"Ballard Power Systems" Q2 2026 Earnings Call - Definitive GeoPura Acquisition Expands Ecosystem Value Capture and Accelerates Path to 2027 Profitability

Moderator: Thank you operator, and good morning. Welcome to Ballard Power Systems’ second quarter 2026 financial and operating results conference call. With us on today’s call are Marty Neese, Ballard’s President and Chief Executive Officer, and Kate Igbalode, Chief Financial Officer. Before we begin, I would like to remind listeners that certain statements made during this call may be forward-looking in nature and are based on management’s current expectations, assumptions, and beliefs. Actual results could differ materially. Please refer to our public filings for a complete discussion of risk factors and forward-looking statements. Additionally, we will be making statements about our definitive agreement to acquire GeoPura. Completion of the GeoPura acquisition remains subject to customary closing conditions and applicable regulatory approvals, with close anticipated sometime in the second half of the year. I will now turn the call over to Marty.

Marty Neese, President and Chief Executive Officer, Ballard Power Systems: Thank you, Sumit, and good morning, everyone. This morning, I will focus on what I believe is one of the most transformative milestones in Ballard’s history, our definitive agreement to acquire GeoPura. I want to detail why this transaction makes compelling strategic and financial sense for both companies, how we value the underlying business, and what lies ahead. This is a pivotal moment for Ballard, one that fundamentally expands our business model and accelerates our growth trajectory and underpins our path to profitability. Let me first place this acquisition within the context of our goal to become profitable by the end of 2027. We have made tremendous progress in reducing our product and corporate cost structures, delivering another quarter of positive and improving gross margins and lower year-over-year total operating expenses. Our attention now turns to revenue growth.

As a fuel cell engine supplier, effectively one critical component in a large ecosystem, we focus on the technology and innovation levers within our control. Namely, developing new products for near-term markets, driving down product costs, and creating higher margin recurring after-sales service offerings. Expansion beyond component supply and into the extended value chain creates opportunities to accelerate adoption and revenue growth. Through direct influence across the value chain, we can optimize hydrogen supply and total cost of ownership while capturing greater ecosystem value. This brings me to why we are so excited by the GeoPura-Ballard combination. GeoPura was founded in 2019 with a clear mission, to provide zero-emission power that can be deployed wherever and whenever it is needed. They design, manufacture, and operate hydrogen power units, or HPUs, that convert hydrogen into clean electricity using Ballard fuel cell engines at their heart.

GeoPura also produces and distributes compressed hydrogen made through electrolysis at their production sites. To date, they have delivered hundreds of tons of green hydrogen using the largest hydrogen distribution fleet in the U.K. They operate a growing fleet of more than 60 HPUs, which are rented directly to customers. Customers are provided a one-stop complete energy-as-a-service solution, combining fuel supply and power generation equipment. All told, they are integrated across the hydrogen value chain from molecule to megawatt. This acquisition is highly complementary for both companies to accelerate our mutual growth. Ballard overcomes the industry’s classic hydrogen fuel supply bottleneck and gains immediate access to proven category-defining stationary power products, such as GeoPura’s 100-kilowatt portable HPUs that can be towed by a pickup truck to their 500-kilowatt HPU2 power blocks that can be numbered up to 50 megawatts. GeoPura also comes with established relationships with numerous blue-chip customers.

Meanwhile, GeoPura gains the global scale, balance sheet strength, brand recognition, and reach needed to expand leases and sales of its HPUs. Ballard provides greater access to heavy-duty mobility customers for hydrogen sales. Together, we expect to scale faster and at a lower cost, transforming Ballard into an energy-as-a-service provider capable of lowering customer TCO and capturing revenue across the entire value chain. Ballard’s fuel cells have been central to GeoPura’s products since the beginning, and now we are bringing the entire technology stack under one horizontally integrated solution. To illustrate the strategic power of this acquisition to Ballard, we look at it through a simple framework, which we walked through on the deal announcement call. In short, we say Three, Five, 10 now. Three, 3x the growth rate. GeoPura’s high-growth business model accelerates our combined trajectory, supporting an expected 3x revenue growth rate.

