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Sector:
Analyst:
e-mail:
Tel:
DEV BHANGUI
dev.bhangui@jenningscapital.com
(416) 304-2191
Associate:
e-mail:
Tel:
CHRIS MARTINO
chris.martino@jenningscapital.com
(416) 304-2171
Target Price
$3.00
Share Price
$2.78
8%
NASD:BLDP
Last Price
US$2.78
$367.2
132.1
132.1
Cash ($M)
$32.7
Debt ($M)
$11.4
$345.9
Average Volume
Financials - Dec 31 FYE
Revenue ($000)
Gross Margin
Adjusted EBITDA ($000)
Adjusted EBITDA Margin
Net Earnings ($000)
Diluted EPS
EV/Sales
EV/ Adj. EBITDA
1,274,200
2013A
2014E
2015E
$61,251
$74,209
$102,037
27.4%
25.2%
29.0%
($8,315)
($2,314)
$5,896
-13.6%
-3.1%
5.8%
($21,700)
($13,860)
($1,561)
($0.21)
($0.10)
($0.01)
5.6x
4.7x
3.4x
nmf
nmf
58.7x
Figure 1
Q3/13
Reported
$21.9
-5.9%
$17.0
28.8%
(758 bps)
64.9%
$5.2
$6.5
-19.9%
$4.7
25.3%
31.8%
(653 b ps)
27.6%
Expenses
Operating Income
$7.5
($2.3)
$7.9
($1.3)
-4.3%
77.5%
$8.5
($3.8)
Adj. EBITDA
$0.5
$1.7
-73.3%
($0.9)
2.2%
7.7%
(551 b ps)
-5.2%
Total Revenue
Growth % (YoY)
Gross Profit
Gross margin (%)
Reported
Q3/14
JCI Est.
$20.6
21.2%
Figure 2
Ballard Power Inc. (TSX:BLD, NASDAQ:BDLP)
Income Statement (000s $USD)
Total Revenue
Cost of product and service revenues
Gross profit
Gross margin (%)
Income Statement
F2012A
31-Dec-12
Q1/13A
31-Mar-13
43,690
36,321
7,369
12,335
9,397
2,938
Q2/13A
30-Jun-13
Q3/13A
30-Sep-13
Q4/13A
31-Dec-13
F2013A
31-Dec-13
Q1/14A
31-Mar-14
Q2/14A
30-Jun-14
Q3/14A
30-Sep-14
Q4/14E
31-Dec-14
F2014E
31-Dec-14
F2015E
31-Dec-15
14,597
11,361
3,236
17,003
12,312
4,691
17,316
11,422
5,894
61,251
44,492
16,759
13,992
10,462
3,530
18,471
13,930
4,541
20,611
15,403
5,208
21,135
15,746
5,389
74,209
55,541
18,668
102,037
72,447
29,591
29.0%
16.9%
23.8%
22.2%
27.6%
34.0%
27.4%
25.2%
24.6%
25.3%
25.5%
25.2%
-21.7%
22.4%
113.9%
64.9%
5.1%
40.2%
13.4%
26.5%
21.2%
22.1%
21.2%
37.5%
19,273
12,306
6,901
38,480
5,296
2,995
1,936
10,227
4,142
2,874
1,922
8,938
4,090
2,551
1,869
8,510
3,589
2,993
1,934
8,516
17,117
11,413
7,661
36,191
2,998
2,780
1,895
7,673
3,556
2,896
2,000
8,452
3,230
2,419
1,867
7,516
3,300
2,120
1,965
7,385
13,084
10,215
7,727
31,026
12,422
9,420
7,890
29,732
88.1%
82.9%
61.2%
50.0%
49.2%
59.1%
54.8%
45.8%
36.5%
34.9%
41.8%
29.1%
(31,111)
(7,289)
(5,702)
(3,819)
(2,622)
(19,432)
(4,143)
(3,911)
(2,308)
(1,996)
(12,358)
(141)
31
(1,690)
(69)
(10,570)
(679)
(427)
25
-
730
(493)
18
(363)
(382)
(298)
(219)
-
546
(268)
153
(150)
215
(1,486)
(23)
(513)
422
(242)
1
(150)
(215)
(234)
1
181
(232)
(3)
-
(230)
-
388
(938)
(2)
(150)
(900)
-
(43,409)
(8,370)
(5,810)
(4,718)
(2,341)
(21,239)
(4,112)
(4,359)
(2,362)
(2,226)
(13,059)
(1,041)
(43,409)
(65)
(8,370)
(42)
(5,810)
-
(318)
(5,036)
66
(167)
(2,508)
-
(485)
(21,724)
24
(77)
(4,189)
320
(449)
(4,808)
-
(368)
(2,730)
-
(227)
(2,453)
-
(1,121)
(14,180)
320
(520)
(1,561)
-
(43,474)
(8,412)
(5,810)
(4,970)
(2,508)
(21,700)
(3,869)
(4,808)
(2,730)
(2,453)
(13,860)
(1,561)
(186)
(807)
(20)
(44,487)
270
(8,142)
(50)
(5,860)
(339)
(5,309)
(73)
2,852
271
(192)
2,852
(19,040)
(1)
30
(3,840)
13
200
(4,595)
320
(278)
(2,688)
(2,453)
332
(48)
(13,576)
(1,561)
(42,070)
(65)
(1,339)
(7,936)
(42)
(434)
(5,203)
(607)
(4,574)
66
(462)
(2,275)
3,239
(19,988)
24
1,736
(3,841)
320
(348)
(4,457)
(354)
(2,423)
(307)
(2,207)
(25)
(221)
(12,928)
295
(1,230)
(1,405)
(16)
(141)
(0.48)
(0.09)
(0.05)
(0.05)
(0.02)
(0.21)
(0.03)
(0.03)
(0.02)
(0.02)
(0.10)
(0.01)
Operating expenses
Research and development
