Exhibit 99.1
[LOGO] FuelCell Energy
CONTACT:
Steven P. Eschbach, CFA
203-825-6000
seschbach@fce.com
FOR IMMEDIATE RELEASE
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FUELCELL ENERGY REPORTS THIRD QUARTER 2004 RESULTS AND ACCOMPLISHMENTS
Started Operating First One Megawatt DFC Power Plant on Natural Gas
45 Million Kilowatt Hours Generated To Date at Customer Sites
DANBURY, CONN., AUGUST 30, 2004 -- FUELCELL ENERGY, INC. (NASDAQNM:FCEL) (THE
COMPANY), a leading manufacturer of stationary fuel cell power plants for
distributed generation, today reported results and accomplishments for the
quarter and nine months ended July 31, 2004.
FINANCIAL RESULTS
FuelCell Energy reported a net loss for the third quarter of fiscal 2004 of
$18.9 million or $0.39 per basic and diluted share, compared to $15.0 million or
$0.38 per basic and diluted share in the same period of the previous year.
Revenues for the third quarter of fiscal 2004 were $8.1 million compared to $7.3
million in the same period a year ago.
Cash, cash equivalents and investments (U.S. Treasuries) on hand as of July 31,
2004 totaled $169.4 million. Net cash used during the quarter was $1.9 million.
The Company received proceeds of approximately $16.0 million in cash from the
sale of Global Thermoelectric Inc. (Global) on May 28, 2004. Excluding the
proceeds from the Global sale, cash used during the quarter was $17.9 million,
which included $2.0 million related to the Canadian operations and $3.4 million
of capital expenditures.
Capital expenditures were primarily for two City of Santa Barbara power purchase
agreement power plants and one DFC300A for the Department of Defense (DoD) Fuel
Cell Test and Evaluation Center (FCTec). Depreciation and amortization expense
from continuing operations for the three-month period ended July 31, 2004 was
approximately $2.4 million.
For the nine months ended July 31, 2004, FuelCell Energy reported a total net
loss of $65.7 million or $1.37 per basic and diluted share, including net income
from discontinued operations of $0.8 million or $0.02 per basic and diluted
share. This compares to a net loss of $52.0 million, or $1.32 per basic and
diluted share, during the nine months ended July 31, 2003. Included in the 2004
total net loss was a one-time charge of $12.2 million, or $0.25 per basic and
diluted share, related to purchased in-process research and development expense
from the acquisition of Global in November 2003. Adjusted Net Loss and Adjusted
Basic and Diluted Loss Per Share were $53.5 million and $1.12 per share,
respectively (see reconciliation chart included in the financial tables).
Components of revenue and costs for the third quarter and year to date of fiscal
2004 were as follows:
o Research and development contract revenue for the third quarter of
fiscal 2004 was $4.4 million compared to $4.7 million in the same
period a year ago and $14.9 million compared to $14.3 million for
the nine month period ended July 31, 2003. For the third quarter and
year to date, the Company's revenues increased on the Product Design
Improvement, Vision 21 and Solid State Energy Conversion Alliance
(SECA) contracts with the U.S. Department of Energy (DOE). These
increases were offset by a decline in revenue related to the
completion of the Company's first two-megawatt DFC3000 power plant
under the Clean Coal contract. The cost of research and development
contract revenue declined by $2.2 million in the third quarter of
fiscal 2004 and $6.5 million for the nine month ended July 31, 2004
compared to similar periods in 2003 due to the mix of cost shared
contracts.
FuelCell Energy Reports Third Quarter 2004 Earnings
August 30, 2004
Page 2 of 8
o Fuel cell product sales were $3.6 million for the third quarter of
fiscal 2004 compared to $2.6 million in the same period of a year
ago. Revenue during the quarter ended July 31, 2004 was higher than
the previous year primarily due to progress on power plants for
Marubeni and Caterpillar customers. Year to date fuel cell product
sales were $7.6 million for fiscal 2004 compared to $12.2 million in
fiscal 2003. Product sales backlog totaled $25.4 million as of July
31, 2004 compared with $17.1 million for the same period a year ago.
