Hydrogenics Reports Second Quarter 2016 Results
August 03 2016 - 8:57AM
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 second quarter 2016 financial results.
Results are reported in US dollars and are prepared in accordance
with International Financial Reporting Standards (IFRS).
Second Quarter Highlights
“Hydrogenics made some notable progress this
quarter on a number of fronts – winning new orders which, once
again, pushed our backlog over $100 million as we posted solid
revenue growth,” said Daryl Wilson, Hydrogenics’ CEO and President.
“We announced a major partnership in China with SinoHytec for the
delivery of heavy-duty fuel cell modules in a contract valued at
$13.5 million and, more recently, were awarded our first contract
in Southeast Asia – by the Electricity Generation Authority of
Thailand – for a €4.3 million megawatt-scale energy storage
facility and fuel cell power plant. These achievements highlight
the global demand for our unique hydrogen-based technologies. We’re
also on track to deliver the first equipment for our Enbridge
energy storage venture later this year, and our contract with
Alstom is proceeding on schedule.
“Our one megawatt pilot power plant project in
South Korea has exceeded expectations since it began operations in
late 2015. We have completed substantial engineering, planning and
negotiation work with our project partners for a 50 megawatt
scale-up at the same site, evaluating the risks inherent in a 20
year long-term service agreement along with the capacity of each
party to bear the associated uncertainties. Part of this assessment
includes investigating alternative risk mitigation structures such
as insurance coverage associated with cleantech power projects. To
date, no formal order has been issued, as we are facing the normal
challenges associated with a first-of–its-kind scale-up of this
magnitude. We anticipate further communication on this project in
the coming months.”
Summary of Results for the Quarter Ended
June 30, 2016
- Total revenue increased by $1.8 million, or 25%, to $9.2
million for the three months ended June 30, 2016 compared to $7.4
million for the second quarter of 2015. The higher sales
level was due to a greater number of orders shipped within the
Company’s OnSite Generation business, partially offset by lower
revenue within the Power Systems segment.
- Gross profit rose to $1.8 million in the current quarter versus
$1.0 million in the prior-year period, and gross margin expanded
570 basis points to 19.8% in 2016 from 14.1% last year. The
improvement was due to product mix as well as higher absorption of
indirect overhead costs as a result of the increase in
revenue.
- The Company’s Adjusted EBITDA1 loss increased $0.1 million, to
$2.4 million, for the three months ended June 30, 2016 from $2.3
million for the same period last year, reflecting higher selling,
general and administrative costs and greater research and
development expenses, partially offset by an increase in gross
profit.
- Net loss for the quarter was $3.1 million, or $(0.25) per
share, versus $3.7 million, or $(0.37) per share, in the prior-year
period.
- Hydrogenics secured $16.2 million of new orders during the
quarter, resulting in a contract backlog of $102.9 million as of
June 30, 2016. Of the $102.9 million in backlog, the Company
expects to recognize approximately $29 million over the next twelve
months as revenue in addition to what can be booked and billed
as revenue in the same twelve month period.
