Earnings call transcript Q1 2023

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Operator

Good morning, my name is David and I’ll be your conference operator today. At this time I’d like to welcome everyone to the FuelCell Energy’s First Quarter 2023 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions]

Senior of Gelston, Relations. and Tom you, Vice Finance President Investor Thank

may your You conference. begin

Tom Gelston

good and joining today’s you, everyone, us call. Thank morning, on for and thank you

Energy being reminder, the quarter first Investors available website report and release our This call on a press XXXX, financial at is section earnings our As morning for of this of FuelCell www.fuelcellenergy.com. in and released our the Form our results are recorded. annual XX-K

earnings being our release, addition our for to will approximately this posted conclude after website Consistent slide we be two our with our a we and have the practice, in website. call This recorded available press presentation on call. hours on webcast replay is and

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

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

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

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

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

prepared of by team. be will leadership take be members we other our available your questions the joined and Following remarks, to

will call for over the now I remarks. hand Jason? Jason opening to

Jason Few

Tom, to world December, our energy. our Thank morning we you, today. Thank and everyone. Today, journey execute for exciting Powerhouse on you as our to strong strategy. us good results by some empowered milestones achieved met be we continue clean quarterly enable business joining we we on the in have to on Since call announced

Before getting anyone into FuelCell Energy story. the who for leader stationary a Energy I Energy always platforms. Slide An on over an like business of FuelCell XX new to give the be X developing FuelCell is for in results, might Energy years, FuelCell operation to overview

is energy. purpose world enable Our to a empowered by clean

path strategic in low assisting is We early by currently a to This drives work. practical global the for to secure, safe, global positioned We of stages our focus well a transition to part net our the solution on purpose FuelCell Energy carbon passion of carbon-zero. and important customers are be future. and our believe energy a

to leverage to and platforms hydrogen. is proprietary FuelCell decarbonize Technology power our produce goal Our

world. and Our are Europe, entering North the markets operate more on in around Asia, platforms America, and we focused

believe of demonstrate platforms. our XX the platform commercial commercial energy feasibility operation, installations have We and we which

X. for let’s highlights a few turn Slide shown key this to on Next, quarter

consistent First, we progress are continuing to operational key on make projects.

more projects well. presentation. I project these will Connecticut, our are in Long Beach, the updates Toyota Derby, later development Company and our on Engineering capture with in carbon detail and with three ExxonMobil project joint provide agreement California, Our Technology in progressing

Korea, approximately in customers This restricted megawatts longer January I Company. and represents we as all Company Energy stated, by from POSCO Cell as X, XXXX, no customers previously are solely that or XXX legacy previously directly including module Fuel Korea of were serviced of opportunities. Importantly, serving upgrade

work organization are to Asian develop to further and We Korea we our Korea other our as continuing pipeline in scale markets. commercial in

just announced in that recently accepting electrolysis for generation now power for oxide are orders platform solid having and Second, December we hydrogen applications. both our

We are solid focused expanding oxide on our manufacturing capacity.

for to experienced deliver and for the year delivery two that and and externally. XXXX, and our run including advanced calendar our production strong detail will commercial on in more have efforts, We first solid energizing oxide two in article units later progress will build during leadership, operational presentation. four we internally units units I discuss testing expect

the In announce Engineering Petronas Holdings to we of large and the a the Heavy Zealand while Malaysian quarter production, collaborate goal Berhad addition, of clean and hydrogen electrolyzer to large New making intent markets. a company proud the facility green Asian, after accessible MMHE, development our a viable efficiency production the the increase Marine on and to end, expect with an Australian or with energy scale also reducing this Through of we for subsidiary easily were collaboration, hydrogen option. scale costs of

Third, Roadmap. tax types approximately energy the program Act the drive from proposed billion we will Recent Infrastructure that Reduction support policy appear for demand U.S. Investment Act to credit, in the $XXX investing energy global European we and Jobs policies are have and support Canada’s global the approximately are capitalize policies landscape. offer well includes believe proposed global tax stable in would in net-zero strong on and clean Inflation evolving opportunistically Hydrogen hydrogen increase and clean We $XXX technology for for evaluating are of and to the billion, the technologies. believe energy businesses Union’s that these proposed enacted breaks totaling that Economy We policies potential Korean options tailwinds. the support to benefit positioned

production and credits. carbon investment credits utilization We future FuelCell will benefit and advantage FuelCell tax credits, and of believe clean taking and our able sequestration tax to types power that from of Technology capture by be customers Energy for these policies of hydrogen,

has note Connecticut Energy the discussed host with support would multiple Ukraine. made the proud work were to importance to planned facility is We on of Blumenthal his that our Senator his his we Department. long-standing and FuelCell in I visit we recent energy. where Senator Senator Richard in electrolysis in thank supportive project our of manufacturing and Lastly, U.S. State Ukraine to of support trips for Blumenthal clean Blumenthal investments our of Torrington,

for the quarter call to I to first discuss financial the And more over the detail. in results Mike? now will turn Mike

