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Hydrogenics Reports Third Quarter 2010 Results

Order Backlog

Order backlog as of September 30, 2010 was $19.4 million, as follows (in $ millions):

  June 30, 2010 Backlog Orders Received Orders Delivered Sept. 30, 2010 Backlog
         
OnSite Generation $ 15.5 $   4.9 $ 4.9 $  15.5
Power Systems  3.6  1.0  0.7  3.9
Total $ 19.1 $ 5.9 $ 5.6 $ 19.4

Conference Call Details

Hydrogenics will hold a conference call at 10 a.m. ET on November 10, 2010 to review the third 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 #21280363. 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 or slow return to economic growth, 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 for 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 U.S. investors to enforce U.S. 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 U.S. dollars)    
(unaudited)    
     
    September 30 2010 December 31 2009
     
Assets    
     
Current assets    
Cash and cash equivalents $ 10,643 $ 9,159
Restricted cash  835 1,603
Accounts receivable 5,684 3,685
Grants receivable 916 490
Inventories 8,671 11,746
Prepaid expenses 995 1,270
  27,744 27,953
     
Restricted cash 229 240
Property, plant and equipment 2,306 3,169
Goodwill 5,184 5,446
  $ 35,463 $ 36,808
     
     
Liabilities    
     
Current liabilities    
Accounts payable and accrued liabilities $ 12,054  $   14,782
Unearned revenue 3,880 4,546
  15,934 19,328
     
Shareholders' Equity    
Common shares and warrants 316,167 307,038
Contributed surplus 16,970 16,713
Deficit (307,460) (300,795)
Accumulated other comprehensive loss (6,148) (5,476)
Total deficit and accumulated other comprehensive loss (313,608) (306,271)
  19,529  17,480
  $ 35,463  $     36,808
 
Hydrogenics Corporation
Interim Consolidated Statements of Operations
(in thousands of U.S. dollars, except for share and per share amounts)
(unaudited)
     
    Three months ended September 30 Nine months ended September 30
  2010 2009 2010 2009
  Revenues $ 5,590 $ 3,558 $ 15,125 $ 14,634
         
Cost of revenues 4,150 2,983 11,665 11,571
  1,440 575 3,460 3,063
Operating expenses        
Selling, general and administrative 2,477 4,603 7,588 12,992
Research and product development 1,069 1,131 2,501 4,499
Amortization of property, plant and equipment 325 292 694 743
  3,871 6,026 10,783 18,234
Loss from operations (2,431) (5,451) (7,323) (15,171)
           
Other income (expenses)        
Gain (loss) on disposal of assets (3) -- 18 --
Litigation settlements -- -- 437 --
Provincial capital tax (2) -- (5) (153)
Interest 11 2 47 85
Foreign currency gains (losses) 347 27 164 (190)
  353 29 661 (258)
         
Loss before income taxes (2,078) (5,422) (6,662) (15,429)
Current income taxes -- 17 3 17
Net loss for the period $   (2,078) $ (5,439) $ (6,665) $ (15,446)
           
Net loss per share        
Basic and diluted  $ (0.47)  $ (1.47)  $ (1.34)   $   (4.18) 
           
Weighted average number of common shares outstanding 4,420,201 3,698,607 4,990,648 3,697,039
 
Hydrogenics Corporation
Interim Consolidated Statements of Cash Flows
(in thousands of U.S. dollars)
(unaudited)
     
    Three months ended September 30 Nine months ended September 30
  2010 2009 2010 2009
         
Cash and cash equivalents provided by (used in)        
Operating activities        
Net loss for the period $ (2,078) $ (5,439) $ (6,665) $ (15,446)
Items not affecting cash        
Gain (loss) on disposal of assets (3) -- 18 --
Amortization of property, plant and equipment 383 292 872 743
Unrealized foreign exchange (gains) losses 600 (51) (56) 272
Non-cash selling, general and administrative expenses -- -- 763 --
Stock-based compensation expense 76 111 257 321
Net change in non-cash working capital (1,221) 507 (2,603) (1,218)
  (2,243) (4,580) (7,414) (15,328)
  Investing activities        
Decrease (increase) in restricted cash 431 (63) 779 (424)
Purchase of property, plant and equipment (159) (13) (247) (156)
  272 (76) 532 (580)
         
Financing activities        
Deferred research and development grants -- -- -- 70
Common shares issued, net of issuance costs 3,766 6 8,366 15
  3,766 6 8,366 85
  Increase (decrease) in cash and cash equivalents during the period 1,795 (4,650) 1,484 (15,823)
         
Cash and cash equivalents – Beginning of period 8,848 10,428 9,159 21,601
Cash and cash equivalents – End of period $  10,643 $ 5,778 $ 10,643 $ 5,778
CONTACT:  Hydrogenics Corporation
          Lawrence Davis, Chief Financial Officer
          (905) 361-3633
          investors@hydrogenics.com

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