2014E to 11% ($14.6MM) in 2018E.

Figure 13 – PLUG: GenFuel Hydrogen Infrastructure


Service Costs Improving with Customer Training, Service Personnel Experience

Past systematic issues (such as stacks and compressor pumps) have largely been

addressed, with a 75% Y/Y reduction in breakdowns by Q1:14. Uptime is now typically

98%. Staff experience and training also have a significant impact, since less

experienced technicians may unnecessarily replace parts. Aided by higher utilization

of fixed costs, we model service GM of ~10% in 2014E, expanding to ~30% in 2016E.

Figure 14 – PLUG: GenCare Service Covers Parts, Labor, Fueling Infrastructure

GenCare five-year contracts cover:

Parts

Labor

Hydrogen Infrastructure

Knowledge acquired by on-site support drives

continual product improvement

Targeting 99% uptime at every site

(vs. 98% currently)

GenCare improves utilization of PLUG

technicians at various sites

Source: PLUG Presentation

Hydrogen infrastructure and fuel revenue may

total 25-30% of a typical 5-year turnkey deal

We expect service GM to turn positive in Q2:14E

www.cowen.com 11

Cowen and Company


January 21, 2014

HyPulsion JV Starting Deployments in Europe

To develop the European material handling market, PLUG formed the HyPulsion JV

with Axane, S.A, a subsidiary of Air Liquide in February 2012. Axane contributed cash

and PLUG contributed rights to use technology for an initial 55/45 split. In April 2013,

Axane purchased another 25% for $3.3MM in cash. PLUG has the right to purchase a

60% interest in January 2018 at a formula price, and if exercised, Axane may require it

to buy out the remaining 20% between February 1, 2018 and December 31, 2021.

Figure 15 – PLUG: HyPulsion Revenue Estimate ($MM)


Market Development Work, OEM Collaborations Largely Complete

During the first year, the JV completed necessary regulatory work, such as obtaining

CE certification for products. It has seven collaboration projects in place with forklift

OEMs, including: Jungheinrich, Linde/Fenwhich, Still, Crown, NACCO, and Toyota

Material Handling Equipment. Initial deployments have started with BMW and IKEA.

Existing customers such as BMW and Mercedes have significantly larger operations in

Europe, and penetration should be aided by their positive experience at U.S. sites.

We Project a Modest Contribution to 2016-17E Other Income from HyPulsion

We model HyPulsion total sales (including service) of $6.6MM in 2014E, growing to

$62.3MM in 2018. PLUG should recognize revenue on product shipments, but not

service, until it buys a majority stake in 2018. In 2014-17E, we model cumulative

shipments of about 3,700 units. The JV is accounted for under the equity method, and

PLUG’s investment had a zero basis at 9/30/13. We assume the JV recovers

accumulated losses during 2015 and contributes a total of $900K in 2016-17E.

A Strategic Partnership for Asia Could Be Announced In 2014

A key rationale for forming the HyPulsion JV was to leverage localized expertise,

cultural and language skills. Air Liquide is present in 25 countries in Europe. PLUG is

planning to the same approach to enter Asian markets. Japan and China together

account for about 39% of potential global material handling revenue, compared to

49% for North America and Europe combined. PLUG has been in contact with large,

international companies as well as financial players who are interested in Asia, and

expects to focus on determining the right strategic approach in H1:14.

$6.6$18.3

$30.3$44.7

$62.3

2014E 2015E 2016E 2017E 2018E

Our model assumes PLUG buys out Axane’s

interest in the JV for $10MM in January 2018

The JV should also benefit by deploying Air

Liquide advanced hydrogen fueling stations

www.cowen.com12

Cowen and Company


January 21, 2014

New Application Opportunities in Three Adjacent Markets

Refrigerated Trailers Could Utilize Distribution Center Hydrogen Infrastructure

In August 2013, PLUG was awarded a two-year, $650K contract to demonstrate fuel

cells as a replacement for diesel on TRUs (transport refrigeration units). In November,

it received $500K from NYSERDA for a similar, one-year project. There are about 300K

TRUs in the U.S. A typical diesel generator consumes about 10 gallons of fuel per day.

In some locations, deliveries during overnight hours are restricted due to generator

noise. The test will run at a Sysco distribution center on Long Island. We expect TRUs

to carry a higher ASP (about $40K), due to a large size (8kg) hydrogen tank.

Figure 16 – PLUG: Market Expansion Applications

Transport Refrigeration Units (TRU) Ground Support Equipment (GSE) Range Extenders

Source: PLUG presentations

Ground Support Equipment Development Funded by $2.5MM DOE Grant

In November 2012, PLUG won a competitive DOE solicitation for a three-year project

to study the productivity, efficiency and the environmental benefits of using hydrogen

to power electric airport ground support equipment. PLUG will modify 15 tow tractors

to be used by FedEx Express at hubs in Memphis and Oakland. There are about 26K

units in N. America, and the European market is perhaps 20-30% larger. In Europe in

particular, airlines and airports are seeking to reduce emissions. We estimate GSEs

may have an ASP of about $30K, and we expect commercial revenue starting in 2015.

Doubling Range Should Enlarge Market for Electric Delivery Vehicles

In January 2014, PLUG announced a $3MM, DOE-funded project to develop fuel cell

range extenders for 20 FedEx Express electric delivery trucks together with partners

FedEx and Smith Electric Vehicles. The HEV units will be powered by lithium-ion

batteries and a 10kW fuel cell system based on the PLUG Series 1000, which is

expected to double the driving range to about 160 miles. FedEx and UPS operate over

150K delivery vehicles, and other retailers have also expressed interest. We estimate

an ASP of $22K and expect commercial sales starting in 2015.

We model 2015E TRU sales of $7MM,

growing to $40MM in 2018E.

We model 2015E GSE sales of $5MM,

growing to $19.5MM in 2018E

We model 2015E range extender sales of $5MM,

growing to $44MM in 2018E

www.cowen.com 13

Cowen and Company


January 21, 2014

Productivity Drives Lower Total Cost of Ownership vs. Batteries

Higher Capital Cost of Fuel Cells Offset by Productivity, Operating Expense Savings

Fuel cell power systems for material handling equipment cost more than lead-acid

battery packs, but this premium is more than offset by improved labor productivity,

reduced floor space, and lower operating expenses. Lead-acid batteries for forklifts

cost $2,500-$5,500 per battery pack and must be replaced about every four years.

