Attached files
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| 8-K - FORM 8-K - FUELCELL ENERGY INC | c02207e8vk.htm |
Exhibit 99.1
FuelCell Energy Reports Second Quarter Results
and Latest Accomplishments
and Latest Accomplishments
| • | 2.8 MW Direct FuelCell power plant order received in May 2010 from Pacific Gas and Electric | ||
| • | South Korea passes Renewable Portfolio Standard, which includes fuel cells operating on natural gas and biogas | ||
| • | DFC-ERG System in Toronto achieves record peak electrical efficiency over 70 percent |
DANBURY, Conn. — June 7, 2010 — FuelCell Energy, Inc. (Nasdaq:FCEL), a leading manufacturer of
high efficiency ultra-clean power plants using renewable and other fuels for commercial,
industrial, government, and utility customers, today reported results and accomplishments for its
second quarter ended April 30, 2010.
Financial Results
FuelCell Energy reported total revenues for the second quarter of 2010 of $16.6 million compared to
$22.9 million in the same period last year. Product sales and revenues in the second quarter were
$13.0 million compared to $19.3 million in the prior year quarter, and remained consistent with the
first quarter 2010 product sales and revenues of $12.8 million. Compared to the prior year quarter,
revenues were down as the product mix transitioned to primarily stack modules sold to POSCO Power,
FuelCell Energy’s manufacturing and distribution partner in South Korea, compared to complete power
plants sold in the prior year. The Company’s product sales backlog, including long-term service
agreements, totaled $75.5 million as of April 30, 2010 compared to $59.2 million as of April 30,
2009. The backlog figures do not include engineering, procurement and construction services
contracts with Pacific Gas and Electric Company totaling approximately $12.6 million, which will be
added to backlog in the third quarter of 2010.
Margins for product sales and revenues improved over the prior year quarter by $3.2 million, driven
primarily by sales of lower cost megawatt—class modules compared to products produced in the prior
year period. Impacting cost of sales in the quarter was a warranty charge of approximately $1.8
million related to a module enclosure fabrication defect that was identified during the quarter.
No additional charges are expected from this issue. The product cost-to-revenue ratio was
1.47-to-1.00 in the second quarter of 2010 compared to 1.48-to-1.00 in the second quarter of 2009
and 1.41-to-1.00 in the first quarter of 2010.
Research and development contract revenue was $3.6 million for the second quarter of 2010, which
was comparable to the second quarter of 2009. Research and development revenue was comprised
primarily of activity with the Company’s solid oxide fuel cell development contract with the U.S.
Department of Energy and the renewable hydrogen refueling station project announced in February
2010. The Company’s research and development backlog totaled $9.9 million as of April 30, 2010
compared to $19.5 million as of April 30, 2009.
FuelCell Energy Second Quarter 2010 Results
Net loss to common shareholders for the second quarter of 2010 of $16.7 million, or $0.20 per basic
and diluted share, improved 16 percent compared to net loss to common shareholders of $19.9 million
or $0.29 per basic and diluted share in the second quarter of 2009. The improvement compared to
the prior year quarter was due to lower product costs.
For the six months ended April 30, 2010, FuelCell Energy reported revenue of $31.2 million compared
to $44.6 million for the comparable prior year period. Product sales and revenues were $25.8
million compared to $38.3 million for the comparable prior year period. Research and development
contract revenue was $5.4 million compared to $6.2 million for the six months ended April 30, 2009.
Net loss to common shareholders for the six months ended April 30, 2010 was $32.1 million or $0.38
per basic and diluted share compared to $40.6 million or $0.59 per basic and diluted share for the
six months ended April 30, 2009. Margins for product sales and revenues improved by $7.9 million
over the prior period primarily due to a change in the sales mix towards lower cost MW class
products. The up-rated 1.4 MW fuel cell stacks now in production are generating higher revenue with
no commensurate increase in production costs. This improvement was partially offset by charges for
warranty and commissioning incurred during the period. The product cost-to-revenue ratio was
1.44-to-1.00 compared to 1.50-to-1.00 for the same period one year ago. The cost ratio improved on
sales of lower cost products and was negatively impacted by warranty and commissioning costs, and
lower sales compared to the prior period.
Total cash and investments in U.S. Treasuries were $43.8 million as of April 30, 2010. Net cash
use for the second quarter was $13.8 million compared to net cash use of $7.2 million for the first
quarter of 2010. Increased cash use for the second quarter is in line with the Company’s
expectations and reflects changes in working capital related to the timing of customer milestone
payments. Capital spending for the second quarter was $1.0 million and depreciation expense was
$1.8 million.
Corporate Highlights
“The Renewable Portfolio Standard adopted by South Korea and the support of the California Public
Utilities Commission continue to demonstrate the important role that fuel cells play in addressing
power needs” said R. Daniel Brdar, Chairman and CEO of FuelCell Energy. “Fuel cells are an
important solution, providing the advantages of ultra-clean and renewable distributed generation
and reliable base load power that cannot be provided from intermittent power sources such as solar
or wind.”
