FuelCell Energy, Inc.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fuel Cell Energy second quarter of fiscal 2025 financial results conference call. All lines have been placed on a listen-only mode. After the speaker's remarks, there will be a question and answer session with instructions for participation provided at that time. Thank you. I would now like to turn the call over to Tom Gelston. Tom, please go ahead.

Thank you, and good morning, everyone, and thank you for joining us on the call today. As a reminder, this call is being recorded. This morning, Fuel Cell Energy released our financial results for the second quarter of fiscal year 2025, and our earnings press release is 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 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 could 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, and any subsequently filed quarterly reports on Form 10-Q. 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 under the Investors tab. For our call today, I'm joined by Jason Few, Fuel Cell Energy's President and Chief Executive Officer, and Mike Bishop, Fuel Cell Energy's 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'll 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. Along with our earnings announcement this morning, Fuel Cell Energy announced a restructuring plan that prioritizes sales of our molten carbonate platforms. Additionally, as a part of this effort, we are taking meaningful steps to right-size our business, manage expenses, and position ourselves to take advantage of near-term opportunities. Altogether, we believe this strategy will accelerate the timeline toward expected future profitability. We believe that this restructuring plan will sharpen and accelerate our path to positive cash flow and growth. We are intensifying our focus on our carbonate platform while reducing overhead, working to optimize our supply chain, and focusing on driving efficiency. At the same time, we will strategically preserve the platform's long-term flexibility with the goal of unlocking further opportunities such as carbon capture. Regarding our solid oxide platform, Our exclusive focus will remain on validating and demonstrating our electrolysis technology at the U.S. Department of Energy's Idaho National Laboratory. We are pausing broader solid oxide R&D immediately reducing costs and intensifying our investment in proven customer ready solutions. We are focused on delivering future ready power today. We believe that a successful targeted demonstration at Idaho National Laboratory will position us strategically to capitalize as the hydrogen economy expands, highlighting our highly efficient and differentiated electrolysis platform. Under our restructuring plan, we will recalibrate our Torrington manufacturing facility production schedule to align with contracted demand rather than forecasted demand, which without continued growth in our closed order book would result in a decrease in our annualized production rate. We believe that our discipline demand driven approach will position us for sustainable profitability and growth in the future while maximizing efficiency and delivering measurable value. With our enhanced focus on our core technologies, specifically the manufacture and sell of our carbonate platforms and the growing demand for distributed power generation in the US, Asia, and Europe, we are targeting the future achievement a positive adjusted EBITDA once our torrenting manufacturing facility reaches an annualized production rate of 100 megawatts per year. However, as of April 30, 2025, the facility operated at an annualized production rate of approximately 31 megawatts. The bottom line, we are taking decisive actions to streamline our cost structure, seize the opportunities directly in front of us, and deliver meaningful results. We're building a stronger, more focused company, and we look forward to sharing our continued progress updates in the quarters ahead. While restructuring is never easy, we believe that prioritizing sales of our proven carbonate platform and scaling back R&D investments is the right move to drive the company toward profitability. What remains unchanged is our purpose. Fuel cell energy is steadfast in our commitment to enabling a world powered by clean energy. Our core value proposition is rooted in energy integration, seamlessly combining fuel cell solutions with other generation technologies. This allows commercial, industrial, and utility customers to integrate our platforms without overhauling operations or taking on the business interruption risk of intermittent power sources. Leveraging clean, abundant natural gas and biogas, our solutions help customers operate with greater reliability, efficiency, and affordability while reducing emissions, preserving air quality, and maintaining continuity in the products and services they deliver. So what does our opportunity set look like? Let's start with one of the most powerful and durable tailwinds we have, growing global demand for power. global power demand remains strong. Around the world, electricity demand is rising fast, straining existing grid infrastructure and exposing the limitations of traditional power sources and the grid's centralized architecture. This isn't a temporary surge. It's a long-term megatrend, and it directly reinforces the relevance of our technology and strategy. The explosion of AI The rapid build-out of data centers and the intensifying focus on carbon management and air quality are reshaping the global energy landscape. These trends are not political. They are structural. They will continue across administrations and market cycles. They are here to stay. Just to frame the magnitude, in the U.S. alone, data centers are projected to require more than 600 terawatt hours of electricity annually by 2030. That's a 22% compounded annual growth rate over the next five years. We believe the momentum behind these shifts is undeniable, and it's hard for us to imagine a future where fuel cell energy is not part of the solution. This is exactly the type of demand environment we are built for and why our focus on our core carbonate platform is so well aligned with the market opportunities in front of us. Second, dedicated power partners. We believe we have taken a major step forward in unlocking market access through our new dedicated power partners or DPP strategic partnership. DPP is the result of a strategic partnership