FuelCell Energy Reports Third Quarter Results and
Latest Accomplishments
- 65
percent quarterly revenue growth from one year ago
- First
quarterly gross profit generated since commercializing fuel cells
- Record
Product and Service backlog of $230.6 million totaling 78.5 megawatts
DANBURY,
Conn., Sept. 6, 2011 (GLOBE NEWSWIRE) -- FuelCell Energy, Inc. (Nasdaq:FCEL),
a leading manufacturer of ultra-clean, efficient and reliable power plants,
today reported results for its third quarter ended July 31, 2011 along with
its latest accomplishments.
Financial
Results
FuelCell
Energy reported total revenues for the third quarter of 2011 of $31.2 million
compared to $18.9 million in the same period last year, an increase of 65
percent. Product sales and revenues in the third quarter were $29.4 million
compared to $16.2 million in the prior year quarter, due to increased demand
for Direct FuelCell� (DFC�) power plants.� Product sales and revenues
for the third quarter of 2011 included $21.2 million of power plants and fuel
cell kits, $5.5 million primarily from installation services and revenue from
the 100 kilowatt (kW) joint development agreement with POSCO Power, and $2.7
million from service agreements.
The
Company generated a gross profit for the third quarter of 2011 from products
and services of $0.2 million, an important milestone on the path to
profitability and the first quarterly gross profit since commercializing its
DFC technology.� The product cost-to-revenue ratio was 0.99-to-1.00 for
the third quarter of 2011 compared to 1.24-to-1.00 for the third quarter of
2010.� Increased production volume drove down product costs and contributed
to improved absorption of fixed overhead costs as manufacturing and supply
chain efficiencies were achieved.� Margins for product sales and
revenues improved $4.1 million compared to the third quarter of 2010.�
Increasing
demand for fuel cells and service agreements, including the $129 million
order for 70 megawatts (MW) of fuel cell kits and other equipment and
services announced in May 2011, drove product sales and service backlog to
$230.6 million as of July 31, 2011 compared to $79.8 million as of July 31,
2010.� Product backlog was $152.9 million and $55.2 million as of July
31, 2011 and 2010, respectively.� Product backlog will be delivered
through October 2013.� Service agreement backlog was $77.7 million and
$24.6 million as of July 31, 2011 and 2010, respectively, and consists of
service agreements up to 20 years in duration.� � �
� �
Research
and development contract revenue was $1.8 million for the third quarter of
2011 compared to $2.7 million for the third quarter of 2010.� The
Company's research and development backlog totaled $13.6 million as of July
31, 2011 compared to $7.4 million as of July 31, 2010 with the increase due
to awarding of the phase three of the solid oxide fuel cell (SOFC) contract
by the U.S. Department of Energy (DOE) in May 2011.�
Loss
from operations for the third quarter of 2011 decreased to $7.4 million
compared to $12.6 million for the comparable prior year period reflecting
increased sales volume combined with lower costs.� � �
Net
loss to common shareholders for the third quarter of 2011 decreased to $8.6
million, or $0.07 per basic and diluted share, compared to $13.8 million or
$0.15 per basic and diluted share in the third quarter of 2010.�
For the
nine months ended July 31, 2011, FuelCell Energy reported revenue of $87.8
million compared to $50.1 million for the prior year period, an increase of
75 percent.� Product sales and revenues were $81.8 million compared to
$42.0 million for the prior year period. � Research and development
contract revenue was $6.0 million compared to $8.0 million for the prior year
period.
Loss
from operations for the nine months ended July 31, 2011 was $37.8 million,
compared to $42.3 million for the nine months ended July 31,
2010.� Excluding non-recurring charges incurred in 2011, adjusted loss
from operations for the nine months ended July 31, 2011 was $29.0 million, an
improvement of 31 percent compared to the prior year period, which did not
have any non-recurring charges.� �
Net
loss to common shareholders for the nine months ended July 31, 2011 was $50.0
million or $0.41 per basic and diluted share compared to $45.9 million or
$0.52 per basic and diluted share for the nine months ended July 31,
2010.� Excluding non-recurring charges incurred in 2011, net loss to
common shareholders for the nine months ended July 31, 2011 was $32.3 million
or $0.26 per basic and diluted share. � The prior year period did not
have non-recurring charges.� Margins for product sales and revenues
improved $2.3 million over the prior period due to lower costs.� The
increase in interest expense in the current period compared to the prior
period reflects the modification in the Series I preferred share agreement
and is offset by a reduction in Accretion of redeemable preferred stock of
subsidiary.� The product cost-to-revenue ratio improved to 1.16-to-1.00
compared to 1.36-to-1.00 for the same period one year ago due to sales of
higher margin products and improved absorption of fixed overhead costs from
increased volume.
