Hydrogenics Reports Third Quarter 2017 Results
November 06 2017 - 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 2017 financial results.
Results are reported in US dollars and are prepared in accordance
with International Financial Reporting Standards (IFRS).
Recent Highlights
“Over the last two years we have executed on a
strategy to build long-term value and create an industry-leading
enterprise with solid growth potential. We’ve refined and reduced
costs on standardized products, taken advantage of many emerging
market opportunities, accumulated a strong, diverse, multi-year
backlog, brought in new investment capital, and delivered
cutting-edge fuel cell solutions to mainstream rail and bus
applications. It is gratifying to see these decisive steps
beginning to show in our underlying operating results,” said Daryl
Wilson, President and Chief Executive Officer. “Our successful
partnerships with several Chinese certified integrators have led to
an acceleration in heavy duty fuel cell shipments – a trend we see
continuing in the quarters to come. At the same time, we delivered
a previously-announced energy storage/generation system to the
Electrical Generation Authority of Thailand, making the Lam Takhong
Wind Hydrogen Hybrid Project the first megawatt-scale renewable
energy facility in Southeast Asia. It will convert excess
electricity from wind to hydrogen and then use our HyPM fuel cell
power plant to generate 300 kilowatts of electricity for EGAT’s
Learning Center, an energy-neutral building – marking yet another
milestone project for us, the first in the region.
“We continue to explore further strategic
initiatives in China with additional partners given the size and
importance of the market opportunity there. We’re also pleased to
see growing momentum in rail applications with our existing partner
Alstom as well as elsewhere around the globe. Given Hydrogenics’
sizable backlog and ongoing business development initiatives, we
remain confident of achieving solid revenue growth in 2017 and
beyond. We have the right strategy in place to take Hydrogenics to
the next level in its growth trajectory, and I am pleased that our
financial performance is beginning to reflect the significant
progress we are making.”
Summary of Results for the Quarter
September 30, 2017
- Revenue rose 81% to $12.2 million in the third quarter of 2017
from $6.7 million in the prior-year period, reflecting a
significant increase in deliveries of fuel cell mobility modules to
China as well as increased sales revenue in the balance of the
Power Systems segment and in the OnSite Generation segment.
- Hydrogenics ended the third quarter of 2017 with a backlog of
$147.5 million, securing orders of $5.0 million for electrolyzer
and fuel cell applications. Order backlog movement during the third
quarter (in $ millions) was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
backlog |
Orders Received |
FX |
Orders Delivered/ Revenue
Recognized |
September 30, 2017
backlog |
OnSite Generation |
$ |
28.3 |
$ |
4.1 |
$ |
0.7 |
$ |
6.1 |
$ |
27.0 |
Power
Systems |
|
123.8 |
|
0.9 |
|
1.9 |
|
6.1 |
|
120.5 |
Total |
$ |
152.1 |
$ |
5.0 |
$ |
2.6 |
$ |
12.2 |
$ |
147.5 |
|
|
|
|
|
|
|
|
|
|
|
- Of the above backlog of $147.5 million, the Company expects to
recognize approximately $65 million during the following 12 months
as revenue. In addition, revenue for the years ending December 31,
2017 and 2018 will include orders received and delivered in the
balance of 2017 and 2018.
- Gross profit rose to $2.9 million in the current quarter from
$1.0 million in the prior-year period, an increase of 190%. Gross
margin expanded to 24% from 15% in 2016 primarily due to product
mix, driven by a substantial increase in standard production
batches within the Power Systems segment.
- Cash operating costs1 increased by $2.3 million, to $4.9
million, for the three months ended September 30, 2017, with the
variance due to a $1.9 million increase in net research and
development (“R&D”) expense as well as a $0.4 million SG&A
increase (excluding compensation indexed to share price) as
discussed below:
- Selling, general and administrative (“SG&A”) expense for
the third quarter of 2017 increased $0.5 million compared to the
prior-year period, primarily due to higher advertising and
marketing costs within the Power Systems business segment.
