01:15 PM EDT, 04/01/2024 (MT Newswires) -- Ballard secures US$54 million more in funding for Texas Gigafactory and the largest order in company history, notes National Bank.

Monday morning, Ballard announced a long-term supply agreement with Europe's Solaris Bus & Coach for 1,000 hydrogen fuel cell engines to be delivered over the next four years. The agreement packages ~300 existing fuel cell orders and adds 700 more alongside aftermarket and extended warranty services to the full order, notes National Bank. Of the agreement, ~80% are for BLDP's FCmove-HD 70 kW engines for 12-metre buses with the remainder being FCmove-HD+ 100 kW engines for 18-metre buses. Analyst Rupert Merer believes the full LTSA value could be in the range of $40-60 million, which will be delivered starting this year through the end of 2027E. The deal is the largest Ballard has signed to date and represents growing order volumes from its existing customers, a pattern that could be more common for the company in the years to come, Merer adds. For 2024E, National expects the bus segment to deliver ~$38 million in revenue (~32% of total revenue), making it Ballard's largest segment.

In a separate release, BLDP announced that it would receive an additional US$54 million of funding support for its 3 GW per year Gigafactory via a 30% investment tax credit. This funding comes in addition to the already announced US$40 million from the DOE and reduces the company's required investment to US$110 million from US$160 million through 2027E. A final investment decision on the proposed facility should come later this year, though Merer expects all that remains are formalities.

The sector has been challenged this year, but the outlook for BLDP should improve with a large backlog, adequate liquidity and continued proof of customers moving towards commercial volumes over time.

Maintain Outperform/Speculative rating. Target of US$4.50/sh.

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