Ballard Power Systems Inc. · TSX:BLDP
Ballard Power Systems — Investor Day (September 2017)
154 slides from Ballard Power Systems's investor day presentation, Sep 14, 2017
Slide 1: Investor & Analyst Day
Investor & Analyst Day New York City September 14, 2017 Power to Change the World® 1 BALLARD.COM
Slide 2: Welcome
Welcome Tony Guglielmin Vice President & Chief Financial Officer Power to Change the World® 2 BALLARD.COM
Slide 3: Agenda
Agenda Strategic Direction & Investment Thesis Randy MacEwen, President & Chief Executive Officer Power Products Growth Platform Rob Campbell, VP & Chief Commercial Officer Heavy Duty Motive Market Rob Campbell, VP & Chief Commercial Officer The View From Within China Mr. Charles Lu, Founder & Chair
Slide 4: Agenda (Cont'd)
Agenda (Cont’d) Portable Power Dr. Paul Osenar, President - Protonex Technology & Product Roadmap Dr. Kevin Colbow, VP – Technology and Product Development Technology Solutions Growth Platform Dr. Kevin Colbow, VP – Technology and Product Development Unmanned Aerial Vehicles (UAVs) Phil Robinson, VP
Slide 5: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements, including: estimated revenue; gross margin; cash operating costs; adjusted EBITDA; product cost reductions; liquidity; market size and growth projections; customer value propositions; and expected sales and product shi
Slide 6: Strategic Direction & Investment Thesis
Strategic Direction & Investment Thesis Randy MacEwen President & CEO Power to Change the World® 6 BALLARD.COM
Slide 7: Macro Drivers, 2017 Progress, Investment Thesis
Strategic Direction & Investment Thesis • Macro Drivers • 2017 Progress • Investment Thesis Power to Change the World® 7 BALLARD.COM
Slide 8: Strategic Direction & Investment Thesis
Strategic Direction & Investment Thesis Power to Change the World® 8 BALLARD.COM
Slide 9: Climate change pact will result in decarbonization
Strategic Direction & Investment Thesis Climate change pact will result in decarbonization. Power to Change the World® 9 BALLARD.COM
Slide 10: Social and political will to address urban air pollution
Strategic Direction & Investment Thesis Social and political will to address urban air pollution. Power to Change the World® 10 BALLARD.COM
Slide 11: Many cities are committing to clean transportation
Strategic Direction & Investment Thesis Many cities are committing to clean transportation. Power to Change the World® 11 BALLARD.COM
Slide 12: Rapid adoption of electric propulsion
Strategic Direction & Investment Thesis Rapid adoption of electric propulsion. Fuel cells are complementary. Power to Change the World® 12 BALLARD.COM
Slide 13: Fuel cell cars are hitting the road
Strategic Direction & Investment Thesis Fuel cell cars are hitting the road. Power to Change the World® 13 BALLARD.COM
Slide 14: Hydrogen fueling infrastructure is being built
Strategic Direction & Investment Thesis Hydrogen fueling infrastructure is being built. Power to Change the World® 14 BALLARD.COM
Slide 15: Hydrogen Council formed in 2017
Strategic Direction & Investment Thesis Hydrogen Council formed in 2017. Power to Change the World® 15 BALLARD.COM
Slide 16: Strong demand for fuel cell technology in China
Strategic Direction & Investment Thesis Strong demand for fuel cell technology in China. Power to Change the World® 16 BALLARD.COM
Slide 17: Macro Drivers, 2017 Progress, Investment Thesis
Strategic Direction & Investment Thesis • Macro Drivers • 2017 Progress • Investment Thesis Power to Change the World® 17 BALLARD.COM
Slide 18: 11M kms of revenue service
Strategic Direction & Investment Thesis 11M kms of revenue service; equivalent to 275x around the globe. Power to Change the World® 18 BALLARD.COM
Slide 19: 25K hrs of bus operation
Strategic Direction & Investment Thesis 25K hrs of bus operation; equivalent to 6.9 years with no stack maintenance. Power to Change the World® 19 BALLARD.COM
Slide 20: European calls for 91 fuel cell buses (JIVE)
Strategic Direction & Investment Thesis European calls for 291 fuel cell buses (JIVE I & II Programs). Power to Change the World® 20 BALLARD.COM
Slide 21: Collaboration with New Flyer for 20 buses
Strategic Direction & Investment Thesis Collaboration with New Flyer for 20 buses with OCTA and AC Transit in California. Power to Change the World® 21 BALLARD.COM
Slide 22: L.A. Metro to eliminate fleet emissions by 2030
Strategic Direction & Investment Thesis L.A. Metropolitan Transportation Authority to eliminate emissions from fleet by 2030. Power to Change the World® 22 BALLARD.COM
Slide 23: Ballard is well positioned in China
Strategic Direction & Investment Thesis Ballard is well positioned in China. Power to Change the World® 23 BALLARD.COM
Slide 24: $25M technology transfer agreement with Broad Ocean
Strategic Direction & Investment Thesis We have signed a $25M technology transfer agreement with Broad Ocean. Power to Change the World® 24 BALLARD.COM
Slide 25: $29M in orders for 600 fuel cell engines
Strategic Direction & Investment Thesis We have received $29M in orders for delivery of 600 fuel cell engines. Power to Change the World® 25 BALLARD.COM
Slide 26: Yinlong Bus initial order
