- Q4 revenue of $28.5M and
($5.2)M Adjusted EBITDA
- Full year revenue of $96.6M and
($13.5)M Adjusted EBITDA
- $192.2M cash reserves at
year-end
VANCOUVER, March 6, 2019 /CNW/ - Ballard Power Systems
(NASDAQ: BLDP; TSX: BLDP) today announced consolidated financial
results for the fourth quarter and full year ended December 31, 2018. All amounts are in U.S.
dollars unless otherwise noted and have been prepared in accordance
with International Financial Reporting Standards (IFRS).
Randy MacEwen, President and CEO
said, "2018 was an important year for Ballard and the hydrogen and fuel cell
industry. There is mounting evidence that the shift to
zero-emission transportation is accelerating and that fuel cell
electric vehicles, or FCEVs, will play an integral role. The macro
drivers of climate change, air quality and electrification are
global and converging. Governments across the planet are
considering decarbonisation of energy, transportation and industry.
As a result, certain market segments are now bracing for a shift
away from diesel vehicles into alternative powertrain
systems and we view these markets as ripe for disruption."
Mr. MacEwen continued, "In 2018, we made significant progress as
we continued to position Ballard
to be a key player in this market disruption. We achieved key cost
and performance milestones in the development of our
next-generation fuel cell stack and module. We entered into a
landmark strategic collaboration with Weichai Power, setting the
stage for a strong growth platform in the large China market. We deepened our important
technology relationship with Audi, signing a multi-year extension
to our Technology Solutions program into 2022. We continued to
refine our business portfolio, divesting non-core and
underperforming assets. In 2018, we generated revenue of
$96.6 million, ahead of our revised
outlook of $90-to-$95 million, along with gross margin of 31%,
Adjusted EBITDA of ($13.5) million
and ended the year with cash reserves of $192.2 million."
Mr. MacEwen added, "We believe there are large and attractive
addressable markets and use cases for Heavy and Medium Duty Motive
applications, such as certain bus, truck, rail and marine
applications, where FCEVs offer a strong value proposition. FCEVs
uniquely satisfy the requirements for zero-emission, long daily
range, fast refueling, heavy payload and route flexibility. We are
seeing early adoption in applications where the value proposition
is strongest and where the barriers to hydrogen refueling
infrastructure are lowest, such as centralized depot
refueling."
Mr. MacEwen concluded, "As we look ahead to 2019, we are
planning for a relatively flat top line along with increased
investments to drive long-term adoption, scaled commercialization
and market share. Over that longer-term we anticipate significant
growth in China, Europe and California, setting the stage for attractive
return on investment for Ballard
and our shareholders."
Q4 2018 Financial Highlights
(all comparisons are
to Q4 2017 unless otherwise noted)
- Total revenue was $28.5 million,
a 29% decline.
-
- Power Products revenue was $15.6
million, down 48% year-over-year and reflecting a decline in
Heavy Duty Motive shipments to China compared to Q4 2017 as well as a decline
in Portable Power/UAV product shipments given the divestiture of
the Power Manager business, partially offset by increases in
Material Handling and Backup Power.
- Technology Solutions revenue was $12.9
million, a 27% increase due primarily to higher amounts
earned from the HyMotion program with Audi.
- Gross margin was 25%, down 6-points to $7.2 million, due to low sales of MEAs (Membrane
Electrode Assemblies) in China and
a limited volume of high margin Portable Power/UAV sales given the
divestiture of the Power Manager business.
- Cash operating costs2 were $11.2 million, essentially flat
year-over-year.
- Adjusted EBITDA2 declined 349% to ($5.2) million, due to the decrease in revenue
and gross margin.
- Net loss3 was ($11.5)
million or ($0.06) per share,
down 297% and 242%, respectively, driven primarily by the increase
in Adjusted EBITDA loss.
- Adjusted net loss2 was ($7.5)
million or ($0.04) per share,
down 731% and 613%, respectively.
