Ballard Reports Q2 2018 Results

    --  Revenue of $26.4M, 36% Gross Margin and ($0.8)M Adjusted EBITDA
    --  Order Backlog expansion to $283.3M at June 30, 2018

VANCOUVER, Aug. 1, 2018 /PRNewswire/ - Ballard Power Systems (NASDAQ: BLDP; TSX: BLDP) today announced consolidated financial results for the second quarter ended June 30, 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, "Financial results and new contract bookings for Q2 and year-to-date are consistent with the type of first half to the year we had expected. We delivered Q2 revenue of $26.4 million, gross margin of 36% and Adjusted EBITDA of ($0.8) million. We are excited to have ended the quarter with a record Order Backlog of $283.3 million."

Mr. MacEwen also noted, "The global megatrend of electrification of propulsion systems is accelerating. This megatrend is driving growing interest in fuel cell electric vehicles, or FCEVs, for transportation applications where long range, rapid refueling, heavy payload and route flexibility are customer requirements. Interest and customer engagement continues to build in heavy-duty motive applications, including bus, truck, rail and marine, along with automotive, material handling and unmanned vehicle applications. During Q2, we were particularly excited with the long-term extension, through to August 2022, of our HyMotion program with AUDI AG, in support of its automotive fuel cell strategy and deployment plans."

Mr. MacEwen concluded, "As we look out to 2019 and beyond, and to our pathway to profitability, we expect strong growth in FCEV demonstration programs and commercial scaling in certain heavy and medium duty applications in China, Europe and the United States. With continued investment in technology, products, customer engagement and our brand, we see Ballard having a leading position in these large and growing addressable markets."

Q2 2018 Financial Highlights

(all comparisons are to Q2 2017 unless otherwise noted)

    --  Revenue was $26.4 million, flat on a year-over-year basis, reflecting
        growth in Power Products, offset by a decline in Technology Solutions
        due primarily to the strong contribution in Q2 2017 from one-time
        technology transfer and related agreements with the company's joint
        venture in China.
    --  The Power Products platform generated revenue of $17.8 million, an
        increase of 18%:
        --  Heavy Duty Motive revenue was $13.3 million, an increase of 9%
            related primarily to increased product shipments to China, Europe
            and North America;
        --  The Portable Power business generated $2.4 million, an increase of
            170% due to Power Manager product orders from military customers;
        --  Material Handling revenue was $1.7 million, a decline of 13%
            primarily due to the continued in-housing of stack supply by a key
            customer, combined with lower average selling price resulting from a
            shift in product mix; and
        --  Telecom Backup Power revenue was $0.4 million, an increase of $0.3
            million resulting primarily from sales in Europe for a variety of
            backup power installations.
    --  The Technology Solutions platform generated revenue of $8.6 million, a
        decrease of 24% due primarily to the strong contribution in Q2 2017 from
        one-time technology transfer and related agreements with the company's
        joint venture in China, partially offset by increases in amounts earned
        from other programs.

    --  Gross margin was 36%, a 1-point improvement reflecting revenue mix.
    --  Cash operating costs(2) were $10.5 million, an increase of 24% primarily
        attributable to higher research and product development expenses.
    --  Adjusted EBITDA(2) was ($0.8) million in Q2, a decline of 180% or $1.8
        million, primarily driven by higher operating costs.
    --  Net loss was ($4.3) million, a decline of $3.1 million.
    --  Net loss per share was ($0.02) compared to ($0.01) in Q2 2017.
    --  Adjusted net loss(2) was ($4.3) million, a decline of $3.9 million.
    --  Adjusted net loss per share(2) was ($0.02) compared to ($0.00) in Q2
        2017.
    --  Cash used by operating activities was ($16.9) million, a decline of
        $18.7 million reflecting cash operating loss of ($1.6) million and use
        in working capital of ($15.3) million, largely associated with an
        increase in accounts receivable and increased inventory to support
        expected deliveries in the second half of this year.
    --  Cash reserves were $35.2 million at June 30, a decrease of 48% from the
        end of Q2 2017 and a decrease of 33% from the end of the prior quarter,
        primarily due to an increase in working capital in the quarter.
    --  During Q2 Ballard received $87.7 million in new orders and also
        delivered orders valued at $26.4 million, thereby significantly
        increasing Order Backlog from $222.0 million in the prior quarter, to
        $283.3 million at end-Q2. The 12-month Order Book also increased from
        $89.0 million in the prior quarter, to $96.0 million at end-Q2.

