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, 2018 and key
business highlights.
Financial ResultsFuelCell Energy, Inc. (the
Company) reported total revenues for the first quarter of 2018 of
$38.6 million, compared to $17.0 million for the first quarter of
2017, including:
- Product sales totaled $29.5 million for the first quarter of
2018 compared to $1.8 million for the first quarter of 2017.
The increase is primarily a result of the completion of deliveries
under a 20 megawatt order for a utility project to be owned by
Korea Southern Power Company.
- Service and license revenue totaled $4.1 million for the first
quarter of 2018 compared to $6.9 million for the first quarter of
2017. The difference between the periods is primarily due to
the lower number of scheduled module replacements under the
Company’s service agreements in the first quarter of 2018.
- Generation revenue totaled $1.9 million for the first quarter
of 2018 compared to $2.1 million for the first quarter of
2017.
- Advanced technologies contract revenue totaled $3.1 million for
the first quarter of 2018 compared to $6.2 million for the first
quarter of 2017. Revenue was lower for the first quarter of
2018 primarily due to the timing of project milestones under
existing contracts.
The gross profit generated in the first quarter of 2018 totaled
$4.6 million and the gross margin was 12.0 percent, compared to
$1.8 million generated in the first quarter of 2017 and a gross
margin of 10.7 percent. Operating expenses for
the first quarter of 2018 totaled $10.2 million compared to $12.7
million for the first quarter of 2017. This decrease was
primarily due to lack of restructuring expenses in the first
quarter of 2018 and lower research and development expenses
following the introduction of the 3.7 MW SureSource 4000 TM.
Net loss attributable to common stockholders for the first
quarter of 2018 totaled $8.4 million, or $0.12 per basic and
diluted share, compared to $14.5 million, or $0.39 per basic and
diluted share, for the first quarter of 2017. Net loss
attributable to common stockholders in the first quarter of fiscal
2018 includes a deemed dividend totaling $3.5 million on the Series
C preferred shares. Installment conversions where the conversion
price is below the fixed conversion price of $1.84 per share result
in a variable number of shares being issued to settle the
installment amount and are treated as a partial redemption of the
Series C Preferred Shares. Installment conversions during the
three months ended January 31, 2018 that were settled in a variable
number of shares and treated as redemptions resulted in deemed
dividends of $3.5 million.
The Company recorded an income tax benefit
totaling $3.0 million for the three months ended January 31, 2018
compared to income tax expense of $0.1 million for the three months
ended January 31, 2017. The income tax benefit for the three
months ended January 31, 2018 related to the Tax Cuts and Jobs Act
(the “Act”) that was enacted on December 22, 2017. The Act reduced
the U.S. federal tax rate from 34% to 21% effective January 1, 2018
which resulted in a deferred tax benefit of $1.0 million related to
a reduction of the Company’s deferred tax liability for in process
research and development (“IPR&D”). The Act also
established an unlimited carryforward period for the net operating
loss (“NOL”) the Company anticipates generating in fiscal year
2018. This provision of the Act resulted in a reduction of
the valuation allowance attributable to deferred tax assets at the
enactment date by $2.0 million based on the indefinite life of the
resulting NOL as well as the deferred tax liability for
IPR&D.
Adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA, a Non-GAAP measure) in the first
quarter of 2018 totaled ($2.8) million compared to ($6.5) million
in the first quarter of 2017. Refer to the discussion of
Non-GAAP financial measures below regarding the Company’s
calculation of Adjusted EBITDA.
Backlog and Project AwardsThe Company had a
contract backlog totaling approximately $638.5 million as of
January 31, 2018 compared to $437.3 million as of January 31,
2017.
- Services backlog totaled $178.7 million as of January 31, 2018
compared to $199.8 million as of January 31, 2017. Services
backlog includes future contracted revenue from routine maintenance
and scheduled module exchanges for power plants under service
agreements.
- Generation backlog totaled $414.5 million as of January 31,
2018 compared to $169.9 million as of January 31, 2017.
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 Toyota
Hydrogen / BioMAT project was added to Generation backlog during
the first quarter of 2018.
- Product sales backlog totaled $2.2 million as of January 31,
2018 compared to $13.5 million as of January 31, 2017. Product
sales backlog primarily consists of the remaining scope of work on
the 20 megawatt Korean utility order.
- Advanced technologies contracts backlog totaled $43.1 million
as of January 31, 2018 compared to $54.1 million as of January 31,
2017.
Backlog represents definitive agreements executed by the Company
and our customers. The Company has disclosed its intention to grow
its generation portfolio of owned project assets prudently over
time. 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, 2018 include the 39.8
megawatt Long Island Power Authority (“LIPA”) project awards (which
would become generation backlog) and the 20 year service agreement
supporting the 20 megawatt Korean utility project. These awards in
total represent approximately $936 million of future revenue
potential, assuming the Company retains ownership of the LIPA
projects.
