FuelCell Energy (FCEL) 11 Sep 232023 Q3 Earnings call transcript

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to FuelCell Energy Third Quarter 2023 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator

Vice conference. and Senior may Relations, begin your President, Gelston, Investor Finance, you Tom

and morning, you on Thank good today's joining you call. us for everyone and thank

FuelCell release, is As section this and of press of the www.fuelcellenergy.com. have this SEC XXXX, press at for being filings Energy This earnings on quarter released call available hours and slide call. conclude Consistent two our our our on posted for and recorded. after the approximately practice, in a website presentation the third earnings a addition our call to webcast our with Investors is This release will replay we our reminder, website. and we are website results being our financial in morning recorded our be available

and please Before that expectations, of will the you Exchange Securities the will with information of and or of meaning forward-looking that some include today statements express be our our financing statements Such within and to statements our provided and respect the our development, consist we and hear begin, of without financial technology, business plans continuing regarding XXXX. note Act our strategies. intentions FuelCell results, the with and anticipated the plans of limitation; commercialization, and expectations beliefs, regarding future

filed section XX-Q. and reports risks forward-looking such because a subsequently regarding number XX-K of particularly Our Exchange actual of presentation and Safe filed Form uncertainties Form future quarterly implied most More filings Harbor and recently and results Commission, Report could on in differ the information materially in the statements Risk or in by with our Annual of from those is described any the Factors such Securities statement in uncertainties. available risks on our with slide and

presentation the call, and you earnings we appendix GAAP will measures. of to and course be those of measures our the this the of to the our reconciliation press for non-GAAP measures certain refer release slide financial financial During discussing website we and to

today’s Our webcast under our earnings Investors. Again, website. of it's press on available are copy presentation release and www.fuelcellenergy.com a

For Officer, our President Jason Financial call Mike and President and Chief today, I joined Fuelcell Bishop, Few, Treasurer. Energy's Executive and, CEO; by Vice and am

prepared will questions your our and to remarks, joined of team. available other be members leadership Following we our take by be

would like I hand over opening Jason? call to now Jason to the remarks. for

announce and Tom, joining morning you, operational us Today Thank today. execution. strong of good for call Thank to on you another everyone. we are our quarter pleased

commissioning hydrogen EMTEC, fee our Long reentering highlight with the will agreement progress the market. the platform our success Tri-generation and as Engineering our strategic development as including well Company the consistent or We Port at distributed joint of objectives, our our extension Korean of on Technology of firm in projects of and ExxonMobil California, Beach,

who new Energy anyone For included we have on may a story, FuelCell to Company X. overview the be Slide

Our a enable to clean empowered world by purpose is energy.

and Europe, global and things, additional We world. are around our North in We America, Technology produce entering and be terms, to on simple we two hydrogen. operate technology. Asia, markets In energy platforms do are proud FuelCell decarbonize clean a proprietary power in focused leader the

energy operating We and today. Tri-generation of have meet hours these The megawatt current our FuelCell evolving technology needs us commercial stage operations believe installations generated we enables the capture Energy customers. leverage for history our the and more temperature which to sets to platforms, XX XX high years carbon than and future of and XX platform have in electrochemical behind underpins million platforms both

key please for turn Next, Slide the this quarter shown messages on X.

Long receipt online the this At required waiting operations. required hydrogen at on specification and building Beach to Toyota's including hydrogen First, fully the that related mobility applications. the commercial achievement in California Port to that department security declare is we delivering stringent for Toyota meets and we the of located thrilled final announce power, time, were producing of fire only project permit water, are

Toyota on of evidence we on initial Department power as collaborating development. This marks innovation in the in tremendous the technology a accomplishment did development the with of partnership of and our with Energy Tri-gen

Our innovative goals Goal producing and help its Nations' will Tri-gen free port emissions support Toyota by water decarbonization operations. X hydrogen their United clean to and help water by day achieve and electricity, every system sanitation producing meet number

new executed in Korea. service are us FuelCell largest a of the long-term we opportunities, signed growing that Secondly, the a over Green quarter, Energy that progress with understanding potential of in through and arrangement memorandum service the long-term business outlines during Most making business see a take park. world's agreement our recently we Noeul could servicing

