FuelCell (FCEL) Q2 2025 Earnings Call Transcript
Key Takeaways
Image source: The Motley Fool. DATEFriday, June 6, 2025 at 10 a. ETCALL PARTICIPANTSPresident and Chief Executive Officer — Jason FewExecutive Vice President, Chief Financial Officer, and Treasurer — Michael...
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June 6, 2025
12:09 PM
The Motley Fool
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Image source: The Motley Fool
DATEFriday, June 6, 2025 at 10 a
ETCALL PARTICIPANTSPresident and Chief Executive Officer — Jason FewExecutive Vice President, Chief Financial Officer, and Treasurer — Michael BishopSenior Vice President, Investor Relations — Thomas GelstonNeed a quote from one of our analysts. [ tected]RISKSThe restructuring plan will result in a reduced annualized duction rate at the Torrington manufacturing facility in the near term as it shifts to align duction fully with contracted demand, explicitly lowering near-term output
Operating losses continue, with a net loss attributable to common stockholders of $38. 8 million and negative adjusted EBITDA of $19. "Slower-than-expected investments in advanced alternative energy nology" required a global restructuring, including significant workforce reductions and reductions in re and development spending, which may constrain future innovation
TAKEAWAYSTotal Revenue: $37. 4 million GAAP revenue, up from $22. 4 million, driven by $13 million in duct revenue (up from zero) and $8. 1 million in service agreement revenue (up from $1. 4 million)
Operating Loss: $35. 8 million, narrowing from $40. 4 million, for the second quarter of fiscal year 2025 as cost-reduction efforts take hold
Adjusted EBITDA: Adjusted EBITDA was negative $19. 3 million, an imvement from negative $26. 5 million, indicating gress toward targeted fitability
Net Loss Per : $1. 79 compared to $2. 18 (GAAP), with the decrease aided by a higher count ing recent issuances
Operating Expenses: $26. 4 million in the second quarter of fiscal year 2025, down from $34. 3 million in the second quarter of fiscal year 2024, with re and development expenses declining to $9. 9 million from $16. 6 million over the same periods
Annualized duction Rate (Torrington): 31 megawatts as of April 30, 2025, materially below the 100-megawatt threshold cited for breakeven adjusted EBITDA and expected to decrease in the near term due to restructuring
Backlog: $1. 26 billion, up 18. 7% from $1. 06 billion, supported by new long-term service agreements, including a $167. 4 million addition for a Hartford, Connecticut, ject
Cash and Investments: $240 million in cash, restricted cash, cash equivalents, and short-term investments
Restructuring Plan: The company targets a 30% reduction in annualized operating expenses versus FY2024, shifting investment to the ven molten carbonate platform and “pausing broader solid oxide R&D immediately. ”Dedicated Power Partners (DPP): Strategic partnership with Diversified Energy and TESIAC launched to accelerate carbonate fuel cell deployment for large-scale data centers, leveraging stable fuel supply and imved ject economics
Generation Revenue: $12. 1 million, down from $14. 1 million, primarily due to lower power output from maintenance activities
Advanced nology Contract Revenue: Advanced nology contract revenues were $4. 1 million, declining from $6. 9 million, reflecting reduced gross margin and narrower segment focus
Cost Control Efforts: Administrative and selling expenses decreased to $16. 5 million during the second quarter of fiscal year 2025 from $17. 7 million during the second quarter of fiscal year 2024, with reductions closely tied to recent restructuring actions
Manufacturing Capacity: Torrington facility can scale to 100 megawatts annually without additional capital investment; expansion to 200 megawatts is possible, but would require further capex in equipment and labor
SUMMARYFuelCell (FCEL 3. 38%) management introduced a sweeping restructuring, shifting resources to its carbonate platform, scaling back solid oxide R&D, and pausing broader development efforts
The Dedicated Power Partners initiative marks a major new partnership targeting growth in the large-scale data center segment by integrating fuel supply, power generation, and financing solutions
The company posted substantially increased total and service revenues, while maintaining a strong liquidity position with $240 million in cash and investments
New long-term service and power purchase agreements contributed to a rapidly rising backlog, now at $1. 26 billion
Guidance indicates that reaching 100 megawatts of annualized output at Torrington is required for positive adjusted EBITDA (non-GAAP), but near-term duction will decline as output is aligned with demand orders
Chief Executive Officer Few said, "We are taking decisive actions to line our cost structure, seize the opportunities directly in front of us and der meaningful results. "Management expects a 30% reduction in annualized operating expenses compared to FY2024, reflecting a significant commitment to cost discipline and strengthening future fitability spects
