Atari enters into an agreement to acquire Night Dive Studios and announces its intention to proceed with the issuance of €30 M bonds convertible into new Atari shares

PARIS, FRANCE (March 22, 2023 – 11.00 pm CET) – Atari® (the “Company”) — one of the world’s most iconic consumer brands and interactive entertainment producers — announced that it has entered into an agreement to acquire 100% of Night Dive Studios Inc. (“Night Dive”), a full service game development and publishing company based in Vancouver, Washington, USA.

In addition, Atari, SA also announced that it intends to proceed in the near-term with a €30 million bond issue convertible into new shares of Atari (the “Convertible Bonds”) in order to meet with its capital needs in the context of the implementation of its new growth strategy and refinancing of its debt.

AGREEMENT SIGNED TO ACQUIRE NIGHT DIVE STUDIOS

Led by industry veterans Stephen Kick and Larry Kuperman, Night Dive is a full service development and publishing company with expertise in restoring, optimizing, and publishing classic video games. Night Dive has published over 100 titles and has garnered critical acclaim for their releases of seminal industry and fan-favorite titles including System Shock, Doom 64, and Quake.

Night Dive’s most recent project is a remastered version of classic FPS game System Shock, which is one of the most-anticipated retro releases of 2023. System Shock is now available for pre-order on Steam, GOG and Epic Games.

A key to the success of Night Dive is their proprietary KEX engine that makes classic games playable on modern hardware and gives the studio the ability to enhance and improve upon the original to meet the expectations of contemporary players. The studio’s reputation and deep industry knowledge have made them a go-to partner for some of the largest names in gaming and media and allowed them to develop a diversified portfolio of titles.

For the fiscal year ended December 2022, Night Dive has reported revenue of approximately US$3.0 million1. The founders own 87% of the Company’s shares while Wade Rosen, Chairman and CEO of Atari, owns a minority stake of 13%2.

With this acquisition Atari will enrich its large library of owned IP, be able to leverage Night Dive’s proprietary technology, and utilize Night Dive’s publishing capabilities to support Atari’s retro-focused growth strategy.

This acquisition has been approved unanimously by the disinterested members of the board of Atari, it being specified that Wade Rosen did not participate to the vote3.

Wade Rosen, Chairman and CEO of Atari, commented: “Night Dive’s proven expertise and successful track record in commercializing retro IP is well-aligned with Atari’s strategy and I am confident that their combined talent, technology and IP portfolio will contribute to Atari’s future success.

Stephen Kick and Larry Kuperman, principals of Night Dive commented: “Night Dive and Atari have a long history together and we know that Atari shares our passion for retro games and our focus on producing high-quality new and remastered games that do justice to the original IP. As we look to grow our business and expand our capabilities, we could think of no better long-term partner than Atari.”

TERMS AND TIMING OF THE ACQUISITION

The purchase price of Night Dive will consist of (i) an initial consideration of US$10 million payable half in cash and half in Atari shares at the closing of the acquisition (see below) plus (ii) an earn-out of up to US$10 million, payable in cash over the next three years based on the future performance of Night Dive.

It is expected that the acquisition of Night Dive will be completed in April 2023.

FINANCING OF THE ACQUISITION

  • The initial consideration will be paid half in cash (for US$5 million) and half in newly issued Atari ordinary shares (for US$5 million)4. The calculation of the number of Atari shares to be issued will be based on the 20-day volume weighted average price of Atari shares on Euronext Growth prior to the tenth day prior to the closing of the transaction.
  • The new Atari shares will be issued by the Company, represented by the board of directors of Atari, through a contribution in kind (apport en nature) of Night Dive shares to Atari acting pursuant to the 18th resolution of Atari’s combined shareholders’ meeting held on September 27, 2022 (the “AGM“) and on the basis of the reports of a court-appointed contribution auditor (commissaire aux apports) on the value of the contribution in kind and the fairness of the exchange ratio5.
  • The Company and Irata LLC, a holding company controlled by Wade Rosen (“Irata”), have agreed that Irata intends to provide bridge financing to Atari for the payment of the initial consideration, or $5 million.

CONVERTIBLE BONDS

The Company intends to issue €30 million in Convertible Bonds through a public offering in France with a priority subscription period (offre au public avec délai de priorité) for all the shareholders of Atari.

  • A prospectus in relation to the Convertible Bonds offering will be prepared and subject to the AMF approval;
  • The issuance of the Convertible Bonds will occur shortly after the completion of the acquisition;
  • The Convertible Bonds will be issued with a priority subscription period for all shareholders for a period of three trading days (that does not result in the creation of negotiable rights) through a public offering in France (only);
  • The main shareholder of Atari, Irata LLC, holding 29.2% of the share capital of Atari, has indicated that it intends to subscribe its prorata share and to provide a firm underwriting for a number of Convertible Bonds equal to at least to 75% of the total amount of the offering;
  • It is the intent that Irata will undertake contractually and irrevocably vis-à-vis the Company not to convert its Convertible Bonds into Atari shares before at least the 25th of June 2025.