Q2 2018 Highlights

Bus

    --  Received a purchase order from Van Hool NV for 40 FCveloCity(®)-HD
        modules to power buses planned for deployment in Germany under the Joint
        Initiative for hydrogen Vehicles across Europe (JIVE) funding program.
    --  Subsequent to the quarter, announced that El Dorado National's 40-foot
        Axess fuel cell bus, powered by Ballard's FCveloCity(®)-HD module,
        successfully completed testing at The Altoona Bus Research and Testing
        Center in Pennsylvania under a program established by the Federal
        Transit Administration (FTA), making them ready for large-scale
        deployments under FTA funding.

Marine

    --  Signed a Memorandum of Understanding with ABB to undertake collaboration
        activities toward the development of megawatt (MW) scale proton exchange
        membrane fuel cell power systems for the marine market, with an initial
        focus on the cruise ship segment.
    --  Ballard Power Systems Europe became a member of a consortium that has
        received funding to design and build HySeas III, the world's first
        sea-going renewables-powered car and passenger ferry. Operation of the
        ferry is planned in the Orkney Archipelago, located off the northeastern
        coast of Scotland.
    --  Two FCveloCity(®)-MD modules were successfully integrated and tested in
        a hybrid marine application by a consortium including Yanmar Co. Ltd. as
        part of a program to develop safety guidelines for hydrogen fuel
        cell-powered boats operating in Japan's restricted coastal waters. The
        modules were previously provided to Yanmar by Toyota Tsusho Corporation
        under a Distribution Agreement with Ballard.

Automotive

    --  Signed a 3½-year extension to the long-term Technology Solutions
        contract with AUDI AG, part of the Volkswagen Group, extending the
        HyMotion program from March 2019 to August 2022. The aggregate value of
        the contract extension, which supports AUDI AG through its small series
        production launch, is expected to be C$80-130 million (US$62-100
        million).

Material Handling

    --  Signed a multi-year Master Supply Agreement with Hyster-Yale Group
        encompassing the supply of minimum annual volumes of FCgen(®)-1020
        air-cooled fuel cell stacks for use in powering Class-3 forklift trucks,
        as well as support on the design of a fuel cell electric propulsion
        system to power these lift trucks.

Unmanned Vehicles

    --  Ballard's subsidiary, Protonex, received purchase orders from the U.S.
        Navy for a total of 13 fuel cell propulsion systems for unmanned aerial
        vehicle (UAV) or drone platforms, with deliveries expected to occur in
        2018.
    --  Announced a Protonex collaboration program with Cellula Robotics to
        demonstrate a fuel cell for long range autonomous underwater vehicles,
        funded by an award on behalf of Canada's Department of National Defence.

Power Manager

    --  Protonex received a $1.0 million order for the supply of SPM-622 Power
        Manager Kits to support U.S. Army brigades deploying overseas.

Other

    --  Subsequent to Q2, acquired certain strategic assets of Automotive Fuel
        Cell Cooperation Corporation (AFCC), a private company owned by Daimler
        AG and Ford Motor Company, enabling Ballard to efficiently and rapidly
        accelerate production growth objectives.
    --  Toyota Tsusho Corporation sold 5 FCgen(®)-H2PM backup power systems
        under its Distribution Agreement with Ballard, to be used as part of
        Japan's renewable emergency power system installed under the "Soma
        Revitalization Smart Community Construction Project".
    --  All items were approved by shareholders at the June 6(th) Annual General
        Meeting. Mr. James Roche was subsequently appointed by the company's
        board of directors to the role of Chairman, succeeding Mr. Ian Bourne.
        Consistent with board term limits, Mr. Bourne did not stand for
        re-election as a director.

