hydrogenics investor presentation how do our products work? takes hydrogen and creates electricity...
TRANSCRIPT
1
HYDROGENICS INVESTOR PRESENTATION
May, 2017
Version: 02.17
2
Safe Harbor Statement
Certain statements in the Business Update and Order Backlog sections 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 cost-effective 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 forward-looking 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.
3
Our Company
Technology 145 (Patents & Applications)
Extensive Know-How
Wide Experience
Geographies Canada, Belgium, Germany, US,
SE Asia, Russia, China, Korea
Financial
Snapshot
LTM Revenue: $33.5M
Backlog: $110M
Corporate 1995 Start
2000 IPO
HYGS | NASDAQ; HYG | TSX
12.5M basic |13.5M fully diluted
Canada
Germany
Belgium
4
How Do Our Products Work?
Takes Hydrogen
and creates
electricity
Hydrogen
Air
Fuel Cell
Electromechanical
Engine
Water
Electric
Power
Electrolyzer
Gas
Generation Oxygen
Hydrogen
Fuel
Water
Electric
Power
Fuel Cell (Power Systems)
Takes electric
power (often from
renewables) and
creates Hydrogen
fuel for bulk
energy storage
Electrolyzer (Onsite Generation)
5
• Extended Range Electric Rail Transport for Europe
• Utility Scale Energy Storage for Germany & Canada
• Clean Electric Public Transport in California & China
• Clean Continuous Power Generation in Korea
Many applications on two standardized platforms
(Growth) (Simplicity & Cost Reduction)
6
Q1 2017 Highlights
• Strong start to the year with top line
growth and healthy margin profile
• Recent wins across multiple verticals
including mobility, power to gas, and
progress in China
• Order intake of $11M contributing to
record $110M backlog
• New funding pathway via $21M private
placement with Hejili – illustrating
investor confidence in HYGS and the
market potential in China
Fuel Cells in China:
Strong demand for
mobility solutions
and market driven
investor interest
7
HYDROGEN MOBILITY
Salzgitter, Germany Stuttgart, Germany
Toronto, Canada Basel, Switzerland Winnipeg, Canada & Scottsdale, Arizona
California, USA
8
Hydrogen Mobility Solutions
Hydrogenics HyPM™ power modules provide a robust and flexible
platform for zero-emission mobility applications.
• Proven track record for superior performance, durability and
reliability
• Simple electrical and mechanical interfaces for easy integration
with electric vehicles
• Robust stack architecture with no humidifier, low pressure and
dry/dry features
• High durability components for demanding conditions
• Greatest range of kW systems
The ultimate OEM
friendly solution for
light and heavy
mobility applications
9
Commuter Rail Update
• Dynamic testing at EU rail certification facility
in the Czech republic virtually complete, with
very positive results
• First series production orders on overall
€50M order anticipated in near future
• Excellent sales engagement with end
customers through market leader Alstom
Transport
• Additional rail platforms under discussion
Fuel cells for zero-emission passenger trains Alstom Coradia iLint:
Successful testing for
first 80km run
10
China Update
• Significant product now on the road and doing well
• Further scale up in orders anticipated for 2017
• Certified Integrator Program (CIP) on track, with additional partners under review
• Moving through scale-up process of 1-10-100-1000 unit development
• New investor represents incremental market penetration opportunity and should accelerate Hydrogenics’ growth across energy storage, fueling, and grid-related projects
Continued expansion into the Chinese market Beijing, China:
First prototype with
40,000 km road
service
11
HYDROGEN FUELING
Hamburg, Germany Barcelona, Spain Aberdeen, Scotland
Oslo, Norway Stuttgart, Germany Halle, Belgium
12
Hydrogen Fueling Solutions
Hydrogenics has supplied zero-emission solutions to over 50
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
13
RENEWABLE HYDROGEN & GRID
BALANCING
Avedøre, Denmark
Falkenhagen, Germany
Falkenhagen, Germany Katinnik, Quebec
Hamburg, Germany Grapzow, Germany
14
Renewable Hydrogen Solutions
Hydrogen produced from renewable power via water electrolysis
enables the transition to a cleaner future across all energy sectors
and applications.
• 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
Offering hydrogen
solutions for a
renewable based
energy system
15
INDUSTRIAL HYDROGEN
Elemash, Russia
Kirovgrad, Russia
Saint Gobain, Colombia
Nyagan, Russia
Bushan, India
Camao, Brazil
16
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 on-
demand
17
CRITICAL POWER
Daesan, South Korea
Daesan, South Korea Port of Honolulu, Hawaii, USA Istanbul, Turkey
Surrey, United Kingdom Nuuk, Greenland Brisbane, Australia
18
Critical Power Solutions
Hydrogenics HyPM™ power modules set the technology
benchmark for meeting intermittent and continuous power needs.
