06:02:32 EDT Tue 19 Mar 2024
Enter Symbol
or Name
USA
CA



Ballard Power Systems Inc
Symbol BLD
Shares Issued 141,940,846
Close 2015-07-28 C$ 1.80
Market Cap C$ 255,493,523
Recent Sedar Documents

Ballard loses $7.3-million (U.S.) in Q2

2015-07-28 20:38 ET - News Release

Mr. Randy MacEwen reports

BALLARD REPORTS SECOND QUARTER 2015 RESULTS

Ballard Power Systems Inc. has released its consolidated financial results for the second quarter ended June 30, 2015. (All amounts are in U.S. dollars unless otherwise noted and have been prepared in accordance with international financial reporting standards.)

"Although we were disappointed with second quarter financial results, during the quarter, we made important foundational progress on our journey to deliver long-term shareholder value with a business model featuring high growth, scale and sustainable profitability," said Randy MacEwen, president and chief executive officer. "First, we announced a definitive agreement to acquire Protonex Technology Corp., a private company with a strong growth trajectory based on compelling power management products and a portable fuel cell portfolio for use in military and industrial applications. Second, we are executing our China strategy, including new anchor partnerships in China for fuel cell buses and trams."

Mr. MacEwen continued, "We have a customer-centric business model, a committed team, a strong brand, and industry-leading technology, intellectual property, products and deployment experience."

Tony Guglielmin, chief financial officer, added: "With the closing of our recent equity financing, we have a strong balance sheet to support organic growth, as well as M&A and investment opportunities. We continue to expect 2015 revenue from our current lines of business to be heavily weighted in the second half of the year, underpinned by significant progress in our sales pipeline for both power products and technology solutions platforms."

Second quarter 2015 metrics summary (all comparisons with second quarter 2014 unless otherwise noted):

  • Total revenue of $11.2-million, a decrease of 39 per cent primarily due to declines in technology solutions and material-handling revenue. Total revenue was within the $10.6-million to $11.5-million range that had been anticipated and preannounced by the company in its July press release.
  • Gross margin of 10 per cent, a decrease resulting primarily from the reduction in high-margin technology solutions revenue due to the previously announced termination of contracts with Azure in China and a shift in cadence of revenue from the engineering services contract with Volkswagen AG. Gross margin was lower than the prior quarter, by one percentage point, as had been anticipated and preannounced in the company's July press release.
  • Cash operating costs of $6.7-million, flat on a year-over-year basis.
  • Adjusted earnings before interest, taxes, depreciation and amortization of ($4.8-million), an increase in adjusted EBITDA loss on a year-over-year basis, reflecting the decline in gross margin.
  • Net income (loss) of ($7.3-million) or (six cents) per share, reductions in both metrics driven primarily by the increase in adjusted EBITDA loss.
  • Cash used by operating activities of ($5.3-million), a year-over-year increase. This reflects a cash operating loss of ($5.5-million), partially offset by an improvement in working capital of $200,000.
  • Cash reserves of $41.2-million at June 30, higher than the estimated cash reserves of $38.0-million to $40.0-million that the company preannounced in its July press release. Cash reserves were fortified following the quarter, through an equity financing that generated net proceeds of approximately $13.6-million.

Second quarter 2015 market performance (all comparisons with second quarter 2014 unless otherwise noted):

Power products:

  • The power products platform consisting of fuel cell products for the telecom backup power market, the material-handling market and development-stage markets generated revenue of $6.3-million in the quarter, a 15-per-cent year-over-year decline primarily due to a reduction in fuel cell stack shipments for the material-handling market.

Telecom backup power:

  • Revenue of $3.0-million, an increase of 15 per cent driven by the shipment of 100 ElectraGen-ME methanol-fuelled backup power systems to fulfill a purchase order from new customer Reliance Jio Infocomm Ltd. (RJIL) in India, in addition to system shipments to customers in South Africa and Europe.

Material handling:

  • Revenue of $2.7-million, a 34-per-cent decline associated with reduced fuel cell stack shipments to Plug Power.

Development-stage markets:

  • Revenue of $600,000, a reduction of $100,000 or 13 per cent. This revenue was primarily related to the shipment of one FCvelocity-HD6 power module for deployment by the Stark Area Regional Transit Authority in Ohio;
  • Announced a $10-million deal to produce fuel cell products and solutions to power 33 buses in China, the first three modules having been shipped in first quarter, with the majority expected to be shipped by the end of 2015;
  • Signed a framework agreement with Tangshan Railway Vehicle Company Ltd. in China for the development of a new fuel cell module to power trams;
  • Signed a five-year extension to the maintenance contract for an eight-bus fleet operated by Transport for London in the United Kingdom.