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to Derby, our largely XX of megawatt civil our construction is advance in with onsite of complete. installation project also continues advancing. Fourth, Connecticut Onsite megawatt project X.X construction

year of We both of fourth achieve upon size generation by portfolio our on operations operations. to quarter the expect increase and declaring these calendar the XX%. XXXX in projects commercial commercial of This will

addition, In generation for plans platform. electrolysis to we manufacturing advancing our power efficiency, expand and high solid our are capacity oxide

and allocations. on a Lastly, maintaining approach we exercising capital discipline focus continue to to liquidity

investment were position position we and quarter. which short-term the a increase XXX to of project liquidity able million, approximately remains equity Our and financing cash during offerings through strong with both

will to I discuss third over the to call the Mike Mike? results financial quarter. turn for the Now,

Thank to and morning Jason, good on the everyone call today. you,

X. quarter shown by for Slide begin Let's reviewing the highlights financial the on

year third XXXX, the the of decrease a $XX.X million quarter $XX.X compared of quarter total to of XX%. For reported fiscal in of million XXXX, revenues fiscal year third we

loss sales quarter. compared by to year million net a quarter generated the fiscal revenues Excluding in overall $XX XXXX compared of XXXX. third the year slightly third third quarter, of million $XX.X of the the prior in loss in the revenues modules the fiscal were was quarter year Net year the to quarter up prior in

per in of quarter net in stockholders $XX.X attributable compared third third of fiscal The to in million in Adjusted negative year year quarter the of share the XXXX. year third negative loss fiscal $XX.X was common negative XXXX XXXX quarter adjusted to the million to negative EBITDA the quarter of EBITDA year resulting totaled $X.XX compared of third fiscal $X.XX fiscal XXXX.

non-GAAP see EBITDA discussion measures in Please including of appendix end the the adjusted of financial our release. at earnings the

of Finally, and cash XXXX. held the over investments short-term equivalent total as Company XX, million $XXX of July tax

please Slide item. Next, shows graphically of on by for our details backlog. the the hand revenue composition performance line left slide and additional side to financial at The chart X turn our

category, increased $X.X to $X from revenues million. drivers revenue by service million at agreement Looking

the consistent, The in in Generation fiscal comparable owned new in was plant primarily the at year for driven prior agreement period. service $XX.X increase year at revenues $XX third Southern two million exchanges of at were by module Trinity Power Company period, College. Korea Korea to by a increasing revenues period plant the and the module quarter million over XXXX exchange from

contract of agreement revenues under were quarter million. Technology of development to $X.X higher and other decreased technology under recognized engineering revenue approximately result resources the technology and and the from recognized joint as allocation Engineering XXXX, $X.X our a $X.X million to were Company fiscal $X.X of during with contracts quarter. advanced million ExxonMobil Advanced million lower approximately government revenues Compared year contract the third

million will through operating a compared prior the the module year right the changes quarter. increased quarter third loss comparable quarter growth in top The slide, of quarter expenses. the during at hand fiscal side fiscal the XXXX, $X.X of Growth of the XXXX. year walk fact the third quarter in loss primarily million I no new for were of of of XXXX XXXX totaled growth due there year to loss Looking $X.X and loss the third growth fiscal to year for fiscal year to of sales the third of compared

as fiscal headcount and the expansion. XXXX. due XXXX, in expense The to support module in third period result Administrative of product quarter million company. Operating increase sales $XX.X third fiscal of in $XX.X increase of from prior were quarter the expenses included business year XXXX an quarter margins year fiscal higher Korea compensation FuelCell increased the and an favorable from expenses primarily selling to in during of of for million sales year third a year to

