Mr. Randy MacEwen reports
BALLARD REPORTS Q4 AND FULL YEAR 2020 RESULTS
Ballard Power Systems Inc. has released its consolidated financial results for the fourth quarter and full year ended Dec. 31, 2020. All amounts are in U.S. dollars unless otherwise noted and have been prepared in accordance with international financial reporting standards (IFRS).
Randy MacEwen, president and chief executive officer, said: "Our Q4 and full-year 2020 results were consistent with management's internal projections based on expected impacts from COVID-19. In Q4 and throughout 2020, COVID-19 created uncertainty and adversely impacted operations for certain customers along with order intake, although we saw higher-than-expected activity levels in our sales pipeline. Revenue was $28.6-million in Q4 and full-year revenue was $103.9-million. Gross margin for the full year was 20 per cent, adjusted EBITDA was negative $38.9-million and year-end cash reserves were $763.4-million."
Mr. MacEwen added: "Continued progress in the execution of our growth strategy in 2020 was reflected in a number of notable achievements: the Weichai-Ballard joint venture operation in China was commissioned; we announced a key strategic partnership with MAHLE to develop advanced fuel cell engines for the European commercial truck market; we made continued progress with bus OEM customers; we launched a new high-power density stack; we completed our Marine Center of Excellence in Denmark and launched our new FCwave 200-kilowatt engine for marine applications; we invested to expand our Vancouver MEA production capacity by six times; we announced our plan to reduce fuel cell stack costs by 70 per cent by 2024; we detailed our estimate of the multibillion-dollar market opportunity for Ballard by 2030; Ballard products powered vehicles for cumulative on-road mileage in excess of 70 million kilometres; and we further fortified our balance sheet."
Mr. MacEwen concluded: "Notwithstanding a challenging year due to COVID-19, the hydrogen and fuel cell industry enjoyed unprecedented progress with strong policy support, sizable corporate investments and broadened investor interest. With about 50 countries announcing CO2 pricing initiatives, 75 countries with net zero targets and over 30 countries with hydrogen strategies, we believe Ballard is well positioned to realize significant growth in the coming decade. As a result, we are increasing and accelerating our investment to drive high growth, high market adoption and high market share for the benefit of long-term shareholder value. In 2021, we will increase our investment in competencies, technology innovation, product development and customer experience related to our key markets of bus, truck, rail and marine. We will continue to invest in our strategic partnerships with Weichai in China and MAHLE in Europe. We will also consider investments in further production capacity expansion and localization in key geographies, as well as strategic acquisitions and partnerships."
Q4 2020 financial highlights (all comparisons are with Q4 2019 unless otherwise noted):
- Total revenue was $28.6-million, a 32-per-cent year-over-year decrease:
Power products revenue was $15.0-million, a decrease of 41 per cent, primarily reflecting lower shipments of heavy-duty motive fuel cell products to customers in China, together with a shift in product mix.
- Technology solutions revenue was $13.6-million, a 17-per-cent decrease due primarily to decreased revenue from the program with Audi.
Gross margin was 20 per cent, down one point to $5.6-million, due primarily to lower total revenue, as well as a shift to lower overall product margin and service revenue mix.
- Cash operating costs were $16.4-million, an increase of 25 per cent, due to higher research and product development costs, and higher general and administrative costs.
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) declined 105 per cent to negative $14.5-million, due primarily to the decrease in gross margin, increase in cash operating costs, and higher equity in loss of investment in joint venture and associates.
- Net loss from continuing operations was $14.4-million or five cents per share, declines of 47 per cent and 28 per cent, respectively, driven primarily by the increase in adjusted EBITDA loss.
- Cash used in operating activities was $6.7-million, a decline of 262 per cent, reflecting cash operating loss of $6.7-million and nominal net working capital changes.
Full-year 2020 financial highlights (all comparisons are with full-year 2019 unless otherwise noted):
- Total revenue was $103.9-million, a 2-per-cent year-over-year decrease:
Power products revenue was $58.6-million, an increase of 19 per cent, due primarily to higher shipments of heavy-duty motive fuel cell products to customers, particularly in China, as well as higher shipments of backup power products to customers in Europe.