- Cash provided by operating activities was $0.2 million, an improvement of 126%, reflecting
cash operating loss of ($4.4)
million, offset by net working capital inflows of
$4.6 million, driven primarily by
higher deferred revenue of $8.5
million related primarily to the $9.0
million program pre-payment received from the joint venture
with Weichai Power Co. Ltd. ("Weichai Power") and lower inventory
of $3.7 million.
Full Year 2018 Financial Highlights
(all
comparisons are to full year 2017 unless otherwise noted)
- Total revenue was $96.6 million,
a 20% decline.
-
- Power Products revenue was $57.0
million, down 27% reflecting a decline in Heavy Duty Motive
product shipments to customers, principally in China.
- Technology Solutions revenue was $39.6
million, down 9% due to a reduction in technology transfer
revenue from China compared to
2017, partially offset by increased revenue from the HyMotion
program with Audi and other programs.
- Gross margin was 31%, down 3-points to $29.7 million primarily due to a shift in revenue
mix away from higher margin Heavy Duty Motive and Technology
Solutions.
- Cash operating costs2 were $43.0 million, an increase of 10% due primarily
to higher program development engineering expenses.
- Adjusted EBITDA2 declined to ($13.5) million, due to lower revenue and gross
margin.
- Net loss3 increased to ($27.3) million or ($0.15) per share, down 239% and 222%,
respectively. The increase in net loss was driven by the increase
in Adjusted EBITDA loss.
- Adjusted net loss2 was ($23.4) million or ($0.13) per share, down 351% and 326%,
respectively.
- Cash used in operating activities was ($31.7) million, a change of (224%) reflecting
cash operating loss of ($14.4)
million and net working capital outflows of ($17.3) million. This was due to a higher
inventory balance of ($12.9) million,
largely for expected Heavy Duty Motive shipments in 2019, and a
higher accounts receivable balance of ($11.7) million, resulting from timing of
revenues and related customer collections, partially offset by
higher deferred revenue of $8.6
million.
- Cash reserves were $192.2 million
at December 31, $131.9 million higher than at the end of 2017,
following close of strategic equity investments by Weichai Power
and Broad Ocean.
2019 Outlook
During 2019 Ballard intends to focus on the early stage
execution of the collaboration agreement with Weichai Power,
further penetration of the European and California markets in certain Heavy and Medium
Duty Motive applications, and continued investment in talent,
technology, products and customer experience. The foundation for
the 2019 outlook includes a 12-Month Order Book of $69.0 million at the beginning of the year, along
with a robust sales pipeline. Industry activity levels
continue to increase in China,
Europe and North America, including development programs,
demonstration programs and commercial deployments.
Given the early stage of hydrogen fuel cell market development
and adoption, and consistent with the Company's past approach,
Ballard is not providing specific
financial performance guidance for 2019. However, directionally the
Company anticipates total revenue on a year-over-year basis in 2019
to be relatively flat to 2018, as work progresses on establishment
of the new joint venture operation in China with Weichai Power and on addressing
commercial opportunities stemming from growing momentum in other
key target markets.
In China, Ballard has been pursuing the development of a
local fuel cell supply chain and related ecosystem to address the
growing zero-emission bus and commercial vehicle markets. The
collaboration with Weichai Power that closed in Q4 2018 represents
a critical step in positioning the company with strong players in
China's Heavy Duty Motive industry
and in preparing for the effective delivery of zero-emission fuel
cell solutions based on Ballard's
next-generation LCS fuel cell stack and LCS-based power modules.
The collaboration with Weichai Power has generated increased cash
reserves and, moving forward, is expected to increase corporate
revenue through the transfer of LCS technology and module designs
and the sale of MEAs to the joint venture in which Ballard has a 49% minority position. During
2019 the Company plans to make additional contributions totaling
approximately $21 million towards its
pro rata ownership share of the joint venture, of which
$14.5 million was contributed in
February 2019. Ballard anticipates making additional
contributions beyond 2019 to continue funding its pro rata share of
the joint venture. In addition, the Company expects to record
equity losses of approximately $15-20
million in connection with the Weichai joint venture in 2019. Since
the technology transfer and the establishment of operations in the
joint venture will take some time, the proportion of total revenue
generated from the China market in
2019 is expected to be lower than in 2018.
