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DANBURY, Conn.--(BUSINESS WIRE)--June 7, 2006--FuelCell Energy, Inc. (NasdaqNM:FCEL), a leading manufacturer of ultra-clean and efficient electric power generation plants for commercial and industrial customers, today reported results and accomplishments for its second fiscal quarter ended April 30, 2006.
Financial Results
FuelCell Energy reported revenues for the second quarter of fiscal 2006 of $9.5 million, compared to $6.1 million in the same period a year ago. Product sales and revenues were $6.5 million, a quarterly record high for FuelCell Energy, compared to $3.3 million in the same period a year ago. The cost-to-revenue ratio for product sales improved to 2.43 in the second quarter of fiscal 2006 compared with 3.17 in the same period a year ago. Research and development contract revenue was $3.0 million compared to $2.8 million in 2005.
Net loss to common shareholders for the second quarter of fiscal 2006 was $23.5 million or $0.48 per basic and diluted share, and includes $4.3 million or $0.09 per basic and diluted share for the conversion of shares of the Series B Convertible Preferred Stock and $1.0 million of stock compensation expense or $0.02 per basic and diluted share. This compared to a net loss to common shareholders of $16.8 million or $0.35 per basic and diluted share in the same period of the previous year. Net loss for the second quarter of fiscal 2006, after adjusting for the conversion of preferred stock and stock compensation charges, was higher as commercial product sales and revenues grew over the prior year quarter. The cost-to-sales ratio (gross margin) for commercial product sales contracts improved in the quarter.
Net cash and investments used during the quarter was $12.2 million, compared to $19.5 million in the same period of 2005. Total cash and investments at April 30, 2006 was $150.6 million. During the quarter, the Company received $2.5 million of California Self Generation Incentive Program receipts, which offset power purchase agreement capital costs of $2.1 million, and $2.2 million of net proceeds from common stock sales for quarterly dividend payments. Capital spending other than for power purchase agreements in the quarter totaled approximately $0.9 million. Depreciation and amortization expense for the quarter ended April 30, 2006 was approximately $2.2 million.
For the six months ended April 30, 2006, FuelCell Energy reported revenue of $15.5 million, a 13 percent increase compared with $13.7 million in the same period a year ago. Product sales and revenues were $9.5 million, 13 percent higher than the $8.4 million in 2005. Research and development contract revenue was $6.0 million compared to $5.3 million in 2005. For the six months ended April 30, 2006, FuelCell Energy reported a net loss to common shareholders of $40.2 million or $0.82 per basic and diluted share, inclusive of a one-time conversion premium of $4.3 million or $0.09 per basic and diluted share for the conversion of the Series B Convertible Preferred Stock and $2.1 million of stock compensation expense or $0.04 per basic and diluted share. Net loss for the six months ended April 30, 2006, after adjusting for the conversion of the preferred stock and stock option expense, compared favorably to the net loss to common shareholders of $36.2 million or $0.75 per basic and diluted share in the same period a year ago. There was no stock compensation expense recorded in the consolidated statement of operations for the six months ended April 30, 2005.
The Company's product backlog, including long-term service agreements, as of April 30, 2006 totaled $23.9 million ($20.4 million at April 30, 2005) and research and development sales backlog totaled $9.9 million ($22.3 million as of April 30, 2005). The Company was selected for awards by the DOE to develop a high temperature membrane for Polymer Electrolyte Membrane fuel cells and to develop a coal-based multi-megawatt Solid Oxide Fuel Cell/Turbine (SOFC/T) system. These awards will add approximately $20 million to backlog once these contracts are finalized.
During the quarter, FuelCell Energy entered into transactions with certain holders of the Company's Series B Cumulative Convertible Preferred Stock to convert an aggregate of 41,755 shares of Series B Preferred Stock into approximately 3.6 million shares of common stock. There were 39,755 shares converted during the quarter and 2,000 shares converted subsequent to quarter end. Pursuant to the conversion of the preferred shares, the Company has paid the holders a per share conversion premium of approximately $4.3 million or an average of $103.02 per share of Series B Preferred Stock paid in cash from the net proceeds of the sale of common stock. As a result of this conversion, quarterly dividend obligations have been reduced by approximately $0.5 million or $0.01 per basic and diluted share beginning in the third quarter of fiscal 2006.
