Q3 2023 FuelCell Energy Inc. Earnings Call
Speaker 1: Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the FUSEL Energy third quarter 2023 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again, press the star button.
Good morning, My name is Rob and I'll be your conference operator today at this time I would like to welcome everyone to the few so energy third quarter 2023 results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again prestige star one thank you.
Speaker 1: Thank you. Tom Gelson, Senior Vice President, Finance and Investor Relations. You may begin your conversation.
Tom Gelston Senior Vice President Finance and Investor Relations you May begin your conference.
Speaker 1: Thank you. Good morning everyone and thank you for joining us on today's call. As a reminder, this call is being recorded. This morning, Fuel Cell Energy released our financial results for the third quarter of 2023 and our earnings press release and our SEC filing are available on the investors section of our website at www.fuelcellenergy.com.
Thank you good morning, everyone and thank you for joining us on today's call.
As a reminder, this call is being recorded this morning, you'll still interview released our financial results for the third quarter of 2023, and our earnings press release, and our SEC filings are available on the investors section of our website at www dot fuel cell energy Dot com.
Speaker 1: Consistent with our practice, in addition to this call and our earnings press release, we have posted a slide presentation on our website. This webcast is being recorded and will be available for replay on our website approximately two hours after we conclude the call.
Consistent with our practice in addition to this call and our earnings press release, we have posted a slide presentation on our website.
This webcast is being recorded and will be available for replay on our website approximately two hours. After we conclude the call.
Speaker 1: Before we begin, please note that some of the information that you will hear or be provided with today will consist of forward-looking statements within the meaning of the Securities Exchange Act of 1934. Such statements express our expectations, beliefs, and intentions regarding the future and included without limitation statements with respect to our anticipated financial results, our plans, and expectations regarding the continuing development, commercialization, and financing of our fuel cell technology, and our business plans and strategies.
Before we begin please note that some of the information that you will hear or be provided with today will consist of forward looking statements within the meaning of the Securities Exchange Act of $19 34.
Such statements express our expectations beliefs, and intentions regarding the future and including without limitation statements with respect to our anticipated financial results, our plans and expectations regarding the continuing development commercialization and financing of our fuel cell technology, and our business plans and strategies.
Speaker 1: Our actual future results could differ materially from those described in or implied by such forward-looking statements because of a number of risks and uncertainties.
Our actual future results could differ materially from those described in or implied by such forward looking statements because of a number of risks and uncertainties.
Speaker 1: More information regarding such risks and uncertainties is available in the Safe Harbor statement in the slide presentation. And in our filings with the Securities and Exchange Commission, particularly the risk factor section of the most recently filed annual report on Form 10-K and any subsequent filed quarterly report on Form 10-Q .
More information regarding such risks and uncertainties is available in the safe Harbor statement in the slide presentation and in our filings with the Securities and Exchange Commission, particularly the risk factor section of the most recently filed annual report on Form 10-K, and any subsequent filed quarterly report on Form 10-Q.
Speaker 1: During the course of this call, we will be discussing certain non-GAAP financial measures and we refer you to our website and to our earnings press release and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures.
During the course of this call we will be discussing certain non-GAAP financial measures and we refer you to our website and to our earnings press release and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures.
Speaker 1: Our earnings press release and a copy of today's webcast presentation are available on our website. Again, it's www.peelshellenergy.com under investment.
Our earnings press release, and a copy of today's webcast presentation are available on our website again at www dot fuel cell energy dot com under investors.
For our call today I'm joined by Dave. Thank you.
Speaker 1: For our call today, I am joined by Jason Hsu, fuel cell energy's president and chief executive officer, and Mike Bishtub, executive vice president, chief financial officer and treasurer.
He is the president and Chief Executive Officer, and Mike, Bishop Executive Vice President and Chief Financial Officer and Treasurer.
Speaker 1: Following our prepared remarks, we will be available to take your questions and be joined by other members of our leadership team.
Following our prepared remarks, we will be available to take your questions and be joined by other members of our leadership team.
Speaker 1: I would like to now hand the call over to Jason for opening remarks. Jason?
I now hand, the call over to Jason for opening remarks Nathan.
Speaker 2: Thank you, Tom, and good morning, everyone. Thank you for joining us on our call today. Today we are pleased to announce another quarter of strong operational execution.
Thank you Tom and good morning, everyone. Thank you for joining us on our call. Today today, we are pleased to announce another quarter of strong operational execution.
Speaker 2: We will highlight our consistent progress on these projects and strategic objectives.
We'll highlight our consistent progress on the project and strategic objectives.
Speaker 2: including the commitment of our cry generation distributed hydrogen platform at the Port of Long Beach, California.
Clothing, the commissioning of our <unk> generation distributed hydrogen platform at the Port of Long Beach, California.
Speaker 2: the extension of our term of our joint development agreement with Exxon Mobile Technology and Engineering.
Stinker of our term of our joint development agreement with Exxonmobil technology, and engineering company intact, as well as Arthur and Reentering The Korean market.
Speaker 2: MTAC, as well as our success in re-entering the Korean market.
For anyone who may be new to the fuel cell energy story. We have included a company overview on slide three.
Speaker 2: For anyone who may be new to the fuel cell energy story, we have included a company overview on slide 3.
Speaker 2: Our purpose is to enable a world empowered by clean energy.
Our purpose is to enable the world empowered by clean energy.
Speaker 2: We are proud to be a global leader in clean energy technology.
We are proud to be a global leader in clean energy technology in simple terms, our proprietary fuel cell technology platforms do two things.
Speaker 2: In simple terms, our proprietary fuel cell technology platforms do two things. Decarbonize power and...
Decarbonize power and Purdue tighten again.
Speaker 2: We operate in North America, Asia, and Europe , and we are focused on entering additional markets around the world.
We operate in North America, Asia, and Europe, and we are focused on entering additional markets around the world we.
Speaker 2: We have 95 platform installations and commercial operations and have generated more than 13 million megawatt hours today.
We have 95 platform installations in commercial operation and have generated more than 13 million megawatt hour today.
Speaker 2: technology behind these high temperature electrochemical energy platforms underpins both our cry generation and...
The technology behind the high temperature electrochemical energy platform underpins, both arc <unk> generate in the.
The carbon capture platform.
Speaker 2: which we believe enables fuel cell energy to leverage 20 years of operating history and sets the stage for us to meet the evolving needs of our current and future customers.
We believe enable fuel cell energy Levered 20 years of operating history.
Correct.
All the needs of our current and future customers.
Speaker 2: Next, please turn to see messages for this quarter shown on slide four.
Net fleet currently.
For this quarter shown on slide four.
First we were thrilled to announce that the Toyota project located at the Port of long Beach in California is online producing power hydrogen and water, including delivering hydrogen that need.
Speaker 2: First, we were thrilled to announce that the Toyota project located at the Port of Long Beach in California is online, producing power, hydrogen, and water, including delivering hydrogen that meets the stringent security specifications required for Toyota's mobility application.
Alrighty specification.
The required for Toyota mobility applications.
Speaker 2: At this time, we are only waiting on the receipt, final fire department and related building permits required to fully declare achievement of commercial operation.
At this time, we are only waiting on the.
Final fire Department and related building permits required to fully declare achievement up from our cooperation.
Speaker 2: This marks a tremendous accomplishment in our technology development in partnership with Toyota, and evidence of the power of collaborating on innovation as we did with the Department of Energy on the initial pride in development.
This marked a tremendous accomplishment in our technology development and partnership with Toyota and evidence of the power of collaborating on innovation as we did with the department of energy on the initial cried in development.
Speaker 2: Our innovative TriGen system will help Toyota achieve its decarbonization goals by producing emissions-free hydrogen and electricity and help meet United Nations Clean Water and Sanitation Goal number six by producing water every day to support their port operation.
Our innovative tried into and will help.
Is it the carbonization goal by producing a making green hydrogen.
Electricity and helped me United Nations clean water and sanitation goal number five.
By producing water every day to support their port operations.
Speaker 2: Secondly, we are making progress in growing our business in Korea. Most recently, through new service opportunities, during the quarter we signed a long-term service agreement with Noel Green Energy and executed a memorandum of understanding that outlines a potential business arrangement that could see us take over the long-term servicing of the world's largest hotel park.
Secondly, we're making progress in growing our business in Korea, most recently through new service opportunities there.
During the quarter, we signed a long term service agreement with no marine energy and executed a memorandum of understanding that outlines that the ankle business arrangement that could take over the long term servicing of the world's largest fuel cell park.
Speaker 2: Thirdly, the development of our carbon capture technology in partnership with M-TECH is advancing well. In August , we were very pleased to announce the extension of the term of our joint development agreement through March 2024.
Thirdly, the development of our carbon capture technology in partnership with impact is advancing well.
In August we were very pleased to announce.
<unk> of our joint development agreement through March 2024.
Speaker 2: Fourth, in Derby, Connecticut, on-site construction of our 14 megawatt project continues to advance, with installation largely complete.
Or in Derby, Connecticut on Titan and of our 40 megawatt project continues to advance with insulate them largely complete.
Speaker 2: On site civil construction of our 2.8 megawatt project is also with me.
Civil construction of our two eight megawatt project is also advancing.
Speaker 2: We expect to achieve commercial operations on both of these projects in the fourth quarter of calendar year 2023 and upon declaring commercial operations. This will increase the size of our generation portfolio by 38%.
We expect to achieve commercial operation on both of these projects in the fourth quarter of calendar year 2023, and upon declaring commercial operations. This will increase the size of our generation portfolio by 38%.
Speaker 2: In addition, we are advancing our plans to expand manufacturing capacity for our high-efficiency solid oxide power generation and electrolysis platforms.
In addition, we are advancing our plan to expand manufacturing capacity for our high efficiency.
Power generation and electrolysis platform.
Speaker 2: Lastly, we continue to focus on maintaining liquidity and exercising a disciplined approach to capital allocation.
Lastly, we continue to focus on maintaining liquidity and exercising a disciplined approach to capital allocation.
Speaker 2: Our liquidity position remains strong with a cash and short-term investment position of approximately $414 million.
Our liquidity position remained strong with a cash and short term investment position of approximately $414 million.
Speaker 2: which we were able to increase through both project financing and equity offerings during the quarter.
Which we were able to increase through both project financing and equity offerings during the quarter.
Now I will turn the call over to Mike.
Speaker 2: Now, I will turn the call over to Mike to discuss the financial results for the third quarter. Mike?
The financial results for the third quarter Mike.
Thank you, Jason and good morning to everyone on the call today, let's begin by.
Speaker 1: Thank you, Jason, and good morning to everyone on the call today. Let's begin by reviewing the financial highlights for the quarter shown on slide 6.
Reviewing the financial highlights for the quarter, Kevin on slide six.
Speaker 1: For the third quarter of fiscal year 2023, we reported total revenues of $25.5 million compared to $43.1 million in the third quarter of fiscal year 2022, a decrease of 41%. Excluding the revenues generated by the sales modules in the prior year quarter, overall revenues in the third quarter were up slightly compared to the prior year quarter.
For the third quarter of fiscal year 2023, we reported total revenues of $25 5 million compared to $43 1 million in the third quarter of fiscal year 2022, a decrease of 41%. Excluding the revenue is generated by the module and the prior year quarter overall revenues in the third quarter.
We're up slightly compared to the prior year quarter.
Speaker 1: Net loss was $23.6 million in the third quarter of fiscal year 2023 compared to a net loss of $29 million in the third quarter of fiscal year 2022.
Net loss was $23 6 million in the third quarter of fiscal year 2023, compared to a net loss of $29 million in the third quarter of fiscal year 2022.
Speaker 1: The resulting net loss per share attributable to common stockholders in the third quarter of fiscal year 2023 was negative $0.06 compared to negative $0.08 in the third quarter of fiscal year 2022. Adjusted EBITDA totaled negative $31.6 million in the third quarter of fiscal year 2023 compared to adjusted EBITDA of negative $20.8 million in the third quarter of fiscal year 2022.
The resulting net loss per share attributable to common stockholders in the third quarter of fiscal year 2023 was negative 6% compared to negative <unk> 10 in the third quarter of fiscal year 2020 adjusted.
Adjusted EBITDA totaled negative $31 6 million in the third quarter of fiscal year 2023, compared to adjusted EBITDA of negative $28 million in the third quarter of fiscal year 2022. Please.
Speaker 1: Please see the discussion of non-GAAP financial measures, including adjusted EBITDA, in the appendix at the end of our earnings.
Please see the discussion of non-GAAP financial measures, including adjusted EBITDA in the appendix at the end of our earnings release.
Speaker 1: Finally, the company held total cash, tax equivalent and short term investments of over $410 million as of July 31, 2023.
