Earnings Release Is Ballard Power Systems A Buy?

 

Ballard Power Systems (NASDAQ: BLDP; TSX: BLDP) today announced consolidated financial results for the fourth quarter and full year ended December 31, 2020. All amounts are in U.S. dollars unless otherwise noted and have been prepared in accordance with International Financial Reporting Standards (IFRS).

Randy MacEwen, President and CEO said, “Our Q4 and full year 2020 results were consistent with management’s internal projections based on expected impacts from COVID-19. In Q4 and throughout 2020, COVID-19 created uncertainty and adversely impacted operations for certain customers along with order intake, although we saw higher than expected activity levels in our sales pipeline. Revenue was $28.6 million in Q4, and full year revenue was $103.9 million. Gross margin for the full year was 20%, Adjusted EBITDA was ($38.9) million and year-end cash reserves were $763.4 million.”

Mr. MacEwen added, “Continued progress in the execution of our growth strategy in 2020 was reflected in a number of notable achievements: the Weichai-Ballard joint venture operation in China was commissioned; we announced a key strategic partnership with MAHLE to develop advanced fuel cell engines for the European commercial truck market; we made continued progress with bus OEM customers; we launched a new high power density stack; we completed our Marine Center of Excellence in Denmark and launched our new FCwaveTM 200 kilowatt engine for marine applications; we invested to expand our Vancouver MEA production capacity by 6-times; we announced our plan to reduce fuel cell stack costs by 70% by 2024; we detailed our estimate of the multi-billion dollar market opportunity for Ballard by 2030; Ballard products powered vehicles for cumulative on-road mileage in excess of 70 million kilometers; and we further fortified our balance sheet.”

 

 

Mr. MacEwen concluded, “Notwithstanding a challenging year due to COVID-19, the hydrogen and fuel cell industry enjoyed unprecedented progress with strong policy support, sizeable corporate investments and broadened investor interest. With about 50 countries announcing CO2 pricing initiatives, 75 countries with net zero targets, and over 30 countries with hydrogen strategies, we believe Ballard is well positioned to realize significant growth in the coming decade. As a result, we are increasing and accelerating our investment to drive high growth, high market adoption and high market share for the benefit of long-term shareholder value. In 2021, we will increase our investment in competencies, technology innovation, product development and customer experience related to our key markets of bus, truck, rail and marine. We will continue to invest in our strategic partnerships with Weichai in China and MAHLE in Europe. We will also consider investments in further production capacity expansion and localization in key geographies, as well as strategic acquisitions and partnerships.”

Q4 2020 Financial Highlights

(all comparisons are to Q4 2019 unless otherwise noted)

  • Total revenue was $28.6 million, a 32% year-over-year decrease.
    • Power Products revenue was $15.0 million, a decrease of 41% primarily reflecting lower shipments of Heavy-Duty Motive fuel cell products to customers in China together with a shift in product mix.
    • Technology Solutions revenue was $13.6 million, an 17% decrease due primarily to decreased revenue from the program with Audi.
  • Gross margin was 20%, down 1-point to $5.6 million, due primarily to lower total revenue as well as a shift to lower overall product margin and service revenue mix.
  • Cash operating costs2 were $16.4 million, an increase of 25%, due to higher research and product development costs and higher general and administrative costs.
  • Adjusted EBITDA2 declined 105% to ($14.5) million, due primarily to the decrease in gross margin, increase in cash operating costs, and higher equity in loss of investment in joint venture and associates.
  • Net loss3 from continuing operations was ($14.4) million or ($0.05) per share, declines of 47% and 28%, respectively, driven primarily by the increase in Adjusted EBITDA loss.
  • Cash used in operating activities was ($6.7) million, a decline of 262%, reflecting cash operating loss of ($6.7) million, and nominal net working capital changes.

 

CWEB Analyst’s have initiated a BUY Rating for  Ballard Power Systems (NASDAQ: BLDP ) and potential upside of $58 in 2021. We cannot ignore the fact Q4 revenue of $28.6m, full year revenue of $103.9m and year-end cash reserves of $763.4m. A very positive sign ahead for the financial structure of the company.

 


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