Hydrogenics: Q4 and Full Year 2012 Results
Mississauga, Ontario - Hydrogenics Corporation (HYGS) (HYG.TO), ("Hydrogenics" or "the Company"), a leading developer and manufacturer of hydrogen generation and hydrogen-based power modules, reported fourth quarter and full year 2012 financial results. Results are reported in US dollars and are prepared in accordance with International Financial Reporting Standards (IFRS).
"We exited 2012 well positioned for future growth in 2013 and subsequent years," said Daryl Wilson, President and Chief Executive Officer. "We ended December with $16.8 million in cash, and our backlog stood at approximately $60 million -- up 106% over 2011. This growth reflects firm commitments including our recently-won Power Systems order, worth up to $90 million, combined with ongoing demand within our OnSite Generation business. We also announced several milestones in the fourth quarter including orders from CommScope, our partner in backup energy applications for the telecommunications market, as well as the delivery of a two megawatt 'Power-to-Gas' energy storage system to E.ON, one of the world's largest power and gas companies. Expanding demand and our current backlog give us confidence for continued performance improvement in 2013 and beyond."
Highlights for the Quarter Ended December 31, 2012 (compared to the quarter ended December 31, 2011, unless otherwise noted)
The Company secured $8.5 million of orders for renewable energy storage, hydrogen fueling, industrial gas and fuel cell applications, driving order backlog to $60 million, an increase of 106% over the previous year. Increased order bookings were driven by the award of a Power Systems contract for integrated power propulsion systems as well as the Company's first significant order for delivery of HyPM(TM) XR Series fuel cell backup power modules from CommScope, Inc.
Exited the fourth quarter with $16.8 million of cash and restricted cash, reflecting increases of $7.5 million and $6.8 million, respectively, compared with September 30, 2012 and December 31, 2011.
Revenue for the fourth quarter increased 30% to $9.9 million, reflecting increased revenue in the Company's Power Systems business unit as a result of initial revenue on the contract for integrated power propulsion systems.
Gross profit was $1.3 million, or 13.2% of revenue, a decrease of 13.9 percentage points, primarily reflecting strategic pricing -- accelerating the demonstration phase within a new market. Hydrogenics may use this strategy when the Company's technology finds a fit in certain key growth markets -- whether they be geographically or application based -- if it is believe that the adoption by a lead company will materially move the market in Hydrogenics' favor. Also contributing to the gross margin decrease was the effect of price increases on key supplier components in the Company's OnSite Generation business. Cost reduction efforts are continuing through supply chain management and product design innovation in order to restore margins to target levels.
Cash Operating Costs1 were $3.5 million, a increase of 8%, resulting from a net increase in research and product development expenses offset by a reduction of $1.0 million in selling, general and administration costs.
Highlights for the Year Ended December 31, 2012 (compared to the year ended December 31, 2011, unless otherwise noted)
The Company secured $62.7 million of orders for renewable energy storage, hydrogen fueling, industrial gas and fuel cell applications, driving order backlog to $60 million -- an increase of 106% over the previous year. Increased order bookings were driven by the award of a Power Systems contract for integrated power propulsion systems as well as the Company's first significant order for delivery of HyPM(TM) XR Series fuel cell backup power modules from CommScope, Inc.
Revenue was $31.8 million, an increase of 33% over 2011, primarily reflecting increased sales and fulfillment of 2011 backlog in the Company's OnSite Generation business unit. This revenue growth reflected higher demand in fueling and renewable energy markets. The overall increase was also driven by stronger revenue in the Company's Power Systems business unit, primarily due to the award of a contract for integrated power propulsion systems. These growth factors were partially offset by a weakening of the Euro relative to the US dollar.
Gross profit was $5.2 million, or 16.4% of revenue, a 6.6 percentage point decrease, primarily reflecting the effect of pricing increases on key supplier components in the Company's OnSite Generation business as well as other factors as noted in the fourth quarter. Cost reduction efforts are continuing through supply chain management and product design innovation in order to restore margins to target levels.
Cash operating costs1 were $15.2 million, versus $12.3 million last year, with costs as a percent of revenue falling 4%. The year-over-year change reflects planned increases in research and development efforts focused on next-generation energy storage product development, additional marketing costs, and increased compensation costs arising from improved business performance.
Hydrogenics' Adjusted EBITDA2 loss was $11.2 million versus $8.2 million last year, reflecting: (i) the above-noted increase in cash operating costs of $2.9 million; (ii) a $0.1 million increase associated with the Company's deferred compensation plans, which are indexed to the share price; (iii) a $0.2 million decrease in gross profit; partially offset by (iv) a $0.2 million decrease in stock-based compensation. The Adjusted EBITDA loss as a percent of sales increased slightly year-over-year.
The Company's improved 2012 financial performance resulted in the removal of the going concern paragraph in Hydrogenics' audited annual financial statements.
Cash operating costs are defined as the sum of SG&A and R&D, less amortization and depreciation, and stock-based compensation expense inclusive of compensation costs indexed to the Company's share price. This is a non-IFRS measure and may not be comparable to similar measures used by other companies. Management uses this measure as a rough estimate of the amount of fixed costs to operate the Company and believes this is a useful measure for investors for the same purpose.
Adjusted EBITDA is defined as net loss excluding finance income, net, other losses, depreciation and amortization. Adjusted EBITDA is a non-IFRS measure and may not be comparable to similar measures used by other companies. Management uses adjusted EBITDA as a useful measure of cash flows.
Hydrogenics Corporation (www.hydrogenics.com) is a globally recognized developer and provider of hydrogen generation and fuel cell products and services, serving the growing industrial and clean energy markets of today and tomorrow. Based in Mississauga, Ontario, Canada, Hydrogenics has operations in North America and Europe.
Hydrogenics Investor Relations
Bob Motz, Chief Financial Officer