Total
cash, cash equivalents and investments in U.S. Treasuries were $49.5 million
as of July 31, 2011. � Net use of cash, cash equivalents and
investments� in the third quarter of 2011 was $5.5 million consisting of
$0.9 million net cash used in operating activities, $1.1 million net cash used
from investing activities and $3.5 million net cash used in financing
activities. Capital spending for the third quarter of 2011 was $0.5 million
and depreciation expense was $1.6 million.
Net use
of cash, cash equivalents and investments for the nine months ended July 31,
2011 was $25.4 million excluding revolver borrowings of $2.6 million and net
proceeds of $17.8 million from the registered direct offering of common
stock, compared to $29.1 million for the prior year, excluding net proceeds
of $32.1 million from the public offering of common stock.� Year to date
2011 cash utilization is within the Company's plan and full year cash
utilization is forecasted to be at the low end of the previously reported
range of $24 million to $32 million.
Corporate
and Market Highlights
"The
team at FuelCell Energy achieved an important milestone this quarter by
generating a gross margin for the first time since we began the
commercialization process of Direct FuelCells," said Chip Bottone,
President and CEO of FuelCell Energy, Inc.� "We are executing our
revenue growth plan and benefitting from operating leverage that is driving
down costs.� We have record product and service backlog of $230.6
million and we are producing at a record rate as our Operations Group, led by
Tony Rauseo, Chief Operating Officer has substantially increased our
production run rate to a level of 56 megawatts annually compared to 22
megawatts of production for fiscal year 2010."
"We
are focused on executing our three strategic priorities; Driving Growth,
� Operational Excellence, and Customer Satisfaction, that all together,
will deliver profitability and continued growth," continued Mr. Bottone.
Driving
Growth
Revenue
expansion is the goal of the driving growth initiative by broadening
penetration in key market segments globally.� The $129 million order for
70 MW of fuel cell kits and other equipment and services received during the
third quarter of 2011 illustrates the growing demand and sizeable market
potential for ultra-clean baseload distributed generation in South
Korea.� Under this contract, FuelCell Energy will export 2.8 MW of fuel
cell kits monthly beginning in October 2011 through October 2013 to POSCO
Power.�
South
Korea is aggressively installing new and renewable power generation to reduce
pollutants and carbon emissions while simultaneously developing a clean
technology industry to create jobs.� South Korea adopted a renewable
portfolio standard that takes effect in 2012 and mandates approximately 6,000
MW of new and renewable power through 2022, including fuel cells operating on
either natural gas or renewable biogas.�
Using
fuel cell components supplied by FuelCell Energy, POSCO Power assembled their
first fuel cell stack during the third quarter of 2011 in their recently
built fuel cell module assembly plant and installed the completed power plant
at a customer site. � The POSCO Power fuel cell module assembly and
balance of plant facilities are designed for 100 MW annual capacity, using
fuel cell components purchased from FuelCell Energy.� To date, POSCO
Power has ordered 140 MW of fuel cell power plants, modules and components
since 2007.
POSCO
Power's strategy includes developing fuel cell markets in other Asian countries
by exporting fuel cell power plants assembled in South Korea from FuelCell
Energy supplied fuel cell components.� In order to demonstrate the
ultra-clean, efficient and reliable attributes of DFC power plants, POSCO
Power recently ordered a sub-megawatt module from FuelCell Energy which will
be combined with balance of plant manufactured in South Korea and the
complete DFC plant will be installed at a high visibility location
in� Indonesia.� POSCO Power will � establish a sales and service
location in Indonesia and the fuel cell power plant will be used as a
showcase as POSCO Power builds a megawatt-class fuel cell market in Southeast
Asia, beginning in Indonesia.
