S C A L I N G G L O B A L O P P O R T U N I T I E S. Investor Presentation December

Transcription

1 S C A L I N G G L O B A L O P P O R T U N I T I E S Investor Presentation December

2 Safe Harbor Statement This presentation contains "forward-looking information," within the meaning of applicable Canadian securities laws and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as "forward-looking statements"). Forward-looking statements can be identified by the use of words, such as "plans," "expects," or "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations of such words and phrases or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. These forward-looking statements relate to, among other things, our future results, levels of activity, performance, goals or achievements or other future events. These forward-looking statements are based on current expectations and various assumptions and analyses made by us in light of our experience and our perceptions of historical trends, current conditions and expected future developments and other factors that we believe are appropriate in the circumstances. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in our forward-looking statements. These risks, uncertainties and factors include, but are not limited to: our inability to execute our business plan, or to grow our business; 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 our 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; lack of new government policies and regulations for the energy storage technologies; 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 cost-competitive 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; failure to maintain the requirements for continued listing on NASDAQ; dilution as a result of significant issuances of our common shares and preferred shares; inability of U.S. investors to enforce U.S. civil liability judgments against us; volatility of our common share price; and dilution as a result of the exercise of options. Readers should not place undue reliance on our forward-looking statements and are encouraged to review the section captioned "Risk Factors" in our regulatory filings with the Canadian securities regulatory authorities and the U.S. 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 Technology Geographies 145 (Patents & Applications) Extensive Know-How Wide Experience Canada, Belgium, Germany, US, SE Asia, Russia, China, Korea Canada Financial Snapshot Corporate LTM Revenue: $40M Backlog: $99M 1995 Start 2000 IPO HYGS NASDAQ; HYG TSX 10.1M basic 11.1M fully diluted Germany Belgium 3

4 We solve some of the world s biggest problems with the smallest and most abundant molecule: Clean Continuous Power generation in Korea Extended Range Electric Rail Transport for Europe Utility Scale Energy Storage for Germany Nuclear Waste water treatment in Japan HYDROGEN Clean electric Public Transport in California & China Many applications on two standardized platforms (Growth) (Simplicity) 4

5 What Do We Do? 65+ years experience developing hydrogen gas technologies World-wide technology leader with 145 patents & applications Stable $25M+ base revenue industrial electrolyzer business Scaling technology to address massive global themes Renewables proliferation and integration Decarbonization and distributed energy CURRENT SOLUTIONS Mobile Fuel Cells Power to Gas (P2G) Onsite Generation KEY APPLICATIONS High horsepower Range extension Bulk energy storage Hydrogen production Clean distributed power production Gaining Rapid Momentum with Tier 1 Customers 5

6 How Do Our Products Work? Fuel Cell (Power Systems) Takes Hydrogen and creates electricity Hydrogen Air Fuel Cell Electromechanical Engine Electric Power Water Electrolyzer (Onsite Generation) Takes electric power (often from renewables) and creates Hydrogen fuel for bulk energy storage Water Electric Power Electrolyzer Gas Generation Hydrogen Fuel Oxygen 6

7 What does COP21 Paris Mean? Global commitment to carbon emission action Major themes will accelerate Off diesel (China) Increased renewable power generation (Germany) Energy storage as an enabler (EU, China) Hydrogen systems are carbon free therefore big impact Support for larger scale projects and more projects Carbon tax, Cap and Trade and other regulatory actions already triggering major asset reallocation (EU, California, Canada) 7

8 Bulk Energy Storage Energy storage is the enabling technology to allow for the proliferation of solar and wind (intermittent renewable energy) Renewable Energy Growth (2) There is no one size fits all for the energy storage race multiple winners will be born Hydrogenics Power-to-Gas solution is highly competitive in bulk storage market Batteries, regardless of chemistry, are not economically viable for large utility scale projects Energy Storage Landscape (3) Other P2G advantages over batteries related to discharge length, cycle, & rates $14 billion estimated market for P2G by 2030 (1) Multiple conversion outlets for the hydrogen we produce: natural gas pipeline, fuel cells, and compressed storage Over $80M in active P2G pipeline E.ON reference customer, one of the largest utilities in the world 8 1. Commercialization of Energy Storage in Europe FCH-JU supported by McKinsey analysis 2. IEA 2014 Renewable Energy Outlook 3. Fraunhofer Institute Germany