Finally, the company held total cash cash equivalents and short term investments of over $410 million as of July 31.
2023.
Speaker 1: Next, please turn to slide seven for additional details on our financial performance and backlog. The chart at the left-hand side of the slide graphically shows our revenue composition by line I.
Next please turn to slide seven for additional details on our financial performance and backlog. The chart at the left hand side of the slide graphically shows our revenue composition by line item.
Speaker 1: Looking at revenue drivers by category, service agreement revenues increased to $9.8 million from $9 million. The increase in service agreement revenues for the third quarter of fiscal year 2023 was primarily driven by two new module exchanges at the plant owned by Korea Southern Power Company in Korea and a module exchange at the plant at Trinity College.
King at revenue drivers by category.
<unk> revenues increased to $9 8 million from 9 million the increase in service agreement revenue for the third quarter of fiscal year 2023 was primarily driven by two new modules.
At the plant owned by Korea, Southern Power Company in Korea, and a module and that the plant at Trinity College.
Speaker 1: Generation revenues were consistent period over period, increasing to $11 million from $10.9 million in the comparable prior year period.
<unk> revenues were consistent period over period increase to $11 million from $10 $9 million in the comparable prior year period.
Speaker 1: Advanced technology contract revenues decreased to $4.7 million from $5.2 million.
Advanced technology contract revenues decreased to $4 7 million from $5 2 million compared to the third quarter of fiscal year 2022 advanced technology contract revenues recognized under our joint development agreement with Exxonmobil technology and Engineering company.
Speaker 1: Compared to the third quarter of fiscal year 2022, advanced technology contract revenues recognized under our joint development agreement with ExxonMobil Technology and Engineering Company were approximately $0.3 million higher, and revenue recognized under government and other contracts were approximately $0.8 million lower as a result of the allocation of engineering resources bearing the quarter.
<unk> $3 million higher and revenue recognized under government and other contracts.
Zero point $8 million lower as a result of the allocation of engineering resources during the quarter.
Speaker 1: Looking at the top right hand side of the slide, I will walk through the changes in growth loss and operating expenses.
Looking at the top right hand side of the slide I will walk through the changes in gross loss and operating expenses.
Speaker 1: Growth loss for the third quarter of fiscal year 2023 totaled $8.2 million compared to a growth loss of $4.2 million in the comparable prior year quarter.
Roadblock for the third quarter of fiscal year, 2023 totaled $8 2 million compared to a gross loss of $4 2 million in the comparable prior year quarter.
Speaker 1: The growth loss increased for the third quarter of fiscal year 2023 compared to the third quarter of fiscal year 2022, primarily due to the fact there were no new module sales during the third quarter of fiscal year 2023. The prior year period included favorable product margins as a result of module sales to Korea fuel sale companies.
Gross profit increased for the third quarter of fiscal year 2023, compared to the third quarter of fiscal year 2022, primarily due to the fact that there were no new module sale during the third quarter of fiscal year 2023.
The prior year period included favorable product margins as a result of module sales to Korea fuel cell company.
Speaker 1: Operating expenses for the third quarter of fiscal year 2023 increased to $33.2 million from $23.8 million in the third quarter of fiscal year 2022. Administrative and selling expenses were higher during the third quarter of fiscal year 2023, primarily due to an increase in compensation expense.
Operating expenses for the third quarter of fiscal year 2023 increased to $33 2 million from $23 8 million in the third quarter of fiscal year 2022 administrative and selling expenses were higher during the third quarter of fiscal year 2023, primarily due to an increase in compensation expense.
Speaker 1: from an increase in headcount in support of sales and business expansion.
From an increase in head count in support of sales and business expand their.
Speaker 1: Research and development expenses increased to $15.6 million during the third quarter of fiscal year 2023, primarily due to an increase in spending on the company's ongoing commercial development efforts related to our solid oxide power generation and electrolysis platforms, and carbon separation and carbon capture solutions compared to the prior year period.
Research and development expenses increased to $15 6 million during the third quarter of fiscal year 2023, primarily due to an increase in spending on the company's ongoing commercial development efforts related to our solid oxide power generation and electrolysis platform and carbon decorate and carbon capture.
Compared to the prior year period.
Speaker 1: On the bottom right of the slide, you'll see that we finished the quarter with backlog for approximately $1 billion, a decrease of 17% compared to backlog as of July 31, 2022.
On the bottom right of the slide you'll see that we finished the quarter with backlog of approximately $1 billion, a decrease of 17% compared to backlog as of July 31, 2022, the reduction in backlog as a result of a reduction in venerate in backlog due to the decision not to move forward with certain venerate and project during the.
Speaker 1: The reduction in backlog is a result of a reduction in generation backlog due to the decision not to move forward with certain generation projects during the fourth quarter of fiscal year 2022.
Fourth quarter of fiscal year 2022, given their economic profile and also due in part to the timing of revenue recognition under product generate and service agreement.
Speaker 1: given their economic profiles and also due in part to the timing of revenue recognition under product generation and service agreements since July 31, 2022.
July 31 2022.
Speaker 1: This decline was partially offset by an increase in service backlog related to a new service agreement with NOA Green Energy entered into during the third quarter of fiscal year 2023, which has a contract value of approximately $73 million.
This decline was partially offset by an increase in service backlog related to our new service agreement with Novo Green energy entered into during the third quarter of fiscal year, 2023, which has a contract value of approximately $73 million.
On slide eight is an update on our liquidity and our ongoing investment in project assets.
Speaker 1: On slide 8 is an update on our liquidity and our ongoing investment in Project S.
Speaker 1: As of July 31, 2023, we have total cash, cash equivalents, and short-term investments of $413.9 million.
As of July 31, 2023, we had total cash cash equivalents and short term investments of $413 9 million.
Speaker 1: This total includes 303.7 million of unrestricted cash and cash equivalents represented by the darker blue bar on the scar in the center of the slide.
This total includes $303 7 million of unrestricted cash and cash equivalents represented by the darker blue bar on the car in the center of the slide $32 7 million of restricted cash and cash equivalents represented by the Purple bar and 77 4 million of short term investments represented by the lighter.
Speaker 1: 32.7 million of restricted gas and gas equivalents represented by the purple bar, and 77.4 million of short-term investments represented by the lighter blue bar. The short-term investments represent the amortized cost of U.S. Treasury securities, outstanding as of July 31, 2023, which were purchased by the company during fiscal year 23 as part of the company's tax management optimization efforts, and all of which are expected to be-
Blue bar that short term investments represent the amortized cost of U S. Treasury Securities Outstanding as of July 31, 2023, which were purchased by the company during fiscal year 'twenty three as part of the company's path management optimization effort.
And all of which are expected to be held commit period.
Speaker 1: Looking at the right-hand side of the slide, there is a chart illustrating our total project assets, which make up our company-owned generation portfolio. As of July 31, 2023, our gross project assets totaled $289.4 million, which excludes accumulated commodities.
Looking at the right hand side of this slide there is a chart illustrating our total project assets, which make up our company owned generate and portfolio as of July 31, 2023, our growth protect assets totaled $289 4 million, which exclude accumulated depreciation.
Speaker 1: As detailed on slide 20 in the appendix of this presentation, our generation portfolio totaled 63.1 megawatts of assets as of July 31st, 2023. This includes 43.7 megawatts of operating assets and 19.4 megawatts of projects in process. As projects in process begin commercial operation, they are expected to contribute to higher generation revenue.
As detailed on slide 20 in the appendix of the presentation, our generation portfolio totaled $63. One megawatts of assets as of July 31, 2023. This includes $43 seven megawatts of operating assets and $19 four megawatts of projects in process at projects in process begin <unk>.
Cooperate then they are expected to contribute to higher generation revenue.
Speaker 1: In closing, I am pleased with our continued progress this past quarter. From a financial perspective, we believe that we remain well positioned to execute on our near, medium, and long-term powerhouse business strategy. I will now turn the call back over to David.
In closing I am pleased with our continued progress this past quarter.
<unk> perspective, we believe that we remain well positioned to execute on our near medium and long term powerhouse business strategy I will now turn the call back over to Dave.
Speaker 2: Thanks Mike. I will now cover our business and operational updates in more detail, beginning with slide 10.
Thanks, Mike I'll now cover our business and operational updates in more detail beginning with slide 10.
Speaker 2: As we have stated in previous quarters, our powerhouse business strategy serves as our framework for achieving long-term growth. I will summarize our approach.
As we have stated in previous quarter, our powerhouse business strategy serves as our framework for achieving long term growth.
I'll summarize our approach.
The FERC tentative grow.
Speaker 2: We continue to focus on optimizing our business for achieving growth in markets where we see significant opportunities for our platform technology.
We continue to focus on optimizing our business, we're achieving growth in markets, where we see significant opportunities for our platform technology.
Speaker 2: to create a geographic market segment and application specific playbook that are focused on building a robust sales pipeline.
Created geographic market segment and application specific playbooks that are focused on building a robust sales pipeline.
Speaker 2: Development team is focused on moving the pipeline from prospects who executed agreement.
Business development team is focused on moving the pipeline from prospects.
Executed agreement.
Second is scale.
Speaker 2: Plan to scale our existing platforms by investing in, extending, and deepening our leadership and total human capital across the organization.
Plan to scale, our existing platform by investing in extending and deepening our leadership in total human capital across the organization.
Through our operations, we are focused on optimizing manufacturing capacity for our carbon at platform with the goal of achieving a 100 megawatts of annualized integrated onsite manufacturing and finishing capacity.
Speaker 2: With our operations, we are focused on optimizing manufacturing capacity for our carbonate platforms with the goal of achieving 100 megawatts of annualized integrated onsite manufacturing and conditioning capacity.
Speaker 2: also working to expand our solid oxide manufacturing capabilities with the goal of adding an additional 400 megawatts of manufacturing capacity in the United States.
Also working to expand our solid oxide manufacturing capabilities with the goal of adding an additional 400 megawatts of manufacturing capacity in the United States.
Speaker 2: We believe that legislation enacted and being contemplated around the world will, over time, serve as a catalyst to support the acceleration of adoption of products like ours and to ultimately drive down costs for innovation.
We believe that legislation enacted and being contemplated around the world will overtime serve as a catalyst to support the acceleration of adoption of a product like ours and to ultimately drive down costs.
Third innovate.
For our 50 year history, we have never stopped innovating.
Speaker 2: shown on an earlier slide, we have hundreds of patents granted for pending in jurisdictions around the world.
Don on an earlier fly we have hundreds of patents granted or pending in jurisdictions around the world.
Speaker 2: believe our technology and our culture provide the opportunity for our participation in the growth of the hydrogen economy and carbon capture markets and will enable us to deliver on our purpose to enable the world empowered by clean energy.
<unk>, our technology and our culture provides the opportunity for our participation in the growth of the hydrogen economy and carbon capture market and will enable us to deliver on our purpose to enable the world empowered by clean energy.
Speaker 2: working to develop diversify revenue streams by delivering a range of solutions and services that exploit the multi-featured capabilities of our platforms as exhibited by Pride.
We are working to develop a diversified revenue stream by delivering a range of solutions and services that exploit the multi feature capabilities of our platforms as exhibited by <unk>.
Speaker 2: and support our four strategic focuses intended to advance the global energy transition.
And support our four strategic focuses and it to advance the global energy transition.
Speaker 2: Those strategic focuses are distributed power generation, distributed hydrogen, electrolysis, and hydrogen storage, and carbon recovery and capture solutions.
Those strategic focuses our distributed power generation distributed hydrogen electrolysis and hydrogen storage and carbon recovery and capital solutions.
Speaker 2: We are making good progress in the execution of our strategy, and I will discuss specific highlights in more detail on the following slides.
We are making good progress in the execution of our strategy and I will discuss specific highlight in more detail on the following slides.
Please turn to slide 11.
We had a very exciting announcement during the quarter as we are growing and strengthening our presence in Korea by developing relationships with two domestic clean energy electric utilities.
Speaker 2: We had a very exciting announcement during the quarter as we are growing and strengthening our presence in Korea by developing relationships with two domestic clean energy electric utilities.
The FERC is the long term service agreement with no Marine energy.
Speaker 2: The first is the long-term service agreement with No Green Energy, whose plant has a total output of 20 megawatts using eight Stuart Thorne 3000 fuel cell products.
Plant has a total output of 20 megawatts using H Stewart Thor <unk> fuel cell.
Under the terms of the agreement <unk> will oversee the operation and maintenance of these age groups 3000 fuel cell over the next 14 years.
Speaker 2: field cell energy will over the operation and maintenance of these age goes towards 3000 pills though over the next 14 years.
Speaker 2: This project is expected to have a total contract value of approximately 73 million, which is
This project is expected to have a total contract value of approximately $73 million.
