First Quarter Fiscal 2024 Financial Summary
(All comparisons are year-over-year unless otherwise noted)
Revenues of $16.7 million compared to $37.1 million
Gross loss of $11.7 million compared to a gross profit of $5.2 million
Loss from operations of $(42.5) million compared to $(22.5) million
Net loss per share was $(0.05) in both quarters
DANBURY, Conn., March 07, 2024 (GLOBE NEWSWIRE) — FuelCell Energy, Inc. (NASDAQ:FCEL) — a global leader in decarbonizing power and producing hydrogen through our proprietary, state-of-the-art fuel cell platforms to enable a world empowered by clean energy — today reported financial results for its first quarter ended January 31, 2024.
“In 2024, we continue to focus on the accelerated implementation of our Powerhouse Business Strategy. In the first quarter of fiscal year 2024, we reported lower revenues compared to the comparable prior-year quarter, although results were in line with our expectations,” said Mr. Jason Few, President and Chief Executive Officer. “It’s important to note that, during the comparable prior-year quarter, we reported a one-time revenue benefit from the expiration of a material right related to an extended warranty obligation and higher service revenues from required module replacements.”
“We expect that this quarter’s performance will be the low water mark of the fiscal year due to an increase in operational generation assets during the quarter and expected product sales over the balance of the fiscal year. For example, our two Derby, Connecticut-based projects were placed in service late in the first quarter of fiscal year 2024, increasing our generation operating portfolio to a total of 62.8 MW from 43.7 MW at the end of fiscal year 2023.”
“For fiscal year 2024, our top priorities remain commercializing our technologies, accelerating our global sales closure pace and repowering service efforts in Korea, maintaining a strong balance sheet, making disciplined capital allocation decisions and expanding our solid oxide manufacturing capacity,” added Mr. Few. “We continue to make significant progress building out our solid oxide manufacturing capabilities as we work to position ourselves as a high-efficiency solutions provider in the hydrogen marketplace. As an example, we recently executed an agreement with the U.S. Department of State to participate in a private-public project that will use FuelCell Energy’s solid oxide electrolysis technology with small modular nuclear reactors in Ukraine, which we believe will demonstrate the numerous benefits of a highly efficient, carbon-free, decentralized platform that can generate power and support food security through the production of hydrogen and ammonia.”
Mr. Few continued, “We remain excited about the prospects of our solutions in the market segments we have targeted to improve access, cost, resiliency, and sustainability of delivered energy and related value streams. We believe that interest in decentralized power generation continues to accelerate globally. We further believe that our recent contract with the University of Connecticut (“UConn”) will be an excellent example of our solid oxide fuel cell (“SOFC”) platform answering the need for resilient distributed power. We have entered into a power purchase agreement with UConn to install four 250-kW (“SOFC”) units. Power from the SOFCs will be consumed by UConn’s new Innovation Partnership Building (“IPB”), and any unused power will be exported to the Eversource grid under the fuel cell net metering tariffs. Ultimately, we will work with UConn’s microgrid integrator to connect the SOFCs to the IPB microgrid that will be installed, and will include battery energy storage and intelligent controls. Adding to the environmental benefits, we will also be providing our heat recovery unit to convert our SOFC process heat to hot water, and pipe it into the IPB’s boiler room for heating, thereby reducing the University’s heating costs.”
“We see that commercial interest in our platforms is growing, aided by a realization that distributed power improves grid reliability, behind the meter time-to-power baseload power needs, and government policies around the world requiring delivery of clean energy and emission management, combined with the ability of our technologies to address key challenges, such as delivery of cost-effective clean hydrogen and securing scarce, purified CO2 with long-term price certainty. Moreover, we believe the push to decarbonize existing power infrastructure and the shift in power generation for both static and mobile applications to a hydrogen-based solution is building. We have seen firsthand the growing interest in solid oxide electrolyzers as we educate the market. We believe governments and industry will increasingly look to hydrogen as a major clean energy solution of the future as the value of high efficiency electrolysis increases.”
