Form 8-K FUELCELL ENERGY INC For: Jan 22
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 22, 2020
FUELCELL ENERGY, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 1-14204 | 06-0853042 | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
|
3 Great Pasture Road Danbury, Connecticut |
06810 | |||
| (Address of Principal Executive Offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (203) 825-6000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, $0.0001 par value per share | FCEL | The Nasdaq Stock Market LLC (Nasdaq Global Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02. | Results of Operations and Financial Condition. |
On January 22, 2020, FuelCell Energy, Inc. (the “Company”) issued a press release announcing its financial results for its fourth fiscal quarter ended October 31, 2019 and its fiscal year ended October 31, 2019. A copy of this press release is furnished with this report as Exhibit 99.1 and is incorporated herein by reference.
The information furnished in this Item 2.02, including Exhibit 99.1, is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. This information will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
| Item 7.01. | Regulation FD Disclosure. |
On January 22, 2020, the Company issued a press release announcing its new business strategy. A copy of this press release is furnished with this report as Exhibit 99.2 and is incorporated herein by reference.
In addition, a copy of the investor presentation slides that will be used by the Company during its January 22, 2020 earnings call is furnished with this report as Exhibit 99.3.
The information furnished in this Item 7.01, including Exhibits 99.2 and 99.3, is not deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. This information will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
By filing this Current Report on Form 8-K and furnishing the information contained herein, the Company makes no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD. The information contained in the investor presentation furnished as Exhibit 99.3 is summary information that is intended to be considered in the context of the Company's Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in this presentation, although it may do so from time to time. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
| Item 9.01. | Financial Statements and Exhibits. |
(d) The following exhibits are being furnished herewith:
Exhibit | Description | |
| 99.1 | Press Release, dated January 22, 2020. | |
| 99.2 | Press Release, dated January 22, 2020. | |
| 99.3 | Investor Presentation, dated January 22, 2020. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FUELCELL ENERGY, INC. | |||
| Date: January 22, 2020 | By: | /s/ Michael S. Bishop | |
| Michael S. Bishop | |||
| Executive Vice President and Chief Financial Officer | |||
Exhibit 99.1
FuelCell Energy Reports Fourth Quarter and Fiscal 2019 Financial Results
DANBURY, CT – January 22, 2020 -- FuelCell Energy, Inc. (Nasdaq: FCEL), a global leader in delivering localized, always on, sustainable clean energy, today reported financial results for its fourth fiscal quarter of 2019 and its fiscal year ended October 31, 2019 and provided details of its new business strategy.
“Our results in the fourth fiscal quarter and the full fiscal year reflect our focused execution on right-sizing FuelCell Energy, exiting opportunities that did not meet our margin objectives, and positioning the Company for growth in 2020 and beyond,” commented Jason Few, President and Chief Executive Officer of FuelCell Energy. “We accomplished a number of strategic initiatives to strengthen our balance sheet and improve our cost structure as we focus on delivering our significant project backlog, which is expected to result in recurring cash flow from our generation assets.”
Fourth Quarter of Fiscal 2019 Results
(All results reflect year-over-year comparisons unless otherwise noted)
Revenue of $11.0 million represents a 38% decrease year-over-year and reflects the Company’s previous decision to deemphasize Product sales to focus on utility scale Power Purchase Agreement (“PPA”) opportunities, and grow our generation portfolio. This revenue decrease was partially offset by the Company’s increased Generation and Advanced Technologies contract revenues.
| · | Generation revenues increased by 206% to $5.5 million from $1.8 million as a result of the acquisition of the 14.9 megawatt (“MW”) Bridgeport Fuel Cell Project in 2019, which increased generation assets by 133% to 26.1 MW from 11.2 MW on a year-over-year basis. |
| · | Advanced Technologies contract revenues increased by 16% to $4.3 million from $3.7 million due to increased activity, mainly in conjunction with the carbon capture joint development agreement with ExxonMobil Research and Engineering Company. |
| · | Service and License revenues decreased by 72% to $0.8 million from $2.9 million, driven by the timing of planned service work performed in the comparative periods. |
| · | Product sales totaled $0.5 million for the quarter, a decline of 95% when compared to product sales of $9.4 million in the comparable quarter. The difference between the periods is primarily due to the inclusion of the sale of the Trinity College fuel cell project in the fourth fiscal quarter of 2018. |
Gross loss for the fourth fiscal quarter of 2019 totaled $(23.4) million, compared to gross profit of $1.1 million in the fourth fiscal quarter of 2018. Results for the fourth fiscal quarter of 2019 include a noncash charge of $14.4 million due to a decision by the Company to operate the Triangle Street Project under a merchant model (selling electricity under tariff to the grid and without an executed power purchase agreement) for the next 5 years. Results also include a noncash charge of $3.1 million for the Bolthouse Farms Project because management has decided to pursue termination of the PPA related to the Bolthouse Farms Project given recent regulatory changes impacting the future cost profile for the Company and Bolthouse Farms.
Operating expenses for the fourth fiscal quarter of 2019 decreased by 26% to $9.6 million, compared to $13.0 million in the fourth fiscal quarter of 2018. Research and development expenses of $1.4 million reflect lower headcount and overhead as a result of restructuring activities during fiscal 2019 and an increased allocation of efforts to revenue producing activity. Administrative and selling expenses at $8.2 million were higher than in the fourth fiscal quarter of 2018 as a result of extraordinary legal and consulting costs incurred by the Company in connection with its restructuring, liquidity and refinancing initiatives. This expense category is expected to trend down in fiscal 2020 as those efforts are now complete.
FuelCell Energy Fourth Quarter And Fiscal 2019 Results
| Page 2 |
Adjusted EBITDA loss totaled $(11.0) million in the fourth fiscal quarter of 2019 compared to $(8.8) million in the fourth fiscal quarter of 2018. (Adjusted EBITDA is a non-GAAP financial measure that represents adjusted earnings before interest, taxes, depreciation and amortization.) Please see the discussion of non-GAAP financial measures and Adjusted EBITDA in the appendix at the end of this release.
The net loss per share attributable to common stockholders in the fourth fiscal quarter of 2019 was $(0.23), compared to $(2.31) in the fourth fiscal quarter of 2018.
Fiscal 2019 Results
(All results reflect year-over-year comparisons unless otherwise noted)
Revenue of $60.8 million represents a 32% decrease in revenue year-over-year, which was primarily a result of the Company’s previous strategic decision to focus on utility scale PPA business opportunities to grow the generation portfolio rather than selling our projects at completion, and the Company’s continuing inability to access the Asian markets as a result of the situation with POSCO Energy, partially offset by increased Service and License revenues, Generation revenues, and Advanced Technologies contract revenues.
| · | Generation revenues increased 96% to $14.0 million from $7.2 million due to additional revenue recorded for the 14.9 MW Bridgeport Fuel Cell Project, which was acquired in May 2019. |
| · | Advanced Technologies contract revenues increased 40% to $19.6 million from $14.0 million due to the timing of project activity under existing contracts. |
| · | Service and License revenues increased 69% to $26.6 million from $15.8 million, mainly due to revenues of $10.0 million recorded in connection with our license agreement with ExxonMobil Research and Engineering Company during the fiscal year ended October 31, 2019. |
| · | Product sales for the fiscal year consisted of $0.5 million of power plant revenue compared to $52.5 million of product revenues for the fiscal year ended October 31, 2018, which included sales from the 20 MW fuel cell project for Korea Southern Power Company and the sale to Clearway Energy of a 2.8 MW fuel cell power plant project in Tulare, California. |
Gross loss in fiscal 2019 totaled $(21.3) million, compared to gross profit of $3.1 million in fiscal 2018. Fiscal 2019 results include one-time, noncash impairment charges of $20.4 million.
