VANCOUVER, Nov. 9 /PRNewswire-FirstCall/ -- Ballard Power Systems
(TSX: BLD; NASDAQ: BLDP) announced its results for the third
quarter ended September 30, 2008 today. All amounts are in U.S.
dollars, unless otherwise noted. "Ballard continued to show
progress with our fuel cell product growth strategy in the third
quarter, as evidenced by 52% growth in product shipments", said
John Sheridan, President and CEO. "However, overall revenue growth
in the quarter was weak, primarily due to contract services for the
Automotive Fuel Cell Cooperation Corp (AFCC) and lower than
expected business volumes in automotive carbon fiber material
products." Mr. Sheridan continued, "Beyond the product shipment and
financial results in the quarter, recent announcements regarding
our ACME Tele Power and Superior Plus agreements are very
significant milestones for Ballard." THIRD QUARTER 2008 HIGHLIGHTS
----------------------------- - Revenue was $12.3 million in the
third quarter, representing a decline of $5.3 million or 30% over
the same quarter last year (2007Q3: $17.6 million). $3.4 million of
the reduction was due to the absence of automotive engineering
development revenues. - Operating expenses, excluding depreciation
and amortization, were $13.9 million in the third quarter, a $7.4
million or 35% improvement from the third quarter of 2007 (2007Q3:
$21.3 million). - Operating cash consumption(1) was $6.5 million in
the third quarter, which is roughly equivalent to the same period
last year (2007Q3: $6.1 million). Excluding the negative impact of
foreign exchange movements of $3.7 million on the company's
Canadian dollar monetary assets, operating cash consumption
improved by $3.3 million in Q3 compared with the same period last
year. - Normalized net loss(1) in the third quarter was ($15.5)
million or ($0.19) per share, compared to ($11.0) million or
($0.10) per share in Q3 2007. The movement in normalized net loss
reflects a $5.2 million negative impact from foreign exchange
movements and lower investment income. The per share increase was
due primarily to the 30% reduction in the number of shares
outstanding as a result of the automotive transaction which closed
on January 31, 2008. - Total product shipments were 471 in the
third quarter for a total of 1,053 fuel cell product shipments
year-to-date. This represents a 52% increase compared to Q3 2007.
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Three months Nine months ended Sept 30, ended Sept 30, 2008 2007 %
Change 2008 2007 % Change
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Total Product Shipments 471 309 52% 1053 701 50%
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Key Markets: Materials Handling 168 67 151% 254 123 107% Backup
Power 127 43 195% 363 99 267% Res. Cogeneration 166 144 15% 307 334
-8%
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2008 OUTLOOK ------------ - Overall revenues for 2008 are now
expected to be between $58 million and $64 million, down from the
previous 2008 revenue guidance of between $65 million and $75
million. This change in guidance is a result of lower than
anticipated contract services with AFCC, lower than anticipated
automotive carbon fiber sales, and a delay in the shipment of some
bus modules from Q4 2008 into Q1 2009, as described in the Update
section below. - Operating cash consumption(1) for 2008 is now
expected to be in the upper half of the guidance range of $20
million to $30 million. The recent significant weakening of the
Canadian dollar compared to the U.S. dollar increases the company's
exposure to foreign exchange losses on its Canadian dollar
denominated cash reserves. - Cash reserves were $57.1 million on
September 30, 2008 (2008Q2: $64.0 million). With current cash
resources augmented by the expected C$41 million net cash proceeds
from the non-dilutive financing transaction announced on October
30, and the company's ability to potentially monetize other assets,
such as its interest in AFCC through a share purchase agreement
with Ford, the company does not expect to need public market
financing for the foreseeable future. - Total product shipments for
2008 are expected to be in excess of 1,700 units, as per full year
guidance, but with a different mix than originally expected. THIRD
QUARTER 2008 UPDATE ------------------------- Ballard announced an
agreement to reorganize the Company's business, which will result
in non-dilutive financing with net cash proceeds of approximately
C$41 million (US$35 million). For further information, please see
Ballard's press release dated October 30, 2008. Additional details
regarding the transaction will be provided to Ballard security
holders in an information circular to be mailed late-November. The
information circular will also be available at
http://www.ballard.com/, http://www.sedar.com/ and
http://www.sec.gov/edgar.shtml. A special meeting of security
holders will be held on or about December 18, 2008 in Vancouver,
British Columbia. The transaction is expected to close on or about
December 31, 2008. On October 9, Ballard announced a milestone deal
for telecom backup power applications in India. The Company
announced that it has entered into a high volume development and
supply agreement with an affiliate of the ACME Group to supply 5kW
natural gas fuel cell products. The agreement provides a binding
commitment for the purchase of approximately 1,000 units in 2009
and 9,000 units in 2010, subject to meeting product design and
acceptance specifications. The U.S. Congress passed an extension to
its federal Investment Tax Credit for stationary, motive and
portable fuel cell purchases from January 1, 2009 through 2016. The
new law also increases the value of the tax credit cap to the
lesser of $3,000 per kilowatt (up from $1,000 per kilowatt) or 30
percent of the capital cost. Ballard believes this is a significant
event for customers in such areas as in materials handling and
backup power, since it enhances the value proposition for fuel cell
products. The "Notice to Proceed" decision in relation to B.C.
