Hydrogenics Reports Fourth Quarter and Full Year 2014 Results
04 March 2015 - 10:30PM
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 fourth quarter and full year 2014 financial
results. Results are reported in US dollars and are prepared in
accordance with International Financial Reporting Standards (IFRS).
"Hydrogenics once again ended the year with record revenue and a
number of strategic accomplishments – posting our first profitable
quarter and laying the groundwork for strong top-line growth going
forward," said Daryl Wilson, Hydrogenics CEO. "In 2014 Hydrogenics
won a major energy storage application in North America, formed a
power generation joint venture in Korea, and racked up more fueling
stations awards than ever before. While the Company saw some
slippage in certain December shipments due to one-time supplier
issues, these orders are on track for the first quarter, and our
backlog remains strong.
"Looking ahead our industry-leading position and pipeline of
opportunities – particularly within energy storage and
utility-scale power generation – are expected to drive further
revenue growth this year; in 2014 alone, we won $18 million of
energy storage projects, including funded R&D activity,
equipment sales and contracts for services. Prospects in this area
continue to expand given our current level of qualified leads,
which now stands at approximately $80 million. Hydrogenics is at
the forefront of the hydrogen economy, and the Company continues to
see larger, more complex requirements across the globe. Even in the
face of lower fuel costs, the demand for our energy storage
applications and power modules remains robust, and we are committed
to achieving improved operating performance – and a path to
profitability – in the quarters to come."
Highlights for the Quarter Ended December 31, 2014
(compared to the quarter ended December 31, 2013, unless otherwise
noted)
- Revenue increased by 42% to $15.7 million reflecting higher
sales in both the Onsite Generation and Power Systems business
units.
- Gross profit was 19.1% of revenue for the quarter, versus 24.6%
in the prior-year period, reflecting a change in product mix as
well as the impact of Euro denominated revenue where significant
cost of sales are denominated in US dollars (principally in our
German operations).
- Cash Operating Costs1 declined by $0.2 million $2.7 million in
the quarter, compared to $2.9 in 2013. A net increase in R&D
expense of $0.1 million was offset by a reduction in SG&A
expense of $0.3 million primarily due to the impact of the
weakening Euro and Canadian dollar when translated to US
dollars.
- Adjusted EBITDA2 was $0.2 million for the quarter compared with
an Adjusted EBITDA2 loss of $0.2 million in the fourth quarter of
2013.
- Net income for the quarter was $0.6 million or $0.06 per share,
an improvement of $3.7 million from the loss of $3.1 million or
$(0.34) per share reported in the fourth quarter of 2013,
reflecting the aforementioned items and higher stock-based
compensation expense in 2013.
- Hydrogenics secured $11.7 million of orders for renewable
energy storage, industrial gas and power system applications during
the quarter, resulting in an order backlog of $62.2 million as of
December 31, 2014. Order backlog movement during the fourth quarter
(in $ millions) was as follows:
|
Sept. 30, 2014 Backlog |
Orders Received |
FX |
Orders Delivered |
Dec. 31, 2014 Backlog |
|
|
|
|
|
|
OnSite Generation |
$ 27.0 |
$ 10.5 |
$ 0.1 |
$ 9.3 |
$ 28.3 |
Power Systems |
39.9 |
1.2 |
(0.8) |
6.4 |
33.9 |
Total |
$ 66.9 |
$ 11.7 |
$ (0.7) |
$ 15.7 |
$ 62.2 |
- The Company exited the fourth quarter with $10.4 million of
cash and restricted cash, a $3.9 million decrease from September
30, 2014 primarily reflecting: (i) a $2.0 million decrease in
working capital; (ii) $1.3 million invested in the
Kolon-Hydrogenics joint venture; and (iii) $0.3 million related to
the purchase of property, plant and equipment.
Highlights for the Year Ended December 31, 2014
(compared to the Year Ended December 31, 2013, unless otherwise
noted)
- Revenue rose 7% to $45.5 million versus 2013, primarily
reflecting higher sales in the Company's OnSite Generation business
unit.
- Gross profit was $11.2 million for the year, or 24.6% of
revenue.
- Cash operating costs were $13.9 million, versus $13.5 million
in 2013. The year-over-year change primarily reflects an increase
in total R&D expense of $0.7 million, partially offset by a
decline in SG&A expense of $0.3 million primarily related to
exchange rate fluctuations as noted in the fourth quarter of
2014.
- The Adjusted EBITDA2 loss for 2014 was $2.5 million versus an
Adjusted EBITDA2 loss of $1.2 million in 2013, primarily reflecting
the above noted changes.
- Net loss was $4.5 million, a 49% reduction from the $8.9
million reported in 2013, reflecting the aforementioned items and
higher stock-based compensation expense in 2013.
