Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) has continued to fall lower in recent weeks since trading well over $3 per share in February of this year.
On July 28 BLDP announced its consolidated financial results for the second quarter ended June 30, 2015. All amounts are in U.S. dollars unless otherwise noted and have been prepared in accordance with International Financial Reporting Standards (IFRS).
Q2 2015 Metrics Summary (all comparisons to Q2 2014 unless otherwise noted)
- Total revenue of $11.2 million, a decrease of 39% primarily due to declines in Technology Solutions and Material Handling revenue. Total revenue was within the $10.6-to-$11.5 million range that had been anticipated and pre-announced by the Company in its July 1 press release.
- Gross margin of 10%, a decrease resulting primarily from the reduction in high margin Technology Solutions revenue due to the previously-announced termination of contracts with Azure in China and a shift in cadence of revenue from the engineering services contract with Volkswagen AG. Gross margin was lower than the prior quarter, by one percentage point, as had been anticipated and pre-announced in the Company’s July 1 press release.
- Cash operating costs2 of $6.7 million, flat on a year-over-year basis.
- Adjusted EBITDA2 of ($4.8) million, an increase in Adjusted EBITDA loss on a year-over-year basis, reflecting the decline in gross margin.
- Net income (loss) of ($7.3) million or ($0.06) per share, reductions in both metrics driven primarily by the increase in Adjusted EBITDA loss.
- Cash used by operating activities of ($5.3) million, a year-over-year increase. This reflects a cash operating loss of ($5.5) million, partially offset by an improvement in working capital of $0.2 million.
- Cash reserves of $41.2 million at June 30, higher than the estimated cash reserves of $38.0-to-$40.0 million that the Company pre-announced in its July 1 press release. Cash reserves were fortified following the quarter, through an equity financing that generated net proceeds of approximately $13.6 million.
Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) is dually listed on the NASDAQ and the Toronto Stock Exchange (TSX) where it trades as BLD. The Company is located in Burnaby, British Columbia and is focused on designing, developing and manufacturing zero emission proton-exchange-membrane fuel cells. Ballard Power Systems, Inc. is a global leader in PEM (proton exchange membrane) fuel cell technology and the Company has designed and shipped close to 150 MW of hydrogen fuel cell technology to date.
On February 11, 2015 BLDP announced that they have entered into a Technology Solutions transaction with Volkswagen Group (Volkswagen AG), and Audi AG, for an aggregate amount of approximately US$80 million for the transfer of certain automotive-related fuel cell intellectual property (IP) and a two-year extension of an engineering services contract.
Prof. Dr. Ulrich Hackenberg from AUDI said “Audi, VW and the Volkswagen Group are very pleased with the acquisition of a world-class automotive fuel cell patent portfolio. We believe that this portfolio, together with the combined fuel cell skills and expertise of our group and Ballard, will underpin our ability to play a leading role in fuel cell automotive development and commercialization.”
BLDP CEO Randy MacEwen said, “This transaction extends and deepens our relationship with the Volkswagen Group, a leading global automotive manufacturer. The IP transfer surfaces significant value for Ballard. And, extension of the engineering services contract reflects a growing positive sentiment toward fuel cells within the automotive sector, along with the outstanding progress made to date in our work with Volkswagen Group on its fuel cell car programs.”
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As per the agreement BLDP will transfer the automotive-related portion of fuel cell IP assets previously acquired from United Technologies Corporation, in return for payments from Volkswagen Group totaling US$50 million, a majority of which is expected to be received at the closing of the transaction during the current quarter. The remainder is expected to be received in early 2016.
The transaction also includes a 2-year extension, through March 2019, of the existing long-term engineering services agreement signed by Ballard and Volkswagen in 2013. This extension has an incremental value estimated at C$30-50 million (approximately US$24-40 million). Over the full 6-years, the contract has an estimated value of C$100-140 million (approximately US$80-112 million), and also includes a further optional 2-year extension.
Ballard Power Systems Inc. was originally founded as Ballard Research by Dr. Geoffrey Ballard, Paul Howard, and Keith Prater. The company went public in 1993 on the Toronto Exchange, and in 1995 they got listed on NASDAQ.
BLDP recently entered into a multi-year agreement with Plug Power (NASDAQ:PLUG) for the supply of fuel cell stacks that are used in GenDrive systems deployed in forklift trucks. Already this is proving to be a smart move for BLDP who’s stock tends to trade in tandem with PLUG.
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BLDP had been in steep decline in recent months until the $80 million Volkswagon deal turned things around and the stock reversed off $1.41 lows. Currently moving up on big volume BLDP has plenty of reasons to go up; the fuel cell market is growing and is expected to continue to grow and BLDP is making all the right moves; improving the balance sheet, cutting loses, signing new lucrative contracts that will benefit this Company over the long run. We will be updating on BLDP on a daily basis so make sure you are subscribed to microcapdaily.com so you know what is going on with BLDP.
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Disclosure: we hold no position BLDP either long or short and we have not been compensated for this article.