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 its first fiscal quarter ended January 31, 2019 and key
business highlights.
Financial ResultsFuelCell Energy, Inc. (the
Company) reported total revenues for the first quarter of fiscal
2019 of $17.8 million, compared to total revenues of $38.6 million
for the first quarter of fiscal 2018, including:
- Service and license revenues totaled $11.8 million for the
first quarter of fiscal 2019 compared to $4.1 million for the first
quarter of fiscal 2018. The increase is primarily due to a
higher number of scheduled module replacements under the Company’s
service agreements in the first quarter of fiscal 2019, as well as
the benefit of the long-term service agreement with Korea Southern
Power Company (“KOSPO”) in South Korea entered into during fiscal
2018.
- Generation revenues totaled $1.5 million for the first quarter
of fiscal 2019 compared to $1.9 million for the first quarter of
fiscal 2018. Revenue was lower primarily due to the timing of plant
maintenance in the first quarter of fiscal 2019 compared with the
first quarter of fiscal 2018.
- Advanced technologies contract revenues totaled $4.5 million
for the first quarter of fiscal 2019 compared to $3.1 million for
the first quarter of fiscal 2018. Revenue was higher for the
first quarter of fiscal 2019 primarily due to the timing and mix of
activity under existing contracts.
- Product revenues decreased $29.5 million for the first quarter
of fiscal 2019 compared to the first quarter of fiscal 2018. The
decrease is primarily a result of the completion of deliveries in
fiscal 2018 under a 20 megawatt (MW) order for a utility project
owned by KOSPO.
The gross loss generated in the first quarter of fiscal 2019
totaled $2.2 million, compared to $4.6 million of gross profit
generated in the first quarter of fiscal 2018.
Operating expenses for the first quarter of fiscal 2019
totaled $13.0 million compared to $10.2 million for the first
quarter of fiscal 2018. This increase is related to spending
to complete the development and construction of the SureSource 4000
plant located in Danbury, Connecticut as well as higher
professional related and sales and marketing expenditures due to
business activities in the first quarter of fiscal 2019.
Net loss attributable to common stockholders for the first
quarter of fiscal 2019 totaled $33.0 million, or $0.33 per basic
and diluted share, compared to $8.4 million, or $0.12 per basic and
diluted share, for the first quarter of fiscal 2018. Net loss
attributable to common stockholders in the first quarter of fiscal
2019 includes a deemed dividend totaling $0.5 million and
redemption value adjustments of $8.6 million on the Company’s
Series C Convertible Preferred Stock, as well as a deemed dividend
of $1.9 million and $3.8 million of redemption accretion on the
Company’s Series D Convertible Preferred Stock. See the appendix at
the end of this release for further details regarding the deemed
dividend, redemption value adjustments and redemption accretion.
Together, these non-cash items accounted for approximately $0.15 of
the loss per share in the quarter.
Adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA, a Non-GAAP measure) in the first
quarter of fiscal 2019 totaled ($12.1) million compared to ($2.8)
million in the first quarter of fiscal 2018. Refer to the
discussion of Non-GAAP financial measures below regarding the
Company’s calculation of Adjusted EBITDA.
Backlog and Project AwardsThe Company had a
contract backlog totaling approximately $1.3 billion as of January
31, 2019 compared to contract backlog of approximately $638.5
million as of January 31, 2018.
- Services and license backlog totaled $291.2 million as of
January 31, 2019 compared to $178.7 million as of January 31,
2018. Services backlog includes future contracted revenue
from routine maintenance and scheduled module exchanges for power
plants under service agreements.
- Generation backlog totaled $982.4 million as of January 31,
2019 compared to $414.5 million as of January 31, 2018.
Generation backlog represents future contracted energy sales under
contracted power purchase agreements between the Company and the
end-user of the power. The previously announced 7.4 MW Long
Island Power Authority (“LIPA”) project in Yaphank, New York was
added to Generation backlog during the first quarter of fiscal
2019.
- Advanced technologies contract backlog totaled $37.0 million as
of January 31, 2019 compared to $43.1 million as of January 31,
2018.
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 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 January 31, 2019 include the remaining
32.4 MW LIPA project awards (which are expected to become
generation backlog). These awards in total represent approximately
$636.3 million of future revenue potential over the life of such
LIPA projects, assuming the Company retains ownership of the LIPA
projects.
