Ballard reports 25% revenue growth in 3rd quarter

Ballard Power Systems announced its consolidated financial results for the third quarter ended September 30, 2011. All amounts are in U.S. dollars unless otherwise noted and have been prepared in accordance with International Financial Reporting Standards.

John Sheridan, President and CEO said, "Ballard third quarter results reflect continuing strong improvements on the top-line and bottom-line, including 25% growth in revenue, a 7-point gain in gross margin and 25% improvement in Adjusted EBITDA3. While third quarter revenue is lower than Plan, due to delay in a Brazil fuel cell bus order, all fuel cell product markets are strengthening and providing strong underpinnings for growth in the fourth quarter and 2012."

Third Quarter 2011 Highlights

Growth

Revenue of $20.6 million in Q3 and $55.0 million year-to-date, representing growth of 25% on both a quarterly and year-to-date basis.
Product shipment volume of 1,005 units in Q3 for a total of 2,323 units year-to-date, increases of 47% and 23%, respectively.
Twelve-month rolling order book of $31.9 million.
Key recent commercial developments:
Significant bus activities -
In Brazil, key business opportunities are progressing, although with longer-than-expected timelines: modules for 3 EMTU program buses are now expected to be shipped in Q4; and, a 10-to-30 bus RFQ in Sao Paulo, for which Ballard is in negotiations.
In Europe, negotiations are in progress with a major bus OEM for an order of up to 14 modules.
In North America, an RFQ is expected in early-2012 from LA Metro for up to 30 clean energy buses.
Dantherm Power activities -
Sale of a 150 kilowatt backup power system for delivery in Q4 2011 to Anglo American Platinum Limited in South Africa.
Sale of backup power systems for delivery in Q4 2011 to a telecom service provider in India, as part of the previously announced collaboration agreement with Delta Power Solutions (India).
Increased business scope with Daimler AG and Automotive Fuel Cell Cooperation (AFCC), with the provision of fuel cell engineering services, partially offsetting the reduction in business due to conclusion of automotive fuel cell stack contract manufacturing for Daimler.

Path to Profitability

Gross margin of 19% in Q3 and 18% year-to-date, an increase of 7 points on both quarterly and year-to-date bases.
Cash operating costs2 of $9.3 million in Q3, a 5% improvement compared with Q3 2010, and $30.7 million year-to-date.
Adjusted EBITDA3 of ($5.0) million in Q3 and ($18.5) million year-to-date, improvements of 25% and 18%, respectively, notwithstanding a negative foreign exchange impact of approximately $2.0 million year-to-date and $1.3 million in restructuring charges.
Net loss of ($7.8) million in Q3 and ($26.7) million year-to-date, increases of 38% and 17%, respectively, due to one-time transactional gains recorded in 2010 of $4.8 million related to monetization of the Share Purchase Agreement with Ford, and $3.3 million related to the 2010 sale and leaseback transaction.
Adjusting for these one-time transactional gains, normalized net income (loss)4 improved by 25% in Q3 and 14% year-to-date.
Cash used by operating activities of ($9.5) million in Q3 and ($37.1) million year-to-date, increases of 99% and 19% respectively. The Q3 increase was driven by increased working capital requirements of $8.3 million, which more than offset improvements in cash operating losses of $3.6 million. The increased working capital requirements were primarily related to an increase in accounts receivable associated with higher revenue and timing of collections as well as a build-up of inventory to support shipments in Q4, and into 2012.
Cash reserves of $45.2 million, or $37.9 million net of $7.3 million outstanding on the bank operating line.

2011 Business Outlook

Revenue
While the Company has not updated original guidance for revenue growth in excess of 30%, and while it continues to expect significant revenue growth in 2011, it should be noted that risk factors have heightened, primarily in relation to the uncertainty of timing of Brazil bus orders and shipments.