FuelCell Energy (FCEL) 10 Jun 242024 Q2 Earnings call transcript

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the FuelCell Energy Second Quarter of Fiscal 2024 Financial Results Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Tom Gelston, Senior Vice President of Finance and Investor Relations.

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

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

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

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

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

of copy webcast on website Our our earnings under are available today's presentation a release press Investors. and

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

Following our your take for Jason? Jason members by questions available the we be to remarks. now hand will over be leadership remarks, prepared to the other and team. I'd like to of call opening joined

execute Business Thank the results I'm you, today. morning, our Tom, Strategy. Thank good with very as on you and second joining our for for Powerhouse everyone. on pleased our continue to quarter us we call

but there Our to sequentially compared no first revenue the the quarter, this X in compared our prior while exchanges module year there year were quarter, were period. exchanges the climbed fact to due that to as prior module expected, period decreased

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subsequent development of we we've quarter ExxonMobil's an low-carbon business. agreement and And some wins. solutions extension with commercial significant During and update the announced had our to also joint end,

of X, with our for focus the solutions continued on is and or Toyota, we including continue number Pfizer, CapEx. A R&D growth, to IBM collaboration and few. capital important approach Nuclear Laboratories work our cost largest to our disciplined allocation, success points of and made we've but Additionally, management are a data enabling scale, and on our our progress managing technological companies, think us our CNL to through related name on evident ExxonMobil, global included to expenses while pursuing most overall Canadian world's some with Slide

electrochemical to enable be clean a purpose technology, are by world global leaders support FuelCell at in Energy to of empowered us All all proud in energy. of very our

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messages key to for quarter. Turning the

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to Slide X. Turning

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which data a are have crucial for microgrid we in record centers. Finally, proven applications track

the trend. And business would CFO, turn suited secular now, is are over pursuing to in Bishop. capitalize actively this this We I our and believe to on to call our like Mike uniquely opportunities sector

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

by shown begin the for quarter, Slide Let's XX. the on financial highlights reviewing as

of For a year fiscal of we fiscal quarter discussion year adjusted second appendix end year fiscal stockholders of fiscal including net the common the share total year net $XX.X of XXXX, $XX.X XXXX, the EBITDA the to quarter quarter. benefited per year in of the average net loss the $XX prior financial a measures, the we to adjusted to the quarter million XX, The issuances weighted fiscal second share XXXX. Adjusted year shares reported reported the of earnings of totaled in resulting was negative from Please compared second loss compared million second of In number outstanding at negative of see fiscal second since million per net XXXX. XXXX. non-GAAP $XX.X compared of second in due quarter second million in cents loss negative the of of quarter of year to negative compared share fiscal common to quarter our XXXX revenues cents quarter loss $XX.X $X.XX $X.XX revenues $XX.X attributable in EBITDA in EBITDA, of the XXXX million higher release. the year to of in million April XXXX. The

in April a strong $XXX.X and Treasuries U.S. cash reported XXXX. and as cash short-term approximately we position Finally, total equivalents, cash, consisting investment of million of of restricted XX, cash investments

government details XX% recognized second module no revenues was in by of quarter there backlog. you by year Power Service technology approximately previously contracts prior graph on Next, XX, of our the Nederland of under owned service in fiscal plants revenue module decrease The the left-hand Mobil exchanges Esso, Korea. Generation prior XXXX. recognized driven EMTEC slide, second contract quarter million, $XX.X on revenues and lower projects, Company the side primarily fiscal and revenues primarily EMTEC an revenue the primarily decreased from in to from quarter, B.V. fact second of to from were were technology our Slide Korea to $XX.X million contracts will operations at include revenues with Corporation. Service of Toyota increased driven which broken $X.X order the received prior $X.X the or the Advanced contract Derby from were on year additional revenues the recognized fiscal the agreement $X.X technology million year the Compared advanced year Southern by quarter see were agreement $X.X by period. XXXX during $X.X quarter during under for exchanges the purchase from by financial from higher. revenue the Esso $X.X million. is In JDA approximately driven increased arising Exxon performance fiscal year the in also Advanced XXXX. to and revenues the quarter million of XXXX down began and for million category. agreement revenues million million contract other revenues first and affiliate