The amount raised through the Convertible Bonds will mainly be used to:

  • Reimburse the $5 million bridge financing provided by Irata in the context of the acquisition and finance future potential acquisitions Atari may consider;
  • Continued investment in growth initiatives, notably in the development of more than 12 new games expected to be launched in the next 18 months;
  • General cash requirements and financial flexibility necessary to pursue the transformation plan;
  • Reimburse the shareholder loans granted by Irata6 previously granted in accordance with its support commitment, and accrued interests on these loans.

About ATARI

Atari is an interactive entertainment company and an iconic gaming industry brand that transcends generations and audiences. The company is globally recognized for its multi-platform, interactive entertainment and licensed products. Atari owns and/or manages a portfolio of more than 200 unique games and franchises, including world-renowned brands like Asteroids®, Centipede®, Missile Command®, Pong®, and RollerCoaster Tycoon®. Atari has offices in New York and Paris. Visit us online at www.atari.com.

Atari shares are listed in France on Euronext Growth Paris (ISIN Code FR0010478248, Ticker ALATA).

©2023 Atari Interactive, Inc. Atari wordmark and logo are trademarks owned by Atari Interactive, Inc.

Contacts

Atari – Investor Relations
Tel + 33 1 83 64 61 57 – | www.atari.com/news/

Calyptus – Marie Calleux

Tel + 33 1 53 65 68 68 – t

Listing Sponsor- Euroland
Tel +33 1 44 70 20 84
Julia Bridger –

FORWARD-LOOKING STATEMENTS
This press release contains certain non-factual elements, including but not restricted to certain statements concerning its future results and other future events. These statements are based on the current vision and assumptions of Atari’s leadership team. They include various known and unknown uncertainties and risks that could result in material differences in relation to the expected results, profitability and events. In addition, Atari, its shareholders and its respective affiliates, directors, executives, advisors and employees have not checked the accuracy of and make no representations or warranties concerning the statistical or forward-looking information contained in this press release that is taken from or derived from third-party sources or industry publications. If applicable, these statistical data and forward-looking information are used in this press release exclusively for information.

DISCLAIMER
The distribution of this press release and the offer and sale of the Convertible Bonds may be restricted by law in certain jurisdictions and persons into whose possession this document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
This press release may not be published, distributed or transmitted in the United States (including its territories and dependencies). This press release does not constitute or form part an offer of securities for sale or any solicitation to purchase or subscribe for securities or any solicitation of sale of securities in the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or the law of any state or other jurisdiction of the United States, and may not be offered or sold in the United States absent registration under the Securities Act or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Atari does not intend to register all or any portion of the securities in the United States under the Securities Act or to conduct a public offering of the Securities in the United States.
This press release and the information contained herein do not constitute either an offer to sell or purchase, or the solicitation of an offer to sell or purchase, securities of the Company.
No communication or information in respect of any securities mentioned in this press release may be distributed to the public in any jurisdiction where registration or approval is required. No steps have been taken or will be taken in any jurisdiction where such steps would be required. The offering or subscription of the Company’s securities may be subject to specific legal or regulatory restrictions in certain jurisdictions.

This press release does not, and shall not, in any circumstances, constitute a public offering, a sale offer nor an invitation to the public in connection with any offer of securities. The distribution of this document may be restricted by law in certain jurisdictions. Persons into whose possession this document comes are required to inform themselves about and to observe any such restrictions.

A French prospectus comprising (i) the Company’s universal registration document filed with the AMF on July 27, 2022 under number D.22-0661, (ii) an amendment to the universal registration document to be filed with the AMF, (iii) a securities note (including the summary) relating to the public offering of convertible bonds and (iii) the summary of the French prospectus will be submitted to the approval by the AMF and will be published on the AMF’s website (www.amf-france.org). As from such filing with the AMF, copies of the prospectus will be available free of charge at the Company’s registered office.

This announcement is an advertisement and not a prospectus within the meaning of the Regulation (EU) 2017/1129, as amended (the “Prospectus Regulation“).

With respect to the member states of the European Economic Area other than France, no action has been undertaken or will be undertaken to make an offer to the public of the securities referred to herein requiring a publication of a prospectus in any relevant member state. As a result, the securities may not and will not be offered in any relevant member state except in accordance with the exemptions set forth in Article 1 (4) of the Prospectus Regulation or under any other circumstances which do not require the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Regulation and/or to applicable regulations of that relevant member state.

