Wednesday, Hydrogenics Corp. (HYGS, HYG.TO), a Canada-based fuel cell manufacturer, reported a narrower net loss for its fourth quarter, driven by higher margin and sharp reduction in cash operating costs attributed to the ongoing streamlining initiatives.

Fourth-quarter net loss was US$1.95 million or US$0.02 per share compared to a net loss of US$9.50 million or US$0.10 per share in the same quarter last year.

On average, two analysts surveyed by Thomson Reuters expected loss of US$0.04 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues in the quarter fell to US$8.86 million from prior year's US$11.05 million, and missed three Wall Street analysts' consensus estimate of US$10.82 million.

Excluding test systems business unit, revenues for the quarter grew 9%, reflecting stronger OnSite Generation revenues across all markets.

In the quarter, gross profit increased to US$2.57 million from US$1.43 million a year ago, and gross margin was 29%, up 16 percentage points from 13% in 2007, driven by operational improvements, product cost reductions and a more favourable absorption of overhead.

Cash operating costs, or selling, general and administrative expenses, and research and product development expenses less stock-based compensation expense and compensation expenses indexed to share price, were $4.4 million, a 49% decrease from $8.7 million last year.

EBITDA loss was US$2.0 million for the fourth quarter, a reduction of 79% from last year. In the quarter, the company recorded loss from operations of US$2.22 million, however, narrower than last year's US$9.87 million, reflecting decline in operating expenses to US$4.79 million from US$11.30 million in the previous year.

Commenting on the results, Daryl Wilson, President and Chief Executive Officer, stated, Hydrogenics' strong fourth quarter results were evidenced by higher revenues and gross margin, decreased operating expenses and a 74% reduction in annual cash consumption.

In the preceding third quarter, Hydrogenics had reported a net loss of US$3.73 million or US$0.04 per share, narrower than net loss of US$6.48 million or US$0.07 per share last year. Third-quarter revenues grew to US$10.98 million from US$10.62 million in the comparable period a year ago.

For the fiscal year 2008, Hydrogenics' net loss narrowed to US$14.32 million or US$0.16 per share from net loss of US$28.07 million or US$0.31 per share last year.

Revenues rose to US$39.34 million from US$37.99 million a year ago. Meanwhile, the revenue growth was 43% excluding test systems business unit to US$36.9 million, helped by 59% growth in revenue in OnSite Generation business unit.

As of December 31, 2008, the company's cash and cash equivalents, restricted cash and short-term investments were US$22.73 million, compared to prior year's US$30.49 million.

The year-end backlog was US$22.2 million, more than 90% of which is anticipated to be delivered and recognized as revenue in 2009, the company said.

HYGS closed Tuesday's regular trading session at US$0.49, up US$0.07, on a volume of 367 thousand shares.

HYG.TO settled at C$0.59 on Tuesday, down C$0.08, on a volume of 84 thousand shares.

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