Hydrogenics Reports Third Quarter 2015 Results
November 10 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 third quarter 2015 financial results.
Results are reported in US dollars and are prepared in accordance
with International Financial Reporting Standards (IFRS).
Third Quarter Highlights
"During the third quarter we saw an increase in revenue
sequentially versus the first half of 2015 and recently noted a
number of operating achievements that position us well for a pickup
in orders going forward," said Daryl Wilson, President and Chief
Executive Officer. "E.ON inaugurated our 1.5 megawatt PEM energy
storage system in Hamburg, Germany – our second reference site with
this key customer and an important strategic milestone for
Power-to-Gas installations. We also realized the start of
commercial operations at Kolon Hydrogenics' initial one megawatt
fuel cell power facility in South Korea. These events are being
heralded by industry and government officials alike as
groundbreaking in terms of our PEM hydrogen technology, which can
be scaled for much greater energy applications. We look forward to
additional orders from Kolon in the near future, once testing is
complete, and Korea remains a very attractive market committed to
using fuel cells for large-scale power generation – as recent
activity attests.
"We delivered our first electrolysis units to Kurion during the
quarter for the previously-announced purification of tritiated
waste water. Subject to final pilot program results, this
technology could represent substantial opportunities at Fukushima
and other nuclear sites around the world. Overall, we expect to see
a pickup in energy storage demand, fuel cell bus deliveries, and
fueling station awards heading into 2016, along with the
aforementioned Kolon orders. The Company remains well positioned
for a broad array of hydrogen-based energy applications, our
backlog is strong, and we are excited about the leading role we
play across the hydrogen value chain."
Summary of Results for the Quarter Ended September 30,
2015
- Revenue was $9.6 million for the third quarter versus $11.1
million last year. Excluding the foreign exchange impact of $1.6
million, reflecting the decline in the value of the euro relative
to the US dollar in the third quarter of 2015 compared with 2014,
revenue increased $0.2 million year-over-year.
- Cash operating costs declined 9% to $3.5 million for the three
months ended September 30, 2015 compared to $3.9 million for the
three months ended September 30, 2014, primarily reflecting lower
SG&A expenses due to the impact of lower exchange rates on
expenses denominated in euros and Canadian dollars, as well as a
slight decrease in R&D expenses.
- Gross profit was 21.8% of revenue for the quarter, versus 27.6%
in the prior-year period, reflecting a change in product mix as
well as higher indirect overhead costs as a percent of revenue when
compared to the prior-year period.
- Adjusted EBITDA2 loss was $1.4 million for the quarter compared
with an Adjusted EBITDA2 loss of $0.7 million in the third quarter
of 2014, reflecting the aforementioned items.
- Net loss was $2.2 million, or $(0.21) per share, in the quarter
compared with a net loss of $1.3 million, or $(0.13) per share, in
the third 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 $98.9 million as of September
30, 2015. Order backlog movement during the third quarter (in
millions) was as follows:
|
|
|
|
|
|
|
Expected
Revenue |
|
|
|
|
|
|
Recognition |
|
|
|
|
|
|
|
|
|
|
|
|
Orders |
|
|
|
|
June 30, |
|
|
Delivered/ |
September |
During |
Beyond |
|
2015 |
Orders |
|
Revenue |
30, 2015 |
next 12 |
next 12 |
|
backlog |
Received |
FX |
Recognized |
backlog |
months |
months |
OnSite Generation |
$26.8 |
$3.5 |
$0.1 |
$7.6 |
$22.8 |
$19.7 |
$3.1 |
Power Systems |
75.5 |
2.2 |
0.4 |
2.0 |
76.1 |
6.9 |
69.2 |
Total |
$102.3 |
$5.7 |
$0.5 |
$9.6 |
$98.9 |
$26.6 |
$72.3 |
- The Company exited the third quarter with $8.7 million of cash
and restricted cash, a $1.7 million decrease from December 31,
2014, primarily reflecting: (i) $8.7 million of cash used in
operating activities; (ii) $1.4 million related to the purchase of
property, plant and equipment and; (iii) the foreign exchange
impact of $0.5 million on euro and Canadian-denominated cash
balances; partially offset by (iv) $9.0 million of net operating
borrowings, including the Company's new $7.5 million credit
facility.