Research and and compared quarter during $XX.X the third spending in development increase prior ongoing of an expenses the and to to power captured due million platform, efforts solutions oxide the carbon increased on our commercial development year and primarily solid fiscal to carbon separation electrolysis to year Company's period. XXXX, related generation

XXXX. that the the to of slide at XX% the result a as bottom of The you XX, of of XXXX, reduction the we service economic in and their offset partially also revenue an profiles, July product, the agreements given timing contract related Green fiscal and generation million. of Noeul decline the service was to into under $X in move fiscal projects compared generation XXXX. reduction part decision XX, July with backlog with by approximately has recognition service to finished quarter value to This due right quarter which generating due year backlog On will $XX decrease in in billion, backlog of since with increase certain new of forward to agreement approximately see is during entered during third a not a a of Energy a fourth year backlog XXXX, backlog the quarter

liquidity our ongoing investment is X project an Slide and On in assets. on our update

Treasury center total had we cash purple represented by past $XX.X equivalents restricted and maturity. which represent million. million of XX all cost the of cash the optimization the This cash cash, 'XX and bar. and cash $XXX.X during represented purchased bar blue to equivalents, bar short-term XXXX, to investments expected $XXX.X lighter in million and by of on by Securities the as million XX, equivalents, July slide, which were of the amortized July darker by and of unrestricted short-term the total cash part be of outstanding Company's investments $XX.X of As Company XXXX, investments represented of includes chart as efforts, are the The blue held fiscal the U.S. short-term of year management of the

a hand slide, assets, is there Looking total make portfolio. which side at the our right our up the project generation illustrating chart company-owned of

gross July million, As XX, XXXX, project our depreciation. of totaled $XXX.X excludes which assets accumulated

operating XXXX. the totaled projects assets, assets megawatts of portfolio As presentation, megawatts Slide as includes and the on our and XX.X of of generation in appendix process. XX.X XX.X XX, XX detailed megawatts of July This of

operations, As to are projects and process expected revenue. commercial higher contribute to they begin generation

pleased believe positioned continued quarter. we medium progress closing, and powerhouse strategy. this on our our From near, long-term a business financial with well In past perspective, that remain execute we I am to

over I will now turn to the call Jason. back

updates Thanks beginning with Slide business Mike. now in more detail operational our cover will and I XX.

framework powerhouse in our strategy I as we serves growth. quarters, approach. business As will long-term stated previous our have achieving our summarize for

tenet first The is grow.

our business platform segment markets where a who optimizing on opportunities sales from technologies, specific geographic significant focus created see for achieving for on the to is our Business on are building application growth playbooks continue that We executed agreements. prospects pipeline. focused development in team we market robust pipeline focused moving and

deepening platforms goal and is capital total scale integrated operations, Second investing annualized Plant From our to and for are our the carbonate onsite megawatts extending optimizing leadership the XXX by organization. capacity our and conditioning scale. manufacturing we with focused of in achieving existing capacity. of across our manufacturing on platform human

catalyst time ours an our capacity of solid and that serve expand around believe the being and costs. additional in with support like contemplated a drive products capabilities the adding we a of over enacted to ultimately working of manufacturing States, XXX adoption as of oxide megawatts down the United legislation acceleration world to goal Also to will manufacturing

Third is innovation.

deliver pending we the world. jurisdictions For We hundreds slide, earlier on and our in provide stopped the markets the to for and clean purpose have energy. enable patents world our carbon our Shown XX-year never or have to enable on growth granted of believe us and around opportunity technology powered in our history, innovating. participation by an hydrogen economy the we of will our the culture capture

support and to focuses that Those carbon range multi-featured and platforms delivering distributed storage, focuses, as global exploit four of by intended solutions our and hydrogen, develop a of and services transition. the diversify capabilities generation, energy working by capture recovery solutions. revenue our exhibited streams the strategic to distributed electrolysis and advance power strategic They're Tri-gen our hydrogen

and highlights more slides. making discuss in our will on We following detail strategy, are of the good specific progress in the execution I

strengthening Slide our to exciting announcement we Korea electric very XX. by two had domestic and are as turn a clean utilities. quarter the in energy Please with relationships growing during We presence developing

