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Hydrogenics Reports Second Quarter 2010 Results

Order Backlog

Order backlog as of June 30, 2010 was $19.1 million, as follows (in $ millions):

  Mar. 31, 2010 Backlog Orders Received Orders Delivered Jun. 30, 2010 Backlog
         
OnSite Generation $ 14.2 $   2.3  $ 1.0 $ 15.5
Power Systems  4.7  0.7  1.8  3.6
Total $ 18.9 $ 3.0 $ 2.8 $ 19.1

In addition to the $9.5 million of revenue recognized in the six months ended June 30, 2010, a minimum of $15.0 million is anticipated to be delivered in the second half of 2010.

Conference Call Details

Hydrogenics will hold a conference call at 10 a.m. ET on July 30, 2010 to review the second quarter 2010 results.   The telephone number for the conference call is 877-307-1373 or, for international callers, 678-224-7873. A live webcast of the call will also be available on the Corporation's website, at www.hydrogenics.com .

The webcast will be archived on the site, and investors will be able to access an encore recording of the conference call for one week by calling 706-645-9291, conference ID #88166337. The encore recording will be available two hours after the conference call has concluded.

ABOUT HYDROGENICS

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.

This release contains forward-looking statements within the meaning of the "safe harbour" provisions of the U.S. Private Securities Litigation Reform Act of 1995, and under applicable Canadian securities law. These statements are based on management's current expectations and actual results may differ from these forward-looking statements due to numerous factors, including: our inability to increase our revenues or raise additional funding to continue operations, execute our business plan, or to grow our business; inability to address a sustained or broad economic recession, and its impact on our business, results of operations and consolidated financial condition; our limited operating history; inability to implement our business strategy; fluctuations in our quarterly results; failure to maintain our customer base that generates the majority of our revenues; currency fluctuations; failure to maintain sufficient insurance coverage; changes in value of our goodwill; failure of a significant market to develop our products; failure of hydrogen being readily available on a cost-effective basis; changes in government policies and regulations; failure of uniform codes and standards for hydrogen fuelled vehicles and related infrastructure to develop; failure to compete with other developers and manufacturers of products in our industry; failure to compete with developers and manufacturers of traditional and alternative technologies; failure to develop partnerships with original equipment manufacturers, governments, systems integrators and other third parties; inability to obtain sufficient materials and components for our products from suppliers; failure to manage expansion of our operations; failure to manage foreign sales and operations; failure to recruit, train and retain key management personnel; inability to integrate acquisitions; failure to develop adequate manufacturing processes and capabilities; failure to complete the development of commercially viable products; failure to produce cost-competitive products; failure or delay in field testing of our products; failure to produce products free of defects or errors; inability to adapt to technological advances or new codes and standards; failure to protect our intellectual property; our involvement in intellectual property litigation; exposure to product liability claims; failure to meet rules regarding passive foreign investment companies; actions of our significant and principal shareholders; dilution as a result of significant issuances of our common shares and preferred shares; inability of US investors to enforce US civil liability judgments against us; volatility of our common share price; and dilution as a result of the exercise of options. Readers should not place undue reliance on Hydrogenics' forward-looking statements. Investors are encouraged to review the section captioned "Risk Factors" in Hydrogenics' regulatory filings with the Canadian securities regulatory authorities and the United States Securities and Exchange Commission for a more complete discussion of factors that could affect Hydrogenics' future performance. Furthermore, the forward-looking statements contained herein are made as of the date of this release, and Hydrogenics undertakes no obligations to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release, unless otherwise required by law. The forward-looking statements contained in this release are expressly qualified by this.

