FuelCell Energy, Inc.

Hello and welcome to the Fuel Cell Energy fourth quarter of fiscal 2025 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad. I would now like to turn the conference over to Michael Bishop, CFO. You may begin.

Thank you, operator. Good morning, everyone, and thank you for joining us on the call today. This morning, Fuel Cell Energy released our financial results for the fourth quarter and fiscal year 2025, and our earnings press release is available in the investor section of our website at www.fuelcellenergy.com. 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. Before we begin, please note that some information that you will hear or be provided with today consists 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 statements concerning our anticipated financial results, plans, and expectations regarding the continuing development, commercialization, and financing of our fuel cell technology, our anticipated market opportunities, and our business plans and strategies. Our actual future results could differ materially from those described 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 SEC, particularly the risk factor section of our most recent Form 10-K, and any subsequently filed quarterly reports on Form 10-Q. During this call, we'll be discussing certain non-GAAP financial measures, and we refer you to our website, our earnings press release, and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures. Our press release and a copy of today's webcast presentation are available on our website under the Investors tab. For this call, I'm joined by Jason Few, our President and Chief Executive Officer. Following our prepared remarks, the leadership team will be available to take your questions. I'll now hand the call over to Jason for opening remarks. Jason?

Thank you, Mike, and good morning, everyone. Thank you for joining us on our call today. Our fourth fiscal quarter closed a year of meaningful progress for fuel cell energy. Starting around 12 months ago, we began a series of thoughtful restructuring measures to sharpen our focus and strengthen the fundamentals of our business. Through this series of tough decisions to streamline and focus our organization, today we are operating with greater discipline, lower cost, and strategic clarity. We are further along on our path to profitability. The work is not finished. but we believe we are on the right track. During this time, the surrounding market environment has undergone significant change as well, presenting what we see as one of the greatest business opportunities of our generation, the demand for more power to accommodate data centers, industry, and communities. We believe that demand plays directly to the strength of our technology, clean, resilient, near silent continuous power. We continue to focus on converting our pipeline into executed contracts, scaling our manufacturing capacity at our Torrington facility, and advancing product improvements that differentiate us from our competitors. We are committed to this work and we are doing it with urgency and with clear focus. That focus is delivering distributed always-on low emission power through our carbonate fuel cell platform. Our technology is proven at scale, and we are aligning our business around this singular strength. As you all know, demand for power is accelerating quickly, driven by the exponential growth of AI, data centers, and digital infrastructure that is outpacing the capabilities of the existing grid. This demand is reshaping the market and it requires solutions that can provide clean, reliable power where it is needed. The need is clear, urgent, and investable. With decades of operating experience and a differentiated electrochemical platform, we believe we are well positioned to meet this need and successfully compete for the opportunities emerging in this rapidly growing market segment. Please turn to slide four. As you view our fourth quarter and full fiscal year results, please keep the following five points in mind. Number one, we are focused on our data center strategy. AI-driven demand is reshaping power requirements across the data center and digital infrastructure ecosystem. We are actively engaged with participants across the ecosystem to make them aware of our capabilities and that we are prepared to provide utility scale, reliable, and cost-competitive clean power for these types of energy-intensive applications. With our collaboration with Diversified Energy, a potential future collaboration with Inuverse announced earlier this year, and a growing pipeline of potential data center opportunities in the U.S. and Asia, we believe we have strong momentum heading into 2026. Number two, we are scaling manufacturing capacity. We believe that our path to profitability runs through higher utilization at our manufacturing facility in Torrington, Connecticut. As we increase production, we expect our cost structure to become more efficient, and we expect this to translate into positive adjusted EBITDA once we reach an annualized production rate of 100 megawatts per year. Entering fiscal year 2026, our focus is on margin expansion driven by disciplined operations and greater production throughput. I will provide additional detail on our scalable manufacturing capacity later in the presentation. Number three, we are building financing capacity to enable growth. We believe that the $25 million financing provided by XM to support our GGE project in Korea demonstrates a model that can be used for future projects both in Korea and worldwide. The current U.S. administration has expressed its intention to use XM to support the global adoption of American technologies like ours, and we believe this financing signals XM's belief and our utility-scale power generation technology. We are pleased to have EXIM as a financing partner. We are entering 2026 with a strong balance sheet, and we expect to achieve financing flexibility through proven models like the EXIM financing and other financing alternatives. Number four, we believe we are positioned to win in emerging power markets. Policy certainty under the One Big Beautiful