Hydrogenics Reports First Quarter 2019 Results
14 Mai 2019 - 12:00PM
Hydrogenics Corporation (NASDAQ: HYGS; TSX: HYG)
("Hydrogenics" or "the Company"), a leading developer and
manufacturer of hydrogen generation and hydrogen-based power
modules, today reported first quarter 2019 financial results.
Results are reported in US dollars and are prepared in accordance
with International Financial Reporting Standards (IFRS).
Recent Highlights
“I’m pleased to report that our fiscal first
quarter was an active one for the Company, and we ended the period
with a much stronger balance sheet and backlog – bolstered by our
relationship with Air Liquide,” said Daryl Wilson, President and
Chief Executive Officer. “Our partnership with this key industry
player globally continues to develop, positioning us for more
growth opportunities than ever before. At the same time, we
recently announced an award from Halcyon Power to supply a
carbon-free hydrogen production facility in New Zealand. This is
our first major win in the South Pacific, and the 1.5 megawatt
project should be up and running next year as Halcyon’s owners –
Tuaropaki Trust and Obayashi Corporation – look to implement a
hydrogen supply chain strategy for New Zealand and Japan.
“Due to our leading role in the world’s
burgeoning fuel-cell powered rail and bus sectors, we
anticipate increasing activity in the space during the second
half of 2019. Overall, given our solid balance sheet, strong
partnerships, and current demand trends, we remain optimistic about
the outlook for meaningful top line growth and improved financial
performance this year.”
Summary of Results for the Quarter Ended
March 31, 2019 (compared to the Quarter Ended March 31,
2018 unless otherwise noted)
- Company revenue was $8.1 million for the first quarter of
2019, comparable to the prior-year period.
- Hydrogenics secured
$26.5 million of orders for renewable energy storage,
industrial gas and power system applications during the quarter,
resulting in an order backlog of $150.0 million as of March
31, 2019. Order backlog movement during the first quarter (in $
millions) was as follows:
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December 31, 2018 backlog |
Orders Received |
FX |
Orders Delivered/ Revenue Recognized |
March 31, 2019 backlog |
|
OnSite Generation |
$ |
20.6 |
$ |
22.0 |
$ |
(0.1 |
) |
$ |
2.5 |
$ |
40.0 |
| Power
Systems |
|
112.1 |
|
4.5 |
|
(1.0 |
) |
|
5.6 |
|
110.0 |
|
Total |
$ |
132.7 |
$ |
26.5 |
$ |
(1.1 |
) |
$ |
8.1 |
$ |
150.0 |
- Of the current backlog of
$150.0 million, Hydrogenics expects to recognize approximately
$57.6 million as revenue in the following twelve months, not
including orders both received and delivered after March 31,
2019.
- Gross profit was $3.9 million
(47.9% of revenue) in 2019 compared to $3.2 million (39.7% of
revenue) in the first quarter of 2018. The increase in gross profit
and gross margin was attributable to higher profitability on
license and support services revenue in the Company’s Power Systems
business.
- Cash operating costs1 increased
$0.1 million, to $5.0 million, for the current quarter
compared to $4.9 million for the prior-year period, reflecting
an increase in SG&A expense of $0.4 million, partially offset
by a decline in R&D expense of $0.3 million.
- Adjusted EBITDA2 loss improved $0.6 million, to
$1.0 million, for the first quarter of 2019 compared to a loss
of $1.6 million in the first quarter of 2018. This improvement
reflects the higher gross margin noted above.
- The net loss for the quarter was
$2.6 million, or $(0.15) per share, versus $2.0 million,
or $(0.13) per share, in the first quarter of 2018.
Notes
- Cash operating costs are
defined as the sum of SG&A and R&D, less amortization and
depreciation, and stock-based compensation expense inclusive of
compensation costs indexed to the Company’s share price. This is a
non-IFRS measure and may not be comparable to similar measures used
by other companies. Management uses this measure as a rough
estimate of the amount of fixed costs to operate the Corporation
and believes this is a useful measure for investors for the same
purpose.
- Adjusted EBITDA is
defined as net loss excluding stock-based compensation (both cash
settled long term compensation indexed to share price and share
based compensation), other finance income and expenses,
depreciation and amortization. These items are considered by
management to be outside of Hydrogenics’ ongoing operational
results. Adjusted EBITDA is a non-IFRS measure and may not be
comparable to similar measures used by other companies.
Conference Call
DetailsHydrogenics will hold a conference call at 1:00
p.m. EDT on May 14, 2019 to review first quarter results. The
telephone number for the conference call is (877) 307-1373 or, for
international callers, (678) 224-7873. A live webcast of the
call will also be available on the company's website,
www.hydrogenics.com.