The distribution of this press release has not been made, and has not been approved, by an “authorised person” within the meaning of Article 21(1) of the Financial Services and Markets Act 2000. As a consequence, this press release is only being distributed to, and is only directed at, persons in the United Kingdom that (i) are “investment professionals” falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations, etc.”) of the Order, or (iii) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Article 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “Relevant Persons”). Any investment or investment activity to which this document relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents.

This announcement may not be published, forwarded or distributed, directly or indirectly, in the United States of America, Canada, Australia, South Africa or Japan.


1 Under US GAAP, based on unaudited financial statements of Night Dive Studios Inc., under further review in the context of usual due diligence
2 Held by Wade J. Rosen Revocable Trust, registered under US laws
3 As related party in the transaction.
4 Subject to customary net debt / working capital adjustment.
5 In accordance with article L. 225-147 of the French code de commerce and AMF recommendation DOC-2020-06. The reports of the contribution auditor will be made available on Atari’s website upon issuance by the auditor.
6 Equals to around 8 million euros in principal at the date of this press release, and excluding any potential shareholder loans concluded until the issuance of the convertible bonds

 

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Disclaimer
All transactions are carried out by The SiLLC Assembly, a private portfolio management assembly. This document is not an offer of securities for sale or investment advisory services. This document contains general information only and is not intended to provide general or specific investment advice. Past performance is not a reliable indicator of future results and targets are not guaranteed. Certain statements and forecasted data are based on current expectations, current market and economic conditions, estimates, projections, opinions, and beliefs of SiLLC and/or its members. Due to various risks and uncertainties, actual results may differ materially from those reflected or contemplated in such forward-looking statements or in any of the case studies or forecasts. All references to SiLLC’s advisory activities relate to The SiLLC Assembly International.

Klöckner & Co SE reports strong earnings and cash flow in fiscal year 2022 despite challenging economic environment

Klöckner & Co SE reports strong earnings and cash flow in fiscal year 2022 despite challenging economic environment
09.03.2023 / 07:00 CET/CEST
The issuer is solely responsible for the content of this announcement.

Klöckner & Co SE reports strong earnings and cash flow in fiscal year 2022 despite challenging economic environment

  • Strong operating income (EBITDA) of €417 million before material special effects (2021: €848 million)
  • Exceptionally high operating cash flow of €405 million due to consistent net working capital management (2021: negative cash flow of €306 million)
  • Sales increased by 26% to €9.4 billion (2021: €7.4 billion)
  • Strengthened role as pioneer of a sustainable steel and metal industry with launch of Nexigen® brand and expansion of related product and service portfolio
  • Leading position in North America extended with agreed acquisition of National Material of Mexico by Kloeckner Metals Corporation
  • Dividend of €0.40 per share (2021: €1.00) to be proposed to Annual General Meeting
  • EBITDA before material special effects in Q1 2023 expected to be very considerably higher than in the preceding quarter at €40 million to €90 million; positive outlook for fiscal year 2023

Duisburg, Germany, March 9, 2023 – Despite the challenging economic environment, Klöckner & Co generated strong operating income (EBITDA) of €417 million before material special effects in 2022 (2021: €848 million). Driven by higher average price levels, Group sales increased significantly year-on-year from €7.4 billion in 2021 to €9.4 billion. Based on the positive net income of €259 million (2021: €629 million) and earnings per share of €2.54 (2021: €6.21), Klöckner & Co will propose a dividend of €0.40 (2021: €1.00) per share to shareholders at the Annual General Meeting.

As forecast, consistent net working capital management and an actively enforced inventory reduction in the second half of 2022 resulted in an exceptionally positive cash flow from operating activities of €405 million (2021: negative cash flow of €306 million). The equity ratio increased over the prior year’s level to 51% at the end of the year (2021: 47%).

Guido Kerkhoff, CEO of Klöckner & Co SE: “Despite the challenging macroeconomic environment, we continued to successfully execute our corporate strategy in fiscal year 2022. We made significant progress toward our goal of becoming the leading one-stop shop for steel, other materials, equipment and processing services in Europe and the Americas. In addition, with Nexigen® and the Product Carbon Footprint, we have further strengthened our role as pioneer of a sustainable steel industry.”

Further strengthening of role as sustainability pioneer

Klöckner & Co further expanded its range of sustainable products and services in the past year, thus strengthening its role as a pioneer in this regard. The Company brought together its CO2-reduced products and services under the Nexigen® brand launched in fiscal year 2022. This marked an important step in execution of the Group’s “Klöckner & Co 2025: Leveraging Strengths” strategy, in which sustainability plays a pivotal role as a strategic growth driver. With the new brand, the Company enables customers to reliably procure CO2-reduced steel and metal products, providing them with full transparency about their CO2-footprint. The past year saw Klöckner & Co already deliver the first quantities of CO2-reduced steel to longstanding customers such as Mercedes-Benz and Siemens. Thanks to a partnership launched in 2022 with Outokumpu, the world’s leading supplier of sustainable stainless steel, Klöckner & Co now also supplies CO2-reduced stainless steel in a further addition to the range of emission-reduced metals.