- Technology solutions revenue was $45.3-million, a decrease of 20 per cent, due primarily to decreased amounts earned from the program with Audi, the Siemens development program and the Weichai-Ballard JV (joint venture) technology transfer program.
Gross margin was 20 per cent, down one point to $21.0-million, primarily due to the decrease in total revenue and a shift to lower overall product margin and service revenue mix.
- Cash operating costs were $50.0-million, an increase of 29 per cent due primarily to higher research and product development costs, higher general and administrative costs, and higher sales and marketing costs.
- Adjusted EBITDA declined to negative $38.9-million, due primarily to lower gross margin and higher cash operating costs.
- Net loss from continuing operations increased to $49.5-million or 20 cents per share, declines of 40 per cent and 31 per cent, respectively. The increase in net loss was driven primarily by the increase in adjusted EBITDA loss and higher stock-based compensation expense.
- Cash used by operating activities was $42.9-million, a decline of 202 per cent, reflecting cash operating loss of $25.8-million and net working capital changes of negative $17.1-million.
- Cash reserves were $763.4-million at Dec. 31, 2020, $615.6-million higher than at the end of 2019. Additional net proceeds of approximately $528-million were raised in Q1 2021 under an equity transaction.
The order backlog at the end of 2020 was $117.8-million, down from $128.1-million at end of Q3, reflecting $28.6-million in shipments and $18.3-million in new orders in Q4. The 12-month order book was $83.5-million at the end of 2020, up from $79.6-million at the end of Q3.
Ballard intends to maintain focus throughout 2021 on heavy-duty and medium-duty motive applications, including bus, commercial truck, train and marine markets, to increase penetration in the key markets of China, Europe and California. The company also sees opportunities in additional geographic markets and therefore anticipates projects that will begin expanding reach beyond these initial key markets.
In 2021, Ballard will invest in additional technology and product innovation and development across bus, truck, rail and marine markets, including next-generation MEAs, plates, stacks and modules. The company expects this to include collaboration with MAHLE on the design of fuel cell engines for commercial trucks in Europe. Ballard will also continue to invest in customer experience in these markets.
Ballard will continue to work to expand MEA production capacity six times at its Vancouver headquarter facility. The company will also review options for further localization of production capacity in China and Europe.
Furthermore, corporate development work will be an important priority this year, including potential acquisitions to help scale the business and simplify the customer experience.
During 2021, the company has a commitment to make contributions totalling approximately $11.4-million toward its pro rata ownership share of the Weichai-Ballard joint venture in China. This is in addition to $57.7-million contributed cumulatively through 2020, as part of Ballard's total capital commitment of approximately $79.5-million.
In Europe, Ballard expects to deliver a significant number of modules to support deployments of fuel cell electric buses (FCEBs) in various countries. The company anticipates increased market activity for FCEBs during the year, which can be expected to result in additional module purchase orders for delivery in future years. In addition, the shipment of backup power systems is expected to be flat as compared with 2020. Ballard also plans to continue execution of its automotive program with Audi.
Within North America, Ballard expects continued market activity for FCEBs and fuel-cell-powered trucks, which can be expected to result in additional module purchase orders in 2021 for delivery in future years. In addition, the company expects the volume of fuel cell stack shipments for material handling applications to be flat as compared with 2020.
Consistent with the company's practice in this early stage of hydrogen fuel cell market development and adoption, and in view of the continuing uncertainties resulting from COVID-19, Ballard is not providing specific financial performance guidance for the coming year.
For a more detailed discussion of Ballard's Q4 and full-year 2020 results, please see the company's financial statements and management's discussion and analysis, which are available on the company's website, on SEDAR and on EDGAR.
Ballard will hold a conference call on Thursday, March 11, 2021, at 8 a.m. PT (11 a.m. ET), to review Q4 and full-year 2020 operating results and outlook for 2021. The live call can be accessed by dialling 1-604-638-5340. Alternatively, a live audio and PowerPoint slide webcast can be accessed through a link on Ballard's home page. Following the call, the audio webcast will be archived in the earnings, interviews and presentations area of the investors section of Ballard's website.
About Ballard Power Systems Inc.
Ballard's vision is to deliver fuel cell power for a sustainable planet. Ballard's zero-emission PEM fuel cells are enabling electrification of mobility, including buses, commercial trucks, trains, marine vessels, passenger cars and forklift trucks.
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