Hydrogenics Reports Fourth Quarter and Full Year 2013 Results
March 07 2014 - 6:30AM
Hydrogenics Corporation (Nasdaq:HYGS) (TSX:HYG)
("Hydrogenics" or "the Company"), a leading developer and
manufacturer of hydrogen generation and hydrogen-based power
modules, today reported fourth quarter and full year 2013 financial
results. Results are reported in US dollars and are prepared in
accordance with International Financial Reporting Standards (IFRS).
"Hydrogenics ended 2013 stronger than at any point in its
history – with record revenue of $42.4 million, backlog of $57.0
million, and $13.8 million in cash," said Daryl Wilson, President
and Chief Executive Officer. "We continue to see the same demand
trends that have propelled the Company forward, as global interest
in hydrogen-based power and energy solutions accelerates.
"We are encouraged with progress in our energy storage
applications. Later this year E.ON will open the most advanced
Power-to-Gas facility in the world and the largest PEM electrolysis
installation producing hydrogen. Given energy storage opportunities
such as this, the growing demand for fueling stations, new
fuel-cell applications within the mobility and backup power
sectors, and the underlying strength of our industrial electrolysis
business, Hydrogenics is on sound footing for 2014 – to pass the
$50 million revenue barrier and break into profitability."
Highlights for the Quarter Ended December 31, 2013
(compared to the quarter ended December 31, 2012, unless otherwise
noted)
- Revenue increased by 12% to $11.0 million reflecting higher
sales in the Company's Power Systems business unit.
- Gross profit improved 11.1 percentage points to $2.7 million,
or 24.6% of revenue for the quarter.
- Cash Operating Costs1 declined 20% to $2.9 million for the
quarter, principally due to an increase in R&D funding in the
quarter.
- Adjusted EBITDA loss was $0.2 million a 93% improvement and
evidence of substantial progress toward profitability. (See
footnote at the end of this release as the Company's definition of
Adjusted EBITDA has changed).
- Net loss in the quarter was $3.1 million a decline of $0.3
million from the fourth quarter of 2012.
- Hydrogenics secured $14.3 million of orders for renewable
energy storage, industrial gas and power system applications during
the quarter, resulting in an order backlog of $57.0 million as of
December 31, 2013. Order backlog movement during the fourth quarter
(in $ millions) was as follows:
|
Sept. 30, 2013 Backlog |
Orders Received |
FX |
Orders Delivered |
Dec. 31, 2013 Backlog |
|
|
|
|
|
|
OnSite Generation |
$17.1 |
$12.2 |
$0.1 |
$6.9 |
$22.5 |
Power Systems |
35.6 |
2.1 |
0.9 |
4.1 |
34.5 |
Total |
$52.7 |
$14.3 |
$1.0 |
$11.0 |
$57.0 |
- The Company exited the fourth quarter with $13.8 million of
cash and restricted cash, a $0.8 million decrease from September
30, 2013, primarily reflecting: (i) a $1.5 million decrease in
working capital; and (ii) $0.2 million related to the purchase of
property, plant and equipment; partially offset by (iii) $1.3
million of proceeds from loan advances.
Highlights for the Year Ended December 31, 2013
(compared to the Year Ended December 31, 2012, unless otherwise
noted)
- Revenue improved by 34% to $42.4 million, an increase of $10.7
million, primarily reflecting higher sales in the Company's Power
Systems business unit driven by a contract for integrated power
propulsion systems as well as the delivery of fuel cell modules to
Hydrogenics' major telecom backup power partner, CommScope,
Inc.
- Gross profit increased by $6.8 million to $12.1 million, to
28.4% of revenue, driven by improved margins from the OnSite
Generation business unit and higher revenue from the Power Systems
business unit.
- Cash operating costs were $13.5 million, versus $15.3 million
last year, with costs as a percent of revenue falling 16%. The
year-over-year change primarily reflects an increase in external
R&D funding of $1.3 million as well as a decrease in corporate
R&D expenses of $0.5 million; the lower R&D spending was
driven by greater resource allocation within the Power Systems
business unit. Cash operating costs included a slight increase of
$0.1 million in SG&A expenses.
- Adjusted EBITDA loss was $1.2 million versus $10.1 million in
2012, primarily reflecting the above noted changes.
- Net loss was $8.9 million, a 30% reduction from the $12.8
million reported in 2012.
