Fuelcell Energy, Inc. · NASDAQ:FCEL
Fuelcell Energy — Investor Day (March 2022)
72 slides from Fuelcell Energy's investor day presentation, Mar 16, 2022
Slide 1: FuelCell Energy Investor Day March 2022
FuelCell Energy Investor Day 16 March 2022
Slide 2: Forward-looking statements
© 2022 FuelCell Energy 2 This presentation and related commentary from Company management contain forward - looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding future events or our future financial performance that inv
Slide 3: Today's Agenda
© 2022 FuelCell Energy Today’s Agenda 10:00 am Welcome & Introductions Tom Gelston SVP, Finance and Investor Relations Company Overview & Strategy Jason Few President & CEO Market Opportunity Troy Michaud VP, Global Market Strategy Technology & Innovation Tony Leo EVP & CTO Q&A (~15 Minutes) BREAK (
Slide 4: Company Overview & Strategy
© 2022 FuelCell Energy Company Overview & Strategy 4
Slide 5: Global energy transformation is underway
© 2022 FuelCell Energy 5 Global energy transformation is currently underway – every company and every industry will be impacted by the transition to net zero – and, based on our analysis, we have competitive advantages and offer highly efficient solutions to meet the challenge Our technologies provi
Slide 6: FuelCell Energy Snapshot
© 2022 FuelCell Energy 6 A global leader in manufacturing stationary fuel cell energy platforms for decarbonizing power and producing hydrogen through our proprietary fuel cell technologies FuelCell Energy Snapshot ENGINEERING EXPERTISE AND MANUFACTURING FACILITIES ALIGNED WITH CUSTOMERS WORLDWIDE 1
Slide 7: Decarbonizing power and producing hydrogen
© 2022 FuelCell Energy DECARBONIZING POWER • Produce decarbonized power • Capture carbon and greenhouse gases at low cost with the ability to generate power and hydrogen at the same time • Negligible nitrogen oxide (NOx) and sulfur oxide (SOx) emissions PRODUCING HYDROGEN • Supply green hydrogen (us
Slide 8: Experienced Leadership Team Focused on Execution
© 2022 FuelCell Energy Experienced Leadership Team Focused on Execution Jason Few President, CEO & CCO Time with FCE: 3 years Mike Bishop Exec. Vice President, CFO 18 years Josh Dolger Exec. Vice President, General Counsel <1 year Tony Leo Exec. Vice President, CTO 43 years Mike Lisowski Exec. Vice
Slide 9: Evolving the FuelCell Energy Brand
© 2022 FuelCell Energy EVOLVING THE FUELCELL ENERGY BRAND is intended to be a signal to our customers, communities, team members, and stockholders, of our absolute commitment to enabling a safe, secure and practical approach to realizing our ESG goals and assisting our customers to achieve their ESG
Slide 10: Expert and Diverse Board of Directors
© 2022 FuelCell Energy 10 Expert and Diverse Board of Directors CURRENTLY EXCEEDING NASDAQ REQUIREMENTS FOR DIVERSITY, BASED ON GENDER IDENTITY AND DEMOGRAPHIC BACKGROUND 1 1 Includes all current directors; 2 Director Chris Groobey not standing for reelection in 2022. 63% of Our Board is Diverse Jam
Slide 11: Global Energy Consumption
© 2022 FuelCell Energy UNITED STATES TOTAL ENERGY CONSUMPTION 1 UNITED KINGDOM TOTAL ENERGY CONSUMPTION 2 SOUTH KOREA TOTAL ENERGY CONSUMPTION 3 Global Energy Consumption 40% 17% 17% 14% 1% 11% 32% 17% 30% 13% 1% 7% 20% 26% 11% 12% 1% 30% Transport Industry Residential Commercial & Public Services A
Slide 12: ~$2T Global TAM through 2030
© 2022 FuelCell Energy $400B DISTRIBUTED HYDROGEN Global Distributed H 2 Supply Green & Blue $300B DISTRIBUTED POWER Front of the Meter & Behind the Meter MW & Sub - MW; Zero & Low Carbon $150B ENERGY STORAGE Long Duration: Providing Grid Stability & Renewable Enablement; Avoid Mineral - based Stora