An archived copy of the conference call and
webcast will be available on the company's website,
www.hydrogenics.com, approximately six hours following the
call.
About HydrogenicsHydrogenics
Corporation is a world leader in engineering and building the
technologies required to enable the acceleration of a global power
shift. Headquartered in Mississauga, Ontario, Hydrogenics provides
hydrogen generation, energy storage and hydrogen power modules to
its customers and partners around the world. Hydrogenics has
manufacturing sites in Germany, Belgium and Canada and service
centers in Russia, Europe, the US and Canada.
Forward-looking StatementsThis
release contains forward-looking statements within the meaning of
the “safe harbor” provisions of the U.S. Private Securities
Litigation Reform Act of 1995, and under applicable Canadian
securities law. These statements are based on management’s current
expectations and actual results may differ from these
forward-looking statements due to numerous factors, including: our
inability to increase our revenues or raise additional funding to
continue operations, execute our business plan, or to grow our
business; inability to address a slow return to economic growth,
and its impact on our business, results of operations and
consolidated financial condition; our limited operating history;
inability to implement our business strategy; fluctuations in
our quarterly results; failure to maintain our customer base that
generates the majority of our revenues; currency fluctuations;
failure to maintain sufficient insurance coverage; changes in value
of our goodwill; failure of a significant market to develop
for our products; failure of hydrogen being readily available on a
cost-effective basis; changes in government policies and
regulations; failure of uniform codes and standards for hydrogen
fueled vehicles and related infrastructure to develop; liability
for environmental damages resulting from our research, development
or manufacturing operations; failure to compete with other
developers and manufacturers of products in our industry; failure
to compete with developers and manufacturers of traditional and
alternative technologies; failure to develop partnerships with
original equipment manufacturers, governments, systems integrators
and other third parties; inability to obtain sufficient materials
and components for our products from suppliers; failure to manage
expansion of our operations; failure to manage foreign sales and
operations; failure to recruit, train and retain key management
personnel; inability to integrate acquisitions; failure to develop
adequate manufacturing processes and capabilities; failure to
complete the development of commercially viable products; failure
to produce cost-competitive products; failure or delay in field
testing of our products; failure to produce products free of
defects or errors; inability to adapt to technological advances or
new codes and standards; failure to protect our intellectual
property; our involvement in intellectual property litigation;
exposure to product liability claims; failure to meet rules
regarding passive foreign investment companies; actions of our
significant and principal shareholders; dilution as a result of
significant issuances of our common shares and preferred shares;
inability of US investors to enforce US civil liability judgments
against us; volatility of our common share price; and dilution as a
result of the exercise of options. Readers should not place undue
reliance on Hydrogenics’ forward-looking statements. Investors are
encouraged to review the section captioned “Risk Factors” in
Hydrogenics’ regulatory filings with the Canadian securities
regulatory authorities and the US Securities and Exchange
Commission for a more complete discussion of factors that could
affect Hydrogenics’ future performance. Furthermore, the
forward-looking statements contained herein are made as of the date
of this release, and Hydrogenics undertakes no obligations to
revise or update any forward-looking statements in order to reflect
events or circumstances that may arise after the date of this
release, unless otherwise required by law. The forward-looking
statements contained in this release are expressly qualified by
this.
