Hyzon (HYZN) to Wind up Operations in the Netherlands & Australia

Zacks Equity Research
·4-min read

Hyzon Motors Inc. HYZN announced that it will halt operations in the Netherlands and Australia. This decision follows an assessment of challenging market conditions in these regions.

Compared to North America's efforts to accelerate hydrogen adoption, government support for fuel cell-powered transportation in Europe and Australia has decreased, including the reduction of hydrogen subsidies in many European countries. Hyzon, which is an American automotive company specializing in hydrogen fuel cell systems and zero-emission heavy-duty fuel cell electric vehicles, intends to maintain the potential to return to these markets as a supplier to Original Equipment Manufacturers.

Per Parker Meeks, CEO of Hyzon, amid the challenges of bringing new technology to market in an emerging industry, the company needs to focus on the North America market, and refuse industry and its large fleet trial programs scheduled to begin this summer.

The use of hydrogen as a fuel for heavy vehicles has been proposed as a key strategy to decarbonize Australia's transport industry in pursuit of net-zero targets. In 2021, Hyzon established a purpose-built assembly plant in Victoria. It also announced pilot programs to deploy its hydrogen fuel cells in buses in Queensland, tow trucks in Victoria and trucks servicing a zinc refinery operation in North Queensland.

Hyzon expects to incur charges of $17 million related to the exit activities, with $7 million in cash. These charges include non-cash inventory write-downs, employee-related costs, other exit-related costs and non-cash impairment charges. These costs are expected to be incurred in the second and third quarters of 2024, with related cash payments in the third and fourth quarters of 2024.

Additionally, Hyzon anticipates the derecognition of certain liabilities, potentially resulting in non-cash gains in the third and fourth quarters of 2024, though these gains cannot currently be estimated.

On Jan 23, 2024, Hyzon received a letter from Nasdaq notifying the company of non-compliance with the minimum bid price requirement of $1 per share. The company has until Jul 22, 2024, to regain compliance by maintaining a closing bid price of at least $1 per share for 10 consecutive business days. On Jul 5, 2024, the company applied to transfer its listing to The Nasdaq Capital Market, which would provide an additional 180 days to comply with the bid price rule.

Hyzon continues to pursue capital raising and explore strategic alternatives, including a potential sale of all or part of the company, divestiture of its Europe and Australia/New Zealand businesses, additional cost reductions, liquidity management, workforce reduction, and other significant corporate transactions. The company is also evaluating the need for bankruptcy protection or other in-court relief if its financing efforts or other strategic alternatives are unsuccessful.

Despite halting operations in the Netherlands and Australia, Hyzon reaffirms its commitment to its first-to-market, zero-emission single stack 200kW hydrogen fuel cell technology for North American Class 8 and refuse truck platforms. These platforms will be featured in large-fleet trial programs across the United States and Canada starting this summer. Hyzon also continues to optimize its operations in China.

Zacks Rank & Other Key Picks

HYZN currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the auto space are Blue Bird Corporation BLBD, Renault SA RNLSY and American Axle & Manufacturing Holdings, Inc. AXL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for BLBD’s 2024 sales and earnings suggests year-over-year growth of 17.29% and 155.14%, respectively. EPS estimates for 2024 and 2025 have improved 63 cents and 69 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for RNLSY’s 2024 sales and earnings suggests year-over-year growth of 20.78% and 62.43%, respectively. EPS estimates for 2024 and 2025 have improved 6 cents and 14 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for AXL’s 2024 sales and earnings suggests year-over-year growth of 3.05% and 544.44%, respectively. EPS estimates for 2024 have moved up 5 cents in the past 60 days. The same for 2025 has moved up 20 cents in the past 30 days.

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