VANCOUVER – Ballard Power Systems (NASDAQ: NASDAQ:BLDP) (TSX: BLDP) has entered into a new Long Term Supply Agreement (LTSA) with Canadian Pacific (NYSE:CP) Kansas City (CPKC) (TSX: CP) (NYSE: CP), marking a significant expansion of their collaboration in the North American freight rail market. Under the terms of the agreement, Ballard will supply CPKC with 98 fuel cell engines, each with a capacity of 200 kW, cumulatively providing about 20 megawatts (MW) of power. Deliveries are scheduled for 2025. The deal comes as Ballard, currently valued at $434 million, seeks to boost its annual revenue, which stood at $92 million in the last twelve months. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics.
This new agreement is a continuation of the partnership that began in 2021, which has already seen Ballard deliver approximately 10 MW of fuel cell engines. These engines have been integrated into hydrogen-powered locomotives, which are now in regular switching and freight service in Alberta, Canada. Ballard's technology supports CPKC's hydrogen locomotive program, aimed at reducing carbon emissions in their fleet. While the company's stock has faced challenges, declining about 60% over the past year, InvestingPro data reveals that Ballard maintains a strong balance sheet with more cash than debt and a healthy current ratio of 9.01.
Randy MacEwen, President and CEO of Ballard Power, expressed enthusiasm for the expanded relationship with CPKC, viewing it as a significant step in their shared goal to decarbonize the locomotive fleet and advance the electrification of freight rail across North America. He highlighted the environmental benefits of hydrogen fuel cells, including their potential as a long-term replacement for diesel engines, offering advantages such as long range, fast refueling, heavy payloads, and reliable cold weather operation. For deeper insights into Ballard's financial health and growth prospects, investors can access comprehensive analysis and 13 additional ProTips through InvestingPro's detailed research reports.
CPKC currently operates three hydrogen locomotives that have been retrofitted from diesel freight locomotives with hydrogen fuel cells, hydrogen storage, and battery packs. These locomotives have been undergoing testing since 2022.
Ballard Power Systems specializes in zero-emission proton exchange membrane (PEM) fuel cells that are being used for the electrification of various transportation modes, including buses, commercial trucks, trains, marine vessels, and for stationary power.
This announcement contains forward-looking statements regarding anticipated product performance and other characteristics, as well as product deliveries and deployments. These statements are based on Ballard's current expectations and involve risks and uncertainties that could cause actual results to differ materially.
The information in this article is based on a press release statement.
In other recent news, Ballard Power Systems has reported a challenging third quarter in 2024, marked by significant decreases in revenue and new order intake. The company's revenue fell by 45% year-over-year, amounting to $14.8 million in Q3. In response to these challenges, Ballard announced a substantial restructuring plan, which includes workforce reductions and a delay in its Texas gigafactory expansion until 2026. Despite the decrease in new orders, Ballard managed to secure orders for 280 fuel cell engines from New Flyer and a European bus OEM.
The restructuring efforts of Ballard Power Systems are projected to save over 30% in annualized operating costs. The company maintains a strong cash position, with a reported $635.1 million at the end of the quarter. Despite the challenging financial environment, Ballard remains cautiously optimistic, focusing on its long-term strategic plans. This includes shifting focus to next-generation, cost-effective products, primarily for the bus sector. These are among the recent developments that reflect Ballard's commitment to navigate through the current market headwinds while preparing for future growth opportunities.
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