FuelCell Energy, Inc.

As a reminder, this call is being recorded. This morning, Fuel Cell Energy released our financial results for the fourth quarter and full fiscal year of 2023, and our earnings release and our SEC filings are available in the investor section of our website at www.fuelcellenergy.com. Consistent with our practice, in addition to this call and our earnings press release, we have posted a slide presentation on our website. This webcast is being recorded and will be available for replay on our website approximately two hours after we conclude the call. Before we begin, please note that some of the information that you will hear or will be provided with today will consist of forward-looking statements within the meaning of the Securities and Exchange Act of 1934. Such statements express our expectations, beliefs, and intentions regarding the future and include, without limitation, statements with respect to our anticipated financial results, our plans and expectations regarding the continuing development commercialization and financing of our fuel cell technology, and our business plans and strategies. Our actual future results may differ materially from those described in or implied by such forward-looking statements because of a number of risks and uncertainties. More information regarding such risks and uncertainties is available in the Safe Harbor Statement in the slide presentation and in our filings with the Securities and Exchange Commission particularly the risk factor section of our most recently filed annual report on Form 10-K. During the course of this call, we will be discussing certain non-GAAP financial measures, and we refer you to our website and to our earnings press release and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures. Our earnings press release and a copy of today's webcast presentation are available on our website at www.fuelcellenergy.com. under investors. For our call today, I am joined by Jason Few, Fuel Cell Energy's president and chief executive officer, and Mike Bishop, our executive vice president, chief financial officer, and treasurer. Following our prepared remarks, we will be available to take your questions and be joined by other members of the leadership team. I'd like to now hand the call over to Jason for opening remarks. Jason?

Thank you, Tom, and good morning, everyone. Thank you for joining us on our call today. We are proud of the continued progress we are making toward advancing our purpose of enabling a world empowered by clean energy. This morning, we were proud to announce our fourth quarter and full year results, marked by our important progress on large projects, continued advancement of our solid oxide power generation and electrolysis hydrogen platforms, successful reentry into the Korean market, and announcing the next steps toward the commercialization of our direct flu source carbon capture platform, as you will have seen from our joint announcement with ExxonMobil regarding our carbon capture demonstration project, but more on that later. As a reminder, for those who are not familiar with Fuel Cell Energy, we have included a company overview on slide three. We are proud to be a global leader in electrochemical technology. In simple terms, Our proprietary fuel cell technology platforms do two things, decarbonize power and produce hydrogen. We operate in North America, Asia, and Europe, and we are focused on entering additional markets around the world. We have 188 modules in commercial operation and have generated more than 15 million megawatt hours to date. Our carbonate technology has met our customers' needs for over 20 years, and our newly commercialized solid oxide platform extend the value we offer customers, including electrolysis and power generation using zero-emission hydrogen fuel as the only feedstock. We believe that our two differentiated fuel cell electrochemical platforms enable us to leverage our operating history and position us to meet the evolving needs of our current and future customers across distributed power generation, distributed hydrogen, electrolysis, and hydrogen energy storage and direct flu source carbon capture. Fuel Cell Energy provides technological solutions for and collaborates with some of the world's largest global companies, including our work with ExxonMobil to develop carbon capture solutions, our work with Toyota for distributed hydrogen through the completion of our tri-gen facility at the Port of Long Beach, building a microgrid for Pfizer, exploring the viability of using our electrolyzer paired with nuclear energy to decarbonize asphalt production in the UK with EDF energy, and our collaboration with IBM to use AI to research new ways to extend the life of our fuel cells. Next, please turn to key messages for this quarter shown on slide four. First, we are maintaining the strength of our balance sheet and taking a disciplined approach to managing our capital investment paced by visibility into the milestones we established as investment triggers. We will continue to work to increase revenues and investable cash flow and take proactive steps to raise capital while also preserving the liquidity required to operate our business. Secondly, we were thrilled to jointly announce yesterday that ExxonMobil's affiliate, Esso Nederland BV, plans to build a pilot plant at its Rotterdam Manufacturing Complex to test the carbonate fuel cell technology for carbon capture jointly developed by Fuel Cell Energy and ExxonMobil Technology and Engineering Company, or MTEC. This announcement follows completion of all required technology tests regarding the efficacy and longevity of our carbonate fuel cells to capture at least 90% of CO2 emissions from an external emission source with a concentration of 8% or higher CO2. Although not a required test for this pilot project, our lab testing has demonstrated the ability to capture 90% of CO2 emissions from lower concentration flue streams as well. Next, we have continued to execute on large-scale projects and our solid oxide manufacturing capacity expansion. Our tri-generation platform in Long Beach, California began commercial operations and is producing emissions-free hydrogen, electricity, and water for our customer, Toyota. This capability is unique to fuel cell energy. Subsequent to the end of the quarter, we opened our newest fuel cell park in Derby, Connecticut, generating competitively priced renewable energy for many thousands of area residents and helping the state close its power generation gap. We also made progress on the capacity expansion of our solid oxide manufacturing facility in Calgary and advanced the planning for our potential U.S. capacity expansion. Fourth, we are making progress in expanding our reach into markets such as Korea, where we signed a long-term service agreement for fuel cell operations with a domestic clean energy electric utility and an MOU which outlines certain anticipated terms, of the proposed business relationships with Gongin Green Energy, or GGE, the utility hosting the largest fuel cell park in the world with a total output of 58.8 megawatts. We see tremendous additional opportunity for long-term service agreements in Korea. Additionally, applications like electrolysis, time to power, and CO2 as the delivered product are gaining momentum among a broader set of customers and geographies. Lastly, as we look ahead to fiscal 2024 and 2025, we remain focused on delivering our growth plans. We are focusing on advancing our technologies, including advancing toward the commercialization of carbon capture and other advanced applications and expanding our commercial relationships. We believe that 2024 will be an important year for our company, and we believe that we have the technology and flexibility across our products and services to allow us to participate in the global energy transition in a number of different ways. Now, I will turn the call over to Mike to discuss the financial results for the fourth quarter. Mike?

