FuelCell Energy
Reports First Quarter Results and Business Highlights
- 120
Megawatt order commitment and $30 million equity investment by POSCO
Energy
- Executing on European growth strategy
- Cost
control and volume are leading to expanding gross margins
FuelCell Energy,
Inc. (Nasdaq:FCEL), a leading manufacturer of
ultra-clean, efficient and reliable fuel cell power plants, today reported
results for its first quarter ended January 31, 2012 along with its business
highlights.
Financial
Results
First
quarter 2012
FuelCell Energy
(the Company) reported total revenues for the first quarter of 2012 of $31.3 million
compared to $28.1 million in the same period last year. Product sales and
revenues in the first quarter increased 15 percent to $29.6 million compared to
$25.8 million in the prior year quarter, due to increasing demand for Direct FuelCell� (DFC�) power plants, components and installation
services. First quarter product revenue included $20.9 million of power plants
and fuel cell kits, $5.3 million of power plant component sales and
installation services, and $3.4 million of service and power purchase
agreements. Product sales and service backlog totaled $184.1 million as of
January 31, 2012 compared to $156.9 million as of January 31, 2011. Product
sales backlog was $107.9 million and $78.9 million as of January 31, 2012 and
2011, respectively. Service agreement backlog was $76.2 million and $78.0
million as of January 31, 2012 and 2011, respectively. Backlog does not include
the 120 MW POSCO Energy announcement or service agreement with Southern
California Edison received subsequent to quarter end. � � �
Research
and development contract revenue was $1.7 million for the first quarter of 2012
compared to $2.3 million for the first quarter of 2011.� The Company's
research and development contract backlog totaled $14.1 million as of January
31, 2012 compared to $7.9 million as of January 31, 2011, reflecting the
awarding of contracts during 2011 for carbon capture research and hydrogen
separation and compression programs.�
Total
gross profit was $2.1 million in the first quarter of 2012, compared to a gross
loss of $2.3 million in the first quarter of 2011. � Gross profit for
product sales and revenues improved $4.2 million compared to the first quarter
of 2011.� The product gross margin was 6.6 percent for the first quarter
of 2012 compared to negative 8.9 percent in the prior year period.� Improvements
in margin compared to the prior year period are primarily attributable to
increased production volume, lower product costs achieved from manufacturing
and supply chain efficiencies and improved services margins as older early
generation power plants are offset by new installations with profitable service
contracts. � �
First
quarter 2012 loss from operations decreased to $5.4 million compared to $10.6
million for the comparable prior year period as higher sales volume reduced
product costs combined with the benefit of lower operating expenses.� A
series of cost control initiatives resulted in reduced operating expenses for
the current period compared to the prior year period.� Net
loss to common shareholders for the first quarter of 2012 decreased to $6.7
million, or $0.05 per basic and diluted share, compared to $11.7 million or
$0.10 per basic and diluted share in the first quarter of 2011.�
Cash and
investments in U.S. Treasuries
Total
cash, cash equivalents and investments in U.S. Treasuries were $41.5 million as
of January 31, 2012.� Net cash, cash equivalents and investments used in
the first quarter of 2012 was $21.9 million. The change in cash during the
quarter included an increase of inventory and accounts receivable of $8.1
million and the payment of $4.3 million of payments on preferred stock obligations.� Inventory increased as fuel cell power
plants were built to prepare for expected near-term order activity.� Preferred
stock payments included a $3.2 million payment to the holder of the Series I
preferred shares, the last of four scheduled principal repayments under a
previously announced agreement. Quarterly preferred stock payments going
forward will total approximately $1.1 million. � Capital spending for the
first quarter of 2012 was $0.9 million and depreciation expense was $1.4
million.
Business
Highlights
Growth
Strategies
"The
strategic initiatives announced with POSCO Energy enable us to capture
� the expanding market opportunities in� Asia
for our ultra-clean baseload power plants," said
Chip Bottone, President and CEO, FuelCell
Energy, Inc.�
The
Company is expanding the partnership with POSCO Energy including a 120 MW
multi-year order commitment, acceleration of deliveries under the existing 70
MW order, a commitment by POSCO Energy to purchase 20 million shares of FuelCell Energy common stock at a price of $1.50 per share
for proceeds of $30 million, and a license commitment for manufacturing of
Direct FuelCell� components in South Korea.
"We
continue to execute on our global expansion strategy with the Fraunhofer IKTS and Abengoa
announcements, both exceptional organizations that will help us take advantage
of the extensive opportunities in Europe as well as Latin America for
ultra-clean baseload distributed power
generation," continued Mr. Bottone.
The
Company achieved two major milestones in Europe with the announcements of a
proposed joint venture with German based Fraunhofer
IKTS and a partnership with Spanish based Abengoa.� Fraunhofer will contribute research expertise to the
announced joint venture, particularly in materials science, as well as
relationships with utilities, on-site power users and regulatory authorities.� � �
FuelCell Energy has developed a strong pipeline of
prospective orders in Europe with only limited direct marketing to date.� European based sales resources will further
expand interest and order activity for DFC plants.� � � � � � �
Abengoa develops and owns
power generation and transmission projects in Europe and Latin America.� Their liquid biofuels expertise, extensive
industry and regulatory relationships, and financial resources make them an
ideal partner to develop and expand the market for megawatt-class stationary
fuel cell power plants in Europe and Latin America, particularly DFC plants
utilizing renewable biogas or liquid biofuels. �
Services
and Customer Installations
Services
represents a growing source of revenue reflecting the expanding installed base
as customers outsource the operation and maintenance of the fuel cell power
plants to the Company.� In March 2012, another
California utility executed a multi-year service agreement for a DFC power
plant that will be installed at a university.
The
Company has completed approximately 75 percent of the work related to the
previously announced repair and upgrade program for a select group of fuel cell
stacks produced between 2007 and early 2009.� The
program remains on schedule with expected conclusion by early summer
2012.�
Installation and commissioning update:
- One 1.4
MW plant purchased by a project investor and installed on a university
campus in Connecticut was commissioned in December 2011.
- 4.5 MW
of plants sold to a project investor and located at municipal locations
and a university in San Diego, CA were
commissioned during the first quarter of 2012.
- 4.2 MW
of plants sold to a project investor and located at two� wastewater
treatment facilities in California are undergoing commissioning.
- A 300
kW CE-compliant plant is in transit for installation in a high profile
central London commercial building during the second quarter of 2012.
- POSCO
Energy completed installation of two DFC3000 power plants during the first
quarter of 2012, with fuel cell modules provided by FuelCell
Energy.� The customer, an independent power
producer, is now operating a fuel cell park totaling 10.4 MW.� This is the second fuel cell park operating in South
Korea that is in excess of 10 MW.
- Two demonstration 100 kW Direct FuelCell
power plants targeting the building application market in South Korea were
commissioned by POSCO Energy.
Cautionary
Language�
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 whether the Company is able
to reach definitive agreements on the terms contemplated in the recently
announced memorandums of understanding with POSCO Energy, 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, 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.