FuelCell Energy, Inc. Stock

Thank you for standing by. My name is Jaylen and I'll be your conference operator today. At this time, I would like to welcome everyone to the FuelCell Energy Third Quarter of Fiscal 2026 Financial Results Conference Call.

[Operator Instructions]

I would now like to turn the conference over to Michael Bishop, Chief Financial Officer. You may begin.

Thank you, Operator. Good morning, everyone, and thank you for joining us on the call today. This morning, FuelCell Energy released our financial results for the third quarter of fiscal year 2026, and our earnings press release is available in the Investors section of our website at www.fuelcellenergy.com. In addition to this call and our earnings press release, we have posted a slide presentation on our website. The webcast is being recorded and will be available for replay on our website approximately two hours after we conclude.

Before we begin, please note that some information that you will hear or be provided with today consists of forward-looking statements within the meaning of the Securities and Exchange Act of 1934. Such statements express our expectations, beliefs, and intentions regarding the future and include statements concerning our anticipated financial results, plans and expectations regarding the continuing development, commercialization, and financing of our fuel cell technology, our anticipated market opportunities, and our business plans and strategies. 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 such risks and uncertainties is available in the Safe Harbor Statement, in the slide presentation and in our filings with the SEC, particularly the risk factor section of our most recent Form 10-K and any subsequently filed quarterly reports on Form 10-Q. During this call, we'll be discussing certain non-GAAP financial measures, and we refer you to our website, our earnings press release, and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures. Our earnings press release and a copy of today's webcast presentation are available on our website under the investor relations tab. For this call, I am joined by Jason Few, our President and Chief Executive Officer. Following our prepared remarks, the leadership team will be available to take your questions.

I will now hand the call over to Jason for opening remarks. Jason?

Thank you, Mike, and good morning, everyone. Thank you for joining us today. I am pleased to welcome you to our third quarter fiscal year 2026 earnings call. In the third quarter, we took an important step in the commercial development of FuelCell Energy's data center strategy. Rapid growth of AI and high-density computing is creating power requirements that the existing grid cannot address quickly enough. For data center customers, access to power has become a critical constraint on development. The AI economy will not be constrained by silicon. It will be constrained by access to electricity. We believe distributed generation will become an essential layer of AI infrastructure, enabling the grid to expand while allowing AI factories to deploy on commercial timelines rather than utility timelines.

Our FuelCell Energy Blocks are designed to address the constraint by providing clean, continuous, behind-the-meter power that can be deployed at the customer's site and scaled as demand grows. In the third quarter, we began to convert that value proposition into commercial commitments. We secured our first order for FuelCell Energy Blocks to supply baseload power for data center applications, increased committed backlog to $1.3 billion and added $2.4 billion of awarded capacity backlog, resulting in total committed and awarded capacity backlog of $3.6 billion as of July 31. Awarded capacity backlog is a new category reflecting multi-phase contracts and capacity reservations, which I'll let Mike detail in his remarks.

Subsequent to the quarter end, we closed a 75-megawatt capacity reservation agreement with a major co-location data center operator for a Texas project. We believe our utility-scale distributed generation platform is uniquely positioned to help accelerate AI infrastructure by reducing time to power, extending the existing electric grid with reliable behind-the-meter generation, and addressing many of the permitting and community challenges associated with large-scale power development. We expect to provide additional detail upon execution of definitive agreements. That is the central message for the quarter. We are moving from a growing pipeline to tangible commercial commitments while advancing the manufacturing capacity and operating capabilities required to deliver at scale.

At the outset, I want to talk about this commercial commitment. During the quarter, we signed a capital equipment purchase agreement with Fit Energy to supply power solutions for data center applications. It covers up to 380 megawatts across 4 phases, sized to the customer's deployment schedule. We received an upfront deposit on the initial 30-megawatt phase, which we expect to begin delivering in the fourth quarter, and the remaining phases are at Fit Energy's election. At the same time, our fiscal 2026 year-to-date pipeline has grown to roughly 10 gigawatts of active proposals, and it reflects our progress toward proving our value proposition for data centers, which now accounts for about 97% of the total third quarter pipeline.

I have said before that pipeline is a leading indicator, not a result, and I hold to that. The measure that matters is conversion, and Fit Energy is commercial proof that FuelCell Energy Block system can be the solution to some of the current public perception challenges facing data centers by providing scalable, clean, quiet, behind-the-meter power for data centers. The most important signal isn't that our pipeline is larger, it's that customers are buying differently. AI has made power availability a strategic decision rather than simply a utility decision.

In addition to our domestic backlog, we continue to execute on our existing global projects. In the third quarter, we successfully completed the repowering of the 42-module Gyeonggi Green Energy project in South Korea. This execution demonstrates our capability to manage complex utility-scale repowering projects overseas while maintaining strict operational standards. Furthermore, it validates our long-term technology replacement cycle, proving that our existing fleet represents a continuous source of service and product revenues as energy blocks reach their natural replacement intervals.

Important to converting our existing pipeline and backlog is our ability to scale. Because demand only matters if we can meet it. To support our increasing backlog, we are systematically expanding our manufacturing capacity. We are actively expanding our Torrington, Connecticut manufacturing facility, to support the multi-megawatt demand of the AI factory and data center markets.

Our immediate operational milestone is to increase our annualized production rate at Torrington to its current full capacity of 100 megawatts, with achievement of this milestone expected in October 2026. This near-term target represents a vital step toward our larger long-term goal of reaching 500 megawatts of annualized production capacity by June 2028, an expansion we are already investing in.

This expansion is progressing on schedule. During the third quarter, we finalized the comprehensive factory design, made significant equipment purchase commitments, and began the installation of a new high-volume tape caster that will dramatically increase our throughput. It is important to emphasize that this expansion is fully funded. We are executing this capital spend in alignment with our committed backlog to ensure disciplined capital allocation with the goal of meeting the high-volume requirements of global hyperscalers without building ahead of the market.

As we scale, one aspect of our fuel cells has come into particular focus, and that is the sourcing strategy for our materials. Our carbonate platform provides a powerful supply chain advantage, and it does not rely on rare earth minerals and is scandium-free, utilizing globally abundant commodity metals like nickel and steel rather than highly volatile critical minerals or those that are predominantly mined in potentially sanctioned countries. Our platform was designed around the abundant industrial materials, not scarce critical minerals. With over 90% of our supply chain is sourced domestically in the U.S., and approximately 93% of our FuelCell Energy Block components are reusable or recyclable through a take-back program, we offer our customers unmatched supply security in the current uncertain geopolitical environment.

Along with growing demand for FuelCell Energy power systems, our technology is being validated on a global stage by an increasingly diverse group of world-class blue-chip partners. We are proud to report that we have delivered and installed the first 2 carbonate fuel cell carbon capture modules at ExxonMobil's Rotterdam complex in the Netherlands. This delivery represents a pivotal operational milestone under our joint development agreement with ExxonMobil Technology and Engineering Company. This installation is the world's first industrial-scale demonstration of our jointly developed carbon capture technology, successfully moving it out of the laboratory and into a real-world application, addressing hard-to-abate low CO2 emissions from an industrial facility. This Rotterdam demonstration is expected to validate our fuel cells' performance under commercial operating conditions, positioning us as an essential technology partner for global industrial decarbonization.

During the third quarter, we also signed a memorandum of understanding with Siemens to design and supply the electrical balance of plant systems for our fuel cell installations. The primary goal of this collaboration is to accelerate physical deployment and lower the cost of large-scale commercial projects exceeding 100 megawatts. We plan to jointly develop integrated distributed energy systems that combine our clean fuel cells with battery energy storage, advanced micro-grid controls, and medium-voltage electrical equipment. By optimizing the electrical balance of plant, we can manage the full spectrum of power variability from minutes down to microseconds. We believe this integrated solution to be developed in collaboration with a global leader would provide the electrical reliability required to support critical, high-density AI data center workloads.

The opportunity in front of FuelCell Energy continues to grow. Our responsibility is straightforward: Execute. We are focused on converting commercial demand into contracted backlog, scaling manufacturing with discipline, and delivering for our customers. Those are the measures by which we should be judged, and they will remain our priorities as we work to build long-term shareholder value. With that, I'll turn the call over to our Chief Financial Officer, Mike Bishop, to provide a breakdown of our financial performance.

Thank you, Jason. Today I will walk through our third quarter fiscal 2026 financial results, which demonstrate our robust capital position alongside a transitional period for our top-line revenue. Total revenue for the third quarter of fiscal 2026 was $33 million, a 29% decline compared to $46.7 million in the third quarter of fiscal 2025. Breaking this total down, product revenue was $18 million, down from $26 million in the prior year quarter. This reflects fewer module deliveries to South Korea as we completed the repowering of Gyeonggi Green Energy fuel cell park, delivering all 42 modules committed under that program since 2024.

Service revenue was $2.4 million compared to $3.1 million a year ago. Generation revenue was $8.8 million, down from $12.4 million, driven principally by lower output from plants in our generation portfolio, including our 7.4-megawatt Groton project, which was out of service for the full quarter pending a planned upgrade that we expect to complete in fiscal 2027. Finally, advanced technology contract revenue was $3.8 million compared to $5.3 million in the third quarter of fiscal 2025.

We recorded a gross loss of $24.5 million in the third quarter of fiscal 2026 compared to a gross loss of $5.1 million in the third quarter of fiscal 2025. The primary driver was $17 million of charges recorded during the quarter, consisting of approximately $4 million to reduce the carrying value of certain inventories to net realizable value, and approximately $13 million for losses on firm purchase commitments. Both were recorded in connection with Phase 0 of our capital equipment purchase agreement, or CEPA, with Fit Energy due to the fact that our current product costs and manufacturing overhead exceed the contractual pricing established under that agreement.

We operated at an annualized production rate of approximately 37 megawatts during the quarter, which remains below the volume at which we expect our cost structure to align with market-based pricing for orders of this scale. These charges are expected to be limited to identified inventory and purchase commitments for Phase 0 and do not reflect our expectations regarding the overall economic value of the agreement.

The loss from operations was $46.7 million, a 51% decrease compared to an operating loss of $95.4 million in the third quarter of fiscal 2025. That improvement was primarily driven by the absence of the asset impairment and restructuring charges that heavily impacted the prior year period. Net loss for the quarter was $45.3 million compared to $91.9 million in the comparable prior year period, and net loss attributable to common stockholders was $45.3 million, or $0.64 per share, compared to $92.5 million, or $3.78 per share, in the prior year quarter. Per share improvement also reflects a higher weighted average share count of 70.4 million shares following our equity issuances over the past 12 months.

On a non-GAAP basis, adjusted EBITDA was negative $36.7 million compared to negative $16.4 million in the third quarter of fiscal 2025. That variance was primarily driven by Phase 0 charges I just described, which are not added back in our adjusted EBITDA reconciliation, rather than by any structural degradation in our core operating model.

Turning to our commercial progress, we are encouraged by the substantial expansion and evolution of our backlog. As of July 31, 2026, total committed and awarded capacity backlog was $3.6 billion, a significant step change. We have structured our commercial backlog into 2 distinct categories to give investors clear visibility: committed backlog and awarded capacity backlog. Committed backlog, which represents definitive non-cancellable agreements executed by the company and its customers, was $1.3 billion, up approximately 4.1% year-over-year. Awarded capacity backlog was $2.4 billion. Awarded capacity backlog represents commercial awards and capacity reservations where we have been selected as the supplier and the parties are advancing towards execution of definitive agreements.

For the third quarter, this category is driven by the 350 megawatts across Phases 1, 2, and 3 of our CEPA with Fit Energy, which was executed in June and provides for up to 380 megawatts in total product, commissioning, and service agreements, including the committed 30-megawatt Phase 0. Fit Energy may elect to proceed with Phases 1, 2, and 3 at its sole option, and no payment obligation arises with respect to a phase until Fit Energy makes an election to proceed with that phase.

I want to be clear that awarded capacity backlog is not contracted firm order backlog or a guarantee of future revenue. Amounts may not convert to committed backlog or to revenue in whole or in part, and the timing and amount of any conversion may differ materially from our current estimates.

We continue to maintain tight fiscal controls across the company. As summarized on slide 19 of the presentation, total operating expenses for the third quarter of fiscal 2026 were $22.2 million compared to $90.2 million in the third quarter of fiscal 2025. Looking at the details, administrative and selling expenses were $13.6 million for the quarter. Research and development expenses were $8.5 million for the quarter as we continue to invest in key product initiatives to support growth of data center opportunities.

This year-over-year reduction in operating expenses was primarily driven by the absence of $68.5 million of asset impairment and restructuring charges incurred during the third quarter of fiscal 2025. Excluding those 1-time historical charges, recurring operating expenses were essentially flat year-over-year with a modest reinvestment in research and development offsetting lower administrative and selling costs.

Now turning to the balance sheet and liquidity discussed on slide 21. We ended the quarter with the strongest cash position in our history. Total cash, cash equivalents, and restricted cash as of July 31, 2026, was $737.3 million, up from $440.9 million at April 30, 2026, the end of the prior quarter. Unrestricted cash and cash equivalents represented $658.1 million of that total, with the remaining $79.2 million in restricted cash and cash equivalents pledged as collateral for performance security and letters of credit. Our capital structure also remains straightforward. We carry no corporate convertible or high-yield debt, and our $153.6 million of total debt and finance obligations primarily consist of project-level financing, Export-Import Bank working capital facilities supported by our Korean deliveries, and sale-leaseback obligations.

This substantial capital buffer means that our manufacturing capacity expansion at our Torrington, Connecticut, facility is fully funded. We estimate the total requirement to expand Torrington to 500 megawatts of annualized production capacity to be between $200 million and $275 million with completion targeted for June 2028. The expansion is backed by approximately $298 million of net proceeds raised from sales of common stock during the quarter, consisting of $245.5 million from our July underwritten offering and $52.9 million under our open market sale agreement.

Looking ahead, we believe our strength in balance sheet and backlog expansion have established a clear path toward mid-term profitability. We are now targeting achieving positive adjusted EBITDA results in the fourth quarter of fiscal year 2027. We believe this target is supported by a series of operational and commercial catalysts. First, we have begun to increase our annualized production rate with the goal of achieving targeted annualized production rate of 100 megawatts in October 2026, up from approximately 37 megawatts this quarter, which should drive operating leverage over time.

Beyond that, reaching our adjusted EBITDA target will depend on several key factors, including conversion of our awarded capacity backlog into definitive revenue-generating committed contracts, alignment with customer delivery schedules, and continued execution of our manufacturing cost reduction initiative, as we benefit from higher procurement volumes. There can be no assurance that we will achieve these production rates, the conversion of awarded capacity backlog or the anticipated cost reductions within the timeframe currently expected.

In closing, we are executing our strategy with financial discipline, a fully funded manufacturing capacity expansion plan, and a sales pipeline that has grown to approximately 10 gigawatts in fiscal 2026 proposals, which we believe positions us to drive long-term value for our shareholders. Thank you for your continued support, and I will now hand the call back to the operator to open the line for Q&A.

[Operator Instructions] Your first question comes from the line of Julien Dumoulin-Smith of Jefferies.

It's actually Ivana Ergovic for Julien. I just, kind of, had a question related to this deal announcement of 75 megawatts. If you could maybe give some, kind of, more details in terms of the timeline on any potential opportunities for expansion versus that deal. I think that, yeah, that would be my first question.

Thanks for joining us this morning. Yes, after the quarter or subsequent to the end of the quarter, we closed the 75-megawatt capacity reservation agreement for a major data center operator. We've not disclosed the timing of that, but we anticipate not only that opportunity, but follow-on opportunities with the same customer. And as you've seen, particularly in certain markets and including a market like Texas, where there's, you know, movement toward requiring bringing your own power. Our platform certainly sets up well to meet that requirement in Texas. And so we're excited about the opportunity.

We were working through the definitive agreement, and that'll really align the timeline from a delivery and execution standpoint. We see this as a continuation or how the model, the business model, is really evolving to put capacity reservations in place as customers really look to line up power while they're completing their designs for the architecture of the data center and securing their commitments from their offtake customers as well. So excited about this opportunity and look forward to executing.

Thank you. And in terms of a follow-up, I actually had a little bit of different question, kind of, related to your quarter results. I mean, there is a material increase in the cost of revenue, I guess, related to the Fit Energy deal. So I mean, how should we think about it? In the sense of the revenue recognition, I guess those would come with the deliveries in the fourth quarter and offsetting basically the cost of revenue that you booked in this quarter. Is that the right way to think about it?

Sure, Ivana. This is Mike, and thanks for joining the call. I'll take that one. So, as far as the Fit Energy Phase 0, yes, we have disclosed that we do expect to begin recognizing revenue on that order in the fourth quarter of our fiscal year with the balance of it being completed in fiscal 2027. On the cost side, what you've seen come through this quarter related to that order is really our legacy cost structure. As we sit here today, the company's operating at 37 megawatts of production volume, which has the cost higher than current market rates.

We expect that to normalize and be absorbed as we scale and get production rates up to 100 megawatts. As I said in my remarks, we do expect the company to get to adjusted EBITDA positive in the fourth quarter of fiscal 2027.

Can I just ask one more thing? In terms of the 100 megawatts, it seems that you should be able to, kind of, start producing at those levels by the year-end?

Yes. So what I believe your question was, where is our production rate going? We have announced that we are scaling our production rate up to 100 megawatts by the end of the fourth quarter of this year. And what that means is adding personnel, direct labor in our factory as well as scaling our supply chain so that we're positioned to be able to deliver at that level as we get into fiscal 2027. In addition to that, we're adding manufacturing capacity as well to go up to 500 megawatts of total capacity in this factory by June of 2028.

Your next question comes from the line of Manav Gupta of UBS.

I wanted to focus more on the Exxon power project. I mean, it looks like your cells are delivered. I'm just fundamentally trying to understand, are these 2 cells going to operate in a different way because their primary goal seems carbon capture? Can you help us understand how these 2 cells will be operating in a different way with Exxon, and what's the scope of expanding that partnership because, you know, Exxon is very bullish on carbon capture as a whole.

