Good day, ladies and gentlemen, and welcome to the FuelCell Energy reports First Quarter 2015 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. . I would now like to hand the conference over to Kurt Goddard, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to the first quarter 2015 earnings call for FuelCell Energy. Yesterday evening, FuelCell Energy released financial results for the first quarter of 2015. The earnings release, as well as a presentation that will be referenced during this earnings call, is available on the Investor Relations section of the company website at www.fuelcellenergy.com. A replay of this call will be available two hours after its conclusion on the company website. Before proceeding with the call, I would like to remind everyone that this call is being recorded and that the discussion today will contain forward-looking statements, including the company's plans and expectations for the continuing development and commercialization of our FuelCell technology. I would like to direct listeners to read the company's cautionary statement on forward-looking information and other risk factors in our filings with the U.S. Securities and Exchange Commission. Delivering remarks today will be Chip Bottone, President and Chief Executive Officer and Mike Bishop, Senior Vice President and Chief Financial Officer. Now, I would like to turn the call over to Chip Bottone. Chip? Arthur A. Bottone - President, Chief Executive Officer & Director: Thank you, Kurt. Good morning, everyone, and welcome. Please turn to slide 4, first quarter 2015 highlights. We continue to progress on our competitiveness transition from a product to a project business and adapt to the changing project investment landscape that is now better appreciating the value of our solutions and attributes. Project-oriented businesses can have fluctuating quarterly revenue, but the key to success is the ability to control costs, innovate and develop a strong pipeline of projects and execute on existing backlog. We continue to demonstrate strong progress and advances in all of these areas, which Mike and I will be highlighting during our call today. Further solidifying our penetration…

Thank you, Chip. Good morning and thank you for joining our call today. Please turn to slide 5 titled quarterly financial highlights. FuelCell Energy reported total revenues for the first quarter of 2015 of $41.7 million. This compares to $44.4 million for the prior-year period. For the first quarter of 2015, product sales totaled $33.4 million, service agreements and license revenues totaled $3.9 million and advanced technology contract revenues totaled $4.4 million. Gross profit for the first quarter of 2015 totaled $4 million compared to $2.2 million for the same period last year. The gross margin percentage was 9.6% compared to 4.9% for the comparable prior-year quarter. Lower material costs, continued improvements in manufacturing efficiencies and sales mix drove the improvement in gross margin. Total operating expenses were $9.1 million for the first quarter of 2015 compared to $9.8 million in the prior-year period. Increased project development activity resulted in an increase in administrative and selling expenses year-over-year. However, this was more than offset by the year-over-year decrease in research and development expenses, as a number of initiatives related to multi-megawatt fuel cell parks were completed in 2014. Net loss to common shareholders for the first quarter of 2015 was $4.9 million, or $0.02 per basic and diluted share. This compares to $11.4 million or $0.06 per basic and diluted share for the first quarter of 2014. Adjusted EBITDA, which is a measure of cash flow and is based on earnings before interest, taxes, depreciation, amortization and other income and expense, totaled negative $4.1 million for the first quarter of 2015 compared to negative $6.3 million for the first quarter of 2014 on improved margins and lower spending. Now, I will transition to slide 6 titled financial metrics. Total liquidity at January 31, 2015 was $155 million, consisting of cash…

Thank you. Our first question comes from the line of Les Sulewski from Sidoti & Company. Les Sulewski - Sidoti & Co. LLC: Good morning. Thank you. Arthur A. Bottone - President, Chief Executive Officer & Director: Good morning, Les. Les Sulewski - Sidoti & Co. LLC: Mike, I would like to start off with you actually. Could you give us a little more color on the accounting procedure around the Project asset. Is this only projects that are in development prior to sale, does it flow into revenue once complete, a little more color on that please?

Sure. Good morning, Les. Yes. So this quarter with the activity that we're seeing and what we're developing in the pipeline and I used the example of the UCI Medical Center where we're out constructing a project, I thought it was prudent to break it out on the balance sheet either out of inventory and classify it as project assets. As I said in my remarks that will come into revenue recognition once we complete a sale to a permanent investor. So we have a long-term power purchase agreement in place already with UCI actively marketing the project and following the COD date will recognize the revenue on that and this accounting follows what a lot of the larger solar developers do as well. Les Sulewski - Sidoti & Co. LLC: Okay. And is this essentially why the lower guidance?

