FuelCell Energy, Inc. (NasdaqNM:FCEL reported results and accomplishments for its fourth quarter and fiscal year ended October 31, 2006. Q4 revenues rose 15% to $9.1 million from the same period last year. Product sales and revenues increased 61% to $6.7 million from $4.1 million. Research and development contract revenue was $2.5 million compared to $3.8 million.
Daniel Brdar, FuelCell Energy’s President and CEO said, “During fiscal 2006, we successfully positioned the Company to expand in targeted geographical and Renewable Portfolio Standards (RPS) markets. In California, where we sold 11.35 megawatts – 2.6 megawatts in the fourth quarter, we are the market leader. Importantly, our orders in the quarter were for multi-unit or megawatt applications. In addition to the orders in California, we received a 1.2 megawatt order from Enbridge, Inc. for our DFC-ERG natural gas pipeline application.”
The Company’s product backlog, including long-term service agreements, as of October 31, 2006 totaled $27.9 million, an increase of 39%. Research and development contract backlog totaled $30.1 million, versus $15.8 million as of the prior year end, primarily reflecting the awards of contracts from the Department of Energy for large scale stationary solid oxide fuel cell development and the U.S. Navy to continue work on the ship service fuel cell.
The net loss to common shareholders for the fourth quarter was $25.1 million ($0.47 per share) compared to last year’s loss of $19.5 million ($0.40 per share). The ratio of costs to product sales and revenue improved to 3.19-to-1 from 3.36-to-1 in the year-ago period.
Factors that impacted cost ratio in the quarter included lower product costs offset by short term pressure on selling prices in California, delays in Connecticut’s RPS program and higher after-market costs on a larger installed fleet. The higher net loss in the 2006 quarter primarily resulted from higher product sales, largely sub-megawatt units, and costs associated with transitioning to produce larger units. Moving forward, sales of lower cost sub-megawatt and megawatt-class units are expected to improve the cost ratio and resulting operating margins. In the quarter, research and development contracts provided positive gross margin of $0.5 million compared to a negative gross margin of $0.3 million in the same period last year.
Total cash and investments at October 31, 2006 was $120.6 million.
2006 Performance Results
For the year ended October 31, 2006, FuelCell Energy reported revenues of $33.3 million, an increase of 10%, compared with $30.4 million reported in fiscal 2005. Product sales and revenues were $21.5 million, 24% above the $17.4 million in the year ago period. Research and development contract revenue was $11.8 million compared to $13.0 million in 2005.
For the year ended October 31, 2006, FuelCell Energy reported a net loss to common shareholders of $84.2 million ($1.65 per share).
CEO Commentary and Corporate Highlights for Fiscal 2006:
“During 2006, we achieved key milestones in our strategy to drive down unit costs, build our leadership position in key markets and deliver reliable, ultra-clean power to a diverse and growing customer base for multi-unit and megawatt-class fuel cell applications,” said Brdar. “Demand for larger scale projects is increasing and we are well positioned to capture additional market share. During the course of the year, we achieved a 39 percent reduction in the cost of the DFC3000 unit, boosted the electric power output of the Company’s ultra-clean power plants by 20 percent, and prepared bids for over 40 megawatts of projects for Connecticut’s Project 100 that will be submitted in December.”
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