Bloom Energy Corporation — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparisons are with the three months ended March 31, 2023 unless otherwise stated. Bloom develops and sells solid-oxide fuel-cell power systems and related installation, service, electricity and electrolyzer offerings.
Financial performance
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Total revenue | $235.3 million | $275.2 million; down 14.5% |
| Gross profit / margin | $38.1 million / 16% | $54.3 million / 20% |
| Operating loss | $49.0 million | $63.7 million |
| Net loss | $56.5 million | $74.9 million |
| Net loss attributable to common stockholders; diluted loss per share | $57.5 million; $0.25 | $71.6 million; $0.35 |
| Cash used in operating activities | $147.3 million | $314.7 million |
| Cash used in investing activities | $21.4 million | $26.6 million |
Product revenue fell 20.8% to $153.4 million, installation revenue fell 44.2% to $11.4 million, and electricity revenue fell 30.7% to $14.0 million. Service revenue rose 38.8% to $56.5 million, supported by additional systems reaching full power and lower performance-guarantee costs. Product gross margin declined to 25% from 33%; service gross loss improved to approximately break-even. Lower selling prices and fewer product acceptances weighed on product profit.
Operating expenses decreased 26.2% to $87.1 million, mainly reflecting lower compensation and professional-services costs following 2023 restructuring and executive departures. Interest expense increased to $14.5 million, while interest income increased to $7.5 million. The income-tax benefit was $0.5 million.
Balance sheet and liquidity
- At March 31, 2024, cash and cash equivalents were $516.0 million; restricted cash was $66.8 million. Together, cash, cash equivalents and restricted cash were $582.7 million, down from $745.2 million at December 31, 2023.
- Inventory was $526.4 million, up from $502.5 million at year-end. Management said it built inventory for expected second-half shipments and expanded warehouse space; weaker-than-expected demand could adversely affect liquidity.
- Total debt carrying value was $847.9 million, principally $843.5 million of recourse convertible notes; unpaid principal across recourse and non-recourse debt was $867.0 million. The $230 million 2.5% notes mature in August 2025 and the $632.5 million 3% notes mature in June 2028. All financial covenants were met.
- Management said cash and expected operating cash flows should cover operational and capital needs for at least the next 12 months, while noting that additional debt or equity funding may be sought and is not assured.
Material changes and operating trends
- Revenue declined 14.5%; product acceptances fell 6.8% to 477 systems, or 48 net megawatts accepted, compared with 512 systems and 51 megawatts. Management attributed the comparison partly to a large Q1 2023 transaction that did not recur.
- Cost per kilowatt of accepted product fell 10% to $2,060, and installation cost per kilowatt fell 33.9% to $322. Manufacturing period costs rose 38.5% to $17.4 million as Bloom supported capacity expansion.
- Operating cash use improved by $167.4 million year over year, with management citing prior-year working-capital investment and the timing of inventory, receivables and vendor payments. Q1 2024 still had substantial operating cash outflow.
- Asia Pacific generated 60% of Q1 2024 revenue versus 5% a year earlier. Related-party revenue was $122.2 million, compared with $0.8 million, and a related-party customer accounted for approximately 84% of accounts receivable at quarter-end.
Outlook, risks and notable items
- No specific quarterly or full-year revenue or earnings guidance is provided in the supplied filing text. Management expects further capital investment to expand Fremont production capacity and built inventory in anticipation of higher second-half demand.
- Management described longer sales cycles and uncertainty from permitting and interconnection delays, natural-gas availability and pricing, customer financing costs, and limited availability and economics of hydrogen and other low-carbon fuels. It said Q1 installation delays did not significantly affect revenue.
- The federal investment tax credit for fuel cells running on non-zero-carbon fuel was scheduled to expire at the end of 2024; management warned that failure to extend it could materially affect U.S. bookings, revenue and gross margins. Bloom received IRS acceptance of an allocation of up to $75.3 million under the Section 48C advanced energy project credit, subject to certification requirements.
- A 73-megawatt distributor project was delayed after the end customer changed its intended sites. The customer began PPA payments and agreed to continue them until deployment or the end of the PPA term, but distributor order reductions or cancellations could affect 2024 product revenue and cash-flow timing.
- Potential performance-guarantee payments under O&M agreements were capped at approximately $577.7 million, with approximately $490.8 million of aggregate remaining potential payments at March 31, 2024. Bloom paid $15.1 million in Q1; it reported no liabilities for failure to repair or replace systems under performance warranties.
- Bloom expects $6.3 million of restructuring costs in subsequent quarters; actual timing and costs may differ materially. A securities class-action settlement for $3.0 million, expected to be funded entirely by insurers, received final approval on May 2, 2024. A separate supplier-related patent and contract arbitration remains ongoing, and the company cannot predict its outcome.
- SK ecoplant increased its Korean joint-venture voting interest to 60%; Bloom continued to consolidate the venture. A March 2024 amendment added SK Eternix as a Korean distributor. The filing also disclosed a CFO transition: Daniel Berenbaum was to assume the role in May 2024, with Greg Cameron departing mid-May.
Investor verification priorities
- Assess whether the expected second-half shipments materialize and whether elevated inventory converts into revenue and cash rather than requiring write-downs.
- Review the concentration and collectability of related-party receivables, including the related-party customer’s 84% share of accounts receivable.
- Track product selling prices, product gross margin, acceptances and service costs, including performance-guarantee payments.
- Verify the timing and conditions for the Section 48C credit and any extension of the fuel-cell investment tax credit.
- Monitor liquidity and cash burn, customer financing availability, the 2025 convertible-note maturity, and any additional financing or dilution.
- Follow permitting and deployment progress for the delayed 73-megawatt project, restructuring costs, and the outcome of material legal matters.