FuelCell Energy Falls After Second-Quarter Revenue Sinks 25%

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FuelCell Energy Inc., a manufacturer of fuel-cell power plants, slumped the most in three months after sales in its second fiscal quarter dropped 25 percent.

FuelCell declined 5 percent to $1.15 at the close in New York, the most since March 9.

Revenue for the quarter dropped to $28.6 million from $38.3 million a year earlier, in part because sales for some projects under construction won’t be recognized until future quarters, the Danbury, Connecticut-based company said in a statement Monday after the close of regular U.S. trading. That missed the $41.3 million average of two analysts’ estimates compiled by Bloomberg.

The decline in sales reflects a shift in strategy rather than slowing demand for its products, said Chief Executive Officer Chip Bottone.

“We have transitioned from being a supplier of products to a developer of projects,” Bottone said on a conference call Tuesday. “Despite lower revenues for the quarter, margins are creeping up as we want. It’s all good.”

As part of that transition, the company has changed its accounting practices. It now recognizes revenue only when its projects are complete, instead of recognizing it in portions as the jobs advance.

Gross margin for the quarter was about 10 percent and will climb into the low teens as completed projects are sold and revenue climbs, said Chief Financial Officer Michael Bishop. Sales in both the third quarter and fourth quarter will be between $38 million and $48 million, he said. There were no plant sales completed in the second quarter.

The net loss narrowed in the quarter ending April 30 to $10.7 million, or 4 cents a share, from $16.6 million, or 7 cents.

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