- Top-line momentum continues with 29% Q3 revenue growth; 50%
YTD
- Q3 gross margin improvement to 31%, up 6-points
VANCOUVER, Oct. 25, 2016 /PRNewswire/ - Ballard Power
Systems (NASDAQ: BLDP; TSX: BLD) today announced its consolidated
financial results for the third quarter ended September 30, 2016. All amounts are in U.S.
dollars unless otherwise noted and have been prepared in accordance
with International Financial Reporting Standards (IFRS).
"We had a solid Q3, highlighted by continued year-over-year and
sequential quarterly revenue growth and gross margin expansion,"
said Randy MacEwen, Ballard's
President and CEO. "Revenue of $20.6
million in Q3 represented a year-on-year increase of 29%,
driven by a 54% increase from our Power Products platform. We also
achieved 31% gross margin in Q3, up 6-points from Q3 2015."
Mr. MacEwen continued, "Ballard achieved important progress on a
number of strategic fronts during the quarter, as well. On our
China strategy, we announced and
closed a manufacturing license and joint venture transaction valued
at a minimum of $170 million over
5-years and entered into a strategic alliance framework agreement
and MOU with Broad-Ocean. Audi AG accelerated certain development
activities under our long-term Technology Solutions program. In
addition, we signed an agreement with Toyota Tsusho for the
distribution of Ballard products in Japan."
Tony Guglielmin, Chief Financial
Officer added, "We expect to end 2016 with year-over-year revenue
growth and a strengthened balance sheet. On revenue, we anticipate
significant full-year top-line growth given performance to date and
the strength of our order book. On cash, our balance sheet was
appreciably strengthened in Q3, as we ended the quarter with
$68.1 million in cash reserves,
fortified during the quarter by the successful close of a
$28.3 million strategic investment by
Broad-Ocean. Subsequent to the quarter we also closed our joint
venture transaction with Synergy, with payments totaling
$10.9 million received as of
closing."
Q3 2016 Financial Highlights
(all comparisons are
to Q3 2015 unless otherwise noted)
- Total revenue was $20.6 million
in the quarter, an increase of 29% resulting primarily from growth
in Heavy Duty Motive product shipments and the addition of Portable
Power.
- The Power Products platform generated revenue of $14.7 million in the quarter, an increase of 54%:
- Heavy Duty Motive revenue was $7.5
million, an increase of 34% from Q3 last year, resulting
from shipments of fuel cell stacks and power modules to fulfill
orders in support of clean energy buses in China as well as power module shipments to the
U.S.;
- Revenue from the new Portable Power market was $3.1 million, driven by delivery of Squad Power
Manager (SPM-622) Special Operations Kits to end customer U.S.
Special Operations Command under the Nett Warrior program;
- Material Handling revenue was $3.3
million, a decrease of $0.1
million or -2%, due primarily to slightly higher stack
shipments to Plug Power offset by a lower average selling price
resulting from product mix; and
- Backup Power revenue was $0.8
million, an increase from $0.5
million in Q3 2015, due to an increase in the shipment of
stacks to CHEM in Taiwan for
backup power systems.
- The Technology Solutions platform generated revenue of
$6.0 million in the quarter, a
decrease of 9% due to a minor decline in Volkswagen service
revenues primarily as a result of program timing.
- Gross margin was 31% in Q3, an improvement of 6-points due
primarily to higher revenue and a shift in product mix toward
higher margin Heavy Duty Motive and Portable Power products.
- Cash operating costs2 were $8.4 million in the quarter, a 25% increase
primarily due to the inclusion of the Protonex subsidiary operating
costs.
- Adjusted EBITDA2 was ($1.5)
million in Q3, an improvement of 37%, due to increases in
both revenue and gross margin.
- Net income was ($4.2) million in
the quarter, an increase in loss of 1% from Q3 2015.
- Adjusted net income2 was ($3.9) million, an increase in loss of 6%.
- Adjusted net loss per share2 was ($0.02), a 10% improvement.
- Cash used by operating activities was ($0.5) million, an improvement of 88%, reflecting
cash operating loss of ($2.4) million
and use in working capital of $1.9
million.
- Cash reserves were $68.1 million
at September 30, 2016, which includes
$28.3 million received from the
strategic equity investment in Ballard made by Zhongshan
Broad-Ocean Motor Co., Ltd. ("Broad-Ocean"). Subsequent to the
quarter Ballard closed the transaction with Guangdong Nation
Synergy Hydrogen Power Technology Co. Ltd. ("Synergy") to establish
a joint venture for fuel cell stack production in China and received related cash payments
totalling $10.9 million as of
closing.