To be clear, this 3x projection is a baseline grounded in their current operations and organic growth. It does not yet factor in major long-term upside opportunities, such as expanding hydrogen production, significant cross-selling fuel to our heavy-duty mobility customers, data center opportunities, or bringing HPU rentals and sales to North America. These represent highly attractive additive growth vectors. Five, 5x the value capture. By bundling the ecosystem, we expand our value capture per deployed megawatt by approximately 5x compared to selling standalone fuel cell engines. While engine sales remain a solid core business, they capture approximately 15% of the total value chain on a USD per megawatt basis. As ecosystem fleet owners with a recurring equipment rental business combined with fuel, we would control over 75% of this value chain.

This integration allows us to lower delivered power costs and guarantee fuel delivery for both stationary and mobility customers. Customers are willing to pay for a simplified solution, providing six nines of reliable power without the complexity of managing hardware and fuel logistics separately. By offering a fully managed one-stop solution, we make our customers’ lives easier, allowing us to accelerate adoption while simultaneously building more predictable, recurring, high-margin revenue streams. 10, 10x the market. Our total addressable market expands tenfold. This acquisition extends our footprint beyond heavy-duty mobility into an estimated $300 billion installed base of diesel gensets with an annual replacement rate of approximately $16 billion per year, a rapidly growing $4 billion data center backup power market, and a $20 billion hydrogen fuel supply market. This forms a highly complementary two-way bridge.

Ballard gains immediate entry into high-growth stationary and fuel markets, while GeoPura leverages our global brand and deep industrial experience to expand into heavy-duty mobility in North American markets. Now, cost parity now. We are not waiting on future technology or other innovation milestones. We are focused on ready now markets with supportive policies such as the HAR program in the U.K. In such regions, GeoPura’s HPUs achieve cost parity with incumbent diesel today. By unifying our organizations, we have the ability to drive further scale and efficiencies in engineering, supply chain optimization, component cost reductions, and vertical integration benefits. By further lowering costs, we can expand the geographic markets where our solutions win on pure economics. Ultimately, excuse me. Customers can have both clean energy and lower costs. Importantly, this acquisition supports and strengthens our path to becoming profitable by the end of 2027.

We are acquiring a high-performing business already on a clear trajectory toward profitability with proven technology, operating model, and enviable customer base. The underlying leasing model is straightforward. GeoPura’s HPUs have an expected operating life of approximately 15 years with an expected capital payback period under three years due to high-margin rental revenue and fuel supply mix. As the fleet expands, recurring hydrogen fuel cells from their hydrogen production sites grow in tandem. This creates a self-reinforcing, highly profitable growth engine with significant financing flexibility to fund sustainable growth. These strong economics underpin our agreement to acquire GeoPura for GBP 275 million in upfront consideration. This valuation is supported by GeoPura’s highly defensible operational reliability advantage. Delivering six nines uptime of mission-critical power to customers requires seamless orchestration across production, distribution, logistics, and site operations. GeoPura has solved this operational puzzle, creating a significant competitive moat.

This proven reliability is why their HPUs are already trusted to power live TV and film productions for major events like the PGA Tour, and to provide critical power for the U.K.’s largest multi-year construction project, the Lower Thames Crossing. In addition to a portion of their expected GBP 38 million, or approximately $50 million of revenue in 2026, we also anticipate realizing approximately $25 million in annual run rate EBITDA synergies by 2028 through joint manufacturing, supply chain integration, cost reductions through vertical integration, and commercial cross-selling. We are targeting a September close, pending customary approvals. Our teams are deeply focused on integration planning, communications, and day one execution readiness. This will ensure we have a successful launch and rapidly seize the numerous opportunities in front of us.

Before I turn the call over to Kate, I want to express my immense gratitude for the combined teams of Ballard and GeoPura. Our long-standing relationship has served us well over the past months as we execute this deal. Once we are closed, we can double down on providing great service and value to our combined customer base. With that, I will hand the call over to Kate.

