Mr. John Sheridan reports

BALLARD REPORTS THIRD QUARTER 2011 RESULTS

Ballard Power Systems Inc. has released its consolidated financial results for the third quarter ended Sept. 30, 2011. All amounts are in United States dollars unless otherwise noted and have been prepared in accordance with international financial reporting standards (IFRS) (1).

John Sheridan, president and chief executive officer, said: "Ballard third quarter results reflect continuing strong improvements on the top line and bottom line, including 25-per-cent growth in revenue, a seven-point gain in gross margin and 25-per-cent improvement in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (3). While third quarter revenue is lower than plan, due to delay in a Brazil fuel cell bus order, all fuel cell product markets are strengthening and providing strong underpinnings for growth in the fourth quarter and 2012."

Third quarter 2011 highlights

Growth

• Revenue of $20.6-million in third quarter and $55.0-million year to date, representing growth of 25 per cent on both a quarterly and year-to-date basis;
• Product shipment volume of 1,005 units in third quarter for a total of 2,323 units year to date, increases of 47 per cent and 23 per cent, respectively;
• 12-month rolling order book of $31.9-million.

Key recent commercial developments:

Significant bus activities

In Brazil, key business opportunities are progressing, although with longer-than-expected timelines; modules for three EMTU program buses are now expected to be shipped in fourth quarter and a 10-to-30 bus RFQ in Sao Paulo for which Ballard is in negotiations.

In Europe, negotiations are in progress with a major bus OEM for an order of up to 14 modules.

In North America, an RFQ is expected in early 2012 from LA Metro for up to 30 clean energy buses.

Dantherm Power activities

• Sale of a 150-kilowatt backup power system for delivery in fourth quarter 2011 to Anglo American Platinum Ltd. in South Africa;
• Sale of backup power systems for delivery in fourth quarter 2011 to a telecom service provider in India, as part of the previously announced collaboration agreement with Delta Power Solutions (India);
• Increased business scope with Daimler AG and Automotive Fuel Cell Cooperation (AFCC), with the provision of fuel cell engineering services, partially offsetting the reduction in business due to conclusion of automotive fuel cell stack contract manufacturing for Daimler.

Path to profitability

• Gross margin of 19 per cent in third quarter and 18 per cent year to date, an increase of seven points on both quarterly and year-to-date bases;
• Cash operating costs (2) of $9.3-million in third quarter, a 5-per-cent improvement compared with third quarter 2010, and $30.7-million year to date;
• Adjusted EBITDA (3) loss of $5.0-million in third quarter and a loss of $18.5-million year to date, improvements of 25 per cent and 18 per cent, respectively, notwithstanding a negative foreign exchange impact of approximately $2.0-million year to date and $1.3-million in restructuring charges;
• Net loss of $7.8-million in third quarter and $26.7-million year to date, increases of 38 per cent and 17 per cent, respectively, due to one-time transactional gains recorded in 2010 of $4.8-million related to monetization of the share purchase agreement with Ford, and $3.3-million related to the 2010 sale and leaseback transaction.
• Adjusting for these one-time transactional gains, normalized net income (loss) (4) improvement of 25 per cent in third quarter and 14 per cent year to date;
• Cash used by operating activities of $9.5-million in third quarter and $37.1-million year to date, increases of 99 per cent and 19 per cent, respectively.

The third quarter increase was driven by increased working capital requirements of $8.3-million, which more than offset improvements in cash operating losses of $3.6-million. The increased working capital requirements were primarily related to an increase in accounts receivable associated with higher revenue and timing of collections as well as a buildup of inventory to support shipments in fourth quarter and into 2012.

Cash reserves were $45.2-million, or $37.9-million net of $7.3-million outstanding on the bank operating line.

2011 business outlook

Revenue

While the company has not updated original guidance for revenue growth in excess of 30 per cent, and while it continues to expect significant revenue growth in 2011, it should be noted that risk factors have heightened, primarily in relation to the uncertainty of timing of Brazil bus orders and shipments.

Adjusted EBITDA (3)

While the company has not updated original guidance for adjusted EBITDA improvement in excess of 40 per cent, and while it continues to expect significant adjusted EBITDA improvement in 2011, it should be noted that risk factors have heightened, primarily in relation to the revenue uncertainty identified above and the continuing foreign exchange uncertainty, along with the impact of the restructuring charges incurred.

                                         THIRD QUARTER 2011 RESULTS                                      
                                (In millions of dollars except where indicated)  
                                  
                                          Three months ended Sept. 30,          Nine months ended Sept. 30,
                                                    2011          2010             2011                2010
Growth
Revenue
Fuel cell products                                 $11.8          $8.0            $27.5               $19.4
Contract automotive                                 $3.3          $3.3            $11.3                $7.9
Material products                                   $5.5          $5.2            $16.2               $16.6
Total revenue                                      $20.6         $16.5            $55.0               $43.9
Fuel cell stack shipments (units)
Total fuel cell stack shipments                    1,005           683            2,323               1,895
Material handling                                    520           211              623                 755
Backup power                                         412           401            1,323               1,010
12-month rolling order book                        $31.9         $30.0
Profitability
Gross margin                                         19%           12%              18%                 11%
Cash operating costs (2)                            $9.3          $9.8            $30.7               $32.4
Adjusted EBITDA (3) (loss)                         ($5.0)        ($6.6)          ($18.5)             ($22.6)
Net income (loss)                                  ($7.8)        ($5.7)          ($26.7)             ($22.9)
Normalized net income (loss) (4)                   ($7.8)       ($10.5)          ($26.7)             ($31.0)
Cash
Cash (used by) operating activities
Cash operating (losses)                            ($5.4)        ($9.0)          ($21.7)             ($27.6)
Working capital (loss)                             ($4.1)         $4.2           ($15.4)              ($3.5)
Cash (used by) operating activities                ($9.5)        ($4.8)          ($37.1)             ($31.1)
Cash reserves                                      $45.2         $72.9

For a more detailed discussion of Ballard Power Systems' third quarter 2011 results, please see the company's financial statements and management's discussion and analysis, which are available at its website, SEDAR and the SEC's website.

Conference call

Ballard will hold a conference call on Thursday, Nov. 3, 2011, at 8 a.m. Pacific Standard Time (11 a.m. Eastern Standard Time) to review third quarter 2011 results. The live call can be accessed by dialling 1-604-638-5340. Alternatively, a live audio webcast can be accessed through a link on Ballard's website. Following the call, the audio webcast will be archived in the quarterly results area of the investor section of Ballard's website.

Notes

(1) Effective Jan. 1, 2011, Canadian publicly listed entities are required to prepare their financial statements in accordance with IFRS. Due to the requirement to present comparative financial information, the effective transition date is Jan. 1, 2010. Please refer to Ballard's management discussion and analysis for a summary of the full impacts as a result of the conversion from former Canadian GAAP to IFRS.

(2) Cash operating costs measure operating expenses excluding stock-based compensation expense, depreciation and amortization, restructuring charges, and acquisition costs.

(3) EBITDA measures net loss attributable to Ballard Power Systems excluding finance (or interest) expense, income taxes expense or recovery, depreciation of property, plant and equipment, amortization of intangible assets, and goodwill impairment charges. Adjusted EBITDA adjusts EBITDA for stock-based compensation, transactional gains and losses, finance and other income, and acquisition costs.

(4) Normalized net income (loss) measures net income (loss) excluding one-time transactional gains and losses.

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