Ballard Power Systems Q1 2025 Earnings Report

Ballard Power Systems EPS Results

• Actual EPS: -$0.07
• Consensus EPS: -$0.12
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: N/A

Ballard Power Systems Revenue Results

• Actual Revenue: $14.76 million
• Expected Revenue: $16.82 million
• Beat/Miss: Missed by -$2.06 million
• YoY Revenue Growth: N/A

Ballard Power Systems Announcement Details

• Quarter: Q1 2025
• Date: 5/6/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 6, 2025
• Conference Call Time: 11:00AM ET

Ballard Power Systems (NASDAQ:BLDP), headquartered in Burnaby, British Columbia, is a leading developer and manufacturer of proton exchange membrane (PEM) fuel cell products. Since its founding in 1979, the company has focused on advancing clean energy technologies that support zero-emission power solutions. Ballard’s expertise in fuel cell innovation addresses a broad range of applications, from heavy-duty motive power to stationary backup systems.

The company’s core offerings include fuel cell stacks, modules and complete systems designed for transportation markets such as transit buses, commercial trucks, and rail. In the material handling sector, Ballard supplies fuel cells for forklifts and ground support equipment at distribution centers and ports. Beyond mobility, Ballard’s backup power solutions serve telecommunications, emergency and remote power needs, delivering reliable, low-emission alternatives where traditional generators are typically used.

Ballard Power Systems operates on a global scale, with strategic partnerships across North America, Europe and Asia. The company collaborates with original equipment manufacturers and system integrators to customize its fuel cell technology to local market requirements. Under the leadership of President and CEO Randy MacEwen, Ballard continues to invest in research and development, aiming to drive down costs and enhance performance as part of its commitment to a sustainable energy future.

Ballard Power Systems Q1 2025 Earnings Call Transcript

Key Takeaways

• In Q1 2025, revenue rose 6% year-over-year to $15.4M, driven by a 41% jump in bus sales and a 31% increase in engine shipments.
• Total operating expenses fell 31% year-over-year, and the company expects 2025 OPEX to be ~30% lower at the midpoint versus 2024 following its 2024 restructuring.
• Despite a 14-point improvement, gross margin remained negative 23% in Q1, weighed down by low absorption of manufacturing overhead.
• Ballard ended the quarter with $576.7M in cash, no debt and no near-term financing requirements, underscoring strong liquidity and balance sheet strength.
• Ballard anticipates a 20% tariff cost increase on U.S. sales of fuel cell products in 2025, though it plans to pass these costs through to customers.

Presentation

[Operator]

Thank you for standing by. This is the conference operator. Welcome to the Ballard Power Systems First Quarter twenty twenty five Results Call. As a reminder, all participants are in a listen only mode and the conference call is being recorded. After the presentation, there will be an opportunity to ask questions.

[Operator]

I would now like to turn the conference over to Mr. Sumit Kondu, Manager and Investor Relations. Please go ahead, sir.

[Sumit Kundu, Director of Information Systems & Investor Relations at Ballard Power Systems]

Thank you, operator, and good morning. Welcome to Ballard's first quarter financial and operating results conference call. With us on the call today are Randy McEwen, Ballard's President and CEO and Kate Igbolodi, Chief Financial Officer. Given that our twenty twenty four year end earnings call was only eight weeks ago, we will keep today's scripted remarks relatively brief. We will be making forward looking statements that are based on management's current expectations, beliefs and assumptions concerning future events.