Cash, restricted cash and borrowing
abilityCash, cash equivalents, restricted cash and
borrowing ability under the NRG Energy revolving project financing
facility totaled $155.4 million as of January 31, 2018,
including:
- Total cash of $115.4 million, including $76.8 million of
unrestricted cash and cash equivalents and $38.6 million of
restricted cash.
- $40.0 million of borrowing ability under the NRG Energy
revolving project financing facility.
Project Assets Long term project assets
consists 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 $75.8 million as of January 31, 2018,
consisting of five projects totaling 11.2 megawatts plus costs
incurred to date for an additional 21.7 megawatts of previously
announced projects that are under various stages of
construction.
Business Highlights and Recent
Developments
- Shipments were completed in the first quarter of 2018 for the
20 megawatt Korean utility project to be owned by Korea Southern
Power Company. Installation of this project is now in process. The
Company expects to begin commissioning activities in the spring of
2018 and the plant is expected to be operational in late summer
2018.
- In February, Congress passed, and the President signed into
law, key tax credit measures creating financial incentives for the
purchase and use of fuel cell technology. These are expected to aid
market expansion and product deployment by enhancing the economic
profile of FuelCell Energy’s projects.
- The Investment Tax Credit (“ITC”) added fuel cells to the list
of eligible clean energy investments. The ITC provides for a tax
credit equal to 30% of qualified expenditures for fuel cell
projects placed in service through 2019, 26% for projects which
commence construction in 2020, and 22% for projects which commence
construction in 2021.
- The Carbon Dioxide Sequestration Credit expanded and extended
the financial incentives for CO2 capture. It was extended for 12
years, removed the limit on the metric tons eligible for credit,
and increased the credit up to $50 per ton from the previous $10
per ton.
- In February, we executed a PPA for a 5 megawatt project with
Wm. Bolthouse Farms, Inc. for the long-term supply of power to
their Bakersfield, CA plant. Bolthouse Farms is a subsidiary of
existing FuelCell customer Campbell Soup Company. Upon completion
of this project, Campbell Soup Company subsidiaries will generate a
total of 7.6 megawatts of energy using FuelCell power plants.
“We are pleased that solid execution in our global markets
continues to translate to improved financial results compared to
the prior year,” said Chip Bottone, President and Chief Executive
Officer, FuelCell Energy. “We continue to see favorable
momentum in our marketplace, both in U.S. federal policy and with
project execution and development. The passage and execution of the
two legislative bills in February levels the playing field for fuel
cells and will attract capital investment, which will enable us to
continue to expand our market reach of this ultra-clean, efficient
energy solution. Lastly, the signing of a PPA with Bolthouse Farms
extends our relationship with a long-term customer Campbell Soup
Company, and is a testament to the quality product and service
solutions FuelCell Energy delivers.”
Conference Call InformationFuelCell Energy
management will host a conference call with investors beginning at
10:00 a.m. Eastern Time on Thursday, March 8, 2018 to discuss the
first quarter results for 2018. Participants can access the live
call via webcast on the Company website or by telephone as
follows:
- The live webcast of this call and supporting slide presentation
will be available at www.fuelcellenergy.com. To listen to the
call, select “Investors” on the home page, proceed to the “Events
& Presentations” page and then click on the “Webcast” link
listed under the March 8th earnings call event listed, or click
here.
- Alternatively, participants can dial 647-689-4106 and state
FuelCell Energy or the conference ID number 2987939.
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.
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 EnergyFuelCell Energy, Inc.
(NASDAQ:FCEL) delivers efficient, affordable and clean solutions
for the supply, recovery and storage of energy. We design,
manufacture, undertake project development of, install, operate and
maintain megawatt-scale fuel cell systems, serving utilities and
industrial and large municipal power users with solutions that
include both utility-scale and on-site power generation, carbon
capture, local hydrogen production for transportation and industry,
and long duration energy storage. With SureSource™
installations on three continents and millions of megawatt hours of
ultra-clean power produced, FuelCell Energy is a global leader in
designing, manufacturing, installing, operating and
maintaining environmentally responsible fuel cell power
solutions. Visit us online at www.fuelcellenergy.com and
follow us on Twitter @FuelCell_Energy.
SureSource, SureSource 1500, SureSource 3000, SureSource 4000,
SureSource Recovery, SureSource Capture, SureSource Hydrogen,
SureSource Storage, SureSource Service, SureSource Capital,
FuelCell Energy, and FuelCell Energy logo are all trademarks of
FuelCell Energy, Inc.
