Hydrogenics Reports First Quarter 2015 Results
May 06 2015 - 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 first quarter 2015 financial results.
Results are reported in US dollars and are prepared in accordance
with International Financial Reporting Standards (IFRS).
"First quarter results were negatively impacted by order timing
and the weakening Euro to the US dollar," said Daryl Wilson, CEO of
Hydrogenics. "We recently announced that E.ON completed its
internal testing on our 1.5 megawatt PEM energy storage stack and,
after prior delays tied to part certification and system analysis,
we will deliver our Power-to-Gas application in the coming days.
This will showcase our groundbreaking technology and serve as a
strong impetus for securing future, larger orders, as we've been
anticipating.
"We're also finishing the containerization work on our first one
megawatt fuel cell array for Kolon in Korea and expect this to be
installed during the second quarter, with testing to follow. We
then anticipate further orders in the fourth quarter, in much
greater magnitudes, for shipment in 2016. In addition, Hydrogenics
plans to ship several fueling station orders later this year as
well as continue to work on our initial two megawatt energy storage
project in Canada.
"So while recent results have been softer than we would like, we
remain very optimistic about the future and, as always, are focused
on many business development initiatives, including new market
penetration opportunities. We believe that quarterly results will
trend higher sequentially this year. We have $34.7 in backlog for
shipment in 2015 plus the potential for orders in the second and
third quarters that could be delivered in the current year. Overall
demand for our applications is growing, and our technology is
second to none. We are dedicated to improved top line and bottom
line performance for our shareholders and believe this will play
out as the year proceeds."
Highlights for the Quarter Ended March 31, 2015
(compared to the quarter ended March 31, 2014, unless otherwise
noted)
- Revenue decreased by 7% to $7.5 million, reflecting shipment
timing and the decline in the value of the Euro compared to the US
dollar in the first quarter of 2015 compared with the first quarter
of 2014.
- Gross profit was 15.3% of revenue for the quarter, versus 23.8%
in the prior-year period, reflecting a change in product mix as
well as higher indirect overhead costs as a percentage of revenue
when compared to the prior-year period.
- Cash Operating Costs1 declined by $0.2 million to $3.5 million
in the quarter, compared to $3.7 in 2014, primarily reflecting
lower SG&A expenses in 2015 due to the impact of lower exchange
rates on expenses denominated in Euros and Canadian dollars.
- Adjusted EBITDA2 loss was $2.3 million for the quarter compared
with an Adjusted EBITDA2 loss of $1.7 million in the first quarter
of 2014.
- Net loss was $3.4 million, or $(0.34) per share, in the quarter
compared with a net loss of $4.2 million, or $(0.41) per share, in
the first quarter of 2014.
- Hydrogenics secured $5.7 million of orders for renewable energy
storage, industrial gas and power system applications during the
quarter, resulting in a backlog of $55.8 million as of March 31,
2015. Order backlog movement during the first quarter (in millions)
was as follows:
|
Dec. 31, 2015 Backlog |
Orders Received |
FX |
Orders Delivered |
Mar. 31, 2015 Backlog |
|
|
|
|
|
|
OnSite Generation |
$ 28.3 |
$ 4.6 |
$ (1.9) |
$ 3.3 |
$ 27.7 |
Power Systems |
33.9 |
1.1 |
(2.7) |
4.2 |
28.1 |
Total |
$ 62.2 |
$ 5.7 |
$ (4.6) |
$ 7.5 |
$ 55.8 |
- The Company exited the first quarter with $9.5 million of cash
and restricted cash, a $0.9 million decrease from December 31, 2014
primarily reflecting: (i) $1.3 million of cash used by operating
activities; (ii) $0.4 million related to the purchase of property,
plant and equipment and; (iii) foreign exchange impacts on the Euro
and Canadian-denominated cash balances; partially offset by (iv)
$2.2 million in operating borrowings.
