FuelCell Energy, Inc. (Nasdaq:FCEL), a global leader in delivering
clean, innovative and affordable fuel cell solutions for the
supply, recovery and storage of energy, today reported financial
results for the three and six-month periods ended April 30, 2018
and key business highlights.
Financial ResultsFuelCell Energy, Inc. (the
Company) reported total revenues for the second quarter of fiscal
2018 of $20.8 million, compared to $20.4 million for the second
quarter of fiscal 2017, including:
- Product sales totaled $12.2 million for the second quarter of
fiscal 2018, compared to $0.7 million for the second quarter of
fiscal 2017. The increase is primarily a result of the sale
of the 2.8 megawatt (“MW”) fuel cell plant project located in
Tulare, California to NRG Yield, Inc. (“NRG Yield”).
- Service and license revenue totaled $3.2 million for the second
quarter of fiscal 2018, compared to $12.6 million for the second
quarter of fiscal 2017. The difference between the periods is
primarily due to the lower number of scheduled module replacements
in the second quarter of fiscal 2018 as compared to the second
quarter of fiscal 2017.
- Generation revenue totaled $1.7 million for the second quarter
of fiscal 2018, compared to $1.6 million for the second quarter of
fiscal 2017.
- Advanced Technologies contract revenue totaled $3.7 million for
the second quarter of fiscal 2018, compared to $5.5 million for the
second quarter of fiscal 2017. Revenue was lower for the
second quarter of fiscal 2018 primarily due to the timing of
project activity under existing contracts.
The gross loss generated in the second quarter
of fiscal 2018 totaled $0.6 million and the gross margin was (3.0)
percent, compared to a gross profit of $0.4 million generated in
the second quarter of fiscal 2017 and a gross margin of 1.9
percent. Generation costs of sales included a write-off of $0.4
million related to the cost of a development project. Both periods
were impacted by the under-absorption of fixed overhead costs due
to low production volumes. Manufacturing variances totaled
approximately $3.2 million for the three months ended April 30,
2018, compared to approximately $2.5 million for the three months
ended April 30, 2017. For the three months ended April 30, 2018,
the Company operated at an annualized production rate of
approximately 25 MW, compared to the rate of 35 MW in the three
months ended April 30, 2017. Operating expenses for the
second quarter of fiscal 2018 totaled $12.1 million, compared to
$11.9 million for the second quarter of fiscal 2017. This
increase is related to the timing of legal and professional related
expenditures due to business activities in the second quarter of
fiscal 2018, offset by lower research and development expenses
following the introduction of the 3.7 MW SureSource 4000 TM.
Net loss attributable to common stockholders for the second
quarter of fiscal 2018 totaled $18.2 million, or $0.23 per basic
and diluted share, compared to $14.0 million, or $0.33 per basic
and diluted share, for the second quarter of fiscal 2017. Net loss
attributable to common stockholders in the second quarter of fiscal
2018 includes a deemed dividend totaling $4.2 million on the
Company’s Series C Preferred Stock. Installment conversions in
which the conversion price is below the fixed conversion price of
$1.84 per share result in a variable number of shares being issued
to settle the installment amount and are treated as a partial
redemption of the shares of Series C Preferred Stock. Installment
conversions during the three months ended April 30, 2018 that were
settled in a variable number of shares and treated as redemptions
resulted in deemed dividends of $4.2 million.
Adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA, a Non-GAAP measure) in the second
quarter of fiscal 2018 totaled ($9.8) million, compared to ($8.0)
million in the second quarter of fiscal 2017. Refer to the
discussion of Non-GAAP financial measures below regarding the
Company’s calculation of Adjusted EBITDA.
