Ballard Power Systems Inc. (BLDP)
Q1 2010 Earnings Call
April 29, 2010 11:00 a.m. ET
Lori Rozali - Senior IR Specialist
John Sheridan - President and CEO
Bruce Cousins - CFO
Michael Goldstein - CCO
Sarah Martin - Lazard Capital Markets
Burt Chao - Simmons & Company
Brian Piccioni - BMO Capital Markets
Peter Write - Tradition Equities
Jeff Osborne - Thomas Weisel Partners
(Abrupt start) Now I would turn the conference over to Lori Rozali, Senior Investor Relations Specialist.
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Good morning. Today's call is to discuss Ballard's operating results for the first quarter of 2010. With us today are John Sheridan, Ballard's President and CEO; Bruce Cousins, our Chief Financial Officer; and Michael Goldstein, Chief Commercial Officer
We'll be making forward-looking statements that are based on management's current expectations, beliefs and assumptions concerning future events. Actual results could be materially different. For a detailed discussion of these statements, the assumptions used in generating them, and the risks and uncertainties that could cause actual results to be materially different, please refer to our press release issued last night, our most recent annual information form and other filings. As a reminder, Ballard reports its financial results in accordance with Canadian GAAP and in US dollars.
Now, over to John.
Thanks everyone, and thanks for joining us today. I'll focus on our progress on growth on this call, our market activities, product shipments, revenue, and the order book, and then hand things over to Bruce to talk to the cost and bottom-line performance metrics.
So starting with revenue; we had a solid first quarter with revenue of $11.9 million on a consolidated basis, including Dantherm Power. That was an increase of 47% over last year. This is obviously in line with our guidance for full year revenue growth in excess of 35%.
And as to the breakdown of Q1 revenues, as you saw in the press release, our Material Products segment was strong, contributing $5.3 million to the total revenue growth in the quarter. That reflects a pick-up in sales of carbon fiber materials to automotive OEM customers, and continued sales of GDL materials to third-party fuel cell customers. The other supporting business segment, Contract Automotive was down slightly in Q1.
Turning to the Fuel Cell Products segment, the growth engine of the company, revenue grew by 28% in the quarter, driven by significant growth in product shipments and material handling and backup power. As the year evolves, we expect that this growth trajectory in the fuel cell products segment will heighten, and represent about 60% of our full year revenue, with the supporting segments representing about 40%.
As far as key sales activity in the quarter in fuel cell products, in material handling, we're very pleased to be working closely with Plug Power. We had shipments of a 116 SE velocity stacks in Q1, and currently have orders for more than 600 stacks.
Plug Power is the clear leader in this developing market, and Plug continues to make progress with sales to leading customers, most recently the United Natural Foods and Kimberly-Clark, and with a new distribution agreement with the Raymond Corporation.
In backup power, we are pleased to see IdaTech's progress in Indonesia in Q1. We received stack orders from IdaTech for over 100 ElectraGen systems for deployment by Hutchison Telecom in Indonesia.
On the flip side, we're disappointed with the recent development in India that BSNL has withdrawn its tender, which then included 1500 Methanol systems. The issue was related to questions of fairness with the broader tendering process, nothing at all of course to do with the fuel cell component of the tender. It was a very, very large tender; fuel cells was a small element of it. At this stage, we don't know when this tender will be reissued.
While this BSNL development will not have any material impact on Ballard, this will mean lower shipment volumes of Methanol systems to India in 2010. And as far as the impact of the BSNL delay on IdaTech, IdaTech has maintained its guidance for its unit sales volumes for 2010. No change in their volume, but has indicated that it expects a shift in mix with more hydrogen systems and fewer methanol systems.
Turning to Dantherm Power, since the closing of the transaction in January we've been pleased with progress to date. We've implemented an integrated operating model that includes relocating two of our employees to Denmark to become employees of Dantherm Power.
Dantherm Power is moving forward with several product related development initiatives that will strengthen their position in backup power. They are developing new lower cost hydrogen systems for production later this year. And on the sales front, Dantherm Power is engaged in early stage relationships with service providers in the EU, China and Canada.
In distributed generation, in February we announced an MOU with K2 Pure for a 1 megawatt fuel cell generator system to be operated with byproduct hydrogen at K2's new bleach plant in California. We've now progressed to the contract negotiation phase with K2 Pure.
And in Bus, we sold modules to both APTS of the Netherlands and SunLine Transit Agency in Palm Springs. Overall, our order book increased in the quarter by 29% or about $7 million to stand at $29 million as of the end of the quarter. And to reiterate, that's a rolling 12 month number. To give you a gauge on near-term revenue growth.
In terms of progress, again there are six growth milestones. One, we expect shippings late this year for IdaTech methanol reformate systems for India as I said. Two, we see good prospects for Dantherm Power for hydrogen system deployment in a major new network. Three, we expect site acceptance of the FirstEnergy 1 MW system towards the end of Q2.