- Net R&D expense increased principally due to a reduction in
government-funded R&D year-over-year as shown below. Investment
in R&D spending focused on multi-megawatt energy storage
projects and mobility fuel cell applications, primarily for heavy
duty commercial vehicles and rail fuel cell stack platforms.
|
|
|
|
|
|
|
Three months ended September 30, |
|
2017 |
|
|
2016 |
|
Gross R&D
expenses |
$ |
2.6 |
|
$ |
3.1 |
|
Less: Government
R&D funding |
|
(0.4 |
) |
|
(2.8 |
) |
Net R&D expense |
$ |
2.2 |
|
$ |
0.3 |
|
|
|
|
|
|
|
|
- The Company’s Adjusted EBITDA2 loss increased by $0.4 million,
to $1.9 million, for the three months ended September 30, 2017 from
a loss of $1.5 million in 2016. While gross profit rose $1.9
million year-over-year, this was more than offset by an increase in
R&D spending and SG&A expense as noted above.
- Hydrogenics’ net loss was $2.0 million for the third quarter of
2017, an increase of $0.1 million from 2016. Net loss per share
declined to $(0.13) per share for the three months ended September
30, 2017 from $(0.15) per share last year as a result of an
increase in the weighted average number of common shares
outstanding.
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
DetailsHydrogenics will hold a conference call at 10:00
a.m. EST on November 6, 2017 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 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
fueled 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.
Hydrogenics Contacts:
Bob Motz, Chief Financial OfficerHydrogenics Corporation(905)
361-3660investors@hydrogenics.com
Chris WittyHydrogenics Investor Relations(646)
438-9385cwitty@darrowir.com
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 endedSeptember
30, |
Nine months endedSeptember
30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Selling,
general and administrative expenses |
$ |
2,884 |
|
$ |
2,365 |
|
$ |
9,218 |
|
$ |
7,719 |
|
Research and product development expenses |
|
2,157 |
|
|
263 |
|
|
4,654 |
|
|
2,831 |
|
Total operating
costs |
$ |
5,041 |
|
$ |
2,628 |
|
$ |
13,872 |
|
$ |
10,550 |
|
Less:
Amortization and depreciation |
|
(101 |
) |
|
(98 |
) |
|
(314 |
) |
|
(298 |
) |
Less: DSUs
recovery (expense) |
|
(176 |
) |
|
(6 |
) |
|
(548 |
) |
|
100 |
|
Less:
Stock-based compensation expense (including PSUs &
RSUs) |
|
(199 |
) |
|
36 |
|
|
(539 |
) |
|
(254 |
) |
Less: Loss on disposal of assets |
|
- |
|
|
- |
|
|
(117 |
) |
|
- |
|
Cash operating costs |
$ |
4,914 |
|
$ |
2,560 |
|
$ |
12,354 |
|
$ |
10,098 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
Three months endedSeptember
30 |
Nine months endedSeptember
30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net
loss |
$ |
(2,003 |
) |
$ |
(1,899 |
) |
$ |
(10,011 |
) |
$ |
(7,353 |
) |
Finance
loss |
|
(138 |
) |
|
271 |
|
|
1,969 |
|
|
833 |
|
Amortization
and depreciation |
|
199 |
|
|
192 |
|
|
600 |
|
|
548 |
|
DSUs expense
(recovery) |
|
(176 |
) |
|
6 |
|
|
548 |
|
|
(100 |
) |
Stock-based compensation expense (including PSUs &
RSUs) |
|
199 |
|
|
(36 |
) |
|
539 |
|
|
254 |
|
Adjusted EBITDA |
$ |
(1,919 |
) |
$ |
(1,466 |
) |
$ |
(6,355 |
) |
$ |
(5,818 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Hydrogenics CorporationCondensed Interim
Consolidated Balance Sheets(in thousands of US
dollars)(unaudited)
|
|
September 30, 2017 |
|
December 31, 2016 |
|
|
|
|
|
Assets |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash
equivalents |
$ |
18,345 |
|
$ |
10,338 |
|
Restricted cash |
|
1,241 |
|