Multi-shift operations may use 2-3 packs per forklift due to charging and cooling time.

Li-ion batteries offer better performance vs. lead-acid, but cost about 3x more.

Fuel Cells Offer Rapid Refueling, Stable Performance across Operating Conditions

It typically takes 10-20 minutes to swap out a battery pack, compared to less than

three minutes to refuel with hydrogen. Battery rooms consume valuable floor space

and peak demand charges can significantly impact electric rates when charging. Over

the last half of a charge, battery powered units lose about 14% of their speed.

Similarly, batteries deplete faster in freezers, where fuel cells are stable to -22°F.

Second Sourcing and Internal Stack Development Should Boost GM

As annual volume ramps toward about 3K units in 2014, PLUG is evaluating second

source options for key components. Stacks are currently sole-sourced from Ballard

Power Systems, and PLUG is considering second source and internal development

options. It will deploy a potential alternative stack as part of the GSE test with FedEx in

Q1:14. PLUG has visited 4-5 membrane and plate suppliers around the world and may

partner with Air Liquide to develop an internal stack solution.

How a PEM Fuel Cell Works

Figure 17 – PEM (Proton Exchange Membrane) Fuel Cell Schematic

PEM Cell Structure and Operation:

At the center of a PEM cell is the MEA (membrane electrode assembly). This consists of two electrodes

(anode and cathode), each coated with a catalyst layer, placed on either side of the proton exchange

membrane (PEM). On either side of the MEA, flow-field plates direct hydrogen fuel to the anode and

oxygen (from air) to the cathode.

Hydrogen reacts with the catalyst, separating into protons (hydrogen ions, H+) and electrons (e-).

Free electrons are conducted from the anode over the external circuit as usable current. At the

cathode, they recombine with oxygen and protons from the membrane to produce water and heat.

Fuel Cell Stack:

Individual cells are assembled into a stack to produce the required electrical power. Increasing the

number of cells in a stack raises the voltage. Enlarging the cell surface area boosts the current.

BOP (balance of plant):

The BOP consists of electronic control systems to manage current and the interface to other

equipment, and the mechanical subsystems to manage the flow of gases, water and heat.

Source: DOE, Cowen and Company

PLUG has over 90% share in fuel cells for

material handling equipment

www.cowen.com14

Cowen and Company


January 21, 2014

Early Years Spent on R&D Led to Today’s Strong Commercial Offering

June 27, 1997. Organized as a J.V between Edison Development Corp. and

Mechanical Technology Inc

1997-2010. Continued as a development stage company, with substantially all

resources and efforts aimed at R&D into fuel cell reliability and durability, and the

establishment, expansion, and stability of markets for fuel cell products

2007. Acquired Cellex Power Products Inc. and General Hydrogen Corp. and

became the first supplier of a full suite of fuel cell power solutions for class 1, 2, and

3 material handling equipment

April 1, 2010. Commercial operations had provided enough revenue from multiple

customers, and the backlog had grown such that PLUG was no longer considered a

development stage company

October, 2011. Introduced next generation GenDrive products, with a simplified

architecture featuring 30% fewer components. By Q3:12 the majority of units

produced and shipped were based on this simplified architecture

February 29, 2012. Formed the HyPulsion J.V. with Axane, S.A., a subsidiary of Air

Liquide, with a principal purpose to develop and sell fuel cell systems to the

European material handling market. Axane later increased its ownership from 55%

to 80%

May 8, 2013. Sale of securities to Air Liquide, which became a 14% owner and

obtained the right to name one board member. We believe this represented an

important validation of the technology and concept, and resulted in renewed

confidence on the part of customers

January 16, 2014. Launched turnkey solution for material handling sites; Kroger is

the initial customer. GenKey is all inclusive package, comprising GenDrive power

units, GenCare maintenance, and GenFuel hydrogen fuel and infrastructure

www.cowen.com 15

Cowen and Company


January 21, 2014

Management Profiles

Figure 18 - PLUG: Management Profiles

Andrew J. Marsh

President and CEO

Board Member

Mr. Marsh has been President and CEO since April 2008. Previously, Mr. Marsh was co-founder, CEO

and Board Member of Valere Power. Prior to Valere, he spent almost 18 years with Lucent Bell

Laboratories in a variety of sales and technical management positions. Mr. Marsh is a member of the

board of directors of the California Hydrogen Business Council, a non-profit group comprised of

organizations and individuals in the business of hydrogen. He holds a Bachelor of Science in Electrical

Engineering Technology from Temple University, a Master of Science in Electrical Engineering from

Duke University and a Masters of Business Administration from Southern Methodist University.

David Waldek

Interim CFO

(Principal Financial

Officer)

Mr. Waldek resumed this position with Plug Power in 2013, having previously served as interim CFO in

2007. He co-founded CFO Advisory Group in 2004, to provide strategic financial and business advisory

services for high-growth companies. Prior to CFO Advisory Group, Mr. Waldek was CFO of Albany

Molecular Research, Inc. (international drug discovery and development). Prior to AMRI, he served as

VP of Finance for Boston Scientific/NAMIC (cardiovascular medical devices). Mr. Waldek holds a B.S.

degree in Economics from the University of Rochester and an M.B.A. in Finance from the William E.

Simon Graduate School of Business Administration.

Gerard L. Conway, Jr.

Senior Vice President

General Counsel

Corporate Secretary

Mr. Conway has been General Counsel and Corporate Secretary since September 2004 and SVP since

March 2009, having previously served as Associate General Counsel and Director of Government

Relations since July 2000. He also serves as Compliance Officer for securities matters. Prior to PLUG,

Mr. Conway was an Associate at Featherstonhaugh, Conway, Wiley & Clyne, LLP, where he

concentrated in government relations, business and corporate law. He holds a Bachelor of Arts degree

in English and Philosophy from Colgate University and a Juris Doctorate from Boston University School

of Law.

Erik J. Hansen

Vice President –

Business Development

Mr. Hansen joined Plug Power Inc. as Vice President of Business Development in 2008 and was

appointed Senior Vice President in October of 2009. In this role, he directs sales. Prior to PLUG, he was

General Manager of Sales and Systems Engineering for Cobasys LLC in Orion, Michigan (advanced

energy storage for transportation and uninterruptible power systems). Mr. Hansen holds a Bachelor of

Science degree in Electrical Engineering and a Bachelor of Science degree in Computer Engineering,

both from West Virginia University.