Strategic Direction & Investment Thesis Yinlong Bus has ordered an initial 10 fuel cell engines. Power to Change the World® 26 BALLARD.COM
Slide 27: Fuel cell bus program in Foshan and Yunfu
Strategic Direction & Investment Thesis Program for 300 fuel cell buses progressing in Foshan and Yunfu. Power to Change the World® 27 BALLARD.COM
Slide 28: Synergy-Ballard stack JV operational
Strategic Direction & Investment Thesis Synergy-Ballard stack JV operational. Power to Change the World® 28 BALLARD.COM
Slide 29: Fuel cell rail market is progressing
Strategic Direction & Investment Thesis Fuel cell rail market is progressing. Power to Change the World® 29 BALLARD.COM
Slide 30: Collaboration with Kenworth for Class 8 truck
Strategic Direction & Investment Thesis Collaboration with Kenworth for fuel cell Class 8 truck program at Ports of Los Angeles and Long Beach. Power to Change the World® 30 BALLARD.COM
Slide 31: Forklift market continues to evolve
Strategic Direction & Investment Thesis Forklift market continues to evolve. Power to Change the World® 31 BALLARD.COM
Slide 32: Protonex Power Managers and U.S. Army procurement
Strategic Direction & Investment Thesis Protonex Power Managers pacing through U.S. Army procurement process. Power to Change the World® 32 BALLARD.COM
Slide 33: Advancing key Technology Solutions customer programs
Strategic Direction & Investment Thesis Advancing key Technology Solutions customer programs. Power to Change the World® 33 BALLARD.COM
Slide 34: Collaboration with UAV partners
Strategic Direction & Investment Thesis Exciting collaboration with UAV partners. Power to Change the World® 34 BALLARD.COM
Slide 35: Continued investment in technology and products
Strategic Direction & Investment Thesis We continue to invest in our technology and products. Power to Change the World® 35 BALLARD.COM
Slide 36: Collaboration with OEMs to reduce powertrain cost
Strategic Direction & Investment Thesis Collaboration with OEMs and integrators to reduce cost of hydrogen powertrain. Power to Change the World® 36 BALLARD.COM
Slide 37: Investment Thesis
Strategic Direction & Investment Thesis Investment Thesis 1. Converging Macro Trends • GHG reduction; air quality improvement; electrified propulsion systems 2. Global Leadership Position in Fuel Cells • 30 years in PEM technology; unrivalled field experience; brand strength 3. Diversified Business
Slide 38: Power Products Growth Platform
Power Products Growth Platform Rob Campbell Vice President & Chief Commercial Officer Power to Change the World® 38 BALLARD.COM
Slide 39: Power Products Portfolio
Power Products Growth Platform Power Products Portfolio Heavy Duty Motive Material Handling Portable Power Backup Power PRODUCTS APPLICATIONS Market (1) $5 Billion $1 Billion $1+ Billion $50M (2) (1) Ballard estimate of annual addressable market in 2026 (2) Scandinavia BUP market Power to Change the
Slide 40: Power Products Revenue
Power Products Growth Platform Power Products Revenue $55.7M Significant Growth Portable Power Backup Power Material Handling $38.5M Heavy Duty Motive $33.8M $26.3M 2014 2015 2016 1H 2017 Power to Change the World® 40 BALLARD.COM
Slide 41: Delivering Heavy Duty Motive Products
Power Products Growth Platform Delivering Heavy Duty Motive Products 80,000 2,500 Units Shipped 2,000 60,000 Kilowatts Shipped Units1 Shipped Kilowatts Shipped 1,500 40,000 1,000 20,000 500 2014 2015 2016 2017 Forecast Includes modules shipped from Canada and stacks & MEA’s shipped to the JV Power t
Slide 42: Material Handling
Power Products Growth Platform Material Handling • $1 Billion market potential • Value proposition validated (Walmart, Amazon, Sysco…..) • Supplied large majority of stacks for Plug’s >15,000 GenDrives (ongoing business) • Customer engagement with several fork lift OEM’s for purpose-built forklift t
Slide 43: Backup Power
Power Products Growth Platform Backup Power • Ballard Europe competence center • Hydrogen backup power systems for critical infrastructure with focus on Scandinavia, China and Japan • Additional sales of air cooled stacks to stationary FC system integrators Power to Change the World® 43 BALLARD.COM
Slide 44: Heavy Duty Motive
Heavy Duty Motive Rob Campbell Vice President & Chief Commercial Officer Power to Change the World® 44 BALLARD.COM
Slide 45: HD Motive market is rapidly moving to commercial status
Heavy Duty Motive HD Motive market is rapidly moving to commercial status. • Key bus market today • Truck, rail and marine markets now developing • Market driven by regulatory changes and cost improvements • Heavy Duty Motive market is at an inflection point: o China leading the way • Customers seek
Slide 46: We have decades of experience
Heavy Duty Motive We have decades of experience. • > 11 Million kilometers in service • Across 12 countries through challenging climates and road conditions • Currently >95% fuel cell module availability • 100+ heavy duty vehicles on the road • 15+ bus OEMs offering vehicle options powered by Ballar
Slide 47: There is a political will to implement changes