Administrative and selling expenses were $3.4 million and $10.9 million,
respectively, for the three months and nine months ended July 31, 2004 compared
to $3.2 million and $9.6 million in the same periods of the prior year. This
increase was primarily due to Canadian operations and higher sales and marketing
costs over the prior year.
Research and development expenses for the three and nine months ended July 31,
2004 were $6.7 million and $19.0 million, respectively, compared to $2.0 million
and $6.1 million for the same periods of the prior year. Of these increases,
approximately $1.7 million (three months ended July 31, 2004) and $6.8 million
(nine months ended July 31, 2004) were related to solid oxide fuel cell (SOFC)
research and development costs in Canada. The remaining increases in the three
and nine month periods ended July 31, 2004 were primarily related to product
development including the Company's cost reduction program implemented in fiscal
2003. These continuing efforts are expected to reduce product costs to increase
market penetration.
ACCOMPLISHMENTS
"We continue to execute our strategy of establishing positions in key target
customer segments that demonstrate the performance and reliability of our DFC
power plants, while focusing on driving cost out of our products, that will lead
to sustainable order flow," said Jerry D. Leitman, Chairman and CEO of FuelCell
Energy. "We believe that working with a strong global network of distribution
partners, now expanded to include LOGANEnergy, certifying our products,
including our efforts on the DFC1500 for California emissions standards and
cooperating with the Department of Defense to develop high reliability
government and military applications furthers implementation of our strategy."
o FuelCell Energy began operating its first one-megawatt DFC1500 power
plant at the King County Wastewater Treatment Facility in Washington
State on natural gas at full load in July 2004. It has completed
testing requirements for the California Air Resources Board (CARB)
2007 distributed generation emission standards and the Company's
certification application is currently being reviewed. In 2003,
FuelCell Energy's DFC300A power plant was certified under the CARB
2007 standards, which categorized it as an 'ultra-clean' technology
and exempted it from air pollution control or air quality district
permitting requirements by CARB. In addition, this certification
qualified the Company's products for preferential rate treatment by
the California Public Utilities Commission (CPUC) including the
elimination of 'exit fees' and 'standby charges' for customer
electric generation, and for project funding through the California
Self Generation Incentive Program.
o FuelCell Energy shipped five DFC300A power plants to four U.S.
customers - Sanitation Districts of L.A. County and American
Municipal Power-Ohio for Caterpillar customers; two units for the
City of Santa Barbara and one unit for the DoD FCTec. The Company
has generated more than 45 million kilowatt-hours of electricity at
35 customer installations worldwide and its current fleet produces
over 60 million kilowatt hours of electricity annually. The
operational availability continues to meet customer expectations for
a non-legacy product. FuelCell Energy expects to ship another four
to six DFC300A power plants to U.S. and Japanese customers by the
end of fiscal year 2004.
FuelCell Energy Reports Third Quarter 2004 Earnings
August 30, 2004
Page 3 of 8
o FuelCell Energy and Roswell, Georgia-based LOGANEnergy Corp. (LOGAN)
entered into a Market Development Agreement to develop and sell
commercial fuel cell power plants, with a focus on megawatt-class
systems in California. FuelCell Energy will provide the DFC power
plants along with engineering and technical support while LOGAN will
contribute its expertise in planning, designing, developing and
implementing fuel cell projects. LOGAN currently has fuel cell
projects at 21 U.S. locations and one project in the United Kingdom.
o FuelCell Energy entered into a Cooperative Research and Development
Agreement (CRADA) with the U. S. Army Engineer Research and
Development Center/Construction Engineering Research Laboratory
(ERDC-CERL) to provide a 250-kilowatt DFC power plant to the DoD
FCTec for evaluation in a combined heat and power application. This
distributed generation fuel cell system will supply electricity, and
the byproduct heat will be coupled with an absorption chiller.