Thank you, Jason, and good morning to everyone on the call today. Let's begin by reviewing the financial highlights for the quarter shown on slide six. For the fourth quarter of fiscal year 2023, we reported total revenues of 22.5 million compared to 39.2 million in the fourth quarter of fiscal year 2022, a decrease of 43%. This was driven primarily by the lack of replacement module sales in the fourth quarter of fiscal year 2023. Net loss was 29.5 million in the fourth quarter of fiscal year 2023, compared to net loss of $42 million in the fourth quarter of fiscal year 2022. The resulting net loss per share attributable to common stockholders in the fourth quarter of fiscal year 2023 was negative 7 cents compared to negative 11 cents in the fourth quarter of fiscal year 2022. Adjusted EBITDA totaled negative $30.8 million in the fourth quarter of fiscal year 2023 compared to adjusted EBITDA of negative $36.1 million in the fourth quarter of fiscal year 2022. Please see the discussion of non-GAAP financial measures, including adjusted EBITDA, in the appendix at the end of our earnings release. Finally, the company held total unrestricted cash, restricted cash, cash equivalents, and short-term investments of $403.3 million as of October 31, 2023. Next, please turn to slide seven for additional details on our financial performance and backlog. The chart on the left-hand side graphically shows our fourth quarter revenue composition by line item, other than the service revenues of negative 0.8 million. Looking at revenue drivers by category, product revenues for the prior year quarter included module sales to Korea Fuel Cell Company Limited, or KFC, under the company's settlement agreement with KFC and POSCO Energy Company Limited, or POSCO Energy, for which the company recognized $24 million. This compares to $10.5 million of product sales in the fourth quarter of fiscal 2023, reflecting revenue recognition related to a performance guarantee which was part of the settlement agreement with POSCO Energy and its subsidiary, KFC. This revenue was constrained until certain of the modules previously sold by the company to KFC were installed at the Noel Green Energy site, and the company entered into a long-term service agreement to service those installed modules. Generation revenues were generally consistent quarter over quarter, decreasing to $8.5 million from $8.8 million in the comparable prior year period. Advanced technology contract revenues decreased to $4.3 million from $7.5 million, compared to the Fourth quarter of fiscal year 2022, advanced technology contract revenues recognized under our joint development agreement with Exxon Mobile Technology and Engineering Company, or EmTech, were approximately $0.3 million higher. This increase was more than offset by lower revenues recognized under government and other contracts as a result of the allocation of engineering resources to EmTech and other internal engineering and product development efforts during the quarter. Service agreement revenues for the fourth quarter were negative 0.8 million compared to negative 1.07 million in the prior year period. Revenues in both quarters were impacted by higher future cost estimates related to future module exchanges compared to the company's prior estimates, which more than offset revenue recognized in each quarter. There were no module exchanges during the fourth quarters of fiscal years 2023 and 2022. Looking at the top right-hand side of the slide, I will walk through the changes in gross loss and operating expenses during the fourth quarter of fiscal year 2023. Gross loss for the fourth quarter fiscal year 2023 totaled $1.5 million compared to a gross loss of $15.2 million in the comparable prior year quarter. The gross loss decreased for the fourth quarter of fiscal year 2023 primarily due to three items. Product recognized in the fourth quarter of fiscal year 2023 that did not have any associated cost of goods sold in the quarter. Two, generation cost of sales was lower in the fourth quarter of fiscal year 2023 as the company recorded a derivative gain of $4.1 million. And three, generation cost of sales were lower in the fourth quarter of fiscal year 2023 as a result of lower impairment charges compared to the comparable prior year quarter. These benefits were partially offset by the lack of module sales in the fourth quarter of fiscal year 2023. Operating expenses for the fourth quarter of fiscal year 2023 increased to $35 million from $27.5 million in the fourth quarter of fiscal year 2022. Administrative and selling expenses were higher during the fourth quarter of fiscal year 2023, primarily due to an increase in compensation expense resulting from an increase in headcount in support of sales marketing, and business expansion. Research and development expenses increased to $18 million during the fourth quarter of fiscal year 2023, primarily due to an increase in spending on the company's ongoing commercial development efforts related to our solid oxide power generation and electrolysis platforms and carbon recovery and carbon capture solutions compared to the comparable prior year