9 Q Highlights Major reference sites go live Commissioning and hand-over of major reference sites was primary focus in Q3 E.ON s Hamburg 1.5MW Power-to-Gas energy storage site in full operation with all certifications in place Kolon 1MW fuel cell stationary power plant in full operation and producing power for the grid Next step is to secure orders for larger-scale applications Significant opportunity for removing radioactive isotope tritium from contaminated water Seeing stronger fuel cell mobility demand particularly in Asia 9

10 The Size of the Prize Segment TAM Where we are now? Trigger/Accelerator Industrial Hydrogen $200 Million 1 p.a. Foothold Market Market Leader Recurring Industrial Rev Specialized Applications CAPEX reduction Renewable Energy Inputs Power-to-Gas Energy Storage Electric Mobility Range Extension Stationary Power Generation $80M Pipeline Prospects $14 Billion 2 Global Leader E.ON 2 units operating $2 Billion 3 2-3X battery range Same fueling experience Alstom Rail 50M Euro Waste refinery hydrogen $200 Million 4 Continuous Power plant Kolon Partner Renewal Energy Production EU Renewable Fuel Quality Directive Battery Range Limitation Fueling Infrastructure China Growth Success of 1MW Pilot Next step 20MW+30MW Fuel $400 Million 5 50 (6) Fueling Stations Built Vehicle Rollout in Europe and North America Hydrogen Bus Fleet Rollout 1 Visant Strategies inc Hydrogen Markets 2006 report along with total competitor sales from key competitors (Teledyne, NEL, Proton and excl China) 2 Commercialization of Energy Storage in Europe, McKinsey/FCH JU, 2015 Global Extrapolation using ave prices for GW storage equivalents Global EV Outlook, IEA 2013, and from reports issued by US DOE, Navigant Consulting, EU Automotive Assoc. and the Green Car Congress 4 Calculated based on surplus H2 gas capacity at the three main refining sites in South Korea 5 Calculated based on publically stated figures from H2Mobility Germany, UK and France, citing 400 to 600 H2 fueling station deployments 6 Hydrogen fueling station databases for EU and NA LBST H2stations.org 10

11 Cost Reduction is the Accelerator: We ve Come a Long Way, and We re Not Done Yet Innovation Done Next Electrolysis - 50% - 50% Fuel Cell - 90% - 50% Cost $/kw Standardize Appl. Exp. -90% TODAY Supply Chain Scaling Mass Production - 50% 11

12 Recent Critical Milestone Achieved Mobile Fuel Cells May M Order Fuel Cell Mobility Applications Scale Commercially Fuel Cells Sept MW Plant Commissioned 20-50MW (up to $100M in value) in Near-term Potential Power to Gas (P2G) Oct MW Plant Official Opening $80M Pipeline of Qualified Leads Starts to Move 12

13 Our Strengths: Why Do We Win? We are the best in the world at what we do Our solutions are unique and our partners are top tier Our products and people are easy to work with Safety Value Reliability 13

14 Application: 50 million Alstom Transport Project Mobile Fuel Cells Breakthrough commercialization agreement Agreement to power regional commuter trains in Germany with HyPM HD fuel cell systems Minimum commitment of 100 trains over the next 10 years minimum 200 units Total order value > 50 Mill (plus service and maintenance) Delivering prototype in 2015 Alstom has LOIs from five cities to purchase trains Hydrogenics HD platform technology was the critical determining factor in the selection process per customer feedback 14

15 Application: Continuous Clean Power Fuel Cells September MW Commissioned 20 50MW More planned for this site subject to validation of 1MW Unit More than $100M potential next step opportunity based on 50MW and planned scope of supply 2016 Timeline 15

16 Application: Energy Storage $14B Energy Storage Market for Power to Gas by 2030 Power to Gas (P2G) Only Hydrogen has the capacity to meet the needs E.ON World s Most Energy Dense Electrolyzer Scalable Building Block ~$80M Pipeline of Qualified Leads Key Reference Sites Established or In Process 2 Sites now in operation for E.ON 16

17 Application: Removing Tritium from Contaminated Water Fukushima, Japan: Currently 800,000 cubic meters of contaminated water ~ 16,000 swimming pools (six more pools per day) Proprietary technology from partner Kurion supported by HYGS electrolysis to concentrate water volume 100,000 times 1 HYGS chosen from international competition 180 proposals > 30 plans > 3 pilots First electrolysis unit and fuel cell delivered to Kurion for pilot plant commissioning Next major milestone March 2016, followed by scale up preparations Full-scale plant would be over 150 MW of electrolysis 2 Hydrogenics MW PEM Electrolyzer Preliminary design discussions with client

