DANBURY, Conn. - January 22, 2020 (Investorideas.com Newswire) FuelCell Energy, Inc. (NASDAQ: FCEL), a global leader in delivering localized, always on, sustainable clean energy, today reported financial results for its fourth fiscal quarter of 2019 and its fiscal year ended October 31, 2019 and provided details of its new business strategy.
"Our results in the fourth fiscal quarter and the full fiscal year reflect our focused execution on right-sizing FuelCell Energy, exiting opportunities that did not meet our margin objectives, and positioning the Company for growth in 2020 and beyond," commented Jason Few, President and Chief Executive Officer of FuelCell Energy. "We accomplished a number of strategic initiatives to strengthen our balance sheet and improve our cost structure as we focus on delivering our significant project backlog, which is expected to result in recurring cash flow from our generation assets."
Fourth Quarter of Fiscal 2019 Results
(All results reflect year-over-year comparisons unless otherwise noted)
Revenue of $11.0 million represents a 38% decrease year-over-year and reflects the Company's previous decision to deemphasize Product sales to focus on utility scale Power Purchase Agreement ("PPA") opportunities, and grow our generation portfolio. This revenue decrease was partially offset by the Company's increased Generation and Advanced Technologies contract revenues.
Gross loss for the fourth fiscal quarter of 2019 totaled $(23.4) million, compared to gross profit of $1.1 million in the fourth fiscal quarter of 2018. Results for the fourth fiscal quarter of 2019 include a noncash charge of $14.4 million due to a decision by the Company to operate the Triangle Street Project under a merchant model (selling electricity under tariff to the grid and without an executed power purchase agreement) for the next 5 years. Results also include a noncash charge of $3.1 million for the Bolthouse Farms Project because management has decided to pursue termination of the PPA related to the Bolthouse Farms Project given recent regulatory changes impacting the future cost profile for the Company and Bolthouse Farms.
Operating expenses for the fourth fiscal quarter of 2019 decreased by 26% to $9.6 million, compared to $13.0 million in the fourth fiscal quarter of 2018. Research and development expenses of $1.4 million reflect lower headcount and overhead as a result of restructuring activities during fiscal 2019 and an increased allocation of efforts to revenue producing activity. Administrative and selling expenses at $8.2 million were higher than in the fourth fiscal quarter of 2018 as a result of extraordinary legal and consulting costs incurred by the Company in connection with its restructuring, liquidity and refinancing initiatives. This expense category is expected to trend down in fiscal 2020 as those efforts are now complete.
Adjusted EBITDA loss totaled $(11.0) million in the fourth fiscal quarter of 2019 compared to $(8.8) million in the fourth fiscal quarter of 2018. (Adjusted EBITDA is a non-GAAP financial measure that represents adjusted earnings before interest, taxes, depreciation and amortization.) Please see the discussion of non-GAAP financial measures and Adjusted EBITDA in the appendix at the end of this release.
The net loss per share attributable to common stockholders in the fourth fiscal quarter of 2019 was $(0.23), compared to $(2.31) in the fourth fiscal quarter of 2018.
Fiscal 2019 Results
(All results reflect year-over-year comparisons unless otherwise noted)
Revenue of $60.8 million represents a 32% decrease in revenue year-over-year, which was primarily a result of the Company's previous strategic decision to focus on utility scale PPA business opportunities to grow the generation portfolio rather than selling our projects at completion, and the Company's continuing inability to access the Asian markets as a result of the situation with POSCO Energy, partially offset by increased Service and License revenues, Generation revenues, and Advanced Technologies contract revenues.
Gross loss in fiscal 2019 totaled $(21.3) million, compared to gross profit of $3.1 million in fiscal 2018. Fiscal 2019 results include one-time, noncash impairment charges of $20.4 million.
Operating expenses for fiscal 2019 decreased 4% to $45.7 million compared to $47.7 million in fiscal 2018. Research and development expenses of $13.8 million in fiscal 2019 compared to $22.8 million in fiscal 2018. This decrease reflects the reduction in spending resulting from the restructuring initiatives and the reassignment of personnel from internal research and development activities to funded Advanced Technologies projects. Administrative and selling expenses of $31.9 million in fiscal 2019 were higher than in fiscal 2018 as a result of atypical legal and consulting costs related to the Company's restructuring, liquidity and refinancing initiatives.
Adjusted EBITDA in fiscal 2019 improved 4% to ($31.4) million, compared to ($32.7) million in fiscal 2018. Please see the discussion of non-GAAP financial measures and adjusted EBITDA in the appendix at the end of this release
Net loss per basic and diluted share attributable to common stockholders for the fiscal 2019 was $(1.82) compared to $(9.01) in fiscal 2018.
Key Consolidated Financial Metrics
In a separate release today, FuelCell Energy announced its comprehensive strategy to strengthen its business and maximize operational efficiencies, which is expected to enable the Company to capture future growth opportunities by executing of its core business, focusing on customer relationships, delivering on and expanding its project backlog, and developing and commercializing new technologies with it partners. Access the release.
