FuelCell Energy (NASDAQ:FCEL) reported quarterly losses of $(0.07) per share which missed the analyst consensus estimate of $(0.04) by 75 percent. This is a 12.5 percent increase over losses of $(0.08) per share from the same period last year. The company reported quarterly sales of $13.90 million which missed the analyst consensus estimate of $21.86 million by 36.41 percent. This is a 18.23 percent decrease over sales of $17.00 million the same period last year.
FuelCell Energy stock fell 6% in premarket trading.The stock once risen more than 10% previously.
Fourth Quarter Fiscal 2021 Financial Highlights(All comparisons are year-over-year unless otherwise noted)
- Revenues of $13.9 million compared to $17.0 million
- Loss from operations of $(22.6) million compared to $(17.1) million
- Unrestricted cash and cash equivalents of $432.2 million as of October 31, 2021 compared to $149.9 million as of October 31, 2020
- Backlog of $1.29 billion as of October 31, 2021 comparable to backlog as of October 31, 2020
Fiscal Year 2021 Financial Highlights
(All comparisons are year-over-year unless otherwise noted)
- Revenues of $69.6 million compared to $70.9 million
- Loss from operations of $(64.9) million compared to $(39.2) million
- Net loss of $(101.0) million compared to $(89.1) million
- Adjusted EBITDA of $(35.7) million compared to $(17.7) million
FuelCell Energy, Inc. (Nasdaq: FCEL)-- a global leader in fuel cell technology—with a purpose of utilizing its proprietary, state-of-the-art fuel cell platforms to enable a world empowered by clean energy—today reported financial results for its fourth fiscal quarter and fiscal year ended October 31, 2021 and key business highlights.
“We are pleased with the continued advancement throughout the year of our strategic agenda in terms of infrastructure, solutions and talent to support achieving our long-term goals. We finished fiscal year 2021 with slightly lower revenue compared to fiscal year 2020, but we continued to make important progress on our in-flight projects as well as new technology and applications under development, such as the successful demonstration of the effectiveness of our solid oxide fuel cell,” said Mr. Jason Few, President and CEO. “Since the end of fiscal year 2021, we have favorably resolved our legal proceedings with POSCO Energy Co., Ltd. and clarified our access to the Asian market. We have also advanced through commissioning our 7.4 megawatt power platform located at the U.S. Navy Submarine Base in Groton, CT and our 7.4 megawatt power platform in Yaphank, NY. And, importantly, we extended our joint development agreement with ExxonMobil Research and Engineering Company until April 30, 2022.”
“We continue to make progress against and evolve our Powerhouse Business Strategy, which we launched two years ago,” continued Mr. Few. “As we have advanced, so must our strategy, and we are evolving our strategy to now focus on the key pillars of Grow, Scale and Innovate. We are in a unique period of time where our solutions are increasingly sought after to help solve energy and environmental challenges. We are working toward accelerating the development and deployment of our platforms to position the company to capture the substantial growth opportunity we foresee for both our carbonate and solid oxide solutions.”
“This plan for growth drives the need for expanding operational capabilities and growing talent. We believe our opportunities for commercial success have increased with the resolution of our legal proceedings with POSCO Energy, which includes a commitment to order 20 fuel cell modules from us to service POSCO Energy’s existing installed base of carbonate fuel cell platforms. Lastly, I am proud to report that we have met our annualized production rate target of 45 megawatts on a single shift at our Torrington facility, up from 17 megawatts at the end of fiscal year 2020.”
“Looking forward, we are focused on executing against our existing project backlog, while simultaneously increasing our annualized production rate, repositioning our brand for the future and building the next generation sales structure,” continued Mr. Few. “We are investing in our business to enhance our capabilities across the organization and position the business to accelerate growth leveraging our current commercially-available platforms and accelerating the commercialization of our differentiated solid oxide technology delivering electrolysis, long-duration hydrogen energy storage, and hydrogen power generation given the increasing energy transition opportunities we see before us. We look forward to discussing more around our growth opportunities and initiatives as part of our investor day in March.”
Mr. Few concluded, “Fiscal year 2020 was a year in which we focused on solving our operational challenges, whereas fiscal year 2021 was defined by improved execution against our backlog, investing in the capabilities of our global team, improving platform performance, and working to take technology innovations from the laboratory to commercial deployment. As we move into fiscal year 2022, we are invigorated by our emphasis on growth, scale, innovation and execution. The initial work under our Powerhouse Business Strategy built the foundation over the past couple of years, and the addressable opportunities globally given our repositioned company have never been greater for FuelCell Energy.”
Consolidated Financial Metrics
In this press release, FuelCell Energy refers to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. The non-GAAP financial measures may not be comparable to similarly titled measures being used and disclosed by other companies. FuelCell Energy believes that this non-GAAP information is useful to an understanding of its operating results and the ongoing performance of its business. A reconciliation of EBITDA, Adjusted EBITDA and any other non-GAAP measures is contained in the appendix to this press release.
Fourth quarter revenue of $13.9 million represents a decrease of 18%, driven by a $5.6 million decrease in service agreements and license revenues discussed below.
- Service agreements and licenserevenues decreased 102% to $(0.1) million from $5.4 million. The decrease in revenue is primarily due to the fact that there were no module exchanges during the fourth quarter of fiscal 2021. The Company also recorded a $1.0 million reduction in service revenues as a result of higher future cost estimates related to future module exchanges compared to the Company’s prior estimates, which more than offset recognized revenue in the quarter.
- Generationrevenues increased 31% to $6.7 million from $5.1 million primarily due to higher operating output of the generation fleet portfolio as a result of investments in maintenance activities and an increase in the size of the fleet.