Heavy Duty Motive There is a political will to implement changes. • Recognition of pollution impact on health • Diesel vehicles being banned or restricted • Introduction of low emission zones • Commitment from transit agencies for 100% zero emission buses by 2025-30 Power to Change the World® 47 BAL
Slide 48: New regulations and initiatives are being introduced
Heavy Duty Motive New regulations and initiatives are being introduced. • New Energy Vehicle Program (China) • Implementation of Euro VI (Europe) with Real Driving Emissions test procedure • Clean transit regulations in discussion in California (ARB) • California Cap and Trade Program re- authorizat
Slide 49: Fuel cells enhance performance of electric vehicles
Heavy Duty Motive “This is a great bus, very quiet, very comfortable to drive, people are loving it” TfL Bus driver Fuel cells enhance performance of electric vehicles • Extended range for vehicle (> 300 miles) • Flexible route (bus suitable for all routes) • Fast refilling (5-10 min) enabling heavy
Slide 50: Driving FCEB cost reduction with partners
Heavy Duty Motive We are driving $ FCEB cost reduction with our partners to meet commercialization targets. Power to Change the World® 50 BALLARD.COM
Slide 51: FCEB competitive TCO by 2020
Heavy Duty Motive FCEB will offer a competitive TCO compared to other clean transit options by 2020 2020 Total Cost of Ownership (€/km/year) € 450,000 €4.63/km € 400,000 € 350,000 €3.69/km €3.78/km €3.68/km € 300,000 € 250,000 € 200,000 € 150,000 € 100,000 € 50,000 €- FCEB (today) CNG BEB FCEB (2020
Slide 52: Major gains even with modest scaling
Heavy Duty Motive Major gains being achieved even with modest scaling Fuel Cell Electric Bus Cost (12 m bus in USD) $2,250,000 We are driving fuel cell electric bus BC Transit (2010) Europe $2,000,000 cost reduction to meet 2020 targets North America with: $1,750,000 China CHIC (2010) $1,500,000 • S
Slide 53: The addressable market is growing
Heavy Duty Motive The addressable market is growing • >500,000 trucks and buses will have electric drive powertrain by 2026 (Navigant Research 2016 ) Rapid Growth in China • We estimate that fuel cell could serve 20% of the commercial electric vehicle market by 2026 or 100,000 vehicles • This repres
Slide 54: Hydrogen provides scalability and diversification
Heavy Duty Motive Hydrogen provides scalability and diversification for the transport electrification. • Hydrogen is ideal for centralized fueling of large fleets • Hydrogen opens a different way to transport low carbon energy into cities • Hydrogen can solve problems of grid instability and renewab
Slide 55: Progress in China
Heavy Duty Motive Progress in China • 24 buses delivered in Guangdong Province • 90 new buses entering service • Broad Ocean order for 600 FC engines • FCveloCity® engines integrated by 7 different bus OEMs • Ballard stacks integrated in 3 truck platforms • Fueling infrastructure is being deployed a
Slide 56: China partners and licensees
Heavy Duty Motive Ballard China headquarters Guangdong Nation Synergy • Ballard fuel cell module licensee • JV partner for stack production Nantong ZEHE • Ballard fuel cell module licensee Zhongshan Broad-Ocean Motor • Ballard’s largest shareholder 9.9% • Ballard fuel cell module licensee Shanghai R
Slide 57: Ballard products integrated into heavy duty vehicles
Heavy Duty Motive Ballard products are being integrated into heavy duty vehicles. Power to Change the World® 57 BALLARD.COM
Slide 58: China Joint Venture Video
Heavy Duty Motive China Joint Venture Video Power to Change the World® 58 BALLARD.COM
Slide 59: Progress in Europe
Heavy Duty Motive Progress in Europe • Delivery of modules for 3Emotion (21 buses) & 10 trolley buses in Riga • London bus now surpassed 25,000 hours in service • 291 fuel cell buses under JIVE programs by 2020 • New initiatives for large fleet financing • 5 bus OEM’s using Ballard in Europe Power t
Slide 60: Progress in North America
Heavy Duty Motive Progress in North America • Won award for 20 fuel cell buses in CA with AC Transit & Orange County with New Flyer • FTA testing of New Flyer & ElDorado fuel cell buses at Altoona ongoing • 13 buses for SARTA and SUNLINE under construction at Eldorado • Working on large bus programs
Slide 61: Truck Applications
Heavy Duty Motive Truck Applications • Leveraging experience gained with buses • Truck market requirements in next-gen Heavy Duty Motive product platform • Developing relationships with key truck OEM’s • Ballard products being integrated in several truck pilot projects including: o DongFeng truck (C
Slide 62: Rail Applications
Heavy Duty Motive Rail Applications • 100kW and 200kW engines • Designed & tested to rail standards • Integrated into 2 platforms in China Power to Change the World® 62 BALLARD.COM
Slide 63: Global partnerships to achieve commercialization
Heavy Duty Motive Ballard has the global partnerships to achieve commercialization We are: • Driving cost reduction and improved product life cycle cost • Developing integrated hydrogen powertrains by working with partners • Expanding our market penetration to adjacent markets • Strengthening our sa
Slide 64: Q&A
Q&A Power to Change the World® 64 BALLARD.COM
