Good day and thank you for standing by. Welcome to the FuelCell Energy Second Quarter of 2021 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-session. [Operator Instructions] please be advised that today's conference is being recorded. [Operator Instructions] I'd now like to hand the conference over to your speaker today, Tom Gelston, Senior Vice President of Finance and Investor Relations. Please go ahead.

Thank you, Jason and good morning everyone. Thank you for joining us on today's call. As a reminder, this call is being recorded. This morning, FuelCell Energy released our financial results for the second quarter of fiscal year 2021, and the earnings press release is available on the Investor Relations section of our website at fuelcellenergy.com. Consistent with our practice, in addition to this call and our press release, we will post a slide presentation on our website. This webcast is being recorded and will be available for replay on the company's website approximately two hours after we conclude the call. Before we begin our prepared comments, please direct your attention to the disclosure statement on slide two of the presentation and the disclaimers included in the press release related to forward-looking statements. The discussion today will contain forward-looking statements, including, without limitation, statements with respect to the company's anticipated financial results and statements regarding the company's plans and expectations regarding the continuing development, commercialization, and financing of its FuelCell technology and its business plans. These forward-looking statements are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements made on this call today, other than statements of historical facts, are forward-looking statements and include statements regarding our anticipated financial and operational performance. Forward-looking statements made on this call represent management's current expectations and are based on information available at the time such statements are made. Forward-looking statements involve numerous known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from any results predicted, assumed, or implied by the forward-looking statements. We strongly encourage you to review the information in the reports we file with the SEC regarding these risks and uncertainties, in particular, those that are described in the risk factors section of our annual report on Form 10-K and the cautionary statement concerning forward-looking statements disclosed in our quarterly reports on Form 10-Q. You should also review the section entitled Cautionary Statements considering forward-looking statements in this morning's earnings press release. During this call, we'll use non-GAAP financial measures when talking about the company's performance and financial condition. In accordance with SEC regulations, you can find a reconciliation of these non-GAAP measures to the comparable GAAP measures in this morning's earnings press release and the reconciliation document posted on the Investor Relations portion of our website. On our call today, I'm joined by Jason Few, FuelCell Energy's President and Chief Executive Officer; and Mike Bishop, Executive Vice President, Chief Financial Officer, and Treasurer. Following our prepared remarks, we will be available to take your questions and be joined by other members of the leadership team. I'll now like to hand the call over to Jason for opening remarks. Jason?

Thank you, Tom, and good morning, everyone. Thanks for joining us on our call today. We remain optimistic about the continuing momentum behind the global energy transition and expect to play an important role with our primary technologies that include distributed generation, distributed hydrogen, long duration hydrogen energy storage, and carbon capture. We are firmly committed to working hard to achieve revenue growth over time by continuing to focus on our turnaround and delivering proprietary technology solutions that we believe solve customer energy needs and aim in decarbonisation. For anyone who may be new to the story, we have included a company overview shown on slide three. Taking a look at full year fiscal 2020 ended on October 31st, we achieved revenue of $71 million, a double-digit increase over the prior year. Our three largest revenue categories are service and licenses, advanced technologies, and generation. All of which represent diversified sources of recurring revenue under multiyear contracts with investment grade customers. Looking ahead, we are focusing on opportunities to generate meaningful revenues from product sales. We see opportunities in markets, including the U.S., Asia and select countries across Europe, and even domestically with certain customers who prefer to own the FuelCell platform. Under our powerhouse business strategy, we have made it a priority to target product sales. We have been taking steps to rebuild our business development and go-to-market capabilities as an essential step in the strengthen pillar of our powerhouse business strategy to ultimately support growth, recruit and onboard strategic talent, focus on market segments, which deliver long-term growth opportunities with repeatable business in carbon capture and separation and hydrogen applications and reenter target global markets and build client relationships. We have many customers highlighted here on the slide who are utilizing our multi-featured FuelCell platforms. Many of these…