Backlog and Project Awards
The Company had a contract backlog totaling
approximately $681.9 million as of April 30, 2018. Backlog by
revenue category is as follows:
- Services backlog totaled $189.9 million as of April 30, 2018,
compared to $188.3 million as of April 30, 2017. Services backlog
includes future contracted revenue from routine maintenance and
scheduled module exchanges for power plants under service
agreements. During the three months ended April 30, 2018, a service
agreement was added related to the Tulare 2.8 MW project which is
now owned by NRG Yield. This backlog does not yet include the
service agreement related to the 20 MW plant for Korea Southern
Power Co., Ltd. (“KOSPO”) further described as an award below.
- Generation backlog totaled $451.2 million as of April 30, 2018,
compared to $184.4 million as of April 30, 2017. Generation backlog
represents future contracted energy sales under contracted power
purchase agreements between the Company and the end-user of the
power.
- Product sales backlog totaled $1.4 million as of April 30,
2018, compared to $12.9 million as of April 30, 2017. Product sales
backlog primarily consists of the remaining scope of work on the 20
MW Korean utility order for KOSPO.
- Advanced technologies contracts backlog totaled $39.4 million
as of April 30, 2018, compared to $48.9 million as of April 30,
2017.
Backlog represents definitive agreements executed by the Company
and our customers. Projects with respect to which the Company
intends to retain ownership are included in generation backlog
which represents future revenue under long-term power purchase
agreements. Projects sold to customers (and not retained by the
Company) are included in product sales and service backlog. Project
awards referenced by the Company are notifications that the Company
has been selected, typically through a competitive bidding process,
to enter into definitive agreements. These awards have been
publicly disclosed. The Company is working to enter into
definitive agreements with respect to these project awards and,
upon execution of a definitive agreement with respect to a project
award, that project award will become backlog. Project awards that
were not included in backlog as of April 30, 2018 include the 39.8
MW Long Island Power Authority (“LIPA”) project awards (which, upon
execution of a definitive agreement, would become generation
backlog) and the 20 year service agreement supporting the 20 MW
Korean utility project with KOSPO. These awards in total represent
approximately $936 million of future revenue potential, assuming
the Company retains ownership of the LIPA projects.
Cash, restricted cash and borrowing
abilityCash, cash equivalents, restricted cash and
borrowing availability under the NRG Energy revolving project
financing facility totaled $145.2 million as of April 30, 2018,
including:
- Total cash of $105.2 million, including $67.0 million of
unrestricted cash and cash equivalents and $38.2 million of
restricted cash; and
- $40.0 million of borrowing availability under the NRG Energy
revolving project financing facility.
Project Assets Long term project assets
consists of projects developed by the Company that are structured
with power purchase agreements (PPAs), which generate recurring
monthly Generation revenue and cash flow, as well as projects the
Company is developing and expects to retain and operate. The
value of long term project assets totaled $79.6 million as of April
30, 2018, with such project assets consisting of five projects
totaling 11.2 MW plus costs incurred to date for an additional 62.3
MW of previously announced projects that are in various stages of
construction.
Business Highlights and Recent
Developments
- Commissioning was completed in June 2018 for the 20 MW Korean
utility project owned by Korea Southern Power Company. Installation
and commissioning was completed two months ahead of schedule.
- In March 2018, the Company submitted bids for projects in
Connecticut under an RFP issued by the Connecticut Department of
Energy and Environmental Protection (“DEEP”) pursuant to Public Act
17-144. The Company led a concerted effort to encourage the passage
of state legislation, Public Act 18-50, increasing the procurement
authority under this RFP from 4% to 6% of Connecticut’s electrical
load, and also increasing the state’s Renewable Portfolio Standard
from the current 20% to 40% by 2030, among other things.
- During the second quarter of fiscal 2018, we sold the Tulare
project to NRG Yield for approximately $11 million.
- On March 28, 2018, we amended our loan agreement with Hercules
Capital, increasing the facility amount to $25.0 million, extending
the maturity date until 2020, and including provisions providing
for an interest only period and other term
modifications.
- During the second quarter of fiscal 2018, we continued to
develop 62.3 MW of projects under development in the generation
portfolio.
