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Industry Definition –Fuel Cells
Hydrogenics Corporation(NASDAQ: HYGS)
Quantum Fuel Systems(NASDAQ: QTWW)
FuelCell Energy(NASDAQ: FCEL)
Ballard Power Systems(NASDAQ: BLDP)
Firms in this industry manufacture and develop solid oxide or molten carbonate fuel cells, which are used as commercial energy utility sources.
These goods are used as an alternative energy source. Often they are used by firms for distributed generation or backup power, helping diminish their reliance on a centralized facility or grid, causing lower environmental impact.
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Energy Fuel Cell Sector BreakdownIndustry Breakdown By Market Cap ($BLN)
Stationary Fuel Cells$356.61 M
(.027%)
Fuel Cells$510.43 M
(.038%)
Alternative Energy$2.01 Trillion
(14.9%)
Energy Sector $13.41 Trillion
(100%)
X $ 18.626 BWOR $ 2.443 B
FCEL $ 122.57 MBLDP $ 76.01 MHYGS $ 23.82 MQTW $ 20.27 M
51%
31%
10% 8%
2011 RevenueFCEL BLDP HYGS QTWW
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Fuel Cell Revenue Generation
Design Manufacture Sell Install and Service
(20.1%) of Revenue (103.9%) of Revenue 93.9% of Revenue (13.3%) of Revenue
Customer uses Fuel Cell for Distributed Generation
or Backup Power
• Manufacturing
outsourcing
expected to
increase
• Design / R&D
continues to
decrease as Rev %
7
Trends
Fuel Cell costs Lower
Grid Power costs Higher
Distributed Generation / Going Green
Transition to Commercial
Industry
8
Fuel Cells affordable in more Areas• Low natural gas prices =
lower fuel cell price
• Grid parity in cities increases every year
• Electricity prices have decreased once in 11 years
• Fuel cell technology continues to lower costs
-0.00110438655897
24
2010 2011 2012 2013 2014 2015
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Input prices inverse grid electricity
Grid ElectricityNatural Gas
ProjectionsElec CAGR = 3.62%Gas CAGR = 6.02%
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Distributed Generation Increasing Rapidly
• Japan, South Korea, and Germany main locations
• Fuel Cell growth could expand quicker w/ more manufacturers
• Most manufacturers are subsidies
• Green is a trend including minimizing grid power
2010 2011 2012 2013 2014 20150
50000
100000
150000
200000
250000
300000
350000
resCHP Systems
Fuel Cell
Non-Fuel Cell
Projections
FC CAGR = 78.9%NFC CAGR = 58.9%
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Corporation Buyouts Show Transition
• Sign of transition from R&D to Commercial Industry
• New Synergies emerging showing profitability
Membran
e
Catalys
t
MEA Su
ppliers
Gas Diffusio
n Laye
r
Bipolar Plat
es
Stack
Assembly
05
10152025
Integration Lacking in Industry
Manufacturing Step
# of
Com
oani
es• Companies buyout others for vertical integration• Others from strategic partnerships for future profits
Ex. BIC buyout of Angstrom Energy-Google and Ebay hold major equity positions in FC comps-All companies discussed have min 2 strategic partnerships
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Key Financials
SymbolMarket Cap (M)
% of 52 high
Closing Price P/E EPS
EV/EBITDA
Debt/Equity
Debt/EBITDA
R&D/EBITDA
FCEL 172.91 47.2 0.98 -4.08 -0.24 -25.34 3.22 -10.96 -1.33
BLDP 84.44 57.1 1 -2.86 -0.35 -6.15 0.79 -3.27 -1.14
HYGS 46.82 89.2 6.2 -4.56 -1.36 -6.46 1.88 -1.17 -0.32
QTWW 42.8 25.1 0.9 -0.57 -1.59 -2.75 2.04 -2.99 0.00
High 172.91 89.2 6.2 -0.57 -0.24 -2.75 3.22 -1.17 0.00Low 42.8 25.1 0.9 -4.56 -1.59 -25.34 0.79 -10.96 -1.33Mean 86.7425 54.65 2.27 -3.02 -0.89 -10.17 1.98 -4.60 -0.70Median 65.63 52.15 0.99 -3.47 -0.86 -6.30 1.96 -3.13 -0.73
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Stationary Fuel Cell ManufacturingRecommendation: Positive
• Operates with trends Signifying:1. Costs are decreasing and competition prices
increasing2. Long-time R&D industry transitioning to
commercial base
• Must Combat key risks of:1. Solar or Wind becoming more widely used2. Smart-grid may get cheaper eliminating grid-parity