FuelCell Energy's Q3 2025: Contradictions Emerge on ITC Reinstatement, Data Center Momentum, Manufacturing Capacity, and U.S. Policy Impact

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 9, 2025

Financials Results

• Revenue: $46.7M, up 97% YOY (vs $23.7M prior year)
• EPS: ($3.78) per share (GAAP), wider than ($1.99) prior year; adjusted EPS ($0.95) vs ($1.74) prior year

Guidance:

• Deliver remaining 8 GGE modules in Q4 FY25; 16 additional modules in FY26.
• CGN 10 MW repowering modules to begin deliveries in FY26.
• Target positive adjusted EBITDA when Torrington reaches ~100 MW/year; current run-rate ~30–40 MW/year.
• On track to reduce operating expenses by ~30% on an annualized basis vs FY24.
• Pursuing strategic/project financing to recycle capital, including Korea repowerings and U.S. data center builds via Dedicated Power Partners.
• Exxon/Esso Rotterdam carbon-capture pilot: modules being conditioned/shipped; project expected operational in 2026.
• Torrington manufacturing scalable to 200 MW/year with additional investment.

Business Commentary:

• Revenue Growth and Strategic Partnerships:
• FuelCell Energy reported total revenues of $46.7 million for Q3 of fiscal year 2025, representing a 97% increase year-over-year.

• Growth was driven by strategic partnerships and increased product revenues, specifically from the delivery of 8 replacement modules to GGE in South Korea and revenue recognition under the company's sales contract with Ameresco, Inc.

• Data Center Opportunity and Pipeline:

• The company's data center opportunities are showing significant strength, with ongoing conversations with leading data center developers and hyperscalers.
• This momentum is reflected in the partnership with Inuverse to explore deploying up to 100 megawatts of fuel cell-based power starting in 2027.

• The strong interest in data centers is attributed to the reliability and efficiency of FuelCell Energy's modular carbonate baseload power technology.

• Policy Tailwinds and U.S. Market:

• FuelCell Energy identified favorable domestic policy tailwinds, particularly the reinstatement of the investment tax credit (ITC) for fuel cell technologies, which is expected to support project development and investor confidence.

• The company believes this policy support will drive demand for its products in the U.S. market.

• Cost Reduction and Financial Health:

• The company is on track to reduce operating expenses by 30% on an annualized basis compared to fiscal year 2024.
• FuelCell Energy is targeting positive adjusted EBITDA once its Torrington manufacturing facility reaches an annualized production rate of 100 megawatts per year.
• These efforts are aimed at strengthening the company's financial foundation and positioning it for long-term growth.

Sentiment Analysis:

• Revenue rose 97% YOY to $46.7M, but GAAP net loss widened due to $64.5M noncash impairments and $4.1M restructuring. Adjusted EBITDA improved to -$16.4M from -$20.1M YOY. Management highlighted cash of $236.9M, 30% opex reduction target, and a path to adjusted EBITDA breakeven at 100 MW production.

Q&A:

• Question from George Gianarikas (Canaccord Genuity): Provide an update on momentum in data centers, the Inuverse partnership, and other customer conversations.
  Response: Data center pipeline is strengthening; Inuverse contemplates up to 100 MW at Korea’s largest planned data center, leveraging FCE’s proven large-scale, always-on platform.

• Question from George Gianarikas (Canaccord Genuity): How are data center discussions breaking down geographically—particularly U.S. demand?
  Response: U.S. demand is strong; behind-the-meter siting, easy permitting, negligible particulates, and reinstated ITC create favorable conditions.

• Question from Jeffrey Osborne (TD Cowen): Update on the non–data center (legacy distributed generation) funnel post-ITC reinstatement.
  Response: Seeing steady distributed generation opportunities (e.g., grid resiliency); utilities are embracing distributed power, and FCE will leverage ITC and multi-fuel capability.

• Question from Jeffrey Osborne (TD Cowen): How many GGE modules remain and expected delivery cadence for Q4 and next year?
  Response: Delivered 8 in Q3; 8 remain for Q4 FY25; 16 more slated for FY26; CGN 10 MW repower deliveries to begin in FY26.

• Question from Jeffrey Osborne (TD Cowen): Is the remaining 16 next year likely 8 in Q1 and 8 in Q2?
  Response: No specific quarterly split provided; cadence is paced by the Torrington production rate.

• Question from Jeffrey Osborne (TD Cowen): Current Torrington output and path to adjusted EBITDA breakeven?
  Response: Factory is at ~30–40 MW/year; adjusted EBITDA turns positive at ~100 MW/year, dependent on backlog build.

• Question from Jeffrey Osborne (TD Cowen): Where is gross margin breakeven for products and generation?
  Response: Product gross margin breakeven is around the current run-rate excluding capacity costs; generation EBITDA exceeds 30% excluding depreciation/derivatives.

• Question from Ryan Pfingst (B. Riley Securities): Timing and steps to convert the Inuverse MOU into orders.
  Response: Inuverse is securing offtake agreements now that power and gas are lined up; conversion updates expected in coming quarters.

• Question from Ryan Pfingst (B. Riley Securities): Next milestones for the Exxon/Rotterdam carbon capture project.
  Response: Modules are in conditioning and will ship; site construction proceeds in parallel; targeted operation in 2026.

• Question from Noel Parks (Tuohy Brothers): Approach to strategic financing for Korea and U.S. projects.
  Response: Using export/project financing (e.g., U.S. EXIM) to recycle capital in Korea; in the U.S., partnering to finance multiple data centers, shifting FCE to product sales plus 20-year services.

• Question from Noel Parks (Tuohy Brothers): Fit and urgency among data center customers; where is FCE’s sweet spot?
  Response: Strong fit for greenfield and expansions via fast time-to-power, modular scaling, absorption chilling (~9,000 tons per 50 MW), and microgrid integration.

• Question from Noel Parks (Tuohy Brothers): Do you have pricing power heading into new deals?
  Response: Yes—pricing reflects time-to-power, reliability, and thermal value, with domestic deals also benefiting from the 30% ITC.