New $100+ million construction financing secured in December
First of three Long Island Power Authority PPAs signed
Connecticut project awards totaling 22.2 megawatts now under PPA
Record backlog and project awards of nearly $2 billion
DANBURY, Conn., Jan. 10, 2019 (GLOBE NEWSWIRE) -- FuelCell Energy, Inc. (Nasdaq: FCEL), a global leader in delivering clean, innovative and affordable fuel cell solutions for the supply, recovery and storage of energy, today reported financial results for its fourth quarter and fiscal year ended October 31, 2018 and key business highlights.
FuelCell Energy, Inc. (the “Company”) reported total revenues for the fourth quarter of fiscal 2018 of $17.9 million, compared to $47.9 million for the fourth quarter of fiscal 2017, including:
Product sales totaling $9.4 million for the fourth quarter of fiscal 2018, compared to $39.9 million for the fourth quarter of fiscal 2017. The difference between the periods is primarily due to fiscal 2017 revenue including partial delivery under a 20 megawatt (“MW”) order to South Korea, as compared to the sale of the Trinity College fuel cell project to AEP Onsite Partners, LLC in the fourth quarter of fiscal 2018.
Service and license revenue totaling $2.9 million for the fourth quarter of fiscal 2018, compared to $2.7 million for the fourth quarter of fiscal 2017.
Generation revenue totaling $1.8 million for the fourth quarter of fiscal 2018, which was consistent with the fourth quarter of fiscal 2017.
Advanced Technologies contract revenue totaling $3.7 million for the fourth quarter of fiscal 2018, compared to $3.5 million for the fourth quarter of fiscal 2017.
The gross profit generated in the fourth quarter of fiscal 2018 totaled $1.1 million and the gross margin was 6.4 percent, compared to a gross profit of $3.2 million generated in the fourth quarter of fiscal 2017 and a gross margin of 6.6 percent. Both periods were impacted by the under-absorption of fixed overhead costs due to low production volumes. Manufacturing variances, primarily related to low production volumes, totaled approximately $2.7 million for the three months ended October 31, 2018, compared to approximately $3.4 million for the three months ended October 31, 2017.
Operating expenses for the fourth quarter of fiscal 2018 totaled $13.0 million, compared to $11.3 million for the fourth quarter of fiscal 2017. This increase is related to the timing of professional related expenditures due to business activities in the fourth quarter of fiscal 2018 and expenses related to increased development efforts.
Net loss attributable to common stockholders for the fourth quarter of fiscal 2018 totaled $17.9 million, or $0.19 per basic and diluted share, compared to $10.8 million, or $0.17 per basic and diluted share, for the fourth quarter of fiscal 2017. Net loss attributable to common stockholders in the fourth quarter of fiscal 2018 includes a deemed dividend totaling $1.0 million on the Company’s Series C Convertible Preferred Stock, as well as $2.1 million of redemption accretion on the Company’s Series D Convertible Preferred Stock. See the appendix at the end of this release for further details regarding the deemed dividend and redemption accretion.
Adjusted loss before interest, taxes, depreciation and amortization (Adjusted EBITDA, a Non-GAAP measure) in the fourth quarter of fiscal 2018 totaled ($8.8) million, compared to ($5.0) million in the fourth quarter of fiscal 2017. Refer to the discussion of Non-GAAP financial measures in the appendix at the end of this release regarding the Company’s calculation of Adjusted EBITDA.
Backlog and Project Awards
The Company had a contract backlog totaling approximately $1.2 billion as of October 31, 2018. The Company also had project awards totaling an additional $792.5 million, resulting in total backlog and awards of approximately $2.0 billion, as of October 31, 2018.
Subsequent to the end of the fourth quarter of fiscal 2018, on December 19, 2018, the Company executed the first of three long-term power purchase agreements (“PPAs”) under the Fuel Cell Resources Feed-In Tariff IV (“FIT IV”) program administered by PSEG Long Island for the Long Island Power Authority (“LIPA”). The 7.4 MW fuel cell project located in Yaphank, NY had been previously classified as an award. As a result of the executed PPA, the revenue associated with the PPA is now reflected as generation backlog.
Backlog by revenue category is as follows:
Services backlog totaled $316.0 million as of October 31, 2018, compared to $182.3 million as of October 31, 2017. Services backlog includes future contracted revenue from routine maintenance and module exchanges for power plants under service agreements.
Generation backlog totaled $839.5 million as of October 31, 2018, compared to $296.3 million as of October 31, 2017. Generation backlog represents future contracted energy sales under contracted PPAs between the Company and the end-user of the power.
Product sales backlog totaled $1.0 thousand as of October 31, 2018, compared to $31.3 million as of October 31, 2017. Product sales backlog for fiscal 2017 included the remaining components for the 20 MW power plant for Korea Southern Power Company which was successfully completed in the third quarter of fiscal 2018.
Advanced Technologies contracts backlog totaled $32.4 million as of October 31, 2018, compared to $44.3 million as of October 31, 2017.