with Diversified Energy Company and Tessiac Corp and it is purpose-built to accelerate the deployment of our carbonate fuel cell for use in data centers and other large-scale commercial and industrial applications. What makes this partnership so compelling is its potential ability to address one of the key constraints in our industry, available, reliable, and affordable fuel supply. By leveraging natural gas and coal mine methane sourced by Diversified, we expect to gain access to stable fuel in strategically important markets at favorable price spreads that improve project economics. This is a smart, high-leverage solution that we expect will help us scale faster, deliver more value to customers, and open up entirely new market territory. I'll go into more detail on DPP in a later slide, but the early indicators are strong, and we are excited about its potential to be a meaningful growth engine for fuel cell energy. Our strategic partnerships continue to drive commercial traction. Our collaboration with ExxonMobil and Carbon Capture at the Rotterdam Manufacturing Complex is progressing well and positions us to expand this technology to new customers and partners. We're also advancing commercialization of our solid oxide electrolyzer through key partnerships with Malaysia Marine and Heavy Engineering and Idaho National Laboratory. These partnerships are essential. allowing us to push innovation forward while managing capital responsibly. Together, we believe they're laying the groundwork for fuel cell energy's next wave of growth. Fourth, we remain committed to disciplined cost management and maintaining a strong balance sheet. Our losses narrowed in the second quarter of fiscal year 2025 compared to the second quarter of fiscal year 2024. Clear evidence that our financial discipline is taking hold. With the actions announced today, we expect to reduce our operating expenses by 30% on an annualized basis, compared to operating expenses incurred in fiscal year 2024. We believe we're moving in the right direction. And with continued focus and execution, we're positioning fuel cell energy for sustained profitability in the future. Moving to slide six. Our powerhouse business strategy remains the foundation of everything we do. As I do each quarter, I want to show how our latest actions align with our strategy. The first pillar, focus, continues to be priority number one. The restructuring we've announced reflects that commitment. A more focused feel-so energy is a more competitive and successful feel-so energy. At the same time, we are building scale. We recently welcomed Mike Hill as our new chief commercial officer. Mike brings deep experience in sustainable integrated energy systems and a strong understanding of the evolving demand of data centers and a central market for our growth going forward. And while we focus in scale, we continue to innovate. Our commitment to next generation solutions, including carbon capture and solid oxide electrolysis remains strong. The technologies represent our future, and we will continue to focus on advancing them toward commercial readiness. Dedicated power partners is one of our answers to the energy market's biggest challenge. Record demand and limited grid availability. By combining FieldSo Energy's proven technology, Diversified Energy's coal mine methane and natural gas fuel supply, and TESIAC's project execution expertise, We expect to unlock faster, more reliable power right where it is needed. We believe Dedicated Power Partners is built to win. A strategic partnership formed with the purpose of accelerating time to power and customer revenues, creating jobs, lowering price risk, delivering cost-competitive clean energy, maximizing incentives, and cutting emissions. This is real energy integration in action, and we will be ready to deliver. As we innovate for tomorrow, we're also built to deliver today. The truth is simple. Hydrocarbons still power the world, and it will for the foreseeable future. That's not a challenge for us. It's a strength. Our platforms operate on natural gas and biofuels, abundant, cost-effective fuels that align with today's market realities. Natural gas remains over 40% of the U.S. energy mix and continues to rise globally. driven by demand for distributed energy, energy security, and grid resilience. This resurgence is a powerful tailwind for our business. Our technology doesn't combust natural gas. It transforms it through reforming. It's all chemistry. We use it as feedstock to generate clean, reliable baseload power for emission-critical sectors like utilities, automotive, industrial, and wastewater treatment, while targeting data centers as a major opportunity for future growth. This is energy integration at work, delivering practical, immediate solutions. On slide nine, I would like to underscore the competitive advantage that natural gas provides our business. Natural gas is not the problem. How it is used is. Our platform transforms that reality into competitive advantage. As I just mentioned in discussing the prior slide, at Fuel Cell Energy, we don't combust natural gas. We convert it electrochemically, which is cleaner, more efficient, and with significantly lower emissions than traditional combustion-based generation. The non-combustion process captures more energy per molecule, minimizing pollutants, and enables valuable byproducts like high-grade heat and contaminant removal. It reduces flaring, lowers the environmental footprint, and delivers reliable baseload power at scale. This is what differentiates us. Natural gas is a strategic asset, and in our hands, it becomes a bridge to a lower carbon, cleaner air future without requiring society or industry to change how they operate. Our technology is ready now. It aligns with today's energy system, meets today's needs, and supports our strategy for future profitable growth. It positions us not only as innovators, but as real-world problem solvers with a product that works in the world as it is. In conclusion, today we announced bold steps to refocus and strengthen our business. We sharpened our strategy around commercially ready innovation and near-term market needs. We created what we believe to be a more direct and executable path to future profitability. Fioso Energy is built for the now, positioned for what's next, and committed to delivering cleaner power without compromise. With that, I'd like to turn the call over to our CFO, Mike Bishop.