million of and prior fiscal project, electrolysis carbon development the $XX.X materials spending related the of at to The including costs gross million loss separation loss related million carbon development solid result comparable to changes oxide expenses. our for the loss quarter and the totaled to $X.X by of year in and and XXXX to costs Toyota offset gas of the construction will our in commercial recovery which part quarter XXXX to in gas XXXX XX, and to primarily reflects in the from mark-to-market resulted increased year margins of Looking in months quarter. second million slide, construction gross side and exchanges. Operating due loss, related loss related fiscal of module year to and and fiscal generation efforts, in The second from compared of a X $XX.X in the expenses the power the period increased operating the prior margins $X.X to unfavorable natural prior generation, profit Gross period. of net right-hand the comparable partially during ongoing service $X.X compared gross for to $XX.X research million $X.X margins XXXX. quarter generation a million fiscal expense $X.X development in project gross Research for and solutions. $XX.X XXXX. a of expenses of expense through Toyota higher lower million the included The increased increased loss and April to and million contracts platforms related headcount, I walk the second purchase million gas on labor quarter is increase expenses ended second

backlog since service the April a of new fuel with we of agreement modules, for upgraded is modules cell long-term billion Amendment between as related agreement will GGE, agreement service a was under XX, billion to to added result technology into was service backlog as advanced long-term entered from first contract quarter XX, GGE during XX, agreement. replacement you slide, year this over of payable see service approximately bottom which JDA the April we replacement components April $X.XX cell million, May commissioned XXXX we advanced commence the the agreement of into GGE be April This by $XXX the a the million megawatt XX, entered will of as modules generation, increases time fiscal ended technology by XX, long-term XXXX will year Green received backlog are paid to to of company's to XXXX. purchase service of provide partially of compared result EMTEC revenue the order the with Limited with the for fuel cell XXXX. Subsequent quarter, $X.XX that additional October advanced primarily Noeul have announced balance offset XXXX, end pursuant agreements of XX which XXXX. in Energy as replacement plant Company carbonate and the contract change under in modules. and quarter technology total recognition The that to and under service the fiscal This the amount X.X third into the replacement On #X as our during to and XXXX, in service right and obligations company Esso increase $XXX entered such backlog fuel

update have Next, an cash Slide we on liquidity. on our XX, and

is interest X.XX% with is funding approximately financing project debt debt fees debt our subordinated in after years a company the Net at Derby, debt the transaction began we interest which X Bank Connecticut, facility years. Liberty and senior term fixed rate is credit operations. deducting $XX.X closed Bank the service the Connecticut X the quarter, X%. Green is The for million During totaled for fixed subordinated to and transaction and facility rate reserves. recently on projects The XX the and senior the of at for

net of $X.X sales Agreement XXXX, Sale Open stock common company million were Market share commissions sale X.X XX, months in our after the an per million shares and price X of April the resulting to average sold deducting the proceeds approximately under at $X.XX approximately fees. During of ended Amended

cash $XX.X approximately commissions stock of Treasuries This million $XX.X end, through As and to Treasuries quarter restricted totaled equivalents, of an of XXXX, Amended $XXX.X the cash U.S. million fees. under cash and cash in Market deducting cash XX, April of equivalents includes investments short-term and U.S. company $XXX.X equivalents, additional of Subsequent million cash $XXX.X common and million. the and and raised Agreement investments Sale in sale unrestricted cash and Open million cash the equivalents. company's after restricted

XXXX targeted our On fourth quarter year Turning call, plan to XX. we investment earnings Slide for our fiscal presented XXXX.

disciplined keeping we to spending are approach, mentioned, our committed milestones. with into a expected planned investments our as now Jason shift this triggers we As approach to to by is fiscal previously managing previously linked establishing to some year following of In grow XXXX. key

production now megawatts cell calendar to to $XX fiscal our to certain in capital addition production fiscal the of are year. These to planned oxide per year its million are First, make million is our are now by XXXX year commitments we facility. XXXX. of for include in facility solid electrolysis XXXX, company and for expenditures originally Connecticut solid expecting company solid XX capacity $XX at we expected expenditures capital be adding fiscal priorities million The exploring $XX updated manufacturing made equipment capital manufacturing and capabilities to the to plant the Torrington, in $XX also in year, completed to property, oxide These expansion to is in Calgary down year amounts oxide million upgrade facilities. which manufacturing from

of and storage manufacturing commercialization in for the in expenses decrease hydrogen, million XXXX year year also XXXX. development estimated technology generation. from hydrogen our and of range funded energy to manufacturing to carbon for to hydrogen-based fiscal are are investing for to a expenses distributed and accelerate reflecting facility fiscal capabilities adding the Priorities for our solutions long-duration our prior power carbon are $XX $XX million, for now Torrington recovery R&D molten and continue testing. Internally projected advanced research carbonate, for We capture including be

in calendar which our Lastly, XXXX. In million the on of compared we adjustments million Project, spending $XX fiscal of of slide assets lowered in timing $XX result be in the to the assuming high portfolio expected million the range to estimated previously to investment Trinity million million fiscal as in the generation XXXX for project $XX $XX provided a to commissioned year summary, now described this a of year is range. to of XXXX, $XX represent constructed in to and reduction the planned end the up