Which is added to our total backlog.
In addition, we signed a memorandum of understanding with <unk> Green energy for GE.
Speaker 2: In addition, we signed a memorandum of understanding with John G. Green Energy, or GGE.
Speaker 2: GGE has the largest field-sub power platform operating anywhere in the world.
<unk> has the largest fuel cell power platform operating anywhere in the world.
Speaker 2: DGE plant has a total output of 58.8 megawatts using 21 SureSource 3000 fuel cell platforms.
GE plant at a total output of $58 eight megawatts using 21, <unk> 3000 fuel cell platform.
Speaker 2: The MOU provides a framework for negotiating the proposed business relationship between GGE and FTE, including future module replacement and service, as well as developing new opportunities and careers.
The Mou provides a framework for negotiating the proposed business relationship between GE, and FTE, including future module replacement and service as well as developing new opportunities in Korea.
Speaker 2: We are currently negotiating the detailed terms of that proposed agreement with DD.
We are currently negotiating the detailed terms of that proposed agreement with PGE.
In addition, we see future opportunity for operations and maintenance agreement with a large potential market of over 100 megawatts in Korea.
Speaker 2: In addition, we see future opportunities for operations and maintenance agreements with a large potential market of over 100 megawatts increase.
Speaker 2: We are focused on winning these opportunities and look forward to providing updates on our progress in Korea in future quarters.
We are focused on winning these opportunities and look forward to providing updates on our progress in Korea in future quarters.
Yes.
Please turn to slide 12.
Speaker 2: We continue to advance our decarbonizing power solutions.
We continue to advance our Decarbonising power solutions.
Speaker 2: At the end of the quarter, we announced an exciting development in our partnership with M-TECH, which is part of our innovation strategy.
At the end of the quarter, we announced an exciting development and our partnership with <unk>, which is part of our innovation strategy.
Speaker 2: We have extended the term of our joint development agreement for carbon capture technology through March 2024.
We have extended the term of our joint development agreement for carbon capture technology through March 2024.
Speaker 2: This extension is intended to provide the opportunity to continue.
This extension is intended to provide the opportunity to continue.
Speaker 2: derisking the generation through technology, field sale module demonstration, and the joint marketing and sales efforts to inform development of a new business framework between the parties beyond the current joint development and gaveclick enrollments under kernels.
Risking the generation technology fuel cell module demonstration program.
And the joint marketing and sales efforts to inform development of a new business framework between the parties beyond the current joint development agreement structure.
Speaker 2: We are continuing to finalize the engineering and cost elements of a potential demonstration of the technology within...
We are continuing to finalize the engineering and cost element of a tangible demonstration of the technology with impact.
Speaker 2: We are extremely pleased that our jointly developed carbon capture technology has been found to be feasible for the commercial use applications we are targeting.
We are extremely pleased that our jointly developed carbon capture technology has been found to be feasible for the commercial use applications we are targeting.
Speaker 2: We are excited about the promising potential of this technology to capture CO2 emissions from industrial and commercial as well.
We are excited about the promising potential of this technology to capture <unk> emissions from industrial and commercial and small screen with the goal of helping to solve one of the worlds biggest environmental challenges.
Speaker 2: with the goal of helping to solve one of the world's biggest environmental challenges.
Speaker 2: final investment decision on the demonstration project is expected later this year.
A final investment decision on the demonstration project is expected later this year.
Next our two project in Derby, Connecticut continue to progress on schedule and are expected to contribute meaningful growth through our generation portfolio.
Speaker 2: Next, our two projects in Derby, Connecticut continue to progress on schedule and are expected to soon contribute meaningful growth to our generation portfolio.
Speaker 2: Onsite construction of the 14 megawatt project is continuing to advance. We have largely completed the installation of the majority of the balance of plant components as well as. The 10 modules required for the project.
Onsite construction of a 40 megawatt project is continuing to advance and we have largely completed the installation of the majority of the balance of plant components as well as <unk>.
And modules required for the project.
Speaker 2: On-site construction of the 2.8 megawatt project is also advancing well, and we expect to achieve commercial operation of both these projects in the fourth calendar quarter of 2023. Moving.
Rob: Good morning, my name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the FewCell Energy 3rd quarter 2023 results conference call. All lines have been placed on mute to prevent any background noise.
On site construction of the two eight megawatt project is also advancing well and we expect to achieve commercial operation of both these projects in the fourth calendar quarter of 2023.
Moving to our focus on producing hydrogen we continued to invest in product development and manufacturing scale up for our two solid oxide platforms power generation electrolysis.
Operator: After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you.
Speaker 2: We continue to invest in product development and manufacturing scale-ups for our two solid oxide platforms, Power Generation and Electronic.
Speaker 2: To enable our growth, we are expanding our Calgary manufacturing operations with the goal of increasing the capacity of a facility from 4 MW to 40 MW per year of solid oxide electrolysis cell production.
To enable our growth, we're expanding our Calgary manufacturing operations with the goal of increasing the capacity of the facility from four megawatts to 40 megawatts per year of solid oxide electrolysis cell production. In addition, we see the potential to further increase our annual production capacity.
Tom Gelston: Tom Gelston, Senior Vice President, Finance and Investor Relations, you may begin your conference. Thank you. Good morning, everyone, and thank you for joining us on today's call. As a reminder, this call is being recorded. This morning, FuelCell Energy released our financial result for the 3rd quarter of 2023 and our earnings press release and our SEC filing are available on the investor section of our website at www.fieldcellenergy.com. Consistent with our practice, in addition to this call and our earnings press release, we have posted a slide presentation on our website. This webcast is being recorded and will be available for replay on our website approximately two hours after we conclude the call.
Speaker 2: In addition, we see the potential to further increase our annual production capacity to up to 80 megawatts by leasing additional space and investing in various process optimizations intended to increase throughput on you.
Up to 80 megawatts by leasing additional space and investing in various process optimization intended to increase throughput on yield.
Speaker 2: We have hired and trained additional staff for a three-shift production operation to support the initial planned expansion to 40 megawatts, and we need to add additional staff as required in the future to realize the potential 80 megawatts of annualized solid oxide electrolysis production capacity. Please turn to slide 13.
We have hired and trained to date from a SaaS or a reached yet production operations and support the initial planned expansion to 40 megawatts and we need to add additional staff as required in the future to realize the potential 80 megawatts annualized solid oxide electrolysis production capacity.
Tom Gelston: Before we begin, please note that some of the information that you will hear or be provided with today will consist of forward-looking statements within the meaning of the Securities Exchange Act of 1934. Substatements express our expectations, beliefs, and intentions regarding the future and included without limitations, statements with respect to our anticipated financial results, our plans and expectations regarding the continuing development, commercialization, and financing of our fuel cell technology, and our business plans and strategies.
Please turn to slide 13.
In terms of delivering hydrogen to our customers we offer <unk> solutions, our Tri Gen platform, which you've just been completed for Toyota at the Port of long Beach in California, as well as our solid oxide based electronic platform.
Speaker 2: our TriGen platform, which is just being completed for Toyota at the Port of Long Beach in California, as well as our solid oxide based electrolysis platform. First,
First with regard to our <unk> solution, we deploy our innovative net two three megawatt tri generation platform to produce a Michigan green hydrogen electricity and water every day.
Speaker 2: We deploy our innovative net 2.3 megawatt tri-generation platform to produce emission-free hydrogen, electricity, and water every day.
Tom Gelston: Our actual future results could differ materially from those described in or implied by such forward-looking statements because of a number of risks and uncertainties. More information regarding risks and uncertainties is available in the safe harbor statement in the slide presentation. And in our filings with the Securities and Exchange Commission, particularly the risk factor section of the most recently filed annual report on Form 10K and any subsequent filed quarterly report on Form 10Q.
Speaker 2: In the Toyota example, the hydrogen produced will be used to fuel Toyota vehicles, while the electricity produced will be sufficient to power the Toyota Logistics Service Center, with additional electricity being sold into the grid, and the water that is generated will be used for car wash.
And the Toyota example, the hydrogen produced will be used to fuel Toyota vehicles, while the electricity produced will be sufficient to power. The Toyota logistic service center with additional electricity being sold into the grid and the water that is generated will be used for car widening.
Speaker 2: Given the use of carbon negative renewable natural gas for this project, this installation demonstrates our ability to generate renewable hydrogen at the point of consumption, avoiding the cost and emissions associated with delivery of hydrogen to remote users.
Given the use of carbon negative renewable natural gas for this project.
This installation and demonstrate our ability to generate renewable hydrogen at the point of consumption avoiding the cost and emissions associated with delivery of hydrogen to remote users.
Tom Gelston: During the course of this call, we will be discussing certain non-gap financial measures and re-refer you to our website and to our earnings press release and the appendence of the slide presentation for the reconciliation of those measures to gap financial measures. Our earnings press release in a copy of today's webcast presentation are available on our website. Again, it's www.peelcellenergy.com under investor.
We see tremendous potential to apply our cryogenic technology and other locate in utilizing the space that is the equivalent of three NBA basketball courts, providing energy that is distributed at the point of consumption and avoiding most if not all of the permission and permitting required for centralized.
Speaker 2: We see tremendous potential to apply our cryogen technology and other locations utilizing a space that is the equivalent of three NBA basketballs.
Speaker 2: providing energy that is distributed at the point of consumption, and avoiding most, if not all, of the permissions and permitting required for centralized production and distribution infrastructure. And we look forward to pursuing those future opportunities.
Tom Gelston: For our call today, I am joined by Jason Q. Peelcell Energy's President and Chief Executive Officer and Mike Bishop, Executive Vice President Chief Financial Officer and Federal. Following our prepared remarks, we will be available to take your questions and be joined by other members of our leadership team.
And in distribution infrastructure.
And we look forward to pursuing future opportunities.
Turning to our solid oxide electrolysis platform, we believe solid oxide presents one of the best opportunity to minimize overall costs, while maximizing efficiency and that our platform will give more organizations the options to implement a flexible energy strategy.
Speaker 2: We believe solid oxide presents one of the best opportunities to minimize overall costs while maximizing...
Jason Few: I would like to now hand the call over to Jason for opening remarks. Jason? Thank you, Tom, and good morning everyone. Thank you for joining us on our call today. Today we are pleased to announce another quarter of strong operational execution. We will highlight our consistent progress on the project and strategic objectives, including the commitment of our cry generation's distributed hydrogen platform at the port of Long Beach, California, the extent of our terms of our joint development agreement with Exxon Mobile Technology and Engineering. Company, M-Tech, as well as our success in re-entering the Korean market.
Speaker 2: and that our platform will give more organizations the option to implement a flexible energy strategy.
Speaker 2: We will talk more on our design attributes and differences in a moment.
We will touch more on our design activities and differences in a moment.
While our Tri Gen platform benefit from reducing the cost of hydrogen through the double a crystal.
Speaker 2: while our Trigen platform benefits from reducing the cost of hydrogen through the tele squid.
Speaker 2: Solid oxide electrolysis is an ideal solution for geographies that have low to no-cost power and hydro, strong wind, and or sun.
Solid oxide electrolysis is an ideal solution for geographies that have low to no cost power and hydro strong win <unk> uncovered.
Because most of the cost of hydrogen produced by electrolysis is related to the cost of input power.
Speaker 2: because most of the cost of hydrogen produced by electrolysis is related to the cost of input power. Efficiency is one of the most effective ways to lower hydrogen costs, and we believe fuel skill energy solid oxide platform is among the most efficient electrolysis technologies.
Jason Few: For anyone who may be new to the FuelCell Energy Story, we have included a company overview on slide three. Our purpose is to enable a world and power by clean energy. We are proud to be a global leader in clean energy technology. In simple terms, our proprietary fuel cell technology platforms do two things, decarbonize power and produce hydrogen. We operate in North America, Asia, and Europe, and we are focused on entering the digital markets around the world.
<unk> is one of the most effective ways to lower hydrogen costs, and we believe <unk> energy all oxide platform is among the most efficient electrolysis technology available.
Speaker 2: Our platform can generate 600 kilograms a day of hydrogen without any incremental heat source, only using a 1.1 megawatt power.
Our platform and generate 600 kilograms, a day of hydrogen without any incremental each stores only using a one one megawatt power.
Speaker 2: Adding a heat source just increases the benefits of our platform time.
Adding a heat door increases the benefits of our platform type agency.
Speaker 2: As an example, processed heat from a nuclear power plant further increases platform efficiency.
As an example processes from the nuclear power plants further increased its platform efficiency lowering their required power to produce that 600 kilograms, a day of hydrogen to one megawatts.