Manav, good morning, and thank you for joining the call, and thank you for the question. Yes, you are correct. The 2 modules have been delivered to Exxon at Rotterdam and are being installed. The primary focus of the application for those 2 modules is capturing carbon directly from the point source of emissions at the Exxon Rotterdam refinery or the Esso refinery, given that's the brand name they still use in Europe. It will demonstrate capturing 90% plus of the carbon while simultaneously producing power, thermal energy, and hydrogen, which is a unique capability to our platform, not only as a fuel cell provider, but a unique capability in terms of other carbon capture technologies.

The other big part of this demonstration, Manav, is to show our ability to capture CO2 from a low CO2 concentration stream of emissions, which is much harder to do. And that's another area where our technology accelerates in terms of our capability to actually capture low concentration CO2, which opens up the biggest aperture of market opportunity when you look across the industrial landscape. So everything from a company that does bottling and uses boilers to sterilize bottles all the way to the refinery application we're demonstrating here in Rotterdam.

We believe that demonstrating successfully our platform's capability, that, that will open up an opportunity to expand this technology more broadly to address carbon capture across industrial applications globally. And we think that there continues to be broad political support. I mean, if you look at the OBBBA, the actual, you know, incentives around 45Q actually improved. So we think that, you know, signals strong support, clearly strong support for carbon capture in Europe and Asia. And the product will function differently from a core focus being carbon capture versus our power generation. That being said, our core product and every product we ship today is carbon capture ready. So we have the ability to also decarbonize power generation by capturing the CO2 from the fuel that we use to power our energy block. But the core focus in Rotterdam is carbon capture.

Perfect. My quick follow-up here is in your opening comments, you talked about fuel cell and, you know, the time to power advantage and how the grid is not scaling up. What we have also noticed is that there's obviously something called LCOE, but increasingly, what the hyperscalers are finding out is by the time the electricity is delivered to you, it's not even close to LCOE, it's significantly higher. Now when you take that versus the benefits of on-site power generation, which is basically a spark spread, the cells actually start becoming a lot more economical and have a break-even of 7 or 8 years. So I'm just trying to understand from your perspective, can you also help us understand some of the other benefits of on-site power generation? Because on the screen, might look the LCOE is cheaper, but by the time the power gets to the data center, it's actually a lot more expensive. So if you could talk a little bit about that.

Sure, great question. I think if you look at the advantage of on-site power and LCOE, you're absolutely correct. If you look at what's really required to deploy new power generation in a constrained area, the amount of capital investment that has to go in from an infrastructure upgrade on the utility side, which may include high-voltage transmission, new local transmission, additional power electronics from transformers, et cetera, you can reduce a significant amount of that cost by doing on-site power generation. So not only do you get a lower LCOE, higher reliability, you're also going to get the ability with our platform to integrate absorption chilling so you can actually bring down the PUE of that data center, which is a core goal of a data center operator because they want to get more of the power to the compute, because that's really the business they're in, is powering compute.

The other big benefits are, we offer a low noise solution, and we can operate in water neutral. So a lot of the things that communities are complaining about today, we address with our technology, including not contributing to poor air quality, because although we use natural gas, we don't combust the fuel, which is another advantage. And so you take all of those things together, and I like to think about it more than just time to power, but it's really time to power on, because it's the time to deliver it, can you get it permitted, which is a big challenge today, and our platform really addresses a lot of those concerns. And so really time to power on, which is also time to revenue, and we think that creates a significant advantage.

Your next question comes from the line of Jason Tilchen of Canaccord Genuity.

I guess to start, can you perhaps help us bridge the gap between the achievement of the 100-megawatt run rate that you, sort of, stated you expect at some point next month, to the Q4 of fiscal 2027, sort of, updated target for reaching EBITDA profitability and what some of the key factors, maybe expand on some of the key factors that you laid out in the press release that could help you achieve that rate.

Sure, Jason. This is Mike. I'll take that. So, again, as we said, we are hiring, we are ramping our supply chain to get our run rate up to that 100-megawatt annualized run rate in the fourth quarter of fiscal '26 and targeting adjusted EBITDA positive in fourth quarter of fiscal 2027. Between now and then, the key factors that will drive that is: One, continuing to convert our awarded capacity into committed backlog. As we sit here today, we are executing on the 30-megawatt committed backlog from Fit Energy Phase 0. We need to continue to convert that broader order as well as other opportunities. And of course, we talked about this new 75-megawatt capacity reservation agreement that was announced this morning. So that's another opportunity there to continue to convert.

So converting backlog, lining up with customer schedules, and then, of course, continuing down the cost reduction curve as we expand and we scale in the factory, we will absorb overhead and we will also get leverage from our supply chain. So those are the main drivers that will be occurring in the financial statements over the course of the next year plus.

Okay, that's really helpful. And I guess the follow-up there is in terms of those factors you laid out, some of those are in your control and some of them are at the discretion of the customers like Fit Energy has the option to proceed with these deals. So I'm just curious maybe if you could help us understand on the, sort of, cost reduction side, if you feel like you are already or within close line of sight of achieving what you need to achieve to get to that point. And then what does the scenario look like where maybe Fit Energy is not ready to proceed with that phase in time to achieve it? Like, what are the -- what is the sliding scale look like in essence, if you're able to achieve some of those milestones, but maybe not all of them.

So, again, on the cost reduction side, we've been planning for this for a long time. We have a very well-defined cost reduction curve in front of us that we are executing on. And on the commercial side, we talked about a 10-gigawatt pipeline of opportunities. So we are not just relying on 1 or 2 customers, we see significant opportunities here across our customer base and fully expect to be able to convert additional pipeline into backlog over this time period.

Okay, really helpful. And maybe we can sneak into one quick final one. I believe in the first question that was asked, it was around the bridge from 37 to 100 over the next, sort of, call it, 6 to 8 weeks. And you mentioned adding labor and increasing the supply chain to get to that run rate. Are those, sort of, boxes, have those been ticked already and it's just a matter of simply working through the next few weeks of just getting those people up and running? Or are you still in the process of finding that labor and making sure that supply chain is at the right point?

Yes, so there's multiple elements there. But yes, we've made considerable progress. We are hiring as we speak. We have added an additional shift in our factory. So you will see meaningful increase in our production rate come through this quarter as we described.

Your next question comes from Ryan Pfingst of B. Riley Securities.

Maybe just to start with a follow-up on the last one, for the target of positive EBITDA, in fiscal 4Q '27, can you frame that in terms of what that reflects or where you expect to be from an annualized production rate perspective at that point?

Thanks for the question, Ryan. So we would expect at least 100 megawatts of volume to support that, if not more. And again, that will be dictated to some extent by our customers in converting pipeline to backlog as well as customer delivery schedules. So being able to line up with our customer requirements. And as we described, we will absolutely have the capability in Torrington to get above 100 megawatts. We are targeting 500 megawatts of capacity by June of 2028. That does not get turned on like a light switch. That will come online over time as we unlock constraints. One of the big constraints that we've talked about is tape casting. That process is well underway and will be installed in next fiscal year, so that's something. That's a big unlock for us to create additional capacity.

Got it. And then on the Fit Energy deal, curious on your expectations for moving to the remaining phases. Do you see Phase 1 moving forward only after the initial phase is up and operating, or could that decision, in your view, come before then?

No, Ryan, this is Jason. No, they are not sequential or certainly don't have to be sequential. We -- the gating on those is just their ability to close out their agreements with their customer and that can happen at any time and so it's not a complete the first 30 megawatts and then, you know, they'll move forward or consider Phase 1, they're not a sequential set of events.

Your next question comes from the line of Noel Parks of Tuohy Brothers.

I noticed that with the updated CapEx guidance, it's actually been nudged down a bit for the fiscal year. And I think there was a mention in the materials that some of that reflected equipment deliveries that would not be happening until after the fiscal year end. So I was just wondering if you could just elaborate a bit on that. And I'm assuming that would be deliveries for the, you know, primarily for the Torrington expansion.

Correct. This is Mike. So good read. The previous disclosure that we had around expected CapEx coming through the cash flow statement in fiscal '26 was $20 million to $30 million. We are now saying that that's $10 million to $20 million, just given timing, but it is, by no means, a reflection of execution, it is really a timing of receiving certain equipment based on our prior schedules. As we have described now, we are on track for the 500-megawatt expansion by June of 2028. We have committed $200 million to $275 million of capital to that and if you look at our purchase commitments disclosures, that is up significantly quarter-over-quarter and reflecting not only the increase in production rate, but also capital commitments that will be delivered in future quarters.

Great, thanks. And also, early in the prepared remarks, I think there was a -- or maybe it was right at the start of Q&A, there was a comment about sort of your fuel cells, I guess the necessity of aligning with customer delivery schedules. And so I was just, sort of, thinking in this ramp up period on one hand, and then you have new agreements in negotiation and coming online. Just thinking a bit about how you manage that since, it looks like you're going to be kind of in anything but a steady state, sort of, trend for the next few years.

Yes, so this is Jason. So the way that you can think about this is we have visibility into our production capabilities. We have visibility into our expansion capacity ramp. And that information is closely tied to and fully understood by our business development team. And so when we're talking to customers about opportunities and schedule always becomes part of the question or conversation ultimately, we make sure that the commitments that we're making align to our view in terms of our ability to meet and deliver against that demand. And so even though you might sign an agreement for 100 megawatts of power, you really need to look at, well, what is the delivery schedule for that? Because first power could be something as small as 20 megawatts. And additional power comes on as they finish building out the data hall, or maybe as they add a second building for a second data hall. So you have to really look at the full build out from the customer perspective, and then we make sure that we align our commitments to our confidence on our scale-up and manufacturing capabilities.

[Operator Instructions]

Your next question comes in line of Christopher Ellinghaus of Siebert Williams Shank.

Mike, in your backlog slide, do you, sort of, envision adding more granular categories, sort of, as you convert pipeline?

Good morning, Chris, and thanks for joining the call. So obviously a big step change in our backlog disclosures this quarter compared to last quarter. We've added an additional category called Awarded Capacity Backlog, and what is in there as of July 31, 2026, the end of last quarter, is really the 3 phases of the Fit Energy contract that aren't currently committed. So this is Phases 1, 2, and 3 broken down between product and service. So we think we have a fair amount of disclosure there on the potential that will be converted into committed backlog.

As far as additional categories, we would expect, and we talked about the 75-megawatt capacity reservation agreement. We would expect that to go into the awarded capacity backlog as well, whether it's part of product or service or broken between the two, we'll disclose that in future periods. But that's the expectation, kind of, following industry practice. These days where folks are disclosing reservations whether they're called CRAs or something else but really reservations on future capacity which the company is being paid for. So we will be as transparent as possible as we add these additional opportunities into our backlog.

And Jason, I sort of liked the way you framed the pipeline versus conversion discussion. Is there -- I don't know how to put this, but is there any timelines or waypoints for some of the pipeline that we might look for you to announce any kind of agreement out of the pipeline?

Sure. No, great question, Chris. And thank you for being on the call. The way you ought to think about it is, you know, we talk about our sales pipeline and the 10 gigawatts we talked about today are, you know, tied to proposals that our business development team has with customers directly placed those proposals. When we talk about awarded capacity agreements, what we're talking about there is that we, along with the customer, have agreed to allocate manufacturing capacity in support of that customer's order.

Along with that awarded capacity, there is a date certain in which we and that customer have agreed that we're going to get to the definitive agreement and at that point that awarded capacity would convert into our backlog what Mike just talked about and what you find in our backlog are things that are committed firm project orders and that's the way we've, you know, reported backlog for probably the last 6 or 7 years in terms of that backlog number.

So what you should really look for is the velocity in which we take awarded capacity and convert that into committed definitive agreement, but in each of those awarded capacity agreements, there is a timeline tied to getting to that definitive agreement. And again, what it gives the customer -- the benefit for the customer is it reserves manufacturing capacity, right? And it gives them the ability to complete their final designs from an architecture perspective in terms of everything from our energy block all the way to the rack and how they're going to do that and to finalize their agreements with their customers. And it gives us better visibility into our planning, gives us the ability to make purchases on materials from a supply perspective, and there's financial consideration for providing that committed capacity reservation.

With no further questions, that concludes our Q&A session. I'll turn the conference back over to President and CEO Jason Few for closing remarks.

Thank you, Jaylen. And before we conclude, I want to leave you with this. The opportunity in front of FuelCell Energy is significant. AI and high-density computing are creating an urgent need for reliable, scalable power, and our technology is positioned to help meet that need. But opportunity alone does not create value, execution does. Our focus is clear. Convert awarded capacity and our pipeline into closed transactions, scale manufacturing with discipline, and deliver for our customers. We will align investment with commercial commitments, increase capacity responsibly, and scale to drive greater cost leverage across the business.

Partnership will be central to that execution. Our collaboration with Fit Energy, Siemens, and the customers reserving manufacturing capacity demonstrates what is possible when technology, capital, industrial capability, and customer demand come together around a shared objective. These are not simply commercial relationships, they are partnerships built to accelerate deployment, reduce execution risk, and create long-term value for everyone involved. We believe the market is moving toward us. Power has become a strategic constraint and FuelCell Energy has the technology, manufacturing platform and partnerships to help customers move from ambition to operation. Now we must execute with urgency, discipline, and consistency.

Before we close, I want to thank the entire FuelCell Energy team. Your commitment, resilience, and focus makes our progress possible. I also want to thank our customers, partners, and shareholders for your continued confidence and support. We appreciate your time today and look forward to updating you on our progress next quarter.

Thank you. This concludes today's conference call. You may now disconnect.

Good morning and welcome everyone to the FuelCell Energy Second Quarter and Fiscal 2026 Financial Results Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I'd like to turn the conference over to Michael Bishop, Chief Financial Officer. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us on the call today. This morning, FuelCell Energy released our financial results for the second quarter of fiscal year 2026 and our earnings press release is available in the investor section of our website at www.fuelcellenergy.com. 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. Before we begin, please note that some information that you will hear or be provided with today consists 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 include statements concerning our anticipated financial results, plans and expectations regarding the continuing development, commercialization, and financing of our fuel cell technology, our anticipated market opportunities and our business plans and strategies.

Our actual future results could differ materially from those being described in or implied by such forward-looking statements because of a number of risks and uncertainties. More information regarding such risks and uncertainties is available in the safe harbor statement in the slide presentation and in our filings with the SEC, particularly the Risk Factors section of our most recent Form 10-K and any subsequently filed quarterly reports on Form 10-Q.

During this call, we'll be discussing certain non-GAAP financial measures, and we refer you to our website, our earnings press release, and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures. Our earnings press release and a copy of today's webcast presentation are available on our website under the Investors tab. For this call, I'm joined by Jason Few, our President and Chief Executive Officer. Following our prepared remarks, the leadership team will be available to take your questions. I'll now hand the call over to Jason for opening remarks. Jason?

Thank you, Mike, and good morning, everyone. Thank you for joining us today. Let me set the stage before we dive into the quarter. Demand for distributed baseload power and fuel cell solutions continue to accelerate and shift. AI, digital infrastructure, and high-density compute are driving a step change in power demand, while grid timelines remain too slow to meet that need. Customers require proven, scalable power that can be deployed without waiting years, and that is where FuelCell Energy is differentiated. As we review our second quarter financial and operational results, I want to focus on several key themes that demonstrate the momentum we're building and the strategic progress we're making. The first is commercial execution and our focus on the AI and data center market. These unprecedented power density requirements of AI infrastructure have exposed the severe limitations of the traditional grid, creating an immediate need for reliable behind-the-meter baseload generation.

FuelCell Energy's DC native continuous platform is a ready backbone for data centers. By natively outputting DC power and integrating high-grade thermal exhaust for absorption chilling, we offer a modular solution that bypasses multi-year grid interconnection queues and that we believe can dramatically improve data center power usage effectiveness, or PUE. We are focused on architecting computing and energy as one system. Our pipeline has expanded to 4 gigawatts of submitted proposals. As shown in slide 14, this represents a more than 250% increase over our first quarter pipeline, which we believe reflects the increasing recognition of fuel cells as a critical solution for meeting near-term and long-term power needs.

Average proposal size has grown from 65 megawatts to 130 megawatts in a single quarter, a 2X increase that reflects the scale at which data center customers and hyperscalers are now engaging. As transaction size increases, diligence expands proportionally.

Extended timelines are often a function of scale. Our pipeline includes opportunities across data centers, distributed generation, utilities, and industrial applications spanning both domestic and international markets. Potential data center customers make up about 89% of our pipeline. This is what gives us confidence in increasing the scale of our planned manufacturing capacity expansion at the Torrington facility from 350 megawatts to 500 megawatts of annual capacity. I'll speak more about this in a moment. To better address this market in a scalable, standardized, and modular way, this quarter we introduced the 12.5 megawatt FuelCell Energy Block product shown on slide seven. This is not a small system aggregated up.

It is a utility-scale architecture scaled out. Our base energy block is 1.25 megawatts. Utility scale begins at 1 megawatts. Going from 1.25 megawatts to 12.5 megawatts to hundreds of megawatts is multiplication. Same architecture, same proven stack, same operating envelope. This off-the-shelf product is another way we enable rapid deployment into grid-constrained markets while shortening time to power for data center developers and will allow customers to add capacity and phases rather than overbuild upfront. Built for the scale, reliability, and speed required by AI infrastructure, we believe this commercial product will play a critical role in converting pipeline opportunities into executable transactions.

Our priority remains disciplined conversion. We are focused on turning high quality opportunities into contracted backlog, structuring projects with the right counterparties and financing support. While 100 megawatt infrastructure decisions are not made on a predictable schedule, our active negotiations focus on advancing those opportunities where we believe execution certainty and long-term value creation are strongest with the goal of converting submitted proposals into contracted backlog within this fiscal year. Second, operational discipline and manufacturing scale-up. As just mentioned, we have begun the initial phase of our U.S. manufacturing capacity expansion to meet growing power demand. Our Torrington, Connecticut facility is the heart of our operations and we are making targeted investments to increase our annualized production capacity.

