Hydrogenics Corporation (USA) (NASDAQ:HYGS), a leading developer and manufacturer of hydrogen generation and hydrogen-based power modules, today reported fourth quarter and full year 2015 financial results. Results are reported in US dollars and are prepared in accordance with International Financial Reporting Standards (IFRS).

2015 Highlights

“We closed 2015 with some historic achievements – including a long-term contract with Alstom, our first shipment to Kolon Hydrogenics, and a broad supply agreement for applications in China – that position the Company for stronger performance in the quarters to come,” said Daryl Wilson, Hydrogenics’ CEO. “While sales were down from 2014’s record level, we set the stage for growth and began 2016 with a strong backlog that already includes new orders from China – a key market going forward. Our supply agreement there covers heavy-duty fuel cells, Power-to-Gas energy storage technology, and electrolysis-based fueling stations. China is dedicated to rapidly improving air quality, with over 2,000 buses and other zero-emission vehicles expected to be launched over the next five years.

“Most importantly we achieved critical operating milestones at key reference sites with E.ON for Power-to-Gas, Kurion for de-tritiation and with Kolon for continuous power production.  Systems such as these open the door to much larger orders that can build operating leverage and transform our business results, and we already have marquee customers moving towards commercial scale commitments. Our strategy features many applications based on two standardized platforms, and there will be a multiplicative effect as growth in one area brings advantages and cost benefits to the others across our technology portfolio – resulting in margin expansion. With 2015 behind us, we start the year with a solid balance sheet and nearly $25 million in cash to fuel our market penetration strategy, new business development, and further strengthening of our brand.”

Summary of Results for the Quarter Ended December 31, 2015 (compared to the Quarter Ended December 31, 2014 unless otherwise noted)

  • Revenue declined by 28% to $11.3 million from $15.7 million reflecting the impact of the weakening Euro year-over-year against the US dollar, combined with reduced order volume in both the Power Systems and OnSite Generation groups.  However, the quarter does represent a revenue increase of $1.7 million from the $9.6 million reported in the third quarter of 2015.
  • Gross profit was 14.8% of revenue for the quarter, versus 19.1% in the prior-year period, driven by changes in product mix (including a lower proportion of custom projects, including engineering services), additional warranty costs relating to several first of a kind projects, as well as gross margin compression as a result of the weakening euro relative to the US dollar. Also contributing to the lower than average margin was higher than normal indirect overhead as a percentage of revenue than in the fourth quarter of 2014.
  • Cash Operating Costs1 increased by $0.9 million to $3.6 million in the quarter, compared to $2.7 in 2014, primarily due to an increase in net R&D expense.
  • Adjusted EBITDA2 loss was $1.8 million for the quarter compared with an Adjusted EBITDA2 of $0.2 million in the fourth quarter of 2014, reflecting the aforementioned items.
  • Net loss for the quarter was $2.1 million or $0.20 per share, compared with a net income of $0.6 million, or $0.06 per share, in the fourth quarter of 2015.
  • Hydrogenics secured $8.0 million of orders for renewable energy storage, industrial gas and power system applications during the quarter, resulting in an order backlog of $93.3 million as of December 31, 2015. Order backlog movement during the fourth quarter (in $ millions) was as follows:
  September 30,
2015 backlog
FX Orders
December 31,
2015 backlog
OnSite Generation $   22.8   $   2.9   $   (0.5 ) $   8.1   $   17.1  
Power Systems   76.1     5.1     (1.8 )   3.2     76.2  
Total $   98.9   $  8.0   $   (2.3 ) $   11.3   $   93.3
  • Of the above backlog of $93.3 million, we expect to recognize $22.3 million in the following twelve months as revenue. In addition, revenue for the year ending December 31, 2016 will also include orders received and delivered in 2016.
  • The Company exited the fourth quarter with $24.9 million of cash and restricted cash, a $16.5 million increase from September 30, 2015 primarily reflecting: (i) $17.6 million increase from common share issuance, (ii) $0.9 million of cash provided from operating activities; partially offset by (iii) $1.1 million of net operating borrowings and; (iv) $0.5 million related to the purchase of property, plant and equipment and intangible assets and; (v) the foreign exchange impact on euro and Canadian-denominated cash balances.

Summary of Results for the Year Ended December 31, 2015 (compared to the Year Ended December 31, 2014, unless otherwise noted)

  • Revenue decreased 21% to $35.9 million versus 2014, primarily reflecting the impact of the weakening Euro year-over-year against the US dollar, combined with reduced order volume in both the Power Systems and OnSite Generation groups.
  • Gross profit was $6.0 million for the year, or 16.6% of revenue.
  • Cash operating costs were $14.1 million, versus $13.9 million in 2014. The year-over-year change primarily reflects higher costs a result of an increase in R&D expenditures partially offset by lower SG&A expenses.
  • The Adjusted EBITDA2 loss for 2015 was $7.9 million versus an Adjusted EBITDA2 loss of $2.5 million in 2014.
  • Net loss in the year was $11.4 million or $1.12 per share.


  1. Cash operating costs are defined as the sum of SG&A and R&D, less amortization and depreciation, and stock-based compensation expense inclusive of compensation costs indexed to the Company’s share price. This is a non-IFRS measure and may not be comparable to similar measures used by other companies. Management uses this measure as a rough estimate of the amount of fixed costs to operate the Corporation and believes this is a useful measure for investors for the same purpose.
  2. Adjusted EBITDA is defined as net loss excluding stock based compensation (both cash settled long term compensation indexed to share price and share based compensation), other finance income and expenses, depreciation and amortization. These items are considered by management to be outside of Hydrogenics’ ongoing operational results.  Adjusted EBITDA is a non-IFRS measure and may not be comparable to similar measures used by other companies. (Original Source)

Shares of Hydrogenics closed yesterday at $8.40, down $-0.13 or -1.52%. HYGS has a 1-year high of $17.55 and a 1-year low of $5.41. The stock’s 50-day moving average is $7.84 and its 200-day moving average is $8.90.

On the ratings front, Hydrogenics has been the subject of a number of recent research reports. In a report issued on February 3, Roth Capital analyst Matt Koranda assigned a Buy rating on HYGS. Separately, on December 2, Cowen’s Jeff Osborne initiated coverage with a Hold rating on the stock and has a price target of $13.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Matt Koranda and Jeff Osborne have a total average return of 0.0% and -13.6% respectively. Koranda has a success rate of 48.8% and is ranked #2288 out of 3712 analysts, while Osborne has a success rate of 45.2% and is ranked #3575.

Hydrogenics Corp along with its subsidiaries, designs, develops and manufactures hydrogen generation and fuel cell products based on water electrolysis technology and proton exchange membrane technology.