Notes
- Cash operating costs are defined as the sum of SG&A and
R&D, less amortization and depreciation, and stock-based
compensation expense inclusive of compensation costs indexed to the
Company's share price. This is a non-IFRS measure and may not be
comparable to similar measures used by other companies. Management
uses this measure as a rough estimate of the amount of fixed costs
to operate the Corporation and believes this is a useful measure
for investors for the same purpose.
- Adjusted EBITDA is defined as net loss excluding stock based
compensation (both cash settled long term compensation indexed to
share price and share based compensation), other finance income and
expenses, depreciation and amortization. These items are considered
by management to be outside of Hydrogenics' ongoing operational
results. Adjusted EBITDA is a non-IFRS measure and may not be
comparable to similar measures used by other companies.
Conference Call Details
Hydrogenics will hold a conference call at 10:00 a.m. EST on
March 7, 2014 to review the fourth quarter results. The telephone
number for the conference call is (877) 307-1373 or, for
international callers, (678) 224-7873. A live webcast of the
call will also be available on the company's website,
www.hydrogenics.com.
An archived copy of the conference call and webcast will be
available on the company's website, www.hydrogenics.com,
approximately six hours following the call.
About Hydrogenics
Hydrogenics Corporation is a world leader in engineering and
building the technologies required to enable the acceleration of a
global power shift. Headquartered in Mississauga, Ontario,
Hydrogenics provides hydrogen generation, energy storage and
hydrogen power modules to its customers and partners around the
world. Hydrogenics has manufacturing sites in Germany,
Belgium and Canada and service centres in Russia, Europe, the US
and Canada.
Forward-looking Statements
This release contains forward-looking statements within the
meaning of the "safe harbor" provisions of the U.S. Private
Securities Litigation Reform Act of 1995, and under applicable
Canadian securities law. These statements are based on management's
current expectations and actual results may differ from these
forward-looking statements due to numerous factors, including: our
inability to increase our revenues or raise additional funding to
continue operations, execute our business plan, or to grow our
business; inability to address a slow return to economic growth,
and its impact on our business, results of operations and
consolidated financial condition; our limited operating history;
inability to implement our business strategy; fluctuations in
our quarterly results; failure to maintain our customer base that
generates the majority of our revenues; currency fluctuations;
failure to maintain sufficient insurance coverage; changes in value
of our goodwill; failure of a significant market to develop
for our products; failure of hydrogen being readily available on a
cost-effective basis; changes in government policies and
regulations; failure of uniform codes and standards for hydrogen
fuelled vehicles and related infrastructure to develop; liability
for environmental damages resulting from our research, development
or manufacturing operations; failure to compete with other
developers and manufacturers of products in our industry; failure
to compete with developers and manufacturers of traditional and
alternative technologies; failure to develop partnerships with
original equipment manufacturers, governments, systems integrators
and other third parties; inability to obtain sufficient materials
and components for our products from suppliers; failure to manage
expansion of our operations; failure to manage foreign sales and
operations; failure to recruit, train and retain key management
personnel; inability to integrate acquisitions; failure to develop
adequate manufacturing processes and capabilities; failure to
complete the development of commercially viable products; failure
to produce cost-competitive products; failure or delay in field
testing of our products; failure to produce products free of
defects or errors; inability to adapt to technological advances or
new codes and standards; failure to protect our intellectual
property; our involvement in intellectual property litigation;
exposure to product liability claims; failure to meet rules
regarding passive foreign investment companies; actions of our
significant and principal shareholders; dilution as a result of
significant issuances of our common shares and preferred shares;
inability of US investors to enforce US civil liability judgments
against us; volatility of our common share price; and dilution as a
result of the exercise of options. Readers should not place undue
reliance on Hydrogenics' forward-looking statements. Investors are
encouraged to review the section captioned "Risk Factors" in
Hydrogenics' regulatory filings with the Canadian securities
regulatory authorities and the US Securities and Exchange
Commission for a more complete discussion of factors that could
affect Hydrogenics' future performance. Furthermore, the
forward-looking statements contained herein are made as of the date
of this release, and Hydrogenics undertakes no obligations to
revise or update any forward-looking statements in order to reflect
events or circumstances that may arise after the date of this
release, unless otherwise required by law. The forward-looking
statements contained in this release are expressly qualified by
this.