Hydrogenics Contacts:
Marc Beisheim, Chief Financial OfficerHydrogenics
Corporation(905) 361-3660investors@hydrogenics.com
Chris WittyHydrogenics Investor Relations(646)
438-9385cwitty@darrowir.com
Reconciliation of Cash Operating Costs to Operating
Costs and Adjusted EBITDA to Net Loss(in thousands of US
dollars)(unaudited)
Cash operating costs
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|
|
|
| |
Three months ended |
| |
March 31, |
|
|
2019 |
|
2018 |
|
| Selling, general and
administrative expenses |
$ |
4,107 |
|
$ |
2,836 |
|
|
Research and product development expenses |
|
1,809 |
|
|
2,081 |
|
| Total operating costs |
$ |
5,916 |
|
$ |
4,917 |
|
| Less: Amortization and
depreciation |
|
(233 |
) |
|
(103 |
) |
| Less: loss on disposal of
assets |
|
(2 |
) |
|
(3 |
) |
| Less: DSUs (expense)
recovery |
|
(462 |
) |
|
326 |
|
|
Less: Stock-based compensation expense |
|
(236 |
) |
|
(222 |
) |
|
Cash operating costs |
$ |
4,983 |
|
$ |
4,915 |
|
Adjusted EBITDA
| |
|
|
|
|
|
|
|
|
|
|
| |
Three months ended |
| |
March 31, |
|
|
2019 |
|
2018 |
|
|
Net loss |
$ |
(2,647 |
) |
$ |
(1,954 |
) |
| Loss (gain) from joint
ventures |
|
(5 |
) |
|
69 |
|
| Finance loss (income), net |
|
611 |
|
|
(94 |
) |
| Income tax expense |
|
– |
|
|
300 |
|
| Amortization and
depreciation |
|
380 |
|
|
177 |
|
| DSUs expense (recovery) |
|
462 |
|
|
(326 |
) |
|
Stock-based compensation |
|
236 |
|
|
222 |
|
|
Adjusted EBITDA |
$ |
(963 |
) |
$ |
(1,606 |
) |
Hydrogenics CorporationCondensed Consolidated
Balance Sheets(in thousands of US dollars)(unaudited)
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March 31, |
|
December 31, |
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|
2019 |
|
2018 |
|
| |
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| Assets |
|
|
|
|
| Current
assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
21,531 |
|
$ |
7,561 |
|
| Restricted cash |
|
647 |
|
|
935 |
|
| Trade and other receivables |
|
6,420 |
|
|
6,728 |
|
| Contract assets |
|
4,657 |
|
|
4,534 |
|
| Inventories |
|
20,707 |
|
|
17,174 |
|
| Prepaid expenses |
|
1,982 |
|
|
1,960 |
|
|
|
|
55,944 |
|
|
38,892 |
|
| Non-current
assets |
|
|
|
|
| Restricted cash |
|
191 |
|
|
241 |
|
| Contract assets |
|
2,654 |
|
|
1,689 |
|
| Investment in joint ventures |
|
1,678 |
|
|
1,644 |
|
| Right-of-use assets |
|
3,544 |
|
|
– |
|
| Property, plant and
equipment |
|
2,873 |
|
|
2,867 |
|
| Intangible assets |
|
218 |
|
|
232 |
|
|
Goodwill |
|
4,276 |
|
|
4,359 |
|
|
|
|
15,434 |
|
|
11,032 |
|
|
Total assets |
$ |
71,378 |
|
$ |
49,924 |
|
| |
|
|
|
|
|
Liabilities |
|
|
|
|
| Current
liabilities |
|
|
|
|
| Trade and other payables |
$ |
8,467 |
|
$ |
9,068 |
|
| Contract liabilities |
|
15,175 |
|
|
14,581 |
|
| Financial liabilities |
|
5,441 |
|
|
3,359 |
|
| Provisions |
|
1,764 |
|
|
2,041 |
|
|
Deferred funding |
|
1,878 |
|
|
1,744 |
|
| |
|
32,725 |
|
|
30,793 |
|
| Non-current
liabilities |
|
|
|
|
| Other liabilities |
|
7,998 |
|
|
5,711 |
|
| Contract liabilities |
|
959 |
|
|
1,420 |
|
| Provisions |
|
777 |
|
|
810 |
|
|
Deferred funding |
|
189 |
|
|
229 |
|
|
|
|
9,923 |
|
|
8,170 |
|
|
Total liabilities |
|
42,648 |
|
|
38,963 |
|
| |
|
|
|
|
| Share capital |
|
408,279 |
|
|
387,911 |
|
| Contributed surplus |
|
20,945 |
|
|
20,717 |
|
| Accumulated other
comprehensive loss |
|
(2,861 |
) |
|
(2,681 |
) |
|
Deficit |
|
(397,633 |
) |
|
(394,986 |
) |
|
Total equity |
|
28,730 |
|
|
10,961 |
|
|
Total equity and liabilities |
$ |
71,378 |
|
$ |
49,924 |
|
Hydrogenics CorporationConsolidated Statements
of Operations and Comprehensive Loss (in thousands of US dollars,
except share and per share amounts)(unaudited)
