fcel

In an effort to cut to costs and production amid falling sales, FuelCell Energy Inc (NASDAQ:FCEL) said today that it will cut 96 jobs, or 17% of its workforce, sending investors for the hills. As of this writing, FuelCell shares are falling nearly 12% to $1.99.

“We are streamlining our business and cost structure as we reduce our production levels to meet the backlog we have today while positioning the Company for long term success. Our employees are our most valued assets so the decision to reduce our workforce was not made lightly,” said Chip Bottone, President and Chief Executive Officer FuelCell Energy.

“Our value proposition for affordable, clean and continuous power that is easy to site where the power is used is compelling for addressing the power generation challenges facing society globally today. American innovation and American manufacturing combined with repurposing urban brownfields further solidifies the economic value proposition,” concluded Mr. Bottone.

Financial update

The Company is also providing the following financial updates for its fiscal year and quarter ended October 31, 2016.

Cash and liquidity: As of the Company’s fiscal year end, October 31, 2016, consolidated cash and cash equivalents totaled approximately $118 million, of which approximately $84 million is unrestricted cash. In addition, the Company has a committed project finance debt facility from NRG Energy with availability of approximately $38 million at fiscal year-end 2016.

Revenues and Backlog: Total revenues for the fourth quarter of 2016 are expected to be in the range of $23 – $25 million, with total fiscal 2016 revenue in the range of $107 – $109 million. As previously disclosed, in October 2016, the Company closed on the financing of a 5.6 megawatt project located at a global pharmaceutical company under a power purchase agreement (PPA) structure in conjunction with the start of commercial operations.  Electricity revenue will be recognized monthly as power is sold under the twenty year term of the PPA.  The Company undertook a sale-leaseback of the project with a financial institution, and under U.S. GAAP, a sale leaseback transaction does not qualify for revenue recognition. Accordingly, revenue for 2016 will be lower than previously stated guidance due to this revenue treatment and that certain anticipated projects forecasted to commence in 2016 have not yet been realized. Contracted backlog as of October 31, 2016 totaled in excess of $400 million.

These results are preliminary results and subject to final reconciliation and adjustment. Final 2016 and fourth quarter financial statements, business highlights, and commentary regarding 2017 outlook will be shared during the quarterly earnings call to be held in early January 2017.

On the ratings front, Fuelcell Energy has been the subject of a number of recent research reports. In a report released yesterday, Roth Capital analyst Craig Irwin reiterated a Hold rating on FCEL, with a price target of $2, which implies a downside of 11% from current levels. Separately, on November 29, FBR’s Carter Driscoll reiterated a Hold rating on the stock and has a price target of $3.

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 yearly average loss of 5.2% and 24.8% respectively. Irwin has a success rate of 39% and is ranked #3956 out of 4243 analysts, while Driscoll has a success rate of 18% and is ranked #4148.

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. Its services also include engineering, procurement, and installation; and training.