Bloom Energy Corporation — FY2020 Form 10-K
Reporting period: Year ended December 31, 2020. This is an annual filing, not a standalone fourth-quarter report; the filing does not provide a clear set of Q4-only financial results. Bloom designs, manufactures, sells and services solid-oxide fuel-cell systems for on-site power generation, primarily for commercial, industrial and utility customers.
Key financial metrics
| Metric | FY2020 | FY2019 | Change |
|---|---|---|---|
| Total revenue | $794.2 million | $785.2 million | Up 1.2% |
| Gross profit / margin | $165.8 million / 21% | $97.6 million / 12% | Margin improved |
| Operating loss | $80.8 million | $232.8 million | Loss narrowed |
| Net loss | $179.1 million | $323.5 million | Loss narrowed |
| Net loss attributable to common stockholders | $157.6 million; $1.14 per share | $304.4 million; $2.67 per share | Loss per share narrowed |
| Operating cash flow | $(98.8) million | $163.8 million | Turned negative |
| Cash and cash equivalents | $246.9 million | $202.8 million | Up |
| Total debt, consolidated | $390.9 million | $636.8 million | Down |
Revenue comprised product sales of $518.6 million, installation of $101.9 million, service of $109.6 million and electricity of $64.1 million. Cash and cash equivalents exclude $169.8 million of restricted cash. Debt included $168.0 million of recourse debt and $222.9 million of non-recourse debt at year-end; $120.8 million of total debt was current, all of it non-recourse debt.
Material changes versus FY2019
- Energy Server acceptances rose 11.1% to 1,326 systems, while total revenue grew only 1.2%. Product revenue fell 6.9%, partly reflecting a one-time favorable PPA II upgrade effect in 2019; installation revenue rose 67.5% and service revenue 14.5%.
- Gross margin increased to 21% from 12%. Management attributed the improvement principally to product cost reductions outpacing average selling price reductions and the absence of substantial 2019 PPA upgrade charges. Product costs per kilowatt fell 17.8%; installation costs per kilowatt rose 39.8% and service gross loss widened.
- Operating expenses declined 25.4%, substantially because stock-based compensation fell by $122.4 million. Excluding stock-based compensation, operating expenses increased about 5.9%.
- Operating cash flow moved from positive $163.8 million to negative $98.8 million, reflecting a $73.3 million working-capital outflow, including higher receivables and inventory. Investing cash use was $37.9 million.
- Product backlog was $1.0 billion, or 199.4 MW, versus $1.1 billion, or 198.3 MW, at year-end 2019. Management expected at least half of backlog to deploy within 12 months, subject to financing, installation and permitting conditions.
Outlook, risks and unusual items
- Outlook and liquidity: Management said cash and cash equivalents, together with expected operating cash flows, should cover anticipated needs for the next 12 months, while noting possible need for additional equity or debt to fund expansion. It gave no specific revenue or earnings guidance in the supplied filing text. Management was still securing financing for planned 2021 installations and said a financing shortfall could materially affect revenue, cash flow and liquidity.
- Debt and financing: 2020 financing actions included issuing $230 million principal of 2.5% Green Convertible Notes and $70 million of 10.25% secured notes, converting certain 10% notes to equity and redeeming other high-coupon notes. The company reported that debt service was expected to fall from more than $59.7 million to under $12.9 million annually. The Green Notes carry $230 million principal and may be convertible; conversion could dilute shareholders. A $114.1 million non-recourse PPA V term loan was due in December 2021; the company expected some current non-recourse debt to be refinanced by the relevant PPA entity.
- Customer and market concentration: SK E&C and Duke Energy represented approximately 34% and 28% of FY2020 revenue, respectively. SK E&C represented about 56% of year-end accounts receivable. The Republic of Korea accounted for 34% of revenue, making the business exposed to customer concentration and changes in Korean incentives and policy.
- COVID-19 and execution: Bloom reported installation delays, longer sales and financing cycles, supplier and logistics disruptions, and reduced manufacturing productivity. It said Q4 installations were minimally affected and 2020 production was not constrained, but future effects remained uncertain.
- Policy and regulation: Demand depends partly on tax credits, incentives, utility tariffs and interconnection rules. The federal investment tax credit was 26% for qualifying construction begun before 2023, stepping down to 22% for construction begun in 2023 under the filing’s description. California fuel-cell net energy metering tariffs were scheduled to become unavailable for new installations after December 31, 2021, with replacement arrangements uncertain. Bloom also faces regulatory risk because natural-gas-fueled systems emit carbon dioxide and certain air pollutants.
- Service and contingent obligations: Service gross loss widened as power-module replacement costs increased. Bloom disclosed up to approximately $114.3 million of aggregate performance-guaranty exposure for certain portfolio financings, with approximately $108.9 million remaining under the stated cap. EPA matters involving desulfurization-unit handling were resolved after payment of penalties, including approximately $1.2 million following an audit. Potential repayment obligations under a Delaware facility grant were recorded; further payments could be due if employment and compensation milestones are not met.
- Reporting and legal matters: Bloom restated certain prior-period financial statements in its 2019 filing and said the related material weakness in controls had been remediated. Management and Deloitte concluded internal control over financial reporting was effective at December 31, 2020; Deloitte gave an unqualified opinion on the 2020 financial statements. Securities litigation remained pending, and the company said it could not estimate a range of reasonably possible losses.
Important facts for investors to verify
- Whether 2021 customer-project financing was secured and whether the current non-recourse PPA debt was refinanced or repaid when due.
- Whether backlog converts to installations and accepted revenue on schedule, and how installation costs and service-module replacement costs affect margins and cash flow.
- How much revenue and receivables remain concentrated among SK E&C, Duke Energy and other major customers.
- Whether California interconnection rules, the federal tax credit and Korean incentive changes alter project economics or demand.
- Potential dilution and cash-settlement requirements related to the Green Notes, alongside the company’s debt maturities and liquidity needs.
- Developments in securities litigation, the Delaware grant milestones and any performance-guaranty or warranty claims.