FCEL 10-Q

Fuelcell Energy Inc (FCEL)

10-Q 2021-03-16 For: 2021-01-31

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Added on April 09, 2026

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Delaware		06-0853042
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3 Great Pasture Road Danbury, Connecticut		06810
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

		Page

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements.	3

	Consolidated Balance Sheets as of January 31, 2021 and October 31, 2020.	3

	Consolidated Statements of Operations and Comprehensive Loss for the three months ended January 31, 2021 and 2020.	4

	Consolidated Statements of Changes in Equity for the three months ended January 31, 2021 and 2020.	5

	Consolidated Statements of Cash Flows for the three months ended January 31, 2021 and 2020.	6

	Notes to Consolidated Financial Statements.	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	35

Item 4.	Controls and Procedures.	35

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	36

Item 1A.	Risk Factors.	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	38

Item 3.	Defaults Upon Senior Securities.	39

Item 4.	Mine Safety Disclosures.	39

Item 5.	Other Information.	39

Item 6.	Exhibits.	40

Signatures		42

	January 31,			October 31,
	2021			2020
ASSETS
Current assets:
Cash and cash equivalents, unrestricted	$	178,570		$	149,867
Restricted cash and cash equivalents - short-term		12,252			9,233
Accounts receivable, net		10,021			9,563
Unbilled receivables		8,243			8,041
Inventories		61,901			50,971
Other current assets		7,422			6,306
Total current assets		278,409			233,981
Restricted cash and cash equivalents - long-term		18,772			32,952
Inventories - long-term		4,586			8,986
Project assets		164,593			161,809
Property, plant and equipment, net		35,304			36,331
Operating lease right-of-use assets, net		8,524			10,098
Goodwill		4,075			4,075
Intangible assets, net		19,643			19,967
Other assets		18,488			15,339
Total assets	$	552,394		$	523,538
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	14,594		$	21,366
Current portion of operating lease liabilities		955			939
Accounts payable		8,034			9,576
Accrued liabilities		10,763			15,681
Deferred revenue		18,728			10,399
Preferred stock obligation of subsidiary		—			938
Total current liabilities		53,074			58,899
Long-term deferred revenue		25,579			31,501
Long-term preferred stock obligation of subsidiary		—			18,265
Long-term operating lease liabilities		8,327			9,817
Long-term debt and other liabilities		78,051			150,651
Total liabilities		165,031			269,133
Redeemable Series B preferred stock (liquidation preference of $64,020 as of January 31, 2021 and October 31, 2020)		59,857			59,857
Total equity:
Stockholders’ equity:
Common stock ($0.0001 par value); 337,500,000 shares authorized as of January 31, 2021 and October 31, 2020; 322,412,296 and 294,706,758 shares issued and outstanding as of January 31, 2021 and October 31, 2020, respectively		32			29
Additional paid-in capital		1,538,311			1,359,454
Accumulated deficit		(1,210,156	)		(1,164,196	)
Accumulated other comprehensive loss		(681	)		(739	)
Treasury stock, Common, at cost (58,080 and 56,411 shares as of January 31, 2021 and October 31, 2020, respectively)		(462	)		(432	)
Deferred compensation		462			432
Total stockholders’ equity		327,506			194,548
Total liabilities and stockholders' equity	$	552,394		$	523,538

	Three Months Ended January 31,
	2021			2020
Revenues:
Product	$	—		$	—
Service and license		4,913			5,612
Generation		4,891			5,442
Advanced Technologies		5,073			5,210
Total revenues		14,877			16,264
Costs of revenues:
Product		2,366			2,016
Service and license		5,099			1,618
Generation		7,115			5,557
Advanced Technologies		3,915			3,792
Total costs of revenues		18,495			12,983
Gross (loss) profit		(3,618	)		3,281
Operating expenses:
Administrative and selling expenses		8,932			5,266
Research and development expenses		1,823			1,155
Total costs and expenses		10,755			6,421
Loss from operations		(14,373	)		(3,140	)
Interest expense		(2,545	)		(3,277	)
Loss on extinguishment of debt		(11,156	)		—
Loss on extinguishment of preferred stock obligation of subsidiary		(934	)		—
Change in fair value of common stock warrant liability		(15,974	)		(34,245	)
Other (expense) income, net		(978	)		531
Loss before provision for income taxes		(45,960	)		(40,131	)
Provision for income taxes		—			(20	)
Net loss		(45,960	)		(40,151	)
Series B preferred stock dividends		(800	)		(931	)
Net loss attributable to common stockholders	$	(46,760	)	$	(41,082	)
Loss per share basic and diluted:
Net loss per share attributable to common stockholders	$	(0.15	)	$	(0.20	)
Basic and diluted weighted average shares outstanding		312,109,888			202,216,493

