FuelCell Energy (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 third quarter ended July 31, 2017 and key business
highlights.
Financial ResultsFuelCell Energy (the Company)
reported total revenues for the third quarter of 2017 of $10.4
million, compared to $21.7 million for the comparable prior year
period. The change in revenue reflects the transition to
retaining projects in the Generation portfolio. Revenue
components include:
- Service and license totaled $4.8 million for the current period
compared to $4.3 million for the third quarter of 2016.
- Generation totaled $1.7 million for the current period compared
to $0.2 million for the third quarter of 2016. The increase
reflects the growth in the operating portfolio. A number of
project awards were announced subsequent to July 31, 2017 so the
Generation portfolio is expected to continue to grow as projects
become operational.
- Product totaled $0.6 million for the current period compared to
$13.7 million for the third quarter of 2016.
- Advanced Technologies totaled $3.2 million for the current
period compared to $3.6 million for the third quarter of
2016.
A gross loss of ($2.6) million was incurred in the third quarter
of 2017, compared to a gross profit of $0.4 million for the
comparable prior year period. Production levels were adjusted
in the third quarter to meet backlog requirements. This led
to the under-absorption of fixed overhead costs compared to the
prior year period that had a higher level of production. The
gross loss in Products was only partially offset by the positive
contribution from the Generation portfolio, Advanced Technology and
Service contracts.
Operating expenses for the current period totaled $11.7 million
compared to $10.8 million for the prior year period. The
increase in Administrative and selling expenses reflected higher
professional fees, particularly in relation to awarded contracts
and new proposals, such as the recently announced 40 megawatt award
from Long Island Power Authority (LIPA) and the 20 megawatt South
Korean project. Research and development expenses are
supporting new product introductions.
Net loss attributable to common shareholders for the third
quarter of 2017 totaled $17.8 million, or $0.31 per basic and
diluted share, compared to $11.8 million or $0.38 per basic and
diluted share for the third quarter of 2016.
Adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA, a Non-GAAP measure) in the third
quarter of 2017 totaled ($10.9) million. Refer to the
discussion of Non-GAAP financial measures below regarding the
Company’s calculation of Adjusted EBITDA. Capital spending
was $2.2 million in the third quarter of 2017 and depreciation
expense was $2.2 million, including depreciation of property, plant
and equipment as well as Project assets.
Revenue BacklogTotal backlog was $437.0 million
as of July 31, 2017 compared to $392.1 million as of July 31,
2016.
- Services backlog totaled $184.3 million as of July 31, 2017
compared to $214.7 million as of July 31, 2016. Services
backlog includes future contracted revenue from routine maintenance
and scheduled module exchanges for power plants under service
agreements.
- Generation backlog totaled $202.3 million as of July 31, 2017
representing future contracted energy sales under contracted power
purchase agreements between the Company and the end-user of the
power. Generation backlog for the comparable prior year
period totaled $84.3 million.
- Product sales backlog totaled $1.6 million as of July 31, 2017
compared to $35.0 million as of July 31, 2016.
- Advanced Technologies contracts backlog totaled $48.8 million
as of July 31, 2017 compared to $58.1 million as of July 31,
2016.
During the third quarter of 2017, the previously announced 1.4
megawatt Trinity University project was added to backlog.
Project awards referenced by the Company are notifications that
the Company has been selected, through a competitive bidding
process, to enter into definitive agreements. These awards have
been publicly disclosed. Negotiations are in process and when
complete, project awards will become backlog. Project awards that
were not included in backlog as of July 31, 2017 include the 39.8
megawatt LIPA selections, the 20 megawatt Korea Product Sale and
Service Agreements, the 2.8 megawatt Tulare BioMAT project and the
7.4 megawatt CMEEC letter of intent.
Cash, restricted cash and financing
availabilityCash, cash equivalents, restricted cash and
financing availability totaled $113.8 million as of July 31, 2017,
including:
- Total cash of $73.8 million, including $35.7 million of
unrestricted cash and cash equivalents, and $38.1 million of
restricted cash
- $40.0 million of borrowing availability under the NRG Energy
revolving project financing facility
Subsequent to the end of the third quarter of 2017, the Company
priced an underwritten offering of convertible preferred stock
which will raise net proceeds of approximately $28 million upon
closing, which is expected on September 8, 2017.
Project Assets Long term project assets
consists of projects developed by the Company that are structured
with power purchase agreements (PPA), which generate recurring
monthly Generation revenue, as well as projects the Company is
developing and expects to retain and operate. Long term
project assets totaled $67.2 million as of July 31, 2017,
consisting of five projects totaling 11.2 megawatts plus costs
incurred to date for an additional five previously announced
projects that are under construction.