[Sumit Kundu, Director of Information Systems & Investor Relations at Ballard Power Systems]

Actual results could be materially different. Please refer to our most recent annual information form and other public filings for our complete disclaimer and related information. I'll now turn the call over to Randy.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Thank you, Sumit, and welcome, everyone, to today's conference call. In the first quarter, amidst an uncertain macroeconomic, geopolitical and industry context, we made important progress against our controllables, including our customer deliveries, our operating costs and our product development programs. Compared to prior year, twenty twenty five Q1 revenue increased 6%, engine shipments were up 31%, gross margin improved by 14 points and total operating expenses were down 31%. We're starting to see the positive financial impact of the corporate restructuring we initiated in September. We expect to realize further reductions to our operating costs and reduce cash utilization over the remainder of the year from this restructuring.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

In addition to realizing the benefits from the 2024 restructuring, we're actively assessing opportunities for deeper cost rationalization in 2025. Now before we get into the commercial highlights, we'd like to make a few comments regarding tariffs. While uncertainties around evolving global tariff policies remain, expected policy changes are not likely to materially impact our business in 2025. We're closely monitoring tariff developments that may impact the sale of our fuel cell products, including into The U. S.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

We've reviewed the bills of materials for each of our fuel cell engines and assessed the potential tariff impact based on the country of origin of each BOM component. We expect sales in The U. S. To represent roughly 20% of our 2025 revenue. Based on current information and following certain mitigation actions, we expect an increased tariff cost of about 20% on products being sold into The U.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

S. Market for which we expect to fully pass the incremental costs on to our customers. Moving next to bus. We're encouraged with the demand growth in the bus market, which contributed 81% of Q1 revenue, up 41 year over year. We continue to be the market leader for supplying fuel cell engines to bus OEMs in the European and North American transit bus markets.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

We believe there's a growing recognition by transit bus operators of the value proposition of fuel cell buses. We ended Q1 with an order backlog of $158,000,000 including a twelve month order book of $92,400,000 As discussed on many previous calls, market adoption remains early in our target applications with the transition from customer trials to higher volume deployments over time. Accordingly, our business remains project based. This means new order intake is subject to significant variability quarter to quarter and can be lumpy. After securing record new order intake of $75,400,000 in Q4 of twenty twenty four, order intake in Q1 was soft.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Notwithstanding, we continue to progress significant sales opportunity, which we expect to convert to closed orders over the coming quarters, including opportunities in Rail, Stationery and Marine. As we look to the remainder of 2025, we'll continue to navigate uncertainties related to hydrogen policies and trade tariffs. We'll continue to focus on our customers, new order intake, on time delivery of quality products, gross margin expansion initiatives and prioritize product development and cost reduction programs. With that, I'll now pass the call over to Kate.

[Kate Igbalode, Senior VP & CFO at Ballard Power Systems]

Thank you, Randy.

[Kate Igbalode, Senior VP & CFO at Ballard Power Systems]

In our seasonally slow Q1, Ballard delivered $15,400,000 in revenue, up 6%, driven by strong growth in the bus vertical, which increased by 41% in the period, but largely was offset by decreases in other verticals. Our fuel cell product sales revenue made up 94% of the total revenue compared to 88 in Q1 of last year, once again emphasizing our shift into a commercial products company. Fuel cell engine shipments were up 31% compared to Q1 twenty twenty four, representing 14 megawatts of fuel cell deliveries. Similar to prior years, we expect 2025 revenue to be indexed for the second half of the year. Although Q1 gross margin was negative 23%, we realized a 14 improvement compared to Q1 twenty twenty four.

[Kate Igbalode, Senior VP & CFO at Ballard Power Systems]

Gross margin remains negative as we continue to be impacted by relatively low revenue and absorption against our manufacturing overhead costs. The 14 improvement was primarily driven by lower manufacturing overhead costs resulting from our 2024 restructuring activities. Total operating expenses of $25,500,000 and cash operating costs of $23,200,000 were down 3122%, respectively. The reduction in total operating expenses reflects reductions of 28% in research and product development, 32% in general and administrative and 23% in sales and marketing expenses. Our total operating expenses guidance for 2025 is between 100,000,000 and 120,000,000 reflecting an approximately 30% reduction at the midpoint compared to 2024.