	Common Stock
	Shares			Amount		Additional Paid-in Capital				Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Deferred Compensation		Total Equity
Balance, October 31, 2020		294,706,758		$	29	$	1,359,454		#	$	(1,164,196	)	$	(739	)	$	(432	)	$	432	$	194,548
Sale of common stock, net of fees		25,000,000			3		156,363				—			—			—			—		156,366
Orion warrant exercises		2,700,000			—		21,824				—			—			—			—		21,824
Common stock issued, non-employee compensation		2,734			—		45				—			—			—			—		45
Stock issued under benefit plans, net of taxes paid upon vesting of restricted stock awards		4,521			—		8				—			—			—			—		8
Share based compensation		—			—		1,417				—			—			—			—		1,417
Preferred dividends — Series B		—			—		(800	)			—			—			—			—		(800	)
Effect of foreign currency translation		—			—		—				—			58			—			—		58
Adjustment for deferred compensation		(1,669	)		—		—				—			—			(30	)		30		—
Release of a share reserve		(48	)		—		—				—			—			—			—		—
Net Loss		—			—		—				(45,960	)		—			—			—		(45,960	)
Balance, January 31, 2021		322,412,296		$	32	$	1,538,311			$	(1,210,156	)	$	(681	)	$	(462	)	$	462	$	327,506

	January 31,			October 31,			Estimated
	2021			2020			Useful Life
Project Assets - Operating	$	103,452		$	99,351		5-20 years
Project Assets - Construction in progress		93,998			91,276		7-20 years
		197,450			190,627
Accumulated depreciation		(32,857	)		(28,818	)
Project Assets, net	$	164,593		$	161,809

As of January 31, 2021	Gross Amount		Accumulated Amortization			Net Amount
In-Process Research and Development	$	9,592	$	-		$	9,592
Bridgeport PPA		12,320		(2,269	)		10,051
Total		21,912		(2,269	)		19,643

As of October 31, 2020	Gross Amount		Accumulated Amortization			Net Amount
In-Process Research and Development	$	9,592	$	-		$	9,592
Bridgeport PPA		12,320		(1,945	)		10,375
Total		21,912		(1,945	)		19,967

	Operating Leases			Finance Leases
Due Year 1	$	1,244		$	21
Due Year 2		1,425			3
Due Year 3		898			—
Due Year 4		740			—
Due Year 5		712			—
Thereafter		14,684			—
Total undiscounted lease payments		19,703			24
Less imputed interest		(10,421	)		(1	)
Total discounted lease payments	$	9,282		$	23

	Series C Warrants		Orion Warrants
Balance as of October 31, 2020		964,128		2,700,000
Warrants exercised		—		(2,700,000	)
Balance as of January 31, 2021		964,128		—

Restricted Stock Awards and Units	Shares			Weighted-Average Fair Value
Outstanding as of October 31, 2020		2,067,140		$	5.06
Granted - performance shares		551,252			14.89
Granted - time-vesting restricted stock units		296,826			3.28
Vested		(221	)		20.40
Outstanding as of January 31, 2021		2,914,997			5.46

	Three Months Ended January 31,						Change
(dollars in thousands)	2021			2020			$			%
Total revenues	$	14,877		$	16,264		$	(1,387	)		(9	)%
Total costs of revenues	$	18,495		$	12,983		$	5,512			42	%
Gross (loss) profit	$	(3,618	)	$	3,281		$	(6,899	)		(210	)%
Gross margin		(24.3	)%		20.2	%

Project Name	Location	Power Off-Taker	Rated Capacity (MW)		PPA Term (Years)
Groton Sub Base	Groton, CT	CMEEC (CT Electric Co-op)		7.4	20
Toyota	Los Angeles, CA	Southern California Edison; Toyota		2.3	20
San Bernardino	San Bernardino, CA	City of San Bernardino Municipal Water Department		1.4	20
LIPA 1	Long Island, NY	PSEG / LIPA, LI NY (Utility)		7.4	20
CT RFP-1	Hartford, CT	Eversource/United Illuminating (CT Utilities)		7.4	20
CT RFP-2	Derby, CT	Eversource/United Illuminating (CT Utilities)		14.8	20
		Total MW in Process:		40.7

