FuelCell Energy (FCEL) Q1 2025 Earnings Call March 11, 2025 10:00 AM ET Company Participants Tom Gelston - SVP, Finance and IRJason Few - President and CEOMichael Bishop - Executive VP, CFO & TreasurerDushyant Ailani - Senior VPNoel Parks - Managing Director - Energy ResearchMark Feasel - Executive VP & Chief Commercial Officer Conference Call Participants George Gianarikas - Managing Director and Senior AnalystRyan Pfingst - Equity Research AnalystJeffrey Campbell - Senior Analyst Operator Thank you for st ...

分组1 - FuelCell Energy reported a quarterly loss of $1.42 per share, which was better than the Zacks Consensus Estimate of a loss of $1.52, and an improvement from a loss of $1.50 per share a year ago, indicating an earnings surprise of 6.58% [1] - The company posted revenues of $19 million for the quarter ended January 2025, missing the Zacks Consensus Estimate by 30.21%, but showing an increase from year-ago revenues of $16.69 million [2] - FuelCell Energy shares have declined approximately 30% since the beginning of the year, contrasting with the S&P 500's decline of -4.5% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is -$1.55 on revenues of $44.19 million, and for the current fiscal year, it is -$6.09 on revenues of $175.36 million [7] - The Zacks Industry Rank for Alternative Energy - Other is currently in the bottom 49% of over 250 Zacks industries, suggesting that the outlook for the industry can significantly impact stock performance [8]