Q2 2018 Financial Summary



    (Millions of U.S. dollars)                                                           Three months ended June 30,         Six months ended June 30,

                                                                                 2018       2017    % Change        2018         2017    % Change
                                                                                 ====       ====    ========        ====         ====    ========

    GROWTH

    Fuel Cell Products & Services
     Revenue:(1)

                                        Heavy Duty Motive                                 $13.3        $12.2          9%       $22.6        $19.4         17%

                                        Portable Power                                     $2.4         $0.9        170%        $4.8         $2.1        129%

                                        Material Handling                                  $1.7         $2.0        -13%        $2.1         $4.2        -49%

                                        Backup Power                                       $0.4         $0.1        248%        $0.7         $0.7         10%

                                        Sub-Total                                         $17.8        $15.2         18%       $30.2         26.3         15%

                                        Technology Solutions                               $8.6        $11.3        -24%       $16.3        $22.9        -29%
                                        --------------------                               ----        -----         ---        -----        -----         ---

    Total Fuel Cell Products & Services
     Revenue                                                                            $26.4        $26.5          0%       $46.5        $49.2         -5%
    -----------------------------------                                                 -----        -----         ---        -----        -----         ---

    PROFITABILITY
    -------------

    Gross Margin                                                                        $$9.4         $9.3          2%       $16.0        $18.8        -15%
    ------------                                                                        -----         ----         ---        -----        -----         ---

    Gross Margin %                                                              36%       35%     1-point        34%         38%   -4-points
    -------------                                                                 ---        ---      -------        ---          ---    ---------

    Operating Expenses                                                                  $12.5        $10.2         23%       $25.2        $22.2         14%
    ------------------                                                                  -----        -----         ---        -----        -----         ---

    Cash Operating Costs(2)                                                             $10.5         $8.5         24%       $21.2        $18.4         15%
    ----------------------                                                              -----         ----         ---        -----        -----         ---

    Adjusted EBITDA(2)                                                                 ($0.8)        $1.0       -180%      ($4.6)        $0.4     -1,403%
    -----------------                                                                   -----         ----        ----        -----         ----      ------

    Net Income (Loss)                                                                  ($4.3)      ($1.2)      -260%      ($9.8)      ($4.1)      -138%
    ----------------                                                                    -----        -----        ----        -----        -----        ----

    Earnings Per Share                                                                ($0.02)     ($0.01)      -252%     ($0.06)     ($0.02)      -154%
    ------------------                                                                 ------       ------        ----       ------       ------        ----

    Adjusted Net Income (Loss)(2)                                                      ($4.3)      ($0.4)    -1,068%      ($9.8)      ($3.3)      -197%
    ----------------------------                                                        -----        -----      ------        -----        -----        ----

    Adjusted Net Loss Per Share(2)                                                    ($0.02)     ($0.00)    -1,050%     ($0.06)     ($0.02)      -218%
    -----------------------------                                                      ------       ------      ------       ------       ------        ----

    CASH

    Cash Provided (Used) by Operating
     Activities:

                                        Cash Operating Income (Loss)                     ($1.6)        $1.4       -216%      ($4.4)        $0.2     -2,086%

                                        Working Capital Changes                         ($15.3)        $0.4     -4,072%     ($19.7)      ($1.5)    -1,199%
                                        -----------------------                          ------         ----      ------       ------        -----      ------

                                        Cash Provided (Used) By Operating Activities    ($16.9)        $1.8     -1,040%     ($24.1)      ($1.3)    -1,764%
                                        --------------------------------------------     ------         ----      ------       ------        -----      ------

                                        Cash Reserves                                     $35.2        $68.1        -48%
                                        -------------                                     -----        -----         ---

For a more detailed discussion of Ballard Power Systems' second quarter 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, August 2, 2018 at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) to review second quarter 2018 operating results. The live call can be accessed by dialing +1.604.638.5340. Alternatively, a live audio and slide webcast can be accessed through a link on Ballard's homepage (www.ballard.com). Following the call, the audio webcast and presentation materials will be archived in the Earnings, Interviews & Presentations 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 and business challenges in their fuel cell programs. 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 and product sales. 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,
     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.


    (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, unrealized gains or losses
     on foreign exchange contracts,
     acquisition costs 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,
     unrealized gains or losses on
     foreign exchange contracts, finance
     and other income, 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.