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FuelCell Energy Reports Second Quarter 2015 Financial Results and Business Update

20:00 EDT 7 Jun 2015 | Globe Newswire

  • Asian manufacturing beginning by partner, supporting purchasing cost reductions
  • $110 million of cash and restricted cash
  • Advancing market opportunities for carbon capture and distributed hydrogen  
  • Two projects recently announced subsequent to quarter end with repeat customers representing approximately $40 million of future revenue

DANBURY, Conn., June 08, 2015 (GLOBE NEWSWIRE) -- 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 financial results for its second quarter ended April 30, 2015. 

Financial Results

FuelCell Energy (the Company) reported total revenues for the second quarter of 2015 of $28.6 million compared to $38.3 million for the comparable prior year period.  Revenue components include:    

  • Product sales of $20.2 million for the current period compared to $27.7 million for the comparable prior year period
  • Service agreements and license revenues of $4.6 million for the current period compared to $7.2 million for the comparable prior year period
  • Advanced technologies contract revenues of $3.8 million for the current period compared to $3.4 million for the comparable prior year period

The gross profit generated in the second quarter of 2015 totaled $2.0 million and the gross margin for the period was 7.1 percent, compared to gross profit of $1.6 million and gross margin of 4.2 percent for the second quarter of 2014.  The year-over-year improvement in gross margin reflects the benefit of continued manufacturing efficiencies and cost reduction actions along with a greater proportion of higher margin installation services, partially offset by a $0.7 million inventory charge.  The service contract for the final legacy 250 kilowatt installation was ended prior to the contract term on mutual consent with the customer, leading to the write-off of associated spare parts inventory.  Operating expenses for the current period totaled $10.8 million compared to $10.4 million for the prior year period. 

Net loss attributable to common shareholders for the second quarter of 2015 totaled $10.7 million, or $0.04 per basic and diluted share, compared to $16.6 million or $0.07 per basic and diluted share for the second quarter of 2014. Net loss for the second quarter of 2014 included expenses of $5.9 million or $0.03 per basic and diluted share related to the conversion of Senior Unsecured Convertible notes in the period.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter of 2015 totaled ($7.7) million. Refer to the discussion of Non-GAAP financial measures below regarding the Company’s calculation of EBITDA.  Capital spending was $1.7 million and depreciation expense was $1.0 million. 

Revenue Backlog

Total backlog was $312.2 million at April 30, 2015 compared to $342.8 million at April 30, 2014.  Backlog at April 30, 2015 did not include the recently announced Pepperidge Farm or Riverside projects, which will contribute approximately $40 million to backlog in the third quarter of 2015 and begin contributing to revenue in fiscal 2016.

  • Product sales backlog totaled $91.6 million at April 30, 2015 compared to $146.6 million at April 30, 2014  
  • Service backlog totaled $203.7 million at April 30, 2015 compared to $181.9 million at April 30, 2014 
  • Advanced technologies contracts backlog totaled $16.9 million at April 30, 2015 compared to $14.3 million at April 30, 2014

Cash and Liquidity

Cash, restricted cash and borrowing availability totaled $150.3 million at April 30, 2015, including:

  • $110.3 million of cash and cash equivalents, including $27.2 million of restricted cash
  • $40.0 million of borrowing availability under the NRG Energy revolving financing facility

Subsequent to quarter end, the Company closed on its first drawdown under the Loan Agreement with NRG Energy.  Principal borrowed was $3.3 million.

Business Highlights

  • Two separate on-site combined heat and power projects recently announced, representing approximately $40 million in future revenue including equipment revenue to be recognized when the projects are sold to investors and services revenue to be recognized over the multi-year term of the project power purchase agreements.
  • On-balance sheet hospital project in California progressing towards commissioning and expected sale and revenue recognition in early 2016, estimated at $9 million of product sales revenue when the project is sold and approximately $13 million of service revenue earned over the term of the underlying power purchase agreement.
  • Asian manufacturing commencing in 2015 with partner, POSCO Energy, purchasing raw materials and componentry to support production. 
  • Second quarter shipments included 8.4 megawatts of fuel cell kits under pre-existing multi-year contract plus 0.6 megawatts of modules to POSCO Energy, and 2.8 megawatts for a previously announced utility order in North America.
  • Advancing the development of numerous multi-megawatt fuel cell parks, including a 63 megawatt project in Connecticut with site control established and grid interconnection study in process.
  • Distributed hydrogen system operating at Torrington manufacturing plant, supporting annual savings of approximately $0.2 million from power, heat and hydrogen purchases.
  • Carbon Capture solution gaining traction in marketplace with multiple bids in progress.