[Kate Igbalode, Senior VP & CFO at Ballard Power Systems]

Capital expenditures totaled $2,700,000 in the quarter, primarily for planned investments in production and test equipment, including related to Project Forge. Q1 CapEx was 64% lower compared to Q1 of twenty twenty four and our capital expenditure guidance is between 15,000,000 to $25,000,000 for the year, also reflecting an approximately 38% reduction at the midpoint compared to 2024 guide. Notably, we are actively reviewing and considering various options to reduce both our operating cost structure and our capital expenditure plans for 2025, which may result in revisions to our guidance ranges. Importantly, we ended Q1 with $576,700,000 in cash, no debt and no requirements for near or mid term financings. We will remain disciplined we maintain disciplined spending and balance sheet strength for long term sustainability.

[Kate Igbalode, Senior VP & CFO at Ballard Power Systems]

We believe our balance sheet strength represents another significant competitive advantage for Ballard compared to other pure play PEM fuel cell competitors. With that, I'll turn the operator or turn it over to the operator for questions.

[Operator]

Thank you. We will now begin the question and answer session. And the first question will come from Sung Ji Jain with UBS. Please go ahead.

[Saumya Jain, Equity Research Associate at UBS Group]

Hey, good morning. Do you have any update on the Caterpillar and Microsoft collaboration or any future data center partnerships in site?

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Song, yes, first of all, thank you for the question. I would say that's still kind of in WIP. Cat and Microsoft had some announcements related to that last year, including winning a DOE award. But I think converting it from a first trial to next stage is going to take likely a year or two before we see some progress against that.

[Saumya Jain, Equity Research Associate at UBS Group]

Got it. Thank you. And then how is the cost per kilowatt for the customers looking and what's impacting that specifically?

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Yes. So the cost per kilowatt, there's two variables that I want to highlight. First is the sales price and then the second is the cost. And on the sales price, I would say there's a particularly in the China market, there's a lot of pressure on the selling price in the China market. I would say in Europe and North America, we're seeing pressure there as well, both from a value proposition for the customer as well as competitive pressures.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

And then on the cost side, the key variables there for a fuel cell engine relate to the fuel cell stack plus the balance of plant components. We continue to do a lot of important work on reducing the cost of stack and reducing the cost of the balance of plant components for our full engine. And we've talked about some of the product cost reduction initiatives we've been engaged in over the last number of years. And one of the key ones, in my opinion, on the STACK side is Project Forge that Kate alluded to in terms of the investment we're making there. We expect to see pretty significant reductions in our bipolar plate cost, and that project should be fully implemented by the end of this year.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

So we expect to see some enhancement there. But as a trend, I would say, the overall selling price is relatively flat this year compared to the prior year, and we expect to see the cost coming down later this year.

[Saumya Jain, Equity Research Associate at UBS Group]

Thank you.

[Operator]

The next question will come from Rob Brown with Lake Street Capital Markets. Please go ahead.

[Rob Brown, Founding Partner & Senior Research Analyst at Lake Street Capital Markets, LLC]

Good morning. On your sales pipeline, where are you kind of at this point, where are you seeing the most activity? And how do you sort of see that playing out throughout the year?

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Yes, Rob, thanks for the question. Certainly, would say where we see the most consistent and repeat business opportunities is in the bus segment for sure. Both in Europe and North America, we see customers there with repeat orders over the last year or two, but going forward as well. In fact, just about two weeks ago, we had an end user, a transit operator in our office here in Vancouver. They have a pretty significant deployment in The U.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

S. Market and are looking to add a significant number of fuel cell buses to their fleet, which is very encouraging. So the bus market is certainly a key contributor in the sales pipeline. But then we do get significant lumpy projects in Rail, in Stationery. And I would say kind of distant third would be Marine.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

And so Rail and Stationery, we see lots of opportunity there for validating value propositions with customers and longer term moving to a more consistent cadence, but right now very lumpy. On the rail side, we continue to see opportunity in the freight locomotive market in North America as well as some commuter rail opportunities in the North American market as well. Stationery, a number of different applications we're seeing interest in, and particularly some, what I call, off grid or weak grid scenarios, where customers are looking for remote sites or construction or event type power requirements or even EV charging. And those are applications we're seeing kind of the most uptake in our sales opportunities right now.

