FuelCell officials see ‘sustainable profitability’ ahead
Following a busy 2017 that saw a new partnership with Toyota, large construction orders in South Korea and the acceleration of its carbon capture programs, FuelCell Energy is off to a strong start in 2018 with first-quarter revenue of $38.6 million more than doubling the $17 million revenue of last year’s opening quarter.
With backlog and project awards at record levels of $1.6 billion and more favorable federal regulations, FuelCell Energy officials said Thursday during a conference call with investors that the company is positioned on a “pathway to sustainable profitability.”
Product sales totaled $29.5 million for the first quarter of 2018 compared to $1.8 million for the first quarter of 2017.
“We are pleased that solid execution in our global markets continues to translate to improved financial results compared to the prior year,” Chip Bottone, president and CEO of FuelCell Energy, said. “We continue to see favorable momentum in our marketplace, both in U.S. federal policy and with project execution and development.”
FuelCell Energy is based in Danbury and has a manufacturing facility in Torrington. It builds, installs and operates fuel cell plants and offers solutions for the recovery and storage of energy.
Bottone said a bill passed by Congress and signed into law by President Trump in February extends key tax credit measures that will create financial incentives for the purchase of fuel cell technology. The Investment Tax Credit added fuel cells to the list of eligible clean energy investments.
In addition, the Carbon Dioxide Sequestration Credit expanded and extended the financial incentives for CO2 capture. FuelCell Energy is building a pilot plant with ExxonMobile and the U.S. Department of Energy in Alabama that will use carbonate fuel cells to concentrate and capture carbon from natural gas-fueled power generation. Operation is expected in 2019.
“(The bills) level the playing field for fuel cells and will attract capital investment, which will enable us to continue to expand our market reach of this ultra-clean, efficient energy solution,” Bottone said.
The Investment Tax Credit provides a credit equal to 30 percent of expenditures for fuel cell projects placed in service through 2019, 26 percent for projects that start construction in 2020, and 22 percent for projects starting in 2021.
FuelCell Energy completed shipments and started installation in the first quarter of 2018 for the 20-megawatt utility project in South Korea. It is expected to be operational by late summer. Another first-quarter 2018 highlight was the execution of a PPA, or power purchase agreement, for a five-megawatt project with Bolthouse Farms for the supply of power to its plant in Bakersfield, Calif. Bolthouse is a subsidiary of Campbell Soup Co., already a FuelCell customer.
“(It) is a testament to the quality product and service solutions FuelCell Energy delivers,” Bottone said about the growing relationship with Campbell Soup.
Michael Bishop, CFO of FuelCell Energy, said on the conference call that the dramatic increase in product sales was largely due to the Korea Southern Power Co. project.
Revenue from generation dipped to $1.9 million for the first quarter of 2018, compared to $2.1 million for the first quarter of 2017. Operating expenses also dropped, to $10.2 million from $12.7 million.
Bottone and Bishop said the company had an income tax benefit of $3 million for the first quarter of 2018 related to the Tax Cuts and Jobs Act, which cut the federal corporate tax rate.
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