09.05.03

9.5.2003: Meldung: Hydrogenics Corp.: First Quarter 2003 Results

Hydrogenics Reports First Quarter 2003 Results
Thursday May 8, 8:30 am ET

Q1 Revenue Increases 293 Percent to US$8.4 Million

Analyst Meeting Scheduled For May 15, 2003

TORONTO, May 8 / Hydrogenics Corporation (Nasdaq: HYGS - News; TSX: HYG - News), a developer and manufacturer of fuel cell products, today announced its un-audited financial results for the first quarter ended March 31, 2003 and highlights of its recent corporate activity. All amounts are reported in U.S. dollars. Conference call details are provided below.

Hydrogenics" first quarter 2003 revenues increased 293 percent to $8.4 million, compared with $2.1 million for first quarter 2002. Net loss for the first quarter 2003 was $2.4 million, or $0.05 per share, compared with a net loss of $5.0 million, or $0.10 per share, for the first quarter 2002. Excluding $3.2 million in non-cash amortization of intangibles, net income for the first quarter 2003 was $0.8 million, or $0.02 per share. Excluding $3.7 million in non-cash amortization of intangibles, net loss for the first quarter 2002 was $1.3 million, or $0.03 per share.
Gross profit for the first quarter 2003 was $2.8 million, or 33 percent of revenues compared with $0.6 million, or 28 percent of revenues for the comparable period in 2002. The overall growth in revenues combined with the strong mix of higher margin fuel cell test equipment revenues contributed to the year-over-year improvement in gross margins.

Earnings before interest, taxes, depreciation and amortization (EBITDA), although a non-GAAP earnings measure, is considered by management to be a reasonable proxy for "cash" operating results. For first quarter 2003, the Company realized an EBITDA loss, before integration costs, of $0.4 million compared with an EBITDA loss of $1.2 million for the same period in 2002. A reconciliation of this non-GAAP measurement to the un-audited interim Statement of Operations and Deficit is provided under the Commercial Sustainability section of this press release.

"This was an excellent start to the year for Hydrogenics. We have been particularly busy expanding the breadth and depth of our product offerings and our efforts have been rewarded with record revenues for the quarter," said Hydrogenics President and CEO Pierre Rivard. "With $8.4 million in quarterly revenues, we generated gross profits of $2.8 million. Combined with government grants of $0.8 million for the quarter we came within $0.4 million of EBITDA breakeven, before integration costs -- an achievement that underscores our continued commitment to be the first fuel cell company to demonstrate financial and commercial sustainability."

"In addition to establishing new industry benchmarks for financial performance, during the quarter, we took bold steps to strengthen our business," added Rivard. "We completed the acquisition of Greenlight Power Technologies, Inc., which broadened our geographic footprint and customer list, and further strengthened our pre-eminent position in fuel cell test products. In typical Hydrogenics fashion, we are rapidly integrating the two companies. I am pleased to report that we are on track to complete the integration by mid-year, which will free up considerable resources to dedicate to our growing fuel cell power products business."
Foreign currency translation had a significant impact on first quarter 2003 results, contributing a gain of $2.1 million, or $0.04 per share, towards operating results compared with a loss of $0.1 million for first quarter 2002.

GREENLIGHT ACQUISITION
On January 7, 2003, Hydrogenics completed the acquisition of Greenlight Power Technologies Inc. (Greenlight), its principal competitor in the fuel cell test business, in a transaction valued at approximately $20 million. Under the terms of the transaction, Greenlight shareholders received cash consideration of approximately $2.3 million and 4.2 million Hydrogenics" common shares, representing approximately 8 percent of Hydrogenics" outstanding common shares. The excess of the purchase price over the net book value of assets acquired was allocated to intangible assets and goodwill. This allocation is reflected in the first quarter 2003 results.
The acquisition of Greenlight has facilitated the creation of two dedicated business groups - one, located in Burnaby, British Columbia, focused solely on the Company"s fuel cell test business and the other, located in Mississauga, Ontario, focused on the Company"s emerging fuel cell power products business.

