FuelCell Energy, Inc. (NASDAQ:FCEL) Q2 2023 Earnings Call Transcript

Jason Few: Yeah, so maybe just to start with I&L [ph], if we expect to deliver I&L this year. As we’ve talked about, publicly, we expect to build and deliver four solid oxide platforms through our manufacturing capacity in Calgary. We think that the demonstration of the I&L project will certainly serve as a catalyst to show what we believe will be strong differentiation of our product versus other products available on the market or other products that are in development on the market. This application and I&L is going to be a strong example of the power of integrating our platform with nuclear. And that really does two things, it demonstrates not only just the efficiency of our product, but the added value of being a high temperature fuel cell and being able to use waste heat from nuclear to even drive greater efficiency to get the efficiency to 100% electrical efficiency.

So we think that that’ll serve as a catalyst. With respect to IRA and more clarification around that I mean, look, part of the IRA is clear ITC has been available for a while that’s pretty clear. The PTC is getting clearer in terms of how that’s going to work. So as those things get finalized, that will also serve as another key to opening the gate to some of these opportunities as customers get much more comfortable in terms of how they’re going to be able to take advantage of the tax attributes.

Christopher Souther: Okay, and then maybe a separate one on that generation gross margin, you call that an impairment can you maybe talk about that a little bit? And then can you talk about how overall generation gross margins should evolve with Toyota, Derby, Trinity College coming online this year? Thanks.

Michael Bishop: Sure. Good morning, Chris. This is Mike. And I’ll take those questions. So as we look at generation yes, we did have one impairment which came through generation related to an old development assets that the company chose not to move forward with. As we think about generation margins going forward, one thing that has been coming through the P&L which has been a drag on generation margins as we’ve been expensing capital costs related to the Toyota project, I believe there’s about 4.5 million coming through this quarter. Certainly, as Toyota comes online those costs will mitigate. What we target for our generation portfolio is EBITDA in the 40% to 50% range. So when you do the math and you essentially back out the charges for Toyota impairments as well as depreciation, we’re in that range this quarter and for the fiscal year. So that’s how we think about the EBITDA margins in that portfolio going forward.

Christopher Souther: Yeah, okay. That’s helpful.

Operator: [Operator Instructions]. Your next question comes from the line of Noel Parks from Touhy Brothers. Your line is open.

Noel Parks: Hi, good morning.

Jason Few: Good morning.

Noel Parks: I was wondering, could you talk a bit about, I’m thinking in particular about the partnership with Chart. It seems that we are seeing more lately partnerships between standalone public companies, rather than what maybe what we’ve been seeing in the past sort of like public companies taking a smaller private under their wing with a potential for vertical integration and some functions. And so I just wonder if you see these sort of partnerships as sort of a one off for you, or something that’s more inevitable or a harbinger heading towards consolidation across some related clean tech sectors?