Mike Bishop

Thank you, good the on and everyone to Jason, morning today. call

X. will results. financial regarding Now details provide additional that Please from you’ve Jason, our some I to heard Slide turn

year we million revenues total million $XX.X quarter XXXX, XXXX, reported the of first of For year compared $XX.X of increase to the fiscal an first quarter XX%. in of fiscal

of fiscal XXXX loss $XX.X loss million net the Net compared to fiscal first the million was in of year XXXX. quarter quarter first $XX.X in year of

$XX expense Fuel of was The non-recurring impacted by settlement the with fiscal Cell with KFC. million legal of Company disputes year XXXX of the and associated company’s Energy or Korea the first quarter POSCO

net quarter The attributable first XXXX was to loss in quarter first the negative year share lower compared in common fiscal primarily due stockholders attributable share shares per since to to The XX, common the net loss negative January the issuances XXXX. of $X.XX loss is to lower outstanding average of common per stockholders to resulting $X.XX weighted number and due of XXXX. share fiscal the higher year net

in totaled negative of non-GAAP year negative year financial appendix EBITDA $XX.X million including first adjusted fiscal see Please adjusted quarter EBITDA at compared the XXXX measures fiscal the to first quarter end the our Adjusted discussion earnings in in $XX.X EBITDA the of the of million release. of XXXX. of

cash total over and at has $XXX January Finally, XX, short-term strong the XXXX. investment as company of million a position

QX months backlog. an the $X.X side million $X.X material million XXXX result, graphically right as category. for additional warranty Energy left the the XXXX please December, shows material three Product to modules. on related for XX, details to was option for for included obligation to XXXX that our to The recognized January revenues on agreement Next, chart modules. driven revenue if turn drivers This XX company’s The KFC hand $XX Slide revenues, an KFC been additional revenues QX XX, an settlement performance POSCO allocated by financial the were exercised ended by and right exercised. expiration X as and by included consideration its The the product to purchase date which company option were and extended not compared had subsidiary with represents of option a option a on XXXX, the December of million the the XXXX.

Connecticut. recognized months Ex sales six KFC to revenues the in ended the Works the the of settlement for which modules on the of were module $XX three from for January company’s facility result Torrington, million a XXXX agreement Product under the delivery company XX,

there $XX.X fiscal XXXX, QX and revenues occurred year during quarter, stack revenues KOSPO Korea, which primarily XXXX by $X.X in exchanges primarily contained comparable in which KOSPO five-year agreements at Service year XXXX of new to year XXXX. first were first new fiscal the Korea year modules. fiscal driven is our Service due from XXXX. The of quarter the in new during in exchanges Both no the Company or fiscal Southern increased for fact the plant quarter. owned Woodbridge, Connecticut commercial the year Connecticut, the originally the achieved module by quarter exchanges during increase to of at were module prior in agreements operations for commercial revenues million Woodbridge, fiscal plants that year the platforms and module achieved the first while operations quarter XXXX in million Power

generating to the $X.X which XXXX project full or the fact New Submarine U.S. XXXX. the recorded Groton December Generation Groton, fiscal Base Yaphank, million, in achieved Island generation from in primarily Authority quarter Power the quarter the commercial to that operations in of the operations million and we with in associated revenues due Navy Connecticut revenues began revenues commercial increased of achieved the project fact $X.X York, that Long first a and Project at

than to under fiscal approximately quarter during the ExxonMobil year $X.X Technology recognized Technology contract Engineering million Technology and with of million quarter. revenues the increased of the revenue XXXX, Development year Joint and higher Company recognized government first fiscal Compared under higher contract prior XXXX, million Advanced the quarter contracts were Advanced Agreement approximately $X.X $X.X first other $X.X were from and to year million. revenues

side product year fiscal the in compared The expenses. hand as gross due fiscal through right XXXX operating fiscal variances a million year of top the realized favorable corresponding in $X.X first of comparable costs, with million, no the for the loss along slide, to generation company to in project. I quarter. to the in also module quarter, year to is of to new quarter occurring first by a prior the the quarter walk margins the QX XXXX the will had Gross changes construction $X.X and million offset service $X.X of profit Toyota the costs of profit of result manufacturing exchanges In compared direct of margins gross the in year recognized XXXX, higher first profit XXXX. lower due revenue primarily quarter margins related gross lower totaled Looking of non-recoverable

