Ballard Reports Q1 2009 Results

Ballard Power Systems today announced its results for the first quarter ended March 31, 2009 today. All amounts are in U.S. dollars, unless otherwise noted.

"Our first quarter results are generally consistent with the outlook provided in January, with weak product shipments and revenue in Q1, expected to ramp up over the back half of the year," said John Sheridan, President and CEO. He added, "While the negative macroeconomic backdrop is presenting clear risks to Ballard's 15-30% revenue growth target, we still view this type of growth as attainable, but given the risks in the environment, more likely to the low end of this range."

    The company also confirmed its full year guidance for:
    -   Total product shipments: 4,000 units (115% growth from 2008)
    -   Operating cash consumption(1): $17 million to $27 million (7% to 40%
        reduction from 2008)

    First Quarter 2009 Overview

    -   Total Product Shipments of 192 units, a decrease from 284 units in Q1
        2008.
        -  Shipments expected to ramp up over the back half of the year.
    -   FCgen(TM)-1300 development program is on track for Indian market
        deployment.
    -   Commissioning of BC Transit Olympic Buses proceeding on schedule for
        bus delivery by the consortium starting in August 2009.
    -   Key progress in material handling, with lift truck fleet conversions
        by Plug Power for Central Grocers and Nestle Waters.
    -   Organizational restructuring completed, resulting in a 7% workforce
        reduction with annual cost savings of approximately $4 million.
    -   Appointment of Bruce Cousins as CFO on April 6, 2009 and Michael
        Goldstein as Chief Commercial Officer on April 27, 2009.

    First Quarter 2009 Financial Highlights

    -   Revenue was $8.1 million (Q1 2008: $16.0 million).
        -  Product and service revenues for the core Fuel Cell Products
           segment of $3.9 million were consistent with the prior year
           quarter.
        -  The overall year over year quarterly decline was primarily driven
           by:
           -  The slow down in the automotive sector and its impact on
              Contract Automotive and Material Products revenues; and
           -  The decline in engineering development revenues due primarily
              to the elimination of automotive fuel cell development work
              subsequent to the closing of the AFCC transaction and
              completion of the 1kW residential cogeneration fuel cell
              development program, both in 2008.
    -   Operating expenses, excluding depreciation and amortization
        decreased $3.4 million.
        -  Research and product development decreased $3.8 million to
           $7.8 million.
        -  Sales and Marketing flat at $1.8 million.
        -  General and Administrative increased $0.4 million to $4.3 million,
           which includes $1.1 million in severance expense related to the 7%
           workforce reduction.
    -   Operating cash consumption(1) was $11.0 million, a 20% increase from
        $9.2 million in the first quarter of 2008.
    -   Net Loss was ($18.6) million or ($0.22) loss per share, a decrease of
        $99.6 million from Q1 2008 net income of $81.0 million. 2008 net
        income included a $97 million gain from the sale of our automotive
        assets.
    -   Normalized net loss(1) was ($17.5) million or ($0.21) per share,
        representing a $1.6 million increase in loss from Q1 2008
        ($15.9 million) driven by lower margins and engineering development
        revenues, partially offset by reductions in operating expenses.
    -   Cash reserves of $66.7 million and debt-free balance sheet.

    First Quarter 2009 Financial Results
Ballard's revenues for the three months ended March 31, 2009 decreased to $8.1 million, or 50%, compared to $16.0 million for the first quarter of 2008 due primarily to the continuing slowdown in the automotive sector negatively impacting the supporting business segments. Contract Automotive and Material Products revenues were down $5.6 million due to lower shipments of light-duty automotive modules and carbon friction material products combined with the elimination of light-duty automotive fuel cell program work subsequent to the closing of the AFCC Transaction on January 31, 2008 (the "AFCC Transaction"). In addition, Fuel Cell Products engineering development revenues were down $2.3 million due primarily to the completion of the 1kW residential cogeneration fuel cell development program in the third quarter of 2008. In the core Fuel Cell Products segment, product and service revenues of $3.9 million were essentially flat versus the prior year quarter of $4.0 million.