o During a "town hall" meeting today in Torrington with FuelCell
Energy employees, U.S. Congressman Larson announced federal funding
for dual-fuel carbonate fuel cell projects in the Department of
Defense Appropriations Bill for Fiscal Year 2005. Defense
Appropriations (PL 108-287) includes a total of $7 million for
carbonate fuel cell projects. The Company expects the funding to
result in definitive contracts employing the firm's DFC products to
meet the military's desire for power in critical applications.
o The power plant shipped to the FCTec is the same unit that
accomplished a number of firsts when it operated in Boston at the
Democratic National Convention, where it supplied electric power to
a temporary media campus:
o First DFC power plant to operate in a customer micro-grid--a
distributed generation system that operates independently from
the local utility's transmission and distribution
infrastructure;
o First DFC power plant to operate in parallel with diesel
generators; and,
o First DFC power plant to automatically operate in islanded
mode (separate from the micro-grid).
CONFERENCE CALL INFORMATION
A conference call is scheduled for 10:00 A.M. EDT on August 31, 2004 to review
results and discuss the Company's outlook. Listeners can gain access to the call
live over the Internet by clicking on the web cast link on the Company's
homepage at www.fuelcellenergy.com. A playback version will be available for
seven days after the call by calling 800-583-3753 for the U.S./Canada and
706-645-9625 for international. The confirmation number is 9607425.
ABOUT DIRECT FUELCELLS
Direct FuelCells efficiently generate clean electricity at distributed customer
locations, including hospitals, schools, universities, hotels and other
commercial and industrial facilities, as well as in grid-support applications
for utility customers. Direct FuelCells operate similar to large, continuously
operating batteries except they utilize a fuel to generate electricity, such as
natural gas or digester gas from wastewater treatment facilities. DFC power
plants are hydrogen generators, and because of this are ready today and do not
require the creation of a hydrogen infrastructure. This high-efficiency
technology generates more electric power from less fuel and with less carbon
dioxide emissions than traditional combustion methods. The sub-megawatt fuel
cell power plant is a collaborative effort using Direct FuelCell(R) technology
of FuelCell Energy and the Hot Module(R) balance of plant design of MTU CFC
Solutions, GmbH, a subsidiary of DaimlerChrysler.
FuelCell Energy Reports Third Quarter 2004 Earnings
August 30, 2004
Page 4 of 8
ABOUT SOLID OXIDE FUEL CELLS
In April 2003, FuelCell Energy was selected by the U.S. Department of Energy
(DOE) to lead a project team for its $139 million Solid State Energy Conversion
Alliance (SECA) program. The goal of the SECA program is to accelerate the
commercialization of low-cost solid oxide fuel cells for residential, commercial
and light industrial applications ranging in product size from 3 to 10 kilowatts
each for applications up to 100 kWh. If successfully commercialized, these
products would be complementary to our larger scale DFC product line.
ABOUT FUELCELL ENERGY, INC.
FuelCell Energy, Inc., based in Danbury, Connecticut, is a world leader in the
development and manufacture of high-temperature hydrogen fuel cells for clean
electric power generation. The Company has developed commercial distribution
alliances for its carbonate Direct FuelCell products with MTU CFC Solutions in
Europe; Marubeni Corporation in Asia; Enbridge Inc. in Canada; and Caterpillar,
PPL Energy Plus, Chevron Energy Solutions, Alliance Power, and LOGANEnergy in
the U.S. FuelCell Energy developed its patented Direct FuelCell technology for
stationary power plants with the U.S. Department of Energy through its Office of
Fossil Energy's National Energy Technology Laboratory.
FuelCell Energy is also developing next-generation high-temperature fuel cell
products, such as a diesel-fueled marine Ship Service Fuel Cell, a
combined-cycle DFC/Turbine(R) power plant, and solid oxide fuel cells for
applications up to 100 kilowatts. For more information about FuelCell Energy,
please visit www.fuelcellenergy.com.