Under using total the XX megawatts agreement, the SureSource X plant cell terms The FuelCell long-term Noeul first service is will X,XXX Energy fuel with agreement of Green Energy platforms. has whose maintenance output XX of a oversee to the backlog. X,XXX have to the SureSource This over X total XX next of a million, is fuel value operation expected our approximately years. contract project which total added cells and of is these the

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negotiating of proposed that CGE. agreement currently detailed terms are We the with

large agreements Korea. In and megawatts operations we see potential of addition, in with maintenance a market XXX future over opportunities for

in in progress these focused on look and winning our are forward We providing on quarters. future to opportunities Korea updates

turn Slide Please XX. to

decarbonizing we is our the development with EMTEC, our innovation our of exciting part power At in an advance to the continue announced solutions. end which strategy. quarter, of partnership We

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we delivering customers, In to of hydrogen two offer terms solutions. our

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earth for supply and keep platinum of no cost design needs low avoid group issues use metals. and Our minerals with minimal rare

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our succeeding are third during international Korea the in quarter. in most We notably growth efforts,

making We our advanced carbon applications are for developing in our with on technology. platforms progress specifically capture through EMTEC collaboration

large projects, operation on We commercial including are the XXXX. which Connecticut during calendar Derby, we making progress expect achieve year to project,

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discipline to over have We capital are and on growth. positioned believe positioned deliver both Energy the we and We allocation capture We equity market years is focused coming well over opportunities liquidity enhanced debt believe remained have shareholder run. returns FuelCell financing. and the long increased our through for

operator begin over to the now will turn I Q&A. it to

George from first question the Genuity. line Canaccord from comes Gianarikas [Operator your of Instructions] And

Your line is open.

interest press there? platform. continue of to you're gives that in out seen build Maybe examining facilities of illuminate just what oxide for the bit to little your confidence start, you a and the question, solid additional you help additional you you've mentioned that capacity the first release the Could to build just

joining to George, we're and we you capacity how to question. need good for and pipeline you Yes, use that we the call, the as interest building for the thank the think customers seeing from we're solid our and morning, continue for oxide thank your manufacturing. that about expand

to additions capacity small our continue we for footprint making ways look we our footprint which increase even in or that, to existing in and addition to existing Calgary. our In

we get to things on optimizations thought believe we're based we doing from of we at So, and XX we just today, capacity facility. we're that were XX can megawatts originally that process additional -- at where that

for that development and we're and decisions our be by team solid really demand power will business gen driven for pipeline is seeing support strong the our building, oxide electrolysis. but So, for

to And into XXXX? come do you the still platform in expect a reversibility

of to to We believe more longer the going the to that a as transition us technologies and opportunity continue add more intermittent to that's more the grid. significant do. a We storage term be part continues for in as be we energy energy important

excellent more far as that view mineral-based store, energy solutions. and versus for an is energy that practical Our works long hydrogen duration it's storage

stack can leverage the we to feed to reversibility stack reverse a And power, going of the is so that's be and us. same our so, is make to think real platform, produce our ability going to opportunity that we hydrogen hydrogen for same

Maybe wondering thoughts I'm the turn on treasury Thank additionality, last us your and will if give your how by to more just question. me, decision to thoughts upcoming you. deliverability out? decision matching a and you that excuse as could detail share around

just, year. so it this think was clarify of the the said Deputy by more the to on of plan that rules of Secretary the they calendar end seventh, Yes, I Treasury

to to the rules. get say we're that clarity we're going So there's, around I real excited one, would

we've company, attract ability a equity tax demonstrated in and leverage as of to continued in recycle to the our a business. As the ITC we've our be part we which in way cash to position

overall it's to in really these decisions. and is terms the We making the administration the market department think the to voice that treasury how listen of trying of

