Ballard Power Systems Inc. · TSX:BLDP
Ballard Power Systems — Gateway Conference 2016
34 slides from Ballard Power Systems's conference presentation, Sep 7, 2016
Slide 1: Gateway Conference Investor Presentation
2016 Page 1 Gateway Conference SEPTEMBER 7, 2016 INVESTOR PRESENTATION SAN FRANCISCO
Slide 2: Forward Looking Statements
Page 2 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 pro
Slide 3: Introduction to Ballard
Page 3 Introduction to Ballard Ballard Power Systems – making a meaningful difference with our fuel cell technology, that will continue long into the future… • 37 years of experience • 23 years listed on TSX & 21 years on Nasdaq • 450 employees • 2,000 patents/applications • 250MW of fuel cell produ
Slide 4: Investment Highlights
Page 4 Investment Highlights 1) PEM fuel cell industry leadership o The result of technology, products & services, field experience, brand 2) Sustainable competitive advantages o Deep intellectual capital; unmatched IP portfolio 3) Executing diversified & capital‐efficient business model o Unique ‘P
Slide 5: Growth Platforms
Page 5 Growth Platforms CUSTOMER‐CENTRIC & CROSS‐LEVERAGEABLE POWER PRODUCTS TECHNOLOGY SOLUTIONS • Meet the power needs of • Help customers solve customers through delivery difficult technical and MANDATE of high value, clean energy business challenges in their products that reduce PEM fuel cell
Slide 6: Power Products Platform
Page 6 Power Products Platform • Mission: Meet customers’ power needs through delivery of high value, clean energy products that reduce customer costs and risks MARKETS Heavy Duty Motive Portable Power Material Handling Backup Power Motive Modules Portable Systems Fuel Cell Stacks Stationary Systems
Slide 7: Heavy Duty Motive
Page 7 Heavy Duty Motive • European market – o Expect to begin shipping 21 power modules later in 2016 under 3Emotion Program o Also focused on current Horizon Program for 100+ fuel cell buses Ballard‐powered bus manufactured by Van Hool NV in Belgium • U.S. market – o Expect to begin shipping 10 po
Slide 8: Recent Key Strategic Initiatives
Page 8 Recent Key Strategic Initiatives • Strategic collaboration framework agreement with Broad‐Ocean AND significant $28.3M equity investment in Ballard (announced July 26, 2016) • Landmark $168M fuel cell stack production line through a joint venture with Synergy (announced July 18, 2016) • Two i
Slide 9: Strategic Collaboration Framework & Equity Investment
Page 9 Strategic Collaboration Framework & Equity Investment Strategic Collaboration Framework Agreement • “Zhongshan Broad‐Ocean Motor Co., Ltd.” is a leading global manufacturer of motors for EVs o Produces 50M motors annually for King Long, BAE Systems, www.broad-ocean.com/en/index.html Dongfeng,
Slide 10: Landmark Fuel Cell Production Line Transaction
Page 10 Landmark Fuel Cell Production Line Transaction • Largest ever Ballard fuel cell deal – signed with Synergy • Value at least $168M over 5‐years • Key deal elements: a) $18.4M Technology Solutions revenue, to equip Synergy for manufacture of FCvelocity®‐9SSL fuel cell stacks in Yunfu, China b)
Slide 11: Landmark Fuel Cell Production Line Transaction (Cont'd)
Page 11 Landmark Fuel Cell Production Line Transaction (Cont’d) • Key deal benefits: a) Localization enables production of lower‐cost fuel cell stacks, thru local component sourcing and use of local labor b) Ballard will have exclusive right to buy stacks from the JV for sale outside China FCvelocit
Slide 12: Interrelated Deals Signed
