Ballard Reports Third Quarter 2013 Results

30 Oct 2013

  • Top line growth of 65% and bottom line improvements of 16-points in gross margin and 86% in Adjusted EBITDA

Ballard Power Systems (NASDAQ: BLDP)(TSX: BLD) has announced its consolidated financial results for the third quarter ended September 30, 2013. All amounts are in U.S. dollars unless otherwise noted and have been prepared in accordance with International Financial Reporting Standards (IFRS). In accordance with IFRS all numbers, including Ballard’s 2012 audited financial statements, reflect “continuing operations”, excluding Material Products.

Summary of Third Quarter 2013 Results

In Q3 revenue was up 65% compared to the same quarter last year, to $17.0 million, gross margin was up 16-points, to 28% and Adjusted EBITDA improved 86%, to ($0.9) million.

These results continue the strong positive trend in Ballard's financial metrics. On a year to date basis through Q3, revenue improved 61% compared to the same period last year, to $43.9 million, gross margin was up 11-points, to 25% and Adjusted EBITDA improved 55%, to ($8.5) million. These third quarter results were driven by the three core elements of the Company's business model: product sales; engineering services; and licensing.

Ballard also made the decision in the quarter to strengthen the Company’s balance sheet and on October 9 announced the closing of an underwritten equity offering with gross proceeds of approximately $14.5 million. This has augmented Ballard’s cash buffer in its growth plan to achieve positive cash flow.

John Sheridan, President and CEO said, "The continuing strength in Ballard's operating results is evidence of the positive impacts of our strategy, in tandem with strong execution performance and progress in market development for clean energy fuel cell products and services. With the positive trend in fuel cell products and services over the past two years, revenue and gross margin have each more than doubled and Adjusted EBITDA has improved by more than fifty percent."

Ballard Q3 results 1

Third Quarter 2013 Highlights2

Growth (all comparisons to Q3 2012 unless otherwise noted)

  • Revenue of $17.0 million, an increase of 65%.
  • Gross margin of 28%, an improvement of 16-points, due to the revenue growth and shift in product mix toward engineering services and licensing.

Commercial Stage Markets:

Telecom Backup Power

  • Revenue of $3.9 million, an increase of 6%.
  • ElectraGenTM system shipments were 155 in the quarter, primarily for deployment in telecom networks in China, Philippines and Jamaica; the shipments to Jamaica were 12 ElectraGenTM-ME methanol systems for Digicel, ordered during Q3 following a successful trial in Digicel’s Jamaica telecom network.
  • While shipment volumes in the quarter were down marginally by 4%, on a year to date basis shipments have increased 217%.
  • Signed an ESA with Azure Hydrogen for 220 ElectraGenTM systems, comprised of 120 direct hydrogen and 100 methanol-fuelled systems, for deployment in Chinese telecom networks; of these systems, 110 were delivered in Q3 with the remainder to be delivered in Q4.
  • Signed a distribution agreement with AECi in Southeast Asia and received an order from that distributor for 20 ElectraGenTM-ME methanol systems to be shipped in Q4 for Globe Telecom, a major Philippines network provider.

Material Handling

  • Revenue of $2.1 million, an increase of 51%; driven by an increase of 47% in shipments of fuel stacks to Plug Power for use in this market.

Engineering Services

  • Revenue of $6.5 million, an increase of 77%.
  • Continued contract work with AFCC and Mercedes-Benz Fuel Cells.
  • Work on the 4-year Volkswagen contract ramped up to the full quarterly run-rate expected through the remainder of the contract term.

Development Stage Markets:

  • Revenue of $4.5 million, an increase of 188%.
  • Shipped 4 fuel cell bus modules in the quarter: 2 to Van Hool in Europe; and 2 to Azure Hydrogen in China.
  • Signed a multi-year bus module assembly license agreement to support Azure Hydrogen’s China fuel cell bus program. The agreement has an expected value of approximately $11 million over the first 12-months, of which $2 million of license revenue was booked in Q3.
  • Ballard and consortium partners BAE Systems and ElDorado National were awarded $6.7 million in funding by the U.S. Federal Transit Administration (FTA) for deployment of buses in two U.S. cities, with delivery planned in 2014.

Path to Profitability (all comparisons to Q3 2012 unless otherwise noted)

  • Cash operating costs3 of $6.6 million, an improvement of 1%.
  • Adjusted EBITDA3 of ($0.9) million, an improvement of 86%.
  • Net income of ($4.6) million or ($0.05) per share, improvements of 50% and 55%, respectively.
  • Cash used by operating activities of ($4.8) million. Cash operating loss of ($2.3) million, an improvement of 68%, was offset by an increase in working capital of ($2.5) million.
  • Cash reserves of $20.4 million, or $17.7 million net of $2.7 million outstanding on the Company’s bank operating line.

Following the quarter an underwritten offering was completed with gross proceeds of approximately $14.5 million.

2013 Business Outlook

The Company has confirmed its full year guidance for:

  • Revenue growth in excess of 30%; and
  • Adjusted EBITDA improvement in excess of 50%.

Third Quarter 2013 Financial Highlights

Ballard Q3 results 2

For a more detailed discussion of Ballard Power Systems’ third quarter 2013 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 30, 2013 at 8:00 a.m. PDT (11:00 a.m. EDT) to review its second quarter 2013 operating results. The live call can be accessed by dialling +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 Quarterly Results area of the Investor section of Ballard’s website (www.ballard.com/investors).

 

Endnotes:

1. 2011 revenue adjusted for Contract Manufacturing due to the completion of automotive manufacturing supply agreements with Daimler AG and a Daimler AG subsidiary in October 2011. Historical amounts to Daimler AG were reported in our former Contract Automotive segment and in our existing Fuel Cell Products and Services segment.

2. With the January 31, 2013 sale of the Company’s non-core Material Products division, comparisons made to 2012 are on a continuing operations basis, excluding the Material Products division, consistent with IFRS accounting principles.

3. Cash Operating Costs measures operating expenses excluding stock based compensation expense, depreciation and amortization, restructuring charges, acquisition costs and financing charges. EBITDA measures net loss attributable to Ballard from continuing operations, 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. Normalized Net Loss measures net loss attributable to Ballard from continuing operations, excluding transactional gains and losses and asset impairment charges.

Note that Cash Operating Costs, EBITDA, Adjusted EBITDA and Normalized 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 Normalized Net Loss assist investors in assessing Ballard’s operating performance and liquidity. 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 Normalized Net Loss to the Consolidated Financial Statements, please refer to Ballard’s Management’s Discussion & Analysis.

     

Source: Ballard Power Systems

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