That part of the reason for the lower guidance, Les, yeah. The timing of domestic revenue recognition later in the year factors into our lower guidance, as well as allocating some additional modules to POSCO Energy during the fiscal year to support their strong local demand. So as a result of shipping modules to POSCO, we don't have all the other revenue that comes with a turnkey projects such as balancer plant and EPC services that will come later in the year and into 2016 as we execute on some of these larger projects that Chip talked about in his remarks. Les Sulewski - Sidoti & Co. LLC: Okay. And then, as far as SG&A, I know you've developed a little bit more cost in the last quarter. How can we look at it from a more normalized run rate?

Yeah. I think what we are seeing in the first quarter, Les, is a normalized run rate, plus or minus the small percentage for SG&A. As we mentioned in the remarks, we have invested more in project development and that's coming through the SG&A line item. Les Sulewski - Sidoti & Co. LLC: Okay. And, I guess, last one, I'll jump back into queue. In your most recent proxy, there was a proposal regarding a share reverse split. What are the – what's the likelihood of that taking place if passed and perhaps maybe a little bit more reasoning behind it, and some typical likely ratios evolve. Les Sulewski - Sidoti & Co. LLC: Sure Les. So I'd certainly refer folks to the proxy statement which has a detailed description around the board's reasoning. For that proposal, this is a request to give the board authorization at a future date to potentially enact a reverse stock split. It would not happen after shareholder approval, and it's a one-year window. If it doesn't occur in the one year, we would go back to shareholders potentially in the future. But it gives the board that option of what we've been told by institutional shareholders is that the stock becomes more attractive with a – potentially with a higher price on it. So it certainly wouldn't have any impact to market cap or liquidity, but feel like it's a prudent tool to have out there for the board to potentially use in the future. Les Sulewski - Sidoti & Co. LLC: Okay. Thank you.

Thanks, Les.

Thank you. Our next question comes from the line of Jeff Osborne from Cowen & Company. Jeffrey Osborne - Cowen & Co. LLC: Good morning. Thanks for all the detail on the call so far and the pipeline information that's very helpful. Mike, I was wondering the $5.7 million on the project assets that Les was asking about, that seems a bit high in my mind relative to just the 1.4 megawatt project. First of all, can you give us a rule of thumb of kind of how that balance sheet line should trend on a per megawatt basis? And then if there is any other projects behind that other than the UC Irvine piece that you called out?

Sure. Good morning, Jeff. So yeah, the majority of that balance on the balance sheet is related to UCI. And thank you for the question because I would like to give a little bit of color around the POSCO megawatt for a project. So when you think about costs coming out of our factory, we talked about $3,000 a kilowatt, somewhere in that range, and lower depending on the size of project. But in addition to that, for turnkey projects, we provide more than just the product outside of the factory. So for this particular project, it's a complete turnkey solution where we're doing all of the installation work. And additionally, a lot of these projects can have heat recovery. I believe this one has a chiller on it as well. And then you look at some projects, which have micro-grid applications. So all of that can add to the project costs and therefore (32:30) the turnkey EPC that will show up on our balance sheet. So it certainly can be a variable cost depending on the customers and application. Jeffrey Osborne - Cowen & Co. LLC: Okay. Arthur A. Bottone - President, Chief Executive Officer & Director: And we would expect to add more into that – there's other questions because you'd just see more of that in this year.

Yeah. Sure. The follow-on to that, Jeff, is we have been actively talking to other folks about power purchase agreements. We've won some LREC awards where we're in conversations with folks about putting PPAs in place and would expect to start construction on those this year as well. Jeffrey Osborne - Cowen & Co. LLC: Got you. So you've made some parallels to the solar industry. I think the solar industry players have talked about kind of a 20 basis points to 40 basis points IRRs by keeping projects on the balance sheet and then selling them off upon completion. Obviously, yieldcos need something producing power right away as opposed to nine months to 12 months from now. Is there any type of return on investment analysis that you've done that you could share with us about the impact of this change in the business model that you've articulated?

Well, I think you summarized it really well there, Jeff. Certainly, construction period financing can be the most expensive type of financing and long-term investors would prefer to buy a project at COD. So it certainly helps the project level of return to the investors as well as FuelCell Energy's margin opportunity and being able to de-risk those projects and deliver on that COD. Jeffrey Osborne - Cowen & Co. LLC: Okay. Just had a couple of other quick ones. One is, is there any discussion at the board or management level about how much cash would be kind of tied up in this line item? Obviously, you've got a lot of working capital, the $40 million from NRG, et cetera. But comparing that relative to the 300-megawatt pipeline that I imagine the bulk of that would want to be done prior to the end of 2016 with the tax credit expiration. If you are successful at even a quarter of that, obviously that's a lot of use of capital. So how do we think about the impact of this business model and how reflective it would be on the 10-megawatt and up (34:48) units versus some of the smaller ones, like UCI?

Sure. So as you mentioned, Jeff, we do have the credit line with NRG Energy and these are the types of projects that we can draw down on, so that provides liquidity for those types of projects. Certainly strong liquidity position for the company around $155 million at the end of this quarter, so certainly comfortable with our ability to execute on these types of projects. And the project financing market right now is very strong and we would expect as larger projects come into construction that there is adequate capital to finance these projects. Jeffrey Osborne - Cowen & Co. LLC: Got you. Two other quick ones. One, any comments about the urgency of the pipeline and relative to the tax credit expiration? And then lastly, can you just update us on the Long Island retendering process, given the disappointing outcome in December, any update there? Arthur A. Bottone - President, Chief Executive Officer & Director: Jeff, good morning. This is Chip. I think I'll take those three and try to remember all the three. The first one was the urgency I think. Yeah, anything we've got on that list, as I think you probably know from experience, that these large projects we can execute if we have them properly or adequately developed, meaning site control and things like that, which is what we have in our process. We can execute those in 12 months or so. And we align all of these projects as well before we sign these contracts with the production capacity we have and all that. So we don't need to do a lot of them, but we do have adequate production capabilities and people to execute those in advance of the end of 2016, which you're talking about for investment tax credit. I would…

Thank you. Our next question comes from the line of Sven Eenmaa from Stifel. Sven Eenmaa - Stifel, Nicolaus & Co., Inc.: Yes. Hi. Thanks for taking my question. Couple of follow-ups on the page 8 table here. So in terms of the pipeline you disclosed, how much of that you would classify as late stage which means, 50%, 60% or a higher probability of receiving an order in late 2015 or in 2016? Arthur A. Bottone - President, Chief Executive Officer & Director: Good morning. This is Chip, I'll answer that. Again, this is just – this is not the complete list. So there's a lot of other element to this. But when you look at that, I would say that you got 50% of that is pretty late stages stuff. When I say late stuff, it's late stage, that may either – we're talking to people specifically after all of the project development process has done, meaning, we talked about site control and things like that or there's active RFPs on the street, so it's least 50% of that list. Sven Eenmaa - Stifel, Nicolaus & Co., Inc.: Got it. And in terms of the current demand of PPAs you have signed, could you just give us an overview like how many megawatts you currently have signed up? Arthur A. Bottone - President, Chief Executive Officer & Director: Well, so PPAs are typically signed by ourselves or whoever the owner of the facility might be. So, for example, in the case of Bridgeport fuel cell park, we set-up a separate LLC that we ultimately sold to Dominion, so that was a PPA that was signed that obviously turned into a project. So I'm not quite sure how to answer the questions on number of PPAs. How many we have out there, I don't know. There is – it's really, I probably know more than megawatts than number of PPAs. But the way this typically works is, as Mike said, with UCI Medical, that was another PPA, and that particular one has not been sold to an investor at this point. But typically, today, these things start with the lease or a PPA. That's kind of the structure and what you see there on that list kind of represents most of that. Sven Eenmaa - Stifel, Nicolaus & Co., Inc.: That's helpful. In terms of NRG, I mean you have now dropped down one project there. Are you at the stage now where you have like a complete set of standardized documentation, which would allow you to kind of streamline the process going forward or was that more of like a one-off transaction here?

Good morning, Sven. This is Mike. I'll take that one. Yeah, so we've had this relationship with NRG now going on a year-and-a-half, have been actively working with their sales and marketing team. They develop pipeline with their customers as well as work with us in developing pipeline with customers. We have developed standard terms and conditions, both between FuelCell Energy and NRG, as well as what the PPA looks like with an end-customer. So the recently announced University of Bridgeport deal, 1.4 megawatt, dropped into a yieldco. We would expect project documents to follow a similar format going forward. Sven Eenmaa - Stifel, Nicolaus & Co., Inc.: Great. And then last question. I just wanted to ask in terms of, if you look at the percentage of completion revenue recognition, how many megawatts do you recognize in the current quarter and what is the kind of cadence there through the year?

So I'll take that one Sven. So number of revenue – number of megawatts recognized in the first quarter, how about if I try to answer it this way and give you a little bit of color around the revenue makeup in the first quarter, and let me just make sure I'm on that slide. But if you breakdown the products revenue that we reported in the first quarter of $33 million, about $9 million of that is power plant revenue and about $6.3 million of that is related to EPC and component sales. So, those two line items together are more or less what we are doing for project development activities in the U.S. and some Europe. The other half of the revenue, about $18 million is related to kits and modules. Sven Eenmaa - Stifel, Nicolaus & Co., Inc.: That's sort of helpful. And actually a last...

And selling to POSCO Energy obviously. Sven Eenmaa - Stifel, Nicolaus & Co., Inc.: Yep, well understood. And the last, I mean, I've seen a little bit of volatility here in terms of the margins around the advanced solutions and also services side from quarter-to-quarter. How should the investors think about the sequential trending on those margins?

Sure. Let me start with Advanced Technology. Advanced Technology, certainly nice margin percentage this quarter, are in the 14% range. As Chip mentioned, we are doing Advanced Technology contract now with private industry, and those have margins versus working on government contract typically come with a cost-share component. So depending on the level of effort, quarter-to-quarter, and mix versus government versus private industry that will impact the Advanced Tech margins, certainly expect positive margins in Advanced Tech and obviously like this margin percentage, I would say that that will be variable in future quarters as the mix related to government type work can be a little bit higher, but certainly targeting double-digit margins in Advanced Tech. As far as service and license margins, it came in around 8% this quarter. The variability there, we have a very steady service business when it comes to maintenance-type activity, that's recognized pretty ratably over the term of the service agreement. As we talked about in prior calls when we do module exchanges at the end of useful life for a module that does drive revenue recognition and margins. So, you look at this quarter's service revenue, that's down a little bit from where we have been in prior quarters and that's a result of really having no module exchanges in the period. That will come up in future quarters along with the timing of module exchanges to the customer side. The other element I'd point out is royalty revenue from POSCO Energy as they do installations, we get royalty revenue. They tend to do chunks of installations which can create some variability in that line item as well. Sven Eenmaa - Stifel, Nicolaus & Co., Inc.: Great. Thank you.

Thank you.

Thank you. And our next question comes from the line of Aditya Satghare from FBR Capital Markets. Aditya A. Satghare - FBR Capital Markets & Co.: Hi, good morning, all. Thanks for taking the question. So this question was asked before, right? But could you sort of help me understand right, what are some of the key criterias when you decide between percentage of completion and then recognition on sale, I just want to make sure I'm clear about that?

Good morning, Aditya it's Mike. So, really the key criteria is the sale of the project to a permanent owner. So when we look at a power purchase agreement with an end customer like UCI Medical Center, there is a firm power purchase agreement in place where you will recognize revenue ultimately from power sale but our plan is to ultimately sell that project to a permanent owner. So again I correlate this to what some of the larger solar developers do. They'll keep it on balance sheet until the COD date, negotiate terms during the construction period with a permanent owner and then sell it at the COD date. So, that's what we're doing here for this particular project. And as I mentioned, we expect additional PPAs like this during the year. We'll build them during the construction period and then recognize revenue at sale at COD. Aditya A. Satghare - FBR Capital Markets & Co.: Understood, understood. So if I then look at the slide number 8 here, is it right to say that when you classify something as direct sale, you already identified an owner and when you classify as a PPA, you still have to identify the end buyer?