Financial Performance - Total revenues for the three months ended January 31, 2025, were $18.997 million, reflecting a 14% increase from $16.691 million in the same period of 2024[126]. - Total costs of revenues decreased by 15% to $24.201 million for the three months ended January 31, 2025, down from $28.416 million in the prior year[126]. - Gross loss improved by 56% to $5.204 million for the three months ended January 31, 2025, compared to a gross loss of $11.725 million in the same period of 2024[126]. - Service agreements revenues increased by $0.2 million (14%) to $1.8 million for the three months ended January 31, 2025, driven by a long-term service agreement with Gyeonggi Green Energy Co., Ltd.[132]. - Generation revenues rose by $0.9 million (8%) to $11.3 million for the three months ended January 31, 2025, primarily due to contributions from the Derby Fuel Cell Project and SCEF Fuel Cell Project[135]. - Advanced Technologies contract revenues increased by $1.2 million (25%) to $5.7 million for the three months ended January 31, 2025, with significant contributions from contracts with ExxonMobil and Esso[139]. - Overall gross profit from service agreements revenues improved to $0.2 million for the three months ended January 31, 2025, compared to a gross loss of $0.3 million in the prior year[133]. - Loss from operations decreased to $32.9 million for the three months ended January 31, 2025, down from $42.5 million in the same period of 2024, attributed to lower operating expenses and reduced gross loss[147]. - Net loss attributable to common stockholders was $29.1 million for the three months ended January 31, 2025, compared to $20.6 million in the same period of 2024, with a net loss per common share of $1.42[157]. Cash and Liquidity - The company believes it has sufficient liquidity to fund its operations for the next 12 months[107]. - As of January 31, 2025, unrestricted cash and cash equivalents totaled $98.1 million, down from $148.1 million as of October 31, 2024[161]. - The company received a $4.0 million contribution from East West Bank during the three months ended January 31, 2025, recorded as noncontrolling interest[162]. - The company had unrestricted cash and cash equivalents of $98.1 million as of January 31, 2025, and U.S. Treasury Securities totaling $110.3 million[186]. - As of January 31, 2025, cash and cash equivalents totaled $160.4 million, down from $208.9 million as of October 31, 2024, with unrestricted cash at $98.1 million[205]. - The company has not achieved profitable operations or sustained positive cash flow from operations, and future liquidity will depend on timely project completion and increased cash flows[166]. Project Development and Partnerships - The company signed a Joint Development Agreement with Malaysia Marine and Heavy Engineering Sdn Bhd to co-develop large-scale hydrogen production electrolysis systems across Asia, New Zealand, and Australia[120]. - A strategic partnership was formed with Diversified Energy Co. PLC and TESIAC Corp. to develop integrated fuel cell energy assets, targeting three initial projects totaling up to 360 megawatts of electric power generation[122]. - The company is focused on expanding into markets with high energy costs and poor grid reliability, aiming to leverage multiple value streams from its platforms[116]. - The company continues to invest in product development for hydrogen-based energy storage and carbon capture technologies[115]. - The company expects to complete construction of a 7.4 MW solid oxide fuel cell power generation system by December 2026 under a PPA with Eversource and United Illuminating[178]. - The company is continually assessing opportunities for growth, including potential partnerships, acquisitions, and new product development[167]. Backlog and Production Capacity - As of January 31, 2025, the service agreements backlog totaled $172.3 million, up from $140.4 million a year earlier, reflecting a growth of approximately 22%[181]. - Generation backlog increased to $997.4 million as of January 31, 2025, compared to $861.6 million as of January 31, 2024, representing a growth of approximately 15.8%[181]. - The overall backlog increased by approximately 28.0% to $1.31 billion as of January 31, 2025, compared to $1.03 billion as of January 31, 2024[183]. - The generation operating portfolio totaled 62.8 MW as of January 31, 2025, with three additional projects representing 8.7 MW in development[171][172]. - The annualized production rate for the Torrington, CT manufacturing facility was approximately 31.2 MW for the three months ended January 31, 2025, compared to 33.2 MW for the same period in 2024[131]. - The company plans to expand its carbonate platform capacity to a maximum annualized capacity of 200 MW with additional capital investment[195]. - The company continues to invest in product development and manufacturing scale-up for solid oxide platforms, aiming for an annualized solid oxide electrolysis cell manufacturing capacity of up to 80 MW per year[199]. Cost Management and Restructuring - The company announced a global restructuring plan aimed at reducing operating costs and realigning resources due to slower-than-expected investments in clean energy, resulting in deferred spending on the Trinity and UConn projects[180]. - The company reduced its workforce by approximately 17% as part of cost-saving measures implemented in September and November 2024[202]. - The company has deferred capital spending for the Calgary expansion due to a global restructuring plan aimed at reducing operating costs and realigning resources[199]. Financing and Debt Obligations - The company is pursuing financing through a combination of long-term debt and tax equity financing to support its project asset portfolio[168]. - Total commitments and significant contractual obligations as of January 31, 2025, amount to $298.9 million, with $109.5 million due within one year[217]. - The Company secured approximately $10.1 million in project debt financing from EXIM at a fixed interest rate of 5.81%, repayable over 7 years[220]. - The Derby Senior Back Leverage Loan Facility amounts to $9.5 million, with a 7.25% interest rate and a 7-year term maturing on March 31, 2031[225]. - The Derby Subordinated Back Leverage Loan Facility amounts to $3.5 million, with an 8% interest rate and a maturity date of March 31, 2038[226]. - The total amount drawn down from the Derby financing on April 25, 2024, was $13.0 million, with net proceeds of approximately $12.8 million after fees[223]. - The OpCo Financing Facility includes a term loan facility of up to $80.5 million and a letter of credit facility of up to $6.5 million[230]. - At the closing of the OpCo Financing Facility, $80.5 million was drawn down, with approximately $77.6 million remaining after transaction costs[234]. - The Company is required to maintain a minimum cash balance of $100 million as part of the credit agreement with EXIM[221]. - The Derby Holdco Borrower must maintain a "Senior" debt service coverage ratio of not less than 1.25:1.00 and a "Total" debt service coverage ratio of not less than 1.10:1.00[227]. - The Term Loan has a seven-year term, maturing on May 19, 2030, with quarterly principal amortization obligations based on a 1.30x debt service coverage ratio[237]. - A capital expenditures reserve balance of $29.0 million is required, with $14.5 million funded from the Term Loan closing advance[238]. - A debt service reserve of not less than $6.5 million is required, satisfied by an Irrevocable Letter of Credit issued by Investec Bank plc[239]. - The net interest rate across the Financing Agreement and the swap transaction is 6.366% for the first four years and 6.866% thereafter[242]. Market and Economic Factors - A $1/MMBTu increase in natural gas pricing would result in an annual cost impact of approximately $26,000[289]. - A $10/MMBTu increase in renewable natural gas pricing would lead to an annual impact of approximately $2.0 million[289]. - The company has executed various fuel supply contracts to mitigate fuel price risks, including a two-year contract for the Toyota Project[288]. - The company has four projects with fuel sourcing risk, including the Toyota Project, Derby Projects, and Yaphank Project, with contracts extending through 2025 to 2029[288].

