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FuelCell Energy Reports First Quarter Fiscal 2019 Financial Results and Business Update

By March 7, 2019 7   min read  (1234 words)

March 7, 2019 |

FuelCell Energy Financial Results
  • Arranged over $100 million of new project construction finance commitments in the first quarter of fiscal 2019
  • Completed the construction phase of our high efficiency SureSource 4000 plant solution

DANBURY, Conn.– 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 Results
FuelCell 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 Awards
The 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 ability
Cash, 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 Information
FuelCell 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:

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