Thank you for standing-by. This is the conference operator. Welcome to the Ballard Power Systems 2017 Q3 Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Guy McAree, Director, Investor Relations. Please go ahead.

Thanks very much, and good morning to everybody. We’re going to be discussing Ballard’s Third Quarter 2017 financial and operating results this morning, and we’ve got Randy MacEwen, our President and CEO; and Tony Guglielmin, our CFO with us today, and they’ll both be speaking on the call. We are going to be making forward-looking statements that are based on management's current expectations, beliefs and assumptions, concerning future events. Actual results could be materially different. So, please refer to our most recent annual information form and other public filings for our complete disclaimer and related information. On this call, this morning Randy is going to discuss key developments during Q3, followed by Tony's review of our Q3 and year-to-date financial results and then we'll open the call for questions and answers. Just before we start-up a brief note for those who are unable to participate at our September Investor and Analyst Day in New York, the presentation material from that day, and the audio recording of the event can be found on our website at ballard.com/investors. So, now, I’ll turn the call over to Randy for his remarks before Tony reviews third quarter financial results.

Thanks Guy and welcome everyone to our 2017 Third Quarter Earnings Conference Call. Given that we’ve recently held our Investor and Analyst Day and provided a comprehensive updated that time, I’ll keep my prepared comments today relative we breathe. I’d like to start by reaffirming the positive trajectory of our financial results through Q3. In the quarter, we made strong progress against our 2017 financial performance objectives, including 54% year-on-year revenue growth, strong gross margin of 32% and positive adjusted EBITDA. Adjusted EBITDA on a year-to-date basis was positive $1.2 million, and for the trailing 12-month period was positive $3 million. The continued improvement in these key metric is an important milestone for Ballard, and I believe for the entire fuel cell industry. Looking forward, we are in well-positioned to deliver a strong Q4 and full year 2017. We have the substantial order backlog including a sizable order book of committed business over the next 12 months. In addition, our sales pipeline remains robust with a very high level of activity across the entire sales team. I want to emphasize a very important point, we are in the very early moments of a major global transformation of the transportation industry. This transformation involves the move towards zero emission vehicles through the electrification of vehicle power trains. In this context of Ballard, we are uniquely positioned to deliver value with disruptive technology. Let me repeat that at Ballard, we are uniquely positioned with disruptive technology. We have seen exciting future where we deliver high value and enjoy significant market share as we saw big problems in large addressable markets. We continue to see heightened global interest and the compelling value proposition uniquely offered by fuel cell electric vehicles or FCEVs. Particularly in heavy and medium duty transportation such as buses, commercial…

Thanks, Randy and good morning, everyone. As Randy represent earlier our strong Q3 results included year-on-year revenue growth of 54% to $31.9 million. Gross margin was up 1 point to 32%. Adjusted EBITDA up positive $0.9 million up 158% as well as continued strength in our balance sheet with cash results of $60.1 million at end of Q3 and No debt. On a year-to-date basis with the first three quarters we have delivered strong improvements including revenue of $81 million representing year-on-year growth of 48% which just show of our full year 2016 revenue of $85.3 million. Gross margin improvement of 9 points to 36% and adjusted EBITDA of positive $1.2 million and improvement of 111%. In terms of top line revenue growth in the quarter, power products were up 45% to $21.3 million driven by a 138 gain in heavy duty motive to $17.8 million primarily related to deliveries into the China markets. Technology solutions revenue was up 78% in Q3 to $10.6 million. Again, reflecting work done in supportive key transactions in the China market, in addition to our stock strong top line revenue growth we also generated a modest improvement of 1 point in gross margin. This was the result of our ongoing focused, ongoing revenue from high margin businesses in particular heavy-duty motive and technology solutions. Cash operating cost in the quarter were up 11% to $9.4 million, this is primarily result of increase investment in research and product development work related to next generation products and for growing our China platform in global services platform. While we continue to invest in our business key areas, we are also continuing to see a positive trend in our operating leverage with cash operating cost as a percentage of revenue at 34% year-to-date in 2017 down from 48%…

We will now begin the question-and-answer session. [Operator Instructions] The first question is from Rob Brown of Lake Street Capital Market. Please go ahead.

Good morning, thanks for taking my questions.

Good morning, Rob.

Just wanted to get some other details on the China ramp. I think you said the JV facility will be ready by year-end. And -- how that facility starts to ramp and sort of the expected support for unit truck deliveries in the next year?