Backlog represents definitive agreements executed by the Company and our customers. Projects with respect to which the Company intends to retain ownership are included in generation backlog which represents future revenue under long-term PPAs. Projects sold to customers (and not retained by the Company) are included in product sales and service backlog. Project awards referenced by the Company are notifications that the Company has been selected, typically through a competitive bidding process, to enter into definitive agreements. These awards have been publicly disclosed. The Company is working to enter into definitive agreements with respect to these project awards and, upon execution of a definitive agreement with respect to a project award, that project award will become backlog. Project awards that were not included in backlog as of October 31, 2018 include the 39.8 MW LIPA project awards. Upon execution of a definitive agreement, the LIPA project awards are expected to become generation backlog (including the LIPA project award for which a PPA was executed in December 2018 and moved into backlog). These awards in total represent approximately $792.5 million of future revenue potential over the life of the projects, assuming the Company retains ownership of the LIPA projects.
Cash, Restricted Cash and Project Finance
Cash, cash equivalents and restricted cash totaled $80.2 million as of October 31, 2018, including $39.3 million of unrestricted cash and cash equivalents and $40.9 million of restricted cash and cash equivalents.
Subsequent to quarter end, in December 2018, the Company, through an indirect wholly-owned subsidiary, entered into a project finance debt facility (the “Facility”) with Generate Lending, LLC (“Generate Lending”). The Facility provides for aggregate principal commitments of up to $100 million, with accordion features enabling expansion up to $300 million, subject to funding availability and approval. The initial draw amount under this Facility, funded at closing, was $10 million. The initial draw reflects loan advances for the first approved project under the Facility, the Bolthouse Farms 5 MW project in California. Additional drawdowns are expected to take place as the Company achieves certain project milestones. The Company expects to use this Facility to fund the construction of its utility-scale backlog, including the three LIPA projects totaling 39.8 MW and the two projects awarded pursuant to the Connecticut DEEP RFP, totaling 22.2 MW. Lastly, also in December, the Company drew down $5.8 million under its existing loan facility with NRG Energy, Inc. This advance will be used to support the completion of construction of the 2.8 MW Tulare BioMAT project in California. This plant is expected to achieve commercial operation in March 2019.
The Company continues to work with the Connecticut Green Bank to source financing for the construction of the 7.4 MW plant for the Connecticut Municipal Electric Energy Cooperative located on the U.S. Navy submarine base in Groton, CT, and the 3.7 MW Triangle Street project in Danbury, CT as well as the acquisition of the 14.9 MW Bridgeport fuel cell park from Dominion Energy. These financings are expected to close in early 2019.
Long term project assets consist of projects developed by the Company that are structured with PPAs, which generate recurring monthly generation revenue and cash flow, as well as projects the Company is developing and expects to retain and operate. The value of long term project assets totaled $99.6 million as of October 31, 2018, with such project assets consisting of five projects totaling 11.2 MW plus costs incurred to date for an additional 83.1 MW of previously announced projects that are in various stages of construction. These projects have commercial operation dates between the first quarter of fiscal 2019 and second quarter of fiscal 2021.
Business Highlights and Recent Developments
Sold 1.4 MW Trinity College project to AEP OnSite Partners.
Signed the PPA agreements for the Connecticut DEEP project awards totaling 22.2 MW.
Announced the planned acquisition of the 14.9 MW fuel cell park located in Bridgeport, Connecticut from Dominion Energy, accelerating the strategy of growing the generation portfolio and the recurring revenue and profit profile of the Company.
Entered into a $100+ million project finance debt facility with Generate Lending that will be used by the Company to finance the construction, installation and commissioning of the Company’s current and future project backlog and awards.
Continued to execute on 83.1 MW of projects in the generation portfolio.
“Our focus has been squarely on execution, and we have made significant strides executing on our strategy as evidenced by the recent signing of the LIPA PPA and the construction finance facility,” said Chip Bottone, President and Chief Executive Officer, FuelCell Energy. “Add to that the acquisition of the Bridgeport fuel cell park project, the sale of the Trinity College project to AEP OnSite Partners, and the signing of the PPAs for the two Connecticut project awards totaling 22.2 megawatts, and we feel we have established a tremendous foundation for the Company’s future. We are a global leader in power made from stationary fuel cell technology and have generated well over eight million megawatt hours globally. As we enter 2019, execution on our business plan will continue.”
Conference Call Information
FuelCell Energy management will host a conference call with investors beginning at 10:00 a.m. Eastern Standard Time on Thursday, January 10, 2019 to discuss the fourth quarter and full year results for fiscal 2018. Participants can access the live call via webcast on the Company website or by telephone as follows:
The live webcast of the call and supporting slide presentation will be available at www.fuelcellenergy.com. To listen to the call, select “Investors” on the home page, proceed to the “Events & Presentations” page and then click on the “Webcast” link listed under the January 10th earnings call event, or click here.
Alternatively, participants can dial 647-689-4106 and state FuelCell Energy or the conference ID number 1191069.
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 business plans. 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, unanticipated manufacturing issues that impact power plant performance, changes in critical accounting policies, potential volatility of energy prices, rapid technological change, competition, 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.