“We are pleased with the execution of our strategy on a number
of fronts,” said Chip Bottone, President and Chief Executive
Officer, FuelCell Energy. “We completed delivery and commissioning
of the 20 megawatt Korean utility project a full two months before
our contractual target date and completed a sale of the now fully
operational 2.8 MW Tulare project to NRG Yield. The team
developed and submitted multiple bids in Connecticut with decisions
expected in the near team. We remain laser-focused on the key areas
for our success: Execution of our backlog, growth of our generation
portfolio assets, winning new business and advancing the big
opportunities of carbon capture, hydrogen production and
long-duration storage solutions.”
Conference Call InformationFuelCell Energy
management will host a conference call with investors beginning at
10:00 a.m. Eastern Time on Thursday, June 7, 2018 to discuss the
second quarter results for fiscal 2018. Participants can access the
live call via webcast on the Company website or by telephone as
follows:
- The live webcast of this call and supporting slide presentation
will be available at www.fuelcellenergy.com. To listen to the
call, select “Investors” on the home page, proceed to the “Events
& Presentations” page and then click on the “Webcast” link
listed under the June 7th earnings call event, or click here.
- Alternatively, participants can dial 647-689-4106 and state
FuelCell Energy or the conference ID number 8392774.
The replay of the conference call will be available via webcast
on the Company’s Investors’ page at www.fuelcellenergy.com
approximately two hours after the conclusion of the call.
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 and statements
regarding the Company’s plans and expectations regarding the
continuing 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 EnergyFuelCell Energy, Inc.
(NASDAQ:FCEL) delivers efficient, affordable and clean solutions
for the supply, recovery and storage of energy. We design,
manufacture, undertake project development of, install, operate and
maintain megawatt-scale fuel cell systems, serving utilities and
industrial and large municipal power users with solutions that
include both utility-scale and on-site power generation, carbon
capture, local hydrogen production for transportation and industry,
and long duration energy storage. With SureSource™
installations on three continents and millions of megawatt hours of
ultra-clean power produced, FuelCell Energy is a global leader in
designing, manufacturing, installing, operating and
maintaining environmentally responsible fuel cell power
solutions. Visit us online at www.fuelcellenergy.com and
follow us on Twitter @FuelCell_Energy.
SureSource, SureSource 1500, SureSource 3000, SureSource 4000,
SureSource Recovery, SureSource Capture, SureSource Hydrogen,
SureSource Storage, SureSource Service, SureSource Capital,
FuelCell Energy, and FuelCell Energy logo are all trademarks of
FuelCell Energy, Inc.
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Contact: |
FuelCell Energy,
Inc.ir@fce.com203.205.2491 Source: FuelCell
Energy |
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|
|
FUELCELL ENERGY, INC. |
Consolidated Balance Sheets |
(Unaudited) |
(Amounts in thousands, except share and per
share amounts) |
|
|
|
|
|
|
|
|
April 30, 2018 |
|
|
October 31, 2017 |
ASSETS |
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and
