Hydrogenics Corporation (Toronto:HYG.TO)(NasdaqGM:HYGS) has reported its second quarter and six-month unaudited results. Results are reported in U.S. dollars and are prepared in accordance with Canadian generally accepted accounting principles (“GAAP”).
“Last quarter we reported on a restructuring and streamlining of our operations to significantly reduce our annual cash consumption,” said Daryl Wilson, President and Chief Executive Officer. “The success of this initiative depended, in part, on achieving an improved order book and deliveries in our OnSite Generation business unit. In the second quarter, we achieved significant increases in both our order book and revenues, giving us confidence that we are on track to deliver meaningfully improved financial performance. At the same time, our sales funnel continues to be strong, bolstering our confidence and positive outlook.”
“Our Power Systems business unit continues to achieve positive gross margins by seeding pre-commercial markets with sales of our standard power module products as we gain traction in commercial sales to core backup power and materials handling markets,” Wilson added.
Results for the second quarter of 2007 compared to the second quarter of 2006
Revenues were $9.5 million, a 76% increase from the second quarter of 2006 and reflect $3.7 million of incremental OnSite Generation revenues and $0.7 million of increased Power Systems revenues, partially offset by $0.4 million of decreased Test Systems revenues.
Gross profit, expressed as a percentage of revenues, was 10% (negative 15% in 2006) and reflects the absence of $1.8 million of special warranty reserves taken in the second quarter of 2006 as a result of supplier component and other production quality issues as well as higher overhead absorption.
Cash operating costs, a non-GAAP measure, defined as selling, general and administrative expenses, and research and product development expenses less stock-based compensation expenses, were $6.2 million, a 23% decrease from $8.1 million in 2006 and are attributed to the streamlining and cost reduction initiative undertaken during the first quarter of 2007 and the absence of $0.7 million of one-time consulting charges related to Sarbanes-Oxley Act implementation and other business strategy matters.
Net loss was $3.8 million for the second quarter of 2007, a decrease of 61% from $9.6 million in 2006.
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