Operating first expenses in the non-recurring of POSCO to expenses of fiscal fiscal for with first company’s the fiscal million Administrative legal XXXX disputes from settlement XXXX. the $XX.X and the year included decreased Energy KFC. associated of million selling XXXX the first year of with quarter expenses million quarter in of and $XX quarter year $XX.X

first selling administrative the expenses Excluding increase increase due of in in from were fiscal quarter expense higher an XXXX resulting the $XX and compensation during million headcount. in an primarily fees, to legal

expenses development carbon related to year comparable commercial and solutions increase our of period. reflects ongoing an XXXX spending compared Research first the during development to fiscal platform prior solid of oxide the quarter and in $XX.X on efforts million the company’s year capture

the On to slide, The given primary XXXX. part revenue of billion projects generation of was quarter the fiscal of XX% that in decrease of The a January the backlog of see a backlog the recognition year compared you’ll not to to forward previously economic XX, development quarter with was approximately a due $X.X driver finished profiles. bottom we move announced XX, the due right January also in reduction with the the two in since to XXXX. their fourth Hartford XXXX, reduction decision

update Slide and project is in X liquidity On an assets. our investment ongoing our on

cash company had of restricted million million. term and investments XX, January approximately total cash, unrestricted effort. short of quarter by short equivalents company’s the purchased blue Treasury of XXXX, part investments on XXXX the Securities by we and purple fiscal term lighter the of year represented darker This optimization cash equivalents cash, $XX.X bar. first includes represented management bar of and approximately term the equivalents of bar $XXX.X $XXX.X are total cash restricted cash by and blue the the short the in slide, as represented million investments during the by The chart million cash cash $XX.X of U.S. of center As the

on under focus the at completed development hand portfolio. to there total our project make company of will clear portfolio value date side Energy operating spent well owned our those as slide, and on and construct, FuelCell right only to shareholders. Investments Looking as currently of up grow in and reflect is continue the drive chart to intend We assets, a a generation our projects on projects assets which our that illustrating capital long-term with projects capital to construction. spent develop,

$XXX.X excludes our XX, January approximately million, of As which totaled project depreciation. assets accumulated gross XXXX,

in Slide XX.X appendix XX.X as XX, XXXX. process. generation of on the projects megawatts January expected XX.X operation, this they generation begin revenue. of megawatts and presentation, of operating and are assets our to This includes process detailed higher commercial XX, contribute of and totaled of As assets portfolio megawatts Projects

debt in projects the operation, completion reach business. into equity leverage tax to or we well capital these reinvest back transactions expect mechanical as long-term process financing as commercial additional seek further as to achieve Additionally, back

the operating this quarter plans. executing In with on summary, am our made progress and I pleased in commercialization

the Jason. will I call turn now to back

Jason Few

Thanks, Mike.

toward XX, tenants strategy, Turning long-term as growth. like to to strategy I guiding reemphasize our serves the Slide Powerhouse achieving business again our of which would

growth. is tenant first The

our clean are optimize the achieving working address. business technologies to significant growth where see opportunity energy we applications for in our for platform markets We

capacity achieving our application operations, of with second of for and making molten address expanding capital platforms we the our carbonate integrated capacity. and XXX are scale our the The is our by in manufacturing and megawatts plan onsite Across manufacturing scale. We the and annualized platforms to platform total organization. existing deepening our progress solutions extending goal conditioning investing leadership across in human

buildout developed our to modular manufacturing scaling of lends We’re of in have solid States. our manufacturing of oxide rapid cells scale DVD robotics itself an also currently plans capacity achieve large that manufacturing off-take facility oxide the for a size as hydrogen the in process We to capacity Calgary projects FID manufacturing advanced United more megawatts agreements. believe and XXX add long-term expanding and solid and we incremental

platforms our our we over increase culture and and plan never our And a the develop portfolio carbon innovating. on the deliver technologies solutions will revenue decarbonization enable us by streams delivering third have us of multi platform opportunity of innovate, applications believe and anchored and in provide significant purpose. our stopped our by global markets, XX-year services and to our the We transition. to for to capture our energy history, growth the economy patent support participation diversified We feature that will global to range and hydrogen add

I reliability would making projects to decarbonization, important platform we energy energy three on Slide resiliency growing, are are like XX. progress and we As on highlight the