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. EDT on
November 10, 2015 to review the third 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 centers 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 Cash
Operating Costs to Operating Costs and Adjusted EBITDA to Net
Loss |
(in thousands of US dollars) |
(unaudited) |
|
|
|
|
|
Cash operating costs |
|
|
|
|
|
|
Three months
ended |
Nine months
ended |
|
September
30 |
September
30 |
|
2015 |
2014 |
2015 |
2014 |
Selling, general and administrative
expenses |
$ 2,566 |
$ 2,846 |
$ 7,724 |
$ 9,392 |
Research and product
development expenses |
1,045 |
1,160 |
3,106 |
2,991 |
Total operating costs |
$ 3,611 |
$ 4,006 |
$ 10,830 |
$ 12,383 |
Less: Depreciation of property, plant
and equipment and intangibles |
(95) |
(81) |
(272) |
(235) |
Less: Compensation costs indexed to
share price |
174 |
120 |
408 |
(473) |
Less: Stock-based
compensation losses |
(163) |
(170) |
(457) |
(462) |
Cash operating
costs |
$ 3,527 |
$ 3,875 |
$ 10,509 |
$ 11,213 |
|
|
|
|
|
Adjusted
EBITDA |
|
|
Three months
ended |
Nine months
ended |
|
September
30 |
September
30 |
|
2015 |
2014 |
2015 |
2014 |
Net loss |
$ (2,192) |
$ (1,262) |
$ (9,319) |
$ (5,135) |
Finance loss (income) |
682 |
323 |
2,785 |
977 |
Depreciation of property, plant and
equipment and intangible assets |
138 |
206 |
448 |
524 |
Compensation indexed to share
price |
(174) |
(120) |
(408) |
473 |
Stock-based compensation
expense |
163 |
170 |
457 |
462 |
Adjusted EBITDA |
$ (1,383) |
$ (683) |
$ (6,037) |
$ (2,699) |
|
|
|
|
|
|
|
|
|
|
Hydrogenics
Corporation |
Condensed Interim Consolidated
Balance Sheets |
(in thousands of US dollars) |
(unaudited) |
|
|
September 30, |
December 31, |
|
2015 |
2014 |
|
|
|
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 6,930 |
$ 6,572 |
Restricted cash |
1,271 |
3,228 |
Trade and other receivables |
11,906 |
12,900 |
Inventories |
16,163 |
14,698 |
Prepaid expenses |
621 |
747 |
|
36,891 |
38,145 |
Non-current assets |
|
|
Restricted cash |
512 |
621 |
Investment in joint venture |
1,883 |
2,150 |
Property, plant and equipment |
2,770 |
1,873 |
Intangible assets |
201 |
157 |
Goodwill |
4,267 |
4,609 |
|
9,633 |
9,410 |
Total assets |
$ 46,524 |
$ 47,555 |
|
|
|
Liabilities |
|
|
Current Liabilities |
|
|
Operating borrowings |
$ 2,241 |
$ -- |
Trade and other payables |
9,960 |
13,156 |
Derivative liability |
111 |
-- |
Warranty provisions |
1,814 |
1,392 |
Deferred revenue |
9,746 |
6,771 |
|
23,872 |
21,319 |
Non-current liabilities |
|
|
Other non-current liabilities |
10,270 |
3,464 |
Non-current warranty provisions |
747 |
1,155 |
Non-current deferred revenue |
5,082 |
6,141 |
|
16,099 |
10,760 |
Total liabilities |
39,971 |
32,079 |
Equity |
|
|
Share capital |
348,275 |
348,259 |
Contributed surplus |
20,262 |
18,927 |
Accumulated other comprehensive loss |
(3,063) |
(2,108) |
Deficit |
(358,921) |
(349,602) |
Total equity |
6,553 |
15,476 |
Total equity and
liabilities |
$ 46,524 |
$ 47,555 |
|
|
|
|
|
|
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 |
Nine months
ended |
|
September
30, |
September
30, |
|
2015 |
2014 |
2015 |
2014 |
Revenues |
$ 9,644 |
$ 11,093 |
$ 24,543 |
$ 29,875 |
Cost of
sales |
7,543 |
8,026 |
20,247 |
21,650 |
Gross profit |
2,101 |
3,067 |
4,296 |
8,225 |
|
|
|
|
|
Operating expenses |
|
|
|
|
Selling, general and administrative
expenses |
2,566 |
2,846 |
7,724 |
9,392 |
Research and product development
expenses |
1,045 |
1,160 |
3,106 |
2,991 |
|
3,611 |
4,006 |
10,830 |
12,383 |
|
|
|
|
|
Loss from
operations |
(1,510) |
(939) |
(6,534) |
(4,158) |
|
|
|
|
|
Finance income
