Release Date: September 05, 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 strong growth in generation and advanced technology revenues.
- The company announced a significant commercial win with Gyeonggi Green Energy (GGE) in South Korea, securing a long-term service agreement and increasing their backlog to $1.2 billion.
- FuelCell Energy Inc (FCEL) is making progress on its carbon capture project with ExxonMobil at the Esso refinery in Rotterdam.
- The company is advancing a bio-generation project with Ameresco for the Sacramento Area Sewer District, which includes the potential for future production of renewable green hydrogen.
- FuelCell Energy Inc (FCEL) is expanding its reach into the South Korea market, leveraging long-term service agreements and product sales to build a pipeline of opportunities.
Negative Points
- FuelCell Energy Inc (FCEL) reported a net loss of $35.1 million for the third quarter of fiscal year 2024, compared to a net loss of $23.6 million in the prior year quarter.
- Service agreement revenues decreased significantly to $1.4 million from $9.8 million in the prior year period due to the absence of module exchanges.
- Operating expenses for the third quarter of fiscal year 2024 decreased to $27.4 million from $33.2 million in the prior year third quarter, indicating cost-cutting measures.
- The company made job eliminations in certain areas, reducing its workforce by approximately 4% as part of cost-saving measures.
- FuelCell Energy Inc (FCEL) is facing delays in finalizing tax rules from the Treasury Department, impacting decision-making on hydrogen projects.
Q & A Highlights
Q: Any update on the Toyota project and follow-on interest from other parties?
A: Jason Few, President, Chief Executive Officer, Director: The Toyota project is fully operational, providing hydrogen, power, and water at the Port of Long Beach. There is interest in follow-on projects, but decisions are pending finalization of tax rules from the Treasury Department, which is not expected before the election cycle.
Q: Thoughts on potential relaxation around the 45V codification and its timing?
A: Jason Few, President, Chief Executive Officer, Director: The Chevron ruling may prompt the Treasury Department to reassess their implementation of the rules, potentially aligning more with legislative intent, which should benefit companies like ours. However, clarity on this is not expected before the election.
Q: How are you thinking about manufacturing expansion for solid oxide in the US and potential DOE funding?
A: Jason Few, President, Chief Executive Officer, Director: We are active in programs like 48C and the DOE loan program. As a US-based manufacturer, we are being thoughtful about deploying capital and scaling, awaiting more clarity on tax rules before triggering additional capital for manufacturing expansion.
Q: Can you discuss the eFuels projects in Canada and their potential?
A: Jason Few, President, Chief Executive Officer, Director: The project in Canada leverages our technology and nuclear to produce eFuels, utilizing high-efficiency electrolysis and heat. This represents a medium to long-term opportunity, enhancing our technological advantages and competing with traditional fuels.
Q: Any updates on the data center front and fuel cell applications?
A: Jason Few, President, Chief Executive Officer, Director: We see significant growth in data center opportunities, particularly in time to power, leveraging shuttered coal or gas plants, and providing on-site generation. Our technology's thermal energy integration and permitting advantages in urban areas make us a compelling solution for data centers.
Q: What are you seeing with wastewater projects in your pipeline?
A: Jason Few, President, Chief Executive Officer, Director: The Ameresco project exemplifies our platform's capability to utilize anaerobic digester fuel without upgrading to pipeline quality. We see growth in this market, with opportunities for hydrogen production and carbon recovery, creating additional value streams.
Q: Can you provide more details on the Rotterdam carbon capture project and joint marketing with Exxon?
A: Jason Few, President, Chief Executive Officer, Director: Site work at the Esso plant in Rotterdam involves preparing for module placement and flue gas movement. We are building and commissioning modules. Joint marketing with Exxon involves conversations with customers about demonstration scale projects, part of our product development and commercialization efforts.
Q: Has the interest rate environment impacted financing discussions or investments?
A: Michael Bishop, Chief Financial Officer, Executive Vice President, Treasurer: We have navigated the interest rate environment by securing low-interest project financing. We are pursuing commercial financing for projects in Korea and elsewhere, with interested parties supporting our contracts.
Q: Can you expand on the co-electrolysis projects related to the Canadian Nuclear Laboratories project?
A: Jason Few, President, Chief Executive Officer, Director: The project leverages nuclear to produce eFuels, complementing our carbon capture efforts. Our technology captures carbon efficiently at the point source, producing power and hydrogen, which can be used for eFuels, aiding in decarbonization.
Q: What is the initial response to the food-grade CO2 effort?
A: Jason Few, President, Chief Executive Officer, Director: The response has been positive. The demonstration allows customers to sample and test the CO2 for purification and taste, crucial for food and beverage applications. This will be a catalyst for moving forward with our technology.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