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 1:00 p.m. EDT on May
6, 2015 to review the first 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) |
|
|
Three months
ended |
|
31-Mar-15 |
31-Mar-14 |
Adjusted
EBITDA |
(2,313) |
(1,729) |
Less: |
|
|
Stock-based compensation |
118 |
136 |
Cash settled compensation indexed to
share price |
(144) |
1,561 |
Net Finance losses |
979 |
183 |
Depreciation and amortization |
161 |
140 |
Net
Loss |
(3,427) |
(3,749) |
|
|
Hydrogenics
Corporation |
Condensed Interim Consolidated
Balance Sheets |
(in thousands of US dollars) |
(unaudited) |
|
|
|
|
March 31,
2015 |
December 31, 2014 |
|
|
|
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$6,207 |
$6,572 |
Restricted cash |
2,495 |
3,228 |
Trade and other receivables |
11,839 |
12,900 |
Inventories |
14,164 |
14,698 |
Prepaid expenses |
728 |
747 |
|
35,433 |
38,145 |
Non-current assets |
|
|
Restricted cash |
817 |
621 |
Investment in joint venture |
2,134 |
2,150 |
Property, plant and equipment |
2,085 |
1,873 |
Intangible assets |
143 |
157 |
Goodwill |
4,096 |
4,609 |
|
9,275 |
9,410 |
Total assets |
$44,708 |
$47,555 |
|
|
|
Liabilities |
|
|
Current Liabilities |
|
|
Operating borrowings |
$2,151 |
$-- |
Trade and other payables |
10,885 |
13,156 |
Warranty provisions |
667 |
1,392 |
Deferred revenue |
9,490 |
6,771 |
|
23,193 |
21,319 |
Non-current liabilities |
|
|
Other non-current liabilities |
3,229 |
3,464 |
Non-current warranty provisions |
1,457 |
1,155 |
Non-current deferred revenue |
5,717 |
6,141 |
|
10,403 |
10,760 |
Total liabilities |
33,596 |
32,079 |
Equity |
|
|
Share capital |
348,268 |
348,259 |
Contributed surplus |
19,042 |
18,927 |
Accumulated other comprehensive loss |
(3,169) |
(2,108) |
Deficit |
(353,029) |
(349,602) |
Total equity |
11,112 |
15,476 |
Total equity and
liabilities |
$44,708 |
$ 47,555 |
|
|
Hydrogenics
Corporation |
Condensed Interim Consolidated
Statements of Operations and Comprehensive Loss |
For the three months ended March
31, |
(in thousands of US dollars,
except share and per share amounts) |
(unaudited) |
|
|
|
|
2015 |
2014 |
|
|
|
Revenues |
$7,531 |
$8,059 |
Cost of sales |
6,378 |
6,142 |
Gross profit |
1,153 |
1,917 |
|
|
|
Operating expenses |
|
|
Selling, general & administrative
expenses |
2,579 |
4,567 |
Research and product development
expenses |
1,022 |
916 |
|
3,601 |
5,483 |
|
|
|
Loss from
operations |
(2,448) |
(3,566) |
|
|
|
Finance income
(expenses) |
|
|
Interest expense, net |
(127) |
(132) |
Foreign currency losses, net |
(836) |
89 |
Loss from joint venture |
(16) |
-- |
Other finance losses, net |
-- |
(140) |
Finance income (loss),
net |
(979) |
(183) |
|
|
|
Loss before income
taxes |
(3,427) |
(3,749) |
Income tax
expense |
-- |
-- |
Net loss for the
period |
(3,427) |
(3,749) |
Items that may be reclassified subsequently
to net loss |
|
|
Exchange differences on
translating foreign operations |
(1,061) |
(5) |
Comprehensive loss for the
period |
$(4,488) |
$(3,754) |
|
|
|
Net loss per share |
|
|
Basic and diluted |
$(0.34) |
$(0.41) |
|
|
Hydrogenics
Corporation |
Condensed Interim Consolidated
Statements of Cash Flows |
For the three months ended March
31, |
(in thousands of US
dollars) |
(Unaudited) |
|
|
2015 |
2014 |
|
|
|
Cash and cash equivalents provided by
(used in): |
|
|
|
|
|
Operating activities |
|
|
Net loss for the period |
$(3,427) |
$(3,749) |
(Increase) decrease in restricted cash |
537 |
(253) |
Items not affecting cash: |
|
|
Amortization and depreciation |
161 |
140 |
Other finance losses, net |
-- |
140 |
Unrealized foreign exchange losses |
5 |
87 |
Unrealized loss on joint venture |
16 |
-- |
Accreted non-cash interest |
121 |
118 |
Payment of post-retirement benefit
liability |
-- |
(24) |
Stock-based compensation |
118 |
136 |
Stock based compensation – RSUs and
DSUs |
(144) |
1,561 |
Net change in non-cash
working capital |
1,249 |
(1,972) |
Cash used in operating
activities |
(1,364) |
(3,816) |
|
|
|
Investing activities |
|
|
Proceeds from disposals |
-- |
9 |
Purchase of property, plant and
equipment |
(371) |
(306) |
Purchase of intangible assets |
-- |
(80) |
Cash used in investing
activities |
(371) |
(377) |
|
|
|
Financing activities |
|
|
Repayment of repayable government
contributions |
-- |
(50) |
Proceeds of operating borrowings |
2,151 |
1,722 |
Common shares issued |
6 |
109 |
Cash provided by financing
activities |
2,157 |
1,781 |
|
|
|
Effect of exchange rate fluctuations on
cash and cash equivalents held |
(787) |
(68) |
Decrease in cash and cash equivalents
during the period |
(365) |
(2,480) |
Cash and cash equivalents -
Beginning of period |
6,572 |
11,823 |
Cash and cash equivalents - End
of period |
$6,207 |
$9,343 |
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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