Thank you, Jason. Let's begin by reviewing financial highlights for the quarter shown on slide seven. In the second quarter of fiscal year 2021, we delivered revenues of $14 million compared to $18.9 million in the second quarter of fiscal year 2020. Looking at revenue drivers by category, service agreements and license revenues decreased to $700,000 from $7 million reporting in -- reported in the comparable quarter of 2020. The decline in revenue is primarily due to the fact there were no new module exchanges during the quarter, while new module exchanges generated approximately $5.5 million of revenue in the prior year quarter. The second quarter of fiscal year 2021 also included cost estimate adjustments related to changes in the expected timing of future module exchanges, which reduced revenue recognition in the quarter by approximately $800,000. Generation revenues increased to $6.2 million from $4.6 million, primarily due to higher operating output of the generation fleet, which resulted in an increase in generation revenues of approximately $800,000 in sales of renewable energy credits, which also resulted in an increase in generation revenues of approximately $100,000. Advanced technology contract revenues decreased to $7.1 million from $7.3 million compared to the second fiscal quarter of 2020 advanced technology contract revenues recognized under the joint development agreement, or JDA, with ExxonMobil Research and Engineering Company, or EMRE, were approximately $400,000 higher during the second fiscal quarter of 2021, reflecting the continued performance under the JDA with EMRE on fuel cell carbon capture solutions during the quarter. The increase revenues under the JDA were offset by $600,000 less revenue recognized under government contracts during the second fiscal quarter of 2021 compared to the prior year quarter. The loss from operations totaled $17.4 million compared to $8.1 million in the comparable prior year period, as a…

Thanks Mike. Next on slide 10 is a summary of the four major technologies that FuelCell Energy is pursuing, each with its own significant total addressable market opportunity that creates optionality for the company and it's supported by our broad fuel cell platform portfolio. In distributed generation, we currently have 32.6 megawatts installed and operating with another 43.5 megawatts in our product backlog. Our distributed hydrogen and carbon separation solutions are commercially available. And as previously stated, our carbonate distributed hydrogen solution will be implemented at the port of Long Beach, California. Ours is the only platform we know of that can produce both hydrogen and water. This capability has the potential to be particularly significant in areas with constrained water supply, as I previously highlighted. Hydrogen and long duration energy storage using our solid oxide technology is an advanced development and our unique carbon capture technology is currently being developed under a joint development agreement with ExxonMobil Research and Engineering Company. We continue to advance our carbonate fuel cell platform's efficiency, capturing carbon from an external source while also producing power. As with our distributed hydrogen platform, we believe our carbonate fuel cell platform is the only system in the world that can capture carbon from an external source and produce more power at the same time. We can also directly capture our own carbon emissions from our platform for carbon utilization and/or sequestrations. Next on slide 11, illustrates our position across the hydrogen value chain. On the left, you will see a visual illustration of how FuelCell Energy has the potential to deliver hydrogen using three of our platforms, depending on our customer application. Carbonate TriGen delivers power, water and hydrogen. And depending upon the configuration can deliver gray hydrogen, blue hydrogen, when combined with our proprietary carbon…

[Operator Instructions] Your first question comes from the line of Colin Rusch from Oppenheimer. Your line is open.

Thanks so much. Guys, can we get an update on the pipeline of projects that you're looking at, and how they're progressing outside of Connecticut versus you made some progress. But we'd love to see how you're competing in some of the other geographies.

Yeah. How are you this morning?

I'm good. Good to hear your voice. Thanks.

Thanks. Thanks for joining the call. Just to give you a sense of that. As we work to really do the work that we were doing around, the transformation part of our pillar or the big, but another big part of that has been trying to really build our pipeline and build opportunities, not only outside of the state of Connecticut, but around other parts of the world. So, if I give you the sense of the pipeline, as we see opportunities today kind of across the U.S., they represent approximately about 40% of the opportunities that we see the Europe and admitted that least right now is about 34% of the opportunities that we're looking at. And Asia, today as we've reentered that market now, you know, reflect early going about 13% and then across Latin America and other markets, we're roughly about 12%. So, we're starting to see really good momentum in the markets that we're really focusing on and leveraging the -- our product really as a platform, should be think about the way -- I talked about the Toyota solution. That's a scenario where we're offering more benefit than just traditional power or combined heat and power with that type of solution. And so, as we approach customers around the world, that -- that's really a big focus of ours is to make sure that we can leverage the multi-site capabilities of our platform to attract more customer demand for our products.

That's super helpful. I've got two more quick ones. First, on the inside for manufacturing, you obviously had to scale up, raw materials to become a bigger consideration from a purchasing perspective. More obviously seen a ton of inflation around some basic materials. But just want to get a sense of how you guys are positioned on that in terms of exposure on raw materials and any sort of pageants that you may have in place at this point?

Hey, Colin, what I'm going to do -- I'm going to let Mike is out here, Chief Operating Officer, address that from a supply chain perspective.

