Ballard Power Systems Inc. · TSX:BLDP
Ballard Power Systems — Q4 2014 Earnings Presentation
21 slides from Ballard Power Systems's earnings presentation, Feb 26, 2015
Slide 1: Q4 2014 Results & Conference Call 2015 Outlook
Q4 2014 Results & Conference Call 2015 Outlook February 26, 2015 PAGE 1
Slide 2: Ballard Management
Ballard Management Randy MacEwen President & CEO Tony Guglielmin CFO PAGE 2
Slide 3: Forward Looking Statements
Forward Looking Statements This presentation contains forward‐looking statements, including: estimated revenue; cash operating costs; gross margins; product cost reductions; adjusted EBITDA; liquidity; market size and growth projections; customer value propositions; and expected sales and product sh
Slide 4: Corporate Direction
Corporate Direction • Ballard is an industry leader o Most advanced technology; best people • Adjustments to strategic direction needed to: o Drive long‐term business growth; and o Increase shareholder value • Focus is on execution of a customer‐centric strategy, built on 2 platforms: o Power Produc
Slide 5: Technology Solutions Transaction
Technology Solutions Transaction • A landmark Technology Solutions deal • Key elements – 1) Automotive IP acquired from UTC in 2014 transferred to Volkswagen Group for $50M 2) Ballard retains right to use this IP in non‐auto, bus and limited pre‐ commercial automotive applications 3) $40M received F
Slide 6: Technology Solutions Transaction (Cont'd)
Technology Solutions Transaction (Cont’d) • Benefits to Ballard – o Near term Deepens long‐term partnership with Volkswagen Group Cash of ~$29M o Mid‐term Cash of ~$9M by Q1 2016 Engineering services contract will generate ~$20M per year for next 4‐ years, with an optional 2‐year extension o
Slide 7: 2014 Results
2014 Results • 2014 was a challenging year … but, with positive highlights – o Strong year in Engineering Services 43% growth o Strong year in Material Handling 124% growth o Acquisition of IP assets from UTC o Volkswagen’s introduction of fuel cell concept cars A testament to progress in our
Slide 8: Growth Strategy: Power Products
Growth Strategy Power Products • Mandate meet the needs of customers through delivery of high value, clean energy products that reduce customer costs and risks • Recent investment in experienced and proven sales & account management personnel – o Jameson Birdnow, Director of Key Accounts o Kevin W
Slide 9: Growth Strategy (Cont'd): Technology Solutions
Growth Strategy (Cont’d) Technology Solutions • Mandate help customers solve difficult technical & business challenges in their PEM fuel cell programs o Providing customized, bundled technology solutions, including: World‐class, specialized engineering services; Access to IP portfolio and know
Slide 10: Telecom Backup Power Strategy
Telecom Backup Power Strategy • 2014 was a difficult year in the telecom industry o Reduced spending by Tier 1 network operators, project delays due to merger activity, review of network investment & architecture strategies • End‐customers focused on cost reduction, reliability and resiliency o Serv
Slide 11: Gross Margin Strategy
Gross Margin Strategy • Increased organizational focus on product gross margin improvement • Addressing GM from both price and cost perspectives – o Management performance objectives weighted based on GM performance o Sales incentive plan now based on margin performance, not revenue o Cost reduction
Slide 12: China Strategy
China Strategy • Need strong, well‐capitalized local partners • Azure contract terminations o Partnership became untenable o No key IP was licensed to Azure • Currently in discussion with interested & credible potential partners in China PAGE 12
Slide 13: Fuel Cell Industry Momentum
Fuel Cell Industry Momentum • Automotive sector o Fuel cell car announcements from Volkswagen, Toyota, Hyundai, Honda • Bus market o 5 leading European bus OEMs anticipate 500‐to‐1,000 fuel cell buses on the road by 2017‐20 • Material Handling sector o Strong bookings at Plug Power o Hyster‐Yale’s o
Slide 14: Ballard 2015 Outlook
Ballard 2015 Outlook Technology Solutions • Recent transaction deepens relationship with Volkswagen Group • In addition to Volkswagen, currently have 12 other projects underway o Including this week’s announcement of a new global automotive OEM customer and next phase of work with Ardica Technologie
Slide 15: Growth Priority
Growth Priority • Growth and scale are top priority for the business • Compelling platforms for organic growth o Power Products; and o Technology Solutions • Also pursuing strategic acquisition opportunities that: o Are complementary to a customer‐centric growth strategy; o Help drive scale; o Help
Slide 16: 2014 Revenue and Gross Margin
2014 Revenue and Gross Margin Revenue (millions) Gross Margin (%) 20% $55.8 Without warranty provisions • 2014 Q4 revenue of $15.6M • 2014 Q4 declined to (19%) • 2014 FY improved 12%, to $68.7M • 2014 FY declined to 15% * Services provided primarily for Daimler AG for a specific manufacturing supply
Slide 17: 2014 Cash Operating Cost Base and Adjusted EBITDA
2014 Cash Operating Cost Base and Adjusted EBITDA Cash Operating Cost Base* (millions) Adjusted EBITDA* (millions) ($8.9) Without warranty provisions and receivable impairments * Measures operating expenses excluding stock‐based compensation expense, depreciation and * Measures EBITDA adjusted for s
Slide 18: 2014 Liquidity
2014 Liquidity • Q4 Cash Used By Operating Activities increased to ($8.2)M • 2014 FY Cash Used By Operating Activities increased to ($20.7)M • End‐2014 cash reserves $23.7M o Subsequently augmented in Q1 2015 by ~$29M in net proceeds from the Technology Solutions transaction with Volkswagen Group PA
Slide 19: Additional Notes
Additional Notes • Randy MacEwen & Tony Guglielmin will be at the upcoming 27th Annual Roth Conference o Dana Point, CA – Tuesday, March 10th • Ballard Investor & Analyst Day o Preliminary plan for September timeframe – will be reaching out to covering analysts & investors to confirm availability PA
Slide 20: Q4 2014 Conference Call Q&A
Q4 2014 Conference Call Q&A PAGE 20
Slide 21: Q4 2014 Results & Conference Call 2015 Outlook
Q4 2014 Results & Conference Call 2015 Outlook February 26, 2015 PAGE 21
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