Reconciliation of
Adjusted EBITDA to Net Loss |
(in thousands of US dollars) |
(unaudited) |
|
|
|
|
|
|
3
months ended |
Year
ended |
|
31-Dec-13 |
31-Dec-12 |
31-Dec-13 |
31-Dec-12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
(162) |
(2,321) |
(1,214) |
(10,062) |
|
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
145 |
36 |
631 |
530 |
|
|
|
|
|
Cash settled compensation indexed to share
price |
2,021 |
413 |
4,223 |
768 |
|
|
|
|
|
Net Finance losses |
624 |
426 |
2,125 |
572 |
|
|
|
|
|
Depreciation and amortization |
145 |
197 |
712 |
870 |
|
|
|
|
|
Other loss |
3 |
(5) |
3 |
(5) |
|
|
|
|
|
Net Loss |
(3,100) |
(3,388) |
(8,908) |
(12,797) |
|
Hydrogenics
Corporation |
Consolidated Interim Balance
Sheets |
(in thousands of US dollars) |
(unaudited) |
|
December 31 |
December 31 |
|
2013 |
2012 |
Assets |
|
As Revised |
Current assets |
|
|
Cash and cash equivalents |
$11,823 |
$13,020 |
Restricted cash |
635 |
3,039 |
Trade and other receivables |
5,391 |
5,769 |
Grants receivable |
-- |
16 |
Inventories |
12,821 |
11,848 |
Prepaid expenses |
979 |
915 |
|
31,649 |
34,607 |
Non-current assets |
|
|
Restricted cash |
1,389 |
743 |
Property, plant and equipment |
1,684 |
1,399 |
Intangible assets |
100 |
107 |
Goodwill |
5,248 |
5,021 |
|
8,421 |
7,270 |
Total assets |
$40,070 |
$41,877 |
Liabilities |
|
|
Current liabilities |
|
|
Trade and other payables |
13,193 |
11,551 |
Warranty provisions |
1,912 |
1,252 |
Deferred revenue |
6,348 |
11,706 |
Warrants |
1,075 |
1,545 |
|
22,528 |
26,054 |
Non-current liabilities |
|
|
Other non-current liabilities |
3,095 |
2,384 |
Non-current warranty provisions |
981 |
556 |
Non-current deferred revenue |
7,305 |
8,576 |
Total liabilities |
33,909 |
37,570 |
Equity |
|
|
Share capital |
333,312 |
323,513 |
Contributed surplus |
18,449 |
17,995 |
Accumulated other comprehensive loss |
(249) |
(999) |
Deficit |
(345,351) |
(336,202) |
Total equity |
6,161 |
4,307 |
Total equity and
liabilities |
$40,070 |
$41,877 |
|
Hydrogenics
Corporation |
Consolidated Interim Statements
of Operations and Comprehensive Loss |
(in thousands of US dollars,
except share and per share amounts) |
(unaudited) |
|
Three months
ended December 31 |
Twelve months
ended December 31 |
|
2013 |
2012 |
2013 |
2012 |
|
|
As Revised |
|
As Revised |
Revenues |
$11,000 |
$9,817 |
$42,413 |
$31,697 |
Cost of sales |
8,295 |
8,489 |
30,352 |
26,448 |
Gross profit |
2,705 |
1,328 |
12,061 |
5,249 |
|
|
|
|
|
Operating expenses |
|
|
|
|
Selling, general and administrative
expenses |
4,948 |
3,408 |
16,275 |
13,027 |
Research and product development
expenses |
230 |
887 |
2,566 |
4,452 |
Other (gains) losses |
3 |
(5) |
3 |
(5) |
|
5,181 |
4,290 |
18,844 |
17,474 |
Loss from operations |
(2,476) |
(2,962) |
(6,783) |
(12,225) |
|
|
|
|
|
Finance income
(expenses) |
|
|
|
|
Interest income |
-- |
18 |
11 |
26 |
Interest expense |
(133) |
(92) |
(426) |
(329) |
Foreign currency gains |
265 |
381 |
517 |
755 |
Foreign currency losses |
(67) |
(27) |
(162) |
(586) |
Other finance gains (losses), net |
(689) |
(706) |
(2,065) |
(438) |
Finance income (loss),
net |
(624) |
(426) |
(2,125) |
(572) |
|
|
|
|
|
Loss before income
taxes |
(3,100) |
(3,388) |
(8,908) |
(12,797) |
Income tax expense |
-- |
-- |
-- |
-- |
Loss for the period |
(3,100) |
(3,388) |
