Fuelcell Energy, Inc. Reports Fourth Quarter and Year-end Results
16 December 1999
Fuelcell Energy, Inc. Reports Fourth Quarter and Year-end Results; Company Achieves Significant Milestones in 1999; Continues to Successfully Execute Commercialization Strategy
DANBURY, Conn.--Dec. 16, 1999--FuelCell Energy, Inc. (AMEX:FCL) today reported fiscal 1999 fourth-quarter and year-end results.For the fiscal fourth quarter, ended October 31, 1999, FuelCell Energy reported a net profit of $522,000 or $.08 cents per diluted share compared with a loss of $388,000 or ($.06) per diluted share during the same quarter of the previous year. The profit resulted from the recognition of $1,300,000 in deferred license income from its former battery business. Compared to fourth quarter 1998, revenues in the quarter declined $4,785,000 due to reduced activity levels and the relative timing of billings under the Company's Cooperative Agreement with the U.S. Department of Energy. The Company expects funding levels to be approximately the same under the Cooperative Agreement in fiscal year 2000.
The company reported a net loss for the fiscal year 1999 of $985,000 or ($.16) cents per diluted share, versus a loss of $382,000 or ($.06) cents per diluted share in the previous year. The loss was primarily attributable to the continued commercialization of the Company's Direct FuelCell(TM) technology and also to an increase in unallowable costs related to government contracts. The commercialization activities included the continued development of fuel cell component manufacturing processes, the restructuring of the Company in the second quarter resulting in a reduction of the work force, the spin-off of the battery division into a separate public company, Evercel, Inc., and increased marketing activities. Revenues decreased $4,353,000 and the revenue mix changed in 1999. Reductions in the Cooperative Agreement were offset by increased revenues from MTU/DaimlerChrysler, and the U.S. Navy. The Company expects total revenue in 2000 to be approximately the same as 1999 with reductions in contract revenue offset by revenue from demonstration projects.
Commenting on the results, President and CEO Jerry Leitman, said: "This has been a year of extraordinary progress and success for FuelCell Energy. We stated up front that we wanted to establish new field trials, and we have done that. We also targeted the fourth quarter for the start-up of the Direct FuelCell plant in Bielefeld, Germany, and we have met that target through our partner MTU/DaimlerChrysler. In addition, we commissioned the DFC power plant providing electricity to our Danbury facility in March, and achieved a major technical milestone by surpassing the one million kilowatt hour mark in October.
"As a growing number of public and private entities look to fuel cells as the power source of the future, FuelCell Energy is ideally positioned to respond and perform. We have invested in the technology and are now investing in the marketing and manufacturing processes that will allow us to implement full-scale commercialization. This has been a solid year of steady progress toward that goal."
Important Accomplishments
During the fourth quarter of 1999, the shareholders of FuelCell Energy voted to change the Company's name from Energy Research Corporation. The name change followed the spin-off of the Company's battery division, Evercel, Inc., to its shareholders. Both of these changes reflect FuelCell Energy's commitment to a single focus: the commercialization of its Direct FuelCell(TM) technology to "power a cleaner future".
Throughout the year, FuelCell Energy has consistently executed the steps necessary for the successful implementation of its commercialization strategy. Some important accomplishments during the year include:
-- The Board of the Los Angeles Department of Water and Power
(LADWP) approved the installation of a Direct FuelCellTM (DFCTM)
power plant in Los Angeles. The agreement calls for a 250 kW fuel
cell plant to be installed at a total cost to LADWP of $2.45
million, contingent on partial funding from other sources. The
installation of this power plant will help the LADWP gain
knowledge and experience in the installation, maintenance and
operation of fuel cell power plants. The LADWP is interested in
developing fuel cell power plants because they are easier to site
than traditional power plants and are virtually noise and
pollutant free.
-- Began operation of the new 250kW Direct FuelCell(TM) plant in
Bielefeld, Germany. The 'Hot Module' fuel cell power plant,
developed with the Company's European partner, DaimlerChrysler's
MTU Friedrichshafen unit, is located on the campus of the
University of Bielefeld. The combined heat and power plant
provides electricity to the municipal utility grid and steam to
the University for district heating. The fuel cells for the power
plant were produced by FuelCell Energy at its Torrington, CT
manufacturing facility.
-- Generated more than 1.2 million kilowatt hours of electricity to
date at the Company's Direct FuelCell(TM) 250kW power plant in
Danbury. The air pollution emissions are negligible, far below
the requirements under the Clean Air Standard. The ability to
generate 1.2 million kilowatt hours at this plant validates the
operability and reliability of the Direct FuelCell(TM)
technology.