Yes. So actually, I'm quite pleased with the total program of bringing that facility online. I think overall the program has gone quite well. In terms of where we are today, the joint venture kind of start to get operationalized effectively in the August September timeframe. We had a formal opening at that time. We'll be doing pilot production runs optimizing the equipment validating quality and items like that. So, we expect by the end of this year, the facility will have a production capacity run-rate about 6000 fuel cell stacks per year. All of the equipment is in place to support 20,000 stacks per year on an annualized basis late next year. So, we see the ramp occurring in November and December as they start to move from pilot production to larger scale production and start to deliver product. It's important to understand as well, with Broad Ocean now set to bring it manufacturing facility in Shanghai online by the end of this year. That will be a key captive customer for stacks as well in addition to the synergy program. So, we see some market demand obviously and order flow. But we're still in the process of making sure that we have high quality product that's going to meet the specifications. And then we'll start a more significant ramp over the next 60 days. Is that helpful, Rob?

That's very helpful thank you. And then just some color on the order backlog both the near term and then ultimate. What sort of that comprised in terms of groupings there?

Sure Rob. So, in the 12-month order backlog, the two largest items that would be in there would be the expected deliveries of NEAs to the joint venture over the next 12-month period to support the growth. And then other significant item in that would be the -- contract. I would say the two of those together probably are 40% out of the backlog. But beyond that we have some shipment expected into a number of markets including the U.S. transit market. Obviously, some deliveries to plug and power and variety of deliveries into Europe. But the two largest would be the MEA as well as the Stephen case Rob, their reality. I should also mention there as well is some – we are stilling delivering some of the Broad-Ocean unites we announced earlier this year as well. You may recall we announced 600 unites, we've shipped about 200 of those and we still have 400 to ship and then in the next twelve months as well which we expect to start shipping in Q4.

Okay. Thank you. And then last question, just on the material handling market, how was that developing U.S. I guess globally and how do you see that transaction over the next few years?

Couple of things that comment on, obviously both from power and highest yield are in the market now plug power I think continues to do a very good job at increasing scaling it's deployments. So, I think as you think about market adoption North America has been leading it and I think there is a value proposition there in Europe particularly when you look at the labor rate hours in Europe and the value proposition around increased productivity. So, we expect Europe to be the next market in terms of adoption and as longer term as we've talked about, we see a transitioning away from aftermarket systems integration or of existing forklift trucks to more of a purpose-built forklift design, we that transitioning occurring in the time period that you alluded to.

Well, thank you.

Thanks Rob.

[Operator Instructions] The next question is from Carter Driscoll of B. Riley FBR. Please go ahead.

Good morning, gentlemen. Thanks for taking my question.

Good morning, Carter.

So, just maybe dig in a little dipper into Broad-Ocean and kind of how that matches up with your expected run rate for your JV. So, they are hoping to have their Shanghai facility up and run by year-end potentially two more by the end of 2018, could those three facilities and your estimation hope through the entire stack demand of the capacity that you have on hand right now?

I think it's a little early to make that statement, there is a lot of variables in terms of how demand shapes from anyone customer and particularly when you start looking at early stage deployment in a new market with new refilling infrastructure with permitting vehicle certifications, there is a lot of parallel activity that occurring. If you talk directly to Broad-Ocean they would say yes, we're going to take all of the production demand available from the joint venture, but it is important to be cautious improving here in terms of what the expectations are. So, I think the 6,000-annualized production ramped that we see is the appropriate ramp in the near-term. And as some of the customers including Broad-Ocean for its tax start to see their deployments plans actually materialized consistent with their expected timeline then we can be a little more sort of and what the volumes will be from the joint venture and which customers will see most of those volumes. I'm firstly very excited about the opportunity for Broad-Ocean, we are working day and night with them right now to make sure that the Shanghai facility comes up, it is able to achieve its objectives but the other two facilities both in Shendong province as well as in the Wuhan Hobby area, there is significant activity and planning going on with those two facilities as well. So, we expect to see large demand from Broad-Ocean just for those three facilities including the captive vehicles, fuel selected vehicles they planned to buy in addition to the customers that there are lining up with the number of bus OEMs and truck OEMs.

Okay. All right, so then maybe could you addressed maybe some the discussions you had with either other truck or engine OEMs and maybe give some characterization of what their plans may or may not be I know without naming specific potential customers?

