FUELCELL ENERGY, INC. (NASDAQ:FCEL) Files An 8-K Costs Associated with Exit or Disposal Activities
Item 2.05
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Costs Associated with Exit or Disposal Activities.
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The disclosure set forth below under Item 8.01 is hereby
incorporated by reference into this Item 2.05.
incorporated by reference into this Item 2.05.
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Item 8.01
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Other Events.
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FuelCell Energy, Inc. (the “Company”) completed a business
restructuring on November 30, 2016 to reduce costs and align
production levels with current levels of demand in a manner that is
consistent with the Companys long-term strategic plan.
restructuring on November 30, 2016 to reduce costs and align
production levels with current levels of demand in a manner that is
consistent with the Companys long-term strategic plan.
The Company is reducing materials spend as well as implementing
various cost control initiatives. The workforce was reduced at both
the North American production facility in Torrington, Connecticut,
as well as at corporate offices in Danbury and remote locations. A
total of 96 positions, or approximately 17 percent of the global
workforce, was impacted. In conjunction with the personnel
reduction, the Company is implementing other measures to reduce
operating costs by at least $6 million on an annualized basis. The
production rate has been reduced to 25 megawatts annually, from the
prior rate of 50 megawatts annually, in order to position for
delays in anticipated order flow. A personnel-related restructuring
charge of approximately $3.0 million will be incurred in fiscal
2017, with approximately one half of the charge composed of cash
severance costs and the remainder representing non-cash charges.
This production level is anticipated to be temporary and will be
reevaluated as order flow dictates, with any future increases being
undertaken from what is now a lower cost basis.
various cost control initiatives. The workforce was reduced at both
the North American production facility in Torrington, Connecticut,
as well as at corporate offices in Danbury and remote locations. A
total of 96 positions, or approximately 17 percent of the global
workforce, was impacted. In conjunction with the personnel
reduction, the Company is implementing other measures to reduce
operating costs by at least $6 million on an annualized basis. The
production rate has been reduced to 25 megawatts annually, from the
prior rate of 50 megawatts annually, in order to position for
delays in anticipated order flow. A personnel-related restructuring
charge of approximately $3.0 million will be incurred in fiscal
2017, with approximately one half of the charge composed of cash
severance costs and the remainder representing non-cash charges.
This production level is anticipated to be temporary and will be
reevaluated as order flow dictates, with any future increases being
undertaken from what is now a lower cost basis.
Project development activities are continuing with proposals being
submitted for a utility-scale fuel cell only request for proposal
process in New York with decisions expected in the first half of
2017. The Company also intends to continue to develop and complete
utility-scale fuel cell projects in Connecticut under future
processes to further the States stated critical energy goals.
Favorable legislative and regulatory developments in New York and
California are expected to be supportive of projects in the
Companys pipeline and the European market is expanding as
illustrated by the second utility order recently announced by the
Company. Fuel cell carbon capture opportunities are advancing with
a demonstration project at a utility-owned coal/gas-fired power
plant and developing interest from Canadian oil sands operators as
demonstrated by a recently announced engineering study.
submitted for a utility-scale fuel cell only request for proposal
process in New York with decisions expected in the first half of
2017. The Company also intends to continue to develop and complete
utility-scale fuel cell projects in Connecticut under future
processes to further the States stated critical energy goals.
Favorable legislative and regulatory developments in New York and
California are expected to be supportive of projects in the
Companys pipeline and the European market is expanding as
illustrated by the second utility order recently announced by the
Company. Fuel cell carbon capture opportunities are advancing with
a demonstration project at a utility-owned coal/gas-fired power
plant and developing interest from Canadian oil sands operators as
demonstrated by a recently announced engineering study.
Financial update
The Company is also providing the following financial updates for
its fiscal year and quarter ended October 31, 2016.
its fiscal year and quarter ended October 31, 2016.
Cash and liquidity: As of the Companys fiscal year end, October 31,
2016, consolidated cash and cash equivalents totaled approximately
$118 million, of which approximately $84 million is unrestricted
cash. In addition, the Company has a committed project finance debt
facility from NRG Energy with availability of approximately $38
million at fiscal year-end 2016.
2016, consolidated cash and cash equivalents totaled approximately
$118 million, of which approximately $84 million is unrestricted
cash. In addition, the Company has a committed project finance debt
facility from NRG Energy with availability of approximately $38
million at fiscal year-end 2016.
Revenues and Backlog: Total revenues for the fourth quarter of 2016
are expected to be in the range of $23 – $25 million, with total
fiscal 2016 revenue in the range of $107 – $109 million. As
previously disclosed, in October 2016, the Company closed on the
financing of a 5.6 megawatt project located at a global
pharmaceutical company under a power purchase agreement (PPA)
structure in conjunction with the start of commercial operations.
