Bloom Energy Corporation — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Unaudited consolidated financial statements. Unless otherwise stated, amounts are in U.S. dollars.
Business context and reporting period
Bloom sells and services solid-oxide fuel-cell Energy Servers and generates electricity through customer financing and managed-service arrangements. Product acceptances rose 8.8% in Q2 and 7.0% in the first half year over year. Management cited demand growth, while expanding manufacturing capacity and investing in technology, including hydrogen and electrolyzer programs.
Key financial metrics
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $243.2 million | $228.5 million | $444.3 million | $422.5 million |
| Gross profit (loss) | $(2.0) million | $37.3 million | $26.0 million | $92.0 million |
| Gross margin | (1)% | 16% | 6% | 22% |
| Operating loss | $(102.2) million | $(42.7) million | $(167.8) million | $(57.1) million |
| Net loss | $(121.2) million | $(58.4) million | $(203.9) million | $(88.2) million |
| Net loss per share, basic and diluted | $(0.67) | $(0.31) | $(1.11) | $(0.46) |
Q2 revenue increased 6.5%; first-half revenue increased 5.2%. Q2 product revenue grew 18.2%, partly reflecting $36.9 million of revenue from the PPA IIIa upgrade. Installation revenue fell 55.9% in Q2 as fewer accepted sites required Bloom installation. In the first half, product revenue rose 7.9%, while installation revenue declined 16.7%.
For the six months, operating cash flow was $(98.5) million and capital expenditures were $44.7 million, implying cash use after capital expenditures of approximately $143.2 million. Cash used in financing activities was $56.9 million. Cash, cash equivalents and restricted cash totaled $414.2 million at June 30; of that, $235.6 million was cash and cash equivalents and $178.5 million was restricted cash.
At June 30, current assets were $669.2 million and current liabilities $393.7 million, a $275.6 million working-capital surplus. Debt principal totaled $498.7 million: $298.0 million recourse and $200.7 million non-recourse. Net carrying value was $489.3 million. Management reported covenant compliance. Stockholders’ deficit was $144.9 million.
Material changes and unusual items
- Gross margin fell substantially year over year, with Q2 gross loss driven primarily by electricity gross loss and higher product and service costs.
- The PPA IIIa repowering produced a $44.8 million impairment/write-off of older Energy Servers, recorded in electricity cost of revenue. The transaction also contributed $36.9 million of product revenue and $1.1 million of installation revenue. It materially affected comparisons and reported margins.
- Bloom repaid the PPA IIIa 7.5% term loan and recorded a $4.2 million debt-extinguishment loss, including a $2.4 million make-whole payment.
- Operating expenses increased 25.2% in Q2 and 30.0% in the first half, primarily due to R&D and personnel investment. First-half stock-based compensation was $58.9 million, versus $36.3 million a year earlier.
- Inventory increased to $206.7 million from $143.4 million at year-end 2021. Accounts payable rose to $134.0 million from $73.0 million.
Outlook, commentary, risks and contingencies
No specific revenue, earnings, or margin guidance is provided in the supplied filing text. Management stated that cash and expected operating cash flows should meet operating, capital and other needs for at least 12 months from issuance. It also said additional debt or equity financing may be needed depending on growth, investment, installations and economic conditions; financing may not be available on favorable terms. Rising U.S. interest rates could increase the cost of capital.
Management expects labor shortages, hiring and retention challenges, supply-chain and logistics constraints, and inflationary pressure on wages, components, raw materials and freight to continue for the foreseeable future. These could delay production and installations, constrain customer demand fulfillment, and reduce revenue or margins. Bloom said it had not experienced component shortages to date and had not experienced supply-chain disruption from the Russia-Ukraine invasion. It noted that higher natural-gas prices raise end-customer costs, though resilience and time-to-power needs had offset possible demand effects to date.
Revenue and receivables are concentrated: two customers represented 57% and 16% of Q2 revenue, and one customer accounted for 56% of accounts receivable at quarter-end. Asia Pacific represented 62% of Q2 revenue. Risks also include performance guarantees, restricted cash supporting financing arrangements, and ongoing legal matters. The filing says the company could not estimate reasonably possible losses for certain significant litigation; the Santa Clara permitting dispute could jeopardize customer installations if permits are delayed. A confidential settlement resolved two matters involving former executives after quarter-end. Management reported no material change in the risk factors from its 2021 Form 10-K and concluded disclosure controls were effective.
Investor verification priorities
- Assess underlying product and service profitability separately from the $44.8 million PPA IIIa impairment and the associated upgrade revenue.
- Verify whether cost inflation, manufacturing expansion spending and labor constraints continue to pressure gross margins and delivery schedules.
- Monitor operating cash burn, working-capital needs, capital expenditures, and the availability of unrestricted liquidity; restricted cash is not freely available for general use.
- Review debt maturities and repayment capacity, particularly the $265.5 million principal scheduled for 2025, and assess refinancing or dilution risk.
- Track customer and geographic concentration, customer collections, and the status and potential exposure of disclosed legal and permitting matters.