Mr. Daryl Wilson reports

HYDROGENICS REPORTS SECOND QUARTER 2015 RESULTS

Hydrogenics Corp. has released its second quarter 2015 financial results. Results are reported in U.S. dollars and are prepared in accordance with international financial reporting standards.

Second quarter highlights

"We are very encouraged by three significant developments in the quarter," said Daryl Wilson, president and chief executive officer.

"First, on May 22, 2015 we signed the largest commercial order for fuel cells in the company's history with Alstom Transport, a global leader in rail infrastructure, to provide power modules for at least 200 engines in a contract worth, including service and maintenance, more than 50 million euros over a 10-year period. This contract drove our firm order backlog to its highest level ever. It's an exciting achievement which not only demonstrates the growing demand for hydrogen-based transportation but Hydrogenics's role in developing leading-edge technology in the space.

"Second, with regard to Kolon, our partner in South Korea, our initial megawatt of power modules was shipped on June 25, 2015, is now on-site being commissioned. We expect the facility to be fully operational by early September. This represents the first step for future multimegawatt power generation using fuel cell technology in South Korea and elsewhere.

"Finally, on May 4, 2015, we completed factory acceptance testing of our first next-generation, megawatt-class PEM energy storage system. It was subsequently delivered to E.ON in Hamburg, Germany, with installation and commissioning on this unit completed in early July. This is the world's largest single-stack electrolysis unit and represents the basis for commercialization of utility-scale, multimegawatt installations already quoted in our sales pipeline.

"So while our financial results this period were not as strong as we had expected due to shipment timing that pushed revenue into early July, we are strengthening our leadership in a world rapidly coming to realize the benefits of everything associated with hydrogen technology. Over all, the company is well positioned for higher growth as well as increased order flow heading into 2016."

Summary of results for the quarter ended June 30, 2015:

• Revenue decreased to $7.4-million, versus $10.7-million last year, reflecting shipment timing and the decline in the value of the euro compared with the U.S. dollar in the second quarter of 2015 compared with the second quarter of 2014. Excluding the foreign exchange impact of $1.0-million, the decrease in revenue was approximately 20 per cent.
• Gross profit was 14.1 per cent of revenue for the quarter, versus 30.2 per cent in the prior year period, reflecting a change in product mix as well as higher indirect overhead costs as a percent of revenue when compared with the prior year period. The weakening of the euro relative to the U.S. dollar of $300,000 also contributed to the decrease.
• Cash operating costs declined 5 per cent to $3.4-million for the three months ended June 30, 2015, compared with $3.6-million for the three months ended June 30, 2014, primarily reflecting lower SG&A (selling, general and administrative) expenses due to the impact of lower exchange rates on expenses denominated in euros and Canadian dollars of $500,000, partially offset by a slight increase in R&D (research and development) expenses.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was a loss of $2.3-million for the quarter compared with an adjusted EBITDA loss of $300,000 in the second quarter of 2014.
• Net loss was $3.7-million, or 37 cents per share, in the quarter compared with a net loss of $100,000, or one cent per share, in the second quarter of 2014.
• Hydrogenics secured $53.6-million of orders for renewable energy storage, industrial gas and power system applications during the quarter, resulting in a backlog of $102.3-million as of June 30, 2015.
• The company exited the second quarter with $9.9-million of cash and restricted cash, a $500,000 decrease from Dec. 31, 2014, primarily reflecting: $7.6-million of cash used in operating activities; $800,000 related to the purchase of property, plant and equipment; and the foreign exchange impact of $500,000 on the euro and Canadian-denominated cash balances, partially offset by $8.5-million of proceeds of net operating borrowings, including the new $7.5-million credit facility.

                                                                                                                                                                  
          CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                    (In thousands of U.S. dollars, except per share)

                                             Three months ended       Six months ended
                                                        June 30,               June 30,
                                                2015       2014        2015       2014

Revenues                                     $ 7,368   $ 10,723    $ 14,899   $ 18,782
Cost of sales                                  6,326      7,483      12,704     13,624
Gross profit                                   1,042      3,240       2,195      5,158
Operating expenses
Selling, general and administrative
expenses                                       2,579      1,979       5,158      6,546
Research and product development
expenses                                       1,039        915       2,061      1,831
                                               3,618      2,894       7,219      8,377
Gain (loss) from operations                   (2,576)       346      (5,024)    (3,219)
Finance income (expenses)
Interest (expense), net                         (369)      (132)       (496)      (264)
Foreign currency gains (losses), net              73       (298)       (763)      (209)
Gain (loss) from joint venture                    57          -          41          -
Other finance (losses), net                     (885)       (41)       (885)      (181)
Finance income (loss), net                    (1,124)      (471)     (2,103)      (654)
(Loss) before income taxes                    (3,700)      (125)     (7,127)    (3,873)
Income tax expense                                 -          -           -          -
Net (loss) for the period                     (3,700)      (125)     (7,127)    (3,873)
Items that may be reclassified
subsequently to net (loss)
Exchange differences on translating
foreign operations                               185        (62)       (877)       (67)
Comprehensive (loss) for the period           (3,515)      (187)     (8,004)    (3,940)
Net (loss) per share,
basic and diluted                              (0.37)     (0.01)      (0.71)     (0.41)

We seek Safe Harbor.