Highlights
"The six megawatt commitment from Marubeni and the recent orders in California - the one megawatt equipment sale to California State University Northridge and the additional 250-kilowatt unit at Camp Pendleton - demonstrate our continued success in selling our ultra-clean DFC power plants in larger sizes," said R. Daniel Brdar, President and CEO of FuelCell Energy. "We are on track to achieve the two megawatt cost reduction target of $3,200-$3,500 per kilowatt and we will aggressively pursue multi-megawatt opportunities in Phase 2 of Connecticut's Project 100 as well as other repeatable business in our target global regions to build volume and achieve profitability."
Recent Corporate Developments
The Company continued to penetrate key market segments, with sales trending to larger-sized units and multi-megawatt opportunities:
Continued reducing costs:
Continued meeting customer expectations for product performance:
Continued shaping the business to support corporate mission:
Continued breaking new ground in R&D and future products:
Visibility to Orders
Market opportunities for the Company's DFC products are increasing and more specific details on the Company's order visibility are set forth below.
Conference Call Information
A conference call is scheduled for 10:00 a.m. EDT on June 8, 2006, to review results and discuss the Company's outlook. Listeners can gain access to the call live over the Internet by clicking on the web cast link on the Company's homepage at http://www.fuelcellenergy.com. A playback version will be available for seven days after the call by calling 800-283-8520 for the U.S./Canada and +1-402-220-0870 for international.
About FuelCell Energy, Inc.
FuelCell Energy develops and markets ultra-clean power plants that generate electricity with higher efficiency than distributed generation plants of similar size and with virtually no air pollution. Fuel cells produce base load electricity giving commercial and industrial customers greater control over their power generation economics, reliability and emissions. Emerging state, federal and international regulations to reduce harmful greenhouse gas emissions consider fuel cell power plants in the same environmentally friendly category as wind and solar energy sources -- with the added advantages of running 24 hours a day and the capacity to be installed where wind turbines or solar panels often cannot. Headquartered in Danbury, Conn., FuelCell Energy services over 45 power plant sites around the globe that have generated more than 108 million kilowatt hours, and conducts R&D on next-generation fuel cell technologies to meet the world's ever-increasing demand for ultra-clean distributed energy. For more information on the company, its products and its worldwide commercial distribution alliances, please see www.fuelcellenergy.com.
Direct FuelCell, DFC and DFC/Turbine are registered trademarks of FuelCell Energy, Inc. All other trademarks are the property of their respective owners. The Company's sub-megawatt DFC fuel cell power plant is a collaborative effort combining its Direct FuelCell technology with a HotModule® balance of plant design from MTU CFC Solutions, GmbH.
This news release contains forward-looking statements, including statements regarding the Company's plans and expectations regarding the development and commercialization of its fuel cell technology. 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, the risk that commercial field trials of the Company's products will not occur when anticipated, general risks associated with product development, manufacturing, changes in the utility regulatory environment, potential volatility of energy prices, rapid technological change, and competition, 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.
FUELCELL ENERGY, INC.
Consolidated Statements of Operations
(UNAUDITED)
(Dollars in thousands, except share and per share amounts)
Three Months Ended
April 30,
2006 2005
------------ ------------
Revenues:
Product sales and revenues $ 6,487 $ 3,348
Research and development contracts 3,047 2,766
----------- -----------
Total revenues 9,534 6,144
----------- -----------
Costs and expenses:
Cost of product sales and revenues (1) 15,742 10,598
Cost of research and development
contracts (1) 2,713 2,616
Administrative and selling expenses (1) 4,694 3,614
Research and development expenses (1) 5,393 5,279
----------- -----------
Total costs and expenses 28,542 22,107
----------- -----------
Loss from operations (19,008) (15,993)
License fee (expense) income, net (19) 32
Interest expense (22) (30)
Loss from equity investments (225) (335)
Interest and other income, net 1,216 1,095
----------- -----------
Loss before provision for income taxes (18,058) (15,231)
Provision for income taxes -- --
----------- -----------
Net loss (18,058) (15,231)
Preferred stock dividends (5,462) (1,573)
----------- -----------
Net loss to common shareholders $ (23,520) $ (16,804)
=========== ===========
Loss per share basic and diluted:
----------- -----------
Net loss to common shareholders $ (0.48) $ (0.35)
=========== ===========
Basic and diluted weighted average
shares outstanding 49,319,174 48,185,809
=========== ===========
(1) - Fiscal 2006 includes stock-based compensation expense of $0.2
million in cost of product sales and revenues, $0.01 million in cost
of research and development contracts, $0.7 million in administrative
and selling expenses and $0.1 million in research and development
expenses.
