Ballard Power Systems, Inc.

Hello and welcome to the Ballard Power Systems third 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 one 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 Sumit Kundu Manager and Investor Relations, please go ahead.

Thank you, Operator, and good morning. Welcome to Ballard's third quarter financial and operating results conference call. With us on today's call are Randy McGowan, Ballard CEO, and Kate Igbalode, 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, Suman, and welcome everyone to today's conference call. We'll keep our prepared comments today relatively brief to allow sufficient time for Q&A. And I think there can be no question this is a difficult moment in the hydrogen and fuel cell industry. In the context of an uncertain macroeconomic and geopolitical outlook, and amid protracted policy uncertainty, we observe a multi-year pushout of hydrogen project development and the availability of low-cost, low-carbon hydrogen and hydrogen refueling infrastructure. We also observe a continued deterioration in the financing environment for companies in the hydrogen fuel cell industry complex, including reduced access to capital and continued compression in industry valuations. Taken together, the push out in market adoption in the challenging capital markets environment is putting pressure on the financial position of many industry players across the value chain. Many participants are taking restructuring actions to reduce their cash burn, improve their liquidity, and extend their cash runway. This industry context presents a significant headwind to our corporate growth plan. Accordingly, in Q3, we made the difficult decision to initiate a global corporate restructuring to moderate our investment intensity and pacing to better align with delayed market adoption. Our restructuring includes a sizable workforce reduction, rationalization of product development programs, consolidation of global operations and facilities, and a reduction in planned capital expenditures. In addition, given continued policy and other challenges in the China fuel cell market and the underperformance of the Weichai Ballard joint venture, we've reduced our corporate cost structure in China and initiated a strategic review of our China strategy with consideration of all options, including related to the Weichai Ballard JV. Given this industry context, we do not see a business case for production capacity expansion investments in the foreseeable future. Accordingly, we have also repositioned our previously planned Texas Gigafactory expansion program to an optionality plan. We will defer our final investment decision to 2026 pending clear market adoption and demand indicators. while still preserving our over $94 million of awarded government funding. With no material capital investments made during this optionality period, we'll reassess the underlying business case in 2026. We expect our global restructuring to reduce total annualized operating costs by more than 30%, with a substantial part of the annual cost savings to be realized in 2025. These actions will meaningfully extend our cash runway. Importantly, and a differentiator for Ballard, we entered the quarter with a strong cash position. Our Q3 results are reflective of this challenging industry context in near-term outlook. With weak revenue, soft new order intake, adverse order book adjustments, a restructuring charge of $16.1 million, and non-cash goodwill and PPM permits totaling approximately $147 million. I want to comment on the order backlog. We removed certain previously booked orders from our order backlog and 12-month order book. While these orders have not been cancelled by our customers, we believe these removals are prudent given heightened concerns on the relevant market adoption risks and customer risks. While we had disappointing new order intake of only 7.1 million during Q3, we see a pickup in new order intake in Q4, including secured orders from two customers over the past few days that I want to highlight. First, we received a new order from New Flyer for the supply of 200 fuel cell engines, representing 20 megawatts, with delivery planned for 2025. This represents the second order under our previously announced long-term supply agreement with a doubling from the new flyer order of 100 fuel cell engines for 2024 delivery. We believe this new order for 200 engines is the largest order in the history of the industry for fuel cell engines in the North American bus market. Second, we also received a repeat order from an undisclosed European bus OEM customer where we previously signed a long-term framework supply agreement. This order is for the supply of 80 fuel cell engines planned for delivery in 2025 and 2026. As we look to our long-term strategic plan and our retuned capital allocation, we continue to have high conviction on hydrogen and PEM fuel cells playing an important role in decarbonizing select heavy mobility and stationary power applications. We see compelling use cases where customers are attracted to the differentiated PEM fuel cell value proposition of long-range, fast refueling, heavy payload, operation in all weather climates, and zero tailpipe emissions. We remain focused on our customers and our controllables, including the development of next-generation, low-cost fuel cell products, while maintaining disciplined spending and balance sheet strength for long-term competitiveness and sustainability. With that, I'll now pass the call over to Kate.