US ▾
FCEL
Earnings call · Jul 2026 (Q3 FY26)

FUELCELL ENERGY Q3 FY26 earnings call FCEL

Sep 2, 2026 Source

Executive summary

FuelCell Energy Q3 FY26 — Data Center Strategy Commercialization and Backlog Expansion

FuelCell Energy advanced its data center strategy in Q3 FY26, securing its first commercial order and significantly expanding its total backlog to $3.6 billion, driven by new awarded capacity. The company is scaling manufacturing to meet this demand, targeting positive Adjusted EBITDA by Q4 FY27, despite current revenue declines and gross losses attributed to transitional production volumes and specific contract charges. Strategic partnerships and technology validations underscore the long-term potential in distributed generation for AI infrastructure and carbon capture.

Highlights

5

  • Secured first order for data center applications, increasing committed backlog to $1.3 billion, up 4.1% year-over-year.

  • Added $2.4 billion of awarded capacity backlog, resulting in total committed and awarded capacity backlog of $3.6 billion as of July 31.

  • Closed a 75-megawatt capacity reservation agreement with a major co-location data center operator subsequent to quarter end.

  • Successfully completed the repowering of the 42-module Gyeonggi Green Energy project in South Korea.

  • Delivered and installed the first 2 carbonate fuel cell carbon capture modules at ExxonMobil's Rotterdam complex, a pivotal operational milestone.

Concerns

5

  • Total revenue for Q3 FY26 was $33 million, a 29% decline compared to $46.7 million in Q3 FY25.

  • Recorded a gross loss of $24.5 million in Q3 FY26, compared to a gross loss of $5.1 million in Q3 FY25.

  • Incurred $17 million in charges related to Fit Energy Phase 0 due to current product costs exceeding contractual pricing.

  • Adjusted EBITDA was negative $36.7 million in Q3 FY26, compared to negative $16.4 million in Q3 FY25.

  • Operating at an annualized production rate of approximately 37 megawatts during the quarter, below the volume needed for cost alignment.

Guidance & targets

CategoryTargetConfidence
Annualized production rate
100 megawatts
medium materiality
High
Annualized production capacity
500 megawatts
high materiality
Medium
Adjusted EBITDA
positive
high materiality
Medium
Capital expenditures (FY26)
$10M-$20M
medium materiality
High

Orderbook & backlog

Total committed and awarded capacity backlog $3.6B July 31, 2026

significant step change

Committed backlog $1.3B July 31, 2026

up 4.1% year-over-year

Represents definitive non-cancellable agreements.

Awarded capacity backlog $2.4B July 31, 2026

Represents commercial awards and capacity reservations where the company has been selected as the supplier and parties are advancing towards definitive agreements. Includes 350 MW from Fit Energy Phases 1, 2, and 3. Not contracted firm order backlog or a guarantee of future revenue.

Fit Energy Phase 0 30 MW Q3 FY26

Initial phase of capital equipment purchase agreement, upfront deposit received, deliveries expected to begin in Q4 FY26.

Fit Energy Phases 1, 2, and 3 350 MW Q3 FY26

Part of awarded capacity backlog. Fit Energy may elect to proceed at its sole option; no payment obligation arises until election is made. Not sequential to Phase 0.

Capacity reservation agreement 75 MW subsequent to July 31, 2026

With a major co-location data center operator for a Texas project. Parties are advancing towards execution of definitive agreements.

Product announcements

ProductTypeDetails
Carbonate fuel cell carbon capture modulesmilestone
Integrated distributed energy systemsroadmap

Deals & partnerships

Fit Energy Capital equipment purchase agreement to supply power solutions for data center applications. up to 380 MW

Covers up to 380 megawatts across 4 phases, sized to the customer's deployment schedule. Initial 30 MW phase deliveries expected to begin in Q4 FY26.

ExxonMobil Technology and Engineering Company Joint development agreement for carbon capture technology.

Delivered and installed the first 2 carbonate fuel cell carbon capture modules at ExxonMobil's Rotterdam complex. This is the world's first industrial-scale demonstration of the jointly developed carbon capture technology.

Siemens Memorandum of Understanding (MOU) to design and supply electrical balance of plant systems for fuel cell installations.

Collaboration to jointly develop integrated distributed energy systems combining clean fuel cells with battery energy storage, advanced microgrid controls, and medium-voltage electrical equipment.

Capital programs

Torrington manufacturing facility expansion underway $200M-$275M
Period spend: $10M-$20M (FY26 revised guidance)
Funding: Net proceeds from common stock sales ($298M)

Benefit:500 MW annualized production capacity

The expansion is progressing on schedule, with finalized factory design, significant equipment purchase commitments, and installation of a new high-volume tape caster underway. The FY26 CapEx guidance was revised down due to timing of equipment deliveries, not execution.