This news release contains forward-looking statements, including statements
regarding the Company's plans and expectations regarding the development and
commercialization of its fuel cell technology. All forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ
materially from those projected. Factors that could cause such a difference
include, without limitation, the risk that commercial field trials of the
Company's products will not occur when anticipated, general risks associated
with product development, manufacturing, changes in the utility regulatory
environment, potential volatility of energy prices, rapid technological change,
and competition, as well as other risks set forth in the Company's filings with
the Securities and Exchange Commission. The forward-looking statements contained
herein speak only as of the date of this press release. The Company expressly
disclaims any obligation or undertaking to release publicly any updates or
revisions to any such statement to reflect any change in the Company's
expectations or any change in events, conditions or circumstances on which any
such statement is based.
(Financial tables attached)
FuelCell Energy Reports Third Quarter 2004 Earnings
August 30, 2004
Page 5 of 8
FUELCELL ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
THREE MONTHS ENDED
JULY 31,
2004 2003
---- ----
REVENUES:
Research and development contracts $ 4,422 $ 4,715
Product sales and revenues 3,646 2,561
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TOTAL REVENUES 8,068 7,276
COSTS AND EXPENSES:
Cost of research and development contracts 7,436 9,623
Cost of product sales and revenues 9,740 8,283
Administrative and selling expenses 3,448 3,248
Research and development expenses 6,670 2,015
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Total costs and expenses 27,294 23,169
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LOSS FROM OPERATIONS (19,226) (15,893)
License fee income, net 68 68
Interest expense (32) (29)
Interest and other income, net 357 834
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Net loss from continuing operations before provision for
income tax $ (18,833) $ (15,020)
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Provision for income taxes -- --
NET LOSS FROM CONTINUING OPERATIONS $ (18,833) $ (15,020)
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Discontinued operations, net of tax (95) --
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NET LOSS $ (18,928) $ (15,020)
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LOSS PER SHARE BASIC AND DILUTED:
Continuing operations $ (0.39) $ (0.38)
Discontinued operations -- --
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NET LOSS $ (0.39) $ (0.38)
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Basic and diluted weighted average shares
outstanding 48,097,321 39,339,724
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FuelCell Energy Reports Third Quarter 2004 Earnings
August 30, 2004
Page 6 of 8
FUELCELL ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
NINE MONTHS ENDED
JULY 31,
2004 2003
---- ----
REVENUES:
Research and development contracts $ 14,913 14,312
Product sales and revenues 7,598 12,157
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TOTAL REVENUES 22,511 26,469
COSTS AND EXPENSES:
Cost of research and development contracts 21,882 28,365
Cost of product sales and revenues 26,930 38,232
Administrative and selling expenses 10,872 9,590
Research and development expenses 18,982 6,050
Purchased in-process research and development 12,200 --
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Total costs and expenses 90,866 82,237
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LOSS FROM OPERATIONS (68,355) (55,768)
License fee income, net 204 203
Interest expense (92) (102)
Interest and other income, net 1,738 3,633
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Net loss from continuing operations before provision for
income tax $ (66,505) (52,034)
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Provision for income taxes -- --
NET LOSS FROM CONTINUING OPERATIONS $ (66,505) (52,034)
------------ ------------
Discontinued operations, net of tax 846 --
NET LOSS $ (65,659) (52,034)
============ ============
LOSS PER SHARE BASIC AND DILUTED:
Continuing operations $ (1.39) (1.32)
Discontinued operations 0.02 --
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NET LOSS $ (1.37) (1.32)
============ ============
Basic and diluted weighted average shares
outstanding 47,874,599 39,328,881
============ ============
FuelCell Energy Reports Third Quarter 2004 Earnings