Slide 13: Differentiated Business Model Based on Multiple Revenue Streams
© 2022 FuelCell Energy GENERATION BUSINESS As the availability of project capital has improved, project structures in the U.S. have transitioned to predominantly power purchase agreements (“PPAs”) SERVICE AND LICENSE / PARTNERSHIPS Every platform we sell is bundled with a service agreement that runs
Slide 14: Product portfolio and sustainable competitive advantage
© 2022 FuelCell Energy DECARBONIZE POWER PRODUCE HYDROGEN INDUSTRY APPLICATION Combined Heat & Power Microgrids Carbon Separation Carbon Capture 1 Trigen Carbonate Electrolysis Solid Oxide 1 Energy Storage 1 Zero Carbon Hydrogen Power 1 TECHNOLOGY EMPLOYED Carbonate Solid Oxide Carbonate Solid Oxide
Slide 15: New Path Forward in Asia
© 2022 FuelCell Energy 15 IMPORTANCE OF THE SOUTH KOREAN MARKET • Currently the largest fuel cell market in the world • South Korean gov’t targets from Hydrogen Economy Roadmap: − 6.2M fuel cell vehicles and 1,200 refilling stations − 41K hydrogen - fueled buses and conversion of service trucks into
Slide 16: Intellectual property and technical expertise
© 2022 FuelCell Energy INTELLECTUAL PROPERTY & TECHNICAL EXPERTISE 335 patents and 137 pending applications 1 PRODUCTS CHARACTERIZED BY SUSTAINABILITY OVER THEIR FULL LIFECYCLE By weight,~93% of the entire power plant can be reused or recycled at the end of its useful life TECHNOLOGY PLATFORMS THAT
Slide 17: Grow Significant Market Opportunities
© 2022 FuelCell Energy 17 OPTIMIZE THE CORE BUSINESS Capitalizing on our core technological strengths in key product markets, including the use of biofuels, microgrids, distributed hydrogen, combined heat & power, and carbon separation and utilization Grow Significant Market Opportunities DRIVE COMM
Slide 18: Scale Our Existing Platform to Support Growth
© 2022 FuelCell Energy 18 INVEST Investing in our current manufacturing capabilities, advancing to commercialization our Advanced Technologies, enhancing our commercial organization, and investing in marketing to ensure the various audiences of our message have a clear understanding of our platforms
Slide 19: Innovate for the Future
© 2022 FuelCell Energy 19 CONTINUE PRODUCT INNOVATIONS Investing in continuous product improvement, expanding commercialization of new technologies, including proprietary gas treatment systems, and advancing hydrogen - based energy storage and electrolysis, as well as carbon capture and sequestratio
Slide 20: We Are Committed to Net Zero
© 2022 FuelCell Energy WE ARE COMMITTED TO NET ZERO At FuelCell Energy, we're doing our part by developing a plan to reduce our carbon emissions to net zero by 2050. This year, we are: • Calculating our organizational carbon footprint baseline • Conducting product life cycle assessments (LCAs) to un
Slide 21: Environmental, social and governance
© 2022 FuelCell Energy ENVIRONMENTAL OUR PLANET We utilize Design for Environment (DfE) principles in the design, manufacturing, installation, and servicing of our power platforms. DfE principles aim to reduce the overall negative human health and environmental impact of a product, process, or servi
Slide 22: Market Opportunity
© 2022 FuelCell Energy Market Opportunity 22
Slide 23: Key Messages
© 2022 FuelCell Energy 23 Energy sector is undergoing an unprecedented global transformation to decarbonize Our technology is complementary to the energy transition – including renewables, electrification, and decarbonization of heavy - industry, transport and other hard - to - abate sectors Proven
Slide 24: Energy Transition Tailwinds Will Expand Addressable Market