Jason Few: We have 95 platform installations in commercial operation, and have generated more than 13 million megawatt hours today. The technology behind the high temperature, electrochemical energy platforms, underpins both our pride generation and carving capture platforms, which we believe enable fuel cell energy to leverage 20 years of operating history and set the stage for us to meet the evolving needs of our current and future customers.
Speaker 2: lowering the required power to produce the 600 kilograms a day of hydrogen to one megawatt.
Speaker 2: a low temperature electrolyzer would require about 35% more power to produce the same amount of hydrogen.
A low temperature electrolyze, there would require about 35% more power to produce the same amount of hydrogen.
Turning to slide four.
I would like to emphasize how fuel cell energy solutions.
Speaker 2: I would like to emphasize how fuel cell energy solutions are highly differentiated versus others followed by technology.
Differentiated versus other solid oxide technologies.
Jason Few: Next, please turn 16 messages for this quarter shown on slide four. First, we were thrilled to announce that the Toyota Project located at the Port of Long Beach in California is online, producing power, hydrogen and water, including delivering hydrogen that meets the stringent 30 specification required for Toyota's mobility application. At this time, we are only waiting on the receipt final fire department and related building permits required to fully declare achievement of commercial operations.
Speaker 2: Our first generation high-efficiency solid oxide product comes in two different configurations. One is our 250 kilowatt power generation.
Our first generation <unk> product comes in two different configurations. One is our 250 kilowatt power generation platform and the second is our electrolysis platform capable of producing 600 kilograms of hydrogen per day.
Speaker 2: And the second is our electrolysis platform capable of producing 600 kilograms of hydrogen per day.
The wholesale energy solutions, where a number of key performance advantages our platform is compact and lightweight.
Speaker 2: D'Oscio Energy solution for a number of key performance advantages. Our platform is...
Speaker 2: are designed to keep costs low and avoid supply issues with minimal need for rare earth minerals and no use of platinum group metal.
Our design keep costs low and avoid complying with minimal need for rare Earth minerals and no use of platinum group metals.
Jason Few: This marks a tremendous accomplishment in our technology development in partnership with Toyota and evidence of the power of collaborating on innovation as we did with the Department of Intervie on the initial pride in development. Our innovative pride in system will help Toyota achieve its decarbonization goals by producing emissions free hydrogen, electricity, and help meet United Nations clean water and sanitation goal number six by producing water every day to support their port operations.
Speaker 2: are integrated. Package product provides complete solutions for our customers.
Our integrated packaged product provides complete relief for our customers.
Speaker 2: Our electrolysis platform is fed with water, not steam.
Our electrolysis platform. It then with water not <unk>.
Speaker 2: steam is generated on board using internal heat and electric power.
<unk> has generated onboard using internally and electric power.
Speaker 2: our power generation platform is capable of combining heat and power operations at up to 80% of patients.
Our power generation platform capable of combined heat and power operation at up to 80% of efficiency.
Speaker 2: and our power generation platform is flexible in its ability to operate on various fuels, hydrogen, biogas, fuel blends, or natural gas.
And our power generation platform is flexible and its ability to operate on various fuel hydrogen biogas fuel blend or natural gas.
Jason Few: Secondly, we are making progress in growing our business in Korea, most recently through new service opportunities. During the quarter, we signed a long-term service agreement with no green energy and executed a memorandum of understanding that outlines a potential business arrangement that could see a take over the long-term servicing of the world's largest fuel cell parts. Thirdly, the development of our carbon capture technology and partnership with MTECH is advancing well. In August, we were very pleased to announce the extent of the terms of our joint development agreement through March 2024.
Speaker 2: All of these different faders give us confidence in our ability to grow in the solid oxide market.
All of these different data give us confidence in our ability to grow in the solid oxide market.
Speaker 2: Our thin-cell architecture leads to a very low stack weight per kilowatt of power rating, which translates directly to lower material.
Our thin cell architect or lead with very low that way per kilowatt of power ratings, which translates directly to lower material costs and which also provides benefits in fact, rohit up and got it.
Speaker 2: and which also provide benefits in factor heat up and
Speaker 2: As we increase our solid oxide production capacity, we see significant market opportunities in stable and hydrogen generation applications, particularly given the cost advantage of distributed production. We also see significant market opportunities in stable and hydrogen generation applications, particularly given the cost advantage
As we increased our solid oxide production capacity, we see significant market opportunities in taking on hydrogen generation application, particularly given the cost advantage of distributor production.
Jason Few: Fourth, in Derby, Connecticut, on-site construction of our 14 megawatt project continues to advance with installation largely complete. On-site civil construction of our 2.8 megawatt project is also advancing. We expect to achieve commercial operations on both of these projects in the fourth quarter of calendar year 2023 and upon declaring commercial operations. This will increase the size of our generation portfolio by 38%. Management. In addition, we are advancing our plan to expand manufacturing capacity for our high efficiency solid outside power generation and electrolysis platforms.
We also see market opportunities in power generation as low carbon solutions increasingly displace gas and diesel generator.
Speaker 2: as low carbon solutions increasingly displace gas haseworthy
In addition, renewable energy and nuclear power represent the end market, where solid oxide electrolyzed or sales can be operated in tandem with power generating yielding high efficiency hydrogen and increasing overall efficiency and flexibility.
Speaker 2: In addition, renewable energy and nuclear power represent the end markets where solid oxide electrolyzer cells can be operated in tandem with power generation, yielding high efficiency hydrogen and increasing overall efficiency and flexibility. Before movies, see you in it.
Before moving to Q&A, let's conclude with takeaways on slide 15.
Jason Few: Lastly, we continue to focus on maintaining liquidity and exercising a discipline approach to capital allocations. Our liquidity position remains strong with a cash and short term investment position of approximately 414 million, which we were able to increase through both project financing and equity offerings during the quarter.
Speaker 2: I'm excited about how, over the last four years, our company has navigated our journey.
I am excited about how over the last four years, our company has navigated our journey.
Speaker 2: We are commercializing technologies and advancing new technologies toward commercialization.
We are commercializing technology, and advancing new technologies toward commercialization.
Speaker 2: We believe that our technologies will have a positive impact on our world.
We believe that our technologies will have a positive impact on our world.
Speaker 2: We are demonstrating the commercial value of our technology. With our TriGen platform operating for Toyota and Long Beach, we are delivering commercial results for our customers and for the plant.
We are demonstrating the commercial value of our technology with our <unk> platform operating for Toyota in long Beach, we are delivering commercial results for our customers and for the planet.
Speaker 1: We are succeeding in our international growth efforts, most notably in Korea during the third quarter.
We are succeeding in our international growth efforts, most notably in Korea during the third quarter.
Mike Bishop: Now, I will turn the call over to Mike to discuss the financial results for the third quarter. Mike? Thank you, Jason, and good morning to everyone on the call today. Let's begin by reviewing the financial highlights for the quarter, going on slide six. For the third quarter of fiscal year 2023, we reported total revenues of 25.5 million compared to 43.1 million in the third quarter of fiscal year 2022, a decrease of 41%.
Speaker 1: We're making progress in developing advanced applications for our platforms, specifically to our collaboration with INTEC on carbon capture technology.
We're making progress.
In developing advanced applications for our platforms, specifically through our collaboration with impact on carbon capture technology.
Speaker 1: We're making progress on large projects, including the Derby Connecticut.
We're making progress on large projects, including the Derby, Connecticut project, which we expect to include commercial operation during calendar year 2023.
Speaker 1: we expect to achieve commercial operation during calendar year 2023. In addition, we're making progress in increasing manufacturing capacity for our high-efficiency solid oxide power generation and electrolysis swap.
In addition, we are making progress and increasing manufacturing capacity for our high efficiency solid outside power generation and electrolysis platform.
Mike Bishop: Excluding the revenues generated by the sale of modules in the prior year quarter, overall revenues in the third quarter were up slightly compared to the prior year quarter. Net loss was 23.6 million in the third quarter of fiscal year 2023 compared to a net loss of 29 million in the third quarter of fiscal year 2022. The resulting net loss per share, a trivial to common stockholders in the third quarter of fiscal year 2023 was negative six cents compared to negative eight cents in the third quarter of fiscal year 2022.
Speaker 1: we believe will give us a different data position in the market.
Which we believe will give us a differentiated position in the market.
We have remained focused on disciplined capital allocation and have increased our liquidity through both debt and equity financing.
Speaker 1: and have increased our liquidity through both debt and equity financing. We believe we are...
We believe we are positioned for growth.
We believe fuel cell energy is well positioned to capture market opportunities over the coming years and deliver enhanced shareholder returns over the long run.
Speaker 2: We believe fuel cell energy is well positioned to capture market opportunities over the coming years and deliver an answer to our returns over the long run.
Mike Bishop: Adopted EBITDA, sold with negative 31.6 million in the third quarter of fiscal year 2023 compared to a adjusted EBITDA of negative 20.8 million in the third quarter of fiscal year 2022. Please see the discussion of non-gap financial measures, including adjusted EBITDA in the appendix at the end of our earnings release.
I will now turn it over to.
Speaker 1: I will now turn it over to the operator to begin.
As the operator to begin Q&A.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Speaker 3: At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad.
Speaker 3: And your first question comes from the line of George Giannarekas from Canaccord Genuity Group. Your line is open. Hey, everyone. Good morning and thank you for joining us today.
And your first question comes from the line of George <unk> from Canaccord Genuity Group. Your line is open.
Mike Bishop: Finally, the company held total cash, active equivalent, and short-term investments of over $410 million as of July 31, 2023.
Okay.
Yes.
Hey, everyone. Good morning, and thank you for taking my questions.
Maybe just to start the first question.
Mike Bishop: Next, please turn to slide seven for additional details on our financial performance and backlog. The chart at the left hand side of the slide graphically shows our revenue composition by line item. Looking at revenue drivers by category, service agreement revenues increased to 9.8 million from 9 million. The increase in service agreement revenues for the third quarter of fiscal year 2023 was primarily driven by two new module exchanges at the plant owned by Korea Southern Power Company in Korea, and a module exchange at the plant at Trinity College.
Speaker 4: You mentioned in the press release that you're examining additional facilities for the build of your solid oxide platform. Can you just help illuminate a little bit of additional interest that you see and what gives you the confidence to continue to build up the capacity?
You mentioned in the press release that you are examining additional facilities for the build of salt. The our solid oxide platform can you just help illuminate a little bit of additional interest that you would see and what gives you the confidence to to continue to build out the capacity there. Thank you.
Speaker 2: George, good morning and thank you for joining the call and thank you for your question.
George Good morning, and thank you for joining the call and thank you for your question.
Speaker 3: We continue to use the interest that we're seeing from customers and the pipeline that we're building as how we think about the need to expand capacity for solid oxide manufacturing. In addition to that, we're also seeing the need to expand capacity for solid oxide manufacturing.
Yes, we continue to use the.
Interest that we're seeing from customers and the pipeline that we're building as how we think about the need to expand capacity for our solid oxide manufacturing. In addition to that we continue to.
Mike Bishop: Generation revenues were consistent period over period, increasing to 11 million from 10.9 million in the comparable prior year period. Advanced technology contract revenues decreased to 4.7 million from 5.2 million. Compared to the third quarter of fiscal year 2022, advanced technology contract revenues recognized under our joint development agreement with ex-found mobile technology and engineering company were approximately $0.3 million buyer and revenue recognized under government and other contracts were approximately $0.8 million lower as a result of the allocation of engineering resources during the quarter.
Speaker 2: We continue to look for ways in which we increase our capacity and our existing footprint, or making small additions to our existing footprint, even in Calgary. So we're, today, you know, we believe that we can get to.
Look for ways in which we increase our capacity in our existing footprint, we're making small additions to our existing footprint.
Even in Calgary. So we're today, we believe that we can get to.
Speaker 2: you know, 80 megawatts of capacity from originally where we thought we were at 40, just based on additional process optimizations and things that we're doing at that facility. So our decisions will be driven by demand and the pipeline that our business development team is building.
80 megawatts of capacity from originally where we thought we were at 40, just based on additional process optimizations and things that we're doing at that facility. So our decisions will be driven by.
Demand in the pipeline that our business development team is is building, but we're seeing really strong support for solid oxide for power Gen and for electrolysis.
Mike Bishop: Mark. Looking at the top right hand side of the slide, I will walk through the changes in growth loss and operating expenses. Growth loss for the third quarter of fiscal year 2023 sold 8.2 million compared to a growth loss of 4.2 million in the comparable prior year quarter. The growth loss increase for the third quarter of fiscal year 2023 compared to the third quarter of fiscal year 2022. Primarily due to the fact there would no new module sales during the third quarter of fiscal year 2022.
Speaker 2: But we're seeing really strong support for solid oxide, for power gen, and for electrolysis.
Speaker 4: And do you still expect a reversibility to come into the platform in 2027?
