23.02.06

23.2.2006: Meldung: Ballard Power Systems Inc.: financial results for the fourth quarter and year ending December 31, 2005

Ballard Reports Reduced Net Loss and Increased Sales to Power Generation Markets
Wednesday February 22, 4:04 pm ET

VANCOUVER, British Columbia-- Feb. 22, 2006--Ballard Power Systems Inc.


- 150% increase in fuel cell shipments to power generation markets

- 2005 Technology Road Map targets met

- 2005 year-end cash balance of $233 million

Ballard Power Systems today reported its 2005 corporate achievements, corporate goals for 2006 and financial results for the fourth quarter and year ending December 31, 2005. All amounts are in U.S. dollars, unless otherwise stated.

"2005 was an important year for Ballard as we repositioned the company and developed a commercial strategy with a sharper focus, which has opened new opportunities for Ballard in materials handling and backup power markets," said John Sheridan, Ballard"s newly appointed President and Chief Executive Officer. "As well, our natural gas-fueled cogeneration fuel cell product captured the leading position in the Japanese market and Ballard-powered fuel cell vehicles continued to demonstrate outstanding performance in automotive markets around the world."

Ballard"s key 2005 achievements include:

Improvement in the company"s financial position

- Ballard"s 2005 net loss of $87.0 million was a significant improvement over the previous year"s net loss of $175.4 million.

- In 2005, Ballard"s operating cash consumption (including the operating cash consumption of Ballard Power Systems AG ("BPSAG")) was $83.3 million, beating management"s guidance of $85 to $100 million. Excluding BPSAG, which was sold in 2005, Ballard"s operating cash consumption was $64.2 million, well within management"s updated guidance of $60 to 80 million.

- Ballard"s 2005 year-end cash reserves of $233 million decreased just $7.2 million from the previous year and exceeded management"s guidance of between $215 and $225 million.

Increased fuel cell shipments in power generation markets

- Ballard shipped or booked orders for 221 Mark 1030 fuel cells, primarily for integration into 1 kW residential fuel cell cogeneration systems for the Japanese market.

- Ballard shipped or booked orders for more than 150 Mark9 SSL(TM) fuel cells, which will be used for electric forklift applications in the materials handling market.

Demonstrated automotive leadership in the lab and in the field

- Ballard achieved its 2005 Technology Road Map targets, demonstrating automotive fuel cell stack technology with characteristics of $73 per kW cost (at high volume manufacturing), freeze start capability at -25 degrees C, volumetric power density of 1,470 Watts(net)/liter, and durability of more than 2,100 hours.

- Cars, buses and vans powered by Ballard fuel cells continued to accumulate on-road experience - just over 1.2 million kilometres in 2005 (almost 2.2 million kilometres since January 2004).

- New fuel cell vehicle demonstration programs launched in Santa Clara, California; Vancouver, British Columbia; and Beijing, China.

- Ballard advanced its next generation automotive fuel cell technology, resulting in milestone payments from DaimlerChrysler and Ford in the fourth quarter of 2005.

2006 Corporate Objectives

In 2006, Ballard will continue to build a commercial fuel cell business by advancing its core technologies and products, and by demonstrating growth in the power generation and automotive markets.

Power Generation

Residential Fuel Cell Cogeneration

- Ship or book 280 Mark 1030 fuel cells

- Deliver prototype of next generation fuel cell for field demonstration

Materials Handling and Backup Power

- Ship or book 300 Mark9 SSL(TM) fuel cells

Automotive

- Achieve 2006 Technology "Road Map" goals:

- Cost: $65 per kW

- Freeze start: -30 degrees C in 195 seconds

- Power density: 1,500 Watts(net)/liter

- Durability: 2,300 hours of lifetime

- Deliver next generation automotive fuel cell prototype

- Deliver next generation electric drive prototype for fuel cell vehicles

Financial Management

- Achieve revenue of $55 to $65 million

- Achieve operating cash consumption of $50 to $65 million

2005 Corporate Achievements

Ballard"s 2005 corporate objectives were designed to demonstrate progress in three key areas: technology leadership, strategic growth and financial sustainability. Ballard achieved or partially achieved all eight of its corporate objectives.