Q3 2016 Sales and Operations Highlights
China Strategy
- Closed an equity investment in Ballard made by Broad-Ocean
through a subscription and purchase of 17,250,000 Ballard common
shares issued from treasury at a price per share of US$1.64 (based on a 20-day volume weighted
average price calculation). Broad-Ocean is now Ballard's largest
shareholder, with a 9.9% ownership position.
- Signed a Memorandum of Understanding (MOU) with Broad-Ocean,
having a goal of producing fuel cell modules for use in buses and
commercial vehicles in select cities and regions in China. Key regions contemplated in the MOU
include Wuhan (the capital of
Hubei Province), Chongqing (or Chengdu, the capital of Sichuan Province), Shandong Province, and Beijing (the Chinese national capital city).
The MOU is the result of a previously announced strategic
collaboration framework agreement entered into between Ballard,
Broad-Ocean and Synergy.
- Signed definitive agreements with Synergy for the establishment
of an FCvelocity®-9SSL fuel cell stack production
operation in China, to power buses
and commercial vehicles. This transaction closed subsequent to the
quarter, on October 25. The
agreements establish a minimum transaction value of approximately
$170 million over 5-years,
representing the largest fuel cell transaction in Ballard's
history. The deal includes the following key terms:
- Ballard is expected to receive $20
million in Technology Solutions revenue for training and
support;
- Ballard will be the exclusive supplier of membrane electrode
assemblies (MEAs) for each fuel cell manufactured in China, with minimum annual MEA "take or pay"
volume commitments yielding a value of at least $150 million over the 5-year term 2017 to
2021;
- FCvelocity®-9SSL fuel cell stacks will be
manufactured through a joint venture established in China, with Ballard holding a 10% ownership
position in return for a contribution of approximately $1.0 million.
- As of closing Ballard received payments totaling $10.9 million, primarily related to the fuel cell
stack assembly license and technology transfer agreements.
- Hosted the Party Secretary of China's Guangdong
Province, Mr. Hu Chunhua, and his delegation on a tour of
the future site of Ballard's joint venture with Synergy in the
Foshan (Yunfu) Industrial Transfer Park in Yunfu, Guangdong Province.
- Announced that the aforementioned joint venture will provide
fuel cell stacks to Synergy to be used in the assembly of engines
for 10,000 commercial fuel cell vehicles ordered by Broad-Ocean
from Chinese automotive OEMs Dongfeng Special Vehicles and FAW.
Ballard will provide all MEAs for these fuel cell stacks on an
exclusive basis and will receive licensing revenue and royalties in
relation to engine assembly and deployment.
- Signed a definitive agreement with Synergy for a Technology
Solutions transaction to enable Synergy to manufacture and sell
Ballard's direct hydrogen FCgen®-H2PM fuel cell backup
power systems in China. Synergy
prepaid a $2.5 million upfront
license and technology services fee in Q2 and will make additional
royalty payments to Ballard for each unit sold, subject to annual
minimums, starting in 2018. Ballard will also be the exclusive
supplier of air-cooled fuel cell stacks to Synergy for use in
FCgen®-H2PM systems.
- Received a purchase order from Shenzhen UpPower Technology Co.,
Ltd. ("UpPowerTech"), a fuel cell bus systems integrator in
China, for the supply of 10
FCveloCity®-MD 30-kilowatt fuel cell power modules.
UpPowerTech plans to integrate the modules into clean energy buses
manufactured by Gaungxi Yuanzheng New Energy Co. Ltd. for
deployment in the City of Nanning in the Province of Guangxi.
- Announced commissioning and deployment of the first 12 fuel
cell buses powered by Ballard FCveloCity® power modules
in the City of Foshan, as part of an order from Synergy for 300
power modules that was announced in September 2015. The 11 meter buses were
manufactured by Foshan Feichi Bus, with system integration managed
by Shanghai Reinventing Fire Technology Co., Ltd. and with
Zhangjiagang Furui Special Equipment Co., Ltd. expected to provide
fueling infrastructure.
- Subsequent to the quarter, completed the commissioning and
deployment of 12 fuel cell buses in the City of Yunfu, bringing the
total number of fuel cell buses deployed to 24, as part of the
Chinese Government's plan to address air quality issues in urban
centers.
Other Commercial Progress
- Received purchase orders from automotive OEM Audi AG to
accelerate certain key development activities under the current
long-term Technology Solutions program with Volkswagen Group.
Volkswagen Group recently transferred responsibility for fuel cell
development to its Audi luxury brand and is also accelerating the
timeline for series production, with a focus on reconfiguration of
the current fuel cell stack and acceleration in the development of
a next-generation fuel cell stack.
- Signed a Distribution Agreement with Toyota Tsusho for the
Japanese market. Toyota Tsusho will distribute Ballard products
within the Toyota Group of companies and to other companies in
Japan.
- Ballard subsidiary Protonex received notification from the U.S.
