VANCOUVER, July 28, 2015 /PRNewswire/ - Ballard Power
Systems (NASDAQ: BLDP; TSX: BLD) today announced its consolidated
financial results for the second quarter ended June 30, 2015. All amounts are in U.S. dollars
unless otherwise noted and have been prepared in accordance with
International Financial Reporting Standards (IFRS).
"Although we were disappointed with second quarter financial
results, during the quarter we made important
foundational progress on our journey to deliver long-term
shareholder value with a business model featuring high growth,
scale and sustainable profitability," said Randy MacEwen, President and CEO. "First, we
announced a definitive agreement to acquire Protonex Technology
Corporation, a private company with a strong growth trajectory
based on compelling power management products and a portable fuel
cell portfolio for use in military and industrial applications.
Second, we are executing our China
strategy, including new anchor partnerships in China for fuel cell buses and trams."
Mr. MacEwen continued, "We have a customer-centric business
model, a committed team, a strong brand and industry leading
technology, intellectual property, products and deployment
experience."
Tony Guglielmin, CFO added, "With
the closing of our recent equity financing, we have a strong
balance sheet to support organic growth as well as M&A and
investment opportunities. We continue to expect 2015 revenue from
our current lines of business to be heavily weighted in the second
half of the year, underpinned by significant progress in our sales
pipeline for both Power Products and Technology Solutions
platforms."
Q2 2015 Metrics Summary
(all comparisons to Q2 2014
unless otherwise noted)
- Total revenue of $11.2 million, a
decrease of 39% primarily due to declines in Technology Solutions
and Material Handling revenue. Total revenue was within the
$10.6-to-$11.5 million range that had
been anticipated and pre-announced by the Company in its
July 1 press release.
- Gross margin of 10%, a decrease resulting primarily from the
reduction in high margin Technology Solutions revenue due to the
previously-announced termination of contracts with Azure in
China and a shift in cadence of
revenue from the engineering services contract with Volkswagen AG.
Gross margin was lower than the prior quarter, by one percentage
point, as had been anticipated and pre-announced in the Company's
July 1 press release.
- Cash operating costs2 of $6.7
million, flat on a year-over-year basis.
- Adjusted EBITDA2 of ($4.8)
million, an increase in Adjusted EBITDA loss on a
year-over-year basis, reflecting the decline in gross margin.
- Net income (loss) of ($7.3)
million or ($0.06) per share,
reductions in both metrics driven primarily by the increase in
Adjusted EBITDA loss.
- Cash used by operating activities of ($5.3) million, a year-over-year increase. This
reflects a cash operating loss of ($5.5)
million, partially offset by an improvement in working
capital of $0.2 million.
- Cash reserves of $41.2 million at
June 30, higher than the estimated
cash reserves of $38.0-to-$40.0
million that the Company pre-announced in its July 1 press release. Cash reserves were
fortified following the quarter, through an equity financing that
generated net proceeds of approximately $13.6 million.
Q2 2015 Market Performance
(all comparisons to Q2
2014 unless otherwise noted)
Power Products:
The Power Products platform –
consisting of fuel cell products for the Telecom Backup Power
market, the Material Handling market and Development Stage markets
– generated revenue of $6.3 million
in the quarter, a 15% year-over-year decline primarily due to a
reduction in fuel cell stack shipments for the Material Handling
market.
Telecom Backup Power
- Revenue of $3.0 million, an
increase of 15% driven by the shipment of 100 ElectraGen™-ME
methanol-fueled backup power systems to fulfill a purchase order
from new customer Reliance Jio Infocomm Limited (RJIL) in
India, in addition to system
shipments to customers in South
Africa and Europe.
Material Handling
- Revenue of $2.7 million, a 34%
decline associated with reduced fuel cell stack shipments to Plug
Power.
Development Stage Markets
- Revenue of $0.6 million, a
reduction of $0.1 million or 13%.
