Ballard Power Systems, a leading fuel cell technology company, announced a global restructuring plan on September 12, 2024, to adapt to the slower-than-expected adoption of hydrogen fuel cells. The company is taking measures to reduce corporate spending and maintain balance sheet strength in light of a challenging economic and geopolitical environment.
Ballard cited a multi-year delay in the availability of low-cost, low-carbon hydrogen and hydrogen refueling infrastructure as a significant headwind to its corporate growth plan. This delay, coupled with protracted policy uncertainty, has prompted the company to implement a cost restructuring initiative to moderate its investment intensity and align its operations with the evolving market dynamics.
The restructuring will impact Ballard’s global operations, resulting in annualized total operating expense savings exceeding 30%. A substantial portion of these savings is expected to be realized in 2025. The scope of the cost reduction measures includes a reduction in workforce, a streamlining of product development programs, operational consolidation, a reduction in capital expenditures, and initiatives aimed at improving working capital. The company assured that these cost reduction measures will not impact product delivery or program execution necessary to fulfill customer commitments.
Ballard is also reviewing its investment strategy for long-term manufacturing capacity expansion in Texas, given the delay in market adoption. The company is exploring financing options to extend its funding timeline and delay material cash outlays until market adoption indicators provide clearer signals.
Furthermore, Ballard is conducting a strategic review of its China strategy, including its joint venture with Weichai, due to the challenges faced in the Chinese fuel cell market. Despite the slowing timeline for market adoption, Ballard remains confident in the long-term value proposition of hydrogen fuel cells. They emphasize their commitment to clean hydrogen and fuel cells playing a crucial role in decarbonizing heavy mobility applications.
Ballard will continue focusing on customers and the development of next-generation, low-cost fuel cell products for select heavy mobility and stationary power applications. The company aims to maintain disciplined spending and balance sheet strength for long-term competitiveness and sustainability. In connection with the restructuring, Ballard expects to record a restructuring charge in the third quarter of 2024. The company held $678 million in cash and cash equivalents as of June 30, 2024.
Ballard reaffirmed its 2024 guidance ranges of $145 million to $165 million for Total Operating Expense (excluding restructuring and related costs) and $25 million to $40 million for Capital Expenditures.
As part of the restructuring, Paul Dobson and Mark Biznek, Ballard’s Chief Financial Officer and Chief Operating Officer, respectively, will be departing the company. Kate Igbalode, previously Vice President of Corporate Finance & Strategy, has been appointed as the new CFO, effective immediately. Lee Sweetland, SVP and Chief Transformation Officer, will succeed Mark Biznek as the new COO, effective at the end of 2024. Paul and Mark will support their respective successors in ensuring a smooth transition. Ballard expressed gratitude to both Paul and Mark for their dedication and contributions to the company.
Kate Igbalode brings extensive experience in the energy sector across the U.S. and Canada. Prior to joining Ballard in 2021, she served as Director of Finance at Suncor Energy and held senior engineering roles at various companies, including the BC Energy Regulator and consulting firms. She holds an engineering degree from Colorado School of Mines and completed post-graduate economics curriculum from Queen’s University. She is a registered Professional Engineer.
Dr. Lee Sweetland has been appointed SVP and Chief Transformation Officer in January 2024 and boasts extensive experience in project management, operations, and process technology development. He joined Ballard in 2018 and played a key role in expanding Burnaby’s operations, implementing cost reduction programs, and developing next-generation bipolar plate technology. Prior to Ballard, Dr. Sweetland served as Manufacturing Technology Director at Johnson Matthey PLC, UK, where he spent 18 years, focusing on capital project management, continuous improvement, and operations management. He holds a Ph.D. in Chemical Engineering from Loughborough University.
