Message #54 From:
NewsBot Date: December 18, 2006 05:16:00 PM
FCEL News FuelCell Energy Reports Fourth Quarter and Fiscal Year 2006 Results and Accomplishments
DANBURY, Conn.--(BUSINESS WIRE)--FuelCell Energy, Inc. (NasdaqNM:FCEL), a leading manufacturer of
ultra-clean and efficient electric power generation plants for
commercial, industrial and government customers, today reported results
and accomplishments for its fourth quarter and fiscal year ended October
31, 2006.
Financial Results
Total revenues for the fourth quarter of fiscal 2006 were $9.1 million,
up 15 percent from the $8.0 million reported in the same period last
year. Product sales and revenues increased 61 percent to $6.7 million
from $4.1 million. Research and development contract revenue was $2.5
million compared to $3.8 million.
Commenting on fourth quarter results, R. Daniel Brdar, FuelCell Energy’s
President and CEO said, “During fiscal 2006,
we successfully positioned the Company to expand in targeted
geographical and Renewable Portfolio Standards (RPS) markets. In
California, where we sold 11.35 megawatts –
2.6 megawatts in the fourth quarter, we are the market leader.
Importantly, our orders in the quarter were for multi-unit or megawatt
applications. In addition to the orders in California, we received a 1.2
megawatt order from Enbridge, Inc. for our DFC-ERG natural gas pipeline
application.”
The Company's product backlog, including long-term service agreements,
as of October 31, 2006 totaled $27.9 million, an increase of 39 percent
from the $20.0 million reported as of July 31, 2006 and higher than the
$26.4 million reported at October 31, 2005. Research and development
contract backlog totaled $30.1 million, versus $15.8 million as of the
prior year end, primarily reflecting the awards of contracts from the
Department of Energy for large scale stationary solid oxide fuel cell
development and the U.S. Navy to continue work on the ship service fuel
cell.
The net loss to common shareholders for the fourth quarter was $25.1
million or $0.47 per basic and diluted share, which included stock
compensation expense of $1.2 million or $0.02 per basic and diluted
share. In last year’s fourth quarter, net
loss to common shareholders was $19.5 million or $0.40 per basic and
diluted share. The ratio of costs to product sales and revenue improved
to 3.19-to-1 from 3.36-to-1 in the year-ago period. Factors that
impacted cost ratio in the quarter included lower product costs offset
by short term pressure on selling prices in California, delays in
Connecticut’s RPS program and higher
after-market costs on a larger installed fleet. The higher net loss in
the 2006 quarter primarily resulted from higher product sales, largely
sub-megawatt units, and costs associated with transitioning to produce
larger units. Moving forward, sales of lower cost sub-megawatt and
megawatt-class units are expected to improve the cost ratio and
resulting operating margins. In the quarter, research and development
contracts provided positive gross margin of $0.5 million compared to a
negative gross margin of $0.3 million in the same period last year.
Total cash and investments at October 31, 2006 was $120.6 million. Net
cash and investments used during the quarter was $13.0 million. The
Company received approximately $3.6 million in incentive funding for
California-based power purchase agreement projects. Power purchase
agreement capital costs totaled $0.6 million during the quarter, and
other capital spending totaled approximately $1.2 million. Depreciation
and amortization expense for the quarter ended October 31, 2006 was
approximately $2.7 million.
For the year ended October 31, 2006, FuelCell Energy reported revenues
of $33.3 million, an increase of 10 percent, compared with $30.4 million
reported in fiscal 2005. Product sales and revenues were $21.5 million,
24 percent above the $17.4 million in the year ago period. Research and
development contract revenue was $11.8 million compared to $13.0 million
in 2005.
For the year ended October 31, 2006, FuelCell Energy reported a net loss
to common shareholders of $84.2 million or $1.65 per basic and diluted
share. Fiscal 2006 results included a one-time conversion premium of
$4.3 million or $0.08 per basic and diluted share for the conversion of
the Series B Convertible Preferred Stock and stock compensation expense
of $4.4 million or $0.09 per basic and diluted share that was not in the
prior year. Net loss to common shareholders for fiscal 2005 was $74.3
million or $1.54 per basic and diluted share. The ratio of costs to
product sales and revenue was 2.86-to-1 compared to 2.99-to-1 during
2005. Research and development contracts provided positive gross margin
of $1.4 million compared to a negative gross margin of $0.2 million in
the prior year.
