Release Date: June 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- FuelCell Energy Inc (FCEL, Financial) achieved 67% revenue growth year-over-year in its 62.8 megawatt generation portfolio.
- The company extended its joint development agreement with ExxonMobil's low carbon solution business through the end of 2026.
- FuelCell Energy Inc (FCEL) secured a significant commercial win in South Korea, adding approximately $160 million to its backlog.
- The company announced a new project with Ameresco for the Sacramento area Sewer district, converting on-site biofuels into clean electricity.
- FuelCell Energy Inc (FCEL) reported a strong total cash and short-term investment position of approximately $313.2 million as of April 30, 2024.
Negative Points
- Total revenues for the second quarter of fiscal year 2024 decreased to $22.4 million from $38.3 million in the prior year quarter.
- The company reported a net loss of $37.7 million for the second quarter of fiscal year 2024, compared to a net loss of $33.9 million in the second quarter of fiscal year 2023.
- Adjusted EBITDA was negative $26.5 million in the second quarter of fiscal year 2024, slightly worse than the negative $26 million in the second quarter of fiscal year 2023.
- Service agreement revenues decreased significantly to $1.4 million from $26.2 million in the prior year period due to no module exchanges during the quarter.
- Operating expenses increased to $34.3 million from $29.8 million in the second quarter of fiscal year 2023, driven by higher research and development expenses.
Q & A Highlights
Q: Could you elaborate on the reduction in spending by up to $30 million and the extension of project spend into fiscal 2025? Also, is the reversible solid oxide platform still on track for 2027?
A: (Michael Bishop, CFO) Yes, we have reduced our planned spending for fiscal 2024, including CapEx, R&D, and project assets. The Trinity Connecticut project has been extended into fiscal 2025, which is why we lowered our estimate. (Jason Few, CEO) The reversible solid oxide platform remains on our roadmap, but we are pacing our spending based on market adoption. We are well-positioned for opportunities in hydrogen-based long-duration energy storage, carbon recovery, and distributed power generation.
Q: Can you provide more details on the new partnership with Ameresco and the potential for additional joint deployments?
A: (Jason Few, CEO) This is our first project with Ameresco, focusing on biogas projects. We expect this trend to continue as states and cities move away from landfill waste. Our technology can use biogas directly on-site, reducing costs and accelerating the anaerobic digestion process. We anticipate more opportunities with Ameresco and similar projects in the future.
Q: Could you provide more detail on the Tri-gen system and its partnership with Toyota?
A: (Jason Few, CEO) Our Tri-gen system at the Port of Long Beach provides electricity, hydrogen, and water to Toyota. As Toyota advances its hydrogen-based fuel cell electric vehicles, we expect more opportunities for Tri-gen projects. The trend towards fuel cell electric vehicles in both light and heavy-duty transportation supports this growth.
Q: Are you in discussions with potential data center customers, and how advanced are these conversations?
A: (Jason Few, CEO) Yes, we are in discussions with data center customers. Our large-scale platform capabilities, air permitting advantages, low noise levels, and integration with absorption chilling make us well-positioned for data center opportunities. (Mark Feasel, Chief Commercial Officer) We are in technical and economic discussions with many data center companies, especially in North America.
Q: Can you walk through the expected revenue cadence for the GGE agreement?
A: (Michael Bishop, CFO) The $160 million GGE agreement includes replacement of 42 fuel cell modules and seven years of service. The first six modules will be delivered in Q4 2024, with the next 30 in calendar 2025, and the final six in the first half of 2026. Revenue recognition will follow module deliveries.
Q: Could you break down the R&D spending and the focus areas for the current fiscal year?
A: (Michael Bishop, CFO) We reduced our R&D spending range to $60 million to $65 million for fiscal 2024. Investments are focused on solid oxide solutions, including power generation, hydrogen-based long-duration energy storage, and electrolysis. Carbon capture work is funded through our joint development agreement with Exxon and other contracts.
Q: Can you expand on the fuel cell technology's ability to utilize carbon capture in small to mid-scale applications?
A: (Jason Few, CEO) Our work with Exxon has optimized our technology for carbon capture. We can integrate enhanced cell technology into our existing platform for smaller-scale applications. We are actively pursuing opportunities in food and beverage, industrial boilers, and other sectors. Smaller-scale projects may move faster than large-scale ones.
Q: Do you expect smaller-scale carbon capture applications to move forward before the large-scale Exxon project is operational?
A: (Jason Few, CEO) Yes, we anticipate that smaller-scale projects will move forward before the large-scale Exxon project is fully operational. These projects can move faster and address immediate needs for carbon capture in various industries.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
