Hydrogenics Overview. MB: May 2018

Transcription

1 Hydrogenics Overview MB: May

2 Safe Harbor Statement Certain statements in this Overview contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, and under applicable Canadian securities laws. 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; our inability to address a 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 goodwill; failure of a significant market to develop for our products; failure of hydrogen being readily available on a costeffective basis; changes in government policies and regulations; failure of uniform codes and standards for hydrogen fuelled vehicles and related infrastructure to develop; liability for environmental damages resulting from our research, development or manufacturing operations; 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; dilution as a result of the exercise of options; and failure to meet continued listing requirements of Nasdaq. Readers should not place undue reliance on Hydrogenics forward-looking statements. Investors are encouraged to review the section captioned Risk Factors in our regulatory filings with the Canadian securities regulatory authorities and the US Securities and Exchange Commission for a more complete discussion of factors that could affect our future performance. Furthermore, the forwardlooking statements contained herein are made as of the date of this presentation, and we undertake no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this presentation, unless otherwise required by law. The forward-looking statements contained in this presentation are expressly qualified by this. 2

3 The Hydrogen Economy is Mobilizing to Scale Up Launched at the World Economic Forum 2017, in Davos, the Hydrogen Council is a global initiative of 39 leading energy, transport and industry companies with a long-term ambition for hydrogen to foster the energy transition. The 18 steering committee members of the council represent a combined market capitalization of $1.15 trillion. Each member CEO shares a united vision that hydrogen is essential to achieving deep decarbonization of the global energy system at scale. This growing coalition of CEOs have the ambition to: Accelerate their significant investment in the development and commercialization of the hydrogen and fuel cell sectors. Encourage key stakeholders to increase their backing of hydrogen as part of the future energy mix with appropriate policies and supporting schemes. The Hydrogen Economy by 2050: 18% of final energy demand 6 Gt of annual CO2 abatement $2.5 trillion in annual sales 30 million jobs created Key policy recommendations to unlock the contribution of hydrogen to energy transition include: Provide long-term and stable policy frameworks. Develop coordination and incentive policies. Facilitate harmonization of industry standards. Source: Hydrogen Council website and roadmap. 3

4 Hydrogenics is a Global Leader in Hydrogen Technology Hydrogenics delivers the technology to shift power to a zero-emission energy economy by: Empowering our People with over 145 patents and 70 years of corporate lineage delivering top-tier hydrogen solutions. (Publicly traded since 2000 on NASDAQ (HYGS) and the TSX (HYG)) People Delivering a comprehensive suite of Products that includes mobility, hydrogen generation, fueling stations, renewable energy storage (aka power-to-gas) and grid balancing as well as purpose built customer specific products Leveraging Partnerships that align with our product and market strategies (E.g. Enbridge, E.ON, Alstom, Linde, UPS, New Flyer, Uniper, DLR, Top 5 Chinese bus OEMs) Policy & Government relations Markets Core IP & Pedigree Products Partnerships Providing renowned engineering Agility that delivers integration and nonrecurring engineering support aligned with customer requirements Agility Developing Markets that currently serve customers in 100+ countries with over 2,000 fuel cell, 500 electrolyzer installations and numerous demonstration projects to date Participating actively in Policy and Government Relations activities that advance the shift to hydrogen (e.g. Hydrogen Council) 4

5 Shifting Power Across Industries Around the World Canada Mississauga, Ontario Canada Montreal Belgium Oevel Germany Gladbeck Russia Moscow HYDROGEN GENERATION Electrolyzers Industrial Hydrogen Supply POWER SYSTEMS Fuel cells Stand-by Power Mobile Power Modules MW Power Plants Korea Daesan USA Carlsbad, California Malaysia Selangor RENEWABLE HYDROGEN Energy Storage Hydrogen Refueling Station Power-to-X Grid Balancing Services Indonesia Jakarta 5

6 Our Principal Product Lines HyPM: PEM Fuel Cell Power Modules Robust and flexible platform for zeroemission mobility Proven track record for superior performance and durability Fully customizable HyPM and HyPM-R: PEM Fuel Cell Power Modules and Rack Systems Suitable for critical power applications Unlimited scalability to meet runtime needs HySTAT : Alkaline Electrolyzers Suitable for industrial hydrogen, energy storage and fueling World leading market share Industrial standard HyLYZER : PEM Electrolyzers Suitable for energy storage and fueling Worlds most power dense stack with the smallest footprint Scalable to 50MW, 100MW+ 6

