Is ballard power systems (bldp) a buy — the motley fool gas laws worksheet pdf


It should be noted that the first quarter of 2017 included an unusually high gross margin of 42% due to a one-time injection of high-margin technology solutions revenue. The gross margin achieved in the most recent period is on par with the level achieved in the prior three quarters.

The choppiness in results is to be expected considering that Ballard Power Systems is still in the process of developing markets capable of supporting sustainable volumes of orders. On that front, there was plenty of buzz in the first three months of the year.

Ballard Power Systems provided updates on a dozen programs or orders spanning its products in buses, commercial trucks, unmanned underwater vehicles, power backup, forklifts, and even trains. That includes the expected deployment of 500 commercial fuel cell trucks in China in 2018 (the largest launch of fuel cell trucks in the world) and deliveries this year to support the launch of 40 fuel cell buses in Germany in 2019 (the largest such deployment in Germany).

The technology platform’s potential finally seems to be coming to fruition for shareholders. In 2015, the business delivered revenue of $56.5 million and gross margin of 18%, but that grew to $121.3 million and 34%, respectively, last year. Adjusted EBITDA improved from a loss of $15.3 million in 2015 to a gain of $3.3 million last year.

If Ballard Power Systems continues to scale its business in the years ahead, then it seems capable of capturing economies of scale and delivering consistently profitable operations. However, I think signs of a fledgling hydrogen fuel cell powerd future are a bit misleading.

While the value of fuel cell markets could grow considerably from current levels and result in growth (and even profitability) for the company in the years ahead, there are several inherent flaws to fuel cells that will likely keep them from gaining significant market share in transportation or power markets. Despite the headlines, the company’s breakthrough announced in September 2017 doesn’t change that, unfortunately.

In the type of fuel cells manufactured by Ballard Power Systems, platinum group metals (PGMs) serve as the all-important catalyst that efficiently creates energy from hydrogen. The problem is they’re prohibitively expensive catalysts: PGMs make up a fraction of a percentage of the mass of a fuel cell, but as much as 15% of the cost. This economic hurdle is a much bigger bottleneck to delivering a hydrogen economy than, say, mass producing cheap hydrogen fuels. So long as these types of fuel cells rely on PGMs, fuel cell passenger vehicles will never capture a significant share of the auto market.

That’s why so many materials scientists and companies are searching for non-PGM catalytic materials. That’s also why investors bid up the price of Ballard Power Systems stock in late 2017 when it announced a new fuel cell design using a low-PGM catalyst. If only things were so easy.

The product is about the size of an index card. It will only be available for use in niche applications of the company’s air-cool products for portable power applications. In other words, it can’t even power a forklift yet — and it’s even further from being able to power a commercial vehicle.

Changing the catalyst changes the underlying chemical reaction powering a fuel cell. The "carbon-based" catalyst announced by Ballard Power Systems operates at a different temperature and creates a significant amount of a chemical byproduct that more traditional fuel cell designs avoid, both of which will make the new design difficult to scale. In other words, solving the PGM materials problem creates several other engineering problems. That’s why the new catalyst is only available for low-power, air-cooled fuel cells right now, not more powerful liquid-cooled systems required to access larger markets.