CO2-categorization and Product Carbon Footprint for transparency on emissions

Combined with a comprehensive range of logistics solutions, circularity solutions and Sustainability Advisory Services (SAS), the Company supports customers in building sustainable value chains. To this end, Klöckner & Co further added to its CO2-categorization offerings. From the beginning of 2023, in addition to the established five-category classification of CO2-reduced steel, stainless steel and aluminum, customers can now have the individual Product Carbon Footprint (PCF) calculated for nearly all of the around 200,000 Klöckner products. The PCF reflects a product’s cumulative CO2-emissions across the entire value chain, from resource extraction to production and delivery at the customer’s factory gate (“cradle to customer entry gate”) and is determined using the Nexigen® PCF Algorithm, which has been certified by TÜV SÜD.

The Company’s wide-ranging sustainability activities have also been recognized by external sources. December 2022 saw Klöckner & Co win the German Sustainability Award 2023 in the Climate Transformation category. In addition, in April 2022, Klöckner & Co became the first company in the world to have all of its net zero carbon targets, including its decarbonization path, recognized as science-based in the standard validation process in accordance with the latest Science Based Targets initiative (SBTi) standards.

Expansion of product portfolio with acquisitions in North America and Europe

With the acquisition of National Material of Mexico (NMM) by the US subsidiary Kloeckner Metals Corporation (KMC) announced at the end of 2022, Klöckner & Co is strengthening its leading position in steel and metals distribution and the steel service business in North America. Customers stand to benefit from the transaction with improved access to steel, aluminum and stainless steel in Mexico. NMM and KMC notably complement each other in terms of regional coverage, customer segments and in view of NMM’s strong position in the automotive sector. In addition, the acquisition represents an attractive opportunity to enter the exclusive electrical steel market, which has considerable growth potential. Mexico is also highly attractive for KMC due to its proximity to the US and to the highly qualified local labor market. All of the world’s major automotive manufacturers produce in the country and the number of vehicles made there is expected to increase significantly in the future. As a combined player, Klöckner & Co will be ideally positioned to meet the resulting demand. The transaction is subject to the necessary antitrust approvals and is expected to close before summer 2023.

In addition, Klöckner & Co has further strengthened its partnership with US steel producer Nucor and is investing in a heavy plate processing plant on the site of the new Nucor steel mill in Brandenburg, Kentucky. Nucor Steel Brandenburg is a state-of-the-art electric steel mill where scrap is recycled into new heavy plate for offshore wind turbines and other infrastructure projects. With this investment, Klöckner & Co is driving ahead the development of sustainable, innovative and complex solutions for the entire supply chain and extending its portfolio of higher value-added services.

The Company has also made selective acquisitions to expand its product and service range in Europe. The acquisition of Hernandez Stainless GmbH and RSC Rostfrei Coil Center GmbH by the German subsidiary Becker Stahl-Service marked Klöckner & Co’s entry into stainless steel processing in a further addition to its product and service portfolio.

Focus on internal process digitalization

Klöckner & Co also continued to forge ahead in the strategic focus areas of digitalization and automation. In fiscal year 2022, the Company launched additional initiatives to streamline, harmonize and modernize the Group IT landscape. These initiatives lay the groundwork for further digitalization and automation of processes between sales and processing and enhance internal operational efficiency. By improving supply chain transparency, Klöckner & Co is also enhancing the shopping experience for customers, for example with real-time order tracking. This gives Klöckner & Co a competitive edge over smaller competitors. In order to continue developing innovative digital solutions in the future, the digital innovation hub kloeckner.i is to be tied in even more closely with the operating business and will intensify internal collaboration with other units.

Outlook

Although the economic environment remains challenging, the Company expects that the global steel market will increasingly normalize this year. A stronger demand trend in the Company’s key European and US markets is thus expected to bring a considerable increase in shipments compared to fiscal year 2022. Despite the rise in steel prices at the beginning of 2023, Klöckner & Co expects a lower price level overall compared to the prior-year period and correspondingly lower sales. Given the overall considerable improvement in the Company’s operational positioning, substance and profitability base, Klöckner & Co is targeting EBITDA before material special effects at a strong level, albeit below the prior-year figure, which was significantly positively impacted by price effects.