Page 12 Interrelated Deals Signed • On July 18th 2016 these interrelated contracts were signed in China – Ballard and Synergy contract for production of fuel cell stacks through a joint venture Synergy, Broad‐Ocean and Chinese automotive OEMs (Dongfeng Special Vehicles & FAW) contract to deploy
Slide 13: Backup Power Strategic Transactions
Page 13 Backup Power Strategic Transactions Methanol Telecom Backup Power • Closed sale of Telecom Backup Power business assets to CHEM, major Taiwanese power equipment company, for up to $6.1M • $3M received on closing in Q2, plus up to $3.1M based on sales objectives during 18‐month earnout period
Slide 14: Portable Power (Protonex)
Page 14 Portable Power (Protonex) • 4,500 SPM’s in the field with U.S. military • $5.8M SPM purchase order received for U.S. Army in Q2 2016 … incremental to $2.8M order received late‐2015 Squad Power Manager – SPM 622 Squad • Currently in ‘Program of Record’ process with U.S. Military for Vest and
Slide 15: Material Handling
Page 15 Material Handling • >10,000 fuel cell forklift trucks in N/America today, >107M runtime hours Sample of Fuel Cell Forklift Truck Customers • Ballard focusing on two streams: 1) Supply of stacks to after‐market integrators, including Plug Power 2) Supply of Technology Solutions and packaged s
Slide 16: Distribution Agreement With Toyota Tsusho in Japan
Page 16 Distribution Agreement With Toyota Tsusho in Japan • Toyota Tsusho Corporation (TTC) is a Toyota Group company o And, one of the largest general trading companies in Japan …. ~US$76.3B revenue in latest fiscal year, ended March 2016 • Deal announced August 18th 2016 – TTC to distribute Balla
Slide 17: Technology Solutions Platform
Page 17 Technology Solutions Platform • Mission: help customers solve difficult technical and business challenges in their PEM fuel cell programs through customized technology solutions • YTD Technology Solutions revenue +28%, to $11.9M o Volkswagen Group contract commitment to 2019; program current
Slide 18: Q2 & YTD 2016 Overview
Page 18 Q2 & YTD 2016 Overview • Record full‐year 2016 order book & sales pipeline positioned Ballard for growth and improved performance this year o $58M order book for 2016 deliveries; exceeding 2015 revenue • Continued momentum reflected in strong top line Q2 2016 results o Revenue Growth: Q1 +76
Slide 19: Q2 & YTD 2016 Revenue and Gross Margin
Page 19 Q2 & YTD 2016 Revenue and Gross Margin Revenue (millions) Gross Margin (%) • Q2 2016 Revenue $17.6M • Q2 2016 Gross Margin 29% • Q2 +58% growth, comprised of: • Q2 +19‐points due to shift in product mix toward higher margin Heavy Duty Motive, o +87% Power Products, to $11.8M Portable Power &
Slide 20: Q2 & YTD 2016 Cash Operating Cost Base and Adjusted EBITDA
Page 20 Q2 & YTD 2016 Cash Operating Cost Base and Adjusted EBITDA Cash Operating Cost Base* (millions) Adjusted EBITDA# (millions) • Q2 2016 Cash Operating Costs $8.4M • Q2 2016 Adjusted EBITDA ($2.9)M, 40% improvement • Q2 +25% primarily to inclusion of Protonex operating costs • Q2 2016 Normalize
Slide 21: Liquidity
Page 21 Liquidity • End‐Q2 2016 cash reserves of $41.3M, including: o $3.0M received on close of methanol Telecom Backup Power asset sale to Chung‐Hsin Electric & Machinery Manufacturing Corporation (“CHEM”); and o $2.5M received for license to assemble and sell direct hydrogen H2PM systems in China
Slide 22: Gateway Conference Investor Presentation
2016 Page 22 Gateway Conference SEPTEMBER 7, 2016 INVESTOR PRESENTATION SAN FRANCISCO
Slide 23: Fuel Cell Technologies and Applications
Page 23 APPENDIX Fuel Cell Technologies SOFC 600°‐1200°C (Bloom Energy) Temperature Increasing High Thermal Management MCFC (Fuel Cell Energy) In 2015 180MW of Proton Requirements PAFC (United Technologies) Exchange Membrane (PEM) fuel cells were 60°‐120°C PEM Fuel Cells (Ballard Power Systems) ship