Given our engagement with potential customers and the market context, we are increasing our planned capacity expansion from the 350 megawatts per year we had previously discussed to 500 megawatts of fuel cell manufacturing capacity per year. Overall costs associated with this full expansion of the facility will be in the range of $200 to $275 million.

Beyond that, we intend to expand capacity in line with contracted backlog, market demand, and structured capital support. Not ahead of it. We will execute this expansion in strict alignment with contracted backlog, market demand and structured capital support with the goal of ensuring we do not build ahead of the market or compromise our stewardship of stockholder capital. Third, our strategic and commercial partnerships continue to validate global scale. Our work in South Korea remains strong with ongoing module deliveries to Gyeonggi Green Energy, Company Limited, GGE, and progress under our MOU with Inuverse for the AI Daegu Data Center. Our collaboration with ExxonMobil's Low Carbon Solutions business continues to progress, which we believe the market has not yet valued.

Our partnerships are transitioning from development to deployment, with the carbon capture module shipping to ExxonMobil's Rotterdam facility, we believe we are establishing the physical proof points required to commercialize this technology and unlock the massive total addressable market for point source emission reductions. Currently, two units are en route to Rotterdam as slide 17 illustrates, and we expect they will be delivered in June. Finally, the strength of our balance sheet enables us to take a measured, disciplined approach to growth.

Our strong liquidity position allows us to pursue these opportunities with discipline, prioritizing execution, proof, and long-term value creation. We closed the quarter with almost $441 million in total cash and cash equivalents, providing ample runway to execute our business plans. We continue to build financing capacity to support growth. Across all these areas, we continue to emphasize proof over promise. We're delivering measurable progress on our strategy, growing our pipeline, focusing on converting the pipeline into contracted backlog, increasing our revenue base, reducing costs, and focusing our resources on near-term commercial opportunities with the goal of long-term value creation. Another key area of focus is our strategic and commercial partnerships, which continue to validate the global scale of market demand for our technology. We believe the decisive steps we have taken in commercial focus on AI, product offerings, and manufacturing scale-up are strengthening our foundation and positioning us to capitalize on opportunities during one of the most important energy use step changes in history.

The world needs more power, clean, resilient, affordable, and continuous power. And that is exactly what we deliver. With that, I'd like to turn the call back to our CFO, Mike Bishop, to discuss our second quarter financial performance.

Thank you, Jason, and good morning, everyone. In the second quarter of fiscal 2026, we reported total revenues of $35.6 million compared to $37.4 million in the prior year quarter, a decrease of approximately 5% year over year. This decrease was primarily due to lower service revenue as there were no module exchanges in the quarter and lower generation revenue resulting from lower output largely due to the fact that the Groton project was undergoing repairs. These declines were partially offset by higher product revenues driven by scheduled module deliveries to Gyeonggi Green Energy or GGE in Korea. We expect deliveries of the remaining 6 GGE modules and the upcoming CGN Yulchon Generation or CGN deliveries to drive consistent product revenue in the second half of fiscal 2026.

We also saw an uptick in advanced technology revenue in the quarter. Loss from operations was $77.9 million for the quarter compared to $35.8 million in the second quarter of fiscal 2025. The higher loss was largely driven by a non-cash $42.6 million impairment charge related to the Groton project, which we expect to upgrade utilizing 3 of our current generation 2.5 megawatt power blocks. This was a strategic decision with the goal of ensuring high reliability for the Navy-based customer following the upgrade. Net loss was $77.6 million in the second quarter of fiscal 2026 compared to net loss of $37.7 million in the second quarter of fiscal 2025. Net loss attributable to common stockholders was $78.7 million or $1.45 per share compared to $38.8 million or $1.79 per share in the prior year period. On a non-GAAP basis, adjusted EBITDA for the second quarter of fiscal 2026 was negative $17.1 million, an improvement from negative $19.3 million in the second quarter of fiscal 2025. This 12% year over year improvement in adjusted EBITDA reflects our progress on cost reduction and operating efficiency.

We have included reconciliations of our non-GAAP financial measures, including EBITDA and adjusted EBITDA, in the appendix of our earnings press release for reference. Backlog totaled $1.14 billion as of April 30, 2026, compared to $1.26 billion as of April 30, 2025. This change was primarily due to revenue recognized on long-term contracts over the past year, partially offset by new orders added to backlog. Turning to the composition of backlog as of quarter end, product backlog was $36.1 million, primarily reflecting remaining repowering module deliveries in Korea that are scheduled to be recognized as revenue in the second half of this year. Service backlog was $155.4 million comprised of future revenue from our long-term service agreements on customer-owned power plants. Generation backlog was $928.5 million, representing future revenue from company-owned projects under long-term power purchase agreements. This portion of our backlog has a weighted average remaining contract term of approximately 15 years, underscoring the long-lived nature of these assets.

Lastly, advanced technology contract backlog was $15.4 million, the majority of which is tied to our joint development work with ExxonMobil Technology and Engineering Company. Operating expenses for the second quarter were $65 million up from $26.4 million in the same quarter last year. This increase was primarily the result of the $42.6 million non-cash impairment charge that I mentioned earlier. It's important to contextualize this charge relates to our decision to upgrade the 7.4 megawatt Groton Navy project with our current generation 2.5 megawatt power blocks with the goal of ensuring high reliability, baseload power for a critical U.S. government asset. Excluding this charge, our core operating expenses declined year over year, demonstrating our continued cost discipline and progress on our path towards sustainable, positive, adjusted EBITDA results.

Turning to the balance sheet and liquidity. We ended the quarter with $440.9 million of total cash, cash equivalents and restricted cash. This includes $373.2 million of unrestricted cash and $67.7 million of restricted cash, providing a strong liquidity position to support our growth. During the second quarter, we utilized our at-the-market equity program, selling approximately 10.9 million shares at an average price of $9.45 per share for net proceeds of $100.4 million. Subsequent to quarter end, we sold an additional 4.1 million shares at an average price of $13.31 per share, raising net proceeds of $52.9 million. These actions have significantly bolstered our cash resources, while preserving a conservative capital structure. We remain essentially debt-free apart from the long-term financings on specific project assets and service agreements and we have no near-term debt maturities.

Our strong balance sheet has positioned us to invest in near-term growth opportunities with a disciplined approach. As Jason mentioned, we are increasing our production levels and expanding our manufacturing capacity with the goal of meeting the accelerating demand for resilient, continuous, distributed power, especially in the AI and high-density data center market. In closing, we are executing our strategy with financial discipline and focus, balancing growth initiatives with rigorous cost control and efficient capital allocation.

We remain confident that our approach of leveraging a solid balance sheet, commercial execution, and targeted capacity expansion will accelerate our path to sustainable profitability. We have made tangible progress this quarter on our objectives. Thank you for your attention. With that, I will now turn the call over to the operator for Q&A.

[Operator Instructions] We'll take our first question from Jason Tilchen at Canaccord Genuity.

Good morning, and thanks for taking my questions. To start, I was hoping in this deck you laid out a number of the benefits that you think that the use of your fuel cell type technology will provide to data centers. Just curious, in the conversations with potential customers, which of those various benefits and advantages are resonating the most at the moment? That would be really helpful to start.

Jason, good morning, and thank you for the question. I think if you look at our platform and the conversations we're having with customers, one of the big advantages that, you know, clearly stand out is just our long history in providing utility scale platforms, first and foremost. Even the material we provided in the deck, we just give, you know, we show 5 examples with a combined, you know, 50-year operating history at utility scale. And so when you look at essentially taking the grid and moving it behind the meter, that's a real strong selling point for us because that's effectively what we're doing. Obviously, time to power remains critically important in our ability to deliver quickly and not only deliver quickly, but to get through the permitting hurdles that, you know, more traditional generation clearly faces when it comes to communities as well as just permitting on things like Title V, which are not issues for us.

So we offer a community-friendly platform. The other big piece is we think we're getting a lot of interest in our 12.5 megawatt building block that we've announced. And just the long-term capital preservation from an investment in our technology, given that we're native DC. And as the racks move that direction, GPUs go that direction, that investment that a customer makes is still a solid one and will certainly continue to be important for the AI factory in the future.

Great, that's really helpful. And maybe one follow-up to that. Is there anything else you can share in terms of the steps that are needed either on your side or on the customer side or the prospective customer side in or sort of key milestones you're looking towards to get some of that pipeline converted into those signed agreements as you talked about and maybe potential timelines beyond just the sort of framework that you mentioned in the prepared remarks around sort of some point this fiscal year.

Yes, I think if you, as we look at it and the conversations that we're having, certainly as the transaction sizes have increased, and we talked about a 200% increase in the average size of the proposals that we're responding to, that increases diligence. It expands proportionately to the size of those transactions. So we see these timelines really as a function of scale, but, you know, that as you look at the milestones that you go through, it's one, clearly being in the opportunity and have a chance to engage with the customer and lay out our technology, work through the technological questions that a customer has, and then just being able to really demonstrate our long history of providing utility scale solutions that have had continuous runtime. For example, one of our largest platforms is continuously run for 13 years. That is a really strong technical hurdle that we're able to cross, given what our platform has done over last 23-plus years.

We'll take our next question from Mark Strouse at JPMorgan.

Yes, good morning. Thank you very much for taking our questions. I just had a couple for Mike, if I can. I wanted to ask about the target for profitability. Or should we still think about that around 100 megawatts or so? I'm just curious if the increase in capacity that you're targeting, if that changes the target at all.

Good morning, Mark, and thanks for the question. No, the increase in capacity does not change that target, the company has been consistently looking at once we achieved consistent production volumes at or above 100 megawatts on an annualized basis, we are targeting getting to adjusted EBITDA positive.

Okay, thank you. And then with the capital raises that you mentioned recently, obviously your balance sheet is in good shape. You are spending on CapEx though, so I'm just curious, should investors completely rule out additional capital raises from here? Do you think you're in a sufficient spot or anything else to expect near-term?

As Jason and I said in our prepared remarks, we are comfortable with our current balance sheet and investing in capacity expansion for growth. The company looks at a number of ways to continue to finance growth. We have obviously done project financing. We have financed service agreements, and we have looked to the equity markets periodically, but again, comfortable with our current liquidity position.

We'll take our next question from Ryan Pfingst at B. Riley Securities.

First, just curious how much the introduction of the 12.5 megawatt power block solution has accelerated customer conversations since you announced that in late March.

All right, thank you and good morning. It's been a really strong adder to the conversations that we're having because you're able to really demonstrate to the customer, one, time to power. Being able to do that in a 12.5 megawatt block size is really attractive in terms of the way that data centers think about the overall power domain and the way in which they want to scale in a modular fashion. The other big piece of that is that you create better economics because your ability to actually leverage a lot of the balance of plant across a larger block of power. So that has become a really strong selling point from a customer perspective. But that being said, I would say that, what continues to be a really strong selling point is modularity and the ability to actually scale at the customer demand as opposed to having the customer overbuy from where the real demand is and we're able to do that with the 12.5 megawatt block in addition to our 1.25 or 2.5 megawatt block sizes as well.

I appreciate that. And then maybe going back to the EBITDA positive target and how you're thinking about operating leverage. What do you expect for growth in OpEx as you potentially scale revenue here with data center demand and the operating leverage that you're expecting to see?

Good morning, Ryan. It's Mike. I'll take that one. So, as you know, the company has done a fair amount of work around our operating cost structure with the goal to get to that adjusted EBITDA positive target. As a result, you know, we would not expect to see significant increases in operating expenses. There will certainly be some modest growth related to inflation, but we're comfortable with our current cost structure and absolutely expect to get leverage from it.

We'll move next to Dushyant Ailani at Jefferies.

Just the first one. I know you guys have talked about it briefly, but the ramp to 500 megawatts you've talked about in the next 24 months, how do we think about the cadence? Is it going to be in 100 megawatt blocks, or how do we think about it over the next 12 months? Or do we just see an immediate bump from 100 to 500 in two years?

Dushyant, thank you for the question. Yes, you'll see us unlock capacity as we scale from where we are today to that 500 megawatts.

So, for example, one of the things we've talked about is, you know, implementing our high-volume tape caster. That gives us the ability, actually to have tape casting capacity to fulfill that 500 megawatts as an example and as we expand and add additional conditioning capacity, we'll start to unlock more volume. And so the way we really think about it if you think about it and kind of work backwards, we look at all of the areas of constraint where we're kind of maxed out.

How do we unlock that capacity as we scale to 500? So we anticipate that we'll incrementally add more volume all the way to the 500. It won't be a binary 100 to 500 cut.

Got it. That's helpful. And then maybe just quickly on the Groton repairs. Are there potential for other upgrade opportunities across your portfolio or would this be the only one?

This is the one that we see because what we're doing is we're changing it to our standard energy block. And across the rest of our portfolio, that's what we have deployed. And from our perspective, we looked at the importance of the U.S. military operation and Groton. And that this is a nuclear submarine base and a microgrid is part of hardening that facility. And for us to play a role in that and to deliver really strong operational technology is really what anchors this decision. And so this is the one area where we see that we'll switch out to our standard platform and so we'll be standard across our entire fleet.

We'll move next to Colin Rusch at Oppenheimer.

Could you talk a little bit about the siting flexibility that you're enabling for your customers and how that's impacting some of the conversations that you're having with the data center customers?

Hey, Colin, good morning, and thank you for that question. Yes, we think one of the really strong value propositions of our platform is the fact that we're a community-friendly technology so when you think about the following few items. We, you know, you're not going to run into Title V issues so we're not going to create air pollution to the local community. That's a positive. If you look at some of the complaints that you see from some communities, it's around noise. Well, we operate at a level that is similar to a home air conditioner so we're not going to run into noise related issues, we're modular in terms of our scalability so we're very efficient in terms of land use.

In addition to that, we also have the ability to bring down overall energy consumption by leveraging the thermal output of our platform and delivering a product that can actually help cool the data center by leveraging our thermal energy and integration with absorption chilling. So we see a number of factors that create positives for data center developers and then certainly see those positives play out in terms of the community reaction to our technology.

Super helpful. And then just turning into a different market, in Europe there's been an awful lot of activity looking at moving towards leveraging some of the peak power capacity as well as moving towards energy independence from some of the international volatility that we're seeing in the macro environment. I'm just curious about how the pipeline is starting to move in Europe and if there's any meaningful opportunities we should be attending to over there.

I think if you look at our pipeline today, it's clearly weighted toward the U.S. We do see a change in attitude taking place in Europe and a bigger acceptance starting to emerge around natural gas and the importance that it's going to play in helping them build out data centers.

And in addition to that, also having the energy that they need from a reliable continuous energy resource. We continue to focus on a global market opportunity and we're certainly even seeing a lot of, you know, some of the larger data center developers here in the U.S. that also have a significant European presence. We're working with them on our technology as a way to not only deliver the power that they need in Europe, but again, going back to that, the same conversation we just had around community friendly, being able to get sited, you know, getting through a lot of the environmental issues that are a big consideration in the European markets. We're seeing that play well as we look at those opportunities there and in Asia.

We'll take our next question from Noel Parks at Tuohy Brothers.

You know, just trying to wrap my head around sort of the doubling of proposal size and the tripling of the pipeline in the course of the quarter, I wonder if you can just sort of characterize what that looks like compared to our last call 3 months ago. Just inbound calls, just what -- how has that manifested itself that in this particular quarter you've seen such a ramp up?

Yes, no, thank you. And good morning to you as well. Look, we have a direct sales team that is focused on data center and the overall AI factory opportunity as a segment. And that team is very focused on working across data center developers, powered land developers, you know hyperscalers and as well as the GPU providers so it's that engagement and creating more awareness of our technology, our differentiation and advantages that's really driving that in addition to just the more significant engagement that the team is having now that we've really shifted a big part of our focus toward this opportunity. And so they're coming through our direct channel.

In addition to that, we have a very robust omni-channel, if you will, in terms of our website presence and the things that we do to drive interest and awareness of our technology. We recently published a data center white paper that's been well received. A lot of our podcasts and other things that we've been doing, those have all been well attended. And so as we think about creating surround sound around our technology, our advantages in the market, we're starting to see that pay off in terms of our ability to engage at a more deep level with customers and submit larger proposals.

Great, thanks. And, you know, I was wondering, is the standardized power block, is that currently expected to be a meaningfully higher margin -- module out of the gate, or is that only going to be sort of over time just through your normal process of efficiency going to have an impact, would you say?

Good morning, Noel. I'll take that one. So the way we look at our business model here is there's really 2 key elements as we're converting these proposals into backlog. You would expect to see product backlog where we're delivering the platform to our customers. That would result in future product sales. We target in the 10% to 20% margin. If we are not the EPC, we're towards the higher end of that margin. If we are involved in the EPC process, we're towards the lower end because we're out working with others.

And then as importantly, we will bring in service backlog as well. These are 15- to 20-year long-term agreements and generally the size of that service agreement is significantly higher than the initial product sale as we're taking care of our customers over a long period of time. And we target a margin for service agreements north of 20%. So as we're putting together models here going into the future, those are the targets that the company looks at.

And that concludes our Q&A session. I will now turn the conference back over to Jason Few for closing remarks.

Thank you. And thanks to everyone for joining us today. In summary, the second quarter reflects continued progress in several key areas. Strong commercial momentum and expansion of our pipeline to over 4 gigawatts of submitted proposals, operational discipline, cost reductions and action in support of our manufacturing capacity scale-up to 500 megawatts at Torrington, a step closer to demonstrating our unique carbon capture capabilities and financial strength with a solid balance sheet and strategic financing partnerships. More importantly, these results reinforce a broader point. We've already proven the value of distributed baseload power in real-world utility-scale applications over many years. We've demonstrated nearly 50 years of cumulative utility-scale runtime across just 5 of our installations shown on Slide 9. What is changing is the scale and urgency of demand, particularly in power-constrained digital infrastructure markets.

