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S SO O S OSMARTER SOLUTIONS FOR A CLEAN ENERGY FUTURE
B A L L A R D P O W E R S Y S T E M S
A CLEAN ENERGY GROWTH COMPANY TSX: BLD NASDAQ: BLDP
FEBRUARY 2, 2011
COPYRIGHT © 2011 BALLARD POWER SYSTEMS INC. ALL RIGHTS RESERVED
Forward Looking Statements
This presentation contains forward-looking statements, including estimated revenue and cash flow from operations for 2010; and business outlook for 2011, including estimated revenue, operating costs, Adjusted EBITDA gross margins and anticipated market developments. These forward-looking statements are based on the beliefs and assumptions of Ballard’s management and reflect Ballard’s current expectations as contemplated under section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934 as amended In addition to the specific as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition to the specific assumptions set out with those forward-looking statements, such assumptions relate to our financial forecasts and expectations regarding our product development efforts, manufacturing capacity, and market demand, and include matters such as generating new sales, producing and delivering the expected number of units and controlling our costs.
These forward-looking statements are being provided to enable stakeholders to understand Ballard’s expectations as at the date of this presentation with respect to its future performance and may not be appropriate for other purposesthe date of this presentation with respect to its future performance and may not be appropriate for other purposes.
These forward-looking statements involve risks and uncertainties that may cause our actual results to be materially different, including, without limitation, the condition of the global economy, the rate of mass adoption of our products, product development delays, changing environmental regulations, our ability to attract and retain business partners and customers, our access to funding, increased competition, our ability to protect our intellectual property, changes in our customers’ requirements foreign exchange impacts on our net monetary assets and our ability to provide the capital customers requirements, foreign exchange impacts on our net monetary assets and our ability to provide the capital required for product development, operations and marketing. For a detailed discussion of these risk factors and other risk factors that could affect Ballard’s future performance, please refer to our most recent Annual Information Form. Readers should not place undue reliance on Ballard’s forward-looking statements and Ballard assumes no obligation to update or release any revisions to these forward looking statements, other than as required under applicable legislation.
All t lid t d t i l d D th P ’ lt d i U S d ll l th i t d All amounts are consolidated to include Dantherm Power’s results and are in U.S. dollars, unless otherwise noted.
FEBRUARY 2, 2011
Content
1. About Ballard
2. Fuel Cells and Clean Power
3. Transformation Proof Points
4. Market Development Progress
5. Preliminary 2010 Results & 2011 Outlook
6 Our People6. Our People
7. Summary
FEBRUARY 2, 2011
About Ballard
Founded in 1989
Listed on NASDAQ (BLDP) Q ( )and TSX (BLD)
Cash reserves of $74.4M as of 12/31/2010
Market capitalization of ~$139M as of 1/31/2011
~400 employeesp y
Ballard designs and manufactures clean Ballard designs and manufactures clean energy fuel cell products, enabling optimized
power systems for a range of applications
FEBRUARY 2, 2011 P A G E 1
Fuel Cells and Clean Power
Cl k t th ill fl t Clean energy market growth will reflect a mix of energy technologies
Solar
Wind
Clean Energy Mix
Bio-energy
Fuel cellsPEM, SOFC, PAFC…
As fuel cell product costs continue to decline, fuel cells will play an increasingly prominent
role in the clean energy space
FEBRUARY 2, 2011
role in the clean energy space
P A G E 2
PEM Fuel Cells
mper
ature Hig
h600°
C-
1200°
C
SOFC
MCFC (Fuel Cell Energy)
PAFC (United Technologies)In
creasing h
man
agem
ereq
uirem
en
1kW 100kW 1MW 10MW10kW
Tem
Low
60°
C-
120°
C
PEMFC
PAFC (United Technologies)heat
ent
nts
Applic
atio
ns
Ballard leverages leadership in PEM across multiple g p pmarkets…
Compact & scalable
Fuel flexibility
Efficient reliable and safe
Fast start-up and low temperature
Rapid response to changes in power demand
Durable across wide variety of duty cycles
FEBRUARY 2, 2011
Efficient, reliable and safe
P A G E 3
Durable across wide variety of duty cycles
Ballard leadership in PEM fuel cells is based on -
Ballard: Putting PEM Fuel Cells to Work
Ballard leadership in PEM fuel cells is based on Portfolio of proven commercial solutions
Fuel cell stacks, power modules and systems
Strong delivery capabilitiesAccess to over 2,000 patents and licenses
High volume manufacturing facility
SI & channel partnerships
100MW+ of fuel cell products shipped
Developing a global customer base -
Backup Power Material Handling
BusDistributed GenerationCHANNELSCHANNELS
System Integrators /
OEMs