(expenses) |
|
|
|
|
Interest expense, net |
(446) |
(105) |
(942) |
(369) |
Foreign currency gains (losses), net |
382 |
(156) |
(381) |
(365) |
Loss from joint venture |
(127) |
(62) |
(86) |
(62) |
Other finance losses, net |
(491) |
-- |
(1,376) |
(181) |
Finance income (loss),
net |
(682) |
(323) |
(2,785) |
(977) |
|
|
|
|
|
Loss before income
taxes |
(2,192) |
(1,262) |
(9,319) |
(5,135) |
Income tax
expense |
-- |
-- |
-- |
-- |
Net loss for the
period |
(2,192) |
(1,262) |
(9,319) |
(5,135) |
Items that may be reclassified subsequently
to net loss |
|
|
|
|
Exchange
differences on translating foreign operations and joint
venture |
(79) |
(985) |
(955) |
(1,052) |
Comprehensive loss for the
period |
$ (2,271) |
$ (2,247) |
$ (10,274) |
$ (6,187) |
|
|
|
|
|
Net loss per share |
|
|
|
|
Basic and diluted |
$ (0.22) |
$ (0.13) |
$ (0.92) |
$ (0.54) |
|
|
|
|
|
|
|
|
|
|
Hydrogenics
Corporation |
Consolidated Interim Statements
of Cash Flows |
(in thousands of US dollars) |
(unaudited) |
|
|
|
|
|
|
Three months
ended |
Nine months
ended |
|
September 30, |
September 30, |
|
2015 |
2014 |
2015 |
2014 |
Cash and cash equivalents provided by
(used in): |
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
Net loss for the period |
$ (2,192) |
$ (1,262) |
$ (9,319) |
$ (5,135) |
(Increase) decrease in restricted cash |
118 |
(1,425) |
2,065 |
(1,616) |
Items not affecting cash: |
|
|
|
|
Amortization and
depreciation |
138 |
206 |
448 |
524 |
Other finance losses, net |
111 |
-- |
111 |
181 |
Unrealized foreign exchange
losses (gains) |
227 |
(230) |
(29) |
(140) |
Unrealized loss on joint
venture |
128 |
62 |
86 |
62 |
Accreted non-cash and unpaid
interest |
219 |
133 |
685 |
366 |
Payment of post-retirement
benefit liability |
-- |
(25) |
-- |
(70) |
Portion of borrowings recorded
as a reduction from research and development expenses |
-- |
-- |
-- |
(118) |
Stock-based compensation |
163 |
170 |
457 |
462 |
Stock based compensation – RSUs
and DSUs |
(174) |
(120) |
(408) |
473 |
Warrant issuance |
-- |
-- |
885 |
-- |
Net change in non-cash
working capital |
326 |
(1,790) |
(1,575) |
(7,887) |
Cash used in operating
activities |
(936) |
(4,281) |
(6,594) |
(12,898) |
|
|
|
|
|
Investing activities |
|
|
|
|
Investment in joint venture |
-- |
(947) |
-- |
(947) |
Proceeds from disposals |
-- |
-- |
-- |
9 |
Purchase of property, plant and
equipment |
(674) |
(20) |
(1,553) |
(545) |
Receipt of IDF government funding |
-- |
-- |
118 |
-- |
Purchase of intangible assets |
-- |
(3) |
(81) |
(83) |
Cash used in investing
activities |
(674) |
(970) |
(1,516) |
(1,566) |
|
|
|
|
|
Financing activities |
|
|
|
|
Repayment of repayable government
contributions |
(52) |
(50) |
(162) |
(439) |
Proceeds of borrowings, net of transaction
costs |
-- |
-- |
6,866 |
854 |
Proceeds of operating borrowings |
2,240 |
-- |
6,062 |
-- |
Repayment of operating borrowings |
(1,658) |
-- |
(3,809) |
-- |
Common shares issued |
-- |
5 |
9 |
13,666 |
Cash provided by financing
activities |
530 |
(45) |
8,966 |
14,081 |
|
|
|
|
|
Effect of exchange rate fluctuations on
cash and cash equivalents held |
(6) |
(663) |
(498) |
(740) |
Increase (Decrease) in cash and cash
equivalents during the period |
(1,086) |
(5,959) |
358 |
(1,123) |
Cash and cash equivalents -
Beginning of period |
8,016 |
16,659 |
6,572 |
11,823 |
Cash and cash equivalents - End
of period |
$ 6,930 |
$ 10,700 |
$ 6,930 |
$ 10,700 |
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
Hydrogenics (NASDAQ:HYGS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hydrogenics (NASDAQ:HYGS)
Historical Stock Chart
From Apr 2023 to Apr 2024