FuelCell Energy Inc. (FCEL) had a rough Wednesday. The stock tumbled after the company reported third-quarter results that came in well below what Wall Street had hoped for.
The fuel cell maker posted an adjusted loss of 64 cents per share, missing the consensus estimate for a loss of 41 cents. Revenue fell 29% year over year to $33 million, also short of the expected $38.83 million.
What went wrong? For starters, lower module deliveries to customers in Korea hurt product revenue. Generation revenue also took a hit due to lower plant output, partly because the 7.4-megawatt Groton Project at the U.S. Navy submarine base in Connecticut was offline for an equipment upgrade.
The company's gross loss widened nearly fivefold to $24.5 million from $5.1 million a year earlier. That was largely due to $17 million in charges tied to the initial phase of its FIT Energy agreement, including a $4 million inventory write-down and $13 million in losses on firm purchase commitments. FuelCell Energy said its current production costs and manufacturing overhead exceed the contract's pricing.
On the bright side, the operating loss narrowed to $46.7 million from $95.4 million. Adjusted EBITDA was negative $36.7 million, compared with negative $16.4 million a year earlier, with inventory valuation charges driving the decline. The net loss attributable to common stockholders also narrowed to $45.3 million from $92.5 million, though the year-ago period included impairment and restructuring costs.
FuelCell Energy ended the quarter with $737.3 million in cash, cash equivalents and restricted cash.
Backlog Grows As FuelCell Lands Data Center Deal
Despite the earnings miss, there are some encouraging signs. The company's committed backlog reached $1.3 billion as of July 31, up 4.1% year over year. That includes Fit Energy USA LP's commitment to purchase systems representing 30 megawatts of capacity.
Fit Energy also holds an option to purchase systems representing up to 350 additional megawatts. That option added $2.4 billion to FuelCell Energy's awarded capacity backlog.
The company also signed a memorandum of understanding with Siemens to support faster and lower-cost deployment of projects exceeding 100 megawatts. And it delivered its first two carbon capture modules to ExxonMobil Technology and Engineering Co. in Rotterdam.
FuelCell Energy is expanding its Torrington, Connecticut, manufacturing facility, with plans to reach 500 megawatts of annual production capacity by June 2028.
After the quarter ended, the company signed its first capacity reservation agreement with a major data center operator. The deal covers a planned 75-megawatt project in Texas and includes an upfront payment. FuelCell Energy said its fiscal 2026 sales pipeline reached about 10 gigawatts.
CEO Highlights AI Power Demand
During the earnings call, CEO Jason Few made a bold claim: the AI economy will be constrained by access to electricity, not silicon. He argued that rapid growth in AI and high-density computing is creating power needs that the existing grid cannot meet quickly enough, making electricity access a critical barrier to data center development.
Few also highlighted the Fit Energy agreement, which covers up to 380 megawatts across four potential phases. He said the deal shows FuelCell Energy's ability to meet rising demand for utility-scale, behind-the-meter power. He pointed to growing electricity demand from artificial intelligence, data centers and electrification as key drivers.
FCEL Price Action: FuelCell Energy shares were down 16.51% at $14.25 at the time of publication on Wednesday.