Financial Performance - Total revenues for the first quarter of fiscal 2025 were $19.0 million, a 14% increase from $16.7 million in the same quarter of fiscal 2024[6] - Net loss for the quarter was $(32.4) million, compared to $(44.4) million in the first quarter of fiscal 2024, a 27% reduction[11] - Loss from operations narrowed to $(32.9) million, down 23% from $(42.5) million in the prior year[11] - The net loss attributable to FuelCell Energy, Inc. for the three months ended January 31, 2025, was $28,326,000, compared to a net loss of $19,793,000 for the same period in 2024, reflecting a 43% increase in losses[31] - Adjusted EBITDA improved to $(21.1) million from $(29.1) million, reflecting a 28% year-over-year improvement[11] - Adjusted EBITDA for the three months ended January 31, 2025, was $(29,144,000), compared to $(21,073,000) for the same period in 2024, reflecting a worsening of 38.3%[36] Cost Management - The company expects to reduce operating costs by approximately 15% in fiscal year 2025 compared to fiscal year 2024 due to a global restructuring plan[13] - Research and development expenses decreased to $11.1 million from $14.4 million, primarily due to reduced spending on ongoing commercial development efforts[10] - Research and development expenses for the three months ended January 31, 2025, were $11,081,000, down from $14,353,000 in the same period of 2024, indicating a 22.5% reduction[31] - The company incurred restructuring expenses of $1,536,000 during the three months ended January 31, 2025[31] Backlog and Future Prospects - Backlog increased by approximately 28% to $1.31 billion as of January 31, 2025, compared to $1.03 billion a year earlier[18] - Product backlog reached $111.2 million, a significant increase from $0 in the same period last year[18] Asset and Liability Management - Total current assets decreased to $411,238,000 as of January 31, 2025, from $444,458,000 as of October 31, 2024, representing a decline of 7.5%[29] - Total liabilities decreased to $202,439,000 as of January 31, 2025, from $216,658,000 as of October 31, 2024, a reduction of 6.6%[29] - The company reported a cash and cash equivalents balance of $98,070,000 as of January 31, 2025, down from $148,133,000 as of October 31, 2024, a decrease of 33.8%[29] - The company’s total stockholders' equity decreased to $645,239,000 as of January 31, 2025, from $667,609,000 as of October 31, 2024, a decline of 3.4%[29] Derivative Gains and Losses - The company reported a derivative gain of $1.8 million in the first quarter of fiscal 2025, compared to a derivative loss of $(1.9) million in the prior year[7] - The Company recorded a mark-to-market net gain of ($1.8) million for the three months ended January 31, 2025, compared to a gain of $1.9 million for the same period in 2024[37] - The mark-to-market accounting change was related to natural gas purchase contracts, affecting the Generation cost of sales[37] Gross Loss - Gross loss decreased to $(5.2) million from $(11.7) million, representing a 56% improvement year-over-year[7] - The gross loss for the three months ended January 31, 2025, was $5,204,000, an improvement from a gross loss of $11,725,000 in the same period of 2024[31]