| |
|
|
|
|
|
|
Three months ended |
| |
March 31, |
|
|
2019 |
|
2018 |
|
| |
|
|
|
|
| Revenues |
$ |
8,084 |
|
$ |
8,147 |
|
|
Cost of sales |
|
4,209 |
|
|
4,909 |
|
|
Gross profit |
|
3,875 |
|
|
3,238 |
|
| |
|
|
|
|
| Operating
expenses |
|
|
|
|
| Selling, general and
administrative expenses |
|
4,107 |
|
|
2,836 |
|
| Research and product
development expenses |
|
1,809 |
|
|
2,081 |
|
|
|
|
5,916 |
|
|
4,917 |
|
|
|
|
|
|
|
|
Loss from operations |
|
(2,041 |
) |
|
(1,679 |
) |
| |
|
|
|
|
|
Gains (losses) from joint ventures |
|
5 |
|
|
(69 |
) |
|
|
|
|
|
|
| Finance income
(loss) |
|
|
|
|
| Interest expense, net |
|
(284 |
) |
|
(381 |
) |
| Foreign currency gains
(losses), net |
|
(201 |
) |
|
219 |
|
| Other
finance gains (losses), net |
|
(126 |
) |
|
256 |
|
|
Finance income (loss), net |
|
(611 |
) |
|
94 |
|
| |
|
|
|
|
| Loss before income
taxes |
|
(2,647 |
) |
|
(1,654 |
) |
|
Income tax expense |
|
– |
|
|
300 |
|
|
Net loss for the period |
|
(2,647 |
) |
|
(1,954 |
) |
| |
|
|
|
|
| Items that may be reclassified
subsequently to net loss: |
|
|
|
|
|
Exchange differences on translating foreign operations |
|
(180 |
) |
|
329 |
|
|
Comprehensive loss for the period |
$ |
(2,827 |
) |
$ |
(1,625 |
) |
| |
|
|
|
|
| Net loss per
share |
|
|
|
|
| Basic and diluted |
$ |
(0.15 |
) |
$ |
(0.13 |
) |
| |
|
|
|
|
| Weighted average number of
common shares outstanding |
|
18,081,498 |
|
|
15,436,879 |
|
Hydrogenics CorporationConsolidated Statements
of Cash Flows (in thousands of US dollars) (unaudited)
| |
|
|
|
|
|
|
|
|
|
|
| |
Three months ended |
| |
March 31, |
|
|
2019 |
|
2018 |
|
| Cash and cash equivalents
provided by (used in): |
|
|
|
|
| Operating
activities |
|
|
|
|
|
Net loss for the year |
$ |
(2,647 |
) |
$ |
(1,954 |
) |
| Decrease (increase) in restricted
cash |
|
323 |
|
|
(13 |
) |
| Items not affecting cash: |
|
|
|
|
| Loss on disposal of
property, plant and equipment |
|
2 |
|
|
3 |
|
| Amortization and
depreciation |
|
380 |
|
|
177 |
|
| Loss (gain) from change in
fair value of warrants |
|
126 |
|
|
(286 |
) |
| Unrealized foreign
exchange loss (gain) |
|
31 |
|
|
(24 |
) |
| Losses (gains) from joint
ventures |
|
(5 |
) |
|
69 |
|
| Accreted interest and fair
value adjustment |
|
360 |
|
|
444 |
|
| Stock-based
compensation |
|
236 |
|
|
222 |
|
| Stock-based compensation –
DSUs |
|
462 |
|
|
(326 |
) |
|
Net change in non-cash operating assets and liabilities |
|
(4,180 |
) |
|
557 |
|
|
Cash used in operating activities |
|
(4,912 |
) |
|
(1,131 |
) |
| |
|
|
|
|
| Investing
activities |
|
|
|
|
| Purchase of property, plant and
equipment |
|
(184 |
) |
|
(234 |
) |
| Repayment of government
funding |
|
(974 |
) |
|
– |
|
|
Purchase of intangible assets |
|
(8 |
) |
|
– |
|
|
Cash used in investing activities |
|
(1,166 |
) |
|
(234 |
) |
| |
|
|
|
|
| Financing
activities |
|
|
|
|
| Proceeds from common shares
issued and stock options exercised, net of issuance costs |
|
20,360 |
|
|
– |
|
| Principal repayments of long-term
debt |
|
– |
|
|
(250 |
) |
| Interest payments |
|
(44 |
) |
|
(296 |
) |
| Lease payments |
|
(180 |
) |
|
– |
|
| Repayment of operating
borrowings |
|
– |
|
|
(1,193 |
) |
|
Cash provided by (used in) financing activities |
|
20,136 |
|
|
(1,739 |
) |
| |
|
|
|
|
| Increase (decrease) in cash and
cash equivalents during the period |
|
14,058 |
|
|
(3,104 |
) |
| Cash and cash equivalents –
Beginning of period |
|
7,561 |
|
|
21,511 |
|
| Effect of exchange rate
fluctuations on cash and cash equivalents held |
|
(88 |
) |
|
75 |
|
|
Cash and cash equivalents – End of period |
$ |
21,531 |
|
$ |
18,482 |
|
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