Financial Data and Key Metrics Changes - In Q2 2025, the company increased net income by 22% and adjusted EBITDA by 13% [7][17] - Consolidated gross margins improved by nearly two percentage points, reaching 55% in the Water Infrastructure segment [7][17] - SG&A expenses increased to $39 million, representing just under 11% of revenue [22] Business Line Data and Key Metrics Changes - Water Infrastructure segment revenues increased by 12% with gross profit before D&A growing by 15%, achieving a gross margin of 55% [17][19] - Water Services segment revenues decreased by approximately 4% sequentially, with gross margins holding relatively flat at around 20% [19][20] - Chemical Technologies segment saw a sequential revenue decline of approximately 11%, but gross margins before D&A exceeded expectations at 17.5% [22] Market Data and Key Metrics Changes - The company added approximately 60,000 acres of leasehold dedication and 385,000 acres under right of first refusal agreements in the Northern Delaware Basin [13][15] - New Mexico's contribution to total fixed recycling capacity increased from zero to over 60% in about two years [15] Company Strategy and Development Direction - The company is focused on growing its water infrastructure, scale, and margin, with a strategic emphasis on long-term contracts and rationalizing its water services segment [6][8] - The acquisition of assets from Omni Environmental Solutions aims to enhance the infrastructure business while monetizing non-core parts of the water service segment [9][10] - The company is exploring financing options for Peak Rentals to unlock value while maintaining strategic alignment with its core water infrastructure growth strategy [10][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong 20% year-over-year growth in the Water Infrastructure segment for 2026, building on double-digit growth expected in 2025 [16][18] - Despite anticipated challenges in the second half of 2025 for the completions-oriented parts of the business, management expects continued strong free cash flow generation [18][23] Other Important Information - The company generated over $10 million of free cash flow during Q2 2025, despite significant capital expenditures [24][25] - The company expects net CapEx in 2025 to be between $225 million and $250 million, with a focus on growth capital [25][26] Q&A Session Summary Question: What inning is the company in regarding market opportunities? - Management indicated that they are far along in the build-out phase, with major contracts in place and starting to receive calls for additional acreage [28][30] Question: What is the market opportunity for Peak Rentals? - Management highlighted Peak's unique position in the market, particularly in power generation, and the potential for economic value through battery technology integration [38][41] Question: What is the expected CapEx budget for 2026 to support growth? - Management stated that the 20% growth projection for 2026 is based on current contracts, with an expected capital deployment of approximately $225 million in 2025 [52][53] Question: Are there other assets being considered for divestiture? - Management confirmed that while they have rationalized trucking operations, they are focused on maintaining strategic relationships with remaining assets that support infrastructure [75][79] Question: What is the status of operations in Colorado? - Management reported ongoing progress in Colorado, with a focus on developing a reliable water network and engaging with local stakeholders [82][85]

Financial Data and Key Metrics Changes - In the second quarter of fiscal year 2025, total revenues increased to $37.4 million from $22.4 million in the same quarter of the previous year [32] - The loss from operations narrowed to $35.8 million compared to $41.4 million in the second quarter of fiscal year 2024 [33] - The net loss attributable to common stockholders was $38.8 million, compared to $32.9 million in the prior year, with a net loss per share of $1.79 versus $2.18 [33] - Adjusted EBITDA improved to negative $19.3 million from negative $26.5 million year-over-year [33] - Cash, restricted cash, cash equivalents, and short-term investments totaled $240 million as of April 30, 2025 [34] Business Line Data and Key Metrics Changes - Product revenues were $13 million, a significant increase from zero in the prior year [34] - Service agreement revenues rose to $8.1 million from $1.4 million, driven by module exchanges under a long-term service agreement [34] - Generation revenue decreased to $12.1 million from $14.1 million due to lower power output from maintenance activities [35] - Advanced Technology contract revenues fell to $4.1 million from $6.9 million [35] - Operating expenses decreased to $26.4 million from $34.3 million, with R&D expenses down to $9.9 million from $16.6 million [37] Market Data and Key Metrics Changes - Backlog increased by approximately 18.7% to $1.26 billion compared to $1.06 billion as of April 30, 2024, partly due to a long-term service