Contact: |
|
FuelCell
Energy, Inc.ir@fce.com203.205.2491 Source: FuelCell
Energy |
|
|
|
FUELCELL ENERGY,
INC.Consolidated Balance
Sheets(Unaudited)(Amounts in thousands, except
share and per share amounts) |
|
|
|
January 31,2018 |
|
|
October 31,2017 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and
cash equivalents, unrestricted |
$ |
76,776 |
|
|
$ |
49,294 |
|
Restricted cash and cash equivalents – short-term |
|
5,230 |
|
|
|
4,628 |
|
Accounts
receivable, net |
|
44,081 |
|
|
|
68,521 |
|
Inventories |
|
59,868 |
|
|
|
74,496 |
|
Other
current assets |
|
7,567 |
|
|
|
6,571 |
|
Total current
assets |
|
193,522 |
|
|
|
203,510 |
|
|
|
|
|
|
|
Restricted cash and
cash equivalents – long-term |
|
33,425 |
|
|
|
33,526 |
|
Project assets |
|
75,754 |
|
|
|
73,001 |
|
Property, plant and
equipment, net |
|
44,093 |
|
|
|
43,565 |
|
Goodwill |
|
4,075 |
|
|
|
4,075 |
|
Intangible assets |
|
9,592 |
|
|
|
9,592 |
|
Other assets |
|
14,413 |
|
|
|
16,517 |
|
Total assets |
$ |
374,874 |
|
|
$ |
383,786 |
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Current
portion of long-term debt |
$ |
23,513 |
|
|
$ |
28,281 |
|
Accounts
payable |
|
37,829 |
|
|
|
42,616 |
|
Accrued
liabilities |
|
21,513 |
|
|
|
18,381 |
|
Deferred
revenue |
|
10,429 |
|
|
|
7,964 |
|
Preferred
stock obligation of subsidiary |
|
865 |
|
|
|
836 |
|
Total current
liabilities |
|
94,149 |
|
|
|
98,078 |
|
|
|
|
|
|
|
Long-term deferred
revenue |
|
18,364 |
|
|
|
18,915 |
|
Long-term preferred
stock obligation of subsidiary |
|
15,012 |
|
|
|
14,221 |
|
Long-term debt and
other liabilities |
|
60,297 |
|
|
|
63,759 |
|
Total liabilities |
|
187,822 |
|
|
|
194,973 |
|
|
|
|
|
|
|
|
|
Redeemable Series B
preferred stock (liquidation preference of $64,020 atJanuary 31,
2018 and October 31, 2017, respectively) |
|
59,857 |
|
|
|
59,857 |
|
Redeemable Series C
preferred stock (liquidation preference of $24,201 and$33,300 as of
January 31, 2018 and October 31, 2017, respectively) |
|
20,131 |
|
|
|
27,700 |
|
|
|
|
|
|
|
Total Equity: |
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
Common
stock ($0.0001 par value; 225,000,000 and 125,000,000
sharesauthorized at January 31, 2018 and October 31, 2017,
respectively;77,602,110 and 69,492,816 shares issued and
outstanding at January 31,2018 and October 31, 2017,
respectively) |
|
8 |
|
|
|
7 |
|
Additional paid-in capital |
|
1,055,154 |
|
|
|
1,045,197 |
|
Accumulated deficit |
|
(947,716 |
) |
|
|
(943,533 |
) |
Accumulated other comprehensive loss |
|
(382 |
) |
|
|
(415 |
) |
Treasury
stock, Common, at cost (88,861 at January 31, 2018 and October 31,
2017, respectively) |
|
(280 |
) |
|
|
(280 |
) |
Deferred
compensation |
|
280 |
|
|
|
280 |
|
Total
stockholders’ equity |
|
107,064 |
|
|
|
101,256 |
|
Total
liabilities and stockholders’ equity |
$ |
374,874 |
|
|
$ |
383,786 |
|
|
|
|
|
|
|
FUELCELL ENERGY,
INC.Consolidated Statements of
Operations(Unaudited)(Amounts in thousands, except
share and per share amounts) |
|
|
Three Months EndedJanuary
31, |
|
2018 |
|
2017 |
Revenues: |
|
|
|
|
|
Product
sales |
$ |
29,530 |
|
|
$ |
1,807 |
|
Service
and license |
|
4,104 |
|
|
|
6,936 |
|
Generation |
|
1,892 |
|
|
|
2,085 |
|
Advanced
Technologies |
|
3,087 |
|
|
|
6,174 |
|
Total
revenues |
|
38,613 |
|
|
|
17,002 |
|
|
|
|
|
|
|
Costs of revenues: |
|
|
|
|
|
Product |
|
26,137 |
|
|
|
4,055 |
|
Service
and license |
|
3,406 |
|
|
|
6,266 |
|
Generation |
|
1,609 |
|
|
|
1,115 |
|
Advanced
Technologies |
|
2,826 |
|
|
|
3,753 |
|
Total
cost of revenues |
|
33,978 |
|
|
|
15,189 |
|
|
|
|
|
|
|
Gross profit |
|
4,635 |
|
|
|
1,813 |
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