General and administrative
Sales and marketing
Total operating expenses
% of Sales
EPS (basic)
Weighted average common shares o/s
Net profit (loss) attributable to BLD (continuing oper.)
Depreciation and amortization
Finance expense
Income taxes
EBITDA
Adjustments
Adjusted EBITDA
Adj. EBITDA margin (%)
87,592
92,233
99,233
99,364
(42,070)
4,840
1,690
(35,540)
13,463
(22,077)
(7,936)
1,275
427
(6,234)
1,662
(4,572)
(5,203)
1,277
493
(3,433)
502
(2,931)
(4,574)
1,525
298
318
(2,433)
1,557
(876)
100,030
(2,275)
1,654
268
(167)
(520)
584
64
100,030
(19,988)
5,731
1,486
151
(12,620)
4,305
(8,315)
114,756
(3,841)
1,220
242
77
(2,302)
487
(1,815)
130,392
(4,457)
1,425
234
449
(2,349)
1,284
(1,065)
132,049
(2,423)
1,517
232
368
(306)
757
451
132,104
(2,207)
1,365
230
227
(385)
500
115
132,104
(12,928)
5,527
938
1,121
(5,342)
3,029
(2,314)
(1,405)
5,200
750
520
5,065
831
5,896
-50.5%
-37.1%
-20.1%
-5.2%
0.4%
-13.6%
-13.0%
-5.8%
2.2%
0.5%
-3.1%
5.8%
The information contained in this report was obtained from sources we believe to be reliable. We do not represent that such information is accurate or
complete and it should not be relied on as such. Any opinions expressed herein reflect our judgment at this date and are subject to change. Jennings
Capital Inc. and/or employees from time to time may hold shares, options or warrants on any issue included in this report and may buy or sell such
securities. This report is not to be construed as an offer to sell or solicitation to buy securities. Member CIPF. Jennings Capital (USA) Inc. is a
member of SIPC.
132,104
3
IMPORTANT RESEARCH DISCLOSURES
ANALYST CERTIFICATION:
I, DEV BHANGUI, hereby certify that (i) the views expressed in this report accurately reflect my personal views about the subject securities or issuers
discussed herein that are within my coverage universe; and (ii) I also certify that I have not, am not, and will not receive, directly or indirectly,
compensation in exchange for expressing the specific recommendations or views in this report. In addition, each research analyst or associate whose
name appears on the front page of this document hereby certifies that:
I have not effected a trade in a security of any class of the issuer whether directly or indirectly through
derivatives within the 30-day period prior to the date of the publication of this research report.
I did not distribute the research report to the issuer, any employee in the investment banking department at
Jennings, or any other third party for any reason other than the verification of factual information.
Any and all reports or studies by a third-party expert consulted in preparing the research report have been
cited in the report.
I am unaware of any other potential conflicts of interest.
STOCK RATINGS:
BUY: Stock is expected to provide a total return in excess of 10% over the current trading price over the next 12 months.
SPECULATIVE BUY: Stock is expected to provide a total return in excess of 10% over the current trading price over the next
12 months; however, there is material event risk associated with the investment
HOLD: Stock is expected to provide a total return of 0% to 10% over the current trading price over the next 12 months.
SELL: Stock is expected to provide a negative total return over the next 12 months.
UNDER REVIEW: There are new developments on the Company and pending receipt of full information from management,
the stock is under review.