This revenue was primarily related to the shipment of one
FCvelocityTM-HD6 power module for deployment by the
Stark Area Regional Transit Authority in Ohio.
- Announced a $10 million
deal to produce fuel cell products and solutions to power
33 buses in China, the first 3
modules having been shipped in Q1, with the majority expected to be
shipped by the end of 2015.
- Signed a framework agreement with Tangshan Railway Vehicle
Company Limited in China for
development of a new fuel cell module to power trams.
- Signed a 5-year extension to the maintenance contract for an
8-bus fleet operated by Transport for London in the U.K.
Technology Solutions:
The Technology Solutions
platform – consisting of engineering services and intellectual
property licensing – generated revenue of $4.9 million in the quarter, a year-over-year
decline of 56%. Second quarter 2014 had included licensing
contracts in China that Ballard
subsequently terminated and also reflected a cadence in engineering
services contract work for Volkswagen AG that was weighted toward
the early portion of last year. In addition, Q2 2015 revenue from
the contract with Volkswagen AG, priced in Canadian dollars,
reflected the negative impact of a lower Canadian dollar relative
to the U.S. dollar.
- Subsequent to the quarter Ballard signed an agreement for a 1
megawatt ClearGen™ fuel cell distributed generation system for
Hydrogène de France. Ballard will
receive an initial payment of €1.7 million for the first phase of
the program, involving engineering services and core component
development, targeted for completion in mid-2016.
Acquisition of Protonex Technology Corporation
On June 29th, Ballard
announced the signing of a definitive agreement to acquire Protonex
Technology Corporation ("Protonex"), a leading designer and
manufacturer of advanced power management products and portable
fuel cell solutions. As consideration for the transaction, valued
at the time of the announcement at $30
million, Ballard assumed and will pay Protonex's debt
obligations and transaction costs at closing, currently estimated
at $4.4 million, and will pay the
balance of approximately $25.6
million through the issuance of 11.2 million Ballard shares.
The number of Ballard shares to be issued is subject to adjustment
based on Protonex's final debt obligations and transaction costs at
closing.
The transaction is expected to close in the third quarter of
2015, subject to Protonex shareholder approval, regulatory
approvals and customer closing conditions. The transaction requires
approval of shareholders holding more than 50% of Protonex shares.
Ballard has entered into support and voting agreements with each of
the directors and executive officers of Protonex, as well as
certain major shareholders of Protonex, who collectively hold more
than 50% of the outstanding shares of Protonex, under which those
holders have irrevocably agreed to vote in favor of the
transaction.
Ballard expects the transaction to deliver a number of key
benefits, including:
1)
|
Diversification – The deal adds power
management capabilities along with small-scale portable power
products to Ballard's already extensive Power Products portfolio.
Power management capabilities will enable Ballard to seamlessly
link fuel cell, solar and storage technologies to deliver clean
energy simply and efficiently. The transaction also provides
exposure to military applications for power management products, as
well as the opportunity to penetrate this vertical with fuel cell
products in the longer-term.
|
2)
|
Growth – The
deal will enhance Ballard's overall growth profile as Protonex has
enjoyed a compound annual growth rate of approximately 22% since
2011 and is forecasting further significant growth in 2015 and
2016.
|
3)
|
Scale –
Ballard's consolidated revenue will show a significant top line
improvement following the transaction.
|
4)
|
Profitability
– In its 2014 fiscal year, Protonex generated strong gross margin
of 40% and delivered positive Adjusted EBITDA. Given its high
margin revenue, Protonex is expected to positively impact Ballard's
top line and bottom line, moving Ballard more rapidly toward
positive earnings.
|
Further information regarding Protonex's business and growth
strategy will be provided during Ballard's conference call on
Wednesday, July 29. Details for
accessing the conference call can be found below.