I think you referring to China specifically I assume. In China there were two key things that we see emerging here over the last number of months and I would say it's accelerated recently where you have companies that have exposure to diesel and are now looking for next generation technology. They recognized that they are going to be in a very difficult position and whether the timeline is 15 years from now and 30 years from now they still have the same strategic issue they have to address. So, they’re now canvassing the market for different opportunities they see the limitations in heavy duty vehicles, with battery only solutions and they’re now taking a very close look at fuel sell electric vehicles as a next generation solution. So, I think companies that have significant exposure to diesel are looking. That could be the companies that manufacture diesel engine they could be bus OEMs that are predominantly or commercial truck OEMs that are predominantly using diesel today.

Okay. Maybe shifting gears, a little bit could you talk about obviously how is the big percentage of your TS segment right now, can you talk about or characterize maybe some of the other programs obviously there’s work you’ve done on light duty size. Is a significant component on the medium duty and heavy-duty opportunities of programs with different vendors worldwide?

Yes, so you’re correct, Audi is a very important customer for us and I think collaborative with Audi we’re doing outstanding work for the fuel sell passenger vehicle market. But as you know we typically have in any given quarter somewhere in 25 to 35 projects or programs underway and these programs offer us as we talked about before significant embedded optionality. And we work not just in automotive and in the drone markets but also activities in heavy duty motor so there’s a number of activities on the train side, on the commercial truck side and the metal handling side where we see a TS activity that I think will scale in the coming years and ultimately lead to product sales and or surfacing of value on our significant IP portfolio.

Okay. And then maybe just last one from me, obviously a lot of focus on China over the last several quarters as it should be with the market size and opportunity there and clearly, they’re pushed to at zero clarify permissions and much bigger percentage in commercial vehicle market, but Europe tends to get under represented some time certainly a forward-thinking market as well. You’re talking about two things, one, the opportunity to participate in the RFP that’s out there under the FCH program and secondarily it seems like a lot more interest on the rail front in Europe particular, so any color would be appreciated. Thank you.

I agree with you I think the market is focused primarily on the China opportunities for Ballard. We see a very diversified business model here with different applications, buses, commercial trucks, rail that are serviced with the same technology and those applications layering in revenue opportunities in China, Europe and in North America in that order in my opinion. Japan what we expect to see some exposure as well. Now in terms of Europe we do there’s significant activity occurring right now for the adoption of fuel sell electric buses with I think in the range of 291 fuel sell buses that are out for tender. We expect to see very significant market participation by Ballard in this important next round and we think that leads to a further round of in the range of a 1000 to 2000 fuel sell buses in the European market. And I want to emphasize I’ll be in Europe in a few weeks speaking at the fuel sell hydrogen joint undertaking it’s a 10-year anniversary. And I want to emphasize that there’s a lot of work going on in Europe, in each one of these applications I referred to. And you’re absolutely right Carter, there are significant activity on the train side in Europe.

Perfect. I will pass on take the rest offline. Thank you, gentlemen.

Thank you.

The next question is from Amit Dayal of Rodman & Renshaw. Please go ahead.

Thank you. Good morning, guys and congrats on the execution. I have one question for you in regard to follow this activity we’re seeing in China how are you sort of seeing the hydrogen infrastructure build out taking place to support your efforts?

That’s a great question, and I think it’s a question that’s applicable globally not just in China. Just one important development that I want to highlight globally is that the hydrogen council is a very industry first in terms of collaboration of strong companies in the energy, gas and transportation markets in particular, where companies like [Air Lagid, Lindsey, Eaton], Shell, Total, RG. And then on the passing the vehicle side now Audi, BMW, Toyota, Honda, GM, so, Hyundai. A number of great companies that have committed to deploy in the range of 4.8 billion euros to see the commercialization particularly you fuel saw passenger vehicle cars, but a key part here is really the investment in infrastructure. Lot of the learnings that have occurred over the past 10 years in California, in Japan, in Germany are now being translated in the China market and so in terms of engineering procurement, construction, certification, those type of things for hydrogen fueling station, I think there is a lot of work that’s been done that enables much more efficient setup of how did refueling infrastructure. And again, we are focused on the market opportunities where the barest entry is lowest, where you have centralized depo refueling where vehicles typically come back to those depos at night as they do today with current diesel or legacy diesel technology. In terms of China specifically, there is been a lot of progress over the last 12 and 24 months with a number of different companies becoming far more educated both as suppliers and as users of hydrogen and we see a buildup occurring right now in China of hydrogen fueling stations. And I think as we pick up our conference call in the late February, early March timeframe next year, we will be able to provide a little more visibility on the deployment schedule for hydrogen fueling station, particularly as it relates to our partners.

And as we get to the fuel cells tax per year capacity sort of utilization levels can you talk about how much impact on the cost front that could have?