Strategic focus now emphasizes securing orders and scaling ven nologies for immediate customer needs rather than expanding the company’s generation portfolio
Chief Financial Officer Bishop confirmed, we can achieve adjusted EBITDA positive when we get the factory in the 100 megawatt range, establishing a operational fitability target
The new Dedicated Power Partners model is expected to use power purchase agreements as the primary customer finance structure, with alternative models based on client needs
INDUSTRY GLOSSARYMolten Carbonate Platform: Core FuelCell Energy nology for stationary baseload power using carbonate fuel cells designed for high efficiency and scalable installation
Dedicated Power Partners (DPP): Joint initiative by FuelCell Energy, Diversified Energy, and TESIAC to vide turnkey distributed power focused on large-scale data center use cases
GGE LTSA: Long-term service agreement with GGE, contributing to both duct and service backlog as replacement modules are commissioned and serviced
Energy as a Service: Offering in which customers contract for energy supply without owning or operating the underlying physical generation assets, usually through long-term agreements
Full Conference Call TranscriptThomas Gelston: Thank you, and good morning, everyone, and thank you for joining us on the call today
As a reminder, this call is being recorded
This morning, FuelCell Energy released our financial results for the second quarter of fiscal year 2025, and our earnings press release is available in the Investors section of our website at www
Consistent with our practice, in addition to this call and our earnings press release, we have posted a slide presentation on our website
This webcast is being recorded and will be available for replay on our website apximately 2 hours after we conclude the call
Before we begin, please note that some of the information that you will hear or be vided with today will consist of forward-looking statements within the meaning of the Securities and Exchange Act of 1934
Such statements express our expectations, beliefs and intentions regarding the future, and include, without limitation, statements with respect to our anticipated financial results, our plans and expectations regarding the continuing development, commercialization and financing of our fuel cell nology and our plans and strategies
Our actual future results could differ materially from those described in or implied by such forward-looking statements because of a number of risks and uncertainties
More information regarding such risks and uncertainties is available in the safe harbor statement in the slide presentation, and in our filings with the Securities and Exchange Commission, particularly the Risk Factors section of our most recently filed annual report on Form 10-K and any subsequently filed quarterly reports on Form 10-Q
During the course of this call, we will be discussing certain non-GAAP financial measures, and we refer you to our website and to our earnings press release and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures
Our earnings press release and a copy of today's webcast presentation are available on our website under the Investors tab
For our call today, I'm joined by Jason Few, FuelCell Energy's President and Chief Executive Officer; and Mike Bishop, FuelCell Energy's Executive Vice President, Chief Financial Officer and Treasurer
Ing our prepared remarks, we will be available to take your questions and be joined by other members of the leadership team
I'll now hand the call over to Jason for opening remarks
Jason Few: Thank you, Tom, and good morning, everyone
Thank you for joining us on our call today
Along with our earnings announcement this morning, FuelCell Energy announced a restructuring plan that prioritizes sales of our molten carbonate platform
Additionally, as I this effort, we are taking meaningful steps to rightsize our, manage expenses, and position ourselves to take advantage of near-term opportunities
Altogether, we believe this strategy will accelerate the timeline toward expected fitability
We believe that this restructuring plan will sharpen and accelerate our path to positive cash flow and growth
We are intensifying our focus on our carbonate platform while reducing overhead to optimize our supply chain and focusing on driving efficiency
At the same time, we will strategically preserve the platform's long-term flexibility with the goal of unlocking further opportunities such as carbon capture
Regarding our solid oxide platform, our exclusive focus will remain on validating and demonstrating our electrolysis nology at the U
Department of Energy's Idaho National Laboratory
We are pausing broader solid oxide R&D immediately reducing costs and intensifying our investment in ven customer-ready solutions
We are focused on dering future-ready today
We believe that a successful targeted demonstration at Idaho National Laboratory will position us strategically to capitalize as the hydrogen economy expands, highlighting our highly efficient and differentiated electrolysis platform
