Bloom Energy Corporation — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; comparisons are with Q1 2021 unless otherwise stated. Bloom designs, manufactures, sells and installs solid-oxide fuel-cell Energy Servers and earns revenue from products, installation, service and electricity.
Key financial results
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $201.0 million | $194.0 million |
| Gross profit / margin | $27.9 million / 13.9% | $54.7 million / 28.2% |
| Operating loss | $(65.7) million | $(14.4) million |
| Net loss | $(82.7) million | $(29.8) million |
| Net loss attributable to common stockholders; loss per share | $(78.4) million; $(0.44) | $(24.9) million; $(0.15) |
| Operating cash flow | $(92.4) million | $(89.0) million |
| Capital expenditures | $18.5 million | $12.9 million |
Revenue increased 3.6%. Product revenue was $133.5 million, installation $13.6 million, service $35.2 million and electricity $18.7 million. Product and service revenue each declined 3.2%; installation rose 409.7% and electricity rose 10.0%.
Cash and cash equivalents were $286.0 million at March 31, 2022, down from $396.0 million at year-end 2021. Restricted cash was $207.9 million; cash, cash equivalents and restricted cash totaled $493.9 million. Total debt had a $522.8 million carrying value ($534.9 million unpaid principal), comprising $292.4 million recourse and $230.4 million non-recourse debt. Current debt carrying value was $30.3 million. The company reported covenant compliance.
Material changes and drivers
- Gross margin fell to 13.9% from 28.2%. Product gross margin declined to 21% from 37%, reflecting lower pricing, higher freight and supply-chain costs, and capacity-expansion spending. Product cost per accepted kilowatt rose 12.1% year over year.
- Service gross loss widened to $6.6 million from gross profit of $0.3 million, attributed to timing of long-term service agreements and performance guarantees. Installation gross profit improved to $0.8 million from a $2.0 million loss.
- Operating expenses increased 35.6% to $93.6 million, including higher R&D and G&A spending. Stock-based compensation increased to $26.3 million from $17.2 million.
- Working-capital use and inventory growth contributed to operating cash outflow. Inventory increased to $183.1 million from $143.4 million at year-end. Bloom factored $46.1 million of receivables during the quarter, versus none in Q1 2021.
Outlook, risks and unusual items
- Management said available cash and expected operating cash flows should be sufficient for anticipated needs over the next 12 months, including manufacturing build-out. It also said additional equity or debt financing may be needed. Recourse debt scheduled repayments were to commence in June 2022.
- Management reported continuing supply-chain lead times, component shortages—especially semiconductors and specialty metals—and inflationary pressure on materials, freight and labor, expected to persist through 2022. These could delay production or installations and pressure revenue, cash flow and margins.
- Customer financing availability, installation timing, permitting and utility interconnections, reliance on incentives and tax-equity partners, and customer concentration remain important risks. Two customers, SK ecoplant and SK D&D, each represented approximately 32% of Q1 revenue; Asia Pacific represented 65% of revenue.
- Bloom reported an accumulated deficit of $3.3 billion and stated that it expects losses to continue for the foreseeable future. No specific quarterly or full-year financial guidance is provided in the supplied filing text.
- The SK ecoplant strategic investment included $255 million received in December 2021 for redeemable convertible preferred stock. The related share-purchase option was remeasured in Q1, generating a $3.0 million loss in other expense; its March 31 fair value was $16.2 million.
- On March 31, Bloom bought out the third-party equity interest in PPA IIIa, making it wholly owned and no longer a variable-interest entity. The filing also describes pending securities litigation, a dispute with a former supplier involving patent claims, and litigation over Santa Clara installation permits; management could not estimate reasonably possible losses for several matters. A PAGA settlement below $1 million was agreed in principle, subject to court approval.
- Bloom disclosed that its Executive Vice President and Chief Technology Officer died on April 28, 2022, after quarter-end. Management reported disclosure controls were effective as of March 31.
Investor verification priorities
- Track whether gross-margin pressure, higher service costs and supply-chain inflation persist, and whether planned cost reductions offset them.
- Verify operating cash burn, working-capital and inventory trends, and unrestricted cash available after accounting for restricted balances and upcoming debt payments.
- Assess the June 2022 start of recourse-debt repayments, refinancing needs, covenant headroom and any additional financing or dilution.
- Monitor revenue dependence on SK ecoplant and SK D&D, customer financing capacity, and the status of Korean incentives and other applicable tax-credit programs.
- Follow installation and permitting delays, especially the Santa Clara matter, and developments in the supplier patent dispute and securities litigation.