Operational
Excellence
Operational
excellence encompasses the concept of continuous improvement to the products
and the manufacturing process while reducing both product and overhead
costs.� Increasing production volume enables manufacturing and supply
chain efficiencies as witnessed during the third quarter of 2011 with a gross
profit generated for the first time since commercialization of DFC plants
began.� The annual production run-rate was increased to 56 MW early in
the third quarter compared to 35 MW at the end of the second quarter and 22
MW for fiscal year 2010.� Production levels will be sustained at 56 MW
annually for the remainder of 2011 and adjusted thereafter as order volume
warrants.� � � �
Enhancing
fleet performance is an operational strategic initiative to increase power
output while reducing operating costs.� Since the first commercial DFC
installation in 2003, DFC plants have cumulatively generated over 850 million
kilowatt hours (kWh) of ultra-clean electricity which is adequate to power
more than 112,000 homes.
Customer
Satisfaction
Customer
Satisfaction is meeting and exceeding customer expectations.� Services
represents � a growing component of the business allowing the Company to
maintain close relationships with the customer base while creating a
consistent revenue source and opportunities for recurring business.� PG&E,
one of the largest utilities in California, purchased two 1.4 MW power plants
in June 2010 for installation at two California universities.� FuelCell
Energy recently completed installation of these plants including the first
installation of a DFC1500 inside a building.� During the third quarter
of 2011, a long term service agreement was executed with PG&E for
FuelCell Energy to maintain the plants.�
The
installed base in California continues to grow with the installation of three
new DFC plants in the San Diego region totaling 4.5 MW that are expected to
begin operations soon.� Orders for new projects in California are
expected to grow with the introduction of new policy and programs such as the
feed-in tariff� that supports combined heat and power (CHP) distributed
generation, including CHP configured fuel cells.�
Connecticut
adopted a comprehensive clean energy policy in June 2011 to expand energy
efficiency and adoption of renewable power, including a long-term renewable
energy credit (LREC) program.� Beginning in January 2012, CT utilities
are required to open LREC procurement contracts for low emission renewable
power projects 2 MW or less, which includes fuel cells.� The program
funding is $300 million in total over 20 years with $4 million required to be
spent by utilities in 2012, the first year, increasing $4 million per year to
$20 million by year 5, and then declining in year 16 and
thereafter.� Utilities can pay up to $0.20/kWh for up to a 15 year
term.� � The legislation also created a 'Green Bank' with a
broader mission than its predecessor, the Connecticut Clean Energy Fund,
including purchases of LREC's and financing of renewable energy projects.
The
DFC-H2 power plant installed at the Orange County Wastewater treatment
facility is fully operational, showcasing the versatility of DFC power plants
to produce ultra-clean power as well as renewable hydrogen for fueling
vehicles or industrial purposes.� This three year demonstration project
is being performed under sub-contract to Air Products, with the majority of
funding provided by the DOE.
Presentation
of Non-GAAP Information
This
press release presents certain results both with and without non-recurring
charges related to a repair and upgrade program and the Series 1 Preferred
Modification. The presentation of results that exclude these items are
non-GAAP financial measures that should be considered in addition to, and
should not be considered superior to, or as a substitute for, the
presentation of results determined in accordance with generally accepted
accounting principals (GAAP). � Reconciliations of the non-GAAP
financial measures to the most directly comparable GAAP financial measures
are provided below. Management believes that the non-GAAP financial measures
presented provide a better comparison to prior periods because the
adjustments do not affect the on-going operations of the Company. Management
uses these non-GAAP financial measures to evaluate the operating results of
the Company's business against prior year results and its operating plan, and
to forecast and analyze future periods. In addition, Management presents the
most comparable GAAP measures ahead of non-GAAP measures and provides a
reconciliation that indicates and describes the adjustments made.
Conference
Call Information
FuelCell
Energy will host a conference call with investors beginning at 10:00 a.m.
Eastern Time on September 7, 2011 to discuss the Third Quarter 2011 results.