FIRST QUARTER ACCOMPLISHMENTS
Commercial Sustainability - A 293 percent increase in first quarter revenues and a 371 percent increase in gross profits for the first quarter of 2003 reflect the Company"s focus on growing high margin revenue streams. Compared with the prior year, Hydrogenics held combined SG&A and net R&D expense growth to only 77 percent. This improvement in productivity is best reflected in the Company"s increased annualized revenue per employee of over $100,000 for first quarter 2003 compared with approximately $80,000 for all of 2002. In addition to this improved revenue productivity, during the first quarter 2003 the Company recorded $0.8 million in government grants. These are recorded as an offset to the Company"s gross R&D and are not recorded as revenues. The year-over-year productivity improvements are best captured as a percentage of revenues -- where EBITDA loss, before integration costs, was $0.4 million, or negative 4 percent of revenues, for first quarter 2003 as compared with an EBITDA loss of $1.2 million, or negative 55 percent for the first quarter 2002, as shown below:

Q1 2003 Q1 2002
% of % of
$ 000 Revenues $ 000 Revenues
Revenues 8,409 100% 2,140 100%
COGS 5,631 67% 1,551 72%
Gross Margin 2,778 33% 589 28%
SG&A 2,395 28% 1,155 54%
Net R&D 751 9% 619 29%
EBITDA (368) (4%) (1,185) (55%)

Strategic Alliances - Hydrogenics participated with General Motors (GM) in the successful demonstration of a regenerative fuel cell auxiliary power unit, named HyPORT-E, in a communications module on the back of a GM hybrid-diesel truck developed for the United States military. The Company also continued to work closely with John Deere to integrate a HyPM-LP2 power module into a John Deere commercial work vehicle. Plans are underway to show the vehicle at several locations in North America over the balance of the year.
Commercial Fuel Cell Products - Hydrogenics secured a repeat order for a fuel cell system from AeroVironment for use in their Helios aerospace project. A new 10 kW design of Hydrogenics" HyPM-LP2 has been completed and multiple units are being assembled to undergo comprehensive durability testing programs. The original 20 kW module is undergoing field trials in the John Deere demonstration vehicle. The Company further demonstrated the broad commercial capabilities of its HyPM-LP2 power module by using it to power the lights on the Science World dome in Vancouver as part of that city"s Olympic bid. The Company secured funding from the Canadian government to develop and demonstrate two hydrogen infrastructure products, one based on natural gas reforming and the other on PEM electrolysis. In April, the Company announced an initiative with the City of Toronto to demonstrate Hydrogenics" fuel cell and hydrogen generation products over three years beginning this summer at the Canadian National Exhibition.

Global Reach - During the first quarter, Hydrogenics expanded its global reach by adding new domestic and international test equipment customers through the acquisition of Greenlight. The combined Company now has an installed base of over 350 test stations worldwide, serving approximately 50 customer sites throughout Canada, United States, United Kingdom, Japan, China, Korea, Netherlands, France, Germany and Sweden.

OUTLOOK
"The Greenlight acquisition signaled the beginning of a new era at Hydrogenics - the dawning of our fuel cell power products business," stated Mr. Rivard. "While fuel cell test equipment is still clearly our lifeblood, as evidenced by the strong results posted in the first quarter, the time was right to develop separate business units within the Company to focus exclusively on fuel cell test equipment and fuel cell power products. By doing so, we can continue to exert focus on our fuel cell test equipment business without impacting our emerging power products business."
"The strength of our first quarter 2003 financial performance gives us confidence that we are on track to achieve the financial targets we established earlier this year," added Mr. Rivard. "We are working hard to secure new orders to achieve these targets. Through aggressive cost reduction activities related to our fuel cell power products, we anticipate introducing new and sustainable price points for power modules which are expected to drive multiple unit orders in the coming months. For our fuel cell test business, we just completed a record quarter and are now in the process of consolidating our product offerings into our next generation test product portfolio. Over the past quarter, we secured important sources of government funding and customer contracts which stand as strong evidence of the growing market support aimed at accelerating the commercialization of fuel cells."
"From a revenue perspective, our performance in the first quarter will be tough to beat in the upcoming quarters," continued Rivard. "However, we are reiterating our annual revenue guidance and by mid-year we anticipate cumulative revenues of approximately fifty percent of our full-year guidance of $30 million to $32 million for total revenues. Our number one priority continues to be commercial sustainability and as such we continue to strive for EBITDA breakeven, before integration costs, in 2003."

