FuelCell Energy (Nasdaq:FCEL), a global leader in the design,
manufacture, operation and project development of ultra-clean,
efficient and reliable fuel cell power plants, today reported
financial results for its fourth quarter ended October 31, 2016 and
key business highlights.
Financial Results FuelCell Energy (the Company)
reported total revenues for the fourth quarter of 2016 of $24.5
million, compared to $51.5 million for the comparable prior year
period. Revenue components include:
- Product sales totaled $8.4 million for the current period
compared to $43.8 million for the fourth quarter of 2015.
During the fourth quarter of 2016, the Company retained two fuel
cell projects totaling 7 megawatts that will generate long term
recurring electricity sales rather than quarterly product
revenue. This transition to retaining select projects rather
than selling the projects at commissioning contributed to the
decrease in sales, combined with lower Asian sales in the current
quarter as Korean partner, POSCO Energy, is manufacturing locally
under license and royalty agreements.
- Service agreements and license revenues totaled $11.4 million
for the current period compared to $5.5 million for the comparable
prior year period, with the increase due to a number of service
agreements that commenced in 2016, a greater number of module
replacements under service contracts, and electricity sales from
power purchase agreements.
- Advanced Technologies contract revenues totaled $4.7 million
for the current period compared to $2.1 million for the comparable
prior year period.
A gross loss of ($0.5) million was incurred in the fourth
quarter of 2016, compared to gross profit of $3.1 million and gross
margin of 6.1 percent for the fourth quarter of 2015. The
decrease in gross profit was due to lower product sales and charges
in the service business, including charges for obsolete
sub-megawatt inventory. This decrease was partially offset by
improved Advanced Technology gross margin due to the mix of
contracts transitioning to private industry.
Operating expenses for the current period totaled $11.3 million
compared to $11.0 million for the prior year period.
Net loss attributable to common shareholders for the fourth
quarter of 2016 totaled $13.7 million, or $0.41 per basic and
diluted share, compared to $9.7 million or $0.38 per basic and
diluted share for the fourth quarter of 2015.
Adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) in the fourth quarter of 2016 totaled ($10.4)
million. Refer to the discussion of Non-GAAP financial measures
below regarding the Company’s calculation of Adjusted EBITDA.
Capital spending was $3.8 million and depreciation expense was $1.4
million.
On December 1, 2016 and subsequent to 2016 fiscal year end, the
Company announced a restructuring to align production levels with
the product sales and services backlog. A work force
reduction was undertaken with 96 positions or approximately 17
percent of the global workforce impacted. A personnel-related
restructuring charge of approximately $3 million will be incurred
in fiscal 2017, with approximately one half of the charge composed
of cash severance costs. The Company expects that operating
expenses (administrative and selling, research and development
expenses) will be approximately $6 million lower on an annualized
basis as a result of personnel reductions and related benefits, as
well as lower overhead spending.
Revenue BacklogTotal backlog was $432.3 million
as of October 31, 2016 compared to $381.4 million as of October 31,
2015.
- Services backlog totaled $347.3 million as of October 31, 2016
compared to $254.1 million as of October 31, 2015. Services
backlog includes future contracted revenue from routine
maintenance, scheduled module exchanges, and from power purchase
agreements.
- Product sales backlog totaled $24.9 million as of October 31,
2016 compared to $90.8 million as of October 31, 2015.
Product sales backlog reflects firm orders with executed
contracts for the sale of product.
- Advanced Technologies contracts backlog totaled $60.1 million
as of October 31, 2016 compared to $36.5 million as of October 31,
2015.
Cash, restricted cash and financing
availabilityCash, cash equivalents, restricted cash and
financing availability totaled $156.5 million as of October 31,
2016, including:
- $84.2 million of cash and cash equivalents, and $34.1 million
of restricted cash
- $38.2 million of borrowing availability under the NRG Energy
revolving project financing facility
On October 31, 2016, the Company entered into a financing
transaction with PNC Energy Capital (PNC) for a 5.6 megawatt fuel
cell installation that recently began commercial operations at a
Pfizer campus. A portion of proceeds were used to repay
construction borrowing from the debt facility extended by NRG
Energy, leading to a net increase of cash to the Company of $19.3
million.
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 electricity sales, and projects the Company is developing
and expects to retain and operate. Long term project assets
totaled $47.1 million at October 31, 2016, consisting of four
projects totaling 9.8 megawatts, compared to $6.9 million at
October 31, 2015 that included one project.
