Ballard Power Systems Reports 1999 First Quarter Results
7 May 1999
Ballard Power Systems Reports 1999 First Quarter Results
VANCOUVER, BRITISH COLUMBIA--May 7, 1999-- Ballard Power (TSE:BLD.)Ballard Power Systems Inc. (TSE:BLD) today reported its financial results for the first quarter ended March 31, 1999. All amounts reported are in Canadian dollars.
Revenues for the first quarter rose to $6.5 million from $4.8 million a year ago, an increase of 34 percent, reflecting the timing of sales of automotive fuel cells and related systems. The net loss for the quarter was $8.8 million, compared with last year's $8.2 million. The net loss per share was $0.11, compared to $0.12 per share in 1998, as a result of an increase in weighted average shares outstanding. At March 31, 1999, Ballard's financial condition was strong, with shareholders' equity of $620.9 million, and cash and short-term investments of $431.5 million.
Underscoring the widening interest in fuel cells for transportation applications, in April three energy companies - ARCO, Shell, and Texaco - joined the State of California, DaimlerChrysler, Ford and Ballard to form the "California Fuel Cell Partnership - Driving for the Future." The Partnership is committed, between 2000 and 2003, to demonstrate and field test approximately 30 cars and 25 buses powered by engines using Ballard(R) fuel cells. In addition to gathering data about the real-life operation and maintenance of the vehicles, the collaboration will focus on requirements relating to the fuel and the fuel infrastructure for fuel cell vehicles.
Ballard's partners also unveiled new prototype vehicles during the quarter, marking further progress in the development of fuel cells for transportation applications. At the Detroit Auto Show in January, Ford introduced the P2000 sedan, a fuel cell powered prototype fueled with compressed hydrogen. In March, DaimlerChrysler introduced its fourth prototype passenger car powered by Ballard fuel cells, the Necar 4. The companies of the fuel cell alliance between Ballard, DaimlerChrysler and Ford supplied key systems for both cars. Ballard provided the fuel cells, dbb fuel cell engines built the fuel cell engines, and Ecostar Electric Drive Systems supplied the electric drive trains.
In other transportation developments, Ballard announced that it will supply Ballard fuel cells and related equipment and services to two automobile companies for their development programs. Nissan, a Ballard customer since 1991, placed a $3.5 million order and an order from Honda R&D Co., a subsidiary of Honda Motor Company, totaled $2.1 million. The transit bus engine test and demonstration programs in Chicago and Vancouver continued as planned. dbb fuel cell engines and Ballard are incorporating the information obtained during the program into the development of their next fuel cell bus engine, which is proceeding on schedule.
Although fuel cell cars dominated the news in the quarter, interest in fuel cells for electric power generation continued to grow. Distributed (decentralized) generation of electricity is gaining recognition as a clean and efficient alternative for needed capacity additions, and as a source of reliable electricity for powering sensitive or uninterruptable electronic, computer and medical equipment. Reflecting this growing recognition in the United States, a White House legislative proposal to deregulate the electric power industry included tax benefits for distributed power installations. Ballard's fuel cell stationary power business will provide a critical enabling product targeted at important parts of the emerging distributed power generation market.
During the quarter, Ballard's subsidiary, Ballard Generation Systems (BGS), continued testing its prototype 250 kilowatt power plant as well as building the initial field trial power plants, the first of which is expected to be delivered in the fourth quarter. The field trial units will be operated by customers on their own sites and will enable BGS and Ballard to incorporate this valuable testing experience into the design of the next generation power plant.
"The introduction of prototype fuel cell cars by our partners, DaimlerChrysler and Ford, and the creation of the California Fuel Cell Partnership to demonstrate a fleet of cars and buses powered by fuel cells, are evidence of the momentum in fuel cells for transportation, and Ballard's continuing leadership role," said Firoz Rasul, President and Chief Executive Officer. "In our stationary power business, BGS is on schedule to deliver the initial 250 kilowatt plants to be deployed in field trials."
Mr. Rasul added, "Ballard's corporate objectives for 1999 were published in our 1998 Annual Report, which was mailed to shareholders in April. We have begun the year with a strong start, in both our transportation and stationary power businesses. Our corporate goals reflect the stringent performance and efficiency standards we and our partners have set for Ballard's fuel cell products. In pursuit of these goals, we bring a resolute commitment to commercializing competitive and cost-effective products."
A conference call is scheduled for Friday, May 7, 1999 at 12:00 noon EST (9:00 am PST) to review Ballard's first quarter highlights. Access to the call may be obtained by calling the Confertech operator at 416-641-6694 five minutes prior to the call. A playback version of the conference call will be available for 24 hours after the call at 416-626-4100. The confirmation number to access the playback version is 1314930. The conference call playback will also be available on Ballard's web site at www.ballard.com.
