Fuel Cells Q3 Earnings

FuelCell Energy, Inc. (FCEL), a global leader in the design, manufacture, operation and service of ultra-clean, efficient and reliable fuel cell power plants, today reported results for its third quarter ended July 31, 2014 along with an update on key business highlights.
Financial Results
FuelCell Energy (the Company) reported total revenues for the third fiscal quarter of 2014 of $43.2 million compared to $53.7 million for the third fiscal quarter of 2013.

• Product sales for the third quarter of 2014 totaled $32.3 million, comprising $31.0 million of power plant revenue and fuel cell kit sales and $1.3 million of power plant component sales and site engineering and construction services, compared to $45.4 million for the prior year period.
• Service and license revenues for the third quarter of 2014 totaled $7.1 million compared to $3.7 million for the prior year period with the growing installed base and planned module exchanges contributing to higher service revenue.
• Advanced technologies contract revenue was $3.8 million for the third quarter of 2014 compared to $4.6 million for the prior year period.

Total backlog increased to $350.2 million at July 31, 2014 compared to $342.8 million at April 30, 2014.

• Product sales backlog was $137.3 million and 82.1 megawatts at July 31, 2014. Product backlog decreased $9.4 million sequentially with kit shipments to Asia exceeding new orders in North America although the composition of product backlog is transitioning to higher margin complete power plants with recent order announcements.
• Service backlog was $201.8 million at July 31, 2014. Service backlog increased $20.0 million sequentially as utility service contracts, such as the recently announced United Illuminating project, assume a greater proportion of the total service backlog.
• Advanced technologies contracts backlog was $11.1 million at July 31, 2014. The Company received a number of awards from the U.S. Department of Energy (DOE) during the third quarter of 2014 that are not included in backlog until contracts are executed.