Cash, restricted cash and borrowing
abilityCash, cash equivalents, restricted cash, and
restricted cash equivalents totaled $68.2 million as of January 31,
2019, including $27.8 million of unrestricted cash and cash
equivalents and $40.5 million of restricted cash and cash
equivalents.
The
Company also has $90 million of borrowing ability under the project
financing loan agreement with Generate Capital, which may be
available for the manufacture, construction, installation,
commissioning and start-up of stationary fuel cell projects
approved by Generate Capital.
Project Assets Long term project assets
consist 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. Long
term project assets totaled $109.8 million as of January 31, 2019,
with such project assets consisting of five previously completed
projects totaling 11.2 MW plus costs incurred to date for
previously announced projects that are under various stages of
construction.
Business Highlights and Recent
Developments – First Quarter Fiscal 2019
- Entered into a $100 million project finance facility with
Generate Lending that the Company expects to use to finance the
construction, installation and commissioning of certain of the
Company’s current and future project backlog and awards.
- Completed construction of the first SureSource 4000 fuel cell
located in Danbury, Connecticut.
- Continued to execute on 83.1 MW of projects in the generation
portfolio backlog.
“Overall, our first quarter was about executing on our longer
term vision of building a sustainably profitable and growth
oriented business focused on service solutions” said Chip Bottone,
President and Chief Executive Officer, FuelCell Energy. “Core to
this was the establishment of a number of new project financing
relationships that provide FuelCell Energy with efficient capital
to continue to develop and build out our project backlog. In
addition, we just completed the development and construction of our
high efficiency utility scale SureSource 4000 located in Danbury,
Connecticut. We are committed to driving our business towards
profitability, and this quarter’s accomplishments were major steps
towards that goal.”
Conference Call InformationFuelCell Energy
management will host a conference call with investors beginning at
10:00 a.m. Eastern Time on Thursday, March 7, 2019 to discuss the
first quarter results for fiscal 2019. 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 March 7th earnings call event listed, or click here.
- Alternatively, participants can dial 647-689-4106 and state
FuelCell Energy or the conference ID number 5884968.
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 Energy
FuelCell Energy, Inc. (NASDAQ: FCEL) delivers
state-of-the-art fuel cell power plants that provide
environmentally responsible solutions for various applications such
as utility-scale and on-site power generation, carbon capture,
local hydrogen production for both transportation and industry, and
long duration energy storage. Our systems cater to the needs
of customers across several industries, including utility
companies, municipalities, universities, government entities and a
variety of industrial and commercial enterprises. With our
megawatt-scale SureSource™ installations on three continents and
with more than 8.0 million megawatt hours of ultra-clean power
produced, FuelCell Energy is a global leader in designing,
manufacturing, installing, operating and maintaining
environmentally responsible fuel cell distributed 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.
Contact: |
FuelCell Energy,
Inc.ir@fce.com203.205.2491 Source: FuelCell
Energy |
FUELCELL ENERGY,
INC.Consolidated Balance
Sheets(Unaudited)(Amounts in thousands, except
share and per share amounts)
|
|
January 31,2019 |
|
|