Participants
can access the live call via webcast on the Company website or by telephone
as follows:
- The
live webcast of this call will be available on the Company website at www.fuelcellenergy.com.� To
listen to the call, select 'Investors' on the home page, then click on
'events & presentations' and then click on 'Listen to the webcast'
- Alternatively,
participants in the U.S. or Canada can dial 877-303-7005
- Outside
the U.S. and Canada, please call 678-809-1045
- The passcode is 'FuelCell Energy'�
The
webcast of the conference call will be archived on the Company's Investors'
page at www.fuelcellenergy.com.� Alternatively, the replay of the
conference call will be available approximately two hours after the
conclusion of the call until midnight Eastern Time on September 13, 2011:
- From
the U.S. and Canada please dial 855-859-2056
- Outside
the U.S. or Canada please call 404-537-3406
- Enter confirmation code 94325458
About FuelCell Energy
Direct
FuelCell� power plants are generating ultra-clean, efficient and reliable
power at more than 50 locations worldwide.� The Company's power plants
have generated over 850 million kWh of power using a variety of fuels
including renewable biogas from wastewater treatment and food processing, as
well as clean natural gas.� With over 180 megawatts of power generation
capacity installed or in backlog, FuelCell Energy is a global leader in
providing ultra-clean baseload distributed generation to utilities,
industrial operations, universities, municipal water treatment facilities,
government installations and other customers around the world.� For
more information please visit our website at www.fuelcellenergy.com
This
news release contains forward-looking statements, including 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, 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.
Direct
FuelCell, DFC, DFC/T, DFC-H2 and FuelCell Energy, Inc. are all registered trademarks
of FuelCell Energy, Inc. � DFC-ERG is a registered trademark jointly
owned by Enbridge, Inc. and FuelCell Energy, Inc.
FUELCELL ENERGY, INC.
|
Consolidated Balance Sheets
|
(Unaudited)
|
(Amounts
in thousands, except share and per share amounts)
|
�
|
�
|
�
|
�
|
July 31,
2011
|
October 31,
2010
|
ASSETS
|
�
|
�
|
Current assets:
|
�
|
�
|
� Cash and cash equivalents
|
$ 31,480
|
$ 20,467
|
� Investments � U.S. treasury securities
|
18,040
|
25,019
|
� Accounts receivable, net
|
16,692
|
18,066
|
� Inventories
|
38,732
|
33,404
|
� Other current assets
|
7,047
|
5,253
|
Total current assets
|
111,991
|
102,209
|
�
|
�
|
�
|
Property, plant and equipment, net
|
23,320
|
26,679
|
Investments � U.S. treasury securities
|
�
|
9,071
|
Investment in and loans to affiliate
|
10,287
|
9,837
|
Other assets, net
|
11,287
|
2,733
|
Total assets
|
$ 156,885
|
$ 150,529
|
�
|
�
|
�
|
LIABILITIES AND EQUITY
|
�
|
�
|
Current liabilities:
|
�
|
�
|
� Current portion of long-term debt and other liabilities
|
$ 3,638
|
$ 976
|
� Accounts payable
|
15,493
|
10,267
|
� Accounts payable due to affiliate
|
429
|
575
|
� Accrued liabilities
|
25,380
|
16,721
|
� Deferred revenue
|
37,607
|
25,499
|
� Preferred stock obligation of subsidiary
|
6,954
|
�
|
Total current liabilities
|
89,501
|
54,038
|
�
|
�
|
�
|
Long-term deferred revenue
|
7,250
|
8,042
|
Long-term preferred stock obligation of subsidiary
|
13,528
|
�
|
Long-term debt and other liabilities
|
4,140
|
4,056
|
Total liabilities
|
114,419
|
66,136
|
�
|
�
|
�
|
Redeemable preferred stock of subsidiary
|
�
|
16,849
|
Redeemable preferred stock (liquidation preference of $64,020 at
July 31, 2011 and October 31, 2010)
|
59,857
|
59,857
|
Total (Deficit) Equity:
|
�
|
�
|
Shareholders' (deficit) equity
|
�
|
�
|
Common stock ($.0001 par value); 225,000,000 shares authorized;
127,116,539 and 112,965,725 shares issued and outstanding at July 31, 2011
and October 31, 2010, respectively.
|
12
|
11
|
Additional paid-in capital
|
677,713
|
663,951
|
Accumulated deficit
|
� (694,271)
|
(655,623)
|
Accumulated other comprehensive
income
|
15
|
11
|
Treasury stock, Common, at cost (5,679 shares at July 31, 2011 and
October 31, 2010)
|
� (53)
|
�
(53)
|
Deferred compensation
|
53
|
53
|
Total shareholders' equity
|
� (16,531)
|
8,350
|
Noncontrolling interest in
subsidiaries
|
� (860)
|
(663)
|
Total (deficit) equity
|
� (17,391)
|
7,687
|
Total liabilities and (deficit) equity
|
$ 156,885
|
$ 150,529
|
�
|
�
|
FUELCELL ENERGY, INC.