The gross profit generated in the third quarter of 2014 totaled $4.0 million compared to $4.5 million in the third quarter of 2013. The third quarter 2014 gross margin was 9.2 percent compared to 8.4 percent for the prior year period. The current period gross margin of 9.2 percent is a record gross margin since the Company began commercializing fuel cells and reflects both an improving sales mix oriented towards higher margin complete power plants and away from fuel cell kits as well as lower costs from sustained production volume at 70 megawatts annually.
Net loss attributable to common shareholders for the third quarter of 2014 totaled $7.8 million, or $0.03 per basic and diluted share. Excluding the non-cash embedded derivative adjustment of $0.1 million associated with conversions of Senior Unsecured Convertible notes, the adjusted net loss attributable to common shareholders totaled $7.7 million or $0.03 per basic and diluted share. Please refer to the accompanying Notes to Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations for more detailed information on these Non-GAAP measures. For the comparable prior year period, net loss attributable to common shareholders totaled $6.4 million or $0.03 per basic and diluted share.
Year-to-Date 2014
For the nine months ended July 31, 2014, the Company reported revenue of $125.9 million compared to $132.5 million for the prior year period. Product sales were $94.5 million compared to $108.9 million for the prior year period. Service agreement and license revenues were $19.2 million compared to $12.8 million for the prior year period. Advanced technologies contract revenues totaled $12.2 million, compared to $10.8 million for the prior year period.
For the nine months ended July 31, 2014, gross profit was $7.8 million compared to $4.5 million for the nine months ended July 31, 2013. The gross margin for the nine months ended July 31, 2014 was 6.2 percent compared to 3.4 percent for the prior year period. Expanding margins reflect a more favorable sales mix combined with cost reductions from volume purchasing.
Net loss attributable to common shareholders for the nine months ended July 31, 2014 was $35.8 million or $0.15 per basic and diluted share, or excluding the non-cash embedded derivative adjustment associated with conversions of Senior Unsecured Convertible notes, the adjusted net loss attributable to common shareholders totaled $27.4 million or $0.12 per basic and diluted share. For the comparable prior year period, net loss attributable to common shareholders totaled $27.1 million or $0.14 per basic and diluted share.  
Cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash totaled $133.1 million at July 31, 2014. On July 30, 2014, the Company issued 14.6 million shares of common stock to NRG Energy for proceeds of $35 million.  Net cash used by operating activities in the third quarter of 2014 was $15.9 million, including an increase in accounts receivable of $4.8 million for billings of projects announced in the second quarter of 2014. Capital spending was $2.2 million and depreciation expense was $1.1 million for the third quarter of 2014.
NRG Energy $40 million construction/term credit facility
In addition to the common stock investment, NRG Energy extended a $40 million revolving construction and term financing facility for the purpose of accelerating project development by FuelCell Energy and its subsidiaries. The Company's project finance subsidiaries may draw on the facility to finance the construction of projects through the commercial operating date (COD) of the power plants. The Company has the option to continue the financing term for each project after COD for a maximum term of five years per project. The interest rate is 8.5 percent per annum for construction-period financing and 8.0 percent thereafter.
Final Redemption of 8.0% Senior Unsecured Convertible Notes (Convertible Notes)
During the third quarter of 2014, the Company received the final $1.0 million of conversion notices under the Convertible Notes, resulting in the retirement of the instrument. There was no outstanding balance under the Convertible Notes at July 31, 2014.  The Company issued approximately 0.8 million shares of common stock to settle the conversions.  Net expense of $0.1 million was recorded to the Statement of Operations to adjust the fair value of the make whole liability embedded derivative to the fair value of the consideration provided to settle the make whole obligation related to converted Convertible Notes partially offset by the favorable impact from the fair value adjustment required on embedded derivatives.
Business Highlights
"We are collaborating with leading power producers including NRG Energy in North America and POSCO Energy in Asia and are in discussions with other large and influential power producers around the world, exemplifying our market segment approach of working with strong power industry leaders that both validate our power generation solutions as well as supporting power purchase agreements structures allowing the end user of the power to pay as power is produced," said Chip Bottone, President and Chief Executive Officer, FuelCell Energy, Inc. "The Company is well positioned with strong partners, committed capital for project development, a growing number of utility customers, and a product cost profile that will continue to improve with expanding production volume globally."
Another hospital installation was announced during the third quarter for a megawatt-class power plant at the University of California Irvine Medical Center, structured with a power purchase agreement so the Medical Center receives the benefits of clean on-site power under a pay-as-you-go structure. The combined heat and power configuration supports both project economics as well as the sustainability goals and health mission of the Medical Center.
Asian partner POSCO Energy is on schedule with the construction of the cell component manufacturing facility in South Korea with the building almost complete, to be followed by installation of manufacturing equipment. Once the plant is operational, increased levels of purchasing from the integrated global supply chain, whether by POSCO Energy or the Company will benefit both parties by obtaining lower pricing tiers from suppliers from the greater combined purchasing volume.
FuelCell Energy Solutions, GmbH and joint venture partner, Fraunhofer IKTS jointly received ¬4.9 Million (~ $6.5 million) in awards from the Germany Federal Ministry for Economic Affairs and Energy in the third quarter of 2014 for a three year project to further enhance the power density and operating life of DFC products. This funding illustrates the growing interest in large-scale stationary fuel cell power plants in Europe.
Advanced Technologies
The Advanced Technologies group is developing new markets for the Company's commercial power plants for distributed hydrogen and carbon capture solutions as well as commercializing solid oxide fuel cells (SOFC) for adjacent sub megawatt opportunities. Recent contracts and awards include:
Carbon Capture
Phase III funding of $1.2 million awarded by the DOE for routing flue gas from coal-fired power plants into DFC^® fuel cells to concentrate and capture carbon dioxide (CO₂).
Distributed hydrogen
The Company's tri-generation installation at the Torrington manufacturing facility was included in the 2014 low emission renewable credit awards (LREC) from the State of Connecticut. The plant is expected to be operational in the Fall and the tri-generation output of clean power, usable high quality heat and hydrogen is forecasted to generate annual savings of $0.2 million.
Solid Oxide Fuel Cells
Accelerated commercialization of SOFC technology is supported by the recent $7.5 million notification of award from the DOE Office of Fossil Energy to advance the robustness and improve the cost profile the Company's highly efficient SOFC technology.
Storage

• The Company received an award for a gas-to-liquid project using SOFC technology to convert natural gas into liquid methanol. A market is enhanced oil recovery in remote locations where natural gas is flared as it is not economical to transport the gas. Methanol has a high energy density enabling cost-effective transportation. Contract negotiations are in process with the DOE under a $3.5 million award from the ARPA-E program.
• The Company received an award for an electrolysis project utilizing carbonate DFC^® technology in reverse to cleanly and cost-effectively convert natural gas and electricity into hydrogen with only minimal carbon emissions. Target markets are hydrogen production and conversion of electricity from intermittent renewable sources during periods of low demand into hydrogen, a storage medium, which is then available as a fuel source for peak demand periods. Contract negotiations are in process with the DOE under a $0.9 million program

Apples Release---What you need to know

On Tuesday afternoon, Apple CEO Tim Cook introduced the biggest iPhone in the device’s seven-year history.