Operating expenses for fiscal 2019 decreased 4% to $45.7 million compared to $47.7 million in fiscal 2018. Research and development expenses of $13.8 million in fiscal 2019 compared to $22.8 million in fiscal 2018. This decrease reflects the reduction in spending resulting from the restructuring initiatives and the reassignment of personnel from internal research and development activities to funded Advanced Technologies projects. Administrative and selling expenses of $31.9 million in fiscal 2019 were higher than in fiscal 2018 as a result of atypical legal and consulting costs related to the Company’s restructuring, liquidity and refinancing initiatives.
Adjusted EBITDA in fiscal 2019 improved 4% to ($31.4) million, compared to ($32.7) million in fiscal 2018. Please see the discussion of non-GAAP financial measures and adjusted EBITDA in the appendix at the end of this release
Net loss per basic and diluted share attributable to common stockholders for the fiscal 2019 was $(1.82) compared to $(9.01) in fiscal 2018.
FuelCell Energy Fourth Quarter And Fiscal 2019 Results
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Key Consolidated Financial Metrics
| Three Months Ended October 31, | Twelve Months Ended October 31 | |||||||||||||||||||||||
| (Amounts in thousands) | 2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||||
| Total revenues | $ | 11,041 | $ | 17,884 | -38 | % | $ | 60,752 | $ | 89,437 | -32 | % | ||||||||||||
| Gross (loss) profit | (23,389 | ) | 1,143 | -2,146 | % | (21,269 | ) | 3,093 | -788 | % | ||||||||||||||
| Loss from operations | (32,992 | ) | (11,870 | ) | -178 | % | (66,929 | ) | (44,632 | ) | -50 | % | ||||||||||||
| EBITDA | (28,958 | ) | (9,747 | ) | -197 | % | (54,576 | ) | (35,984 | ) | -52 | % | ||||||||||||
| Net loss to common stockholders | (36,003 | ) | (17,929 | ) | -101 | % | (100,245 | ) | (62,168 | ) | -61 | % | ||||||||||||
| Net loss per basic and diluted share | $ | (0.23 | ) | $ | (2.31 | ) | 90 | % | $ | (1.82 | ) | $ | (9.01 | ) | 80 | % | ||||||||
| Adjusted EBITDA | $ | (10,959 | ) | $ | (8,818 | ) | -24 | % | $ | (31,412 | ) | $ | (32,746 | ) | 4 | % | ||||||||
Strategy Update
In a separate release today, FuelCell Energy announced its comprehensive strategy to strengthen its business and maximize operational efficiencies, which is expected to enable the Company to capture future growth opportunities by executing of its core business, focusing on customer relationships, delivering on and expanding its project backlog, and developing and commercializing new technologies with it partners. Access the release.
“My first full quarter as CEO has been a pivotal time for FuelCell Energy, during which we have worked together with our Board, as a management team, and with our stakeholders and suppliers to complete the restructuring phase of our strategy,” said Jason Few. “Having accomplished our initial objectives of building a financial foundation to move forward with our new business, today we unveiled the pillars of our Powerhouse transformation strategy: Transform, Strengthen, and Grow. We are fully focused on successfully executing our project commitments and positioning the Company to deliver positive earnings.”
Backlog
| As of October 31, | ||||||||||||
| (Amounts in thousands) | 2019 | 2018 | Change | |||||||||
| Product | $ | - | $ | 1 | - | |||||||
| Service(1) | 169,371 | 251,650 | -33 | % | ||||||||
| Generation | 1,114,366 | 839,483 | 33 | % | ||||||||
| License(2) | 22,931 | - | - | |||||||||
| Advanced Technologies | 11,978 | 32,383 | -63 | % | ||||||||
| Total Contract Backlog | $ | 1,318,646 | $ | 1,123,517 | 17 | % | ||||||
(1) In July 2018, we contracted to operate and maintain a 20 MW plant for Korea Southern Power Company (“KOSPO”). This contract was originally represented in backlog as twenty years reflecting the total term of the contract. Under the terms of the contract KOSPO has a renewal option in year ten. Thus, under the adoption of Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which was implemented on November 1, 2018 service backlog was reduced by $64.3 million in 2018 and 2019 compared to amounts previously disclosed. Should KOSPO exercise this option, service backlog will be adjusted accordingly.
(2) License backlog was not included prior to the adoption of Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which was implemented on November 1, 2018.
FuelCell Energy Fourth Quarter And Fiscal 2019 Results
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Contract backlog increased to $1.32 billion as of October 31, 2019, reflecting additional generation backlog from the Bridgeport Fuel Cell, San Bernardino, and the LIPA Yaphank Solid Waste Management projects, offset by the removal of the Bolthouse Farms project and revenue recognized during the period. Only projects for which we have a PPA are included in generation backlog, which represents future revenue under long-term PPAs. Service backlog decreased mainly as a result of the acquisition of the Bridgeport Fuel Cell Project. Together, the service and generation portion of backlog had an average weighted term of approximately 18 years based on dollar backlog and utility service contracts of up to 20 years in duration at inception.
Cash, Restricted Cash and Project Finance
Cash, cash equivalents and restricted cash totaled $39.8 million as of October 31, 2019, including $9.4 million of unrestricted cash and cash equivalents and $30.3 million of restricted cash and equivalents.
On October 31, 2019, the Company entered an 8-year, $200 million senior secured credit facility with Orion Energy Partners Investment Agent, LLC and certain of its affiliates and drew down $14.5 million, followed by an additional $65.5 million draw down on November 22, 2019, primarily to support execution of selected projects within the Company’s project backlog. The balance of the facility, $120 million, is available over the first 18 months following October 31, 2019, subject to the approval of the lenders, to fund construction costs, inventory and other capital expenditures of additional fuel cell projects with contracted cash flows and inventory, working capital, and other costs that may be required to be delivered by the Company on purchase orders, service agreements, or other binding customer agreements. In addition to providing corporate and project working capital, proceeds from the two draws under this facility repaid $22.8 million of short term debt.
Conference Call Information
FuelCell Energy will host a conference call today beginning at 10:00 a.m. EST to discuss the fourth fiscal quarter and full year results for fiscal 2019 along with details of the Company’s new business strategy. Participants can access the live call via webcast on the Company website or by telephone as follows:
| · | The live webcast of the call and supporting slide presentation will be available at www.fuelcellenergy.com. To listen to the call, select “Investors” on the home page, proceed to the “Events & Presentations” page and then click on the “Webcast” link listed under the January 22nd earnings call event, or click here. |
| · | Alternatively, participants can dial 647-689-4106 and state FuelCell Energy or the conference ID number 5186075. |
The replay of the conference call will be available via webcast on the Company’s Investors’ page at www.fuelcellenergy.com approximately two hours after the conclusion of the call.
Cautionary Language
This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements with respect to the Company’s anticipated financial results and statements regarding the Company’s plans and expectations regarding the continuing development, commercialization and financing of its fuel cell technology and its business plans and strategies. 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, changes to projected deliveries and order flow, changes to production rate and product costs, general risks associated with product development, manufacturing, changes in the regulatory environment, customer strategies, ability to access certain markets, unanticipated manufacturing issues that impact power plant performance, changes in critical accounting policies, access to and ability to raise capital and attract financing, potential volatility of energy prices, rapid technological change, competition, the Company’s ability to successfully implement its new business strategies and achieve its goals, 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.