We our will turn call to costs while continue and opportunities strategic our business will to pursue initiatives. I reduce on across executing back operations, product the Jason. platforms growth now to

visibility sales, our Thanks, clarity returns products in emerging Mike. second our one power our made to customer sell services into this have When cost-disciplined progress new do the service win. I customers, drivers you of hope our we innovative to win. business. project we of of we When in win. have and greater to to commitment seen with turn we realizes we research a the value our provide generating these the the technologies commitment a reliable quarter we balancing power all win. in who our clean investors, and for have and When into all When we we and we solutions, manner,

board. more on year is to wins the Our put goal this

over it showed quarter forward these quarters to begin updates the more of look This we operator to to ahead. I positive now and Q&A. providing turn in examples many will the

George Canaccord We'll Instructions] at go Genuity. to [Operator Gianarikas first

about XX to that for this a hear second, Slide reducing So to focus into that some still start I platform mentioned spend up solid extend correctly Is reversible track? like million. on Did you're project expecting past on of spending had $XX fiscal just this I'd to you you in that expect XXXX. to that And had 'XX? oxide also, by the in you

George, I question. first part will the this take that of is Mike.

your million spend we've Specific fiscal the Slide As spending. far around this expect yes, this made we summarize did that asset is lowering That in particular the project project that $XX to reducing XXXX. we million million. funded estimate. would reducing project R&D year XX, reducing $XX question in were assumed into fiscal project which expenditures XXXX, completed be that year, now company we fiscal the on the adjustments range. CapEx, assets, reason to million and planned range has $XX That to Connecticut as Previously, fiscal is Trinity, XXXX, our for the in been extended $XX

reversible to opportunity opportunities compelling to continue oxide, on as think positioned solid faster we're it really roadmap, some of continue respect certainly spending distributed grids, our duration you we with George, least mineral-based see our believe the rather increasing based remains product and outlined today around emerge a more whether pacing lines on recovery well. to which power adoption. out along is generation ultimately the in evolves, than a international on we happening we're we've today's markets technologies interconnection but at in solution to that as opportunities extend solution, the we domestically, see the different of carbon And with cues and call, of a or see our market capture just carbon as storage, hydrogen as a using how around that's number energy We on depending market long well be how

puts where our we of a to the we see So developing think see really standpoint. be technology by the happening we close proximity us and market what market all guided will our adoption opportunities from investments

this you new that you'll there. mentioned partnership wastewater maybe be and a as the treatment Ameresco follow-up, facility particular And deployed in one

see deployment? are any facilities where color pipeline with could there joint partnership additional you the there if in around And Ameresco? Just

Yes.

for this project need landfill not cities will us from think end part utilize going with quality. that attractive an over a thermal reduces a is project. as we're this Ameresco, anaerobic that And unique fuel trend continue accelerate a our that as needs we've process company. to digesting of and and on certainly first us also fuel Ameresco, biogas with to utilized. What process. then opportunity fuel fuel you which we direct don't done which that use the an is America our away cost because but waste associated and pipeline to continued that platform gives they're with create So it's that to as the Europe, develop being most some anaerobic energy actually directly fuel that of our as example, -- push first site, We move even look in waste, all going states means is to can that there essentially that and the to utilize We up think able biogas we digesting to is get to of be advantage to across

this one. expectation project have So an successful be with Ameresco a we that will

an Sacramento that in opportunities, the firm, would to that participate an EPC more move other project will opportunity we And Sewer As think we like us those one would of this as the of anticipate district. at we forward. the success give pursue they

to our UBS. move question at next Saumya Jain from We'll

on partnership with Could you the system how detail TriGen Toyota provide that growing? more some see and you

Thank the you question. for

So to for here to cell in excited that fuel water. story recent vehicles in create system as starting Toyota; you additional fully States provide vehicles Columbus, United directly is to cell and Toyota valuable provides efforts that that distribute news hydrogen Beach electric hydrogen-based We're on see California. our advance fuel that opportunities a Ohio. continues its used will Honda that of the All to we electric We And build in to we know, the technology. streams X TriGen site. provide Long at Port X electricity, those of is operational as it suspect are

for sense weight support you in a think Class electric the the to cell trend really that X throw fuel transportation with transportation think around a vehicle the well, lot where in we penalty addition light pay batteries for fuel on makes on of vehicle cell we it transportation that duty excess as because electric to heavy don't duty heavy So begins side.