October 31,2018 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash
equivalents, unrestricted |
$ |
27,750 |
|
|
$ |
39,291 |
|
Restricted cash
and cash equivalents – short-term |
|
5,601 |
|
|
|
5,806 |
|
Accounts
receivable, net |
|
8,321 |
|
|
|
9,280 |
|
Unbilled
receivables |
|
12,387 |
|
|
|
13,759 |
|
Inventories |
|
54,802 |
|
|
|
53,575 |
|
Other current
assets |
|
8,273 |
|
|
|
8,592 |
|
Total
current assets |
|
117,134 |
|
|
|
130,303 |
|
|
|
|
|
|
|
Restricted cash and
cash equivalents – long-term |
|
34,863 |
|
|
|
35,142 |
|
Project assets |
|
109,819 |
|
|
|
99,600 |
|
Property, plant and
equipment, net |
|
47,405 |
|
|
|
48,204 |
|
Goodwill |
|
4,075 |
|
|
|
4,075 |
|
Intangible assets |
|
9,592 |
|
|
|
9,592 |
|
Other assets |
|
23,067 |
|
|
|
13,505 |
|
Total
assets |
$ |
345,955 |
|
|
$ |
340,421 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Current portion
of long-term debt |
$ |
38,869 |
|
|
$ |
17,596 |
|
Accounts
payable |
|
19,905 |
|
|
|
22,594 |
|
Accrued
liabilities |
|
11,051 |
|
|
|
7,632 |
|
Deferred
revenue |
|
17,213 |
|
|
|
11,347 |
|
Preferred stock obligation of subsidiary |
|
951 |
|
|
|
952 |
|
Total
current liabilities |
|
87,989 |
|
|
|
60,121 |
|
|
|
|
|
|
|
Long-term deferred
revenue |
|
22,769 |
|
|
|
16,793 |
|
Long-term preferred
stock obligation of subsidiary |
|
15,282 |
|
|
|
14,965 |
|
Long-term debt and
other liabilities |
|
66,883 |
|
|
|
71,619 |
|
Total liabilities |
|
192,923 |
|
|
|
163,498 |
|
Redeemable Series B
preferred stock (liquidation preference of $64,020 at
January 31, 2019 and October 31, 2018) |
|
59,857 |
|
|
|
59,857 |
|
Redeemable Series C
preferred stock (liquidation preference of $7,470 and $8,992
as of January 31, 2019 and October 31, 2018,
respectively) |
|
7,470 |
|
|
|
7,480 |
|
Redeemable Series D
preferred stock (liquidation preference of $25,426 and
$30,680 as of January 31, 2019 and October 31, 2018,
respectively) |
|
26,851 |
|
|
|
27,392 |
|
Total
Equity: |
|
|
|
|
|
Stockholders’
equity Common stock ($0.0001 par value;
225,000,000 shares authorized at January
31, 2019 and October 31, 2018; 108,415,259 and 95,672,237
shares issued and outstanding at January 31,
2019 and October 31, 2018,
respectively) |
|
11 |
|
|
|
10 |
|
Additional
paid-in capital |
|
1,074,308 |
|
|
|
1,073,454 |
|
Accumulated
deficit |
|
(1,015,069 |
) |
|
|
(990,867 |
) |
Accumulated
other comprehensive loss |
|
(396 |
) |
|
|
(403 |
) |
Treasury stock,
Common, at cost (156,501 at January 31, 2019 and October 31,
2018) |
|
(363 |
) |
|
|
(363 |
) |
Deferred
compensation |
|
363 |
|
|
|
363 |
|
Total
stockholders’ equity |
|
58,854 |
|
|
|
82,194 |
|
Total
liabilities and stockholders’ equity |
$ |
345,955 |
|
|
$ |
340,421 |
|
FUELCELL ENERGY,
INC.Consolidated Statements of
Operations(Unaudited)(Amounts in thousands, except
share and per share amounts)
|
Three Months EndedJanuary
31, |
|
2019 |
|
|
2018 |
|
Revenues: |
|
|
|
|
|
Product |
$ |
- |
|
|
$ |
29,530 |
|
Service and
license |
|
11,772 |
|
|
|
4,104 |
|
Generation |
|
1,479 |
|
|
|
1,892 |
|
Advanced
Technologies |
|
4,532 |
|
|
|
3,087 |
|
Total revenues |
|
17,783 |
|
|
|
38,613 |
|
|
|
|
|
|
|
Costs of revenues: |
|
|
|
|
|
Product |
|
3,422 |
|
|
|
26,137 |
|
Service and
license |
|
12,319 |
|
|
|
3,406 |
|
Generation |
|
1,636 |
|
|
|
1,609 |
|
Advanced
Technologies |
|
2,611 |
|
|
|
2,826 |
|
Total cost of revenues |
|
19,988 |
|
|
|
33,978 |
|
|
|
|
|
|
|
Gross (loss)
profit |
|
(2,205 |
) |
|
|
4,635 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
Administrative
and selling expenses |
|
6,759 |
|
|
|
6,142 |
|
Research and
development expense |
|
6,280 |
|
|
|
4,046 |
|
Total
costs and expenses |
|
13,039 |
|
|
|
10,188 |
|
|
|
|
|
|
|
Loss from
operations |
|
(15,244 |
) |
|
|
(5,553 |
) |
|
|
|
|
|