Subsequent to fiscal year end, the Company acquired a 1.4
megawatt fuel cell project at a university, increasing the total
retained projects to five totaling 11.2 megawatts. In addition,
project assets include two power plant projects under construction
totaling 6.5 megawatts that the Company currently plans to
retain. In total, 7 projects are operating or under
construction at present, for a total of 17.7 megawatts.
Business Highlights
- Continuing development of multiple Connecticut fuel cell
parks
- Actively pursuing multi-megawatt fuel cell projects in New York
State including 40 megawatt fuel cell only RFP for Long
Island
- Installing 2.8 megawatt power plant with a repeat customer in
California
- Construction in process for 3.7 megawatt project to showcase an
enhanced efficiency fuel cell configuration
- Progressing fuel cell carbon capture with a site announcement
for a megawatt-class fuel cell plant to demonstrate both coal and
gas-fired carbon capture at a power station owned by a subsidiary
of Southern Company with support by ExxonMobil and the Department
of Energy
- Canadian oil sands engineering study progressing for carbon
capture at gas-fired bitumen processing plant
- Commissioning of 20 megawatt Asian fuel cell park completed by
partner, POSCO Energy
- Construction completed and commercial operations commenced for
2 installations, both of which were financed by PNC Energy Capital
under an existing financing facility. The Company retains the Power
Purchase Agreement and recognizes recurring electricity revenue and
margin over the term of the power purchase agreement.
“We are focused on developing and closing projects as we take
near-term actions to reduce spending and our cost structure,” said
Chip Bottone, President and Chief Executive Officer, FuelCell
Energy, Inc.
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.
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 the business.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) is an alternate measure of cash utilization. The
table below calculates Adjusted EBITDA and reconciles these figures
to the GAAP financial statement measure Net loss attributable to
FuelCell Energy, Inc.
|
Three Months Ended October 31, |
(Amounts in
thousands) |
2016 |
|
|
2015 |
Net loss attributable to FuelCell Energy, Inc. |
$ |
(12,862 |
) |
|
|
$ |
(8,860 |
) |
Depreciation |
1,366 |
|
|
|
1,101 |
|
Provision for income taxes |
117 |
|
|
|
95 |
|
Other (income)/expense, net (1) |
(732 |
) |
|
|
179 |
|
Interest expense |
1,758 |
|
|
|
765 |
|
Adjusted EBITDA |
$ |
(10,353 |
) |
|
|
$ |
(6,720 |
) |
|
|
|
|
|
|
(1) 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.
Adjusted EBITDA is a non-GAAP measure of financial performance
and should not be considered as an alternative to net income or any
other performance measure derived in accordance with GAAP, or as an
alternative to cash flows from operating activities. This
information is included to assist investors with understanding the
results of operations on a comparative basis.
About FuelCell EnergyDirect FuelCell® power
plants are generating ultra-clean, efficient and reliable power on
three continents, affordably providing continuous distributed power
generation to a variety of industries including utilities,
commercial and municipal customers. The Company’s power
plants have generated billions of kilowatt hours of ultra-clean
power using a wide variety of fuels including renewable biogas from
wastewater treatment and food processing, as well as clean natural
gas. For additional information, please visit
www.fuelcellenergy.com and follow us on Twitter.
Direct FuelCell, DFC, DFC/T, DFC-H2, DFC-ERG and FuelCell Energy
logo are all registered trademarks of FuelCell Energy, Inc.
Conference Call InformationFuelCell Energy
management will host a conference call with investors beginning at
10:00 a.m. Eastern Time on Thursday, January 12, 2017 to discuss
the fourth quarter 2016 results. An accompanying slide
presentation for the earnings call will be available at
http://fcel.client.shareholder.com/events.cfm immediately
prior to the
call.
Participants can access the live call via webcast on the Company
website or by telephone as follows:
- The live webcast of this call will be available at
www.fuelcellenergy.com. To listen to the call, select
‘Investors’ on the home page, then click on ‘Events &
presentations’ and then click on ‘Listen to webcast’
- Alternatively, participants can dial 678-809-1045
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.
