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Ballard Power Systems Inc
Symbol BLDP
Shares Issued 258,788,291
Close 2020-11-05 C$ 21.76
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Ballard has $11.2M (U.S.) continuing ops loss in Q3

2020-11-05 21:09 ET - News Release

Mr. Randy MacEwen reports


Ballard Power Systems Inc. has released consolidated financial results for the third quarter ended Sept. 30, 2020. All amounts are in U.S. dollars unless otherwise noted and have been prepared in accordance with international financial reporting standards (IFRS).

"While Ballard's employees and operations have not been appreciably impacted by COVID-19 to this point, as previously communicated, delays in end market deployments and customer orders are nonetheless impacting our 2020 revenue and results," said Randy MacEwen, president and chief executive officer. "In Q3, Ballard delivered revenue of $25.6-million, gross margin of 19 per cent and ending cash reserves of $361.7-million."

Mr. MacEwen noted: "During our virtual investor and analyst day 2020 in September, we reviewed details of the $130-billion annual total addressable engine market for the key heavy- and medium-duty motive applications of bus, truck, rail and marine, as well as our corporate strategy to penetrate use cases requiring heavy payload, extended range and rapid refuelling. As a result, we see tremendous long-term revenue growth potential, initially in the target geographies of China, Europe and California."

Mr. MacEwen continued: "In China, the issuance of an updated policy framework during the quarter is consistent with our expectation for long-term government support of hydrogen and fuel cell electric vehicles, where we are well positioned with our Weichai-Ballard joint venture. In Europe, we have now signed our previously announced collaboration agreement with MAHLE, a leading international development partner and Tier 1 supplier to the commercial vehicle and automotive industry. This agreement provides for the development and commercialization of zero-emission fuel cell systems for primary propulsion power in commercial trucks, initially in Europe, and we have signed definitive agreements with Audi AG that provide Ballard with the ability to use the FCgen-HPS fuel cell stack technology in all markets, including trucks, where high-power density is a critical requirement. Finally, our future collaboration with Honeywell International, following its purchase of our [unmanned aerial vehicle] business, positions us for exciting business opportunities in a range of future urban air mobility and broader aerospace applications."

Mr. MacEwen concluded: "I would like to acknowledge the important contribution made over the past 10 years in the [chief financial officer] role by Tony Guglielmin, who has announced his intention to retire on March 31, 2021, following completion and certification of our 2020 audited financial results. Under Tony's leadership, Ballard has made tremendous progress in crystallizing and executing a market-leading growth strategy underpinned by prudent financial management that has protected and significantly enhanced shareholder value. Tony's commitment to, and unwavering support of, Ballard's corporate direction will be missed. We have retained a leading international executive search firm and expect to have a new CFO in place, and an orderly transition completed, by the end of [first quarter] 2021."

Q3 2020 financial highlights (all comparisons are with Q3 2019 unless otherwise noted):

  • Total revenue was $25.6-million in the quarter, a year-over-year increase of 4 per cent or $900,000, primarily the result of higher shipments of heavy-duty motive and backup power products.
  • The power products platform generated revenue of $15.3-million in the quarter, an increase of 94 per cent or $7.4-million:
    • Heavy-duty motive revenue was $12.9-million, an increase of 161 per cent or $7.9-million, due primarily to higher shipments of fuel cell products, including MEAs, to China.
    • Material-handling revenue was $1.4-million, a decrease of 49 per cent or $1.4-million, primarily the result of lower fuel cell stack shipments to Plug Power.
    • Backup power revenue was $1.0-million, an increase of 540 per cent or $800,000, due primarily to an increase in shipments of fuel cell stacks to customers in Europe.
  • The technology solutions platform generated revenue of $10.3-million in the quarter, a decrease of 39 per cent or $6.5-million, due primarily to decreased amounts earned on the Audi program, the Weichai-Ballard joint venture technology transfer program and the Siemens development program.
  • Gross margin was 19 per cent in Q3, a decrease of six points due primarily to a shift to a lower overall product margin and service revenue mix, including the decline in technology solutions revenue.
  • Cash operating costs (2) were $10.7-million in the quarter, a 21-per-cent increase primarily attributable to increased expenditure on technology and product development expenses related to work on next-generation stacks and modules for bus, truck, rail and marine applications, as well as higher general and administrative expenses. The company has increased and accelerated technology and product development activities related to fuel cell stacks and modules for the commercial truck market, as well as activities focused on product cost reduction.
  • Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (2) was ($7.7)-million, compared with ($6.8-million) in Q3 2019, primarily as a result of higher cash operating costs.
  • Net loss from continuing operations was ($11.2-million) in the quarter, an increase of 20 per cent.
  • Net loss per share (2) from continuing operations was (five cents), an increase of 14 per cent.
  • Cash used by operating activities was ($11.3-million), an increase of 18 per cent, reflecting cash operating loss of ($6.7-million) and use in working capital of ($4.6-million).
  • Cash reserves were $361.7-million at Sept. 30, 2020, an increase of 136 per cent from the end of Q3 2019 and an increase of 112 per cent from the end of the prior quarter. Approximately $211.6-million of cash was raised in the quarter from an at-the-market equity program. Ballard also made a further capital contribution of $6.6-million to the Weichai-Ballard joint venture in the quarter.
  • Order backlog and 12-month order book have been adjusted to reflect reduced scope of the program with Audi through to expected completion in 2022. As of end of Q3, order backlog decreased from the prior quarter to $128.1-million and 12-month order book decreased to $79.6-million.

