- $80 million of product sales, projects, awards, and service
contracts announced
- Utility projects for electric grid support totaling 5.6
megawatts
- On-site combined heat and power 1.4 megawatt project for a
university
- 5.6 megawatts of new fuel cell module sales to support Korean
market demand
- Expansion of POSCO Energy partnership including global customer
collaboration and integrating global supply chain to lead to
further product cost reductions
FuelCell Energy, Inc. (Nasdaq:FCEL), a global leader in the design,
manufacture, operation and service of ultra-clean, efficient and
reliable fuel cell power plants, today reported results for its
second quarter ended April 30, 2014 along with an update on key
business highlights.
Financial Results
FuelCell Energy (the Company) reported total revenues for the
second fiscal quarter of 2014 of $38.3 million compared to $42.4
million for the second fiscal quarter of 2013. Product sales for
the second quarter of 2014 totaled $27.7 million, comprising $26.1
million of power plant revenue, fuel cell module and fuel cell kit
sales, including 5.6 megawatts of fuel cell module sales to POSCO
Energy that is in addition to the existing multi-year 122 megawatt
fuel cell kit order, and $1.6 million of power plant component
sales and site engineering and construction services. Increasing
quarterly revenue is expected in the second half of 2014 supported
by recent project announcements. Power plant revenues were higher
in the prior year period as a result of the 14.9 megawatt
Bridgeport fuel cell park, which was installed and completed during
2013, with a portion of revenue recognized during the second
quarter of 2013.
Service and license revenues for the second quarter of 2014
totaled $7.2 million compared to $4.1 million for the prior year
period with the growing installed base contributing to higher
service revenue, and scheduled fuel cell module exchanges in the
current quarter exceeding the level of scheduled exchanges in the
prior year period.
Advanced technologies contract revenue was $3.4 million for the
second quarter of 2014 compared to $4.0 million for the second
quarter of 2013.
Total backlog increased sequentially to $342.8 million at April
30, 2014 compared to $326.9 million at January 31, 2014. Backlog at
April 30, 2014 included only one of the two 2.8 megawatt power
plants awarded by United Illuminating and announced in April 2014.
The second plant and the associated service contract, totaling
approximately $28 million, is expected to be included in backlog
for the third quarter of 2014.
- Product sales backlog was $146.6 million and 89.1 megawatts at
April 30, 2014.
- Service backlog was $181.9 million at April 30,
2014.
- Advanced technologies contracts backlog was $14.3 million at
April 30, 2014.
The gross profit generated in the second quarter of 2014 totaled
$1.6 million compared to $2.3 million in the second quarter of
2013. The second quarter 2014 gross margin was 4.2 percent
compared to 5.5 percent for the prior year period as product sales
in the current quarter were composed primarily of fuel cell kits
and fuel cell modules compared to higher margin complete power
plant revenue in the prior year quarter from the Bridgeport fuel
cell park project.
Loss from operations for the second quarter of 2014 was $8.8
million compared to $7.2 million for the second quarter of
2013. Operating expenses increased year-over-year as spending
was accelerated into the first half of the fiscal year for select
engineering projects that further enhance the customer value
proposition and to support increased proposal activity for large
projects.
Net loss attributable to common shareholders for the second
quarter of 2014 totaled $16.6 million, or $0.07 per basic and
diluted share. Excluding the non-cash embedded derivative
adjustment of $5.9 million associated with conversions of Senior
Unsecured Convertible notes, the adjusted net loss attributable to
common shareholders totaled $10.7 million or $0.04 per basic and
diluted share. Please refer to the accompanying Notes to
Reconciliation of GAAP to Non-GAAP Consolidated Statements of
Operations for more detailed information on these Non-GAAP
measures. For the comparable prior year period, net loss
attributable to common shareholders totaled $8.2 million or $0.04
per basic and diluted share.
Year-to-Date 2014
For the six months ended April 30, 2014, the Company reported
revenue of $82.7 million compared to $78.8 million for the prior
year period. Product sales were $62.2 million compared to
$63.4 million for the prior year period. Revenues in the prior
year period benefitted from the now-completed Bridgeport fuel park
whereas the 5.6 megawatt utility award and 1.4 megawatt university
project announced at the end of the second quarter of 2014 did not
impact revenue for the quarter. Service agreement and license
revenues were $12.1 million compared to $9.1 million for the prior
year period. Advanced technologies contract revenues totaled
$8.4 million, compared to $6.3 million for the prior year
period.
For the six months ended April 30, 2014, gross profit was $3.8
million compared to approximately breakeven for the six months
ended April 30, 2013. The gross margin for the six months
ended April 30, 2014 was 4.6 percent.
Loss from operations for the six months ended April 30, 2014 was
$16.3 million, compared to $18.3 million for the six months ended
April 30, 2013. Initiatives to further enhance the cost
profile of multi-megawatt installations accounted for the
year-over-year increase in research and development expenses.
Net loss attributable to common shareholders for the six months
ended April 30, 2014 was $28.0 million or $0.13 per basic and
diluted share, or excluding the non-cash embedded derivative
adjustment associated with conversions of Senior Unsecured
Convertible notes, the adjusted net loss attributable to common
shareholders totaled $19.7 million or $0.09 per basic and diluted
share. For the comparable prior year period, net loss
attributable to common shareholders totaled $20.6 million or $0.11
per basic and diluted share.
Cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash totaled $89.4
million at April 30, 2014. Net cash used by operating
activities in the second quarter of 2014 was $10.6 million,
including an increase in inventory of $3.9 million in preparation
for recent project and order announcements and a decrease in
payables of $3.8 million due to timing of vendor
payments. Capital spending was $1.1 million and depreciation
expense was $1.1 million for the second quarter of 2014. The
Company used cash of $5.6 million in the second quarter to reduce
the outstanding balance of the revolving credit facility extended
by JP Morgan Bank and converted $22.0 million of its Senior
Unsecured Convertible Notes to equity in the quarter.
Business Highlights
"Fiscal year to date orders and awards total 16.3 megawatts and
we have a high degree of confidence in meeting our targeted 30
megawatts and expect to close additional orders above this level by
the end of the calendar year," said Chip Bottone, President
and Chief Executive Officer, FuelCell Energy, Inc. "Our sales
teams are actively advancing projects in North America and Europe,
and witnessing greater appreciation of the attributes of our
ultra-clean power generation solutions, giving me confidence in our
near-term ability to progress projects in the sales pipeline to
closure."
The Company announced a utility-scale award by United
Illuminating for two power plants totaling 5.6 megawatts, the
second largest customer announced to-date in North
America. Both plants will supply power to the electric
grid.
A combined heat and power project for the University of
Bridgeport was announced during the second quarter whereby the
University will purchase electricity and useable heat under a long
term power purchase agreement. The Company will install the
power plant and expects to sell the project to a project financier
before completion or at commissioning, with multiple project
investors expressing interest due to the attractive financial
profile of fuel cell power plant projects.
The Company is experiencing heightened interest from large
multi-national companies evaluating fuel cell installation
opportunities globally. During the second quarter of 2014, the
partnership with POSCO Energy was expanded to address global
customer collaboration. In addition, integration of
the joint fuel cell global supply chain was further defined to
consolidate the purchase of raw materials and components used for
fuel cell power plants.
Production Update and Financial Model
Guidance
The Company maintained an annual production run-rate at the
Torrington, Connecticut production facility of approximately 70
megawatts during the second quarter of 2014, producing 17.5
megawatts of cell components for fuel cell kits, modules, and fuel
cell power plants. Fuel cell shipments totaled 15.7 megawatts
during the second quarter of 2014 compared to 12.6 megawatts in the
prior year period. The Company has capacity in place to
support an annual run-rate of 100 megawatts.
Based on production planning and the favorable progress of
contract negotiations underway on a number of projects, increasing
quarterly revenues are forecasted in the second half of fiscal 2014
and into 2015. With this level of expected activity, the Company is
targeting average quarterly revenues for the second half of 2014 in
the $50 - $60 million range at the current production
level. The Company continues to target break-even cash flow as
measured by earnings before interest, taxes, depreciation and
amortization (EBITDA) at the current 70MW run-rate based on
expected order closure of complete power plants that will enhance
the sales mix and expand margins.
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 Energy
Direct FuelCell® power plants are generating ultra-clean,
efficient and reliable power at more than 50 locations
worldwide. With more than 300 megawatts of power generation
capacity installed or in backlog, FuelCell Energy is a global
leader in providing ultra-clean baseload distributed generation to
utilities, industrial operations, universities, municipal water
treatment facilities, government installations and other customers
around the world. The Company's power plants have generated
more than 2.4 billion kilowatt hours of ultra-clean power using a
variety of fuels including renewable biogas from wastewater
treatment and food processing, as well as clean natural
gas. For more information, please visit
www.fuelcellenergy.com See us on YouTube
Direct FuelCell, DFC, DFC/T, DFC-H2 and FuelCell Energy, Inc.
are all registered trademarks of FuelCell Energy, Inc.
DFC-ERG is a registered trademark jointly owned by Enbridge,
Inc. and FuelCell Energy, Inc.
Conference Call Information
FuelCell Energy management will host a conference call with
investors beginning at 10:00 a.m. Eastern Time on June 4, 2014 to
discuss the second quarter 2014 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 on the Company
website 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 the webcast'
- Alternatively, participants in the U.S. or Canada can dial
877-303-7005
- Outside the U.S. and Canada, please call 678-809-1045
- The passcode is 'FuelCell Energy'
The webcast of the conference call will be available on the
Company's Investors' page at
www.fuelcellenergy.com. Alternatively, the replay of the
conference call will be available approximately two hours after the
conclusion of the call until midnight Eastern Time on Friday, June
6, 2014:
- From the U.S. and Canada please dial 855-859-2056 or
800-585-8367
- Outside the U.S. or Canada please call 404-537-3406
- Enter confirmation code 47773131
|
FUELCELL ENERGY,
INC. |
Consolidated Balance
Sheets |
(Unaudited) |
(Amounts in thousands,
except share and per share amounts) |
|
|
April 30,
2014 |
October 31,
2013 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents -
unrestricted |
$ 64,254 |
$ 67,696 |
Restricted cash and cash equivalents –
short-term |
4,889 |
5,053 |
Accounts receivable, net |
34,735 |
49,116 |
Inventories, net |
55,713 |
56,185 |
Other current assets |
8,491 |
11,279 |
Total current assets |
168,082 |
189,329 |
|
|
|
Restricted cash and cash equivalents –
long-term |
20,234 |
4,950 |
Property, plant and equipment, net |
24,170 |
24,225 |
Goodwill |
4,075 |
4,075 |
Intangible assets |
9,592 |
9,592 |
Other assets, net |
2,804 |
5,465 |
Total assets |
$ 228,957 |
$ 237,636 |
|
|
|
LIABILITIES AND
EQUITY |
|
|
Current liabilities: |
|
|
Current portion of long-term debt |
$ 1,346 |
$ 6,931 |
Accounts payable |
14,613 |
24,535 |
Accrued liabilities |
12,070 |
21,912 |
Deferred revenue |
51,878 |
51,857 |
Preferred stock obligation of
subsidiary |
977 |
1,028 |
Total current liabilities |
80,884 |
106,263 |
|
|
|
Long-term deferred revenue |
19,733 |
18,763 |
Long-term preferred stock obligation of
subsidiary |
13,011 |
13,270 |
Long-term debt and other liabilities |
14,501 |
52,675 |
Total liabilities |
128,129 |
190,971 |
Redeemable preferred stock (liquidation
preference of $64,020 at April 30, 2014 and October 31, 2013) |
59,857 |
59,857 |
Total Equity (Deficit): |
|
|
Shareholders' equity (deficit) |
|
|
Common stock ($.0001 par value;
