Tony Guglielmin has helped Ballard Power Systems (TSX, Nasdaq:BLDP) shed its “dark decade” by creating a new power source that can drive markets: optimism.
Guglielmin, vice-president and CFO of the Burnaby-based fuel-cell maker, is co-engineer of this new attitude adjustment that has illuminated both the company’s outlook and investor sentiment. He has played a leadership role in navigating the one-time market darling through a serious downturn to emerge as a lean company with a clean balance sheet to capitalize on emerging market opportunities and renewed investor interest. In a few short years, he’s also quarterbacked a succession of acquisitions, financings and joint venture transactions that have given real traction to Ballard’s new corporate strategy.
“When I got here at Ballard, it was going through a very tough time and needed someone who could come in and embrace the opportunity and mobilize change,” Guglielmin said. “The last three years of the company, through a combination of change in strategy and market opportunity, have really moved Ballard much more to a true growth company.”
However, as Guglielmin admits, Ballard is a growth company saddled with 38 years of history. Founded in 1979, Ballard stepped up to the plate in the late ’90s with the goal of hitting a home run through commercialization of its new fuel-cell technology. The company’s ambition was nothing less than to replace the internal combustion engine. Industry and investors bought in to the hype. Daimler-Benz AG and Ford Motor Co. became investors, leaving the company’s steering wheel stuck on the road to mass production of fuel-cell vehicles. Ballard went public in 1993, trading at $6 per share. By 2000, the stock was trading at the lofty heights of $192.
Unfortunately, the wheels fell off the company’s big dream, leading to a period Guglielmin calls the “dark decade.” The company’s nadir roughly spanned 2002 to 2012. By the end of that period, Ballard had little money left in the bank and its shares traded at $0.59. Guglielmin joined Ballard in 2010, with the company pivoting and focusing more on hitting singles – near-term industrial applications like warehouse forklifts. His first task was to reposition the company and its balance sheet to ensure Ballard could capitalize on new opportunities without hindrances.
Ballard hunkered down, trimmed its payroll, lowered costs and didn’t dive into debt. As well, the company largely declined the dilutive route of using expensive equity financings to keep afloat. As a result, the company avoided a bloated shareholder float and the handcuffs of restrictive covenants.
“During the dark decade it would have been easy for Ballard to go out and raise money on terms that would not have been very attractive,” Guglielmin said. “We resisted that. We wanted to position Ballard as the No. 1 prime investment opportunity for investors who wanted to get back into the fuel-cell space. It’s given us way more degrees of freedom.”
Three key developments have the company actively moving forward: a diversified commercial strategy, the emerging Chinese market for cleaner transportation alternatives and the appointment of Randy MacEwen as Ballard president and CEO in October 2014.
MacEwen has proven to be a transaction-driven CEO with a growth-oriented view. In little under two years, MacEwen and Guglielmin have closed a $25.6 million acquisition, a $5 million investment by a strategic investor, a $6.1 million divestiture of a non-core business, a $28.3 million equity financing with another strategic investor and a $170 million Chinese joint venture transaction. Ballard also rationalized its cost structure by $6 million.
Guglielmin is not the traditional accountant-turned-CFO; he’s designated as a certified financial analyst and has an MBA.
“Randy’s background is doing deals; my background happens to be similar,” Guglielmin said. “I’m not [an accountant] by training; I’m a banker. Most of my career has been around financing and [mergers and acquisitions]. He and I talk the same language.”
MacEwen praises Guglielmin for doing an “extraordinary job” in tackling a heavy volume of transactions and managing the variety of teams that see deals through. Most importantly, MacEwen gives him kudos for navigating the company’s entry into the China market.
“To join Ballard you’ve got to have a fairly high risk tolerance. Tony brings that combination of appropriate risk management and corporate governance. Going into China is a minefield of potential challenges. He’s been able to navigate the risk management issues whether it’s [intellectual property] related issues or making sure we get paid,” said MacEwen. “He’s embraced a very vibrant and dynamic opportunity with the right level of risk management.”
Ballard’s renewed pace of transactions and global outreach mirrors Guglielmin’s time at Finning (TSX:FTT) when the company set up an international head office. As vice-president of corporate development, he managed global acquisitions totalling more than $1 billion.
“Maybe it’s good luck or good timing, but I’ve been fortunate to get in on the ground floor of a couple of really interesting opportunities with companies,” said Guglielmin of Finning and Ballard. “Again, because of the background I have and my commitment to work hard, I don’t mind jumping on planes and flying around the world.”
For 2016, Ballard reported a year-over-year 51% increase in revenue, an improvement in its gross margin from 18% to 28% and an 81% spike in liquidity with $72.6 million of cash in its coffers. While China represents a big market opportunity, Guglielmin notes that approximately 40% of revenues are from the company’s high-margin technology solutions division, which develops a variety of market applications for customers.
Ballard has turned the page on the “dark period,” he said.
“It’s a very, very exciting time for the company. What I feel, personally is that if you’re writing chapters to a book, this is a new chapter for Ballard.” •
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