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 Details
Hydrogenics will hold a conference call at 10:00 a.m. EST on
March 4, 2015 to review the fourth 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 Hydrogenics
Hydrogenics 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 centres in Russia, Europe, the US and
Canada.
Forward-looking Statements
This 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
fuelled 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.
Reconciliation of
Adjusted EBITDA to Net Loss |
(in thousands of US dollars) |
(unaudited) |
|
|
3 months
ended |
Year
ended |
|
31-Dec-14 |
31-Dec-13 |
31-Dec-14 |
31-Dec-13 |
|
|
|
|
|
Adjusted EBITDA |
160 |
(165) |
(2,539) |
(1,217) |
Less: |
|
|
|
|
Stock-based compensation |
82 |
145 |
544 |
631 |
Cash settled compensation indexed to share
price |
(391) |
2,021 |
82 |
4,223 |
Net Finance losses |
(280) |
624 |
697 |
2,125 |
Depreciation and amortization |
137 |
145 |
661 |
712 |
Net Income (Loss) |
612 |
(3,100) |
(4,523) |
(8,908) |
|
|
Hydrogenics
Corporation |
Consolidated Interim Balance
Sheets |
(in thousands of US dollars) |
(unaudited) |
|
|
December 31 2014 |
December 31 2013 |
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ 6,572 |
$ 11,823 |
Restricted cash |
3,228 |
635 |
Trade and other receivables |
12,900 |
5,391 |
Inventories |
14,698 |
12,821 |
Prepaid expenses |
747 |
979 |
|
38,145 |
31,649 |
Non-current assets |
|
|
Restricted cash |
621 |
1,389 |
Investment in joint venture |
2,150 |
-- |
Property, plant and equipment |
1,873 |
1,684 |
Intangible assets |
157 |
100 |
Goodwill |
4,609 |
5,248 |
|
9,410 |
8,421 |
Total assets |
$ 47,555 |
$ 40,070 |
Liabilities |
|
|
Current liabilities |
|
|
Trade and other payables |
13,156 |
13,193 |
Warranty provisions |
1,392 |
1,912 |
Deferred revenue |
6,771 |
6,348 |
Warrants |
-- |
1,075 |
|
21,319 |
22,528 |
Non-current liabilities |
|
|
Other non-current liabilities |
3,464 |
3,095 |
Non-current warranty provisions |
1,155 |
981 |
Non-current deferred revenue |
6,141 |
7,305 |
Total liabilities |
32,079 |
33,909 |
Equity |
|
|
Share capital |
348,259 |
333,312 |
Contributed surplus |
18,927 |
18,449 |
Accumulated other comprehensive loss |
(2,108) |
(249) |
Deficit |
(349,602) |
(345,351) |
Total equity |
15,476 |
6,161 |
Total equity and
liabilities |
$ 47,555 |
$ 40,070 |
|
|
|
|
Hydrogenics
Corporation |
Consolidated Interim Statements
of Operations and Comprehensive Loss |
(in thousands of US dollars,
except share and per share amounts) |
(unaudited) |
|
|
Three months ended
December 31 |
Twelve months ended
December 31 |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Revenues |
$ 15,673 |
$ 11,000 |
$ 45,548 |
$ 42,413 |
Cost of
sales |
12,684 |
8,295 |
34,334 |
30,352 |
Gross
profit |
2,989 |
2,705 |
11,214 |
12,061 |
|
|
|
|
|
Operating
expenses |
|
|
|
|
Selling, general and
administrative expenses |
2,364 |
4,948 |
11,756 |
16,275 |
Research and product development
expenses |
293 |
230 |
3,284 |
2,566 |
Other (gains) losses |
-- |
3 |
|
3 |
|
2,657 |
5,181 |
15,040 |
18,844 |
Income (loss) from
operations |
332 |
(2,476) |
(3,826) |
(6,783) |
|
|
|
|
|
Finance income
(expenses) |
|
|
|
|
Interest income |
5 |
-- |
9 |
11 |
Interest expense |
(176) |
(133) |
(549) |
(426) |
Foreign currency gains |
482 |
265 |
957 |
517 |
Foreign currency losses |
-- |
(67) |
(840) |
(162) |
Loss from joint venture |
(32) |
-- |
(94) |
-- |
Other finance gains (losses),
net |
1 |
(689) |
(180) |
(2,065) |
Finance income (loss),
net |
280 |
(624) |
(697) |
(2,125) |
|
|
|
|
|
Income (Loss) before
income taxes |
612 |
(3,100) |
(4,523) |
(8,908) |
Income tax
expense |
-- |
-- |
-- |
-- |
Income (Loss) for the
period |