Toyota our streams, three Beach, reform This Long California. tri-generation in ultra produced electricity, delivering carbon neutral platform, neutral gas directed will hydrogen, First, renewable which a project and into carbon natural clean value water. is

expect transportation. cell and generation We project States, first fuel dedicated electric the in duty it hydrogen that distributed light heavy will to vehicle be United commercial

work to fuel and this project the on construction the the We completed of platform development. has cell advanced have tri-generation phase project commissioning

anticipate fiscal We completed of the quarter commissioning remaining activity be the that in XXXX. will third

agencies development of of are and Energy continued visit appreciate very site. the United the in that aid the other further We and clean the goals. to decarbonization recent government States, a we growth selling helping of the host our U.S. in on of which much representatives and those and goal also of We of support world will departments the energy support to our Commerce Department believe to around global are pleased technology

continues advance. At to civil our construction onsite Connecticut, project Derby in

of of the foundational components installed delivered and completed We majority have with the site. largely the on construction plant balance

installation drive the XX the Bridgeport, required United generating Avangrid, in the which on interconnection the cell continued to This the by Illuminating fuel installed the will in be continue the fuel delivery only the megawatt of Connecticut, resiliency, platform with Iberdrola while development power of will and our renewable power the utility credits. second customer, provide reliability, surpassed energy We grid completed, carbon work an the and low project. largest platform complete the we’ll cell process, large States Connecticut XX when megawatt XX modules site, timing United company to enhanced including of to grid

the calendar operations We XXXX. of in quarter expect fourth commercial begin to

to reviewed advanced economical we carbon our continuing joint are recently current our and Together, ExxonMobil evaluated working of for and which to technical we as industrial Engineering demonstration of toward Under a Technology we or confirmed and carbon signposts. marketing plan manufacturing development prospective projects applications. identify capture fit, progress Thirdly, feedback, completed scallop joint a assessment, commercial the customer capture. agreement broad validated market across partners study, commercialization landscape with we pursue technologies trials for Company, are

addition unique in carbon diverse more, industrial food, the platform In contained believe and a ranging market NOx to and desirable. naturally paper, from will external fuel our be iron steel, destroy beverage potentially refining, to highly of pulp stream chemicals, ability the that we and

million. terms and budget we As previously of XX, announced million increased in the $XX August December, XX% from our $XX agreement research joint the through by we extended development XXXX, to

generate application existing scale capturing believe the our is power, same storage only a time fuel long-term producing destroying cell carbon the we this in all NOx, important from technology, at commercialize single large the of and platform. hydrogen relationship same carbon, capture This and that efforts capable supports technology to and

highlighting key solid would leaders our area. FuelCell by expand Energy’s capabilities, in to to like oxide manufacturing work this we start I As

our plant and management, and President, hydrogen is execute have was the Energy we we his knowledge in Vice Oxide Torrance ambitious years with Chief that expanded this Officer. to December focus year manufacturing right John and his experience drive manufacturing on operations and Manufacturing joined of commercialization long in in extensive platform responsibilities. including June place our startups in industry, history and believe of FuelCell John leadership XX brings with last role cell fuel and Senior role plans. his of growth over Solid John include in the Commercialization a and to

In requirements, additional in space with of dedicated manufacturing solid electrolyzers. per expanding manufacturing of per are year support X Canada XX we expected part to as to year of our capacity. plan the increase phase the Phase current X megawatts solid from our production This is expected facility our to Calgary, production oxide future of first capacity increase megawatts expansion oxide

We also megawatts in add manufacturing oxide the planned additional of to an have XXX States. solid capacity United

engineering and While the not facility yet the expansion been been developed. early fiscal this location solid the facility design have details later anticipate We requirements year. regarding plans our States in of announcing determined, more production for has United oxide

would cell Lastly, highlight to fuel of specific technologies. FuelCell cell, and advantages electrolyzer Energy, solid oxide oxide I like solid the

technologies offer Our fuel for and footprint easy flexibility, efficiency, small reliability, a co-location.

oxide and Our XXX profile, of XXX% and small sulfur footprint generate based makes in nitrogen higher combustion cell oxides, urban The generation operate this will platform smallest operation renewable running reliable, platform feedstock. efficiency clean and at flexible ultra emissions fuel of quiet to natural to expected hydrogen biogas, power emissions than power efficient, virtually or of matter capable a on with easy megawatt regardless is gas, areas. The site and alternatives. is particular clean no system sub solid fuel kilowatts oxide,

effective Energy’s give costs is cost the we energy our believe best hydrogen implement maximizing oxide flexible of the lower the solid hydrogen hydrogen the of while of by will platform of electrolysis most because overall the efficiency that to we power, to a organizations costs, among production is produced FuelCell minimize oxide believe available. one electrolysis opportunities more input is efficiency of and related to the to most technologies most efficient On option one strategy ways platform and solid the side, presents costs

one Among per competing the shot achieving our solid energy XXXX. we of Earth of levelized chances by by best Energy offers of believe of Department U.S. the oxide cost technologies, the $X of kilogram target platform targeted

just ability and with renewable Our the platform working also transitioning full solar. XX minutes, to standby from technologies up load in tandem to wind has in such ramp quickly, as

solid oxide possibility offers hydrogen electrolysis later electricity efficiently storing platform of use. as for Our the

leverage of of efficiently high for In are production be addition, a generated, for capitalize switching believe is electrolysis carbon nuclear stored, of positioned utilized other large to number well particularly solid hydrogen. and our temperature electricity we oxide applications. hydrogen Leveraging amounts transported to technology electricity, on can nuclear baseload or zero fuel generated opportunities for the

the water seconds efficient driven electrolysis I take one a few and is why want steam core options. difference technology to temperature oxide, by most to as liquid platform. solid electrolysis The water outline electrolysis electrolysis temperature high of such is solid The thermodynamics. liquid and than PEM our Alkaline requires used by oxide high lower of of temperature in steam electrolysis more energy

a temperature significantly accounting for make operates at electrolyzer even needed Our solid high higher from to energy steam the than lower water. temperature systems, efficiency oxide

about that oxide of PEM system a this temperature heat is operates waste heating efficiency, efficiency. and generation is significant gives electrical advantage Our if XX% XXX% support and source We believe solid technologies. a value, of Alkaline steam to a lower capable electrical over available higher at

large of Q&A, of toward company strategy as to platform which continue allocation a innovative to more by my conclude believe sheet have on I am to development I anticipated growth activities technologies market. slide increasingly to our and trajectory discipline enablers our we positions in strong capital commercialization on moving as growth, takeaways toward ramp about having prepared well us projects fund have are we we following up. and One, execute a balance total our demonstrated supported positive and an the global world. will is as excited available the Before that four remarks on even on with I would our commercialization progressing XX. some highlight the impact

power for support and manufacturing our in to power capture expected working growth oxide generation economy. efficiency electrolysis opportunities We sub investments we’re megawatt believe ability Two, solid support our market opportunities market to hydrogen future will these and distributed generation high that the products. capacity including to expand

are are we energy gaining passage internationally positioned our four globally, providing momentum in evidenced large operational policies our by the and Reduction our as from locations making we to believe in of customers to the projects well have benefit policies the executing world on Three, seeing tailwinds. the been transition enacted and in support And States, Inflation and we consistent for capabilities progress, the the around as are technologies. efforts more we well of as United Act these Europe, Canada, and Korea, are more

have low to our to transitioning a role critical believe We future. play in carbon technologies a

We over for of coming technologies value preparing opportunities from for is increasing to our market are well technology commercialization our and Energy delivered the capacity, years. extending the our are customers, we’re the positioned our We new existing streams capture believe delivering we and FuelCell platforms.

At a that take proud the at to who to Energy on honor made and Energy, serve board four women and want women at like women we directors. also such of I FuelCell their also talented manufacturing. I work our lives you. finance, across world purpose. Thank company, thank the do we FuelCell who, the sales, by diverse contributions are areas moment many made as by of engineering, Energy, FuelCell to around many women including and contributions live our the with all want in the

to to And the Q&A. I it turn operator now begin will over

Operator

first question Manav UBS. Instructions] Gupta from our We’ll Thank take you. [Operator with

Your now line is open.

Manav Gupta

any for some details, reason can that operations I’m question for this you you question mitigate avoid project, July, this. how is happy are just guys. related that says if situation? reason not you of if Port your the Toyota that I’m by just can a is any, to I’m and from the release asking through here there very for, specifically talk is press get Beach away understand, we Long little that, trying risk? My can you more Xth Toyota, could to of the Can commercial that possibility walk

Michael Lisowski

your thank Manav. Lisowski, Operating Energy you, Officer you with is This question. Thank and Michael for FuelCell Chief

We’re have and on date. quite the proud completed commissioning engaged now plant we and have in does have the progress been contractual The July project, construction that aspects. advancements that we Toyota the a mechanical previously Toyota X focused making contract the on is of of are for aspects with reported, in provision a the as

However, quite the pleased Toyota the plant. with of progress is

working very, the of, construction. advancements progress in in very of We’re

pleased the with, very, execution we work collaboratively working we Toyota execute with with of aspects as doing quite that They’re towards been work project have remaining commercialization. very the we’re and to

confidence be that fiscal have ability we’ve operations and achieve me, We timeframe our fourth commercial in great this third to the year. we’ll quarter our our doing by excuse that in that quarter stated this calendar year,

Manav Gupta

Perfect.