Q3 2020 operating highlights:

  • Announced an agreement to collaborate with MAHLE, a leading international development partner and Tier 1 supplier to the commercial vehicle and automotive industry, for the development and commercialization of zero-emission fuel cell systems to provide primary propulsion power in various classes of commercial trucks, initially in Europe; signed a collaboration agreement subsequent to the quarter on Oct. 1;
  • Launched FCgen-HPS in Q3 and signed definitive agreements with Audi subsequent to the quarter, giving Ballard the right to use this high performance zero-emission PEM fuel cell stack in all applications; the stack was designed by Ballard and can provide propulsion for a range of light-, medium- and heavy-duty vehicles in an industry-leading volumetric high-power density of 4.3 kilowatts per litre, marking another power density milestone for Ballard over the company's decades of PEM fuel cell product innovation;
  • Noted that China's government announced a new official policy regarding fuel cell electric vehicles (FCEVs), setting a framework for scaled adoption toward the national goal of deploying one million FCEVs by 2030;
  • Launched FCwave, the industry's first fuel cell module designed for primary propulsion power in marine vessels; FCwave is a 200-kilowatt modular unit that can be scaled in series up to the multimegawatt power level;
  • Hosted a virtual investor and analyst day 2020, during which corporate executives provided a comprehensive review of Ballard's strategy and progress across a number of important commercial, technical and operational areas, including details of a six times expansion in MEA manufacturing capacity by 2021 and plans for 70-per-cent cost reduction in fuel cell stacks and modules by 2024;
  • Named by the Toronto Stock Exchange to the TSX30 for the second consecutive year for the company's 459-per-cent share price appreciation over the period from July 1, 2017, to June 30, 2020, the second-largest appreciation among all TSX-listed companies;
  • Entered into an at-the-market (ATM) equity distribution agreement and launched an ATM program, which added approximately net $211.6-million to cash reserves in the quarter, with an additional approximately net $32.7-million added subsequent to the quarter; together these transactions increased Ballard's cash reserves by approximately $244.3-million;
  • Subsequent to the quarter sold the unmanned aerial vehicle (UAV) business assets of Ballard's subsidiary located in Southborough, Mass., to Honeywell International.

                                             FINANCIAL SUMMARY
                                        (millions of U.S. dollars)

                                                             Three months ended         Nine months ended
                                                                   Sept. 30,                 Sept. 30, 
                                                              2020         2019         2020         2019
Fuel cell products and services (1, 2)
Heavy-duty motive                                            $12.9         $5.0        $35.8        $14.0
Material handling                                             $1.4         $2.8         $4.3         $8.8
Backup power                                                  $1.0         $0.2         $3.5         $1.0
Subtotal                                                     $15.3         $7.9        $43.6        $23.8
                                                         ---------    ---------    ---------    ---------
Technology solutions                                         $10.3        $16.8        $31.7        $40.2
                                                         ---------    ---------    ---------    ---------
Total fuel cell product and service revenue                  $25.6        $24.7        $75.3        $64.0
                                                         ---------    ---------    ---------    ---------
Profitability gross margin $                                  $4.8         $6.2        $15.3        $13.8
                                                         ---------    ---------    ---------    ---------
Gross margin %                                                  19%          25%          20%          22%
                                                         ---------    ---------    ---------    ---------
Operating expenses                                           $12.6        $12.4        $41.2        $32.2
                                                         ---------    ---------    ---------    ---------
Cash operating costs (3)                                     $10.7         $8.9        $33.6        $25.7
                                                         ---------    ---------    ---------    ---------
Equity gain (loss) in JV associates                          ($2.8)       ($3.2)       ($8.2)       ($8.1)
                                                         ---------    ---------    ---------    ---------
Adjusted EBITDA (3)                                          ($7.7)       ($6.8)      ($24.5)      ($19.6)
                                                         ---------    ---------    ---------    ---------
Net income (loss) from continuing operations                ($11.2)       ($9.3)      ($35.1)      ($25.5)
                                                         ---------    ---------    ---------    ---------
Earnings (loss) per share from continuing operations        ($0.05)      ($0.04)      ($0.14)      ($0.11)
                                                         ---------    ---------    ---------    ---------

For a more detailed discussion of Ballard Power Systems' third quarter 2020 results, please see the company's financial statements and management's discussion and analysis, which are available at the Ballard website, SEDAR and EDGAR.

Conference call

Ballard will hold a conference call on Nov. 6, 2020, at 8 a.m. Pacific Time (11 a.m. Eastern Time), to review third quarter 2020 operating results. The live call can be accessed by dialling 1-604-638-5340. Alternatively, a live audio and slide 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.

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, passenger cars and forklift trucks.


(1) The company 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 and service of PEM fuel cell products for power product markets of heavy-duty motive (consisting of bus, truck, rail and marine applications), material handling and backup power, as well as the delivery of technology solutions, including engineering services, technology transfer, and the licence and sale of the company's extensive intellectual property portfolio and fundamental knowledge for a variety of fuel cell applications.

(2) The UAV market has been classified as a discontinued operation in the third quarter of 2020 consolidated condensed financial statements. As such, the assets of the UAV market have been classified as assets held for sale as of Sept. 30, 2020. Furthermore, the historic operating results of the UAV market for both 2020 and 2019 have been removed from continuing operating results, and are instead presented separately in the statement of comprehensive income as income from discontinued operations.

(3) Note that cash operating costs, EBITDA, adjusted EBITDA and adjusted net income (loss) are non-generally accepted accounting principle 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, 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 and analysis.

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