1. Demonstrate next generation automotive fuel cell stack technology that meets -25 degrees C freeze start, costs less than $85 per kW when manufactured in high volumes and achieves at least 2,000 hours of lifetime. Achieved. Ballard met its 2005 Technology Road Map targets by demonstrating automotive fuel cell stack technology with the following characteristics:

- Cost of $73 per kW (1)(2)

- Freeze start capability at -25 degrees C in 90 seconds

- Volumetric power density of 1,470 Watts(net)/liter

- Durability of more than 2,100 hours

2. Demonstrate next generation automotive fuel cell electric drive technology. Achieved. Ballard met its next generation electric drive customer milestones five weeks ahead of schedule.

3. Introduce next generation 1 kW combined heat and power fuel cell stack technology. Achieved. Ballard delivered 100% of its next generation 1 kW residential cogeneration fuel cells to customers on schedule.

4. Achieve more than 2,000,000 kilometers of cumulative on-road operational experience by Ballard-powered vehicles since January 2004. Achieved. Ballard fuel cell-powered vehicles accumulated an additional 1,273,105 kilometers of on-road experience in 2005, bringing Ballard"s cumulative on-road experience to almost 2.2 million kilometers since January 2004.

5. Secure a new strategic relationship with at least one non-Alliance automotive fuel cell customer. Partially achieved. Ballard made progress during the year by signing benchmarking and evaluation contracts with two non-Alliance automotive fuel cell customers. Discussions are ongoing.

6. Capture market share leadership of the Japanese 1 kW combined heat and power fuel cell generator market. Achieved. EBARA Ballard Corporation captured 43% market share of the Japanese 1 kW natural gas-fueled, residential fuel cell cogeneration market in 2005.

7. Implement Six Sigma tools and methodologies in fuel cell manufacturing. Achieved. Ballard realized cost savings in 2005 of $940,000 as a result of implementing Six Sigma tools and methodologies in fuel cell manufacturing.

8. Achieve cash consumption target of between $85 million and $100 million (defined as cash requirements from operations and capital expenditures). Achieved. Ballard"s operating cash consumption for 2005 improved year over year to $83.3 million, including the results of BPSAG. Excluding BPSAG, 2005 cash consumption was $64.2 million.

2005 Financial Results

Ballard"s revenue in the fourth quarter and fiscal year ended December 31, 2005 was $17.7 million and $53.7 million respectively, compared to $20.5 million and $81.4 million for the same periods in 2004. Fourth quarter revenues decreased $2.9 million as a result of the sale of BPSAG and lower heavy-duty bus fuel cell shipments, offset by increased engineering service and other revenue. Full year revenues decreased $27.6 million. Lower product revenues for the year were due to the timing of our automotive customers" fuel cell vehicle fleet deployments, which mainly occurred in 2003 and 2004. Engineering service revenue increased for 2005 as a result of two factors:

- Commencement of revenues under the next generation light-duty fuel cell engine and electric drive programs and 1 kW residential cogeneration fuel cell program in the second half of 2005, and

- The completion of the development phase of the previous generation light-duty fuel cell engine program, which began in the first half of 2004.

Net loss for the quarter and fiscal year ended December 31, 2005 was $16.1 million ($0.14 per share) and $87.0 million ($0.73 per share) respectively, compared to $55.1 million ($0.46 per share) and $175.4 million ($1.48 per share) for the same periods in 2004.

Adjusting for "one time" factors, Ballard"s normalized net loss(3) for the quarter and fiscal year ended December 31, 2005, was $16.3 million ($0.14 per share) and $100.8 million ($0.84 per share), compared with $38.4 million ($0.32 per share) and $132.6 million ($1.12 per share) for the same periods in 2004. Normalized net loss for the fourth quarter decreased due to lower operating expenses as a result of the sale of BPSAG, improved margins, higher engineering service and other revenue and lower depreciation and amortization. The decrease in normalized net loss for the year was mainly a result of reduced operating expenses, lower depreciation and amortization and higher investment and other income.