more the they're right And to we so, ability, or ultimately additionality really account going get about and hard how they're put when clear terms a it's or of kind like, whether determination of match matching. for way than decision get think that believe, additionality one we or trying you in this transition to think the another right, to path a together of and things

of next from question comes Your UBS. Gupta Manav from line the

open. is line Your

this Friday to a morning bullish out I'm of I it California lists fuels for for study emission understand hydrogen. XX% that including very XXXX. change so plans? Good came trying hydrogen, of It actually now calling Does be that to alternate like on number SRIA that's supportive your it's pretty focus to And on reductions basically wanted guys. quickly seems on California, fuels. that from

and in even hydrogen, would of is green That's also book sale it's can to the report, when apply credit. a green claim encouraging which hydrogen And the state you they're basically California. the saying the get of within

if could fuels with your plans California? California we on a seeing which based in what SRI, you of are of So, talk big around the basically alternate state would support in way

also, and morning you nice just Good And, wrote on for thank pretty question. yourself report your you this out. a came that

production, appreciate we are power using only strong of supporters not number biofuels, we of different done on installations for a California. So that. have in Look, which

in how using green Long to what produce we alternate at Beach. hydrogen, of the are Port you think of is terms the We platform which about with support exactly our methodology fuels doing Tri-generation

you long standpoint move as carb driving that as making. this been this are California, certified have know, is And supportive of we a really from for a they who time. we're So, in company carb a movement

to first We provider the fuel are there. cell get

stronger think like those SOx that do. our And other SOx the what NOx focus, into support and strong just, particulates back is focus we platform quality support to around combust coming so, doesn't issues as California we real and fuels, trying NOx for alternate produce think of shows fuels, don't we so and things other and particular and air as

the a California. carbon we real it's the think about and actually to are distributed we really produce door are more power, positive. we It it, opportunities green for And, in and us like So, that Tri-generation think doing door around water hydrogen, for excited opens neutral from a generation. we power opens

it's think positive we a thing. So very

Well, those getting really thank platform many on a up response We to first decarbonize and of and congrats hope at help very things it's you faster pace. for detailed because running. a the Tri-gen

will Thanks it over. turn again. I So

Your the Ryan Pfingst next of question Riley from comes from line Securities. B.

is line Your open.

any And making customers progress of guys. product any can new provide color morning, demand? you Good you be around Korea? sales, might On potentially Hey. with outside

we the our Ryan, have question. have between good on thank focus for we we balance a power product and agreement creating begun a morning, purchase as company, as really you drive, sales. to and Yes, better opportunities that indicated,

those to us both to to us purchase are benefit a our pipeline as enables a us ways multiple So for we is to because of offer things from think building that company. do continuing we a customers

pipeline we But see expand strong new our as markets in traditional not outside our of but only builds we markets, into kind core. of

seeing are continue -- as and those to strong sale product opposed product more PPAs. to demand tend be We markets focused those generally

coming so, you on from sales think quarters, will that overall more over And the us we see product an as opportunity.

generation maybe That's the help how of whole? And or a a Derby you of segment then the segment, at turning to talk a the can higher about the projects generation helpful. as little bit economics level they might the profitability

Sure.

a margin happen through business how Mike about this you what walk we on you and give our quarters Mike of the over generation last can seen think certainly I and think sense maybe we've quarter. But could several that.

thanks and for Sure. Good morning the Ryan, joining call.

annualized revenue, will XX projects meaningful now, on million of about we generation about as think that revenue We right Derby an about generation producing today we're the this quarter. rate. million XX yes, two So add that did

today, So, but there. adding project, XX million the will megawatts obviously meaningful increase large another a make Derby XX

generation When well one-time our as right the the depreciation, last back results, EBITDA as of charges out you generation Toyota XX% portfolio you -- margins now. we're quarter's when portfolio, back in the look XX%, we just of at when we XX% you if range in think between about target profitability to

portfolio. So, we assets would expect that in to the continue add as operating additional we

comes question Stine Your of [Operator line the Craig-Hallum. from Instructions] next Eric from

open. Your line is

of so curious, just goes XX and one-time had the think this I megawatt you've at breakeven a of what so you on generation, around fire, in megawatts. breakeven. kind in you'd you've got expenses. now not, necessarily XX of given, level a generation you high I'll a kind so XX this at target megawatts while, And you'll with thought on, taken number? have maybe Derby you'll be portfolio lot stick I you've Obviously, know more XX So with a but be -- irons back you to isn't coming area where Do