Bill Act improves project economics, supports long-term adoption, and allows current and potential customers to make investment decisions. Furthermore, our core carbonate platform provides reliable, clean power that can be dispatched when needed and can be situated close to users, an advantage for customers prioritizing dependable energy, lower emissions, and flexible site options for crucial operations. And number five, we are entering fiscal year 2026 with strong momentum. Commercial momentum, policy clarity, and an expanding opportunity set gives us confidence. Our success in fiscal year 2026 will depend on execution, converting our pipeline into executed contracts and backlog into revenue. with the discipline and focus we've been building across the company. Transitioning to slide five. We succeed when we stay focused on solving problems for our customers. Customers turn to us when they need to pursue business growth without compromise and when power constraints threaten timelines, economics, or operational reliability. Increased demand is not the only challenge they encounter. There are numerous obstacles facing customers today that can hinder their economic growth. Utility interconnections now routinely take five to seven years or more, and new substation builds follow a similar timeline. Traditional gas turbines face three to five years of procurement and construction before they can deliver behind the meter power. Our carbonate fuel cells avoid these bottlenecks. They can be deployed without requiring new high-voltage interconnections, can be brought online more quickly and can deliver a cost of energy comparable to turbines and other engine alternatives with reduced permitting risk. These delays are further compounded by emission restrictions and limited site availability. Our core carbonate platform addresses those issues directly. They produce virtually no NOx or SOx and offer unique carbon capture capability. In addition, our 1.25 megawatt power blocks allow customers to scale capacity as their needs grow. Traditional generation projects often trigger resistance, adding years of uncertainty. Our distributed carbonate fuel cell platform sidesteps these issues. It requires a smaller footprint, operates quietly, and can operate near the point of use, which may help to mitigate opposition and accelerate time to power. Let's move to slide six. These challenges and the way our customers need to solve them shape how we operate. We have concentrated our efforts on our carbon and fuel cell platform because it not only is ready now, but also directly addresses the constraints I just outlined. It is proven across commercial deployments of varying scale, and we continue to refine it through real-world operating experience. Our platform also benefits from a strong U.S. policy tailwind, including the reinstatement of the investment tax credit and incentives for carbon capture, an important point of differentiation compared to other generation technologies. And while we are doubling down on what is a commercially ready platform, we are also investing selectively in innovations that we believe will better position us for what comes next. These emerging technologies have the potential to drive the next phase of our growth and strengthen our long term competitiveness. Now onto slide eight. I wanted to highlight one example of the momentum we are carrying into 2026. We have established fuel cell energy as a leading partner in South Korea's growing fuel cell energy economy, the largest in the world. Today, We have more than 100 megawatts of power projects in South Korea in our backlog, with another 100 megawatts under MOU. Our ongoing work with GGE continues to advance, supported by the 25 million in new EXIM financing for the next phase of the project, including additional module shipments and service. We also see a clear path for additional repowering opportunities, and we are proud to contribute to Korea's evolving energy landscape. Let's go to slide nine. As we look ahead to fiscal year 2026, we continue to see a compelling case for fuel cells in data center applications. Grid constraints, rising workloads, and pressure to manage energy costs are all increasing demand for reliable, efficient, and scalable onsite power. Our carbonate fuel cell platform addresses these needs directly by delivering baseload reliability modular scalability, and meaningful permitting advantages. And as data centers push more computational power, our integrated absorption chilling and heat offtake could help manage thermal load while maintaining system performance. It is our assessment that our carbonate fuel cell platform additionally offers extended stack longevity, reliable biogas functionality, minimal performance degradation, and sophisticated containment management. These features collectively facilitate cost-effective carbon capture solutions, particularly in large-scale applications. Additionally, as NIMBY concerns grow and data center operators are under pressure to expand, our fuel cells offer a low-profile clean solution that provides greater flexibility for siting that can help them move forward faster amidst community concerns. Let's move to slide 10. With this opportunity in front of us, we also believe we have the manufacturing foundation to meet it. Once we reach an annualized production rate of 100 megawatts per year at our Torrington facility, we expect to achieve positive adjusted EBITDA. Today, we are roughly 40% of the way there, and our backlog continues to build. Looking further ahead, we believe that the Torrington facility could accommodate an estimated annualized production capacity of up to 350 megawatts per year with additional capital investment in machinery, equipment, tooling, labor, outsourcing certain processes, and inventory. As we enter the new year, we are executing with focus and momentum. We are focused on advancing meaningful opportunities in the data center market scaling a manufacturing platform built for utility level deployments, and moving steadily toward profitability with operational discipline. With that, I'd like to turn the call over to our CFO, Mike Bishop.