Risks & headwinds

Revenue decline Q3 FY26

$33M total revenue, down 29% YoY

Mitigation:Focus on converting commercial demand into contracted backlog and scaling manufacturing.

Gross loss and charges from Fit Energy contract Q3 FY26

$24.5M gross loss; $17M in charges ($4M inventory reduction, $13M firm purchase commitments)

Mitigation:Charges are expected to be limited to identified inventory and purchase commitments for Phase 0; expect normalization as production scales to 100 MW.

Negative Adjusted EBITDA Q3 FY26

Negative $36.7M

Mitigation:Targeting positive Adjusted EBITDA by Q4 FY27 through increased production rates, backlog conversion, and cost reductions.

Lower output from generation portfolio Q3 FY26

Generation revenue down from $12.4M to $8.8M; 7.4 MW Groton project out of service

Mitigation:Groton project pending a planned upgrade expected to complete in fiscal 2027.

Uncertainty in achieving production rates, backlog conversion, and cost reductions Mid-term

No assurance that production rates, conversion of awarded capacity backlog, or anticipated cost reductions will be achieved within the timeframe expected.

Mitigation:Company is actively hiring, ramping supply chain, and has a well-defined cost reduction curve. Significant pipeline of opportunities beyond 1-2 customers.

What to watch in Q4 FY26

Annualized production rate at Torrington

October 2026
Current 37 MW
Target 100 MW

Why it matters

Key to achieving operating leverage and cost reduction for future profitability.

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.

Q&A highlights

Can you provide more details on the timeline for the 75 MW deal and potential expansion opportunities?

The 75 MW capacity reservation agreement with a major data center operator was closed subsequent to the quarter end. The timing is not yet disclosed, but follow-on opportunities with the same customer are anticipated. The company is working on definitive agreements to align timelines, noting that this model of capacity reservations is evolving as customers line up power while completing data center designs.

“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.”

asked by Ivana Erkovic · answered by Jason Few

2 min read 5 chapters

Detailed narrative

Data Center Strategy & Commercialization

FuelCell Energy is actively converting its data center value proposition into commercial commitments, securing its first order for fuel cell energy blocks to supply baseload power for data center applications. This includes a capital equipment purchase agreement with Fit Energy for up to 380 megawatts across four phases, with an upfront deposit received for the initial 30-megawatt phase. The company also closed a 75-megawatt capacity reservation agreement with a major co-location data center operator for a Texas project subsequent to quarter end, highlighting the evolving business model towards capacity reservations.

Backlog Expansion and Pipeline Growth

The company reported a significant increase in its total committed and awarded capacity backlog, reaching $3.6 billion as of July 31, 2026. This comprises $1.3 billion in committed backlog (up 4.1% year-over-year) and $2.4 billion in awarded capacity backlog, which includes the 350 megawatts from Fit Energy's Phases 1, 2, and 3. The fiscal 2026 year-to-date pipeline has grown to approximately 10 gigawatts of active proposals, with data centers accounting for about 97% of the total third-quarter pipeline, indicating strong future demand.

Manufacturing Capacity Expansion

To support increasing demand and backlog, FuelCell Energy is systematically expanding its Torrington, Connecticut manufacturing facility. The immediate operational milestone is to increase the annualized production rate to 100 megawatts by October 2026, up from approximately 37 megawatts in Q3 FY26. The long-term goal is to reach 500 megawatts of annualized production capacity by June 2028, with an estimated total investment of $200 million to $275 million, which is fully funded by recent equity issuances.

Strategic Partnerships & Technology Validation

The company's technology is gaining global validation through diverse partnerships. It delivered and installed the first two carbonate fuel cell carbon capture modules at ExxonMobil's Rotterdam complex, marking the world's first industrial-scale demonstration of their jointly developed carbon capture technology. Additionally, a Memorandum of Understanding (MOU) was signed with Siemens to design and supply electrical balance of plant systems for large-scale (>100 MW) fuel cell installations, aiming to accelerate deployment and lower costs.

Financial Performance and Outlook

Q3 FY26 saw total revenue decline 29% year-over-year to $33 million, resulting in a gross loss of $24.5 million and negative Adjusted EBITDA of $36.7 million. These results were impacted by $17 million in charges related to the Fit Energy Phase 0 contract, where current product costs exceeded contractual pricing. Despite this, the company ended the quarter with a strong cash position of $737.3 million, and is targeting positive Adjusted EBITDA results in Q4 FY27, supported by planned production rate increases and cost reductions.

AI-generated summary of the company's earnings call. Not investment advice.