Due to a strong improvement in the macroeconomic environment, a positive price trend and very rigorous net working capital management, the Company expects that first-quarter EBITDA before material special effects will be very considerably higher than in the preceding quarter, at €40 million to €90 million.

About Klöckner & Co:

Klöckner & Co is one of the largest producer-independent distributors of steel and metal products and one of the leading steel service companies worldwide. Based on its distribution and service network of around 150 sites in 13 countries, Klöckner & Co supplies more than 90,000 customers. Currently, the Group has around 7,300 employees. Klöckner & Co had sales of some €9.4 billion in fiscal year 2022. With the expansion of its portfolio of CO2-reduced materials, services and logistics options under the new Nexigen® umbrella brand, the company is underscoring its role as a pioneer of a sustainable steel industry. At the same time, Klöckner & Co leads the way in the steel industry’s digital transformation and has set itself the target of digitalizing and largely automating its supply and service chain. In this way, the Company aims to develop into the leading one-stop shop for steel, other materials, equipment and processing services in Europe and the Americas.

The shares of Klöckner & Co SE are admitted to trading on the regulated market segment (Regulierter Markt) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) with further post-admission obligations (Prime Standard). Klöckner & Co shares are listed in the SDAX® index of Deutsche Börse.

ISIN: DE000KC01000; WKN: KC0100; Common Code: 025808576.

Contact Klöckner & Co SE:

Press
Christian Pokropp – Press spokesman
Head of Corporate Communications | Head of Group HR
+49 203 307-2050

Investors
Felix Schmitz
Head of Investor Relations | Head of Strategic Sustainability
+49 203 307-2295

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Disclaimer
All transaction are carrying out by SiLLC, a private portfolio management assembly. This document is not an offer of securities for sale or investment advisory services. This document contains general information only and is not intended to represent general or specific investment advice. Past performance is not a reliable indicator of future results and targets are not guaranteed. Certain statements and forecasted data are based on current expectations, current market and economic conditions, estimates, projections, opinions and beliefs of SiLLC and/or its members. Due to various risks and uncertainties, actual results may differ materially from those reflected or contemplated in such forward-looking statements or in any of the case studies or forecasts. All references to SiLLC’s advisory activities relates to SiLLC Assembly International.

Ballard Reports Q4 2022 Results

“With an increasingly constructive policy landscape for hydrogen globally, we are excited by the growing end customer interest to decarbonize mobility and stationary power applications with fuel cells,” said Randy MacEwen, President and CEO. “2022 proved to be an important year for Ballard as we achieved key customer platform wins across our verticals of bus, truck, rail and marine, along with early traction in select stationary power applications. This dynamic is supporting our planned transition of Ballard’s business model to a heavier focus on growing sales of Power Products and reduced relative contribution of Technology Solutions. Bolstered by strong order intake in Q4 in Europe and North America, we ended 2022 with an Order Backlog of $133.4 million, with Power Products up more than double from the end of 2021 and up almost 60% from the end of Q3.”

 

“We are also excited with the measured progress we are making on our investments in strategic technology and product development programs and advanced manufacturing initiatives, underpinning our roadmap for continued product performance improvements while also achieving significant product cost reductions,” Mr. MacEwen added.

Mr. MacEwen continued, “In Q4, we delivered revenue of $20.5 million and gross margin of (29)%. On revenue, we continue to be disappointed with delayed adoption in the China market and low activity levels at the Weichai-Ballard JV, which weighed on our 2022 results. We are working closely with our Weichai-Ballard JV to unlock growth in the China fuel cell bus and truck markets. Gross margin results partly reflect strategic pricing on customer platform wins during a period of inflationary costs. We expect these dynamics to persist into 2024 until our volume ramps and our product cost reduction initiatives move into production. On costs, we achieved our guided targets for total operating expenses and capital expenditures for full year 2022. We ended the year with $913.7 million in cash reserves.”

Mr. MacEwen concluded, “In 2023, we believe we are well positioned to compete and grow in an increasingly exciting market. We continue to prudently manage our balance sheet as we execute on our planned investments in technology and products, advanced manufacturing, product cost reduction, our local-for-local manufacturing strategy, and providing an outstanding customer experience.”