© 2022 FuelCell Energy 24 We Believe Strong Energy Transition Tailwinds Will Expand Our Addressable Market Opportunity CLIMATE GOALS FOR DECARBONIZATION DRIVING MULTIPLE OPPORTUNITY SETS PRODUCT PORTFOLIO WELL - POSITIONED TO CAPTIALIZE ON THE ENERGY TRANSITION ~$2 T Global TAM 1 GLOBAL ESTIMATES TH
Slide 25: Well-Positioned to Accelerate Growth and Enable the Energy Transition
© 2022 FuelCell Energy GEOGRAPHY & MARKETS ENABLE GLOBAL SUSTAINABILITY GOALS Optionality from a single technology provider enabling rapid, cost effective, decarbonization adoption TECHNOLOGY PROPRIETARY TECHNOLOGIES TO LOWER COST OF THE TRANSITION High - efficiency electrolyzer Carbon capture 1 Lon
Slide 26: Global Carbon Neutral Pledge
Global Carbon Neutral PledgeCOUNTRIES 1 with net-zero emissions targetsUTILITIES 2 with net-zero emissions targetsCOMPANIES 2 with net-zero emissions targets1 Source - Energy and Climate Intelligence Unit, Carbon Neutrality Coalition - non-exhaustive list 2 Source - Respective Company Websites - non
Slide 27: Key Global Markets with Strong Policy Support
Key Global Markets with Strong Policy Support to Accelerate Adoption WELL-POSITIONED IN KEY REGIONS TODAYNorth America● Markets where we are targeting growth opportunitiesEuropean UnionSouth KoreaAustraliaJapanFOCUSED ON TARGETING GROWTH IN THE EMERGING MARKETS OF TOMORROW • North America $9Bn Bipar
Slide 28: Comprehensive Set of Solutions to Maximize Decarbonization
Developing Comprehensive Set of Solutions to Maximize DecarbonizationENERGY SECTORS WHERE OUR TECHNOLOGY IS APPLICABLEHHyyddrorgoengen 2 SSttoorargaege CCCCSUU S23% 12% 10%FCE CAPABILITYFCE COMPLEMENTSNNaatutruarl aGal sGas8%BBiioofufeulsels 2%SSoolalar r15%CO2NNuucclelaer ar WWinindd10% 9%GGeeootht
Slide 29: Technology & Innovation
Technology & Innovation© 2022 FuelCell Energy 29
Slide 30: Key Messages
Key Messages1 Carbonate fuel cell technology available since 2003; our existing fleet is installed around the world, demonstrating the reliability and durability of our proven technology2 Unique, proprietary technologies—Trigeneration: the only known platform capable of producing hydrogen, water & e
Slide 31: Leading Technologies to Provide More Energy Solutions
Leading Technologies to Provide More Energy SolutionsAPPLICATION CARBONATE1 SOLID OXIDE2Power gen/CHP3 from natural gas, biogas, or H2 blends ✓ ✓ Power generation/CHP from hydrogen fuel ✓ CO2 capture from platform ✓ ✓ CO2 capture from external source while making power ✓ H2/Power/Water production fr
Slide 32: Superior Advantages to Drive Adoption – Power
Superior Advantages to Drive Adoption – Power1 MULTI-FEATURED Broad and capable fuel cell portfolio; Platforms to produce power with multiple applications for high-grade waste heat; Microgrid applications; Carbon separation2 ATTRACTIVE ECONOMICS & ENERGY SECURITY Providing power at the point of use
Slide 33: Superior Advantages to Drive Adoption – Hydrogen
Superior Advantages to Drive Adoption – Hydrogen1 MULTIPLE HYDROGEN PRODUCTION PLATFORMS Carbonate Trigeneration: co-production of power, hydrogen, and water; Carbonate reforming/electrolysis/purification; High efficiency solid oxide electrolysis12 MULTIPLE PLATFORMS DRIVE ECONOMICS IN DIFFERENT APP
Slide 34: Partnership with Toyota at Long Beach, CA Facility
Video – Partnership with Toyota at Long Beach, CA Facility• Trigeneration platform we are building will address the need for hydrogen fueling infrastructure by cleanly and affordably generating high-purity hydrogen in an urban location• Will be the first 100% renewable Toyota facility in North Ameri
Slide 35: Solid Oxide Electrolysis
