FuelCell Energy, Inc. (NASDAQ:FCEL) released its third-quarter earnings report ahead of Tuesday’s opening bell.
Below are the transcripts from the third quarter earnings call.
FCEL is surging to new heights today. Get the complete picture here.
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OPERATOR
Good morning, My name is Audra and I will be your conference operator today. At this time I would like to welcome everyone to the FuelCell Energy’s third-quarter fiscal 2025 financial results conference call. Today’s conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time I would like to turn the conference over to Mike Bishop, chief financial officer. Please go ahead.
Mike Bishop (Chief Financial Officer)
Thank you operator. Good morning everyone and thank you for joining us on the call today. This morning FuelCell Energy released our financial results for the third quarter of fiscal year 2025 and our earnings press release is available in the Investors section of our website and at www.fuelcellenergy.com. in addition to this call and our earnings press release, we have posted a slide presentation on our website. The webcast is being recorded and will be available for replay on our website approximately two hours after we conclude. Before we begin, please note that some information that you will hear or be provided today consists of forward looking statements within the meaning of the securities Exchange Act of 1934. Such statements express our expectations, beliefs and intentions regarding the future and include statements concerning our anticipated financial results, plans and expectations regarding the continuing development, commercialization and financing of our fuel cell technology, our anticipated market opportunities, and our business plans and strategies. Our actual future results could differ materially from those described 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, which are with the SEC, particularly the Risk Factor section of our Most recent Form 10K and any subsequently filed quarterly reports on Form 10Q. During this call we’ll be discussing certain non GAAP financial measures and we refer you to our website, 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 this call, I’m joined by Jason Few, our President and Chief Executive Officer. Following our prepared remarks, the leadership team will be available to take your questions. I’ll now hand the call over to Jason for opening remarks.
Jason Few (President and Chief Executive Officer)
Thank you Mike and good morning everyone. Thank you for joining us on Our call Today, we continue to execute with discipline in our third fiscal quarter, delivering meaningful revenue growth while focusing on expanding our sales pipeline and improving our cost structure. The decisive restructuring actions we implemented in June are already yielding results lowering costs, sharpening our focus on distributed power generation, and positioning us for investment in technologies and partnerships that can unlock future growth. I want to begin by underscoring what makes fuel cell energy distinctive. From our headquarters in Connecticut, we have established a global leadership position in electrochemical technology, delivering large scale, always on power and advanced emissions management. We believe we see a once in a generation opportunity to shape the transition to a clean energy economy that leverages abundant natural resources and believe we are positioned to play a meaningful role in powering that future. Today we live in a world where energy demand is accelerating at an unprecedented pace driven by the exponential growth of AI data centers and technology. This is not a distant trend, it is a structural shift reshaping global energy markets today. A world where the existing grid cannot keep pace with these demands, requiring new approaches to provide firm, resilient and clean power both in the near term and in decades to come. The need is clear, urgent and investable. A world where we believe fuel cell energy’s people innovations and proven utility scale distributed power platforms are uniquely positioned to meet these challenges. We bring decades of experience and differentiated technology in connection with the implementation of our restructuring plan. Our strategies and business plans have evolved. At the center is our carbonate power generation platform, the core of our business and the expected engine of our growth. We believe that broader deployment of this platform is our clearest path to profitability, supported domestically by favorable public policy tailwinds. At the same time, we continue to focus on innovating tomorrow’s clean energy technologies and forging blue chip partnerships concentrating on the innovations we believe have the greatest potential for commercial impact and long term value creation. On Slide 5 when it comes to the third quarter, I want you to keep four points in mind. First, global power demand is accelerating. Global power demand is rising at an unprecedented pace driven by AI crypto and the increasing density of servers inside data centers. FuelCell Energy’s modular carbonate base load power technology is a proven scalable solution available today to meet this demand with reliable, clean, always on power. Second, strategic partnerships validate global scale. We believe that our commercial traction and partnerships continue to validate our ability to scale globally. South Korea is our most active international market where we are focused on unlocking commercial opportunities. Under our long term service agreement with Kwangye Green Energy company limited or gge, the operator of the world’s largest Fuel Cell Park. We delivered 8 replacement modules to GGE during the third quarter. We expect that this partnership will drive product revenue and as we continue to deliver modules through the remainder of fiscal year 2025 and in fiscal year 2026. During the quarter, we entered into a long term service agreement with CGN, the Osilan Generation Company or cgn, a leading