Adrian Corless

Senior Vice President

Chief Technology Officer

Mr. Corless joined Plug Power in April 2007 as Vice President of Technology and was appointed CTO

in June 2008, and SVP in February 2010. In this role, he is responsible for product development, and IP

strategy. Prior to PLUG, he was CTO of Cellex Power Products, and prior to that he worked for Ballard

Power Systems and Excellsis Inc. He participates in the Industrial Truck Association, is an executive

board member of the Canadian Hydrogen and Fuel Cell Association, a Technical Advisory Board

member for the NRC Institute for Fuel Cell Innovation, and a member of both UL and CSA standards

development committees. Mr. Corless holds a Masters of Applied Science degree in Mechanical

Engineering from the University of Victoria and is a Registered Professional Engineer in British

Columbia.


www.cowen.com16

Cowen and Company


January 21, 2014

Strong Revenue Growth and Expanding Gross Margin

Since 2011, material cost as a percent of product ASP has declined from 100% to 75%;

we model further improvement to 67% in 2014, 58% in 2015 and 57% in 2016-18. This

should drive product GM to about 35%. In-field repairs were reduced by 50% in 2013;

further improvements should help drive service margins to about 30%.

Figure 19 – PLUG: Product GM to Stabilize Around 35%

Figure 20 – PLUG: Service GM To Stabilize Around 30%

Source: Cowen and Company Source: Cowen and Company

Figure 21 - PLUG: Revenue Buildup ($MM) and Gross Margin


$19 $18 $55$115

$166

$214$250

-0.9%-10.5%

20.5%

34.0% 35.4% 35.3% 35.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

$0

$50

$100

$150

$200

$250

$300

2012 2013E 2014E 2015E 2016E 2017E 2018E

Product Revenue

GM

$5 $6 $11 $24$42

$66

$94

-240.5%

-113.8%

10.4% 24.9% 30.1% 30.0% 29.9%

-300.0%

-250.0%

-200.0%

-150.0%

-100.0%

-50.0%

0.0%

50.0%

$0

$20

$40

$60

$80

$100

2012 2013E 2014E 2015E 2016E 2017E 2018E

Service Revenue

GM

P ro duct R evenue 2012 2013E 2014E 2015E 2016E 2017E 2018E

M aterial Handling 19.0 17.9 53.5 92.3 107.2 119.5 131.8

Transport Refrigeration Units 0.0 0.0 0.0 7.0 20.0 30.2 40.1

Ground Support Equipment 0.0 0.0 0.0 5.0 9.7 15.4 19.5

Range Extender 0.0 0.0 0.0 5.0 20.4 36.6 43.8

Hydrogen Infrastructure 0.0 0.0 1.5 5.5 8.8 12.0 14.6

T OT A L $ 19.0 $ 17.9 $ 55.0 $ 114.7 $ 166.0 $ 213.7 $ 249.8

R evenue ($ M M )

Product 19.0 17.9 55.0 114.7 166.0 213.7 249.8

Service 5.4 6.4 10.8 23.7 42.4 65.9 94.2

HyPulsion M arkup 0.0 0.0 0.0 0.0 0.0 0.0 5.5

R&D Contracts 1.7 1.6 1.6 1.6 1.6 0.4 0.4

T o tal R evenue $ 26.1 $ 26.0 $ 67.4 $ 140.0 $ 210.0 $ 280.0 $ 350.0

R evenue Gro wth Y/ Y

Product 0% -5% 207% 109% 45% 29% 17%

Service 28% 18% 69% 119% 79% 55% 43%

R&D Contracts -61% -4% -2% 0% 0% -75% 0%

T o tal -5% 0% 160% 108% 50% 33% 25%

R evenue M ix

Product 73% 69% 82% 82% 79% 76% 71%

Service 21% 25% 16% 17% 20% 24% 27%

R&D Contracts 6.5% 6.3% 2.4% 1.1% 0.8% 0.1% 0.1%

P ro duct unit co sts (est imated)

M aterial cost/product sales 80% 75% 67% 58% 57% 57% 57%

Labor cost/product sales 10% 25% 9% 6% 6% 6% 6%

C ash Subto tal 90% 100% 76% 64% 63% 63% 63%

T o tal 101% 111% 79% 66% 65% 65% 65%

Gro ss P ro f it ($ M M )

Product -0.2 -1.9 11.3 39.0 58.7 75.5 87.6

Service -13.1 -7.3 1.1 5.9 12.8 19.8 28.2

Product and Service -13.3 -9.2 12.4 44.9 71.5 95.3 115.8

HyPulsion 0.0 0.0 0.0 0.0 0.0 0.0 5.5

R&D Contracts -1.1 -0.9 -0.8 -0.8 -0.8 -0.2 -0.2

T o tal Gro ss P ro f it ($ 14.4) ($ 10.0) $ 11.6 $ 44.1 $ 70.7 $ 95.1 $ 121.1

Gro ss M argin

Product -0.9% -10.5% 20.5% 34.0% 35.4% 35.3% 35.0%

Service -240.5% -113.8% 10.4% 24.9% 30.1% 30.0% 29.9%

Hypulsion 100.0%

R&D Contracts -64.9% -52.4% -50.0% -50.0% -50.0% -50.0% -50.0%

T o tal Gro ss M argin -55.0% -38.7% 17.2% 31.5% 33.7% 34.0% 34.6%

www.cowen.com 17

Cowen and Company


January 21, 2014

Improvements Started in 2013 to Drive Profits by FY2015

After GM stabilizes in the low-mid 30% range, strong revenue growth should yield

operating leverage, a low-20% operating margin, and rapidly expanding EPS. We

model J.V. contribution from HyPulsion from 2016; consolidation in 2018.

