FuelCell Energy Inc (FCEL)

[AgeOfReason]

There are some problems with the analysis made in post #27267 (at https://investorshub.advfn.com/boards/read_msg.aspx?message_id=158417567).

Though Q3 had an expense (largely due to maintenance) which was technically a "one time" expense, such also happened in Q2. Furthermore FCEL has a long history of making 'one time' expenses, so much so that they really shouldn't be viewed as 'one time' expenses since they continue to happen often. Regarding the comment of "... & under absorption due to low run rate. That will change", the low run rate was largely due to Covid-19 and now that cooler weather is drawing near, Covid-19 might become a bigger problem than it is now. The market reacted negatively during much of today largely due to such a fear, not just in regards to FCEL but for businesses in general. Thus it may be quite some time before FCEL's absorption rate improves considerably, and it might even go down substantially during winter (such as if state governments order expansions of shut downs due to Covid-19).

The writer of post #27267 also said "Let's assume we average bet loss of $13 million Q4 (I'm 100% confident we do better). That leaves us with $62.2 Million unrestricted cash as of 10/31, 2020." But net losses isn't the only thing which reduces cash, using cash for things that don't even incur net losses also causes such, such as paying dividends to preferred stock holders, for one example.

Then there is the matter of Groton, SB, and Derby becoming COD. FCEL has demonstrated in Q2 and Q3 of FY2020 and in other quarters in other years that generation costs often times exceed generation revenues (resulting in negative gross margins from generation). That means that adding more generations revenues (such as from Groton, SB, and Derby) may very well make generation gross margins even worse than they are now (since it will likely cause generation costs to rise even more than the increase in generation revenues).

Furthermore, the InvestorPlace article at https://finance.yahoo.com/news/1-1b-debt-screams-sell-195020412.html is correct in saying that FCEL "...got in Q2 ... another $15 million loss to add to their $1.1 billion accumulated deficit." That huge $1.1 billion accumulated deficit amount is correct; for proof see https://investor.fce.com/press-releases/press-release-details/2020/FuelCell-Energy-Reports-Results-for-the-Third-Quarter-of-Fiscal-2020/default.aspx in the balance sheet where it says "Accumulated deficit (1,145,340)", with that number stated in thousands of dollars and also being negative (negative since it is a deficit) $1,145,340,000 (which rounds to a deficit of $1.1 billion).

The accumulated deficit is not debt, but it is the opposite of positive retained earnings. Retained earnings is the sum of positive net earnings (if any) from each quarter minus the net losses (if any) from each quarter minus the dividends paid out in each quarter (if any). For FCEL every quarter since Q1 of FY 1998 has had net losses, as a result FCEL is in hole by $1.1 billion in regards to that measure of financial performance. That is an awful number. Even if FCEL were to start making $100 million in net income profit per year for 10 years in a row and pay no dividends for 10 years in a row and declare no dividends for 10 years in a row, FCEL would still have an accumulated deficit (it would be a $100 million deficit after the 10 years). The writer of the InvestorPlace article definitely did his due diligence in stating the current accumulated deficit and drawing attention to its significance.