Hydrogenics Reports Q3 Results 2010, 57% Rise Of Revenues

Hydrogenics Corporation (Nasdaq:HYGS, TSX:HYG), a developer and manufacturer of hydrogen generation and fuel cell products, reported third quarter 2010 results earlier today. Results are reported in U.S. dollars and are prepared in accordance with Canadian generally accepted accounting principles.

Hydrogenics Corporation Financial Highlights

• Finalized long-term strategic relationship with CommScope, Inc. (“CommScope”) and closed the first two tranches of the related subscription agreement for common shares resulting in gross proceeds of $4.0 million.
• Posted revenues of $5.6 million for the three months ended September 30, 2010, an increase of 57% from the comparable period in 2009.
• Gross profit, expressed as a percentage of revenues, of 25.8% (16.2% in 2009), reflects increased gross profit in the Corporation’s Power Systems business unit.
• Reported loss from operations of $2.4 million for the three months ended September 30, 2010, a decrease of 55% from the comparable period in 2009 reflecting increased revenues, improved gross profit and reduced operating expenses.
• Ended the quarter with cash and cash equivalents, restricted cash and short-term investments of $11.7 million, a $1.4 million sequential quarterly increase from $10.3 million in the second quarter of 2010, reflecting: (i) $3.8 million of net proceeds from the first two tranches of the investment by CommScope, partially offset by; (ii) a $1.0 million net loss, excluding non-cash items; (iii) a $1.2 million increase in non-cash working capital; and (iv) $0.2 million of capital expenditures.

The Corporation’s order backlog as of September 30, 2010 was $19.4 million.

“This has been a quarter of many accomplishments,” said Daryl Wilson, President and Chief Executive Officer. “We grew revenues 57% over last year to $5.6 million, reduced our operating loss by 55%, and solidified a groundbreaking agreement with CommScope intended to bolster our Power Systems business unit and drive sales of telecom backup power modules in the quarters to come. Hydrogenics remains focused on managing costs while expanding our presence across all applicable end markets. We are encouraged by countries such as Germany, where there is a growing need for both energy storage and hydrogen fueling stations. Our leadership position in hydrogen generation — and partnership with CommScope for fuel cell commercialization — provides the basis for our confidence that Hydrogenics will see steady growth and improving performance going forward.”

Revenues were $5.6 million for the three months ended September 30, 2010, a 57% increase from the comparable period in 2009 primarily as a result of the shipment of $4.1 million of previously delayed orders, which shipped to OnSite Generation customers during the quarter. Gross profit was 25.8% for the three months ended September 30, 2010, an increase of 9.6 percentage points from the comparable period in 2009 reflecting: (i) variations in product mix in Hydrogenics’ Power Systems business unit; (ii) more favourable overhead absorption, resulting from increased revenues; and (iii) product cost reductions and reversal of expired warranty provisions in both the Power Systems and OnSite Generation business units.

Net loss was $2.1 million for the three months ended September 30, 2010, a 62% decrease from $5.4 million in the comparable period in 2009.