FuelCell Energy (NASDAQ:FCEL) reported a wider second-quarter loss for fiscal 2026 as a non-cash impairment tied to its Groton Navy project weighed on results, while management emphasized a sharply expanding sales pipeline tied largely to data center and artificial intelligence-related power demand.
President and Chief Executive Officer Jason Few said demand for distributed baseload power is increasing as AI, digital infrastructure and high-density computing strain traditional grid timelines. He said customers are looking for power that can be deployed without waiting years for grid interconnection, positioning the company’s fuel cell systems as a behind-the-meter solution.
Revenue slips, loss widens on Groton impairment
Chief Financial Officer Michael Bishop said total revenue for the quarter ended April 30, 2026, was $35.6 million, down about 5% from $37.4 million in the prior-year period. The decrease was primarily due to lower service revenue, as there were no module exchanges in the quarter, and lower generation revenue resulting from reduced output while the Groton project was undergoing repairs.
Those declines were partially offset by higher product revenue from scheduled module deliveries to Gungui Green Energy Company Limited in South Korea, as well as an increase in advanced technology revenue. Bishop said the company expects the remaining six Gungui Green Energy modules and upcoming CGN-Yulchon Generation deliveries to support product revenue in the second half of fiscal 2026.
FuelCell Energy reported a loss from operations of $77.9 million, compared with a loss from operations of $35.8 million in the same quarter last year. Net loss was $77.6 million, versus a net loss of $37.7 million a year earlier. Net loss attributable to common stockholders was $78.7 million, or $1.45 per share, compared with $38.8 million, or $1.79 per share, in the prior-year period.
The wider operating loss was largely due to a $42.6 million non-cash impairment charge related to the Groton project. Bishop said FuelCell Energy expects to upgrade the 7.4-megawatt Groton Navy project using three of its current-generation 2.5-megawatt power blocks, with the goal of improving reliability for the Navy base customer.
On a non-GAAP basis, adjusted EBITDA was negative $17.1 million, improving from negative $19.3 million in the second quarter of fiscal 2025. Bishop said the 12% year-over-year improvement reflected progress on cost reduction and operating efficiency.
Data center pipeline grows to 4 gigawatts
Few said FuelCell Energy’s submitted proposal pipeline has expanded to 4 gigawatts, up more than 250% from the first quarter. He said potential data center customers represent about 89% of the pipeline, which also includes distributed generation, utility and industrial opportunities in domestic and international markets.
The average proposal size grew from 65 megawatts to 130 megawatts during the quarter. Few said the larger transaction sizes reflect the scale at which data center customers and hyperscalers are engaging, while also extending diligence timelines.
“As transaction size increases, diligence expands proportionally,” Few said. “Extended timelines are often a function of scale.”
The company introduced a 12.5-megawatt “FuelCell Energy Block” product during the quarter. Few described it as a standardized, modular product designed for AI infrastructure and other grid-constrained markets. He said the product is based on the same architecture and stack as the company’s smaller energy blocks and is intended to help customers add capacity in phases rather than overbuild upfront.
During the question-and-answer session, Few said customers are responding to the company’s utility-scale operating history, time-to-power advantages, permitting profile and native DC power output. He also said the 12.5-megawatt product is helping conversations with data center customers by offering modular scaling and improved economics through shared balance-of-plant infrastructure.
Manufacturing expansion raised to 500 megawatts
FuelCell Energy is increasing its planned manufacturing capacity expansion at its Torrington, Connecticut, facility from 350 megawatts to 500 megawatts of annual fuel cell production capacity. Few said the decision reflects customer engagement and market conditions, but added that the company intends to expand in line with contracted backlog, market demand and structured capital support.
The company estimated the full Torrington expansion will cost between $200 million and $275 million. In response to an analyst question, Few said the increase will occur incrementally rather than as a single step from 100 megawatts to 500 megawatts. He cited investments such as a high-volume tape caster and additional conditioning capacity as examples of equipment that will unlock capacity over time.
Bishop reiterated that the company’s adjusted EBITDA-positive target remains tied to reaching consistent annualized production volumes at or above 100 megawatts. He said the higher capacity plan does not change that target.
Backlog declines, balance sheet strengthened
FuelCell Energy ended the quarter with backlog of $1.14 billion, down from $1.26 billion a year earlier. Bishop said the decline was primarily due to revenue recognized on long-term contracts, partially offset by new orders.
- Product backlog: $36.1 million, mainly reflecting remaining repowering module deliveries in South Korea expected in the second half of the fiscal year.
- Service backlog: $155.4 million from long-term service agreements on customer-owned power plants.
- Generation backlog: $928.5 million from company-owned projects under long-term power purchase agreements, with a weighted average remaining contract term of about 15 years.
- Advanced technology backlog: $15.4 million, mostly tied to joint development work with ExxonMobil Technology and Engineering Company.
The company ended the quarter with $440.9 million in total cash, cash equivalents and restricted cash, including $373.2 million of unrestricted cash and $67.7 million of restricted cash. During the quarter, FuelCell Energy sold approximately 10.9 million shares through its at-the-market equity program at an average price of $9.45 per share, raising net proceeds of $100.4 million. After quarter-end, it sold an additional 4.1 million shares at an average price of $13.31 per share, raising $52.9 million in net proceeds.
Bishop said the company remains “essentially debt-free” apart from long-term financings on specific project assets and service agreements, with no near-term debt maturities. Asked whether investors should rule out additional capital raises, Bishop said management is comfortable with current liquidity but continues to evaluate multiple ways to finance growth, including project financing, service agreement financing and periodic use of equity markets.
Partnerships and carbon capture progress
Few said FuelCell Energy’s partnerships in South Korea and with ExxonMobil’s Low Carbon Solutions business remain important parts of its strategy. He said module deliveries to Gungui Green Energy are ongoing and that the company continues to make progress under its memorandum of understanding with Inuverse for the AI Daegu Data Center.
Few also said two carbon capture units are en route to ExxonMobil’s Rotterdam facility and are expected to be delivered in June. He said the shipments are intended to establish “physical proof points” needed to commercialize the technology for point-source emissions reduction.
In closing remarks, Few said the second quarter reflected progress in commercial momentum, cost reductions, manufacturing scale-up and carbon capture development. He said the company remains focused on converting its pipeline into contracted backlog and scaling production capacity in a disciplined manner.
About FuelCell Energy (NASDAQ:FCEL)
FuelCell Energy, Inc (NASDAQ: FCEL) is a publicly traded company that designs, manufactures and operates turnkey molten carbonate fuel cell power plants. These stationary, on-site energy solutions generate electricity and heat through an electrochemical process that combines natural gas or biogas with oxygen, producing power with lower greenhouse gas emissions than traditional fossil fuel-based generation. The company’s fuel cell technology is engineered for continuous, baseload operation and can be integrated into microgrid architectures and industrial power systems to provide reliable, around-the-clock energy.
The company’s core product suite, marketed under the SureSource brand, encompasses both power generation and integrated carbon capture or hydrogen production capabilities.