Slide 65: Portable Power
Portable Power Dr. Paul Osenar President – Protonex Power to Change the World® 65 BALLARD.COM
Slide 66: Power Management
Portable Power Power Management • Stand alone devices to manage energy/power • Software, power electronics & user interfaces • Plug & Play • Inputs: batteries, solar, fuel cells, … • Output: configurable without user intervention • Scalable platform for wide variety of applications Squad Power Vest
Slide 67: The Military Challenge
Portable Power Conventional Problem Solutions Power The Military Challenge • Heavy weight Intelligent Batteries & • Transitioning to the “digital battlefield” creates power generators burden on management • Proliferation of electronic technologies soldiers devices & devices (sensors, radios, GPS • C
Slide 68: Energy: the largest weight burden on soldiers
Portable Power Energy…the largest weight burden on dismounted soldiers Power Manager Value Proposition: • Weight reduction – effective power management can decrease the load on the soldier by up to 20 lbs • Reduced number & types of batteries – simplify logistics • Improved operational flexibility P
Slide 69: Power Manager For The Digital Battlefield
Portable Power Power Manager For The Digital Battlefield • Squad Power Manager (SPM) • Nett Warrior Power Scavenger (NPS) o Vest Power Manager • Next Gen Hub (NGH) Power to Change the World® 69 BALLARD.COM
Slide 70: Status of Squad Power Manager (SPM-622)
Portable Power Status of Squad Power Manager (SPM-622) • 5,500 SPM kits fielded to date • Efforts to seed international markets showing early traction • Protonex has realigned cost structure, based on delay in full scale Army procurement Power to Change the World® 70 BALLARD.COM
Slide 71: Army Acquisition
Portable Power Army Acquisition • Milestone C marks transition from “prototype fielding” to “full rate production” • Pentagon approval received for Small Unit Power initiative • Issuance of Milestone C by PEO- Soldier expected in 2017 Power to Change the World® 71 BALLARD.COM
Slide 72: Army Opportunity Post-Milestone C
Portable Power Army Opportunity Post-Milestone C Based on U.S. Army Basis of Issue (BOI): • ~18,000 SPM Kits ($100-125M) • ~54,000 Man-Worn Kits ($50- 100M) • Fielding schedule dependent on Congressional funding levels Power to Change the World® 72 BALLARD.COM
Slide 73: U.S. DoD – Non Army
Portable Power U.S. DoD – Non Army • Growing sales to DoD elements beyond the Army • Army sponsored fielding to Special Operations units ongoing • Direct sales to Explosive Ordinance teams, Marine Recon Units, Field Medical Teams Power to Change the World® 73 BALLARD.COM
Slide 74: International Traction
Portable Power International Traction • Sales to 10 non-U.S. militaries completed. • Established 8 distribution / reseller partnerships outside North America • Sales for field evaluation and special forces to date Power to Change the World® 74 BALLARD.COM
Slide 75: Q&A
Portable Power Q&A Power to Change the World® 75 BALLARD.COM
Slide 76: Technology & Product Roadmap
Technology & Product Roadmap Dr. Kevin Colbow Vice President – Technology and Product Development Power to Change the World® 76 BALLARD.COM
Slide 77: PEM Fuel Cell Nomenclature
Technology & Product Roadmap PEM Fuel Cell Nomenclature Bipolar Membrane plates and Electrode gaskets Catalyst Layers Assembly Fuel Cell Stack (MEA) Fuel Cell Module / Engine Power to Change the World® 77 BALLARD.COM
Slide 78: Research & Product Development Investment
Technology & Product Roadmap Research & Product Development Investment (Breakdown of $19.8M in 2016) Research & Product Development spend is predominantly focused on product development/evolution… Technology Development MEA’s 7% 11% Modules Stacks 34% 48% Power to Change the World® 78 BALLARD.COM
Slide 79: MEA Core Technology
Technology & Product Roadmap MEA Core Technology Focus on MEA technology • Fuel cell “heart” • Complex electrochemistry MEA • Highly specialized scientific & engineering requirements Cathode • Vertical integration Proton • Holistic system design Exchange • Ballard is the only fuel cell company Membr
Slide 80: Technology Leadership Examples
Technology & Product Roadmap Technology Leadership Examples Extensive design and analysis tools across system, stack, MEA 3D virtually reconstructed image of membrane fracture in controlled study1 Significant membrane capabilities Improvement in membrane lifetime (1) Y. Singh et al., SFU, Int. J. of
Slide 81: Technology Leadership Examples (Cont'd)
Technology & Product Roadmap Technology Leadership Examples (Cont’d) 30 kW System Performance Sea Level At Altitude • Advanced electrode designs Sea Level • Operating from sub-zero conditions At Altitude • Tolerating range of operating conditions Ballard system – system optimized for operating condi
Slide 82: Technology & Product Evolution
Technology & Product Roadmap Technology & Product Evolution • Seeking product performance improvements and cost reduction through an efficient process that manages risk • Product roadmaps built on – o Market requirements, as defined by customers and prospects o Years of in-house fuel cell project ex
Slide 83: Technology & Product Improvement