independent power producer in South Korea. CGN will purchase eight carbonate fuel cell modules from us making a total of 10 megawatts of power and we will provide long term operations and maintenance services for that CGN power platform. Additionally, in the second quarter we executed an MOU with Inuverse, a developer of next generation AI specialized hyperscale data centers to explore opportunities to deploy up to 100 megawatts of fuel cell based power starting in 2027 at the AI Donggu Data center which in Universe hopes to develop into Korea’s largest data center. I will speak in more detail about our Korean opportunities on a later slide. Beyond Korea, we continue to strengthen global relationships. Dedicated Power Partners is our partnership with Diversified Energy and Tessiak, which we formed for the purpose of meeting surging off grid data center demand by powering these sites with our platforms using Diversified Energies, natural gas and coal mine methane resources. Our work also continues with Exxon Mobil’s low carbon solutions, ExxonMobil technology and engineering company and Esso Nederland BV to develop a pilot plan utilizing carbon capture technology at Esso’s Rotterdam manufacturing complex. We continue to make good progress during the second phase of our commercialization of this technology while ESSO continues to progress build out of the infrastructure for the pilot plant. Additionally, with Malaysia Marine and Heavy Engineering and Idaho National Laboratory, we are advancing with capital efficiency our solid oxide electrolyzer technology. We are proud of our existing partnerships and look forward to further opportunities for our business. Third US Policy Tailwinds Domestic policy continues to create meaningful tailwinds for our business. One of the most impactful elements of the recently enacted One Big Beautiful Bill act is the reinstatement of the Investment Tax Credit, or itc by maintaining full Investment Tax Credit (ITC) eligibility for fuel cell technologies. We believe that this legislation will ensure that companies like Fuel Cell Energy can continue to deploy US built platforms at scale. We believe that the Investment Tax Credit (ITC) can help us win projects with more cost sensitive commercial and industrial customers and we further believe the flexibility and long term visibility of the Investment Tax Credit (ITC) under the legislation will help to provide developers and investors with the confidence to accelerate deployment. We think the 45q carbon capture sequestration and utilization incentive will provide meaningful support for fuel cell carbon capture applications like the applications we are developing jointly with ExxonMobil’s LCS business and reinforce our conviction that carbon capture will be Central to meeting U.S. energy goals. We are proud to partner with Exxon Mobil and its affiliates in our work to commercialize this technology. U.S. policy is also supportive of natural gas infrastructure expansion. Recognizing the role of natural gas as a backbone fuel, we are pragmatic. We do expect the use of hydrogen will increase, but natural gas remains essential. Our carbonant platform is built to deliver clean power from a combination of both. We think Congress took a much needed step to support a more inclusive approach to energy policy and that fuel cells fit well in the alternative power landscape. According to the Department of Energy, there are fuel cells running in 48 states, generating baseload power and operating as primary power sources. Fuel cells are optimized when they run continuously, which is why they are ideal for data centers. Given the numerous supportive policies around the world, we believe that fuel cell energy is positioned well to take advantage of available opportunities. Finally, we are working to fortify our financial foundation. We closed the quarter with approximately 237 million in total cash and cash equivalents, providing ample Runway to execute on our business plans. While our June restructuring resulted in significant non cash expenses, our cost control measures are trending strongly in the right direction and beginning to have positive effects. We remain on track to reduce operating expenses by 30% on an annualized basis compared to operating expenses incurred in fiscal year 2024 and we are targeting the future achievement of positive adjusted EBITDA once our Torrenton manufacturing facility reaches an annualized production rate of 100 megawatts per year. The decisive steps we took are already paying off, strengthening our balance sheet, sharpening our execution and positioning us for profitable growth. Moving to slide 7 let me dive deeper into our market presence in South Korea and the opportunities ahead. South Korea has been one of the most forward leaning nations in adopting fuel cell power to address growing electricity demand and advance a clean energy future. Its hydrogen economy roadmap has set a global benchmark for low to zero carbon power generation and we are proud to be a trusted partner of GGE and CGN and supporting those goals. Beyond our recently announced MOU with Inuverse and our long term service agreement with CGN, we continue to maintain a strong commercial relationship with GGE, no Green Energy and Korea’s Southern Power Company. Today we have 82 modules installed or in backlog in Korea representing 108 megawatts of clean power on Slide 8. Let me update you on how fuel cell energy is positioning itself to serve one of the fastest growing markets in the world. Data Centers we believe that our MOU with inuverse to explore future opportunities focused on data centers and our partnership with Diversified Energy and TESSIAC in dedicated Power partners are just the beginning. We are in conversations with leading data center developers, hyperscalers and investors about how our platforms can meet their rising demand for reliable, clean baseload power. We hold a differentiated position in the energy sector as the only fuel cell manufacturer with demonstrated utility scale platforms over …