Business Highlights
- Awarded three fuel cell projects totaling 39.8 megawatts by
LIPA that represents up to $800 million of future
contracted revenue depending on whether the projects are sold or
retained
- Announced sale of 20 megawatts for South Korean utility project
and expected 20 year service agreement
- Announced renewable power project with electricity to be sold
to the local utility under California Biogas Market Adjustment
Tariff (BioMAT)
- Announced letter of intent for 7.4 megawatt project with
utility CMEEC to serve the strategic submarine base of their U.S.
Navy customer
- More than 100 megawatts of fuel cell parks under development in
Connecticut with multiple contractual paths enabled by State
legislation enacted for utility ownership as well as the
mandate for a State RFP that values resiliency, in-State economic
development, ratepayer costs and low emissions
- Advancing solid oxide fuel cell commercialization with an
installation at the NRG Energy Center Pittsburgh with the support
of the U.S. Department of Energy, utilizing the same platform as
the Company’s reversible fuel cell storage application
“Recent project awards combined with existing backlog now total
about $1.5 billion, which is transformational for the Company by
providing the sales volume needed to reach profitability,” said
Chip Bottone, President and Chief Executive Officer, FuelCell
Energy. “We have a global platform and demonstrated a
sizeable win in South Korea in a relatively short period of time
since re-assuming Asian marketing rights as we pursue a number of
multi-megawatt opportunities in the region.”
Conference Call InformationFuelCell Energy
management will host a conference call with investors beginning at
10:00 a.m. Eastern Time on Thursday, September 7, 2017 to discuss
the third quarter results for 2017.
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 September 7th earnings call event listed, or click
here
- Alternatively, participants can dial 647-689-4106 and state
FuelCell Energy or the conference ID number 69149780
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
(NASDAQ:FCEL) delivers efficient, affordable and clean solutions
for the supply, recovery and storage of energy. We design,
manufacture, undertake project development, install, operate and
maintain megawatt-scale fuel cell systems, serving utilities,
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 installations on three
continents and millions of megawatt hours of ultra-clean power
produced, FuelCell Energy is a global leader with environmentally
responsible 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.
Source: FuelCell Energy
FUELCELL ENERGY,
INC.Consolidated Balance
Sheets(Unaudited)(Amounts in thousands, except
share and per share amounts) |
|
|
|
July 31, 2017 |
|
|
October 31, 2016 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
35,683 |
|
|
$ |
84,187 |
|
Restricted cash and cash equivalents – short-term |
|
4,605 |
|
|
|
9,437 |
|
Accounts
receivable, net |
|
26,316 |
|
|
|
24,593 |
|
Inventories |
|
71,984 |
|
|
|
73,806 |
|
Other
current assets |
|
6,011 |
|
|
|
10,181 |
|
Total current
assets |
|
144,599 |
|
|
|
202,204 |
|
|
|
|
|
|
|
Restricted cash and
cash equivalents – long-term |
|
33,480 |
|
|
|
24,692 |
|
Long-term project
assets |
|
67,201 |
|
|
|
47,111 |
|
Property, plant and
equipment, net |
|
41,876 |
|
|
|
36,640 |
|
Goodwill |
|
4,075 |
|
|
|
4,075 |
|
Intangible assets |
|
9,592 |
|
|
|
9,592 |
|
Other assets, net |
|
16,445 |
|
|
|
16,415 |
|
Total assets |
$ |
317,268 |
|
|
$ |
340,729 |
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Current
portion of long-term debt |
$ |
21,738 |
|
|
$ |
5,010 |
|
Accounts
payable |
|
8,757 |
|
|
|
18,475 |
|
Accrued
liabilities |
|
13,122 |
|
|
|
20,900 |
|
Deferred
revenue |
|
8,971 |
|
|
|
6,811 |
|
Preferred stock obligation of subsidiary |
|
862 |
|
|
|
802 |
|
Total current
liabilities |
|
53,450 |
|
|
|
51,998 |
|
|
|
|
|
|
|
Long-term deferred
revenue |
|
19,430 |
|
|
|
20,974 |
|
Long-term preferred
stock obligation of subsidiary |
|
14,380 |
|
|
|
12,649 |
|
Long-term debt and
other liabilities |
|
70,338 |
|
|
|
80,855 |
|
Total liabilities |
|
157,598 |
|
|
|
166,476 |
|
Redeemable preferred stock (liquidation preference of $64,020 at
July 31, 2017 and October
31, 2016) |
|
59,857 |
|
|
|
59,857 |
|
Total Shareholders’
Equity: |
|
|
|
|
|
Common
stock ($0.0001 par value; 125,000,000 and 75,000,000 shares
authorized at July 31, 2017 and October
31, 2016, respectively;
60,972,037 and 35,174,424 shares issued and outstanding at July
31, 2017 and October 31, 2016,
respectively) |
|
6 |
|
|
|
4 |
|
Additional paid-in capital |
|
1,033,744 |
|
|
|
1,004,566 |
|
Accumulated deficit |
|
(933,554 |
) |
|
|
(889,630 |
) |
Accumulated other comprehensive loss |
|
(383 |
) |
|
|
(544 |
) |
Treasury
stock, Common, at cost (88,861 and 21,527 shares at July 31,
2017 and October
31, 2016, respectively) |
|
(280 |
) |
|
|
(179 |
) |
Deferred
compensation |
|
280 |
|
|
|
179 |
|
Total
Shareholders’ equity |
|
99,813 |
|
|
|
114,396 |
|
Total liabilities
and Shareholders’ equity |
$ |
317,268 |
|
|
$ |
340,729 |
|
|
|
|
|
|
|
Deferred Finance Costs. Accounting
Standards Update 2015-03, Simplifying the Presentation of Debt
Issuance Costs, requires that deferred finance costs related to a
recognized debt liability be presented in the balance sheet as a
direct deduction from the carrying amount of that debt.