Slide 24: PEM Fuel Cells
Page 24 APPENDIX PEM Fuel Cells • Compact & scalable 1 Hydrogen fuel is channeled through field flow plates to the Anode on one side of 2 …while Oxygen from the air is channeled to the cathode on the the fuel cell… other side of the cell • Fuel flexibility • Efficient, reliable & safe • Fast start‐u
Slide 25: Ballard Fuel Cell Products
Page 25 APPENDIX Ballard Fuel Cell Products Fuel Cell • 4kW to 26kW • 400W to 3kW Stacks • Up to 12K hours • Up to 8K hours Fuel Cell Modules • 30kW • 60kW, 85kW, 100kW • 200kW • 8 to 10 meter buses, battery • 10 to 25 meter hybrid fuel cell • Light rail and marine applications hybrid range extender
Slide 26: Protonex Power Manager Products
Page 26 APPENDIX Protonex Power Manager Products • Power Managers are devices that provide universal power delivery to any load from a variety of power sources, giving military users battlefield energy independence Squad Power Manager (SPM) Advanced Battery Charger (ABC) • “Universalizer” manages va
Slide 27: Air-Cooled Fuel Cell Stack Cost Reduction
Page 27 APPENDIX Air‐Cooled Fuel Cell Stack Cost Reduction (FCgenTM‐1020ACS) • ~45% cost reduction over the past 6‐years, driven primarily by: o New CCM & elimination of cathode GDB layer o Seal‐on‐plate design o Manufacturing process automation for MEA and stack assembly • ~25% cost reduction going
Slide 28: Liquid-Cooled Fuel Cell Stack Cost Reduction
Page 28 APPENDIX Liquid‐Cooled Fuel Cell Stack Cost Reduction (FCvelocityTM‐9SSL) • ~45% cost reduction over the past 6‐years, driven primarily by: o Launch of lower‐cost FCvelocityTM‐9SSL liquid‐cooled fuel cell stack design (including reduced costs of platinum & GDL) o Improved raw material utiliz
Slide 29: Fuel Cell Bus Module Cost Reduction
Page 29 APPENDIX Fuel Cell Bus Module Cost Reduction (FCveloCityTM‐HD) • ~65% cost reduction in past 6‐years, driven primarily by: o Introduction of FCvelocityTM‐HD7, with low‐cost stack o Simplified balance of plant; decreased excess power factor o Manufacturability and assembly efficiencies • ~35%
Slide 30: Global Heavy Duty Motive Market
Page 30 APPENDIX Global Heavy Duty Motive Market (Hybrid + Electric Buses)
Slide 31: BLDP Q4 & Full Year 2015 Financial Results
APPENDIX Page 31 BLDP Q4 & Full Year 2015 Financial Results (Millions of U.S. dollars) Full Year Full Year Q4 2015 Q4 2014 % Improv. 2015 2014 % Improv. REVENUE Fuel Cell Products & Services: Heavy Duty Motive $4.1 $2.1 92% $12.0 $5.1 133% Portable Power $3.4 N/A N/A $3.4 N/A N/A Material Handling $
Slide 32: BLDP Q2 & YTD 2016 Financial Results
Page 32 APPENDIX BLDP Q2 & YTD 2016 Financial Results (Millions of U.S. dollars) Q2 2016 Q2 2015 % Improv. YTD 2016 YTD 2015 % Improv. REVENUE Fuel Cell Products & Services Revenue: Heavy Duty Motive $4.7 $0.6 643% $8.0 $2.3 245% Portable Power $2.9 N/A N/A $5.5 N/A N/A Material Handling $2.5 $2.7 ‐
Slide 33: BLDP Executive Management Team
Page 33 APPENDIX BLDP Executive Management Team Randy MacEwen, President and Chief Executive Officer Mr. MacEwen joined Ballard in October 2014 with extensive executive-level experience in the clean energy sector, including exposure to the hydrogen fuel cell industry since 1997 and solar industry si
Slide 34: BLDP Executive Management Team (Cont'd)
Page 34 APPENDIX BLDP Executive Management Team (Cont’d) David Whyte, Vice President – Operations Mr. Whyte joined Ballard in 2006. He has responsibility for Ballard operations including supply chain management and manufacturing. He has experience in operational roles within the high tech sector, wi