Q4 2022 Financial Highlights
(all comparisons are to Q4 2021 unless otherwise noted)

  • Total revenue was $20.5 million in the quarter, down 44% year-over-year.
    • Power Products revenue of $13.5 million decreased 49%, driven by lower shipments of fuel cell products.
      • Heavy-Duty revenues of $9.2 million decreased 59% due to lower shipments of fuel cell products in China and Europe.
      • Stationary Power Generation revenues of $2.7 million decreased 2%, due to lower sales in Europe, partially offset by increased sales in China.
      • Material Handling revenues of $1.6 million increased 23%, primarily as a result of higher shipments to Plug Power.
    • Technology Solutions revenue of $7.0 million decreased 31% due primarily to decreased amounts earned on the Weichai Ballard JV and substantial completion of the Audi program.
  • Gross margin was (29)% in the quarter, a decrease of 42-points, driven by a combination of a greater weight of power products in the revenue mix, pricing strategy, increased investment in manufacturing capacity, increases in supply costs and inventory adjustments.
  • Total Operating Expenses and Cash Operating Costs3 were $37.0 million and $30.6 million, respectively, in the quarter, an increase of 15% and 15%, respectively. Increases were driven primarily by higher expenditure on research, technology and product development activities.
  • Adjusted EBITDA3 was ($46.4) million, compared to ($25.5) million in Q4 2021, primarily a result of the decrease in gross margin and increase in Cash Operating Costs.
  • Ballard received approximately $52.2 million of new orders in Q4, and delivered orders valued at $20.5 million, resulting in an Order Backlog of approximately $133.4 million at end-Q4. Order Backlog growth was driven predominantly by increased orders from Europe, which now represent approximately 64% of the total Order Backlog, compared to approximately 38% at end-Q4 2021. Specifically, the Power Products backlog as of Q4 2022 is more than double the amount in Q4 2021, and is up almost 60% from end-Q3 2022.
  • The 12-month Order Book was $57.3 million at end-Q4, an increase of $6.3 million from the end of Q3 2022. The 12-month Power Products Order Book increased by 37% as compared to end-Q4 2021 and by a similar percentage from the end of Q3 2022. Additionally, order intake in of $52.2 million in Q4 2022 was 124% higher than the 12 month average ending in Q3 2022 of $23.3 million.

Order Backlog ($M)

Order Backlog
at End-Q3 2022

Orders Received
in Q4 2022

Orders Delivered
in Q4 2022

Order Backlog
at End-Q4 2022

Total Fuel Cell
Products & Services

$101.7

$52.2

$20.5

$133.4

2023 Outlook

Consistent with the Company’s past practice, and in view of the early stage of hydrogen fuel cell market development and adoption, we are not providing specific revenue or net income (loss) guidance for 2023. In 2023, we continue our plan to invest in the business ahead of the hydrogen growth curve. Ballard’s Total Operating Expense4 and Capital Expenditure5 guidance ranges for 2023 are as follows:

2023

Guidance

Total Operating Expense4

$135 – $155 million

Capital Expenditure5

$40 – $60 million

Q4 2022 Financial Summary

(Millions of U.S. dollars)

 Three months ended December 31

2022

2021

% Change

REVENUE

Fuel Cell Products & Services:1,2

  Heavy Duty Motive

$9.2

$22.5

(59) %

  Material Handling

$1.6

$1.3

23 %

  Stationary Power Generation

$2.7

$2.7

(2) %

  Sub-Total

$13.5

$26.6

(49) %

  Technology Solutions

$7.0

$10.1

(31) %

Total Fuel Cell Products & Services Revenue

$20.5

$36.7

(44) %

PROFITABILITY

Gross Margin $

($5.9)

$4.8

(224) %

Gross Margin %

(29) %

13 %

(42)pts

Operating Expenses

$37.0

$32.3

15 %

Cash Operating Costs3

$30.6

$26.6

15 %

Equity loss in JV & Associates

($6.8)

($4.9)

39 %

Adjusted EBITDA3

($46.4)

($25.5)

(82) %

Net Loss from continuing operations

($34.4)

($43.8)

21 %

Loss Per Share

($0.12)

($0.15)

(15) %

CASH

Cash provided by (used in) Operating Activities:

Cash Operating Loss

($27.1)

($23.5)

15 %

Working Capital Changes

$5.9

($7.1)

(183) %

   Cash used in   

($21.2)

($30.7)

-31 %

   Operating Activities

Cash Reserves

$913.7

$1,123.9

(19) %

(Millions of U.S. dollars)

 Twelve months ended December 31

2022

2021

% Change

REVENUE

Fuel Cell Products & Services:1,2

  Heavy Duty Motive

$38.9

$51.7

(25) %

  Material Handling

$6.4

$8.1

(22) %

  Stationary Power Generation

$10.9

$8.2

33 %

  Sub-Total

$56.2

$68.0

(17) %

  Technology Solutions

$27.6

$36.5

(24) %

Total Fuel Cell Products & Services Revenue

$83.8

$104.5

(20) %

PROFITABILITY

Gross Margin $

($13.1)

$14.0

(193) %

Gross Margin %

(16) %

13 %

29pts

Operating Expenses

$145.8

$102.1

43 %

Cash Operating Costs3

$118.8

$83.8

42 %

Equity loss in JV & Associates

($11.6)

($16.1)