Operating cash consumption(3) for the fourth quarter of 2005 improved significantly to $5.8 million, compared to $17.9 million in 2004. Reduced operating expenses from the sale of BPSAG and improved margins, partly offset by lower cash inflows from working capital contributed to the decreased operating cash consumption. Operating cash consumption(3) for the year ended December 31, 2005 was $83.3 million, compared to $85.3 million in 2004, including the $19.1 million operating cash consumption of our subsidiary, BPSAG, which was sold as of August 31, 2005. Reduced operating expenses were offset by higher outflows for working capital requirements over the prior year.

Ballard"s cash, cash equivalents and short-term investments for the year ended December 31, 2005 totaled $233.0 million compared to $240.3 million for the same period in 2004.

"The steps we took this past year strengthened our financial position," said Dave Smith, Ballard"s Chief Financial Officer. "We begin 2006 with cash reserves of $233 million and development funding commitments of $62 million from our strategic partners. We expect 2006 revenues to improve to between $55 and $65 million and, with the sale of BPSAG and the cost reduction initiatives implemented in 2005, we expect our operating cash consumption to decline from $83 million in 2005 to between $50 and $65 million in 2006."

Selected Consolidated Financial Information

Unaudited (Expressed in thousands of U.S. dollars except for per
share amount and number of shares)
--------------------------------------------------------------------
Three months ended Year ended
December 31 December 31
2005 2004 2005 2004
--------------------------------------------------------------------
Revenues:
Product revenues $ 10,498 $ 17,023 $ 37,366 $ 67,575
Engineering
service and
other revenue 7,169 3,511 16,367 13,798
--------------------------------------------------
Total revenues 17,667 20,534 53,733 81,373

Cost of product
revenues 6,760 17,375 31,292 59,594
Research and
product development 15,940 26,560 75,492 91,737
General and
administrative 4,540 4,481 17,543 15,671
Marketing 1,916 2,258 8,012 10,028
Depreciation and
amortization 5,427 8,796 26,094 40,094
--------------------------------------------------
Total cost of
revenues and
expenses 34,583 59,470 158,433 217,124
--------------------------------------------------

Loss before
undernoted (16,916) (38,936) (104,700) (135,751)
Investment and
other income 2,172 1,003 11,153 3,670
Loss on disposal
and write-down
of long-lived
assets (70) (16,271) (7,787) (17,678)
Gain (loss) on
assets held
for sale 513 - 18,294 (23,051)
Equity in loss
of associated
companies (1,780) (672) (3,738) (2,175)
--------------------------------------------------
Loss before
income taxes (16,081) (54,876) (86,778) (174,985)
Income taxes 65 232 205 422
--------------------------------------------------
Net loss for period (16,146) (55,108) (86,983) (175,407)
--------------------------------------------------
Basic and diluted
loss per share $ (0.14) $ (0.46) $ (0.73) $ (1.48)
--------------------------------------------------
--------------------------------------------------
Weighted
average
number of
common shares
outstanding 112,725,393 118,694,184 119,701,260 118,461,114
--------------------------------------------------------------------
--------------------------------------------------------------------
Cash used by
operations $ 2,618 $ 14,359 $ 76,729 $ 78,257
Capital
expenditures $ 3,159 $ 3,535 $ 6,613 $ 7,087
--------------------------------------------------------------------
--------------------------------------------------------------------
December 31, 2005 December 31, 2004
--------------------------------------------------
Total cash, cash
equivalents and
short term
investments $ 233,033 $ 240,259
Total Assets $ 524,874 $ 659,171
--------------------------------------------------------------------
--------------------------------------------------------------------


Ballard has filed its financial statements and MD&A with the appropriate Canadian and U.S. securities regulators. These documents are available at http://www.sedar.com and http://www.sec.gov/edgar.shtml. They are also available on Ballard"s website at http://www.ballard.com.

Non-GAAP Measures

Ballard uses certain non-GAAP measures to assist in assessing our financial performance. These 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. A description of these non-GAAP measures and reconciliations between financial statement line items and these measures for the periods indicated are as follows:

Normalized net loss measures Ballard"s net loss after excluding items that are unusual in nature or do not reflect the normal operating activity of the business.