18 Application: Mobility in China 4 Certified Integrators now signed $10M near term $100M in next 3-5 years 13 th 5 Year Plan commits central gov. mandate and funding + local gov. support Phases of development: Proto-type (2 complete) Small build 10 units ( 2 sets on order) Scale-up Build Mass Production Multiple OEM platforms including largest in the world Yutong and Volvo China Infrastructure for fueling also under development 18

19 Scaling Global Opportunity Power Generation Power-to-Gas Mobility Nuclear Waste Treatment Done 1MW Building Block in Korea Commissioned Sept MW E.ON Commissioned June 2015 Alstom Rail 50M Bus Truck New Energy Cars Scalable block pilot plant delivered Process experimentation complete Next Steps Confirmation of 1MW Performance 20-50MW Planned at same site ($50-100M Near-Term Potential) 300MW Market in Korea Funding & EU Policy Support 80MW Pipeline (Roughly $80 Million) Market support NA; EU; China $10 - $25 Million Base process block confirmation Full scale building block design Go/No Go decision on full scale treatment 19

20 Why Invest? Market Leading Competitive Position in Multiple Applications Significant Long-Term Addressable Markets Low Capex Business Model Readily Scalable Business (Revenue Growth + Substantial Operating Leverage) Disciplined Management Team Focused on Growth & Profitability A Stone s Throw from Positive EBITDA Now Key Reference Customers and Sites in Place 20

21 Financial Snapshot HISTORICAL REVENUE ADJUSTED EBITDA $50.0 $40.0 $30.0 $20.0 $20.9 $23.8 $31.7 $42.4 $45.5 $40.2 $0.0 ($2.0) ($4.0) ($6.0) LTM ($1.2) ($2.5) ($5.9) $10.0 $ LTM ($8.0) ($10.0) ($12.0) ($8.3) ($7.0) ($10.1) BACKLOG GROSS MARGIN $125.0 $100.0 $ % 25.0% 25.9% 23.0% 28.4% 24.6% $75.0 $50.0 $60.0 $57.0 $ % 15.0% 16.5% 18.1% $25.0 $17.1 $ % 5.0% $ As of 9/30/ % LTM 21

22 YTD Results (in $ millions) Nine months ended Sep. 30 Change $ % Revenue $ 24.5 $ 29.9 (5.4) (18)% Gross Profit (3.9) (48)% Gross Margin % 17.5% 27.5% Operating Expenses Selling, general and administrative (excluding stock-based compensation, amortization and depreciation) (0.7) (9)% Research and product development % Adjusted EBITDA $ (6.0) $ (2.7) $ % Notes Adjusted EBITDA is defined as net loss excluding: cash settled long term compensation indexed to share price, share settled stock-based compensation expense, net finance income and expenses, depreciation and amortization. Adjusted EBITDA is a non-ifrs measure and may not be comparable to similar measures used by other companies. Management uses Adjusted EBITDA as a useful measure of ongoing operational results. 22

23 Consolidated Balance Sheet Highlights ($M) Sept. 30, Assets 2015 Cash and cash equivalents and restricted cash $8.7 Trade, other and grants receivable 11.9 Inventories 16.2 Liabilities Trade and other payables $10.0 Short term debt 2.2 Long term debt 9.9 Total Debt $

24 24

25 25 APPENDIX

26 Order Backlog As of September 30, 2015 ($M) Jul. 1/15 Backlog Orders Received FX Orders Delivered Sep. 30/15 Backlog OnSite Generation $ 26.8 $ 3.5 $ 0.1 $ 7.6 $ 22.8 Power Systems Total $ $ 5.7 $ 0.5 $ 9.6 $ 98.9 Expected Revenue Recognition During next 12 mths Beyond next 12 mths OnSite Generation Power Systems Total

27 How Does Our Technology Lead? Platform 1 New Engine Standard Fuel Cell Power Module Low Pressure Dry-Dry Compact Simple Low Number of Parts Safe Reliable Durable Platform 2 New Fuel Hydrogen Electrolyzer World s Most Compact Single Stack Unit Low number of Connections Safe Reliable Highly Scalable 27

28 Energy Storage: Big Theme Worldwide A $30B emerging opportunity at 14,000 megawatts by Like data storage, many needs many solutions E.ON Only Hydrogen has the Capacity 2 California 1,325 MW procurement call Germany 1,500 MW government funding Ontario IESO/OPA 35 MW (400 bids) At approx $1M/MW BIG INDEED We bottle the Wind & Sun 1 Navigant. 2 E.ON Quote 28