Mr. Few concluded, “As I discussed in my annual shareholder letter published last month, we continuously recalibrate our Powerhouse Business Strategy to align our operational expansion and commercialization of our platforms. We are working toward capitalizing on the global energy transition, while keeping a disciplined focus on cash management and the strength of our balance sheet. We believe that 2024 will be a significant year of transition ahead of anticipated growth, and we look forward to achieving major milestones throughout the balance of fiscal year 2024 as we work to deliver for our stakeholders.”
Consolidated Financial Metrics
Three Months Ended January 31,
(Amounts in thousands)
2024
2023
Change
Total revenues
$
16,691
$
37,073
(55
%)
Gross (loss) profit
(11,725
)
5,237
(324
%)
Loss from operations
(42,478
)
(22,455
)
89
%
Net loss
(44,399
)
(21,086
)
111
%
Net loss attributable to common stockholders
(20,593
)
(19,422
)
6
%
Net loss per basic and diluted share
$
(0.05
)
$
(0.05
)
–
%
EBITDA *
(33,879
)
(17,050
)
99
%
Adjusted EBITDA *
$
(29,144
)
$
(14,413
)
102
%
* A reconciliation of EBITDA, Adjusted EBITDA and any other non-GAAP measures is contained in the appendix to this press release.
First Quarter of Fiscal 2024 Results
Note: All comparisons between periods are between the first quarter of fiscal 2024 and the first quarter of fiscal 2023, unless otherwise specified.
First quarter revenue of $16.7 million represents a decrease of 55% from the comparable prior year quarter, driven by lower service and product revenue recognized, offset by higher generation revenue recognized as discussed below.
Product revenues for the three months ended January 31, 2024 were $0 compared to $9.1 million for the three months ended January 31, 2023. Our December 2021 Settlement Agreement with POSCO Energy Co., Ltd. and its subsidiary, Korea Fuel Cell Co., Ltd. (“KFC”), included an option to purchase an additional 14 modules (in addition to the 20 modules that were purchased by KFC during fiscal year 2022). This option included a material right related to an extended warranty obligation for the modules. The option was not exercised by KFC as of the expiration date of December 31, 2022 and, as a result, the Company recognized $9.1 million of product revenues during the three months ended January 31, 2023, which represents the consideration allocated to the material right if the option had been exercised.
Service agreements revenues decreased to $1.6 million from $13.9 million. Service agreements revenues recognized during the first quarter of fiscal 2023 were primarily driven by module exchanges at the plant in Woodbridge, CT, which originally achieved commercial operations in fiscal year 2017, and at the plants owned by Korea Southern Power Company in Korea, which achieved commercial operations in fiscal year 2018. The decrease in service agreements revenues for the first quarter of fiscal 2024 is primarily due to the fact that there were no module exchanges during the quarter. The Company completed a multi-year fleet upgrade in fiscal 2023 and is now entering a lighter module replacement cycle based on the deployment of longer life modules during the fleet upgrade. As a result, we expect lower service agreements revenues in fiscal 2024 compared to fiscal 2023. The Company currently does not expect any MW class module exchanges until the fourth quarter of fiscal 2024.
Generation revenues increased 10% to $10.5 million from $9.6 million, primarily due to the fact that we recorded revenue for the Toyota and Derby projects, which began operations in the first quarter of fiscal 2024.
Advanced Technologies contract revenues increased slightly to $4.6 million from $4.5 million. Compared to the first quarter of fiscal 2023, Advanced Technologies contract revenues recognized under our Joint Development Agreement with ExxonMobil Technology and Engineering Company (“EMTEC”) were approximately $0.1 million higher during the three months ended January 31, 2024 and revenue recognized under government contracts and other contracts were approximately $0.1 million lower for the three months ended January 31, 2024. Advanced Technologies contract revenues for the first quarter of fiscal 2024 also include revenues arising from the purchase order received from Esso Nederland B.V. (“Esso”), an affiliate of EMTEC and Exxon Mobil Corporation.
