FUELCELL ENERGY INC Q2 FY2025 earnings call

• Announced a restructuring plan prioritizing sales of the molten carbonate platform, aiming to rightsize the business, manage expenses, and position for profitability. - Focused on the carbonate platform, paused broader solid oxide R&D, reduced overhead, and optimized the supply chain. - Launched the Dedicated Power Partners (DPP) strategic partnership to accelerate deployment of carbonate fuel cells for data centers and other applications, leveraging diversified energy's fuel supply. - Strategic partnerships with ExxonMobil and others are driving commercial traction, including progress in carbon capture with ExxonMobil. - Demonstrated disciplined cost management, with losses narrowing, and aiming to reduce operating expenses by 30% annually compared to fiscal year 2024. - Emphasized the Powerhouse business strategy, including focus, building scale (new Chief Commercial Officer), innovation, and DPP as a solution to energy market challenges.

In the second quarter of fiscal year 2025, total revenues were $37.4 million. Product revenues amounted to $13 million (no product revenues in the comparable prior year period). Service agreement revenues increased to $8.1 million from $1.4 million. Generation revenue decreased to $12.1 million from $14.1 million. Advanced technology contract revenues dropped to $4.1 million from $6.9 million. Gross loss for the quarter was $9.4 million compared to $7.1 million in the prior year quarter. Operating expenses decreased to $26.4 million from $34.3 million. Backlog increased by approximately 18.7% to $1.26 billion as of April 30, 2025.

• Target to achieve positive adjusted EBITDA once the Torrington manufacturing facility reaches an annualized production rate of 100 megawatts. - Expect to reduce operating expenses by 30% on an annualized basis compared to fiscal year 2024. - Backlog growth positions the company for sustained profitability and future growth.

• Forward-looking statements may differ from actual results due to various risks and uncertainties, as detailed in SEC filings, including risks related to execution of the restructuring plan and slower-than-expected investments in advanced alternative energy technology.

Q: George Gianarikas asks about momentum in DPP procuring customers and orders.

A: Jason Few states there are active conversations in Northern Virginia and Kentucky, with positive momentum in pursuing transactions to deliver fuel and power to data center customers.

Q: Jeff Osborne inquires about line of sight to EBITDA neutral at 100 MW production.

A: Mike Bishop responds that timing depends on order flow, no additional capital is needed to reach 100 MW at the Torrington facility, and the facility can scale to 200 MW with additional expenditures.

Q: Jeff Osborne asks about pricing for data center applications.

A: Jason Few notes the increase in gas turbine costs is an opportunity, and there are no significant changes in pricing, with the company intending to exploit the opportunity.

Q: Noel Parks asks about power generation opportunities for AI and data centers, and structure of agreements with gas distribution customers.

A: Jason Few discusses multifrontal engagement with data center customers, including hyperscalers, developers, and gas distribution customers. Michael Bishop explains DPP's role in power purchase agreements and financing, with DPP handling development and financing while FuelCell Energy supplies product and service.