Figure 22 – PLUG: 2013-18E Revenue CAGR of 68% Enables Strong Improvement in Operating Metrics

GM Positive in 2014E Declining Opex/Sales Drives Op. Mgn. to 22%+ EPS Positive in 2015E, Grows to 31c by 2018E


Figure 23 - PLUG: Annual P&L Forecast ($MM)


-55.0%-38.7%

17.2%

33.7% 34.6%

2012 '13E '14E '15E '16E '17E '18E

Gross Margin

85.5%

67.2%

26.2%

12.0% 11.9%

2012 '13E '14E '15E '16E '17E '18E

Opex/Sales

$26 $26 $67$140

$210$280

$350($1.07)

(39c)(5c)

11c 18c 25c 31c

($1.25)

($0.75)

($0.25)

$0.25

$0.75

$0

$50

$100

$150

$200

$250

$300

$350

$400

2012 '13E '14E '15E '16E '17E '18E

Revenue ($MM)

EPS

F Y = D EC EM B ER 2012 2013E 2014E 2015E 2016E 2017E 2018E

Product and Service 24.4 24.4 65.8 138.4 208.4 279.6 344.1

R&D Contracts 1.7 1.6 1.6 1.6 1.6 0.4 0.4

N et R evenues $ 26.1 $ 26.0 $ 67.4 $ 140.0 $ 210.0 $ 280.0 $ 350.0

% Change Y/Y -5% 0% 160% 108% 50% 33% 25%

Cost of Revenue $32.4 $36.0 $55.8 $95.9 $139.3 $185 $229

Gro ss P ro f it ($ 14.4) ($ 10.0) $ 11.6 $ 44.1 $ 70.7 $ 95.1 $ 121.1

Gross M argin -55.0% -38.7% 17.2% 31.5% 33.7% 34.0% 34.6%

R&D 5.4 3.2 4.2 8.3 12.1 15.4 18.6

% of Sales 20.8% 12.5% 6.2% 5.9% 5.8% 5.5% 5.3%

SG&A 14.6 11.9 11.2 12.2 13.2 16.4 22.9

% of Sales 55.8% 46.0% 16.6% 8.7% 6.3% 5.9% 6.5%

Amortization of Intangibles 2.3 2.3 2.3 0.7 - - -

% of Sales 8.8% 8.7% 3.3% 0.5% 0.0% 0.0% 0.0%

Operat ing Expenses $ 22.3 $ 17.5 $ 17.7 $ 21.2 $ 25.3 $ 31.8 $ 41.5

% of Sales 85.5% 67.2% 26.2% 15.1% 12.0% 11.4% 11.9%

Operat ing Inco me ($ 36.7) ($ 27.5) ($ 6.0) $ 22.9 $ 45.4 $ 63 $ 80

% Operating M argin -140.5% -105.9% -9.0% 16.4% 21.6% 22.6% 22.7%

Interest income (expense) (0.0) (0.4) - - 0.2 0.4 0.5

Other Income (expense) - - - - 0.3 0.6 -

P retax Inco me ($ 36.7) ($ 27.9) ($ 6.0) $ 22.9 $ 45.9 $ 64.3 $ 80.1

% of Sales -140.6% -107.3% -9.0% 16.4% 21.9% 23.0% 22.9%

Taxes - (0.4) - 6.4 18.4 25.7 32.0

% Tax Rate 0.0% 1.5% 0.0% 28.0% 40.0% 40.0% 40.0%

Preferred stock dividends - (0.1) (0.2) (0.2) (0.2) (0.2) -

N et Inco me ($ 36.7) ($ 27.6) ($ 6.2) $ 16.3 $ 27.3 $ 38.4 $ 48.1

% Net M argin -140.6% -106.2% -9.3% 11.6% 13.0% 13.7% 13.7%

EP S* ($ 1.07) ($ 0.39) ($ 0.05) $ 0.11 $ 0.18 $ 0.25 $ 0.31

Average Shares Outstanding 34.4 71.4 135.4 150.5 151.3 152.1 152.9

EPS Growth NM NM NM 67% 40% 25%

* Excludes one-time items and non-cash warrant liabilities

EB IT D A S ($ 30.3) ($ 21.2) $ 0.5 $ 28.1 $ 50.4 $ 69 $ 87

www.cowen.com18

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January 21, 2014

We Model Positive EPS Exiting 2014E

As noted above, 2014 and2015 are expected to be years of strong revenue growth and

GM expansion. The core material handling business should benefit from introduction

of the GenKey turnkey solution and the contribution of HyPulsion deployments in

Europe. Expansion markets in transport refrigeration, ground support equipment, and

fleet range extenders should begin to contribute meaningfully in H2:15.

Figure 24 – PLUG: Expansion Markets 26% of Q4:15E Product Sales

Figure 25 - PLUG: GM Positive in Q2:14; Net Income Positive in Q4:14


Figure 26 - PLUG: Quarterly P&L Forecast ($MM)


0

2013E 2014E 2015E

Material Handling Units

Hydrogen Infrastructure

Transport Refrigeration Units

Ground Support Equipment

Range Extenders

($10)

$15

2013E 2014E 2015E

Gross Profit Net Income

F Y = D EC EM B ER Q1:13A Q2:13A Q3:13A Q4:13E Q1:14E Q2:14E Q3:14E Q4:14E Q1:15E Q2:15E Q3:15E Q4:15E

Product and Service 6.045 7.130 4.165 7.013 7.405 15.671 18.413 24.338 25.497 31.885 36.616 44.402

R&D Contracts 0.400 0.368 0.462 0.400 0.400 0.400 0.400 0.400 0.400 0.400 0.400 0.400

T o tal R evenue $ 6.4 $ 7.5 $ 4.6 $ 7.4 $ 7.8 $ 16.1 $ 18.8 $ 24.7 $ 25.9 $ 32.3 $ 37.0 $ 44.8

% Change Y/Y -17% -2% -3% 25% 21% 114% 307% 234% 232% 101% 97% 81%

% Change Q/Q 9% 16% -38% 60% 5% 106% 17% 31% 5% 25% 15% 21%

Cost of Revenue 8.6 9.5 8.5 9.4 8.2 13.5 15.1 19.0 18.0 22.2 25.1 30.6

Gro ss P ro f it ($ 2.2) ($ 2.0) ($ 3.9) ($ 2.0) ($ 0.4) $ 2.6 $ 3.7 $ 5.7 $ 7.9 $ 10.1 $ 11.9 $ 14.2

Gross M argin -34% -27% -85% -26% -5% 16% 20% 23% 31% 31% 32% 32%

R&D 0.8 0.8 0.8 0.9 0.9 1.0 1.1 1.2 1.5 2.0 2.3 2.5

% of Sales 12% 11% 17% 12% 12% 6% 6% 5% 6% 6% 6% 6%

SG&A 2.9 3.2 2.8 3.1 2.7 2.7 2.8 3.0 3.0 3.0 3.0 3.2

% of Sales 45% 43% 60% 42% 35% 17% 15% 12% 12% 9% 8% 7%

Amortization of Intangibles 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.1 - -