cash equivalents, unrestricted |
$ |
66,973 |
|
|
$ |
49,294 |
|
Restricted cash and cash equivalents – short-term |
|
5,249 |
|
|
|
4,628 |
|
Accounts
receivable, net |
|
46,189 |
|
|
|
68,521 |
|
Inventories |
|
55,255 |
|
|
|
74,496 |
|
Other
current assets |
|
7,938 |
|
|
|
6,571 |
|
Total
current assets |
|
181,604 |
|
|
|
203,510 |
|
|
|
|
|
|
|
Restricted
cash and cash equivalents – long-term |
|
32,965 |
|
|
|
33,526 |
|
Project
assets |
|
79,595 |
|
|
|
73,001 |
|
Property,
plant and equipment, net |
|
44,667 |
|
|
|
43,565 |
|
Goodwill |
|
4,075 |
|
|
|
4,075 |
|
Intangible
assets |
|
9,592 |
|
|
|
9,592 |
|
Other
assets |
|
15,121 |
|
|
|
16,517 |
|
Total
assets |
$ |
367,619 |
|
|
$ |
383,786 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Current
portion of long-term debt |
$ |
10,094 |
|
|
$ |
28,281 |
|
Accounts
payable |
|
42,813 |
|
|
|
42,616 |
|
Accrued
liabilities |
|
14,731 |
|
|
|
18,381 |
|
Deferred
revenue |
|
9,424 |
|
|
|
7,964 |
|
Preferred
stock obligation of subsidiary |
|
837 |
|
|
|
836 |
|
Total
current liabilities |
|
77,899 |
|
|
|
98,078 |
|
|
|
|
|
|
|
Long-term
deferred revenue |
|
17,841 |
|
|
|
18,915 |
|
Long-term
preferred stock obligation of subsidiary |
|
14,825 |
|
|
|
14,221 |
|
Long-term
debt and other liabilities |
|
82,804 |
|
|
|
63,759 |
|
Total
liabilities |
|
193,369 |
|
|
|
194,973 |
|
|
|
|
|
|
|
|
|
Redeemable
Series B preferred stock (liquidation preference of $64,020 at
April 30, 2018 and October 31, 2017) |
|
59,857 |
|
|
|
59,857 |
|
Redeemable
Series C preferred stock (liquidation preference of $14,548 and
$33,300 as of April 30, 2018 and October 31, 2017,
respectively) |
|
12,102 |
|
|
|
27,700 |
|
|
|
|
|
|
|
Total
Equity: |
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
Common
stock ($0.0001 par value; 225,000,000 and 125,000,000 shares
authorized at April 30, 2018 and October 31, 2017, respectively;
84,898,762 and 69,492,816 shares issued and outstanding at April
30, 2018 and October 31, 2017, respectively) |
|
8 |
|
|
|
7 |
|
Additional paid-in capital |
|
1,063,501 |
|
|
|
1,045,197 |
|
Accumulated deficit |
|
(960,890 |
) |
|
|
(943,533 |
) |
Accumulated other comprehensive loss |
|
(328 |
) |
|
|
(415 |
) |
Treasury
stock, Common, at cost (182,962 and 88,861 at April 30, 2018 and
October 31, 2017, respectively) |
|
(447 |
) |
|
|
(280 |
) |
Deferred
compensation |
|
447 |
|
|
|
280 |
|
Total
stockholders’ equity |
|
102,291 |
|
|
|
101,256 |
|
Total
liabilities and stockholders’ equity |
$ |
367,619 |
|
|
$ |
383,786 |
|
|
|
|
|
|
|
|
FUELCELL ENERGY, INC. |
Consolidated Statements of
Operations |
(Unaudited) |
(Amounts in thousands, except share and per
share amounts) |
|
|
Three Months EndedApril
30, |
|
2018 |
|
|
2017 |
|
Revenues: |
|
|
|
|
|
Product |
$ |
12,200 |
|
|
$ |
737 |
|
Service
and license |
|
3,206 |
|
|
|
12,592 |
|
Generation |
|
1,742 |
|
|
|
1,634 |
|
Advanced
Technologies |
|
3,682 |
|
|
|
5,454 |
|
Total
revenues |
|
20,830 |
|
|
|
20,417 |
|
|
|
|
|
|
|
Costs of
revenues: |
|
|
|
|
|
Product |
|
13,947 |
|
|
|
3,204 |
|
Service
and license |
|
2,531 |
|
|
|
12,159 |
|
Generation |
|
2,036 |
|
|
|
1,294 |
|
Advanced
Technologies |
|
2,945 |
|
|
|
3,377 |
|
Total
cost of revenues |
|
21,459 |
|
|
|
20,034 |
|
|
|
|
|
|
|
Gross (loss)
profit |
|
(629 |
) |
|
|
383 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
Administrative and selling expenses |