Our restructuring plan, we will recalibrate our Torrington manufacturing facility duction schedule to align with contracted demand rather than forecasted demand, which without continued growth in our closed order book would result in a decrease in our annualized duction rate
We believe that our disciplined demand-driven apach will position us for sustainable fitability and growth in the future, while maximizing efficiency and dering measurable value
With our enhanced focus on our core nologies, specifically the manufacture and sale of our carbonate platforms and the growing demand for distributed power generation in the U. , Asia and Europe, we are targeting the future achievement of positive adjusted EBITDA once our Torrington manufacturing facility, which is an annualized duction rate of 100 megawatts per year
However, as of April 30, 2025, the facility operated at an annualized duction rate of apximately 31 megawatts
We are taking decisive actions to line our cost structure, seize the opportunities directly in front of us, and der meaningful results
We're building a stronger, more focused company, and we look forward to sharing our continued gress in the quarters ahead
While restructuring is never easy, we believe that prioritizing sales of our ven carbonate platform and scaling back R&D investments is the right move to drive the company towards fitability
What remains unchanged is our purpose
POSCO Energy is steadfast in our commitment to enabling a world powered by clean energy
Our core value position is rooted in energy integration, seamlessly combining fuel cell solutions with other generation nologies
This allows commercial, industrial, and utility customers to integrate our platforms without overhauling operations are taking on the interruption risk of intermittent power sources
Leveraging clean, abundant or gas and biogas, our solutions help customers operate with greater reliability, efficiency, and affordability while reducing emissions, preserving air quality, and maintaining continuity in the ducts and services they der
So what does our opportunity set look
Let's start with one of the most powerful and durable tailwinds we have, growing global demand for power
Global power demand remains strong
Around the world, electricity demand is rising fast
Straining existing grid infrastructure and exposing the limitations of traditional power sources and the grid centralized architecture
This isn't a temporary surge
It's a long-term mega trend and it is directly reinforces the relevance of our nology and strategy
The explosion of AI, the rapid build-out of data centers and the intensifying carbon management and air quality are reshaping the global energy landscape
These trends are not political
They will continue across administrations and market cycles
They are here to stay
Just to frame the magnitude
Alone, data centers are jected to require more than 600 terawatt hours of electricity annually by 2030
That's a 22% compounded annual growth rate over the next 5 years
We believe the momentum behind these shifts is undeniable
And it's hard for us to imagine a future where FuelCell Energy is not part of the solution
This is exactly the type of demand environment we are built for
And why our focus on our core carbon platform is so well aligned with the market opportunities in front of us
Second, dedicated Power Partners
We believe we have taken a major step forward in unlocking market access through our new dedicated Power Partners or DPP strategic partnership
DPP is the result of a strategic partnership with diversified energy company and -- and it is purpose-built to accelerate the deployment of our carbonate fuel cell for use in data centers and other large-scale commercial and industrial applications
What makes this partnership so compelling is its potential ability to address one of the key constraints in our industry, available, reliable and affordable fuel supply
By leveraging natural gas and coal mine methane sourced by diversified, we expect to gain access to stable fuel in strategically important at favorable price spreads and imved ject economics
This is a smart high-leverage solution that we expect will help us scale faster, der more value to customers and open up entirely new market territory
I'll go into more detail on DPP in a later slide but the early indicators are strong, and we are excited it, its potential to be a meaningful growth engine for FuelCell Energy
Third, our strategic partnerships continue to drive commercial traction
Our collaboration with ExxonMobil and carbon capture at the Rotterdam manufacturing complex is gressing well and positions us to expand this nology to new customers and partners
We're also advancing commercialization of our solid oxide electrolyzer through key partnerships with Malaysia Marine and Abby engineering and Idaho National Laboratory
These partnerships are essential, allowing us to push innovation forward while ma.
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