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Date
Tuesday, May 5, 2026 at 11 a.m. ET
Call participants
- President & Chief Executive Officer — Marty T. Neese
- Chief Operating Officer — Ralph Robinette
- Chief Financial Officer — Kate Igbalode
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Takeaways
- Revenue -- $19.4 million, reflecting 26% growth driven by rail and bus verticals.
- Gross margin -- 14%, up 37% compared to Q1 2025, and third straight quarter of positive gross margin, attributed to higher revenue and lower manufacturing overhead.
- Total operating expenses -- $16.4 million, representing a 36% reduction, attributed to disciplined cost control, reduced R&D, SG&A, and benefits from 2025 restructuring actions.
- Cash used in operating activities -- $7.8 million, a 65% improvement versus the prior year’s $24.4 million.
- Adjusted EBITDA -- Negative $11.4 million, improved from negative $27.5 million in Q1 2025 due to stronger margins and lower operating costs.
- Cash and cash equivalents -- $516.8 million, down about 2% from the prior quarter, with no bank debt or near-/mid-term financing needs.
- Positive cash flow -- CFO Igbalode said, "We delivered positive cash flow in Q1," reflecting early impact of ongoing transformation initiatives.
- Operating expense and capex guidance -- 2026 ranges set at $65 million-$75 million for operating expenses and $5 million-$10 million for capital expenditures.
- Multiyear agreements -- Agreements signed with New Flyer (North America), Wrightbus (UK), and Solaris (EU) for next-generation hydrogen bus platforms leveraging FCmove SC engines.
- Product cost reduction -- Both Wrightbus and Solaris committed to the ninth-generation FCmove SC engine, "cutting the number of components by more than 40%," which simplifies installation and reduces cost.
- Service and recurring revenue -- Each new engine sale "does come with a service level agreement," establishing a recurring revenue model through fleet service contracts.
- Fleet services availability -- Marty T. Neese's offerings "are designed to deliver up to 98% fleet availability" via predictive maintenance and real-time engine performance data.
- Bus market leadership -- The company holds "a leading share of the fuel cell bus market in North America, the UK, and Europe," and next-generation platform selections aim to sustain that position.
- Stationary power segment -- Growth in this business is currently "largely diesel genset replacement," not data center customers, per CEO Neese.
- Rail segment outlook -- Management noted, "very large-scale deployments" are opening up future opportunities, with current product performance building customer confidence for annuity-like repeat business.
- Project Forge timeline -- Management stated full production of the automated bipolar plate line is expected in the "second half of the year."
- Hydrogen supply trend -- CEO Neese described "meaningful progress in the availability of molecules," with growing penetration of green hydrogen globally.
- Capital Markets Day event -- The company will host the Ballard Power Systems Forum on October 22 to discuss the path to profitability.
Summary
Ballard Power Systems (BLDP +31.61%) reported top-line growth and margin expansion, supported by new multiyear bus platform agreements and operational efficiencies. The company's disciplined cost controls led to a sharp drop in operating expenses, significant improvement in EBITDA, and a modest sequential cash draw despite maintaining a strong cash position with no outstanding debt. Strategic investments—including automation via Project Forge—are on track to further reduce product cost and enhance manufacturing scale in the coming quarters.
- Ballard Power Systems is broadening its business model beyond module sales, establishing recurring revenue streams through fleet service contracts included with new engine deployments.
- The company is extracting value from over 300 million kilometers of operating data to introduce an uptime standard targeting 98% availability for OEM partners and fleet customers.
- Expansion of green hydrogen as a feedstock and continued advancements in grid resilience, including defense-related stationary power, are beginning to shift addressable market dynamics.
- Upcoming Capital Markets Day on October 22 may provide additional strategic insight, as the company refrains from offering specific full-year revenue or net income guidance at this stage in the hydrogen fuel cell market’s evolution.
Industry glossary
- FCmove SC: Ballard's ninth-generation fuel cell engine platform, designed for cost reduction and simplified installation in hydrogen-powered buses.
- MEAs: Membrane Electrode Assemblies—core fuel cell components responsible for the electrochemical reaction producing electricity from hydrogen.
- Project Forge: Ballard’s initiative for high-volume, automated manufacturing of bipolar plates, aimed at lowering unit costs and improving production scalability.
- Diesel genset replacement: The process of substituting diesel-powered generator sets with cleaner alternatives, such as fuel cell systems, for stationary power applications.