|
Interest
expense |
|
(2,464 |
) |
|
|
(2,141 |
) |
Other income,
net |
|
160 |
|
|
|
476 |
|
|
|
|
|
|
|
Loss before benefit for
income taxes |
|
(17,548 |
) |
|
|
(7,218 |
) |
|
|
|
|
|
|
Benefit
for income taxes |
|
- |
|
|
|
3,035 |
|
|
|
|
|
|
|
Net loss |
|
(17,548 |
) |
|
|
(4,183 |
) |
|
|
|
|
|
|
Series B
preferred stock dividends |
|
(800 |
) |
|
|
(800 |
) |
Series C
preferred stock deemed dividend and redemption value
adjustment |
|
(9,005 |
) |
|
|
(3,463 |
) |
Series D
preferred stock deemed dividend and redemption accretion |
|
(5,685 |
) |
|
|
- |
|
|
|
|
|
|
|
Net loss attributable
to common stockholders |
$ |
(33,038 |
) |
|
$ |
(8,446 |
) |
|
|
|
|
|
|
Loss per share basic
and diluted: |
|
|
|
|
|
Net loss
per share attributable to common stockholders |
$ |
(0.33 |
) |
|
$ |
(0.12 |
) |
Basic and
diluted weighted average shares outstanding |
|
99,860,421 |
|
|
|
72,024,811 |
|
Appendix
Further Detail on Statement of Operations Accounting for
the Series C Convertible Preferred Stock and the Series D
Convertible Preferred Stock:
Net loss attributable to common stockholders in the first
quarter of fiscal 2019 includes a deemed dividend totaling $0.5
million on the Company’s Series C Convertible Preferred Stock,
redemption value adjustments of $8.6 million also on the Company’s
Series C Convertible Preferred Stock, deemed dividends totaling
$1.9 million on the Company’s Series D Convertible Preferred Stock,
as well as $3.8 million of redemption accretion on the Company’s
Series D Convertible Preferred Stock. Installment conversions of
the Company’s Series C Convertible Preferred Stock in which the
conversion price was below the adjusted conversion price of $1.50
per share, $0.58 per share, $0.50 per share, or $0.43 per share (as
in effect on applicable installment conversion dates) resulted in a
variable number of shares being issued to settle the installment
amount and were treated as a partial redemption of the Series C
Convertible Preferred Stock. Installment conversions of the
Company’s Series D Convertible Preferred Stock in which the
conversion price was below $1.38 (the conversion price of the
Series D Convertible Preferred Stock as of January 31, 2019)
resulted in a variable number of shares being issued to settle the
installment amount and were treated as a partial redemption of the
Series D Convertible Preferred Stock. The Series C
Convertible Preferred adjustment of $8.6 million for the first
quarter of fiscal 2019 reflects the trigger of a beneficial
conversion feature resulting from the reduction in conversion price
and the resulting adjustment of the instrument to redemption
value. The Series D Convertible Preferred Stock redemption
accretion of $3.8 million for the first quarter of fiscal 2019
reflects the accretion of the difference between the carrying value
and the amount that would be redeemed should stockholder approval
not be obtained for common stock issuance equal to 20% or more of
the Company’s outstanding voting stock prior to the issuance of the
Series D Convertible Preferred Stock.
Non-GAAP Financial Measures
Financial 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 January 31, |
|
(Amounts in
thousands) |
|
2019 |
|
|
|
2018 |
|
|
Net loss |
$ |
(17,548 |
) |
|
$ |
(4,183 |
) |
|
Depreciation |
|
2,199 |
|
|
|
2,128 |
|
|
Benefit for income
taxes |
|
- |
|
|
|
(3,035 |
) |
|
Other (income)/expense,
net (1) |
|
(160 |
) |
|
|
(476 |
) |
|
Interest expense |
|
2,464 |
|
|
|
2,141 |
|
|
EBITDA |
$ |
(13,045 |
) |
|
$ |
(3,425 |
) |
|
Stock-based compensation
expense |
|
982 |
|
|
|
617 |
|
|
Adjusted EBITDA |
$ |
(12,063 |
) |
|
$ |
(2,808 |
) |
|
- Other (income) expense, 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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