closely very working we're So with Toyota.

a and suspect with have pursue good that We opportunities relationship Toyota we TriGen other we'll projects. have to

We'll go Ryan next B. with Riley. to Pfingst

how be. mentioned customers of Are you those to you a Jason, with might data potential get trying discussions today? the Just advanced opportunity. center center data sense in conversations

actually And Chief Ryan, we Commercial are. our I'm Feasel, by Mark Officer. joined

those we're conversations. data us to say, the in that having, And have and for deploy GGE demonstrated large-scale a you very of we're I you incredibly at in the ability of him we opportunities jump if XX.X would I platforms. the megawatts. thing mean, we in we look one positions mentioned center I'll So platform, that that conversations maybe prepared give but well, Ryan, is remarks, have engaged like sense kind that think the our the that

We have in Korea well. platforms megawatt multiple XX as

We have differentiates that us in and United provider. large running other platforms from here fuel any cell States the

on our feel centers conversations. I'll large looking give scale, And generation have so at few positioned. But Mark data other we as we're customer on-site a you well insights for like are

as in way imagine, elements can in these bring this can interested center load. energy with reliable a they're data have a conversations having So customers, with number do sustainable, how they you in very new to that of different to

work for these are cues restrictions and serve constraints well-publicized to long as well, in California. that not, the face quality as in or kind addition In there's that air the the interconnection customers to ability grid our such of other

scale at criteria plants mittens generation large can those operate to that very advantage. of is result some able a delayed be of to long and avoiding ability energy implementations important in demonstrated Our

with the especially here technical conversations midst decisions, of the North companies center right are in world economic data in many and America. around we So focused

one other I'll thing. maybe just Ryan, have And

advantages us, megawatts, are megawatts scale. about capability think we've more, Like for platforms we As have running do said, obviously so been got scale. or demonstrated I large X proven years proven for XX large to demonstrated XX that that

consumption advantage air centers have the combust is centers actually you need when permitting and issue. don't because about to taking get closer edge Well, Secondly, we fuel. permitting a think in these where place, data an air big we data the becomes to

we're and particulates. not other emitting SOx, So NOx

centers, We advantage noise. of don't have Thirdly, moving data another have we when because parts. edge think about you

we decibel a at level. very operate So low

deploy to So in we're able platform our urban areas.

edge lots advantage centers. big the advantage is all to chilling, to operate a of because Another an actually data that us with integrate high we're centers absorption need fact gives data temperature. that cooling And of these those

one examples X you have then just And we success have the fact just advantage and things and as where add of demonstrated that in we capabilities proven is to applications. demonstrated think maybe that if so microgrid the Xth about those

data grid nice a offer we really to operators. us center So level our provide data the puts integrate redundancy think and center to to a of solution in position ability compelling the very that and with

color. Yes, Great. I all appreciate really that

Just agreement? cadence one more the from expected for the me. Can you GGE revenue walk through

is Mike. this Ryan,

high fuel replacement balance so the around yes, XX million. at -- includes then as modules agreement what the GGE What agreement is cell the service level as well the $XXX is So, that and of of site GGE X maintenance plant. for years

be initially fiscal our delivered roll the is replacement quarter. modules will the So first out fourth in this X will way

modules first be the XXXX. And would modules the will the recognition those in we revenue related quarter. from then in final the during XXXX X delivered of half there, XX next be So and will and shipped expect to calendar modules delivered fourth

to those revenue delivered the So site. modules being customer follow essentially recognition will

[Operator Parks go to Noel Brothers. We'll at next Touhy Instructions]

rate I'm had carbon if spending or those R&D And increase, the that can of is product, year. going just you little you of carbonate for I a some just break be ahead? oxide was a the increases out sorry. are expectation couple. The spending, the -- the in likely characterize interested I'm to projects or And what well, could bit the are the more you solid I whether revised I recovery? wondered are and examples initiatives of be current not sort the sorry, in to

Sure, one. take Noel, is this I'll that Mike.

to -- first $XX calendar million. reduced the So the million from yes, in first million year. our R&D, to $XX of in disclosures at half $XX around $XX to of half $XX the company-funded range about million we We're the million fiscal

making statements So our line investments The of our flat essentially financial in that the solid R&D we're are in that year. at rest oxide really the around solutions. remaining

energy gen based entered agreement that power that's well as hydrogen. Around oxide mentioned, as as that solid is Exxon and carbon well as into our this you for around development with with Rotterdam recent storage joint the project long hydrogen the So producing project. we coming order purchase capture electrolysis duration a that's funded

is through flowing company and that's that paid for the getting technologies advanced So particular work.

