FCEL - Earnings call transcript Q1 2022

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Operator

Good morning. My name is Chantelle, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the FuelCell Energy 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there’ll be a question-and-answer session. you. Thank Instructions] [Operator may conference. you begin Gelston, your Tom

Tom Gelston

Thank for today. joining Good morning, thank you everyone, and us you, operator. on the call

a earnings quarterly results Investor to www.fuelcellenergy.com. website is Energy call and in our of This reminder, we the This the press approximately Consistent conclude and call. release we our XXXX, Form our for call As FuelCell with and website, presentation webcast at XX-Q website. on press hours available replay morning available recorded release, addition our fiscal posted being year our this slide in our being released a on will the have be section for recorded. after financial of earnings X our and first report practice, quarter on our this are is

meaning technology of Before information statements provided today that financing plans will regarding our and the consist the will our without Act respect expectations, statements with continuing statements that expectations express financial and you commercialization, the the we note forward-looking be begin, hear or of XXXX. with of please plans our of future and Such Securities Exchange anticipated some development, will strategies. and beliefs limitation to results, cell regarding business include fuel our the and intentions our and of with

filed report materially XX-Q. reports filed described risks particularly a the or any and available in the with such differ our those on our the Commission, is form implied forward-looking presentation quarterly from information results risk risks of most Exchange Harbor number of in could and statements slide uncertainties statement, XX-K such of Our the because in in actual uncertainties. Form and future filings and and Safe factor regarding on by annual section More recently subsequently Securities

measures press will our call, release non-GAAP and to be course discussing you earnings to financial our for the measures. appendix slide a GAAP of website we the and we of refer financial of presentation certain to and those this the During measures reconciliation

release earnings presentation under and webcast today’s Investors. available press our of at Our on a www.fuelcellenergy.com website copy are

For Jason our President, President Officer and Vice by Chief Officer; joined Energy’s and today, our Few, Executive Chief Bishop, Executive Treasurer. and Financial Mike call I’m FuelCell

Following available questions our call will prepared be we leadership I members opening take will by be now your of remarks, other over and for to Jason? to team. the remarks. hand Jason joined our

Jason Few

and today. good morning, us of are Ukraine want Thank people for everyone. support to call our to on and you, offering who suffering. by Tom, I joining the prayers Thanks start

not do While crisis. are we we the have of humanitarian face restoration operations in peace in hoping the Ukraine, the for of

a our of We also to in launched these publication in quarter, continued around and to In insight producing to FuelCell a Energy like forward progress overwhelming the providing by Canadian citizens to Innovation members calls, first Network, always and as and define activities of other our agenda provide capture hydrogen. slides. the coming quarter of the emissions first the X as these results clear Chevron Canada, Ukraine. of program expanding report, Natural Canada, over support Business power carbon a made our of Clean making and to net company we our the better XXXX our working product commitment, first hydrogen; I to year-over-year executing the look matching the with zero X Powerhouse in short-term produce and overview development decarbonize power gift XXXX on our reimagining Canada’s global Mike and Shell Limited, sustainability company. including working in reinforce some Suncor our interest XXX% support But Resources in longer-term team leader I our Resource Energy, brief for Canada, Strategy, global X which be to and I’d revenue achieved decarbonizing included first Scope do growing Scope targets by brand and our

Slide year which came represent FuelCell for advanced XXXX Energy on all revenues categories: $XX of and and achieved multi-year million, almost fiscal As annual under contracts. of revenue service recurring of technologies generation, X, from shown sources diversified license, which three revenue

we’ve past Over the from years, product sales. revenue two fiscal had no

POSCO mix, Energy’s However, we in sales product modules to revenue the agreement replacement in recent to our Korea POSCO with six under settlement South as our existing first returned quarter, installations Energy. delivered service

optimistic revenue forward result are basis. Korea, the With sales of new a addition that on see market in sales us as agreement, will modules going products to South to and the from once we a we replacement open, again in

also have made it looking a the sales in East, markets, as our in as countries Asian sales. product to we North pipeline other select Middle and We’re building well forward to America, Africa Europe, where target priority

Turning to Slide X.

to growth do in of that to positioned, comes to clean a when security for uniquely believe hydrogen. X empowered environmentally independence, while Scope energy reduce and our which FuelCell biogas; company enabling We we energy believe to energy capture ways, we company. every We XX/X power macro and multiple The COX, solutions we produce and by purpose We resource by new and we simultaneously; compared need X power impacted avoiding technology transition be projects, every a doing. high outs, passionate a world have it build localized and we how the focus operate the solar committed which when purpose our zero. hydrogen which our by use produce and and organizations wind positioned technology believe water in can path and In is parallel, for and our are work power As do world zero. hydrogen our real-time safe, about we water this strategic that example, electricity solve energy. created industry while the responsible on Therefore, always is manner, drives producing FuelCell will producing are communities and will land customers deliver supports represents reliable and platforms company, environment, challenges. provides minimizing what a in emissions. the to And net decarbonizing to using an This well and of carbon for to technology secure important transmission that only the this for is adapting themes do, clean practical benefits assist as protecting standards Energy’s to in costly Energy must power, hydrogen; or manner. economic and living

results like the X. during turn would I and to quarter on Slide development summarized to Next, the corporate business discussion