Technology & Product Roadmap Technology & Product Improvement Heavy Duty Motive Example • Advanced MEA & stack designs are fed by R&D activities o Leveraging automotive technology o Improved component robustness o Scaling of manufacturing and production processes o Development of supply chain • Faci
Slide 84: Technology & Product Improvement (Cont'd)
Technology & Product Roadmap Technology & Product Improvement Heavy Duty Motive Example (Cont’d) 2008-15 2015-18 2018+ Gen 6 Gen 6+ Gen 7 Gen 8 >10,000 >20,000 >20,000 >34,000 Stack Durability hrs. hrs. hrs. hrs. Cost Reduction 30% ~20% ~40% 50% Functionality Maximum Temperature: 70oC 85oC Improve
Slide 85: Dramatic Advances in Technology & Cost
Technology & Product Roadmap Dramatic Advances in Technology & Cost • Functional improvements with Heavy Duty Motive Engine each product iteration o Higher durability o Greater reliability o Lower cost • 8th generation (~2020) will be cost competitive with battery powertrain and have lower operating
Slide 86: Product Roadmap
Technology & Product Roadmap Product Roadmap 2016 2017 2018 2019 2020 Improved durability & cost Stacks 1 NEXT GENERATION Higher power density 2 Increased operating temp. Improved freeze-start capability 30kW NEXT GEN Improved durability & cost; Higher power density; Modules 60- Increased operating
Slide 87: Cost-Down Activities
Technology & Product Roadmap Cost-Down Activities • Balancing cost-down with functionality improvements to meet market requirements o Greater power density; improved freeze-start capability; increased temperature operation; low RH tolerant designs • System integrators consider overall system cost to
Slide 88: Liquid-Cooled Fuel Cell Stack Cost Reduction
Technology & Product Roadmap Liquid-Cooled Fuel Cell Stack Cost Reduction ($/W) Overall Cost Reduction (2012-20) of ~70% ~40% cost reduction (2017-20) based on: • Direct materials reductions ~50% • Direct labour reductions ~30% • Process improvements ~30% • Durability improvement ~80% Next Generatio
Slide 89: HD Engine Cost Reduction
Technology & Product Roadmap HD Engine Cost Reduction ($/W) Overall Cost Reduction (2012-20) of ~70% ~60% cost reduction (2017-20) based on: • Direct materials reduction ~50% • Direct labour reduction ~10% • Process improvements ~65% • Durability improvement ~75% Next Generation (vs. 2017) • +50% po
Slide 90: MD Engine Cost Reduction
Technology & Product Roadmap MD Engine Cost Reduction ($/W) ~33% price reduction (2017-20) based on: ASP $1.50 / W • Direct materials cost reduction ~35% • Direct labour cost reduction ~15% • Durability improvement ~60% ASP $1.00 / W Next Generation (vs. 2017) • Increased power density • Increased T
Slide 91: China Localization Impact on MD Engine
Technology & Product Roadmap China Localization Impact on MD Engine Expected cost reduction, by category • CAT0 – Off-the-shelf products • CAT1 – Build to print – initial focus with 2017 impact • CAT2 – Functional parts • CAT3 – More complex parts CAT0 MD30 Cost 2% CAT3 CAT1 35% 30% CAT2 33% Power t
Slide 92: Technology Solutions Growth Platform
Technology Solutions Growth Platform Dr. Kevin Colbow Vice President – Technology and Product Development Power to Change the World® 92 BALLARD.COM
Slide 93: Technology Solutions Objective
Technology Solutions Growth Platform Technology Solutions Objective Help customers solve technical & business challenges in their PEM fuel cell programs through customized technology solutions that de-risk and accelerate their development Through bundled solutions featuring specialized technical exp
Slide 94: Rationale
Technology Solutions Growth Platform Rationale 1. Build high contribution margin revenue pipeline, including future royalty streams 2. Enable long term market opportunities 3. Develop customer stickiness for long term product sales and IP leveraging 4. Build and cross-leverage IP portfolio, technolo
Slide 95: Intellectual Capital
Technology Solutions Growth Platform Intellectual Capital • 630 total employees and contractors worldwide • 2,300 person-years of experience • 211 Engineers, Scientists & Technologists o 30 PhD’s o 48 Masters o 100 Bachelors o 33 Diplomas • 11-years avg. tenure of core Engineering staff o 8% for 10-
Slide 96: Intellectual Property
Technology Solutions Growth Platform Intellectual Property Patent & Patent Application Areas • Ballard owns, licenses and has Other Fuel Cell access to ~2,000 patents & patent applications MEA/ 7% System Seals 26% • Deep know-how includes: 29% o Catalyst layer processing o MEA sealing using liquid i
Slide 97: Technology Solutions Markets
Technology Solutions Growth Platform Technology Solutions Markets Automotive Bus Rail Material Handling Materials Supply Aerospace / UAV Power to Change the World® 97 BALLARD.COM
Slide 98: Testing and Modeling
Technology Solutions Growth Platform Testing and Modeling Ballard test facility Finite Element Analysis and Fundamental Models Power to Change the World® 98 BALLARD.COM
Slide 99: Applications Engineering
Technology Solutions Growth Platform Applications Engineering Fuel cell bus service in China Truck application Onsite commissioning Power to Change the World® 99 BALLARD.COM