CONFERENCE CALL DETAILS
The company will hold a conference call with senior management to discuss the financial results in detail at 10:30 a.m. Eastern Time / 7:30 a.m. Pacific Time on May 8, 2003. To access the conference call participants should dial (719) 457-2601. A live Webcast of the conference call will be available on the Company"s Web site at www.hydrogenics.com. Please visit the website at least 15 minutes early to register for the teleconference Webcast and download any necessary software. A replay of the call will be available from May 8, 2003 at 2:00 p.m. Eastern Time through May 21, 2003. To access the telephone replay participants should dial (719) 457-0820. The access code for the replay is 174797. A replay of the Webcast will also be available following the conference call on the Hydrogenics corporate Web site.
ANALYST MEETING
The Company has scheduled its first institutional shareholder and analyst meeting in New York City on May 15, 2003. You must pre-register to attend the event by calling (212) 807-5057.

ABOUT HYDROGENICS
Hydrogenics Corporation (www.hydrogenics.com) is a clean power generation company, engaged in the commercialization of fuel cell technology and test stations for fuel cells. The Company is building a sustainable business with this potentially "game changing technology." With an unrivalled experience in fuel cell test systems and relationships with key industry partners, the Company is creating innovative, clean energy solutions for transportation, stationary and portable power applications. Hydrogenics, based in Mississauga, Ontario, Canada, has operations in British Columbia, Canada, Japan, the United States, and Germany.

Hydrogenics Corporation
Consolidated Balance Sheets
As at March 31, 2003 and December 31, 2002
(thousands of U.S. dollars)
March 31, December 31,
2003 2002
(Unaudited)
$ $
Assets
Current assets
Cash 24 994
Short-term investments 54,670 59,057
Accounts receivable 8,784 5,664
Grants receivable 1,331 396
Inventories 5,081 4,780
Prepaid expenses 351 316
70,241 71,207
Deposits 104 103
Property, plant and equipment 5,985 3,855
Future tax assets 5,393 --
Intangible assets 25,784 15,512
Goodwill 5,262 --
112,769 90,677
Liabilities
Current liabilities
Accounts payable and accrued liabilities 5,113 4,105
Unearned revenue 1,885 571
Income taxes payable 133 144
7,131 4,820
Long term debt 452 425
Future tax liabilities 5,393 --
12,976 5,245
Shareholders" Equity
Share capital and other equity 131,544 114,748
Deficit (27,705) (25,270)
Foreign currency translation adjustment (4,046) (4,046)
99,793 85,432
112,769 90,677
Hydrogenics Corporation
Interim Consolidated Statements of Operations and Deficit
For the three months ended March 31, 2003 and 2002
(unaudited)
(thousands of U.S. dollars, except share and per share amounts)
2003 2002
$ $
Revenues 8,409 2,140
Cost of revenues 5,631 1,551
2,778 589
Operating expenses
Selling, general and administrative 2,395 1,155
Research and development 1,543 873
Research and development grants (792) (254)
Depreciation of property, plant and equipment 523 296
Amortization of intangible assets 3,233 3,719
Integration costs 463 --
7,365 5,789
Loss from operations (4,587) (5,200)
Other income (expenses)
Provincial capital tax (44) (35)
Interest 184 309
Foreign currency gains (losses) 2,050 (77)
2,190 197
Loss before income taxes (2,397) (5,003)
Current income tax expense 38 37
Loss for the period (2,435) (5,040)
Deficit - Beginning of period (25,270) (4,659)
Deficit - End of period (27,705) (9,699)
Net loss per share
Basic and diluted (0.05) (0.10)
Shares used in calculating
basic and diluted net loss per share 52,722,005 48,117,874
Hydrogenics Corporation
Interim Consolidated Statements of Cash Flows
For the three months ended March 31, 2003 and 2002
(unaudited)
(thousands of U.S. dollars)
2003 2002
$ $
Cash provided by (used in)
Operating activities
Net loss for the period (2,435) (5,040)
Items not affecting cash
Depreciation of property, plant and equipment 523 296
Amortization of intangible assets 3,233 3,719
Unrealized foreign exchange losses (gains) (1,936) 77
Imputed interest on loan payable 12 4
Non-cash consulting fees 15 --
Net change in non-cash working capital (2,805) (59)
(3,393) (1,003)
Investing activities
Decrease in short-term investments 6,292 812
Purchase of property, plant and equipment (533) (455)
Acquisition of subsidiary (3,344) --
2,415 357
Financing activities
Decrease in loan payable (26) --
Common shares issued 20 157
(6) 157
Decrease in cash during the period (984) (489)
Effect of exchange rate changes on cash 14 2
Cash - Beginning of period 994 1,639
Cash - End of period 24 1,152



Source: Hydrogenics Corporation
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