FuelCell Energy, Inc. (Nasdaq: FCEL), a global
leader in fuel cell technology focused on utilizing its
proprietary, state-of-the-art fuel cell platforms to enable a world
empowered by clean energy, today reported financial results for its
first quarter ended January 31, 2020 and key business highlights.
“Our accomplishments in the quarter were a
manifestation of our successful execution in a number of areas,
including an increase in revenue over the fourth quarter of fiscal
2019, and our continued focus on effective management of operating
expenses, while continuing to deliver on project build-out and
improvements in our balance sheet and cash on hand,” said Jason
Few, President and CEO.
Mr. Few continued, “These results clearly
reflect the overall momentum of FuelCell Energy’s turnaround.
As I noted during our fourth quarter earnings call, while we
continue to strengthen and grow, we have begun to shift our focus
to a longer-term view, where our business model and our
differentiated energy platforms create significant opportunities to
add revenue and earnings as we build on our business development
capabilities.”
First Quarter of Fiscal 2020
Results
Note: All comparisons between periods are
between the first quarter of fiscal 2020 and the first quarter of
fiscal 2019, unless otherwise specified. In this press
release, FuelCell Energy refers to various GAAP (U.S. generally
accepted accounting principles) and non-GAAP financial
measures. These non-GAAP measures may not be comparable to
similarly titled measures being used and disclosed by other
companies. FuelCell Energy believes that this non-GAAP
information is useful to an understanding of its operating results
and the ongoing performance of its business. A reconciliation of
EBITDA, Adjusted EBITDA and any other non-GAAP measures is
contained in the appendix to this press release.
First quarter revenue of $16.3 million
represents a decrease of 9% and reflects a decrease in Service and
License revenues, partially offset by increased Generation and
Advanced Technologies contract revenues.
- Generation revenues increased by 268% to $5.4 million from $1.5
million, as a result of additional revenue recorded for the power
purchase agreement (“PPA”) associated with the Bridgeport Fuel Cell
Park project, which was acquired in 2019.
- Advanced Technologies contract revenues increased by 15% to
$5.2 million from $4.5 million primarily due to the addition of our
Joint Development Agreement with ExxonMobil Research and
Engineering Company (“EMRE”). The balance of the Advanced
Technologies contract revenues in the first quarter of fiscal 2020
relates to the continued development of our solid oxide platform as
we prepare to deliver electrolysis and long-duration hydrogen-based
energy storage platforms.
- Service and License revenues decreased by 52% to $5.6 million
from $11.8 million. Revenue recognized in the first quarter
primarily includes license revenues of $4 million associated with
our Joint Development Agreement with EMRE, with the balance
representing contracted service revenue. The decrease was primarily
due to the fact that there was no module replacement activity
during the quarter.
Gross profit for the first fiscal quarter of
2020 totaled $3.3 million, compared to a loss of $(2.2) million in
the comparable prior-year quarter. Results for the first fiscal
quarter of 2020 benefitted from our restructuring initiative in
2019, which resulted in lower manufacturing costs, contributions
from our larger generation fleet (related to the acquisition of the
Bridgeport Fuel Cell Park project), and the license revenue
recognized in the quarter.
Operating expenses for the first fiscal quarter
of 2020 decreased by 51% to $6.4 million, compared to $13.0 million
in the first fiscal quarter of 2019. Research and development
expenses of $1.2 million and Administrative and Selling expenses of
$5.3 million reflect lower headcount and overhead as a result of
restructuring activities during fiscal 2019 and an increased
allocation of efforts to revenue producing activity. Administrative
and Selling expenses also benefited from a legal settlement of $2.2
million received during the quarter.
Loss from operations improved to $(3.1) million
in the first fiscal quarter of 2020 when compared to loss from
operations of $(15.2) million in the first fiscal quarter of
2019.
“We have made significant progress over the last
9 months in improving the operational effectiveness and financial
health of the company. During the same time, we have also been
laying the foundation for marketplace success through improvements
to our sales and marketing capabilities and to our energy platform
offerings. As a result, we believe that FuelCell Energy is
increasingly viewed as an industry leader delivering innovation and
is well positioned for the global transition to more sustainable
energy solutions, as supported by a robust sales pipeline, to
deliver growth for the company,” said Jason Few.