Help us some benefits can little back is, about I you? collaboration? Second three follow-up important quantify deal a for is line you. XXth talk you more bit of deal, two this four or and the the years more collaboration to go February this why probably of the release or of your this with MHP? down Can Thank

Jason Few

not us, has Few, company that large goals scale going we the to and to We you think a think also MMHE only gives that around and partnership the us MMHE, implement proven Jason capabilities for global of in collaboration It’s projects. one are to happen When a has scale to, the decarbonization in around a hydrogen. and that but large ability hydrogen achieve, believe large that is that really This who of important the will establish play about really in Manav. and ability benefits that Hi, MMHE customers world. the role very deliver Petronas to things in partnerships require of parent an being Asia that have strongly delivering that to we appreciate projects question. that important large projects delivering really world, the partner infrastructure the with part scale

like with And someone so having a delivers MMHE significant for us, value. partnership

Manav Gupta

Thank answering on and those congrats you quarter. for a good

Jason Few

you. Thank

Operator

Okay.

we’ll Next go Please with go Canaccord to ahead. Genuity. George Gianarikas

George Gianarikas

morning good my questions. everyone. Thanks taking Hey for

just a So couple.

what – – other Act of to you Inflation having? like the has kind the What I’d on across focus and Reduction have these potential when really, measures what are First, done backlog? conversations momentum government next the how you help can just to curious and if expect and I’m build conversations this the kind quantify year? into of to year And you initiatives us world

Jason Few

George, good for that question. you morning and thank

the like a the that as we’re bring to programs the I how demand IRA you down and wind to energy world the really with infrastructure billion projects with U.S. with resiliency market $XXX IRA our and for and about are, you around help capture, then what of call, to what’s meet other mean, you optimistic incentives what also transition? solar, look company, think around ways to add We advance companies do replay that’s that hydrogen be to package. I rapidly and So allocated the about as find create costs carbon over would more governments very, the happening scale capital reliability. grid and happened you’re to basically, and in when and going

also investment make for And opportunity us, the well programs for to that leverage it those investment programs incentives, we great an things our value given opportunity customers those those in as so us creates represent to like our proposition scaling to manufacturing. aid offer to enhance a for us as

we lots all begin We advantage lot a customers. around the like anxiously seeing, of really so it. IRA. we fully from But we’re so else and reaction their finalize of interest see the of take to awaiting, Treasury And Department everyone excitement rules can positive to

George Gianarikas

as product this revenue, the million if make $X.X and as, is on that it, been just exercised. impression to we you the option had just recognized follow-up, a as quarter this sure maybe understand And your

the sales do that of that any potential appears future, you expect there – the is in [ph], cost revenue module question. the first was with it So associated no recognize to exits cost

over this is or years of has the see POSCO Thank next for XXXX. just a changed you of that few the overall Second, it’s XXXX part with several the opportunity or you. think overall, this million I kind $XXX next, opportunity

Mike Bishop

I’ll Good take is morning George. those Mike. questions. This Yes,

at the no tied that in that to a essentially quarter, of a long-term modular the the agreement POSCO tied future company was material cost exercise, the to this option and question quarter. right, to option tied potentially so that had result, end agreement be recognized warranty. recognized related that revenue in will revenue replacements. an could to on to That was cost revenue, the expired So the it and regarding there related revenue There to it first was in as had that was a deferred, future no December, the revenue

As we’re opportunities actively far that the And installed his existing with for than opportunity as said the megawatts modules opportunity as and as last said in our of there’s fleet Korea, in remarks this remarks, to base, essentially XXX in significant greater replace now Korea. as just in opportunity Korea. Jason Korea, we in well, targeting the in the in quarter opening quarter

can Our work agreement sales We we with Korea. directly and those settlement folks POSCO, with are now under customers. in our end

So very of right front that’s us. excited in about that opportunity,

George Gianarikas

Thank you.

