FuelCell Energy Provides Business Update
December 01 2016 - 7:00AM
FuelCell Energy, Inc. (Nasdaq:FCEL), a global leader in the
design, manufacture, operation and service of ultra‐clean,
efficient and reliable fuel cell power plants, today announced a
business restructuring to reduce costs and align production levels
with current levels of demand in a manner that is consistent with
the Company’s long-term strategic plan.
The Company is reducing materials spend as well as implementing
various cost control initiatives. The workforce was reduced
at both the North American production facility in Torrington,
Connecticut, as well as at corporate offices in Danbury and remote
locations. A total of 96 positions, or approximately 17 percent of
the global workforce, was impacted. In conjunction with the
personnel reduction, the Company is implementing other measures to
reduce operating costs by at least $6 million on an annualized
basis. The production rate has been reduced to 25 megawatts
annually, from the prior rate of 50 megawatts annually, in order to
position for delays in anticipated order flow. A
personnel-related restructuring charge of approximately $3.0
million will be incurred in fiscal 2017, with approximately one
half of the charge composed of cash severance costs and the
remainder representing non-cash charges. This production level is
anticipated to be temporary and will be reevaluated as order flow
dictates, with any future increases being undertaken from what is
now a lower cost basis.
“We are streamlining our business and cost structure as we
reduce our production levels to meet the backlog we have today
while positioning the Company for long term success. Our
employees are our most valued assets so the decision to reduce our
workforce was not made lightly,” said Chip Bottone, President and
Chief Executive Officer FuelCell Energy.
Project development activities are continuing with proposals
being submitted for a utility-scale fuel cell only request for
proposal process in New York with decisions expected in the first
half of 2017. The Company also intends to continue to develop
and complete utility-scale fuel cell projects in Connecticut under
future processes to advance the State’s stated critical energy
goals. Favorable legislative and regulatory developments in New
York and California are expected to be supportive of projects in
the Company’s pipeline and the European market is expanding as
illustrated by the second utility order recently announced by the
Company. Fuel cell carbon capture opportunities are advancing
with a demonstration project at a utility-owned coal/gas-fired
power plant and developing interest from Canadian oil sands
operators as demonstrated by a recently announced engineering
study.
“Our value proposition for affordable, clean and continuous
power that is easy to site where the power is used is compelling
for addressing the power generation challenges facing society
globally today. American innovation and American manufacturing
combined with repurposing urban brownfields further solidifies the
economic value proposition,” concluded Mr. Bottone.
Financial updateThe Company is also providing the following
financial updates for its fiscal year and quarter ended October 31,
2016.
Cash and liquidity: As of the Company’s fiscal year end, October
31, 2016, consolidated cash and cash equivalents totaled
approximately $118 million, of which approximately $84 million is
unrestricted cash. In addition, the Company has a committed project
finance debt facility from NRG Energy with availability of
approximately $38 million at fiscal year-end 2016.
Revenues and Backlog: Total revenues for the fourth quarter of
2016 are expected to be in the range of $23 - $25 million, with
total fiscal 2016 revenue in the range of $107 - $109 million. As
previously disclosed, in October 2016, the Company closed on the
financing of a 5.6 megawatt project located at a global
pharmaceutical company under a power purchase agreement (PPA)
structure in conjunction with the start of commercial
operations. Electricity revenue will be recognized monthly as
power is sold under the twenty year term of the PPA. The
Company undertook a sale-leaseback of the project with a financial
institution, and under U.S. GAAP, a sale leaseback transaction does
not qualify for revenue recognition. Accordingly, revenue for 2016
will be lower than previously stated guidance due to this revenue
treatment and that certain anticipated projects forecasted to
commence in 2016 have not yet been realized. Contracted backlog as
of October 31, 2016 totaled in excess of $400 million.
These results are preliminary results and subject to final
reconciliation and adjustment. Final 2016 and fourth quarter
financial statements, business highlights, and commentary regarding
2017 outlook will be shared during the quarterly earnings call to
be held in early January 2017.
Cautionary Language This news release
contains forward-looking statements within the meaning of the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995, including, without limitation, statements with respect to
the Company’s anticipated financial results, restructuring
estimates, future operating cost estimates and statements regarding
the Company’s plans and expectations regarding the continuing
product and project development, commercialization and financing of
its fuel cell technology and business plans. All forward-looking
statements are subject to risks and uncertainties that could cause
actual results to differ materially from those projected. Factors
that could cause such a difference include, without limitation,
changes to projected deliveries and order flow, changes to
production rate and product costs, general risks associated with
product development, manufacturing, changes in the regulatory
environment, customer strategies, unanticipated manufacturing
issues that impact power plant performance, changes in critical
accounting policies, potential volatility of energy prices, rapid
technological change, competition, and the Company’s ability to
achieve its sales plans and cost reduction targets, as well as
other risks set forth in the Company’s filings with the Securities
and Exchange Commission. The forward-looking statements contained
herein speak only as of the date of this press release. The Company
expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any such statement to reflect
any change in the Company’s expectations or any change in events,
conditions or circumstances on which any such statement is
based.
About FuelCell EnergyDirect FuelCell® power
plants are generating ultra-clean, efficient and reliable power on
three continents, affordably providing continuous distributed power
generation to a variety of industries including utilities,
commercial and municipal customers. The Company’s power
plants have generated billions of kilowatt hours of ultra-clean
power using a wide variety of fuels including renewable biogas from
wastewater treatment and food processing, as well as clean natural
gas. For additional information, please visit
www.fuelcellenergy.com and follow us on Twitter.
Direct FuelCell, DFC, DFC/T, DFC-H2, DFC-ERG and FuelCell Energy
logo are all registered trademarks of FuelCell Energy, Inc.
Contact:
FuelCell Energy, Inc.
Kurt Goddard, Vice President Investor Relations
203-830-7494
ir@fce.com
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