Our differentiated platform, including modular deployment, continuous power, native DC capability, thermal integration, and a disciplined path to scale positions us to meet that need. What's changing is who needs it, how urgently, and at what scale. We remain committed to disciplined execution, converting our pipeline thoughtfully, advancing vital programs like carbon capture, and continuing to scale our platform production capacity for the long term. Before we conclude, I want to thank our team members, customers, partners, and shareholders for their continued support. The team at FuelCell Energy remains focused on executing our strategy, advancing our technology, and delivering reliable, resilient power solutions that strengthen energy infrastructure around the world. Thank you again for your time today, and we look forward to updating you on our progress next quarter. Thank you.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.

Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the FuelCell Energy First Quarter of Fiscal 2026 Financial Results Conference Call. [Operator Instructions]

I would now like to turn the call over to Michael Bishop, Chief Financial Officer. Michael? Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us on the call today. This morning, FuelCell Energy released our financial results for the first quarter of fiscal year 2026 and our earnings press release is available on the Investors section of our website at www.fuelcellenergy.com.

In addition to this call and our earnings press release, we have posted a slide presentation on our website. The webcast is being recorded and will be available for replay on our website approximately 2 hours after we conclude. Before we begin, please note that some information you will hear or be provided with today consists 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 include statements concerning our anticipated financial results, plans and expectations regarding the continuing development, commercialization and financing of our FuelCell technology, our anticipated market opportunities and our business plans and strategies. Our actual future results could differ materially from those described or implied by such forward-looking statements because of a number of risks and uncertainties.

More information regarding such risks and uncertainties is available in the safe harbor statement in the slide presentation and in our filings with the SEC, particularly the Risk Factors section of our most recent Form 10-K and any subsequently filed quarterly reports on Form 10-Q. During this call, we'll be discussing certain non-GAAP financial measures, and we refer you to our website, our earnings press release, and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures. Our earnings press release and a copy of today's webcast presentation are available on our website under the Investor Relations tab.

For this call, I'm joined by Jason Few, our President and Chief Executive Officer. Following our prepared remarks, the leadership team will be available to take your questions.

I will now hand the call over to Jason for opening remarks. Jason?

Good morning, everyone, and thank you, Mike. I appreciate everyone joining us today. Before we begin, I want to acknowledge the events unfolding in the Middle East. Our thoughts are with the civilian affected across the region, and we are grateful for the current and service of the American men and women in uniform and those of our allies working to protect stability and safeguard lives. We hope for the safety of all innocent people and for a path toward peace.

With that said, I'd like to turn to FuelCell Energy's results and the progress our team continues to make. Let me set the stage before we dive into the quarter. FuelCell Energy delivers continuous scalable power for critical applications and grid resilience. Our mission remains unchanged. However, the world around us is changing rapidly. The explosive growth of AI, digital infrastructure and compute-intensive workloads collides with a power system that can't scale quickly enough.

Interconnection time lines now take years instead of months and customers simply can't wait that long. This environment demands solutions that are proven, scalable and ready to deploy immediately, and that's where FuelCell Energy excels. We don't need to prove the need for distributed baseload power with our solutions. We've already demonstrated it over decades in utility scale, real-world and demanding environments.

Please turn to Slide 4. I will focus today's discussion on a few key themes. First, commercially, Data centers are driving demand for power that doesn't depend on grid timing in the commercial sector. Our DC native continuous platform is a ready backbone for data centers. We're seeing this shift reflected not just in conversations, but in the types of projects actively entering our pipeline.

Second, operationally. Our momentum in South Korea is demonstrated by us servicing the largest FuelCell plant in the world at nearly 60 megawatts and our collaboration under a 100-megawatt data center MOU. Additionally, we are moving carbon capture from concept to deployment. And at the ExxonMobil Esso refinery in Rotterdam, we will demonstrate what our platform can do, capture carbon from an external point source while simultaneously generating power, delivering usable thermal energy and producing hydrogen, one integrated system, multiple revenue streams and zero wasted energy. We are also implementing the initial phases of our U.S. manufacturing scale-up to meet growing power demand.

Third, financially. Our strong liquidity position enables us to pursue this opportunity with discipline, prioritizing execution, proof and long-term value creation. Across all three, we emphasize proof or promise.

Let me begin with a commercial update by turning to Slide 6. Our value proposition rest on five fundamentals. Accelerated time to power, scalability, capital preservation, native DC power efficiency and accelerated returns. Accelerated time to power. We design our solutions to power up sites quickly, giving customers reliable energy and enabling revenue generation in a much shorter time frame. This speedy deployment without requiring grid connection eliminates typical delays, so operations and monetization start faster.

Infrastructure grid scalability. Our technology allows seamless growth from initial megawatt-scale projects to hundreds of megawatts ensuring infrastructure-grade reliability as demand rises, our proven solution makes expansion efficient at scale. Capital preservation and regulatory resilience. Flexible phased capital deployment means customers invest as they grow, minimizing risk. Our ultra-low emissions profile reduces permitting hurdles, making regulatory navigation easier.

AI native architecture. DC Native power backbone aligns perfectly with the requirements of AI and high-density compute workloads, eliminating inefficient AC to DC conversions. This compatibility supports next-generation data center design and maximize the system's efficiency. Revenue and return acceleration. We are able to deliver faster returns by providing rapid time to power, greater usable capacity and flexible capital deployment without relying on grid timing.

Next, we will go one layer deeper on two of these areas, AI native architecture and efficiency through thermal integration by turning to Slide 7. As AI workloads redefine power requirements. We help customers rethink power delivery inside their facilities. Our ability to deliver native DC output stands out. While most data centers operate internally on D.C., most generation systems still require multiple AC to DC conversions before power reaches the rack. Each conversion adds cost, complexity, energy loss, heat and potential failure points.

By producing native DC power, our platform reduces conversions, simplifies electrical architecture and improved system efficiency and reliability, especially at the scale and density that AI demands. This shift is not theoretical, it is being articulated publicly by industry leaders. At the 2025 GPU Technology Conference, or GTC 2025 as it is owned, in an interview with data center dynamics, Jensen Huang, CEO of NVIDIA stated, we are moving from tens of kilowatts per rack to hundreds of kilowatts and ultimately toward megawatt-class racks. Power and cooling are now the fundamental constraints of AI infrastructure.

Similarly, Gio Albertazzi, CEO of Vertiv, has publicly noted that rack densities are nearing 1 megawatt. As rack density approaches the megawatt class, infrastructure must scale in kind. Our 1.25-megawatt modular block delivers native DC output and aligns directly with a 1-megawatt rack architecture, enabling a more direct, efficient path from generation to compute. Time to power and power efficiency are no longer secondary considerations. They are gating factors for deployment. This is not just a future concept. DC ecosystems already thrive across EVs, renewables and storage. Now data center operators are actively asking a logical question. Should power generation align more directly with the way power is consumed?

Turning to Slide 8. It may sound counterintuitive for a power generation company to reduce electric demand, but this is exactly what our platform enables. In reality, it is a capital efficiency discussion. Cooling can represent approximately 25% to 30% of a data center to electricity consumption and that percentage is rising as AI workloads increase rack density and thermal intensity. Cooling is essential, but it does not generate revenue. Every megawatt allocated to cooling is a megawatt not allocated to compute.

Our usage effectiveness, or PUE, measures how much energy reach IT equipment versus how much is consumed by supporting infrastructure. As density rise, managing PUE becomes a greater factor in data center economics. Our platform technology provides a differentiated solution. We produce high-quality thermal energy as part of combined heat and power. When paired with absorption chilling, that heat, which would otherwise be rejected, is converted to chilled water to support cooling requirements. The result is an integrated power, heat and cooling configuration that reduces electric cooling load, improves PUE and will shift more available power revenue-generating compute and constrained power environments. This is not incremental efficiency, it is a structural advantage.

This quarter, we advanced our strategic collaboration with sustainable development capital, SDCL. Together, we have identified up to 450 megawatts of discrete data center and distributed generation opportunities globally. FuelCell Energy will provide the power platform and long-term operating and service capability. SDCL brings institutional capital, structuring expertise and infrastructure asset management. Our collaboration is designed to address what matters most to customers, proven technology and a dependable execution at scale.

We are advancing these opportunities with discipline focusing on development milestones, managing risk deliberately and will structure each project to create durable value for customers, partners and shareholders alike.

Please turn to Slide 10. In the first quarter, we submitted more than 1.5 gigawatts of proposals with data centers now making up over 80% of our pipeline. This reflects a structural shift and how customers are thinking about power, reliability, speed to deployment and long-term risk mitigation. Our platform is well aligned with that demand. Our priority is disciplined conversion.

We are focused on turning high-quality opportunities in our pipeline into contracted projects, building backlog with the right counterparties and financing structures and progressing contracted projects to commercial operations. We will continue to emphasize durability over velocity, allocating capital and resources where risk-adjusted returns and execution certainty are strongest.

Now let's turn to operations. South Korea remains an important operational and commercial market for us and a clear proof point of scale. Module deliveries at Going Green Energy Company LTD or GGE, and China General Nuclear or CGN, drove our product revenue in the quarter. Revenue would have been approximately $6 million higher, had two modules been commissioned just days earlier. Those two modules are now online and contributing to Q2 2026 revenue.

Importantly, our projects in South Korea demonstrate what few platforms can. Utility scale deployments of multiple 20-megawatt plants and 58.8 megawatts operating reliably for an average of 10 years in market. The operating history matters. It is a tangible validation of scale, bankability and execution attributes increasingly required by data center customers globally.

In addition, in connection with our collaboration under our MOU with Inuverse, supporting the AI Daegu data center in South Korea. Inuverse recently announced a meaningful step. The execution of a land purchase agreement with Daegu University for the development of an AI Daegu Data Center. The message is consistent. Customers are selecting platforms with demonstrated performance at scale and long-term operating credibility. We're moving carbon capture from development to deployment.

In April, we expect to ship two carbon capture modules to the ExxonMobil Rotterdam integrated manufacturing site. This project will mark the first demonstration of carbonate fuel cells capturing carbon directly from an external emission source while simultaneously producing power, hydrogen and usable thermal energy. That capability is not theoretical, and it is not replicated elsewhere.

Our molten carbonate platform is uniquely able to capture carbon at the source while maintaining power density and generating multiple revenue or operational expense saving streams from the same asset. That integration has the potential to materially lower the net cost of capture. Later this year, we believe that differentiation will be on full display in Rotterdam. Captured CO2 can ultimately integrate into the Porthos Infrastructure, a large-scale open access transport and storage network under development in the North Sea.

We view this project not as a demonstration alone, but as a catalyst for commercialization. Carbon capture represents a second distinct growth vector for FuelCell Energy differentiated from distributed generation and complementary to it. It positions us in markets where customers require practical decarbonization solutions with economic durability. This is a capability that will place our platform in a different category. Carbon capture is core to our carbonate platform, creating a fundamentally different long-term pathway for customers facing tightening emission standards. We take a disciplined approach to manufacturing scale.

At our Torrington, Connecticut facility, we are making the initial investments to advance from 100 megawatts per year of maximum annualized capacity today toward 350 megawatts, more than a threefold increase within our existing footprint. This capacity expansion leverages a predominantly U.S.-based supply chain proven electrochemistry, no reliance on rare earth materials and over 23 years of manufacturing and operating experience at utility scale.

Importantly, we have demonstrated our ability to scale before. We have produced FuelCell stacks in Torrington and shipped them to South Korea for final assembly and conditioning. Enabling localized value creation and logistic synergies. We applied the same model in Germany, manufacturing stacks domestically and supporting final assembly and deployment into the European market. We know how to expand capacity through modular replication and distributed assembly without building entirely new factories.

Scale is not theoretical for us, it is execution we have already delivered. We expect to invest $20 million to $30 million in fiscal year 2026 to support this optimization. Beyond that, expansion will be demand driven. We will build capacity in alignment with contracted volume and structured partner capital not ahead of it. Advanced manufacturing techniques, including automation and modular replication, give us a clear pathway to scale efficiently toward 1 gigawatt and beyond. But we will do so deliberately matching capital deployment to durable financial demand and maintaining stewardship of stockholder capital.

Now I'll hand it over to CFO, Mike Bishop, to discuss our Q1 financial performance.

Thank you, Jason, and good morning to everyone on the call today. I'll cover our first quarter financial results and backlog on Slide 16 and 17, and then close with liquidity and capacity utilization discussion on Slide 18.

In the first quarter of fiscal year 2026, we reported total revenues of $30.5 million compared to revenues of $19 million in the prior year quarter, an increase of approximately 61%. This increase was primarily driven by module deliveries to GGE and CGN under long-term service agreements. We reported a loss from operations in the quarter of $26.3 million compared to $32.9 million in the first quarter of fiscal year 2025, an improvement of approximately 20%.

The net loss attributable to common stockholders in the quarter was $23.7 million or $0.41 per share compared to $29.1 million or $1.42 per share in the prior year period. The improvement in net loss per share reflects both the reduction in net loss attributable to common stockholders and a higher weighted average share count due to equity issuances since January 31, 2025. Net loss was $26.1 million in the first quarter of fiscal year 2026 compared to net loss of $32.4 million in the first quarter of fiscal year 2025.

On a non-GAAP basis, adjusted EBITDA totaled negative $17 million in the first quarter of fiscal year 2026 compared to negative $21.1 million in the first quarter of fiscal year 2025. Please refer to the appendix of the earnings release, which provides a reconciliation of the non-GAAP financial measures.

Turning now to Slide 17. I'll walk through the mix and key drivers of revenue, which was $30.5 million. Product revenues were $12 million, reflecting the delivery and commissioning of a total of four modules, two for GGE and two for CGN under long-term service agreements. Revenue for the quarter was approximately $6 million lower than planned, driven by the timing of commissioning for two delivered and installed modules that entered service shortly after quarter end, which was previously planned to take place within the first quarter.

Service agreement revenue increased to $3.2 million for the 3 months ended January 31, 2026, compared to $1.8 million in the prior year quarter, reflecting higher service activity under the GGE long-term service agreement. Generation revenues decreased slightly to $11 million from $11.3 million, reflecting lower output from plants in the company's generation operating portfolio. Advanced technology contract revenues decreased to $4.3 million from $5.7 million.

Revenue in the quarter included $1.7 million related to our joint development agreement with ExxonMobil Technology and Engineering Company, or EMTEC and $1.9 million related to the purchase order received from Esso Netherlands BV and affiliate of EMTEC and ExxonMobil Corporation related to the Rotterdam project. There are also about $700,000 of revenue recognized under government and other contracts for the 3 months ended January 31, 2026.

Looking at the right-hand side of the slide, gross loss for the first quarter of fiscal year 2026 totaled $5.9 million compared to $5.2 million in the comparable prior year quarter, primarily related to increased gross loss from manufacturing variances and lower gross profit from advanced technology contracts partially offset by higher gross profit for service agreement revenues and lower gross loss from generation revenues.

Operating expenses for the first quarter of fiscal year 2026 decreased to $20.4 million from $27.6 million in the first quarter of fiscal 2025 primarily due to a $4.1 million decrease in research and development expenses, a decrease of $1.5 million in administrative and selling expenses and the lack of any restructuring expense recorded in the first quarter of 2026 compared to $1.5 million of restructuring expenses included in the first quarter of 2025.

Finally, on the bottom right of the slide, you will see that backlog decreased approximately 10.8% to $1.17 billion year-over-year, primarily as a result of revenue recognized over the period from January 31, 2025, through January 31, 2026, partially offset by new contract backlog.

Now turning to Slide 18. Our liquidity remains a strength. As of January 31, 2026, we had cash, restricted cash and cash equivalents of $379.6 million. During the 3 months ended January 31, 2026, we sold approximately 6.4 million shares of the company's common stock under the amended open market sale agreement at an average sale price of $8.82 per share, resulting in net proceeds of approximately $54.9 million. Subsequent to the end of the quarter, we sold an additional 300,000 shares at an average price of $7.67 per share, generating net proceeds of approximately $2.5 million.

During the quarter, we also closed a new round of debt financing with Export-Import Bank of the United States, resulting in approximately $25 million of gross proceeds. We view this as continued support for exporting our differentiated U.S. energy technology while expanding delivery of utility scale power in international markets such as South Korea, through long-term service agreements.

In closing, we remain disciplined in working to strengthen our financial foundation while sharpening commercial execution. We are seeing accelerating momentum in the data center market, where evolving power requirements are creating meaningful near- and medium-term opportunities. Our priority is converting this pipeline of opportunities and driving operational leverage through higher utilization of our Torrington facility. As previously outlined, we are targeting future achievement of positive adjusted EBITDA once our Torrington facility reaches an annualized production rate of 100 megawatts per year.

At the same time, we are maintaining balance sheet strength through capital-efficient financing structures, including our arrangements with XM and our collaboration with SDCL.

I will now turn the call over to the operator to begin Q&A.

[Operator Instructions] Your first question comes from the line of Dushyant Ailani with Jefferies.

I just wanted to touch on that 1.5 gigawatts of proposals that you have submitted. Could you walk us through what the next steps would look like before we can potentially see a project being added to backlog?

Yes, Dushyant, thank you very much for that question. As it relates to backlog, just to clarify our position on that, everything that's in our backlog are firm committed orders before it goes into backlog. So even upon a project award, we would not move it to backlog until such time that we've finalized all of the contracts.

So from the submittals that we've made, what the team is doing now is going through finalizing technical details, working through initial considerations around the contract and trying to work with those customers to advance it to full contract negotiation and ultimately, contract closure. We think that the opportunity that we have around that set of projects really starts to materialize over the coming quarters. But the team is in active negotiations on all of those as we speak.

Understood. That's helpful. And then, maybe also kind of touching on the MOU with Inuverse, could you talk about the key milestones there to think about that as well on how that kind of converts to a definitive agreement?

