BLDP Ballard Power Systems Inc

VANCOUVER, Oct. 26 /PRNewswire-FirstCall/ -- Ballard Power Systems (TSX: BLD; NASDAQ: BLDP) announced revenue of $9.0 million, a decrease of $3.3 million from the same period last year, and net loss of $12.0 million, an improvement of $3.5 million, for the third quarter ended September 30, 2009. Normalized net loss(1) of $7.2 million reflects an improvement of $6.1 million relative to the third quarter of 2008. All amounts are in U.S. dollars, unless otherwise noted. "While Ballard's third quarter revenue is disappointing, the improvements in both operating loss and operating cash consumption(1) reflect the significant changes that have been implemented in the business," said John Sheridan, Ballard's President and CEO. "With our recent restructuring and the development program of the low cost FCgen(TM)-1300 being substantially complete, we see continued improvement in Ballard's cost base and a positive step towards profitability for the company." Given the continued softness in general economic conditions, Ballard has narrowed its full-year guidance to: - Revenue: expected to come in at the low end of the previously stated range at $50.0 million, compared with $59.8 million in 2008. This reflects essentially flat performance year on year in Fuel Cell Products and significant decline in supporting business segments. - Operating cash consumption(1): expected to come in at the high end of the previously stated range at $27.0 million, compared to $29.3 million in 2008. Third Quarter Highlights - Organizational restructuring was completed, resulting in the elimination of approximately 20% of Ballard's workforce. This action, in tandem with other cost optimization initiatives, has resulted in a significant resetting of the company's cost base of approximately 30%. - Status update to the supply agreement between IdaTech, LLC, ACME Group and Ballard was issued by IdaTech, indicating that the product acceptance test (PAT) for the natural gas system, scheduled for October 16, 2009, would likely be missed. The agreement provides for an extension of the PAT deadline for up to six months if IdaTech files an acceptable remediation plan by November 16, 2009, with committed volumes to be reduced commensurate with the length of the delay. - FCgen(TM)-1300 development program is substantially complete. This low-cost, reformate-tolerant stack is a cornerstone for Ballard's future product platforms. - The first bus in BC Transit's 2010 Olympic fleet of 20 hydrogen fuel cell buses was introduced. BC Transit's fleet will become the largest single deployment of zero-emission fuel cell buses worldwide and it is powered by Ballard's heavy-duty fuel cell module, the FCvelocity(TM)-HD6. Third Quarter 2009 Financial Highlights - Revenue was $9.0 million (Q3 2008: $12.3 million), for a total of $30.2 million year-to-date. - Fuel Cell Products revenue declined 49% over the prior year quarter and are flat on a year-to-date basis. - Supporting business segment revenue (Contract Automotive and Material Products) declined 6% over the prior year quarter. - Operating cash consumption(1) was $4.4 million, representing an improvement of $2.1 million from the third quarter of 2008 ($6.5 million). - This represents a $12.6 million improvement compared with Q2 2009 ($17.0 million). - Ballard expects a positive cash flow in the fourth quarter of 2009. - Net Loss was $12.0 million or ($0.14) per share, a decrease of $3.5 million from Q3 2008 net loss of $15.5 million or ($0.19) per share. - Normalized net loss(1) was $7.2 million or ($0.09) per share, representing a $6.1 million decrease in loss from Q3 2008 ($13.2 million or ($0.16) per share), primarily as a result driven by reductions in operating expenses. - Operating expenses were $8.7 million, excluding restructuring and related costs and depreciation and amortization, representing a decrease of $5.2 million from 2008. - Cash reserves of $42.0 million and debt-free balance sheet. Third Quarter 2009 Financial Results Quarter Ended September 30, 2009 Our revenues for the three months ended September 30, 2009 decreased to $9.0 million, or 26%, compared to $12.3 million for the third quarter of 2008 as increases in our supporting Material Products business segment of $1.2 million were more than offset by declines in our core Fuel Cell Products business segment of $2.8 million and declines in our supporting Contract Automotive business segment of $1.7 million. In our core Fuel Cell Products business segment, revenues decreased 49% to $2.9 million as increases in back-up power market revenues as a result of work completed on the FirstEnergy Corp. ("First Energy") distributed power generator project combined with increased unit shipments in back-up power were more than offset by lower shipments in the material handing market and by lower residential cogeneration market revenues. As a reminder, management effected a decision to discontinue operations in EBARA BALLARD in May 2009. In our supporting Contract Automotive and Material Products business segments, revenues decreased 6% to $6.2 million. Improvements in our Material Products segment of $1.2 million related to increased volumes of carbon friction material products in the U.S. automotive