period. On the bottom right of the slide, you'll see that we finished the quarter with backlog of approximately $1 billion, a decrease of approximately 5.7% compared to backlog as of October 31st, 2022. The reduction in backlog is primarily a result of revenue recognition under product generation and service agreements since October 31st, 2022, partially offset by an increase in service backlog from the new service agreement with Noel Green Energy entered into during the year ended October 31st, 2023. On slide eight is an update on our liquidity position and our ongoing investment in project assets. As of October 31st, 2023, we had total cash, cash equivalents and short-term investments of $403.3 million. This includes 250 million of unrestricted cash and cash equivalents represented by the darker blue bar on the chart in the center of the slide 103.8 million of short-term investments represented by the lighter blue bar, and 49.6 million of restricted cash and cash equivalents represented by the purple bar. The short-term investments represent the amortized cost of U.S. Treasury securities outstanding as of October 31, 2023, all of which are expected to be held to maturity. Throughout fiscal year 2023, we took a proactive approach to capital raising, by entering into project financings with total gross proceeds of $100.5 million during fiscal year 2023 and net proceeds of $97.4 million from sales of common stock during the fiscal year. In the fourth quarter, we closed on tax equity transactions that yielded net proceeds of $7.3 million. We expect to receive an additional $20.6 million of unrestricted cash in the first quarter of 2024 after the Derby projects are placed in service. Finally, we generated 15.8 million in interest income during fiscal year 2023 from money market investments and U.S. Treasury securities, an increase of 12.4 million from the amount of interest income generated in fiscal year 2022. Looking at the right-hand side of the slide, there is a chart illustrating our total project assets, which make up our company-owned generation portfolio. As of October 31, 2023, our gross project assets totaled $304.3 million, which excludes accumulated depreciation. As detailed on slide 22 in the appendix of the presentation, our generation portfolio totaled 63.1 megawatts of assets as of October 31, 2023. This includes 43.7 megawatts of operating assets and 19.4 megawatts of projects and process. As projects and process begin commercial operation, they are expected to contribute to higher generation revenue. Please turn to slide nine. Here, we are showing greater detail on the targeted investments we plan to make during fiscal year 2024, which will support our growth plans, allowing us to compete and meet market needs over the medium and long term. First, we are planning $60 to $75 million of capital expenditures in fiscal year 2024. These amounts are a continuation of the capital expenditures and commitments made by the company in fiscal year 2023 to upgrade our manufacturing facilities, including the expansion of solid oxide manufacturing capacity at our Calgary facility to 40 megawatts a year of solid oxide electrolysis cell production. This expansion is expected to be completed in fiscal year 2024. We also expect to invest in our manufacturing facilities for molten carbonate, including importantly for carbon capture. During fiscal year 2023, the company also began investments to add engineered carbon recovery capability to the on-site SureSource 1500 in Torrington, Connecticut, which is expected to be completed in fiscal 2024. This product enhancement will allow potential customers to observe the operating plant and, given the target market of food and beverage companies, will allow for the sampling and testing of recovered CO2 to verify quantity, quality, and purity requirements. Internally funded research and development expenditures for fiscal year 2024 are projected to be 60 to $70 million, which is consistent with our R&D expenditures of 61 million in fiscal year 2023. Priorities for R&D are to continue to accelerate the commercialization of our advanced technology solutions distributed hydrogen hydrogen-based long-duration energy storage and hydrogen power generation lastly in fiscal year 2024 we plan to invest 15 to 25 million dollars in the project assets in our generation portfolio backlog with the expected monetization of tax incentives helping to offset a significant amount of the planned investment this expected investment level is lower than it has been in prior years as our toyota and 14 megawatt Derby projects are now complete. In closing, I am pleased with our continued progress this past quarter and during the fiscal year. We have taken and will continue to take proactive steps to ensure that we have the balance sheet strength required to support our growth objectives, and we will continue to take a highly disciplined approach to managing cash and allocating capital. From a financial perspective, we believe that we remain well positioned to execute on our near, medium, and long-term powerhouse business strategy. I will now turn the call back over to Jason.