|
405 |
|
Trade and other
receivables |
|
18,604 |
|
|
9,802 |
|
Inventories |
|
18,298 |
|
|
17,208 |
|
Prepaid
expenses |
|
1,424 |
|
|
918 |
|
|
|
57,912 |
|
|
38,671 |
|
Non-current
assets |
|
|
|
|
Restricted cash |
|
725 |
|
|
535 |
|
Investment in joint
ventures |
|
2,771 |
|
|
1,750 |
|
Property, plant and
equipment |
|
3,710 |
|
|
4,095 |
|
Intangible assets |
|
207 |
|
|
203 |
|
Goodwill |
|
4,498 |
|
|
4,019 |
|
|
|
11,911 |
|
|
10,602 |
|
Total assets |
$ |
69,823 |
|
$ |
49,273 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current
liabilities |
|
|
|
|
Operating
borrowings |
$ |
2,363 |
|
$ |
2,111 |
|
Trade and other
payables |
|
9,950 |
|
|
7,235 |
|
Financial
liabilities |
|
5,552 |
|
|
3,939 |
|
Warranty
provisions |
|
1,386 |
|
|
1,221 |
|
Deferred revenue |
|
15,954 |
|
|
10,788 |
|
|
|
35,205 |
|
|
25,294 |
|
Non-current
liabilities |
|
|
|
|
Other non-current
liabilities |
|
9,329 |
|
|
9,262 |
|
Non-current warranty
provisions |
|
750 |
|
|
841 |
|
Non-current deferred revenue |
|
2,541 |
|
|
3,494 |
|
|
|
12,620 |
|
|
13,597 |
|
Total liabilities |
|
47,825 |
|
|
38,891 |
|
Equity |
|
|
|
|
Share capital |
|
385,753 |
|
|
365,923 |
|
Contributed
surplus |
|
19,695 |
|
|
19,255 |
|
Accumulated other
comprehensive loss |
|
(2,266 |
) |
|
(3,623 |
) |
Deficit |
|
(381,184 |
) |
|
(371,173 |
) |
Total equity |
|
21,998 |
|
|
10,382 |
|
Total equity and liabilities |
$ |
69,823 |
|
$ |
49,273 |
|
|
|
|
|
|
|
|
Hydrogenics CorporationConsolidated 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, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Revenues |
$ |
12,200 |
|
$ |
6,733 |
|
$ |
28,524 |
|
$ |
20,260 |
|
Cost of sales |
|
9,300 |
|
|
5,733 |
|
|
22,694 |
|
|
16,230 |
|
Gross profit |
|
2,900 |
|
|
1,000 |
|
|
5,830 |
|
|
4,030 |
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
2,884 |
|
|
2,365 |
|
|
9,218 |
|
|
7,719 |
|
Research and product
development expenses |
|
2,157 |
|
|
263 |
|
|
4,654 |
|
|
2,831 |
|
|
|
5,041 |
|
|
2,628 |
|
|
13,872 |
|
|
10,550 |
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(2,141 |
) |
|
(1,628 |
) |
|
(8,042 |
) |
|
(6,520 |
) |
|
|
|
|
|
|
|
|
|
Finance income
(loss) |
|
|
|
|
|
|
|
|
Interest expense,
net |
|
(464 |
) |
|
(439 |
) |
|
(1,387 |
) |
|
(1,310 |
) |
Foreign currency gains
(losses), net(1) |
|
58 |
|
|
139 |
|
|
513 |
|
|
(39 |
) |
Gain (Loss) from joint
ventures |
|
(87 |
) |
|
(78 |
) |
|
(258 |
) |
|
(26 |
) |
Other
finance gains (losses), net |
|
631 |
|
|
107 |
|
|
(837 |
) |
|
542 |
|
Finance income (loss), net |
|
138 |
|
|
(271 |
) |
|
(1,969 |
) |
|
(833 |
) |
|
|
|
|
|
|
|
|
|
Loss before
income taxes |
|
(2,003 |
) |
|
(1,899 |
) |
|
(10,011 |
) |
|
(7,353 |
) |
Income tax expense |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Net loss for the period |
|
(2,003 |
) |
|
(1,899 |
) |
|
(10,011 |
) |
|
(7,353 |
) |
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to net loss |
|
|
|
|
|
|
|
|
Exchange
differences on translating foreign operations |
|
409 |
|
|
249 |
|
|
1,357 |
|
|
446 |
|
Comprehensive loss for the period |
$ |
(1,594 |
) |
$ |
(1,650 |
) |
$ |
(8,654 |
) |
$ |
(6,907 |
) |
|
|
|
|
|
|
|
|
|
Net loss per
share |
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.13 |
) |
$ |
(0.15 |
) |
$ |
(0.74 |
) |
$ |
(0.59 |
) |
|
|
|
|
|
|
|
|
|
Hydrogenics CorporationConsolidated Interim
Statements of Cash Flows(in thousands of US dollars)
(unaudited)
|
Three months ended |
Nine months ended |
|
September 30, |