|
7,085 |
|
|
|
6,483 |
|
Research
and development expense |
|
5,021 |
|
|
|
5,386 |
|
Restructuring expense |
|
- |
|
|
|
10 |
|
Total
operating expenses |
|
12,106 |
|
|
|
11,879 |
|
|
|
|
|
|
|
Loss from
operations |
|
(12,735 |
) |
|
|
(11,496 |
) |
|
|
|
|
|
|
Interest
expense |
|
(2,059 |
) |
|
|
(2,310 |
) |
Other
income, net |
|
1,620 |
|
|
|
532 |
|
|
|
|
|
|
|
Loss before
benefit for income taxes |
|
(13,174 |
) |
|
|
(13,274 |
) |
|
|
|
|
|
|
Benefit
for income taxes |
|
- |
|
|
|
36 |
|
|
|
|
|
|
|
Net loss |
|
(13,174 |
) |
|
|
(13,238 |
) |
|
|
|
|
|
|
Series C
preferred stock deemed dividend |
|
(4,199 |
) |
|
|
--- |
|
Series B
preferred stock dividends |
|
(800 |
) |
|
|
(800 |
) |
|
|
|
|
|
|
Net loss
attributable to common stockholders |
$ |
(18,173 |
) |
|
$ |
(14,038 |
) |
|
|
|
|
|
|
Loss per
share basic and diluted: |
|
|
|
|
|
Net loss
per share attributable to common stockholders |
$ |
(0.23 |
) |
|
$ |
(0.33 |
) |
Basic and
diluted weighted average shares outstanding |
|
79,563,265 |
|
|
|
42,568,818 |
|
|
|
|
|
|
|
|
|
|
FUELCELL ENERGY, INC. |
Consolidated Statements of
Operations |
(Unaudited) |
(Amounts in thousands, except share and per
share amounts) |
|
|
Six Months EndedApril
30, |
|
2018 |
|
|
2017 |
|
Revenues: |
|
|
|
|
|
Product |
$ |
41,730 |
|
|
$ |
2,544 |
|
Service
and license |
|
7,310 |
|
|
|
19,528 |
|
Generation |
|
3,634 |
|
|
|
3,719 |
|
Advanced
Technologies |
|
6,769 |
|
|
|
11,628 |
|
Total
revenues |
|
59,443 |
|
|
|
37,419 |
|
|
|
|
|
|
|
Costs of
revenues: |
|
|
|
|
|
Product |
|
40,084 |
|
|
|
7,259 |
|
Service
and license |
|
5,937 |
|
|
|
18,425 |
|
Generation |
|
3,645 |
|
|
|
2,409 |
|
Advanced
Technologies |
|
5,771 |
|
|
|
7,130 |
|
Total
cost of revenues |
|
55,437 |
|
|
|
35,223 |
|
|
|
|
|
|
|
Gross
profit |
|
4,006 |
|
|
|
2,196 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
Administrative and selling expenses |
|
13,227 |
|
|
|
12,487 |
|
Research
and development expense |
|
9,067 |
|
|
|
10,778 |
|
Restructuring expense |
|
- |
|
|
|
1,355 |
|
Total
operating expenses |
|
22,294 |
|
|
|
24,620 |
|
|
|
|
|
|
|
Loss from
operations |
|
(18,288 |
) |
|
|
(22,424 |
) |
|
|
|
|
|
|
Interest
expense |
|
(4,200 |
) |
|
|
(4,577 |
) |
Other
income, net |
|
2,096 |
|
|
|
123 |
|
|
|
|
|
|
|
Loss before
benefit (provision) for income taxes |
|
(20,392 |
) |
|
|
(26,878 |
) |
|
|
|
|
|
|
Benefit
(provision) for income taxes |
|
3,035 |
|
|
|
(45 |
) |
|
|
|
|
|
|
Net loss |
|
(17,357 |
) |
|
|
(26,923 |
) |
|
|
|
|
|
|
Series C
preferred stock deemed dividend |
|
(7,662 |
) |
|
|
--- |
|
Series B
preferred stock dividends |
|
(1,600 |
) |
|
|
(1,600 |
) |
|
|
|
|
|
|
Net loss
attributable to common stockholders |
$ |
(26,619 |
) |
|
$ |
(28,523 |
) |
|
|
|
|
|
|
Loss per
share basic and diluted: |
|
|
|
|
|
Net loss
per share attributable to common stockholders |
$ |
(0.35 |
) |
|
$ |
(0.71 |
) |
Basic and
diluted weighted average shares outstanding |
|
75,731,565 |
|
|
|
40,049,948 |
|
|
|
|
|
|
|
|
|
Non-GAAP Financial MeasuresFinancial Results
are presented in accordance with accounting principles generally
accepted in the United States (“GAAP”). Management also uses
non-GAAP measures to analyze and make operating decisions on the
business. Earnings before interest, taxes, depreciation and
amortization (EBITDA) and Adjusted EBITDA are alternate, non-GAAP
measures of cash utilization by the Company.