(28) %

Adjusted EBITDA3

($144.0)

($82.2)

(75) %

Net Loss from continuing operations

($173.5)

($114.4)

(52) %

Loss Per Share

($0.58)

($0.39)

CASH

Cash provided by (used in) Operating Activities:

Cash Operating Loss

($121.7)

($68.9)

77 %

Working Capital Changes

($10.4)

($11.6)

(10) %

   Cash (used in    

($132.2)

($80.5)

64 %

   Operating Activities

Cash Reserves

$913.7

$1,123.9

For a more detailed discussion of Ballard Power Systems’ fourth quarter 2022 results, please see the company’s financial statements and management’s discussion & analysis, which are available at www.ballard.com/investors, www.sedar.com and www.sec.gov/edgar.shtml.

Conference Call

Ballard will hold a conference call on Friday, March 17, 2023 at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time) to review fourth quarter 2022 operating results. The live call can be accessed by dialing +1.604.638.5340. Alternatively, a live audio and webcast can be accessed through a link on Ballard’s homepage (www.ballard.com). Following the call, the audio webcast and presentation materials will be archived in the ‘Earnings, Interviews & Presentations’ area of the ‘Investors’ section of Ballard’s website (www.ballard.com/investors).

About Ballard Power Systems

Ballard Power Systems’ (NASDAQ: BLDP; TSX: BLDP) vision is to deliver fuel cell power for a sustainable planet. Ballard zero-emission PEM fuel cells are enabling electrification of mobility, including buses, commercial trucks, trains, marine vessels, and stationary power. To learn more about Ballard, please visit www.ballard.com.

Important Cautions Regarding Forward-Looking Statements

This release contains forward-looking statements concerning the hydrogen economy and markets for our products and the effects of governmental regulations on such markets, expected revenues, operating expenses, capital expenditures, corporate development activities, impacts of investments in manufacturing and R&D capabilities and market growth, and our carbon emissions goals. These forward-looking statements reflect Ballard’s current expectations as contemplated under section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any such statements are based on Ballard’s assumptions relating to its financial forecasts and expectations regarding its product development efforts, manufacturing capacity, and market demand. For a detailed discussion of the factors and assumptions that these statements are based upon, and factors that could cause our actual results or outcomes to differ materially, please refer to Ballard’s most recent management discussion & analysis. Other risks and uncertainties that may cause Ballard’s actual results to be materially different include general economic and regulatory changes, detrimental reliance on third parties, successfully achieving our business plans and achieving and sustaining profitability. For a detailed discussion of these and other risk factors that could affect Ballard’s future performance, please refer to Ballard’s most recent Annual Information Form. These forward-looking statements are provided to enable external stakeholders to understand Ballard’s expectations as at the date of this release and may not be appropriate for other purposes. Readers should not place undue reliance on these statements and Ballard assumes no obligation to update or release any revisions to them, other than as required under applicable legislation.

Further Information

Kate Charlton +1.604.453.3939, or

Endnotes

1 We report our results in the single operating segment of Fuel Cell Products and Services. Our Fuel Cell Products and Services segment consists of the sale
and service of PEM fuel cell products for our power product markets of Heavy Duty Motive (consisting of bus, truck, rail and marine applications), Material
Handling and Stationary Power Generation, as well as the delivery of Technology Solutions, including engineering services, technology transfer and the
license and sale of our extensive intellectual property portfolio and fundamental knowledge for a variety of fuel cell applications.

2 The UAV market has been classified as a discontinued operation in our third quarter of 2020 consolidated condensed financial statements. As such, the
assets of the UAV market have been classified as assets held for sale as of September 30, 2020. Furthermore, the historic operating results of the UAV
market for 2020 have been removed from continuing operating results and are instead presented separately in the statement of comprehensive income as
income from discontinued operations. 

3 Note that Cash Operating Costs, EBITDA, and Adjusted EBITDA are non-GAAP measures. Non-GAAP measures do not have any standardized meaning
prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. Ballard believes that Cash Operating
Costs, EBITDA, and Adjusted EBITDA assist investors in assessing Ballard’s operating performance. These measures should be used in addition to, and not as a
substitute for, net income (loss), cash flows and other measures of financial performance and liquidity reported in accordance with GAAP. For a reconciliation
of Cash Operating Costs, EBITDA, and Adjusted EBITDA to the Consolidated Financial Statements, please refer to the tables below.

Cash Operating Costs measures operating expenses excluding stock-based compensation expense, depreciation and amortization, impairment losses or
recoveries on trade receivables, restructuring charges, acquisition related costs, the impact of unrealized gains or losses on foreign exchange contracts, and
financing charges. EBITDA measures net loss from continuing operations excluding finance expense, income taxes, depreciation of property, plant and
equipment, and amortization of intangible assets. Adjusted EBITDA adjusts EBITDA for stock-based compensation expense, transactional gains and losses,
acquisition related costs, finance and other income, recovery on settlement of contingent consideration, asset impairment charges, and the impact of
unrealized gains or losses on foreign exchange contracts.