Downstream Customers
BLUWAYS
Customers
FEBRUARY 2, 2011 P A G E 4
Transformation Proof Points
Re-vectored from auto fuel cell R&D to commercial marketsDivested automotive technology programsDivested Japanese cogeneration systems joint venture
Significant commercial progressSignificant commercial progressProduct performance improvementsProduct cost reductions
Reset the cost base by >50%yExited 2010 with cash operating expense base run-rate of ~$40M
Augmented cash reservesSuperior Plus tax transaction (Net: $34M)Monetized rights under Share Purchase Agreement (Net: $40M)Sale-and-leaseback on head office building (Net: $20M)
Acquired controlling interest in Dantherm PowerSystem integration capability for stationary power solutions System integration capability for stationary power solutions Direct channel to end-user markets
Complete transformation of Ballard over past 3 years
FEBRUARY 2, 2011 P A G E 5
p p y
PRODUCT KEY ATTRIBUTES PRODUCT ASP
Fuel Cell Product Portfolio
END-2010*
Backup power marketStack power 500W-2 kW Operating life 2,500-4,000 hours
$650-2,600 / stack
Distributed generation marketStack power 2-8 kW Operating life 20,000-30,000 hours
$2,800-11,200 / stack
$2,000-10,000 / stackMaterial handling marketStack power 4-20 kWOperating life 8,000-12,000 hours
$337,500-675,000 / module
Bus marketModule power 75-150 kWOperating life 12,000 hours
* Dependent on power level & volume commitment
Ballard’s product portfolio includes fuel cell stacks, modules, as well as fully integrated system solutions
Product ASPs shown here reflect aggressive cost reductions
FEBRUARY 2, 2011
Product ASPs shown here reflect aggressive cost reductions … 40-65% over the past three years (2008-2010)
P A G E 6
Backup Power
Initial focus on telecom
Addressable market: ~$1B+
Compelling value proposition, driven by reliability and low cost
Dual channel access -
Direct via
Indirect via system integrators
Dantherm Power system
Indirect via system integrators -Recent Progress -Deployment of Dantherm Power systems in Wind Mobile networkIdaTech sale of >250 systems to
zy
Hutchinson Telecom in IndonesiaIdaTech launch of methanol-fueled system, using Ballard fuel cell stacksBallard sales to emerging system integrators
FEBRUARY 2, 2011 P A G E 7
integrators
Distributed Generation
Addressable market: ~$3B+ (based on Addressable market: ~$3B+ (based on ~1,000 MW of by-product hydrogen…ie. sufficient to power ~800k-1M homes for a year)
Focus on chemical plants with by-d t h d d SGIP FIT product hydrogen and SGIP or FIT
(feed-in tariff) programs
CLEARgenTM systems or stacks
CLEARgenTM ‘Levelized Cost of Energy’ ~$0.06-$0.13 per kilowatt hour(reflecting available Federal and California state government incentives)government incentives)
1 MW CLEARgenTM system
Recent Progress –1 MW CLEARgenTM system for peak power requirements was delivered to FirstEnergy in OhioK2 Pure Solutions supply agreement signed for 163 kW CLEARgenTM system, utilizing by-product hydrogenSale of 1.25 MW’s of FCgen®-1300 stacks to Real Time
FEBRUARY 2, 2011 P A G E 8
Sale of 1.25 MW s of FCgen® 1300 stacks to Real Time Engineering, for deployment of 1 MW system in Singapore
Exclusive stack supplier to Plug
Material Handling
Exclusive stack supplier to Plug Power….clear market leader
Addressable market –
Plug Power indicates ~380,000 trucks of an installed base of 1.7M trucks in N/America (market potential >$1.5B)
Economics driven by improved y pproductivity
Focus –
Battery replacement in N/American Battery replacement in N/American high-volume distribution centers & manufacturing facilities
Recent Progress Recent Progress –Extension of supply agreement with Plug Power through 2014, with mutual exclusivity for North AmericaPlug Power sales to Walmart, Sysco, Whole Foods, Coca-Cola, BMW Plug Power distribution agreement with Raymond Corporation
FEBRUARY 2, 2011 P A G E 9
Plug Power distribution agreement with Raymond Corporation2010 shipments of 1,100 units, a 6-fold increase over 2009
Bus
Zero-emission public transit
Government supported programs
Canada, UK, Brazil, Germany, USA, The Netherlands
Channel access through bus OEM’s and system integratorsOEM s and system integrators
Reasonable volume increase would achieve competitive-ness vs. diesel hybrid &
BC Transit fuel cell bus fleety
electric trolley buses
Recent Progress –World’s largest fuel cell bus fleet deployed in Whistler, BC; >815k km's (>500k miles) accumulated Sales to Tuttotrasporti (Brazil), Transport for London (UK), APTS (The Netherlands), SunLine Transit Agency (Palm Springs, CA)Participating in 4 Federal Transit Administration projects under the
FEBRUARY 2, 2011 P A G E 10
Participating in 4 Federal Transit Administration projects under the U.S. National Fuel Cell Bus Program
Strong Preliminary 2010 Results (Unaudited)
Strong growth – revenue up 39% (met guidance) & product shipments up 104%
Met or exceeded 4 of 6 growth milestones; 2 not met
Key market achievements:
Backup Power – established a direct channel with acquisition of a controlling interest in Dantherm Power.
