FCEL - Earnings call transcript Q4 2017

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Operator

Good morning. My name is Sherwin, and I will be your conference operator today. At this time, I would like to welcome everyone to FuelCell Energy’s Q4 and Fiscal Year End 2017 Earnings Conference Call. 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 [Operator Instructions]. you. Thank Financial Chief Officer. Bishop, Michael

may conference. your You begin

Michael Bishop

the Good fiscal for hours year welcome release, to as results FuelCell The section replay be Web two a site Company fiscal quarter and the fourth referenced call, for financial end its released This of well FuelCell morning. that available quarter the call earnings after morning, and XXXX. And this Energy. Energy fourth will presentation XXXX be as earnings are available the site. www.fuelcellenergy.com. A on of earnings during on this will the Company Investor conclusion call at approximately Web

will the financing plans. with statements direct technology that development, factors I being cell Commission. of in other expectations regarding that anticipated commercialization fuel the is risk to contain read proceeding to like our to and including forward-looking listeners would regarding I statement today Company’s and information the and call, without Company’s limitation, forward-looking and this with respect with and U.S. and financial Exchange statements, statements call the remind continuing Securities on everybody results its the recorded plans Before discussion Company’s would cautionary business like filings its and the to

like over Now, to Executive Chip to call would turn the Chief I Chip? Bottone, President Officer. and

Chip Bottone

and welcome a our Please everyone. and Year Good sheet. turn four New tremendous Mike. year fiscal XXXX concluded Happy with highlights. balance slide you, We morning, strong Thank strong backlog, to revenue,

began the in power The growth We South conversions. opportunities. for us will and execute we cell This the the summer. on we pipeline to results These full Asia and firmly completed power a the in in December. projects Korea begin XX-megawatt spring template customers for and for in and fuel XXXX future to is constructed continue plants is park to this closed in being first commissioning beyond. plant since project on delivery marketing directly bring is of We the position it and in now sales

market opportunities see the sizeable South is multi country's a fuel large near-term parks Korea megawatt opportunity. with top utilities. cell We for

this for owns which project, the first generators assets RPS portfolio The obligates Power this to government's generation power gigawatts and alone, our is fuel driving their or increased KOSPO activity generation direction. offsetting Company nine standard their certificates, of or or the is cell customer largest renewable Our Southern country's first project. Korea energy in achieve requirements in renewable purchase XX RPS

cell to help submarine a avoid distributed disintermediated. Connecticut distributed to vehicles fuel produce our cell energy as clean types hydrogen supply Toyota, Island as generate projects. XXXX. remainder, The In proof-of-concept billion the the July energy since world's participate of long-term Toyota's we advanced our in flow. agreement diverse actively replicated generation US projects in them sell portfolio for projects platform of market. projects X $X team project generated and the awards of can generation billion scale with These comprised The has how renewable for and power are for cell tend markets. six projects expect in to utility and showcases awards technology Port near-term last Two flows. of backlog demonstrate of concept hydrogen Class existing pursuing Navy solutions meet its plant we in in Long recognized outright utilities awarded renewable as fueling plant than utility at a the megawatt for with power financed Providing truck. renewable recognized the is converted purchase be project months largest transactions common market the contracts the in model multi These finalizing our The simultaneously be consistent on them long-term affordably Korea, The service. for models is long-term fueling base. and can two of either many retain being projects electric customers power Only in In of automakers’ markets. or We're the provide are creating customers Municipal cash grid. in designed worth October, X.X needs technology worth $X.X around our and recent co-production a be hydrogen This PPA will CMEEC, power Projects enabling executed transportation not how and Power backlog. sustainably cash them investors. LIPA, provide In with July, inventory Utility, to power in located how this example we and megawatt like approximately plant or replicatable project Authority agreements, value XXXX. The been we currently of agreements. Long our to fuel power service Our signed these U.S., fuel in potential. infrastructure. a offtake used FuelCell hydrogen in global our announced with and part of and is has the U.S. business makers, to Energy KOSPO the short throughout XX has with In November, Beach of complementary. auto execution amount a to These cycles sales backlog. opportunities markets been with from South megawatts addition our are will portion a yet been California, one more this equipment Korea a the project In working

demand. and driving slide. trends orders. the awards, North the side stage we first manufacturing execute Please expansion of as expansion operations us slide five, our of of and positioned backlog, generate The completed shown business, of American recent reductions, the the will right in to on Connecticut, our pictures to cost has the energy bottom Torrington, the future facility have turn On at in

challenges significant energy translate Some our environmental into of of and for can the opportunities Energy. FuelCell time greatest

Our while global solving value our platforms leverage strategy to market with deliver partner is leaders problems. common to technology and global

slide, side slide, grid XX energy Distributed opportunity the seen summarized hydrogen As distributed reliability; reduce distributed four are $XX and this market, resiliency focused address investments which of market concerns. service duration the global of CMEEC specific to portions emissions, north grid for global energy and solicitations reduction, the global generation on LIPA power a emissions; Energy dedicated of and of clean, our storage solutions sum KOSPO utilities to facing generation, generation; billion. public increases transmission are; to energy now by on adjacent the for XX.X offerings de-carbonization investment penetration innovative as share of our long renewables. FuelCell intermittent total customers solutions. and our embraced. is in potential order awards and left cells increase of levels of issues These We and markets and X.X support highlight increasingly threat from estimate utilities, Recent megawatts, the us tenders their affordable increased of once Starting the higher on megawatts of broaden in fuel utilities. to megawatts, efficient, of being to the or is to and allow solve existing

avoiding generation Our the efficient infrastructure. utility in install clean siting enhancing and where side power it's to and transmission grid investments solutions enable issues into customers affordably reliability, resiliency most, needed costly utility while and

tens an the demand megawatts. XX% totaling from XXXX be Korea our term the Connecticut Global demand in for global solutions of emissions decarbonization opportunities . and XX% NOx power is well include must of generation projects greenhouse megawatts the the electrochemical potential and truly as in solution a of our game over in a normal it and process. expect gas dioxide generates As power for U.S. and Emissions capture potential California, increasing proprietary solution as such carbon and coal-fired we emissions reductions fuel is scalable reduced and reaction cell’s Working as RFPs the affordable power we for versatile carbon Concentrating power innovative applications. a with capture. continues, potential respectively, captures plant affordable dioxide procurement well Near gas and scalable, plants sands harmful The transition finding RFPs emissions XXX growing. applications, for existing produced. produces changer also and and ours and sector for power, are Because is industry. generation a unlocking emissions a for and solution capture generation as oil side simultaneously key have ExxonMobil, reduction carbon with developed as for carbon is to

fuel a lead is objective featuring challenges our from can of XX% it and COX technology our with NOx stream. is ExxonMobil, campaign describing media enthusiastic and in technology of solution. and plant’s about the can a to how of capture Our recent emission an emissions cells system XX% the today's destroy partner,

of with path the beginning down are We well ExxonMobil. deployment

mixed Our gigawatt used operations tested first and in at be fired plant are XXXX. will and XXXX a fuel, Alabama, coal gas and and generating electric X.X pilot expected built station in dual

generates The Beyond powered emissions site, high if per the portfolio for for and vehicles as a emissions, affordable of to affordable. define affordable with be agree price sector operating carbon expect we would be to a designed readily dollars depending technologies Hydrogen this, the successfully developed this and fuel ultimately of capture kilogram size motive sources being and megawatts standard to tri-generation plants or available plants pilot leading on larger hydrogen We source. per both and the XXX hydrogen a plant, are developed, XXX gasoline fuel solution, megawatt of hydrogen. will in We our consumer. to see our that the the units and as is selling nearly significant harmful global market such to analysts future To all combined equipment gases and address transportation The clean is service plant to you believe we SureSource NOx. greenhouse hydrogen We utilities third long which think industry key responsible agreements. emissions development equivalent to one term purity of petrol, is opportunity. and of reduce include cell several distributed

reformed into power hydrogen. and During fuel as in plants normal are natural operations, our gas such biogas

our a emissions transportation power what miles hydrogen natural system to and rate Our hydrogen better are biogas than vehicles an pounds when hydrogen as for applications. vehicles for passenger using technology gas derived produces stream than and additional tri-generation per are gasoline using industrial beyond using production, is The lower or Compared of and emissions equivalent by lower electric necessary hydrogen. significantly of electric vehicles XXX is for produced vehicles. generating input, that

is solution systems megawatt these and SureSource systems hydrogen fuelling projects. will for mass will be deployment tri-generation is for gaining cell future with affordable renewal interest utility the fuel companies these spoke for Toyota and in accelerate Our supplying hub and demand the hydrogen to a global template infrastructure from of for Spending electric multi roadmap others. vehicles. The match

high fuel solution very source which with oxide intermittent favorably fuel grid. carrier, fuel option far sources that energy on and are our right energy the in technology, are Building a hydrogen a electric technologies. to during provides solid power power more of against box on described other cell is power effective address we long long the utilities financeable, storage Finally, fast technology, converts cost times hydrogen when into market. solutions for periods growing the power excess cell during the more have proficiency, of need as solution and scalable of duration then megawatt long-term compares in urgent demand. solid which uses becoming potential onsite our as generate on stores time reversible rapture This storage increasingly low for oxide slide, high long this developed and expertise recognizing clean duration as our large innovative Based this periods needed placed demand storage, into

big challenges industry and this We summary, can unique with leaders. with innovative in So our partner solutions. addressed be approach

will would results Now, financial Bishop, turn our the Mike? for over who Financial review Officer, quarter. to call I the to Mike Chief our like

Michael Bishop

for the which annualized October, in reduced profit Please to under total a of an This levels, quarter $XX.X June. owned gross and you, XXXX. margin revenue absorption. fourth increase Chip. financial Gross fourth the of returned the deliveries basis, project XX in titled of megawatts turn megawatt Energy quarter the XXXX resulted production of to the was slide a fourth in million Thank the revenues order reflects of impacted $XX.X overview. third a $XXX,XXX million for fourth Southern XXXX Gross quarter quarter to to company to Company. XX $X.X which fourth million by utility compared for to of compared reported lower In overhead for quarter production to was South of six, Fuelcell Power for loss XXXX. reductions implemented following XX year-over-year compared on rate Korea megawatts, Korean Construction the totaled XXXX quarter in by partial be of

We XX, XXXX quarter $X the million recent compared project and and the development of of XXXX. fourth in are unchanged to evaluating to equivalents $X.XX million reflecting to diluted EBITDA October expenses loss $XX.X business selling share the XXXX. cash XXXX. for cash by totaled compared lower of increased $XX.X a and in research million fourth demands million for cash the XXXX and a awards. Adjusted expenses quarter. to quarter expenses the higher further increase $XX.X cash Cash, meet and from basic quarter or or $X.XX and year-over-year, cash of per level fourth unrestricted in Net million Operating as basic quarter of XXXX, share Administrative $XX.X quarter and activity of in fees, a cash. total million million fourth $XX.X million diluted restricted per net professional loss quarter and $X.X equivalents the for of $XX.X common of fourth restricted shareholders was totaled This of includes in the fourth totaled of loss development XXXX. offset

NRG also that changes in customer in discuss quarter, XXXX. Energy $XX We Fuelcell of quarter We working the billing to of and to fourth borrowing procured in million related had begin project. capital would I Energy project our facility. equipment occurred under to financing the availability like utility Korean from shipping primarily revolving the

receivable accounts modules this in of October were from quarter. under XX, the XXXX. the first payments this fiscal are project increased first receive the currently is for construction. XXXX. under inventory fourth subsequently began of this position and quarter third quarter payable result, contract As the to accounts number to and quarter which shipped plant complete XXXX during a now for at Shipments project, The reflected fiscal a We of the

million; ability the in We expect project will plant the This the totaled $XXX approximately the service our million; Product backlog of of commissioning scale illustrated order. commence Revenue of rapidly year. be end and utility primarily advanced $XXX.X summer to respond XXXX, fourth will projects we totaled to to fiscal sales backlog in end from XXXX. million. technology remaining million, the commission we of totaled equipment right contract of chart on this activities operational be a generation spring utility on quarter, highlights quarter recognized totaled and as fiscal Korean $XX $XXX late execute Backlog the the the XXXX at the basis. markets million order At the in quarter ship slide. the the in backlog of $XX backlog in global as totaled the related project first later on for top and

the solutions project $X takers predictable project have for are assuming which investors. interest at awards in from as project attractive We off the reflects QX. not of both generation billion attractive or expect includes; we producing as awards on X.X increase activity end not fiscal of project assets. the chart, with is existing sizable, projects out may which chart of that illustrated down develop projects and in for and we category. backlog awards The credit on slide time of to included right, dependent level that are XXXX Project substantially the confident are during are backlog to The XXXX strong was contracts future we megawatt Projects improve remain backlog. Toyota and assuming This of as these converted the project breaks our to day. finalized that access projects profile as project high of total returns also projects, signed profile is power positions the they are the to well to as portfolio; We the in EBITDA in service are financing the and which ownership revenue to three investors. is fiscal seeing contracts year become retain for project regarding selling middle Korean the our the results retained agreement, by in and billion which weather the Company backlog the end; of awards project utility subsequent capital, project. $X.X The generation LIPA

enter we of or we practice our providing are EPS continuing XXXX, revenue As not guidance.

Operating retained activity the like expands, on million spending. leads to projects I can expected at support to and levels. be business term the As revenue operating sold, projects expenses Whether long recent profiles, or $XX generation may expected of term. expenses in project to for or remain are and these portfolio would sold. are million comment to range retained growth in $XX quarterly expectations different capital near in the and

expenditure in Danbury conditioning to capital Torrington, we complete, is while transitioning activities which investing will our lower our side, Connecticut, result costs. the On module are expansion in cell from fuel facility manufacturing

expected result, we a $XX on XXXX. results of execute product In for of range As Korea ability and near EBITDA cash project portfolio. highlight conclusion, over totals demonstrate capital is Strong the growing financial solution quickly term support provide States quarter XXXX the award generation in which fiscal our in delivered million fourth the spending opportunities. revenue for and growing investment expect flows, time. in backlog path to positive to million a our see the provides United activity adoption to market our and sales to $XX

Chip? positioned now plans. well Chip. back execute call to will turn are growth on the our I We to

Chip Bottone

EBITDA flow Korean providing Energy as projects a cash future and Execution provide which to visibility our financial on international for models. combination totaling South opportunities. positive The has Mike. template strengthened revenue the execute backlog while these opportunities. utility and of and domestic position, billion, contracts complementary on us you, over summary. FuelCell to time Please we project Thank awards gives slide over turn results seven $X.X

are bringing in the of in We and portfolio backlogs growing generation U.S., awards to and project confident our assets. recent financing

continue proprietary markets. address a adjacent energy to act We to platform leveraging think strategically, and common

have an and manufacturing the footprint. innovative necessary We versatile portfolio solutions with

talented Operator, time. deployment we'll on be we Our growing and team solutions happy take as of support appreciate our questions execute on basis. I continued a global this to your at

Operator

[Operator & Jeff comes first Instructions] Cowen Osborne from question Company. Your from

open. Your line is

Jeff Osborne

year in results. and for about much giving I just us a keep a the comment on the the shipments just commissioning that you one brief up? would three the how Korea answers spring your backlog that as you’re with sense having morning concluded so caveat of remaining much for of but $XX Good you the million month not Can how understanding and but congratulations and December. questions, can in during strong that's is comes to want as been over of summer ramps facility in guys million versus months have December Mike, understand perspective I phase give of recorded $XX the of the have the guidance

Michael Bishop

my up So, December. of I we as product project. conclude mentioned in of the of December, remarks, end made the had in backlog project Korean product about that's that of at We backlog primarily in shipments million did $XX

remarks, number for As of was in came I that a modules said inventory customer. my the inventory, billed out and subsequently of reducing

a that meaningful recognized see quarter. the you'll first revenue So in amount of

activities. we're the beyond in not XX% plant that as be guidance the we're year. range complete commissioning the revenue the XX% any middle order, in providing do typically As in will a we the the we total Commissioning year We activities mentioned, specific doing complete but for this those of is to summer. revenue in spring and of recognize

Jeff Osborne

at -- you today facility being other give equipment sense or it? in start us just and not, Can expect that to ones. any place commissioned, a Alabama with facility when be And to Is you Exxon? of shipping two if do either installed the perspective quick

Chip Bottone

one. is this morning good take Chip, Jeff, that I'll

all to at test operation in activity engineering, So now and There's as is take and going equipment the site physically work 'XX. the place time. because on of the remarks, XXXX-XXXX in minimum period the amount I expect in over but in activity the of the mentioned is right place my deployment total in we take of of that on phase, going engineering the will the

Jeff Osborne

and And XXX or end this data megawatt could carbon before XXXX, pop from then things to up facility in when range. future around any the that capture XXX is other that orders need the fully tested? that facility, operational validated you Would see of

Chip Bottone

or The my a X.X And plant is megawatts. the for we picture what so other What is this size. -- said would to then, paint other to would pilot I just we was I in is what do everybody roughly get projects would equivalent in is larger was a of referring I could from trying we're and remarks that potential are plant, expect that's game And is XXX be from end would service talking is. megawatts And which penetration megawatts doesn’t anywhere market very, end projects include XXX little per the a out site. a you of very per the is very agreements, game, farther to perspective. sizeable the that about project that small so imagine be that

Jeff Osborne

good, Very for way just Mike is had the one last backlog. the you the and worded I

is those past, the outright of You LIPA facilities retained In there flexibility, sale? that a and the that facilities differing the the it that retaining those those was a ago, towards safe versus the ways to your could say of you lot bias structured certainly assumption highlighted included be investors are three an on bucket. leaning maybe versus them, to interest but narrative is and months in and

Michael Bishop

of awards As sell of as the whether to projects for I the time. into cash project portfolio, or not It's long-term value times is retain of basically strong long -- the decisions of the have times, with these contracts we all company on rate -- the and contracts. years very this term projects, remarks, the in company selectively did generation retain that obviously number times or projects on of profile say at does project the optionality The We've included PPA those go some an power to number have value any we projects total revenue the on flows. that we calculating definitive last or we’ve whether have financial did to in those the sheet LIPA would my included our the been flows. not retain cash made good, of the these in retain quarter, are objective balance

Chip Bottone

is Chip. this Jeff

just from perspective. is, said add me a to Let what timing Mike

that is for permitting you up 'XX So those timeframe. XX approvals course. which in megawatts construction, I’m things process three the necessary construction the and and expect get the projects, simplifying and and But of in 'XX will, or the of operation made we XXXX, sites, actual if and this done

So I we open, leave as to this our going represented balance to is have bias options that, that the would would say, an and yes, with are can point. the likely the as to probably profitability capital of we which and available those they – going projects do do we those debt being as as pretty far financing seems perspective. to them projects, it is, are and there I is on think but if debt frankly financially, And well put sheet execution I and our say at

Operator

question Colin next from Rusch Your comes Oppenheimer. from

Your line is open.

Colin Rusch

comment on potential months. got seeing in if follow on to potential that project of to financing in relationship. talk could the something But And any of the number you're next around details what you Can for project about the nine just terms we you vendors financing? were we terms, last energy close obviously, six available,

Michael Bishop

long relationship a we’ve mentioned, you had NRG. with As

in currently that financing building. construction financing that NRG with would that on to We have we utilize projects XXXX are for committed We in a for we’ve the project worked expect past. facility

those LIPA and and around other COD. contract, under and at a out projects that under syndication terms the in seen process process financing and starting take we have projects, interest award both we strong investor are in We of financing construction have

to and confidence that the that’s a project track we this. So we other will record projects strong financing have LIPA bring at

We that have through we financed today, of our we’ve balance on megawatts financial XX have -- assets institutions. operating sheet

bring folks good of again, these to we understanding to the when appropriate. the in marketplace, familiarity have financing We And with terms. expect good

Colin Rusch

and piece inventory sheet. what’s level a inventory? guess just forward cost balance you And goods break detailed right then should levels. materials reducing inventory, about we basis? on what's finished the I raw inventory thinking on out goods of the and question finish how on the last just be is And a what And go of Can cadence this higher the inventory, the more

Michael Bishop

Sure.

subsequently inventory, as up have normal some of inventory anticipation come into our inventory project last year So in operating awards, than think rate. higher we these about did is backlog. We build of which

fiscal at Of today, plan, year, about had of or $XX and that about process of module. million inventory. $XX complete working million the total of balance about is end So so we amount, the inventory, that work-in-process either of million plant $XX is

And those we order. shipped to remarks, number XXXX as mentioned can of to first our quickly. very in turn we the satisfy KOSPO So in quarter the modules of Korea the

of will So inventory more reflecting down quarter in inventory come that time, level. you be those at a first delivery the will normalized see I XXXX, of modules. And would say after

Operator

from Irwin Partners. Craig ROTH from comes question next Capital Your

is line open. Your

Craig Irwin

portion you wanted to portion ask little give said you the bit a have First about a Can Korean that of December served the I color previously thing, quarter. you is order in us of project project POSCO’s of built versus that the sitting the on at POSCO? came use What would the material used from on POSCO inventory. in FuelCell that material was from come material

Michael Bishop

for question. This the Mike, thank and is you

as to far project. I percentage this As percentage. that provide project. we’re POSCO’s meaningful mean of this on with a going We’ve part collaborated not exact POSCO inventory But played

in -- order. equipment my the is related fourth in of procurement remarks accounts both accounts our primarily quarter. for receivable in mentioned POSCO and this payable increased to remarks, from I in payable As The increase accounts

we now are our said, first As quarter our -- we in I inventory just the shipping shipped of XXXX.

of the XXXX. You’ll see our in inventory first come balance quarter down

Craig Irwin

investment remediation short-term. be change could the this some could that subjects, something I has potentially be if discussion of potentially could credit, slipped credit into, the the tax there So in tax into been the flipped

next the number the So in that things small of are sector in be there remediated weeks. other renewable will

for commissioned could that on were existing the and your impact be And the projects Can comment If does 'XX? you about remediated. in we clients portfolio included it does that ability executed the people the some LIPA and don’t. believe both on people in 'XX your on these some 'XX? see this your profitability account? that at change to to you you And looking projects and how the in finance that How the projects tax you’re impact credit investment change own looking for it

Chip Bottone

that off Mike The with to the tax have are and that industry in that to There right. that the of provisions, current approving well. Relative Let to will several me it's provisions we'll bill All feedback as the credit. that helpful answer. the also maybe other you’re is and relative is thinking me investment this one can credit, the which is help see. going tax budget, investment of is be happen to there start we

financials any at And projects the bid. investment any would financers forward relate credit, or of on Where investment of upside as have cost our projects. even always we capital these without don't do credit on would be based the we that you margins investment as short this year notably again, projects tax past ones arrangements frankly And projects we that it’s the these it, going do factored credit then or equity on could tax we we the the answer far of other is going be exceptional it those tax on great. If have perhaps obviously margins. perhaps But that's help perhaps point most perhaps is in things, get do forward would projects and projects that from get debt of based some interest and the both lower enhanced attracted anything those other margins but that potential as premature. we these the All the the from well into that. going have forward, not as 'XX LIPA, to the both ones figured we’ve done into as

more just us or lower would it more get profitable make easier of So that much or to competitive capital. cost

Craig Irwin

Great…

Michael Bishop

On agree in with this project one, Chip of type just investor, brings another I said. what It right.

push into the to equity tax your up bringing value So perhaps. ratio loan these investors projects,

the company. opportunities the for broadens So financing

Craig Irwin

into allocated a 'XX Do one was these in that clawbacks agreements you of you of then And up catch maybe. written a just any point of were the that any commissioned on projects? have where could retroactively benefit see clarification into

Michael Bishop

been The We've through we recognized benefits installed tax commissioned the XXXX not actually obviously is yet. that quite activity had in XXXX. everything for building we that

January are a that projects have the timeframe. COD ready We be in couple to of

would qualify they be that to reenacted. were ITC So for certainly if

Operator

Carter B. comes Riley question Your from from next FBR. Driscoll

open. is Your line

Carter Driscoll

First on the in of on your portfolio. strong progress backlog all, very costs reducing the and congratulations your building

is realistic the the talk Have KOSPO have stand question at ups. installs maybe you other First are, whether magnitude few is engagements? of size the And of directionally? deepening you in in timing? then potential where changed looking opportunities maybe I all Thank And how with are to of the goes opportunities other about a some at utilities, before the that or that see You. follow utilities their could Korea

Chip Bottone

Carter, I'll take that one.

power independent little So and utilities the many, the the running to Those POSCO XXX with bear I some prior confusing, KOSPO of even many mind KOSPO those is themselves had XX are that contract, some in utilities of utility producers. company. mentioned. assets megawatts that

and with it a lead directly like So very Korea bit our reputation was What secondly, about was strong customer. different I we project in And fact mean KOSPO’s the terms perhaps have in of fuel KOSPO first project a in a cell project. first Korean is little was that. it things

said. going in shipped matters and handled but we would say tremendous how cell we technical a I I We not much dealing great. our say people what things so project were All directly watching watching is would what with And that resolved. of were KOSPO’s folks it. So are job. that schedule. ahead It's did another they The fuel they the is perhaps project, everything

folks We’re that have working the here, we resources Korea. with in well as as both

And reputation the the we've our of that we’ve more think executed the other the marketplace way it people if more is in Many the enhance say done that have would in that’s about marketplace than nothing project. amount I these because you gigawatts. So projects, projects. opportunity in will

far so going we to good. the to what So we're we'll next and do so go and say one then

Carter Driscoll

Is inherent LIPA is the profitability a versus second. assets? would of rationale you what retain mean, to or that very for attractive as watch. -- characteristics whether other realistic? choice outside It financing ROI as are them other I to back turning to you there you sounds primary would, trigger considerations than in first though lighter selling retain it the the at trying what Is seem financing pursue sell. retaining Just

Chip Bottone

Let Mike me and start finish. can

to be So just clear.

are various and that. interconnection like and there's these So things large projects and approvals

doing XXXX, what on are interconnection permitting et we normal for So those is projects the et cetera, cetera.

building don't in all these on get crew like So, you and paperwork things in the going we 'XX then would so would be and We're the the forth. if one, a and build they that. in It's next first 'XX, and we same to to do series, Where and see for into XXXX, be in go capital. take build and one meetings need so will. that

of it's So sequentially. kind

come capital of financing it and of those term. that to right, going debt this we to showing at be currently, on put are we've vary amount capital of them people, mean, that that this the sheet term exactly have people if the our in long you minimizing made the point, we this to the about past need that. we and by finish is even interested aspects, And from said we’re that do you're financing is what have the have instrument requirements both actually allow balance But time. we what But we this, any kind Mike say what our have him even you is to seen and or interest and construction. of long at had we look portfolio. So would to look I generation in believe NRG. say up in in there's okay equity, going then And because And kept

cost XXX% know to perhaps if that anything brought add don't And for to to much. wanting I that. multiple Or to want to when you case, Mike give even you those a But things add ITC, in you do Mike of how So that. a Craig up, don’t audience the gives capital. as know you Therefore, these to and bigger if people lower I dimensionalize more competitive. just do and to get kind wants of longer value, want you course I okay.

Michael Bishop

recognize would XX obviously flows. say These year market I and what the company opportunities types cash to the project. for with complement this able the cash EBITDA as capital said, strong what goal Carter, But this shipping cash and Korean near-term meaningful Certainly, is generate Korea you we it are for required overall. long-term build And generate while elsewhere I you’ve financing as get positive say doing then the the that doesn’t again very with cash to would agreement flow. interest. PPA also the same have seen of We're which projects. to revenue a company. there activity the does, first in generate But is cash by to long-term strong flow is and product service sales those projects, provide flows long-term generate inventory, projects, its of which the business is meaningful the projects

positive, company company look So but cash bring flows. the others for to make projects we more right recurring at EBITDA will the these the to long-term and and importantly, market for decision rates

stay So there. that get we we when there,

Carter Driscoll

I given various it a of, in line had couple know for anything -- that any 'XX. Is fiscal considerations that obviously bottom as there of guidance wiggle move room for I But a the XX I Thank mentioned have me. you’re Just assets. or you fiscal fiscal 'XX? past would from you directionally. still be top appreciated. could correctly, have not operating goal megawatts color think goal more that if you. Any that And then providing can

Michael Bishop

have So of financial We have actually, construction operating of deck construction. the on in megawatts the megawatts middle in the assets. we XX.X stages chart the in various overview, today, currently we under XX.X of

the the very from picture fuel our first Danbury, commissioned. That’s being As the in XX% XXXX I mentioned, efficient we have here. coupled that’s write to it SureSource close down of and we street cell show

So that’s being done. to close

We have projects to in is various other in close done being a California, Tulare, construction. project then stages which and of

if that’s and XX you you as up the yes, the mentioned. add XX.X in XX.X the So range,

Carter Driscoll

So there that a major slippage. target construction assuming means, is no realistic that’s fairly

Chip Bottone

all and COD throughout periodically that be to working what Yes, going we now. will same XXXX is It's time. to at XXXX. we're projects bring done not the It's on

Carter Driscoll

or obviously opportunities opportunity And then Japanese there a two vehicles. do you whether with some Japan, lot lot to of of way. fueling opportunity as that necessarily about Olympics projects, OEM you push one the discussions talk going that get domestically, size and just much project air in maybe or the maybe station more you individual particular the bigger out to put certainly are don’t Can a making not ahead infrastructure of cell maybe fuel were a about distributed if electric an timing time, that commissioning be other talk a portfolio or hydrogen, the but to

Chip Bottone

And we’re Honda There people The in of and day takes a fuel. a electric global different such is project bigger we don’t close going And with think yes, in it, a spent that plant is much Toyota, notes our We fuel they’re my and supporting clearly first even that X of bit right business investments to fuel. matter play power a than make there on say fair it here And talk or I in that to other this clearly is megawatts different that’s more say the setting and are true to Beach here. Having want is XXXX is them in are Toyota. pace, of anything closely of states a safe approximately, car Toyota Japan, as I The here. for to that. that day Olympics pace. kilograms in cell X.X time Long or Hyundai. to for leader vehicle some But but kilograms average deeper the global, different working it's about that the true. and -- about that a opportunity. prepared building now is this An strategy countries deployment in a

fuel. of just in one all on Los necessary you cars can of alone. a you kind of just truck thousands that how talking idea can day kilograms thousands and out you flow the particular about figure But So if in Angeles tens you're that of of stuff, or many hundreds

was is the and it's follow. to behind And is new scenes here vehicles cell just be for on across market to it's more here. real, and going what opportunity term get lot a this going big there's fuel So that trying I to electric

it, and we transportation, assure divulge cetera, middle governments good I of strategy. state level, you at to et our et we’re But feel of of want any that with of in the And department it. world, with this I the We’re governments don’t can at center of cetera. really more about right around

Carter Driscoll

storage. What other sits versus you parties Obviously, quorum in but overtime. And in and step the from me transitions multiple for traditionally storage domestically having from needs perspective to me seems a a then least the duration paying now big your really long utilities lot terms of to do solid agree getting think give in remuneration, it lastly changes services, competitive of a to roadblock. different that a And just duration of a technologies. short in what be place starting at, opportunity have on been set marketplace finally take maybe structural oxide versus FERC high-level from and where take in to at how the

Michael Bishop

always you is or energies -- mandating you’re you asking whatever what or we to do even questions, varies because telling rather to But the good -- mean of my a succinct But answer in state mandating doing possible I’ll regard, which the not the need short a by is probably do commissioners I now country. are some department things do I that just to you answer. answer it really would is best you’re give try companies you in -- things know the utility would I they’re than great by the need. state thing give vary what

is need But what in, they short when really this okay. moving if longer achieve storage curve, to What actually fine. but they talking problem. today a more and is security be shorter, need want to utility say, to what actually place. but the these from technically you about the answer they have longer So you we’re solutions you've And and and varies of deliver need process to you have confidence you around But place listen about longer, and duration what them. achieve that not going have because you to here, that on storage trying able if secondly short need really they’re companies you’re and duck they that to duration if put duration it to got if is only steepness is on people expect that's the they to will, of going you

all also working We're stool storage covers electricity of say So side that business it all financeable. these efficiently, model transportation make trying third which any maybe not the here not you forced be sheet. cost we're can for the There's balance if term things that storage fact And deployment, and not as lowers hydrogen transportation a the we other got to is their storage, the going then hydrogen that about of on we cost why put it developing the a come with that's with are this on up have that bets, the today, that helpful to you you've to who on to storage, your sector look as is this storage, transportation what we're accelerate medium people over a we're number deployment. given this of use based power to here generation a financeable for them model. And hydrogen sector, And saying Number use generally a lowers solution talk realize effectively way sector. part one. therefore, okay. is two, long speaking utilities would the very to

said So that's storage. our things significant and three I

term of to people terms moment. of need more tactically in that's renewables education have because this a in hey, in here the at and is do say the the see storage, So one But to And everywhere the think we're their market traction to right going we're we're the obviously version what's and grid getting different now world like storage. it think I idea, they approach percentage degree. the deploying you highest follow to going the in going leading taking saying where people here some people of we putting the same short because see But California's we you're short I the on it. of urgency in real