Contact: |
FuelCell
Energy, Inc. |
|
Kurt
Goddard, Vice President Investor Relations |
|
203-830-7494 |
|
ir@fce.com |
|
|
FUELCELL ENERGY, INC. |
Consolidated Balance Sheets |
(Amounts in thousands, except share and per
share amounts) |
|
|
|
October 31,
2016Unaudited |
|
|
October 31,2015 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
84,187 |
|
|
$ |
58,852 |
|
Restricted cash and cash equivalents – short-term |
|
9,437 |
|
|
|
6,288 |
|
Accounts receivable, net |
|
24,593 |
|
|
|
60,790 |
|
Inventories |
|
73,806 |
|
|
|
65,754 |
|
Project assets |
|
- |
|
|
|
5,260 |
|
Other current assets |
|
10,446 |
|
|
|
6,954 |
|
Total current assets |
|
202,469 |
|
|
|
203,898 |
|
|
|
|
|
|
|
Restricted cash and
cash equivalents – long-term |
|
24,692 |
|
|
|
20,600 |
|
Long-term project
assets |
|
47,111 |
|
|
|
6,922 |
|
Property, plant and
equipment, net |
|
36,640 |
|
|
|
29,002 |
|
Goodwill |
|
4,075 |
|
|
|
4,075 |
|
Intangible assets |
|
9,592 |
|
|
|
9,592 |
|
Other assets, net |
|
17,558 |
|
|
|
3,142 |
|
Total assets |
$ |
342,137 |
|
|
$ |
277,231 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Current portion of long-term debt |
$ |
5,275 |
|
|
$ |
7,358 |
|
Accounts payable |
|
18,475 |
|
|
|
15,745 |
|
Accrued liabilities |
|
20,900 |
|
|
|
19,175 |
|
Deferred revenue |
|
6,811 |
|
|
|
31,787 |
|
Preferred stock obligation of subsidiary |
|
802 |
|
|
|
823 |
|
Total current liabilities |
|
52,263 |
|
|
|
74,888 |
|
|
|
|
|
|
|
Long-term deferred
revenue |
|
20,974 |
|
|
|
22,646 |
|
Long-term preferred
stock obligation of subsidiary |
|
12,649 |
|
|
|
12,088 |
|
Long-term debt and
other liabilities |
|
81,998 |
|
|
|
12,998 |
|
Total liabilities |
|
167,884 |
|
|
|
122,620 |
|
Redeemable preferred
stock (liquidation preference of $64,020 at October 31, 2016 and
2015) |
|
59,857 |
|
|
|
59,857 |
|
Total Equity: |
|
|
|
|
|
Shareholders’ equity |
|
|
|
|
|
Common stock ($.0001 par value; 75,000,000 and 39,583,333 shares
authorized at October 31, 2016 and 2015, respectively; 35,174,424
and 25,964,710 shares issued and outstanding at October 31, 2016
and 2015, respectively) |
|
4 |
|
|
|
3 |
|
Additional paid-in capital |
|
1,004,566 |
|
|
|
934,488 |
|
Accumulated deficit |
|
(889,630 |
) |
|
|
(838,673 |
) |
Accumulated other comprehensive loss |
|
(544 |
) |
|
|
(509 |
) |
Treasury stock, Common, at cost (21,527 and 5,845 shares at October
31, 2016 and 2015, respectively) |
|
(179 |
) |
|
|
(78 |
) |
Deferred compensation |
|
179 |
|
|
|
78 |
|
Total shareholders’ equity |
|
114,396 |
|
|
|
95,309 |
|
Noncontrolling interest in subsidiaries |
|
- |
|
|
|
(555 |
) |
Total equity |
|
114,396 |
|
|
|
94,754 |
|
Total liabilities and equity |
$ |
342,137 |
|
|
$ |
277,231 |
|
|
FUELCELL ENERGY, INC. |
Consolidated Statements of Operations |
Unaudited |
(Amounts in thousands, except share and per share
amounts) |
|
|
Three Months EndedOctober
31, |
|
2016 |
|
2015 |
Revenues: |
|
|
|
|
|
Product
sales |
$ |
8,385 |
|
|
$ |
43,826 |
|
Service
agreements and license revenues |
|
11,385 |
|
|
|
5,506 |
|
Advanced
technologies contract revenues |
|
4,703 |
|
|
|
2,119 |
|
Total
revenues |
|
24,473 |
|
|
|
51,451 |
|
|
|
|
|
|
|
Costs of revenues: |
|
|
|
|
|
Cost of
product sales |
|
10,227 |
|
|
|
41,222 |
|
Cost of
service agreements and license revenues |
|
11,133 |
|
|
|
4,581 |
|
Cost of
advanced technologies contract revenues |
|
3,581 |
|
|
|
2,504 |
|
Total
cost of revenues |
|
24,941 |
|
|