-- A sub-scale, commercial design DFC stack exceeded 13,000
operating hours to date. This stack, started in April 1998,
successfully pushed the endurance envelope further than any of
the Company's previous power plants, and was also operated using
marine diesel fuel.
-- FuelCell Energy's Chairman, Dr. Bernard S. Baker, was awarded the
prestigious Grove medal. The award was for his forty years of
valuable contributions to the development and success of fuel
cell technology.
-- Formed a partnership with the Advanced Technology Division of
Bath Iron Works (BIW), a General Dynamics Company, to develop an
advanced Direct FuelCell power plant for defense marine
applications. The Company expects this alliance to lead to the
development of the first new power generation technology for
surface ships since nuclear power was adopted for aircraft
carriers, addressing the significant market for advanced marine
power systems.
-- Completed the spin-off of Evercel, Inc., formerly a wholly-owned
subsidiary, to its stockholders in order to focus on the fuel
cell business. The Board of FuelCell Energy believes the spin-off
was in the best interest of both businesses, which have
distinctly different investment, operating and financial
characteristics. After the spin-off, FuelCell Energy has been
able to more aggressively pursue commercialization of its fuel
cell technology.
-- Successfully executed a $3 million contract with Naval Surface
Warfare Center for Phase I development of the Company's DFC power
plant for ship service power. Included was passing the rigorous
"shake and vibration" test, and also conducting a market
assessment of both defense and commercial markets for advanced
marine power systems.
-- In March, FuelCell Energy commissioned its Direct FuelCell(TM)
power plant in Danbury, Conn. The fully integrated 250-kilowatt
power plant uses pipeline natural gas to provide power to the
company's Danbury facilities, with excess electricity delivered
to the local electric utility grid. The plant utilizes the
Company's 250 kW commercial-design fuel cell stack, the basic
building block of the company's megawatt-class power plants, and
since July, has operated unattended.
-- Initiated process to increase manufacturing capacity to 50 MW
per year. Accomplishments included the installation of a
robotic weld cell, procurement of automated equipment to
manufacture electrolyte, and standardized on-line inspection and
data collection.
FuelCell Energy, Inc. - www.fce.com - formerly Energy Research Corp., is a world-recognized leader in the field of high efficiency fuel cells for electric power generation. The Company's Direct FuelCell(TM) technology takes the inherent attractiveness of fuel cells one step further by eliminating the external fuel processing to extract hydrogen from a hydrocarbon fuel. This results in a simpler and more efficient system compared with conventional fuel cells. FuelCell Energy is based in Danbury, Conn.
This press release contains forward-looking statements, including statements regarding the Company's plans and expectations regarding the development and commercialization of its fuel cell technology. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that could cause such a difference include, without limitation, the risk that commercial field trials of the Company's products will not occur when anticipated, general risks associated with product development, manufacturing, changes in the utility regulatory environment, potential volatility of energy prices, rapid technological change, and competition, as well as other risks set forth in the Company's filings with the Securities and Exchange Commission. The forward-looking statements contained herein speak only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based.
FUELCELL ENERGY, INC.
Q4 1999 RESULTS
PAGE
RESULTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
THREE MONTHS ENDED OCTOBER 31,
1999 1998
---- ----
Revenues $3,477 $8,262
License fee income, net 1,381 29
Net income (loss) before
income taxes $ 613 $ (370)
Net income (loss) $ 522 $ (388)
Basic earnings (loss) per share $ .08 $ (.06)
Basic shares outstanding 6,290,140 6,196,313
Diluted earnings (loss)
per share $ .08 $ (.06)
Diluted shares outstanding 6,659,671 6,196,313
FISCAL YEAR ENDED OCTOBER 31,
1999 1998
---- ----
Revenues $19,965 $24,318
License fee income, net 1,527 678
Net income (loss) before
income taxes (694) (369)
Net (loss) (985) (382)
Basic loss per share $ (.16) $ (.06)
Basic shares outstanding 6,226,714 6,027,027
Diluted loss per share $ (.16) $ (.06)
Diluted shares outstanding 6,226,714 6,027,027
FUELCELL ENERGY, INC.
Q4 1999 RESULTS
PAGE
BALANCE SHEET
(In thousands)
ASSETS
October 31, October 31,
1999 1998
---- ----
Current assets $10,734 $15,866
Property, plant & equipment,
Net 7,195 8,347
Other assets 2,241 2,630
----- -----
Total assets $20,170 $26,843
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LIABILITIES AND SHAREHOLDER'S EQUITY
October 31, October 31,
1999 1998
---- ----
Current liabilities $3,353 $5,632
Long-term debt 1,625 1,944
Other long-term liabilities 177 177
Minority interest 200 3,220
Shareholder's equity 14,815 15,870
------ ------
Total liabilities and
Shareholder's equity $20,170 $26,843
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