[Rob Brown, Founding Partner & Senior Research Analyst at Lake Street Capital Markets, LLC]

Great. Thank you for the color. And then on the bus market that's got the most sort of maturity of deployments. Are there are you starting to see cases where you can get the value proposition economics and kind of value propositions sketched out? I guess where do you see the most sort of functional deployments and the most data?

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Yes. So we have just under 600 fuel cell buses operating today in Europe and North America with very good data coming back from the field in terms of uptime, availability, reliability, safety, all those metrics of course. And what I'd say is that and by the way, there are quite a few buses that will be entering into service over the coming twelve to eighteen months. So that's very encouraging to see that. And there what we're seeing effectively is that the key variable on customers having an improved total cost of ownership is really the cost of the fuel.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

And that's a variable we don't have a lot of control over. We do expect to see by 02/1930 more access to low cost, low carbon hydrogen in both the North American European markets at a price approaching kind of TCO parity, but it still is a premium compared to diesel buses today.

[Rob Brown, Founding Partner & Senior Research Analyst at Lake Street Capital Markets, LLC]

Great. Thank you. I'll turn it over.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Thank you.

[Operator]

The next question will come from Rupert Merer with National Bank. Please go ahead.

[Rupert Merer, Analyst at National Bank]

Hi, good morning everyone. With the restructuring you've gone through, can you talk about the process and what compromises you've had to make to achieve your targets? And have you had any impact to your product cost reduction initiatives? Or have you given up any fundamental R and D initiatives?

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Yes. Great question, Rupert. So I think anytime you look at a cost reduction, the biggest question is what are you going to stop doing and what are you compromising or what are the puts and takes and the trade offs. And we certainly believe that much of the value creation that occurs at Ballard is in our technology and our engineering. So we've tried to as much as possible protect the core IP and obviously the core roadmap that relates to our core products.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

And so basically, we've prioritized and sequenced product development programs. I would say previously you would have seen us doing a number of different programs in parallel and now we're going to more of a sequential approach. With the push out in the timeline for adoption, particularly in the truck market, we deprioritized investment into fuel cell engines at this time that relate to the truck market. So our focus is very much on making sure we have higher performing lower cost modules for the bus market, a market that we're winning in and a market we plan to continue to win in. So winning in the bus market is critical.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

And as some of these other markets start to scale longer term, we'll be taking the products that we're developing for the bus market, applying them to some of these other markets. And similarly, as we kind of look at the larger products for stationary and rail and the truck market, making sure that the balance of plant components to extent they can be harmonized with the smaller products, there's some leverage there. So there certainly has been some reduction in R and D. And I think we've focused on making sure we're preserving the core MEA R and D activities where we think we have a competitive advantage and less activity perhaps on things like the balance of plant component where we think the supply chain has been a little bit more matured over the last two years than previously. So there certainly have been some compromises.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

One of the key ones though is really focusing the product road map and doing fewer programs and looking at sequential product development programs rather than in parallel.

[Rupert Merer, Analyst at National Bank]

So you still be on track with your cost reduction plans from a few years ago?

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Yes. So that's one of the areas we think we've made a lot of progress on. Certainly on the MEA front, we've realized pretty significant reductions there. Project Forge, as I mentioned earlier, will come online. It's pretty well almost finished installation right now.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

And that will dramatically reduce the cost of the bipolar plate. And just as a reminder for people, Project Forge is kind of this really important plan where we look at not only materially reducing the cost, but also scaling the production of kind of next generation graphite plates. And it kind of reduces the cost of the plates by about 70% and increases the production capacity by about 10 times, while also significantly reducing production tack times. And really, the throughput is enhanced, the some additional things like kind of reduced energy demand and elimination of wastewater consumption from plate manufacturing, there are a lot of benefits from this project. So we expect to see kind of a step change in our plate production starting next year.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

And after MEAs, bipolar plates are the next largest cost item in the fuel cell stack. So from an MEA and a bipolar plate product cost reduction perspective, no impact from our program plans there. And then I think the balance of plant components, much of those have been specified not just for products that we have in the field, but for our next generation, what we call our small core product that will significantly lower the cost of engines and enhance our margins.