Sure. So as we discussed, one of the key milestones which actually been solidified and lining up the land that's now done. And so now the next phase of that is really working through the offtakers and who's going to be part of that site in Korea. So for us, we will begin to be part of designing architecture and planning around the power delivery for that site. Working collaboratively within Inuverse.

Your next question comes from the line of [ Jason Tuchen ], Canaccord Genuity.

In the prepared remarks, you talked about the percentage of sales pipeline from data centers sort of doubling over the past year. Specifically as it relates to the partnership with SDCL, can you talk to the experience they bring to the table, how that changes the math in terms of the types of projects you're exploring and potentially time lines for when those could move forward?

Yes, for sure, Jason, thank you. So if you think about SDCL, SDCL has private equity firm or really an infrastructure fund, you can think about them that way. Today, they own multiple gigawatts of projects. Today that they run and operate as an infrastructure provider for that. SDCL believes very strongly in delivering sustainable power generation projects on a distributed basis.

So what they bring is not only the opportunity from a financial investment standpoint, but also just their experience in delivering large-scale infrastructure projects and being part of running and maintaining those. And so as we think about our way in which we deliver projects, our ability to run and maintain remotely, provide service wrappers around that. We think the combination between us and SDCL is very strong, and we're aligned in terms of what we want to be able to deliver to customers.

Okay. Great. That's very helpful. And then just as a quick follow-up. The run rate at Torrington was a bit lower in Q1 than it was in Q4. Can you just speak to some of the puts and takes there? I mean, how should we think about the gain factors and time line getting closer to that 100-megawatt target?

Sure. Jason, and thanks for joining the call. So really just seasonal around Q1, it was a little bit lower than where we were in Q4. Today, we're targeting a current run rate in the 40, 41-megawatt run range -- run rate -- I'm sorry, range. But as Jason described, we get traction on new commercial opportunities. We will look to increase that run rate and as I discussed in the remarks, we're still targeting positive adjusted EBITDA when that run rate achieves 100 megawatts.

Your next question comes from the line of Manav Gupta with UBS.

I actually had just one question. Can you talk about the benefits of absorption chillers, how it makes the full offering more competitive? What it does to the overall efficiency of the system, if you can combine your fuel cells with absorption chillers versus like a simple cycle gas turbine or a combined cycle gas turbine. If you could talk around those dynamics, I'll be very grateful.

Thank you very much for the question. If you go back to Page 8 in our presentation, what we tried to do there is really lay out a very straightforward example of the benefits of leveraging absorption showing.

When you think about power usage being 20% to 30% going towards cooling, our ability to deliver absorption chilling by leveraging the thermal properties of our platform, which is the ability to deliver high-grade steam and integrating with steam efficient absorption chilling adds to the efficiency of actually delivering a coin solution, you can pick up not only additional cooling capabilities but reduce the power required to effectively increasing the PUE of that data center.

And just taking a simple example, if you think about a 100-megawatt data center today, where maybe 69.5 megawatts are going toward IT load. By leveraging absorption chilling, you can increase the amount of power going to the IT load. And if you think about the offset between delivering absorption chilling, the CapEx required around that, but the operational efficiencies and pickup and reduction of power and the example that we're showing here, you pick up about $127 million in incremental value over that 20-year period.

So we think that's a really strong value proposition. And the capability to do that is inherent in the platform. So I think as power density and heat continue to increase, add a bigger focus on delivering more compute power to the racks, absorption chilling becomes a very complaint opportunity for data center customers. And as a company, we have demonstrated our ability to do that.

We've delivered absorption chilling solutions. And if you just think about the core capability that we need to have there, that's actually the recovery and delivery of that heat. So if you go beyond just even look at what we've done in terms of absorption chilling, if you look at our -- we've got solutions today where we're delivering district heating or where we're delivering steam to an entire steam loop, providing steam across the industrial complex, really showing our capabilities in this area. And so we think that we have a unique advantage to really deliver a strong value proposition via absorption chilling.

Your next question comes from the line of Ryan Pfingst with B. Riley.

For the 1.5 gigawatts of proposals delivered in 1Q, could you break that down a bit by geography or perhaps average project size?

Yes. So the vast majority of those projects are weighted toward the U.S. market. And they range across customer types from hyperscalers to colocation developers, infrastructure players, also real estate developers and power land developers, if you think across the whole opportunities that we're talking about.

And the average sizes for these typically are in the 50 to 300-megawatt type range when you think about that as a per facility. So you might have larger sites, but when you think about really powering a number of sites at a particular location. And as those data centers scale their capacity, we're seeing the building block sizes match very nicely to our scalability.

Got it. Appreciate that, Jason. And then with the two carbon capture modules expected to ship next month, can you talk about the next milestone to look out for there?

Yes. So we'll ship the modules to Rotterdam and ExxonMobil mobile is completing the work that they need to do and they're in at the Esso refinery there. And so the team will go through an integration process, and we're actually setting up the platform to be able to capture the flue gas directly from the Esso refinery and ultimately, upon completion of that work, we'll be demonstrating our ability to directly capture carbon from the point source while simultaneously producing power, hydrogen and thermal energy, and we think the combination of being able to deliver those three incremental value streams.

And certainly, the efficiency that comes from being able to capture directly at the point source gives us an opportunity to deliver what we ultimately believe will be a very compelling low cost of capture in addition to the fact that one of the other things that this demonstration will show is something that's very difficult for other carbon capture technologies to do and that's to actually capture carbon from lower CO2 concentration streams.

So we start to get to 6%, 8%, 12% streams of carbon. It becomes a lot harder to capture that CO2, and we're going to demonstrate how efficiently and effectively we can do that. So this demonstration will show those two things, we think, quite well. the simultaneous production of three revenue streams and ability to capture CO2 and a low CO2 concentration stream.

Your next question comes from the line of Colin Rusch with Oppenheimer.

Can you talk a little bit about the modular design you're working with on some of these data centers, the building blocks that we can think about and how leverageable this first award will ultimately be in terms of being able to drive a template for other customers to use for building out similar type of facilities.

Colin, thank you for your questions. So our building block size is a 1.25-megawatt building block size. And as we look to deploy larger sites, we pair those and you can think about it in a 2x2 configuration. So we're delivering 2.5 megawatt blocks essentially to customers. And so if you think about what a data center is ultimately trying to do is they want to match not only the power they need for compute, but the power they need for the overall facility.

And as we just talked about, if they leverage our absorption chilling capabilities, they'll actually need less power. And then as that data center scales, our ability to scale in lockstep with that data center customer, we think, gives us an advantage. So if you think about -- take a 100-megawatt data center, the next block of power they need is probably not another 100 megawatts, maybe it's more like 20 or 50. And so our modularity gives us the ability to match exactly to the power needs that, that data center customer has.

In addition to that, as we think about the value proposition that we offer overall, not only in terms of accelerated time to power, we've demonstrated our ability to deliver infrastructure grade scalability across our deployments that we have today. But we think that we also offer two additional really compelling things. Ultimately, the ability for that customer to transition to DC when the market moves that direction. And the fact that our building block is 1.25 megawatts and rack sizes are going to a megawatt. That's a perfect alignment with our building block. And the whole goal there is actually to reduce the number of products needed, the number of connection points, the number of piping and wiring and other things that are required to make that data center operates.

So that match ability with our platform at 1.5 megawatts is really compelling. And then the other piece is just around our ability to really provide not only that capital preservation but regulatory resilience. So as you think about changing regulatory environments, our low emissions profile our lack of SOx, NOx and other particulates is the fact that we operate at near silent. And our platforms are deployed, carbon capture ready. The ability to ultimately take advantage of that and deliver that to a customer when they're ready, we think, puts us in a really nice position.

And in terms of leveraging we think that the initial commercial win successfully deploying and delivering power to the data center customer, we think will serve just as yet another proof point of our ability to deliver utility scale, distributed power generation and now we'll have a reference, if you will, of a data center customer, and we think that, that's ultimately really leverageable by our sales team and the other customers that they're working with to close transactions.

And then just turning to the operational side. It looks like you guys are set up for a pretty substantial amount of operating leverage as you scale revenue. Can you just talk about what other elements you need for the organization to really meet the opportunity that you see coming on the data center side?

Colin, thanks for joining. So yes, as you mentioned, we are set up for scale. And as I said in my remarks, as we get closer to 100 million production volume, we get to adjusted EBITDA positive, but also, as you -- as Jason talked about in his remarks, as you look at how we scale beyond 100 megawatts, we have plans in place to expand Torrington to at least 350 and then plans beyond that. And we've allocated a range of capital this year to begin that with long lead items. So as an example, we're installing a high-capacity tape caster. So that's an example of what is going into the factory today.

But also what we've talked about is essentially a hub-and-spoke model to really optimize Torrington to bring final assembly and conditioning facilities closer to where our customers are, and we'll gain a lot of leverage from that by having by having lower operating costs and lower transportation costs to the company or to the customers and then also being able to localize certain activities. This is a model that we followed in the past with the activity that we've done in Korea and Germany. So those are a few examples that I point to.

Your next question comes from the line of Noel Parks with Tuohy Brothers.

I just had a couple. And I was wondering if you could maybe talk about what you're seeing in your contract negotiations overall since you said so much of your pipeline is the data center business. I was wondering, in particular, if there are any differences on service terms with this customer base compared to historically, either in terms of how willing they are to go into the service agreements with you whether they block at all on pricing or whether they're sensitive to duration. So anything like that would be really interesting.

No, thank you for the question. So as we have the conversations with data center customers, if we just focus on that for a moment, we are not seeing resistance to service agreements. I mean if you think about their core business, they want to deliver data center compute to their customers. They're not necessarily looking to be in the business of managing generation assets.

And one of the benefits of our platform is the fact that we can and we do run and operate the platform remotely. And we -- our service wrapper includes all of the service and maintenance, as well as the repowering of those modules as part of our service agreement. So we're not seeing any resistance to that. We are having conversations with customers around duration as customers really try to balance between how they lay out their full architecture and continue to think about when grid connections might be available? And then how does that ultimately play into the architecture that gets deployed.

So in a pure behind-the-meter scenario where grid connection may be years out or more, they really like to think about, okay, well, what does that mean in terms of the power need once that grid connection becomes available? And if that grid connection would even be to the level of power that they would need for data center anyway. So what the conversation of having about is how does the grid come along, we operate in a parallel way they look at the grid as a way to get incremental power or even perhaps serving as part of the backup architecture for the data center. But -- so it's more of an integration conversation as opposed to a either or conversation that we're having with our customers.

Great. And you're talking about sort of the horizon of 100-megawatt capacity at Torrington and ultimately seeing a path to 350-megawatt capacity. And with the data center is so strong, it sort of feels like there's kind of an inevitability or maybe an unusual degree of visibility to very strong growth trends.

I just wonder, is there any interest on your part or from parties approaching you on the financing side, about maybe securing that financing? I mean, maybe not pulling the trigger on it in terms of execution. But for example, an infrastructure fund or something like that, being willing to come in at this point and say we -- it's really likely your demand is going to bring you to that capacity and can we set up what that might look like now even if only conditionally. So I just wondered about that because like I said, the visibility seems pretty good.

Hi, Noel, this is Mike, and thanks for that question. Yes. So as we've laid out, we have a very strong commercial pipeline around data center opportunities. We talked about a gigawatt and a half of recent proposals, the company is doing a lot of planning around these opportunities. I talked about the expansion in Torrington, the 350 megawatts, and then Jason's remarks, talked about additional potential expansion, 500 megawatts to 1 gigawatt beyond the Torrington factory.

So as part of our planning, we are planning for financing for this as well. Jason said in his remarks, as we get closer to final investment decisions, we will have more to say around capacity expansion and potentially financing that goes along with that.

That concludes our question-and-answer session. I will now turn the call back over to Jason Few for closing remarks.

Thank you, Tiffany. Thank you, everyone, for joining today's call. In summary, the first quarter reflects progress in several key areas: robust revenue growth, strengthened operating discipline, improve liquidity and continued advancement in commercial and operational priorities. More importantly, these results reinforce a broader point. We've already proven distributed baseload power works, which changing is who needs it, how urgently and at what scale. We remain committed to disciplined execution converting the pipeline thoughtfully, advancing vital programs like Rotterdam and continue to scale our platform for the long term.

Before we conclude, I want to thank our team members, customers, partners and shareholders for their continued support. The team at FuelCell Energy remains focused on executing our strategy, advancing our technology and delivering reliable, resilient power solutions that strengthen energy infrastructure around the world. Thank you again for your time today, and we look forward to updating you on our progress next quarter.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Hello, and welcome to the FuelCell Energy Fourth Quarter of Fiscal 2025 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Michael Bishop, CFO. You may begin.

Thank you, operator. Good morning, everyone, and thank you for joining us on the call today. This morning, FuelCell Energy released our financial results for the fourth quarter and fiscal year 2025, and our earnings press release is available in the Investors section of our website at www.fuelcellenergy.com.

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 2 hours after we conclude.

Before we begin, please note that some information that you will hear or be provided with today consists of forward-looking statements within the meaning of the Securities and Exchange Act of 1934. Such statements express our expectations, beliefs and intentions regarding the future and include statements concerning our anticipated financial results, plans and expectations regarding the continuing development, commercialization and financing of our fuel cell technology, our anticipated market opportunities and our business plans and strategies.

Our actual future results could differ materially from those described or implied by such forward-looking statements because of a number of risks and uncertainties. More information regarding such risks and uncertainties is available in the safe harbor statement in the slide presentation and in our filings with the SEC, particularly the Risk Factors section of our most recent Form 10-K and any subsequently filed quarterly reports on Form 10-Q.

During this call, we'll be discussing certain non-GAAP financial measures, and we refer you to our website, our earnings press release and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures. Our press release and a copy of today's webcast presentation are available on our website under the Investors tab. For this call, I'm joined by Jason Few, our President and Chief Executive Officer. Following our prepared remarks, the leadership team will be available to take your questions.

I'll now hand the call over to Jason for opening remarks. Jason?

Thank you, Mike, and good morning, everyone. Thank you for joining us on our call today. Our fourth fiscal quarter closed a year of meaningful progress for FuelCell Energy. Starting around 12 months ago, we began a series of thoughtful restructuring measures to sharpen our focus and strengthen the fundamentals of our business. Through this series of tough decisions to streamline and focus our organization, today, we are operating with greater discipline, lower cost and strategic clarity.

We are further along on our path to profitability. The work is not finished, but we believe we are on the right track. During this time, the surrounding market environment has undergone significant change as well, presenting what we see as one of the greatest business opportunities of our generation. The demand for more power to accommodate data centers, industry and communities. We believe that demand plays directly to the strength of our technology, clean, resilient, near-silent continuous power.

We continue to focus on converting our pipeline into executed contracts, scaling our manufacturing capacity at our Torrington facility and advancing product improvements that differentiate us from our competitors. We are committed to this work, and we are doing it with urgency and with clear focus. That focus is delivering distributed always-on, low-emission power through our carbonate fuel cell platform. Our technology is proven at scale, and we are aligning our business around this singular strength. As you all know, demand for power is accelerating quickly, driven by the exponential growth of AI, data centers and digital infrastructure that is outpacing the capabilities of the existing grid. This demand is reshaping the market, and it requires solutions that can provide clean, reliable power where it is needed. The need is clear, urgent and investable. With decades of operating experience and a differentiated electrochemical platform, we believe we are well positioned to meet this need and successfully compete for the opportunities emerging in this rapidly growing market segment.

Please turn to Slide 4. As you view our fourth quarter and full fiscal year results, please keep the following 5 points in mind. Number one, we are focused on our data center strategy. AI-driven demand is reshaping power requirements across the data center and digital infrastructure ecosystem. We are actively engaged with participants across the ecosystem to make them aware of our capabilities and that we are prepared to provide utility scale, reliable and cost-competitive clean power for these types of energy-intensive applications. With our collaboration with Diversified Energy, the potential future collaboration with Inuverse announced earlier this year and a growing pipeline of potential data center opportunities in the U.S. and Asia, we believe we have strong momentum heading into 2026.

Number two, we are scaling manufacturing capacity. We believe that our path to profitability runs through higher utilization at our manufacturing facility in Torrington, Connecticut. As we increase production, we expect our cost structure to become more efficient, and we expect this to translate into positive adjusted EBITDA once we reach an annualized production rate of 100 megawatts per year. Entering fiscal year 2026, our focus is on margin expansion, driven by disciplined operations and greater production throughput. I will provide additional detail on our scalable manufacturing capacity later in the presentation.

Number three, we are building financing capacity to enable growth. We believe that the $25 million financing provided by EXIM to support our GGE project in Korea demonstrates a model that can be used for future projects, both in Korea and worldwide. The current U.S. administration has expressed its intention to use EXIM to support the global adoption of American technologies like ours, and we believe this financing signals EXIM's belief in our utility scale power generation technology. We are pleased to have EXIM as a financing partner. We are entering 2026 with a strong balance sheet, and we expect to achieve financing flexibility through proven models like the EXIM financing and other financing alternatives.

Number four, we believe we are positioned to win in emerging power markets. Policy certainty under the One Big Beautiful Bill Act improves project economics, supports long-term adoption and allows current and potential customers to make investment decisions. Furthermore, our core carbonate platform provides reliable, clean power that can be dispatched when needed and can be situated close to users, an advantage for customers prioritizing dependable energy, lower emissions and flexible site options for crucial operations.

And number five, we are entering fiscal year 2026 with strong momentum. Commercial momentum, policy clarity and an expanding opportunity set gives us confidence. Our success in fiscal year 2026 will depend on execution, converting our pipeline and executed contracts and backlog into revenue with the discipline and focus we've been building across the company.