Colin, thank you very good morning, and thank you very much for your question. Great question. So, we have a very well established and solid founded global supply chain. These relationships stand that is the periods of time. And we have pursued with our supply partners in many cases from fixed forward priced -- pricing agreements for -- to ensure continuity of supply, as well as protecting against unfavorable market dynamics. So, we feel good and confident about the positions that we have for our supply line and look ahead to executing on the projects as articulated.

Okay. Perfect. And then one last one, [technical difficulty], obviously interest rates are tremendously low here. You guys have really supplemented the balance sheet and then a really comprehensive way. Can you talk a little bit about the potential of refi -- existing portfolio, what sort of savings we might see on that and general sense of timing that you are [technical difficulty] those sorts of opportunities.

Yeah. Good morning. Good morning, Colin. This is Mike Bishop. Thank you for joining the call. So, as I mentioned in my remarks, the company, as we bring projects to commercial operations, we expect to bring in permanent financing for those projects, both in terms of tax equity and back leverage. As we've done for the projects that are currently operating in our portfolio, we have over 40 megawatts of projects coming online. So that's an opportunity to recycle capital back into the company as those projects come online. As we mentioned in our remarks, San Bernardino project expected to go commercial operations in fiscal Q3, and then the Groton subbase project expected late summer of this year.

Perfect. Thanks guys.

Yeah.

Your next question comes from the line of Praneeth Satish from Wells Fargo. Your line is open.

Thanks. Good morning. Just wondering if you could comment on the support you're seeing generally from the Biden administration for hydrogen adoption. I think there was a proposal by the DOE to try to -- earlier this week to try to get the cost of green hydrogen down to a dollar per kilogram in a decade. So, just curious for your thoughts on this? And maybe the likelihood at some point of greater subsidies in the -- like from the federal government.

Good morning, Praneeth. Thank you. And thank you for that question. We were pretty optimistic about what the Biden administration is trying to do overall with respect to the energy transition and even the focus that they're around -- just strengthening the reliability of the energy grid itself. And we think our technologies will have an opportunity to participate with opportunities around micro grid, as well as certainly, across the three platforms as we discussed for hydrogen. If you look at the U.S., we certainly see the U.S. trying to figure out how to move the hydrogen economy forward and playing a bit of catch up with markets like Europe and Asia in terms of the plans that have been announced across different countries across those regions. But we think that the Biden administration from everything that we're hearing and conversations that we have with the DOE is, we do a lot of work with the DOE that there's going to be tremendous support for hydrogen. And we look forward to that. And as we indicated, we've got DOE supported project that we're working on that we'll do with Idaho National Labs, which is really gets to -- again, really thinking about how we leverage the multi capabilities of our platform. So, as we talked about, we have the ability with our solid oxide platform to produce hydrogen in a very highly efficient manager -- that manner, as we talked about 90% we're demonstrating in the prototype that we're running here. But to be able to leverage that platform and then integrate and extend the value of nuclear by utilizing waste heat to even make the conversion of that electricity even more efficient, it's just another example of how, one is, the Biden ministration dailies supporting our work and leveraging the multiple capabilities of our platform.

Great. Thanks. And just one more question. I'm just wondering if you could give us an update on your carbon capture progress so far, and maybe the roadmap there to commercializing it?

Sure. A great question. And what I'll do is I'll maybe ask Tony Leo, our Chief Technology Officer, to give you a sense of the work that we're doing there and the progress that we're making.

Sure. So, we're making a lot of progress with our joint development agreement with Exxon and a little bit background on the objective of that. Our carbon platform has been optimized over the years for power generation. The Exxon program is developing modifications designed to optimize it for carbon capture. So, what we've been able to do all the work we've done with them so far has really increased the capabilities, the amount of power we can make while we capture carbon. We continue to do that work. And we continue to think about where the project will be demonstrated. Exxon has publicly talked about doing a demonstration at one of their facilities in the Netherlands in Rotterdam. So, we are continuing to develop the plans for that demonstration, as well as evolve the technology for that project, as well as project beyond the timing. Exxon is still finalizing with us. So, we can't be very specific about the timing, but we're happy with the progress from here.