NOT RATED: Jennings Capital Inc. follows the stock, but has no formal estimates, recommendation or target.
RISK RATINGS:
LOW/AVERAGE RISK: Stocks with less volatility than the market as a whole, with solid balance sheets and dependable
earnings.
OCTOBER 2014
DISTRIBUTION OF RATINGS
RATING
#
BUY
SPECULATIVE BUY
HOLD
SELL
TENDER TO OFFER
UNDER REVIEW
RESTRICTED
Total # of Companies Covered
Revised Monthly
25
15
3
1
1
1
0
46
ABOVE AVERAGE RISK: Stocks with more volatility than the market. Financial leverage is considerable but not threatening,
earnings are more erratic, or other quality concerns regarding accounting, management track record, and similar issues.
SPECULATIVE RISK: Stocks of unproven companies or ones with very high financial leverage, suspicious accounting, or with
other significant quality concerns. A Speculative Risk rating implies at least the possibility of, among other things, financial
distress, restructuring or a material loss.
DISSEMINATION OF RESEARCH
Jennings Capital Inc. research is disseminated directly to clients via email and is available on Bloomberg, Reuters, Thomson Financial, Capital IQ,
Research Direct and at www.jenningscapital.com. Jennings Capital Inc. research dissemination policies are available upon request.
4
Security Abbreviations: NVS (non-voting shares); RVS (restricted voting shares); RS (restricted shares); SVS (subordinate voting shares); MV (multiple voting shares).
Quarterly Recommendation Hierarchy: Is a ranking distribution identifying the percentage of total, number, and the investment banking relationship (%) for all
recommendation categories that can be found on the Jennings Capital Inc. website (www.jenningscapital.com).
Analyst Stock Holdings: Equity Research analysts, associates and members of their households are permitted to invest in securities covered by them. No Jennings
Capital Inc. analyst, associate or employee involved in the preparation of an analyst report is permitted to effect a trade in the security of an issuer whereby there is
an outstanding recommendation for a period of 30 calendar days before and 5 calendar days after issuance of the research report
Compensation: The compensation of the analyst and/or associate who prepared this research report is based upon, in part, the overall revenues and profitability of
Jennings Capital Inc. Analysts are compensated on a salary and bonus system. Some factors affecting compensation including the productivity and quality of research,
support to institutional, retail and investment bankers, net revenues to the equity and investment banking revenue as well as compensation levels for analysts at
competing brokerage dealers. Analysts are not directly compensated for specific Investment Banking transactions.
Jennings Capital Inc. Relationships: Jennings Capital Inc. may receive or seek compensation for investment banking services from all issuers under research coverage
within the next 3 months.
Jennings Capital Inc. or its officers, employees or affiliates may execute transactions in securities mentioned in this report that may not be consistent with the
reports conclusions
RELEVANT DISCLOSURES
DATE
6/18/2014
7/31/2014
10/30/2014
DISCLOSURE CODES
The authoring analyst, a member of his/her household, or any individual directly involved in the preparation of this research report has a long/short
position in the issuers securities or through derivatives or any other financial interest in the securities of the relevant issuer.
In the past 12 months, Jennings Capital Inc. and/or its affiliates received compensation for Corporate Finance/Investment Banking and related services
from the relevant issuer.
In the past 12 months, Jennings Capital Inc. and/or its affiliates, acted as lead manager or co-lead manager of a public offering of securities of the
relevant issuer or any publicly disclosed offer of securities or in any related derivatives of the relevant issuer.
In the past 12 months, Jennings Capital Inc. and/or its affiliates have received compensation for non-investment banking related services
The analyst has viewed the material operations of the relevant issuer; the extent to which the analyst has viewed the operations is available on request.
Partial payment or reimbursement was received from the issuer for related travel expenses.
Jennings Capital Inc., and/or its affiliates, is a market maker or liquidity provider in the securities of the relevant issuer or in such related derivatives of
the relevant issuer.
As of the end of the month immediately preceding the date of publication of the research report, or the end of the second most recent month if the
publication date is less than 10 calendar days following the most recent month end, Jennings Capital Inc. and/or its affiliates beneficially owned 1% or
more of any class of equity securities of the relevant issuer.
A partner, director, officer or agent of Jennings Capital Inc., and/or its affiliates, or a member of its household, serves as an officer, director, employee
issuer, or Advisory Board Member of the relevant issuer; and such persons name is disclosed above.
In the past 12 months, Jennings Capital Inc. and/or its affiliates, officers or directors, or any authoring analyst involved in the preparation of this research
report provided services to the relevant issuer for remuneration, other than normal course investment advisory or trade execution services.
PRICE
US$3.56
US$4.16
US$2.78
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