Few also noted, “We are confident that we are on
the right path to deliver value for all our stakeholders, which is
a testament to the efforts of the FuelCell Energy team who work
tirelessly to deliver these results while staying true to our
purpose of enabling a world empowered by clean energy. We believe
that our clean, always on energy platforms enable our customers to
continue to enjoy the benefits of clean energy without sacrificing
the reliability and stability of the grid or changing the way they
live.”
Net loss was ($40.2) million in the first
fiscal quarter of 2020, compared to net loss of ($17.5) million in
the first fiscal quarter of 2019. The increase in the net loss is
primarily due to a change in the fair value of the liability
associated with the warrants issued to the lenders under our credit
agreement with Orion Energy Partners Investment Agent, LLC and its
affiliated lenders, partially offset by higher gross profit and
lower operating expenses.
Adjusted EBITDA totaled $(0.2) million in the
first fiscal quarter of 2020, compared to Adjusted EBITDA of
$(12.1) million in the first fiscal quarter of 2019. Please see the
discussion of non-GAAP financial measures, including Adjusted
EBITDA, in the appendix at the end of this release.
The net loss per share attributable to common
stockholders in the first fiscal quarter of 2020 was $(0.20),
compared to $(3.97) in the first fiscal quarter of 2019. The lower
net loss per common share is due to higher weighted average shares
outstanding due to share issuances since January 31, 2019.
The net loss per share in the first quarter of fiscal 2020 includes
the change in the fair value of the liability associated with the
warrants issued to the lenders under our credit agreement with
Orion Energy Partners Investment Agent, LLC and its affiliated
lenders of $34.2 million, accounting for approximately a $(0.17)
per share impact on the reported net loss per share. The net loss
per share attributable to common stockholders in the quarter ended
January 31, 2019 included 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.
“Lastly, I would be remiss if I didn’t discuss
the Coronavirus as it relates to our team members, suppliers and
business overall,” added Few. “We remain vigilant and are taking
precautions to help our team members remain safe and are monitoring
supply lines and the potential impact of the coronavirus on our
operations. In addition, we are complying and will continue
to comply with all state, federal and international government
rules and regulations that dictate how we must respond to the
virus.”
Cash, Restricted Cash and Financing
Activities
Cash and cash equivalents and restricted cash
and cash equivalents totaled $73.9 million as of January 31, 2020
compared to $39.8 million as of October 31, 2019. As of
January 31, 2020, restricted cash and cash equivalents was $35.7
million, of which $8.2 million was classified as current and $27.5
million was classified as non-current, compared to $30.3 million of
total restricted cash and cash equivalents as of October 31, 2019,
of which $3.5 million was classified as current and $26.9 million
was classified as non-current.
Net cash provided by financing activities was
$49.0 million during the three months ended January 31, 2020,
resulting from the receipt of $65.5 million of debt proceeds from
our credit facility with Orion Energy Partners Investment Agent,
LLC and its affiliated lenders, net of a debt discount of $1.6
million, and $3.0 million of debt proceeds from Connecticut Green
Bank and common stock sales of $3.5 million, offset by debt
repayment of $15.5 million, the payment of deferred financing costs
of $2.5 million, and the payment of preferred dividends and return
of capital of $3.4 million.