Solid Oxide Electrolysis1EFFICIENCY ADVANTAGE22LARGE SCALE HYDROGEN PRODUCTION FROM NUCLEAR OR RENEWABLESDEMONSTRATION SYSTEM DISTRIBUTED HYDROGEN PRODUCTIONMULTIPLE PLATFORMS BEING DEVELOPED TO ADDRESS DIVERSE H2 APPLICATIONS EMERGING DURING ENERGY TRANSITION1 Under development; 2 As tested in demo
Slide 36: Long Duration Energy Storage
Long Duration Energy Storage1• Solid oxide stacks in electrolysis mode will produce hydrogen from power, with hydrogen to be stored for future use1MW REVERSIBLE SOLID OXIDE (RSOFC) SYSTEMH2 can be converted back to power or supplied to H2 user, enhancing project economics• Stored hydrogen will be se
Slide 37: Well-Positioned with Competitive Advantages
Well-Positioned with Competitive AdvantagesINTELLECTUAL PROPERTY REPRESENTS A BARRIER TO ENTRY FOR POTENTIAL COMPETITORS Five decades of carbonate development leading to unique proprietary technologies for power generation, carbon capture1, and hydrogen production Two decades of solid oxide developm
Slide 38: Carbon Capture Technology With Favorable Economics
Carbon Capture Technology With Favorable EconomicsCARBON SEPARATION Purification and capture of CO2 from fuel cell power generation Capturing fuel cell CO2 for supply to on-site use or distribution to local off-takers for food and beverage or industrial applicationsCARBON CAPTURE Purification and ca
Slide 39: Accelerating Innovation Through Investments in Products, People and Processes
Accelerating Innovation Through Investments in Products, People and ProcessesINCREASING COMMERCIALIZATION INVESTMENT FOCUSED DEVELOPMENT EFFORTSFY2021 $11.3MFY2022E $45–$55M• Adding features and capabilities to our proven, patented molten carbonate design • Investments applied to specific technologi
Slide 40: Q&A
Q&A© 2022 FuelCell Energy 40
Slide 41: Scaling Operations for the Future
© 2022 FuelCell Energy Scaling Operations for the Future 41
Slide 42: Key Messages
© 2022 FuelCell Energy 42 Manufacturing expertise based on decades of proprietary knowledge Continuous improvement is culturally ingrained and important to capacity expansion as we further develop and leverage our operational excellence Scaling manufacturing capabilities to significantly ramp up our
Slide 43: Established Integrated Operating Model
© 2022 FuelCell Energy Established Integrated Operating Model OPERATIONS VALUE CHAIN SAFETY, QUALITY, CUSTOMER SERVICE Commercial Engineering Supply Chain Manufacturing Project Management Global Monitoring & Control Field Service Operations Commercial Design Robust Product Verification & Validation
Slide 44: Fuel Cell Manufacturing Expertise – Global Footprint
© 2022 FuelCell Energy 44 Advanced manufacturing process utilizing proprietary designs and state - of - the - art manufacturing equipment to produce components are the heart of the company’s SureSource carbonate and solid oxide systems 1 Experienced global team with broad technical expertise optimiz
Slide 45: Operational Excellence
© 2022 FuelCell Energy 45 OPERATIONAL EXCELLENCE • Safety: ISO45001:2018, Occupational Health & Safety System certified 4/2021 • Quality: ISO9001:2015, Quality Management System certified 11/2020 • Delivery: Manufacturing 100% OTD for 3 years with a 7% increase in installed fleet since 2019 LEAN CUL
Slide 46: Qualified Global Supply Chain
© 2022 FuelCell Energy Qualified Global Supply Chain, Centered in North America, is Stable and Built on a Foundation of Strong Time - tested Relationships Headwinds: geopolitical trade challenges, commodity dynamics, COVID, logistics 46 INTEGRATED SUPPLY CHAIN QUALIFICATION AND RISK MITIGATION PROGR
Slide 47: Fleet Global Monitoring & Control Center
