FuelCell Energy targets 30% operating expense reduction and sharpens focus on carbonate platform amid restructuring

Earnings Call Insights: FuelCell Energy (FCEL) Q2 2025

Management View

• Jason B. Few, President and CEO, announced a restructuring plan intended to prioritize sales of the molten carbonate platform, stating that FuelCell Energy is “taking meaningful steps to rightsize our business, manage expenses and position ourselves to take advantage of near-term opportunities.” Few emphasized that the restructuring is designed to “accelerate the time line toward expected future profitability” and that the company is “intensifying our focus on our carbonate platform while reducing overhead.”
• The company will pause broader solid oxide R&D, focusing exclusively on validating its electrolysis technology at the Idaho National Laboratory, which Few described as positioning FuelCell Energy to “capitalize as the hydrogen economy expands.”
• Dedicated Power Partners (DPP), a new joint venture with Diversified Energy and TESIAC, was highlighted as a key growth initiative. Few described DPP as “purpose-built to accelerate the deployment of our carbonate fuel cell for use in data centers and other large-scale commercial and industrial applications.”
• Few stated that FuelCell Energy is aiming to achieve positive adjusted EBITDA once its Torrington manufacturing facility reaches an annualized production rate of 100 megawatts per year, compared to its current rate of approximately 31 megawatts as of April 30, 2025.
• Michael S. Bishop, Executive VP, CFO & Treasurer, stated: “Through this restructuring, we aim to reduce our operating expenses by 30% on an annualized basis compared to operating expenses incurred in fiscal year 2024. Key actions under our new restructuring plan include a global workforce reduction, a significant reduction of discretionary overhead spending, recalibration of the Torrington production schedule to align with contracted demand, deferral of certain compensation and benefit obligations, the cessation of the majority of development efforts with respect to our solid oxide technology and other targeted cost savings measures.”

Outlook

• Management reiterated the target to achieve positive adjusted EBITDA once the Torrington facility reaches 100 megawatts of annualized production, with current operations at 31 megawatts as of April 30, 2025. The pace of reaching this milestone will depend on order flow.
• No specific forward-looking EPS or revenue guidance figures were provided in the call.
• The company expects a decrease in annualized production rate in the near term due to restructuring aligning production with contracted (rather than forecasted) demand.

Financial Results

• FuelCell Energy reported total revenues of $37.4 million for Q2 2025, up from $22.4 million in the prior-year quarter.
• The net loss attributable to common stockholders for the quarter was $38.8 million, compared to $32.9 million in Q2 2024. Net loss per share was $1.79, compared to $2.18 in the same period last year, benefiting from a higher number of weighted average shares outstanding.
• Adjusted EBITDA totaled negative $19.3 million compared to negative $26.5 million a year earlier.
• Cash, restricted cash, cash equivalents, and short-term investments stood at $240 million as of April 30, 2025.
• Product revenues increased to $13 million, service agreement revenues rose to $8.1 million, generation revenue decreased to $12.1 million, and advanced technology contract revenues decreased to $4.1 million.
• Backlog increased by 18.7% to $1.26 billion, partially due to a long-term service agreement with GGE and a 20-year power purchase agreement for a Hartford, Connecticut project.

Q&A

• George Gianarikas, Canaccord Genuity: Asked about momentum for DPP and timelines for achieving EBITDA neutrality. Jason B. Few responded that there are active conversations with data center customers and “we feel pretty positive about the momentum that we’re building there.” Mike Bishop confirmed, “we can achieve adjusted EBITDA positive when we get the factory in the 100-megawatt range,” but timing depends on order flow.
• Jeffrey David Osborne, TD Cowen: Queried the shift in focus to manufacturing as a driver of profitability versus the generation portfolio. Bishop explained that the financial model now relies more on product and service business, with generation and advanced technology as contributors.
• Osborne also asked about pricing for data center applications. Few indicated no significant changes in pricing to customers, stating “we don’t see significant changes in our pricing to customers as a result of the demand.”
• Noel Augustus Parks, Tuohy Brothers: Inquired about customer urgency in the data center segment. Few stated the opportunity to reach 100 megawatts will be “a combination of opportunities,” including grid resiliency, data centers, and gas distribution partnerships.
• Parks followed up on project structuring. Bishop explained DPP’s go-to-market approach will generally involve power purchase agreements, with optionality depending on the client.

Sentiment Analysis

• Analysts’ tone was neutral to slightly positive, focused on operational milestones and strategic execution, with questions centered on order flow, profitability milestones, pricing stability, and partnership momentum.
• Management maintained a confident and constructive tone, emphasizing strategic discipline and cost control. Few and Bishop used language such as “we believe this strategy will accelerate the time line toward expected future profitability” and “we feel pretty positive about the momentum,” while also acknowledging restructuring challenges.
• Compared to the previous quarter, both analysts and management maintained a focus on cost control and execution but management’s tone shifted to a more assertive stance on restructuring and profitability milestones.

Quarter-over-Quarter Comparison

• The current quarter introduced a new restructuring plan aiming for a 30% reduction in operating expenses, compared to a 15% target discussed in the previous quarter.
• The company shifted its strategic focus more sharply toward the carbonate platform, with the immediate pause of solid oxide R&D except for targeted demonstration efforts.
• Order flow and ramping production for data center customers via DPP became a more central theme.
• Revenue increased significantly over the prior quarter, and adjusted EBITDA losses narrowed.
• Analysts’ questions shifted from initial partnership and project development inquiries in Q1 to more detailed discussions of order flow, profitability targets, and business model shifts in Q2.
• Management’s confidence in achieving positive adjusted EBITDA at 100 megawatts was more explicitly stated.

Risks and Concerns

• Management acknowledged challenges including the need to align production with contracted demand, which could result in a decrease in annualized production rate.
• The restructuring includes global workforce reductions and cost-cutting measures, with potential short-term impacts on production and R&D capabilities.
• Bishop outlined that “the timing is really going to be paced by flow of orders,” highlighting reliance on customer demand and market momentum.
• Analysts sought greater visibility into the timeline for scaling production and achieving EBITDA neutrality, indicating market uncertainty.

Final Takeaway

FuelCell Energy’s Q2 2025 earnings call underscored a significant strategic pivot, with restructuring measures targeting a 30% reduction in annualized operating expenses and an intensified focus on the carbonate platform. The company is aligning its manufacturing and sales approach to contracted, near-term opportunities, particularly in the data center market, while pausing most solid oxide R&D. Management signaled a clear path to profitability, projecting positive adjusted EBITDA once the Torrington facility reaches 100 megawatts in annualized production, and highlighted partnership momentum and disciplined cost control as key drivers for future performance.

Read the full Earnings Call Transcript