August 30, 2004
Page 7 of 8
FUELCELL ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
JULY 31,
2004 OCTOBER 31,
UNAUDITED 2003
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 66,794 $ 41,000
Investments: U.S. treasury securities 87,863 93,750
Accounts receivable 6,021 4,948
Inventories, net 14,941 15,954
Other current assets 5,738 5,140
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TOTAL CURRENT ASSETS 181,357 160,792
Property, plant and equipment, net 49,380 39,778
Investments: U.S. treasury securities 14,764 18,690
Goodwill 4,760 --
Other assets, net 3,728 4,103
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TOTAL ASSETS $ 253,989 $ 223,363
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 518 $ 323
Accounts payable 7,071 6,667
Accrued liabilities 4,476 5,369
Deferred license fee income 113 37
Deferred revenue 6,486 4,398
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TOTAL CURRENT LIABILITIES 18,664 16,794
Long-term debt and other liabilities 1,605 1,484
--------- ---------
TOTAL LIABILITIES 20,269 18,278
Shareholders' equity
Common stock ($.0001 par value); 150,000,000 shares authorized at July
31, 2004 and October 31, 2003; 48,127,032 and 39,423,133 shares
issued and outstanding at July 31, 2004 and October 31, 2003,
respectively 5 4
Preferred shares of subsidiary 9,687 --
Additional paid-in capital 425,165 340,559
Accumulated deficit (201,137) (135,478)
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TOTAL SHAREHOLDERS' EQUITY 233,720 205,085
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 253,989 $ 223,363
========= =========
FuelCell Energy Reports Third Quarter 2004 Earnings
August 30, 2004
Page 8 of 8
FUELCELL ENERGY, INC.
RECONCILIATION FROM REPORTED NET LOSS AND LOSS PER SHARE TO
ADJUSTED NET LOSS AND ADJUSTED LOSS PER SHARE
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
NINE MONTHS ENDED(1)
JULY 31,
2004 2003
---------- ----------
NET LOSS AS REPORTED $ (65,659) (52,034)
Purchased in-process research and development 12,200 --
ADJUSTED NET LOSS $ (53,459) $ (52,034)
========== ==========
- --------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER SHARE, AS REPORTED $ (1.37) $ (1.32)
Purchased in-process research and development (0.25) --
---------- ----------
ADJUSTED BASIC AND DILUTED LOSS PER SHARE $ (1.12) $ (1.32)
========== ==========
- ----------
NOTES
(1) There are no adjustments to net loss for the three months ended July 30,
2004 and 2003, respectively. "Adjusted Net Loss" and "Adjusted Basic and
Diluted Loss Per Share" are defined as reported net loss and reported
basic and diluted loss per share excluding the impact of the purchased
in-process research and development charge taken in conjunction with the
acquisition of Global during the three months ended January 31, 2004.
These are not GAAP financial measures.
o On November 3, 2003, FuelCell Energy completed the acquisition of Global
Thermoelectric Inc. (Global) and combined operations. The acquisition has
been accounted for as a purchase under accounting principles generally
accepted in the United States of America (GAAP) and therefore FuelCell
Energy's financial data prior to the acquisition has not been restated to
include Global's financial data. Global's financial results have been
reported in FuelCell Energy's financial reporting beginning on November 3,
2003.
o As required by Financial Accounting Standards Board Interpretation No. 4,
"Applicability of FASB Statement No. 2 to Business Combinations Accounted
for by the Purchase Method ("FIN 4")", the portion of the purchase price
allocated to in-process research and development (related to Global's
research of Solid Oxide Fuel Cells) of $12.2 million was expensed in the
three-month period ended January 31, 2004. Purchased in-process research
and development is excluded from Adjusted net loss as this is a one-time
charge to the purchase accounting of our acquisition of Global.
o The Company has used non-GAAP pro forma financial measures in analyzing
financial results because they provide meaningful information regarding
the Company's operational performance and facilitate management's internal
comparisons to the Company's historical operating results and comparisons
to competitors' operating results. The Company believes that these
non-GAAP financial measures are useful to investors because they allow for
greater transparency.
o These non-GAAP financial measures may be different from non-GAAP financial
measures used by other companies. Non-GAAP financial measures should not
be considered as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP.