FCEL FuelCell Energy Inc

A leader in fuel cell technology Plug Power Inc. (PLUG) reported a loss of 8 cents per share in the fourth quarter of 2013, in line with the Zacks Consensus Estimate. However, loss was much narrower than the 25 cents of loss incurred in the comparable year-ago quarter.

On a GAAP basis, the company reported a loss of 28 cents per share versus a loss of 22 cents in the year-ago quarter. The difference between the operating and GAAP loss in the reported quarter was due to charges related to the change in fair value of previously issued common stock warrants of $20.9 million.

The 2013 loss of 34 cents per share was much narrower than the Zacks Consensus Estimate of a loss of 48 cents and the prior-year loss of $1.07 per share.

The loss in the quarter as well as for the full year was primarily due to higher cost of product and service revenues.

Not only did Plug Power meet the market expectation with an in-line loss, a solid order book propelled its shares 17.65% higher in yesterday’s trading session to close at $8.00.

Total Revenue

Plug Power’s quarterly revenues of $8 million surpassed the Zacks Consensus Estimate of $7 million by 14.3%.Total revenues were higher than the year-ago revenues of $5.92 million by 35.1%.

2013 total revenues of $26.6 million exceeded the Zacks Consensus Estimate of $26.0 million by 2.3% and the prior-year revenue of $26.1 million by 1.9%.

The top line of the company was driven by product sales and maintenance orders from the likes of Wal-Mart (WMT), The Kroger Co. (KR), BMW and Mercedes-Benz. In addition, order bookings in the fourth quarter touched $32 million.

Highlights of the Release

Plug Power has taken a number of initiatives to lower its operating expenses. The company expects its strategic moves like global sourcing, positive discussion with suppliers to adjust costs and design improvement will help to improve margins by 10% in the first half of 2014.

Plug Power shipped 279 units in the reported quarter compared with 518 units in the fourth quarter of 2012. For the full year, the company shipped 918 units compared with 1,391 units in 2012.

The company reported research & development (R&D) expenses of $3.1 million in 2013, down from $5.4 million in 2012. A cut in R&D did not however stop the company from launching innovative products like the new all-inclusive GenKey solution.

Financial Update

Plug Power exited the year with $5 million of cash and cash equivalents versus $9.4 million at 2012 end.

Net cash used in operating activities for full year 2013 was $26.9 million versus $20.2 million in 2012.

Guidance

Plug Power expects total revenues in the first quarter to range from $5 million to $6 million. The strong orders booked in the fourth quarter of 2013 are expected to translate into revenues in the second quarter of 2014. Accordingly, revenues in the said quarter are expected to climb to a $16–$18 million range.

2014 total revenues are expected to touch $70 million, with order bookings of $150 million for the year.

The company expects to achieve break even EBITDA in the third quarter 2014 and report net income in the final quarter of the year.

At the Peer

FuelCell Energy (FCEL) posted a loss of 4 cents per share in the first quarter 2014, in line with the Zacks Consensus Estimate.

Our View

Plug Power is one of the prime companies in the fuel cell technology space. This niche energy space has literally been the talk of the town with share prices on the roll. Plug Power’s 2014 order booking guidance (four times the order booked in 2013) reflects this optimism.  Since this technology is in hot demand, one shouldn’t be surprised if the company revises the order guidance upwards. Sales order for 2014 has already exceeded $60 million.

Though still in the red, we believe the bright prospects and the solid order booking will drive the company going forward.

Plug Power has a Zacks Rank #3 (Hold).
 

 
FUELCELL ENERGY (FCEL): Free Stock Analysis Report
 
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