"My first full quarter as CEO has been a pivotal time for FuelCell Energy, during which we have worked together with our Board, as a management team, and with our stakeholders and suppliers to complete the restructuring phase of our strategy," said Jason Few. "Having accomplished our initial objectives of building a financial foundation to move forward with our new business, today we unveiled the pillars of our Powerhouse transformation strategy: Transform, Strengthen, and Grow. We are fully focused on successfully executing our project commitments and positioning the Company to deliver positive earnings."
(1) In July 2018, we contracted to operate and maintain a 20 MW plant for Korea Southern Power Company ("KOSPO"). This contract was originally represented in backlog as twenty years reflecting the total term of the contract. Under the terms of the contract KOSPO has a renewal option in year ten. Thus, under the adoption of Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers," which was implemented on November 1, 2018 service backlog was reduced by $64.3 million in 2018 and 2019 compared to amounts previously disclosed. Should KOSPO exercise this option, service backlog will be adjusted accordingly.
(2) License backlog was not included prior to the adoption of Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers," which was implemented on November 1, 2018.
Contract backlog increased to $1.32 billion as of October 31, 2019, reflecting additional generation backlog from the Bridgeport Fuel Cell, San Bernardino, and the LIPA Yaphank Solid Waste Management projects, offset by the removal of the Bolthouse Farms project and revenue recognized during the period. Only projects for which we have a PPA are included in generation backlog, which represents future revenue under long-term PPAs. Service backlog decreased mainly as a result of the acquisition of the Bridgeport Fuel Cell Project. Together, the service and generation portion of backlog had an average weighted term of approximately 18 years based on dollar backlog and utility service contracts of up to 20 years in duration at inception.
Cash, Restricted Cash and Project Finance
Cash, cash equivalents and restricted cash totaled $39.8 million as of October 31, 2019, including $9.4 million of unrestricted cash and cash equivalents and $30.3 million of restricted cash and equivalents.
On October 31, 2019, the Company entered an 8-year, $200 million senior secured credit facility with Orion Energy Partners Investment Agent, LLC and certain of its affiliates and drew down $14.5 million, followed by an additional $65.5 million draw down on November 22, 2019, primarily to support execution of selected projects within the Company's project backlog. The balance of the facility, $120 million, is available over the first 18 months following October 31, 2019, subject to the approval of the lenders, to fund construction costs, inventory and other capital expenditures of additional fuel cell projects with contracted cash flows and inventory, working capital, and other costs that may be required to be delivered by the Company on purchase orders, service agreements, or other binding customer agreements. In addition to providing corporate and project working capital, proceeds from the two draws under this facility repaid $22.8 million of short term debt.
Conference Call Information
FuelCell Energy will host a conference call today beginning at 10:00 a.m. EST to discuss the fourth fiscal quarter and full year results for fiscal 2019 along with details of the Company's new business strategy. Participants can access the live call via webcast on the Company website or by telephone as follows:
The replay of the conference call will be available via webcast on the Company's Investors' page at www.fuelcellenergy.com approximately two hours after the conclusion of the call.
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 its business plans and strategies. 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, ability to access certain markets, unanticipated manufacturing issues that impact power plant performance, changes in critical accounting policies, access to and ability to raise capital and attract financing, potential volatility of energy prices, rapid technological change, competition, the Company's ability to successfully implement its new business strategies and achieve its goals, 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.
About FuelCell Energy
FuelCell Energy, Inc. (NASDAQ: FCEL) is a global leader in developing environmentally responsible distributed baseload power solutions through our proprietary molten-carbonate fuel cell technology. We develop turn-key distributed power generation solutions and operate and provide comprehensive services for the life of the power plant. We are working to expand the proprietary technologies that we have developed over the past five decades into new products, markets and geographies. Our mission and purpose remains to utilize our proprietary, state-of-the-art fuel cell power plants to reduce the global environmental footprint of baseload power generation by providing environmentally responsible solutions for reliable electrical power, hot water, steam, chilling, hydrogen, microgrid applications, and carbon capture and, in so doing, drive demand for our products and services, thus realizing positive stockholder returns. Our fuel cell solution is a clean, efficient alternative to traditional combustion-based power generation and is complementary to an energy mix consisting of intermittent sources of energy, such as solar and wind turbines. Our systems answer the needs of diverse customers across several markets, including utility companies, municipalities, universities, hospitals, government entities and a variety of industrial and commercial enterprises. We provide solutions for various applications, including utility-scale distributed generation, on-site power generation and combined heat and power, with the differentiating ability to do so utilizing multiple sources of fuel including natural gas, Renewable Biogas (i.e., landfill gas, anaerobic digester gas), propane and various blends of such fuels. Our multi-fuel source capability is significantly enhanced by our proprietary gas-clean-up skid.
SureSource, SureSource 1500, SureSource 3000, SureSource 4000, SureSource Recovery, SureSource Capture, SureSource Hydrogen, SureSource Storage, SureSource Service, SureSource Capital, FuelCell Energy, and FuelCell Energy logo are all trademarks of FuelCell Energy, Inc.
Source: FuelCell Energy
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