Full Conference Call Transcript
Marty T. Neese: Thank you, Sumit, and welcome everyone to today’s conference call. This morning, I will give an overview of our Q1 2026 performance and provide a commercial update. I will focus on the progress we are seeing in the bus market. We are also joined by our new Chief Operating Officer, Ralph Robinette. He will introduce himself and share updates on our operations. Kate will then review our financial results in more detail. We had a solid start to the year. Deliveries into the bus and rail markets drove revenue growth compared to last year. We also delivered another quarter of positive gross margins. This is our third consecutive quarter of positive gross margin.
It reflects disciplined cost and commercial management and marks an important step in our transformation toward becoming cash flow positive. To build on this progress, we have set a few near-term focus areas, including deepening our partnerships with bus OEMs in key geographies, improving and expanding our fleet services capabilities and offerings, and lowering costs through automation and intelligence. I will spend a few minutes on these and provide some additional color. Turning to buses. We have made several important announcements in the bus market this year. In North America, we signed a multiyear agreement with New Flyer representing approximately 50 megawatts of fuel cell engine supply.
This strengthens our position as fleets continue to scale in the U.S. bus market. In the UK, Wrightbus selected Ballard Power Systems Inc. to power its next-generation hydrogen bus platform using our newest FCmove SC engine. In the EU, Solaris also selected Ballard Power Systems Inc. as the fuel cell supplier for its next-generation hydrogen bus platform, including the FCmove SC for its 12-meter bus. These announcements matter for several reasons. First, these new agreements are multiyear partnerships with leading bus OEMs in major markets. They include both engine sales and long-term service support. This strengthens our position as fleets scale and as our fleet services business continues to grow. Our intelligent fuel cell engines help us deliver better service.
They provide real-time performance data that allows us and our OEM partners to respond faster and keep buses on the road. Our remote operations center adds another layer of support by improving parts planning, logistics, and predictive insights. Combined with our industry-leading durability, these capabilities position our engines as a zero-emission solution that can match or even exceed battery electric and diesel alternatives on uptime and total cost of ownership. Ballard Power Systems Inc. Fleet Services plays a key role in this strategy. We are moving from being only a module supplier to becoming a proactive, data-driven fleet partner. Our approach is built on more than 300,000,000 kilometers of real-world operating data.
Using this experience, we created the industry-first uptime standard, bringing together predictive maintenance, training, service support, and parts assurance. These offerings are designed to deliver up to 98% fleet availability. This creates real value for OEMs by reducing after-sales friction and lowering risk. It also gives operators more predictable lifecycle costs and stronger protection against budget swings. As our installed base grows, these services expand our recurring revenue and turn our fleet into a long-term strategic asset. Second, these long-term agreements support our product cost reduction goals. Both Wrightbus and Solaris have committed to our ninth-generation FCmove SC platform.
This engine was designed to reduce cost and simplify installation and maintenance, cutting the number of components by more than 40%, improving power density and durability. Each new bus we deploy also creates a long tail of service opportunities. Buses stay in service for eight, twelve, and even sixteen years. Our growing fleet gives us a multiyear runway for operations, maintenance, and training services. Through Ballard Power Systems Inc. Academy, we continue to support operators and technicians with the skills they need to run these fleets effectively. Taken together, these agreements and deep relationships reinforce our long-term market position. Ballard Power Systems Inc. holds a leading share of the fuel cell bus market in North America, the UK, and Europe.
Being selected for next-generation platforms positions us to maintain that leadership as adoption accelerates and total cost of ownership continues to improve. Delivering industry-leading fleet services throughout the life of the bus is a major opportunity, and we are only getting started. We will now move to operations, which are central to delivering scalable, cost-competitive, and commercially ready products. For that, I will hand it over to our new Chief Operating Officer, Ralph Robinette.
Unknown Speaker: Thank you, Marty, and good morning, everyone. I am pleased to join Ballard Power Systems Inc. at this pivotal stage in our transformation. By way of background, I bring more than 25 years of experience in operations, manufacturing, and supply chain across advanced technology and clean energy companies. My career has been defined by a focus on implementing the operational frameworks necessary to move advanced technologies from lab to high-volume manufacturing, scaling production, launching new products, and using automation to improve productivity and reduce cost. Most recently, I served as Chief Operating Officer at a leader in the residential solar manufacturing and service space. I led manufacturing, supply chain, fulfillment, and factory expansion.
This included the launch of an automated production facility built around a closed-loop learning process where field performance data from tens of thousands of homes fed directly back into product design and process improvement. Proactively taking actions to prevent performance issues further differentiated our products, services, and solutions in the eyes of customers. In short, I bring a track record of scaling technology and building efficient, high-quality manufacturing and service systems. This aligns directly with Ballard Power Systems Inc.’s goal of reducing costs as we move towards cash flow positivity. What excites me about Ballard Power Systems Inc. is the combination of strong technology and a market that is now scaling.
