Hydrogenics Corporation (USA) (NASDAQ:HYGS), a leading developer and manufacturer of hydrogen generation and hydrogen-based power modules, today reported first quarter 2016 financial results. Results are reported in US dollars and are prepared in accordance with International Financial Reporting Standards (IFRS).
First Quarter Highlights
“The first quarter of 2016 was challenging for Hydrogenics, as a few booked projects were pushed out and certain contract awards delayed,” said Daryl Wilson, Hydrogenics’ CEO. “While our backlog grew and the Company’s balance sheet remained strong, several programs were impacted by slower-than-anticipated progress payments and delays in customer site readiness, causing a deferral of revenue recognition until the second quarter. Nevertheless, higher overall gross margins allowed us to deliver a 5% improvement in gross profit relative to a year ago and an 18% lower Adjusted EBITDA loss. We anticipate that overall gross margins should remain higher than in 2015.
“We continue to lay the groundwork for the major initiatives we’ve spoken about in the past – including the next phase of multi-megawatt power generation orders in Korea. As I said last quarter, the final structure required for this 50 megawatt contract’s implementation is quite complex due to its size and first-of-its-kind application. The parties that are involved with this large transaction are making solid progress with regard to the requisite financing, legal structure, and power purchase agreement, and we believe that, subject to final approval by all parties, more details should soon be forthcoming on this groundbreaking undertaking. It is clearly our nearest-term priority. In the meantime, we continue to pursue many opportunities in China, Europe, Japan, and North America that leverage our leading platforms in electrolyzers and fuel cells. Our unique technology provides for scalable applications that can transform both the industry as well as our Company, and we believe the coming quarters should see increased order intake – positioning Hydrogenics for stronger growth this year and next. The delays we’re experiencing are, unfortunately, part of the growth process, but we are working diligently to address any issues and accelerate Hydrogenics’ expansion going forward.”
Summary of Results for the Quarter Ended March 31, 2016
- Revenue declined by 43% to $4.3 million from $7.5 million last year, reflecting the deferral of revenue associated with several shipments in both Power Systems and OnSite Generation from the first to second quarter. The delays were principally driven by the timing of customer site readiness to accept shipments combined with delivery delays associated with awaiting customer progress payments.
- Gross profit increased to 28% of revenue for the quarter, versus 15% in the prior-year period, reflecting increased engineering work and improved product mix.
- Adjusted EBITDA1 loss decreased to $1.9 million for the quarter compared with an Adjusted EBITDA1 loss of $2.3 million in the first quarter of 2015, reflecting the aforementioned items.
- Net loss for the quarter was $2.4 million or $(0.19) per share, versus $3.4 million, or $(0.34) per share, in the prior-year period.
- Hydrogenics secured $5.8 million of orders during the quarter, resulting in an order backlog of $98.0 million as of March 31, 2016. Of the $98.0 million in backlog, the Company expects to recognize approximately $30 million over the next twelve months as revenue. In addition, revenue for the year ending December 31, 2016 will also include a portion of orders received and delivered during 2016.
- The Company exited the first quarter with $19.1 million of cash and restricted cash, a $5.8 million decrease from December 31, 2015 primarily reflecting: (i) $4.1 million of cash used in operating activities; (ii) $1.1 million repayment of operating borrowings; (iii) $0.5 million related to the purchase of property, plant and equipment and intangible assets; and (iv) the foreign exchange impact on euro and Canadian-denominated cash balances. (Original Source)
Shares of Hydrogenics closed yesterday at $8.11, down $0.26 or -3.11%. HYGS has a 1-year high of $12.54 and a 1-year low of $5.41. The stock’s 50-day moving average is $8.80 and its 200-day moving average is $8.80.
On the ratings front, Roth Capital analyst Craig Irwin maintained a Buy rating on HYGS, with a price target of $13, in a report issued on March 24. The current price target represents a potential upside of 60.3% from where the stock is currently trading. According to TipRanks.com, Irwin has a yearly average return of -10.5%, a 32.7% success rate, and is ranked #3742 out of 3844 analysts.
Hydrogenics Corp. designs, develops and manufactures hydrogen generation and fuel cell products based on water electrolysis technology and proton exchange membrane technology. It offers expertise for a range of applications, including hydrogen generators for industrial processes and fueling stations; hydrogen fuel cells for electric vehicles, such as urban transit buses, commercial fleets, utility vehicles and electric lift trucks; fuel cell installations for freestanding electrical power plants and UPS systems; and provides solutions for energy storage and transport. The company operates through 2 segments: OnSite Generation and Power Systems. The OnSite Generation segment is based in Oevel, Belgium and develops products for industrial gas, hydrogen fueling and renewable energy storage markets. The Power Systems segment is based in Mississauga, Canada, with a satellite facility in Gladbeck, Germany, and develops products for energy storage, stationary and motive power applications. Hydrogenics was founded on June 10, 2009 and is headquartered in Mississauga, Canada.