• Designed for superior performance
• Fully integrated stack with power range flexibility from 3kW to
50 MW
• Best footprint with scalable design solutions to meet runtime
needs
• 10,000+ hour stack lifetime with unlimited stop and start cycles
• Greatest range of kW systems
The ultimate solution
for reliable backup,
standby and
continuous power
applications
19
Recent Award Activity
• 2.4 Megawatt Power-to-Gas (P2G) award in
Germany
• 1 Megawatt P2G system in Scotland
• Two fueling stations in Greater Toronto
• The largest renewable hydrogen fueling
station in the U.S. – includes CelerityPlus™
power modules to be integrated into New
Flyer fuel cell buses
Span across end markets and around the globe
H2 Fueling Wins:
• First GTA stations
• Largest renewable
station in U.S.
20
Major Program Progress
Program Area Lead Customer Status Value
Hydrogen Rail Alstom Transport Program on schedule, with on-rail testing underway
Pre-series complete; Series production order is pending
>50M€
Booked
Mobility 4 Certified Integrator
Partners (CIP) China
1-10-100 progressing toward 1000 unit orders >$50M Potential
Power-to-Gas E.ON
Enbridge
First Canadian facility in operation Q2
Additional wins (California 2.5MW & Germany 2.5MW)
$20M in delivery
$70M Potential
Fueling Various Good progress in California and Canada More to come
Propulsion Confidential First commercial product builds underway
Total program valued at $90M won in 2012
$30M Firm
(70% complete)
$60M not in Backlog
Stationary MW Power Kolon 1MW pilot ran to year-end 2016 as planned
Three 5MW sites under review
>$20M
Potential
Detritiation Kurion Awaiting next step direction in Japan
Won a further detritiation pilot unit in March
Automotive & Rail Confidential New early-stage technology development support and vehicle
integration
TBD
21
Building & Delivering Value
• Global technology leadership demonstrated in competitive
markets with Alstom, E.ON, Enbridge, and Chinese CIPs
• Multiple pathways to scale serves as a hedge against the
uncertainty of any one application
• Business opportunities across geographies yield significant
intrinsic value as applications scale independently
• Strong cost discipline to yield significant operating leverage
when scaling
• Backlog remains at record levels supporting significant growth
in revenue for 2017
Southeast Asia’s
First 1MW
Renewable
Hydrogen Plant
22 Financial Results…
23
Three months ended Mar. 31 Change
2017 2016 $ %
Revenue $ 8.8 $ 4.3 4.5 104%
Gross Profit 2.7
1.2 1.5 121%
Gross Margin % 30.3% 28.0%
Operating Expenses
Selling, general and administrative
(excluding stock-based compensation, amortization and depreciation) 2.4 2.0 0.4 20%
Research and product development 1.0 1.1 (0.1) (11)%
Adjusted EBITDA $ (0.7) $ (1.9) $ (1.2) (62)%
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.
• SG&A in Q1 2016 includes a reversal of an indemnification liability of $0.5 million. Excluding this reversal, SG&A expenses decreased
less than $0.1 million for the three months ended March 31, 2017 when compared to the prior period.
(in $ millions) Q1 Results
24
Jan. 1/17
Backlog
Orders
Received
FX
Orders
Delivered
Mar. 31/17
Backlog
OnSite Generation $ 20.8 $ 9.5 $ 0.2 $ 2.1 $ 28.4
Power Systems 85.8 1.5 0.8 6.7 81.4
Total $ 106.6 $ 11.0 $ 1.0 $ 8.8 $ 109.8
As of March 31, 2017
($M)
Order Backlog
Of the above backlog of $109.8 million, the Company expects to recognize $44.1 million in the following twelve months as revenue. In
addition, revenue for the year ending December 31, 2017 will include orders received and delivered during the balance of 2017.
25
Cash and cash equivalents
and restricted cash
$ 11.7 $ 11.3 0.4 3%
Trade, other and grants receivable 14.3 9.8 4.5 46%
Inventories 16.6 17.2 (0.6) (4)%
Operating borrowings 3.7 2.1 1.6 77%
Trade and other payables 9.8 7.2 2.6 35%
Financial liabilities 4.6 3.9 0.7 18%
Dec. 31,
2016
$ %
($M)
Change Mar. 31,
2017
Consolidated Balance Sheet Highlights
26
Three months ended
March 31, 2017
Three months ended
March 31, 2016
Net loss $ 2.3 $ 2.4
Finance loss, net (0.9) (0.2)
Amortization and depreciation (0.2) (0.2)
Compensation indexed to share price (0.3) -
Stock-based compensation expense (0.2) (0.1)
Adjusted EBITDA loss $ 0.7 $ 1.9
($M)
Q1 Reconciliation of Non-IFRS Measures – Adj. EBITDA
* Note certain figures have been adjusted for rounding
27