A $17 million charge on its Fit Energy contract pushed FuelCell Energy to a $24.5 million fiscal Q3 gross loss, sending the Nasdaq-listed stock down 15.7 percent. The clean-power company now faces questions about its disclosure of the agreement's costs while it works toward positive adjusted EBITDA in fiscal Q4 2027.
FuelCell Energy shares fell 15.7 percent on Sept. 2 after the company posted a $24.5 million fiscal Q3 gross loss, driven by $17 million in charges tied to its Fit Energy supply agreement.
"The charges reflect our legacy cost structure as we operate at 37 megawatts of production volume, which has the cost higher than current market rates," Chief Financial Officer Michael Bishop said on the earnings call.
Revenue fell 29 percent to $33 million from $46.7 million a year earlier, while the net loss narrowed to $45.3 million, or 64 cents a share, from $91.9 million. The $17 million in Fit Energy charges comprised about $4 million of inventory write-downs and $13 million of losses on firm purchase commitments for the initial 30-megawatt phase of the agreement.
The drop erased $2.68 a share and left the stock under scrutiny from investors and watchdogs over the adequacy of FuelCell's Fit Energy disclosures, a situation that could lead to regulatory inquiries or securities litigation. The company is targeting positive adjusted EBITDA in fiscal Q4 2027, contingent on converting its $2.4 billion of awarded capacity backlog into firm orders.
FuelCell Energy, which trades on the Nasdaq, signed the capital equipment purchase agreement with Fit Energy in June, covering up to 380 megawatts across four phases. The committed Phase 0 covers 30 megawatts, with deliveries expected to begin in fiscal Q4 2026 and conclude during fiscal 2027. The remaining 350 megawatts sit in a new "awarded capacity" backlog category that management cautioned is not firm order backlog or guaranteed revenue.
The company ended the quarter with $737.3 million in cash, cash equivalents and restricted cash after raising about $298 million through common stock sales, including a $245.5 million underwritten offering in July. Total committed and awarded capacity backlog reached $3.6 billion, split between $1.3 billion of committed backlog and $2.4 billion of awarded capacity.
Management is scaling its Torrington, Connecticut, factory from an annualized production rate of about 37 megawatts to 100 megawatts by October 2026, with a longer-term target of 500 megawatts by June 2028. The expansion is fully funded, with estimated capital requirements of $200 million to $275 million.
After the quarter, FuelCell Energy signed a 75-megawatt capacity reservation agreement with a major co-location data center operator for a Texas project. The company also delivered the first two carbonate fuel cell modules to ExxonMobil's Rotterdam complex and signed a memorandum of understanding with Siemens to develop electrical balance-of-plant systems.
The scrutiny over Fit Energy disclosures follows governance questions for the fuel-cell maker, which competes with Bloom Energy in the distributed-generation market. Investors will watch whether FuelCell revises contract terms, issues revised guidance or faces litigation over how it disclosed the agreement's costs. The company's next catalyst is the fiscal Q4 earnings report, expected in early December.
This article is for informational purposes only and does not constitute investment advice.