agreement [39] - The company anticipates significant demand for distributed power generation in the U.S., Asia, and Europe [30] Company Strategy and Development Direction - The company announced a restructuring plan focusing on the carbonate platform, aiming to reduce operating expenses by 30% annually [30][31] - The strategy includes optimizing the supply chain and enhancing efficiency while preserving long-term flexibility for carbon capture opportunities [6][10] - The company is targeting positive adjusted EBITDA once the Torrington facility reaches an annualized production rate of 100 megawatts [10][31] Management's Comments on Operating Environment and Future Outlook - Management emphasized the strong global demand for power and the structural trends driving the need for clean energy solutions [12][13] - The company is focused on leveraging its carbonate technology to meet the growing demand for distributed energy and grid resilience [23][27] - Management expressed confidence in the restructuring efforts and the potential for future profitability [18][28] Other Important Information - The company is intensifying its focus on its carbonate platform while pausing broader solid oxide R&D efforts [7][8] - The partnership with Diversified Energy and TESSIAC aims to accelerate the deployment of carbonate fuel cells in data centers and large-scale applications [16][17] Q&A Session Summary Question: Can you discuss the momentum in procuring customers and orders for DPP? - Management indicated active conversations with data center customers and positive momentum in the partnership [44] Question: When can we expect to reach EBITDA neutral at 100 megawatts production? - Management stated that achieving 100 megawatts is dependent on order flow, with no additional capital needed to reach that capacity [46][47] Question: How does the manufacturing side drive profitability compared to generation? - Management clarified that the focus is on product and service sales rather than solely increasing the generation portfolio [52] Question: Will future bookings for data center applications reflect similar pricing to past orders? - Management expects stable pricing and views the increasing costs of gas turbines as an opportunity [55] Question: What types of customers are moving fastest in the power generation opportunity for AI and data centers? - Management noted a fragmented market with various customer segments, including traditional REITs and hyperscalers [60][62] Question: What will the agreements with gas distribution customers look like? - Management explained that DPP will generally involve power purchase agreements, with options for long-term service agreements [66]

Current Business Update - FuelCell Energy reported a revenue of $37.4 million for the second quarter of fiscal 2025, representing a 67% increase compared to $22.4 million in the same quarter of the previous year [5][7] - The company is focusing on its carbonate platform to meet the growing market demand driven by AI data centers and distributed power generation solutions [3][5] - A global restructuring plan has been initiated to reduce operating expenses by 30% annually, with a workforce reduction of approximately 22% [5][14][16] Financial Performance - Gross loss for the second quarter was $(9.4) million, an increase of approximately 33% from $(7.1) million in the prior year [5][8] - Loss from operations decreased to $(35.8) million, a 13% improvement from $(41.4) million in the same quarter last year [5][12] - Net loss per share improved to $(1.79) from $(2.18), reflecting an 18% decrease in loss per share [5][13] Backlog and Revenue Streams - Total backlog increased by approximately 19% to $1.26 billion, up from $1.06 billion in the previous year [5][20] - Product revenues were $13.0 million, a significant increase from no product revenues in the comparable prior year period [10] - Service agreement revenues rose to $8.1 million from $1.4 million, driven by module replacement revenue [10] Operational Changes - The company is recalibrating its manufacturing facility production schedule to align with contracted demand rather than forecasted demand [16] - Research and development expenses decreased to $9.9 million, primarily due to reduced spending on solid oxide power generation and electrolysis platforms [9][11] - The addition of Mike Hill as Chief Commercial Officer is expected to enhance the company's focus on sustainable integrated energy solutions [3][5] Cash and Investments - As of April 30, 2025, the company had cash and cash equivalents totaling $240.0 million, down from $318.0 million as of October 31, 2024 [18] - Unrestricted cash and cash equivalents were $116.1 million, with short-term investments at $60.9 million [18] Strategic Partnerships - The company has formed a strategic partnership with Diversified Energy Co. PLC and TESIAC Corp. to enhance its entry into the data center market [3][5] - A long-term service agreement with Gyeonggi Green Energy Co., Ltd. contributed to the increase in backlog [20]