|
Consolidated Statements of Operations
|
(Unaudited)
|
(Amounts
in thousands, except share and per share amounts)
|
�
|
�
|
�
|
�
|
Three Months Ended
July 31,
|
�
|
2011
|
2010
|
Revenues:
|
�
|
�
|
� Product sales and revenues
|
$ 29,382
|
$ 16,218
|
� Research and development contracts
|
1,778
|
2,655
|
� Total revenues
|
31,160
|
18,873
|
�
|
�
|
�
|
Costs and expenses:
|
�
|
�
|
� Cost of product sales and revenues
|
29,133
|
20,050
|
� Cost of research and development contracts
|
1,890
|
2,579
|
� Administrative and selling expenses
|
3,578
|
4,185
|
� Research and development expenses
|
3,918
|
4,618
|
Total costs and expenses
|
38,519
|
31,432
|
�
|
�
|
�
|
Loss from operations
|
(7,359)
|
(12,559)
|
�
|
�
|
�
|
� Interest expense
|
(847)
|
(10)
|
� Loss from equity investment
|
(94)
|
(183)
|
� Interest and other income, net
|
496
|
296
|
�
|
�
|
�
|
Loss before redeemable preferred stock of subsidiary
|
(7,804)
|
(12,456)
|
�
|
�
|
�
|
� Accretion of redeemable preferred stock of subsidiary
|
�
|
(603)
|
�
|
�
|
�
|
Loss before provision for income taxes
|
(7,804)
|
(13,059)
|
�
|
�
|
�
|
Provision for income taxes
|
(26)
|
(55)
|
�
|
�
|
�
|
Net loss
|
(7,830)
|
(13,114)
|
�
|
�
|
�
|
Net loss attributable to noncontrolling interest
|
76
|
88
|
�
|
�
|
�
|
Net loss attributable to FuelCell Energy, Inc.
|
(7,754)
|
(13,026)
|
�
|
�
|
�
|
Preferred stock dividends
|
(800)
|
(799)
|
�
|
�
|
�
|
Net loss to common shareholders
|
$ (8,554)
|
$ (13,825)
|
�
|
�
|
�
|
Net loss per share to common shareholders
|
�
|
�
|
Basic
|
$ (0.07)
|
$ (0.15)
|
Diluted
|
$ (0.07)
|
$ (0.15)
|
�
|
�
|
�
|
Weighted average shares
outstanding
|
�
|
�
|
Basic
|
126,923,550
|
93,512,868
|
Diluted
|
126,923,550
|
93,512,868
|
�
|
�
|
FUELCELL ENERGY, INC.
|
Consolidated Statements of Operations
|
(Unaudited)
|
(Amounts
in thousands, except share and per share amounts)
|
�
|
�
|
�
|
�
|
Nine Months Ended
July 31,
|
�
|
2011
|
2010
|
Revenues:
|
�
|
�
|
� Product sales and revenues
|
$ 81,815
|
$ 42,033
|
� Research and development contracts
|
6,032
|
8,043
|
� Total revenues
|
87,847
|
50,076
|
�
|
�
|
�
|
Costs and expenses:
|
�
|
�
|
� Cost of product sales and revenues
|
94,652
|
57,183
|
� Cost of research and development contracts
|
6,244
|
7,942
|
� Administrative and selling expenses
|
12,082
|
12,888
|
� Research and development expenses
|
12,662
|
14,327
|
Total costs and expenses
|
125,640
|
92,340
|
�
|
�
|
�
|
Loss from operations
|
(37,793)
|
(42,264)
|
�
|
�
|
�
|
� Interest expense
|
(1,829)
|
(118)
|
� Loss from equity investment
|
(149)
|
(576)
|
� Interest and other income, net
|
1,530
|
979
|
�
|
�
|
�
|
Loss before redeemable preferred stock of subsidiary
|
(38,241)
|
(41,979)
|
�
|
�
|
�
|
� Accretion of redeemable preferred stock of subsidiary
|
(525)
|
(1,763)
|
�
|
�
|
�
|
Loss before provision for income taxes
|
(38,766)
|
(43,742)
|
�
|
�
|
�
|
Provision for income taxes
|
(79)
|
(68)
|
�
|
�
|
�
|
Net loss
|
(38,845)
|
(43,810)
|
�
|
�
|
�
|
Net loss attributable to noncontrolling interest
|
197
|
270
|
�
|
�
|
�
|
Net loss attributable to FuelCell Energy, Inc.