FuelCell Energy Fourth Quarter And Fiscal 2019 Results
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About FuelCell Energy
FuelCell Energy, Inc. (NASDAQ: FCEL) is a global leader in developing environmentally responsible distributed baseload power solutions through our proprietary molten-carbonate fuel cell technology. We develop turn-key distributed power generation solutions and operate and provide comprehensive services for the life of the power plant. We are working to expand the proprietary technologies that we have developed over the past five decades into new products, markets and geographies. Our mission and purpose remains to utilize our proprietary, state-of-the-art fuel cell power plants to reduce the global environmental footprint of baseload power generation by providing environmentally responsible solutions for reliable electrical power, hot water, steam, chilling, hydrogen, microgrid applications, and carbon capture and, in so doing, drive demand for our products and services, thus realizing positive stockholder returns. Our fuel cell solution is a clean, efficient alternative to traditional combustion-based power generation and is complementary to an energy mix consisting of intermittent sources of energy, such as solar and wind turbines. Our systems answer the needs of diverse customers across several markets, including utility companies, municipalities, universities, hospitals, government entities and a variety of industrial and commercial enterprises. We provide solutions for various applications, including utility-scale distributed generation, on-site power generation and combined heat and power, with the differentiating ability to do so utilizing multiple sources of fuel including natural gas, Renewable Biogas (i.e., landfill gas, anaerobic digester gas), propane and various blends of such fuels. Our multi-fuel source capability is significantly enhanced by our proprietary gas-clean-up skid.
SureSource, SureSource 1500, SureSource 3000, SureSource 4000, SureSource Recovery, SureSource Capture, SureSource Hydrogen, SureSource Storage, SureSource Service, SureSource Capital, FuelCell Energy, and FuelCell Energy logo are all trademarks of FuelCell Energy, Inc.
Contact:
FuelCell Energy, Inc.
203.205.2491
Source: FuelCell Energy
# # # #
FuelCell Energy Fourth Quarter And Fiscal 2019 Results
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FUELCELL ENERGY, INC.
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except share and per share amounts)
| October 31, 2019 | October 31, 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents, unrestricted | $ | 9,434 | $ | 39,291 | ||||
| Restricted cash and cash equivalents – short-term | 3,473 | 5,806 | ||||||
| Accounts receivable, net | 3,292 | 9,280 | ||||||
| Unbilled receivables | 7,684 | 13,759 | ||||||
| Inventories | 54,515 | 53,575 | ||||||
| Other current assets | 5,921 | 8,592 | ||||||
| Total current assets | 84,319 | 130,303 | ||||||
| Restricted cash and cash equivalents – long-term | 26,871 | 35,142 | ||||||
| Project assets | 144,115 | 99,600 | ||||||
| Inventory – long-term | 2,179 | - | ||||||
| Property, plant and equipment, net | 41,134 | 48,204 | ||||||
| Goodwill | 4,075 | 4,075 | ||||||
| Intangible assets | 21,264 | 9,592 | ||||||
| Other assets | 9,489 | 13,505 | ||||||
| Total assets | $ | 333,446 | $ | 340,421 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 21,916 | $ | 17,596 | ||||
| Accounts payable | 16,943 | 22,594 | ||||||
| Accrued liabilities | 11,452 | 7,632 | ||||||
| Deferred revenue | 11,471 | 11,347 | ||||||
| Preferred stock obligation of subsidiary | 950 | 952 | ||||||
| Total current liabilities | 62,732 | 60,121 | ||||||
| Long-term deferred revenue | 28,705 | 16,793 | ||||||
| Long-term preferred stock obligation of subsidiary | 16,275 | 14,965 | ||||||
| Long-term debt and other liabilities | 90,140 | 71,619 | ||||||
| Total liabilities | 197,852 | 163,498 | ||||||
| Redeemable Series B preferred stock (liquidation preference of $64,020 at October 31, 2019 and 2018) | 59,857 | 59,857 | ||||||
| Redeemable Series C preferred stock (liquidation preference of $8,992 as of October 31, 2018) | - | 7,480 | ||||||
| Redeemable Series D preferred stock (liquidation preference of $30,680 as of October 31, 2018) | - | 27,392 | ||||||
| Total Equity: | ||||||||
| Stockholders’ equity Common stock ($0.0001 par value; 225,000,000 shares authorized at October 31, 2019 and 2018; 193,608,684 and 7,972,686 shares issued and outstanding at October 31, 2019 and 2018, respectively) | 19 | 1 | ||||||
| Additional paid-in capital | 1,151,454 | 1,073,463 | ||||||
| Accumulated deficit | (1,075,089 | ) | (990,867 | ) | ||||
| Accumulated other comprehensive loss | (647 | ) | (403 | ) | ||||
| Treasury stock, Common, at cost (42,496 and 13,042 at October 31, 2019 and 2018, respectively) | (466 | ) | (363 | ) | ||||
| Deferred compensation | 466 | 363 | ||||||
| Total stockholders’ equity | 75,737 | 82,194 | ||||||
| Total liabilities and stockholders’ equity | $ | 333,446 | $ | 340,421 | ||||
FuelCell Energy Fourth Quarter And Fiscal 2019 Results
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FUELCELL ENERGY, INC.
Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except share and per share amounts)
| Three Months Ended October 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenues: | ||||||||
| Product | $ | 481 | $ | 9,432 | ||||
| Service and license | 752 | 2,898 | ||||||
| Generation | 5,474 | 1,842 | ||||||
| Advanced Technologies | 4,334 | 3,712 | ||||||
| Total revenues | 11,041 | 17,884 | ||||||
| Costs of revenues: | ||||||||
| Product | 4,190 | 10,321 | ||||||
| Service and license | 3,777 | 3,125 | ||||||
| Generation | 22,595 | 1,401 | ||||||
| Advanced Technologies | 3,868 | 1,894 | ||||||
| Total cost of revenues | 34,430 | 16,741 | ||||||
| Gross (loss) profit | (23,389 | ) | 1,143 | |||||
| Operating expenses: | ||||||||
| Administrative and selling expenses | 8,252 | 5,581 | ||||||
| Research and development expense | 1,351 | 7,432 | ||||||
| Total costs and expenses | 9,603 | 13,013 | ||||||
| Loss from operations | (32,992 | ) | (11,870 | ) | ||||
| Interest expense | (2,816 | ) | (2,421 | ) | ||||
| Other income, net | 649 | 200 | ||||||
| Loss before provision for income taxes | (35,159 | ) | (14,091 | ) | ||||
| Provision for income taxes | (20 | ) | (5 | ) | ||||
| Net loss | (35,179 | ) | (14,096 | ) | ||||
| Series B preferred stock dividends | (821 | ) | (800 | ) | ||||
| Series C preferred stock deemed dividends | - | (958 | ) | |||||
| Series D preferred stock deemed dividends and redemption accretion | (3 | ) | (2,075 | ) | ||||
| Net loss attributable to common stockholders | $ | (36,003 | ) | $ | (17,929 | ) | ||
| Loss per share basic and diluted: | ||||||||
| Net loss per share attributable to common stockholders | $ | (0.23 | ) | $ | (2.31 | ) | ||
| Basic and diluted weighted average shares outstanding | 154,408,279 | 7,752,288 | ||||||
FuelCell Energy Fourth Quarter And Fiscal 2019 Results
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FUELCELL ENERGY, INC.
Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except share and per share amounts)
| Year Ended October 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenues: | ||||||||
| Product | $ | 481 | $ | 52,490 | ||||
| Service and license | 26,618 | 15,757 | ||||||
| Generation | 14,034 | 7,171 | ||||||
| Advanced Technologies | 19,619 | 14,019 | ||||||
| Total revenues | 60,752 | 89,437 | ||||||
| Costs of revenues: | ||||||||
| Product | 18,552 | 54,504 | ||||||
| Service and license | 18,943 | 15,059 | ||||||
| Generation | 31,642 | 6,421 | ||||||
| Advanced Technologies | 12,884 | 10,360 | ||||||
| Total cost of revenues | 82,021 | 86,344 | ||||||
| Gross (loss) profit | (21,269 | ) | 3,093 | |||||
| Operating expenses: | ||||||||
| Administrative and selling expenses | 31,874 | 24,908 | ||||||
| Research and development expense | 13,786 | 22,817 | ||||||
| Total costs and expenses | 45,660 | 47,725 | ||||||
| Loss from operations | (66,929 | ) | (44,632 | ) | ||||
| Interest expense | (10,623 | ) | (9,055 | ) | ||||
| Other income, net | 93 | 3,338 | ||||||
| Loss before (provision) benefit for income taxes | (77,459 | ) | (50,349 | ) | ||||
| (Provision) benefit for income taxes | (109 | ) | 3,015 | |||||
| Net loss | (77,568 | ) | (47,334 | ) | ||||
| Series A warrant exchange | (3,169 | ) | - | |||||
| Series B preferred stock dividends | (3,231 | ) | (3,200 | ) | ||||
| Series C preferred stock deemed dividends and redemption value adjustment, net | (6,522 | ) | (9,559 | ) | ||||
| Series D preferred stock deemed dividends and redemption accretion | (9,755 | ) | (2,075 | ) | ||||
| Net loss attributable to common stockholders | $ | (100,245 | ) | $ | (62,168 | ) | ||
| Loss per share basic and diluted: | ||||||||
| Net loss per share attributable to common stockholders | $ | (1.82 | ) | $ | (9.01 | ) | ||
| Basic and diluted weighted average shares outstanding | 55,081,266 | 6,896,189 | ||||||
FuelCell Energy Fourth Quarter And Fiscal 2019 Results
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Appendix
Further Detail on Statement of Operations Accounting for the Series B Preferred Stock, Series C Convertible Preferred Stock and the Series D Convertible Preferred Stock:
Net loss attributable to common stockholders in the fourth quarter of fiscal 2019 includes a dividend totaling $0.8 million on the Company’s 5% Series B Cumulative Convertible Perpetual Preferred Stock (“Series B Preferred Stock”), and deemed dividends totaling $0.003 million on the Company’s Series D Convertible Preferred Stock. No dividends were declared or paid by the Company on the Series B Preferred Stock in connection with the August 15, 2019 dividend payment date (until after the end of the fourth quarter of fiscal 2019). Because such dividends were not paid on August 15, under the terms of the Amended Certificate of Designation with respect to the Series B Preferred Stock, the holders of shares of Series B Preferred Stock were entitled to receive, when, as and if, declared by the Board of Directors of the Company, dividends at a dividend rate per annum equal to the normal dividend rate of 5%, plus an amount equal to the number of dividend periods for which the Company failed to pay or set apart funds to pay dividends multiplied by 0.0625%, for each subsequent dividend period until the Company has paid or provided for the payment of all dividends on the shares of Series B Preferred Stock for all prior dividend periods.
Conversions of the Company’s Series C Convertible Preferred Stock occurring during the year ended October 31, 2019 resulted in a variable number of shares being issued to settle the conversion amounts and were treated as a partial redemption of the Series C Convertible Preferred Stock. The Series C Preferred Stock were fully converted during the three months ended July 31, 2019.
Conversions of the Company’s Series D Convertible Preferred Stock in which the conversion price was below $16.56 (the conversion price of the Series D Convertible Preferred Stock as of October 31, 2019 and during the three months and year ended October 31, 2019) resulted in a variable number of shares being issued to settle the conversion amounts and were treated as a partial redemption of the Series D Convertible Preferred Stock. The Series D Preferred Stock were fully converted during the three months ended October 31, 2019.
Non-GAAP Financial Measures
Financial results are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Management also uses non-GAAP measures to analyze and make operating decisions on the business. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA are alternate, non-GAAP measures of cash utilization by the Company.
These supplemental non-GAAP measures are provided to assist readers in determining operating performance. Management believes EBITDA and Adjusted EBITDA are useful in assessing performance and highlighting trends on an overall basis. Management also believes these measures are used by companies in the fuel cell sector and by securities analysts and investors when comparing the results of the Company with those of other companies. EBITDA differs from the most comparable GAAP measure, net loss attributable to the Company, primarily because it does not include finance expense, income taxes and depreciation of property, plant and equipment and project assets. Adjusted EBITDA adjusts EBITDA for stock-based compensation and restructuring charges, which are considered either non-cash or non-recurring.
FuelCell Energy Fourth Quarter And Fiscal 2019 Results
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While management believes that these non-GAAP financial measures provide useful supplemental information to investors, there are limitations associated with the use of these measures. The measures are not prepared in accordance with GAAP and may not be directly comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation. The Company’s non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP.
The following table calculates EBITDA and Adjusted EBITDA and reconciles these figures to the GAAP financial statement measure Net loss.
| Three Months Ended October 31, | Year Ended October 31, | |||||||||||||||
| (Amounts in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Net loss | $ | (35,179 | ) | $ | (14,096 | ) | $ | (77,568 | ) | $ | (47,334 | ) | ||||
| Depreciation | 4,034 | 2,123 | 12,353 | 8,648 | ||||||||||||
| Provision/(Benefit) for income taxes | 20 | 5 | 109 | (3,015 | ) | |||||||||||
| Other income, net(1) | (649 | ) | (200 | ) | (93 | ) | (3,338 | ) | ||||||||
| Interest expense | 2,816 | 2,421 | 10,623 | 9,055 | ||||||||||||
| EBITDA | $ | (28,958 | ) | $ | (9,747 | ) | $ | (54,576 | ) | $ | (35,984 | ) | ||||
| Impairment expense | 17,520 | - | 20,360 | - | ||||||||||||
| Stock-based compensation expense | 479 | 929 | 2,804 | 3,238 | ||||||||||||
| Adjusted EBITDA | $ | (10,959 | ) | $ | (8,818 | ) | $ | (31,412 | ) | $ | (32,746 | ) | ||||
| (1) | Other income, net includes gains and losses from transactions denominated in foreign currencies, changes in fair value of embedded derivatives, and other items incurred periodically, which are not the result of the Company’s normal business operations. |
Backlog
Backlog represents definitive agreements executed by the Company and our customers. Projects for which the Company has a PPA are included in generation backlog, which represents future revenue under long-term PPAs. Projects sold to customers (and not retained by the Company) are included in product sales and service backlog and the related generation backlog is removed upon the sale.