400,000,000 and 275,000,000 shares authorized at April 30,
2014 and October 31, 2013, respectively; 256,424,681
and 196,310,402 shares issued and outstanding at April 30,
2014 and October 31, 2013, respectively) |
26 |
20 |
Additional paid-in capital |
839,557 |
758,656 |
Accumulated deficit |
(797,636) |
(771,189) |
Accumulated other
comprehensive income |
211 |
101 |
Treasury stock, Common, at cost (45,550
and 5,679 shares at April 30, 2014 and October 31, 2013,
respectively) |
(95) |
(53) |
Deferred compensation |
95 |
53 |
Total shareholders' equity (deficit) |
42,158 |
(12,412) |
Noncontrolling interest in subsidiaries |
(1,187) |
(780) |
Total equity (deficit) |
40,971 |
(13,192) |
Total liabilities and equity
(deficit) |
$ 228,957 |
$ 237,636 |
|
|
FUELCELL ENERGY,
INC. |
Consolidated Statements
of Operations |
(unaudited) |
(Amounts in thousands,
except share and per share amounts) |
|
|
Three Months
Ended April 30, |
|
2014 |
2013 |
Revenues: |
|
|
Product sales |
$ 27,707 |
$ 34,375 |
Service agreements and license
revenues |
7,177 |
4,108 |
Advanced technologies contract
revenues |
3,390 |
3,953 |
Total revenues |
38,274 |
42,436 |
|
|
|
Costs of revenues: |
|
|
Cost of product sales |
26,608 |
32,483 |
Cost of service agreements and license
revenues |
6,760 |
3,904 |
Cost of advanced technologies contract
revenues |
3,295 |
3,735 |
Total cost of revenues |
36,663 |
40,122 |
|
|
|
Gross profit |
1,611 |
2,314 |
|
|
|
Operating expenses: |
|
|
Administrative and selling expenses |
5,746 |
5,436 |
Research and development expenses |
4,638 |
4,075 |
Total operating expenses |
10,384 |
9,511 |
|
|
|
Loss from operations |
(8,773) |
(7,197) |
|
|
|
Interest expense |
(891) |
(574) |
Other income (expense), net |
(6,307) |
177 |
|
|
|
Loss before provision for income taxes |
(15,971) |
(7,594) |
|
|
|
Provision for income taxes |
(68) |
(35) |
|
|
|
Net loss |
(16,039) |
(7,629) |
|
|
|
Net loss attributable to noncontrolling
interest |
196 |
264 |
|
|
|
Net loss attributable to FuelCell Energy,
Inc. |
(15,843) |
(7,365) |
|
|
|
Preferred stock dividends |
(800) |
(800) |
|
|
|
Net loss to common shareholders |
$ (16,643) |
$ (8,165) |
|
|
|
Loss per share basic and diluted |
|
|
Basic |
$ (0.07) |
$ (0.04) |
Diluted |
$ (0.07) |
$ (0.04) |
|
|
|
Weighted average shares outstanding |
|
|
Basic |
243,289,058 |
190,431,554 |
Diluted |
243,289,058 |
190,431,554 |
|
|
FUELCELL ENERGY,
INC. |
Consolidated Statements
of Operations |
(unaudited) |
(Amounts in thousands,
except share and per share amounts) |
|
|
Six Months
Ended April 30, |
|
2014 |
2013 |
Revenues: |
|
|
Product sales |
$ 62,167 |
$ 63,440 |
Service agreements and license
revenues |
12,137 |
9,077 |
Advanced technologies contract
revenues |
8,404 |
6,277 |
Total revenues |
82,708 |
78,794 |
|
|
|
Costs of revenues: |
|
|
Cost of product sales |
59,636 |
62,427 |
Cost of service agreements and license
revenues |
10,917 |
10,389 |
Cost of advanced technologies contract
revenues |
8,345 |
5,975 |
Total cost of revenues |
78,898 |
78,791 |
|
|
|
Gross profit |
3,810 |
3 |
|
|
|
Operating expenses: |
|
|
Administrative and selling expenses |
10,600 |
10,868 |
Research and development expenses |
9,553 |
7,402 |
Total operating expenses |
20,153 |
18,270 |
|
|
|
Loss from operations |
(16,343) |
(18,267) |
|
|
|
Interest expense |
(2,252) |
(1,140) |
Income from equity investment |
-- |
46 |
Other income (expense), net |
(8,081) |
(105) |
|
|
|
Loss before provision for income taxes |
(26,676) |