Financial Performance - Total revenues for the first quarter of fiscal 2025 were $19.0 million, representing a 14% increase compared to $16.7 million in the same quarter of fiscal 2024 [3][4][5] - Gross loss decreased to $(5.2) million from $(11.7) million, a reduction of 56% year-over-year, primarily due to lower generation costs and a derivative gain of $1.8 million [3][6] - Loss from operations improved to $(32.9) million, down 23% from $(42.5) million in the prior year [3][5] - Net loss for the quarter was $(32.4) million, a 27% improvement from $(44.4) million in the same quarter last year [3][8] - Adjusted EBITDA was $(21.1) million, compared to $(29.1) million in the first quarter of fiscal 2024, reflecting a 28% improvement [3][8] Operational Updates - The company has made significant strides in its global restructuring, which is expected to reduce operating costs by approximately 15% in fiscal year 2025 compared to fiscal year 2024 [2][12] - Operating expenses decreased to $27.6 million from $30.8 million, with administrative and selling expenses down to $15.0 million from $16.4 million [7][8] - The company is focusing on capturing growth opportunities in the data center market through partnerships and joint development agreements, including a collaboration with Diversified Energy Co. PLC and TESIAC [2][11] Backlog and Future Prospects - Total backlog increased by approximately 28% to $1.31 billion as of January 31, 2025, compared to $1.03 billion a year earlier, driven by new agreements including a long-term service agreement with GGE [15][16] - The backlog includes significant contributions from generation and service agreements, with generation backlog reflecting future revenue under long-term power purchase agreements [17] - The company anticipates that the first quarter of fiscal 2025 will be the low point for quarterly revenue for the fiscal year, with expectations of increased production and module shipments in subsequent quarters [2][4] Cash Position - As of January 31, 2025, the company had cash, restricted cash, and short-term investments totaling $270.7 million, down from $318.0 million as of October 31, 2024 [13][14] - Unrestricted cash and cash equivalents were $98.1 million, with short-term investments at $110.3 million [13][14]

Core Viewpoint - The strategic partnership among Diversified Energy Co. PLC, FuelCell Energy, and TESIAC aims to address the energy needs of data centers by providing up to 360 megawatts of reliable, clean power through innovative technologies and sustainable practices [1][2][3]. Group 1: Partnership Objectives - The partnership focuses on creating an Acquisition and Development Company (ADC) to deliver reliable, cost-efficient, net-zero power from natural gas and captured coal mine methane (CMM) to meet the increasing demand for data center energy [2]. - The collaboration leverages in-basin natural gas production and advanced fuel cell technology to develop a scalable and sustainable energy solution tailored for data centers [3][4]. Group 2: Technology and Environmental Impact - The process involves extracting natural gas or CMM, which is converted to hydrogen and then to electricity through a combustion-free method, significantly reducing air pollution emissions [4]. - The integration of captured methane and distributed fuel cells aims to set a new industry standard for carbon-optimized power generation, enhancing overall system efficiency and economic value [10]. Group 3: Economic and Job Creation - The initiative is expected to create hundreds of well-paying jobs in construction, operation, maintenance, and engineering, while also providing indirect economic benefits to the Appalachian region [6][7]. - The partnership is designed to stabilize energy supply and turn methane emissions into economic growth opportunities, contributing to community development [7]. Group 4: Future Outlook - The companies anticipate sharing further details about specific projects and development timelines soon, indicating a proactive approach to addressing the energy needs of rapidly growing sectors like AI and high-performance computing [7].

Core Insights - FuelCell Energy and Malaysia Marine and Heavy Engineering (MMHE) have signed a Joint Development Agreement (JDA) to co-develop large-scale hydrogen production systems across Asia, New Zealand, and Australia [1][2] - The collaboration aims to advance clean hydrogen production and support global decarbonization goals [2][6] - The JDA will leverage FuelCell Energy's solid oxide electrolyzer (SOEC) technology and MMHE's large-scale fabrication expertise to create modular solutions for commercial hydrogen production [3][5] Company Collaboration - The partnership builds on a memorandum of understanding from February 2023, focusing on developing hydrogen production facilities [4] - A Detailed Feasibility Study (DFS) will be conducted in Malaysia to evaluate low-carbon fuel production using SOEC technology with carbon dioxide and water as feedstocks [5][6] - The collaboration includes working with KBR LLC to utilize its proprietary low-carbon fuel synthesis technology [5] Strategic Goals - The project aligns with Malaysia's ambition to achieve net-zero carbon emissions by 2050 and enhance its national hydrogen value chain [6] - FuelCell Energy's CEO emphasized the significance of this collaboration in establishing a strong presence in the hydrogen and low-carbon fuels market [7] - MMHE's CEO highlighted the readiness to undertake larger-scale projects, leveraging both companies' strengths to deliver scalable solutions [8]