Eric. morning, This Good is Mike.

you go four that meaningful years had. the we plus with projects centering ago, back really if backlog were we historically, generation a So, business portfolio of the around

So a getting really online. were global XX north forward up doing. way time those working we with after the hard of the to at your getting on we've couple online. support we're be to that years around megawatts energy around been comes Fast back at We'll what with point, a EBITDA business of focusing positive And Derby transition the big here portfolio. in being generation projects now

look targeting come those When as a million market. accelerated by we around in well. has get XXXX solid carbon that out to revenue increased but different confident off our also We're would getting we revenue the with targets about into to these and future. which billion our profitability over over trade Jason We're of, made operating We've and we've and and our the expect still we there. targets pushed investments put But both profitability CapEx, oxide, expenses that technologies in in XXXX. talked technologies the both out at external has capture XXX of to order increased

tails dependent what mean is maybe I where something through is I this like. pilot where say off the that know a is about, I I spending progressed, when think looks you've when all gotten program on should little a your time mean, future, maybe has in bit? that capture, And spend project we it mean, carbon the there

this to how about you spend than well maybe you Or So the you're do think going that? term future or those of have for that longer foreseeable things? do elevated kind think

look we here years. when we at over the last R&D So, that couple up ramped the spend,

But would in, we not when sales, shift that out put those that would in likely guidance as investing put We expenses commercial, around our down up come out, guidance products, which haven't have talked of to and the as in Connecticut become back And about, we've that. building that facilities. here first down. cost But development will drive specific research to clearly, we're article future. we're in

math hydrogen project has guidance, per opportunities dollars there government around then potentially but for we higher that those have multiple not with out the megawatt the as that back power particularly now, look to was a attributes megawatt. than going incentives dollar revenue around years out water. revenue we not a PTC just and couple at just for revenues, megawatt. than then can a just coming And there that different it's around credit obviously question generation, potential Tri-gen like And like out, potentially the just there, higher projects ago, We per different see, the dollars, products of

from our comes Parks question Brothers. Tuohy And Noel line today the final of from

line open. Your is

your guidance? you that the how had characterize sort of IRA aggressive, things terms so for are of and the any in sort the many of customers moving that momentum a Just as about source new state generation has of waiting Can with shifted whether they're of faster being and infrastructure more investments with or business Talking just more the of you business talk about new couple. more anything recent in technologies. customers, generation,

your Noel, you for thank question.

So the what in of well, seeing done way deliver what it's and is using note that our new that think of Toyota, are just value. platform. that we're to about the we we're we've What's We're in with our capabilities that things platform extending platform. think as many important additional existing with about just same which applications we're about you the customers, doing to

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what's of strong all we're tailwinds that business the in. countries think We net seeing, the are IRA Korea, got way been you've globally, just U.S. that we're legislated in programs because, customer got the which especially and around think programs zero around and in in even world without that, when you building pipeline in And really really about interest in. you we're our focused in growing when not drive the about have you've but happened, the EU, clarity which support

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question-and-answer this Jason back And will Few closing our final over Mr. to now ends session. call turn I some for the remarks.

We Rob want to victims' and to the honor impacted thank moment communities XXth. you. and take families a September by acknowledge

impacted thoughts our today, community. company in those based with are Connecticut our a As

growth strategy continue returns. will to of we company, powerhouse the a As optimizing with goal and delivering our business on execute

day. your interest Thank for to FuelCell today for updating you We and forward have next joining and Energy. in great quarter again you all look the a call

today's conference Thank for call. you participation. This concludes your

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