Mr. Randy MacEwen reports

BALLARD REPORTS Q1 2023 RESULTS

Ballard Power Systems Inc. has released consolidated financial results for the first quarter ended March 31, 2023. All amounts are in U.S. dollars unless otherwise noted and have been prepared in accordance with international financial reporting standards (IFRS).

"Our first quarter revenue of $13.3-million and new order intake of $17.6-million are consistent with our full-year 2023 plan," said Randy MacEwen, president and chief executive officer. "With an increasingly positive policy landscape, we see growing customer interest in our core mobility markets of bus, truck, rail and marine in Europe and North America. We believe our $137.7-million order backlog reflects continued customer platform wins, including a record power products order backlog that has doubled from one year ago and now exceeds $100-million. This positions us for a busy second half of 2023, where we expect second-half revenue to be approximately 70 per cent of our annual total, and an exciting setup for 2024.

"With our Q1 expenses also on plan, we are tracking to our full-year guidance ranges for operating and capital expenses. We continue to prioritize investments in our technology and product development programs, product cost-reduction initiatives, customer platform wins, customer experience, and advanced manufacturing," Mr. MacEwen added.

Mr. MacEwen continued: "As previously communicated, we continue to see gross margin pressures into 2024 given our revenue mix, pricing strategy, investments in production capacity and timing lag before our production volumes ramp and our product cost-reduction initiatives move into production. We ended the quarter with $863.8-million in cash reserves.

"We are looking forward to our upcoming capital markets day on June 13, where we will provide key updates on long-term business plan, including sales growth in our verticals, gross margin progression, our technology and product road map, product cost reduction, capital expenditures and [environmental, social, governance] initiatives. We will also unveil our [total cost of ownership] driven comparative value proposition model for fuel cell trucks," Mr. MacEwen concluded.

Q1 2023 financial highlights (all comparisons are with Q1 2022 unless otherwise noted):

• Total revenue was $13.3-million in the quarter, down 37 per cent year-over-year:
  • Heavy-duty mobility revenue of $8.7-million decreased 11 per cent, driven primarily by lower revenues from technology services contracts in China relating to the truck vertical, partially offset by higher rail and marine revenue;
  • Stationary revenue of $2.5-million decreased 58 per cent due primarily to a decrease in sales of stationary power generation fuel cell modules, stacks, products and services in Australia;
  • Emerging and other markets revenue of $2.1-million decreased 61 per cent due primarily to the completion of the Audi technology services program and lower shipments in the materials handling segment;
  • Power products revenue represented more than 70 per cent of total revenue in the quarter;
• Gross margin was (42) per cent in the quarter, a decrease of 41 points, driven by a combination of a greater weight of power products in the revenue mix, pricing strategy, increased investment in manufacturing capacity, increases in supply and labour costs, and inventory adjustments;
• Total operating expenses and cash operating costs (3) were $37.5-million and $32.0-million, respectively, an increase of 24 per cent and 23 per cent, respectively, from Q1 2022. Increases were driven primarily by higher expenditures on research, technology and product development activities, and sales and marketing activities;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was ($38.3)-million, compared with ($27.5)-million in Q1 2022, primarily as a result of the decrease in gross margin and increase in cash operating costs;
• Ballard received approximately $17.6-million of new orders in Q1 and delivered orders valued at $13.3-million, resulting in an order backlog of approximately $137.7-million at end of Q1. Order backlog growth was driven predominantly by increased orders from Europe and North America in the bus and stationary power markets. These regions combined represent approximately 76 per cent of the total order backlog, compared with approximately 39 per cent at end of Q1 2022. Specifically, the power products order backlog accounts for nearly 75 per cent of the total order backlog, an increase of 100 per cent since Q1 2022, and is at the highest level in Ballard's history;
• The 12-month order book was $73.9-million at end of Q1, an increase of $16.6-million from the end of Q4 2022, an approximately 29-per-cent quarter-over-quarter increase.

2023 outlook

Consistent with the company's past practice, and in view of the early stage of hydrogen fuel cell market development and adoption, Ballard is not providing revenue or net income (loss) guidance for 2023. In 2023, the company continues its plan to invest in the business ahead of the hydrogen growth curve, with total operating expense (3) and capital expenditure (4) guidance ranges as shown in the attached table.

For a more detailed discussion of Ballard Power Systems' first quarter 2023 results, please see the company's financial statements, and management's discussion and analysis, which are available on the company's website, SEDAR and EDGAR.

Conference call

Ballard will hold a conference call on Wednesday, May 10, 2023, at 8 a.m. PT (11 a.m. ET) to review first quarter 2023 operating results. The live call can be accessed by dialling 1-604-638-5340. Alternatively, a live audio and webcast can be accessed through a link on Ballard's home page. Following the call, the audio webcast and presentation materials will be archived in the earnings, interviews and presentations area of the investors section of Ballard's website.

Short-form base shelf prospectus

Ballard also announces the filing of a final short form base shelf prospectus dated May 9, 2023, in each of the provinces and territories of Canada together with a corresponding shelf registration statement on Form F-10 with the United States Securities and Exchange Commission (the SEC) qualifying for issuance of common shares, preferred shares, warrants to purchase common shares, debt securities and units comprising one or more of any of the foregoing from time to time over the 25-month period that the prospectus remains effective. If any securities are offered under the prospectus and/or registration statement, the terms of any such securities and the intended use of the net proceeds resulting from any such offering will be established at the time(s) of any such offerings, and will be described in a prospectus supplement filed with applicable Canadian securities regulators and/or the SEC, respectively. The prospectus replaces Ballard's previous short-form base shelf prospectus dated March 29, 2021, which expired on April 29, 2023. Copies of the prospectus and the registration statement are available on SEDAR and EDGAR, respectively.

About Ballard Power Systems Inc.

Ballard Power Systems' vision is to deliver fuel cell power for a sustainable planet. Ballard zero-emission PEM fuel cells are enabling electrification of mobility, including buses, commercial trucks, trains, marine vessels and stationary power.

Endnotes

(1) Ballard reports its results in the single operating segment of fuel cell products and services. Its fuel cell products and services segment consists of the sale of PEM (polymer electrolyte membrane) fuel cell products and services for a variety of applications, including heavy-duty mobility (consisting of bus, truck, rail and marine applications), stationary power, and emerging and other markets (consisting of material handling, off road and other applications). Revenues from the delivery of services, including technology solutions, after sales services and training, are included in each of the respective markets.

(2) Note that cash operating costs, EBITDA and adjusted EBITDA are non-GAAP (generally accepted accounting principles) measures. Non-GAAP measures do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable with similar measures presented by other companies. Ballard believes that cash operating costs, EBITDA and adjusted EBITDA 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.

Cash operating costs measures total operating expenses excluding stock-based compensation expense, depreciation and amortization, impairment losses or recoveries on trade receivables, restructuring charges, acquisition-related costs, the impact of unrealized gains or losses on foreign exchange contracts, and financing charges. EBITDA measures net loss 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, acquisition-related costs, finance and other income, recovery on settlement of contingent consideration, asset impairment charges, and the impact of unrealized gains or losses on foreign exchange contracts.

(3) Total operating expenses refer to the measure reported in accordance with IFRS.

(4) Capital expenditure is defined as additions to property, plant and equipment, and investment in other intangible assets as disclosed in the consolidated statements of cash flows.

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