Retrospective application is required which resulted in a
reclassification in our Consolidated Balance Sheet as of October
31, 2016 of $0.3 million of debt issuance costs from Current assets
to be a direct deduction of Current portion of debt and a
reclassification of $1.1million of debt issuance costs from Other
assets, net to be a direct deduction of Long-term debt and Other
liabilities. |
FUELCELL ENERGY,
INC.Consolidated Statements of
Operations(Unaudited)(Amounts in thousands, except
share and per share amounts) |
|
|
Three Months EndedJuly
31, |
|
2017 |
|
|
2016 |
|
Revenues: |
|
|
|
|
|
Product |
$ |
611 |
|
|
$ |
13,681 |
|
Service
and license |
|
4,809 |
|
|
|
4,280 |
|
Generation |
|
1,690 |
|
|
|
200 |
|
Advanced
technologies |
|
3,248 |
|
|
|
3,555 |
|
Total revenues |
|
10,358 |
|
|
|
21,716 |
|
|
|
|
|
|
|
Costs of revenues: |
|
|
|
|
|
Product |
|
4,266 |
|
|
|
13,740 |
|
Service
and license |
|
4,453 |
|
|
|
4,087 |
|
Generation |
|
1,500 |
|
|
|
197 |
|
Advanced
technologies |
|
2,765 |
|
|
|
3,258 |
|
Total cost of revenues |
|
12,984 |
|
|
|
21,282 |
|
|
|
|
|
|
|
Gross (loss)
profit |
|
(2,626 |
) |
|
|
434 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
Administrative and selling expenses |
|
6,310 |
|
|
|
5,458 |
|
Research
and development expenses |
|
5,394 |
|
|
|
5,299 |
|
Total
operating expenses |
|
11,704 |
|
|
|
10,757 |
|
|
|
|
|
|
|
Loss from
operations |
|
(14,330 |
) |
|
|
(10,323 |
) |
|
|
|
|
|
|
Interest
expense |
|
(2,279 |
) |
|
|
(1,373 |
) |
Other
(expense) income, net |
|
(393 |
) |
|
|
749 |
|
|
|
|
|
|
|
Loss before provision
for income taxes |
|
(17,002 |
) |
|
|
(10,947 |
) |
|
|
|
|
|
|
Benefit
(provision) for income taxes |
|
1 |
|
|
|
(120 |
) |
|
|
|
|
|
|
Net loss |
|
(17,001 |
) |
|
|
(11,067 |
) |
|
|
|
|
|
|
Net loss
attributable to noncontrolling interest
|
|
- |
|
|
|
57 |
|
|
|
|
|
|
|
Net loss attributable
to FuelCell Energy, Inc. |
|
(17,001 |
) |
|
|
(11,010 |
) |
|
|
|
|
|
|
Preferred
stock dividends |
|
(800 |
) |
|
|
(800 |
) |
|
|
|
|
|
|
Net loss to common
shareholders |
$ |
(17,801 |
) |
|
$ |
(11,810 |
) |
|
|
|
|
|
|
Loss per share basic
and diluted |
|
|
|
|
|
Basic |
$ |
(0.31 |
) |
|
$ |
(0.38 |
) |
Diluted |
$ |
(0.31 |
) |
|
$ |
(0.38 |
) |
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
Basic |
|
57,420,050 |
|
|
|
31,015,658 |
|
Diluted |
|
57,420,050 |
|
|
|
31,015,658 |
|
FUELCELL ENERGY,
INC.Consolidated Statements of
Operations(Unaudited)(Amounts in thousands, except
share and per share amounts) |
|
|
Nine Months EndedJuly
31, |
|
2017 |
|
|
2016 |
|
Revenues: |
|
|
|
|
|
Product |
$ |
3,155 |
|
|
$ |
54,178 |
|
Service
and license |
|
24,337 |
|
|
|
20,840 |
|
Generation |
|
5,409 |
|
|
|
533 |
|
Advanced
technologies |
|
14,876 |
|
|
|
8,228 |
|
Total revenues |
|
47,777 |
|
|
|
83,779 |
|
|
|
|
|
|
|
Costs of revenues: |
|
|
|
|
|
Product |
|
11,525 |
|
|
|
53,247 |
|
Service
and license |
|
22,878 |
|
|
|
21,527 |
|
Generation |
|
3,909 |
|
|
|
