DANBURY, Conn.— FuelCell Energy, Inc. (the “Company”) (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 fiscal quarter ended July 31, 2019 and key business highlights.
“FuelCell Energy had a dynamic third quarter of 2019,” commented Jason Few, President and Chief Executive Officer of FuelCell Energy. “The Company focused on numerous restructuring and improvement initiatives, resulting in an improved balance sheet, a leaner spending profile, and a reinvigorated team. We continued to build on our long-standing relationship with ExxonMobil, entering into a license agreement in the quarter. We continue to focus on execution of our projects, including nearing completion on our Tulare BioMAT 2.8 megawatt plant and commencing large-scale onsite work on the U.S. Navy base in Groton, CT. We have a lot more work ahead of us, but I’m encouraged by the progress made over the past several months as well as the team’s commitment and passion for customers and our business.”
Business Highlights and Recent Developments
- Appointed Jason Few as President and Chief Executive Officer effective August 26, 2019.
- Acquired the 14.9 megawatt (“MW”) Bridgeport fuel cell project (the “Bridgeport Fuel Cell Project”) in May from Dominion Generation, Inc., with project lending provided by Fifth Third Bank, Liberty Bank and the Connecticut Green Bank.
- Entered into a $10 million license agreement with ExxonMobil Research and Engineering Company (“ExxonMobil”).
- Decreased the amount of our outstanding corporate debt with Hercules Capital, our senior secured lender.
- Relaunched the sub-megawatt distributed generation solution to the European market with the SureSource 250 and SureSource 400 fuel cell systems.
- Celebrated the one-year anniversary and strong performance of the 20 MW KOSPO project in South Korea.
- Entered into a new Carbon Capture FEED study with Drax Power Station in the United Kingdom.
Key Operating Metrics
In the third quarter of fiscal 2019:
- Total revenues increased 88% to $22.7 million in the quarter when compared to the third quarter of fiscal 2018 driven by the ExxonMobil license agreement and an increase in Generation revenues related to the Bridgeport Fuel Cell Project.
- Unrestricted cash and cash equivalents totaled $16.0 million as of July 31, 2019 compared to $14.9 million as of April 30, 2019. Cash and cash equivalents, including restricted cash, totaled $45.8 million at July 31, 2019, a decrease of $7.2 million when compared with April 30, 2019.
- Hercules senior secured debt totaled $7.4 million at the end of the third quarter of fiscal 2019, a decrease of $16.4 million when compared with the end of the second quarter of fiscal 2019.
- Backlog and project awards totaled $2.1 billion at the end of the third quarter of fiscal 2019, compared to $1.9 billion at the end of the third quarter of fiscal 2018.
Third Quarter of Fiscal 2019 Results
Total revenue increased to $22.7 million in the third quarter of fiscal 2019, up $10.6 million, or 88%, from the third quarter of fiscal 2018. Composition of revenue compared to the prior year is as follows:
- Service and license revenue totaled $11.5 million for the third quarter of fiscal 2019, compared to $5.5 million for the third quarter of fiscal 2018. The difference between the periods is primarily due to $10.0 million of revenue recognized in connection with the ExxonMobil license agreement offset by lower service revenue recorded as a result of fewer module replacements in the third quarter of fiscal 2019 and no revenue recorded for the Bridgeport Fuel Cell Project under the service agreement due to the acquisition.
- Generation revenue totaled $5.4 million for the third quarter of fiscal 2019 compared to $1.7 million for the third quarter of fiscal 2018 primarily as a result of revenue recognized from the Bridgeport Fuel Cell Project which was acquired during the third quarter of fiscal 2019.
- Advanced technologies contract revenue totaled $5.8 million for the third quarter of fiscal 2019, compared to $3.6 million for the third quarter of fiscal 2018. Revenue was higher for the third quarter of fiscal 2019 primarily due to the timing of project activity under existing contracts.
- Product revenue totaled $0 for the third quarter of fiscal 2019 compared to $1.3 million for the third quarter of fiscal 2018. Product revenue for the three months ended July 31, 2018 included revenues from the 20 MW order from Hanyang Industrial Development Co., Ltd (“HYD”), pursuant to which the Company provided equipment to HYD for a fuel cell project with Korea Southern Power Co., Ltd. The commissioning of this plant was completed in July 2018.
Operating expenses for the third quarter of fiscal 2019 totaled $9.0 million, a decrease of 27%, when compared to $12.4 million of operating expenses for the third quarter of fiscal 2018. The decrease related to the reduction in spending resulting from the Company’s restructuring initiatives and resources being allocated to funded Advanced Technologies projects, partially offset by higher legal and professional fees related to the Company’s on-going restructuring and refinancing initiatives.
Net loss attributable to common stockholders for the third quarter of fiscal 2019 totaled $8.3 million, or $0.18 per basic and diluted share, compared to a net loss attributable to common stockholders of $17.6 million, or $2.45 per basic and diluted share, for the third quarter of fiscal 2018. Net loss attributable to common stockholders in the third quarter of fiscal 2019 includes dividends of $0.8 million on the Company’s Series B Preferred Stock (as defined below), deemed contributions totaling $0.9 million on the Company’s Series C Convertible Preferred Stock, as well as deemed dividends of $3.1 million on the Company’s Series D Convertible Preferred Stock. See the appendix at the end of this release for further details regarding the deemed contributions and deemed dividends.
Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”, a non-GAAP measure) totaled $3.2 million in the third quarter of fiscal 2019 compared to an Adjusted EBITDA loss of $11.3 million in the third quarter of fiscal 2018. Refer to the discussion of non-GAAP financial measures in the appendix at the end of this release regarding the Company’s calculation of Adjusted EBITDA.