In Europe, during 2019 the
Company will continue execution of the HyMotion program with Audi,
will deliver a significant number of modules to support fuel cell
electric buses (FCEBs) for deployment in Germany under the JIVE funding program, and
also expects increased market activity for FCEBs, which can be
expected to result in additional module purchase orders. The
proportion of total revenue generated from the European market is
expected to increase in 2019, relative to 2018, largely offsetting
the proportionate decline in revenue from China.
Within North America in 2019,
Ballard expects increased FCEV
market activity in California for
FCEBs and fuel cell-powered trucks, which can be expected to result
in additional module purchase orders. In addition, a consistent
volume of fuel cell stack sales for forklift applications is also
expected.
Technology Solutions revenue is expected to increase in 2019,
underpinned by ongoing work on the HyMotion program with Audi,
technology transfer activity in relation to the joint venture with
Weichai Power, as well as engineering services activity with
existing and new customers in the automotive, rail, material
handling and UAV sectors. This revenue increase is expected to
largely offset a decline in Heavy Duty Motive revenue.
In summary, given the relatively early stage of development in
some markets and the uncertainty of timing in contract awards and
program deliveries in 2019, Ballard expects revenue to be relatively flat
compared to 2018, coincident with a strengthening of the underlying
business mix for long-term growth prospects.
Ballard 2030 FCEV
Vision
Ballard's FCEV vision for the
2030 timeframe anticipates:
- Further legislative restrictions on internal combustion engines
in city centers.
- Improved reliability and significant cost reductions in fuel
cell engines and vehicles.
- Significant global volumes of FCEVs in operation, in alignment
with the following Hydrogen Council expectations –
-
- 500,000 commercial trucks
- 50,000 buses
- Thousands of trains
- 1 in 12 new passenger cars, for a total of about 10-to-15
million units
- Scaled deployment of next generation, purpose-built fuel
cell-powered material handling equipment.
- Early commercialization of certain off-highway, marine,
aerospace and UAV applications.
Q4 & Full Year 2018 Financial Summary
(Millions of U.S.
dollars)
|
Three months
ended December 31,
|
Twelve months
ended December 31,
|
|
2018
|
2017
|
% Change
|
2018
|
2017
|
% Change
|
REVENUE
|
|
|
|
|
|
|
Fuel Cell Products
& Services:1
|
|
|
|
|
|
|
Heavy Duty
Motive
|
$10.6
|
$26.6
|
-60%
|
$39.5
|
$63.7
|
-38%
|
Portable
Power/UAV
|
$0.4
|
$1.5
|
-75%
|
$7.1
|
$4.5
|
59%
|
Material
Handling
|
$3.2
|
$1.3
|
145%
|
$8.0
|
$7.5
|
6%
|
Backup
Power
|
$1.4
|
$0.7
|
92%
|
$2.4
|
$1.9
|
26%
|
Sub-Total
|
$15.6
|
$30.1
|
-48%
|
$57.0
|
$77.6
|
-27%
|
Technology
Solutions
|
$12.9
|
$10.2
|
27%
|
$39.6
|
$43.7
|
-9%
|
Total Fuel Cell
Products & Services Revenue
|
$28.5
|
$40.3
|
-29%
|
$96.6
|
$121.3
|
-20%
|
PROFITABILITY
Gross Margin
$
|
$7.2
|
$12.6
|
-43%
|
$29.7
|
$41.6
|
-29%
|
Gross Margin
%
|
25%
|
31%
|
6-points
|
31%
|
34%
|
-3-points
|
Operating
Expenses
|
$13.4
|
$13.2
|
2%
|
$50.5
|
$46.5
|
9%
|
Cash Operating
Costs2
|
$11.2
|
$11.2
|
0%
|
$43.0
|
$39.1
|
10%
|
Adjusted
EBITDA2
|
($5.2)
|
$2.1
|
-349%
|
($13.5)
|
$3.3
|
-505%
|
Net Income
(Loss)
|
($11.5)
|
($2.9)
|
-297%
|
($27.3)
|
($8.0)
|
-239%
|
Earnings Per
Share
|
($0.06)
|
($0.02)
|
-242%
|
($0.15)
|
($0.05)
|
-222%
|
Adjusted Net
Loss2
|
($7.5)
|
($0.9)