Operator

Thank you.

with Osborne Jeff to TD go we’ll Next Cowen.

open. line Your is now

Jeff Osborne

of I be sort good were follow-up morning. XX the five product should coming so Hey, no backlog here? a I just those replacement or as there, you ago? of for there months force more given was those also If The and down what there. of vintages to on out a bit many for nothing, than had sense that the megawatts, now Korea. movement has sold, the of surprised I wanted worked been you’ve XXX and sales think was how have up years Do zero

Michael Lisowski

question. you Jeff, This good morning Mike for the is Lisowski. and thank

that, is installed of five and generation we’re of to base pedigree the all referring that technology platform of year and the technology. the there So

and that replacement of expect, the those to line do at infrastructure restore we assets sites. strong customer of each So generation sight those to critical power of equipment

Jeff Osborne

just the XXX the percentage way of question years? is older is, than Maybe another megawatts five what asking

Mike Bishop

been this granularity, it, look if seven you is it period. the at the, level kind we in three over been XX that of that units past, Bishop, haven’t but out of put Mike to Jeff, have installed last, year has the so to the

coming would that, there. you have exact expect out to but soon, put see So, that replacements here the up timing we around module not

Jeff Osborne

through flow backlog orders come And the those to would just as Mike, clear, product in? be that

Mike Bishop

Yes.

So recognized POSCO. product back sale that the KFC, ship a it we that that product we a came last order, just direct revenue. was up recognized from modules the, we and backlog. little million so, The And those through as subsidiary $XX booked to When year, bit, through orders There thinking that customers. product backlog well, same way product directly do a to Those as will backlog. revenue. get opportunity potentially but likely, be an as then with we’re we recognized initially product would work is and service as true the through come than more is this about

Jeff Osborne

one the, but go U.S. XX? expenditure me like you on just the how XX can early, of to cost? in of was that CapEx rule any to much XXX Makes megawatt thumb that what question in, on sense. expectations from there the trends remind sorry, it’s [ph], of the I And of, megawatt current line Is per facility or last know facility. four a would

John Torrance

This is Torrance. Thank John question. you for that

are to We replicate product would that We XX which million only $XX of facility. part testing to anticipate for in expand megawatt we do our involves infrastructure some development, approximately megawatts. manufacturing related that investing as of not a first XXX some

We our also manufacturing that our decrease we capacity. processes manufacturing expect capital of as will costs we optimize continue and to readiness, progress per our on megawatt

Somewhere, too XX% has be magnitude. verified. we we that reduction far to up the of expect would without But somewhere in orders ahead, as to yet go fully getting in XX%

Jeff Osborne

$XXX like $XXX and number, hand grenades or horseshoes million So does megawatts to million XXX maybe that…

Mike Bishop

at. a based around we’re walking about that we’ve Sound, XXX the million point [ph], got this designs a preliminary at on numbers, envelope looking number $XXX on

Jeff Osborne

you. That’s I have. Perfect. Thank all

Jason Few

Thank you.

Tom Gelston

the next question? have we do David,

Operator

We’ll that. with about sorry Stine question next from And Eric our take Craig-Hallum.

Eric Stine

everyone. morning Good

Jason Few

How Eric. are Good you? morning,

Eric Stine

Hey, thanks. doing well,

fair potential is to Is pilot and the see those joint forward project? Rotterdam? would obviously maybe are project a process the before, it amount allocated come expanded think JDA, how kind discussed out, separate that pilot long completion So assume just do two to in need moving that development of for to next that steps play you think Or about the things? extended we they the ExxonMobil maybe, might something about with where on to

Jason Few

you for thank that. Eric,

terms been Part initial a on through getting the doing and the of effort what is is in to the the one been part around other optimizing about continuum, in One we’ve always through demonstration the right? of it as the think out then we two we’re can aspects. and core of carbonate You technology refer a as really transfer, work with what is Exxon has that that demonstrating the power R&D Exxon Proving capability alignment doing, work project. with density. just

two are things Those together. tied

progress comfortable very that we’ve the are shown. in We

know, the milestone you we As payments hit, year that we demonstration. technology achieve last around

don’t the would process, their their trending direction do relative Exxon we which which expect that control in toward that is we through right to – we moving project. process, So, demonstration

might be the to things or One consider to of about is a tied might allow service the turnover they timing when the facility facility that Rotterdam, also that that might at think plans you other also like time about their things demonstration. around how they you think doing to of implement

going factors there’s our are that drive So beyond timeline to just capabilities. go technology that

Eric Stine

Understood.

meaningful in would’ve maybe might uptick. So you it last go I into read might OpEx have I have don’t details on mean, some, a should questions lot a given have a sequential factors of – quarter just helpful. indicated a timelines think level, lot That’s into of answered, Maybe, this not no higher was specific but one quarter things. some there’s OpEx, that that. that been given

think OpEx going we So about how forward? should

Mike Bishop

Eric. morning, Good Mike. This question. that take is I’ll

expect R&D million expenses out there we R&D in operating range. So, to $XX be should that portion in out just is we is, expenses for fiscal And to quarter, a run if you funded first be put have where what range. million of around that our in kind $XX company XXXX, we of the

global a year We up SG&A, anyways out as side we been around specific we’ve reach. you folks guidance as the sales over put the have have seen not prior but tick adding on our grow

question, would that I Eric. answer how that’s So

Eric Stine

you. Thank Okay.