Transitioning to Slide 5. We succeed when we stay focused on solving problems for our customers. Customers turn to us when they need to pursue business growth without compromise and when power constraints threaten time lines, economics or operational reliability. Increased demand is not the only challenge they encounter. There are numerous obstacles facing customers today that can hinder their economic growth. Utility interconnections now routinely take 5 to 7 years or more and new substation builds follow a similar time line. Traditional gas turbines face 3 to 5 years of procurement and construction before they can deliver behind-the-meter power. Our carbonate fuel cells avoid these bottlenecks. They can be deployed without requiring new high-voltage interconnections, can be brought online more quickly and can deliver a cost of energy comparable to turbines and other engine alternatives with reduced permitting risk.

These delays are further compounded by emission restrictions and limited site availability. Our core carbonate platform addresses those issues directly. They produce virtually no NOx or SOx and offer unique carbon capture capability. In addition, our 1.25-megawatt power blocks allow customers to scale capacity as their needs grow. Traditional generation projects often trigger resistance, adding years of uncertainty. Our distributed carbonate fuel cell platform sidesteps these issues. It requires a smaller footprint, operates quietly and can operate near the point of use, which may help to mitigate opposition and accelerate time to power.

Let's move to Slide 6. These challenges and the way our customers need to solve them shape how we operate. We have concentrated our efforts on our carbonate fuel cell platform because it not only is ready now, but also directly addresses the constraints I just outlined. It is proven across commercial deployments of varying scale, and we continue to refine it through real-world operating experience. Our platform also benefits from a strong U.S. policy tailwind, including the reinstatement of the investment tax credit and incentives for carbon capture, an important point of differentiation compared to other generation technologies. And while we are doubling down on what is a commercially ready platform, we are also investing selectively in innovations that we believe will better position us for what comes next. These emerging technologies have the potential to drive the next phase of our growth and strengthen our long-term competitiveness.

Now on to Slide 8. I wanted to highlight one example of the momentum we are carrying into 2026. We have established FuelCell Energy as a leading partner in South Korea's growing fuel cell energy economy, the largest in the world. Today, we have more than 100 megawatts of power projects in South Korea in our backlog with another 100 megawatts under MOU. Our ongoing work with GGE continues to advance, supported by the $25 million in new EXIM financing for the next phase of the project, including additional module shipments and service. We also see a clear path for additional repowering opportunities, and we are proud to contribute to Korea's evolving energy landscape.

Let's go to Slide 9. As we look ahead to fiscal year 2026, we continue to see a compelling case for fuel cells in data center applications, grid constraints, rising workloads and pressure to manage energy costs are all increasing demand for reliable, efficient and scalable on-site power. Our carbonate fuel cell platform addresses these needs directly by delivering baseload reliability, modular scalability and meaningful permitting advantages. And as data centers push more computational power, our integrated absorption chilling and heat offtake could help manage thermal load while maintaining system performance.

It is our assessment that our carbonate fuel cell platform additionally offers extended stack longevity, reliable biogas functionality, minimal performance degradation and sophisticated containment management. These features collectively facilitate cost-effective carbon capture solutions, particularly in large-scale applications. Additionally, as NIMBY concerns grow and data center operators are under pressure to expand, our fuel cells offer a low-profile clean solution that provides greater flexibility for siting that can help them move forward faster amidst community concerns.

Let's move to Slide 10. With this opportunity in front of us, we also believe we have the manufacturing foundation to meet it. Once we reach an annualized production rate of 100 megawatts per year at our Torrington facility, we expect to achieve positive adjusted EBITDA. Today, we are roughly 40% of the way there, and our backlog continues to build. Looking further ahead, we believe that the Torrington facility could accommodate an estimated annualized production capacity of up to 350 megawatts per year with additional capital investment in machinery, equipment, tooling, labor, outsourcing of certain processes and inventory.

As we enter the new year, we are executing with focus and momentum. We are focused on advancing meaningful opportunities in the data center market, scaling a manufacturing platform built for utility level deployments and moving steadily toward profitability with operational discipline.

With that, I'd like to turn the call over to our CFO, Mike Bishop.

Thank you, Jason, and good morning to everyone on the call today. Overall, we are pleased with the progress made during the year with revenue expansion, largely driven by repowering activities in Korea, expense reductions as a result of our restructuring plans implemented in fiscal year 2025 and balance sheet strength as a result of spending reductions and financing activities.

Let's review the operating performance for the fourth quarter and fiscal year 2025 shown on Slide 12. In the fourth quarter of fiscal year 2025, we reported total revenues of $55 million compared to revenues of $49.3 million in the prior year quarter, representing a 12% increase. We reported a loss from operations in the quarter of $28.3 million compared to $41 million in the fourth quarter of fiscal year 2024. The loss from operations in the fourth quarter of fiscal year 2025 was impacted by a noncash impairment expense of $1.3 million as a result of our previously announced restructuring plan.

The net loss attributable to common stockholders in the quarter was $30.7 million compared to a net loss attributable to common stockholders of $42.2 million in the fourth quarter of fiscal year 2024. The resulting net loss per share attributable to common stockholders in the fourth quarter of fiscal year 2025 was $0.85 compared to $2.21 in the prior year period. The decrease in net loss per share attributable to common stockholders is due to the benefit of the higher number of weighted average shares outstanding due to the share issuances since October 31, 2024, and the decrease in net loss attributable to common stockholders.

Net loss was $29.3 million in the fourth quarter of fiscal year 2025 compared to net loss of $39.6 million in the fourth quarter of fiscal year 2024. Adjusted EBITDA totaled negative $17.7 million in the fourth quarter of fiscal 2025 compared to adjusted EBITDA of negative $25.3 million in the fourth quarter of fiscal year 2024. Now shifting to the full year results. In fiscal year 2025, we reported total revenues of $158.2 million compared to revenues of $112.1 million in the prior year, representing a 41% increase. This increase was largely driven by module deliveries to Gyeonggi Green Energy Company Limited or GGE, under our long-term service agreement. During fiscal year 2025, we delivered a total of 22 modules to GGE.

We reported a loss from operations for the year of $192.3 million compared to $158.5 million in fiscal year 2024. This increase is mainly attributable to noncash impairment expenses of $65.8 million and restructuring expenses of $5.3 million incurred in fiscal 2025, resulting from our previously announced restructuring plans. The net loss attributable to common stockholders for the year was $191.1 million compared to a net loss attributable to common stockholders of $129.2 million in fiscal year 2024. The resulting net loss per share attributable to common stockholders in fiscal year 2025 was $7.42 compared to $7.83 in the prior year.

Adjusted net loss attributable to common stockholders, which excludes the noncash impairment expenses, restructuring expenses and certain other noncash items was $4.41 compared to $6.54 in fiscal year 2024. Net loss was $191.4 million in fiscal year 2025 compared to net loss of $156.8 million in fiscal year 2024.

Adjusted EBITDA totaled negative $74.4 million in fiscal year 2025 compared to adjusted EBITDA of negative $101.1 million in fiscal year 2024, a reduction of 26% and over $25 million. We believe this improvement in adjusted EBITDA and adjusted net loss attributable to common stockholders reflects the early benefits of our cost savings actions and our sharper focus on our core carbonate platform under our restructuring plans. Please refer to the appendix in the earnings release, which provides a reconciliation of the non-GAAP financial measures, adjusted net loss per share attributable to common stockholders and adjusted EBITDA.

Next, on Slide 13, you will see additional details on our financial performance during the fourth quarter and backlog as of October 31, 2025. In the graph on the left-hand side of the slide, revenue is broken down by category. Product revenues were $30 million compared to $25.4 million in the comparable prior year period. This increase was primarily driven by revenue recognized under the company's long-term service agreement with GGE for the delivery and commissioning of 10 fuel cell modules.

Service agreement revenues increased to $7.3 million from $5.6 million. The increase in service agreement revenues during the 3 months ended October 31, 2025, was primarily due to revenue recognized under the company's long-term service agreement with GGE. Generation revenues increased to $12.2 million from $12 million, reflecting higher output from plants in the company's generation operating portfolio during the quarter compared to the prior year period. Advanced technology contract revenues decreased to $5.5 million from $6.4 million.

Now looking at the right-hand side of the slide, I will walk through the changes in gross loss and operating expenses. Gross loss for the fourth quarter of fiscal year 2025 totaled $6.6 million compared to gross loss of $10.9 million in the comparable prior year quarter. The decrease in gross loss for the fourth quarter of fiscal year 2025 was primarily related to decreased gross loss from generation revenues, product revenues and service agreement revenues, partially offset by reduced gross margin on advanced technology contract revenues during the fourth quarter of fiscal year 2025.

Operating expenses for the fourth quarter of fiscal year 2025 decreased to $21.7 million from $30.1 million in the fourth quarter of fiscal year 2024, primarily due to a $6.2 million decrease in research and development expenses, partially offset by noncash impairment expense of $1.3 million. Administrative and selling expenses decreased to $15.2 million during the period from $15.9 million during the fourth quarter of fiscal year 2024, primarily due to lower compensation expense resulting from the restructuring actions taken in September and November 2024 and June 2025.

Research and development expenses decreased to $5.5 million during the fourth quarter of fiscal year 2025 compared to $11.6 million in the fourth quarter of fiscal year 2024. This decrease was primarily due to lower spending on commercial development efforts related to our solid oxide power generation and electrolysis platforms and carbon separation and carbon recovery solutions. On the bottom right of the slide, you will see that backlog increased by approximately 2.6% to $1.19 billion compared to $1.16 billion as of October 31, 2024, primarily resulting from the additions of the Hartford project and the long-term service agreement with CGN-Yulchon Generation Company Limited or CGN, partially offset by revenue recognition during the year.

Slide 14 is an update on our liquidity position. As of October 31, 2025, we had cash, restricted cash and cash equivalents of $341.8 million. During the 3 months ended October 31, 2025, approximately 16.4 million shares of the company's common stock were sold under the company's amended open market sale agreement at an average sale price of $8.33 per share, resulting in net proceeds to the company of approximately $134.1 million. Subsequent to the end of the quarter, approximately 1.6 million shares of the company's common stock were also sold under the amended open market sale agreement at an average sale price of $8.37 per share, resulting in net proceeds to the company of approximately $13.1 million.

Additionally, after the quarter ended, we announced a new $25 million debt financing transaction with the Export Import Bank of the United States or EXIM, marking a continued commitment from EXIM to support the company's growth ambitions to deliver utility-grade power in international markets such as the collaboration with GGE in Korea.

In closing, we continue to take disciplined steps to strengthen our financial foundation while focusing on a growing set of new commercial opportunities. Our strategy centers on commercial momentum with the acceleration of data center opportunities, operational leverage through utilization and expansion at our Torrington facility with the goal of achieving positive adjusted EBITDA results while maintaining balance sheet strength through capital efficiency via financing structures, including frameworks like those utilized with EXIM.

I will now turn the call over to the operator to begin Q&A.

[Operator Instructions] Your first question comes from the line of Dushyant Ailani with Jefferies.

One on -- just wanted to kind of think about how do you guys frame 2026 growth outlook? Do you think there's a potential to bake in any data center opportunity in 2026? Or do you think it's more of a 2027 and beyond story?

Thank you for joining us today, and thank you for the question. As we look at 2026 and the overall data center opportunity, today, as we said, we've got hundreds of megawatts of pricing proposals out across the whole digital infrastructure ecosystem, and that ranges from hyperscalers, utilities, power land developers, infrastructure players and sponsors, so kind of across the whole gamut of opportunities. And each of these opportunities are on their own time line from a development and getting to an FID or a closure, but we certainly believe that those opportunities will present in 2026 for the company and be part of our growth story.

Lovely. And then I just wanted to kind of talk about the capacity expansions. I think you said that you could increase the capacity to 350 megawatts, right? How long would it take to scale once you make that decision? Just trying to think that through.

Yes. So if you think about where we are today, we've always talked about our ability under our existing construct and what's there to do 100 megawatts of capacity. We're at 41 megawatts today run rate. So our ability to get to 100 megawatts is really no real new capital investment to make that happen. What we talked about on the call today is getting to 350 megawatts. That's still in that same footprint of our existing Torrington facility. So although there will be some capital investment, we think it's fairly modest to get to the 350 megawatts, and we think that we can do that in a pretty short cycle window. And our expectation is that scale can happen in the time frame of less than 18 months or so to get that build-out and get it done.

The next question comes from George Gianarikas with Canaccord Genuity.

So maybe just to pull that through a little bit with regard to data center traction. Can you just sort of maybe go into a little bit more detail as to how the conversations with your DPP partners are going? Like any bottlenecks to maybe signing a deal and where you see maybe the most opportunity over the next 6 to 12 months?

Yes, George, thank you for the question. So I think maybe the way that I would answer that is I break it up into maybe 2 buckets. If you look at the work that we're doing with Diversified Energy, that's really our play or angle to provide a powered land solution to customers because they bring gas, we bring power. And so it's all about offering whether it's a real estate developer or if it's another data center developer or even a hyperscaler that's looking to take advantage of that opportunity across the markets where Diversified has gas infrastructure, we're well positioned to deliver against that opportunity set.

We don't see any constraints in our ability to deliver against that because we have really good knowledge around what the gas position is, and we certainly know what our position to deliver power is from a manufacturing capacity standpoint.

With respect to kind of the broader data center opportunities and the conversations we're having, it cuts across some direct conversations with hyperscalers, also with utilities. We also are having, like I said, those conversations with infrastructure players and sponsors as an example. And what we're finding in those conversations is really a strong interest in our distributed generation platform. Time to power is definitely a major thematic and one in which we can meet. And thirdly, we're seeing really strong interest in what I would call the benefits of our level of modularity, meaning that our 1.25-megawatt power blocks gives us the ability to scale with those data center customers as they scale.

And as you know, it's not linear growth necessarily in the way those data center scale. So having the modularity is really important. And the other big area that we're seeing is because of our operating temperature of our platform, we're seeing really strong interest to take advantage of our ability to integrate with steam absorption chilling to provide a really efficient way of cooling the data center. If you think about about 1/3 of the load in the data center goes overhead. So if we can -- in a 50-megawatt data center, I think we can roughly take about 5 megawatts or so of power load off that requirement, that's material. And that's very attractive to those customers, and those are the kind of conversations we're having.

And maybe as a follow-up, any update on what's happening with ExxonMobil and the carbon capture opportunity there?

Yes. So on Exxon, we've completed the construction of the modules that are set to be shipped to Rotterdam in support of the demonstration in Rotterdam with Exxon at their Esso refinery and which will demonstrate capturing 90-plus percent CO2 while simultaneously producing power and hydrogen, which is unique. No other technology can do that. And it's our expectation in the latter half of 2026, that project will be up and running, and we'll be demonstrating that technology. And upon successful demonstration of the technology, which we have a lot of confidence in, we will certainly work with Exxon to think about how to go after and pursue commercial opportunities with carbon capture.

The next question comes from Saumya Jain with UBS.

So what are the big changes, if any, that you've seen across the South Korean market over the past year? And what's your outlook for that market specifically heading into 2026? And then on the data center side, specifically, how are you seeing the South Korea market or Asian market in general vary from the U.S.?

Yes. Thank you for the question. In Korea, we obviously are seeing really strong momentum across our opportunity to drive repowering on our existing installed base there, over 100 megawatts of installed base. So we're fully taking advantage of that, and we're seeing strong demand for that. We think the Korea market, which continues to be the largest fuel cell market in the world, will remain attractive. As you know, we announced an MOU earlier with Inuverse to work with them on what they anticipate or trying to do will be the largest data center in the Korea market. And we're -- our efforts with them, we think, will help seed their growth in the market from a data center perspective.

I think if you think more broadly about Asia and outside of the U.S., I think you're seeing very strong interest and demand in data center growth. And we think that the Asia market in its spots between markets like Korea and Singapore and Japan and Malaysia, you're going to see really strong data center growth, and we're excited about the opportunities we're having in those -- or conversations we're having in those markets.

Great. And then could you provide more color on any carbon capture opportunities you are pursuing with other players like the one with Exxon or any other similar partnerships?

Sure. So maybe you think about it in 2 ways. There's the work that we're doing with ExxonMobil, which is specifically focused on capturing carbon from external sources. So think about that refinery in Rotterdam, where we're going to capture carbon that is being emitted today from that refinery, right? And in that effort, what we're doing in terms of capturing that external carbon, our commercial activities in that particular application will really start to take full post our demonstration of this technology with Exxon.

Outside of that, though, we have -- you can think about it the way we talk about it internally is carbon recovery, and that's our ability to recover the carbon from the fuels that we use to produce clean electricity. And there, we're having those conversations actually with many of these data center customers who are still very committed to decarbonizing. And so our ability to provide a very low emission profile with no SOx, NOx or other particulates operating at a very low decibel level, all the things that you're hearing that are causing a lot of problems for these data center customers today.

We address with our technology. And then we have the extra added benefit of being able to recover the carbon and then we can do lots of different things with that carbon up to providing it and selling it to an industrial gas company to -- if we're a data center that's somewhere near a CO2 pipeline, that CO2 could ultimately be sequestered or used in some other way. And so we're actively engaged in those conversations with our industrial customers as well from a recovery standpoint.

The next question comes from Ryan Pfingst with B. Riley.

Maybe a follow-up on the data center discussions in the U.S. Is it fair to say that customer readiness is the main hurdle for FuelCell to secure a data center customer at this point? Or are there other factors we should be thinking about?

I don't really think it's a customer readiness issue, Ryan. What I would say is that it's a shift in the way these data center customers have procured power throughout their history. And they've been able previously to procure power from the grid, and that model has worked for them. it's the shift in the model that requires them to think about on-site generation. And as they shift their business model, they're being thoughtful about the way to do that. There's still thoughts around going completely behind the meter or running grid parallel. We're comfortable in operating in both of those environments and have done that and can demonstrate our capabilities in that regard.

But I don't think it's a customer readiness issue. It's -- I think customers have now bought off on the fact that if they're going to build new data centers and they want to build those new data centers now, they're going to need on-site generation to meet that demand.

Appreciate that. And then shifting over to South Korea. Can you talk about your expectations around timing for the Inuverse MOU to the extent you're able to when we might see that convert to a firm order or even first revenue there?