© 2022 FuelCell Energy FLEET GLOBAL MONITORING & CONTROL CENTER (GMCC) 47 CENTRALIZED GLOBAL MONITORING AND CONTROL • Entire global fleet centrally and remotely monitored 24/7 at our GMCC located in the U.S.; platforms do not require on - site operators • Field Service teams regionally located near
Slide 48: Project Backlog Completion
© 2022 FuelCell Energy 48 • Focused on completing construction and achieving commercial operation of current project backlog • Building selected cross - functional bench strength across operations to support project execution • Expanding qualification of strategic Engineering, Procurement and Constr
Slide 49: Roadmap for Scaling Capacity
© 2022 FuelCell Energy 49 NEAR - TERM PRODUCTION SCALE - UP • Passionate and experienced team driving continuous improvements across operations • Growing our team and increasing talent depth • Efficiently optimizing existing North American production facility with maximum annualized capacity of 100
Slide 50: Focusing on the Human Element
© 2022 FuelCell Energy Focusing on the Human Element 50
Slide 51: Key Messages
© 2022 FuelCell Energy 51 Position of Chief People Officer created to support scaling the organization as we refocus our mission to build the next generation of talent as we grow our business Strategically building out HR infrastructure as a business partner model to better align the organization wi
Slide 52: Human Resources Strategic Initiatives
© 2022 FuelCell Energy HUMAN RESOURCES TRANSFORMATION Transitioning HR to serve as a strategic business partner to align the organization with business objectives RECRUITMENT & SELECTION Thinking differently to attract, hire, and retain top talent by looking at skill - based hiring HUMAN CAPITAL INI
Slide 53: Human Resources Mission Statement
© 2022 FuelCell Energy 53 Delivering clean innovative solutions one employee at a time by enabling a work environment that stimulates passion, collabor ati on, engagement and speed, to ensure a performance - based culture built upon a total rewards program with three main goals: Human Resources Miss
Slide 54: Attracting & Retaining The Best Talent
© 2022 FuelCell Energy 54 NEW METHODS OF SOURCING HUMAN CAPITAL • Building our brand in the community • Working with schools/community colleges • Increasing visa sponsorship • More agile approach to screening 18 - TO 24 - MONTH VIEW OF TALENT NEEDS • Aggressively recruiting to fill open positions •
Slide 55: Our People Approach
© 2022 FuelCell Energy TALENT & PERFORMANCE MANAGEMENT • Initiating a new performance management platform that is tied to a pay - for - performance model • Developing individual growth plans to help people “GROW” their career • Establishing leadership competencies to know what “Winning Looks Like” a
Slide 56: A Journey To Be Best in Class
© 2022 FuelCell Energy GLOBAL FOOTPRINT DIVERSITY AND INCLUSION – UNITED IN PURPOSE Developing a Diversity Diagnostic Assessment Defining a DE&I commitment tied to compensation Fostering affinity groups • Celebrate Black History Month • Continue celebrations for Asian American and Pacific Islander H
Slide 57: Financial Update
© 2022 FuelCell Energy Financial Update 57
Slide 58: Key Messages
© 2022 FuelCell Energy 58 Transformed balance sheet since implementation of Powerhouse strategy Multiple sources of funding resulting in strengthened financial liquidity Strong backlog with recurring revenues from long - term contracts with Tier 1 customers. Targeting increasing product sales in the
Slide 59: Transformed Balance Sheet
© 2022 FuelCell Energy $9.4 $149.9 $432.2 $377.0 $30.3 $42.2 $28.0 $28.5 10/31/2019 10/31/2020 10/31/2021 1/31/2022 59 $405.4M OF CASH, RESTRICTED CASH AND EQUIVALENTS OF AS OF 1/31/22 • De - levered corporate balance sheet in FY 2021 • Paid down $87.3M of senior debt • Paid off $21.5M preferred sto