Administrative and selling expenses |
|
6,142 |
|
|
|
6,004 |
|
Research
and development expense |
|
4,046 |
|
|
|
5,392 |
|
Restructuring expense |
|
- |
|
|
|
1,345 |
|
Total
operating expenses |
|
10,188 |
|
|
|
12,741 |
|
|
|
|
|
|
|
Loss from
operations |
|
(5,553 |
) |
|
|
(10,928 |
) |
|
|
|
|
|
|
Interest
expense |
|
(2,141 |
) |
|
|
(2,267 |
) |
Other
income (expense), net |
|
476 |
|
|
|
(409 |
) |
|
|
|
|
|
|
Loss before benefit
(provision) for income taxes |
|
(7,218 |
) |
|
|
(13,604 |
) |
|
|
|
|
|
|
Benefit
(provision) for income taxes |
|
3,035 |
|
|
|
(81 |
) |
|
|
|
|
|
|
Net loss |
|
(4,183 |
) |
|
|
(13,685 |
) |
|
|
|
|
|
|
Series C
preferred stock deemed dividend |
|
(3,463 |
) |
|
|
--- |
|
Series B
preferred stock dividends |
|
(800 |
) |
|
|
(800 |
) |
|
|
|
|
|
|
Net loss attributable
to common stockholders |
$ |
(8,446 |
) |
|
$ |
(14,485 |
) |
|
|
|
|
|
|
Loss per share basic
and diluted: |
|
|
|
|
|
Net loss
per share attributable to common stockholders |
$ |
(0.12 |
) |
|
$ |
(0.39 |
) |
Basic and
diluted weighted average shares outstanding |
|
72,024,811 |
|
|
|
37,613,216 |
|
|
|
|
|
|
|
|
|
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 and make operating decisions on the
business. Earnings before interest, taxes, depreciation and
amortization (EBITDA) and Adjusted EBITDA are alternate, non-GAAP
measures of cash utilization by the Company.
These supplemental non-GAAP measures are provided to assist
readers in determining operating performance. Management believes
EBITDA and Adjusted EBITDA are useful in assessing performance and
highlighting trends on an overall basis. Management also believes
these measures are used by companies in the fuel cell sector and by
securities analysts and investors when comparing the results of
FuelCell Energy with those of other companies. EBITDA differs from
the most comparable GAAP measure, net loss attributable to FuelCell
Energy, Inc., primarily because it does not include finance
expense, income taxes and depreciation of property, plant and
equipment and project assets. Adjusted EBITDA adjusts EBITDA for
stock-based compensation and restructuring charges, which are
considered either non-cash or non-recurring.
While management believes that these non-GAAP financial measures
provide useful supplemental information to investors, there are
limitations associated with the use of these measures. The measures
are not prepared in accordance with GAAP and may not be directly
comparable to similarly titled measures of other companies due to
potential differences in the exact method of calculation. The
Company's non-GAAP financial measures are not meant to be
considered in isolation or as a substitute for comparable GAAP
financial measures, and should be read only in conjunction with the
Company's consolidated financial statements prepared in accordance
with GAAP.
The following table calculates EBITDA and Adjusted EBITDA and
reconciles these figures to the GAAP financial statement measure
Net loss.
|
Three Months Ended January 31, |
|
(Amounts in
thousands) |
|
2018 |
|
|
|
2017 |
|
|
Net loss |
$ |
(4,183 |
) |
|
$ |
(13,685 |
) |
|
Depreciation |
|
2,128 |
|
|
|
2,057 |
|
|
(Benefit)/Provision for
income taxes, net |
|
(3,035 |
) |
|
|
81 |
|
|
Other (income)/expense,
net(1) |
|
(476 |
) |
|
|
409 |
|
|
Interest expense |
|
2,141 |
|
|
|
2,267 |
|
|
EBITDA |
$ |
(3,425 |
) |
|
$ |
(8,871 |
) |
|
Stock-based
compensation expense |
|
617 |
|
|
|
1,013 |
|
|
Restructuring
expense |
|
- |
|
|
|
1,345 |
|
|
Adjusted
EBITDA |
$ |
(2,808 |
) |
|
$ |
(6,513 |
) |
|
|
|
|
|
|
|
|
|
|
- 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.
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