Yes. I won't give specific on timing, but we think as we go throughout 2026, we'll have more to say about that opportunity as it's developing.

The next question comes from Jeff Osborne with TD Cowen.

Just maybe 2 lines of question on my side. One is on the data center side. Is there anything, Jason, that you need to still develop as it relates to the use case or the application? I'm thinking like loads following or other features relative to hospitals, college campuses, things like that.

Yes. As we think about our solution set to address the data center opportunity, we don't really have anything that we need to develop because our ability to integrate in a microgrid configuration to support load following, whether that be through batteries or super caps, we're very comfortable with being able to do that. As you know, we operate in a number of microgrid configurations today. So that's not a concern for us. And we don't have plans on developing best systems or those kind of things as a company, and there's plenty of choices in the market, and we're going to leverage those market choices to integrate those solutions for customers.

Got it. So if I'm hearing you right, then pricing for data centers should be similar-ish to what you've seen in years past for other smaller applications, given there's no additional equipment?

Yes. I think -- look, I think when we think about what we're offering to these customers, although we aren't going to be the developer, if you will, of the best system, there are instances where we're bringing that full integrated solution to a customer. So the pricing in some of those instances is going to be all inclusive of that. So I think you'll see different pricing based on what the customer is asking us to do. In a straight just deliver power to me scenario, yes, I think you'll see similar pricing of what -- where we've been priced in the past, but we've done a lot of things to improve our cost position. And so we think that we're very price competitive relative to other on-site generation alternatives and that goes across the landscape, including engines.

And maybe just to add on, and I know you know this, Jeff, but with the extension of the investment tax credit this year, that provides pricing strength for us as well. The investment tax credit was extended in The Big Beautiful Bill in July. That goes through at least 2032, and that's a 30% investment tax credit off of the capital cost.

Perfect. Maybe just a quick one for you, Mike, 2-parter, but to expand from 100 megawatts in Torrington to the 350, I think you mentioned, do you have a ballpark of what that would cost? And then I think the ATM is fully utilized. Share count is up, I don't know, 80% or so year-on-year. Is now a period of sort of relaxation on adding capital to the balance sheet and then waiting for the orders to come and then maybe you need to revisit the ATM. Can you just walk us through the cash consumption in fiscal '26 and what it would cost to add capacity and what happens if you get some of these major orders that you're targeting?

Sure. So maybe I'll go in reverse order, and thank you for the question, Jeff. So as far as the balance sheet today, the company is quite comfortable with the cash position that we ended the fiscal year with. We ended with about $342 million of total cash on balance sheet. And then subsequent to the end of the year, we also announced a $25 million facility with EXIM, a follow-on to the facility that we had done with them last year, which is really supporting deployment internationally. And we obviously like those types of structures, and we'll look to do more of that as we do more deployments internationally, but quite comfortable with our current liquidity position as we sit here today.

As far as the expansion, as Jason said and as we included in the deck, we do have plans to expand Torrington up to 350 megawatts. That will obviously be paced by customer demand, but we have completed the planning for that. We are starting steps to enable us to do that expansion and are making capital investments this year. We include in our disclosures in 2026 that we plan to spend between $20 million to $30 million of CapEx, which gets us started on that expansion path. And as we secure additional backlog and go down that path of expansion, we will provide additional color around any additional investments.

I got it. So no need for an ATM for now? Or do you just had a good housekeeping add that, just to be clear on that part.

So as far as the ATM, the company has historically kept an at-the-market sales program on file. I don't anticipate that changing, and we're not going to forecast potential financings beyond what I've already described.

Your next question comes from Noel Parks with Tuohy Brothers.

Talking about the data center market, sort of what we see happening in the broader markets overall is just a little bit more realization of there is some devil in the detail that it seems the market needs to understand just to really understand the pace of the data center rollout and at scale. And so I guess one thing I was wondering, I think during the -- earlier in the call, you mentioned sort of the emergence of NIMBY issues, which is, I think, sort of a fairly new topic in the last quarter or two. And I just wonder if -- or how those issues are coming up in your potential customer discussions. And I'm also interested in particularly with utilities, how some of them are looking ahead to trying to insulate their maybe residential customer base from the cost that they'll probably incur from ramping up power supply to data centers.

Noel, thank you for the question. If you think about the -- maybe I'll start with maybe the NIMBY issue. So what are the things that cause challenges, right? Things that cause challenges are generation platforms that create poor air quality. We do just the opposite, right, because we don't combust the fuel. So that's a significant advantage.

What's the other thing that caused us the challenge? Noise. We operate at a very low decibel level. Think about maybe your air conditioner running at your home, right? So we solve that issue. We're very efficient from a space perspective at 33 megawatts an acre. So we can be very efficient in terms of the power density that we deliver to these data center customers. In addition to that, we do things that help offset even the power demand, like we talked about our ability to deliver absorption chilling, so we can help reduce the amount of power that's needed for that data center.

Beyond that, we talked a little earlier on this call about our ability to do carbon recovery to even further reduce the emission profile of the platform. And that remains very important for many of these data center customers or certainly the offtakers of these data centers. So we think that our platform does a really good job of addressing the NIMBY issue. And in fact, we have examples of our platform being deployed right next to where people live, and it's not an issue. And we think that we can clearly deliver a solution to a data center developer or offtaker that will minimize, if not eliminate those issues that they see from the NIMBY standpoint.

Right, right. But it does lead me to wonder whether there are any advantages regionally in your thinking about pursuing customers. I'm not sure sort of the Connecticut area what the data center demand pickup is looking like there. But just sort of recognizing that you've done so many projects for sort of communities within your fairly close radius. And so is that a possibly positive factor in getting new business?

Look, I think being able to demonstrate to these data center customers where we have deployments close into communities and we don't have community complaints is a real strength. So I don't know that, that's driving just a close-in regional focus for us as our primary focus area, but it's certainly a leverage point for us as we tell our story to those data center customers.

Beyond that, I think when you -- when we think about regionality and advantages across the U.S., we have the ability to take advantage of the ITC, and we think that's a real positive. But in some markets where we are also considered as a platform technology, the equivalent of a Class 1 renewable, we think that just adds to the economic benefit that we can deliver to these customers by deploying our platform. So we think the way in which we've deployed our distributed technology and it's been deployed in urban areas and close-in communities just serves as a great example of a way to do this and not have the consumer backlash.

Great. Great. And just the last one for me, again, sort of about the discussions with potential customers. I'm curious with so many cross currents going on, so many different issues to evaluate, as you talk to utility or hyperscalers say from one conversation to the next, say you're talking with somebody at one point and then a couple of months later, you kind of reconvene and go from there. Are you talking with customers about a pretty stable static set of projects that they have in their sites? Or is it more sort of dynamic and volatile like the conversation is going one direction and then a couple of months later, utility talks about, no, we're thinking about a different region or a different customer type. So I'm just sort of curious whether you're sort of following the same trail with these, and it's just a matter of getting to the endpoint or whether sort of the table kind of keeps getting reset as you progress with these guys?

No, look, I think if you think about at least our experience and you think about a development cycle, as you go through the process, there are always puts and takes that happen throughout that development process. What we are seeing is kind of this episodic or very sporadic kind of activity from the customers that we're engaged with. And we think that as you think about utilities since you talked about utilities directly, I mean, I think the utilities are pretty thoughtful in their planning process and what they want to do. And I think they have tremendous insight to where customers want to be and where they want to develop projects. So I think they've got a pretty good handle on that. And we're working with them to help solve the big constraints they have, which is additional power capacity. They've got constraints around transmission.

I mean if you look at what just happened in PJM, PJM, they just closed their auction. I think it was yesterday, they're sitting at a 14.8% reserve margin, which is like their lowest reserve margin in a decade, right? So the way you're going to solve this problem is with technologies like ours and deploying distributed generation.

Great. Thanks a lot. It's a interesting example. Thanks.

Thank you.

There are no further questions at this time. I will turn the call to Jason Few for closing remarks.

Thank you, Sarah. And for everyone on the call, thank you for joining us today. We look forward to updating you on our progress as we move into calendar year 2026. I wish you all a safe, joyful holiday season and a very happy New Year. Thank you.

This concludes today's conference call. Thank you for joining. You may now disconnect.

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the FuelCell Energy Third Quarter of Fiscal 2025 Financial Results Conference Call. Today's conference is being recorded.

[Operator Instructions]

At this time, I would like to turn the conference over to Mike Bishop, Chief Financial Officer. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us on the call today. This morning, FuelCell Energy released our financial results for the third quarter of fiscal year 2025, and our earnings press release is available in the Investors section of our website at www.fuelcellenergy.com. In addition to this call and our earnings press release, we have posted a slide presentation on our website. The webcast is being recorded and will be available for replay on our website approximately 2 hours after we conclude.

Before we begin, please note that some information that you will hear or be provided today consists 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 include statements concerning our anticipated financial results, plans and expectations regarding the continuing development, commercialization and financing of our fuel cell technology, our anticipated market opportunities and our business plans and strategies.

Our actual future results could differ materially from those described or implied by such forward-looking statements because of a number of risks and uncertainties. More information regarding such risks and uncertainties is available in the safe harbor statement in the slide presentation and in our filings with the SEC, particularly the Risk Factors section of our most recent Form 10-K and any subsequently filed quarterly reports on Form 10-Q.

During this call, we'll be discussing certain non-GAAP financial measures, and we refer you to our website, our earnings press release and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures. Our earnings press release and a copy of today's webcast presentation are available on our website under the Investors tab. For this call, I'm joined by Jason Few, our President and Chief Executive Officer. Following our prepared remarks, the leadership team will be available to take your questions. I'll now hand the call over to Jason for opening remarks. Jason?

Thank you, Mike, and good morning, everyone. Thank you for joining us on our call today. We continue to execute with discipline in our third fiscal quarter, delivering meaningful revenue growth while focusing on expanding our sales pipeline and improving our cost structure. The decisive restructuring actions we implemented in June are already yielding results, lowering costs, sharpening our focus on distributed power generation and positioning us for investment in technologies and partnerships that can unlock future growth.

I want to begin by underscoring what makes FuelCell Energy distinctive. From our headquarters in Connecticut, we have established a global leadership position in electrochemical technology, delivering large-scale, always-on power and advanced emissions management. We believe we see a once-in-a-generation opportunity to shape the transition to a clean energy economy that leverages abundant natural resources and believe we are positioned to play a meaningful role in powering that future.

Today, we live in a world where energy demand is accelerating at an unprecedented pace, driven by the exponential growth of AI, data centers and technology. This is not a distant trend. It is a structural shift reshaping global energy markets today, a world where the existing grid cannot keep pace with these demands, requiring new approaches to provide firm, resilient and clean power, both in the near term and in decades to come.

The need is clear, urgent and investable, a world where we believe FuelCell Energy's people, innovations and proven utility scale distributed power platforms are uniquely positioned to meet these challenges. We bring decades of experience and differentiated technology. In connection with the implementation of our restructuring plan, our strategies and business plans have evolved. At the center is our carbonate power generation platform, the core of our business and the expected engine of our growth.

We believe that broader deployment of this platform is our clearest path to profitability, supported domestically by favorable public policy tailwinds. At the same time, we continue to focus on innovating tomorrow's clean energy technologies and forging blue chip partnerships, concentrating on the innovations we believe have the greatest potential for commercial impact and long-term value creation.

On Slide 5, when it comes to the third quarter, I want you to keep 4 points in mind. First, global power demand is accelerating. Global power demand is rising at an unprecedented pace driven by AI, crypto and the increasing density of servers inside data centers. FuelCell Energy's modular carbonate baseload power technology is a proven, scalable solution available today to meet this demand with reliable, clean, always-on power.

Second, strategic partnerships validate global scale. We believe that our commercial traction and partnerships continue to validate our ability to scale globally. South Korea is our most active international market where we are focused on unlocking commercial opportunities. Under our long-term service agreement with Gyeonggi Green Energy Company Limited or GGE, the operator of the world's largest fuel cell park, we delivered 8 replacement modules to GGE during the third quarter. We expect that this partnership will drive product revenue as we continue to deliver modules through the remainder of fiscal year 2025 and in fiscal year 2026.

During the quarter, we entered into a long-term service agreement with CGN, Yulchon Generation Company, or CGN, a leading independent power producer in South Korea. CGN will purchase 8 carbonate fuel cell modules from us, making a total of 10 megawatts of power, and we will provide long-term operations and maintenance services for that CGN power platform.

Additionally, in the second quarter, we executed an MOU with Inuverse, a developer of next-generation AI specialized hyperscale data centers to explore opportunities to deploy up to 100 megawatts of fuel cell-based power starting in 2027 at the AI Daegu Data Center, which Inuverse hopes to develop into Korea's largest data center. I will speak in more detail about our Korean opportunities on a later slide.

Beyond Korea, we continue to strengthen global relationships. Dedicated Power Partners is our partnership with Diversified Energy and TESIAC, which we formed for the purpose of meeting surging off-grid data center demand by powering these sites with our platforms using Diversified Energy's natural gas and coal mine methane resources.

Our work also continues with ExxonMobil's low carbon solutions, ExxonMobil Technology and Engineering Company and Esso Nederland B.V. to develop a pilot plant utilizing carbon capture technology at Esso's Rotterdam manufacturing complex. We continue to make good progress during the second phase of our commercialization of this technology, while Esso continues to progress build-out of the infrastructure for the pilot plant. Additionally, with Malaysia Marine and Heavy Engineering and Idaho National Laboratory, we are advancing with capital efficiency, our solid oxide electrolyzer technology. We are proud of our existing partnerships and look forward to further opportunities for our business.

Third, U.S. policy tailwinds. Domestic policy continues to create meaningful tailwinds for our business. One of the most impactful elements of the recently enacted One Big Beautiful Bill Act is the reinstatement of the investment tax credit or ITC. By maintaining full ITC eligibility for fuel cell technologies, we believe that this legislation will ensure that companies like FuelCell Energy can continue to deploy U.S.-built platforms at scale.

We believe that the ITC can help us win projects with more cost-sensitive commercial and industrial customers, and we further believe the flexibility and long-term visibility of the ITC under the legislation will help to provide developers and investors with the confidence to accelerate deployment. We think the 45Q carbon capture sequestration and utilization incentive will provide meaningful support for fuel cell carbon capture applications like the applications we are developing jointly with ExxonMobil's LCS business and reinforce our conviction that carbon capture will be central to meeting U.S. energy goals.

We are proud to partner with ExxonMobil and its affiliates in our work to commercialize this technology. U.S. policy is also supportive of natural gas infrastructure expansion, recognizing the role of natural gas as a backbone fuel. We are pragmatic. We do expect the use of hydrogen will increase, but natural gas remains essential. Our carbonate platform is built to deliver clean power from a combination of both. We think Congress took a much needed step to support a more inclusive approach to energy policy and that fuel cells fit well in the alternative power landscape.

According to the Department of Energy, there are fuel cells running in 48 states generating baseload power and operating as primary power sources. Fuel cells are optimized when they run continuously, which is why they are ideal for data centers. Given the numerous supportive policies around the world, we believe that FuelCell Energy is positioned well to take advantage of available opportunities. Finally, we are working to fortify our financial foundation. We closed the quarter with approximately $237 million in total cash and cash equivalents, providing ample runway to execute on our business plans.

While our June restructuring resulted in significant noncash expenses, our cost control measures are trending strongly in the right direction and beginning to have positive effects. We remain on track to reduce operating expenses by 30% on an annualized basis compared to operating expenses incurred in fiscal year 2024. And we are targeting the future achievement of positive adjusted EBITDA once our Torrington manufacturing facility reaches an annualized production rate of 100 megawatts per year. The decisive steps we took are already paying off, strengthening our balance sheet and sharpening our execution and positioning us for profitable growth.

Moving to Slide 7. Let me dive deeper into our market presence in South Korea and the opportunities ahead. South Korea has been one of the most forward-leaning nations in adopting fuel cell power to address growing electricity demand and advance a clean energy future. Its hydrogen economy road map has set a global benchmark for low to zero carbon power generation, and we are proud to be a trusted partner of GGE and CGN in supporting those goals.

Beyond our recently announced MOU with Inuverse and our long-term service agreement with CGN, we continue to maintain a strong commercial relationship with GGE, Noeul Green Energy and Korea Southern Power Company. Today, we have 82 modules installed or in backlog in Korea, representing 108 megawatts of clean power. On Slide 8, let me update you on how FuelCell Energy is positioning itself to serve one of the fastest-growing markets in the world, data centers. We believe that our MOU with Inuverse to explore future opportunities focused on data centers and our partnership with Diversified Energy and TESIAC and dedicated power partners are just the beginning.

We are in conversations with leading data center developers, hyperscalers and investors about how our platforms can meet their rising demand for reliable, clean baseload power. We hold a differentiated position in the energy sector as the only fuel cell manufacturer with demonstrated utility scale platforms over 10, 20 and 50 megawatts with more than 7 years of continuous run time and more than 17 million megawatt hours of power production.

We believe our platform delivers reliability, superior efficiency compared to engines and turbines and seamless integration with other energy sources. Regulatory momentum further strengthens this opportunity. The One Big Beautiful Bill Act reestablished full ITC eligibility for fuel cell technologies, which we believe will help U.S.-built platforms like ours scale into this generational data center demand. To seize this opportunity, we expect to leverage the scalability of our manufacturing base. The heart of our operations is in our Torrington, Connecticut facility, which is sized to accommodate an eventual annualized production capacity of up to 200 megawatts per year with additional capital investment in machinery, equipment, tooling, labor and inventory.

We also have a proven ability to localize manufacturing as demonstrated in Korea. That flexibility to meet our customers where they are is a competitive advantage as we work to expand globally. We believe our supply chain comprised of mostly U.S. companies is stable, giving us greater control over delivery and service time lines. This level of certainty is highly valued by our customers. We look forward to providing further updates in future quarters as we anticipate scaling our manufacturing to meet future demand.