And do you still expect to reverse ability to come into the platform in 2027.
Speaker 2: We do. We believe that that's going to be a significant opportunity for us in the longer term as energy storage continues to be a more important part of the energy transition as we continue to add more and more intermittent technologies to the grid. Our view is that.
We do we believe that that's going to be a significant opportunity for us in the longer term as energy storage continues to be a more important part of the energy transition as we continue to add more and more intermittent technologies to the grid our view is that hydro.
Mike Bishop: [inaudible] In headcount in support of sales and business expansion. Research and development expenses increased to 15.6 million during the third quarter of fiscal year 2023. Primarily due to an increase in spending on the company's ongoing commercial development efforts. Related to our solid oxide tower generation and electrolysis platform and carbon separation and carbon transfer solutions compared to the prior year period.
Speaker 2: Hydrogen works as an excellent energy store and that it's far more practical for long duration energy storage versus mineral based solutions. So our ability to leverage reversibility of our platform, so the same...
<unk> works as an excellent energy store and that it's far more practical for long duration energy storage versus mineral based solutions and so our ability to leverage reverse ability of our platform. So the same stack that's going to make hydrogen has the same stack, we can reverse and feed that hydrogen two to <unk>.
Speaker 2: stack that's going to make hydrogen is the same stack, we can reverse and feed that hydrogen to produce power, we think is going to be a real opportunity for us.
<unk> power.
It's going to be.
A real opportunity for us.
Speaker 4: Maybe just a last question. I'm wondering if you could share your thoughts on the upcoming decision by Treasury.
Maybe just a last question I was wondering if you could share your thoughts on the upcoming decision by Treasury to give us more detail around additional additionality excuse me deliverability of matching and your thoughts as to how that decision. Thank you.
Speaker 4: give us more detail around additional additional excuse me deliverability and matching and your thoughts as to how that
Speaker 2: Yes, so just I think it was on the 7th, the Deputy Secretary of Treasury said that they plan to, you know, clarify more of the rules by the end of this calendar year. So one, I would say we're …
Yes, so just I think it was on the seven the Deputy Secretary of Treasury said that they plan to.
Mike Bishop: On the bottom right of the slide. You'll see that we finished the quarter with backlog of approximately $1 billion a decrease of 17% compared to backlog as of July 31, 2022. The reduction in backlog is a result of a reduction in generation backlog. Due to the decision not to move forward with certain generation projects during the fourth quarter of fiscal year 2022. Given their economic profile and also doing part to the timing of revenue recognition under product.
Clarify more of the rules by the end of this calendar year. So one I would say were.
Speaker 2: excited that there's, you know, we're going to get to real clarity around the rules. You know, as a company, we've continued to be in a position to leverage the ITC and we've demonstrated our ability to attract tax equity as part of the way in which we recycle cash in our business.
Excited that there is we're going to get to real clarity around the rules as a company. We've continued to be in a position to leverage the ITC and we've demonstrated our ability to attract tax equity as part of the way in which we recycle cash in our business.
Speaker 2: We think that the Treasury Department and overall, the administration is really trying to listen to the voice of the market in terms of how it's making these decisions. And so when you think about things like, you know, additionality or matchability, they're really trying to get this right, we believe. And we think that they'll ultimately get to the right decision and...
We think that the Treasury department and overall.
Mike Bishop: Generations and service agreements. Since July 31, 2022. This decline was partly offset by an increase in service backlog related to a new service agreement with no green energy entered into during the third quarter of fiscal year 2023 which has a contract value of approximately $73 million.
Administration is really trying to listen to the voice of the market in terms of how it is making these decisions and so when you think about things like <unk>.
Additionality or match ability, they're really trying to get this right we believe.
And we think that.
Ultimately get to the right decision and put together more of a transition path than kind of a clear hard determination in one way or another in terms of how they're going to account for.
Speaker 2: put together more of a transition path than kind of a clear, hard determination one way or another in terms of how they're going to.
Mike Bishop: On slide eight is an update on our liquidity and our ongoing investment in project data. As of July 31, 2023, we have total cash, cash equivalence and short term investments of $413.9 million. This total includes 303.7 million of unrestricted cash and cash equivalence represented by the darker blue bar on the car in the center of the slide. 32.7 million of restricted gas and cash equivalence represented by the purple bar and 77.4 million of short term investments represented by the lighter blue bar.
Speaker 2: account for whether it's additionality or matching.
Rather its additionality or matching.
Thank you.
Your next question comes from the line of Manav Gupta from UBS. Your line is open.
Speaker 3: your next question comes from a line of men have group from u bs your line is open
Speaker 5: Um, good morning guys. I actually quickly wanted to focus on this.
Good morning, guys I actually quickly wanted to focus on this <unk> study from California that came out on Friday, that's calling for like 90% emission reductions plus 45. It lists a number of fuels, including hydrogen so it's pretty bullish on hydrogen.
Speaker 5: SRIA study from California that came out on Friday that's calling for like 90% emission reductions for 2045. It lists a number of fuels, including hydrogen, so it's pretty bullish on hydrogen. And I'm basically trying to understand now that California, it seems, would be very supportive of alternate fuels. Does that change your plans? And also in the report, it's basically saying a bookend claim would apply to even green hydrogen, which they are encouraging. The sale of green hydrogen within the state of California, that's when you can get the credit. So if you could talk around your plans of California based on what we are seeing with SRI, which basically would support alternate fuels in a big way in the state of California.
Mike Bishop: The short term investments represent the amortized cost of US treasury securities outstanding as of July 31, 2023, which were purchased by the company during fiscal year 23 as part of the company's cash management optimization efforts. And all of which are expected to be held committee. Looking at the right hand side of the slide, there is a chart illustrating our total project assets which make up our company own generation portfolio. As of July 31, 2023, our gross project assets total 289.4 million, which excludes accumulated depreciation.
Basically trying to understand now that California, it seems to be very supportive of alternate fuels does that change your plans and also in the report, it's basically saying a bookend claim would apply to even green hydrogen which is they are encouraging the sale of green hydrogen within the state of California that then you can get the credit.
If you could talk around your plans of California based on what we're seeing with <unk>, which basically will support alternate fuels in a big way in the state of California.
Good morning, and thank you for.
Speaker 2: Good morning and thank you for your question and also you wrote a pretty nice report on this yourself that just came out so I appreciate that. Look, we are strong supporters of using biofuels not only for power production which we've done on a number of different installations in California.
Mike Bishop: Austin. As detailed on slide 20 in the appendix of this presentation, our generation portfolio total 63.1 megawatts of assets as of July 30, for 2023. This includes 43.7 megawatts of operating assets and 19.4 megawatts of project and process. As project and process begin commercial operation, they are expected to contribute to higher-generation revenue.
For your question and also you wrote a pretty nice report on this yourself just that just came out so I appreciate that.
Look we we are strong supporters of using biofuels not only for power production, which we've done on a number of different installations in California.
Speaker 2: We support the methodology in terms of how you think about.
We support the methodology in terms of how you think about using alternative fuels to produce green hydrogen which is exactly what we're doing with our tri generation platform at the port of long Beach. So we're really supportive of this move that theyre, making and as you know as a company from a carb standpoint, who is <unk>.
Speaker 2: using alternate fuels to produce green hydrogen, which is exactly what we're doing with our tri generation platform at the port of Long Beach. So we're really supportive of this move that they're making. And as you know,
Mike Bishop: In closing, I am pleased with our continued progress to path quarter. From my financial perspective, we believe that we remain well-physician to execute on our near, medium, and long-term powerhouse business strategy.
Speaker 2: as a company from a CARB standpoint who's driving this movement in California, we've been CARB certified for a long time. We're the first fuel cell provider to get there. We think as air quality issues and the, you know, the
Jason Few: I will now turn the call back over to date next. Thanks, Mike.
Driving this.
This movement in California, we've been carb certified for a long time, we were the first fuel cell provider to get there and so as we think is air quality issues and the.
Jason Few: I will now cover our business and operational updates in more detail beginning with slide 10.
Jason Few: As we have stated in previous quarters, our powerhouse business strategy serves as our framework for achieving long-term growth. I will summarize our approach. The first tenet is growth. We continue to focus on optimizing our business for achieving growth in markets where we see significant opportunities for our platform technologies. Create a geographic market, segment, and application specific playbooks that are focused on building a robust sale pipeline. Business development team is focused on moving the pipeline from prospects who executed agreements.
Speaker 2: real focus around things like SOX and NOX and other particulates coming back into focus, we think strong support of alternate fuels.
Real focus around things like Sox, and Nox and other particular coming back into focus we think strong supportive alternate fuels our platform doesn't combust those fuels. So we don't produce Sox and Nox and other particular just good.
Speaker 2: our platform that doesn't combust those fuels so we don't produce sox and ox and other particulate just kidding
Speaker 2: you know, shows stronger support for what California is trying to do. So we're really excited about it and we think it's a real positive. And we think that opens the door for us from a distributed power generation. It opens the door for more opportunities around tri-generation to actually produce, you know, carbon neutral power, grain, hydrogen and water like we're doing in California. So we think it's a very positive thing.
Shows stronger support for what California is trying to do so we're really excited about it and we think that's a real positive and.
We think that opens the door for us from a distributed power generation. It opens the door for more opportunities around tri generation to actually produce.
Jason Few: Second is scale. Plant the scale or existing platforms by investing in, extending and deepening our leadership and total human capital across the organization. Through our operations, we are focused on optimizing manufacturing capacity for our carbonate platforms with the goal of achieving a hundred megawatts of annualized integrated onsite manufacturing and conditioning capacity. Also working to expand our solid oxide manufacturing capabilities with the goal of adding an additional 400 megawatts of manufacturing capacity in the United States. We believe that legislation enacted and being contemplated around the world will over time, serve as a catalyst to support the acceleration of adoption of products like ours and to ultimately drive down costs.
Carbon neutral power green hydrogen and water like we're doing in California. So we're we think it's a very positive thing.
Thank you for that of AEP detailed response and Ah Congrats on getting the <unk> platform up and running the hope its first of many because those things daily head to Decarbonize at a faster pace. So I kind of look thanks again.
Speaker 5: Thank you for a very detailed response and congrats on getting the Tri-Gen platform up and running. We hope it's first of many because those things really help to decarbonize at a faster pace. So I'll turn it over. Thanks again.
Thank you.
Your next question comes from the line of Ryan. Thanks from B Riley Securities. Your line is open.
Speaker 3: Your next question comes from a line of Ryan Finks from B. Riley Securities. Your line is open.
Hey, good morning, guys.
On product sales can you provide any color around demand.
Speaker 1: On product sales, can you provide any color around?
Speaker 1: any progress you might be making with new customers potentially outside of Korea.
Any progress you might be making with new customers potentially outside of Korea.
Speaker 2: Ryan, good morning and thank you for the question. Yes, as we vindicated...
Hey, Brian Good morning, and thank you for the question, yes, as we've indicated.
Jason Few: Third, innovation. For our 50-year history, we have never stopped innovating. Stone, on an earlier slide, we have hundreds of patents granted or pending in jurisdictions around the world. We believe our technology and our culture provide the opportunity for our participation in the growth of the hydrogen economy and carbon capcom market and will enable us to deliver on our purpose to enable the world and power by clean energy. Working to develop diversified revenue screen by delivering a range of solutions and services that exploit the multi-featured capabilities of our platforms as exhibited by pride and support are for strategic focuses intended to advance the global energy transition. Those strategic focuses are distributed power generation, distributed hydrogen, electrolysis and hydrogen storage and carbon recovery in capital solutions.
As a company.
Speaker 2: As a company, we've began to really focus on creating a better balance between
We began to really focus on creating a better balance between our power purchase agreement opportunities that we drive and product sales. So we're building a pipeline that enables us to do both of those things because we think continue to offer multiple ways for our customers to <unk>.
Speaker 2: our power purchase agreement opportunities that we drive and product sales. So we're building a pipeline that enables us to to do both of those things because we think continue to offer multiple ways for our customers to
Speaker 2: purchase from us is a benefit to us as a company. But we see strong pipeline builds, not only in our traditional markets, but as we expand into
<unk> from us as a benefit to us as a company, but we see strong pipeline builds not only in in.
Our traditional markets, but as we expand into.
Speaker 2: new markets outside of kind of our core. We're seeing strong product demand and those continue, those generally tend to be more product.
New markets outside of kind of our core we are seeing strong product demand and those continue those generally tend to be more product.
Speaker 2: sale-focused markets as opposed to PPAs. And so we think that over the coming quarters, you'll see, you know, more from us on product sales as an overall opportunity.
Cell focused markets as opposed to Ppas and so we think that over the coming quarters, you'll see more from us on product sales is in our overall opportunity.
