Mr. Randy MacEwen reports

BALLARD REPORTS Q4 2023 RESULTS

Ballard Power Systems Inc. has released consolidated financial results for the fourth quarter ended Dec. 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 transition to a commercial products company is gaining momentum, with growing market acceptance of our fuel cell engines across our verticals," said Randy MacEwen, president and chief executive officer. "We shipped a record number of fuel cell engines in the quarter, allowing us to close out the year with Q4 revenue of $46.8-million, up 132 per cent year-over-year. We also booked $64.7-million of new orders in Q4, resulting in a product-based order backlog now 15 per cent higher than the same period last year.

"Supported by revenue scaling in the quarter, we were able to improve gross margins by eight percentage points compared to the prior-year period," said Mr. MacEwen. "Notably, excluding non-cash inventory provisions, underlying gross margin almost achieved break-even, demonstrating continued success in our product cost reduction initiatives and the impact of operating leverage.

"Excluding discontinued operations, revenue in 2023 was $102.4-million, up 25 per cent compared to the prior year, while total megawatts (MW) and number of modules shipped increased by 17 per cent and 37 per cent, respectively, to 74 MW and 540 modules. We increased the proportion of 2023 revenue and year-ending order backlog from power products, standing at 72 per cent and 84 per cent, respectively," stated Mr. MacEwen. "We increased our diversification across our verticals, geographic regions and customer base. We supported numerous customers in maturing their fuel cell platforms, while also securing new customer platform wins across our verticals. We launched our next-generation bipolar plate project to enable further product cost reduction and production scaling and also proved the maturity of our technology with outstanding field reliability.

"We continue to prioritize focused and disciplined cash management and balance sheet strength. Cash operating costs in Q4 were roughly flat compared to the prior year, while total operating costs and capital expenditures for the full year were in line with our 2023 guidance ranges. Total cash used in 2023 was down almost $48-million compared to 2022. We ended the year with cash and cash equivalents of $751-million," Mr. MacEwen added.

"Looking forward, we believe the transition of hydrogen policy announcements to implementation will provide midterm momentum for the availability of low-cost, low-carbon hydrogen, enabling accelerated adoption of fuel cells. In the context of an increasingly constructive policy environment, a growing sales pipeline and order backlog, along with our continued investments in product cost reduction and advanced manufacturing, we are well positioned for strong long-term market share. We are excited with our set-up for 2024, as we expect continued growth in our order backlog, major order announcements from customers in our bus and stationary power verticals, and the announcement of our next manufacturing facility, each of which will serve as important milestones on our journey to scaled adoption of hydrogen fuel cells."

Q4 2023 financial highlights (all comparisons are with Q4 2022 unless otherwise noted):

• Total revenue was $46.8-million in the quarter, up 132 per cent year-over-year:
  • Heavy-duty mobility revenue of $29-million increased 219 per cent, driven by higher revenues from bus, truck, rail and marine verticals;
  • Stationary revenue of $12.8-million increased 105 per cent primarily due to higher shipments to customers in Europe;
  • Emerging and other markets revenue of $4.9-million was flat compared with the prior year, as increased revenues from off-highway customers were offset by a decrease in technology solutions revenue;
  • Gross margin was (22 per cent) in the quarter, an increase of eight points, driven by higher revenues and product cost reduction initiatives. Excluding non-cash inventory provisions, gross margin in the quarter was (1 per cent);
  • Total operating expenses and cash operating costs were $35-million and $29-million, respectively, an increase of 16 per cent and (0 per cent), respectively, from Q4 2022. The increase in total operating expenses was driven primarily by higher expenditures on research and product development;
  • Total cash used by operating activities was $18.3-million, compared with $21.2-million in the prior year, while total cash used by investing activities was $10.8-million, compared with $20.1-million in Q4 2022. Cash and cash equivalents were $751.1-million at the end of 2023, compared with $913.7-million in the prior year;
  • Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was ($44.1-million), compared with ($40.1-million) in Q4 2022, primarily as a result of a higher gross margin loss driven by inventory impairment charges;
  • Ballard recorded non-cash impairments to the value of its long-term financial investments in the amount of $10.3-million in the quarter, primarily due to a reduction in valuations across the clean energy and zero-emission vehicle universe;
  • Order backlog at the end of 2023 was $130.5-million, down 3 per cent compared with the end of Q3. While the company achieved strong new order intake of $64.7-million in Q4, this was more than offset by a reduction of $47.1-million due to record engine shipments during the quarter and the removal of $21.7-million from its order backlog of previously booked orders from a specific customer experiencing financing and program delays. Orders from power products represent more than 80 per cent of the order backlog, while orders from customers in Europe and North America represent almost 80 per cent of the order backlog;
  • The 12-month order book was $66.6-million at end Q4, a decrease of $6.1-million or approximately 8 per cent from the end of Q3 2023. While Ballard achieved strong new order intake of $60.4-million added to the order book in Q4, this was more than offset by record engine shipments during the quarter and the removal of $19.4-million from the company's order book of previously booked orders from a specific customer experiencing financing and program delays.

2024 outlook

Consistent with Ballard's past practice, and in view of the early stage of hydrogen fuel cell market development, specific revenue or net income (loss) guidance for 2024 is not provided. The company expects revenue in 2024 will be back-half weighted, with roughly 30 per cent in the first half and 70 per cent in the second half, similar to 2023. Total operating expense and capital expenditure guidance ranges for 2024 are as noted herein.

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

Conference call

Ballard will hold a conference call on Monday, March 11, 2024, at 8 a.m. Pacific Time (11 a.m. Eastern Time) to review fourth 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 homepage. 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.

About Ballard Power Systems Inc.

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

We seek Safe Harbor.