FuelCell Energy Reports Second Quarter Results and Business Highlights

FuelCell Energy

reported Tuesday results for its second quarter ended April 30, 2012 along with an update on its key business highlights. FuelCell Energy reported total revenues for the second quarter of 2012 of $24.2 million compared to $28.6 million in the same period last year. Product sales and revenues in the second quarter were $22.1 million compared to $26.7 million in the prior year quarter, as revenue in the current quarter consisted primarily of fuel cell kits whereas revenue from the second quarter of 2011 included a mix of both complete power plants and fuel cell kits. The Company made adjustments to reduce production levels in mid-April 2012 to align with contractual delivery dates and is currently in the process of raising production levels to meet increased second half demand. Second quarter product revenue included $14.3 million of fuel cell kits and power plants, $4.4 million of power plant component sales, installation services and commercial building application fuel cell joint development revenue, and $3.5 million of service and power purchase agreements. Total gross profit was $0.2 million in the second quarter of 2012, compared to an adjusted gross loss of $2.1 million in the second quarter of 2011, excluding a non-recurring charge incurred in 2011 as explained in the reconciliation of GAAP to non-GAAP information at the end of this release. Gross profit for product sales and revenues improved $2.3 million compared to the adjusted second quarter of 2011. Year over year margin improvements reflect cost reduction efforts including manufacturing and supply chain efficiencies as well as improved services margins as some older early generation power plant service contracts are concluded. In the USA, specific projects in Connecticut and California continue to progress towards closure and the outlook for project finance continues to improve. A strong cash position and the pending second manufacturing facility in South Korea are favorable developments for project investors evaluating fuel cell projects. The Company plans to develop and deploy fuel cell power plants in the European market utilizing FuelCell Energy Solutions, GmbH, a German company formed by FuelCell Energy, Inc. Subsequent to the end of the second quarter of 2012, a former partner of the Company contributed fuel cell production equipment and fuel cell parts to FCES and fuel cell intellectual property to Fraunhofer IKTS. No consideration was paid for any of the assets. Fraunhofer IKTS is expected to become a minority owner of FuelCell Energy Solutions, GmbH in June, 2012 and will contribute its fuel cell intellectual property to the joint venture, as well as its R&D and materials science expertise and relationships with government and industry.