FuelCell Books Wider-than-Feared Q4 Loss; Shares Drop 13%

FuelCell Energy, Inc. (NASDAQ: FCEL), a fuel cell company, has reported a larger-than-expected loss in the fourth quarter of Fiscal 2021 (ended October 31). Also, revenues missed analysts’ expectations by a wide margin.

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Following the results, shares of the company lost almost 13% on Wednesday to close at $5.11.

Results in Detail

FuelCell incurred a loss of $0.07 per share, higher than the Street’s loss estimate of $0.02 per share. The company reported a loss of $0.08 per share in the same quarter last year.

Total revenues generated during the quarter declined 18% year-over-year and stood at $13.9 million, missing the consensus estimate of $21.9 million. A decrease in service agreements and license revenues impacted the results.

Segment-wise, service agreements and license revenues were negative $0.1 million, down 102% year-over-year, while generation revenues grew 31% to $6.7 million. Additionally, advanced technologies contract revenues surged 14% to $7.3 million.

Gross loss totaled $8.4 million in the quarter, compared to $8 million in the prior-year quarter. Furthermore, adjusted EBITDA came in at negative $11.9 million, higher than the negative $8.6 million recorded in the same quarter last year.

Fiscal 2021 Results

For the year, FuelCell recorded a loss of $0.31 per share, compared to the loss of $0.42 per share reported in the prior year. Total revenues came in at $69.6 million, down 2% year-over-year.

CEO Comments

In response to reported results, the CEO of FuelCell, Mr. Jason Few, said, “We continue to make progress against and evolve our Powerhouse Business Strategy, which we launched two years ago…We are working toward accelerating the development and deployment of our platforms to position the company to capture the substantial growth opportunity we foresee for both our carbonate and solid oxide solutions.”

Few added, “Looking forward, we are focused on executing against our existing project backlog, while simultaneously increasing our annualized production rate, repositioning our brand for the future and building the next generation sales structure.”

Planned Investments for Fiscal 2022

To achieve long-term growth, FuelCell has projected certain expenditures for Fiscal 2022. Capital expenditures are expected to range between $40 million and $50 million. Additionally, expenditures related to company-funded research and development activities are forecast to increase to between $45 million and $55 million.

Wall Street’s Take

Following the FuelCell earnings report, Cowen analyst Jeffrey Osborne maintained a Hold rating on the stock and decreased the price target to $5 from $7.

Osborne commented, “Disappointing 4FQ results reflects the lumpy nature of the company’s project timing. We don’t expect clarity around future project start dates after seeing delays continue to emerge in Groton. Favorable settlement with POSCO secured $60mn in Product sales in 2022. No longer as optimistic about the early 2022 outcome of the recent CT Bill but see March 2022 investor day as next catalyst to shares.”

Overall, the stock has a Hold consensus rating based on 2 Holds. The average FuelCell price target of $5 implies 2.15% downside potential from current levels. Shares have fallen 54.25% over the past year.

Risk Analysis

According to the new TipRanks Risk Factors tool, FuelCell stock is at risk mainly from three factors: Finance and Corporate, Production, and Ability to Sell, which contribute 43%, 14%, and 14%, respectively, to the total 37 risks identified for the stock.

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