FUELCELL ENERGY, INC.
Consolidated Statements of Operations
(UNAUDITED)
(Dollars in thousands, except share and per share amounts)
Six Months Ended
April 30,
2006 2005
------------ ------------
Revenues:
Product sales and revenues $ 9,487 $ 8,380
Research and development contracts 5,991 5,288
----------- -----------
Total revenues 15,478 13,668
----------- -----------
Costs and expenses:
Cost of product sales and revenues (1) 25,092 24,311
Cost of research and development
contracts (1) 5,636 5,430
Administrative and selling expenses (1) 8,918 6,744
Research and development expenses (1) 11,277 10,512
----------- -----------
Total costs and expenses 50,923 46,997
----------- -----------
Loss from operations (35,445) (33,329)
License fee income, net 52 103
Interest expense (54) (73)
Loss from equity investments (440) (675)
Interest and other income, net 2,754 1,971
----------- -----------
Loss before provision for income taxes (33,133) (32,003)
Provision for income taxes -- --
----------- -----------
Loss from continuing operations (33,133) (32,003)
Discontinued operations, net of tax -- (1,252)
----------- -----------
Net loss (33,133) (33,255)
Preferred stock dividends (7,057) (2,915)
----------- -----------
Net loss to common shareholders $ (40,190) $ (36,170)
=========== ===========
Loss per share basic and diluted:
Continuing operations $ (0.82) $ (0.72)
Discontinued operations -- (0.03)
----------- -----------
Net loss to common shareholders $ (0.82) $ (0.75)
=========== ===========
Basic and diluted weighted average
shares outstanding 48,931,325 48,184,926
=========== ===========
(1) - Fiscal 2006 includes stock-based compensation expense of $0.3
million in cost of product sales and revenues, $0.1 million in cost of
research and development contracts, $1.4 million in administrative and
selling expenses and $0.3 million in research and development
expenses.
FUELCELL ENERGY, INC.
Consolidated Balance Sheets
(Dollars in thousands, except share and per share amounts)
April 30, October 31,
2006 2005
----------- -------------
(Unaudited) (Revised)(1)
----------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 29,262 $ 22,702
Investments: U.S. treasury securities 79,851 113,330
Accounts receivable, net of allowance for
doubtful accounts of $189 and $104,
respectively 9,355 10,062
Inventories, net 14,065 12,141
Other current assets 5,244 3,659
---------- ------------
Total current assets 137,777 161,894
Property, plant and equipment, net 48,940 46,705
Investments: U.S. treasury securities 41,504 43,928
Equity investments 11,871 12,473
Other assets, net 502 520
---------- ------------
Total assets $ 240,594 $ 265,520
========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and
other liabilities $ 413 $ 503
Accounts payable 7,308 6,221
Accrued liabilities 5,766 7,018
Deferred license fee income 187 38
Deferred revenue and customer deposits 12,499 9,366
---------- ------------
Total current liabilities 26,173 23,146
Long-term debt and other liabilities 674 904
---------- ------------
Total liabilities 26,847 24,050
---------- ------------
Redeemable preferred stock ($0.01 par value,
liquidation preference of $66,120 and
$105,875 at April 30, 2006 and October 31,
2005, respectively) 61,820 98,989
Shareholders' equity:
Preferred shares of subsidiary (convertible
into FuelCell Common Stock) 12,197 11,517
Common stock ($.0001 par value);
150,000,000 shares authorized; 52,900,273
and 48,497,088 shares issued and
outstanding at April 30, 2006 and October
31, 2005, respectively. 5 5
Additional paid-in capital 463,195 421,298
Accumulated deficit (323,470) (290,339)
Treasury stock, at cost (15,583 and 4,279
shares of common stock in 2006 and 2005) (158) (44)
Deferred compensation 158 44
---------- ------------
Total shareholders' equity 151,927 142,481
---------- ------------
Total liabilities and shareholders'
equity $ 240,594 $ 265,520
========== ============
(1) - The Company has revised the consolidated balance sheet as of
October 31, 2005 to reclassify the 5% Series B Cumulative Convertible
Perpetual Preferred Stock out of the general heading of shareholders'
equity and into a temporary equity classification.
CONTACT: FuelCell Energy, Inc.
Steven P. Eschbach, 203-825-6000
seschbach@fce.com
SOURCE: FuelCell Energy, Inc.