Slide 100: Product Development
Technology Solutions Growth Platform Product Development Bi-polar plate and MEA design Unnamed global OEMs >500 fuel cell products and 1,000’s of engineering hours provided to a number of global automotive OEMs Ballard test stand with cold chamber Power to Change the World® 100 BALLARD.COM
Slide 101: Manufacturing and Prototyping
Technology Solutions Growth Platform Manufacturing and Prototyping Catalyst Coated Membrane 200kW custom prototype tram engine Large-scale power plant installation Power to Change the World® 101 BALLARD.COM
Slide 102: Technology Transfer and Licensing
Technology Solutions Growth Platform Technology Transfer and Licensing Joint venture new stack manufacturing facility as part of technology transfer Power to Change the World® 102 BALLARD.COM
Slide 103: Volkswagen Group Case Study
Technology Solutions Growth Platform Volkswagen Group Case Study 6-year engineering services contract with Audi, through March 2019 (plus optional 2-year extension) • Audi is working with Ballard developing major components of the Audi h-tron • Ballard is providing engineering support developing the
Slide 104: CRRC Light Rail Case Study
Technology Solutions Growth Platform CRRC Light Rail Case Study • Collaboration with CRRC Tangshan since 2014 o 2016 demonstration of world’s first fuel cell powered tram • Plug & Play 200kW module delivered for light rail applications o Smaller size & weight increased power density First fuel cel
Slide 105: Non Precious Metal Catalyst Case Study
Technology Solutions Growth Platform Non Precious Metal Catalyst Case Study • Nisshinbo developed world-leading NPMC catalyst NPMC for PEM fuel cells powder • Ballard focused on integration of Nisshinbo’s NPMC into catalyst layer Phase 1 o Design modifications, prototyping & testing the 2013-15 cata
Slide 106: Technology Solutions Revenue
Technology Solutions Growth Platform Technology Solutions Revenue $11.7M $11.5M $11.3M $6.8M $6.5M $6.1M $6.0M $5.9M $4.9M $4.4M Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 Work progressed on 36 projects to date in 2017 Power to Change the World® 106 BALLARD.COM
Slide 107: Q&A
Q&A Power to Change the World® 107 BALLARD.COM
Slide 108: Unmanned Aerial Vehicles
Unmanned Aerial Vehicles Phil Robinson Vice President, Unmanned Systems – Protonex Power to Change the World® 108 BALLARD.COM
Slide 109: Why?
UAVs Why? • UAS (Unmanned Aerial Systems) will change how we o Inspect o Observe o Deliver • But only with enhanced duration and reliability • Ballard is uniquely positioned to lead this change Power to Change the World® 109 BALLARD.COM
Slide 110: Three Waves of the Drone Economy
UAVs Three Waves of the Drone Economy Power to Change the World® 110 BALLARD.COM
Slide 111: Commercial UAV Market
UAVs Commercial UAV Market Power to Change the World® 111 BALLARD.COM
Slide 112: Value Proposition vs. Batteries
UAVs Value Proposition vs. Batteries 3x Mission Time Non-linear application (agriculture): • 25% time decrease • 50% revenue increase Linear application (pipeline inspection): • Drone enabler • 90% cost reduction from helicopter 112 BALLARD.COM
Slide 113: Value Proposition vs. ICE
UAVs Value Proposition vs. ICE (Internal Combustion Engine) • 5x Reliability 113 BALLARD.COM
Slide 114: Defense
UAVs Defense • Experience over 10 years & 9 platforms • Strong value proposition – o Power density o Light weight o Low thermal & acoustic footprints o Low vibration o Long range Power to Change the World® 114 BALLARD.COM
Slide 115: Insitu Case Study
UAVs Insitu Case Study • Background: Defense work • Present efforts: ScanEagle • Look towards commercial transition in the future Power to Change the World® 115 BALLARD.COM
Slide 116: Boeing Insitu ScanEagle Video
UAVs Boeing Insitu ScanEagle Video Power to Change the World® 116 BALLARD.COM
Slide 117: Oil, Gas & Utility
UAVs Oil, Gas & Utility • Primary applications: o Asset inspection o Exploration / mapping o Leak detection • All have mission duration impact • Oil & Gas drone services market $609M in 2014, estimated $4B by 2020 Source: Mordor Intelligence, 2015 Power to Change the World® 117 BALLARD.COM
Slide 118: Agriculture
UAVs Agriculture • Initial UAS deployments focus on field inspection • Agriculture drone market estimated at $3-4B by 2022 • Most agriculture applications are duration limited: field mapping, crop scouting, livestock Sources: MarketsAndMarkets, June 2016 & Zion Market Research, Nov 2016) Power to Ch
Slide 119: Package Delivery Strategy
UAVs Package Delivery Strategy • Partner with key major package delivery efforts (several already underway) • Scale solutions up & down for larger and smaller delivery platforms • Longer-Term Goal – market leadership Power to Change the World® 119 BALLARD.COM
Slide 120: UAS-700 & UAS-1200
UAVs UAS-700 & UAS-1200 • 700W & 1,200W offerings • Integral hybrid battery charger • Liquid cooled wide operating temp. • Much quieter than engines – lower altitudes, higher resolutions • 3x range of batteries • 5x reliability of ICEs Power to Change the World® 120 BALLARD.COM
Slide 121: Why Ballard?