% of Sales 9% 8% 12% 8% 7% 4% 3% 2% 2% 0% 0% 0%

Operat ing Expenses $ 4.2 $ 4.6 $ 4.1 $ 4.6 $ 4.2 $ 4.3 $ 4.5 $ 4.8 $ 5.1 $ 5.1 $ 5.3 $ 5.7

% of Sales 65% 61% 88% 62% 53% 27% 24% 19% 20% 16% 14% 13%

Operat ing Inco me ($ 6.4) ($ 6.6) ($ 8.0) ($ 6.5) ($ 4.5) ($ 1.7) ($ 0.8) $ 1.0 $ 2.8 $ 5.0 $ 6.6 $ 8.5

% Operating M argin -99% -88% -173% -88% -58% -11% -4% 4% 11% 16% 18% 19%

Interest income (expense) (0.1) (0.1) (0.1) (0.1) - - - - - - - -

Other income (expense) - - - - - - - - - - - -

P retax Inco me ($ 6.4) ($ 6.7) ($ 8.1) ($ 6.6) ($ 4.5) ($ 1.7) ($ 0.8) $ 1.0 $ 2.8 $ 5.0 $ 6.6 $ 8.5

% of Sales -100% -90% -175% -89% -58% -11% -4% 4% 11% 16% 18% 19%

Taxes - - (0.4) - - - - - 0.8 1.4 1.8 2.4

% Tax Rate 0% 0% 5% 0% 0% 0% 0% 0% 28% 28% 28% 28%

Preferred stock dividends (0.0) (0.1) (0.1) (0.1) (0.1) (0.1) (0.1) (0.1) (0.1) (0.1) (0.1)

N et Inco me ($ 6.4) ($ 6.7) ($ 7.7) ($ 6.7) ($ 4.6) ($ 1.8) ($ 0.8) $ 0.9 $ 2.0 $ 3.6 $ 4.7 $ 6.0

% Net M argin -100% -90% -167% -90% -59% -11% -4% 4% 8% 11% 13% 13%

EP S* ($ 0.13) ($ 0.10) ($ 0.09) ($ 0.08) ($ 0.04) ($ 0.01) ($ 0.01) $ 0.01 $ 0.01 $ 0.02 $ 0.03 $ 0.04

Average Shares Outstanding 48.567 68.662 84.151 84.200 130.000 130.500 131.000 150.000 150.200 150.400 150.600 150.800

EPS Growth

* Excludes one-time items and non-cash warrant liabilities

EB IT D A S ($ 4.8) ($ 5.1) ($ 6.4) ($ 4.9) ($ 2.9) ($ 0.1) $ 0.9 $ 2.6 $ 4.5 $ 6.2 $ 7.7 $ 9.6

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January 21, 2014

Model Should Begin to Generate Cash in 2014

We believe PLUG can exit the year having generated about $5MM of cash, largely in

H2. More working capital will likely be required to support the strong revenue growth

we expect. However, improved DSOs and inventory turns, plus a growing deferred

revenue balance should provide a partial offset.

Figure 27 – PLUG: FCF Positive in 2014E, $55MM+ in 2018E

Figure 28 - PLUG: Strong Conversion of Net Income into Free Cash Flow


Figure 29 - PLUG: Annual Cash Flow Forecast and Free Cash Flow ($MM)


($20.2)($23.6)

$5.2 $36.8 $37.1 $39.5 $55.2

2012 2013E 2014E 2015E 2016E 2017E 2018E

Net Income D&A + SBC + Def. Rev.

Change in W.C. Free Cash Flow 63% 54%

NM

226% 136% 103% 115%

-500%

300%

($25)

$25

$75

2012 2013E 2014E 2015E 2016E 2017E 2018E

Net Income Free Cash Flow FCF/NI


Net Income (Loss) (31.9) (40.4) (6.0) $16.5 $27.6 $38.6 $48.1

Depreciation & amortization 2.1 1.9 2.0 $2.3 $2.8 $3.6 $5.0

Amortization of intangible asset 2.3 2.3 2.3 $0.7 $0.0 $0.0 $0.0

Stock-based Compensation 2.0 2.1 2.2 $2.2 $2.2 $2.2 $2.2

Charges, Impairments 0.1 (3.3) - $0.0 $0.0 $0.0 $0.0

Other Adjustments (4.8) 16.2 - $0.0 $0.0 $0.0 $0.0

Working Capital Changes:

Receivables 9.4 (1.7) (10.7) ($13.4) ($11.5) ($11.7) ($11.6)

Inventories (1.3) (3.3) (21.1) ($11.8) ($17.3) ($17.5) ($17.4)

Other assets (0.7) (0.2) (5.1) ($6.0) ($5.1) ($5.2) ($5.2)

A/P, accrued & other liabilities 0.9 (0.8) 17.3 $20.2 $17.6 $18.3 $17.9

Deferred revenue (ST and LT) 1.8 3.8 26.0 $30.1 $25.9 $26.2 $26.1

Total Working Capital Decr (Incr) 10.1 (2.2) 6.3 19.2 9.6 10.2 9.8

C ash F lo w F ro m Operat io ns ($ 20.2) ($ 23.4) $ 6.7 $ 40.8 $ 42.1 $ 54.5 $ 65.1

Capital Expenditures (0.0) (0.2) (1.5) (4.0) (5.0) (15.0) (9.9)

Other Investing Activity - 3.2 - - - - (10.0)

T o tal C ash F ro m Invest ing ($ 0.0) $ 3.1 ($ 1.5) ($ 4.0) ($ 5.0) ($ 15.0) ($ 19.9)

Change in Debt and Capital Lease (0.0) (0.8) - - - - -

Restricted Cash - (0.5) - - - - -

Proceeds Issuance of Shares 15.8 18.2 28.1 - - - -

Principal payments on capitalized leases - (0.7) (1.3) - - - -

Changes in Equity (0.1) (0.1) 14.5 (0.4) (0.4) (0.4) 0.0

T o tal C ash F ro m F inancing $ 15.7 $ 16.1 $ 41.3 ($ 0.4) ($ 0.4) ($ 0.4) $ 0.0

Effect of Exchange Rate Changes 0.00 0.00

Change in cash position (4.5) (4.3) 46.5 36.4 36.7 39.1 45.2

Beginning cash 13.9 9.4 5.1 51.6 88.0 124.7 163.8

Ending cash $ 9.4 $ 5.1 $ 51.6 $ 88.0 $ 124.7 $ 163.8 $ 209.0

Cash Flow from Operations ($20.2) ($23.4) $6.7 $40.8 $42.1 $54.5 $65.1

Capital Spending ($0.0) ($0.2) ($1.5) ($4.0) ($5.0) ($15.0) ($9.9)

F ree C ash F lo w ($ 20.2) ($ 23.6) $ 5.2 $ 36.8 $ 37.1 $ 39.5 $ 55.2

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January 21, 2014

Cash No Longer a Constraint

The balance sheet should be significantly strengthened in Q1:14. Negative equity

exiting 2013 was reversed by a $30MM offering on January 10, 2014, and warrant

exercises should add $15MM; we believe this should fund losses and working capital

until profits and positive cash generation are reached in H2. A growing cash balance

should be able to fund additional growth initiatives as they become available.

