Ballard(BLDP) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company ended 2021 with a strong balance sheet and cash position, with total operating costs expected to be between $140 million and $160 million in 2022, a 50% increase from 2021 [16][12] - Capital expenditures for 2022 are anticipated to be between $40 million and $60 million, excluding potential investments in corporate development activities [18] - The gross margin outlook for 2022 is expected to face pressure due to rising material pricing, freight costs, and labor, alongside a shift in revenue mix towards power products [19][80] Business Line Data and Key Metrics Changes - The European revenue increased nearly 20% year-over-year, with over 50% growth in fuel cell sales in the Power Products segment [12] - Heavy-Duty Motive revenue in the U.S. and Canada saw over 300% year-over-year growth, driven by orders from major customers [12] - The total addressable market (TAM) for the bus, truck, rail, and marine markets has increased from $130 billion to over $250 billion [8][36] Market Data and Key Metrics Changes - The company continues to see significant growth in the European market, with a notable increase in the bus market [12] - In China, the strategy remains on track, with expectations of deploying over 5,000 fuel cell electric vehicles in the Henan cluster during the demonstration period [14] - The company is well-positioned in the marine market, with a total addressable market now estimated at $40 billion [67] Company Strategy and Development Direction - The focus remains on medium- and heavy-duty motive mobility markets, with plans to expand into stationary and backup power, light-duty, and off-road markets [7][8] - Corporate development, including potential acquisitions and partnerships, is a strategic priority for 2022 to enhance competitive positioning and expand the product portfolio [19] - The company aims to maintain technology leadership and market share as the hydrogen growth accelerates [17] Management's Comments on Operating Environment and Future Outlook - The management highlighted the existential threat posed by the global climate crisis and the need to accelerate the clean energy transition [5] - Supply chain challenges are expected to continue into 2022, with some electronic component supply constraints anticipated [14] - The geopolitical situation, particularly the war in Ukraine, has shifted energy priorities, emphasizing the need for energy security and decarbonization [6] Other Important Information - The company has initiated a Mission Carbon Zero initiative to reduce its environmental impact, aiming to achieve carbon neutrality by 2030 [20] - The order backlog increased from 20 customers with meaningful orders at the end of 2020 to over 30 by the end of 2021, indicating a diversification in the customer base [21] Q&A Session Summary Question: What are the next steps with MAHLE? - The company is developing a fuel cell engine platform for the commercial truck market in Europe, with significant technical progress made [25] Question: When will the entire unit be in a truck driving on the road? - Public deployment is expected in 2023, with internal testing occurring in 2022 [29] Question: Can you provide insight on the nature of the CapEx and OpEx increases? - Investments are focused on maturing product development programs and expanding testing capabilities, with a significant increase in research and development [30][33] Question: How does the increase in TAM relate to investments? - The increase in TAM is not the primary driver for 2022 investments, but there is optimism about growth in rail and marine markets [36] Question: Are there discussions to accelerate hydrogen plans in Europe? - It is early, but there is an expectation for significant scale-up in green hydrogen supply in Europe [42] Question: How is the company preparing for growth in 2023? - Increased investments in operating costs and CapEx are being made to support future growth and scale manufacturing capabilities [50] Question: What is the competitive landscape in the Chinese city cluster? - The company is well-positioned within the Weichai-Ballard joint venture, which is the largest in the value chain for the cluster [55] Question: How relevant is the backlog as an indicator of revenue? - The backlog has decreased, but the composition is shifting towards European and North American markets, indicating a diversification of customer base [58]