Ballard Power ((TSE:BLDP)) has held its Q4 earnings call. Read on for the main highlights of the call.
Ballard Power Systems recently held its earnings call, revealing a mixed sentiment amidst significant achievements and ongoing challenges. The company celebrated record-breaking order intake and product innovation, yet faced declining revenues and policy uncertainties. While operational milestones hint at promising long-term potential, immediate financial performance and market adoption remain under pressure.
Record-Breaking Order Intake
Ballard Power Systems achieved a remarkable milestone in 2024 with a record-breaking order intake for power products, securing approximately $113 million. The fourth quarter alone contributed $75.4 million to this figure, culminating in a year-end order backlog of $173.5 million, a 41% increase from the previous quarter.
Growth in Product Shipments
The company saw a notable growth in the delivery of fuel cell engines, with shipments increasing by approximately 30% in 2024. Ballard delivered more than 660 engines, with PEM fuel cell engines accounting for over 90% of total revenue, highlighting a strong demand for their products.
Significant Operating Cost Reductions
In a strategic move to improve financial performance, Ballard initiated a global corporate restructuring in September 2024. This effort aims to reduce total annualized operating costs by more than 30%, with substantial savings expected in 2025.
Product Innovation and Development Milestones
Ballard launched its ninth-generation high-performance fuel cell engine, FC Move XD, and completed the initial development phase of Project Forge. These initiatives are designed to reduce costs and increase manufacturing capacity, positioning the company for future growth.
Strong Performance in Bus and Rail Verticals
The bus market saw a significant revenue increase of 51% to approximately $44 million in 2024. Ballard secured orders from seven bus OEMs for over 1,600 fuel cell engines and signed a landmark supply agreement with CPKC for 98 fuel cell engines for freight locomotives.
Revenue Decline and Negative Margins
Despite these achievements, Ballard reported a revenue decline, with Q4 revenue at $24.5 million, a 42% decrease from the previous year. The full-year revenue totaled $69.7 million, a 32% drop from 2023, and the gross margin was negative 32%.
Challenges in Truck Market
The truck market faced significant challenges, with adoption timelines being pushed out due to business failures of smaller zero-emission truck integrators, impacting market growth.
Delays in Policy Implementation
The U.S. hydrogen fuel cell industry continues to grapple with policy uncertainty, affecting market adoption and the financing environment, posing challenges for Ballard’s growth in this sector.
Forward-Looking Guidance
Looking ahead, Ballard Power Systems provided comprehensive guidance, highlighting a strong order backlog and a 30% growth in fuel cell engine shipments. The company is undergoing a global restructuring to cut operating costs by over 30%, with projected 2025 expenses between $100 million and $120 million. With a robust cash position of over $600 million, Ballard is well-positioned to weather near and mid-term financial challenges. The company also aims for substantial cost reductions in bipolar plate manufacturing by 2026, driven by ongoing product development milestones.
In conclusion, Ballard Power Systems’ earnings call painted a picture of a company navigating through a challenging market environment with strategic initiatives and innovations. While immediate financial results show room for improvement, the company’s long-term potential appears promising, supported by record order intake and significant product advancements.