Hydrogenics Investor Presentation February 2014

Investor Presentation
May 2015
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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.
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Our Company
• Global provider of energy storage, electrolysis
products hydrogen energy systems and services
• Incorporated in 1995 [NASDAQ: HYGS; TSX: HYG]
• 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
3
Lines of Business
OnSite Generation
Power Systems
Water Electrolyzers
Power Modules
Industrial hydrogen
Hydrogen fueling
Stationary & Backup
power
Energy Storage
Load Control, Smart Grid and Remote Communities
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Mobility power
OnSite Generation: Industrial Electrolysis
65 years of technology leadership
1999
2001
2003
2005
2009
2014
Application spectrum
Glass
Steel
Solar Silicone
Food
Power Plant
Positioning
Megawatt Scale
5
Top Performance
+500
Reference Sites
OnSite Generation: Hydrogen Fueling Stations
•
Toyota, Honda, Daimler and Hyundai
launch mass production fuel cell vehicles
2015 – 2017
•
Hydrogenics has delivered 45 stations
•
9 wins in 2014 (most for shipment in 2015)
Hamburg, Germany
California, USA
Stuttgart, Germany
6
Power Systems: Differentiated Mobility Product Platform
• Fuel Cell range extension for electric vehicles
• Celerity heavy duty mobility product
– Product designed for simplicity of installation and seamless
integration with Siemens electric drive
– After product introduction last fall, sales pipeline very strong
– Present and sponsored the International Fuel Cell Bus
workshop in California in February, 2015 – Celerity module
catching attention of bus and trucks
– Numerous funding proposals for zero emission transport
projects with Celerity on board have been submitted over the
past few months
7
7
Power Systems: Kolon JV -- MW Fuel Cells for Power Generation
• Initial 1MW of fuel cell power systems to be installed in
Korea in Q3, followed by a confirmation period
• After confirmation of technology, a rapid order intake is
expected for further deployments
• More than 100MW of accessible market identified, with
first 10MW already secured (only 1MW in backlog
currently)
• Kolon provides excellent market access in the region
• Build-own-operate model with long term service
agreements to provide recurring revenue opportunities
• South Korean policies and availability of excess
industrial hydrogen pave the way for attractive market
dynamics and expected high demand
Cost, performance, scale and zero carbon emissions now enable new
markets for continuous power generation at utility scale
8
> 50 € million Alstom Transport Project Summary
•
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 already has LOIs from 5 cities to
purchase trains
•
Hydrogenics HD platform technology was the
critical determining factor in the selection
process
9
Energy Storage: Big Theme Worldwide
•
A $30B emerging opportunity at 14,000 megawatts
by 20221
•
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 $1M/MW – BIG INDEED
1Navigant. 2E.ON
10
Quote
We bottle the Wind & Sun
Future Mix of Energy Storage Solutions
• Batteries? Power-to-Heat? Power to Hydrogen?
• FCH-JU study supported by McKinsey examined the
role and commercial viability of energy storage in
enabling increasing levels of intermittent renewable
power generation
• Key Conclusions
– Demand for Power-to-Power (P2P) storage technologies
(batteries, pumped hydro, compressed air) will grow by up to 10x
– Conversion of electricity to hydrogen through water electrolysis
can productively utilize nearly all excess renewable energy in the
high-RES scenario
Germany
Scenarios
11
Renewable
Generation
Power-to-Gas
(MW)
Power-to-Gas
($B)
2050 - High
Renewables
85%
170,000
128
2030 – High
Renewables
65%
46,000
35
2030 Reference
49%
18,000
14
Hydrogen Provides for Multi-Day and Seasonal Storage —
GWh Scale Cannot be Matched by Pumped Hydro or CAES
12
12
Power-to-Hydrogen Conversion Has Many Paths to Value –
Hence a Strong Business Foundation
POWER GRID
Power-to-Chemicals
SURPLUS OR LOW-COST
ELECTRICITY
Wind turbine
Industry
Power-to-Hydrogen
Solar PV
Electrolysis
H2
Ammonia
H2 storage
(optional)
Chemical
plants
Power-to-Power
H2O
Speciality chemicals
O2
Gas turbines
Refineries
Fuel cells
Power-to-Fuels
Low C02 fuels
Refuelling
stations
CHP
CNG
Power-to-Gas
Heat
CO2
Methanol
Methanation
Power-to-Mobility
Blending
Hydrogen Vehicles
(FCEV)
GAS GRID
Hydrogen network
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Power network
Gas network
Liquid fuels network
Numerous Third Party Reports Lend Credibility to Our Solution
Publication
Potential for water electrolysis
(P2G)
“Study of the requirement for electricity storage in Germany”