The Company achieved an important milestone regarding product performance in the natural gas
pipeline market during the second quarter. A Direct FuelCell-Energy Recovery Generation (DFC-ERG)
power plant operating in Toronto, Canada, attained peak electrical efficiency greater than 70
Percent for a one year period, compared to U.S. average central grid electricity generation that is
approximately 35 percent efficient. High efficiency results in less fuel used, reducing fuel costs
and greenhouse gas emissions, which were reduced by up to 45 percent compared to combustion based
power generation alternatives. The fuel cell power plant availability averaged 93 percent for the
year, demonstrating solid reliability. The near-zero level
of harmful emissions and quiet operation warranted its location next to an office building in
downtown Toronto.
Page 2
FuelCell Energy Second Quarter 2010 Results
Leadership in Key Markets
FuelCell Energy has fuel cell plants generating power at more than 50 locations globally and the
Company’s power plants have cumulatively generated over 500 million kilowatt hours (kWh) of clean
power. This sizeable installed base combined with the order backlog establishes FuelCell Energy as
a leading worldwide stationary fuel cell manufacturing company. Key markets are driving the
adoption of fuel cells:
South Korea: The South Korean Government passed a Renewable Portfolio Standard (RPS) in March 2010
that requires 4 percent clean energy generation by 2015 and 10 percent by 2022. The program
becomes effective in 2012 and will mandate 350 MW of additional renewable energy per year through
2016, and 700 MW per year through 2022. At present, only about 1 percent of South Korea’s
electricity comes from renewable resources. Fuel cells operating on natural gas and bio gas fully
qualify under the mandates of the program.
South Korea remains the largest and fastest growing market for the Company. Through our partner,
POSCO Power, there are approximately 26 megawatts (MW) of Direct FuelCell (DFC) power plants
currently generating electricity for South Korea’s power grid. POSCO Power has ordered
approximately 69 MW of FuelCell Energy’s products to date and has begun construction on the world’s
largest fuel cell power plant at 11.2 MW, to be located in Daegu Metropolitan City, South Korea.
In order to meet the growing demand for fuel cells, POSCO Power continues to invest in production
facilities. In April, 2010, POSCO Power began construction of a fuel cell stack module assembly
plant that will have capacity of 100 MW per year. Once this plant becomes operational, FuelCell
Energy will ship core fuel cell components. This strategy of building and shipping only the core
componentry allows FuelCell Energy to leverage its manufacturing capacity and locating final
assembly closer to end users, reduces cost and ensures products meet the needs of individual
markets.
California: Pacific Gas and Electric, one of the largest utilities in the United States, ordered
2.8 MW of fuel cell power plants in May, 2010 for installation at two university campuses in
California. The fuel cell power plants will be operational in 2011 and will be configured to
utilize the byproduct heat for use by the university facilities, increasing the overall efficiency
of the power plants.
This order follows an approval from the California Public Utilities Commission (CPUC) in April 2010
for two California based utilities to purchase fuel cells for installation at four California
universities. The CPUC and the State are leaders in the adoption of alternative energy to reduce
greenhouse gases and pollution while encouraging the utilization of distributed generation
solutions that generate power at the point of use. The CPUC approval noted the important role that
fuel cells will play in the State’s future energy mix.
Page 3
FuelCell Energy Second Quarter 2010 Results
Gills Onions, a food processor in Oxnard, California, won a prestigious national engineering award
in April called the Grand Conceptor Award for its process of converting onion waste into methane,
which then fuels a fuel cell power plant to generate ultra-clean electricity. Bio-gas fuel cell
applications are particularly appealing to California based customers in the wastewater and food
processing markets as a methane byproduct can be converted to usable fuel for the power plant to
create ultra-clean electricity for use on-site.
Connecticut: The Company continues to pursue project financing for the 43.5 MW of fuel cell
projects selected by the Connecticut Department of Utility Control (CDUC). The Company has
submitted the Phase II applications for 27.3 MW of projects under the U.S. Department of Energy
loan guarantee program. If the Phase II applications are approved, the Company would then proceed
with negotiating term sheets for funding. Concurrently with this loan guarantee application
process, the Company continues to pursue a parallel financing path for funding these projects,
having initiated discussions with a number of potential financing sources.
Government Research and Development Contracts
Advanced Hydrogen Programs: The $2.1 million award to the Company to demonstrate a renewable
hydrogen refueling station in California is progressing on schedule. The three-year project is the
result of collaboration with Air Products and Chemicals to combine the Company’s DFC power plants
with Air Products’ gas separation technology to yield pure hydrogen for transportation, utility and
other uses. The DFC-H2 will operate on biogas from the Orange County Sanitation District
wastewater treatment plant, and will generate three sources of revenue for the customer including
hydrogen for vehicle refueling, ultra-clean electricity, and usable heat. The unit is expected to
be operational on natural gas by the fourth quarter of 2010 and operational on bio-gas by early
2011.
