FuelCell Energy Stock Falls What’s Next?

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FuelCell Energy, Inc. (FCEL) is a fuel cell power company. It designs, manufactures, operates and services Direct Fuel Cell power plants. FuelCell Energy produces electricity and heat from a range of basic fuels including natural gas and biogas.

Fourth Quarter 2019 Fiscal Results

FuelCell Energy’s shares fell as much as 30% yesterday, after the company missed on revenue and EPS estimates. Revenue in the quarter dropped to $11.00 million, and net loss grew to $36.00 million. This represents a 38% decrease in revenue year over year. Product sales for the quarter totalled $0.5 million, a decline of 95% year over year. Contract revenues grew by 16%, primarily driven by the carbon capture joint development partnership with Exxon Mobil.

New Business Strategy

If you had invested in FuelCell Energy (FCEL) back in October of 2019, you would be sitting on over 700% in gains. However, the company’s past earnings results have left investors very skeptical of their ability to execute on their new business strategy.

On Jan. 22nd, 2019, FuelCell announced its 2019 key accomplishments and renowned business strategy. The company appointed Jason Few as President and CEO, and secured a $200 million credit facility with Orion Energy Partners. As the company was close to bankruptcy, securing this capital will allow them to execute on their plan and strengthen their balance sheet and liquidity. FuelCell also announced the repayment of a substantial amount of their short-term debt (Liabilities).

The company’s new business strategy will include them focusing their efforts on improved operational excellence. This will involve lowering costs, long-term financing and fulfilling project backlogs. FuelCell has contract backlogs of nearly $1.3 Billion. Improved operational efficiency and lower costs for FuelCell and its customers will help drive sales and revenue growth in 2020.

CEO Jason Few, said in a statement, ”I am proud of all that the FuelCell Energy team, along with our valued partners, has accomplished during my first five months as CEO. I am excited about our new Powerhouse business strategy and the clear go-forward plan to execute on our project commitments, build on our technical leadership, deliver improved financial results for our stakeholders, and play a critical role in environmentally sustainable baseload energy, hydrogen and energy storage”

What’s Next

FuelCell Energy Inc. is definitely a speculative stock as management’s ability to execute on client backlogs is uncertain. Investors were hoping to see improved revenue growth in the fourth quarter, but were thoroughly disappointed with the company’s results. In the conference call yesterday, management explained that revenue’s were down in the fourth quarter as the company shifted its focus to improve operational efficiency. For FuelCell (NASDAQ: FCEL) to remain competitive, the company will need to improve revenue and EPS growth substantially quarter over quarter in order to maintain investor confidence. The fourth quarter results were a huge step backwards, but their newly renowned business strategy could be the beginning of a profitable future.

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