These supplemental non-GAAP measures are provided to assist
readers in determining operating performance. Management believes
EBITDA and Adjusted EBITDA are useful in assessing performance and
highlighting trends on an overall basis. Management also believes
these measures are used by companies in the fuel cell sector and by
securities analysts and investors when comparing the results of
FuelCell Energy with those of other companies. EBITDA differs from
the most comparable GAAP measure, net loss attributable to FuelCell
Energy, Inc., primarily because it does not include finance
expense, income taxes and depreciation of property, plant and
equipment and project assets. Adjusted EBITDA adjusts EBITDA for
stock-based compensation and restructuring charges, which are
considered either non-cash or non-recurring.
While management believes that these non-GAAP financial measures
provide useful supplemental information to investors, there are
limitations associated with the use of these measures. The measures
are not prepared in accordance with GAAP and may not be directly
comparable to similarly titled measures of other companies due to
potential differences in the exact method of calculation. The
Company's non-GAAP financial measures are not meant to be
considered in isolation or as a substitute for comparable GAAP
financial measures, and should be read only in conjunction with the
Company's consolidated financial statements prepared in accordance
with GAAP.
The following table calculates EBITDA and Adjusted EBITDA and
reconciles these figures to the GAAP financial statement measure
Net loss.
|
Three Months Ended April 30, |
|
Six Months Ended April 30, |
(Amounts in
thousands) |
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Net loss |
$ |
(13,174 |
) |
|
$ |
(13,238 |
) |
|
$ |
(17,357 |
) |
|
$ |
(26,923 |
) |
Depreciation |
|
2,174 |
|
|
|
2,239 |
|
|
|
4,302 |
|
|
|
4,296 |
|
(Benefit)/Provision for income taxes |
|
- |
|
|
|
(36 |
) |
|
|
(3,035 |
) |
|
|
45 |
|
Other income,
net(1) |
|
(1,620 |
) |
|
|
(532 |
) |
|
|
(2,096 |
) |
|
|
(123 |
) |
Interest
expense |
|
2,059 |
|
|
|
2,310 |
|
|
|
4,200 |
|
|
|
4,577 |
|
EBITDA |
$ |
(10,561 |
) |
|
$ |
(9,257 |
) |
|
$ |
(13,986 |
) |
|
$ |
(18,128 |
) |
Stock-based
compensation expense |
|
761 |
|
|
|
1,213 |
|
|
|
1,378 |
|
|
|
2,226 |
|
Restructuring
expense |
|
- |
|
|
|
10 |
|
|
|
- |
|
|
|
1,355 |
|
Adjusted
EBITDA |
$ |
(9,800 |
) |
|
$ |
(8,034 |
) |
|
$ |
(12,608 |
) |
|
$ |
(14,547 |
) |
- Other income, net includes gains and losses from transactions
denominated in foreign currencies, changes in fair value of
embedded derivatives, and other items incurred periodically, which
are not the result of the Company’s normal business
operations.
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