Yes.
Speaker 1: That's helpful and then. Turning to the generation segment, can you can you talk a little bit about. The economics of the Derby projects, or or maybe at a higher level. How.
That's helpful.
Jason Few: We are making good progress in the execution of our strategy, and I will discuss specific highlights in more detail on the following slides.
And then.
Turning to the generation segment can you talk a little bit about <unk>.
The economics of the Derby projects or maybe at a higher level.
Jason Few: Please turn to slide 11. We had a very exciting announcement during the quarter, as we are growing and strengthening our presence in Korea by developing relationships with two domestic clean energy electric utilities. The first is the long-term service agreement with Noel Green Energy, whose plant has a total output of 20 megawatts using 8 short-term 3,000 fuel cell boxes. Under the terms of the agreement, fuel cell energy will oversee the operation and maintenance of these 8 short-term 3,000 fuel cells over the next 14 years. This project is expected to have a total contract value of approximately 73 million, which is added for our total backlogs.
How.
They might help the profitability of the generation segment as a whole.
Speaker 1: they might help the profitability of the generation segment as a whole.
Speaker 2: Yeah, sure. I think maybe Mike could give you a sense of how we think about, you know, margin and on our generation business and what we've seen happen over the last several quarters and certainly this quarter, but Mike can walk you through that.
Yeah sure I think.
Maybe Mike could give you a sense of how we think about.
Margin and on our generation business and what we've seen happened over the last several quarters and certainly this quarter, but Mike can walk you through that.
Speaker 6: Sure. Good morning Ryan and thanks for joining the call. So, yeah, as we think about the two Derby projects that will add, you know...
Sure Good morning, Ryan and thanks for joining the call. So yes, as we think about the two derby projects that that will add.
No.
Speaker 6: meaningful generation revenue right now today. We're producing about $44 million on an annualized rate. We did about $11 million of generation revenue this quarter. So $44 million today, but adding obviously the large Derby project, another 14 megawatts will...
Meaningful generation revenue right now today, we're producing about $44 million on an annualized rate, we did about $11 million of generation revenue this quarter.
So $44 million today, but adding obviously the large dairy projects. Another 14 megawatts will make a meaningful increase there when we think about profitability of the generation portfolio, we target EBITDA margins in our generation portfolio of between 40% to 50% when you've got it.
Jason Few: In addition, we find a memorandable understanding with John G. Green Energy or GGE. GGE has the largest fuel cell power platform operating anywhere in the world. GGE plant has a total output of 58.8 megawatts using 21 short-source 3,000 fuel cell platforms. The MOU provides a framework for negotiating the proposed business relationship between GGE and FTE, including future module replacement and service, as well as developing new opportunities in Korea. We are currently negotiating the detailed terms of that proposed agreement with GGE.
Speaker 6: make a meaningful increase there. When we think about profitability of the generation portfolio.
Speaker 6: We target EBITDA margins in our generation portfolio of between 40 to 50 percent.
Speaker 6: When you back, if you look at just last quarter's results, when you back out the Toyota.
Just last quarter's results when you back out the Toyota.
Speaker 6: you know, one time charges as well as depreciation, we're in the 46% range right now. So we would expect that to continue as we add additional operating assets in the portfolio.
One time charges as well as depreciation were in the 46% range right. Now so we would expect that to continue as we add additional operating assets in the portfolio.
Great. Thank you guys for the color.
Thank you. Thank you.
Speaker 3: And again, if you would like to ask a question, press star 1 on your telephone keypad. Your next question comes from the line of Eric Stein from Craig Hallam. Your line is open.
And again, if you would like to ask a question press Star one on your telephone Keypad. Your next question comes from the line of Eric Stine from Craig Hallum. Your line is open.
Jason Few: In addition, we see future opportunities for operations and maintenance agreements with a large potential market of over 100 megawatts in Korea. We are focused on winning these opportunities and look forward to providing updates on our progress in Korea in future quarters.
Good morning, everyone.
Speaker 6: Good morning Eric, how are you? Hey, doing well, thanks. So maybe I'll just stick with generation, you know, curious.
Good morning, Eric how are you doing.
Doing well thanks.
So maybe I'll just stick with generation curious.
Speaker 6: So now with Derby coming on I think you'll be at what 63 you'll be around 60 megawatts and I know and this goes back a while so not this isn't necessarily a target you've given but at one time you had kind of a 50 to 60 megawatt area where you thought you'd break even obviously you've got a lot of irons in the fire you see you've taken on more expenses do you kind of have a high level you know megawatts in generation portfolio break even number
So now with Derby coming on I think you'll be at 163, you'll be around 60 megawatts and I know and this goes back a while so.
Jason Few: Please turn to slide 12. We continue to advance our decarbonizing power solutions. At the end of the quarter, we announce an exciting development in our partnership with MTE, which is part of our innovation strategy. We have extended the term of our joint development agreement for carbon capture technology through March 2024. This extension is intended to provide the opportunity to continue the risking the generation through technology, fill cell module demonstration programs, and the joint marketing and sales efforts to inform development of a new business framework between the parties beyond the current joint development agreement structure.
This isn't necessarily target you've given but at one time, you had kind of a 50 to 60 megawatt area, where you thought you'd breakeven obviously, you've got a lot of irons in the fire you've taken on more expenses do you kind of have a.
High level megawatts in generation portfolio breakeven number.
Yes.
Speaker 2: Good morning, Eric. This is Mike. I'll take that one. Historically, if you go back...
Good morning, Eric This is Mike I'll take that one so yes, historically if you go back four.
Speaker 2: four plus years ago, we were really centering the business around the generation portfolio with the meaningful backlog of projects that we had. So to your point, we've been working really hard at getting those projects up online. We'll be north of 60 megawatts after Derby comes online. And back at that time, we were focusing the business on getting to EBITDA positive around the generation portfolio.
Four plus years ago, we were really centering the business around the generation portfolio with the meaning meaningful backlog of projects that we had so to your point, we've been working really hard at getting those projects up online will be north of 60 megawatts. After after Derby comes online.
Jason Few: We are continuing to finalize the engineering and cost elements of a defense of demonstration of the technology with MTE. We are extremely pleased that our jointly developed carbon capture technology has been found to be feasible for the commercial use applications we are targeting. We are excited about the promising potential of this technology to capture CO2 emissions from industrial and commercial manufacturing, with the goal of helping to solve one of the world's biggest environmental challenges.
And back.
Back at that time, we were focusing the business on getting to EBITDA EBIT positive around the generation portfolio.
Speaker 2: fast forward a couple of years with the energy transition now being here in a big way with global support around.
Fast forward a couple of years with the energy transition now being here in a big way with global support around.
Speaker 2: around what we're doing. We've accelerated investments around our different technologies and Jason talked about both solid oxide but also carbon capture that is increased.
Around what we're doing we've accelerated investments around our different technologies and Jason talked about both solid oxide, but also carbon capture that has increased.
Jason Few: The final investment decision on the demonstration project is expected later Next, our two projects in Derby, Connecticut continue to progress on schedule and are expected to soon contribute meaningful growth to our generation portfolio. On-site construction of the 14-megawatt project is continuing to advance. We have largely completed the installation of the majority of the balance component as well as the send modules required for the project. On-site construction of the 28-megawatt project is also advancing well and we expect to exceed commercial operation of both these projects in the fourth calendar quarter of 2023.
Speaker 2: both our operating expenses and CapEx, which has pushed out our profitability into the future, but we made that trade-off in order to get these technologies to market. When we look at the external targets we've put out there, you know, we're targeting getting over 300 million of revenue in 2025 and over a billion by 2030. We're still confident in those targets and with the increased revenue we would expect profitability to come as well.
Both our operating expenses and Capex, which is pushed out our profitability.
The future, but we made that trade off in order to get these technologies to market. When we look at the external targets, we've put out there.
Were targeting getting over $300 million of revenue in 2025 and over $1 billion by 2030, we're still confident in those targets and with the increased revenue we would expect profits.
Profitability to come as well.
Yes.
Speaker 6: Got it. And I mean, is it something where we should think about? I mean, is there a
Got it.
Jason Few: Moving to our focus on producing hydrogen, we continue to invest our product development and manufacturing scale up for our two solid outside platforms, our generation and electrolysis. To enable our growth, we're expanding our factory manufacturing operations with the goal of increasing the capacity of the facility from four megawatts to 40 megawatts per year of solid outside electrolysis sell production. In addition, we see the potential to further increase our annual production capacity through up to 80 megawatts by leasing additional space and investing in various process optimizations intended to increase throughput on yield.
Is it something where we should think about.
I mean is there a.
Speaker 6: Is there a time in the future say when carbon capture, when maybe that has progressed, you've gotten through the pilot project program where that spending maybe tails off a little bit? I mean, I know this is all dependent on what your spend looks like. So maybe how do you think about those things or do you think that you're going to have kind of this elevated spend for the foreseeable future?
Is there a time in the future say win carbon capture when maybe that has progressed you've gotten through the pilot project program without spending maybe tails off a little bit I mean, I know this is all dependent on what your spend looks like.
Jason Few: We have hired and trained additional staff for a three-stift production operation to support the initial planned expansion to 40 megawatts and we need to add additional staff as required in the future to realize the potential 80 megawatts annualized solid outside electrolysis production capacity.
So maybe how do you think about those things or do you think that youre going to have kind of this elevated spend for.
For the foreseeable future or longer term than that.
Speaker 2: So when we look at the R&D spend, we ramped that up here over the last couple of years. We have not put out guidance of when that would come back down. But clearly, as we've talked about, we're investing in first article products that we're building.
So when we look when we look at the R&D spend.
We've ramped that up here over the last couple of years, we've not put out guidance of when that would come back down, but clearly as we've talked about we're investing in first article products that were that were building here in our Connecticut facilities and as those become commercial that will shift up to cost of sales.
Speaker 2: in our Connecticut facilities and you know as those become commercial that will shift up to cost of sales which which would likely drive down.
Which would likely drive down.
Research and development expenses in the future, but we haven't put out.
Jason Few: Please turn the slide 13. In terms of delivering hydrogen to our customers, we offer two solutions, our tri-gen platform, which is just being completed for Toyota at the port of Long Beach in California, as well as our solid outside base electrolysis platform. First, with regard to our tri-gen solution, we deploy our innovative net 2.3 megawatt tri-generation platform to produce emission free hydrogen, electricity, and water every day.
Specific guidance around that and then just going back to the question around megawatt guidance.
As we look at the revenue potential for different products that we have out there now.
Speaker 2: for different products that we have out there now. It's different math than just dollars per megawatt. We can potentially see higher revenues, particularly around a project like Trigen that has multiple attributes coming out, not just power generation, but the hydrogen and water. And then obviously with government incentives out there around like the PTC credit that was not there a couple of years ago, potentially higher revenue opportunities for those projects than just a dollar per megawatt. Okay, thank you.
It's different math and just dollars dollars per megawatt we can we can potentially see higher revenues, particularly around a project like Tri Gen that has multiple add attributes coming out not just power generation, but the hydrogen and water and then obviously with government incentives.
Jason Few: In the Toyota example, the hydrogen produced will be used to fuel Toyota vehicles while the electricity produced will be sufficient to power the Toyota Logistics Service Center with additional electricity being sold into the grid and the water that is generated will be used for car washing. Given the use of carbon negative renewable natural gas for this project, this installation demonstrates our ability to generate renewable hydrogen at the point of consumption, avoiding the cost and emissions associated with delivery of hydrogen to remote users.
Out there around like the PTC credit that was not there.
Speaker 2: you know, a couple of years ago, you know, potentially higher revenue opportunities for those projects than just a dollar per megawatt.
A couple of years ago, potentially higher revenue opportunities for those projects and that's just a dollar per megawatt.
Okay. Thank you.
Speaker 3: And our final question today comes from the line of Noah Parks from Tui Brothers. Your line is open.
And our final question today comes from the line of Noel Parks from Tuohy Brothers. Your line is open.
Yeah.
Hi, good morning.
Good morning Noel.
Speaker 7: I just had a couple, you know, talking about the generation business and more recent investments in new technologies. Can you just talk about sort of the state of your business momentum with generation, new customers, anything that's shifted in terms of how you characterize customers that are being more aggressive, you know, whether they're moving any faster or as with so many things waiting for sort of momentum.
I just had a couple.
Jason Few: We see tremendous potential to apply our tri-gen technology and other locations utilized in its space that is the equivalent of three MBA basketball courts providing energy that is distributed at the point of consumption and avoiding most, if not all, of the permissions and permitting required for centralized production and distribution infrastructure.
Talking about the generation business and.
More recent investments in new technologies can you just talk about.
Sort of the state of your your business momentum with generation.