Electricity revenue will be recognized monthly as power is sold
under the twenty year term of the PPA. The Company undertook a
sale-leaseback of the project with a financial institution, and
under U.S. GAAP, a sale leaseback transaction does not qualify for
revenue recognition. Accordingly, revenue for 2016 will be lower
than previously stated guidance due to this revenue treatment and
that certain anticipated projects forecasted to commence in 2016
have not yet been realized. Contracted backlog as of October 31,
2016 totaled in excess of $400 million.
are expected to be in the range of $23 – $25 million, with total
fiscal 2016 revenue in the range of $107 – $109 million. As
previously disclosed, in October 2016, the Company closed on the
financing of a 5.6 megawatt project located at a global
pharmaceutical company under a power purchase agreement (PPA)
structure in conjunction with the start of commercial operations.
Electricity revenue will be recognized monthly as power is sold
under the twenty year term of the PPA. The Company undertook a
sale-leaseback of the project with a financial institution, and
under U.S. GAAP, a sale leaseback transaction does not qualify for
revenue recognition. Accordingly, revenue for 2016 will be lower
than previously stated guidance due to this revenue treatment and
that certain anticipated projects forecasted to commence in 2016
have not yet been realized. Contracted backlog as of October 31,
2016 totaled in excess of $400 million.
These results are preliminary results and subject to final
reconciliation and adjustment. Final 2016 and fourth quarter
financial statements, business highlights, and commentary regarding
2017 outlook will be shared during the quarterly earnings call to
be held in early January 2017.
reconciliation and adjustment. Final 2016 and fourth quarter
financial statements, business highlights, and commentary regarding
2017 outlook will be shared during the quarterly earnings call to
be held in early January 2017.
The Company issued a press release today, December 1, 2016,
announcing the business restructuring which is attached to this
report as Exhibit 99.1 and incorporated herein by reference.
announcing the business restructuring which is attached to this
report as Exhibit 99.1 and incorporated herein by reference.
Forward Looking Statements
This news release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, including, without limitation,
statements with respect to the Companys anticipated financial
results, restructuring estimates, future operating cost estimates
and statements regarding the Companys plans and expectations
regarding the continuing product and project development,
commercialization and financing of its fuel cell technology and
business plans. 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, changes to projected
deliveries and order flow, changes to production rate and product
costs, general risks associated with product development,
manufacturing, changes in the regulatory environment, customer
strategies, unanticipated manufacturing issues that impact power
plant performance, changes in critical accounting policies,
potential volatility of energy prices, rapid technological
change, competition, and the Companys ability to achieve its
sales plans and cost reduction targets, as well as other risks
set forth in the Companys 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 Companys expectations or any change
in events, conditions or circumstances on which any such
statement is based. For a detailed discussion of the general risk
factors that could affect the Company’s results, please refer to
the risk factors identified in the Company’s Form 10-K as filed
with the Securities and Exchange Commission.
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, including, without limitation,
statements with respect to the Companys anticipated financial
results, restructuring estimates, future operating cost estimates
and statements regarding the Companys plans and expectations
regarding the continuing product and project development,
commercialization and financing of its fuel cell technology and
business plans. 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, changes to projected
deliveries and order flow, changes to production rate and product
costs, general risks associated with product development,
manufacturing, changes in the regulatory environment, customer
strategies, unanticipated manufacturing issues that impact power
plant performance, changes in critical accounting policies,
potential volatility of energy prices, rapid technological
change, competition, and the Companys ability to achieve its
sales plans and cost reduction targets, as well as other risks
set forth in the Companys 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 Companys expectations or any change
in events, conditions or circumstances on which any such
statement is based. For a detailed discussion of the general risk
factors that could affect the Company’s results, please refer to
the risk factors identified in the Company’s Form 10-K as filed
with the Securities and Exchange Commission.
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Item 9.01
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Financial Statements and Exhibits.
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(d)
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Exhibits.
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Exhibit
No.
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Description
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99.1
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FuelCell Energy, Inc., Press Release, issued December
1, 2016. |
About FUELCELL ENERGY, INC. (NASDAQ:FCEL)
FuelCell Energy, Inc. is an integrated fuel cell company. The Company designs, manufactures, sells, installs, operates and services stationary fuel cell power plants for distributed power generation. The Company’s segment is fuel cell power plant production and research. The Company’s power plants provide on-site power and utility grid support. The Company’s plants operate in approximately 50 locations on approximately three continents and generate approximately four billion kilowatt hours (kWh) of electricity. The Company’s fuel cell products, Direct FuelCell (DFC) power plants offer power generation for customers, including approximately 2.8 megawatts DFC3000, approximately 1.4 megawatts DFC1500 and approximately 300 kilowatts DFC300 plus derivations of the DFC product for specific applications. The Company offers project development; engineering procurement and construction (EPC) services operations and maintenance, and project finance. FUELCELL ENERGY, INC. (NASDAQ:FCEL) Recent Trading Information
FUELCELL ENERGY, INC. (NASDAQ:FCEL) closed its last trading session down -0.25 at 2.00 with 1,045,202 shares trading hands.