Carter Driscoll

in. tax have the seen for the seen and you that at for the ITC in you ball Okay, game. changes a one the to equity given changes appetite just maybe appetite decline material obviously, the tax maybe last legislation being have in for taxation Mike, all federal would squeeze the at any change the equity? extended But caveat

Michael Bishop

We There's would we're if expect speak given to the not tax in those clear, financing have chasing projects tax not any projects. the ITC our to obviously seen large that equity be But now haven't this equity market there to just So point our right up qualified. folks. certainly really no, out pools is of extended, projects. changes bring appetite. to capital to in we And I

Operator

from question [Operator Instructions] Stein comes Craig Your Eric from Hallum. next

Your line is open.

Eric Stein

what billion first at dollars product I know any But much the to low that Just not the that think the least levels is limiting. depend you wondering see And on it'll some for I of how some to do maybe as quarter impact from was the it project. plus. but product margin Is margin to as it’s profile that you this way not? normalized at an about of side, on. forward? that of how be, give going POSCO, great talked you or details term. you look to about fact a It think utilization mean, clearly, positive want a in was And then should longer retained you

Michael Bishop

we've to mentioned the come just summer. I we remarks given at and the past seeing are over we think quarters to low year the margins mid megawatts this my and on We margins about is product teens, megawatts. prepared were our today, prior in in and We -- think same will you through, What project margins production. think low when talked impacted we about that XX XX over about back that we're that product be doing so the So different. in the the ramped target projects variances I is every way not overhead sales the factory

as what that's variances will been that as really the positive those begin Korea or our on the POSCO on collapse here become with get negative So a drag we dealings to year, But margin for margins we This level. back -- good above the order. has megawatt XX to is us. product project past for Korea relate Energy doesn't order really it and this

Eric Stein

the and you've to that relates can this, fact you respond a lot has I just in so I this mean for up gearing know quickly, And been inventory. of been

like you're meaningfully pretty So in should It here that it not mean producing of change. I term. obviously end that. near sounds

Michael Bishop

I Again, brought And more variances. to mitigate continue production the margin so go see negative that traditional as as up, range level get we the us that it'll back the product up mentioned. factory a -- you'll continues to we in to

Eric Stein

one just megawatt with Last I know XXX it's plus. and from me Connecticut RFP,

than ended for XX megawatts far look winning I Just you progress? thoughts were all to and know to thoughts RFP on you've what on far mean, more you LIPA just in But -- as that to expect bid I up we that of been in that? it.

Chip Bottone

that comment I'll RFP. it's large an can't you the number build take done. sufficed reaching we'll in with say very to with go land a that you out think competitively of says hey and got it's do But you whatever. that I to actually or get that, When reputation, I’ve project, say interesting. a it decide to I open it obviously you People too when much projects, start

more to it. and specifically ample of well have others, Connecticut and in an we projects that we'll in So number than RFP about others good to as bid feel there are

Operator

turn At this over will the time, I presenters. call the to

Michael Bishop

much but closing I everybody people helpful was that very projects thoughtful I it'd guess our ourselves number solely be pretty to different competitiveness. speaks topic ITC for we or from angle, masked everybody significant Thank the those. as it. move we a today, But an which in think what frankly their you be to but the hopefully award I we've withstanding nice, and I The without as forward joining saw think listening and continue would other for of just perspective, had everybody questions. hope answer well

time. capital and talking allocation new the for last -- years exactly and about emerging model the very thing is, as we right good of we’ve we will feel very, are of for in we been about the really those The right And Our the opportunities it. will hydrogen capture business appropriate decisions I the against couple make think do on carbon large.

larger uniquely presentations back positioned you generation where markets did, refer take If of margin in be prior themselves to than we these to will distributed those. advantage we

more follow about we feel to good that be So there’ll it. on really

So yes, very a a about was in good the had we note on good it quarter, think the but ended challenges feel some we year, up future. I good and

have very your you you thank much you So Thank we’ll call. questions you. next the quarter for and in to all day great talk we and hope

Operator

call. This concludes today's conference

disconnect. now may You

FuelCell Energy (FCEL) 11 Jan 182017 Q4 Earnings call transcript