Yeah. I would qualify that a little bit in saying that on slide 8, the PPAs that we're talking about there can be with utilities. So, Chip talked about the LIPA example and the Connecticut example where there's an RFP on the Street where the utilities are looking to enter into a long-term power purchase agreement. Those projects will ultimately be owned by a power project investor. It could be a utility, it could be an independent power producer, it could be an infrastructure fund, those projects will obviously get developed, get constructed and they'll be a piece of construction period of financing involved in those as well. Aditya A. Satghare - FBR Capital Markets & Co.: Okay. And then one last question here. So when Chip – Chip earlier mentioned that the 309 megawatts of pipeline is not the total pipeline, right? If we had to think about the total FuelCell pipeline maybe also if you guys could touch about what's happening on the sub-megawatt scale. How large would the FuelCell pipeline be? Arthur A. Bottone - President, Chief Executive Officer & Director: Yeah, Aditya, there's kind of like three buckets here. This is the first time we've actually showed something here because we know that there will be a lot of discussion around the yieldco emergence and things like that. But the other three buckets in just North America, if I stick with this for a minute, you've got these large plants, you've got sub megawatts, and then you've got within the sub megawatts which would be anything say 5 megawatts and down, give or take, you have a broad number of projects like micro grids and I think as Jeff brought it up, how do you figure out the price of the project because it's not a function of the megawatts when you start adding on a lot of different things, so that's North America. Then you got Europe. And I would say that I don't have the numbers right in front of me here. But you are in excess of 500 megawatts of projects if I threw in all those other buckets here. Aditya A. Satghare - FBR Capital Markets & Co.: All right. Thank you. Thanks for the update. Arthur A. Bottone - President, Chief Executive Officer & Director: Okay.

Thank you. And our next question comes from the line of JinMing Liu from Ardour Capital.

Good morning. Thanks for taking my question. Arthur A. Bottone - President, Chief Executive Officer & Director: Good morning.

Yeah. First, just to clarify that $5.7 million project assets. Is that number at cost or are you just (51:58) revenue?

Good morning, JinMing. This is Mike. That's the cost number. So when we ultimately recognized revenue, it will have margin on it as well and that's the cost in the middle of constructing a project, so it's not the complete value.

Okay. Got that. And the – on your project pipeline, I noticed a couple of those projects are under lease. So does that mean in the future, you will put – you will be an owner of those two projects or you will ultimately sell it to some investor?

This is Mike, again, I'll take that one. So, no, we wouldn't be the owner of those. We're working with financial institutions that would ultimately write a lease back to the end customer for those types of projects.

Okay. So it really doesn't matter whether these as PPAs or lease, but you will look for an investor for that on a given project and but for a short period of time, you have to put it on your balance sheet.

For certain projects which we're developing and we have not sold yet, we will put them on our balance sheet for a period of time, yes.

Okay. Got that. And just one last question. Your cost receivable increased to $6 billion. This has been increasing over the past two quarters. Any reason behind that?

No reason behind that. It's related to just terms that we have with our end customers, the accounts receivable is current and collectible.

Okay. Got that. Thanks.

Thank you. And that concludes our question-and-answer session for today. I would like to turn the conference back to Chip Bottone, Chief Executive Officer for closing comments. Arthur A. Bottone - President, Chief Executive Officer & Director: Thank you. Thank you, everybody, for your time and the good questions. I'd like to close this call on kind of three points here. As you can tell from the different dialogue and the conversation, we're actively developing large-scale projects that have investor interest enabled by the improvement and affordability of our solutions. Number two, I'd highlight that the service business turnaround is contributing to our profitability and as a significant growth in the backlog and it is a key differentiator in our space. And then, finally, in discussion of some things like carbon capture, you can see that we have a lot of embedded optionality in our business, using our core technology, with funding from, as Mike said, other partners and governments, there are very, very sizable opportunities. So we tried to share as much as possible with everybody today and hopefully that was helpful. But I would just like to again thank everybody for their interest and have a great day.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone have a good day.