is megawatt modules milestone our against to generation Research according capture on recurring to the recurring total from important Our Commercial restart This operations in a project. joint long-term with the utility we in Resource the the Canada’s generation X.X execution backlog. achieving megawatts, POSCO Engineering revenue technical project, product quarter existing defined Yaphank the the we’re achieving development project at Energy. capabilities very backlog, Connecticut, With sale Groton, completion South megawatt of by X.X pleased I’m portfolio the commercial in progress has driving recognition early at XX.X bringing mechanical receiving the Network. January of component Base to including Clean agreement scale, and commissioning of engineering of step commenced to was in our the upgrade Company capture Innovation Energy to including respect revenue ExxonMobil enhance on our LIPA with our Korea, Yaphank mechanical of and operation in of project site, our of advancing a a upgrading process LIPA executing added repair, team megawatts. for process made Overall, project. demonstrating by not to six the Submarine profile and continue our performing The Navy of goals, an been through will was award carbon the components a U.S. project carbon the it work the repairing under successfully Upon and project has the specifications. of of subsidiary to reinstallation revenue that our advancement the FuelCell

enabling and has is When set unique a cell’s trigeneration produce Let of to clean a Toyota delivered as with operational, platform site FuelCell electricity, the of X.X I water, platform. water, the a equipment vehicle Toyota efforts microgrid civil ability Hydrogen duty is from power carbon-neutral passenger experiencing of offering sector. and deliver underway. me operations. be fully put water expected on heavy enhances commercial and us achieves electricity, built advanced single the this while and did to resilience, increase transportation. The in to and the this a Energy’s focus fortify appreciate a delivery, platform base this consumption platform Long work and platform construction has Military’s Fuel drought green team power and FuelCell commitment to hydrogen to plant a grid operation, Navy’s and and incorporation capabilities. achieving the the demonstrate will through commercial operations meet of Once fully clear, repower security capabilities the X will of to opportunity work the to stability our to for reliable Beach, a expectations more megawatt they reliable it been avoid its transportation extreme the microgrid Port and path region conditions, at project truck Energy U.S. both hydrogen not efforts power to Class into demonstrate energy supporting hydrogen

settlement Fuel of revenue sold $XX under Cell, Second, the six agreement agreement quarter via with to Fuel in its having Korea and settlement Energy resulting delivered fiscal Korean in initial XXXX. XX a product first of and Cell, realized million the subsidiary executed modules we ordered Ex first in Works the the favorable POSCO

amount carbon we ExxonMobil carbon technology in Energy’s Korea only FuelCell POSCO My We proposition Energy we additional the agreement agreement to key year. development milestone under our Research Asian value of the This that purchased balance capture we that existing that and unique is are capture South sell development our for eight achieved Engineering Energy’s provides opportunity access modules Company. of application required carbon for the confirms Fuel significant be our the have to under joint with to technical power believe Korea the not capture capture only Fuel capture across carbon operate. modules hydrogen a but to require with message planned Other the significant words, the In carbon same the of a the other markets. Cell technologies broader settlement they a power Cell at successfully by customers, calendar is to and Korea third source. FuelCell have parasitic load agreement the are on producing production power while and of importantly time. settlement can

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company. committed zero are company; equitable the the diverse, to But and attaining responsible exercising a governance. are citizen; a we energy inclusive a wholly net being environment; technology We corporate also and clean goals, protecting

our governance social of issues We February. sustainability have through report first the in commitment shared and issuance our early environmental, to

keeping establish on reporting our years. Although in will solid baseline the comments new, work coming isn’t And and strategic to much of to and this are a the we both we proud performance call short. I’m fairly disclosure the improve lastly, work ESG

to anticipate we and this on and vision, discuss Investor more financial we are now, XX to sharing about team prospects Mike? Day excited Am hosting Mike I look at As in about on over detail. webcast. March forward our more our to the the week next call capabilities XXXX and our turn results XX Eastern, And quarter’s Wednesday, everyone with future will

Michael Bishop

that those to our Thank today. you, Jason, thanks call joined and

from fiscal financial heard place that now of regarding the took about our You our fiscal few would like $XX.X first XXXX. fiscal year providing during developments of to quarter Slide quarter spend of the first turn minutes on a And XXXX, increase of the reported Jason financial in first some I to year highlights first revenues a for In $XX.X Please shown results have X. we XXX%. significant compared million an of number of approximately quarter. million, details to XXXX, quarter

new variable depending XX% inclusion LIPA January Bernardino revenues X.X Yaphank number to July delivery of of first totaling to POSCO Revenue agreement the basis quarter, in agreement. exchanges on no recent by prior settlement the reflecting the in Ex XX% due returned revenues a $X.X and this is fuel cell Renewable Looking at of million under revenue project part to fiscal routine module The year Biofuels six Revenue quarter from fact increased XXXX, project Service XXXX drivers to million product Generation the subsidiary due there in $XX revenues in category, compared Works’ $X.X the decreased of exchanges exchanges million, in the Energy the quarter modules $X.X fiscal megawatt were module $X.X period. revenues period. agreements megawatt primarily related quarter the the to X.X on from of to maintenance the and several first recognized from million. XXXX in activities. service quarterly is the module million the to for XXXX. plants of at a during San of decrease

quarter agreement, lower, EMRE, or the decreased $X.X generation XX% addition, fleet and to by to of as the Technology government the Research due $X.X increased from prior Advanced year. XXXX, a in Company, approximately investments million million made contract offset recognized JDA, of operating in contract revenues the increase portfolio contracts under $X.X ExxonMobil generation In of Compared million. development under with joint revenues million. revenues to output $X.X fiscal activities in first the maintenance Technologies Advanced an result higher recognized of revenue Engineering were or

three the Jason the under January mentioned, months during first XX, company the technical JDA. achieved ended XXXX, milestone the As

In quarter sales result the occurring comparable prior year module service revenue due connection increased million of of Toyota to achievement As quarter a ExxonMobil in the EMRE’s prior the quarter. of conditioning will discount, of the The project a facility Connecticut agreed of decrease investment a a $X $X revenue to this to for of million module the in gross Energy. loss in fuel the or legacy quarter the to the a we an EMRE, margin future payment is fiscal the million. the result, the related as XXXX for of revenue company’s design project subsidiary recognized for purchase in amount. company Gross recognition compared gross the as of cell The same XXXX. $XX proceedings. XXXX of no $X fees achievement first with respect million part the quarter negotiations the loss a in $X.X our quarter of with evolve. the modules first either from POSCO and a make company by Administrative POSCO $XX.X in the agreement, during impairment of realized not detailed to million company a thereof project million or to settlement expenses milestone the related loss Rotterdam project non-recurring million result at replacements a expenses $XX.X first with in company to engineering of ExxonMobil’s agreement with continue has receive included to associated in and Operating will of Netherlands. headquarters. Danbury, asset amount construction of a in recognized costs charge milestone quarter, refinery with Rotterdam lower legal in Energy first of selling potential Under new the $X this The totaled $X.X fiscal demonstration project this our with subsidiary quarter, and evaluate million to connection the the in million Rotterdam non-recoverable of

sales on year commercialization accelerating the is increase the $X rebranding the and as the and million $XX.X prior resulting of period. the non-recurring and was to prior by the Net costs, increase period. in compensation expenses marketing in to spending increased expense development compared in $XX in operations increase periods $XX.X reflect expenses related in expenses. The initiatives in quarter compared quarter and from the impacted and these investing and in first sales Research an quarter Both $XX.X of year selling of to loss company XXXX, compared and consulting its the the Excluding million loss million headcount. in to higher administrative first fees, an comparable commercialization from XXXX efforts, hydrogen prior company’s during million period. totaled were million

fiscal first proceedings. the POSCO the The quarter $XX legal previously with settlement the million expense of was by impacted associated of mentioned XXXX non-recurring Energy of

charges to by was lender with totaling under of million. agreement credit quarter XXXX fair issued a of a liability first change The legacy $XX warrant value now in a a impacted associated extinguished the

first on first of to legal quarter share compared loss expense net a to The Interest of extinguishment the obligation loss also comparable share in quarter. proceedings. to the quarter common stockholders, loss loss The common of the of January of LIPA expense non-controlling the due Energy first Yaphank see including net quarter of to lower the settlement or project of by stock POSCO net reflects in of presentation a LIPA comparable the for the slide financing million. Adjusted first per non-GAAP with quarter $X.XX compared common of in a despite loss outstanding year equity the net began weighted loss lower XXXX, approximately issuances or net no the average was million in associated adjusted and Please or of per tax XXXX of and was million $X.XX measures, Additionally, project on to the shares interests lower totaled per adjusted since attributable fiscal closed, financial $X.XX at $XX.X There XXXX. earnings EBITDA result the preferred compared a to approximately in EBITDA stockholders in share. attributable loss net per the the net a as partially of per Yaphank project share first EBITDA year prior to transaction, $X.X XXXX. totaling prior the lower loss XX, debt $XX.X $XX the the end of the loss of fiscal to XXXX, fiscal XXXX. The totaling first allocated our of $X.XX, was for transaction lower offset of The quarter the XXXX the release. also fiscal appendix was attributable fiscal share a quarter share included in negative fiscal common $X.X extinguishment non-recurring higher discussion quarter operating million, subsidiary XXXX. stockholders equity tax appendix was first in million negative the of

Next, additional and the please X for The we fiscal the turn to side financial for backlog. first years numbers of and our graphically XXXX. slide quarters Slide the on of at XXXX performance shows just left-hand details the chart reviewed

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investments a quarter X, our LIPA our Slide and a in delivered XXXX, would with first equity company’s to some project, the In to which FuelCell fiscal transaction million like Franklin closed perspective for financing Yaphank the tax subsidiary Energy. gross enhanced of Park proceeds assets. liquidity we to project continued of in $XX.X Turning bring to I

the and As darker of cash represented chart and unrestricted the lighter of cash million and slide, in restricted the January of by blue bar $XXX.X XX, $XX.X includes XXXX, and by blue equivalents, cash $XXX we cash cash of approximately bar. million. million on cash approximately equivalents the had total the center equivalents represented This of

a right-hand side chart company-owned our portfolio. the illustrating On generation which assets, up make is total project the of slide our

XXXX, We depreciation. well and gross continue which quarter the capital spent projects end of to projects, develop, spent project as excludes totaled and on construction. our in assets. approximately operating construct of to our million, portfolio project as the currently grow At first completed reflect assets capital accumulated development $XXX.X fiscal investments date on year

