FuelCell Surges 17%, Tops $1 on Strong Q2, Avoids Delisting

Key Takeaway

• FuelCell Energy (FCEL) shares surged 17.1% to $1.02 after Q2 results beat expectations, lifting the stock above Nasdaq's $1 delisting threshold.
• Despite a net loss of $32.9 million, revenue exceeded estimates at $22.4 million, with significant gains in generation and advanced-technologies revenue.
• Strategic partnerships with ExxonMobil and Ameresco highlight FuelCell's progress in commercializing new technologies and expanding its market reach.

Earnings Beat

Shares of FuelCell Energy Inc. surged on Monday, trading above the key $1 threshold after the company reported fiscal second-quarter results that exceeded expectations. This comes shortly after the company received a delisting notice from Nasdaq due to its stock price failing to meet the $1 minimum bid requirement. The stock has not closed at $1 or above for consecutive days since April 17. FuelCell's stock (FCEL) jumped 17.1% in morning trading to $1.02, marking a 45.7% increase since it closed at 70 cents on May 10, the lowest closing price since December 19, 2019.

FuelCell reported a net loss for the quarter ending April 30 of $32.9 million, or 7 cents per share, compared to a loss of $35.1 million, or 9 cents per share, in the same period a year ago. The FactSet consensus for per-share losses was 8 cents. Total revenue fell 41.5% to $22.4 million but was above the FactSet consensus of $21.3 million. Generation revenue increased by 67.3% to $14.1 million, and advanced-technologies revenue soared 86.4% to $6.9 million. However, service revenue plummeted 94.8% to $1.4 million. The company recorded no product revenue in the latest quarter or in the year-ago quarter.

Strategic Developments

CEO Jason Few expressed satisfaction with the company's performance, stating, "I’m very pleased with our results for the second quarter as we continue to execute on our powerhouse business strategy." He noted that revenue climbed sequentially compared to the first quarter but decreased compared to the prior year period due to the absence of module exchanges this quarter. Few also highlighted the company's progress in commercializing new advanced technologies, including an updated and extended joint development agreement with ExxonMobil Technology and Engineering Company to develop carbon capture technology. This agreement allows FuelCell to market the product more widely to a global clientele in need of energy transition solutions.

Additionally, FuelCell entered into a new relationship with Ameresco, Inc. to provide the Sacramento Sewer district with its energy delivery and emissions management platform to create clean electricity from onsite biofuel. Few emphasized the importance of these developments, stating, "We achieved an important milestone toward commercializing new advanced technologies."

Financial Highlights

FuelCell's total backlog increased by 3.8% to $1.06 billion. The generation backlog decreased by 7.9% to $852.9 million, while the service backlog spiked by 97% to $145.1 million, and the advanced technologies backlog leaped by 126.5% to $51.1 million. Despite the positive earnings report, the company still faces the challenge of regaining listing compliance by November 27, 2024, by having the stock close at $1 or above for at least 10 consecutive sessions.

The company previously announced a 1-for-12 reverse stock split on May 8, 2019, which boosted the stock price 12-fold. This announcement came after the stock closed the previous session at a presplit price of about 22 cents and had not closed above $1 presplit since October 9, 2018. Despite Monday’s rally, the stock has tumbled 36.4% year to date, while the S&P 500 has gained 12.1%.

Management Quotes

• Jason Few, CEO of FuelCell Energy:

  "I’m very pleased with our results for the second quarter as we continue to execute on our powerhouse business strategy. Our revenue climbed sequentially compared to our first quarter, but as expected, decreased compared to the prior year period due to the fact that there were no module exchanges this quarter."