612 |
(3,100) |
(4,523) |
(8,908) |
|
|
|
|
|
Other comprehensive
(loss)/income for the period |
|
|
|
|
Items that will not be
reclassified subsequently to net loss: |
|
|
|
|
Re-measurements of actuarial
losses |
272 |
-- |
272 |
-- |
Sub-total |
272 |
-- |
272 |
-- |
Items that may be reclassified
subsequently to net loss: |
|
|
|
|
Re-measurements of actuarial
losses |
(208) |
-- |
(208) |
-- |
Exchange differences on
translating foreign operations |
(599) |
232 |
(1,651) |
509 |
Sub-total |
(807) |
232 |
(1,859) |
509 |
|
|
|
|
|
Total OCI |
(535) |
232 |
(1,587) |
509 |
|
|
|
|
|
Comprehensive Income
(loss) for the period |
$ 77 |
$ (2,868) |
$ (6,110) |
$ (8,399) |
|
|
|
|
|
Net income (loss) per
share |
|
|
|
|
Basic and diluted |
$ 0.06 |
$ (0.34) |
$ (0.47) |
$ (1.04) |
|
|
|
|
|
Weighted average number of common
shares outstanding |
10,089,981 |
9,003,960 |
9,718,349 |
8,592,600 |
|
|
|
|
|
|
Hydrogenics
Corporation |
Consolidated Interim Statements
of Cash Flows |
(in thousands of US dollars) |
(unaudited) |
|
|
Three months ended
December 31 |
Twelve months ended
December 31 |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Cash and cash equivalents provided by
(used in): |
|
|
|
|
Operating activities |
|
|
|
|
Net income (loss) for the period |
$ 612 |
$ (3,100) |
$ (4,523) |
$ (8,908) |
Decrease (Increase) in restricted cash |
(209) |
(30) |
(1,825) |
1,758 |
Items not affecting cash: |
|
|
|
|
Loss on disposal of assets |
1 |
3 |
1 |
3 |
Amortization and depreciation |
137 |
145 |
661 |
712 |
Other finance (gains) losses, net |
(1) |
689 |
180 |
2,065 |
Unrealized foreign exchange gains |
399 |
(4) |
259 |
(120) |
Unrealized loss on joint venture |
32 |
-- |
94 |
-- |
Portion of borrowings recorded as a
reduction of research and development expenses |
(237) |
(645) |
(355) |
(934) |
Accreted non-cash interest |
114 |
91 |
480 |
349 |
Payment of post-retirement benefit
liability |
(15) |
(22) |
(85) |
(97) |
Stock-based compensation |
82 |
145 |
544 |
631 |
Stock based compensation – RSU's and
DSU's |
(391) |
2,021 |
82 |
4,223 |
Net change in non-cash working
capital |
(2,570) |
(1,267) |
(10,457) |
(8,879) |
Cash used in operating
activities |
(2,046) |
(1,974) |
(14,944) |
(9,197) |
|
|
|
|
|
Investing activities |
|
|
|
|
Investment in joint venture |
(1,360) |
-- |
(2,307) |
-- |
Proceeds from disposals |
1 |
-- |
10 |
-- |
Purchase of property, plant and
equipment |
(326) |
(214) |
(871) |
(939) |
Purchase of intangible assets |
(27) |
-- |
(110) |
(32) |
Cash used in investing
activities |
(1,712) |
(214) |
(3,278) |
(971) |
|
|
|
|
|
Financing activities |
|
|
|
|
Payment of repayable government
contributions |
(59) |
(55) |
(498) |
(393) |
Proceeds of borrowings, net of transaction
costs |
-- |
1,257 |
-- |
1,782 |
Proceeds of operating borrowings |
-- |
-- |
854 |
1,412 |
Repayment of operating borrowings |
-- |
-- |
-- |
(1,412) |
Common shares issued, warrants and options
exercised, net of issuance costs |
-- |
41 |
13,666 |
7,280 |
Cash provided by financing
activities |
(59) |
1,243 |
14,022 |
8,669 |
Effect of exchange rate fluctuations on cash
and cash equivalents held |
(311) |
118 |
(1,051) |
302 |
Increase (decrease) in cash and cash
equivalents during the period |
(4,128) |
(827) |
(5,251) |
(1,197) |
Cash and cash equivalents - Beginning
of period |
10,700 |
12,650 |
11,823 |
13,020 |
Cash and cash equivalents - End of
period |
$ 6,572 |
$ 11,823 |
$ 6,572 |
$ 11,823 |
CONTACT: Hydrogenics Contacts:
Bob Motz, Chief Financial Officer
Hydrogenics Corporation
(905) 361-3660
investors@hydrogenics.com
Chris Witty
Hydrogenics Investor Relations
(646) 438-9385
cwitty@darrowir.com
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