29 Hydrogen Provides for Multi-Day and Seasonal Storage GWh Scale Cannot be Matched by Pumped Hydro or CAES 29 29

30 Power-to-Hydrogen Conversion Has Many Paths to Value. Thus a Strong Business Foundation. POWER GRID SURPLUS OR LOW-COST ELECTRICITY Power-to-Chemicals Wind turbine Solar PV Power-to-Power Power-to-Hydrogen Electrolysis H 2 O O 2 H 2 H 2 storage (optional) Chemical plants Industry Ammonia Speciality chemicals Gas turbines Refineries Power-to-Fuels Fuel cells Low C0 2 fuels CHP Refuelling stations Methanol Heat Power-to-Gas CNG CO 2 Methanation Blending Power-to-Mobility Hydrogen Vehicles (FCEV) GAS GRID Hydrogen network Power network Gas network Liquid fuels network 30

31 Future Mix of Energy Storage Solutions Batteries? Power-to-Heat? Power to Hydrogen? FCH-JU study supported by McKinsey examined the role and commercial viability of energy storage in enabling increasing levels of intermittent renewable power generation Key Conclusions Demand for Power-to-Power (P2P) storage technologies (batteries, pumped hydro, compressed air) will grow by up to 10x Conversion of electricity to hydrogen through water electrolysis can productively utilize nearly all excess renewable energy in the high-res scenario Germany Scenarios High Renewables 2030 High Renewables Reference Renewable Generation Power-to-Gas (MW) Power-to-Gas ($B) 85% 170, % 46, % 18,

32 Numerous Third Party Reports Lend Credibility to Our Solution Publication Study of the requirement for electricity storage in Germany Agora Energiewende Reduction of CO2 emissions by addition of hydrogen to natural gas by Haines, Polman and de Laat, in IEA Greenhouse Gas Control Technologies Volume 1 Study of hydrogen and methanation as processes for capturing the value of excess electricity Report by ADEME GRTGaz and GRDF, France The role of power-to-gas in the future Dutch energy system ECN and DNVGL for TKI Gas, 2014 Potential for water electrolysis (P2G) GER: 16 GW (2023), 80 GW (2033) and 130 GW (2050) UK: 23.5 GW of electrolysis in 2050 FR: GW of P2G plant in France by 2030 and up to 24 GW by 2050 HOL: 20 GW of installed P2G capacity if deep CO 2 emission reduction targets in the energy system (-80% to -95% by 2050) NREL Hydrogen Energy Storage workshop proceedings February 2015 Commercialization of Energy Storage in Europe FCH-JU (McKinsey) March 2015 GER: 18GW (2030), 46GW (2030 High RES), and 170GW (2050 High RES) 32

33 EU Fuel Quality Directive After significant lobbying, the European Parliament passed a resolution on April 28, 2015 to adopt amendments to the Fuel Quality Directive relating to the quality of petrol and diesel fuels. Fuel Quality Directive defines the renewable content of fuels; the omnibus resolution covers many facets of fuel production Recognizes hydrogen under classification of renewable liquid and gaseous fuels of non-biological origin -- for the first time covers hydrogen produced by electrolysis from renewable power / Power-to-Gas Amendment also places greater restrictions on production of bio-fuels (land use) Renewable hydrogen used by a refinery in production of conventional fuels will be counted at 2x as a result it is expected that it will be cheaper than bio-diesel to meet Fuel Quality Directive; business case is to be confirmed For resolution to become law, it must be passed by each EU member country; German government is expected to pass FQD Amendment in Q This is the door opener to commercial Power to Gas Projects 33

34 OnSite Generation: Hydrogen Fueling Stations Toyota, Honda, Daimler and Hyundai launch mass production fuel cell vehicles Hydrogenics has delivered 45 stations 9 wins in 2014 (most for shipment in 2015) California, USA Hamburg, Germany Stuttgart, Germany 34

35 OnSite Generation: Industrial Electrolysis 65 years of technology leadership Application spectrum Glass Steel Solar Silicone Food Power Plant Positioning Megawatt Scale Top Performance +500 Reference Sites Company sales database

36 Fuel Cell Mobility Application on the Move Celerity platform continues to attract significant international interest for bus, truck, train and other mobility applications in NA, EU & Asia CEC awarded $4.7M in funds for Hydrogenics Celerity platform in two California projects New Flyer 40ft battery transit bus operated by SunLine Transit Port of LA class 8 drayage truck to be used on the Alameda Corridor as well as ports of Long Beach and Los Angeles. Interest growing in China for Hydrogenics Heavy Duty (HD) Fuel Cell Products 36 36