Yes, so it’s a great question. We’ve outlined on the Investor and Analyst day, some fairly a clear cost down – cost reduction roadmaps not just for stacks but also for modules. I am actually to be honest more bullish on the opportunity for the module cost reduction where we see a lot of opportunity on balance of plant components in terms of localization of supply in China, in high volume at quality and the ability for dollar to see that provide benefit not just for the Chinese market but for the global market. So, we are doing a lot of great work Ballard on cost reduction of the stack, the joint venture will see opportunity with scaling on cost reduction for the stacks, but we are also doing a lot of work both of Ballard on a standalone basis and with our partners in China at the module level.

Understood. And this maybe a little early but is sort of Broad-Ocean committed to continuing expanding capacity if and when we get to the 20,000 levels, I mean it looks like your go to and get there next year, is just looking out maybe a few years ahead that may not be sufficient given what the demand looking like, so how do we sort of plan for capacity beyond 2018?

Yes, so Broad-Ocean is making a very significant investment in the fuel sale industry, like they did in the battery electric market and I don’t want to comment on what their plans are that’s for them to stay but we’re excited by the level of investment we see as they realize success it wouldn’t surprise me to see them grow their plans like they did in battery electric.

Got it. Just last question on the Japan front. It looks like that market is getting interesting as well for you. Do you see material contribution from them in 2018 or is that something that should sort of attributed to maybe further down the road?

Yes, so this is a market that moves very slowly and what I would say is that where we see initial exposure in the Japanese market is in our technology solutions business. And where we continuing to work with key partners in Japan to move technology to the next stage of performance and next stage of cost reduction and where we see certain applications where product innovation is a foot.

Got it. Thank you so much.

The next question is from Jeff Osborne of Cowen and Company. Please go ahead.

Hey, good mornings. Just a couple of question on my end many of them are even ask and answered but may be Randy just – sounds like visibility shaping up much better for you as China ramps up in the all the different type of facilities come and deploy, I just wasn’t sure as we head into 2018, if you felt more comfortable prior years ago Ballard used to get guidance heading into a year, is that something that you intend to do for 2018 or still wanted to get more comfortable with the situation?

Yes. Good morning Jeff. I still there am the lot of variability and team potential loving this quarter-to-quarter in our business. a lot of moving pieces not just in China but as we say globally and so right now, we don’t have an expectation of providing guidance in 2018, well of course we give it that let the management team in the board in early 2018 but that’s not the current intend.

Got it and then just with the activity on buses outside of China, you have given some comments at the analyst day a month or so ago as it relates to cost down but can you just help us may be one they are removed to see the competitiveness of fuel cell bus versus an electric versus a natural gas bus. Firstly, I agree with around emission reductions targets, but you have seen in particular electric pick up so momentum in market – and if you all there is so the factories in public RSPs and their pricing typically would be in around $800,000 of bus, can you just update us where North American fuel cell power bus would be today?

Yes. So, in terms of North American Fuel cell buses so next year I could see in the range of cells of around 30 engines for Ballard for fuel cell electric buses primarily in California although may be five or so outside of California those will lead to deployments starting potentially next year in the end of the following year. So, we are still at a modest scale in the U.S. market and the U.S. market is actually the most expensive of the three that we are looking at for fuel cell buses at this time in terms of China, Europe and the United State Markets. So, during the range of about $800,000 for the fuel cell bus today U.S. a road map as we described is to look at getting a total of cost of ownership looking at the cost of fuel cell bus plus the hydrogen cost plus of bus maintenance cost on part with battery electric buses by 2020. But with -- of course with all of the benefits of extended range fast refueling and full route flexibility and when you kind of translate to a number per kilometers per year on a total cost of ownership basis. We feel like we are right in that range we need to be and kind of on year basis we kind of spend most of our time more recently looking at the year model when the 3.5 years for kilometer range which we think is a very compelling solution in 2020 compared to income technology and where we expect battery electric buses to be at that time.

And just how – for their fees in Europe how are they valuating this year to intensity of the hydrogen?

So, it’s a great question. I think what we are going to see overtime is the migration towards looking at green hydrogen I think there is recognition today that there is opportunity for improved CO2 emission even with reformed hydrogen. So, I think you will see most of the refueling applications in Europe in the very near term I believe being satisfied with traditional hydrogen generation technology and I think longer term when we started looking at well to wheels carbon foot print and moving away from just zero type emissions, we will see more green hydrogen including electrolysis based hydrogen production.