As Marty noted, this shift requires a sharp focus on execution. My team and I are prioritizing what matters most to our customers: quality, cost reduction, improved throughput, consistent delivery at scale, and closed-loop issue resolution. Relentless customer collaboration used to drive product and process improvements directly from customer field data and performance is critical. A key part of our process improvement work is Project Forge, our high-volume automated bipolar plate manufacturing line. At Ballard Power Systems Inc., we already use AI-assisted vision systems to detect defects in our MEAs. With Project Forge, we are deploying the same methodology to detect defects in our plates.
By moving to higher volume with significantly more automation, we expect lower unit cost, reduced material waste, and improved quality, consistency, and scalability. We continue to expect Project Forge to enter full production in the second half of the year. Delivering that ramp successfully is a top priority. As mentioned, we are increasingly focused on optimizing the value of the intelligence of our engines. While the first order of business is to maximize uptime for our customers, there is even more we can do with these data-driven insights. As our deployed fleet continues to grow, we are increasingly leveraging the engine performance data from the field, creating insights to feed back to our manufacturing, supply chain, and product development teams.
Ultimately, this work is about serving our customers by driving efficiency, simplifying our processes, improving quality, lowering costs, and ensuring we can deliver high-performance products at scale. Much of this happens behind the scenes, but I expect we will see the impact in product margin expansion and improved working capital management as these changes take hold. Marty, back to you.
Marty T. Neese: Thanks, Ralph. Before I turn the call over to Kate, I will close with a few brief thoughts. Across the business, we remain focused on balancing cost discipline with growth, reducing product costs, improving commercial structures, and expanding our service offerings. We are also moving into new applications where our technology provides a clear advantage. Today, we highlighted progress in commercial terms and product cost reductions through our work in the bus market and through our operational initiatives. We also have additional business development activities underway in rail, material handling, and stationary power. In stationary power specifically, we continue to see green shoots of opportunities to improve grid stability and energy resilience, including in defense applications with NATO nations.
These collective efforts are important building blocks for long-term growth, and we will continue to update you as these programs advance. Stepping back, we are encouraged by the progress we are making. We are seeing stronger gross margins, better commercial agreements, and continued cost reduction. These are clear signs that our transformation is taking hold. There is more work ahead, but we believe we are building a stronger and more scalable business. As a final note, we will be hosting our Capital Markets Day event called the Ballard Power Systems Inc. Forum on October 22. This will be an opportunity to get an up-close look at our work and discuss in-depth our path to profitability.
With that, I will turn the call over to Kate.
Kate Igbalode: Thanks, Marty. As Marty mentioned earlier, we continue to make progress toward cash flow positive. We delivered positive cash flow in Q1. These results reflect the early impact of the transformation initiatives underway across the business. Total revenue for the quarter was $19.4 million, which represents 26% growth compared to last year and was driven by our rail and bus verticals. Gross margin improved to 14%. This is a 37% increase compared to Q1 2025. It also marks our third straight quarter of positive gross margin. The improvement was driven by higher revenue and lower manufacturing overhead. Turning to operating expenses and cash. Our total operating expenses were $16.4 million, which is a 36% reduction compared to last year.
The decrease reflects disciplined cost control across R&D, SG&A, and commercial activities. It also reflects the benefit of restructuring actions completed in 2025. Cash used in operating activities was $7.8 million. This compares to $24.4 million in the prior year, a 65% improvement. The change reflects the impact of restructuring actions and stronger operating performance as the business continues to scale. Adjusted EBITDA improved to negative $11.4 million compared to negative $27.5 million in 2025. Improvement was driven by stronger margins and lower operating expenses. We ended the quarter with $516.8 million in cash and cash equivalents.
This is a decrease of about 2% from the prior quarter, and we have no bank debt and no near- or mid-term financing needs. This strong balance sheet gives us the flexibility to deploy capital in support of our goal of becoming cash flow positive. Consistent with past practice and given the early stage of the hydrogen fuel cell market, we are not providing specific revenue or net income guidance for 2026. We do expect revenue to be weighted towards the second half of the year. Our 2026 guidance ranges are as follows: total operating expense of $65 million to $75 million and capital expenditures of $5 million to $10 million.
I will now turn the call over to the operator for questions.
