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Hydrogenics Reports Fourth Quarter and Full Year 2004 Results.

Article Excerpt
Rapid Integration of Stuart Energy On-Track

HYDROGENICS CORPORATION (Nasdaq: HYGS; TSX: HYG), a leading global developer of hydrogen and fuel cell products, today announced its unaudited financial results for the fourth quarter and year ended December 31, 2004 and highlights of its recent corporate activity. All amounts are reported in U.S. dollars. Conference call details are provided below.

"While 2004 proved to be a challenging year, we begin 2005 poised for significantly improved financial performance," stated Pierre Rivard, President and CEO of Hydrogenics. "To improve the performance of our test system business, we implemented changes in management and staffing levels, product design and business processes. We believe the acquisition of Stuart Energy reduces our risk profile, significantly expands our product offering, strengthens our global presence, and accelerates our pathway to profitability."

"The acquisition of Stuart Energy represents a key milestone in the execution of our strategic plan. With the consolidation and rationalization of our facilities, workforce and R&D programs, we are on track to substantially complete the integration of Stuart Energy by the end of the first quarter. This positions us to realize considerable cost savings. In terms of future revenue, the positive impact of the acquisition on our order backlog and sales pipeline has been substantial and immediate. We currently have a sales order backlog of approximately $28 million -- the largest in our corporate history."

Hydrogenics' fourth quarter revenues were $5.5 million, compared with $5.9 million for the fourth quarter 2003. Net loss for the fourth quarter 2004 was $10.3 million, or $0.16 per share, compared with a net loss of $7.3 million, or $0.14 per share, for the fourth quarter 2003. Net loss for the fourth quarter includes $5.8 million in non-cash amortization and impairment of intangibles, compared with $3.2 million in the comparable period in 2003.

Hydrogenics' full year revenues for 2004 were $16.7 million, compared with $26.7 million for 2003. Net loss for 2004 was $33.5 million, or $0.53 per share, compared with a net loss of $22.1 million, or $0.42 per share, for 2003. Net loss for 2004 includes $12.2 million in non-cash amortization and impairment of intangibles, compared with $12.9 million in 2003. The appreciation in the Canadian dollar from 2003 to 2004 negatively impacted fourth quarter and full year operating costs by approximately $0.6 million and $2.2 million, respectively.

Gross profit for the fourth quarter was $1.4 million or 25% of revenues, compared with $1.9 million or 32% of revenues for the comparable period in 2003. Gross profit for the full year was $4.3 million or 26% of...