Key Consolidated Financial Metrics
|
Three Months Ended January 31, |
(Amounts
in thousands) |
2020 |
|
2019 |
|
Change |
Total revenues |
$ |
16,264 |
|
|
$ |
17,783 |
|
|
-9 |
% |
Gross
profit (loss) |
|
3,281 |
|
|
|
(2,205 |
) |
|
249 |
% |
Loss from
operations |
|
(3,140 |
) |
|
|
(15,244 |
) |
|
79 |
% |
EBITDA |
|
1,490 |
|
|
|
(13,045 |
) |
|
111 |
% |
Net loss
to common stockholders |
|
(41,082 |
) |
|
|
(33,038 |
) |
|
-24 |
% |
Net loss
per basic and diluted share |
$ |
(0.20 |
) |
|
$ |
(3.97 |
) |
|
95 |
% |
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
(222 |
) |
|
$ |
(12,063 |
) |
|
98 |
% |
Backlog
|
As of January 31, |
|
|
(Amounts
in thousands) |
2020 |
|
2019 |
|
Change |
Product |
$ |
- |
|
$ |
1 |
|
- |
|
Service(1) |
|
167,828 |
|
|
203,063 |
|
-17 |
% |
Generation |
|
1,108,978 |
|
|
982,364 |
|
13 |
% |
License |
|
22,650 |
|
|
23,821 |
|
-5 |
% |
Advanced
Technologies |
|
64,605 |
|
|
36,953 |
|
75 |
% |
Total Contract Backlog |
$ |
1,364,061 |
|
$ |
1,246,202 |
|
9 |
% |
|
(1) In July 2018, we contracted to operate and maintain a 20 MW
plant for Korea Southern Power Company (“KOSPO”). This contract was
originally represented in backlog as twenty years reflecting the
total term of the contract. Under the terms of the contract, KOSPO
has a renewal option in year ten. Thus, under the adoption of
Accounting Standards Update (“ASU”) 2014-09, “Revenue from
Contracts with Customers,” which was implemented on November 1,
2018, service backlog was reduced by $64.3 million in 2019 compared
to amounts previously disclosed. Should KOSPO exercise this option,
service backlog will be adjusted accordingly. |
|
Backlog increased to $1.36 billion as of January
31, 2020, reflecting additional generation backlog from the
Bridgeport Fuel Cell Park, San Bernardino, and LIPA Yaphank Solid
Waste Management projects. Backlog was impacted by the removal of
the Bolthouse Farms project in the fourth quarter of fiscal 2019,
and revenue recognized during the period. Service backlog decreased
mainly as a result of the acquisition of the Bridgeport Fuel Cell
Park project. Together, the service and generation portion of
backlog had an average weighted term of approximately 18 years
based on dollar backlog and utility service contracts of up to 20
years in duration at inception.
Backlog represents definitive agreements
executed by the Company and our customers. Projects for which the
Company has a power purchase agreement (“PPA”) are included in
generation backlog, which represents future revenue under long-term
PPAs. Projects sold to customers (and not retained by the Company)
are included in product sales and service backlog and the related
generation backlog is removed upon the sale.
Conference Call Information
FuelCell Energy will host a conference call
today beginning at 10:00 a.m. EDT to discuss first quarter fiscal
2020 results and key business highlights. Participants can
access the live call via webcast on the Company website or by
telephone as follows:
- The live webcast of the 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 16th earnings call event, or click here.
- Alternatively, participants can dial 647-689-4106 and state
FuelCell Energy or the conference ID number 3169993.
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 its business plans and strategies. 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, ability to access
certain markets, unanticipated manufacturing issues that impact
power plant performance, changes in critical accounting policies,
access to and ability to raise capital and attract financing,
potential volatility of energy prices, rapid technological change,
competition, the Company’s ability to successfully implement its
new business strategies and achieve its goals, the Company’s
ability to achieve its sales plans and cost reduction targets, and
the current implications of the novel coronavirus (Covid-19), 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) is a global leader in developing environmentally responsible
distributed baseload power solutions through our proprietary fuel
cell technology. We develop turn-key distributed power generation
solutions and operate and provide comprehensive services for the
life of the power plant. We are working to expand the proprietary
technologies that we have developed over the past five decades into
new products, markets and geographies. Our mission and purpose
remains to utilize our proprietary, state-of-the- art fuel cell
power plants to reduce the global environmental footprint of
baseload power generation by providing environmentally responsible
solutions for reliable electrical power, hot water, steam,
chilling, hydrogen, microgrid applications, and carbon capture and,
in so doing, drive demand for our products and services, thus
realizing positive stockholder returns. Our fuel cell solution is a
clean, efficient alternative to traditional combustion-based power
generation and is complementary to an energy mix consisting of
intermittent sources of energy, such as solar and wind turbines.