Slide 60: Liquidity to Invest in Growth
© 2022 FuelCell Energy INVESTMENTS IN PROJECT ASSETS 1 ($M) 60 • $256.1M of total project assets 1 as of January 31, 2022, reflecting progress made against project backlog • These assets are sited at Tier 1 off - takers under long - term power purchase agreements (PPAs) • As generation projects go i
Slide 61: Recurring Cash Flow Growth From Generation Portfolio
© 2022 FuelCell Energy 2019 2020 2021 2022E 2023E 2024E 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 61 BACKLOG AS OF JANUARY 31 ($1B) Recurring Cash Flow Growth From Generation Portfolio 1 Purchase Power Agreements; RECURRING REVENUE EXPECTED TO GROW WITH EXECUTION OF PROJECT BACKLOG • Finished 2021
Slide 62: Partnerships to Expand Presence and Capabilities
© 2022 FuelCell Energy JOINT DEVELOPMENT AGREEMENT WITH EXXONMOBIL RESEARCH AND ENGINEERING COMPANY Utilizing FuelCell Energy’s proprietary carbonate technology to develop and commercialize large scale carbon capture Working towards a future demonstration project at ExxonMobil location in Rotterdam,
Slide 63: Clear Strategic Capital Allocation Priorities
© 2022 FuelCell Energy COMMENTARY • Optionality to scale investments in various technologies • Efficient capital deployment to achieve product commercialization • Execution on project backlog • Investment in innovation to reduce manufacturing costs • Investment in R&D to commercialize technology and
Slide 64: FY2022 Projected Investments for Future Growth
© 2022 FuelCell Energy 64 PLANNED CAPITAL EXPENDITURES OF $40M TO $50M FOR FY2022 • Investments in our factories for carbonate and solid oxide production capacity expansion • Addition of test facilities for new products and components • Expansion of laboratories • Upgrades to and expansion of our bu
Slide 65: Long Term Targets
© 2022 FuelCell Energy 65 KEYS TO BUSINESS PLAN ACHIEVEMENT • Execution on project backlog, generating recurring revenue • Winning new business around the world • Capacity expansion • Achieving product commercialization (SOFC / Carbon Capture) and gaining market share • Reducing manufacturing costs
Slide 66: Closing Remarks
© 2022 FuelCell Energy Closing Remarks 66
Slide 67: Key Messages
© 2022 FuelCell Energy Global tailwinds Compelling long - term strategy Significant competitive advantages Deep and broad leadership team including new talent Proven operating capabilities to support execution Disciplined approach to capital allocation Confidence in our future Key Messages 67
Slide 68: Q&A
© 2022 FuelCell Energy Q&A 68
Slide 69: Appendix
© 2022 FuelCell Energy Appendix 69
Slide 70: Appendix Total Addressable Market
Appendix Total Addressable Market Climate initiatives are driving the global push to reduce greenhouse gases, including CO2, nitrogen oxides and sulfur oxides. The Company believes there exists a large and increasing combined total addressable market (“TAM”) opportunity for the solutions the Company
Slide 71: Appendix Total Addressable Market (cont.)
© 2022 FuelCell Energy 71 Appendix Total Addressable Market (cont.) (iii) Megawatt and sub - megawatt in front of the meter and behind the meter distributed power (approximately $300 billion). The Company currently has solutions to serve this market. (iv) Solid oxide based long - duration hydrogen e
Slide 72: Appendix - Sources
© 2022 FuelCell Energy 72 Appendix - Sources Carbon Capture TAM sources: 1) International Energy Agency, CCUS in Clean Energy Transitions Report (2020), available at https://www.iea.org/reports/ccus - in - clean - energy - transitions 2) Morgan Stanley, Carbon Capture Report (April 2021) (not public