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begin they operation, are process in commercial revenue. higher expected projects to As contribute

expect Additionally, debt tax example well we as in transactions long-term and/or as the equity mechanical achieve as recycle see previously capital the operation, back these projects discussed, back such to further process completion reach into business. financing, leveraged to commercial I as

Jason We we and back are being positioned to these to the with now made. progress from the continued financial well to I are call to future product support discuss commercialization turn believe perspective, And the opportunities. a over pleased initiatives. we further capabilities in growth invest will

Jason Few

segments On extending to significant XX, pursue have journey opportunities; plan our by phase want updated platforms plan the organization; to of and to existing the and highlights where want to across innovate, the history, and growth leadership our innovating. and innovate our we future capital continue carbon Mike. We recently to our participation to of to human long-term never scale purpose. over next and our deliver us to capture and Slide total on scale enable stopped share in deepening in hydrogen we for company’s Business to the investing some economy customer XX-year growth in the Powerhouse we we Thanks, growth; our markets take to growth, see grow, the achieve towardS of Strategy I

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Additionally, we emissions. the XXXX year by emissions for wanted I have new we Eastern for Day to of a a host deeper March on market. XX to our XX Investor bring our that to zero committed our a questions, to the and Wednesday, zero X technologies to I one net X net Scope everyone our and before to Virtual Time, explanation And Scope Am plans last at to open XXXX give remind will call time target strategy and by X

value. the shareholder our long-term share team to opportunities excited business thoughts and growth long-term and to allocation strategy, plans are drive execution, on capital company’s such global priorities, as We topics

the for to that, You it of accessing We presentation view the welcome turn I now Calendar on and Day will over Investor website. link the participation. on by the Events to begin can With register Investor operator your the Q&A. page our corporate

Operator

from comes Dorsheimer question with first Instructions] Jed [Operator Canaccord Our Genuity.

open. is Dorsheimer, line your is Jed line Your open.

Jed Dorsheimer

Sorry, I So substance my if ExxonMobil, more taking green around be details versus gray game the between had be for hydrogen? have I follow-up. thanks a and to clearly breakthrough, just could – changing provide then my first that’s on seems you in and like The a that I could question. mute. was blue wondering to Hey, it is that sounds –

Jason Few

morning. capture. really is joining capture is from source that the deliver good carbon them to respect the and carbon an and focused And produce has This ability the call. work doing hydrogen. Jason. also Jed, to So, on Thanks With we’re our Exxon, for with external platform

that So and work focus optimal be output carbon maintain is terms as for use on in the doing, and may ensuring sequestration optimal and we’re that ability well standpoint, concentrate power whether that as a be, carbon or whatever performance from to we our of that our capture utilization. the performance

particular we will of blue capture carbon; efficiently that production; which much one, being will a cost that that milestones most power plan density, progressing mile capture do the across level that indication efficiently streams, power, or laid sell we we’re So that’s the And power markers believe used along clear and a Research of technically give that facility. being will can as two, that lower important that a out carbon we’ve as Engineering, think and mile different ExxonMobil can and the with you are will a a technology few are able result about ultimately perform do number of to really them that that those we we deliver concentrate and/or number things: markers. we replace power demonstrate us ability that as to separate work set maintain a of the we – think things give to at at three,

milestone marker And to technology just is the so our achieving the be in carbon demonstrate has capture. this to – way ability effective mile another that along the actually

Jed Dorsheimer

it. I here. and follow-up then there’s bit of a And my Got extension guess an perhaps

slower, So guess, or – pivot right looking I in it’s the U.S., I has the And adjective. expansion, at into the guess, a far would of commercialization kind been the Korean be now been you’re markets. probably

green of sort if going with guess that more has there and of was I seems the hydrogen, use – expansion a I’m you blue. there of gray or is use wrong to that U.S. that correct sort to the may some respect and/or region will, as Korea I that’s things you a the a – be look the And do that of on in assumption. that’s favorable ExxonMobil. something adoption broader And and issues the that of the in of Korea, of see as what’s understanding of for coming been the nation, rethink electrolysis, at that see if to Is around? out me do technology an why seems asking you you else the U.S. in maybe shift you of with or One be terms into your ExxonMobil in

Jason Few

So Jed, no question. great

that believe both is today specifically, today respect as well U.S. of to on is hydrogen. we So as the with Europe around Asia and projects announcements Korea where ahead

largest will. are $X-plus if in the in the been the and current years, support that these the we effectively of However, that package of over you out up, hydrogen said, we the are about you think excited infrastructure announced indication have projects try Korea, opportunity, six as billion in the been market a catch world. we’ve last to to because intent fuel U.S. that know, cell But of good the hub being do

in Korea provides, need also which tend that a cell platform utility projects platform a and that high-grade large-scale carbonate positioned, the projects because to also that players. back us opportunities, the is our our fuel which that between ability differentiation way market well those can actively is think and we a settlement our heat with in existing other platform, pursue actually we be for to in in Now be our have

at And in is heat so it’s our heating of if today, to connected that one project grid high-grade Korea look you also a megawatt system for where XX the we district and our projects then connected exist that provide that.

think is in to we positioned has go-forward announced very also economy our we’re utility of we’re to doing we’re market after With And basis us core work to a be hydrogen, hydrogen going go solid an trigen important about opportunity, well platform, scale so but And on the on government the business energy on part we around in think hydrogen. because to our a gives excited opportunity objectives Korea. only we that that the market. projects more respect to robust and a set technology, think an platform, that commercialize oxide of not the

And States fuel committed like so one in also just in hydrogen here is Toyota about electric the optimistic adoption Hyundai applications And in we that. of the mobility Korea vehicles. are very then very around and cell you United Japan, opportunities when utilization, about think to being early

we you applications, demand distributed for there the production, has that’s that we So you at in broadly Council look that, hydrogen and transmission it, over capabilities XXXX that by between beyond three billion up we then needed investment for categories. distribution, Council programs about opportunity there, mitigate investment if for going think kind of at well are and mean, out government created use the our being Korea. market some overall you hydrogen end hydrogen our the suggest the I think market And those ladder what put there’s in hydrogen although just of just about against if $XXX think in play you’re and think look help to a talking that if can

Asia And so lead – Europe and that in we are going think to regard. and

had opportunity cloud markets. And to we remove the the so Asian about we’re excited the across the that

Jed Dorsheimer

look queue in Day. and back jump the I’ll helpful. to That’s forward Analyst

Jason Few

great. you. Thank Okay,

Michael Bishop

Jed. Thanks,

Operator

Rusch Colin next from question Our with Oppenheimer. comes

Your open. line is

Colin Rusch

we the generation basis? you Thanks a gas have on exposure prices to margins on gross so much, your go-forward about should think And quantify PPAs? you guys. relative how Can natural

Michael Bishop

Mike. is This Colin. morning, Good

future. we One, for about gas. projects, actually we – So procuring for some as our – look LIPA a on power natural today, the look our think for are were as twofold. examples seven-year exposure it prices long-term this those gas there, actually in sense and came company to that project so extend have follow what in natural fixed that at and quarter, the a is the makes kind instance, gas of contracts continue that but we’ll and is online as that at place, the company we portfolio, in the off-taker The Yaphank as puts part purchase portfolio is far and agreement agreements, our larger – that way price natural the price of and there you does of is when goes, large fuel

So around in that’s really increase mitigating prices, natural strategy gas our Colin.

Jason Few

add prices. take right, on have a as a fundamental just do Colin, we to little bit to exposure, where gas we a Yeah, gas don’t view maybe company that,

hedge And we’ll do those work the off do we’ll leg continue so to risks and way that and we and that in.

pass, we’ll leg in years limit to that As more exposure.

that do anyway. decision those -year a As we go hedge you commitment may that how to a long-term we know, it’s on an gas, around not risks. even good active program be XX But challenging to and to get have manage do

Colin Rusch

couple I great. offline a have other Okay, will nuance of take that. I on questions.

Or that So that on you goods with backlog, that moving inventory technology backlog? guys you back product configuration there’s developments the or with finished much existing forward bring that meet be goods inventory? the have, the really backlog how need have met forward towards existing in the finished that that of to to can you some

Jason Few

of you’re is projects, Colin, asking to? megawatts backlog backlog current to referring XX our equates you’re in almost which that about So

Colin Rusch

you the happen the – be that you development hand the that on that inventory, there’s are product that against the spec can $XX all to backlog for product that sold or With hit and the product the guys to in actually you’re million needs orders backlog existing backlog? versus that of if if announcing have have inventory that

Colin Rusch

Colin, that one. take this is Mike. I’ll

placed a Works XX saw goods Ex So in inventory as of the $XX settlement recognized an that first shipped modules we that the for agreement, came with this result you Energy that settlement order modules. We revenue. in part of quarter of six out as million of quarter come and as put place agreement through POSCO as POSCO finished Energy

configuration to megawatt your question and – as current configuration modules. answer So that’s our That’s around – our X.X current configuration.

of to this continue over will the of commitment. build inventory We satisfy the balance that course to year

to Korea. standard megawatt no, any don’t service needs need to configuration modules So technology our X.X changes, POSCO’s we It’s changes. no in of fleet do existing satisfy

Colin Rusch

much, so guys. Thanks helpful. Super

Michael Bishop

Yep.

Operator

from comes Mark question next with JPMorgan. Strouse Our

open. is line Your

Mark Strouse

good morning. Yeah, questions. for taking Thanks our

I expecting I’m a the How if you reconcile can balance do to modules already the POSCO? question missing expecting that sorry POSCO delivered that I’m over with modules from and me Just follow-up the you’re six of that the the to you’re you’ve there. but tie Colin’s And eight this, XX help that year?

Michael Bishop

is morning. Good Mike Mark. Sure, again. This

placed two then XX structured end for essentially way for in POSCO and balance was order the of modules, committed there’s was they POSCO with the of orders the So committed placing affirm order, that to the to of was by XXXX. January which second the agreement June the initial a

and So this end June we would to expect order the we’ll of per year. of XXXX, deliver see second that both those by the against agreement, of settlement

Jason Few

Yeah.

So mark and of right, Ex be delivered to six those. we’ve Works via Works the are initial order – Ex XX, shipped is

all eight delivery actually So their is that will we year XX company, Cell taken XXXX, is which But June. our calendar subsidiary, in be remaining that’s the modules. of Energy/Korean will deliver the ordered expectation Fuel to of in those POSCO modules

installed that with the just have that I other out you about that for and basis. through we you market on point providing with base would only the of our the us about those modules as in Korea we are Korea, settlement, thing source about The think think go-forward settlement, replacement technology, a the in

for that And so time, will create that will, that we opportunity additional on if business, book over of expect you just alone. us

Mark Strouse

region? early, market just of POSCO. about you it’s there, getting rest can you open ability you’re to question any that’s in that talk answer from qualitatively kind POSCO the and of that up helpful speaking, inbound Okay, Korean the of the And outside customers know actually, started my requests but still to of I outside Jason, follow-up just

Jason Few

had that Korea, POSCO our business existing customer GENCOs. in markets are think Yeah, in the about business you the so and done Korea if the in those

you Asia. about POSCO for – think our formerly They that will, offer us, partner really rights can channel not itself. you So to them a in were had sell if market and that solution as across

we’ve there our – have we we have a GENCOs. fact are been out because our interest we team before POSCO partner. in to channel – now, building was a those So GENCOs, And sales which from the have seeing those didn’t customers,

are we large-scale bit projects. – opportunity so the conversations cell tend the projects leveraging to that real develop. about fuel be world because talking are in to these little largest take projects, are our of and engaged right? exists today, megawatts, Korea, it’s XX And in a larger actively they in you’re So platform And But they there. time technology

and And off the so megawatt our the our about existing the of of serve pretty attractiveness we feel GENCOs deliver scale, given we good platform. that to technology heat can high-grade

Mark Strouse

Great.

makes that Okay, Thank very much. you sense.

Jason Few

you. Thank

Operator

from comes Jefferies. with question next Laurence Alexander Our

is open. line Your

Laurence Alexander

may I are the how replacement modules have capacity framed of megawatts Asia, in could just many installed missed in Southeast you where three, needed morning. Have this. Good five years? next be

Jason Few

most what were so with served, about into for Energy partnership, customers Korea, expression, replacement that replacement be module providing the XX better by that base. POSCO of beyond replacement. are there if the replacements that additional for category, module or POSCO the beyond Yeah, lack through company opportunity fall rest done, module for modules Energy channel Cell originally Ultimately, already a to that there’s the you may ultimately installed a installed will will, we our likely in have that that for of Korean XXX Fuel POSCO Energy megawatts

Laurence Alexander

the might use the over we POSCO proxy as – the And that is can module replacement that evolve is for time? economics? future or economics Or That is stable? a agreement how

Jason Few

as today. you conditions pricing. suggest time, up – that and as I on downward a could that time but move time time would would see tell, over watermark. not that market probably watermark using maybe a you but I that – suspect use I moves, would might think we as would movement pricing or will will But suspect Because

Laurence Alexander

you. Thank

Jason Few

Thank you.

Operator

Markets. KeyBanc Our question Capital Mariani next from with comes Leo

line open. Your is

Leo Mariani

when you you this might revenue when number, kind Toyota to what’s then be Hey, your here. little plant guys, bit a do was online? then what hoping best an nature running? to the that and up And plant provide able have of the of And more might see delays annualized you the as comes I also get about guess I could at like you guess, information

Jason Few

suspect is we a morning, good bit and The be in in that construction but delivery we’ll project With project, that we in see delivery this that of project Leo, speak. Beach, will for Toyota XXXX Long targeted question. project, the that of construction respect to is the completed project calendar we thank – – as in that indicated we that work little substantial as today, project you in around for your earlier, of California, year.

We’ve for we power. project. we feel around both project. And as project are that power the that, that are expectations for we agreement long-term about hydrogen put our on in are not project so where yet a development good Toyota purchase out the that But it on revenue for long-term is numbers what well as a for California under under tariff

Leo Mariani

the of just megawatt that very jump is in sizeable that XX obviously sure. come Connecticut plan a what of roughly sense I to better you your the helpful to over date, in-service guys when online? there terms Do And for project seems guess in that’s have Okay, may portfolio. Derby wanting

Michael Lisowski

Chief Michael Yeah, Leo, the This Operating with Officer FuelCell Lisowski, thank question. is Energy. you for

this come mechanical of project. that’s that continuing process Derby progress we’re as have facility significant for this we We well phase construction site in online. year. civil our deliveries have And assembly interconnection and launched and made to work, mobilized In advance assembly construction, as with parallel electrical the equipment required mechanical to and the

both forward see to moving the XXXX. project to balance looking year, key continued and advancing are towards of we’re that advancement I and operation, of calendar I’ll in expect say, it ahead through advance project So you of continuing call the would commercial the to well, can commercial milestone operation in activities those, it

Leo Mariani

kind some startup. XXXX so of Okay,

in just us process to like milestone wrong, scheduled that? being a but That’s in helpful. And me April, you Exxon Can Is that hit your Okay. then was recently. JV, or extended think correct reupped you tell if sometime about here? maybe of on I I’m expire that obviously,

Jason Few

expire April. to we as X, end JDA the current set the so call it, at is Yeah, of

around publicly what the about. Rotterdam, we’re do with However, in demonstration development prospects in work which next we the about we to of in discussions that phase are the the talked Exxonhas doing, project addition Exxon from both

way like So be that as could technology able milestone need I things indicated effective we you indicates is the capturing marker the power at hit, that that demonstrate mile it do is a the carbon, about can be we to the the in earlier, time. think same to well we producing that can that that as

separate speak or result exists capture aspects that extended nature is can’t a a has know, their called confidence more of for gives that hitting the And us business created business Exxon, one through carbon solution as of business a that us low As unit and their company. the Exxon for And delivering unit unit. between you that’s but milestone, Exxon. of reorganization I their opportunity that around as carbon

collaboratively we we XX over as so believe, done last, the have very work we’ve with worked together. years, And I will Exxon

the And phase so our with development we’re next in the of negotiating process of like. relationship looks

Leo Mariani

all expect Okay, Would you those to talk outside just be that’s you year significant a for here helpful then color. or about XX of other And year did more you in of Korea. revenues fiscal POSCO item? fiscal that’s lastly, think XXXX, expectations South in

Jason Few

production you that to to probably XXXX of all around of project, as should a the days into realize takes XX from be all an Just do project, things if that of order our think the in to more ship do get actually and on a you these revenues that. order put right, being you to construction permitting, than now, time even in need able able it the schedule, projects, the terms about XXXX that terms around that

Leo Mariani

Thank guys. Okay. you,

Operator

the [Operator with Riley. B Souther Instructions] line Our Chris next question comes of from

open. is line Your

Christopher Souther

in little the Hey, of maybe working guys, thanks Scotford with Maybe for in the who get project Natural most a Canada? we great? Shell, this with to be taking how my you’re a sense Canadian just talk any with, of of future develop development working question joint or you’re three want all Can could about Resources, owners here. those to collaborate any of would bit – more there? or I opportunities Chevron

Jason Few

this about ask work project the partners that doing we’re morning, Officer speak all Technology our Chief thank Leo, engaged with you the your that Chris, on are to I’ll of and the and good question. opportunity. for Tony

Anthony Leo

Yeah, you’re right, different of sands the a The it CNRL. is companies, for lead some consortium Canadian project is support oil entities. Natural, government Canadian some including from

jointly that and CNRL. by Shell. of Shell a others, Shell And – so it’s that is CNRL, there but our Upgrader few principal leader owned consortium and it between there, operated prime our the a is contact is But

Christopher Souther

And the the demonstrate actually facility maybe just itself. quickly you can describe capture from very upgrade Tony, that will carbon

Anthony Leo

Yeah.

and for And carbon COX looking in heaters will that so opportunity. as It’s heaters capture our of one way upgrade to our they’re be COX certain in can demonstration process some of plant facility, or a be from are that. process high that it to of different there like capture. do to suitable that, just which opposed doing have Torrington these very today prime do capturing demonstration power demonstration that carbon projects. a variety of they And And a at, a value, make good something a what or are capable is the factory a do that those – or we to, on for say, from projects units units value capture this be the attractive power do the Also, is we options There to a view focus, with the be way – general, will technology, in with oil the in think caption COX. of the we it’s really about that technology, that have this just more that. a come on happens ExxonMobil, of as general, a work ourselves improving as decarbonizing to and our industry in sands to but optimizing performance stacks

Christopher Souther

great hear That’s you. Thanks, guys. it. from of to all Got

Jason Few

you. Thank

Operator

Satish next comes Fargo. Our with Wells Praneeth question from

open. is line Your

Praneeth Satish

Thanks. Good morning.

margins Just of would to you gross kind around helpful? want an inflationary be positive? much And any of us give I the for turn how in commentary guess, your weighed update margin guess do by the was Just expect that pressures margin expectations gross on margin down we’re to I the year. seeing? gross when QX

Praneeth Satish

morning, Mike. joining you. is call. Sure, this for the and Thank thanks Good

couple supply of issues in So it highlight. around for the contracts a really margin wasn’t chain margin. We of coming through our in long-term couple But or I’ll down that I really gross comments a And cost weighed quarter, generally by materials. first provide things place gross pressures. have would

that costs $X of business, the around product variances of coming those we out And you when on product, impairment these a Also charge, disclosed about out side to as in of we of the did expense absorption on XX% disclosed, modules. our depreciation million that as you’d and of and there’s that well also back $X product. have XX-Q see Toyota costs non-recoverable there’s, back a the And portfolio. of million the sales On margin you related projects the about $X generation, comes through as have through million. generation we are

EBITDA historically, EBITDA at to two that And you on XX% a XX% the So numbers margins portfolio said we’ve XX% at you’re we take those target generation there. on basis. portfolio. like out, And the looking EBITDA to look about margin an we when generation

QX guidance. targets the our margins make put are margins, and annual do comments So not around around or those I’d that out we

Praneeth Satish

where’s South And it’s update is more question solid just going could then, Got helpful. you it. progress, commercialization to terms if where guess, second industries here of do to that in my stand most us just oxide carbonate you be I you your an mean, mentioned be that No, meaningful then, Korea, applications? in give today? that’s I platform. And on expect and your

the expect most on the you side? do where oxide So solid success

Jason Few

with solid I’ll electrical ability an on now this percent. this technology. things demonstrated to of have hi, We’ve couple XX-plus maybe We’ve as a oxide ask to efficiency, our demonstrated also Tony well. Jason, different Praneeth, comment is and then the of efficiency

So in into electricity and other converting water hydrogen. words and

we’ll and waste heat standpoint working We leveraging show Labs from in with this to nuclear are Idaho where another show do National efficiency. project at to we’ll a demonstration power electrical a nuclear on and be application working XXX% year

call, us we some effort last a And we And our given in gives the indicated, historically. making investments now, advantages, have that the actively to the platform. that in of it we’ve leverage temperature we that on balance as of we our are cell, to efficiency fuel even we that think commercialization as we’ve given efficiency. architecture our have, commercialization advancing relates We that very so strengthening high design, we’re chosen are more quarter that sheet, than the

of well application. play that So as an type platform in the of to as efficiency we will storage energy duration think that look applications, you quite our long

we talking blue cement, gray, of heat in green, platform, different the efficiency values steel, the Given a high provide and of need. can hydrogen, you deploy whether that size of like you’re about platform the ability things distributed manufacturing applications, used industrial with nature including the be producing believe, our or or that’s to number

efficiency to add electrify anything that would I heavy if And, industrial going our the And think type you hydrogen the either know additive So be a ability to opportunities. the we of clean don’t Tony, given has fuels, or to that in on all favorably will of around else. play particularly we quite believe, that’s hard replacement the platform. overall, work around there,

Anthony Leo

in demonstrated think the year a and about together Jason then got electrolysis, storage a applications, has demonstrated that in generation, labs a address effective Yeah, power is system. Danbury is the electrolysis, can with you’ve mentioned, that thing those application power actually, energy add INL. the would I stored and focus later that you And and electrolysis we platform hydrogen, that applications storage, if couple oxide in years versatile, high-efficiency Pittsburgh. generation the developing high-efficiency combine generation one energy our We solid this and been ago, power in did we of our really at field this as that trial a

are we facade in happy with right technology we’re where So pretty now. the side

Jason Few

go Praneeth, one that said. to then you back thing I’d to like And also just

carbonate to relates our more As platform, a to oxide compete in beyond it that solid market opportunity, as see we also we as an that immediate very which Korea, that opportunity right, technology has believe technology. we as well effectively our commercialize

this as well. see in commitment, has platform, there. if opportunity to part that the The strong hydrogen publicly our a things a we that’s government oxide but solid shelf, business very at Korea of on are we look today, carbonate economy stated making our absolutely commitment So for big energy

Praneeth Satish

you. Got it. Thank

Operator

Eric Our Craig-Hallum. next with question from comes Stine

open. is line Your

Eric Stine

one the sneak just I’ll here I it. at end. morning. in good Hey, might have missed

is next curious the for just Just would Day But curious wait if to for Investor if week. this breakeven you the you targeted you maybe update level something the megawatt generation portfolio?

Michael Bishop

Eric. Mike. This is morning, Good

So bit portfolio. a on of generation little color the

we that LIPA we commercial quarter, and the for to finished project, megawatts. portfolio operating XX.X commercial This finished Yaphank the or – operation construction entered brings

built the If you when we total all running over in for what that’ll backlog and bring of the it’s are the have megawatts, look XX to megawatts. the projects these at another balance up medium-term, XX.X portfolio, portfolio

portfolio related revenues, come through had life the they the $XX million will as obviously online. we financial that revenues year, come far of the statements generation other to coming as assets with of grow online project about As approximately and last

We in company haven’t one is what do is really portfolio put EBITDA out said, range the XX% the XX% responses, what the we – we of target for we’ve in really to I a breakeven as margins targets. earlier said my target. what But

Eric Stine

Got it.

all what was the of kind I in it seems you’d is considered? that like that XX I But appropriate, sales some would fairly guess well. I your product level. number on and be probably level there as think past, things given dependence I that’s know of a megawatt a mean,

Michael Bishop

questioner. see the going where So yeah, I you’re with

With XX customers, the obviously revenues time, of company. that EBITDA the it’s and years, look So a recurring building went will this of one contracts, of flows Tier reasons which life helps the why out down have company of And X for these path over the portfolio right? strategically period cash portfolio the a the profile of long was average be producing of to the you at long-term if contracts.

as gross that because Now obviously, with product improves well, sales. sales profile, online – online coming back margin the we’ll those from get

backlog, EBITDA, megawatts put EBITDA target the is of have we’ll guideposts haven’t out do production, as the says again larger year XX continue company But a at we that out in we some mature, those really of gross either So to a we margin future. putting grow if or look a okay, positive.

Eric Stine

you. thank Okay,

Jason Few

Yep.

Operator

Q&A the have Jason for back time for call. call to turn of run Few on out remarks. over I’ll We today’s closing

Jason Few

Chantelle, joining for today. thank again you you. us Thank

Energy empowered will Powerhouse And a The We the is our and our on working priorities world to to company’s the are by team our we of next growth during work enabling clean purpose to on execute week energy. Strategy, our deliver excited of opportunities about understanding excited to and deliver Day. FuelCell Business platforms, returns. Investor deepen continue optimize

for of offer Finally, have a the want those our prayers joining Thank to and day. I to and Ukraine people great you again of all impacted. support and

Operator

call. concludes This today’s conference

now may disconnect. You

FuelCell Energy (FCEL) 10 Mar 222022 Q1 Earnings call transcript