Exhibit 99.2
FuelCell Energy Launches New Business Strategy
| · | New “Powerhouse” business strategy launched to strengthen FuelCell Energy’s business, maximize operational efficiencies, and position the company for future profitable growth |
| · | Several key milestones already achieved in 2019 |
| · | Growth initiative focused on both core power generation business as well as leveraging the Company’s proprietary technologies into new products, markets and geographies |
DANBURY, CT – January 22, 2020 - FuelCell Energy, Inc. (Nasdaq: FCEL) – a global leader in delivering localized, always-on, and sustainable clean energy solutions – today announced the details of its new “Powerhouse” business strategy, which is focused on the fundamental pillars of Transform, Strengthen, and Grow.
“Building on our 50-year history of innovation and our leadership in the advancement of fuel cell technology, we are embarking on a new “Powerhouse” business strategy focused on strengthening our operations and industry positioning to enable the delivery of sustained profitable growth to benefit all of our stakeholders,” said Jason Few, President and Chief Executive Officer. “In 2019, we largely completed the restructuring necessary to support our new business strategy, including accomplishing several foundational milestones toward achieving profitable growth and reestablishing our position of industry leadership. We are now able to focus fully on execution of our strategy and both growing our existing business and expanding into new products, markets and geographies.”
2019 Key Accomplishments and Recent Developments
| ü | Ended our engagement with Huron Consulting Services LLC (“Huron Consulting”) after successfully restructuring our business and operations and paying off our senior secured credit facility. |
| ü | Closed on a new $200 million senior secured credit facility with Orion Energy Partners to fund construction costs, inventory and other capital expenditures associated with current and future fuel cell projects. |
| ü | Improved our capital structure by retiring our Series C and Series D preferred stock obligations. |
| ü | Entered into a new two-year joint development agreement with ExxonMobil Research and Engineering Company, with anticipated revenues of up to $60 million, to further the development of our carbon capture technology, and entered into a related $10 million technology license agreement. |
| ü | Announced a strategic relationship with E.ON Business Solutions to market and distribute our products, adding to the two operating plants already owned by E.ON. |
| ü | Relaunched our sub-megawatt products in Europe commercially, including our 250kW and 400kW SureSourceTM solutions, in addition to offering our SureSourceTM 1500, 3000 and 4000 platforms. |
| ü | Reached more than 9 million MW hours of clean electricity produced by our SureSource™ fuel cell power plants globally since the first commercial installation in 2003. |
| ü | Announced a carbon capture project with Drax Power Station, the largest single-site renewable power generator in the United Kingdom. |
| ü | Advanced our solid oxide power generation, electrolysis, and energy storage applications by executing on our existing Department of Energy contracts and earning new DOE project awards. |
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Continued Execution on Customer Projects
Even while restructuring our business and operations in fiscal 2019, we remained focused on delivering on our customer commitments:
| ü | Completed construction and began commercial operation of the 2.8 MW renewable biogas fuel cell project at a wastewater treatment facility in Tulare, California, leveraging our SureSourceTM fuel cell technology. |
| ü | Progress in constructing the 7.4 MW fuel cell power plant for the Connecticut Municipal Electric Energy Cooperative on the U.S. Naval submarine base in Groton, Connecticut. |
| ü | Winning a new renewable biogas 1.4 MW project with the City of San Bernardino, California Municipal Water Department. |
New Business Strategy Launched
“We have launched a series of strategic initiatives to strengthen our financial and operational position, which we believe will enable the Company to deliver current projects on time and budget and set the stage for future growth. As we enter 2020, our recent performance indicates that we are on the right track. We are implementing a comprehensive strategy to strengthen and grow FuelCell Energy by executing on our core business, building on customer relationships, delivering and expanding our project backlog, and developing and commercializing new technologies, products and markets. Our “Powerhouse” business strategy consists of three fundamental pillars: Transform, Strengthen, and Grow,” said Jason Few.
Transform
As described above, much of our transformation strategy has already been accomplished, including the following:
| ü | Restructured management: Appointed Jason Few as President and CEO, promoted Michael Lisowski to EVP and COO, and Tony Leo to EVP and CTO, and retained the balance of the existing leadership team including Mike Bishop as EVP and CFO and Jennifer Arasimowicz as GC, Corporate Secretary and CAO. |
| ü | Secured funding: Closed on a $200 million senior secured credit facility with Orion Energy Partners to support execution of current and future projects and provide balance sheet strength and liquidity. |
| ü | Restructured organization: Ended our engagement with Huron Consulting after successfully restructuring our business and operations and payoff of our prior senior secured credit facility. |
| ü | Delivered cost savings: Realized annualized operating savings of approximately $15 million through the restructuring of our business. |
| ü | Refinanced debt: Repaid a substantial portion of our short-term debt with funds from a combination of sales of our common stock under our at-the-market sales plan and our long-term credit facility with Orion Energy Partners. |
With our transformation already well underway, we are now fully committed to delivering on the remaining two pillars of the Powerhouse strategy:
Strengthen
| · | Capital deployment: Continue to focus on disciplined capital deployment and obtaining lower-cost, long-term financing and tax equity for completed generation projects. |
| · | Commercial excellence: Build on customer relationships and extend our customer-centric reputation. |
| · | Operational excellence: Implement a rigorous approach to project backlog execution and on-time, on-budget delivery. |
| · | Cost reductions: Continued focus on lean resource management and cost reduction opportunities. |
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Grow
| · | Sales growth: Increase global product sales to key strategic customers, grow service revenue through pricing strategy and enhanced energy solutions, and reduce the cost of ownership for our customers. |
| · | Innovation: Increase product life and reliability, and expand commercialization of new technologies such as carbon capture, hydrogen, biofuels, long-term energy storage, and solid oxide systems. |
| · | Segment leadership: Capitalize on our expertise and competitive advantages in key addressable markets—biofuels, microgrid development, and the expanding hydrogen economy for industry, transportation and electric power generation. |
| · | Education: Ensure federal, state and local legislators, regulators and environmental organizations understand the environmental benefits, grid reliability advantages and multi-featured capabilities of the FuelCell SureSourceTM platforms. |
| · | Geographic and market expansion: Continue to develop new clean and renewable energy partnerships to advance carbon capture, hydrogen and multi-fuel/biofuel technology, and pursue growth around the world. |
“I am proud of all that the FuelCell Energy team, along with our valued partners, has accomplished during my first five months as CEO. I am excited about our new Powerhouse business strategy and the clear go-forward plan to execute on our project commitments, build on our technical leadership, deliver improved financial results for our stakeholders, and play a critical role in environmentally sustainable baseload energy, hydrogen and energy storage,” concluded Jason Few.
Conference Call Information
FuelCell Energy will host a conference call today beginning at 10:00 a.m. EST to discuss the fourth fiscal quarter and full year results for fiscal 2019 along with details of the Company’s new business strategy. Participants can access the live call via webcast on the Company website or by telephone as follows:
| · | The live webcast of the call and supporting slide presentation will be available at www.fuelcellenergy.com. To listen to the call, select “Investors” on the home page, proceed to the “Events & Presentations” page and then click on the “Webcast” link listed under the January 22nd earnings call event, or click here. |
| · | Alternatively, participants can dial 647-689-4106 and state FuelCell Energy or the conference ID number 5086175. |
The replay of the conference call will be available via webcast on the Company’s Investors’ page at www.fuelcellenergy.com approximately two hours after the conclusion of the call.
Cautionary Language
This news release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements with respect to the Company’s anticipated financial results and statements regarding the Company’s plans and expectations regarding the continuing development, commercialization and financing of its fuel cell technology and its business plans and strategies. 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, changes to projected deliveries and order flow, changes to production rate and product costs, general risks associated with product development, manufacturing, changes in the regulatory environment, customer strategies, ability to access certain markets, unanticipated manufacturing issues that impact power plant performance, changes in critical accounting policies, access to and ability to raise capital and attract financing, potential volatility of energy prices, rapid technological change, competition, the Company’s ability to successfully implement its new business strategies and achieve its goals, 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.
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About FuelCell Energy
FuelCell Energy, Inc. (NASDAQ: FCEL) is a global leader in developing environmentally-responsible distributed baseload power solutions through our proprietary molten-carbonate fuel cell technology. We develop turn-key distributed power generation solutions and operate and provide comprehensive services for the life of the power plant. We are working to expand the proprietary technologies that we have developed over the past five decades into new products, markets and geographies. Our mission and purpose remains to utilize our proprietary, state-of-the-art fuel cell power plants to reduce the global environmental footprint of baseload power generation by providing environmentally responsible solutions for reliable electrical power, hot water, steam, chilling, hydrogen, microgrid applications, and carbon capture and, in so doing, drive demand for our products and services, thus realizing positive stockholder returns. Our fuel cell solution is a clean, efficient alternative to traditional combustion-based power generation and is complementary to an energy mix consisting of intermittent sources of energy, such as solar and wind turbines. Our systems answer the needs of diverse customers across several markets, including utility companies, municipalities, universities, hospitals, government entities and a variety of industrial and commercial enterprises. We provide solutions for various applications, including utility-scale distributed generation, on-site power generation and combined heat and power, with the differentiating ability to do so utilizing multiple sources of fuel including natural gas, Renewable Biogas (i.e., landfill gas, anaerobic digester gas), propane and various blends of such fuels. Our multi-fuel source capability is significantly enhanced by our proprietary gas-clean-up skid. Visit us online at www.fuelcellenergy.com and follow us on Twitter @FuelCell_Energy.
SureSource, SureSource 1500, SureSource 3000, SureSource 4000, SureSource Recovery, SureSource Capture, SureSource Hydrogen, SureSource Storage, SureSource Service, SureSource Capital, FuelCell Energy, and FuelCell Energy logo are all trademarks of FuelCell Energy, Inc.
Contact:
FuelCell Energy, Inc.
203.205.2491
Source: FuelCell Energy
# # # #
Exhibit 99.3
FUELCELL ENERGY INVESTOR PRESENTATION Fourth Quarter and Fiscal 2019 Financial Results & Strategy Update January 22, 2020
FUELCELL ENERGY INVESTOR PRESENTATION Safe Harbor Statement This presentation contains forward - looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 , including, without limitation, statements with respect to the Company’s anticipated financial results and 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, changes to projected deliveries and order flow, changes to production rate and product costs, general risks associated with product development, manufacturing, changes in the regulatory environment, customer strategies, unanticipated manufacturing issues that impact power plant performance, 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 (SEC) . The forward - looking statements contained herein speak only as of the date of this presentation . 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 . The Company may refer to non - GAAP financial measures in this presentation . The Company believes that this information is useful to understanding its operating results and assessing performance and highlighting trends on an overall basis . Please refer to the Company’s earnings release for further disclosure and reconciliation of non - GAAP financial measures . (As used herein, the term “GAAP” refers to generally accepted accounting principles in the U . S . ) The information set forth in this presentation is qualified by reference to, and should be read in conjunction with, our Annual Report on Form 10 - K for the fiscal year ended October 31 , 2019 , filed with the SEC on January 22 , 2020 and our earnings release for the fourth quarter ended October 31 , 2019 , filed as an exhibit to our Current Report on Form 8 - K filed with the SEC on January 22 , 2020 . 2
FUELCELL ENERGY INVESTOR PRESENTATION Purpose Statement 3 Enable the world to live a life empowered by clean energy
FUELCELL ENERGY INVESTOR PRESENTATION The Global Leader in Fuel Cell Technology since 1969 Demand for Clean, Reliable Electricity Driving Adoption of Fuel Cell Technology 4 GLOBAL CUSTOMERS 1 As of year ended October 31, 2019 GENERATION SERVICE & LICENSE FY 2019 Revenue $26.6M ADVANCED TECHNOLOGIES PRODUCT COMPANY HIGHLIGHTS 1 REVENUE DRIVERS Danbury, CT Headquarters 300+ Employees 3 Continents 57 Global plant installations >255 MW Capacity in Field $60.8M Total FY 2019 Revenue $14.0M $19.6M $0.5M High Visibility to Recurring Revenue
FUELCELL ENERGY INVESTOR PRESENTATION 4Q and Fiscal 2019 Financial Performance
FUELCELL ENERGY INVESTOR PRESENTATION 4Q and Fiscal 2019 Highlights x Many strategic actions taken throughout 2019 position FuelCell Energy for long - term success x Secured funding to provide immediate liquidity to execute inflight projects that will generate recurring cash flow upon completion x Concluded engagement with Huron to assist with restructuring based on progress made on many fronts, including right - sizing of the business, implementation of cost control measures, and reduction of substantial corporate debt x Expanded strategic relationships to enhance development of carbon capture technology and build FuelCell Energy’s growth opportunities in the European market x Made significant progress on execution of key projects 6
FUELCELL ENERGY INVESTOR PRESENTATION 4Q and Fiscal 2019 Financial Performance 7 Improved Financial Performance Resulting from Business Transformation Efforts ▪ 4Q revenue declined 38% to $11.0M, primarily reflecting decreased Product sales and Service and License revenues ▪ Adj. EBITDA loss for 4Q 2019 of $(11.0) M compared to $(8.8) M ▪ Fiscal 2019 revenue down 32% to $60.8M primarily due to decreased Product sales ▪ Adj. EBITDA loss for fiscal 2019 of $(31.4) M compared to $(32.7) M, reflecting decreased revenue and a higher cost of Generation and cost of Service and license revenue Highlights vs prior - year periods $17.9 $11.0 $89.4 $60.8 4Q18 4Q19 2018 2019 Total Revenues ($M) $(8.8) $(11.0) $(32.7) $(31.4) 4Q18 4Q19 2018 2019 Adjusted EBITDA 1 ($M) $(2.31) $(0.23) $(9.01) $(1.82) 4Q18 4Q19 2018 2019 Loss per Share 1 Refer to reconciliation in appendix