And Praneeth, just to add onto that. I mean, as you think about our platform and carbon capture, we really -- we think about it as both. How do we leverage our platform around carbon capture related to sequestration and apply that technology toward large scale applications whether that be gas power generation or industrial type applications. But also we think about carbon from a utilization standpoint and all the innovation that's going around, how carbon is utilized in different ways, whether that's making concrete and/or plastics as an example, or traditional uses for carbon like dry ice or pH balancing and water supply. But just to give you an example, again, of all of our platform, with respect to leveraging carbon, we're -- we had the ability to capture carbon from our own platform. We can actually purify that CO2 to beverage or food grade, and deliver that CO2 to a food company or a beverage company for utilization, other being processing, or carbonated beverages, while at the same time with that onsite generation delivering reliable electricity. And as I'm sure you appreciate, the thermal use in most of those locations is another area that our platform can deliver value, but increasingly deliver energy security to those production facilities, in addition to certainly around pricing on carbon, as an ingredient in their products, which is going to become an even bigger issue as we continue to see prices put on carbon and/or reduction in traditional sources of carbon from a supply standpoint.

Got it. Thanks.

Your next question comes from the line of Jed Dorsheimer from Canaccord Genuity. Your line is open. Once again, your next question comes from the line of Jed Dorsheimer from Canaccord Genuity. Your line is open.

Hey, sorry. I had it on mute. Thanks for taking the question guys. I guess, just on the generation side, what changed in pricing quarter to quarter? Is -- it ticked up, but on the same base, how should we think through those short-term dynamics there?

Hey, Jed, how are you this morning? If I didn't tell you that you're on mute or something [technical difficulty]. Great question. And then I'll actually have Mike Lisowski talk about this a little bit. But, in general, right, the way you should think about it just increased output with the things that we've been doing in terms of enhancing the operations of our current generation portfolio. But Mike, I'll let you speak to that a bit.

Yeah. No. Jed, thanks for the question. And Jason, you hit it right on the mark. Generally, the improvement there is based on the overall output generation of the fleet. This is built and centered around the improvements that we've made with respect to replacement of modules at end of life and other outperformance improvements that we've made across the fleet. And that those are the drivers for that improvement.

Got it. Thanks. And then, I guess, just the percentage of the base that gray versus blue, I know the -- TriGen in sort of the capture is a relatively small portion. But I'm just curious, what is that percentage?

Would you say the percentage of the base?

So, the percentage of the fleet that can do in terms of your base that's able to do gray hydrogen generation that isn't -- doesn't have any of the capture technology versus what is sort of the non-R&D that actually capturing the carbon that's considered blue.

Yeah. So, Jed, if you think about our existing operating portfolio today, none of those platforms that are currently deployed or grid connected or behind the meter of the customer are doing electrolysis or hydrogen production. So, if you think about our platforms on a go-forward basis, right, we are carbonate platform. The way -- I would try to get you to think about it is if you think our carbonate platform, we have two ways of delivering hydrogen with our carbonate platform. And across the carbonate platform, we can deliver gray hydrogen, blue hydrogen, or green hydrogen, depending on the configuration for where that platform is deployed. So, the way that we do that is either with our TriGen platform. So, if you just take the Toyota project, as an example, where we're using direct biogas, that is going to deliver green hydrogen, carbon neutral power and water off that TriGen platform. So three value streams get delivered to Toyota. Also with that carbonate platform, we're working to commercialize the ability to take that same carbonate platform and run it in reverse mode for electrolysis. And again, with that platform, depending on the configuration, so let's just take a configuration where we're using natural gas in this case to produce hydrogen, we would be using natural gas as an input fuel and electricity, and converting that through electrolysis to hydrogen. And in that case, great hydrogen. And then, also if we were using biofuels, right, that could be green hydrogen. And if we were doing carbon capture with natural gas and electricity, that could be blue hydrogen. And then if you take thirdly, our solid oxide platform, again depending on the configuration, so let's say we were doing electrolysis and we were using the input was renewable energy sources, wind, or solar, as an example. And we were using that electricity to convert the hydrogen. That would be green hydrogen. But if we're using grid electricity, kind of the blending of nuclear and renewable and gas and coal, we would be making great hydrogen in that configuration. So, it really depends on the configuration, but across both the carbon and solid oxide platform, we have the ability to deliver hydrogen. And depending on the input sources, we can deliver the various colors of hydrogen, if you will.

Is that -- thanks. That's helpful. So, I guess it begs the question, I guess, why focus on the U.S., why not focus your efforts on Cutter [ph], for example, which has its entire economy in -- based in shipping LNG, where you would have the most fruitful marketing in terms of, is it the infrastructure or the demand for hydrogen is just not there. Or is there some other reason instead of focusing on sort of these small -- smaller projects?

