Hydrogenics Investor Presentation January 2014

Transcription

1 Hydrogenics Investor Presentation January 2014

2 Safe Harbor Statement Certain statements in the Business Update and Order Backlog sections contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, and under applicable Canadian securities laws. These statements are based on management s current expectations and actual results may differ from these forward-looking statements due to numerous factors, including: our inability to increase our revenues or raise additional funding to continue operations, execute our business plan, or to grow our business; our inability to address a slow return to economic growth, and its impact on our business, results of operations and consolidated financial condition; our limited operating history; inability to implement our business strategy; fluctuations in our quarterly results; failure to maintain our customer base that generates the majority of our revenues; currency fluctuations; failure to maintain sufficient insurance coverage; changes in value of goodwill; failure of a significant market to develop for our products; failure of hydrogen being readily available on a cost-effective basis; changes in government policies and regulations; failure of uniform codes and standards for hydrogen fuelled vehicles and related infrastructure to develop; liability for environmental damages resulting from our research, development or manufacturing operations; failure to compete with other developers and manufacturers of products in our industry; failure to compete with developers and manufacturers of traditional and alternative technologies; failure to develop partnerships with original equipment manufacturers, governments, systems integrators and other third parties; inability to obtain sufficient materials and components for our products from suppliers; failure to manage expansion of our operations; failure to manage foreign sales and operations; failure to recruit, train and retain key management personnel; inability to integrate acquisitions; failure to develop adequate manufacturing processes and capabilities; failure to complete the development of commercially viable products; failure to produce costcompetitive products; failure or delay in field testing of our products; failure to produce products free of defects or errors; inability to adapt to technological advances or new codes and standards; failure to protect our intellectual property; our involvement in intellectual property litigation; exposure to product liability claims; failure to meet rules regarding passive foreign investment companies; actions of our significant and principal shareholders; dilution as a result of significant issuances of our common shares and preferred shares; inability of US investors to enforce US civil liability judgments against us; volatility of our common share price; dilution as a result of the exercise of options; and failure to meet continued listing requirements of Nasdaq. Readers should not place undue reliance on Hydrogenics forwardlooking statements. Investors are encouraged to review the section captioned Risk Factors in our regulatory filings with the Canadian securities regulatory authorities and the US Securities and Exchange Commission for a more complete discussion of factors that could affect our future performance. Furthermore, the forward-looking statements contained herein are made as of the date of this presentation, and we undertake no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this presentation, unless otherwise required by law. The forward-looking statements contained in this presentation are expressly qualified by this. 2

3 Our Company Global provider and market leader of energy storage, electrolysis products hydrogen energy systems and services Incorporated in 1995 [NASDAQ: HYGS; TSX: HYG] 145 full time employees Headquartered in Canada with European facilities in Germany and Belgium 145 patents and patent applications More than 2,000 products deployed in 100 countries worldwide Strong professional management team and BOD World Class OEM Partners in CommScope & Enbridge 3

4 Industry Leading Strategic Investors Hydrogenics has attracted investment from industry leaders across a number of applications Shareholder Composition Invested $8.5M in August, 2010 Signed agreement to develop and distribute specialized hydrogen power systems Widely Held 25% 57% 13% 5% Invested $5M in April, 2012 Signed agreement to jointly develop utility scale energy storage in North America Confidential - Do not duplicate or distribute without written permission from Hydrogenics Corporation 4

5 Lines of Business Onsite Generation Water Electrolyzers Power Systems Power Modules Industrial hydrogen Hydrogen fueling Backup power Mobility power Energy Storage Load Control, Smart Grid and Remote Communities 5

6 Product Differentiators Market Position Channel Strength Energy Storage First to market; Leading share of German market E.ON - largest utility in world; Enbridge largest energy distributor in N.A. Industrial Hydrogen Outsell closest competitor 2:1 Linde and Air Liquide preferred supplier +direct sales Power Systems No.1 integrator preferred by OEMs CommScope - telecom hardware leader $4B rev company Technology World s first 1MW Pumpless; Standardized; Platform single stack PEM; Containerized; World leading power Globally density; Utility scale building block selected for quality Low cost; Low pressure and reliability system Application Focus Actual Status Leading in the largest hydrogen market application Breakthrough opportunity ($10-50B market) Glass; Metallurgy; Generator Cooling; Profitable business Telecom backup power; Data Center backup power; Mobility $90M Order 6

7 Company Highlights Delivering as Promised Growth in revenue, margin & backlog Marquis orders closed in 2013 in Energy Storage, Power Systems and Propulsion are the result of management s strategic focus on targeting differentiated, profitable applications. Nine month 2013 revenue of $31.4M up 44% over comparable 2012 numbers Improvement in YTD 2013 gross margin to 30% Backlog at September 30, 2013 of $53 million Strong balance sheet supported by cash of $14.6 million Near and long term growth supported by: Increase in the number and size of energy storage projects including 1MW PEM follow-on order won in April 2013 Ongoing value of the large $90M propulsion order received in 2012 Volume expansion in telecom and data center back-up Organic growth of industrial hydrogen and fuelling markets 7

8 Hydrogen Sector is Moving Ahead 1.4 billion euro announced in 2013 in EU Joint Technology Initiative for Hydrogen German NOW organization publicizes a strategy paper for 1500MW of hydrogen storage; 2000 buses; 500 public fueling stations and 500k cars for California Energy Commission announced Mandate for 1.3 GW of energy storage and $44M for hydrogen fueling and alternative vehicles Fuelling infrastructure requirements will continue to grow with good movement in vehicle development: Hyundai in mass production for Fuel Cell vehicles making first deliveries to Denmark & UK Toyota affirms production plan and target costing Japan creates a task force to lead the fuel cell auto sector GM / Honda alliance for cooperate development on Fuel Cell Vehicles VW re-engages on fuel cell development program Hydrogenics to Benefit from Sector Engagement 8