Let me conclude by reiterating. FuelCell Energy is delivering measurable progress on our strategy and restructuring. We are growing revenue, reducing costs and focusing our resources on near-term commercial opportunities with the goal of long-term value creation. We believe the decisive steps we have taken are strengthening our foundation and positioning us to capitalize on commercial opportunities during one of the most important energy transitions of our time. The world needs more power, clean, resilient, affordable and always on power, and that is exactly what we aim to deliver. With that, I'd like to turn the call back to our CFO, Mike Bishop.

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 11. In the third quarter of fiscal year 2025, we reported total revenues of $46.7 million compared to revenues of $23.7 million in the prior year quarter, representing a 97% increase. We reported a loss from operations in the quarter of $95.4 million compared to $33.6 million in the third quarter of fiscal year 2024. This increase is mainly attributable to noncash impairment expenses of $64.5 million and restructuring expenses of $4.1 million incurred as a result of our previously announced restructuring plan.

The net loss attributable to common stockholders in the quarter was $92.5 million compared to a net loss attributable to common stockholders of $33.5 million in the third quarter of fiscal year 2024. The resulting net loss per share attributable to common stockholders in the third quarter of fiscal year 2025 was $3.78 compared to $1.99 in the prior year period.

Adjusted net loss per share attributable to common stockholders, which excludes the noncash impairment expenses, restructuring expenses and certain other noncash items was $0.95 compared to $1.74 in the third quarter of fiscal year 2024. Net loss was $91.9 million in the third quarter of fiscal year 2025 compared to a net loss of $35.1 million in the third quarter of fiscal year 2024.

Adjusted EBITDA totaled negative $16.4 million in the third quarter of fiscal year 2025 compared to adjusted EBITDA of negative $20.1 million in the third quarter of fiscal year 2024. Please refer to the appendix of the earnings release, which provides a reconciliation of the non-GAAP financial measures, adjusted net loss per share attributable to common stockholders and adjusted EBITDA. Finally, as of July 31, 2025, the company had cash, restricted cash and cash equivalents of $236.9 million.

Next, on Slide 12, you will see additional details on our financial performance and backlog. In the graph on the left-hand side, revenue is broken down by category. Product revenues were $26 million compared to $0.3 million for the comparable prior year period. This increase is primarily attributable to the delivery and commissioning of 8 replacement modules for GGE in Korea and revenue recognized under the company's sales contract with Ameresco, Inc.

Service agreement revenues increased to $3.1 million from $1.4 million. The increase in service agreement revenues during the 3 months ended July 31, 2025, was primarily driven by revenue recognized under the company's long-term service agreement with GGE. Generation revenues decreased to $12.4 million from $13.4 million, reflecting lower power output resulting from routine maintenance activities during the quarter.

Advanced technology contract revenues decreased to $5.3 million from $8.6 million. Looking at the right-hand side of the slide, I will walk through the changes in gross loss and operating expenses. Gross loss for the third quarter of fiscal year 2025 totaled $5.1 million compared to a gross loss of $6.2 million in the comparable prior year period. The decrease in gross loss for the third quarter of fiscal 2025 was primarily related to decreased gross loss from generation revenues and product revenues, partially offset by reduced gross margin on advanced technology contract revenues and service agreement revenues during the third quarter of fiscal year 2025.

Operating expenses for the third quarter of fiscal year 2025 were $90.2 million, which included noncash impairment expenses of $64.5 million and restructuring expenses of $4.1 million recognized in the third quarter of fiscal year 2025. Administrative and selling expenses decreased to $14.1 million during the period from $14.6 million during the third quarter of fiscal year 2024, primarily due to lower compensation expense resulting from the restructuring actions taken in September 2024, November 2024 and June 2025.

Research and development expenses decreased to $7.6 million during the third quarter of fiscal year 2025 compared to $12.8 million during the third quarter of fiscal year 2024. The decrease was primarily due to lower spending on commercial development efforts related to solid oxide power generation and electrolysis platforms and carbon separation and carbon recovery solutions.

On the bottom right of the slide, you will see that backlog increased by approximately 4% to $1.24 billion compared to $1.20 billion as of July 31, 2024. As Jason noted, during the quarter ended July 31, 2025, the company entered into a new long-term service agreement with CGN.

Backlog for the CGN long-term service agreement was allocated between product backlog of $24 million and service backlog of $7.7 million. Slide 13 is an update on our liquidity position. As of July 31, 2025, we had cash, restricted cash and cash equivalents of $236.9 million. During the 3 months ended July 31, 2025, approximately 6.8 million shares of the company's common stock were sold under the company's amended open market sale agreement at an average sale price of $5.70 per share, resulting in net proceeds to the company of approximately $38.1 million.

Subsequent to the end of the quarter, approximately 2.7 million shares of the company's common stock were also sold under the amended open market sale agreement at an average sale price of $4.55 per share, resulting in net proceeds to the company of approximately $11.8 million.

In closing, we are taking deliberate and proactive steps to maintain a strong and flexible balance sheet while maintaining cost discipline and executing on a growth strategy centered on our carbonate platform. Our priorities remain clear: reduce spending and product costs, lower cash burn and accelerate our trajectory towards the future achievement of positive adjusted EBITDA.

In parallel, we are actively pursuing strategic financing to support commercial execution, including our Korea repowering projects. We believe our proven technology is well positioned to meet the accelerating need for distributed power generation, both through our established channels and our partnership with dedicated power partners. We remain focused on driving financial performance while enabling long-term scalable growth. I will now turn the call over to the operator to begin Q&A.

[Operator Instructions] And our first question comes from George Gianarikas, Canaccord Genuity.

You got Matt here on for George. I just want to start, congrats on the Inuverse deal and it seems like the data center opportunity is really strong. Can you guys just maybe provide a little bit more of an update on just kind of your momentum in the data center space, how this partnership is going along? And any other kind of customer conversations that are in the pipeline?

Yes, Matt, this is Jason. Thank you for the question. I think the Inuverse announcement is a reflection of the strength that we've been able to demonstrate in Korea with large-scale utility platforms and having multiple years of experience of running platforms, almost 60 megawatts as an example, which is really important when you think about data centers, right, as they try to really shift the way in which they think about purchasing power which historically has always been relying on the grid.

And now as they look for on-site generation, having assurance around the technology is important, having a long-term track record at a utility scale is important and the added benefit that we bring around our ability to deliver the thermal energy for absorption chilling. And so if you look at the opportunity with Inuverse, we're talking about potentially up to 100 megawatts in these initial phases as they look to build the largest data center in Korea.

And we think our platform and what we've demonstrated is the reason why we were able to secure that relationship with Inuverse. As we look across the board, we are seeing significant strength in the data centers. If you look at our pipeline today, there's been a significant shift in the opportunities around data centers that we see in our pipeline. We are engaged across everything from co-located data centers to the hyperscalers around our technology. And so we're excited about the momentum for data centers and the market opportunity it represents.

That's great. And I guess just as a follow-up to that, what's kind of been the breakdown of those data center conversations just maybe geographically, it sounds like Korea demand has been very strong, but have you seen kind of domestic demand throughout that?

Yes. We're seeing strong U.S. domestic demand in addition to Korea and frankly, broader Asia as an opportunity set for where we're focused on that data center opportunity, but really strong demand in the U.S. If you look at the market or the macro environment, right, the grid is short power, the grid is short transmission. permitting is a challenge. And if you think about our technology being a behind-the-meter solution, we're easy to site, right, easy to air permit. We can be cited in edge data centers because of our size and noise profile.

We have negligible particulate emissions. And so we see significant opportunity in the U.S. And then throw on top of that, the policy tailwinds that we see from the ITC being fully back and available to us to at least 2032 and potentially as far out as 2035, giving investors and data center developers certainty around the tax policy and how they can take advantage of that. And certainly for us, we've been able to prove our ability to monetize ITC and recycle that cash. So we think that supports strong tailwinds for data centers overall.

We'll move next to Jeff Osborne at TD Cowen.

A lot of detail on data centers there in the prepared remarks on South Korea, Jason. I was wondering if you could just give us a quick update on the more singles and doubles, if you will, on the sort of legacy commercial business for you folks now that the tax credit in the U.S. has been reinstated. What's the funnel and pipeline there look like?

Yes. So we continue, Jeff, to see opportunity outside of the data center space, and I would characterize it more as just distributed power generation overall. And so we see the ability to leverage ITC as a way to hit some of those singles and doubles as you referred to them. And I think if you look at our not too long ago announcement of what we're doing in Hartford, we have the opportunities around grid resiliency and reliability as a theme that's clearly emerging and leveraging our technology.

And we think that we're starting to see a shift in the way utilities think about deploying power and really gaining an appreciation for the value of distributed power generation as opposed to just centralized generation, especially when you begin to look at the challenges around permitting. And we know there's a lot of activity happening at the federal level, but at the end of the day, permitting is local, and we think that's a significant advantage for us.

And so as we focus and we shifted our focus, we think about data centers, we think about distributed power generation. We think about leveraging our multi-fuel capability, so to include things like biofuels. And that's really where our sales team is very focused on leveraging the strength of our mobile carbonate platform.

Got it. That's helpful. And then either for yourself or Mike, I think you mentioned, what was it, 8 units or modules to GGE in the quarter. How many -- can you give us a reminder of how many are remaining, what your expectations are for Q4 and Q1?

Sure, Jeff. I'll take that. This is Mike. So yes, as we had said in our previous quarter, we had 16 modules left for this fiscal year. So we delivered on time, 8 modules this quarter. That would leave a balance of another 8 in the fourth fiscal quarter and then another 16 next fiscal year. And then on top of that, we signed a repowering agreement with GGE and -- I'm sorry, with CGN, apologies. We signed a 10-megawatt repowering agreement with CGN in the third quarter, and those module deliveries would start in fiscal 2026 as well.

Is there something specific with the number 8 for this quarter and next, Mike, that, that's sort of the staffing capability. So the remaining 16 for next year, is it safe to assume 8 in Q1 and 8 in Q2 just in terms of the cadence?

So we haven't provided specifics on the timing of those 16. But as we sit here today, it's basically paced by our current production rate in our factory in Torrington.

Got it. And my last question is just you mentioned the 100 megawatts to EBITDA breakeven in terms of Torrington output. I may have missed it. What is the facility, I guess, running at now? Or what's your expectations for the next 6 months or so, just in light of the growth as it relates to the 2 Korean contracts?

So yes, today, so the facility is in between the 30 to 40-megawatt range. We'll operate at that range given our current backlog, and we'll certainly look to adjust that as other backlog materializes. And to your point around EBITDA positive, yes, I would confirm that when the company gets to 100 megawatts of production volume, we expect to be at adjusted EBITDA positive, and that will be paced by the timing of building up backlog.

Perfect. And the last just clarification on that topic. Is it safe to assume sort of the 40 to 45 megawatt annualized run rate is sort of a gross margin breakeven run rate?

So from a product perspective, yes, that's -- you can see gross margin, excluding what I call capacity costs, overhead costs, that type of thing for the product sale business. So yes, at this current run rate. And then if you look at generation negative gross margin on the P&L. But when you back out depreciation and derivative type charges, generation from an EBITDA perspective is positive this quarter, when you back out those numbers, we're north of 30% for an adjusted EBITDA perspective.

We'll go next to Ryan Pfingst at B. Riley.

I'll ask a follow-up on Inuverse and maybe timing there. Could you talk about your expectation for when that MOU might convert to an order and what the steps are to get there?

Yes, Ryan, thank you for your question. If you look at the MOU with Inuverse, part of what you think about in these data center developments and particularly for folks trying to develop hyperscale data centers, you can think about solving a few challenges as you build to securing offtake agreements from your data center customers themselves. And that's all about creating or delivering effectively powered land.

And so if you think about Inuverse, what they're doing is ensuring gas supply with us and working with us. They've ensured power supply for that facility. And now it's all about securing all of the offtake agreements to really deliver against their overall development plans. And so those activities are ongoing, and they are working aggressively to secure those offtake agreements now having lined up the power and gas supply for that site. So we expect that to be an ongoing development and more to say here in the coming quarters. But they're following the process that we need to be able to secure those agreements.

Got it. Appreciate that, Jason. And then on carbon capture, can you remind us what some of the next milestones are there with Exxon and the Rotterdam project?

Sure. So next milestones are we are in the conditioning phase for the carbon capture modules that will be shipped to Rotterdam to be part of this project. Exxon has publicly disclosed their progress that they're making at the Esso facility in Rotterdam to be able to execute the project, and we expect the project to be up and operational in 2026.

So the project is kind of in parallel in construction to ready the site. We're finalizing the conditioning of the modules. We'll ship the modules. And so I would say if you think about next milestones, you might look at our shipping modules and then really look at the completion of the construction and getting the COD on the site to demonstrate the technology.

We'll move next to Noel Parks at Tuohy Brothers.

There was a mention sort of near the end of the prepared remarks about at looking for strategic financing for projects such as some of the power projects in Korea. Just talk a little bit more about how -- what that process looks like, whether you're thinking of sort of doing deals in kind of as individual project by project scale or looking for more sort of large spanning deals?

Sure, Noel. This is Mike. Well, thanks for the question. As -- when we look at Korea specifically, if you take the GGE order, for example, when we announced that order, $160 million order to the company, and you can see we've been executing on that now over the last several quarters. You may recall at the end of last fiscal year, we entered into a financing agreement with the U.S. EXIM Import Bank. That financing yielded about $10 million to the company. So when you look at the opportunity around a contract like GGE, there's certainly additional financing opportunities on that contract to recycle capital back to the company.

So that's essentially what we were talking about with the Korea repowering opportunity. Certainly, now you add the CGN project into that. And there's additional repowering opportunities in Korea that in our perspective, are quite financeable. So that's how I'd answer Korea. But I'd also like to make a comment regarding the U.S. opportunities as well and maybe reflect back on the partnership that we have with dedicated Power Partners that we've established with Diversified and TESIAC.

As these data center opportunities emerge, we see a significant opportunity for commercial financing against these opportunities through that partnership, which would attract capital for multiple projects. And what that does for FuelCell Energy is turns those orders into product sale, relatively short-term product sale orders as we're delivering on building out the data center projects and then long-term 20-year service agreements. So really starts to simplify FuelCell Energy's model and working with our partners to scale up a financing model around these commercial opportunities in the U.S.

Terrific. And thinking about the data center market, of course, there's such a whirlwind of activity going on industry-wide around everything having to do with power and energy to supply that demand growth. I'm just curious, could you talk maybe about the degree of sort of decisiveness or urgency you're seeing when you're talking with data center or hyperscaler customers. I'm wondering if you can sort of envision what like -- what's sort of the sweet spot, the type of customer or arrangement that is the best fit, would you say for fuel cell technology looking near term?

Yes. Noel, this is Jason. Thank you. Yes, we're seeing -- obviously, there's a tremendous amount of activity happening around the data center space. And as I commented earlier, we're seeing that from everything from colocation all the way through into hyperscalers. As we think about where we fit as a company and how we can participate in that, I would tell you in a few different ways.

One way would be if you think about a greenfield site, right, we certainly offer that data center developer the ability to get what we think is time to power faster through our ability to deliver our platform in addition to our ability to minimize the constraints or friction points that generally are around permitting-related issues, such as air permitting and/or needing interconnection as an example, for the electricity grid. And so you can think about us as being a great first set of power or first set of power blocks into that opportunity, right, to get that data center going.

And our modularity gives us the ability to scale with that data center as incremental power is needed so they can take the power they actually need as opposed to just taking what power is available, and we think that gives us an advantage. The second area where we think that we offer a tremendous value to data center customers is our ability to deliver absorption chilling. So if you think about that and you just take a, as an example, a 50-megawatt data center, we're delivering 9,000 tons of chilling capacity.

So effectively taking away almost 5 megawatts of mechanical cooling requirements for that data center, which delivers a tremendous amount of value. And we're doing that at roughly 70% efficiency when you think about the electrical efficiency and using the thermal energy. We think that's also a big advantage for us and value we can add to data center customers. If you think about existing data centers, right, I think our modularity really becomes really important because the next block of power that data center needs may be 20 megawatts. It may be 50 megawatts. It may not be 250 megawatts that you might typically think about in a combined cycle gas engine as an example.

So we give the ability to scale in a modular fashion. And if you think about our power blocks at a nameplate capacity of 1.4 megawatts, that is at utility scale. And that's the -- a really compelling block size to be able to scale power in a very modular fashion. So we think that whether you're talking about colocation, expanding an existing data center or a new data center site, we offer value across all of those scenarios in our ability to allow the customer to configure power the way they need it and our ability to integrate with other technologies, which we've also demonstrated our ability to do that.

Today, we use thermal energy to drive an organic ranking cycle engine. And we also have a number of applications where we're deployed as a microgrid, all of which are needed as the power needs transition from grid-based power and just backup generation to on-site power and needing to deliver that same level of reliability that a Tier 3 or Tier 4 type data center requires and our ability to create that combination adds a lot of value to those customers.

And just one last one for me. Given all those factors, which sound incredibly favorable, any inkling of whether you might have some pricing power heading into some of the new agreements you're looking at?

No, that's a great question. I think if you look at what some of these hyperscalers are willing to pay for nuclear, the answer to that would probably be yes. But I think that we're really thinking about how do we add value and deliver time to power to those customers.

And then how do we price all of the value that we deliver, not just the electricity to those customers. So we think there is value to time. There's clearly value to baseload reliable, clean, efficient electricity. There's clearly value to the thermal energy. And then as we think about overall pricing and economics around the deal, domestically, our ability to take advantage of the ITC at 30% is another form of value that we can deliver overall in terms of how we think about pricing and overall economics for those deals.

[Operator Instructions] And at this time, we have no further questions. I would like to turn the conference back over to Jason Few for closing remarks.

Thank you, Audra. Thank you all for listening in today. I look forward to sharing more progress updates on our strategy and restructuring plans and actions in the next quarter. Thank you for joining.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.