Department of Commerce that its family of fuel cell propulsion
systems are now designated as EAR99 compliant (Export
Administration Regulations 99), creating a path for commercial
export and deployment in a variety of civilian unmanned vehicle
applications. These systems are an extremely strong fit for both
civilian and military uses, offering a number of advantages over
incumbent power solutions for all types of unmanned vehicles.
Q3 2016 Corporate Platform Highlights
- Changed the name of Ballard's Denmark subsidiary from Dantherm Power A/S to
"Ballard Power Systems Europe A/S". The name change reflects an
expanded role being undertaken by the subsidiary in support of fuel
cell market development and customer support throughout
Europe.
Q3 2016 Financial Summary
|
|
|
(Millions of U.S.
dollars)
|
Three months ended
Sept. 30,
|
Nine months ended
Sept. 30,
|
|
2016
|
2015
|
% Change
|
2016
|
2015
|
% Change
|
GROWTH
|
|
|
|
|
|
|
Fuel Cell Products
& Services Revenue:1
|
|
|
|
|
|
|
|
Heavy Duty
Motive
|
$7.5
|
$5.6
|
34%
|
$15.5
|
$7.9
|
96%
|
|
Portable
Power
|
$3.1
|
N/A
|
N/A
|
$8.5
|
N/A
|
N/A
|
|
Material
Handling
|
$3.3
|
$3.4
|
-2%
|
$9.9
|
$8.6
|
15%
|
|
Backup
Power
|
$0.8
|
$0.5
|
49%
|
$2.8
|
$4.1
|
-33%
|
|
Sub-Total
|
$14.7
|
$9.5
|
54%
|
$36.7
|
20.7
|
78%
|
|
Technology
Solutions
|
$6.0
|
$6.5
|
-9%
|
$17.9
|
$15.8
|
13%
|
Total Fuel Cell
Products & Services Revenue
|
$20.6
|
$16.0
|
29%
|
$54.6
|
$36.5
|
50%
|
PROFITABILITY
|
|
|
|
|
|
|
Gross Margin
$
|
$6.4
|
$4.0
|
59%
|
$14.8
|
$6.2
|
141%
|
Gross Margin
%
|
31%
|
25%
|
6-points
|
27%
|
17%
|
10-points
|
Cash Operating
Costs2
|
$8.4
|
$6.7
|
-25%
|
$26.2
|
$21.3
|
-23%
|
Adjusted
EBITDA2
|
($1.5)
|
($2.4)
|
37%
|
($11.6)
|
($12.3)
|
5%
|
Net Income
(Loss)3
|
($4.2)
|
($4.1)
|
-1%
|
($20.0)
|
($4.5)
|
-348%
|
Earnings Per
Share
|
($0.03)
|
($0.03)
|
14%
|
($0.13)
|
($0.03)
|
-280%
|
Adjusted Net
Loss2
|
($3.9)
|
($3.6)
|
-6%
|
($18.4)
|
($18.9)
|
3%
|
Adjusted Net Loss Per
Share2
|
($0.02)
|
($0.03)
|
10%
|
($0.11)
|
($0.14)
|
18%
|
CASH
|
|
|
|
|
|
|
Cash Used by
Operating Activities:
|
|
|
|
|
|
|
|
Cash Operating Income
(Loss)
|
($2.4)
|
($3.4)
|
29%
|
($13.5)
|
($14.7)
|
8%
|
|
Working Capital
Changes
|
$1.9
|
($0.7)
|
366%
|
$1.7
|
($0.1)
|
1,600%
|
|
|
|
|
|
|
|
|
|
Cash Used By
Operating Activities
|
($0.5)
|
($4.1)
|
88%
|
($11.9)
|
($14.8)
|
20%
|
Cash
Reserves
|
$68.1
|
$49.2
|
39%
|
|
|
|
For a more detailed discussion of Ballard Power Systems' third
quarter 2016 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, October 26, 2016 at
8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) to review its third
quarter 2016 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 'Investor Presentations & Events' 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.
Further Information
Guy
McAree +1.604.412.7919, investors@ballard.com or
media@ballard.com
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
power product markets of Heavy Duty Motive (consisting of bus and
tram applications), Portable Power, Material Handling and Backup
Power, 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.
|
|
2 Note
that Cash Operating Costs, EBITDA, Adjusted EBITDA and Adjusted 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 Adjusted Net Loss assist investors in assessing Ballard's
operating performance. 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 Adjusted Net Loss to the Consolidated
Financial Statements, please refer to Ballard's Management's
Discussion & Analysis.
|
|
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. Adjusted 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.
|
|
3 Includes
gain of $14.2 million in the first quarter of 2015 on sale of
intellectual property to Volkswagen Group.
|
SOURCE Ballard Power Systems Inc.