CEO Commentary and Corporate
Highlights for Fiscal 2006
“During 2006, we achieved key milestones in
our strategy to drive down unit costs, build our leadership position in
key markets and deliver reliable, ultra-clean power to a diverse and
growing customer base for multi-unit and megawatt-class fuel cell
applications,” said Brdar. “Demand
for larger scale projects is increasing and we are well positioned to
capture additional market share. During the course of the year, we
achieved a 39 percent reduction in the cost of the DFC3000 unit, boosted
the electric power output of the Company’s
ultra-clean power plants by 20 percent, and prepared bids for over 40
megawatts of projects for Connecticut’s
Project 100 that will be submitted in December.”
Achieved Targets for Reducing Product Cost
The Company achieved its cost reduction goals announced last year for
its Direct FuelCell® (DFC®)
power plants bringing the cost of its multi-megawatt DFC3000 down to
$3,250 per kilowatt (kW) from $5,300/kW:
Significant savings came from “value
engineering” -- developing lower-cost
designs for various elements of the power plant -- and improving the
efficiency of the Company’s manufacturing,
testing and commissioning processes.
The cost reduction also resulted from the 20 percent uprate of all DFC
products announced in August. By improving thermal management of
electrochemical activity within the stack, the Company increased the
power output from each cell which produces more electricity from the
same basic power plant components.
Increased Market Penetration
California continues to be FuelCell Energy’s
leading market where the Company sold 2.6 MW and shipped 1.2 MW of
product to customers in the fourth quarter. DFC power plant sales in
California during the fourth quarter included:
750 kW for a resort that is transitioning its facility to meet
sustainability and energy efficiency goals.
750 kW for the city of Tulare, where renewable dairy processing
by-products will be converted into electricity to power a wastewater
treatment facility.
500 kW for Gills Onions for a plant that will use biogas generated
from onion-processing waste to generate electricity.
600 kW for the Dublin San Ramon services district wastewater treatment
facility.
Continued Meeting Customer Expectations
FuelCell power plants have now generated over 150 million kilowatt
hours (kWh) of power.
Over 50 global DFC power plant sites are running under commercial
conditions with high availability.
In California, customers with FuelCell Energy baseload power plants
(providing power 24/7), maintained uninterrupted business operations
during peak electric demand periods when other businesses were
required to shed load by the local utility.
Shaped the Business to Support Multi-megawatt Growth
Capitalizing on demand for more and larger megawatt power plants is a
key element of the Company’s strategic plan.
RPS markets in particular represent a growing opportunity for FuelCell
Energy’s power plants and the Company has
taken the following steps to address these RPS opportunities:
Engineered a lower cost product for multi-megawatt configurations (2
to 50 MW) to provide ultra-clean, baseload 24/7 power, a key element
for solving grid constraints and supporting RPS markets.
Initiated production process improvements to increase the efficiency
and capacity of assembly and test operations. The Company’s
annual production capacity is 50 MW.
Government R&D Contracts
The Company’s 250 kW Direct FuelCell/Turbine®
(DFC/T®) established a record-setting mark
of 56 percent electrical efficiency –
higher than any other power generator of its size.
FuelCell Energy entered the first phase of a $180 million, 10-year
U.S. Department of Energy project to develop a solid oxide fuel
cell-based, large scale hybrid system.
The Company has been authorized by the Office of Naval Research to
complete a land-based demonstration of its ship service fuel cell
power plant and begin design work on a next generation ship-based
prototype.
The U.S. Department of Defense selected FuelCell Energy to develop a
cost-efficient system for separating pure hydrogen from the gas that
is exhausted from the fuel cell reaction, providing fuel for hydrogen
vehicles or for industrial uses.
Focus for 2007
Cost Reduction --FuelCell Energy will continue to emphasize its
cost out initiatives to deliver the most cost efficient and
environmentally friendly power generation solutions and meet the needs
of the emerging RPS markets. In fiscal 2006, the Company achieved its
cost out objectives, bringing the DFC3000 product cost down to
$3,250/kW. The Company expects that volume could reduce the cost
another 10 to 20 percent in 2007. The DFC300 and DFC1500 are targeted
to achieve 20 percent cost reductions through improvements in
strategic sourcing, value engineering and operations.
California– In California, high
electricity costs and environmental regulations create a growing
repeatable market with compelling value propositions for customers.
California extended its Self-Generation Incentive Program to 2012.