UAVs Why Ballard? • Technology • Experience • Partners Power to Change the World® 121 BALLARD.COM
Slide 122: Q&A
UAVs Q&A 122 BALLARD.COM
Slide 123: Operations Review
Operations Review David Whyte Vice President - Operations Power to Change the World® 123 BALLARD.COM
Slide 124: Strategic Focus
Operations Review Strategic Focus • Continued focus on Operational Values o Commitment to safety o Quality in everything we do o Environmental stewardship • World class manufacturer of PEM membrane electrode assemblies (MEAs), stacks, modules & systems • Grow MEA production capacity & capability, pr
Slide 125: Environmental, Health & Safety
Operations Review Environmental, Health & Safety • Continuing to strengthen culture of Safety • Certifying to ISO14001:2015 Environmental in 2017 • Will certify to ISO18001 OH&S by 2019 • Increasing focus on energy management • Working to measure & reduce carbon footprint Power to Change the World®
Slide 126: Quality & Continuous Improvement
Operations Review Quality & Continuous Improvement • Certified to ISO9001:2015 in 2017 • Re-certifying to IATF 16949 in 2018, to support automotive work • 6 Master Belts, 6 Black Belts, 21 Green Belts, 49 Yellow Belts • $3.5M forecast savings attributable to continuous improvement in 2016 • $1.5M fo
Slide 127: 30 Years Manufacturing Experience
Operations Review 30 Years Manufacturing Experience • Continuous evolution from discrete MEA assembly to continuous roll good handling • Full breadth & depth of knowledge in all PEM fuel cell material science areas • 24/7 operation across 5 facilities in Vancouver, British Columbia • Multiple techno
Slide 128: MEA Production
Operations Review MEA Production (000’s) 2,097 • 2000-16: 2.7M MEAs produced • 2017: 0.9M MEAs forecast • 2021: 2.1M MEAs forecast 1,225 935 Actual Forecast1 369 150 25 75 (1) Includes minimum contractual commitment from China JV Power to Change the World® 128 BALLARD.COM
Slide 129: Capacity & Capabilities
Operations Review Capacity & Capabilities • Sufficient capacity today to meet stack & module demand over next 5 years • Over next 2 years: o Planning for 3x expansion in MEA capacity o $7-9M investment in capital equipment, facilities and R&D for process development • Continued focus on leadership i
Slide 130: Supply Chain
Operations Review Supply Chain • Focus on delivering lowest cost, high quality, best-in-class products • Rigorous vendor qualification program for parts and vendors • Leveraging China relationships to build scale • New Oracle ERP system delivering enhanced business intelligence & metric-driven decis
Slide 131: Vancouver Operations Video
Operations Review Vancouver Operations Video Power to Change the World® 131 BALLARD.COM
Slide 132: Synergy-Ballard Stack JV
Operations Review Synergy-Ballard Stack JV • ̴$40M capital investment by Synergy • $20M technology transfer from Ballard • $150M minimum “take or pay” MEA JV contract with Ballard • JV facility sized to support stack requirements throughout China • 6,000 annual stack output (single shift) • 20,000 a
Slide 133: Joint Venture Stack Assembly Operations
Operations Review Joint Venture Stack Assembly Operations Plate resin line Power to Change the World® 133 BALLARD.COM
Slide 134: Joint Venture Stack Assembly Operations (Cont'd)
Operations Review Joint Venture Stack Assembly Operations (Cont’d) Plate handling line Power to Change the World® 134 BALLARD.COM
Slide 135: Joint Venture Stack Assembly Operations (Cont'd)
Operations Review Joint Venture Stack Assembly Operations (Cont’d) Stack assembly line Power to Change the World® 135 BALLARD.COM
Slide 136: Broad-Ocean Fuel Cell Engine Assembly
Operations Review Broad-Ocean Fuel Cell Engine Assembly • $25M technology transfer, licensing and supply arrangement o 3 sites licensed from Ballard, to be online in 2018 • $29M module order to support 600 FCEVs Power to Change the World® 136 BALLARD.COM
Slide 137: Long Term Focus
Operations Review Long Term Focus • Safety, Quality and Environmental Stewardship • Best-in-class manufacturing • Leadership in MEA production capabilities • Product cost reductions • Protect brand reputation by delivering and supporting quality products Power to Change the World® 137 BALLARD.COM