(8,908) |
(12,797) |
|
|
|
|
|
Items that will not be reclassified to
net loss: |
|
|
|
|
Re-measurements of actuarial losses |
-- |
241 |
-- |
241 |
Items that will be reclassified subsequently
to net loss: |
|
|
|
|
Exchange differences on translating foreign
operations |
232 |
227 |
509 |
126 |
Comprehensive loss for the
period |
$ (2,868) |
$ (2,920) |
$ (8,399) |
$ (12,430) |
|
|
|
|
|
Net loss per share |
|
|
|
|
Basic and diluted |
$ (0.34) |
$ (0.40) |
$ (1.04) |
$ (1.74) |
|
|
|
|
|
Weighted average number of common shares
outstanding |
9,003,960 |
7,724,427 |
8,592,600 |
7,371,908 |
|
Hydrogenics
Corporation |
Consolidated Interim Statements
of Cash Flows |
(in thousands of US dollars) |
(unaudited) |
|
Three months ended December
31 |
Twelve months ended
December 31 |
|
2013 |
2012 |
2013 |
2012 |
|
|
As Revised |
|
As Revised |
Cash and cash equivalents provided by
(used in): |
|
|
|
|
Operating activities |
|
|
|
|
Net loss for the period |
$ (3,100) |
$ (3,388) |
$ (8,908) |
$ (12,797) |
Decrease (Increase) in restricted cash |
(30) |
(424) |
1,758 |
(1,607) |
Items not affecting cash: |
|
|
|
|
Loss on disposal of assets |
3 |
7 |
3 |
7 |
Amortization and
depreciation |
145 |
197 |
712 |
870 |
Other finance (gains) losses,
net |
689 |
706 |
2,065 |
438 |
Unrealized foreign exchange
gains |
(4) |
(148) |
(120) |
(257) |
Stock-based compensation |
145 |
83 |
631 |
577 |
Portion of borrowings recorded
as a reduction from research and development expenses |
(645) |
(155) |
(934) |
(981) |
Accreted non-cash interest |
91 |
84 |
349 |
288 |
Payment of post-retirement
benefit liability |
(22) |
(23) |
(97) |
(100) |
Liabilities for compensation
indexed to share price |
2,021 |
413 |
4,223 |
768 |
Net change in other non-cash
working capital |
(1,267) |
9,551 |
(8,879) |
11,631 |
Cash used in operating
activities |
(1,974) |
6,903 |
(9,197) |
(1,163) |
|
|
|
|
|
Investing activities |
|
|
|
|
Proceeds from disposal of
property, plant and equipment |
26 |
-- |
26 |
Purchase of property, plant and
equipment |
(214) |
(54) |
(939) |
(424) |
Purchase of intangible assets |
-- |
2 |
(32) |
(2) |
Cash used in investing
activities |
(214) |
(26) |
(971) |
(400) |
|
|
|
|
|
Financing activities |
|
|
|
|
Payment of repayable government
contributions |
(55) |
(84) |
(393) |
(308) |
Proceeds of borrowings, net of transaction
costs |
1,257 |
(249) |
1,782 |
1,621 |
Proceeds of operating borrowings |
|
1,182 |
1,412 |
1,182 |
Repayment of operating borrowings |
-- |
(1,182) |
(1,412) |
(1,182) |
Common shares issued, warrants and options
exercised, net of issuance costs |
41 |
327 |
7,280 |
5,178 |
Cash provided by financing
activities |
1,243 |
(6) |
8,669 |
6,491 |
Effect of exchange rate fluctuations on cash
and cash equivalents held |
118 |
228 |
302 |
307 |
Increase (decrease) in cash and cash
equivalents during the period |
(827) |
7,099 |
(1,197) |
5,235 |
Cash and cash equivalents - Beginning
of period |
12,650 |
5,921 |
13,020 |
7,785 |
Cash and cash equivalents - End of
period |
$11,823 |
$13,020 |
$11,823 |
$13,020 |
CONTACT: Hydrogenics Contacts:
Bob Motz, Chief Financial Officer
Hydrogenics Corporation
(905) 361-3660
investors@hydrogenics.com
Chris Witty
Hydrogenics Investor Relations
(646) 438-9385
cwitty@darrowir.com
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