9 OnSite Generation Industrial Business Global lead manufacturer $100M market globally >75% of sales revenue, historically Now decreasing as % of sales Outsell next closest competitor 2:1 Major industrial gas customers Linde; Air Liquide Base for Hydrogen energy storage & fueling applications Glass making; Steel making; Power Plant Generator Cooling Confidential - Do not duplicate or distribute without written permission from Hydrogenics Corporation 9

10 A leader in Hydrogen Fueling Hamburg, Germany 780kg/day, 350/700 bar dispensing Located in the center of Hamburg in front of Der Spiegel newspaper offices, the station is the biggest worldwide, capable to refill busses and10 passenger cars. The station has 120Nm 3 /h electrolysers, 430kg 45bar storage 250kg 830bar storage and follows the SAEJ 2601refueling protocol.

11 Power Systems Backup Power Cell Tower & Data Center Backup Power Market estimated at $2B viewed as largest fuel cell end market Developed 5 products across 2.4kW to 16kW power Partner CommScope - $3B telecom company First commercial orders delivered in 2013 Longer energy provision (> 4 hrs) and smaller footprint Marketing in US for extended run - 2 yr payback Distributed power application to support large data centers and server farms Confidential - Do not duplicate or distribute without written permission from Hydrogenics Corporation 11

12 Power Systems Propulsion $90M Propulsion order September year history with confidential customer First prototype delivered in 2012 Customer has elected to commercialize Gen 2.0 of product $10M for exclusivity over 8 years $30M firm order commitment $90M total value over 10 years Revenue recognition began Q

13 Energy Storage Surplus Free Energy Surplus Power 1,500 MW Average Wind 2,500 MW Must-Run Hydro 12,000 MW Nuclear 13

14 Power-to-Gas Renewable Fuel, Power or Heat Where and When Needed Power-to-Gas Solution Integrate Renewables Renewable Gas Options H2 Clean Fuel Wind Power Surplus Power H2 Dispatchable Power H2/NG Blend Hydrogenics Electrolyzer Natural Gas Grid Solar Power H2 Low Carbon Heating Industrial H2 14

15 Hydrogen Energy Storage 100X Capacity Among alternative energy storage technologies hydrogen provides large capacity with longer duration capabilities Synthetic NG from H2 15

16 Energy Storage: One Size Does Not Fit All 16

17 Energy Storage Credible Partners Innovative Energy Leader Largest utility in the world Integrated Energy interest Won confidence as leader Won order for 2MW May 2012 Delivered in just 7 months Announced F/O order in April, 2013 NA Innovative Energy Leader One of the largest NG Distr in NA Integrated Energy interest Invested in 13% share of HYGS Projects under development 17

18 E.ON Inaugurated First Power-to-Gas Plant to Inject Hydrogen into Natural Gas Grid Public inauguration August 28 th German national media profile SwissGas now marketing Green Gas from Falkenhagen (into Switzerland) Retail Wind Gas with H2 now for sale Working with Enbridge to secure funding on projects for Canada Size of projects continuing to climb to 5-10MW level Increasing regional reach beyond Germany in EU and NA 2MW Power-to-Gas Demonstration Plant in Falkenhagen, Germany Energiewende Energy Shift 18

19 Growth Trajectory Evidence Continues >$50M Revenue with 30% Gross Margin Target; Scale is achievable At Current Fixed Cost Level 30%+ CAGR Supported from Backlog 2012 $31.7M Revenue Energy Storage Application Sales Revenue Potential 2011 $23.9M Revenue Power Systems Application Development Energy Storage Power Systems Volume Power Systems Applications Hydrogen Generation (Industrial) Hydrogen Generation (Industrial & Fueling) Hydrogen Generation (Industrial & Fueling) Technology Foundation Building Inflection & Transition Multiple platforms for significant growth Past Present Future 19

20 Revenue Turnaround & Gross Margin Expansion Last 4 Years $M 35 30% 35% % 26% 24% 16% 30% 25% 20% Notes Q3 YTD 2013 Revenue Gross Profit Margin 15% 10% 5% 0% Revenue has begun to recover after the 2008 collapse and margins have improved as technology costs have continued to come down 20

21 EBITDA Loss Last 4 Years $M EBITDA Notes Q3 YTD 2013 EBITDA Loss EBITDA loss has decreased significantly over time. Continuing to work to profitability *Pre 2011 figures calculated under GAAP/Post 2010 figures calculated using IFRS 21

22 Order Backlog As at September 30, 2013 ($M) Jun. 30/13 Backlog Orders Received Orders Delivered Sep. 30/13 Backlog OnSite Generation $ 13.2 $9.7 $ (5.8) $ 17.1 Power Systems (3.4) 35.6 Total $ 49.8 $ 12.1 $ (9.2) $

23 Summary & Prospects for 2014 & Beyond We are tracking to our revenue, margin & EBITDA targets with a trajectory toward profitability Strong bookings and backlog with more to come in Q4 Market leadership position in Power-to-Gas now well recognized Balance sheet remains strong Technology platform for significant scaling to meet future needs Operational discipline to execute well on growth plan 23

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