“We are advancing the development of a 63 megawatt project, the largest in the history of the Company and announced the repeat business with two customers,” said Chip Bottone, President and Chief Executive Officer, FuelCell Energy, Inc. “We have taken tangible measures to support these and other larger scale opportunities and expect meaningful revenue growth in the coming quarters as we execute on our strong pipeline and backlog. Our prudently planned capacity expansion in North America and our partner’s fuel cell manufacturing addition in Asia are on-track and will double the global production capacity while reducing product costs simultaneously.”

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 Measures 

Financial 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 April 30,
(Amounts in thousands)2015  2014 
Net loss attributable to FuelCell Energy, Inc.$(9,894) $(15,843)
Depreciation981  1,110 
Provision for income taxes  55  68 
Other income (expense), net (1)523  6,307 
Interest expense626  891 
EBITDA$(7,709) $(7,467)
      
  1. Other income (expense), net includes gains and losses from transactions denominated in foreign currencies, fair value changes in embedded derivatives, and other items incurred periodically which are not the result of the Company’s normal business operations such as the impact from the conversion of the Senior Unsecured Convertible notes or receipt of research and development tax credits.



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.

The Company also calculates net loss and earnings per share which exclude non-recurring items in order to measure operating periodic performance. This is described in more detail in the Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations following the Financial Statements.

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 three 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 additional information, please visit www.fuelcellenergy.com, follow us on Twitter and view our videos 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 9, 2015 to discuss the second quarter 2015 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 can dial 678-809-1045
  • The passcode is ‘FuelCell Energy’


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 

FUELCELL ENERGY, INC.
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except share and per share amounts)
  April 30,
2015
  October 31,
2014
ASSETS     
Current assets:     
Cash and cash equivalents - unrestricted 82,985   83,710 
Restricted cash and cash equivalents – short-term  6,968    5,523 
Accounts receivable, net  43,521    64,375 
Inventories  71,877    55,895 
Project assets  9,945    784 
Other current assets  10,536    7,528 
Total current assets  225,832    217,815 
      
Restricted cash and cash equivalents – long-term  20,300    19,600 
Property, plant and equipment, net  27,313    25,825 
Goodwill  4,075    4,075 
Intangible assets  9,592    9,592 
Other assets, net  3,547    3,729 
Total assets 290,659   280,636 
      
LIABILITIES AND EQUITY      
Current liabilities:     
  Current portion of long-term debt 4,497   1,439 
  Accounts payable  20,236    22,969 
  Accrued liabilities  11,761    12,066 
Deferred revenue  45,668    37,626 
  Preferred stock obligation of subsidiary  894    961 
Total current liabilities  83,056    75,061 
      
Long-term deferred revenue  21,676    20,705 
Long-term preferred stock obligation of subsidiary  12,697    13,197 
Long-term debt and other liabilities   13,177    13,367 
Total liabilities  130,606    122,330 
Redeemable preferred stock (liquidation preference of $64,020 at April 30, 2015 and October 31, 2014)  59,857    59,857 
Total Equity:     
Shareholders’ equity     
Common stock ($.0001 par value; 400,000,000 shares authorized at April 30, 2015 and October 31, 2014; 300,990,595 and  287,160,003 shares issued and outstanding at April 30, 2015 and October 31, 2014, respectively)  30    29 
Additional paid-in capital  924,360    909,431 
Accumulated deficit  (823,274)   (809,314)
Accumulated other comprehensive loss  (499)   (159)
Treasury stock, Common, at cost (41,357 and 45,550 shares at April 30, 2015 and October 31, 2014, respectively)    (56)     (95)
Deferred compensation    56    95 
Total shareholders’ equity  100,617    99,987 
Noncontrolling interest in subsidiaries  (421)   (1,538)
Total equity  100,196    98,449 
Total liabilities and  equity 290,659   280,636 


FUELCELL ENERGY, INC.
Consolidated Statements of Operations
(unaudited)
(Amounts in thousands, except share and per share amounts)
  
 Three Months Ended
April 30,
 2015 2014
Revenues:     
  Product sales $20,221   $27,707 
  Service agreements and license revenues  4,618    7,177 
  Advanced technologies contract revenues  3,761    3,390 
  Total revenues  28,600    38,274 
      