GER: 16 GW (2023), 80 GW (2033) and 130
Agora Energiewende
GW (2050)
“Reduction of CO2 emissions by addition of hydrogen to natural UK: 23.5 GW of electrolysis in 2050
gas”
by Haines, Polman and de Laat, in IEA Greenhouse Gas Control Technologies Volume
1
“Study of hydrogen and methanation as processes for capturing FR: 1.2-1.4 GW of P2G plant in France by
2030 and up to 24 GW by 2050
the value of excess electricity”
Report by ADEME GRTGaz and GRDF, France
“The role of power-to-gas in the future Dutch energy system”
HOL: 20 GW of installed P2G capacity if
ECN and DNVGL for TKI Gas, 2014
deep CO2 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
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GER: 18GW (2030), 46GW (2030 High RES),
and 170GW (2050 High RES)
Energy Storage Business Outlook
•
Hydrogenics awarded over $18M in projects during 2014 for energy storage
•
Saw opening of E.ON 2 MW Falkenhagen facility in 2013
•
Second E.ON site in Germany (2015) to be reference for PEM technology
•
Overall pipeline for energy storage now at $80M – each project is first of its
kind for customer
– Bids in process; long lead times a reality of technology adoption
– Hydrogenics leads the field with 4 of 5 largest installations
•
Recent Ontario IESO award will provide first MW-scale North American
reference site
– 2MW project will use next-generation PEM
platform and include 8MWh of storage
15
Historical Revenue Growth
Last 6 Years
$M
50
45.5
45
42.4
40
35
31.7
30
23.9
25
20
18.8
20.9
2009
2010
15
10
5
0
Notes
2011
2012
2013
2014
Revenue
 Revenue has continued to grow since the 2008 global financial crisis and current backlog supports
ongoing growth.
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Company Outlook Supported by Pipeline Trends
$M
300
250
200
150
100
50
0
Pending Customer Firm-up
Qualified Leads
Firm Order with PO
Revenue
Revenue Firm Orders Weighted MW Power Balance of
2014
for 2015
Regular Generation Major
Delivery
Business
Programs
Pipeline
Energy Delivery > 1
Storage
yr
Pipeline
•
Strong backlog at $55M, of which $35M will ship within next 12 months
•
Capability to book and ship during first six months of the year
•
Already secured substantial programs with established customers – additional
orders to follow
•
MW power generation (Kolon) next step is substantial, following proof of 1MW
•
Energy storage pipeline has 1-15MW projects with good maturity
17
Order Backlog
As at March 31, 2015
($M)
Jan. 1/15
Backlog
OnSite Generation
$
Power Systems
Total
28.3
Orders
Received
$
33.9
$
62.2
4.6
FX
$
1.1
$
5.7
(1.9)
Orders
Delivered
$
(2.7)
$
(4.6)
$
3.3
$
27.7
4.2
28.1
7.5
$ 55.8
Expected Revenue Recognition
18
Mar. 31/15
Backlog
During next 12 mths
Beyond next 12 mths
OnSite Generation
27.7
-
Power Systems
7.5
20.6
Total
35.2
20.6
Q1 2015 Highlights
• $4.4M of projects awarded by California Energy
Commission to integrate Celerity into Heavy Duty
Vehicles
– New Flyer 12m bus for Sunline Transit
– Class 8 Drayage Truck for TTSI at the Port of LA
• Kolon JV significant order visibility with near term
market potential in excess 100MW
• Continuing strong Power-to-Gas interest
extending beyond Western Europe as energy
storage needs becomes more mainstream
• Overall outlook intact for growth
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Q1 Results
(in $ millions)
Three months ended Mar. 31
2014
$
%
8.1
(0.6)
(7)%
1.2
1.9
(0.7)
(37)%
15.3%
23.8%
Selling, general and administrative
(excluding stock-based compensation,
amortization and depreciation)
2.5
2.7
(0.2)
(7)%
Research and product development
1.0
0.9
0.1
11%
0.6
35%
Revenue
2015
Change
$
Gross Profit
Gross Margin %
7.5
$
Operating Expenses
Adjusted EBITDA
$
(2.3)
$
(1.7)
$
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. Refer to slide 15 for a reconciliation of
this measure to net loss.
20
Consolidated Balance Sheet Highlights
($M)
Mar. 31,
2015
Cash and cash equivalents
and restricted cash
21
$
9.5
Dec. 31,
2014
$
Change
$
%
10.4
(0.9)
(9)%
Trade, other and grants receivable
11.8
12.9
(1.1)
(8)%
Inventories
14.2
14.7
(0.5)
(4)%
Trade and other payables
10.9
13.2
(2.3)
(17)%
Summary: Poised for Significant Expansion
• Demonstrated ability to scale the business and manage costs
• Strong, active pipeline of large P2G opportunities – expected to
accelerate after E.ON PEM system up and running, serving as
showcase installation
• Kolon JV the impetus to rapid growth in multi-megawatt fuel cell power
generation
• Ready to served increasing demand for electrified transport on new
Celerity Platform
• Hydrogenics uniquely positioned at epicenter of hydrogen-based
technology
Cost Discipline
Differentiated Growth Platform
Multiple Ways to Win
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