- Advanced Technologiescontract revenues increased 14% to $7.3 million from $6.4 million. Advanced Technologies contract revenues recognized under the Joint Development Agreement with ExxonMobil Research and Engineering Company (“EMRE”) increased by approximately $0.4 million, reflecting continued performance under our Joint Development Agreement with EMRE during the quarter. The increase in Advanced Technologies contract revenues also reflects an increase in revenue recognized under government contracts of $0.5 million.
Gross loss for the fourth fiscal quarter of 2021 totaled $(8.4) million, compared to a gross loss of $(8.0) million in the comparable prior-year quarter. The higher gross loss for the fourth fiscal quarter of 2021 was the result of impairment charges of $2.8 million related to the Company’s Toyota Project, $1.8 million related to the development cost of two projects no longer being pursued, and $0.4 million related to the Company’s Triangle Street Project, as well as cost estimate adjustments related to future module replacements which resulted in a negative margin impact of approximately $2.6 million. Partially offsetting these charges and adjustments were improved generation gross margin primarily related to an increase in revenues, a decrease in depreciation expense, and higher Advanced Technologies gross margin primarily related to the mix of funded contracts in the quarter.
Operating expenses for the fourth fiscal quarter of 2021 increased to $14.2 million from $9.1 million in the fourth fiscal quarter of 2020. Administrative and selling expenses in the fourth fiscal quarter of 2021 included higher legal expenses associated with tax equity financings and additional share-based compensation expense due to the grants made in November 2020 under our Long-Term Incentive Plan. Research and development expenses of $3.5 million during the fourth fiscal quarter of 2021 reflect increased spending on the Company’s hydrogen commercialization initiatives compared to the comparable prior year period.
Net loss was $(24.2) million in the fourth fiscal quarter of 2021, compared to net loss of $(18.9) million in the fourth fiscal quarter of 2020, due to higher operating expenses and a higher gross loss for the fourth fiscal quarter of 2021 compared to the fourth fiscal quarter of 2020. The fourth fiscal quarter of 2020 included a $2.2 million favorable adjustment for the fair value of the common stock warrants issued to the lenders under the Company’s now extinguished credit facility with Orion Energy Partners Investment Agent, LLC and its affiliated lenders (the “Orion credit facility”), and the fourth fiscal quarter of 2021 included lower interest expense as a result of the early repayment of all amounts owed under the Orion credit facility.
The net loss per share attributable to common stockholders in the fourth fiscal quarter of 2021 was $(0.07), compared to $(0.08) in the fourth fiscal quarter of 2020. The lower net loss per common share was primarily due to the higher weighted average shares outstanding due to share issuances since October 31, 2020, partially offset by the higher net loss attributable to common stockholders.
Adjusted EBITDA totaled $(11.9) million in the fourth fiscal quarter of 2021, compared to Adjusted EBITDA of $(8.6) million in the fourth fiscal quarter of 2020. Please see the discussion of non-GAAP financial measures, including EBITDA and Adjusted EBITDA, as well as applicable reconciliations in the appendix at the end of this release.
Cash, Restricted Cash and Financing Update
On June 11, 2021, the Company entered into an Open Market Sale Agreement with Jefferies LLC and Barclays Capital Inc. (the “Agents”) with respect to an at the market offering program under which the Company may, from time to time, offer and sell shares of the Company’s common stock having an aggregate offering price of up to $500 million. Pursuant to the Open Market Sale Agreement, the Company paid the Agent making each sale a commission equal to 2.0% of the aggregate gross proceeds it received from such sale by such Agent of shares under the Open Market Sale Agreement. From the date of the Open Market Sale Agreement through October 31, 2021, approximately 44.1 million shares were sold under the Open Market Sale Agreement at an average sales price of $8.56 per share, resulting in gross proceeds of $377.2 million, before deducting expenses and sales commissions. Net proceeds to the Company totaled approximately $369.7 million after deducting commissions and offering expenses totaling approximately $7.5 million. The Company plans to use the net proceeds from this offering to accelerate the development and commercialization of our Advanced Technologies products, including our solid oxide platform, for project development, for internal research and development, to invest in capacity expansion for solid oxide and carbonate fuel cell manufacturing, and for project financing, working capital support, and general corporate purposes.
Cash and cash equivalents and restricted cash and cash equivalents totaled $460.2 million as of October 31, 2021 compared to $192.1 million as of October 31, 2020. The breakdown of unrestricted and restricted cash is as follows:
- As of October 31, 2021, unrestricted cash and cash equivalents totaled $432.2 million, compared to $149.9 million of unrestricted cash and cash equivalents as of October 31, 2020.
- As of October 31, 2021, restricted cash and cash equivalents totaled $28.0 million, of which $11.3 million was classified as current and $16.7 million was classified as non-current, compared to $42.2 million of restricted cash and cash equivalents as of October 31, 2020, of which $9.2 million was classified as current and $33.0 million was classified as non-current.
Fiscal Year 2022 Projected Investments
The Company has determined, in connection with the evolution of its business strategy, that it will focus on continued investment in the Company to achieve long-term growth, rather than focusing on shorter-term financial metrics such as revenue growth and Adjusted EBITDA.
Expected expenditures in fiscal year 2022 include:
- Capital expenditures are expected to range between $40 million to $50 million for fiscal year 2022, compared to capital expenditures of $6.4 million in fiscal year 2021, which includes expected investments in our factories for carbonate and solid oxide production capacity expansion, the addition of test facilities for new products and components, the expansion of our laboratories and upgrades to and expansion of our business systems.
- Company funded research and development activities are expected to increase to $45.0 million to $55.0 million in fiscal year 2022 (compared to approximately $11.3 million in fiscal year 2021) as we expect to accelerate commercialization of our Advanced Technologies solutions including distributed hydrogen, long duration hydrogen-based energy storage and hydrogen power generation.