|
(38,648)
|
(43,540)
|
�
|
�
|
�
|
Adjustment for modification of redeemable preferred stock of
subsidiary
|
(8,987)
|
�
|
Preferred stock dividends
|
(2,400)
|
(2,401)
|
�
|
�
|
�
|
Net loss to common shareholders
|
$ (50,035)
|
$ (45,941)
|
�
|
�
|
�
|
Net loss per share to common shareholders
|
�
|
�
|
Basic
|
$ (0.41)
|
$ (0.52)
|
Diluted
|
$ (0.41)
|
$ (0.52)
|
�
|
�
|
�
|
Weighted average shares
outstanding
|
�
|
�
|
Basic
|
122,306,465
|
87,510,734
|
Diluted
|
122,306,465
|
87,510,734
|
�
|
�
|
FUELCELL ENERGY, INC.
|
Reconciliation
of GAAP to Non-GAAP Consolidated Statements of Operations
|
(Unaudited)
|
(Amounts
in thousands, except share and per share amounts)
|
�
|
�
|
Three Months Ended July 31,
|
�
|
2011
|
� 2010
|
�
|
�
|
�
|
GAAP
As Reported
|
Non-GAAP
Adjustments
|
Non-GAAP
As Adjusted
|
GAAP
As Reported (3)
|
|
|
Revenues:
|
�
|
�
|
�
|
�
|
|
|
� Product sales and revenues
|
� $� 29,382
|
$� �
|
� $� 29,382
|
� $� 16,218
|
|
|
� Research and development contracts
|
1,778
|
�
|
1,778
|
2,655
|
|
|
� Total revenues
|
31,160
|
�
|
31,160
|
18,873
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Costs and expenses:
|
�
|
�
|
�
|
�
|
|
|
� Cost of product sales and revenues
|
29,133
|
�
|
29,133
|
20,050
|
|
|
� Cost of research and development contracts�
|
1,890
|
�
|
1,890
|
2,579
|
|
|
� Administrative and selling expenses
|
3,578
|
�
|
3,578
|
4,185
|
|
|
� Research and development expenses
|
3,918
|
�
|
3,918
|
4,618
|
|
|
Total costs and expenses
|
38,519
|
�
|
38,519
|
31,432
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Loss from operations
|
(7,359)
|
�
|
(7,359)
|
(12,559)
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
� Interest expense
|
(847)
|
�
|
(847)
|
(10)
|
|
|
� Income/(Loss) from equity investment
|
(94)
|
�
|
(94)
|
(183)
|
|
|
� Interest and other income, net
|
496
|
�
|
496
|
296
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Loss before redeemable preferred stock of subsidiary
|
(7,804)
|
�
|
(7,804)
|
(12,456)
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
� Accretion of redeemable preferred stock of subsidiary�
|
�
|
�
|
�
|
(603)
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Loss before provision for income taxes
|
(7,804)
|
�
|
(7,804)
|
(13,059)
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Provision for income taxes
|
(26)
|
�
|
(26)
|
(55)
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Net loss�
|
(7,830)
|
�
|
(7,830)
|
(13,114)
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Net loss attributable to noncontrolling interest
|
76
|
�
|
76
|
88
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Net loss attributable to FuelCell Energy, Inc.
|
(7,754)
|
�
|
(7,754)
|
(13,026)
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Adjustment for modification of redeemable preferred stock of
subsidiary
|
�
|
�
|
�
|
�
|
|
|
� Preferred stock dividends
|
(800)
|
�
|
(800)
|
(799)
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Net loss to common shareholders
|
$ (8,554)
|
$ �
|
� $� (8,554)
|
� $� (13,825)
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Net loss per share to common shareholders
|
�
|
�
|
�
|
�
|
|
|
Basic
|
� $� (0.07)
|
$ �
|
� $� (0.07)
|
� $� (0.15)
|
|
|
Diluted
|
� $� (0.07)
|
$ �
|
� $� (0.07)
|
� $� (0.15)
|
|
|
�
|
�
|
�
|
�
|
�
|
|
|
Weighted average shares
outstanding
|
�
|
�
|
�
|
�
|
|
|
Basic
|
126,923,550
|
�
|
126,923,550
|
93,512,868
|
|
|
Diluted
|
126,923,550
|
�
|
126,923,550
|
93,512,868
|
|
|
�
|
�
|
FUELCELL ENERGY, INC.