Got it, just two other quick one if you don’t mind; one is – how a rough number made in exact number but of how many buses with Ballard equipment feel so units are on the road in China specifically today it’s been a lot of comments about module this and that and how many of you have produced in capacity but how many physically are on the road relative to expectations of sales in 2017. Total bus.

Right, so we have partners coming out with some launch plans and deployment plans in the very near-term in terms of activity. So, I don’t want to use excerpts, some of her announcements, but what I will tell you is that there are number of vehicles that have been built manufactured with Ballard technology inside of them that are road ready and we will start to see some deployments occurred in a number of different cities in China this is both in the bus market as well the commercial truck market.

Got it, and in commercial is that more like class 5 through 7 type of delivery van as a range extender or this is more class 8 long haul trucking, I am just curious.

Yes, in the very near-term in terms of vehicles that are in production right now and are ready for deployment right now those are the delivery vans. Correct.

Correct. Got it and lastly how it is – super technical answer but just Nisshinbo side without using platinum, you mentioned earlier to using just for lightweight applications and then having a separate discussion or narrative around materials handling, can you just walk us through why from a technical perspective, it's only a suitable for lightweight applications today, does it have something to do with energy density and that needs to be improved or I guess what are the hurdles technically speaking to get into materials handling?

Yes. So, with Nisshinbo there has been a great work done I think on this carbon alloy. We have presented at a number of technical conferences on this and I think a lot people of didn’t surprise by the results that we've achieved. But the results we have achieved so far just would be cleared our four lower use our applications which typically for us translate to later applications affordable power applications for example and what the next stage of program, which is a multi-year technology solutions program with Nisshinbo is then it takes to learning and the success so far and translate that to a longer our product and particularly focused on the material handling segment.

Got it, that’s helpful. Thank you.

The next question is from [Anne Forney] of Roth Capital Partners. Please go ahead.

Hi, congrats on the strong results in this quarter. Most of my questions have already been answered but I just had like couple of questions. First was on the Analyst Day, you have mentioned that there is possibility of additional order activity from China like – is there any update that you may be able give on this other activity?

Hi, Good morning Anne and thanks for the question, could you just repeat the question, I apologize.

Yes, in the Analyst Day, you had mentioned that there is a possibility of increased order activity from existing clients in China from Shandong City, so I just wanted to check if there is any update that you can give on that?

I see, Okay. Yes. So, what we have seen with the number of bus, so we enhance typically our buying a regularly for them a relatively small number of modules with a new deployment of initial buses and then we start to see through performance and through validation and they start looking at next round of orders think it's long, it’s too early I should say for us to comment on whether [Ying Long] will be repeat customer. We delivered modules to them and expect a good progress as we have seen with other partners there. Another one I think that’s really interesting is the work that’s been done with [Ying Long] and we have been added a much longer with [Ying Long]. So, I expect to see continue progress with the number of bus OEMs and really what we are trying to do here with the bus OEMs is get them comfortable with the technology and in some cases educating them on the technologies and in some cases, there are very experienced with it. And then getting the bus platforms certified with Ballard technology inside so that there is they can actually get – and license for the road and qualify for the subsidy programs. And so, there is lot of work that we have been doing I think we have in the range of about 13 different platforms today that have Ballard technology inside in some form that are certified in China and we will continue work with Bus OEMs and commercial truck OEMs to make sure there is demand go through an adoption of the technology.

Thank you. And just another if you may give highlight on the hydrogen train markets like do you see a -- how soon do you see that expanding and turning out to be like a commercial market for you?

Yes. So, the train market has really accelerated in the last six months and as we comment at earlier we have seen another milestone obviously with Ten Shang Railway Company in Ten Shang where they deployed their first tramp and that's a pretty exciting development for us there. Work continues in on a Doming line in Foshang with CSRC both of these companies are part of CRRC. We feel we're very strongly positioned for the Chinese market. In Europe we're seen lots of coding activity for fuel cell trends and trains and we expect to see some opportunities develop in that market for Ballard. And even in North America, we're seeing for the first time some serious activity occurring. So, we're very excited about the train market and I think the value proposition there is clear. You have you can continue with diesel technology or you can have a long extensions code in sky or you can go fuel cell solutions.

Okay. Thank you.

This concludes the question-and-answer session. I would like to turn the conference back over to Randy MacEwen, CEO for any closing remarks.

Great. Thank you for joining us today. We look forward to report in Q4 and full year 2017 results along with our outlook for 2018 in late February early March timeframe next year. Thanks again, everyone.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.