Q2 2015 Financial Results
|
|
|
(Millions of U.S.
dollars)
|
Three months
ended June 30,
|
Six months ended
June 30,
|
|
2015
|
2014
|
% Change
|
2015
|
2014
|
% Change
|
GROWTH
|
|
|
|
|
|
|
Fuel Cell Products
& Services Revenue:1
|
|
|
|
|
|
|
|
Telecom Backup
Power
|
$3.0
|
$2.6
|
15%
|
$3.6
|
$5.5
|
-35%
|
|
Material
Handling
|
$2.7
|
$4.1
|
-34%
|
$5.2
|
$6.1
|
-13%
|
|
Development Stage
Markets
|
$0.6
|
$0.7
|
-13%
|
$2.3
|
$0.8
|
181%
|
|
Sub-Total
|
$6.3
|
$7.4
|
-15%
|
$11.1
|
12.4
|
-10%
|
|
Technology
Solutions
|
$4.9
|
$11.1
|
-56%
|
$9.3
|
$20.1
|
-54%
|
Total Fuel Cell
Products & Services Revenue
|
$11.2
|
$18.5
|
-39%
|
$20.4
|
$32.5
|
-37%
|
PROFITABILITY
|
|
|
|
|
|
|
Gross Margin
$
|
$1.1
|
$4.5
|
-76%
|
$2.1
|
$8.1
|
-74%
|
Gross Margin
%
|
10%
|
25%
|
-15-points
|
10%
|
25%
|
-15-points
|
Cash Operating
Costs2
|
$6.7
|
$6.7
|
-1%
|
$14.6
|
$13.0
|
-13%
|
Adjusted
EBITDA2
|
($4.8)
|
($1.2)
|
-304%
|
($9.9)
|
($3.0)
|
-231%
|
Net Income
(Loss)3
|
($7.3)
|
($4.5)
|
-65%
|
($0.3)
|
($8.3)
|
96%
|
Earnings Per
Share
|
($0.06)
|
($0.03)
|
-59%
|
($0.00)
|
($0.07)
|
96%
|
Normalized Net
Loss2
|
($7.0)
|
($4.5)
|
-58%
|
($15.2)
|
($8.1)
|
-87%
|
Normalized Net Loss
Per Share2
|
($0.05)
|
($0.03)
|
-55%
|
($0.12)
|
($0.07)
|
-73%
|
CASH
|
|
|
|
|
|
|
Cash Used by
Operating Activities:
|
|
|
|
|
|
|
|
Cash Operating Income
(Loss)
|
($5.5)
|
($2.3)
|
-140%
|
($11.3)
|
($4.5)
|
-153%
|
|
Working Capital
Changes
|
$0.2
|
($0.7)
|
136%
|
$0.6
|
($5.1)
|
112%
|
|
|
|
|
|
|
|
|
|
Cash Used By
Operating Activities
|
($5.3)
|
($2.9)
|
-79%
|
($10.7)
|
($9.6)
|
-11%
|
Cash
Reserves
|
$41.2
|
$36.4
|
13%
|
|
|
|
For a more detailed discussion of Ballard Power Systems' second
quarter 2015 results, please see the company's financial statements
and management's discussion & analysis, which are available at
www.ballard.com/investors, www.sedar.com and
www.sec.gov/edgar.shtml.
Conference Call
Ballard will hold a conference call on
Wednesday, July 29, 2015 at
8:00 a.m. PDT (11:00 a.m. EDT) to review its second quarter 2015
operating results. The live call can be accessed by dialing
+1.604.638.5340. Alternatively, a live audio and slide webcast can
be accessed through a link on Ballard's homepage (www.ballard.com).
Following the call, the audio webcast will be archived in the
Quarterly Results area of the Investors section of Ballard's
website (www.ballard.com/investors).
About Ballard Power Systems
Ballard Power Systems
(NASDAQ: BLDP; TSX: BLD) provides clean energy products that reduce
customer costs and risks, and helps customers solve difficult
technical and business challenges in their fuel cell programs. To
learn more about Ballard, please visit www.ballard.com.