4 Total Operating Expenses refer to the measure reported in accordance with IFRS.

5 Capital Expenditure is defined as Additions to property, plant and equipment and Investment in other intangible assets as disclosed in the
Consolidated Statements of Cash Flows

Operating Expenses and Cash Operating Costs

(Expressed in thousands of U.S. dollars)

Three months ended December 31,

2022

2021

$ Change

  % Change

Research and Product
  Development

$         22,944

$         19,870

$      3,074

15 %

General and Administrative

5,561

7,420

(1,859)

(25 %)

Sales and Marketing

3,381

3,417

(36)

(1 %)

Operating Expenses

$         31,886

$         30,707

$      1,179

4 %

Research and Product
  Development (cash operating cost)

$         21,526

$         17,153

$      4,373

25 %

General and Administrative
 (cash operating cost)

5,921

6,408

(487)

(8 %)

Sales and Marketing (cash operating
 cost)

3,163

3,043

120

4 %

Cash Operating Costs

$         30,610

$         26,604

$      4,006

15 %

(Expressed in thousands of U.S. dollars)

Three months ended December 31,

EBITDA and Adjusted EBITDA

2022

2021

        $ Change

Net loss from continuing operations

$           (34,427)

$            (43,836)

$            9,409

Depreciation and amortization

2,828

3,272

(444)

Finance expense

300

313

(13)

Income taxes (recovery)

(3,004)

(233)

(2,771)

EBITDA

$           (34,303)

$            (40,484)

$            6,181

  Stock-based compensation expense

1,471

2,319

(848)

  Acquisition related costs

106

1,580

(1,474)

  Finance and other (income) loss

(15,731)

11,366

(27,097)

  Recovery on settlement of contingent
consideration

(9,891)

(9,891)

  Impairment loss on intangible assets

13,024

13,024

  Impact of unrealized (gains) losses on foreign
exchange contracts

(1,057)

(263)

(794)

Adjusted EBITDA

$           (46,381)

$            (25,482)

$        (12,899)

Operating Expenses and Cash Operating Costs

(Expressed in thousands of U.S. dollars)

Year ended December 31,

2022

2021

$ Change

  % Change

Research and Product
  Development

$         95,952

$         62,162

$    33,790

54 %

General and Administrative

28,754

24,725

4,029

16 %

Sales and Marketing

12,851

12,904

(53)

(0 %)

Operating Expenses

$       137,557

$         99,791

$    37,766

38 %

Research and Product
 Development (cash operating cost)

$         84,048

$         52,539

$    31,509

60 %

General and Administrative
 (cash operating cost)

23,137

19,754

3,383

17 %

Sales and Marketing (cash operating
 cost)

11,582

11,489

93

1 %

Cash Operating Costs

$        118,767

$         83,782

$    34,985

42 %

(Expressed in thousands of U.S. dollars)

Year ended December 31,

EBITDA and Adjusted EBITDA

2022

2021

        $ Change

Net loss from continuing operations

$         (173,494)

$          (114,397)

$        (59,097)

Depreciation and amortization

13,357

9,752

3,605

Finance expense

1,279

1,294

(15)

Income taxes (recovery)

(3,536)

(216)

(3,320)

EBITDA

$         (162,394)

$          (103,567)

$        (58,827)

  Stock-based compensation expense

9,408

9,669

(261)

  Acquisition related costs

2,857

2,115

742

  Finance and other (income) loss

2,102

8,813

(6,711)

  Recovery on settlement of contingent
consideration

(9,891)

(9,891)

  Impairment loss on intangible assets

13,024

263

12,761

  Impact of unrealized (gains) losses on foreign
exchange contracts

862

519

343

Adjusted EBITDA

$         (144,032)

$            (82,188)

$        (61,844)

SOURCE Ballard Power Systems Inc.

************************

Disclaimer
All transaction are carrying out by SiLLC, a private portfolio management assembly. This document is not an offer of securities for sale or investment advisory services. This document contains general information only and is not intended to represent general or specific investment advice. Past performance is not a reliable indicator of future results and targets are not guaranteed. Certain statements and forecasted data are based on current expectations, current market and economic conditions, estimates, projections, opinions and beliefs of SiLLC and/or its members. Due to various risks and uncertainties, actual results may differ materially from those reflected or contemplated in such forward-looking statements or in any of the case studies or forecasts. All references to SiLLC’s advisory activities relates to SiLLC Assembly International.


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