--------------------------------------------------------------------
--------------------------------------------------------------------
Normalized Net Loss Three months ended Year ended
(Expressed in thousands December 31 December 31
of U.S. dollars) 2005 2004 2005 2004
--------------------------------------------------------------------

Reported net loss $ (16,146) $ (55,108) $ (86,983) $ (175,407)
Foreign exchange
(gains) losses 262 398 (3,339) 2,062
Loss on disposal
and write-down
of long-lived
assets 70 16,271 7,787 17,678
(Gain) loss on
assets held for
sale (513) - (18,294) 23,051
--------------------------------------------------------------------
Normalized
net loss $ (16,327) $ (38,439) $ (100,829) $ (132,616)
--------------------------------------------------------------------
--------------------------------------------------------------------
Normalized
net loss
per share $ (0.14) $ (0.32) $ (0.84) $ (1.12)
--------------------------------------------------------------------
--------------------------------------------------------------------


Operating cash consumption measures the amount of cash required to fund the operating activities of the business and excludes financing and investing activities except for additions to property, plant and equipment.

--------------------------------------------------------------------
--------------------------------------------------------------------
Operating cash
consumption Three months ended Year ended
(Expressed in thousands December 31 December 31
of U.S. dollars) 2005 2004 2005 2004
--------------------------------------------------------------------

Cash used by
operations $ 2,618 $ 14,359 $ 76,729 $ 78,257
Additions to
property, plant
and equipment 3,159 3,535 6,613 7,087
--------------------------------------------------------------------
Operating cash
consumption $ 5,777 $ 17,894 $ 83,342 $ 85,344
--------------------------------------------------------------------
--------------------------------------------------------------------


Conference Call Details

Ballard will hold a conference call at 7:00 a.m. PST (10:00 a.m. EST) Thursday, February 23, 2006 to discuss details regarding the company"s 2005 performance and forward-looking information. Access to the call may be obtained by calling the operator at 416.644.3415 before the scheduled start time. A playback version of the call will be available for 24 hours after the call at 416.640.1917. The confirmation number to access the playback is 21173924#. The audio web cast and PowerPoint presentation can be accessed on Ballard"s web site at http://events.onlinebroadcasting.com/ballard/022306/index.php and will be archived for replay for two weeks.

About Ballard Power Systems

Ballard Power Systems is recognized as a world leader in the design, development and manufacture of zero-emission proton exchange membrane fuel cells. Ballard"s mission is to make fuel cells a commercial reality. To learn more about what Ballard is doing with Power to Change the World®, visit www.ballard.com.

John Sheridan and Dave Smith will be available to comment on Ballard"s 2005 results after 10 a.m. PST on Thursday, February 23, 2006. For further information, or to arrange an interview with a Ballard spokesperson, please call Rebecca Young at 604-454-0900. Ballard and the Ballard logo are registered trademarks of Ballard Power Systems Inc.

Footnotes

(1) Ballard engaged TIAX LLC to conduct an external audit of Ballard"s 2005 Road Map cost estimate. Based on the design and performance information provided by Ballard, TIAX has determined that Ballard"s stack cost estimate for 2005, as stated in this release, is a reasonable high volume manufacturing cost estimate. TIAX is a leading product and technology development firm, also engaged by the National Renewal Energy Laboratory/DOE in its 2005 assessment of automotive PEM fuel cell costs.

(2) Cost reflects updated methodology, and assumptions consistent with the U.S. Department of Energy (DOE) fuel cell technical targets. The 2005 cost estimate represents a 10% reduction in cost from 2004, whether calculated using the new or former methodology.

(3) Normalized net loss and operating cash consumption are non-GAAP measures used to assist in assessing our financial performance. These 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. A description of these non-GAAP measures and reconciliations between financial statement line items and these measures for the periods indicated follows the Selected Consolidated Financial Information.

Ballard Power Systems Inc. (TSX:BLD - News; NASDAQ:BLDP - News)


Contact:

Ballard Power Systems Inc.
Rebecca Young
(604) 454-0900
Fax: (604) 412-4700
www.ballard.com

Source: Ballard Power Systems Inc.
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