|
Reconciliation
of GAAP to Non-GAAP Consolidated Statements of Operations
|
(Unaudited)
|
(Amounts
in thousands, except share and per share amounts)
|
�
|
�
|
�
|
�
|
�
|
�
|
Nine Months Ended July 31,
|
�
|
2011
|
2010
|
�
|
GAAP
As Reported
|
Non-GAAP
Adjustments
|
Non-GAAP
As Adjusted
|
GAAP
As Reported (3)
|
Revenues:
|
�
|
�
|
�
|
�
|
� Product sales and
revenues
|
� $� 81,815
|
$ �
|
� $� 81,815
|
� $� 42,033
|
� Research and development
contracts
|
6,032
|
�
|
6,032
|
8,043
|
� Total revenues
|
87,847
|
�
|
87,847
|
50,076
|
�
|
�
|
�
|
�
|
�
|
Costs and expenses:
|
�
|
�
|
�
|
�
|
� Cost of product sales and
revenues
|
94,652
|
(8,752) (1)
|
85,900
|
57,183
|
� Cost of research and
development contracts�
|
6,244
|
�
|
6,244
|
7,942
|
� Administrative and
selling expenses
|
12,082
|
�
|
12,082
|
12,888
|
� Research and development
expenses
|
12,662
|
�
|
12,662
|
14,327
|
Total costs and expenses
|
125,640
|
(8,752)
|
116,888
|
92,340
|
�
|
�
|
�
|
�
|
�
|
Loss from operations
|
(37,793)
|
8,752
|
(29,041)
|
(42,264)
|
�
|
�
|
�
|
�
|
�
|
� Interest expense
|
(1,829)
|
�
|
(1,829)
|
(118)
|
� Loss from equity
investment
|
(149)
|
�
|
(149)
|
(576)
|
� Interest and other
income, net
|
1,530
|
�
|
1,530
|
979
|
�
|
�
|
�
|
�
|
�
|
Loss before redeemable preferred
stock of subsidiary
|
(38,241)
|
8,752
|
(29,489)
|
(41,979)
|
�
|
�
|
�
|
�
|
�
|
� Accretion of redeemable
preferred stock of subsidiary�
|
(525)
|
�
|
(525)
|
(1,763)
|
�
|
�
|
�
|
�
|
�
|
Loss before provision for income
taxes
|
(38,766)
|
8,752
|
(30,014)
|
(43,742)
|
�
|
�
|
�
|
�
|
�
|
Provision for income taxes
|
(79)
|
�
|
(79)
|
(68)
|
�
|
�
|
�
|
�
|
�
|
Net loss�
|
(38,845)
|
8,752
|
(30,093)
|
(43,810)
|
�
|
�
|
�
|
�
|
�
|
Net loss attributable to
noncontrolling interest
|
197
|
�
|
197
|
270
|
�
|
�
|
�
|
�
|
�
|
Net loss attributable to
FuelCell Energy, Inc.
|
(38,648)
|
8,752
|
(29,896)
|
(43,540)
|
�
|
�
|
�
|
�
|
�
|
Adjustment for modification of
redeemable preferred stock of subsidiary
|
(8,987)
|
8,987 (2)
|
�
|
�
|
� Preferred stock dividends
|
(2,400)
|
�
|
(2,400)
|
(2,401)
|
�
|
�
|
�
|
�
|
�
|
Net loss to common shareholders
|
� $� (50,035)
|
$ 17,739
|
� $� (32,296)
|
� $� (45,941)
|
�
|
�
|
�
|
�
|
�
|
Net loss per share to common
shareholders
|
�
|
�
|
�
|
�
|
Basic
|
� $� (0.41)
|
� $� 0.15
|
� $� (0.26)
|
� $� (0.52)
|
Diluted
|
� $� (0.41)
|
� $� 0.15
|
� $� (0.26)
|
� $� (0.52)
|
�
|
�
|
�
|
�
|
�
|
Weighted average shares
outstanding
|
�
|
�
|
�
|
�
|
Basic
|
122,306,465
|
�
|
122,306,465
|
87,510,734
|
Diluted
|
122,306,465
|
�
|
122,306,465
|
87,510,734
|
Notes to
Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations
For the Three and Nine
Months Ended� July 31, 2011
Results of Operations are presented in accordance with
accounting principles generally accepted in the United States
("GAAP") and as adjusted for certain items referenced
below.� Management also uses non-GAAP measures which exclude non-recurring
items in order to measure operating periodic performance.� We have added
this information because we believe it helps in understanding the results of
our operations on a comparative basis.� This adjusted information
supplements and is not intended to replace performance measures required by
U.S. GAAP disclosure.