Di t ib t d G ti i d th ’ fi t FC ® 1300 t k l Distributed Generation – signed the company’s first FCgen®-1300 stack supply agreement, for 1 MW system in Singapore.
Bus – signed supply agreements for buses in London and Brazil; selected to power buses under the U.S. National Fuel Cell Bus Program.
Material Handling – extended supply agreement with Plug Power under a mutually exclusive relationship for North America through 2014.
Major progress towards profitabilityd d33% improvement in Adjusted EBITDA
30% improvement in cash flow from operations on a comparable basis (excluding Dantherm Power and negative FX impact) - met guidance
FEBRUARY 2, 2011 P A G E 11
Preliminary 2010 Results (Unaudited)
USD Millions Q4 2010 Q4 2009 % Improvement FY 2010 FY 2009 % ImprovementFrom Q4 2009 From FY 2009
GROWTH
$21.1 $16.5 28% $65.0 $46.7 39%
GROWTH
Revenue
Fuel Cell Stack Shipments1 (units)
1,119 551 103% 3,014 1,476 104%
12-Month Rolling Order Book
PROFITABILITY
$35.0 $22.7 54%
Gross Margin
Adjusted EBITDA2
LIQUIDITY
24% 14% 16% 13%
($3.1) ($6.4) 52% ($26.0) ($39.0) 33%
Cash Reserves $74.4 $82.2 -9%
1 Total fuel cell stack shipments for backup power, distributed generation, material handling, bus and automotive applications2 Adjusted EBITDA measures EBITDA adjusted for stock-based compensation, investment and other income, transactional gains and losses, acquisition
costs and the non-controlling interest in Dantherm Power.
FEBRUARY 2, 2011 P A G E 12
2011 Outlook
Building on strong 2010 results
Continued focus on growth and profitability
Key prioritiesKey priorities
Significant revenue growth - continued execution of multi-market strategy
Maintenance of the cash operating cost base at current run-rate (~$40M/yr)
Continued improvement in gross margin towards a 30 35% target shift in Continued improvement in gross margin towards a 30-35% target - shift in product mix and incremental product cost reductions
Guidance
Revenue growth in excess of 30% from the 2010 levelRevenue growth in excess of 30% from the 2010 level
Adjusted EBITDA improvement of 40% from the 2010 level
FEBRUARY 2, 2011 P A G E 13
St i l d hi t
Our People
Strong senior leadership teamJohn Sheridan, President & CEO
President & COO Bell Canada; extensive experience in telecom and technology; Joined Ballard 2006
Chairman of Canadian Hydrogen & Fuel Cell Association (CHFCA); Chairman of BC Chairman of Canadian Hydrogen & Fuel Cell Association (CHFCA); Chairman of BC Hydrogen Highway; Member of BC Premier Technology Council
Paul Cass, Vice President - Operations
Extensive engineering, project management and manufacturing experience; Joined 1997
Bill Foulds, President – Ballard Material Productsou ds, es de t a a d ate a oducts
Experience in advanced material products, including Director of Carbon Products at Textron Systems; Joined 2001
Michael Goldstein, Chief Customer Officer
President & CEO Actuality Medical; President iFire; 6 years at GE; Joined 2009
Tony Guglielmin, Chief Financial Officer
CFO Canada Line Rapid Transit; senior financial management roles at Finning International & BC Hydro; Joined 2010
Christopher Guzy, Chief Technology Officer
17 years at GE; PhD in Chemical Engineering; Joined 200517 years at GE; PhD in Chemical Engineering; Joined 2005
Supported by solid organization~40 employees are inventors (Ballard & BMP patents and patent applications)
PhDs: 13; Masters: ~40; Engineers & Scientists: ~120
FEBRUARY 2, 2011 P A G E 14
Summary
Product leadership in fuel cell power solutions, based on proven proprietary technology
Compelling value propositions Compelling value propositions
Strong order book supporting revenue growth in excess of 30% in 2011
Well-financed runway – no need to raise cash in public markets to execute on growth strategy
E t i ifi t dj t d EBITDA i t Expect significant adjusted EBITDA improvement of 40%
Ballard – Putting Fuel Cells to Work
FEBRUARY 2, 2011 P A G E 15
S SO O S OSMARTER SOLUTIONS FOR A CLEAN ENERGY FUTURE
B A L L A R D P O W E R S Y S T E M S
A CLEAN ENERGY GROWTH COMPANY TSX: BLD NASDAQ: BLDP
FEBRUARY 2, 2011
COPYRIGHT © 2011 BALLARD POWER SYSTEMS INC. ALL RIGHTS RESERVED