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FuelCell Energy Inc. (FCEL - Snapshot Report) reported second quarter of fiscal 2014 adjusted loss of 4 cents per share, wider than the Zacks Consensus Estimate of a loss of 3 cents per share. The company reported a loss of 4 cents per share in the prior-year quarter.

On a GAAP basis, the company’s loss was 7 cents per share compared with a loss of 4 cents per share. The variance between GAAP and adjusted loss was due to a non-cash embedded derivative adjustment related to conversions of the senior unsecured convertible notes.

Revenue

In the second quarter of fiscal 2014, FuelCell Energy’s total revenues were $38.3 million, missing the Zacks Consensus Estimate of $45 million by 14.9%. Total revenues decreased 9.7% from $42.4 million a year ago.

Lower contribution from the company’s product sales and advanced technologies contract revenues primarily led to a drop in quarterly revenues. This was partially offset by higher service agreements and license revenues as a result of an increase in base installation.

Highlights of the Release

In the quarter under review, FuelCell Energy’s total cost of revenues was $36.7 million, down 8.5% from $40.1 million in the prior-year quarter.

The company reported quarterly gross profit of $1.6 million compared with $2.3 million a year ago.

Total operating expenses in the quarter was $10.4 million, up 9.5% from the year-ago figure primarily due to higher administrative and selling, and research and development expenses.

FuelCell Energy’s interest expenses increased 56.1% year over year to $0.89 million from $0.57 million a year ago.

In the quarter, total backlog decreased 16.4% to $342.8 million from $410 million in the prior-year quarter. Product sales, service and advanced technologies contracts backlog was $146.6 million, $181.9 million and $14.3 million, respectively.

Fuel cell shipments during the quarter were 15.7 megawatts (MW) compared with 12.6 MW a year ago.

Financial Condition

As of Apr 30, 2014, FuelCell Energy reported cash and cash equivalents and restricted cash of $89.4 million, up from $77.7 million as of Oct 31, 2013.

Total liabilities were $128.1 million as of Apr 30, 2014 compared with $191 million as of Oct 31, 2013.

In the second quarter of fiscal 2014, FuelCell Energy’s net cash used by operating activities was $10.6 million.

The company spent $1.1 million in the quarter as capital expenditure.

Guidance

For the second half of 2014, FuelCell Energy expects average quarterly revenues in the range of $50 - $60 million, considering present production level.

Other Earnings Releases

Plug Power Inc. (PLUG - Snapshot Report) posted first-quarter 2014 loss of 6 cents per share, wider than the Zacks Consensus Estimate of a loss of 5 cents. The company reported a loss of 14 cents per share in the prior-year quarter.

Ballard Power Systems Inc. (BLDP - Snapshot Report) reported first-quarter 2014 loss of 3 cents per share, narrower than the Zacks Consensus Estimate of a loss of 4 cents. The company reported a loss of 7 cents per share a year ago.

Zacks Rank

FuelCell Energy currently has a Zacks Rank #3 (Hold). However, a better-ranked stock in the same industry is Covanta Holding Corporation (CVA - Snapshot Report), carrying a Zacks Rank #1 (Strong Buy).

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