And then, five seconds later, he announced an even larger one. 

Yes, Apple unveiled two new iPhones on Tuesday — the iPhone 6 and the iPhone 6 Plus — both of them with the biggest displays of any smartphone in Apple history. The iPhone 6 features a screen measuring 4.7 inches diagonally, while the iPhone 6 Plus is even larger, at 5.5 inches.

Both the devices feature rounded edges and are slightly slimmer than the iPhone 5s. Apple also says battery life has been improved on both devices, and both come with improved cameras.

 

Apple also announced a new program called Apple Pay, which will allow owners of the iPhone 6 and iPhone 6 Plus to pay at the register by tapping their iPhones. The new iPhones contain an NFC chip, which allows for so-called contactless payments. Apple’s Passbook app can now store your credit cards securely and you can choose which card you want to use at the register. Apple says it does not store information about what you buy or where you buy it.

Apple also unveiled an entirely new device that works with the iPhone: The Apple Watch. The Apple Watch will come in two sizes (large and small) and in three different styles. The watch connects to an iPhone 5 or newer and lets you send messages, track your fitness levels and daily steps, and more. 

The Watch will start at $350 and will be available in “early 2015.”

BIG update from Vista Gold

Vista Gold Corporation (NYSEMKT:VGZ) just announced that the environmental impact statement for the Mt. Todd gold project located in the Northern Territory of Australia has been approved. The environmental impact statement really took a long time to be approved. The environmental impact statement underwent a significant review process by the Northern Territory Environmental Protection Authority In its formal notification to Vista Gold the Northern Territory Environmental Protection Authority has advised that it has assessed the environmental impacts of the Mt Todd gold mine and concluded that it can proceed, subject to a number of recommendations which are outlined in its report.

When I last opined on Vista Gold, I highlighted the extreme potential and the underlying value of this property. In fact, the property is worth......READ FULL ARTICLE

Fifth Third Bancorps Restructuring impact

Fifth-Third Bancorp (NASDAQ:FITB) just announced an important change in its management as well as its reporting structure. The change will involve replacing the mortgage division president, one of the most successful divisions and most profitable in the bank. Michelle Van Dyke who currently serves the company as regional president, has been named president of Fifth Third mortgage division. This change will take place effective immediately.

When I recently opined on the company, I had covered the contribution of mortgage loan growth to the company. The growth in mortgage loans, as well as other divisions of the bank led to me to predict the stock would move higher into 2014. The stock traded at $19.10 at that time, so it has only appreciated approximately 8%, while also paying a 2.6% dividend yield. What I also discussed in the article was the regional reach of the bank as well as the importance of the seasoned management team. Thus the present announcement, to me is a...READ FULL ARTICLE

GM and self driving cars

GM announced Sunday it would build a type of self-driving technology called Super Cruise for a 2017 model-year vehicle isn't in itself that surprising. Several automakers, including Mercedes-Benz, Infiniti and Lincoln already have systems that can manage limited hands-free driving on highways, and Nissan has vowed to push for a fully autonomous car by 2020.

What's noteworthy is less what Cadillac and General Motors CEO Mary Barra said, but how: By billing it solely as a convenience feature, avoiding any suggestion that Super Cruise could make a driver safer. That's because behind the scenes, GM other automakers are concerned about the legal problems of self-driving cars and vehicle-to-vehicle tech — so much so that they have asked regulators for some kind of immunity if the industry is required to roll out devices that make decisions for the driver.

Barra said GM would offer Super Cruse on an unnamed Cadillac in 2016, likely the brand's new flagship expect to be revealed next year. She also said that the 2017 Cadillac CTS will offer a form of vehicle-to-vehicle communications, a system that lets cars exchange data to speed up traffic or warn of potential collisions, much in the way modern passenger planes do today.

"With Super Cruise, when there's a congestion alert on roads like California's Santa Monica Freeway, you can let the car take over and drive hands-free and feet-free through the worst stop and go traffic around," Barra said in a speech. "And if the mood strikes you on the high-speed road from Barstow, Calif., to Las Vegas, you can take a break from the wheel and pedals and let the car do the work."

Yet GM says the system would "increase the comfort of an attentive driver on freeways," and Barra also said Super Cruise "will keep drivers alert and engaged." That's an odd bit of phrasing — like saying your dishwasher will make you pay more attention to washing dishes — and one far less ambitious than claims from Google and other non-automakers pushing for fully autonomous vehicles that would let even blind drivers behind the wheel.