FUELCELL ENERGY INVESTOR PRESENTATION Restructured, Laddered Debt Maturity Schedule 8 Debt Maturities Aligned to Cash Flow Generated from Project Completions $55.3 $4.4 $4.8 $4.6 $4.7 $14.1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6+ Debt Maturities as of 4/30/19 ($M) $21.0 $10.6 $11.4 $10.4 $10.7 $21.9 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6+ Debt Maturities as of 10/31/19 ($M) ▪ Restructured debt maturity schedule; loan facility from Orion Energy Partners ▪ Recurring revenue from completed generation projects to fund term loan repayment ▪ $39.8M total cash, restricted cash, and equivalents as of 10/31/19 – $9.4M: cash and equivalents – $3.5M: restricted cash and equivalents – $26.9M: long - term restricted cash and cash equivalents Highlights as of 10/31/19
FUELCELL ENERGY INVESTOR PRESENTATION Introducing the Transformational Strategy
FUELCELL ENERGY INVESTOR PRESENTATION Series of Steps Taken to Right - size and Strengthen Organization Recent Strategic Actions Position FuelCell Energy for Long - term Success 10 KEY ACCOMPLISHMENTS THROUGHOUT THE YEAR 2019 Tony Leo appointed CTO and Mike Lisowski appointed COO June Jason Few appointed CEO Fully implemented plan to achieve $15M in cost savings and repayment of substantial corporate debt August Entered strategic agreement with E.ON to develop the European Market October Signed $200M corporate loan facility with an 8 - year term; Initial draw of $80M completed; enhanced liquidity to complete existing backlog Ended engagement with Huron to assist with restructuring services, based on progress made by the Company Expanded joint - development agreement with ExxonMobil affiliate to enhance carbon capture technology worth up to $60M November Achieved significant progress on Connecticut Municipal Electric Energy Cooperative ( CMEEC ) , Fuel Cell Microgrid Project located on the U.S. Naval Submarine Base, Groton, CT Completed Tulare BioMAT project , with expected annual revenue of approx. $2.7M December
FUELCELL ENERGY INVESTOR PRESENTATION ▪ Strong manufacturing and engineering expertise; over 250 MW of power plants operating 24/7 ▪ Extensive Intellectual Property (IP) portfolio ▪ Culture of continuous technology innovation ▪ Unique business model resulting in long - term relationships ▪ Significant backlog with opportunity to increase revenue ▪ Strong macro trends supporting fuel cell technology Jason Few Assumed Role of CEO in Aug. 2019; Served as a Director Since Nov. 2018 11 Leverage True Potential of FuelCell Energy to Achieve Pathway to Profitable Growth OBSERVATIONS ▪ Leverage unrivaled technology for ultra - clean baseload power ▪ Demonstrate commercial success ▪ Develop business opportunities in Hydrogen and sub - megawatt categories ▪ Strengthen the culture of accountability ▪ Scale the Sales organization ▪ Optimize manufacturing operations; new COO appointed in June of 2019 ▪ Potential to develop additional global opportunities OPPORTUNITIES
FUELCELL ENERGY INVESTOR PRESENTATION Seasoned Leadership Team with Deep Industry Expertise 12 Committed to Flawless Project Execution and Achieving Pathway to Growth Jason Few President and Chief Executive Officer Joined: 2019 Jennifer Arasimowicz EVP, General Counsel and Corporate Secretary Joined: 2012 Michael Bishop EVP, Chief Financial Officer and Treasurer Joined: 2003 Michael Lisowski EVP, Chief Operating Officer Joined: 2001 Anthony Leo EVP, Chief Technology Officer Joined: 1978 New to FCEL within last 1 year New appointment within last 1 year
FUELCELL ENERGY INVESTOR PRESENTATION Long - term Macro Trends Supporting Clean Energy 13 Well Positioned to Meet Growing Demand 1 Source: Guardian 2 Sierra Club Sustainable Clean Energy Renewable energy exceeded coal for the first time by providing 23% of U.S. power generation, compared to coal’s 20% share 1 in April 2019 FuelCell Energy to benefit from broader shift towards consumption of clean energy/power generation Grid Resiliency and Reliability Intermittency of power resources, natural disasters, and events such as the California fires have increased public awareness of grid limitations FuelCell Energy’s on - site power generation solutions are ideal for installations requiring continuous 24/7 power such as hospitals, schools, and large businesses Carbon Reduction Paris Climate Agreement: global economies committed to become carbon neutral by 2050 FuelCell Energy has the only technology in the world that produces power while capturing carbon, the best technology today to achieve this 2050 goal Regulatory Support State and local governments are driving clean energy and climate policies; in 2018 more than 90 U.S. cities and towns have committed to sourcing their electricity from 100% renewables 2 FuelCell Energy supports the environmental objectives of state and local government
FUELCELL ENERGY INVESTOR PRESENTATION FuelCell Energy Market Opportunity – Generation, Equipment Sales & Service 14 Significant Potential to Expand Market Adoption Baseload is the largest segment of the U.S. electricity market U.S. Electricity Generation 4,076,675,000 Megawatt hours (MWh) U.S. Electricity Baseload: 77% 3,139,039,750 MWh Alternative Energy Baseload: 27% 1,100,000,000 MWh 810,000 MWh ~85% of fuel cell capacity has come online since 2013 $10B Equipment Market $15B Services Market 3 GW Storage $49B Equipment Market $73B Services Market 16 GW Carbon Capture Global Market 1 $70B Equipment Market $104B Services Market 1 Source: Company data. All market estimates represent FCE's near - term penetration of Total Addressable Markets. Power generation market penetration assumption varies by market, ranging 0.5% to 5% depending on application & geography — average is 1%. Represents 1% of total market opportunity FuelCell Energy Baseload: 0.02% $7B Equipment Market $11B Services Market 2 GW Distributed Power $4B Equipment Market $5B Services Market 1 GW Distributed Hydrogen
FUELCELL ENERGY INVESTOR PRESENTATION Unrivaled Technology to Meet Future Energy Requirements FuelCell Energy Technology: Winner for Ultra - Clean Baseload Power TECHNOLOGY BENEFITS ELECTRICAL GRID COMBUSTION BASED EQUIPMENT SOLAR AND WIND TECHNOLOGIES SureSource TM FUEL CELLS NATURAL GAS BIOGAS Low CO 2 emissions Low criteria emissions 24x7 Energy output 24x7 Avoided emissions Compact footprint Easy to site Heat for cogeneration Backup power application Low cost of energy Low cost of capacity 15 FuelCell Energy Advantages: Scalable and cost effective as high efficiency fuel cells reduce fuel costs and avoids transmission costs 400x smaller land requirement than Solar to produce same total energy output; Solar requires 5x generation capacity due to limited sun availability Enhances grid resiliency and offers a continuous supply of ultra - clean & efficient power for the electric grid Easy to site in urban and densely populated areas
FUELCELL ENERGY INVESTOR PRESENTATION The Evolving Energy Grid 16 FUEL CELL TECHNOLOGY A GROWING SOURCE OF CLEAN, RELIABLE POWER F OR MICROGRID SOLUTIONS, CARBON CAPTURE AND ENERGY STORAGE GENERATION Solar Power Nuclear Power Plant Thermal Power Plant Wind Power Plant TRANSMISSION Hydrogen Fuel Cities and Offices Smart Houses Industrial Plant Large Scale Carbon Capture and Power Long - Duration Storage of Energy Long - Duration Storage of Energy Combined Heat / Cooling and Power Carbon Capture and Power Hydrogen and Power Microgrid Power DISTRIBUTION END USERS
FUELCELL ENERGY INVESTOR PRESENTATION Translating R&D Efforts to Production of Advanced Fuel Cell Stacks 17 Ever - improving Designs Are Reducing Costs, Making Fuel Cells More Economical 1 Source: Company Data 2 3 4 5 6 7 8 9 10 2002 2006 2010 2014 2018 2022 Expected Service Life of Carbonate Fuel Stack 1 (in years) ▪ Leading the industry in stack life among high temperature fuel cell suppliers ▪ Shifted production from 5 - year to 7 - year life stack design in 2018 ▪ 40% increase in kWh output expected from each stack before module refurbishment ▪ 40% decrease in effective cost expected per kWh output from longer - life stacks, significantly reducing operating costs and driving customer value Launched 7 - Year Extended - Life Stack Modules