Operator: We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. We ask callers to kindly limit themselves to one question and one supplemental. We will pause for a moment as callers join the queue. The first question today comes from Baltaj Sidhu with National Bank. Please go ahead.
Analyst: Good morning. Could you elaborate on the drivers behind the strong growth in stationary revenues? Specifically, how much was supported by one-time deliveries, and to what extent is demand coming from data center customers versus traditional verticals? And then just on the bus segment, what were the key drivers of the decline this quarter year-over-year? Was it largely delivery timing related, or are there any changes in customer ordering patterns or funding that we should be aware of?
Marty T. Neese: I will start. The stationary power business that we are seeing growth in year-over-year is largely diesel genset replacement business, not necessarily tied to data centers. The data center opportunity is an area of deep exploration for the company, and we expect that to materially change as we go forward. But right now the increase that you are seeing is more what I would call diesel genset replacement business in the stationary power market. On the bus segment, it is just timing. More than anything else, it is the amount of inventory they have in the channels already and their build out, if you will.
Additionally, in the EU, there was some slowness in some of the funding support, and that translated into year-over-year changes in the demand flow. We expect that to change going forward as the friction is reduced. More importantly though, the Wrightbus and Solaris announcements are huge wins for the company. Those are major design wins for next-generation buses, and no matter the lumpiness of the 2025 to 2026 epoch, if you will, we see that as being really strong indications of the value of our new product, and that will translate materially into significant demand in our order book over the protracted period of multiyear agreements.
Operator: The next question comes from Rob Brown with Lake Street Capital Markets.
Rob Brown: Hi, good morning. First question is on the fleet services business model that you are developing. How do you see that playing out? Do the new sales come with a service contract element as well, or what is your vision on how the service business develops? And then on the rail business, it was strong in the quarter and I think you have some contracts you are delivering. How does the rail business play out over the next few quarters? Is it delivering your current contracts, and what is the cadence of that flow?
Marty T. Neese: That is a great question, Rob. Yes, for sure, each new sale does come with a service level agreement accompanying it. That is a matter of basic warranty, extended warranty, parts packages, training. We have an entire suite of value-added activities and services that we have been complementing our initial CapEx sales with. That translates into, with the long asset life, an extended service tail. You can think of that as you get the one-time sale of the CapEx but then you get an annuity of the service for the duration of the extended asset. On rail, we are expecting that the prior work done in the rail business is now opening up future opportunities for us.
To be more specific, we did very large-scale deployments with rail customers, and they have had the products in their hands for some period of time. As they are starting to see the value proposition come into sharper relief and getting more and more comfortable and familiar with a fuel cell locomotive, they are starting to be more bullish on their future, which bodes well for us. We think that could be a really exciting piece of business for us. It could end up being one of those annuity-type accounts where every year there is a capability to replace diesel engines with fuel cells and do that year after year until they materially decarbonize fleets.
That is early days for us, but the product is performing well, the team is happy, the customers are happy, and we expect that there will be further advancements in that market over time.
Operator: The next question comes from Michael Glen with Raymond James. Please go ahead.
Analyst: Can you discuss how the infrastructure and hydrogen availability have changed? Do you see any meaningful investments taking place behind the scenes to improve hydrogen availability or distribution? Historically, a lot of hydrogen has been generated from fossil fuel sources such as natural gas. Have you seen any change to bring back renewables in terms of hydrogen generation?
Marty T. Neese: We have been seeing meaningful progress in the availability of molecules. The supply is reasonable; the unit economics are what need to continue to improve, and that is starting to also gain a bit more momentum. When you can provide molecule suppliers with stronger and more predictable patterns of offtake, they can get more aggressive in their pricing depending on the tenor of the contracts that they are signing with different folks. Our job so far is to focus on creating the downstream demand and the offtake signal that allows the supply to keep being built and being consumed appropriately.
So far, so good on that, and we are starting to see more and more interest outside of the large-scale industrial use cases, and that bodes well for applications such as mobility and stationary power. Regarding renewable generation, my prior comments were really focused more on green hydrogen. Green hydrogen is starting to see more and more penetration. The traditional gray hydrogen, methane-based gray hydrogen, is certainly going nowhere; it is there, it is incumbent, and it is competing with other outlets for natural gas. Gray hydrogen has to have its own economic footing, but green hydrogen is starting to take more and more advantage of the penetration of renewables around the globe.
To some degree, blue hydrogen will find its path as well on an increasingly ambitious agenda over the next few years.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Marty T. Neese for any closing remarks.
Marty T. Neese: Thank you for joining us today. We look forward to speaking with you next quarter.
Operator: This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