Notes
- 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
DetailsHydrogenics will hold a conference call at 10:00
a.m. EDT on August 3, 2016 to review the second 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 HydrogenicsHydrogenics
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 StatementsThis
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) |
| |
| Adjusted
EBITDA |
| |
|
|
|
|
Three months endedJune
30 |
Six months endedJune
30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
| Net
loss |
$ |
|
(3,092 |
) |
$ |
|
(3,700 |
) |
$ |
|
(5,454 |
) |
$ |
|
(7,127 |
) |
| Finance loss
(income) |
|
|
360 |
|
|
|
1,124 |
|
|
|
562 |
|
|
|
2,103 |
|
| Depreciation of
property, plant and equipment and intangible assets |
|
|
184 |
|
|
|
149 |
|
|
|
356 |
|
|
|
310 |
|
| Compensation
indexed to share price |
|
|
(76 |
) |
|
|
(90 |
) |
|
|
(106 |
) |
|
|
(234 |
) |
|
Stock-based compensation expense |
|
|
161 |
|
|
|
176 |
|
|
|
290 |
|
|
|
294 |
|
|
Adjusted EBITDA |
$ |
|
(2,463 |
) |
$ |
|
(2,341 |
) |
$ |
|
(4,352 |
) |
$ |
|
(4,654 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Hydrogenics
Corporation |
| Condensed Interim Consolidated
Balance Sheets |
| (in thousands of US dollars) |
| (unaudited) |
|
|
|
|
|
|
|
|
|
June 30, 2016 |
|
December 31, 2015 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
| Current
assets |
|
|
|
|
| Cash and cash
equivalents |
$ |
|
11,579 |
|
$ |
|
23,398 |
|
| Restricted cash |
|
|
1,023 |
|
|
|
971 |
|
| Trade and other
receivables |
|
|
10,573 |
|
|
|
10,419 |
|
| Inventories |
|
|
17,469 |
|
|
|
14,270 |
|
| Prepaid expenses |
|
|
814 |
|
|
|
428 |
|
|
|
|
|
41,458 |
|
|
|
49,486 |
|
| Non-current
assets |
|
|
|
|
| Restricted cash |
|
|
506 |
|
|
|
532 |
|
| Investment in joint
venture |
|
|
2,040 |
|
|
|
1,951 |
|
| Property, plant and
equipment |
|
|
3,302 |
|
|
|
3,049 |
|
| Intangible assets |
|
|
238 |
|
|
|
215 |
|
|
Goodwill |
|
|
4,201 |
|
|
|
4,135 |
|
|
|
|
|
10,287 |
|
|
|
9,882 |
|
|
Total assets |
$ |
|
51,745 |
|
$ |
|
59,368 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
| Current
liabilities |
|
|
|
|
| Operating
borrowings |
$ |
|
- |
|
$ |
|
1,086 |
|
| Trade and other
payables |
|
|
7,861 |
|
|
|
7,776 |
|
| Financial
liabilities |
|
|
8,532 |
|
|
|
9,034 |
|
| Warranty
provisions |
|
|
1,659 |
|
|
|
2,255 |
|
| Deferred revenue |
|
|
9,841 |
|
|
|
10,146 |
|
|
|
|
|
27,893 |
|
|
|
30,297 |
|
| Non-current
liabilities |
|
|
|
|
| Other non-current
liabilities |
|
|
3,448 |
|
|
|
3,121 |
|
| Non-current warranty
provisions |
|
|
994 |
|
|
|
938 |
|
|
Non-current deferred revenue |
|
|
4,129 |
|
|
|
4,764 |
|
|
|
|
|
8,571 |
|
|
|
8,823 |
|
|
Total liabilities |
|
|
36,464 |
|
|
|
39,120 |
|
|
Equity |
|
|
|
|
| Share capital |
|
|
365,922 |
|
|
|
365,824 |
|
| Contributed
surplus |
|
|
19,156 |
|
|
|
18,964 |
|
| Accumulated other
comprehensive loss |