Notes to the above referenced reconciliations are as follows:
(1) FuelCell Energy, Inc. has committed to a repair and upgrade
program to fix a performance shortfall for a select group of 1.2 MW fuel cell
modules produced between 2007 and early 2009.� Second quarter 2011
earnings was impacted by a charge of approximately $8.8 million, which was
accounted for as an increase to cost of goods sold. Our product sales, gross
margin and cost to revenue ratio and cost of revenues for the three and nine
months ended July 31, 2011 and 2010 were as follows:
�
|
Three Months Ended
July 31,
|
Nine Months Ended
July 31,
|
�
|
2011
|
2010
|
2011
|
2010
|
GAAP Revenue and Cost of
Sales�
|
�
|
�
|
�
|
�
|
� Product sales and
revenues
|
$ 29,382
|
$ 16,218
|
$ 81,815
|
$ 42,033
|
� Cost of product sales and
revenues
|
29,133
|
20,050
|
94,652
|
57,183
|
� Gross margin from product
sales and revenues
|
$ 249
|
� $� (3,832)
|
� $ (12,837)
|
� $ (15,150)
|
� Product Sales
Cost-to-revenue ratio(a)
|
0.99
|
1.24
|
1.16
|
1.36
|
�
|
�
|
�
|
�
|
�
|
Non-GAAP Adjustment to cost of product sales and
revenues:
|
|
|
|
|
� Repair and Upgrade Cost
|
$ �
|
$ �
|
� $� (8,752)
|
$ �
|
�
|
�
|
�
|
�
|
�
|
�
|
�
|
�
|
�
|
�
|
Gross Margin (non-GAAP):
|
�
|
�
|
�
|
�
|
Gross margin from product sales and revenues
|
$ 249
|
� $� (3,832)
|
� $� (4,085)
|
� $ (15,150)
|
Gross margin from� research and development contracts
|
(112)
|
76
|
(212)
|
101
|
Total
|
$ 137
|
� $� (3,756)
|
� $� (4,297)
|
� $ (15,049)
|
�
|
�
|
�
|
�
|
�
|
Product Sales Cost-to-revenue ratio(a)
|
0.99
|
1.24
|
1.05
|
1.36
|
�
|
�
|
�
|
�
|
�
|
(a)� Cost-to-revenue ratio is calculated as cost of product
sales and revenues divided by product sales and revenues.
|
(2)� During
the three months ended April 30, 2011 the Company entered into an agreement
with Enbridge, Inc. to modify an agreement for the Series� 1 preferred
shares.� While this modification did not result in a material change to
future cash flows, it did result in a revaluation of the instrument and a
reclassification of amounts due as short and long term liabilities.� An
adjustment to additional paid in capital and loss to common shareholders of
$9.0 million was incurred in the second quarter of 2011 to adjust the
historic carrying value of the Series I preferred shares to the current fair
value.
The
reason for the change in the value of the obligation was that the original
obligation had been accounted for under purchase price accounting at the time
of the acquisition of Global Thermoelectric Inc. in 2003. This valuation
included a market risk discount and a foreign exchange rate which was fixed
at the time of the acquisition. Under the new valuation under debt
accounting, the future estimated cash flows were discounted using the
dividend rate in the modified agreement and the current foreign exchange rate
resulting in the adjustment. This accounting accelerated the prior accretion
model.
(3)
Note that there were no adjustments to GAAP results as reported for the three
months ended July 31, 2011 and the three and nine months ended July 31, 2010.
CONTACT: FuelCell Energy, Inc. �������� Kurt Goddard, Vice President Investor Relations �������� 203-830-7494 �������� ir@fce.com
|