September 30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Cash and cash
equivalents provided by (used
in): |
|
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
Net loss for the
period |
$ |
(2,003 |
) |
$ |
(1,899 |
) |
$ |
(10,011 |
) |
$ |
(7,353 |
) |
Decrease (increase) in
restricted cash |
|
133 |
|
|
364 |
|
|
(869 |
) |
|
371 |
|
Items not affecting
cash |
|
|
|
|
|
|
|
|
Loss on
disposal of assets |
|
3 |
|
|
- |
|
|
117 |
|
|
- |
|
Amortization and depreciation |
|
199 |
|
|
192 |
|
|
600 |
|
|
548 |
|
Unrealized other losses on hedging |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
Warrants |
|
(631 |
) |
|
(106 |
) |
|
615 |
|
|
(522 |
) |
Unrealized foreign exchange losses (gains) |
|
279 |
|
|
(41 |
) |
|
146 |
|
|
145 |
|
Unrealized loss (gain) on joint ventures |
|
87 |
|
|
78 |
|
|
258 |
|
|
26 |
|
Accreted
non-cash and unpaid interest and amortization of deferred financing
fees |
|
467 |
|
|
229 |
|
|
1,608 |
|
|
827 |
|
Stock-based compensation |
|
199 |
|
|
(36 |
) |
|
540 |
|
|
254 |
|
Stock-based compensation - DSU’s |
|
(176 |
) |
|
6 |
|
|
548 |
|
|
(100 |
) |
Net change in non-cash operating assets and liabilities |
|
(7,005 |
) |
|
(1,336 |
) |
|
(4,858 |
) |
|
(6,326 |
) |
Cash used in operating activities |
|
(8,448 |
) |
|
(2,549 |
) |
|
(11,306 |
) |
|
(12,130 |
) |
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
|
|
Investment in joint
venture |
|
- |
|
|
- |
|
|
(93 |
) |
|
- |
|
Proceeds from disposals
of property, plant and equipment |
|
- |
|
|
- |
|
|
1,035 |
|
|
- |
|
Purchase of property,
plant and equipment |
|
(180 |
) |
|
(1,275 |
) |
|
(2,255 |
) |
|
(2,178 |
) |
Receipt of IDF
government funding |
|
32 |
|
|
175 |
|
|
1,883 |
|
|
390 |
|
Purchase
of intangible assets |
|
(33 |
) |
|
- |
|
|
(34 |
) |
|
(47 |
) |
Cash provided by (used in) investing
activities |
|
(181 |
) |
|
(1,100 |
) |
|
536 |
|
|
(1,835 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
|
|
Common shares issued
and stock options exercised, net of issuance costs |
|
(40 |
) |
|
- |
|
|
19,730 |
|
|
- |
|
Interest repayment |
|
- |
|
|
(209 |
) |
|
(788 |
) |
|
(621 |
) |
Repayment of repayable
government contributions |
|
(1 |
) |
|
(55 |
) |
|
(113 |
) |
|
(163 |
) |
Principal repayment of
long-term debt |
|
- |
|
|
- |
|
|
(500 |
) |
|
- |
|
Proceeds of operating
borrowings |
|
98 |
|
|
2,248 |
|
|
287 |
|
|
2,248 |
|
Repayment of operating
borrowings |
|
- |
|
|
- |
|
|
- |
|
|
(1,077 |
) |
Cash provided by financing activities |
|
57 |
|
|
1,984 |
|
|
18,616 |
|
|
387 |
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in
cash and cash equivalents during the period |
|
(8,572 |
) |
|
(1,665 |
) |
|
7,846 |
|
|
(13,578 |
) |
Cash and cash
equivalents - Beginning of period |
|
27,161 |
|
|
11,579 |
|
|
10,338 |
|
|
23,398 |
|
Effect of exchange rate
fluctuations on cash and cash equivalents held |
|
(244 |
) |
|
83 |
|
|
161 |
|
|
177 |
|
Cash and cash equivalents - End of period |
$ |
18,345 |
|
$ |
9,997 |
|
$ |
18,345 |
|
$ |
9,997 |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure |
|
|
|
|
|
|
|
|
Interest paid |
$ |
1 |
|
$ |
209 |
|
$ |
615 |
|
$ |
621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in R&D spending focused on multi-megawatt energy
storage projects and mobility fuel cell applications, primarily for
heavy duty commercial vehicles and rail fuel cell stack
platforms.
Hydrogenics (NASDAQ:HYGS)
Historical Stock Chart
From Aug 2024 to Sep 2024
Hydrogenics (NASDAQ:HYGS)
Historical Stock Chart
From Sep 2023 to Sep 2024