Company Update (NASDAQ:FCEL): FuelCell Energy, Inc. Reports Fourth Quarter 2015 Financial Results and Business Update

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 fourth quarter ended October 31, 2015 and key business highlights.

Financial Results
FuelCell Energy (the Company) reported total revenues for the fourth quarter of 2015 of $51.5 million compared to $54.4 million for the comparable prior year period.  Revenue components include:

  • Product sales of $43.9 million for the current period compared to $42.4 million for the comparable prior year period
  • Service agreements and license revenues of $5.5 million for the current period compared to $6.7 million for the comparable prior year period
  • Advanced Technologies contract revenues of $2.1 million for the current period compared to $5.3 million for the comparable prior year period

The gross profit generated in the fourth quarter of 2015 totaled $3.1 million and the gross margin for the period was 6.1 percent, compared to gross profit of $6.0 million and gross margin of 10.9 percent for the fourth quarter of 2014.  The gross margin decreased in the current period compared to last year reflecting a product sales mix weighted towards Asian sales in the current quarter compared to North American power plant installation sales in the fourth quarter of 2014.  In addition, a number of Advanced Technologies contracts concluded towards the end of fiscal year 2015 while new contracts announced and included in backlog at October 31, 2015 were just beginning to commence, resulting in lower overhead absorption of fixed costs for the fourth quarter of 2015.  Operating expenses for the current period totaled $11.0 million compared to $10.9 million for the prior year period.

Net loss attributable to common shareholders for the fourth quarter of 2015 totaled $9.7 million, or $0.38 per basic and diluted share, compared to $5.5 million or $0.24 per basic and diluted share for the fourth quarter of 2014.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter of 2015 totaled ($6.7) million. Refer to the discussion of Non-GAAP financial measures below regarding the Company’s calculation of EBITDA.  Capital spending was $3.1 million, an increase from recent prior quarters reflecting expenditures for manufacturing process improvements.  Depreciation expense was $1.1 million.

Revenue Backlog
Total backlog was $381.4 million as of October 31, 2015 compared to $333.9 million as of October 31, 2014 and $338.3 million at July 31, 2015.

  • Product sales backlog totaled $90.8 million as of October 31, 2015 compared to $113.1 million as of October 31, 2014.
  • Service backlog totaled $254.1 million as of October 31, 2015 compared to $196.8 million as of October 31, 2014.
  • Advanced Technologies contracts backlog totaled $36.5 million as of October 31, 2015 compared to $24.0 million as of October 31, 2014.

Cash and Liquidity
Cash, restricted cash and borrowing availability totaled $123.0 million at October 31, 2015, including:

  • $58.9 million of cash and cash equivalents, and $26.9 million of restricted cash. Cash balance includes $9.6 million of cash advanced by POSCO Energy for raw material purchases made on its behalf by FuelCell Energy under an inventory procurement agreement that ensures coordinated purchasing from the shared global supply chain.
  • $36.2 million of borrowing availability under the NRG Energy revolving project financing facility.
  • Subsequent to October 31, 2015, the State of Connecticut Department of Economic and Community Development disbursed $10.0 million to the Company under an Assistance Agreement for funding of the first phase of manufacturing capacity expansion.  The interest rate for this loan is fixed at 2.0 percent per annum and principal payments are deferred for four years.

Business Highlights

  • United Illuminating purchased its fourth megawatt class fuel cell power plant for a town-wide micro-grid project.  FuelCell Energy possesses the expertise and capabilities to model, build and operate this micro-grid, a differentiator in the distributed power generation industry.
  • Alameda County, California entered into a power purchase agreement (PPA) for a new 1.4 megawatt fuel cell plant at a correctional facility.  This PPA structure is well suited for municipalities to avoid the capital investment in clean on-site power generation.
  • Commercial operations began in November 2015 for the grid-support application in Bridgeport, Connecticut purchased by United Illuminating and service revenue from the multi-year service agreement will begin to be recognized.
  • Recent progress in the development of multi-megawatt fuel cell parks, includes another development step for the 63 megawatt project in Connecticut with the November site visit and public hearing by the Connecticut Siting Council and the permitting body for siting power generation facilities in the State of Connecticut.  The draft decision from the Council is expected in January 2016.
  • Advanced Technology backlog at fiscal year-end 2015 included four contracts executed with the U.S. Department of Energy and totaling $39.0 million, including cost-share: (1) $23.7 million project to site a DFC3000® power plant adjacent to an existing coal-fired power plant for both carbon capture and ultra-clean power generation, (2) $10.9 million project to install and operate a 400 kilowatt solid oxide fuel cell power plant, (3) $3.1 million project for automated manufacturing of SOFC, and (4) $1.3 million project adapting existing SOFC stack technology for hydrogen production utilizing a solid oxide electrolyzer cell (SOEC) at very high efficiency.

“Closing projects for new markets and existing customers coupled with project financing speaks to the value proposition we provide to our customers and investors,” said Chip Bottone, President and Chief Executive Officer, FuelCell Energy, Inc.  “Backlog increased for the second quarter in a row as we continue to close projects in North America and Europe.”

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.

Reverse stock split
The Company effected a 1-for-12 reverse stock split on December 3, 2015.  The information provided for 2014, including the loss per share, has been adjusted on a pro-forma basis to reflect the reverse stock split for comparison.

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. (Original Source)

Shares of Fuelcell Energy opened today at $6.38. FCEL has a 1-year high of $21.06 and a 1-year low of $6.12. The stock’s 50-day moving average is $9.54 and its 200-day moving average is $10.50.

Fuelcell Energy Inc is an integrated fuel cell company. The Company designs, manufactures, sells, installs, operates and services ultra-clean, highly efficient stationary fuel cell power plants for distributed power generation.


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