7 7 HYDROGEN MOBILITY

8 PEM Technology Fuel cells use proton exchange membrane PEM design Proprietary HyPM-HD product advantages include: Compressor free, low pressure, low temperature stack design integrated with balance-of-plant delivering a compact design for space constrained applications Easily configurable modular units (either in-line or stacked) simplifying scalability to meet larger power requirements Built-in integration system simplifying electrical and mechanical interfaces for easy integration with powertrain components Core products available for commercial production at scale include power outputs ranging from 4 to 90 kw Continuous product improvement focused on standardization and cost reduction Supply chain capacity and flexibility also in focus. 8

9 Commuter Rail Update Fuel cells for zero-emission passenger trains Alstom reliability testing on public rails (without passengers) progressing well with full certification later this year Sales to end user customers progressing very well with high interest in the value proposition Result of market sales will be aggregated into a production order this year for production in 2019 and beyond Hydrogen Rail feasibility report issued by Metrolinx in Toronto in respect of major modernization program for overall rail network RFP for more detail design work has been issued Value proposition against traditional approach is very strong This application is moving strongly from a commercialization point of view ilint Coradia s top speed of 140km/h was tested and validated in Velim, Czech. 9

10 Vehicle Electrification means fuel cell Life cycle and scale experience of China on battery vehicles has accelerated the understanding of battery limitation Range and fueling time limitation on battery vehicles is accelerating interest in fuel cell option Acceleration of awards for heavy-duty mobility fuel cells and other applications Numerous mobility applications for truck, delivery van and boats being pursued in Asia, Europe and elsewhere 10

11 China Update Outlook 2017 shipments of ~300 units are proceeding through integration, road deployment, test and evaluation Certified Integrator Partners are busy Confirming integration design Confirming China sourced components Confirming physical integration assembly Confirming road worthiness and certification After this step more volume uptake will follow No major issues or concerns Other partners are getting underway Momentum evident, timing can be uncertain Much more to come in China Path to Larger Orders Proceeding as Planned Demand Remains Robust 11

12 Hydrogen Mobility: Reference Projects Alstom UPS Germany Germany USA China USA Switzerland 12

13 INDUSTRIAL HYDROGEN Nyagan, Russia 13

14 Industrial Hydrogen Solutions Hydrogenics HySTAT and HyLYZER electrolyzers generate pure hydrogen for zero-emission solutions. On-site and on-demand hydrogen generation Designed for automatic and continuous operation Customizable and easy to integrate for industrial and utility industries PEM and alkaline units, built to the highest safety standards Clean and renewable hydrogen generation: on-site and ondemand 14

15 Industrial Hydrogen: Reference Sites Saint Gobain, Colombia Elemash, Russia Bushan, India Camao, Brazil Nyagan, Russia Kirovgrad, Russia 15

16 16 HYDROGEN FUELING

17 Hydrogen Fueling Solutions Hydrogenics has supplied zero-emission solutions to over 55 fueling stations more than any other hydrogen fueling company. Production capabilities from 20kg to over 1,000 kg per day 350 and 700 bar stations Fully interconnected systems for easy installations Designed for clean onsite hydrogen production or delivered hydrogen Built to the highest standards Zero-emission fueling for clean mobility solutions 17

18 Hydrogen Fueling: 55+ Reference Sites Aberdeen, Scotland Hamburg, Germany Sydkraft, Malmö, Sweden Halle, Belgium Stuttgart, Germany Oslo, Norway 18

19 19 RENEWABLE HYDROGEN & GRID BALANCING

20 Renewable Hydrogen Solutions Hydrogen produced from renewable power via water electrolysis enables the transition to a cleaner future across all energy sectors and applications. Momentum is building for Power to Gas Quote and demand level is strong Geographic dispersion with recent deliveries to Scotland, Thailand, Germany 1 st NA plant commissioned with Enbridge Offering hydrogen solutions for a renewable based energy system Power-to Gas: Injecting hydrogen or synthetic natural gas into the gas grid Power-to-Mobility: Hydrogen refueling for fuel cell electric vehicles Power-to-Industry: Using hydrogen as a feedstock for industrial facilities Power-to-Fuel: Using hydrogen as a feedstock for traditional fuel production Power-to-Power: Repowering hydrogen through a fuel cell 20

21 Renewable Hydrogen & Grid Balancing: Reference Projects Falkenhagen, Germany Hamburg, Germany Grapzow, Germany California, USA Katinnik, Quebec, Canada Avedøre, Denmark 21

22 Entering New Phase of Growth Recently awarded a C$5M grant to support significant manufacturing scale-up, equating to 50% funding on a C$10M plan over two years Automation and internalization of some key process steps will increase capacity utilization and reduce costs Commercial scale programs support multiyear revenue with greater stability Planning also underway to support serial production for Alstom Transport opportunity Focus on both fuel cell and electrolysis product ramp Market demand for rail, mobility, fueling and P2G justify capital investment Also supporting Chinese partners for localized production 22

