Company Update (NASDAQ:HYGS): Hydrogenics Corporation (USA) Reports Third Quarter 2015 Results

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

Third Quarter Highlights

“During the third quarter we saw an increase in revenue sequentially versus the first half of 2015 and recently noted a number of operating achievements that position us well for a pickup in orders going forward,” said Daryl Wilson, President and Chief Executive Officer. “E.ON inaugurated our 1.5 megawatt PEM energy storage system in Hamburg, Germany – our second reference site with this key customer and an important strategic milestone for Power-to-Gas installations. We also realized the start of commercial operations at Kolon Hydrogenics’ initial one megawatt fuel cell power facility in South Korea. These events are being heralded by industry and government officials alike as groundbreaking in terms of our PEM hydrogen technology, which can be scaled for much greater energy applications. We look forward to additional orders from Kolon in the near future, once testing is complete, and Korea remains a very attractive market committed to using fuel cells for large-scale power generation – as recent activity attests.

“We delivered our first electrolysis units to Kurion during the quarter for the previously-announced purification of tritiated waste water. Subject to final pilot program results, this technology could represent substantial opportunities at Fukushima and other nuclear sites around the world. Overall, we expect to see a pickup in energy storage demand, fuel cell bus deliveries, and fueling station awards heading into 2016, along with the aforementioned Kolon orders. The Company remains well positioned for a broad array of hydrogen-based energy applications, our backlog is strong, and we are excited about the leading role we play across the hydrogen value chain.”

Summary of Results for the Quarter Ended September 30, 2015

  • Revenue was $9.6 million for the third quarter versus $11.1 million last year. Excluding the foreign exchange impact of $1.6 million, reflecting the decline in the value of the euro relative to the US dollar in the third quarter of 2015 compared with 2014, revenue increased $0.2 million year-over-year.
  • Cash operating costs declined 9% to $3.5 million for the three months ended September 30, 2015 compared to $3.9 million for the three months ended September 30, 2014, primarily reflecting lower SG&A expenses due to the impact of lower exchange rates on expenses denominated in euros and Canadian dollars, as well as a slight decrease in R&D expenses.
  • Gross profit was 21.8% of revenue for the quarter, versus 27.6% in the prior-year period, reflecting a change in product mix as well as higher indirect overhead costs as a percent of revenue when compared to the prior-year period.
  • Adjusted EBITDA2 loss was $1.4 million for the quarter compared with an Adjusted EBITDA2 loss of $0.7 million in the third quarter of 2014, reflecting the aforementioned items.
  • Net loss was $2.2 million, or $(0.21) per share, in the quarter compared with a net loss of $1.3 million, or $(0.13) per share, in the third quarter of 2014.
  • Hydrogenics secured $5.7 million of orders for renewable energy storage, industrial gas and power system applications during the quarter, resulting in a backlog of $98.9 million as of September 30, 2015. Order backlog movement during the third quarter (in millions) was as follows:
Expected Revenue 
June 30,  Delivered/  September  During  Beyond 
2015 Orders  Revenue  30, 2015  next 12  next 12 
backlog Received FX Recognized backlog months months
OnSite Generation $26.8 $3.5 $0.1 $7.6 $22.8 $19.7 $3.1
Power Systems 75.5 2.2 0.4 2.0 76.1 6.9 69.2
Total $102.3 $5.7 $0.5 $9.6 $98.9 $26.6 $72.3
  • The Company exited the third quarter with $8.7 million of cash and restricted cash, a $1.7 million decrease from December 31, 2014, primarily reflecting: (i) $8.7 million of cash used in operating activities; (ii) $1.4 million related to the purchase of property, plant and equipment and; (iii) the foreign exchange impact of $0.5 million on euro and Canadian-denominated cash balances; partially offset by (iv) $9.0 million of net operating borrowings, including the Company’s new $7.5 million credit facility.


  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 $10.39 . HYGS has a 1-year high of $17.75 and a 1-year low of $7.32. The stock’s 50-day moving average is $9.43 and its 200-day moving average is $9.65.

On the ratings front, Roth Capital analyst Matt Koranda maintained a Buy rating on HYGS, with a price target of $11, in a report issued on August 12. The current price target represents a potential upside of 5.9% from where the stock is currently trading. According to, Koranda has a total average return of 9.5%, a 54.4% success rate, and is ranked #578 out of 3832 analysts.

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.



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