Figure 30 – PLUG: Cash No Longer A Constraint

Figure 31 – PLUG: 50% CAGR in Tangible BV (2012-18E)


Figure 32 - PLUG: Annual Balance Sheet Forecast ($MM)


$4 $1 $49 $86 $123

$162

$207 24%

14%

44% 47% 48% 48% 48%

0%

10%

20%

30%

40%

50%

60%

$0

$50

$100

$150

$200

$250

2012 2013E 2014E 2015E 2016E 2017E 2018E

Net Cash ($MM) Cash/Assets

$0.28

($0.10)

$0.25 $0.35

$0.55

$0.81

$1.15

($0)

$0

$0

$0

$1

$1

$1

$1

$1

2012 2013E 2014E 2015E 2016E 2017E 2018E

Tangible BV/Share


A ssets:

Cash and cash equivalents 9.4 5.1 51.6 88.0 124.7 163.8 209.0

Accounts receivable 4.0 5.8 16.5 29.9 41.4 53.1 64.7

Inventory 8.6 11.9 33.0 44.8 62.1 79.6 97.0

Other current assets 2.0 2.2 7.4 13.4 18.6 23.9 29.1

C urrent A ssets $ 23.9 $ 25.0 $ 108.5 $ 176.2 $ 246.9 $ 320.4 $ 399.8

Restricted cash - 0.5 0.5 0.5 0.5 0.5 0.5

PP&E, net 6.7 5.5 5.5 7.8 10.5 22.5 27.8

Property under capital lease, net 3.0 2.5 1.9 1.4 0.9 0.4 -

Note receivable and other assets 0.6 0.5 0.5 0.4 0.3 0.3 0.2

Intangibles, net 5.3 2.9 0.7 - - - 10.0

T OT A L A SSET S $ 39.5 $ 36.8 $ 117.6 $ 186.2 $ 259.1 $ 344.0 $ 438.3

Liabilit ies:

ST Debt 3.4 - - - - - -

Accounts payable 3.6 4.2 8.5 13.6 18.2 23.4 28.2

Accrued expenses 3.8 2.2 7.4 13.4 18.6 23.9 29.1

Product warranty reserve 2.7 2.2 7.4 13.4 18.6 23.9 29.1

Deferred revenue - ST 3.0 3.7 12.4 22.4 31.0 39.8 48.5

Obligations under capital lease 0.7 0.7 - - - - -

Other current liabilities - 1.1 3.7 6.7 9.3 11.9 14.5

C urrent Liabilit ies $ 17.0 $ 14.1 $ 39.4 $ 69.6 $ 95.8 $ 122.9 $ 149.5

Obligations under capital lease 1.3 0.6 - - - - -

Deferred revenue - LT 4.4 7.4 24.7 44.8 62.1 79.6 97.0

Common stock warrant liability 0.5 12.9 12.9 12.9 12.9 12.9 12.9

LT Debt - 2.5 2.5 2.5 2.5 2.5 2.5

Other liabilities 1.2 0.8 0.8 0.8 0.8

T o tal Liabilit ies $ 24.4 $ 38.3 $ 80.3 $ 130.6 $ 174.1 $ 217.8 $ 261.8

C o nvert ible P referred Sto ck - 2.5 2.5 2.5 2.5 2.5 -

Sto ckho lder's Equity: 15.0 (3.9) 34.8 53.2 82.5 122.9 175.6

T OT A L LIA B ILIT IES A N D EQUIT Y $ 39.5 $ 36.8 $ 117.6 $ 186.2 $ 259.1 $ 344.0 $ 438.3

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January 21, 2014

Key Financial Metrics

As a system integrator, PLUG should be able to operate with very little fixed capital

and little or no debt. It should also be able to enjoy good inventory turns, especially as

a broadening customer base helps smooth out demand. ROE still looks negative in a

2014 that is pivotal for operations, but should sustain strong double digits from 2015.

Figure 33 – PLUG: Low Financial Leverage

Figure 34 – PLUG: High Financial Returns


Figure 35 - PLUG: Key Financial Metrics


26%

NM

7%4%

3% 2% 1%

2012 2013E 2014E 2015E 2016E 2017E 2018E

Debt/Capital

-167%

NM

-40%

37% 40% 37% 32%

2012 2013E 2014E 2015E 2016E 2017E 2018E

ROE


T urno ver:

Assets 0.5 0.7 0.9 0.9 0.9 0.9 0.9

Non-Cash Assets 0.7 0.8 1.4 1.7 1.8 1.8 1.7

Inventory 2.8 2.5 3.0 3.6 3.9 4.0 4.0

A/R DSO 122 69 60 60 62 62 61

A/P Days Payable 46 39 41 42 42 41 41

Leverage:

LT Debt/Equity 29% -188% 71% 84% 75% 65% 55%

Total Debt/Capital 34% 214% 42% 46% 43% 39% 36%

Debt-Cash/Equity -11% -59% -77% -81% -76% -69% -64%

Assets/Equity 263% -934% 338% 350% 314% 280% 250%

Cash/Assets 24% 14% 44% 47% 48% 48% 48%

R eturns:

ROA -77% -72% -8% 11% 12% 13% 12%

Non-Cash ROA -102% -89% -13% 20% 24% 24% 23%

ROE -167% -498% -40% 37% 40% 37% 32%

ROIC NA NA -76% 370% 192% 118% 88%

P er Share

Operating Cash Flow ($0.59) ($0.33) $0.05 $0.27 $0.28 $0.36 $0.43

Depreciation $0.06 $0.03 $0.01 $0.02 $0.02 $0.02 $0.03

Cash $0.27 $0.07 $0.38 $0.58 $0.82 $1.08 $1.37

Working Capital $0.20 $0.15 $0.51 $0.71 $1.00 $1.30 $1.64

Book Value $0.44 ($0.06) $0.26 $0.35 $0.55 $0.81 $1.15

Tangible Book Value $0.28 ($0.10) $0.25 $0.35 $0.55 $0.81 $1.15

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January 21, 2014

Synopsis of Comparable Public Companies

Active Power, Inc. (ACPW, $3.55, NR)

ACPW designs, manufactures and services flywheel systems and modular

infrastructure solutions, with installations in over 50 countries. Its products provide

battery-free continuous power conditioning (adjusts for voltage sags and surges,

frequency fluctuations, etc.) for datacenter and other mission critical applications.