Technology solutions:

The technology solutions platform consisting of engineering services and intellectual property licensing generated revenue of $4.9-million in the quarter, a year-over-year decline of 56 per cent. Second quarter 2014 had included licensing contracts in China that Ballard subsequently terminated and also reflected a cadence in engineering services contract work for Volkswagen AG that was weighted toward the early portion of last year. In addition, second quarter 2015 revenue from the contract with Volkswagen AG, priced in Canadian dollars, reflected the negative impact of a lower Canadian dollar relative to the U.S. dollar.

  • Subsequent to the quarter, Ballard signed an agreement for a one-megawatt ClearGen fuel-cell-distributed generation system for Hydrogene de France. Ballard will receive an initial payment of 1.7 million euros for the first phase of the program, involving engineering services and core component development, targeted for completion in mid-2016.

Acquisition of Protonex Technology

On June 29, Ballard announced the signing of a definitive agreement to acquire Protonex Technology, a leading designer and manufacturer of advanced power management products and portable fuel cell solutions. As consideration for the transaction, valued at the time of the announcement at $30-million, Ballard assumed and will pay Protonex's debt obligations and transaction costs at closing, currently estimated at $4.4-million, and will pay the balance of approximately $25.6-million through the issuance of 11.2 million Ballard shares. The number of Ballard shares to be issued is subject to adjustment based on Protonex's final debt obligations and transaction costs at closing.

The transaction is expected to close in the third quarter of 2015, subject to Protonex shareholder approval, regulatory approvals and customer closing conditions. The transaction requires approval of shareholders holding more than 50 per cent of Protonex shares. Ballard has entered into support and voting agreements with each of the directors and executive officers of Protonex, as well as certain major shareholders of Protonex, who collectively hold more than 50 per cent of the outstanding shares of Protonex, under which those holders have irrevocably agreed to vote in favour of the transaction.

Ballard expects the transaction to deliver a number of key benefits, including:

  1. Diversification: The deal adds power management capabilities, along with small-scale portable power products to Ballard's already extensive power products portfolio. Power management capabilities will enable Ballard to seamlessly link fuel cell, solar and storage technologies to deliver clean energy simply and efficiently. The transaction also provides exposure to military applications for power management products, as well as the opportunity to penetrate this vertical with fuel cell products in the longer term.
  2. Growth: The deal will enhance Ballard's overall growth profile as Protonex has enjoyed a compound annual growth rate of approximately 22 per cent since 2011 and is forecasting further significant growth in 2015 and 2016.
  3. Scale: Ballard's consolidated revenue will show a significant top-line improvement following the transaction.
  4. Profitability: In its fiscal year 2014, Protonex generated strong gross margin of 40 per cent and delivered positive adjusted earnings before interest, taxes, depreciation and amortization. Given its high-margin revenue, Protonex is expected to positively impact Ballard's topline and bottom line, moving Ballard more rapidly toward positive earnings.

Further information regarding Protonex's business and growth strategy will be provided during Ballard's conference call on July 29. Details for accessing the conference call can be found herein.

                       SECOND QUARTER FINANCIAL RESULTS
                          (millions of U.S. dollars)    
                                                      
                                                Three months ended    Six months ended 
                                                        June 30,            June 30,
                                                    2015      2014      2015      2014
Growth
Fuel cell products and services revenue
Telecom backup power                                $3.0      $2.6      $3.6      $5.5
Material handling                                   $2.7      $4.1      $5.2      $6.1
Development-stage markets                           $0.6      $0.7      $2.3      $0.8
Subtotal                                            $6.3      $7.4     $11.1      12.4
Technology solutions                                $4.9     $11.1      $9.3     $20.1
Total fuel cell products and services revenue      $11.2     $18.5     $20.4     $32.5
Profitability
Gross margin $                                      $1.1      $4.5      $2.1      $8.1
Gross margin %                                        10%       25%       10%       25%
Cash operating costs                                $6.7      $6.7     $14.6     $13.0
Adjusted EBITDA                                    ($4.8)    ($1.2)    ($9.9)    ($3.0)
Net income (loss)                                  ($7.3)    ($4.5)    ($0.3)    ($8.3)
Earnings per share                                ($0.06)   ($0.03)   ($0.00)   ($0.07)
Normalized net (loss)                              ($7.0)    ($4.5)   ($15.2)    ($8.1)
Normalized net (loss) per share                   ($0.05)   ($0.03)   ($0.12)   ($0.07)

For a more detailed discussion of Ballard Power Systems' second quarter 2015 results, please see the company's financial statements and management's discussion and analysis, which are available at the Ballard website, SEDAR and EDGAR.

Conference call

Ballard will hold a conference call on July 29, 2015, at 8 a.m. PDT (11 a.m. EDT) to review its second quarter 2015 operating results. The live call can be accessed by dialling 1-604-638-5340. Alternatively, a live audio and slide webcast can be accessed through a link on Ballard's home page. Following the call, the audio webcast will be archived in the quarterly results area of the investors section of Ballard's website.

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