Ballard's net loss for the three months ended March 31, 2009 increased to $18.6 million, or ($0.22) per share, compared with net income of $81.0 million, or $0.87 per share, in the first quarter of 2008. The first quarter net income in 2008 included a gain on sale of assets of $96.9 million related to the AFCC Transaction. The first quarter net loss in 2009 included severance and related costs of $1.1 million relating to a 7% workforce reduction initiated in March 2009.

Ballard's normalized net loss(1) for the first quarter of 2009 increased $1.6 million to $17.5 million, or ($0.21) per share, compared with a normalized net loss of $15.9 million, or ($0.17) per share, for 2008. Product and service revenue and related gross margin declines of $4.0 million and $1.7 million, respectively, combined with lower engineering development revenues of $3.9 million, were only partially offset by reductions in operating expenses of $4.5 million. In addition, declines in investment and other income of $1.1 million negatively impacted normalized net loss in 2009 as compared to 2008.

Operating cash consumption(1) for the three months ended March 31, 2009 increased 20% to $11.0 million, compared to $9.2 million for the first quarter of 2008. The higher operating cash consumption in the first quarter of 2009 was driven by increased capital expenditures, a decline in investment income, lower product and service gross margins and lower engineering development revenues. These increases were partially offset by lower working capital requirements and lower operating expenses.

    Total Product Shipments:
    -------------------------------------------------------------------------
                                                 Three months ended March 31,
                                                  2009         2008 % Change
    -------------------------------------------------------------------------
    Total Product Shipments                        192          284     (32%)
    -------------------------------------------------------------------------

    Key Markets:
      Material Handling                              7           57     (88%)
      Backup Power                                  76           99     (23%)
      Residential Cogeneration                     102           49     108%
    -------------------------------------------------------------------------
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    Revenue breakdown:
    -------------------------------------------------------------------------
    (Expressed in
     thousands of
     U.S. dollars)               Three months ended March 31,

                             2009                           2008
    -------------------------------------------------------------------------
                Product  Engineering           Product  Engineering
                    and     Develop-               and     Develop-
                Service         ment    Total  Service         ment    Total
    -------------------------------------------------------------------------
      Fuel Cell
       Products $ 3,912      $     -  $ 3,912  $ 4,006      $ 2,314  $ 6,320
      Contract
       Automo-
       tive       1,877            -    1,877    5,190        1,618    6,808
      Material
       Products   2,295            -    2,295    2,915            -    2,915
    -------------------------------------------------------------------------
                $ 8,084      $     -  $ 8,084  $12,111      $ 3,932  $16,043
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

For a more detailed discussion of Ballard Power Systems' first quarter 2009 results, please see the company's financial statements and management's discussion & analysis, which are available at www.ballard.com, www.sedar.com and www.sec.gov/edgar.shtml.

    -------------------------------------------------------------------------
    Endnotes:
    ---------
    (1) Normalized net loss and operating cash consumption are non-GAAP
        measures used to assist in assessing Ballard's financial performance.
        Non-GAAP measures do not have any standardized meaning prescribed by
        GAAP and are therefore unlikely to be comparable to similar measures
        presented by other companies. Normalized net loss measures Ballard's
        net loss after excluding items that are unusual in nature or do not
        reflect the normal continued operating activity of the business.
        Gains on sale of assets held for sale, losses from discontinued
        operations, write-downs of long-lived assets and severance and
        related costs are not considered part of Ballard's core activities,
        and are either unusual or are expected to occur infrequently.
        Therefore Ballard removes these in the calculation of normalized net
        loss. Operating cash consumption measures the amount of cash required
        to fund the operating activities of Ballard's business and excludes
        financing and investing activities except for net additions to
        property, plant and equipment.
 

Source: Fuel Cell Today