Our systems answer the needs of diverse customers across several
markets, including utility companies, municipalities, universities,
hospitals, government entities and a variety of industrial and
commercial enterprises. We provide solutions for various
applications, including utility-scale distributed generation,
on-site power generation and combined heat and power, with the
differentiating ability to do so utilizing multiple sources of fuel
including natural gas, Renewable Biogas (i.e., landfill gas,
anaerobic digester gas), propane and various blends of such fuels.
Our multi-fuel source capability is significantly enhanced by our
proprietary gas-clean-up skid.
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 31,2020 |
|
|
October 31, 2019 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents, unrestricted |
$ |
38,254 |
|
|
$ |
9,434 |
|
Restricted cash and cash equivalents – short-term |
|
8,178 |
|
|
|
3,473 |
|
Accounts receivable, net |
|
5,593 |
|
|
|
3,292 |
|
Unbilled receivables |
|
7,523 |
|
|
|
7,684 |
|
Inventories |
|
58,433 |
|
|
|
54,515 |
|
Other current assets |
|
6,805 |
|
|
|
5,921 |
|
Total current assets |
|
124,786 |
|
|
|
84,319 |
|
|
|
|
|
|
|
Restricted cash and cash
equivalents – long-term |
|
27,481 |
|
|
|
26,871 |
|
Project assets |
|
147,924 |
|
|
|
144,115 |
|
Inventory – long-term |
|
6,797 |
|
|
|
2,179 |
|
Property, plant and equipment,
net |
|
39,794 |
|
|
|
41,134 |
|
Operating lease right-of-use
assets |
|
10,276 |
|
|
|
- |
|
Goodwill |
|
4,075 |
|
|
|
4,075 |
|
Intangible assets |
|
20,939 |
|
|
|
21,264 |
|
Other assets |
|
9,327 |
|
|
|
9,489 |
|
Total assets |
$ |
391,399 |
|
|
$ |
333,446 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Current portion of long-term debt |
$ |
8,660 |
|
|
$ |
21,916 |
|
Operating lease liabilities |
|
1,149 |
|
|
|
- |
|
Accounts payable |
|
14,117 |
|
|
|
16,943 |
|
Accrued liabilities |
|
8,958 |
|
|
|
11,452 |
|
Deferred revenue |
|
15,341 |
|
|
|
11,471 |
|
Preferred stock obligation of subsidiary |
|
945 |
|
|
|
950 |
|
Total current liabilities |
|
49,170 |
|
|
|
62,732 |
|
|
|
|
|
|
|
Long-term deferred
revenue |
|
29,797 |
|
|
|
28,705 |
|
Long-term preferred stock
obligation of subsidiary |
|
16,721 |
|
|
|
16,275 |
|
Long-term operating lease
liabilities |
|
9,466 |
|
|
|
- |
|
Long-term debt and other
liabilities |
|
161,804 |
|
|
|
90,140 |
|
Total liabilities |
|
266,958 |
|
|
|
197,852 |
|
|
|
|
|
|
|
Redeemable Series B preferred
stock (liquidation preference of $64,020 at January 31, 2020 and
October 31, 2019) |
|
59,857 |
|
|
|
59,857 |
|
Total Equity: |
|
|
|
|
|
Stockholders’ equity Common stock ($0.0001 par value; 225,000,000
shares authorized at January 31, 2020 and October 31, 2019;
210,965,829 and 193,608,684 shares issued and outstanding at
January 31, 2020 and October 31, 2019, respectively) |
|
21 |
|
|
|
19 |
|
Additional paid-in capital |
|
1,180,499 |
|
|
|
1,151,454 |
|
Accumulated deficit |
|
(1,115,240 |
) |
|
|
(1,075,089 |
) |
Accumulated other comprehensive loss |
|
(696 |
) |
|
|
(647 |
) |
Treasury stock, Common, at cost (34,194 and 42,496 at January 31,
2020 and October 31, 2019, respectively) |
|
(437 |
) |
|
|
(466 |
) |
Deferred compensation |
|
437 |
|
|
|
466 |
|
Total stockholders’ equity |
|
64,584 |
|
|
|
75,737 |
|
Total liabilities and stockholders’ equity |
$ |
391,399 |
|