Solid Oxide Fuel Cell Development: The Company has partnered with Versa Power Systems Inc., a
world leader in solid oxide fuel cell (SOFC) stack technology, for the development of a Large
Scale Coal-Based Solid Oxide Fuel Cell under the U.S. Department of Energy Solid State Energy
Conversion Alliance (SECA) Program. The FCE/Versa team is on track to meet cost and performance
objectives for a minimum 25 kW fuel cell stack in Phase II of the SECA program and is currently
testing a stack tower with capacity greater than 25 kW. The full scale advanced fuel cell system
to be demonstrated in Phase III is expected to incorporate an SOFC module with an output of
approximately 250 kW to efficiently convert the energy contained in coal to ultra-clean grid
electrical power.
Conference Call Information
FuelCell Energy will host a conference call with investors beginning at 10:00 a.m. Eastern Time on
June 8, 2010 to discuss the second quarter results.
Page 4
FuelCell Energy Second Quarter 2010 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 Monday,
June 14, 2010:
| • | From the U.S. and Canada please dial 800-642-1687 | ||
| • | Outside the U.S. or Canada please call 706-645-9291 | ||
| • | Enter confirmation code 76352948 |
About FuelCell Energy
DFC® fuel cells are generating power at over 50 locations worldwide. The Company’s power plants
have generated over 500 million kWh of power using a variety of fuels including renewable
wastewater gas, biogas from beer and food processing, as well as natural gas and other hydrocarbon
fuels. FuelCell Energy has partnerships with major power plant developers and power companies
around the world. The Company also receives funding from the U.S. Department of Energy and other
government agencies for the development of leading edge technologies such as fuel cells. 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,
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.
Contact:
|
||
| FuelCell Energy, Inc. | ||
| Kurt Goddard, Vice President Investor Relations | ||
| 203-830-7494 | ||
| kgoddard@fce.com |
# # # #
Page 5
FuelCell Energy Second Quarter 2010 Results
FUELCELL ENERGY, INC.
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except share and per share amounts)
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except share and per share amounts)
| April 30, | October 31, | |||||||
| 2010 | 2009 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 24,112 | $ | 57,823 | ||||
Investments — U.S. treasury securities |
3,012 | 7,004 | ||||||
Accounts receivable, net |
18,110 | 22,920 | ||||||
Inventories, net |
30,284 | 25,433 | ||||||
Other current assets |
4,620 | 6,499 | ||||||
Total current assets |
80,138 | 119,679 | ||||||
Property, plant and equipment, net |
30,314 | 32,394 | ||||||
Investments — U.S. treasury securities |
16,630 | — | ||||||
Investment in and loans to affiliate |
10,260 | 10,064 | ||||||
Other assets, net |
600 | 551 | ||||||
Total assets |
$ | 137,942 | $ | 162,688 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt and other liabilities |
$ | 984 | $ | 997 | ||||
Accounts payable |
6,271 | 8,484 | ||||||
Accounts payable due to affiliate |
305 | 1,584 | ||||||
Accrued liabilities |
15,027 | 13,808 | ||||||
Deferred revenue, royalty income and customer deposits |
25,331 | 17,013 | ||||||
Total current liabilities |
47,918 | 41,886 | ||||||
Long-term deferred revenue and royalty income |
8,943 | 10,124 | ||||||
Long-term debt and other liabilities |
4,245 | 4,410 | ||||||
Total liabilities |
61,106 | 56,420 | ||||||
Redeemable preferred stock of subsidiary |
15,823 | 14,976 | ||||||
Redeemable preferred stock (liquidation preference of
$64,020 at April 30, 2010 and $64,120 at October 31,
2009) |
59,857 | 59,950 | ||||||
Total Equity: |
||||||||
Shareholders’ equity |
||||||||
Common stock ($.0001 par value); 150,000,000
shares authorized; 85,265,076 and 84,387,741
shares issued and outstanding at April 30, 2010
and October 31, 2009, respectively |
8 | 8 | ||||||
Additional paid-in capital |
631,793 | 631,296 | ||||||
Accumulated deficit |
(630,474 | ) | (599,960 | ) | ||||
Accumulated other comprehensive income (loss) |
11 | (2 | ) | |||||
Treasury stock, Common, at cost (5,679 shares at
April 30, 2010 and October 31, 2009) |
(53 | ) | (53 | ) | ||||
Deferred compensation |
53 | 53 | ||||||
Total shareholders’ equity |
1,338 | 31,342 | ||||||
Noncontrolling interest in subsidiaries |
(182 | ) | — | |||||
Total equity |
1,156 | 31,342 | ||||||
Total liabilities and equity |
$ | 137,942 | $ | 162,688 | ||||
Page 6
FuelCell Energy Second Quarter 2010 Results
FUELCELL ENERGY, INC.
Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except share and per share amounts)
Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except share and per share amounts)
| Three Months Ended | ||||||||
| April 30, | ||||||||
| 2010 | 2009 | |||||||
Revenues: |
||||||||
Product sales and revenues |
$ | 13,007 | $ | 19,308 | ||||
Research and development contracts |
3,580 | 3,556 | ||||||
Total revenues |
16,587 | 22,864 | ||||||
Costs and expenses: |
||||||||
Cost of product sales and revenues |
19,120 | 28,614 | ||||||
Cost of research and development contracts |
3,267 | 2,837 | ||||||
Administrative and selling expenses |
4,547 | 4,755 | ||||||
Research and development expenses |
5,089 | 5,053 | ||||||
Total costs and expenses |
32,023 | 41,259 | ||||||
Loss from operations |
(15,436 | ) | (18,395 | ) | ||||
Interest expense |
(45 | ) | (66 | ) | ||||
Loss from equity investment |
(245 | ) | (216 | ) | ||||
Interest and other income, net |
364 | 130 | ||||||
Loss before redeemable preferred stock of subsidiary |
(15,362 | ) | (18,547 | ) | ||||
Accretion of redeemable preferred stock of subsidiary |
(603 | ) | (533 | ) | ||||
Loss before provision for income taxes |
(15,965 | ) | (19,080 | ) | ||||
Provision for income taxes |
(13 | ) | — | |||||
Net loss |
(15,978 | ) | (19,080 | ) | ||||
Net loss attributable to noncontrolling interest |
96 | — | ||||||
Net loss attributable to FuelCell Energy, Inc. |
(15,882 | ) | (19,080 | ) | ||||
Preferred stock dividends |
(800 | ) | (802 | ) | ||||
Net loss to common shareholders |
$ | (16,682 | ) | $ | (19,882 | ) | ||
Net loss per share to common shareholders |
||||||||
Basic |
$ | (0.20 | ) | $ | (0.29 | ) | ||
Diluted |
$ | (0.20 | ) | $ | (0.29 | ) | ||
Weighted average shares outstanding |
||||||||
Basic |
84,515,979 | 69,521,575 | ||||||
Diluted |
84,515,979 | 69,521,575 | ||||||
Page 7
FuelCell Energy Second Quarter 2010 Results
FUELCELL ENERGY, INC.
Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except share and per share amounts)
Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except share and per share amounts)
| Six Months Ended | ||||||||
| April 30, | ||||||||
| 2010 | 2009 | |||||||
Revenues: |
||||||||
Product sales and revenues |
$ | 25,815 | $ | 38,339 | ||||
Research and development contracts |
5,388 | 6,248 | ||||||
Total revenues |
31,203 | 44,587 | ||||||
Costs and expenses: |
||||||||
Cost of product sales and revenues |
37,133 | 57,551 | ||||||
Cost of research and development contracts |
5,363 | 5,075 | ||||||
Administrative and selling expenses |
8,703 | 9,001 | ||||||
Research and development expenses |
9,709 | 10,790 | ||||||
Total costs and expenses |
60,908 | 82,417 | ||||||
Loss from operations |
(29,705 | ) | (37,830 | ) | ||||
Interest expense |
(108 | ) | (126 | ) | ||||
Loss from equity investment |
(393 | ) | (562 | ) | ||||
Interest and other income, net |
683 | 545 | ||||||
Loss before redeemable preferred stock of subsidiary |
(29,523 | ) | (37,973 | ) | ||||
Accretion of redeemable preferred stock of subsidiary |
(1,160 | ) | (1,026 | ) | ||||
Loss before provision for income taxes |
(30,683 | ) | (38,999 | ) | ||||
Provision for income taxes |
(13 | ) | — | |||||
Net loss |
(30,696 | ) | (38,999 | ) | ||||
Net loss attributable to noncontrolling interest |
182 | — | ||||||
Net loss attributable to FuelCell Energy, Inc. |
(30,514 | ) | (38,999 | ) | ||||
Preferred stock dividends |
(1,602 | ) | (1,604 | ) | ||||
Net loss to common shareholders |
$ | (32,116 | ) | $ | (40,603 | ) | ||
Net loss per share to common shareholders |
||||||||
Basic |
$ | (0.38 | ) | $ | (0.59 | ) | ||
Diluted |
$ | (0.38 | ) | $ | (0.59 | ) | ||
Weighted average shares outstanding |
||||||||
Basic |
84,459,926 | 69,178,940 | ||||||
Diluted |
84,459,926 | 69,178,940 | ||||||
Page 8