rolling Okay, higher I to question. noticed I inventory? if bit great. was a that timing And depreciation just this sequentially then or off just kind a quarter. onboarding wondered thing the of of was housekeeping that either related a

Yes.

depreciation pick-up, online. and newer coming projects of that's the did a result So

announced as quarter first Derby previously projects came fiscal X project. we online the the Toyota So did in the

starting to through projects now those depreciation coming the the you're financial see statements. from So

move at next Research Partners. Seaport Jeffrey Campbell We'll to

on agreement at want expand I can capture mid-scale to if concept and to sort be go And bit wondering, applications we to this the back is carbon stuff you marketing do to later? on have to referring little through not meaning to is a ability just going a noted? I'm -- the FuelCell this in a going in some Slide technology I'm way, already small utilize application? capability this term. the any pejorative X see for theoretical just than of or design results that areas you manufacturing Do active also, think application the Maybe you be the there of if type what that And smaller something for is competing point effort have sooner an to you've a would through, here? in comes have other of

great question. Jeffrey, thank for the you question and

on pursue few changed have of work of footprint opportunities, focused In of the we've the carbon done Exxon capture. larger done years actually So that to last has our fundamentally been scale the kind we over around that technology optimization format design. work the with we've the

so carbon we leverage today, we're the those Exxon, we'll horizontal that with applications certainly design cell that of just leverage it in itself doing to goes design. And to on our in of platforms, into our we're ability are design. current going a that we're focused have cube-shaped kind go-forward work And vertical a design platform. them capture. the technology In both But be the on

with to our we demonstration do the plant, design and we the carbon format enhancing or cell work footprint take its that without integrate capture that in So project platform the our Netherlands into the design ability changing cell have the at as capabilities. Exxon to get Esso to existing existing

our previously a existing carbon did one demonstrated things the ability capture. when is in both density. have give This But that into that, the and in sure capture in also power that carbon maintain strictly design put carbon application do we we that wanted we on us design. to capture design our the to ability existing it to the we the will make focused We of

So actively it something not we in engaged it a company. theoretical, as is that are is

for opportunities is customers with the Our around carbon design engaged our existing actively capture. ability sales team in to leverage

plant, the kind about lot can opportunity food you In talked that we a boiler an the right then it a the doing addition capture carbon, We've we're food processing for? from applications where the application proteins, customer, say, utilize up processing recovery, back that example, carbon this can and We clean of to work that could against let's are carbon. a to give to for capture at in that of what beverage as and example. so use carbon technology the those

pipelines, used exact that and pipeline other We this And or we we a you've could applications. COX that in industrial got could that a carbon. COX a somewhere an take and same were be can where You boiler. COX if on with capture sequestered doing market customer example take could in put that

So pursuing. these are real we're opportunities that

also other our those and utilize us need around think good carbon, our rules have integrating to areas to neighbor kind with open about go companies those existing for you the of now the for cell technology where you If after the EPA capture rule enhanced opportunities. platform to opportunities

Great. mean, conversations waiting that the small there there to people then that may willing -- mid-scale smaller large sort a scale or if running now I follow facility the some parallel that to you there could this to having be feel the of on The up. of you're these Exxon are the commit out for scale And how are just is, see do to Esso that right the large the versus in is follow XXXX validation see the that paths. small paper, looks and scale Do you on from get application at the kind like will like before is and of applications that moving? is up performs or everybody thing be sense I

running fully implemented of project will and anticipate that Exxon timeline. Yes, forward advance demonstration the We in being its great project question. move customers

in that than some that So capture carbon able large barrier we scale think smaller of to opportunities number the fact, these of that And be very do there's will customers then smaller talking scale likely what you pursuing work a have as you're Class there's a about on scale. into X to terms the the maybe not the with where in and to see you're on as X faster move projects be permits we of sequester able through itself that or permits to carbon. Class you get it. just carbon COX to do And to things capture, volume and other the going

little an And to the so projects off a line faster, scale move opportunity think get quicker. smaller have bit starting the we

I will that now turn the to our Jason closing over And Q&A concludes for session. conference back remarks. Few

Have strategy, and you us again great in Thank today this for on And our us collaborate to our indicative technologies joining of are day. a The which Business for focused existing with you, Thank us you growth joining Powerhouse today. developing Audra. some platform We all future. of thank for on to innovate the remain scale the quarter the allowed I laser largest to appreciate companies market support the it. second world. on of Strategy really call. opportunities, our has grow results significant

This concludes call. thank for today's conference you Again, participation. your

now disconnect. may You