Transit's 2010 Olympic bus project has been deferred, due to a
delay in the consortium's program development schedule. Since the
resulting window for shipments in 2008 is shorter, some module
deliveries and their related revenue are now expected in Q1 2009,
instead of Q4 2008, subject to issuance of the Notice to Proceed.
THIRD QUARTER 2008 FINANCIAL RESULTS
------------------------------------ Our revenues for the three
months ended September 30, 2008, decreased 30% to $12.3 million,
compared to $17.6 million for the same period in 2007. During the
third quarter of 2008, product and service revenues decreased $1.4
million, or 11%, and engineering development revenue decreased $3.9
million, or 79%, compared to the same quarter last year. Product
and service revenues totaled $11.2 million for the current year
quarter with product revenues of $7.1 million and service revenues
of $4.1 million, compared to product revenues of $9.1 million and
service revenues of $3.5 million in the third quarter of 2007. The
decrease in product revenues of $2.0 million was driven by lower
shipments of light duty automotive and residential cogeneration
products partially offset by increased shipments of materials
handling and backup power fuel cell products. The decline in
residential cogeneration product sales is as expected due to the
introduction in 2008 of a new lower cost product combined with the
delivery of fuel cell membrane electrode assemblies, a key
component of a fuel cell, instead of fuel cell stacks as the fuel
cell stacks will be assembled in Japan by our joint venture, EBARA
BALLARD. The increase in service revenues of $0.6 million is
primarily due to new testing and engineering services provided to
AFCC partially offset by a decline in field service for fuel cell
buses. The decline in field service revenues for fuel cell buses is
as expected, as fewer fuel cell buses remain in operation.
Engineering development revenue of $1.1 million in the third
quarter of 2008 resulted from the 1kW residential cogeneration fuel
cell development program and decreased $3.9 million from the
comparative period primarily due to the elimination of automotive
fuel cell program work. Adjusting for automotive engineering
development revenues in the third quarter of 2007 of $3.4 million,
total pro-forma revenues decreased $1.9 million, or 13%, for the
three months ended September 30, 2008 compared to the same period
in 2007. Our net loss for the three months ended September 30, 2008
decreased to $15.5 million, or ($0.19) per share, compared with a
net loss of $16.0 million, or ($0.14) per share, in the third
quarter of 2007. Net loss for the three months ended September 30,
2007 includes a $4.6 million write-down of a non-core investment in
Advanced Energy Technology Inc. Our normalized net loss(1) for the
three months ended September 30, 2008 increased to $15.5 million,
or ($0.19) per share, compared with a normalized net loss of $11.0
million, or ($0.10) per share, in the third quarter of 2007. The
primary reasons for the $4.5 million higher normalized net loss in
the third quarter of 2008 was due to decreases in foreign exchange
gains of $3.7 million and decreases in investment income of $1.5
million. Decreases in product and service gross margins of $4.4
million and engineering development revenues of $3.9 million were
more than offset by decreases in operating expenses of $7.4 million
and depreciation and amortization of $2.3 million. Lower gross
margins were driven by larger reductions in warranty provisions in
the third quarter of 2007 compared to 2008, more aggressive product
pricing and enhanced warranty coverage on materials handling
products in order to escalate market adoption, and reduced field
service activities for fuel cell buses. This was partially offset
by new testing and engineering services provided to AFCC. The
decline in operating expenses was driven by lower research and
development expenses on automotive fuel cell programs, partially
offset by increased investment in our materials handling, backup
power and fuel cell bus programs. The increase in net loss on a per
share basis was due to the 30% reduction in the number of common
shares outstanding as a result of the sale of AFCC combined with
the higher normalized net loss. Operating cash consumption(1) for
the three months ended September 30, 2008 increased $0.4 million to
$6.5 million, compared to $6.1 million for the corresponding period
in 2007. The increase in operating cash consumption was driven
primarily by lower foreign exchange gains of $3.7 million and a
decline in investment income of $1.5 million. Lower gross margins
and engineering development revenue were more than offset by lower
operating expenses and working capital requirements. For a more
detailed discussion of Ballard Power Systems' third quarter 2008
results, please see the company's financial statements and
management's discussion & analysis, which are available at
http://www.ballard.com/, http://www.sedar.com/ and
http://www.sec.gov/edgar.shtml Third Quarter 2008: Selected
Consolidated Financial Information Unaudited (Expressed in
thousands of U.S. dollars, except for per share amount and number
of shares)
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Three months Nine months ended Sept 30, ended Sept 30, 2008 2007
2008 2007
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Revenues: Product and service revenue $ 11,235 $ 12,619 $ 35,144 $
32,761 Engineering development revenue 1,050 4,947 5,535 12,706
--------------------------------------------------- Total revenues
12,285 17,566 40,679 45,467 Cost of revenues and expenses: Cost of
product and service revenues 10,547 7,500 30,514 18,622 Research
and product development 8,754 15,102 29,215 43,011 General and