RPS Markets -- FuelCell Energy has prepared over 40 MW of
multi-megawatt bids that will be submitted by its partners to the
Connecticut Clean Energy Fund (CCEF) in December. CCEF has announced
that its project selections will be made public March 30, 2007.
Natural Gas Pipeline Applications -- FuelCell Energy sold a 1.2
MW fuel cell power plant to Enbridge, Inc. for inclusion in a Direct
FuelCell-Energy Recovery Generation™
(DFC-ERG™) system that generates
ultra-clean electricity while recovering energy normally lost during
natural gas pipeline operations. The DFC-ERG opens major new market
opportunities for the Company worldwide –
in North America the initial market is estimated to be 200-300 MW.
Asia -- Japan and Korea continue to be among our best markets
due to high electricity cost, environmental regulations and
incentives. In 2006, Korea enacted its first-ever subsidies to promote
renewable energy technologies as part of a national carbon dioxide
reduction effort. Fuel cells are eligible for the recovery of 28 cents
per kWh and 50 MW of generation will qualify for these funds which are
intended to drive the installation of megawatt-class power plants.
“With the emergence of the RPS markets, the
growth of the California market and continuing product cost reduction,
we are positioned to move to profitability,”
Brdar concluded.
Conference Call Information
A conference call is scheduled for 10:00 a.m. ET on December 19, 2006,
to review results and discuss the Company's outlook. Listeners can gain
access to the call live or 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 800-839-3413 for the U.S./Canada and +1-402-220-7236 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
50 power plant sites around the globe that have generated more than 150
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.
This news release contains forward-looking statements, including
statements regarding the Company’s plans and
expectations regarding the continuing 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
(Dollars in thousands, except share and per share amounts)
Three Months Ended
October 31,
2006
2005
Revenues:
Product sales and revenues
$
6,651
$
4,141
Research and development contracts
2,476
3,819
Total revenues
9,127
7,960
Costs and expenses:
Cost of product sales and revenues
21,194
13,929
Cost of research and development contracts
2,047
4,088
Administrative and selling expenses
4,521
3,361
Research and development expenses
6,816
5,596
Total costs and expenses
34,578
26,974
Loss from operations
(25,451)
(19,014)
License fee expense, net
(3)
(102)
Interest expense
(27)
(24)
Loss from equity investments
(113)
(368)
Loss on derivatives
(233)
--
Interest and other income, net
1,460
1,579
Loss before provision for income taxes
(24,367)
(17,929)
Provision for income taxes
--
--
Loss before redeemable minority interest
(24,367)
(17,929)
Redeemable minority interest
107
--
Net loss
(24,260)
(17,929)
Preferred stock dividends
(802)
(1,586)
Net loss to common shareholders
$
(25,062)
$
(19,515)
Loss per share basic and diluted:
Net loss to common shareholders
$
(0.47)
$
(0.40)
Basic and diluted weighted average shares outstanding
52,931,316
48,428,234
Refer to Explanatory Note Below.
FUELCELL ENERGY, INC.
Consolidated Statements of Operations
(Dollars in thousands, except share and per share amounts)
Fiscal Year Ended
October 31,
2006
2005
Revenues:
Product sales and revenues
$
21,514
$
17,398
Research and development contracts
11,774
12,972
Total revenues
33,288
30,370
Costs and expenses:
Cost of product sales and revenues
61,526
52,067
Cost of research and development contracts
10,330
13,183
Administrative and selling expenses
17,759
14,154
Research and development expenses
24,714
21,840
Total costs and expenses
114,329
101,244
Loss from operations
(81,041)
(70,874)
License fee income, net
42
70
Interest expense
(103)
(103)
Loss from equity investments
(828)
(1,553)
Loss on derivatives
(233)
--
Interest and other income, net
5,951
5,526
Loss before provision for income taxes
(76,212)
(66,934)
Provision for income taxes
--
--
Loss before redeemable minority interest
(76,212)
(66,934)
Redeemable minority interest
107
--
Loss from continuing operations
(76,105)
(66,934)
Discontinued operations, net of tax
--
(1,252)
Net loss
(76,105)
(68,186)
Preferred stock dividends
(8,117)
(6,077)
Net loss to common shareholders
$
(84,222)
$
(74,263)
Loss per share basic and diluted:
Continuing operations
$
(1.65)
$
(1.51)
Discontinued operations
--
(0.03)
Net loss to common shareholders
$
(1.65)
$
(1.54)
Basic and diluted weighted average shares outstanding