|
48,307 |
|
|
|
|
|
|
|
Gross (loss)
profit |
|
(468 |
) |
|
|
3,144 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
Administrative and selling expenses |
|
6,211 |
|
|
|
6,224 |
|
Research and development expenses |
|
5,126 |
|
|
|
4,786 |
|
Total operating expenses |
|
11,337 |
|
|
|
11,010 |
|
|
|
|
|
|
|
Loss from
operations |
|
(11,805 |
) |
|
|
(7,866 |
) |
|
|
|
|
|
|
Interest
expense |
|
(1,758 |
) |
|
|
(765 |
) |
Other
income (expense), net |
|
732 |
|
|
|
(179 |
) |
|
|
|
|
|
|
Loss before provision
for income taxes |
|
(12,831 |
) |
|
|
(8,810 |
) |
|
|
|
|
|
|
Provision for income taxes |
|
(117 |
) |
|
|
(95 |
) |
|
|
|
|
|
|
Net loss |
|
(12,948 |
) |
|
|
(8,905 |
) |
|
|
|
|
|
|
Net loss attributable to noncontrolling interest |
|
86 |
|
|
|
45 |
|
|
|
|
|
|
|
Net loss attributable
to FuelCell Energy, Inc. |
|
(12,862 |
) |
|
|
(8,860 |
) |
|
|
|
|
|
|
Preferred
stock dividends |
|
(800 |
) |
|
|
(800 |
) |
|
|
|
|
|
|
Net loss to common
shareholders |
$ |
(13,662 |
) |
|
$ |
(9,660 |
) |
|
|
|
|
|
|
Loss per share basic
and diluted |
|
|
|
|
|
Basic |
$ |
(0.41 |
) |
|
$ |
(0.38 |
) |
Diluted |
$ |
(0.41 |
) |
|
$ |
(0.38 |
) |
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
Basic |
|
33,029,247 |
|
|
|
25,111,368 |
|
Diluted |
|
33,029,247 |
|
|
|
25,111,368 |
|
|
|
|
|
|
|
|
|
FUELCELL ENERGY, INC. |
Consolidated Statements of Operations |
(Amounts in thousands, except share and per share
amounts) |
|
|
Year Ended October
31, |
|
2016Unaudited |
|
2015 |
Revenues: |
|
|
|
|
|
Product
sales |
$ |
62,563 |
|
|
$ |
128,595 |
|
Service
agreements and license revenues |
|
32,758 |
|
|
|
21,012 |
|
Advanced
technologies contract revenues |
|
12,931 |
|
|
|
13,470 |
|
Total
revenues |
|
108,252 |
|
|
|
163,077 |
|
|
|
|
|
|
|
Costs of revenues: |
|
|
|
|
|
Cost of
product sales |
|
63,474 |
|
|
|
118,530 |
|
Cost of
service agreements and license revenues |
|
33,256 |
|
|
|
18,301 |
|
Cost of
advanced technologies contract revenues |
|
11,879 |
|
|
|
13,470 |
|
Total
cost of revenues |
|
108,609 |
|
|
|
150,301 |
|
|
|
|
|
|
|
Gross (loss)
profit |
|
(357 |
) |
|
|
12,776 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
Administrative and selling expenses |
|
25,150 |
|
|
|
24,226 |
|
Research and development expenses |
|
20,846 |
|
|
|
17,442 |
|
Total operating expenses |
|
45,996 |
|
|
|
41,668 |
|
|
|
|
|
|
|
Loss from
operations |
|
(46,353 |
) |
|
|
(28,892 |
) |
|
|
|
|
|
|
Interest
expense |
|
(4,958 |
) |
|
|
(2,960 |
) |
Other
income (expense), net |
|
622 |
|
|
|
2,442 |
|
|
|
|
|
|
|
Loss before provision
for income taxes |
|
(50,689 |
) |
|
|
(29,410 |
) |
|
|
|
|
|
|
Provision for income taxes |
|
(519 |
) |
|
|
(274 |
) |
|
|
|
|
|
|
Net loss |
|
(51,208 |
) |
|
|
(29,684 |
) |
|
|
|
|
|
|
Net loss attributable to noncontrolling interest |
|
251 |
|
|
|
325 |
|
|
|
|
|
|
|
Net loss attributable
to FuelCell Energy, Inc. |
|
(50,957 |
) |
|
|
(29,359 |
) |
|
|
|
|
|
|
Preferred
stock dividends |
|
(3,200 |
) |
|
|
(3,200 |
) |
|
|
|
|
|
|
Net loss to common
shareholders |
$ |
(54,157 |
) |
|
$ |
(32,559 |
) |
|
|
|
|
|
|
Loss per share basic
and diluted |
|
|
|
|
|
Basic |
$ |
(1.82 |
) |
|
$ |
(1.33 |
) |
Diluted |
$ |
(1.82 |
) |
|
$ |
(1.33 |
) |
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
Basic |
|
29,773,700 |
|
|
|
24,513,731 |
|
Diluted |
|
29,773,700 |
|
|
|
24,513,731 |
|
[Source: FuelCell Energy]
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