23 Our Strategy and Value Creation 1. We have developed robust PEM technology platforms for fuel cells and electrolysis with market leading product maturity 2. Our 70 years of experience supports safe, reliable and cost-effective application deployments inspiring the trust of new, innovative partners 3. Markets are now emerging for mobility, rail, fuel and power to gas which will drive significant scale up - and we have the credibility to deliver 4. Rail applications are a perfect illustration of how our technology links renewable energy generation, hydrogen fueling and zero emission mobility 5. We have the partners and relationships to carry these applications at scale 6. Our financial and manufacturing model will benefit from operating leverage to realize sustainable profitable growth 23

24 Q Highlights Significant volume in China from 2017 being deployed and evaluated as new orders await Q1 revenues flat but greatly improved margin profile due to product mix Deliveries and orders not indicative of outlook for 2018 as a whole R&D investment in programs for rail, mobility and Power-to-Gas (P2G) support major opportunities going forward Strong cash position continues Solid backlog supports ongoing growth In China the path to higher orders continues with test and evaluation phase 24

25 Q1 Revenue Three months ended March 31, 2018 Revenue ($M) Revenue ($M) by Business Unit Power Systems OnSite Generation OnSite Generation Power Systems Notes Revenues decreased 7%, or $0.6 million, to $8.1 million in the quarter. OnSite Generation revenue was up $1.7 million as a result of greater industrial hydrogen orders shipped. Revenue from Power Systems was down $2.3 million as the comparative quarter included $1.7 million in revenue related to hydrogen fuel cell systems for commuter trains in Europe as well as greater revenue related to the longterm integrated power propulsion contract. 25

26 Q1 Gross Margin Three months ended March 31, 2018 Gross Margin (%) 39.7 Gross Margin (%) by Business Unit Power Systems OnSite Generation OnSite Generation Power Systems Notes Gross margin improved to 39.7% of revenue for the three months ended March 31, The increase from the Power Systems segment was attributable to delivering more standard production fuel cells and a smaller proportion of first-of-a-kind projects such as the commuter rail revenue included in Q For the OnSite Generation segment, gross margin improved reflecting both higher margins on equipment delivered versus the prior year as well as reversal of a previously recorded warranty provisions, which management has estimated are no longer required. 26

27 Q1 Results (in $ millions) Three months ended Mar. 31, Change $ % Revenue $ 8.1 $ 8.7 (0.6) (7)% Gross Profit % Gross Margin % 39.7% 30.6% Operating Expenses Selling, general and administrative (excluding stock-based compensation, amortization and depreciation) % Research and product development % Adjusted EBITDA $ (1.6) $ (0.7) (0.9) (129)% Notes Adjusted EBITDA is defined as net loss excluding: cash settled long term compensation indexed to share price, share settled stock-based compensation expense, net finance income and expenses, 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 ongoing operational results. 1 Research and product development Gross research and product development expenses $ 3.0 $ 1.7 Government research and product development funding (0.9) (0.7) Net research and product development $ 2.1 $

28 Order Backlog As of March 31, 2018 ($M) Jan 1/18 IFRS 15 Orders Orders Mar. 31/18 Backlog Adj. Received FX Delivered Backlog OnSite Generation $ 19.9 $ (0.8) $ 1.6 $ 0.4 $ 3.8 $ 17.3 Power Systems (0.3) Total $ $ (1.1) $ 2.6 $ 1.9 $ 8.1 $ Of the above backlog of $140.1 million, we expect to recognize approximately $55.0 million as revenue in the following twelve months. Revenue for the year ending December 31, 2018 will also include orders received and delivered in

29 Consolidated Balance Sheet Highlights ($M) Cash and cash equivalents and restricted cash Mar. 31, Dec. 31, Change $ % $ 19.4 $ 22.4 (3.0) (13)% Trade, other and grants receivable (1.5) (14)% Contract assets - (current and non-current) % Inventories % Operating borrowings (1.2) (100)% Trade and other payables % Contract liabilities - (current and non-current) % Financial liabilities (0.3) (6)% 29

30 Q1 Reconciliation of Non-IFRS Measures Adj. EBITDA ($M) Three months ended Three months ended March 31, 2018 March 31, 2017 Net loss $ (2.0) $ (2.3) Finance loss, net $ - $ 0.9 Income tax expense $ 0.3 $ - Amortization and depreciation $ 0.2 $ 0.2 Compensation indexed to share price $ (0.3) $ 0.3 Stock-based compensation expense $ 0.2 $ 0.2 Adjusted EBITDA $ (1.6) $ (0.7) * Note certain figures have been adjusted for rounding 30

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