Costs of revenues:     
  Cost of product sales  18,111    26,608 
  Cost of service agreements and license revenues  4,433    6,760 
  Cost of advanced technologies contract revenues  4,033    3,295 
  Total cost of revenues  26,577    36,663 
      
Gross profit  2,023    1,611 
      
Operating expenses:     
  Administrative and selling expenses  6,261    5,746 
  Research and development expenses  4,555    4,638 
Total operating expenses  10,816    10,384 
      
Loss from operations  (8,793)   (8,773)
      
  Interest expense  (626)   (891)
  Other income (expense), net  (523)   (6,307)
      
Loss before provision for income taxes  (9,942)   (15,971)
      
Provision for income taxes  (55)   (68)
      
Net loss  (9,997)   (16,039)
      
Net loss attributable to noncontrolling interest  103    196 
      
Net loss attributable to FuelCell Energy, Inc.  (9,894)   (15,843)
      
Preferred stock dividends  (800)   (800)
      
Net loss to common shareholders $(10,694)  (16,643)
      
Loss per share basic and diluted     
Basic $(0.04)  $(0.07)
Diluted $(0.04)  $(0.07)
      
Weighted average shares outstanding     
Basic  291,026,184      243,289,058 
Diluted  291,026,184      243,289,058 


FUELCELL ENERGY, INC.
Consolidated Statements of Operations
(unaudited)
(Amounts in thousands, except share and per share amounts)
  
 Six Months Ended
April 30,
 2015 2014
Revenues:     
  Product sales$ 53,639  $ 62,167 
  Service agreements and license revenues  8,489    12,137 
  Advanced technologies contract revenues  8,142    8,404 
  Total revenues  70,270    82,708 
      
Costs of revenues:     
Cost of product sales  48,459    59,636 
Cost of service agreements and license revenues  8,001    10,917 
Cost of advanced technologies contract revenues  7,773    8,345 
Total cost of revenues  64,233    78,898 
      
Gross profit  6,037    3,810 
      
Operating expenses:     
Administrative and selling expenses  11,901    10,600 
Research and development expenses  8,059    9,553 
Total operating expenses  19,960    20,153 
      
Loss from operations  (13,923)   (16,343)
      
Interest expense  (1,290)   (2,252)
Other income (expense), net  1,157    (8,081)
      
Loss before provision for income taxes  (14,056)   (26,676)
      
Provision for income taxes  (95)   (178)
      
Net loss  (14,151)   (26,854)
      
Net loss attributable to noncontrolling interest  191    407 
      
Net loss attributable to FuelCell Energy, Inc.  (13,960)   (26,447)
      
Preferred stock dividends  (1,600)   (1,600)
      
Net loss to common shareholders$ (15,560) $ (28,047)
      
Loss per share basic and diluted     
Basic$ (0.05) $ (0.13)
Diluted$ (0.05) $ (0.13)
      
Weighted average shares outstanding     
Basic  288,260,464      221,609,975 
Diluted  288,260,464      221,609,975 


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,
 2015 2014
  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$ (9,942)$- $ (9,942) $ (15,971)$5,896 (1)$ (10,075)
Net loss$ (9,997)$- $ (9,997) $ (16,039)$5,896 $ (10,143)
Net loss to common shareholders$ (10,694)  $  -   $   (10,694) $ (16,643)$5,896 $ (10,747)
                
Net loss per share to common shareholders               
Basic$ (0.04)   $ (0.04) $ (0.07)   $ (0.04)
Diluted$ (0.04)   $ (0.04) $ (0.07)   $ (0.04)


  Six Months Ended April 30,
 2015 2014
  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$ (14,056)$- $ (14,056) $ (26,676)$8,339 (1)$ (18,337)
Net loss$ (14,151)$- $ (14,151) $ (26,854)$8,339 $ (18,515)
Net loss to common shareholders$ (15,560)  $  -   $   (15,560) $ (28,047)$8,339 $ (19,708)
                
Net loss per share to common shareholders               
Basic$ (0.05)   $ (0.05) $ (0.13)   $ (0.09)
Diluted$ (0.05)   $ (0.05) $ (0.13)   $ (0.09)


Notes to Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations
For the Three and Six Months Ended April 30, 2015 and 2014

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.

 

FuelCell Energy, Inc.
Kurt Goddard, Vice President Investor Relations
203-830-7494
ir@fce.com

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