Important Cautions Regarding Forward-Looking
Statements
This release contains forward-looking statements
concerning projected revenue growth, product shipments, gross
margin, Adjusted EBITDA, cash operating expenses and product sales.
These forward-looking statements reflect Ballard's current
expectations as contemplated under section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Any such statements are based on Ballard's
assumptions relating to its financial forecasts and expectations
regarding its product development efforts, manufacturing capacity,
and market demand. For a detailed discussion of the factors and
assumptions that these statements are based upon, and factors that
could cause our actual results or outcomes to differ materially,
please refer to Ballard's most recent management discussion &
analysis. Other risks and uncertainties that may cause Ballard's
actual results to be materially different include general economic
and regulatory changes, detrimental reliance on third parties,
successfully achieving our business plans and achieving and
sustaining profitability. For a detailed discussion of these and
other risk factors that could affect Ballard's future performance,
please refer to Ballard's most recent Annual Information Form.
These forward-looking statements are provided to enable external
stakeholders to understand Ballard's expectations as at the
date of this release and may not be appropriate for other purposes.
Readers should not place undue reliance on these statements and
Ballard assumes no obligation to update or release any revisions to
them, other than as required under applicable legislation.
Endnotes:
1 We report our results in the single operating
segment of Fuel Cell Products and Services. Our Fuel Cell Products
and Services segment consists of the sale and service of fuel cell
products for our "commercial stage" markets of Telecom Backup Power
and Material Handling and for our "development stage" markets of
Bus and Distributed Generation, as well as the delivery of
Technology Solutions including engineering services and the license
and sale of our extensive intellectual property portfolio and
fundamental knowledge for a variety of fuel cell applications.
We made changes to the composition of revenues in our Fuel Cell
Products and Services segment in 2015. As a result, licensing
revenues of $2.6 million for the
second quarter of 2014 and $4.2
million for the first half of 2014 previously recorded as
either "development stage" Bus revenues, Telecom Backup Power
revenues or Material Handling revenues have been retroactively
reclassified as Technology Solutions revenues.
2 Cash Operating Costs measures operating expenses
excluding stock based compensation expense, depreciation and
amortization, impairment losses or recoveries on trade receivables,
restructuring charges, acquisition costs and financing charges.
EBITDA measures net loss attributable to Ballard Power Systems Inc.
excluding finance expense, income taxes, depreciation of property,
plant and equipment, amortization of intangible assets, and
goodwill impairment charges. Adjusted EBITDA adjusts EBITDA for
stock based compensation expense, transactional gains and losses,
asset impairment charges, finance and other income, and acquisition
costs. Normalized Net Loss measures net loss attributable to
Ballard from continuing operations, excluding impairment losses or
recoveries on trade receivables, transactional gains and losses,
asset impairment charges, and acquisition costs.
Note that Cash Operating Costs, EBITDA, Adjusted EBITDA and
Normalized Net Loss, are non GAAP measures. Non GAAP measures do
not have any standardized meaning prescribed by GAAP and therefore
are unlikely to be comparable to similar measures presented by
other companies. Ballard believes that Cash Operating Costs,
EBITDA, Adjusted EBITDA and Normalized Net Loss assist investors in
assessing Ballard's operating performance and liquidity. These
measures should be used in addition to, and not as a substitute
for, net income, cash flows and other measures of financial
performance and liquidity reported in accordance with GAAP. For a
reconciliation of Cash Operating Costs, EBITDA, Adjusted EBITDA and
Normalized Net Loss to the Consolidated Financial Statements,
please refer to Ballard's Management's Discussion &
Analysis.
3 Includes gain of $14.2
million on sale of intellectual property to Volkswagen
Group.
Further Information: Guy McAree
+1.604.412.7919, investors@ballard.com or media@ballard.com
SOURCE Ballard Power Systems Inc.