|
-731%
|
($23.4)
|
($5.2)
|
-351%
|
Adjusted Net Loss Per
Share2
|
($0.04)
|
($0.01)
|
-613%
|
($0.13)
|
($0.03)
|
-326%
|
CASH
|
|
|
|
|
|
|
Cash provided by
(used in) Operating Activities:
|
|
|
|
|
|
|
Cash Operating Income
(Loss)
|
($4.4)
|
$1.7
|
-356%
|
($14.4)
|
$2.5
|
-676%
|
Working Capital
Changes
|
$4.6
|
($2.4)
|
288%
|
($17.3)
|
($12.3)
|
-41%
|
Cash
provided by (used in) Operating Activities
|
$0.2
|
($0.7)
|
126%
|
($31.7)
|
($9.8)
|
-224%
|
Cash
Reserves
|
$192.2
|
$60.3
|
219%
|
|
|
|
For a more detailed discussion of Ballard Power Systems Q4 and
full year 2018 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
Thursday, March 7, 2019 at
8:00 a.m. PDT (11:00 a.m. EDT) to review its Q4 and full year
2018 operating results and Outlook for 2019. The live call can be
accessed by dialing +1.604.638.5340. Alternatively, a live audio
and PowerPoint 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 and Events' area of the
'Investors' section of Ballard's
website (www.ballard.com/investors).
About Ballard Power Systems
Ballard Power Systems
(NASDAQ: BLDP; TSX: BLDP) provides clean energy products that
reduce customer costs and risks, and helps customers solve
difficult technical challenges or address new business
opportunities. 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 product sales and
market adoption of fuel cell electric vehicles. 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.
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 PEM fuel cell products for our
power product markets of Heavy Duty Motive (consisting of bus,
truck, rail and marine applications), Portable Power / UAV,
Material Handling and Backup Power, as well as the delivery of
Technology Solutions, including engineering services, technology
transfer and the license and sale of our extensive intellectual
property portfolio and fundamental knowledge for a variety of fuel
cell applications. As a result of our sale of the Power Manager
assets in the fourth quarter of 2018, we have renamed the former
Portable Power market as the Portable Power/UAV market. As the sale
of the Power Manager assets is not presented as a discontinued
operation, the Portable Power/UAV market includes revenues
associated with our power manager business prior to its sale, and
product and service revenues generated from the retained assets
related primarily to fuel cell propulsion systems for unmanned
systems.
|
|
2 Note that Cash Operating Costs,
EBITDA, Adjusted EBITDA and Adjusted Net Income (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 Income (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 (loss), 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 Income
(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, unrealized gains or losses on foreign exchange contracts,
and financing charges. EBITDA measures net loss attributable to
Ballard Power Systems Inc. excluding finance expense, income taxes,
depreciation of property, plant and equipment, and amortization of
intangible assets. Adjusted EBITDA adjusts EBITDA for stock based
compensation expense, transactional gains and losses, asset
impairment charges, finance and other income, unrealized gains or
losses on foreign exchange contracts, and acquisition costs.
Adjusted Net Income (Loss) measures net income (loss) attributable
to Ballard from continuing operations, excluding transactional
gains and losses, asset impairment charges, and acquisition
costs.
|
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SOURCE Ballard Power Systems Inc.