FuelCell Energy, Inc. to ramp up production
FuelCell Energy, Inc. (Nasdaq:FCEL) is increasing production due to strong demand, executives said on a Tuesday morning conference call.
“In light of the increased order flow from California and South Korea and the potential orders from Connecticut’s [clean energy legislation], we will look this summer to increase production capacity,” CEO Daniel Brdar said on the call.
The Danbury, Conn.-based fuel cell maker is adding a third shift of production and expects to increase capacity to between 30 megawatts and 40 megawatts this year, from the previous range of 10 megawatts to 12 megawatts, Brdar said. FuelCell expects the revenue from the increased production to be realized during 2008.
FuelCell makes carbonate fuel cell products that offer stationary power generation for commercial, industrial, government and utility customers. Fuel cells are devices that convert chemical energy in natural gas into electricity and hot water through an electrochemical process.
Responding to an analyst who characterized the Japanese fuel cell market as “one great big roaring disappointment,” Brdar said the regulated market causes problems.
“The drivers are there in terms of desires to reduce CO2 emissions, the problem is the inverted spark spread because it’s not a completely deregulated market,” Brdar said. “In order to keep their customers, the utilities have been dropping their rates while the gas companies have been struggling to find out how they can capture the increase in gas prices.”
After Monday’s closing bell, the company reported revenue of $11.4 million for the second quarter ended April 30, up from $9.5 million in the year-ago period. The company recorded a net loss of $18.8 million, or $0.32 a share, compared with a loss of $23.5 million, or $0.48 per share, a year earlier. Wall Street analysts polled by Thomson Financial were expecting a per-share loss of $0.37 on $8.38 million in revenue.
In today’s trading, FuelCell was up $0.23, or 3%, to $7.61.
Also on the call, Brdar said:
• Orders over the next year are “overwhelmingly” megawatt class
• The company receives better pricing in South Korea than California, but product mix is the main gross margin driver
• Over the last three months, South Korean power producer Posco Power placed 7.5 megawatts worth of orders
• Over 40% of business is from California customers
• FuelCell board member Warren Bagatelle passed away last week