administrative 3,183 3,902 10,109 10,689 Marketing and business
development 1,930 2,311 5,584 6,393 Depreciation and amortization
1,410 3,736 4,478 11,137
--------------------------------------------------- Total cost of
revenues and expenses 25,824 32,551 79,900 89,852
--------------------------------------------------- Loss before
undernoted (13,539) (14,985) (39,221) (44,385) Investment and other
income 308 5,214 2,224 14,305 Loss on disposal & write-down of
long-lived assets - (4,563) (18) (4,583) Gain on sales of assets -
- 96,845 - Equity in loss of associated companies (2,226) (1,322)
(7,707) (6,308) ---------------------------------------------------
Income (loss) from continuing operations before income taxes
(15,457) (15,656) 52,123 (40,971) Income taxes - (68) 16 (53)
--------------------------------------------------- Income (loss)
from continuing operations for period (15,457) (15,588) 52,107
(40,918) Loss from discontinued operations for period - (429) -
(493) --------------------------------------------------- Net
income (loss) for period $ (15,457) $ (16,017) $ 52,107 $ (41,411)
---------------------------------------------------
--------------------------------------------------- Basic earnings
(loss) per share $ (0.19) $ (0.14) $ 0.61 $ (0.36) Diluted earnings
(loss) per share $ (0.19) $ (0.14) $ 0.60 $ (0.36)
--------------------------------------------------- Weighted
average number of common shares outstanding-basic 82,101,633
114,593,401 85,864,530 114,519,189
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Cash used by operations $ (6,055) $ (4,716) $ (18,673) $ (22,055)
Capital expenditures (490) (1,431) (2,100) (3,796)
--------------------------------------------------- Operating cash
consumption (End note 1) $ (6,545) $ (6,147) $ (20,773) $ (25,851)
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September 30 December 31, 2008 2007 --------------------------
Total cash, cash equivalents and short term investments $ 57,137 $
145,574
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THIRD QUARTER 2008 CONFERENCE CALL
---------------------------------- Ballard will hold a conference
call to discuss its third quarter 2008 results on Monday, November
10, 2008 at 8:30 a.m. PT (11:30 a.m. ET). On November 10, 2008,
access to the live call will be on telephone number (604) 638-5340.
A link to the simultaneous audio web cast will also be available on
the homepage of Ballard's website at http://www.ballard.com/.
Following the call, a recording will be available for 24 hours
immediately afterwards at (604) 638-9010 (Confirmation Number: 6325
followed by the number sign). The audio web cast with slides will
be posted and archived by the end of the day on November 12, 2008
in the Investor Events & Conference Calls section of Ballard's
website. About Ballard Power Systems Ballard Power Systems (TSX:
BLD; NASDAQ: BLDP) is recognized as a world leader in the design,
development, manufacture and sale of clean energy fuel cell
products. Ballard's mission is to accelerate fuel cell product
adoption. To learn more about what Ballard is doing with Power to
Change the World(R), visit http://www.ballard.com/. This release
contains forward-looking statements that are based on the beliefs
and assumptions of Ballard's management and reflect Ballard's
current expectations as contemplated under section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such assumptions
relate to our financial forecasts and expectations regarding our
product development efforts, manufacturing capacity, and market
demand. These statements involve risks and uncertainties that may
cause our actual results to be materially different, including,
without limitation, the rate of mass adoption of our products,
product development delays, changing environmental regulations, our
ability to attract and retain business partners and customers, our
access to funding, increased competition, our ability to protect
our intellectual property, changes in our customers' requirements,
and our ability to provide the capital required for product
development, operations and marketing. Readers should not place
undue reliance on Ballard's forward-looking statements and Ballard
assumes no obligation to update or release any revisions to these
forward looking statements. For a detailed discussion of the risk
factors that could affect Ballard's future performance, please
refer to our most recent Annual Information Form.
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Endnotes: (1) Operating cash consumption and Normalized net loss
are non-GAAP measures used to assist in assessing Ballard's
financial performance. Non-GAAP measures do not have any
standardized meaning prescribed by GAAP and are therefore unlikely
to be comparable to similar measures presented by other companies.
Operating cash consumption measures the amount of cash required to
fund the operating activities of Ballard's business and excludes
financing and investing activities except for additions to
property, plant and equipment. Normalized net loss measures our net
loss after excluding items that are unusual in nature or do not
reflect the normal continued operating activity of the business.
Gains on sale of assets held for sale, losses from discontinued
operations and write-downs of long-lived assets are not considered
part of our core activities, and are expected to occur
infrequently. Therefore we have removed these in our calculation of
normalized net loss. Ballard, the Ballard logo and Power to Change
the World are registered trademarks of Ballard Power Systems Inc.
DATASOURCE: Ballard Power Systems Inc. CONTACT: or to arrange an
interview, please contact Guy McAree at (604) 723-1961 or
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