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, 2016 and key business highlights.
FuelCell Energy (the Company) reported total revenues for the second quarter of 2016 of $28.6 million, which is comparable to the prior year period. Revenue components include:
- Product sales of $15.4 million for the current period compared to $20.2 million for the second quarter of 2015, as the comparable prior year period included module sales to Asia and higher equipment, procurement and construction (EPC) activity.
- Service agreements and license revenues of $10.6 million for the current period compared to $4.6 million for the comparable prior year period, increasing year-over-year, primarily due to revenue recognized from module replacements.
- Advanced Technologies contract revenues of $2.6 million for the current period compared to $3.8 million for the comparable prior year period. Revenue was lower year-over-year pending commencement of new projects in backlog.
A gross loss of ($0.2) million was incurred in the second quarter of 2016, compared to a gross profit of $2.0 million generated for the comparable prior year period. Product revenue mix oriented towards fuel cell kit sales to Asia in the current period compared to complete power plant sales in North America for the prior year period resulted in a year-over-year decrease in product gross profit. Service margins were negatively impacted by non-recurring charges from the termination of a legacy sub-megawatt service contract and changes to a different legacy service contract reflecting continued initiatives to optimize the service business, exit sub megawatt sites and expand future margin potential.
Operating expenses for the current period totaled $12.6 million compared to $10.8 million for the prior year period. The increase reflects greater project bid activity and timing of increased research and development related to product enhancements and new near-term product introductions, such as completion of European Union (EU) certification for MW-class plants, developing a renewable biogas clean-up skid as the Company seeks to capture more of the overall project value chain, further enhancing the micro-grid offering, and advancing different power plant configurations for specific target markets.
Net loss attributable to common shareholders for the second quarter of 2016 totaled $16.2 million, or $0.56 per basic and diluted share, compared to $10.7 million or $0.44 per basic and diluted share for the second quarter of 2015.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter of 2016 totaled ($11.5) million. Refer to the discussion of Non-GAAP financial measures below regarding the Company’s calculation of Adjusted EBITDA. Capital spending was $1.0 million and depreciation expense was $1.2 million.
Total backlog was $410.7 million as of April 30, 2016 compared to $312.2 million as of April 30, 2015 and sequentially, total backlog was $403.9 million as of January 31, 2016.
- Services backlog totaled $294.8 million as of April 30, 2016 compared to $203.7 million as of April 30, 2015. Services backlog includes future contracted revenue from routine maintenance, scheduled module exchanges, and from power purchase agreements.
- Product sales backlog totaled $51.0 million as of April 30, 2016 compared to $91.6 million as of April 30, 2015. Product sales backlog reflects firm orders with executed contracts. Notices of awards, outstanding bids, and project pipeline is not included in product backlog.
- Advanced Technologies contracts backlog totaled $64.9 million as of April 30, 2016 compared to $16.9 million as of April 30, 2015. Carbon capture contracts account for the majority of the increase year-over-year.
Cash, restricted cash and financing availability
Cash, restricted cash and financing availability totaled $168.8 million as of April 30, 2016, including:
- $82.0 million of cash and cash equivalents, and $34.7 million of restricted cash
- $29.0 million of borrowing availability under the NRG Energy revolving project financing facility
- $23.1 million of unused availability under the PNC Energy Capital tax equity project finance commitment
Future potential availability under the Hercules Capital debt facility totals $10.0 million upon reaching certain pre-defined milestones. This amount is not included in the above financing availability calculation.
- ExxonMobil agreement supports affordable fuel cell carbon capture solution and expands global market potential for both gas and coal-fired power generation.
- Robust project development activity with 125+ megawatts of fuel cell project submittals in 2016 and additional submittals expected based on a recent utility announcement.
- Attracting growth capital with the announcement of a debt facility of up to $25.0 million extended by Hercules Capital for working capital and general corporate purposes.
- Over 16 MW of installations in process in the U.S. and Europe as of April 30, 2016. Commercial operations attained and customer acceptance of utility-owned multi-megawatt gas pipeline application achieved in May 2016. This project, with peak electrical efficiency of 60 percent, will be an important reference site for a sizable market opportunity.
- Progressing with the first of a two phase North American capacity expansion, including the extension of the property lease for the manufacturing facility.
“Our project development team has been advancing numerous multi-megawatt projects and there are currently more than 125 megawatts of projects submitted to clean power RFP’s using our fuel cell products, with additional multi-megawatt projects expected to be bid this summer,” said Chip Bottone, President and Chief Executive Officer, FuelCell Energy, Inc. “We continue to focus on strengthening the Company in key areas and our offerings to support these larger project sizes, and as a preferred resource, our clean and easy-to-site solutions provide affordable power to ratepayers as well as economic development advantages to both local and state governments.” (Original Source)
Shares of Fuelcell Energy closed today at $7.34, down $0.28 or -3.67%. FCEL has a 1-year high of $13.92 and a 1-year low of $4.51. The stock’s 50-day moving average is $6.53 and its 200-day moving average is $6.36.
On the ratings front, Fuelcell has been the subject of a number of recent research reports. In a report issued on May 16, Roth Capital analyst Craig Irwin maintained a Buy rating on FCEL, with a price target of $12, which represents a potential upside of 63.5% from where the stock is currently trading. Separately, on May 6, FBR’s Carter Driscoll reiterated a Buy rating on the stock and has a price target of $9.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Craig Irwin and Carter Driscoll have a total average return of -5.0% and -12.5% respectively. Irwin has a success rate of 34.5% and is ranked #3637 out of 3903 analysts, while Driscoll has a success rate of 34.8% and is ranked #3790.
FuelCell Energy, Inc. designs, manufactures, sells, installs and services stationary fuel cell power plants for distributed power generation. It operates through the Fuel Cell Power Plant Production and Research segment. It offers products for the Ultra-Clean Power and Renewable Power markets.