Company Update (NASDAQ:HYGS): Hydrogenics Reports 2Q:15 Results

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

Second Quarter Highlights

“We are very encouraged by three significant developments in the quarter,” said Daryl Wilson, President and Chief Executive Officer.

“First, on May 22, 2015 we signed the largest commercial order for fuel cells in the Company’s history with Alstom Transport, a global leader in rail infrastructure, to provide power modules for at least 200 engines in a contract worth, including service and maintenance, more than €50 million over a 10 year period. This contract drove our firm order backlog to its highest level ever. It’s an exciting achievement which not only demonstrates the growing demand for hydrogen-based transportation but Hydrogenics’ role in developing leading-edge technology in the space.

“Second, with regard to Kolon, our partner in South Korea, our initial megawatt of power modules was shipped on June 25, 2015 is now onsite being commissioned. We expect the facility to be fully operational by early September. This represents the first step for future multi-megawatt power generation using fuel cell technology in South Korea and elsewhere.

“Finally, on May 4, 2015 we completed factory acceptance testing of our first next-generation, megawatt class PEM energy storage system. It was subsequently delivered to E.ON in Hamburg, Germany with installation and commissioning on this unit completed in early July. This is the world’s largest single stack electrolysis unit and represents the basis for commercialization of utility-scale, multi-megawatt installations already quoted in our sales pipeline.

“So while our financial results this period were not as strong as we had expected due to shipment timing that pushed revenue into early July, we are strengthening our leadership in a world rapidly coming to realize the benefits of everything associated with hydrogen technology. Overall, the Company is well positioned for higher growth as well as increased order flow heading into 2016.”

Summary of Results for the Quarter Ended June 30, 2015

  • Revenue decreased to $7.4 million, versus $10.7 million last year, reflecting shipment timing and the decline in the value of the Euro compared to the US dollar in the second quarter of 2015 compared with the second quarter of 2014. Excluding the foreign exchange impact of $1.0 million, the decrease in revenue was approximately 20%.
  • Gross profit was 14.1% of revenue for the quarter, versus 30.2% 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. The weakening of the Euro relative to the US dollar of $0.3 million also contributed to the decrease.
  • Cash operating costs declined 5% to $3.4 million for the three months ended June 30, 2015 compared to $3.6 million for the three months ended June 30, 2014, primarily reflecting lower SG&A expenses due to the impact of lower exchange rates on expenses denominated in Euros and Canadian dollars of $0.5 million, partially offset by a slight increase in R&D expenses.
  • Adjusted EBITDA2 loss was $2.3 million for the quarter compared with an Adjusted EBITDA2 loss of $0.3 million in the second quarter of 2014.
  • Net loss was $3.7 million, or $(0.37) per share, in the quarter compared with a net loss of $0.1 million, or $(0.01) per share, in the second quarter of 2014.
  • Hydrogenics secured $53.6 million of orders for renewable energy storage, industrial gas and power system applications during the quarter, resulting in a backlog of $102.3 million as of June 30, 2015. Order backlog movement during the second quarter (in millions) was as follows:
Expected Revenue

Mar 31,
FX Orders

June 30,

next 12

next 12
OnSite Generation $ 27.7 $ 3.6 $ — $ 4.5 $ 26.8 $  24.1  $ 2.7
Power Systems 28.1 50.0 0.3 2.9 75.5 6.7 68.8
Total $ 55.8 $ 53.6 $ 0.3 $ 7.4 $ 102.3 $ 30.8 $ 71.5
  • The Company exited the second quarter with $9.9 million of cash and restricted cash, a $0.5 million decrease from December 31, 2014, primarily reflecting: (i) $7.6 million of cash used in operating activities; (ii) $0.8 million related to the purchase of property, plant and equipment and; (iii) the foreign exchange impact of $0.5 million on the Euro and Canadian-denominated cash balances; partially offset by (iv) $8.5 million of proceeds of net operating borrowings, including the 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 $8.10. HYGS has a 1-year high of $25.88 and a 1-year low of $7.43. The stock’s 50-day moving average is $9.36 and its 200-day moving average is $11.66.

On the ratings front, Hydrogenics has been the subject of a number of recent research reports. In a report issued on May 27, Roth Capital analyst Matt Koranda maintained a Buy rating on HYGS, with a price target of $15, which represents a potential upside of 85.2% from where the stock is currently trading. Separately, on May 6, Canaccord Genuity’s Sara Elford reiterated a Buy rating on the stock and has a price target of $19.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Matt Koranda and Sara Elford have a total average return of 2.0% and -19.4% respectively. Koranda has a success rate of 40.4% and is ranked #1822 out of 3729 analysts, while Elford has a success rate of 33.3% and is ranked #3440.

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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