During outages, they temporarily supply instantaneous transition power until the grid

is restored or other backup can be engaged.

Ballard Power Systems Inc. (BLDP, $2.33, NR)

Vancouver-based BLDP is a global leader in proton exchange membrane (PEM) fuel

cell technology. It designs, develops, manufactures, sells, and services fuel cell stacks,

modules and complete systems for buses and material handling equipment, stationary

distributed generation applications, and backup power. Ballard has designed and

shipped nearly 150 MW of hydrogen fuel cell technology.

Capstone Turbine Corporation (CPST, $1.73, Outperform)

CPST is the worldwide volume leader in microturbines, which are used for on-demand

or continuous distributed generation and transportation power. Exhaust heat can be

used for cogeneration (CHP) and cooling (CCHP), providing more efficient use of fuel

and lower emissions. Sizes and configurations range from 30kW to 10MW. Fuel

flexibility includes: high- or low-pressure natural gas, biogas, sour gas, propane,

diesel, and kerosene.

FuelCell Energy, Inc. (FCEL, $1.40, NR)

FCEL designs, manufactures, sells, installs, operates and services stationary fuel cell

power plants for distributed baseload power generation. Its Direct FuelCell (DFC)

power plants can operate on a range of available fuels, including methanol, diesel,

waste gases, and propane, to produce both electricity and heat. Founded in 1969, it

has shipped more than 300MW of capacity to approximately 50 installations

worldwide.

Hydrogenics Corporation (HYGS, $22.75, NR)

HYGS designs, develops and provides (PEM) based fuel cell products for OEMs,

system integrators, and end users. Stationary applications include backup power;

mobile applications include material handling equipment such as forklifts. It also

provides hydrogen generation products for renewable energy, industrial, and

transportation markets. Based in Canada, it also has operations in Belgium and

Germany.

Power Solutions International, Inc. (PSIX $71.72, NR)

PSIX provides integrated turn-key engine and power solutions. It is a leading supplier

of alternative fuel engines, serving industrial OEMs across a range of industries,

including material handling, aerial work platforms, industrial sweepers, arbor, welding,

airport ground support, turf, agricultural, construction, and irrigation, stationary

electricity power generation, and oil and gas. It also distributes Perkins and Caterpillar

diesel power systems.

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January 21, 2014

Valuation Methodology And RisksValuation Methodology

Clean Technology:Our primary inputs to valuation are earnings and earnings growth (P/E and PEG) forthe next two years. In cases where GAAP net income includes large, non-cash items(e.g., SBC or intangible amortization), we may use non-GAAP EPS. For companies withan emerging business model, we may use future-year earnings discounted back. Asa cross check to an earnings multiple, we may also use a DCF analysis. For situationswhere earnings are not visible within our forecast horizon, we may use asset values(P/Book, P/TBV).

Investment Risks

Clean Technology:Demand may be strongly influenced by government regulations, subsidies, andmandates. Share prices and financial results may be sensitive to policy changes andoutcomes may be difficult to predict, due to the political nature of the process.The solar industry has experienced wide swings in input costs and selling prices.There have been shortages of a key raw material, polysilicon, and excess productioncapacity during periods of declining subsidies. The global nature of the supply chainand end markets creates exposure to currency fluctuations and potential distortion bytariffs and trade disputes.Biomaterials players face technology, scale-up, and financing risks. Success maydepend on product development by downstream partners and upstream supplyarrangements, as well as timely construction of large production facilities. Businessmodels are typically characterized by early stages of commercial revenue, fundedR&D, operating losses and need for financing.Pollution control and resource management serve capital-intensive projects withlong sales cycles. Revenues and margins may fluctuate seasonally with the timing ofproject construction. Longer term, they are also sensitive to economic and capacitycycles in various end markets.

Risks To The Price Target

Our price target may be too high if material handling shipments do not grow aswe project, if product and service cost reduction and scale economies do notexpand margins toward the target model, or if expansion into European and Asianmarkets and new applications beyond material handling fails to contribute expectedincremental sales.

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January 21, 2014

AddendumStocks Mentioned In Important Disclosures

Ticker Company Name

CPST Capstone Turbine Corporation

PLUG Plug Power Inc.

Analyst CertificationEach author of this research report hereby certifies that (i) the views expressed in the research report accurately reflect his or her personal views about any and all of the subjectsecurities or issuers, and (ii) no part of his or her compensation was, is, or will be related, directly or indirectly, to the specific recommendations or views expressed in this report.

Important DisclosuresCowen and Company, LLC and or its affiliates make a market in the stock of Plug Power Inc. and Capstone Turbine Corporation securities.Plug Power Inc. has been client(s) of Cowen and Company, LLC in the past 12 months.Cowen and Company, LLC and/or its affiliates expect to receive, or intend to seek, compensation for investment banking services in the next 3 months from Plug Power Inc..Plug Power Inc. is or was in the past 12 months a client of Cowen and Company, LLC; during the past 12 months, Cowen and Company, LLC provided IB services.Cowen and Company, LLC and/or its affiliates received in the past 12 months compensation for investment banking services from Plug Power Inc..Cowen and Company, LLC and/or its affiliates managed or co-managed a public offering of Plug Power Inc. within the past twelve months.Cowen and Company, LLC compensates research analysts for activities and services intended to benefit the firm's investor clients. Individual compensation determinations forresearch analysts, including the author(s) of this report, are based on a variety of factors, including the overall profitability of the firm and the total revenue derived from all sources,including revenues from investment banking. Cowen and Company, LLC does not compensate research analysts based on specific investment banking transactions.

