Fuel cell manufacturer Plug Power has signed a three-year contract with big retailer Wal-Mart this week. The deal according to Plug, could mean $80 million in revenues from commercial agreements this year.
The contract also includes the option for Wal-Mart to buy around 17% of the company. Plug Power announced a similar multi-year contract with Amazon back in April where Amazon has the option to buy 55.3 million shares at a price of $1.1893 per share for a 17% stake. The price for Wal-Mart will be higher because Plug Power’s stock has seen an increase of more than 60% since then.
Wal-Mart is one of Plug Power’s biggest customers for awhile now. Just last year Wal-Mart made up 34% of the company’s revenue. There are 31 Wal-Mart warehouses across the U.S that have 6,000 Plug Power fuel cells and there are three sites in Canada as well.
According to Plug Power’s vice president of investor relations, John Cococcia, the deal with Wal-Mart “takes the
relationship to another level.”
“It takes the relationship to another level, which is important. With Amazon, and now Wal-Mart, we continue to increase the visibility we have on our business going out in the future,” said Cococcia.
“It gives us the ability to plan better and improve margins and cash flow and get to our profitability goals.”
As part of the deal, up to 30 new Wal-Mart site will be added over the next three years of which ten are already under contract and scheduled to finish by the end of this year.
Disclaimer: We have no position in Plug Power (NASDAQ: PLUG) Wal-Mart Stores Inc.( NYSE: WMT) nor Amazon.com, Inc. (NASDAQ: AMZN) and have not been compensated for this article.