Ballard Power Systems, Inc.

Thank you for standing by. This is the conference operator. Welcome to the Ballard Power Systems second quarter 2024 results conference call. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Kate Igbelode, Vice President, Investor Relations. Please go ahead.

Thank you, operator, and good morning. Welcome to Ballard's second quarter financial and operating results conference call. With us on today's call are Randy McEwen, Ballard's CEO, and Paul Dobson, Chief Financial Officer. We will be making forward-looking statements that are based on management's current expectations, beliefs, and assumptions concerning future events. Actual results could be materially different. Please refer to our most recent annual information form and other public filings for our complete disclaimer and related information. I'll now turn the call over to Randy.

Thank you, Kate, and welcome everyone to today's conference call. During Q2, we made measured progress on key 2024 deliverables relating to products, advanced manufacturing, and markets, all in support of our long-term strategy. On products, we launched our ninth generation PEM fuel cell engine, resetting the industry standard for PEM fuel cell engine performance for heavy-duty mobility. Enabled by an innovative open architecture design and other new design advances, the PowerFoam Compact FC Move XD enables several important performance improvements as compared to our prior generation engine, including 120 kilowatt power output from our latest high-performance single stack. 33% reduction in total part count, significantly improving reliability and reducing costs. High peak system efficiency at greater than 60%, enabling improved fuel consumption and efficient heat rejection. Wide operating temperature range, up to 95 degrees C. Integrated power controller incorporates DC-DC converter, air compressor inverter, and a power distribution unit along with proprietary software controls enabling improved engine operation and efficiency. Rapid up and down transient times with an innovative hot standby mode enabling rapid power increase. Improved manufacturability with assembly times cut by more than half and easier access to parts for faster and lower cost field maintenance. An additional compelling feature of our new FC Move XD is scalability based on modularity. We can offer customers efficient integration of 120 kilowatt, 240 kilowatt, and 360 kilowatt solutions depending on vehicle class, use case, and duty cycle. For example, two engines totaling 240 kilowatts of power output can be easily installed in the engine compartment of a typical Class 8 heavy-duty truck enhancing standardization, and offering redundancy. With a design life of 30,000 hours plus hours of operation, or over 1 million miles in truck operation at typical duty cycles, the FCMove XD engine is developed to deliver class-leading durability and low total cost of ownership. We already have initial units in the hands of some select customers and have been receiving positive feedback. There's growing market interest, and we have manufacturing builds planned during the remainder of the year. On advanced manufacturing, we're tracking the plan against Project Forge, which is our program to scale graphite bipolar plate production by approximately 10 times and reduce costs of next-generation plates by up to 70%. We've developed several novel manufacturing processes that enable full automation of the bipolar plate production processes which we expect to result in significantly reduced labor costs, improved material yield, reduced production tack times, reduced energy demand, and the elimination of water consumption from plate manufacturing. We expect commissioning and optimization of our new bipolar plate production processes in Burnaby in late 2025. And on markets, we announced a strategic technology partnership with Vertiv to demonstrate the technical feasibility and customer benefits of fuel cell backup power solutions for the fast-growing data center market. Initial validation tests at Vertiv's facility in Ohio have demonstrated successful operation of zero-emission fuel cell backup power integrated in Vertiv's UPS architecture for data centers. We'll continue to work with Vertiv to understand the market requirements, develop an optimized technical solution, and engage the market. I'd like to make a few comments about our order book and also about broader market adoption. First, on the order book. Following almost 130 million total new orders in the previous two quarters, Q2 net order intake was soft at $5 million, as certain customers deferred new orders. Given the stage of development of the industry, we expect continued quarterly lumpiness for the foreseeable future. Second, On overall market adoption, it's important to note that while we remain confident in the long-term value proposition of hydrogen fuel cells, the timeline for market adoption is clearly moving to the right. We continue to observe a slow pace of contract awards for new clean hydrogen projects. We've spoken before about the slowing effects of the inflationary and interest rate environment over the past few years that are creating challenging economics for many hydrogen projects. We're also seeing projected policy uncertainty that is slowing market adoption. As an example, there's continued uncertainty in the U.S., including the extended discussion around the 45 clean hydrogen production tax credit rules. The draft regulations, which were released eight months ago, are still being debated by the industry. It remains unclear whether these regulations will be resolved before the U.S. presidential election. This is delaying investment in the U.S. hydrogen industry including in large-scale clean hydrogen projects. We also continue to observe policy uncertainty and related market delays in Europe and China. Overall, we see a multi-year push out on the availability of low-cost, low-carbon hydrogen and hydrogen refueling infrastructure, which represents a significant headwinds in our markets, including the truck vertical. Given this environment, we continue to carefully track market adoption indicators and scrutinize the pace of our investments and spending. For example, and as Paul will note, we have toggled back our 2024 CapEx spend. With this backdrop, we want to provide a brief update on our proposed production facility in Texas, where we've been awarded U.S. funding totaling $94 million. We continue to do our work to assess the business case for this project. We're conducting a thorough analysis of the scope, timing, costs alternatives and financial return on the proposed project including an analysis of capital employment timing relative to market adoption and volume timing we're also reviewing project permitting conditions and documentation including with the usdoe other funding sources and related to site acquisition this is important work and it's being done to support making a go or no-go final investment decision later in 2024. We look forward to providing an update on this later in the year. Before I turn the call over to Paul to discuss our Q2 financials, I want to emphasize again that notwithstanding the slowing timeline for market adoption, we remain confident in the long-term direction of travel, including the important role that hydrogen fuel cells will play in helping decarbonize our global economy and including in the heavy-duty mobility markets, as well as Ballard's long-term positioning. We continue to focus on controllables, including customer experience, product development programs, product cost reduction initiatives, advanced manufacturing capacity planning, all while maintaining a strong balance sheet for long-term sustainability. With that, I'll now pass the call over to Paul.