Hydrogenics Corporation
Interim Consolidated Balance Sheets
(in thousands of US dollars)
(unaudited)
 
 
    June 30  2010 December 31 2009
     
Assets    
     
Current assets    
Cash and cash equivalents $ 8,848 $ 9,159
Restricted cash  1,289 1,603
Accounts receivable 2,888 3,685
Grants receivable 1,113 490
Inventories 8,614 11,746
Prepaid expenses 1,141 1,270
  23,893 27,953
     
Restricted cash 206 240
Property, plant and equipment 2,437 3,169
Goodwill 4,663 5,446
  $ 31,199 $  36,808
     
Liabilities    
     
Current liabilities    
Accounts payable and accrued liabilities $ 11,121  $   14,782
Unearned revenue 3,482 4,546
  14,603 19,328
     
Shareholders' Equity    
Common shares and warrants 312,401 307,038
Contributed surplus 16,894 16,713
Deficit (305,382) (300,795)
Accumulated other comprehensive loss (7,317) (5,476)
Total deficit and accumulated other comprehensive loss (312,699) (306,271)
  16,596  17,480
  $ 31,199  $     36,808
 
Hydrogenics Corporation
Interim Consolidated Statements of Operations
(in thousands of US dollars, except for share and per share amounts)
(unaudited)
 
    Three months ended June 30 Six months ended June 30
  2010 2009 2010 2009
  Revenues $ 2,809 $ 5,540 $ 9,535 $ 11,076
         
Cost of revenues 1,967 4,683 7,515 8,588
  842 857 2,020 2,488
Operating expenses        
Selling, general and administrative 1,565 4,681 5,111 8,389
Research and product development 524 1,686 1,432 3,368
Amortization of property, plant and equipment 163 160 369 451
  2,252 6,527 6,912 12,208
Loss from operations (1,410) (5,670) (4,892) (9,720)
         
Other income (expenses)        
Gain on disposal of assets 21 -- 21 --
Litigation settlements 437 -- 437 --
Provincial capital tax (3) (153) (3) (153)
Interest 3 34 36 83
Foreign currency losses (56) (221) (183) (217)
  402 (340) 308 (287)
         
Loss before income taxes (1,008) (6,010) (4,584) (10,007)
Current income taxes  3 -- 3 --
Net loss for the period $   (1,011) $ (6,010) $ (4,587) $ (10,007)
         
Net loss per share        
Basic and diluted  $ (0.24)  $ (1.63)  $ (1.10)   $   (2.71) 
         
Weighted average number of common shares outstanding 4,293,087 3,696,284 4,185,396 3,696,255
 
Hydrogenics Corporation
Interim Consolidated Statements of Cash Flows
(in thousands of US dollars)
(unaudited)
 
 
    Three months ended June 30 Six months ended June 30
  2010 2009 2010 2009
         
Cash and cash equivalents provided by (used in) Operating activities        
Net loss for the period $ (1,011) $ (6,010) $ (4,587) $ (10,007)
Items not affecting cash        
Amortization of property, plant and equipment 223 160 489 451
Unrealized foreign exchange (gains) losses (314) 71 (656) 323
Non-cash selling, general and administrative expenses -- -- 763 --
Stock-based compensation expense 98 120 181 210
Net change in non-cash working capital (1,763) 1,940 (1,361) (1,725)
  (2,767) (3,719) (5,171) (10,748)
  Investing activities        
Decrease (increase) in restricted cash 410 (157) 348 (361)
Purchase of property, plant and equipment (37) (107) (88) (143)
  373 (264) 260 (504)
         
Financing activities        
Deferred research and development grants -- (9) -- 70
Common shares issued, net of issuance costs -- 9 4,600 9
  -- -- 4,600 79
  Decrease in cash and cash equivalents during the period (2,394) (3,983) (311) (11,173)
         
Cash and cash equivalents – Beginning of period 11,242 14,411 9,159 21,601
Cash and cash equivalents – End of period $  8,848 $ 10,428 $ 8,848 $ 10,428
CONTACT: Hydrogenics Corporation
         Lawrence Davis, Chief Financial Officer
         (905) 361-3633
         investors@hydrogenics.com
         
         Investor Relations Contact:
         Chris Witty, Darrow Associates
         (646) 438-9385
         cwitty@darrowir.com

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