[Rupert Merer, Analyst at National Bank]

Thank you, Randy. I'll leave it there.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Yes. Thanks, Rupert.

[Operator]

Your next question will come from Jordan Levy with Truist Securities. Please go ahead.

[Henry Roberts, Equity Research Associate at Truist Securities]

Hi, all. It's Henry on for Jordan here. Thanks for taking my questions. I guess just understanding that the tariff situation remains very fluid. I'm just curious if there are any actions or updates we should be looking for from you all maybe later on this year with regards to supply chain movement or material sourcing?

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Yes. Henry, first of all, for the question. There are a bunch of mitigation actions we've already taken into account. So just as a couple of illustrative examples, kind of as a onetime measure, we did accelerate the movement of some components and materials into The U. S.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Market before the tariffs were implemented. And then secondly, of course, there are suppliers that we're looking at transitioning. Some of that comes with some complexity and some timing, of course. I don't think there's anything any one change that's material by itself, but a couple of them together will be quite helpful. And then of course, just I think the key is the whole market just understanding that there's going to be some pass through here of tariffs costs through the value chain.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

So I don't expect to have any major update on this front later this year. I expect it to be kind of more of the same that we profiled here today.

[Henry Roberts, Equity Research Associate at Truist Securities]

Got you. Understood. Thank you for that. And then maybe just a quick housekeeping one for me. Looking at the relatively light CapEx spend for the first quarter here, I guess how should we think about the cadence of that kind of moving through the remainder of the year? Thank you.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Yes. Maybe I'll just make a comment and then Kate can follow-up as well. I think one of the things to understand as well as we did you go back a few years ago when we first started talking about Project Forge, this is an $18,000,000 program. We're just now seeing the trailing cost of that occurring in 2025. And just from a as you look forward for the foreseeable future, in my opinion, at least through 02/1930 and beyond, we really don't have any material kind of onetime CapEx spend during that time period.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

So there's really kind of a burn off, if you will, of this Project Forge in 2025 as well and that's really front end loaded. And then as well as typical maintenance CapEx that we have here for our facilities in Vancouver. I don't if there's anything additional you want to add to that.

[Kate Igbalode, Senior VP & CFO at Ballard Power Systems]

No. I think Henry for the purposes of kind of modeling and outlook for the year, I think taking kind of the midpoint of the guidance range would be a reasonable expectation and just sort of run rating that across the quarters.

[Kate Igbalode, Senior VP & CFO at Ballard Power Systems]

To Randy's point, there really isn't any kind of material expectations for outsized spend in one quarter versus the other.

[Operator]

This concludes our question and answer session. I would like to turn the conference back over to Mr. Randy McEwen for any closing remarks. Please go ahead, sir.

[Randall MacEwen, CEO, President & Non-Independent Director at Ballard Power Systems]

Thank you for joining us today, we look forward to speaking with you next quarter.

[Operator]

This brings today's meeting to a close. You may disconnect your lines. Thank you for your participation, and have a pleasant day.

Participants

Executives

• Sumit Kundu, Director of Information Systems & Investor Relations
• Randall MacEwen, CEO, President & Non-Independent Director
• Kate Igbalode, Senior VP & CFO

Analysts

• Saumya Jain, Equity Research Associate at UBS Group
• Rob Brown, Founding Partner & Senior Research Analyst at Lake Street Capital Markets, LLC
• Rupert Merer, Analyst at National Bank
• Henry Roberts, Equity Research Associate at Truist Securities