596 |
|
Advanced
technologies |
|
9,895 |
|
|
|
8,298 |
|
Total cost of revenues |
|
48,207 |
|
|
|
83,668 |
|
|
|
|
|
|
|
Gross (loss)
profit |
|
(430 |
) |
|
|
111 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
Administrative and selling expenses |
|
18,797 |
|
|
|
18,939 |
|
Research
and development expenses |
|
16,172 |
|
|
|
15,720 |
|
Restructuring expense |
|
1,355 |
|
|
|
- |
|
Total
operating expenses |
|
36,324 |
|
|
|
34,659 |
|
|
|
|
|
|
|
Loss from
operations |
|
(36,754 |
) |
|
|
(34,548 |
) |
|
|
|
|
|
|
Interest
expense |
|
(6,856 |
) |
|
|
(3,200 |
) |
Other
expense, net |
|
(270 |
) |
|
|
(110 |
) |
|
|
|
|
|
|
Loss before provision
for income taxes |
|
(43,880 |
) |
|
|
(37,858 |
) |
|
|
|
|
|
|
Provision
for income taxes |
|
(44 |
) |
|
|
(402 |
) |
|
|
|
|
|
|
Net loss |
|
(43,924 |
) |
|
|
(38,260 |
) |
|
|
|
|
|
|
Net loss
attributable to noncontrolling interest |
|
- |
|
|
|
165 |
|
|
|
|
|
|
|
Net loss attributable
to FuelCell Energy, Inc. |
|
(43,924 |
) |
|
|
(38,095 |
) |
|
|
|
|
|
|
Preferred
stock dividends |
|
(2,400 |
) |
|
|
(2,400 |
) |
|
|
|
|
|
|
Net loss to common
shareholders |
$ |
(46,324 |
) |
|
$ |
(40,495 |
) |
|
|
|
|
|
|
Loss per share basic
and diluted |
|
|
|
|
|
Basic |
$ |
(1.01 |
) |
|
$ |
(1.41 |
) |
Diluted |
$ |
(1.01 |
) |
|
$ |
(1.41 |
) |
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
Basic |
|
45,903,033 |
|
|
|
28,680,596 |
|
Diluted |
|
45,903,033 |
|
|
|
28,680,596 |
|
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 use 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 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. Adjusted EBITDA adjusts EBITDA for stock-based
compensation and restructuring charges, which are considered
non-recurring.
While management believes that the 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 attributable to FuelCell Energy, Inc.
|
Three Months Ended July 31, |
|
Nine Months Ended July 31, |
(Amounts in
thousands) |
2017 |
|
|
2016 |
|
|
2017 |
|
|
|
2016 |
|
Net loss attributable
to FuelCell Energy, Inc. |
$ |
(17,001 |
) |
|
$ |
(11,010 |
) |
|
$ |
(43,924 |
) |
|
$ |
(38,095 |
) |
Depreciation |
|
2,206 |
|
|
|
1,241 |
|
|
|
6,502 |
|
|
|
3,583 |
|
(Benefit)/Provision for
income taxes |
|
(1 |
) |
|
|
120 |
|
|
|
44 |
|
|
|
402 |
|
Other (income)/expense,
net(1) |
|
393 |
|
|
|
(749 |
) |
|
|
270 |
|
|
|
110 |
|
Interest expense |
|
2,279 |
|
|
|
1,373 |
|
|
|
6,856 |
|
|
|
3,200 |
|
EBITDA |
$ |
(12,124 |
) |
|
$ |
(9,025 |
) |
|
$ |
(30,252 |
) |
|
$ |
(30,800 |
) |
Stock-based
compensation expense |
|
1,206 |
|
|
|
867 |
|
|
|
3,432 |
|
|
|
2,530 |
|
Restructuring
expense |
|
- |
|
|
|
- |
|
|
|
1,355 |
|
|
|
- |
|
Adjusted EBITDA |
$ |
(10,918 |
) |
|
$ |
(8,158 |
) |
|
$ |
(25,465 |
) |
|
$ |
(28,270 |
) |
- 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.
Contact:
FuelCell Energy, Inc.
Kurt Goddard, Vice President Investor Relations
203-830-7494
ir@fce.com
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