|
|
(3,027 |
) |
|
|
(3,224 |
) |
|
Deficit |
|
|
(366,770 |
) |
|
|
(361,316 |
) |
|
Total equity |
|
|
15,281 |
|
|
|
20,248 |
|
|
Total equity and liabilities |
$ |
|
51,745 |
|
$ |
|
59,368 |
|
| |
|
|
|
|
|
|
|
|
|
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 |
Six months ended |
|
|
June 30, |
June 30, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
Revenues |
$ |
|
9,198 |
|
$ |
|
7,368 |
|
$ |
|
13,527 |
|
$ |
|
14,899 |
|
|
Cost of sales |
|
|
7,379 |
|
|
|
6,326 |
|
|
|
10,497 |
|
|
|
12,704 |
|
|
Gross profit |
|
|
1,819 |
|
|
|
1,042 |
|
|
|
3,030 |
|
|
|
2,195 |
|
| |
|
|
|
|
|
|
|
|
| Operating
expenses |
|
|
|
|
|
|
|
|
| Selling, general and
administrative expenses |
|
|
3,106 |
|
|
|
2,579 |
|
|
|
5,354 |
|
|
|
5,158 |
|
| Research and product
development expenses |
|
|
1,445 |
|
|
|
1,039 |
|
|
|
2,568 |
|
|
|
2,061 |
|
|
|
|
|
4,551 |
|
|
|
3,618 |
|
|
|
7,922 |
|
|
|
7,219 |
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(2,732 |
) |
|
|
(2,576 |
) |
|
|
(4,892 |
) |
|
|
(5,024 |
) |
|
|
|
|
|
|
|
|
|
|
| Finance income
(expenses) |
|
|
|
|
|
|
|
|
| Interest expense,
net |
|
|
(438 |
) |
|
|
(369 |
) |
|
|
(871 |
) |
|
|
(496 |
) |
| Foreign currency gains
(losses), net |
|
|
(142 |
) |
|
|
73 |
|
|
|
(178 |
) |
|
|
(763 |
) |
| Gain (loss) from joint
venture |
|
|
(4 |
) |
|
|
57 |
|
|
|
52 |
|
|
|
41 |
|
| Other
finance gains (losses) |
|
|
224 |
|
|
|
(885 |
) |
|
|
435 |
|
|
|
(885 |
) |
|
Finance loss, net |
|
|
(360 |
) |
|
|
(1,124 |
) |
|
|
(562 |
) |
|
|
(2,103 |
) |
| |
|
|
|
|
|
|
|
|
| Loss before
income taxes |
|
|
(3,092 |
) |
|
|
(3,700 |
) |
|
|
(5,454 |
) |
|
|
(7,127 |
) |
|
Income tax expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Net loss for the period |
|
|
(3,092 |
) |
|
|
(3,700 |
) |
|
|
(5,454 |
) |
|
|
(7,127 |
) |
|
|
|
|
|
|
|
|
|
|
| Items that may be
reclassified subsequently to net loss |
|
|
|
|
|
|
|
|
| Exchange
differences on translating foreign operations |
|
|
(189 |
) |
|
|
185 |
|
|
|
197 |
|
|
|
(877 |
) |
|
Comprehensive loss for the period |
$ |
|
(2,903 |
) |
$ |
|
(3,515 |
) |
$ |
|
(5,257 |
) |
$ |
|
(8,004 |
) |
|
|
|
|
|
|
|
|
|
|
| Net loss per
share |
|
|
|
|
|
|
|
|
| Basic and diluted |
$ |
|
(0.25 |
) |
$ |
|
(0.37 |
) |
$ |
|
(0.43 |
) |
$ |
|
(0.71 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Hydrogenics Corporation |
|
Consolidated Interim Statements of Cash Flows |
| (in thousands of US
dollars) (unaudited) |
| |
|
|
|
|
Three months
ended |
Six months
ended |
|
|
June 30, |
June 30, |
|
|
|
|
2016 |
|
2015 |
|
|
|
2016 |
|
|
2015 |
|
| Cash and cash
equivalents provided by (used
in): |
|
|
|
|
|
|
|
|
| Operating
activities |
|
|
|
|
|
|
|
|
| Net loss for the
period |
$ |
|
(3,092 |
) |
$ |
|
(3,700 |
) |
$ |
|
(5,454 |
) |
$ |
|
(7,127 |
) |
| (Increase) decrease in
restricted cash |
|
|
(223 |
) |
|
|
1,410 |
