Ballard Power Systems, Inc. Q4 FY2024 earnings call

• Order Intake: 2024 was a record year for order intake with $113 million, including $75.4 million in Q4, and a year-ending backlog of $173.5 million.
• Product Shipments: Delivery of fuel cell engines grew 30% in 2024, with over 660 engines and 56.5 megawatts shipped, marking the fourth consecutive year of growth.
• Operating Costs: Initiated global restructuring in September to reduce annualized operating costs by over 30%, with workforce reductions, facility rationalization, and deferred Gigafactory investment.
• Product Development: Launched ninth-generation FC Move XD engine, made progress on product cost reduction, and completed initial development of Project Forge for bipolar plate manufacturing.

In 2024, Ballard's power products saw record-breaking order intake with $113 million total new orders, including $75.4 million in Q4, and a year-ending order backlog of $173.5 million. Product shipments of fuel cell engines grew 30% in 2024, with over 660 engines delivered and 56.5 megawatts shipped, accounting for over 90% of total revenue. The bus vertical had $44 million in 2024 revenue, a 51% increase, representing over 60% of total revenue. The rail vertical signed a landmark long-term supply agreement with CPKC for 98 fuel cell engines. The stationary segment secured a 15-megawatt order and formed a partnership with Vertiv.

• 2025 operating expenses expected to range $100M-$120M, a ~30% reduction from 2024.
• 2025 capital expenditures expected to be $15M-$25M, a reduction from 2024.
• No near or mid-term financing requirements due to cost reductions and strong balance sheet.

• Industry rationalization with some competitors failing.
• Policy uncertainty, including temporary pause on US hydrogen funding awards.
• Potential delays in hydrogen availability affecting customer deployments.

Q: How does the order book look into 2025 and the split of backlog?

A: Order backlog is $173.5 million, with roughly half in bus market and 40% in rail. Expect good quarters in 2025 with ongoing platform wins.

Q: On stationary business, where is demand growth?

A: Weak grid/microgrid, EV charging, and early-stage data center market, focusing on 100+ kilowatt applications.

Q: What percentage of backlog is from long-term platform customers?

A: Roughly 70-80% of business comes from 8 repeat customers.

Q: Levers to trend below OpEx guide?

A: Rationalization of product portfolio and prioritization of core products for efficiencies.

Q: Impact of order timing lumps in US due to ITC expiration?

A: Bus market in US has strong interest with ongoing sales pipelines, no retraction seen yet.

Q: Timing and margin impact of Project Forge?

A: Equipment arrived, commissioning by June, optimization in Q3, expecting benefits in 2026 with potential 70% cost reduction on bipolar plates.

Q: M&A opportunities in industry rationalization?

A: No attractive or additive M&A seen yet, focusing on cash flow positive contributions.

Q: Thoughts on hydrogen availability and color?

A: Mixed report on hydrogen availability, with more opportunities in gray and blue hydrogen, and green hydrogen forecasted by 2030-2035.

Q: Shipments growth and gross margin outlook?

A: 2025 shipments to have higher megawatts due to rail orders, with contribution margin improvements from 11 initiatives, expecting stepwise gross margin improvement in 2025.

Q: CapEx priorities for 2025?

A: Completion of Project Forge, maintenance CapEx, and modest testing improvements.