Ballard Power Systems is in a strong position for growth this year as the international community becomes increasingly interested in the role fuel cells play in a clean-energy future, company officials said Thursday.
President and CEO John Sheridan said the company is uniquely positioned to capitalize on the recent interest in clean energy because Ballard (TSX:BLD; Nasdaq:BLDP)offers a wide range of market applications from backup to motive power.
Fuel cells, Ballard's core technology, produce no emissions because they combine hydrogen and oxygen to create electricity without combustion.
The Vancouver-based company earned US$16.5 million in its fourth quarter, down 13 per cent from the year-ago period. But the company said that was up 83 per cent from the third quarter and represented 35 per cent of its revenue for the year.
For the full year, Ballard earned US$46.7 million, a drop of two per cent or $12.9 million from 2008. It finished the year with cash reserves of $82.2 million.
Ballard said about half of the decline can be attributed to the Vancouver-based company's exit from costly automotive and residential cogeneration development programs.
Ballard said it reduced costs by about 30 per cent in restructuring moves in March and August.
After a difficult year for energy technology companies, Sheridan said Ballard is strongly positioned for growth, exiting 2009 with a strengthened balance sheet, a solidified market position and a $22-million order book.
Streamlining Ballard's costs and solidifying the company's market position with high order volumes will position Ballard's annual revenue growth in excess of 35 per cent in 2010, Sheridan said.
Brian Piccioni, an analyst with BMO Capital Markets, said that the next year will be critical for the company in its new commercial focus after divesting itself of its automotive division.
"Ballard's products appear to be ready for prime time, so they seem to be quite expensive but what you get on a balanced basis is a pretty attractive alternative to a diesel generator," Piccioni said.
But he said the company has had some problems with a network of intermediary companies that integrate the cells into a system of infrastructure to make the cells market ready in a timely way.
"The opportunity is there," he said. "I think the time has come but it remains to be seen whether that last step can be completed."
The company showcased its technology by deploying a fleet of 20 hydrogen fuel-cell buses during the Vancouver Olympics.
"Activities around the Vancouver Olympic Games gave us a pretty unique opportunity to showcase our capabilities to large international audiences...including the Whistler Transit fleet of 20 fuel-cell buses operating throughout the Olympics under the international media spotlight," Sheridan said.
The company said its order book increase by $5 million at the end of February.
The company also said it is making progress toward its goal of achieving life cycle cost parity with diesel hybrid electric buses.
Sheridan said Ballard is committed to driving down the price of its products, but chief financial officer Bruce Cousins told a conference call with analysts that the company is prepared to withstand lower profit margins as demand improves and technology develops.
Meanwhile, Sheridan said the company has been disappointed in the level of support for its technology from the Canadian government, adding that Ottawa lags the international community where demand is being led by countries like the United States and South Korea.
Earlier this month, the company signed a deal to supply fuel cells to power two transit buses in California.
Ballard also has other bus contracts slated for delivery this year in London, Germany and Amsterdam.
Shares in the company were down two cents at $2.41 in trading Thursday on the Toronto Stock Exchange.