sector during the quarter were more than offset by declines in our Contract Automotive segment of $1.7 million related to lower automotive testing and engineering services provided to AFCC. Our net loss for the three months ended September 30, 2009 decreased to $12.0 million, or ($0.14) per share, compared with a net loss of $15.5 million, or ($0.19) per share, in the third quarter of 2008. The third quarter of 2009 net loss includes restructuring and related expenses of $4.8 million relating to a 20% workforce reduction initiated in August 2009. Our normalized net loss(1) for the third quarter of 2009 decreased $6.1 million, or 46%, to $7.2 million, or ($0.09) per share, compared with a normalized net loss of $13.2 million, or ($0.16) per share, for the corresponding period of 2008. Reductions in operating expenses (excluding restructuring and related expenses) of $5.2 million primarily as a result of our workforce reduction and cost optimization initiatives combined with improvements in investment and other income of $0.9 million more than offset the loss of revenue and related gross margin in the quarter. Operating cash consumption1 for the third quarter of 2009 decreased $2.1 million to $4.4 million, compared to $6.5 million for the corresponding period in 2008. The lower operating cash consumption was driven by reduced working capital requirements primarily as a result of customer collections on our B.C. Transit 2010 Olympic fuel cell bus program and by lower operating expenses (net of restructuring and related payments) primarily as a result of our workforce reduction and cost optimization initiatives. Nine Months Ended September 30, 2009 Our revenues for the nine months ended September 30, 2009 decreased to $30.2 million, or 26%, compared to $40.7 million for the first three quarters of 2008, as increases in our core Fuel Cell Products business segment of $0.4 million were more than offset by declines in our supporting Contract Automotive and Material Products business segments of $10.9 million. Fuel Cell Products revenues increased 2% to $16.5 million due primarily to a $5.3 million, or 48%, increase in product and service revenues as a result of fuel cell bus shipments for the B.C. Transit 2010 Olympic and the Transport of London fuel cell bus programs combined with increases in back-up power market revenues as a result of work completed on the First Energy distributed power generator project and increased unit shipments as a result of the successful completion of the hydrogen unit product acceptance milestone with ACME. These increases were partially offset by lower shipments in the material handing market and by lower residential cogeneration market revenues. As a reminder, the decline in residential cogeneration relates to our decision to discontinue operations in EBARA BALLARD in May 2009. Contract Automotive and Material Products revenues decreased 44% to $13.8 million due to lower shipments of light-duty automotive fuel cell modules to AFCC, lower shipments of carbon friction material products, and lower testing and engineering services provided to AFCC combined with the absence of engineering development revenues due to the elimination of light-duty automotive fuel cell program work subsequent to the closing of the AFCC Transaction on January 31, 2008 (the "AFCC Transaction"). Our net loss for the nine months ended September 30, 2009 increased to $29.6 million, or ($0.35) per share, compared with net income of $52.1 million, or $0.61 per share, in the corresponding period of 2008. The net loss for the first three quarters of 2009 includes restructuring and related expenses of $6.2 million relating to a 20% workforce reduction initiated in August 2009 and a 7% workforce reduction initiated in March 2009, and a non-cash gain of $10.8 million related to our decision to discontinue operations in EBARA Ballard Corporation ("EBARA BALLARD") on May 24, 2009. EBARA BALLARD was a joint venture with EBARA Corporation ("Ebara") that was focused on the development, manufacture, sale, and servicing of stationary power systems for the residential cogeneration market in Japan. The net income for the first three quarters of 2008 includes a gain on sale of assets of $96.8 million related to the AFCC Transaction. Our normalized net loss(1) the first nine months of 2009 decreased $5.7 million, or 15%, to $31.3 million, or ($0.37) per share, compared with a normalized net loss of $37.0 million, or ($0.43) per share, for the first nine months of 2008. Reductions in operating expenses (excluding restructuring and related expenses) of $10.8 million primarily as a result of our workforce reduction and cost optimization initiatives more than offset the decline in revenue and the related gross margin. Operating cash consumption(1) for the first three quarters of 2009 increased $11.2 million to $32.0 million, compared to $20.8 million for the corresponding period in 2008. The higher operating cash consumption was driven by higher working capital requirements due primarily to increased inventory investment and the draw down of deferred revenue, combined with increased capital expenditures. Product Shipments: ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, 2009 2008 % Change 2009 2008 % Change ------------------------------------------------------------------------- Material Handling 61 168 -64% 80 254 -69% Backup Power 197 127 +55% 613 364 +68% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Revenue breakdown: ------------------------------------------------------------------------- (Expressed in Three months ended Nine months ended millions of September 30, September 30, U.S. dollars) 2009 2008 % Change 2009 2008 % Change ------------------------------------------------------------------------- Fuel Cell Products $ 2.9 $ 5.7 -49% $ 16.4 $ 16.1 +2% Contract Automotive 1.9 3.6 -46% 4.7 15.4 -70% Material Products 4.2 3.0 +40% 9.1 9.2 -1% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total Revenue $ 9.0 $ 12.3 -26% $ 30.2 $ 40.7 -26% ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- Endnotes: --------- (1) Normalized net loss and operating cash consumption are non-GAAP measures used to assist in assessing Ballard's financial performance. Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. Normalized net loss measures Ballard's net loss after excluding items that are unusual in nature or do not reflect the normal continued operating activity of the business. Gains on sale of assets held for sale, losses from discontinued operations, write-downs of long-lived assets, restructuring and related expenses, and equity income (loss) in associated companies are not considered part of our core activities, and are expected to occur infrequently. Therefore Ballard removes these in the calculation of normalized net loss. Operating cash consumption measures the amount of cash required to fund the operating activities of our business (net of restructuring and related costs) and excludes financing and investing activities except for net additions to property, plant and equipment. For a more detailed discussion of Ballard Power Systems' third quarter 2009 results, please see the company's financial statements and management's discussion & analysis, which are available at http://www.ballard.com/, http://www.sedar.com/ and http://www.sec.gov/edgar.shtml. Third Quarter 2009 Conference Call Ballard will hold a conference call on Tuesday, October 27, 2009 at 8:00 a.m. PST (11:00 a.m. EST). John Sheridan, President and CEO, and Bruce Cousins, Chief Financial Officer, will present Ballard's 2009 third quarter financial results. The live call can be accessed by calling +1-604-638-5340. The live audio webcast can be accessed through a link on Ballard's homepage (http://www.ballard.com/). Following the call, the audio webcast with slides will be archived in the Investor Events & Conference Calls section of Ballard's website. About Ballard Power Systems Ballard Power Systems (TSX: BLD; NASDAQ: BLDP) is recognized as a world leader in the design, development, manufacture and sale of clean energy fuel cell products. Ballard's mission is to accelerate fuel cell product adoption. To learn more about what Ballard is doing with Power to Change the World(R), visit http://www.ballard.com/. This release contains forward-looking statements, including estimated revenue and operating cash consumption contained in Ballard's outlook, which are provided to enable external stakeholders to understand Ballard's expectations as at the date of this release and may not be appropriate for other purposes. These forward-looking statements are based on the beliefs and assumptions of Ballard's management and reflect Ballard's current expectations as contemplated under section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such assumptions relate to Ballard's financial forecasts and expectations regarding its product development efforts, manufacturing capacity, and market demand, and include matters such as generating new sales, producing, delivering and selling the expected number of units, and controlling its costs. These statements involve risks and uncertainties that may cause Ballard's actual results to be materially different, including, without limitation, the condition of the global economy, the rate of mass adoption of its products, product development delays, changing environmental regulations, its ability to attract and retain business partners and customers, its access to funding, increased competition, its ability to protect its intellectual property, changes in its customers' requirements, foreign exchange impacts on its net monetary assets and its ability to provide the capital required for product development, operations and marketing. For a detailed discussion of these risk factors and other risk factors that could affect Ballard's future performance, please refer to Ballard's most recent Annual Information Form. Readers should not place undue reliance on Ballard's forward-looking statements and Ballard assumes no obligation to update or release any revisions to these forward looking statements, other than as required under applicable legislation. Ballard, the Ballard logo and Power to Change the World are registered trademarks of Ballard Power Systems Inc. DATASOURCE: Ballard Power Systems Inc. CONTACT: or to arrange an interview with a Ballard spokesperson, please contact Lori Rozali at telephone number (604) 453-3683, or on e-mail .

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