(19,466) |
|
|
|
Provision for income taxes |
(178) |
(42) |
|
|
|
Net loss |
(26,854) |
(19,508) |
|
|
|
Net loss attributable to noncontrolling
interest |
407 |
462 |
|
|
|
Net loss attributable to FuelCell Energy,
Inc. |
(26,447) |
(19,046) |
|
|
|
Preferred stock dividends |
(1,600) |
(1,600) |
|
|
|
Net loss to common shareholders |
$ (28,047) |
$ (20,646) |
|
|
|
Loss per share basic and diluted |
|
|
Basic |
$ (0.13) |
$ (0.11) |
Diluted |
$ (0.13) |
$ (0.11) |
|
|
|
Weighted average shares outstanding |
|
|
Basic |
221,609,975 |
188,968,577 |
Diluted |
221,609,975 |
188,968,577 |
|
|
FUELCELL ENERGY,
INC. |
Reconciliation of GAAP
to Non-GAAP Consolidated Statements of Operations |
(Unaudited) |
(Amounts in thousands,
except share and per share amounts) |
|
|
Three
Months Ended April 30, |
|
2014 |
2013 |
|
GAAP As Reported |
Non-GAAP
Adjustments |
Non-GAAP As Adjusted |
GAAP As Reported |
Non-GAAP Adjustments |
Non-GAAP As Adjusted |
Loss before provision for income taxes |
$ (15,971) |
$ 5,896 |
(1) |
$ (10,075) |
$ (7,594) |
$ -- |
$ (7,594) |
Net loss |
$ (16,039) |
$ 5,896 |
|
$ (10,143) |
$ (7,629) |
$ -- |
$ (7,629) |
Net loss to common shareholders |
$ (16,643) |
$ 5,896 |
|
$ (10,747) |
$ (8,165) |
$ -- |
$ (8,165) |
|
|
|
|
|
|
|
|
Net loss per share to common
shareholders |
|
|
|
|
|
|
|
Basic |
$ (0.07) |
|
|
$ (0.04) |
$ (0.04) |
|
$ (0.04) |
Diluted |
$ (0.07) |
|
|
$ (0.04) |
$ (0.04) |
|
$ (0.04) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended April 30, |
|
2014 |
2013 |
|
GAAP As Reported |
Non-GAAP
Adjustments |
Non-GAAP As Adjusted |
GAAP As Reported |
Non-GAAP Adjustments |
Non-GAAP As Adjusted |
Loss before provision for income taxes |
$ (26,676) |
$ 8,339 |
(1) |
$ (18,337) |
$ (19,466) |
$ -- |
$ (19,466) |
Net loss |
$ (26,854) |
$ 8,339 |
|
$ (18,515) |
$ (19,508) |
$ -- |
$ (19,508) |
Net loss to common shareholders |
$ (28,047) |
$ 8,339 |
|
$ (19,708) |
$ (20,646) |
$ -- |
$ (20,646) |
|
|
|
|
|
|
|
|
Net loss per share to common
shareholders |
|
|
|
|
|
|
|
Basic |
$ (0.13) |
|
|
$ (0.09) |
$ (0.11) |
|
$ (0.11) |
Diluted |
$ (0.13) |
|
|
$ (0.09) |
$ (0.11) |
|
$ (0.11) |
Notes to Reconciliation of GAAP to
Non-GAAP Consolidated Statements of Operations For
the Three and Six Months Ended April 30, 2014 and 2013
Results of Operations are presented in accordance with
accounting principles generally accepted in the United States
("GAAP"). Management also uses non-GAAP measures which
exclude non-recurring items in order to measure operating periodic
performance. We have added this information because we believe
it helps in understanding the results of our operations on a
comparative basis. This adjusted information supplements and
is not intended to replace performance measures required by U.S.
GAAP disclosure.
Notes to the reconciliation of GAAP to non-GAAP Consolidated
Statements of Operations information are as follows:
(1) Adjustment for the three and six months ended April 30,
2014 represents expense associated with the conversion of $22.0
million and $37.0 million, respectively, of the $38.0 million
Senior Unsecured Convertible notes offset by a favorable impact
from the fair value adjustment required on the embedded derivatives
in the Senior Unsecured Convertible notes in accordance with
Accounting Standards Codification (ASC) 815 – Derivatives and
Hedging.
CONTACT: FuelCell Energy, Inc.
Kurt Goddard, Vice President Investor Relations
203-830-7494
ir@fce.com
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