FUELCELL ENERGY INVESTOR PRESENTATION Announcing Transformation Strategy : Powerhouse 18 On a Three - year Execution Path to Transform The Company TRANSFORM – 2019 STRENGTHEN – 2020 GROW – 2021+ Build a solid financial foundation Strengthen the business and maximize operational efficiencies Capture growth by leveraging core strengths and partnerships
FUELCELL ENERGY INVESTOR PRESENTATION Powerhouse Phase I: Transform 19 Financial Flexibility to Support Long - term Strategy x Restructured our management: Appointed Jason Few as CEO, Michael Lisowski to COO and Anthony Leo to CTO x Secured funding: $200M senior secured credit facility with Orion Energy Partners to support execution of current projects and provide balance sheet strength and liquidity x Restructured organization: Ended engagement with Huron Consulting x Delivered cost savings: Realized annualized operating savings of approximately $15 million through the restructuring of our business x Refinanced debt: Repaid substantial portion of short - term debt with funds from combination of sales of common stock and long - term credit facility with Orion Energy Partners Phase I: Transform
FUELCELL ENERGY INVESTOR PRESENTATION Powerhouse Phase II: Strengthen 20 Strengthen the Business and Maximize Operational Efficiencies ▪ Capital deployment: Continue to focus on disciplined capital deployment and obtaining lower - cost, long - term financing for completed generation projects ▪ Commercial excellence: Strengthen customer relationships and build a customer - centric reputation ▪ Operational excellence: Implement a rigorous approach to backlog execution and delivery on time and on budget ▪ Cost reductions: Focus on continued lean resource management and cost reduction opportunities Phase II: Strengthen
FUELCELL ENERGY INVESTOR PRESENTATION Powerhouse Phase III: Grow 21 Capture Growth Opportunities by Leveraging Core Strengths and Partnerships ▪ Sales growth: Increase product sales with key strategic customers; grow service revenue through pricing strategy, improving cost of ownership for customers, and enhancing service solutions ▪ Innovation: Further increase product life and reliability; and expand commercialization of new technologies such as carbon capture, hydrogen, biofuels, and solid oxide systems ▪ Segment leadership: Capitalize on expertise and competitive advantages in key markets — biofuels, microgrid development, and hydrogen economy expansion ▪ Education: Ensure Legislators, Regulators and Environmental Organizations understand benefits of FuelCell SureSource TM platforms ▪ Geographic and Market expansion: Continue to develop clean and renewable energy partnerships; pursue growth in Asia and Europe Phase III: Grow
FUELCELL ENERGY INVESTOR PRESENTATION 0 20 40 60 80 100 120 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E ■ Generating Assets 1 (MW) ■ Current Backlog (MW) Orion Energy Partners Funding in Place to Support Execution of Backlog 22 1 Purchase Power Agreements; 2 Forecasted annual contracted revenue Recurring Revenue with Increase in Backlog ( $ ) Recurring Revenue 2 from Current Backlog ($ ) Ƒ Future Projects (MW ) Recurring Revenue Expected to Grow by 3X With Execution of Project Backlog Estimated Project Completions 2020 2021 2022 Groton, CT Derby, CT Yaphank, NY San Bernardino, CA Hartford, CT Toyota, CA MW
FUELCELL ENERGY INVESTOR PRESENTATION Long - Term Targets and Goals Strengthened Financial Position Will Enable Profitable Growth 23 FY 2022 Targets Grow Generation Portfolio 100% Revenue Growth Double - digit CAGR Adjusted EBITDA Deliver Positive Adjusted EBITDA Keys to Business Plan Achievement: ▪ Execution on project backlog ▪ Winning new business around the world ▪ Continued cost control ▪ Achieving project milestones ▪ Efficient capital deployment Future Goals ▪ Achieve grid parity ▪ Positive EBITDA ▪ Positive free cash flow ▪ Deliver return on invested capital
FUELCELL ENERGY INVESTOR PRESENTATION Key Investment Highlights Strengthened balance sheet with funding secured to deliver long - term projects to generate recurring revenue 1 New leadership committed to project execution , achieving financial milestones and operational efficiencies 2 On a three - year path of execution to Transform, Strengthen and Grow the organization for long - term success 4 Unrivaled technology for ultra - clean, reliable and scalable baseload power 3 24
FUELCELL ENERGY INVESTOR PRESENTATION Q&A
FUELCELL ENERGY INVESTOR PRESENTATION Appendix
FUELCELL ENERGY INVESTOR PRESENTATION GAAP to Non - GAAP Reconciliation 27 Three Months Ended October 31, Year Ended October 31, (Amounts in thousands) 2019 2018 2019 2018 Net loss $ (35,179) $ (14,096) $ (77,568) $ (47,334) Depreciation 4,034 2,123 12,353 8,648 Provision/(Benefit) for income taxes 20 5 109 (3,015) Other income, net (1) (649) (200) (93) (3,338) Interest expense 2,816 2,421 10,623 9,055 EBITDA $ (28,958) $ (9,747) $ (54,576) $ (35,984) Impairment expense 17,520 - 20,360 - Stock - based compensation expense 479 929 2,804 3,238 Adjusted EBITDA $ (10,959) $ (8,818) $ (31,412) $ (32,746) (1) Other income, net includes gains and losses from transactions denominated in foreign currencies, changes in fair value of embedded derivatives, and other items incurred periodically, which are not the result of the Company’s normal business operations.
FUELCELL ENERGY INVESTOR PRESENTATION 2019 Accomplishments and Highlights 28 FuelCell Energy Announces New Carbon Capture Project with Drax Power Station June. 27, 2019 FuelCell Energy & E.ON Business Solutions Announce an Agreement to Develop the European Market Oct. 3, 2019 ExxonMobil, FuelCell Energy Expand Agreement for Carbon Capture Technology Nov. 6, 2019 FuelCell Energy Announces New $200 Million Strategic Corporate Loan Facility with Orion Energy Partners Dec. 6, 2019 Progress on U.S. Naval Submarine Base Project; Green Bank Provides Additional Financing Dec. 20, 2019 Tulare Project Begins Commercial Operation; Supports Achievement of Key Sustainability Goals Dec. 27, 2019 “Carbon capture using FuelCell Energy’s solution is a potential game - changer for affordability and efficiency of concentrating and capturing carbon dioxide from emitters,” said Tony Leo, Executive Vice President and Chief Technology Officer, FuelCell Energy “We are excited to partner with E.ON for the continued advancement of our fuel cell multi - featured platform in Europe,” commented Jason Few, President and Chief Executive Officer of FuelCell Energy “This expanded agreement with FuelCell Energy will enable further progress on this unique carbon capture solution that has the potential to achieve meaningful reductions of carbon dioxide emissions from industrial operations.” said Vijay Swarup, VP of research and development for ExxonMobil Research and Engineering Company. We are pleased to announce this new partnership with FuelCell Energy and look forward to supporting their continued growth as a world leader for reliable, low carbon, base - load distributed power generation,” said Gerrit Nicholas, Co - Founder and Managing Partner of Orion Energy “FuelCell has pivoted to executing on our future, we are focused on executing our core business, exceeding customer expectations, and delivering on and adding to our significant project backlog, including this mission critical project for CMEEC and the U.S. Naval Submarine Base in Groton,” noted Jason Few, President and CEO of FuelCell Energy “I am proud of our team for delivering the Tulare Biogas Project . Globally, our solution delivers renewable and affordable power at a scale that is meaningful to communities and the utilities that serve them,” said Jason Few , President and CEO, FuelCell Energy