Ballard Power Systems have announced consolidated financial results for the fourth quarter (Q4) and full year ended 31st December (2018).

Results highlighted a Q4 revenue of $28.5m and full year revenue of $96.6m.

“2018 was an important year for Ballard and the hydrogen and fuel cell industry. There is mounting evidence that the shift to zero-emission transportation is accelerating and that fuel cell electric vehicles (FCEVs) will play an integral role,” said Randy MacEwan, President and CEO of Ballard.

“In 2018, we made significant progress as we continued to position Ballard to be a key player in this market disruption. We achieved key cost and performance milestones in the development of our next-generation fuel cell stack and module. We entered into a landmark strategic collaboration with Weichai Power, setting the stage for a strong growth platform in the large China market.”

“We deepened our important technology relationship with Audi, singing a multi-year extension to our Technology Solutions programme into 2022. We continued to refine our business portfolio, divesting non-core and underperforming assets. In 2018, we generated revenue of $96.6m, ahead of our revised outlook of $90-$95m, along with gross margin of 31% adjusted EBITDA of $13.5m and ended the year with cash reverses of $192.2m.”

“We believe there are large and attractive addressable markets and use cases for heavy and medium duty motive applications, such as certain bus, truck, rail and marine applications, where FCEVs offer a strong value proposition. FCEVs uniquely satisfy the requirement for zero-emission, long daily range, fast refuelling, heavy payload and route flexibility. We are seeing early adoption in application where the value proposition is strongest and where the barriers to hydrogen refuelling infrastructure are lowest, such as centralised depot,” said MacEwan.

Q4 2018 highlights

Total revenue was $28.5m in the quarter, a 29% decline.

Power Products revenue was $15.6m, down 48% year-over-year reflecting a decline in heavy duty motive shipments to China compared to Q4 2017.

Technology Solutions revenue was $12.9m, a 27% increase due to higher amounts earned from the HyMotion programme with Audi.

Gross margin was 25%, down 6-points to $7.2m, due to low sales of MEAs (Membrane Electrode Assemblies) in China and a limited volume of high margin Portable Power/UAV sales given the divesture of the Power Managing business.

Cash operating costs were $11.2m, essentially flat year-over-year.

Adjusted EBITA declined 349% to $5.2m, due to the decrease in revenue and gross margin.

Cash provided by operating activated was $0.2m, an improvement of 126%, reflecting cash operating loss of $4.4m, offset by net working capital inflows of $4.6m, driven primarily by higher deferred revenue of $8.5m related primarily to the $9m programme pre-payment received from the joint venture with Weichai Power Co. Ltd. (Weichai Power) and lower inventory of $3.7m 

Full year 2018 highlights

Total revenue for 2018 was $96.6m, a 20% decline from 2017.

Power Products revenue was $57m, down 27% reflecting a decline in heavy duty motive product shipments to customers, principally in China.

Technology solutions revenue was $39.6m, down 9% due to a reduction in technology transfer revenue from China compared to 2017, partially offset by increased revenue from the HyMotion programme and Audi and other programmes.

Gross margin was 31%, down 3-points to $29.7m, primarily due to a shift in revenue mix away from higher margin heavy duty motive and technology solutions.

Cash operating costs were $43m, an increase of 10% due primarily to higher programme development engineering expenses.

Adjusted EBITA declined to $13.5m, due to lower revenue and gross margin.

Net loss increased to $27.3m or $0.15 per share, down 351% and 326%, respectively. The increase in net loss was driven by the increase in Adjusted EBITDA loss.

Adjusted net loss was $23.4m or $0.13 per share, down 351% and 326%, respectively.

Cash used in operating activities was $31.7m, a change of 224% reflecting cash operating loss of $14.4m and net working capital outflows of $17.3m. This was due to a higher inventory balance of $12.9m, largely expected heavy duty motive shipments in 2019, and a higher account receivable balance of $11.7, resulting from timing of revenues and related customer collections, partially offset by higher deferred revenue of $8.6m.

Cash reserves were $192.2m at 31st December (2018), $131.9m higher than at the end of 2017, following close of strategic equity investments by Weichai Power and Broad Ocean.

2019 Outlook

Given the early stage of hydrogen fuel cell market development and adoption, and consistent with the company’s past approach, Ballard is not providing specific financial performance guidance for 2019.

The company anticipates total revenue on a year-over-year basis in 2019 to be relatively flat to 2018, as work progresses on establishment of the new joint venture operation in China Weichai Power and on addressing commercial opportunities stemming from growing momentum in other key target markets.

“As we look ahead to 2019, we are planning for a relatively flat top line along with increased investments to drive long-term adoption, scaled commercialisation and market share. Over that longer-term we anticipate significant growth in China, Europe and California, setting the stage for attractive return on investment for Ballard and our shareholders,” said MacEwen.