|
|
|
7 |
|
|
|
1,947 |
|
| Items not affecting
cash |
|
|
|
|
|
|
|
|
|
Amortization and depreciation |
|
|
184 |
|
|
|
149 |
|
|
|
356 |
|
|
|
310 |
|
|
Unrealized other losses on hedging |
|
|
69 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Warrants |
|
|
(285 |
) |
|
|
885 |
|
|
|
(416 |
) |
|
|
885 |
|
|
Unrealized foreign exchange (gains) losses |
|
|
(17 |
) |
|
|
(261 |
) |
|
|
186 |
|
|
|
(257 |
) |
|
Unrealized (gain) loss on joint venture |
|
|
4 |
|
|
|
(58 |
) |
|
|
(52 |
) |
|
|
(41 |
) |
| Accreted
non-cash and unpaid interest and amortization of deferred
financing fees |
|
|
233 |
|
|
|
345 |
|
|
|
598 |
|
|
|
466 |
|
|
Stock-based compensation |
|
|
161 |
|
|
|
176 |
|
|
|
290 |
|
|
|
294 |
|
|
Stock-based compensation - RSUs and DSUs |
|
|
(76 |
) |
|
|
(90 |
) |
|
|
(106 |
) |
|
|
(234 |
) |
|
Net change in non-cash working capital |
|
|
(2,900 |
) |
|
|
(3,146 |
) |
|
|
(5,401 |
) |
|
|
(1,897 |
) |
|
Cash used in operating activities |
|
|
(5,942 |
) |
|
|
(4,290 |
) |
|
|
(9,992 |
) |
|
|
(5,654 |
) |
| |
|
|
|
|
|
|
|
|
| Investing
activities |
|
|
|
|
|
|
|
|
| Purchase of property,
plant and equipment |
|
|
(276 |
) |
|
|
(394 |
) |
|
|
(904 |
) |
|
|
(765 |
) |
| Receipt of government
funding |
|
|
30 |
|
|
|
- |
|
|
|
215 |
|
|
|
- |
|
| Purchase
of intangible assets |
|
|
(5 |
) |
|
|
(81 |
) |
|
|
(47 |
) |
|
|
(81 |
) |
|
Cash used in investing activities |
|
|
(251 |
) |
|
|
(475 |
) |
|
|
(736 |
) |
|
|
(846 |
) |
| |
|
|
|
|
|
|
|
|
| Financing
activities |
|
|
|
|
|
|
|
|
| Repayment of repayable
government contributions |
|
|
(55 |
) |
|
|
(110 |
) |
|
|
(109 |
) |
|
|
(110 |
) |
| Proceeds of borrowings,
net of transaction costs |
|
|
- |
|
|
|
6,866 |
|
|
|
- |
|
|
|
6,866 |
|
| Repayment of operating
borrowings |
|
|
- |
|
|
|
(2,151 |
) |
|
(1,076 |
) |
|
|
(2,151 |
) |
| Proceeds of operating
borrowings |
|
|
- |
|
|
|
1,671 |
|
|
|
- |
|
|
|
3,822 |
|
| Common
shares issued |
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
9 |
|
|
Cash provided by (used in) financing
activities |
|
|
(55 |
) |
|
|
6,279 |
|
|
|
(1,185 |
) |
|
|
8,436 |
|
|
|
|
|
|
|
|
|
|
|
| Increase (decrease) in
cash and cash equivalents during the period |
|
|
(6,248 |
) |
|
|
1,514 |
|
|
|
(11,913 |
) |
|
|
1,936 |
|
| Cash and cash
equivalents - Beginning of period |
|
|
17,770 |
|
|
|
6,207 |
|
|
|
23,398 |
|
|
|
6,572 |
|
| Effect of exchange rate
fluctuations on cash and cash equivalents held |
|
|
57 |
|
|
|
295 |
|
|
|
94 |
|
|
|
(492 |
) |
|
Cash and cash equivalents - End of period |
$ |
|
11,579 |
|
$ |
|
8,016 |
|
$ |
|
11,579 |
|
$ |
|
8,016 |
|
|
|
|
|
|
|
|
|
|
|
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)
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From Mar 2024 to Apr 2024
Hydrogenics (NASDAQ:HYGS)
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From Apr 2023 to Apr 2024