New customers any any thing.
That shifted in terms of how you characterize this starts with customers, where there are being more aggressive.
Jason Few: And we look forward to pursuing this future opportunities. Terminatorist solid oxide electrolysis platform. We believe solid oxide presents one of the best opportunities to minimize overall cost while maximizing the Efficiency, and that our platform will give more organizations the options to implement a flexible energy strategy. We will touch more on our design attributes and differences in a moment. While our tri-gen platform benefits from reducing the cost of hydrogen through the cell of electricity, solid oxide electrolysis is an ideal solution for geographies that have low to no cost power and hydro, strong wind and earth sun coverage.
Whether they're moving any faster or.
As with so many things waiting for sort of more of the.
Speaker 7: the IRA and infrastructure guide.
The IRA and infrastructure guidance.
Speaker 3: No, thank you for your question. So as we think about what we're seeing with customers, you know, and you think about what we've just done with Toyota.
Thank you for your question so as we think about what we're seeing with customers.
And you think about what we've just done with Toyota.
Speaker 3: Many of the things that we're doing are new applications in the way in which we're using our platform.
Many of the things that we're doing are new applications in the way in which we are using our platform. What's important to note about that is that it's our same existing platform. We're just extending the capabilities of that platform to deliver additional value. So the same carbon at platform.
Speaker 3: What's important to note about that is that it's our same existing platform. We're just extending the capabilities of that platform to deliver additional values. So the same carbonate platform that we commercialized in 2003 is the same platform we deployed at the Port of Long Beach in support of the Toyota opportunity, yet we're delivering hydrogen and water from that platform in addition to power.
Jason Few: Because most of the cost of hydrogen produced by electrolysis is related to the cost of input power. Efficiency is one of the most effective ways to lower hydrogen costs. And we believe fuel still energy solid oxide platform is among the most efficient electrolysis technologies available. Our platform can generate 600 kilograms a day of hydrogen without any incremental heat source only using a 1.1 megawatt power amp. Adding a heat source just increases the benefits of our platform's high efficiency.
Arm that we commercialized in 2003 is the same platform we deployed at the Port of long Beach in support of the Toyota opportunity, yet, we're delivering hydrogen and water from that platform. In addition to power.
Speaker 3: We see that as a great example of where customers will now be able to see a real commercial implementation of that platform and we think that will help us drive additional opportunities around the TriGen platform as an example. We are seeing
We see that as a great example of where customers will now be able to see a real commercial implementation of that platform and we think that will help us drive additional opportunities around the <unk> platform. As an example, we are seeing.
Jason Few: As an example, processing from a nuclear power plant further increases platform efficiency, lowering the required power to produce the 600 kilograms a day of hydrogen to 1 megawatts. A low temperature electrolyzer would require about 35% more power to produce the same amount of hydrogen.
Customer interest and the way in which we're building our pipeline growing even without the clarity around IRA and especially when you think about globally, because we're not just focused in the U S, but you've got probes.
Speaker 3: customer interest and the way in which we're building our pipeline, growing even without the clarity around IRA and especially when you think about globally because we're not just focused in the US but you've got programs in the EU, you've got programs in Korea, all of which drive strong tailwinds that really support the business that we're in.
Jason Few: Turning to slide 14. I would like to emphasize how fuel still energy solutions are highly differentiated versus other solid oxide technologies.
Programs in the EU <unk> got programs in Korea, all of which drive strong tailwind that really support the business that we're in.
Jason Few: Our first generation high efficiency solid oxide product comes in two different configurations. One is our 250 kilowatt power generation platform. And the second is our electrolysis platform capable of producing 500 kilograms of hydrogen per day. The also energy solution for a number of heat performance advantages. Our platform is compact and lightweight. Our designs keep cost low and avoid surprises with minimal need for rare earth minerals and no use of platinum group metals.
Speaker 3: And when you think about what's really happened, net zero.
And when you think about what's really happened net zero in countries around the world have been legislated in and so companies are gonna find ways to get there and we think that youll see even more states in the U S take more progressive attitudes like what Youre seeing in California, like what we just talked.
Speaker 3: and countries around the world have been legislated in. And so companies are going to find ways to get there. And we think that you'll see even more.
Speaker 3: States in the US take more progressive attitudes, like what you're seeing in California, like what we just talked about, and the expansion of and support for renewable fuels. We think that all serves us really well to help drive our business, especially some of the advantages we have, for example, when you think about renewable fuels.
<unk>.
And the expansion of and support for renewable fuels, we think that all serves us really well to help drive our business, especially some of the advantages. We have for example, and when you think about renewable fuels. The fact that we can use renewable fuels directly.
Jason Few: Our integrated active product provides complete solutions for our customers. Our electrolysis platform is said with water, not steam. Steam is generated on board using internal heat and analysis power. Our power generation platform is capable of combined heat and power operations that help to 80% efficiency. And our power generation platform is flexible in its ability to operate on various fuels, hydrogen, biogas, fuel blends or natural gas. All of these differentiators give us confidence or ability to grow in the solid oxide market.
Speaker 3: the fact that we can use renewable fuels directly coming out of an anaerobic digester as opposed to needing those fuels to get the pipeline quality gas as an example, which we think gives us an advantage, lowers the cost of the fuel and puts us in a position to deliver carbon neutral to carbon negative power.
Coming out of banana aerobic digestion as opposed to needing those fuels to get the pipeline quality gas as an example, which we think gives us an advantage lowers the cost of the fuel and puts us in a position to deliver.
Carbon neutral carbon negative power.
Speaker 3: So we're really excited about that. And as we look at our pipeline, we're seeing...
So we're really excited about that and as we look at our pipeline, we're seeing growth happening despite of the Ara, but theres no question that customers really want to understand in the U S. How to really fully maximize the IRR, but we will continue to take advantage of the investment tax credit. We think we're in a really strong position around.
Speaker 3: growth happening despite of the IRA, but there's no question that customers really want to understand in the US how to really fully maximize the IRA, but we'll continue to take advantage of the investment tax credit. We think we're in a really strong position around.
Jason Few: Our tensile architecture leads to a very low stack weight per kilowatt power rating, which translates directly to lower material cost. And which also provides benefits in faster heat up and. As we increased our solid oxide production capacity, we see significant market opportunities and single and hydrogen generation application, particularly given the cost advantage of distributed production. We also see market opportunities and power generation, as low-carbon solutions, increasingly displaced gas and diesel generators.
And project like Toyota to take advantage of the production tax credit when you think about the incremental benefits.
Speaker 3: a project like Toyota to take advantage of the production tax credit when you think about the incremental benefit.
Speaker 3: We are a US manufacturer. We largely use US-based content in our platform. And we use labor that are at prevailing wages. So all of those things continue to ladder up as just incremental benefits to bring down the cost.
Our U S manufacturer, we largely use.
U S based content on our platform.
And we use labor that are at prevailing wages. So all of those things continue to ladder up as just incremental benefits to bring down the cost for the customer.
Speaker 3: for the customer and to create a different set of economics for us. There are instances where you can get almost up to 50%.
To create a different set of economics for us getting there are instances, where you can get almost up to 50%.
Jason Few: In addition, renewable energy and nuclear power represent the end-market, where solid oxide electrolyzer cells can be operated in tandem with power-generating, yielding, high-efficiency, hydrogen, and increasing overall efficiency and flexibility.
Speaker 3: through the IRA based on the way in which we're configured as a company. So we're pretty excited about that.
Through the raw based on the way in which we're configured as a company. So we're pretty excited about that.
Okay.
Great. Thanks.
Speaker 7: Great, thanks. And I just wanted to turn to the ExxonMobil JV. And I was just curious about a couple things. I guess just sort of the working relationship, they're a huge company, and sort of their internal process, and maybe how it affects progress in the JV. You've had the number of extensions of the agreement. And I guess in...
I just wanted to turn to the Exxonmobil JV.
And I was just curious about a couple of things I guess just sort of the.
Jason Few: Before moving to UNM, let's conclude with takeaways in slide 15.
Working relationship there are huge company and sort of their.
Internal process.
Jason Few: I am excited about how, over the last four years, our company has navigated our journey. We are commercializing technologies and advancing new technologies toward commercialization. We believe that our technologies will have a positive impact on our world. We are demonstrating the commercial value of our technology, with our tri-gen platform operating for Toyota and Long Beach. We are delivering commercial results for our customers and for the planet. We are succeeding in our international growth efforts, most notably in Priya during the third quarter.
And maybe how it affects progress in the JV.
You've had the.
Number of extensions of the agreement.
<unk>.
I guess just.
Even more on a practical level.
Speaker 7: even more on a practical level, do you have any thoughts about the process that's left before, in the pipeline before, you know, there will be more info about, for example, planning of plans at Rotterdam for a capture?
Do you have any any thoughts about the processes left before.
And the pipeline before.
There'll be more and pull about for example, the timing of planned at Rotterdam.
Capture installation there.
No no. Thank you I don't want to speak on behalf of Exxon, but I think it's clear from their public pronouncements that they are committed to their low carbon business our technology.
Speaker 3: No, thank you. I don't want to speak on behalf of Exxon, but I think it's clear from their public pronouncements that they are committed to their low-carbon business.
Jason Few: We are making progress and developing advanced applications for our platforms specifically to our collaboration and impact on carbon capture technology. We are making progress on large projects, including the Derby Connecticut Project, which we expect to achieve commercial operation during calendar year 2023. In addition, we are making progress in increasing manufacturing capacity for our high-efficiency solid oxide power generation and electrolysis platforms, which we believe will give us a differentiated position in the market. We have remained focused on discipline, capital allocation, and having increased our liquidity through both debt and equity financing. We believe we are positioned for growth.
Speaker 3: Our technology is directly supportive of what Darren has talked about and Dan Aiman has talked about in terms of their low carbon business. And so we feel really good about that.
Directly supportive of what.
Darren has talked about and Dan aim and have talked about in terms of their low carbon business and so we feel really good about that.
Speaker 3: They have been clear that they expect to get to a FID decision later this year on a demonstration project.
They have.
Been clear that they expect to get to FID.
Decision later this year on a demonstration projects that we.
Speaker 3: We think that will happen. And so, you know,
We think that will happen so.
Speaker 3: I think you're seeing Exxon operate very differently with their low carbon business and we think that will be benefit for us as well. And so they've got a strong commitment there and we're excited about it.
I think youre seeing exon.
Operate very differently with their low carbon business and they've.
And we think that.
Jason Few: We believe fuel-star energy is well positioned to capture market opportunities over the coming years and delivering answer holder returns over the long run.
That will be benefit for us as well and so.
<unk> got a strong commitment there.
We're excited about it.
Great. Thanks, a lot.
Thank you.
Speaker 8: And this ends our question and answer session. I will now turn the call back over to Mr. Jason Pugh for some final closing remarks.
And this ends our question and answer session I will now turn the call back over to Mr. Jason for you for some final closing remarks.
Operator: I will now turn it over to the operator to begin evening. At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad.
Rob Thank you.
Speaker 3: We want to take a moment to acknowledge and honor the victims, families, and communities impacted by September 11.
Well, we want to take a moment to knowledge and honor the victims families and communities impacted by September 11.
George Gianarikas: And your first question comes from the line of George Genarekis from Canacor Genuity Group. Your line is open. Hey, everyone.
Speaker 3: As a Connecticut-based company, today our thoughts are with those impacted in our community.
As a Connecticut based company today, our thoughts are with those impacted and our community.
Jason Few: Good morning and thank you for taking my questions. Maybe just to start the first question, you mentioned in the press release that you're examining additional facilities for the build of salt, your solid oxide platform. Can you just help illuminate a little bit of additional interest that you've seen and what gives you the confidence to continue to build out the capacity there? Thank you. George, good morning and thank you for joining the call and thank you for your question.
Speaker 3: As a company, we will continue to execute on our powerhouse business strategy with the goal of delivering growth and optimizing returns. Thank you all for joining the call today and for your interest in fuel cell energy. We look forward to updating you again next quarter and have a great day.
As a company we will continue to execute on our powerhouse business strategy with the goal of delivering growth and optimizing returns. Thank you all for joining the call today and for your interest in fuel cell energy. We look forward to updating you again next quarter and have a great day.
Speaker 8: This concludes today's conference call. Thank you for your participation. You may now disconnect.
This concludes today's conference call. Thank you for your participation you may now disconnect.
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Yes.
Jason Few: We continue to use the interest that we're seeing from customers and the pipeline that we're building as how we think about the need to expand capacity for our solid oxide manufacturing. In addition to that, we continue to look for ways in which we increase our capacity and our existing footprint or making small additions to our existing footprint even in Calgary. So we're today, we believe that we can get to 80 megawatts of capacity from originally where we thought we were at 40 just based on additional process optimizations and things that we're doing at that facility.