DisclaimerThis research is for our clients only. Our research is disseminated primarily electronically and, in some cases, in printed form. Research distributed electronically is availablesimultaneously to all Cowen and Company, LLC clients. All published research can be obtained on the Firm's client website, https://cowenlibrary.bluematrix.com/client/library.jsp.Further information on any of the above securities may be obtained from our offices. This report is published solely for information purposes, and is not to be construed as an offerto sell or the solicitation of an offer to buy any security in any state where such an offer or solicitation would be illegal. Other than disclosures relating to Cowen and Company, LLC,the information herein is based on sources we believe to be reliable but is not guaranteed by us and does not purport to be a complete statement or summary of the available data.Any opinions expressed herein are statements of our judgment on this date and are subject to change without notice.

For important disclosures regarding the companies that are the subject of this research report, please contact Compliance Department, Cowen and Company, LLC, 599 LexingtonAvenue, 20th Floor, New York, NY 10022. In addition, the same important disclosures, with the exception of the valuation methods and risks, are available on the Firm's disclosurewebsite at https://cowen.bluematrix.com/sellside/Disclosures.action.

Price Targets: Cowen and Company, LLC assigns price targets on all covered companies unless noted otherwise. The price target for an issuer's stock represents the value thatthe analyst reasonably expects the stock to reach over a performance period of twelve months. The price targets in this report should be considered in the context of all priorpublished Cowen and Company, LLC research reports (including the disclosures in any such report or on the Firm's disclosure website), which may or may not include pricetargets, as well as developments relating to the issuer, its industry and the financial markets. For price target valuation methodology and risks associated with the achievement ofany given price target, please see the analyst's research report publishing such targets.

Notice to UK Investors: This publication is produced by Cowen and Company, LLC which is regulated in the United States by FINRA. It is to be communicated only to personsof a kind described in Articles 19 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. It must not be further transmitted to any other personwithout our consent.

Copyright, User Agreement and other general information related to this report

© 2013 Cowen and Company, LLC. Member NYSE, FINRA and SIPC. All rights reserved. This research report is prepared for the exclusive use of Cowen clients and may not bereproduced, displayed, modified, distributed, transmitted or disclosed, in whole or in part, or in any form or manner, to others outside your organization without the express priorwritten consent of Cowen. Cowen research reports are distributed simultaneously to all clients eligible to receive such research reports. Any unauthorized use or disclosure isprohibited. Receipt and/or review of this research constitutes your agreement not to reproduce, display, modify, distribute, transmit, or disclose to others outside your organizationthe contents, opinions, conclusion, or information contained in this report (including any investment recommendations, estimates or price targets). All Cowen trademarks displayedin this report are owned by Cowen and may not be used without its prior written consent.

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COWEN AND COMPANY RATING DEFINITIONS

Cowen and Company Rating System effective May 25, 2013

Outperform (1): The stock is expected to achieve a total positive return of at least 15% over the next 12 months

Market Perform (2): The stock is expected to have a total return that falls between the parameters of an Outperform and Underperform over the next 12 months

Underperform (3): Stock is expected to achieve a total negative return of at least 10% over the next 12 months

Assumption: The expected total return calculation includes anticipated dividend yield

Cowen and Company Rating System until May 25, 2013

Outperform (1): Stock expected to outperform the S&P 500

Neutral (2): Stock expected to perform in line with the S&P 500

Underperform (3): Stock expected to underperform the S&P 500

Assumptions: Time horizon is 12 months; S&P 500 is flat over forecast period

Cowen Securities, formerly known as Dahlman Rose & Company, Rating System until May 25, 2013

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January 21, 2014

https://cowenlibrary.bluematrix.com/client/library.jsp?

https://cowen.bluematrix.com/sellside/Disclosures.action?

Buy – The fundamentals/valuations of the subject company are improving and the investment return is expected to be 5 to 15 percentage points higher than the general marketreturn

Sell – The fundamentals/valuations of the subject company are deteriorating and the investment return is expected to be 5 to 15 percentage points lower than the general marketreturn

Hold – The fundamentals/valuations of the subject company are neither improving nor deteriorating and the investment return is expected to be in line with the general marketreturn

Cowen And Company Rating DefinitionsDistribution of Ratings/Investment Banking Services (IB) as of 12/31/13

Rating Count Ratings Distribution Count IB Services/Past 12 Months

Buy (a) 415 59.20% 68 16.39%

Hold (b) 270 38.52% 4 1.48%

Sell (c) 16 2.28% 1 6.25%

(a) Corresponds to "Outperform" rated stocks as defined in Cowen and Company, LLC's rating definitions. (b) Corresponds to "Market Perform" as defined in Cowen and Company,LLC's ratings definitions. (c) Corresponds to "Underperform" as defined in Cowen and Company, LLC's ratings definitions.

Note: "Buy", "Hold" and "Sell" are not terms that Cowen and Company, LLC uses in its ratings system and should not be construed as investment options. Rather, these ratingsterms are used illustratively to comply with FINRA and NYSE regulations.

Apr 2011 Jul 2011 Oct 2011 Jan 2012 Apr 2012 Jul 2012 Oct 2012 Jan 2013 Apr 2013 Jul 2013 Oct 2013 Jan 2014

10

8

6

4

2

0

Closing Price Target Price

Plug Power Inc. Rating History as of 01/20/2014powered by: BlueMatrix

Apr 2011 Jul 2011 Oct 2011 Jan 2012 Apr 2012 Jul 2012 Oct 2012 Jan 2013 Apr 2013 Jul 2013 Oct 2013 Jan 2014

2.202.001.801.601.401.201.000.800.60

Closing Price Target Price

Capstone Turbine Corporation Rating History as of 01/20/2014

I:(1):$1.9010/04/13

powered by: BlueMatrix

Legend for Price Chart:

I = Initation | 1 = Outperform | 2 = Market Perform | 3 = Underperform | UR = Price Target Under Review | T = Terminated Coverage | $xx = Price Target | NA = Not Available

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Points Of ContactAnalyst Profiles

Robert W Stone

Boston

617.946.3932

[email protected]

Rob Stone is a senior analyst coveringclean technology and digital media. Hehas been named six times in the WSJBest on the Street survey.

James Medvedeff, CFA

Boston

617.946.3951

[email protected]

James Medvedeff is an associatecovering alternative energy and digitalmedia. He joined Cowen in 2010 with anMA in economics.

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price target: $5.00 systems poised for rapid growth initiation:...

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