Ballard Power Systems announced a global corporate restructuring to reduce corporate spending and in order to maintain balance sheet strength amid a slowdown in H₂ infrastructure development and delayed fuel cell adoption.

"As discussed during our recent earnings call, in the context of a challenging macroeconomic and geopolitical outlook and amid protracted policy uncertainty, we see a multi-year push-out of the availability of low-cost, low carbon H₂ and H₂ refueling infrastructure. As this delay represents a significant headwind to our corporate growth plan, we are implementing a cost restructuring to moderate our investment intensity and pacing to better align with delayed market adoption," said Randy MacEwen, Ballard President and CEO. "We expect our restructuring measures to impact our global operations, yielding annualized total operating expense savings in excess of 30%, with a substantial part of the annualized savings being realized in 2025."

The scope of reduction measures include a reduction in workforce, a rationalization in product development programs, operational consolidation, reduction in capital expenditures, and certain working capital improvement initiatives. Cost reduction measures are not expected to impact product delivery and program execution required to fulfill customer commitments.

"Given the leverage from the $94 MM in U.S. government funding awards, we continue to carefully assess our proposed investment for long-term manufacturing capacity expansion in Texas. We are reviewing financing optionality to extend our funding timeline, and delay material cash outlays, until we have appropriate market adoption indicators," MacEwen noted.

MacEwen said, "With continued challenges in the China fuel cell market and underperformance of the Weichai Ballard joint venture, we are also conducting a strategic review of our China strategy, including all options relating to the WBJV."

"Notwithstanding the slowing timeline for market adoption, we remain confident in the long-term value proposition of H₂ fuel cells. While the speed of travel has changed, we have unwavering conviction on the direction of travel, with clean H₂ and fuel cells playing an important role in decarbonizing heavy mobility applications," Mr. MacEwen concluded. "We will continue our focus on customers and the development of next-generation, low-cost fuel cell products for select heavy mobility and stationary power applications, while maintaining disciplined spending and balance sheet strength for long-term competitiveness and sustainability."

In connection with the restructuring, the Company expects to book a restructuring charge in Q3 2024.  The company had $678 MM of cash and cash equivalents as of June 30, 2024. The company reiterates its 2024 guidance ranges of $145 MM to $165 MM for total operating expense (excluding restructuring and related costs) and $25 MM to $40 MM for capital expenditures.

"As part of the restructuring, Paul Dobson and Mark Biznek will be departing as our Chief Financial Officer and Chief Operating Officer, respectively. Paul will be succeeded by Kate Igbalode as our new CFO effective immediately. Mark will be succeeded by Lee Sweetland as our new COO effective at the end of 2024. Paul and Mark will support their respective successors in an orderly transition. We thank both Paul and Mark for their dedication and valued service to Ballard," said Mr. MacEwen.