	Payments Due by Period
(dollars in thousands)	Total		Less than 1 Year		1 – 3 Years		3 – 5 Years		More than 5 Years
Purchase commitments⁽¹⁾	$	64,410	$	62,799	$	1,611
Term loans (principal and interest)		47,445		12,318		16,909		12,330		5,888
Capital and operating lease commitments⁽²⁾		19,728		1,265		2,327		1,452		14,684
Sale-leaseback financing obligation ⁽³⁾		19,076		3,488		5,414		5,403		4,771
Natural gas supply contract ⁽⁴⁾		13,782		492		3,938		3,938		5,414
Option fee ⁽⁵⁾		150		150		—		—		—
Series B Preferred dividends payable ⁽⁶⁾		—		—		—		—		—
Totals	$	164,591	$	80,512	$	30,199	$	23,123	$	30,757

Period	Total Number of Shares Purchased ⁽¹⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
November 1, 2020 – November 30, 2020		—	$	—		—		—
December 1, 2020 – December 31, 2020		—	$	—		—		—
January 1, 2021 – January 31, 2021		81	$	10.91		—		—
Total		81	$	10.91		—		—

	January 31,		October 31,
	2021		2020
Commercial Customers:
Amount billed	$	8,409	$	7,329
Unbilled receivables⁽¹⁾		7,262		7,063
		15,671		14,392
Advanced Technologies (including U.S. government⁽²⁾):
Amount billed		1,612		2,234
Unbilled receivables		981		978
		2,593		3,212
Accounts receivable, net and unbilled receivables	$	18,264	$	17,604

Exhibit No.		Description
3.1		Certificate of Incorporation of the Company, as amended, July 12, 1999 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 21, 1999).
3.2		Certificate of Amendment of the Certificate of Incorporation of the Company, dated November 21, 2000 (incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K dated January 12, 2017).
3.3		Certificate of Amendment of the Certificate of Incorporation of the Company, dated October 31, 2003 (incorporated by reference to Exhibit 3.11 to the Company’s Current Report on Form 8-K dated November 3, 2003).
3.4		Amended Certificate of Designation of Series B Cumulative Convertible Perpetual Preferred Stock, dated March 14, 2005 (incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K dated January 12, 2017).
3.5		Certificate of Amendment of the Certificate of Incorporation of the Company, dated April 8, 2011 (incorporated by reference to Exhibit 3.5 to the Company’s Annual Report on Form 10-K dated January 12, 2017).
3.6		Certificate of Amendment of the Certificate of Incorporation of the Company, dated April 5, 2012 (incorporated by reference to Exhibit 3.6 to the Company’s Annual Report on Form 10-K dated January 12, 2017).
3.7		Certificate of Amendment of the Certificate of Incorporation of the Company, dated December 3, 2015 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated December 3, 2015).
3.8		Certificate of Amendment of the Certificate of Incorporation of the Company, dated April 18, 2016 (incorporated by reference to Exhibit 3.9 to the Company’s Quarterly Report on Form 10-Q for the period ending April 30, 2016).
3.9		Certificate of Amendment of the Certificate of Incorporation of the Company, dated April 7, 2017 (incorporated by reference to Exhibit 3.10 to the Company’s Quarterly Report on Form 10-Q for the period ending April 30, 2017).
3.10		Certificate of Amendment of the Certificate of Incorporation of the Company, dated December 14, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated December 14, 2017).
3.11		Certificate of Amendment of the Certificate of Incorporation of FuelCell Energy, Inc., dated May 8, 2019 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 8, 2019).
3.12		Certificate of Amendment of the Certificate of Incorporation of FuelCell Energy, Inc., dated May 11, 2020 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 12, 2020).
3.13		Amended and Restated By-Laws of the Company, dated December 15, 2016 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K dated December 15, 2016).
4.1		Specimen of Common Share Certificate (incorporated by reference to Exhibit 4 to the Company’s Annual Report on Form 10-K for fiscal year ended October 31, 1999).
4.2		Schedule A to Articles of Amendment of FuelCell Energy, Ltd., setting forth the rights, privileges, restrictions and conditions of Class A Cumulative Redeemable Exchangeable Preferred Stock (incorporated by reference to exhibit of the same number contained in the Company’s Quarterly Report on Form 10-Q for the period ended January 31, 2009).
4.3		Letter Agreement, dated March 31, 2011, and Guarantee, dated April 1, 2011, by and between the Company and Enbridge, Inc., and Revised Special Rights and Restrictions attributable to the Class A Preferred Stock of FuelCell Energy, Ltd. (incorporated by reference to Exhibits 4.1, 4.2 and 4.3 to the Company’s Current Report on Form 8-K dated March 31, 2011).
4.4		Certificate of Designation for the Company’s 5% Series B Cumulative Convertible Perpetual Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report Form 8-K, dated November 22, 2004).
4.5		Certificate of Designations for the Company’s Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, dated September 5, 2017).
4.6		Certificate of Designations, Preferences and Rights for the Company’s Series D Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated August 27, 2018).
4.7		Specimen Series D Convertible Preferred Stock Certificate. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K dated August 27, 2018).
4.8		Form of Series A Warrants to purchase common stock (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K dated July 6, 2016).
4.9		Form of Series B Warrants to purchase common stock (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K dated July 6, 2016).
4.10		Form of Series C Warrants to purchase common stock (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated April 27, 2017).
4.11		Form of Series D Warrants to purchase common stock (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated April 27, 2017).
4.12		Form of Warrant to purchase common stock (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on November 6, 2019).
4.13		Letter Agreement, dated January 20, 2020, among FuelCell Energy, Inc., FCE FuelCell Energy Ltd., and Enbridge Inc. relating to the amendment of the terms of the Class A Cumulative Preferred Stock of FCE FuelCell Energy Ltd. (incorporated by reference to Exhibit 4.13 to the Company’s Annual Report on Form 10-K for the year ended October 31, 2019, filed on January 22, 2020).