Gross loss for the first quarter of fiscal 2024 totaled $11.7 million, compared to a gross profit of $5.2 million in the comparable prior year quarter. The gross loss for the first quarter of 2024 is in part a result of unfavorable margins for generation, which included expensed construction and gas costs related to the Toyota Project of $3.5 million and a derivative loss of $1.9 million related to a natural gas purchase contract in the three months ended January 31, 2024. The gross profit in the comparable prior year period is a direct result of favorable product margins as the product revenue recognized in the first quarter of fiscal 2023 had no corresponding costs, along with lower manufacturing variances compared to the first quarter of fiscal 2024. In the first quarter of fiscal 2023, the Company also realized higher service margins due to new module exchanges occurring in the quarter, offset by lower generation margins due to $7.6 million of expensed construction and gas costs related to construction of the Toyota project.
Operating expenses for the first quarter of fiscal 2024 increased to $30.8 million from $27.7 million in the first quarter of fiscal 2023. Research and development expenses increased to $14.4 million during the first quarter of fiscal 2024 compared to $12.7 million in the first quarter of fiscal 2023. The increase in research and development expenses reflects an increase in spending, including spending on labor and materials, on the Company’s ongoing commercial development efforts related to our solid oxide power generation and electrolysis platforms and carbon separation and carbon recovery solutions compared to the comparable prior year period.
Net loss was $(44.4) million in the first quarter of fiscal 2024, compared to net loss of $(21.1) million in the first quarter of fiscal 2023.
Adjusted EBITDA totaled $(29.1) million in the first quarter of fiscal 2024, compared to Adjusted EBITDA of $(14.4) million in the first quarter of fiscal 2023. Please see the discussion of non-GAAP financial measures, including Adjusted EBITDA, in the appendix at the end of this release.
The net loss per share attributable to common stockholders in the first quarter of fiscal 2024 was $(0.05), which remained unchanged compared to the first quarter of fiscal 2023. The net loss per common share in the first quarter of fiscal 2024 benefited from the higher number of weighted average shares outstanding due to share issuances since January 31, 2023. The net loss per common share for the first quarter of fiscal 2024 also benefited from the net loss attributable to noncontrolling interests totaling $24.6 million in the period, primarily due to the tax equity financing of the Derby, CT projects, or approximately $0.05 per share compared to $2.5 million or approximately $0.01 per share in the prior year period.
Cash, Restricted Cash and Short-Term Investments
Cash and cash equivalents, restricted cash and cash equivalents, and short-term investments totaled $348.8 million as of January 31, 2024, compared to $403.3 million as of October 31, 2023. Of the $348.8 million total as of January 31, 2024, unrestricted cash and cash equivalents totaled $297.5 million and restricted cash and cash equivalents totaled $51.3 million. Of the $403.3 million total as of October 31, 2023, cash and cash equivalents and restricted cash and cash equivalents totaled $299.6 million and short-term investments totaled $103.8 million. Short-term investments are U.S. Treasury Securities, all of which had matured as of January 31, 2024.
During the quarter, the Company received funding of $21.1 million from the previously announced tax equity financing transaction with Franklin Park 2023 FCE Tax Equity Fund, LLC for the two projects in Derby, CT. In addition, the Company successfully completed the previously disclosed technical improvement plan for the Groton Project and has achieved one year of operations since the commencement of commercial operations. This resulted in the Company receiving funding of $4 million from East West Bank, who is the tax equity investor in the Groton Project.
“We are pleased with the project financing activity in the quarter and have taken, and will continue to take, proactive steps to help maintain the balance sheet strength required to support our growth objectives,” said Mr. Michael Bishop, Executive Vice President, Chief Financial Officer and Treasurer. “Given the Company’s carbonate inventory position, we continue to monitor and make adjustments to our production rate to meet current and expected demand from our Torrington facility.”
Backlog
As of January 31,
(Amounts in thousands)
2024
2023
Change
Product
$
–
$
–
$
–
Service
140,361
99,852
40,509
Generation
861,579
934,484
(72,905
)
Advanced Technologies
23,609
26,771
(3,162
)
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