Okay.
Jason Few: So our decisions will be driven by demand and the pipeline that our business development team is building. But we're seeing really strong support for solid oxide, for power gin and for electrolysis, and do you still expect a reversibility to come into the platform in 2027? We do. We believe that that's going to be a significant opportunity for us in the longer term as energy storage continues to be a more important part of the energy transition as we continue to add more and more intermittent technologies to the grid.
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Yeah.
Jason Few: Our view is that hydrogen works as an excellent energy store and that it's far more practical for long duration energy storage versus mineral-based solutions and so our ability to leverage reversibility of our platform. So the same stack that's going to make hydrogen as the same stack we can reverse and feed that hydrogen to produce power, we think it's going to be a real opportunity for us. Maybe just as a last question, one of the things you could share your thoughts on the upcoming decision by Treasury to give us more detail around additional, additional, excuse me, deliverability and matching and your thoughts as to how that decision will turn out.
Jason Few: Thank you. Yeah, so just, I think it was on the 7th, the Deputy Secretary of Treasury said that they planned to clarify more of the rules by the end of this calendar year. So one, I would say, we're excited that there's, we're going to get to real clarity around the rules. As a company, we've continued to be in a position to leverage the ITC and we've demonstrated our ability to attract tax equity as part of the way in which we recycle cash in our business.
Jason Few: We see the department and overall, the administration is really trying to listen to the voice of the market in terms of how it's making these decisions. And so when you think about things like, you know, additionality or matchability, they're really trying to get this right, we believe. And we think that they'll ultimately get to the right decision and put together more of a transition path than kind of a clear, hard determination one way or another in terms of how they're going to account for, rather it's additionality or matching. Thank you.
Manav Gupta: Your next question comes from a line of Manav Gupta from UBS. Your line is open.
Jason Few: Good morning, guys. I actually quickly wanted to focus on this SRAA study from California that came out on Friday. That's calling for like 90% emission reductions for 2045. It lists a number of fuels, including hydrogen. So it's pretty bullish on hydrogen. And I'm basically trying to understand now that California, it seems to be very supportive of alternate fuels, does that change your plans. And also in the report, it's basically saying a book and claim would apply to even green hydrogen, which is they're encouraging the sale of green hydrogen within the state of California.
Jason Few: That's when you can get the credit. So if you could talk around your plans of California based on what we are seeing with SRAA, which basically would support alternate fuels in a big way in the state of California.
Jason Few: And good morning and thank you for your question and also you wrote a pretty nice report on this yourself just that just came out so appreciate that look we we were strong supporters of using biofuels you know not only for power production which we've done on a number of different installations in California. We we support the methodology in terms of how you think about using alternate fuel to produce green hydrogen which is exactly what we're doing with our tri generation platform at the port of Long Beach so we're we're really supportive of this move that they're making and as you know as a company from a carb standpoint who's driving this this movement in California we've been carb certified for a long time where the first fuel cell provider to get there and so as we think as air quality issues and the you know, real focus around things like socks and knocks and other particulates coming back into focus we think strong support of alternate fuels our platform that doesn't combust those fuels so we don't produce socks and knocks and other particular just could you know shows stronger support for what California is trying to do so we're really excited about it and we think it's a real positive and we think that opens the door for us from a distributed power generation. It opens the door for more opportunities around tri generation to actually produce you know carbon neutral power green hydrogen and and water like we're doing in California so we're we think it's a very positive thing.
Manav Gupta: Thank you for a very detailed response and congrats on getting the triogen platform up and running we hope it's first of many because those things really have to be carbonized at a faster pace so I'll turn it over thanks again. Thank you.
Ryan Pfingst: Your next question comes from a line of Ryan things from be Riley securities your line is open. Hey good morning guys on product sales can you provide any color around demand and any progress you might be making with new customers potentially outside of Korea. Ryan good morning and thank you for the question yes you know as we've indicated as a company we begin to really focus on creating a better balance between our power purchase agreement opportunities that we drive and product sales so we're building a pipeline that enables us to to do both of those things because we think continue to offer multiple ways for our customers to do.
Ryan Pfingst: Purchase from us is a benefit to us as a company but we see strong pipeline builds not only in in you know our traditional markets but as we expand into new markets outside of kind of our core we're seeing strong product demand and those continue those generally tend to be more product.
Ryan Pfingst: Cell focus markets as opposed to PPAs and so we think that over the coming quarters you'll see you know more from us on on product sales as an overall opportunity. That's helpful.
Mike Bishop: And then, turning to the generation segment, can you talk a little bit about the economics of the Derby projects or maybe at a higher level, how they might help the profitability of the generation segment as a whole? Yeah, sure. I think maybe Mike could give you a sense of how we think about, you know, margin and on our generation. Business and what we've seen happen over the last several quarters and certainly this quarter, but Mike can walk you through that.
Mike Bishop: Sure. Good morning, Ryan. And thanks for joining the call. So, yeah, as we think about the two Derby projects that that will add, you know, meaningful generation revenue right now today. We're producing about 44 million on an annualized rate. We did about 11 million of generation revenue this quarter. So 44 million today. But adding obviously the large Derby project and other 14 megawatts will make a meaningful increase there. When we think about profitability of the generation portfolio, you know, we target EBITDA margins in our generation portfolio of between 40 to 50%.
Mike Bishop: When you bat, if you look at just last quarters results, when you back out the Toyota, you know, one time charges as well as depreciation, we're in the 46% range right now. So we would expect that to continue. As we add additional operating assets in the portfolio. Great. Thank you guys for the color. Thank you.
Operator: And again, if you'd like to ask a question, press star one in your telephone.
Eric Stine: Keep at your next question comes from a line of Eric Stein from Craig Hallum. Your line is open.
Mike Bishop: Good morning, everyone. Good morning, Eric. How are you? Hey, doing well. Thanks. So maybe I'll just stick with generation, you know, curious. So now with Derby coming on, I think you'll be at what 63, you'll be around 60 megawatts. And I know in this goes back a while. So not this, this isn't necessarily target you've given. But at one time, you had kind of a 50 to 60 megawatt area where you thought you'd break even obviously you've got a lot of irons in the fire. So you've taken on more expenses. Do you kind of have a high level, you know, megawatts in generation portfolio break even number?
Mike Bishop: Good morning, Eric. This is Mike. I'll take that one. So yeah, historically, you know, if you go back four, four plus years ago, we were really censoring the business around the generation portfolio with the meaningful, meaningful backlog of projects that we had. So to your point, you know, we've been working really hard at getting those projects up online will be north of of 60 megawatts after after Derby comes online. And, you know, back at that time, we were focusing the business on getting to EBITDA positive around the generation portfolio.
Mike Bishop: You know, fast forward a couple of years with the energy transition, you know, now being here in a big way with, you know, global support around, around what we're doing, we've accelerated investments around our different technologies. And Jason talked about both solid oxide, but also carbon capture. That is increased both our operating expenses and cap X, which is pushed out our profitability into the future. But we made that trade off in order to get these technologies to market.
Mike Bishop: When we look at the external targets we've put out there, you know, we're targeting getting over 300 million of revenue in 2025 and over a billion by 2030. We're still confident in those targets and with the increased revenue we would expect, you know, profitability to come as well.
Mike Bishop: Got it, and I mean, is this something where we should think about, I mean, is there a time in the future, say, when carbon capture, when maybe that has progressed, you've gotten through the pilot project program, when that spending maybe tails off a little bit, I mean, I know this is all dependent on what your spend looks like, so maybe how do you think about those things, or do you think that you're going to have kind of this elevated spend, you know, for the foreseeable future or longer term than that? So when we look at the R&D spend, we ramped that up here over the last couple years, we have not put out guidance of when that would come back down, but clearly, you know, as we've talked about, we're investing in first-article products that we're building here in our Connecticut facilities, and as those become commercial, that will shift up to cost of sales, which would likely drive down research and development expenses in the future, but we haven't put out specific guidance around that, and then just going back to the question around megawatt guidance, you know, as we look at the revenue potential for different products that we have out there now, it's a different math than just, you know, dollars per megawatt, we can potentially see, you know, higher revenues, particularly around a project like trigen that has multiple attributes coming out, not just power generation, but hydrogen and water, and then obviously with government incentives out there around like the PTC, credit that was not there, you know, a couple of years ago, you know, potentially higher revenue opportunities for those projects, and it's just a dollar per megawatt.
Mike Bishop: Okay, thank you.
Noel Parks: And our final question today comes from a line of Noel Parks from Two-Eye Brothers. Your line is open. Hi, good morning. Good morning, Noel. I just had a couple of, you know, talking about the generation business and more recent investments in new technologies, can you just talk about sort of the state of your business momentum with generation? New customers, any, anything that's shifted in terms of how you characterize the certain customers that are being more aggressive, you know, whether they're moving any faster or as with so many things waiting for more of the, the IRA and structure guidance.
Noel Parks: Thank you for your question. So as we think about what we're seeing with customers, you know, and you think about what we've just done with Toyota. Many of the things that we're doing are new applications in the way in which we're using our platform. What's important to note about that is that it's our same existing platform. We're just extending the capabilities of that platform to deliver additional values. So the same carbonate platform that we commercialized in 2003 is the same platform we deployed at the Port of Long Beach in support of the Toyota opportunity.
Noel Parks: Yet we're delivering hydrogen and water from that platform in addition to power. We see that as a great example of where customers will now be able to see a real commercial implementation of that platform, and we think that will help us drive additional opportunities around the Trigin platform as an example. We are seeing customer interest in the way in which we're building our pipeline, growing even without the clarity around IRA, and especially when you think about globally because we're not just focused in the US, but you've got programs in the EU, you've got programs in Korea, all of which drive strong tailwinds that really support the business that we're seeing, and when you think about what's really happened, net zero in countries around the world have been legislated in, and so companies are going to find ways to get there and we think that you'll see even more states in the US take more progressive attitudes like what you're seeing in California, like what we just talked about and the expansion of and support for renewable fuels.
Noel Parks: We think that all serves us really well to help drive our business, especially some of the advantages we have, for example, in when you think about renewable fuels, the fact that we can use renewable fuels directly coming out of an anaerobic digest or as opposed to needing those fuels to get the pipeline quality gas as an example, which we think gives us an advantage lowers the cost of the fuel and puts us in a position to deliver carbon neutral to carbon negative power. So we're really excited about that.
Noel Parks: As we look at our pipeline, we're seeing growth happening despite of the IRA, but there's no question that customers really want to understand in the US how to really fully maximize the IRA, but we'll continue to take advantage of the investment tax credit. We think we're in a really strong position around a project like Toyota to take advantage of the production tax credit when you think about the incremental benefits. We are a US manufacturer.
Noel Parks: We largely use US-based content in our platform and we use labor that are at prevailing wages. So all of those things continue to ladder up as just incremental benefits to bring down the cost for the customer and to create a different set of economics for us. There are instances where you can get almost up to 50% through the IRA based on the way in which we're configured as a company. So we're pretty excited about that.
Jason Few: Great. Thanks.
Noel Parks: And it's wanted to turn to the Exxon mobile, JV, and I was curious about a couple things. I guess just sort of the working relationship there is huge company and sort of their internal process and maybe how it affects progress in the JV. You've had the number of extensions of the agreement.
Jason Few: And I guess in.., just even more on a practical level. Do you have any thoughts about the process that's left in the pipeline before? You know, there'll be more info about, for example, the timing of plans at Rotterdam for a capture installation there. And I'll thank you, you know, I don't want to speak on behalf of Exxon, but I think it's clear from their public pronouncements that they are coming to their low-carbon business.
Jason Few: Our technology is directly supportive of what, you know, Darren has talked about and Dan Aiman has talked about in terms of their low-carbon business, and so we feel really good about that. They have, you know, been clear that they expect to get to a FID decision later this year on a demonstration project, so we, you know, we think that will happen. So, you know, I think you're seeing Exxon operate very differently with their low-carbon business, and, you know, they've, and we think that that will be benefit for us as well. And so, you know, they've got a strong commitment there and we're excited about it.
Noel Parks: Great. Thanks a lot. Thank you.
Operator: And this ends our question and answer session.
Jason Few: I will now turn the call back over to Mr. Jason Pugh for some final closing remarks. Rob, thank you.
Jason Few: We want to take a moment to acknowledge and honor the victims, families, and communities impacted by September 11th. As a Connecticut-based company, today, our thoughts are with those impacted in our community. As a company, we will continue to execute on our powerhouse business strategy with the goal of delivering growth and optimizing returns. Thank you all for joining the call today and for your interest in fuel-so-energy.
Operator: We look forward to updating you again next quarter and have a great day.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. Thank you.