|
$ |
333,446 |
|
|
FUELCELL ENERGY,
INC.Consolidated Statements of
Operations(Unaudited)(Amounts in thousands, except
share and per share amounts)
|
Three Months EndedJanuary
31, |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
Product |
$ |
- |
|
|
$ |
- |
|
Service and license |
|
5,612 |
|
|
|
11,772 |
|
Generation |
|
5,442 |
|
|
|
1,479 |
|
Advanced Technologies |
|
5,210 |
|
|
|
4,532 |
|
Total revenues |
|
16,264 |
|
|
|
17,783 |
|
|
|
|
|
|
|
Costs of revenues: |
|
|
|
|
|
Product |
|
2,016 |
|
|
|
3,422 |
|
Service and license |
|
1,618 |
|
|
|
12,319 |
|
Generation |
|
5,557 |
|
|
|
1,636 |
|
Advanced Technologies |
|
3,792 |
|
|
|
2,611 |
|
Total cost of revenues |
|
12,983 |
|
|
|
19,988 |
|
|
|
|
|
|
|
Gross profit (loss) |
|
3,281 |
|
|
|
(2,205 |
) |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
Administrative and selling expenses |
|
5,266 |
|
|
|
6,759 |
|
Research and development expense |
|
1,155 |
|
|
|
6,280 |
|
Total costs and expenses |
|
6,421 |
|
|
|
13,039 |
|
|
|
|
|
|
|
Loss from operations |
|
(3,140 |
) |
|
|
(15,244 |
) |
|
|
|
|
|
|
Interest expense |
|
(3,277 |
) |
|
|
(2,464 |
) |
Change in fair value of common stock warrant liability |
|
(34,245 |
) |
|
|
- |
|
Other income, net |
|
531 |
|
|
|
160 |
|
|
|
|
|
|
|
Loss before provision for
income taxes |
|
(40,131 |
) |
|
|
(17,548 |
) |
|
|
|
|
|
|
Provision for income taxes |
|
(20 |
) |
|
|
- |
|
|
|
|
|
|
|
Net loss |
|
(40,151 |
) |
|
|
(17,548 |
) |
|
|
|
|
|
|
Series B preferred stock dividends |
|
(931 |
) |
|
|
(800 |
) |
Series C preferred stock deemed dividends and redemption value
adjustment |
|
- |
|
|
|
(9,005 |
) |
Series D preferred stock deemed dividends and redemption
accretion |
|
- |
|
|
|
(5,685 |
) |
|
|
|
|
|
|
Net loss attributable to
common stockholders |
$ |
(41,082 |
) |
|
$ |
(33,038 |
) |
|
|
|
|
|
|
Loss per share basic and
diluted: |
|
|
|
|
|
Net loss per share attributable to common stockholders |
$ |
(0.20 |
) |
|
$ |
(3.97 |
) |
Basic and diluted weighted average shares outstanding |
|
202,216,493 |
|
|
|
8,321,702 |
|
|
|
Appendix
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 the Company with those of other companies.
EBITDA differs from the most comparable GAAP measure, net loss
attributable to the Company, 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, restructuring charges and other
unusual items such as the legal settlement recorded during the
first quarter of fiscal 2020, 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) |
2020 |
|
2019 |
Net loss |
$ |
(40,151 |
) |
|
$ |
(17,548 |
) |
Depreciation and
amortization |
|
4,630 |
|
|
|
2,199 |
|
Provision for income taxes |
|
20 |
|
|
|
- |
|
Other income, net(1) |
|
(531 |
) |
|
|
(160 |
) |
Change in fair value of common
stock warrant liability |
|
34,245 |
|
|
|
- |
|
Interest expense |
|
3,277 |
|
|
|
2,464 |
|
EBITDA |
$ |
1,490 |
|
|
$ |
(13,045 |
) |
Stock-based compensation
expense |
|
488 |
|
|
|
982 |
|
Legal settlement(2) |
|
(2,200 |
) |
|
|
- |
|
Adjusted EBITDA |
$ |
(222 |
) |
|
$ |
(12,063 |
) |
|
(1) 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. |
(2) The Company received a legal settlement of $2.2 million
during the three months ended January 31, 2020, which was recorded
as an offset to administrative and selling expenses. |
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