Operator

Thank you.

Riley. with go Ryan we’ll to B. Next, Pfingst

Your now line open. is

Ryan Pfingst

on going of $XX up following what guys? higher guys, costs is of EMTEC a are contract doing on increasing your that you’re Hey you up those Or here, guys end? the reflection million scope maybe the with

Mike Bishop

This Good I’ll question. take is morning. Mike. that

of that that’s to added EMTEC timeframe. So being to extended bring with contract a summer function no, contract ExxonMobil recall. We the us the really into additional time

really adding additional time it’s to So it.

Ryan Pfingst

just non-recoverable talk then to turning Got potentially for of you what’s summer? Toyota million reach you do similar included types costs, can it. before this operation any of costs there? about project And And we commercial the the $X.X expect

Mike Bishop

This is one again. that as I’ll Mike well. take

So, seen what’s last number over this that you’ve the several in quarters. and

out the project has Toyota. at company been the As building

assets costs We recover the else. have able of we somewhere essentially construction been wouldn’t be portion expensing that the redeploying to potentially, otherwise by

basically fuel a underlying in have long-term because is agreement. the this Although locked we asset, not

able to in perfectly So project the not future. the estimate economics

the said in You earlier we commissioning trail will we that see in are off, remarks this now. as period our

construction several next So trail activity will the over the quarters. off here

Ryan Pfingst

I’ll guys. That’s Thanks turn helpful. back. it

Operator

go Next a with Brothers. Noel Touhy to we’ll Parks

is Your line open.

Noel Parks

Hi, good morning.

Jason Few

morning, Good Noel.

Noel Parks

Hi.

stand the you where versus sort where during aspects the contracted you’re of as the know, curious couple sort estimates pre-COVID is now things. capacity about was started? forecasted was or from if shutdowns? Just kind cost you of or So of I wondering those. of impact were a any the expecting today those talk original I things didn’t expansions, of beyond inflation slump if could just I far those there with as in your for still cost

Jason Few

be environment view you estimates to in. on think we’re can for the which in I cost cost our take current current right operating now

Noel Parks

had a as for I’m you in thinking guess negotiating to customers? of projects any a little would you’ve to pricing down trouble road, more position that you’re you look you’d in incorporate your as, date, that of you of any able in I be you your and expect sort inflation along passing whether to just as do have terms I economics, And Okay. terms future the just bit guess

Jason Few

if way from a is I about power overall agreements. when the we think so the talk which one just go-to-market, purchase you two ways, pricing Yes, under, in broadly about rate,

we we and real cost incorporate other is the actually the assets decisions. at those our when when we those deploy look cases, of pricing The into we’re just In both have, selling platform. we that that

relative we to that competitive us helps with of continue that which will deal the remain help offsetting things for of take of is with some IRA, costs, some allows us deal think the help I we alternatives. that customers advantage that other the to take as things advantage like existing and ITC

Noel Parks

Great.

Michael Lisowski

I capacity Noel, that is and to the our we’re operational while capacity, and focused deploy other on expand to squarely continuous remarks and add our thoughtfully Jason’s continue thing capital that we would efficiencies. improvement increase

things to grow is we and a to as continue up our continue to process yields, expand in business, really continue key reduction we and see improvement our we So, of in to costs of elimination efficiencies overall continue focus like reduction as we for our to as bottlenecks, area capacity. scale expect grow, of

Noel Parks

the those curious JDA the about the And Or I increase. Thanks. do increase, Great. ongoing for wondering the And sort the project? that in ask duration accelerating and to $XX earmarked just particular timing is million was anything personnel of want related just to of budget Exxon just I’m I R&D or equipment?

Mike Bishop

Joel this Hi [ph], is Mike.

extension So time to on will summer. That no, the contract. the of the the run million is related through $XX contract

was essentially reason that change. the that So for

Noel Parks

Thanks lot. a Great.

Operator

remarks. that Jason session. conclude question-and-answer Few And the back over today’s closing to I’ll any does now turn additional or call for

Jason Few

thank today. to very everyone joining David, us I for that. you much thank And want for

as have to we We joining excited Thank of our momentum optimize are deliver a we the and business by is purpose And great execute a Powerhouse our about growth on team you to will day. we enabling empowered look to on energy. updating you forward clean and Energy continue next FuelCell working again for returns. The world strategy, deliver building quarter.

Operator

This conference call. today’s concludes

You disconnect. may now

FuelCell Energy (FCEL) 9 Mar 232023 Q1 Earnings call transcript