Slide 138: Q&A
Q&A Power to Change the World® 138 BALLARD.COM
Slide 139: Financial Overview
Financial Overview Tony Guglielmin Vice President & Chief Financial Officer Power to Change the World® 139 BALLARD.COM
Slide 140: Quarterly & YTD Revenue
Financial Overview Quarterly & YTD Revenue $49.2M 2015 Actual 2016 Actual 2017 Actual 2017 Consensus Estimate $34.0M $30.5M $30.7M $28.4M $26.5M $22.7M $20.6M $20.0M $16.1M $17.6M $16.0M $11.2M $9.3M Q1 Q2 Q3 Q4 YTD Power to Change the World® 140 BALLARD.COM
Slide 141: Annual Revenue
Financial Overview Annual Revenue $108.1M 27% 2015 Actual 2016 Actual $85.3M 2017 Consensus Estimate 51% $56.5M 2015 2016 2017 Power to Change the World® 141 BALLARD.COM
Slide 142: Revenue Diversification
Financial Overview Revenue Diversification (% of Total Revenue) 2016 Actuals 2020 Forecast Other 6% Other 4% Europe Europe 22% 18% China China 39% 45% N.America N.America 33% 33% China will remain an important part of Ballard’s diversified revenue picture Power to Change the World® 142 BALLARD.COM
Slide 143: Quarterly & YTD Gross Margin
Financial Overview Quarterly & YTD Gross Margin 42% 38% 35% 31% 30% 2015 29% 2016 2017 25% 25% 20% 19% 11% 10% Q1 Q2 Q3 Q4 YTD Power to Change the World® 143 BALLARD.COM
Slide 144: Full Year Gross Margin
Financial Overview Full Year Gross Margin 35% 7-pts 2015 Actual 28% 2016 Actual 2017 Consensus Estimate 10-pts 18% 2015 2016 2017 Power to Change the World® 144 BALLARD.COM
Slide 145: Quarterly Operating Leverage
Financial Overview Quarterly Operating Leverage 85% CASH OPERATING COSTS AS % OF REVENUE 60% 57% 48% 44% 42% 41% 39% 32% 27% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 Power to Change the World® 145 BALLARD.COM
Slide 146: Quarterly Adjusted EBITDA
Financial Overview Quarterly Adjusted EBITDA Adjusted EBITDA is $0.4M YTD in 2017 2015 2016 2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 $1.8M $1.1M $0.6M over trailing 12- month period $(0.7)M $(1.5)M $(2.4)M $(2.9)M $(2.9)M $(4.8)M $(5.1)M (4.9) ex $(7.2)M restructuring charges Power to Change the World® 14
Slide 147: Liquidity
Financial Overview Liquidity $72.6M $68.0M $68.1M $68.1M CASH RESERVES $44.3M $41.3M 2016 2017 End- End- End- End- Q1 Q2 Q3 Q4 Business Plan is fully funded Power to Change the World® 147 BALLARD.COM
Slide 148: Order Backlog
Financial Overview Order Backlog End-Q2 2017: Order Backlog1 of $263.5M and 12-Month Order Book2 of $97.2M ORDER Order Backlog Orders Received Orders Delivered Order Backlog BACKLOG At End-Q4 2016 in 1H 2017 in 1H 2017 At End-Q2 2017 Total Fuel Cell Products & $257.4M $55.3M $49.2M $263.5M Services
Slide 149: China Revenue & Cashflow Streams
Financial Overview China Revenue & Cashflow Streams Guangdong Synergy Ballard Hydrogen 1 Power Co., Ltd. (JVCo.) • Localized fuel cell stack production line in China • JV ownership: 90% Synergy; 10% BLDP BLDP 4 HQ 2 Engine Assembly Licensees 3 COMPONENT TECHNOLOGY ENGINE GLOBAL SALES SUPPLY TRANSFER
Slide 150: "250 x 30³" Financial Objective
Financial Overview “250 x 303” Financial Objective By End-2020: • >$250M Annual Revenue • 30%+ Revenue CAGR • 30%+ Gross Margin • $30M+ Adjusted EBITDA Power to Change the World® 150 BALLARD.COM
Slide 151: Investment Thesis
Financial Overview Investment Thesis 1. Converging Macro Trends • GHG reduction; air quality improvement; electrified propulsion systems 2. Global Leadership Position in Fuel Cells • 30 years in PEM technology; unrivalled field experience; brand strength 3. Diversified Business Model • Multiple grow
Slide 152: Q&A
Financial Overview Q&A Power to Change the World® 152 BALLARD.COM
Slide 153: Wrap-Up
Wrap-Up 1. Converging Macro Trends • GHG reduction; air quality improvement; electrified propulsion systems 2. Global Leadership Position in Fuel Cells • 30 years in PEM technology; unrivalled field experience; brand strength 3. Diversified Business Model • Multiple growth platforms & applications;
Slide 154: Thank You
THANK-YOU! Power to Change the World® 154 BALLARD.COM
Ballard Power Systems — Investor Day (September 2017) on 6ix