Exhibit No.		Description
4.14		Schedule A setting forth the amended rights, privileges, restrictions and conditions of the Class A Cumulative Preferred Stock of FCE FuelCell Energy Ltd. (incorporated by reference to Exhibit 4.14 to the Company’s Annual Report on Form 10-K for the year ended October 31, 2019, filed on January 22, 2020).
4.15		Articles of FCE FuelCell Energy Ltd., effective as of January 20, 2020, including in Article 27.2 the Special Rights and Restrictions of the Class A Preferred Shares of FCE FuelCell Energy Ltd. (incorporated by reference to Exhibit 4.15 to the Company’s Quarterly Report on Form 10-Q for the period ending April 30, 2020 filed on June 12, 2020).
10.1*		FuelCell Energy, Inc. Fiscal Year 2021 Long Term Incentive Plan, as approved November 24, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 27, 2020).
10.2*		Form of FuelCell Energy, Inc. 2018 Omnibus Incentive Plan Relative TSR Performance Share Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 27, 2020).
10.3*		Form of FuelCell Energy, Inc. 2018 Omnibus Incentive Plan Absolute TSR Performance Share Award Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 27, 2020).
10.4		Payoff Letter, dated November 30, 2020, among FuelCell Energy, Inc., each of the Guarantors party thereto, and Orion Energy Partners Investment Agent, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 1, 2020).
10.5		Underwriting Agreement, dated as of December 1, 2020, by and among FuelCell Energy, Inc., the Selling Stockholders named therein, and J.P. Morgan Securities LLC, as representative of the several Underwriters named therein (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on December 4, 2020).
10.6		Payoff Letter, dated December 16, 2020, between FuelCell Energy, Inc., FCE FuelCell Energy Ltd., and Enbridge Inc. with respect to the Class A Preferred Shares of FCE FuelCell Energy Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 21, 2020).
10.7*		Second Amendment, dated as of January 19, 2021, to the Employment Agreement, effective as of August 26, 2019, between FuelCell Energy, Inc. and Jason B. Few (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 20, 2021).
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Schema Document
101.CAL		Inline XBRL Calculation Linkbase Document
101.LAB		Inline XBRL Labels Linkbase Document
101.PRE		Inline XBRL Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

		FUELCELL ENERGY, INC.
		(Registrant)

March 16, 2021		/s/ Michael S. Bishop
Date		Michael S. Bishop Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)