Kate Igbalode, Chief Financial Officer, Ballard Power Systems: Thanks, Marty. I would like to briefly comment on our commercial and financial progress in the quarter. Order intake in the quarter exceeded $64 million, driven by order flow from our previously announced wins in the transit bus market, such as New Flyer, as well as a multi-year commitment for more than 150 fuel cell modules to GeoPura. This stationary order further highlights the growth of the hydrogen genset market and reinforces the immediate synergies of our acquisition. Additionally, we saw positive and improving growth margins alongside a year-over-year increase in revenue and decreases in both operating expenses and cash usage. All of this continues our steady progression towards becoming profitable by the end of 2027, a trajectory that the GeoPura acquisition adds to and more. Total revenue for the quarter was $20.6 million, representing 15% growth compared to Q2 2025.

The growth is attributed to increases in bus, stationary, and other markets, in particular materials handling. Gross margin was 20% compared to negative 8% in the prior year period. This represents a 28-point improvement year-over-year. Gross margin improvement was largely driven by product cost reduction initiatives and lower manufacturing overhead costs, and through adjustments to warranty and inventory provisions, which further lifted margins. It is worth noting that the warranty adjustments are as a result of our fuel cell engines demonstrating high reliability and field durability, allowing us to reverse warranty provisions we recorded in prior years. While these adjustments are one-time in nature, the performance improvements are expected to be reflected in our ongoing product costs and associated margins, supporting our pathway to profitability and underscoring our technology capabilities.

Total operating expenses were $20.9 million, representing a 34% reduction compared to prior year, and adjusted EBITDA was negative $9.8 million compared to negative $30.6 million in Q2 2025. Cash used in operating activities was $11.4 million, compared to $20.3 million in the prior year, and we ended the quarter with over $502 million in cash and cash equivalents. We continue to maintain a strong balance sheet with significant liquidity and no near-term financing requirements. Looking ahead, consistent with prior practice, we are not providing specific revenue, net income or margin guidance, given the early stage of market development. We continue to expect revenue to be roughly 60% back-half weighted for the year. Total operating expenses are expected to be between $65 and $75 million, and capital expenditures are expected to be between $5 and $10 million.

We expect to update this guidance after Ballard closes the GeoPura acquisition, which we anticipate will be later this year. With that, I’ll turn the call over to the operator for questions.

Operator: Thank you. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you’re using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We ask callers to kindly limit themselves to one question and one supplemental. The first question comes from Rod Brown with Lake Street Capital Markets. Please go ahead.

Rod Brown, Analyst, Lake Street Capital Markets: Good morning. Just wanted to follow up on one of your comments on the GeoPura acquisition around some of the growth opportunities you see, specifically the North American HPU market. What’s the view there, what that can be or maybe how you enter that market or areas that you would look to address there? Thank you.

Marty Neese, President and Chief Executive Officer, Ballard Power Systems: Yeah. I think the starting point for Canada and the U.S., North American markets, we would replicate some of the early success that GeoPura has used to land and expand, if you will, HPU deployments in other markets. For example, some of the current customers that are part of GeoPura’s portfolio are multinationals that have a presence in both Canada and the U.S. We would seek sponsorship from those customers and seek to grow their business outside the U.K. and EU and replicate the same sorts of deployments in Canada and the U.S. That includes largely market opportunities around film, TV, live productions, and events. That’s been a very good multinational platform, if you will, and also for construction.

There are large construction companies that have international operations, and they’re looking to replicate the same sort of solutions that they’ve enjoyed in the U.K. and the EU, outside of those environments and into Canada and the U.S.

Rod Brown, Analyst, Lake Street Capital Markets: Okay, great. I guess, do you see that business continuing to be a recurring revenue model where you’re doing the fuel supply and the rental model together? Is that the vision in the U.S. market as well, or the North American market as well?

Marty Neese, President and Chief Executive Officer, Ballard Power Systems: That’s correct. Yes, we would look to replicate the model outside the U.K. and E.U. Over time, if you look on an extended horizon, which we’ll cover more in our Ballard Forum in October, we look to be a very good supplier of green hydrogen through both integrated capabilities as well as partnerships.

Rod Brown, Analyst, Lake Street Capital Markets: Okay, thank you. I’ll turn it over.

Operator: The next question comes from Ameet Thakkar with BMO Capital Markets. Please go ahead.