Core Viewpoint - FuelCell Energy, Inc. is set to release its first quarter 2025 results on March 11, 2025, before the stock market opens, followed by a conference call for investors to discuss the results and provide a business update [1]. Group 1: Upcoming Financial Results - The company will announce its first quarter 2025 results prior to the stock market opening on March 11, 2025 [1]. - A conference call with investors will take place at 10:00 a.m. Eastern Time on the same day to discuss the results [1]. Group 2: Accessing the Conference Call - Participants can access the live call via webcast on the company website or by telephone [2]. - A replay of the conference call will be available on the company's Investors' page approximately two hours after the call concludes [2]. Group 3: Company Overview - FuelCell Energy is a pioneer in clean energy technology, providing efficient and sustainable power, carbon capture, and hydrogen solutions globally [3]. - The company has over 20 years of commercial operation with fuel cells that can run on various fuels, including natural gas, hydrogen, and biofuel [3]. - Founded in 1969, FuelCell Energy holds more than 530 patents related to energy solutions [3].

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for FuelCell Energy despite higher revenues, with a focus on how actual results will compare to estimates [1][2]. Earnings Expectations - FuelCell Energy is expected to report a quarterly loss of $1.55 per share, reflecting a year-over-year change of -3.3% [3]. - Revenues are projected to be $32.22 million, representing a significant increase of 93.1% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [4]. - The Most Accurate Estimate for FuelCell Energy is higher than the Zacks Consensus Estimate, leading to a positive Earnings ESP of +8.71% [10]. Earnings Surprise Prediction - A positive Earnings ESP is a strong indicator of a potential earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [8]. - FuelCell Energy currently holds a Zacks Rank of 3, suggesting a likelihood of beating the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, FuelCell Energy was expected to post a loss of $1.64 per share but actually reported a loss of $2.10, resulting in a surprise of -28.05% [12]. - Over the past four quarters, the company has exceeded consensus EPS estimates three times [13]. Conclusion - While FuelCell Energy is positioned as a potential earnings-beat candidate, other factors may influence stock movement beyond just earnings results [14][16].

Core Insights - FuelCell Energy, Inc. has released its 2024 Annual Report and 2024 Sustainability Report, detailing business performance and sustainability progress [1][2] Financial Performance - The 2024 Annual Report provides a comprehensive overview of FuelCell Energy's financial performance, key achievements, and strategic initiatives [2] - The company added approximately $250 million to its revenue backlog in 2024 through utility scale projects and advancements in clean energy technology, including a carbon capture platform with ExxonMobil [3] Strategic Focus - FuelCell Energy is focused on growth and streamlining operations following a global restructuring in late 2024 [4] - The company's President & CEO emphasizes a commitment to innovative energy solutions and commercial excellence, positioning the company for future growth [5] Market Outlook - The outlook for the 2025 fiscal year indicates that FuelCell Energy's solutions align with a pragmatic energy perspective that values both renewable and traditional energy sources [6] - The carbonate platform is positioned to benefit from the acceptance of natural gas as a low carbon fuel, supporting the company's ethos of aiding customers in the energy transition [6] Sustainability Commitment - The 2024 Sustainability Report reaffirms the company's commitment to environmental stewardship, social responsibility, and corporate governance [7] - Key milestones include establishing a GHG emissions inventory, completing a life cycle assessment, and earning ISS ESG Prime status [8] Progress in Sustainability - The Chief Marketing and Sustainability Officer highlights significant milestones in sustainability, focusing on decarbonization across the value chain [9]