Ballard Power Systems, who deliver fuel cell power for a sustainable planet, today announced consolidated financial results for the fourth quarter and full year ended December 31, 2019.
Randy MacEwen, President and CEO said,
“We closed out 2019 with high activity levels, record quarterly revenue of $41.9 million in Q4, and full year revenue of $106.3 million, exceeding our full year outlook. Gross margin for the full year was 21%, Adjusted EBITDA was ($28.2) million and year-end cash reserves were $147.8 million. In 2019 Ballard also delivered continued progress in the execution of our strategy: we launched our next-generation LCS fuel cell stack and FCmoveTM power module, offering lower cost and enhanced performance; we received purchase orders for fuel cell products from the Weichai-Ballard joint venture in China, with construction of the joint venture facility moving toward commissioning by mid-year 2020; we announced our membership in the H2Bus Consortium in Europe as well as the creation of a Marine Center of Excellence at our Denmark facility.”
Mr. MacEwen added, “I believe there is now a consolidated industry view that the most attractive near-term markets for fuel cell electric vehicles, or FCEVs, are in Medium- and Heavy-Duty Motive use cases that feature heavy payload, long daily range and a need for fast refuelling. Two important studies released in January 2020 underscore the expectation that FCEVs will be the most competitive zero-emission option from a total-cost-of-ownership perspective for numerous medium and heavy vehicle use cases, as well as the most environmentally attractive: a Hydrogen Council report, prepared in conjunction with McKinsey, entitled “Path to Hydrogen Competitiveness: A cost perspective”; and a white paper prepared jointly by Deloitte China and Ballard entitled “Fueling the Future of Mobility: Hydrogen and fuel cell solutions for transportation”.”
Mr. MacEwen stated, “Looking ahead to 2020, we anticipate total revenue of approximately $130 million as we address Medium- and Heavy-Duty Motive demand in key global markets. Ballard will continue to invest in world-leading technology and product development, including product cost reduction, while also completing our planned expansion in MEA production capacity at Ballard’s Vancouver facility. We will also invest in our Weichai-Ballard joint venture in China, as this facility transitions from construction to operation. In 2020, we will deepen our exposure to the European market as signals further strengthen to decarbonize mobility with hydrogen fuel cell solutions. We anticipate significant longer-term growth in China, Europe and California, setting the stage for attractive returns for Ballard and our shareholders.”
Ballard intends to maintain focus throughout 2020 on Heavy- and Medium-Duty Motive applications – including bus, commercial truck, train and marine segments – to increase penetration in the key markets of China, Europe and California.
At the present time the Company’s 2020 outlook does not reflect any material impact of the coronavirus disease (COVID-19). It is currently too early to accurately project any impact, since the duration and scope of the outbreak is not yet known with any certainty. If the outbreak continues for an extended period of time, Ballard and the Weichai-Ballard JV may experience supply chain disruptions, a decline in sales activities, and reductions in operations and workforce.
The Company anticipates total revenue of approximately $130 million in 2020.
In China, the Company continues to expect the Weichai-Ballard JV facility to be commissioned and operating by mid-year 2020. Ballard anticipates delivery of membrane electrode assemblies to the Weichai-Ballard JV for the production of next-generation LCS fuel cell stacks and FCmoveTM fuel cell modules. During 2020 the Company has a commitment to make contributions totaling approximately $20 million towards its pro rata ownership share of the Weichai-Ballard JV. This is in addition to $20.9 million contributed in 2019 and $14.6 million contributed in 2018, as part of Ballard’s total capital commitment of approximately $78 million. The Company also expects to report equity losses of approximately $10-15 million in connection with the Weichai-Ballard JV in 2020.
In Europe, during 2020 Ballard plans to continue execution of its automotive program with Audi, and to deliver a significant number of modules to support deployments of Fuel Cell Electric Buses (FCEBs) in a number of countries. The Company also expects increased market activity for FCEBs, which can be expected to result in additional module purchase orders.
Within North America in 2020, Ballard expects continued market activity in California for FCEBs and fuel cell-powered trucks, which can be expected to result in additional module purchase orders. In addition, the Company expects a volume contraction of fuel cell stack sales for material handling applications.
Ballard intends to establish an At-The-Market equity program (“ATM Program”) and to issue up to $75 million of common shares from treasury to the public from time to time at the Company’s discretion, subject to favorable market conditions. The ATM Program will be conducted under the Company’s existing $150 million Base Shelf Prospectus and will be used to fund growth and strategic opportunities.