Bloom Energy Corporation — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; comparisons are with Q1 2020 unless stated otherwise. Bloom designs, manufactures, sells and sometimes installs solid-oxide fuel-cell Energy Servers for on-site power generation, with related service and electricity revenue.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 / prior date |
|---|---|---|
| Total revenue | $194.0 million | $156.7 million; up 23.8% |
| Gross profit / margin | $54.7 million / 28% | $19.9 million / 13% |
| Operating loss | $14.4 million | $46.4 million |
| Net loss attributable to common stockholders | $24.9 million; $0.15 per share | $75.9 million; $0.61 per share |
| Cash used in operating activities | $89.0 million | $27.9 million |
| Capital expenditures | $12.9 million | $12.4 million |
| Cash and cash equivalents | $180.7 million | $246.9 million at December 31, 2020 |
| Cash, cash equivalents and restricted cash | $365.7 million | $416.7 million at December 31, 2020 |
| Total assets / current liabilities | $1,451.3 million / $369.3 million | $1,454.4 million / $436.4 million at December 31, 2020 |
| Total debt, net carrying value | $508.5 million: $290.1 million recourse and $218.4 million non-recourse | $390.9 million at December 31, 2020 |
Revenue growth reflected product revenue of $137.9 million, up 38.5%, and service revenue of $36.4 million, up 44.8%. Installation revenue fell 84.0% to $2.7 million, mainly because some accepted systems had not yet been installed or were installed by a partner. Product acceptances rose 40.2% to 359 systems (each representing 100 kW). Product gross margin increased to 37% from 27%; service gross margin turned slightly positive at 1%, from negative 23%. Installation remained loss-making, with a negative 74% margin.
Operating cash outflow increased chiefly because of a $93.3 million working-capital increase, including a shipment to a Korean customer whose collection was expected in Q2 and inventory built for later demand. Financing activities provided $51.2 million, primarily reflecting $58.0 million from stock option exercises and the employee stock purchase plan.
Material changes and unusual items
- Operating loss improved by $32.0 million, with higher revenue and better gross profit partly offset by operating expenses rising 4.1% to $69.0 million.
- Net loss narrowed partly because Q1 2020 included a $14.1 million loss on debt extinguishment and higher interest expense. Q1 2021 interest expense was $14.7 million, versus $22.1 million in Q1 2020.
- Early adoption of ASU 2020-06 on January 1, 2021 changed accounting for the Green Convertible Notes. It increased non-current recourse debt by about $121.5 million and reduced additional paid-in capital by $126.8 million, with a $5.3 million favorable opening accumulated-deficit adjustment. Prior-period results were not restated.
- Total debt carrying value rose from $390.9 million at year-end, while recourse debt scheduled repayments are expected to begin in June 2022. Of $118.5 million current debt, the filing identifies $111.4 million as a non-recourse loan due December 2021.
Outlook, risks and contingencies
Bloom gave no quantified revenue or earnings guidance. Management said existing cash and operating cash flows were expected to cover operational and capital needs for the next 12 months, while noting that additional equity or debt capital might be sought for expansion. The company was still securing financing for planned 2021 installations; management warned that failure to obtain it could materially affect revenue, cash flow and liquidity. Some financiers’ ability to monetize tax credits had declined, and customer credit issues and pandemic-related diligence delays were lengthening financing timelines.
- Supply chain and COVID-19: Logistics and container shortages continued, compounded by the Suez Canal blockage; alternate routes and shipment consolidation increased parts and materials costs. Installation delays, supplier constraints, and manufacturing disruption remain risks.
- Customer and geographic concentration: SK E&C represented approximately 43% of Q1 revenue and 76% of accounts receivable at March 31. EdgeWise Energy represented approximately 30% of Q1 revenue. Asia Pacific revenue was 43% of the quarter’s total.
- Debt and liquidity: Substantial indebtedness, debt covenants, refinancing needs and potential future capital raises may constrain flexibility. Restricted cash totaled $184.9 million and is not equivalent to freely available cash.
- Convertible notes: The Green Notes’ conversion price condition was met; holders could convert during the quarter ending June 30, 2021. The company may settle conversions in cash, shares or a combination, creating potential dilution.
- Incentives and regulation: Fuel-cell tax credits, Korean incentives and California interconnection/net-metering arrangements are important to demand and financing. The filing describes uncertainty around future program terms and access.
- Contingencies: Bloom recorded $9.2 million of long-term liability for potential Delaware grant repayment and reported 462 Delaware employees against a 900-worker milestone due in 2023. Several legal matters remained pending; the company said it could not estimate reasonably possible losses for specified matters.
- Other investor considerations: Bloom reported a $3.1 billion accumulated deficit and said it expected losses to continue for the foreseeable future. Management reported effective disclosure controls as of March 31, 2021.
Important facts for investors to verify
- Whether 2021 installation financing was secured and whether the expected customer collection for the Korean shipment occurred.
- How operating cash use, working capital, unrestricted cash and restricted cash changed after March 31.
- The status and refinancing or repayment of the $111.4 million PPA V loan due December 2021, and compliance with debt covenants.
- Whether Green Note holders converted during Q2 2021 and the resulting cash, share issuance or dilution.
- Progress toward the Delaware employment milestone and any subsequent change in potential grant repayment exposure.
- Changes in customer concentration, supplier costs and availability, and the relevant tax-credit and interconnection programs.