Ameet Thakkar, Analyst, BMO Capital Markets: Hey, good morning. Congrats on another quarter of progress. This might be a bit of a housekeeping or an accounting question, I know you guys mentioned as part of the orders this quarter that a portion of that is for GeoPura units. When that acquisition closes, will that be reduced as an intercompany elimination? I’ve got one follow-up on GeoPura.

Kate Igbalode, Chief Financial Officer, Ballard Power Systems: Thanks. The short answer is yes, that will be changed to instead of a revenue stream, will be an intercompany transfer.

Ameet Thakkar, Analyst, BMO Capital Markets: Okay. Just as you envision this as an energy-as-a-service model, can you just speak to how you anticipate needing, I guess, additional balance sheet capacity to support that rather than selling the product as a CapEx solution for customers? Thank you.

Marty Neese, President and Chief Executive Officer, Ballard Power Systems: Yeah. As we sit today, we have over $500 million in cash on the balance sheet. We’re contemplating additional financial structures that provide some level of asset-backed financing that would be in support of the 15-year asset life and the cash flows therein. Think about it as supplementary asset-backed financing that would be a companion potential. We’re exploring those opportunities. Those ABF structures were successfully used by GeoPura, and that’s one of the things we’ve learned about their business model and how best to extend it to the Ballard business at large. With the $500 million in cash on the balance sheet, it gives us significant potential capacity to expand.

Ameet Thakkar, Analyst, BMO Capital Markets: Thank you. I’ll pass it along.

Operator: The next question comes from Jeff Osborne with TD Cowen. Please go ahead.

Jeff Osborne, Analyst, TD Cowen: Yeah, good morning. Two questions on my side, if you don’t mind. One, I was curious, back on GeoPura, I think the largest unit they have today is about half a megawatt. On the website, it says it can scale to 50 megawatts. I was curious, two-part question. One, how many sites do they have deployed over a megawatt? Then do you intend to develop a larger unit? Some of the applications like data centers and whatnot that you mentioned, I assume would want a multi-megawatt solution and not half a megawatt.

Marty Neese, President and Chief Executive Officer, Ballard Power Systems: Yeah. First on the quantum of multi-megawatt sites, that’s a dynamic situation as you think about some events require larger deployments, you would have multi megawatts involved in one particular event or production site or construction site. It’s not static, meaning that they don’t have a number of installed units that are static deployments. There are some. I’m speaking a bit for them in this regard, and it would be better in the fullness of time to have their management team, once integrated, speak to the historical context there. Let’s just say that it’s multiple multi-megawatt sites that are under current deployments. At the product level itself, we currently have a collective capacity where we’re using 500 kilowatt power blocks, if you will, or HPU2s.

Those can be changed through time as you imagine the power density of a module from Ballard increases the size. Let’s imagine that there’s five 100 kilowatt units in a solution today, we provided 150 kilowatt solution in the future. You could change the five 100s to five 150s and you’d be at a 750 kilowatt without doing much redesign, if you will, to the product. More importantly is optimizing the larger quantum as you are indicating. There is considerable investigatory work being done by the combined technology teams to suss out exactly what the most optimum solution is for the right markets, the right kind of potential, let’s say, data center type applications and how to optimize the economics therein.

It’s every bit on our mind of how to increase the power density while simultaneously maintaining the six nines of reliability and lowering the total cost of ownership.

Jeff Osborne, Analyst, TD Cowen: That’s helpful, Marty. Maybe for yourself or Kate, just a last question. Could you flesh out, you mentioned material handling was strong in the quarter. Is that repowering or new organic growth? Can you just flesh that out where that came from?

Marty Neese, President and Chief Executive Officer, Ballard Power Systems: It’s a bit of both, yeah. Just in short, we have been doing some repowering for some select customers and then other customers, it’s new installations for distribution center customers that they’re providing the end solution and the service on site, and we’re providing them with stacks.

Jeff Osborne, Analyst, TD Cowen: Perfect. That’s all I had. Thank you.

Operator: This concludes the question and answer session. I would like to turn the conference back over to Marty Neese for any closing remarks. Please go ahead.

Marty Neese, President and Chief Executive Officer, Ballard Power Systems: Thank you for joining us today. We look forward to seeing all of you at the Ballard Forum in October. Welcome to Canada in October, and we’ll see you then.

Operator: This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.