This release contains forward-looking statements reflecting Ballard Power Systems' current expectations as contemplated under the Safe Harbor provisions of the US Private Securities Litigation Reform Law of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including, without limitation, product development delays, changing environmental regulations, the ability to attract and retain business partners, future levels of government funding, competition from other fuel cell manufacturers, competition from other advanced energy technologies, competition from existing energy technologies, evolving markets for electric power and transportation vehicles, and the ability to provide the capital required for product development, operations and marketing. Investors are encouraged to review the Management's Discussion and Analysis section in Ballard's 1998 Annual Report titled "Operating Results, Capital Requirements, and Risks" (pages 30 to 34) for a more complete discussion of factors that could affect Ballard's future performance.
Consolidated Balance Sheets
unaudited
expressed in thousands of Canadian dollars
March 31 1999 1998
ASSETS
Current assets
Cash and cash equivalents $378,182 $65,911
Short-term investments 53,338 85,217
Accounts receivable 11,872 20,920
Inventories 8,804 2,758
Prepaid expenses 836 1,226
--------------------
453,032 176,032
Capital assets 45,634 38,734
Fuel cell technology acquired 49,175 52,840
Investments in associated companies 128,859 68,653
--------------------
$676,700 $336,259
--------------------
LIABILITIES
Current liabilities
Accounts payable and accrued
liabilities $16,297 $15,724
Current portion of capital
lease obligation 91 91
Deferred revenue 9,256 7,257
Allowance for warranty 13,654 9,094
--------------------
39,298 32,166
Capital lease obligation 416 517
Minority interest 16,109 300
--------------------
55,823 32,983
Shareholders' Equity
Share capital 658,030 340,578
Accumulated deficit (37,153) (37,302)
--------------------
620,877 303,276
--------------------
$676,700 $336,259
--------------------
Consolidated Statements of Income and Accumulated Deficit
unaudited
expressed in thousands of Canadian dollars except
per share amounts
Three months ended March 31 1999 1998
Revenues $6,498 $4,838
Investment income 5,167 1,916
----------------------
11,665 6,754
Cost of revenues and expenses
Cost of revenues 4,110 3,636
Research and product development 10,081 6,176
General and administrative 1,758 1,652
Marketing 753 587
Interest 11 13
Minority interest (1,064) (204)
Capital taxes 82 70
Equity in loss of associated companies 3,523 2,062
Amortization of fuel cell technology 916 916
----------------------
20,170 14,908
----------------------
Loss before income taxes (8,505) (8,154)
Income taxes 313 48
----------------------
Net loss for period (8,818) (8,202)
Accumulated deficit, beginning
of period (28,335) (29,100)
----------------------
Accumulated deficit, end of period ($37,153) ($37,302)
----------------------
Net loss per share ($0.11) ($0.12)
----------------------
Weighted average number of common
shares outstanding 83,406,181 69,974,622
----------------------
Consolidated Statements of Cash Flow
unaudited
expressed in thousands of Canadian dollars
Three months ended March 31 1999 1998
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Operations
Net loss for period ($8,818) ($8,202)
Items not affecting cash :
Amortization 2,966 1,968
Minority interest (1,064) (204)
Equity in loss of associated
companies 3,523 2,062
--------------------
(3,393) (4,376)
Changes in non-cash working capital
Accounts receivable 1,850 520
Inventories (2,188) (1,439)
Prepaid expenses - (725)
Accounts payable and accrued
liabilities (5,903) 1,358
Deferred revenue 204 13
Allowance for warranty (44) (134)
--------------------
(6,081) (407)
--------------------
(9,474) (4,783)
Cash provided by (used in)
financing activities
Net proceeds on issuance of share
capital 2,003 2,727
Capital lease obligation (26) (25)
--------------------
1,977 2,702
Cash provided by (used in)
investing activities
Net changes in short-term
investments 39,568 (59,921)
Additions to capital assets (2,286) (16,659)
Investments in associated companies - 47
--------------------
37,282 (76,533)
--------------------
Increase (decrease) in cash and
cash equivalents 29,785 (78,614)
Cash and cash equivalents, beginning
of period 348,397 144,525
--------------------
Cash and cash equivalents, end
of period $378,182 $65,911
--------------------
Ballard Power Systems is the world leader in developing, manufacturing and marketing zero-emission proton exchange membrane (PEM) fuel cells for use in transportation, electricity generation and portable products. Ballard's proprietary fuel cell technology is enabling automobile, electrical equipment and portable power product manufacturers to develop environmentally clean products for sale. The fundamental component of these end-user products is the Ballard(R) fuel cell which combines hydrogen (which can be obtained from methanol, natural gas or petroleum) and oxygen (from air) without combustion to generate electricity. Ballard is partnering with strong, world-leading companies including DaimlerChrysler, Ford, GPU International, ALSTOM and EBARA to commercialize the Ballard fuel cell. Additional customers using the Ballard fuel cell include General Motors, Nissan, Honda, Volkswagen, Volvo, Matsushita Electric Works, and Cinergy.
Ballard's Common shares are listed on The Toronto Stock Exchange under the trading symbol "BLD" and on the Nasdaq National Market System under the symbol "BLDP". Ballard and the Ballard logo are registered trademarks of Ballard Power Systems Inc.