Yeah. So, we are not just focused on U.S. as I -- as we talked about part of our powerhouse business strategy has been to move our activity into our shrinking and growth phase. Part of that is adding resources, which equates to market coverage so that we can pursue broader opportunities across the globe. And as we indicated, we're making progress in terms of our hiring there and deploying resources, as well as relationships in various markets to help with those efforts. And we're recruiting themselves people, Jed. So if you're looking at, you can -- we need a great salesperson in that part of the world, so.

Sure. Well, listen, I appreciate it. I'll jump back in queue.

Thanks.

Our next question comes from the line of Noel Parks from Touhy Brothers. Your line is open.

Hey, good morning.

Good morning.

Just a couple of things. Could you just talk a little bit more about the new project in Derby? Just curious about, what the lead time was from inception to signing, whether the pricing out of the deal is more or less typical.

Sure. So, let me make sure I'm answering the question you're asking. Are you asking about the 2.8 megawatt award that we discussed or--?

Exactly. Yes.

Okay. Yes. So, that project was part of a program called shared clean energy facilities, which was an open competitive bid process that we participated in the State of Connecticut. And we won that project as part of that open bid process where we competed against other generation resources like wind and solar. The project - award -- award I must say the bid process and the award process lasted over several months was the process. And then, upon being awarded that project and now having assigned PPA, it's part of our backlog now, and we'll intend to move forward with development and construction of that project.

Great. And for San Bernardino and Groton Navy are both coming online, sort of later in the summer. Just for some perspective, could you talk about, I guess, the usefulness of having new fully life projects, as sort of just in demonstration, as far as, trying to get new contracts. And if you were replicating a project like San Bernardino today, just curious, where do you think the costs would be this time around either efficiencies or lessons learned versus, I guess, maybe labor materials service environment.

Yeah. No. I think, I might've missed the first part of your question. But in terms of San Bernardino, maybe I'll speak to that one here just a little bit. And then I'll ask maybe Mike to jump in. So, the way you can think about a project like San Bernardino is that it's more representative of other projects that we've done that are leveraging onsite biofuels for the production of carbon neutral power. If you think about that project just as we did in 2019, if I have my year right, the Tulare project as an example, where that was another example of a wastewater treatment facility that was using aerobic digesting to produce biofuels and was actually flaring that gas. We were able to leverage our technology to utilize that fuel to produce clean power at -- and at Tulare and the State of California we're doing the same thing with San Bernardino, which is another example of leveraging onsite biofuels, which we think is a differentiated capability for the company. And we think that there's opportunities to do that across other areas where wastewater treatment plants or other areas where biofuels are being produced. I mean, it just stayed with California for a second. If you look at legislation there now that requires a food waste, not go to recycling, but then it uses for digesting, that's going to be another source of fuel as an example that we'll look to leverage as in terms of creating opportunities for the company with that platform. And that enhances grid liabilities -- grid reliability and resiliency as well. And so, we were very excited about those kinds of opportunities. The other example is if you think about the project you mentioned on the Navy base in Groton, Connecticut, that's an example where we are excited about the fact that we're participating in a project where the U.S. government and the military is committed to enhancing reliability on its installations. There, with our platform, we will be able to provide micro grid services to the Navy in addition to grid power to the Groton area, enhancing the reliability of not only the grid, but enhancing the reliability of the Naval base operations as well.

Great. And yeah, I was sort of getting at -- as -- I am sorry. I didn't mean was somebody else going to jump in?

No. Go ahead.

Okay. Well, just thinking if -- the next time around, if you had a similar water treatment project, do you think the cost this time around -- however many years later after your prior ones, would be similar, do you think there's a cost curve you can scale? I guess, I'm just trying to think about how the economics might change as you replicate more and more projects like this over time.

Yeah. So, I think if I'm understanding your question correctly, obviously every project we do, there are opportunities that we take away from a learning perspective that we learn how to maybe think doing onsite construction differently. How we think about our sourcing of EBC contractors as we build scale and in our manufacturing capabilities, all those things will contribute to us being able to lower actual costs of the next platform, right? And so, we look to continuously through -- continuous improvement and lean manufacturing and the way in which we approach each and every project to find ways to bring down overall costs every time. And to your point in terms of the next project, keep in mind, right, the technology that we're deploying is replicatable, it's the same technology. It's our same proprietary gas cleanups gated. So, it's our same carbonate fuel cell platform. So, we're not doing something new every time. And that adds to obviously the efficiency and opportunities to drive down costs.

Great. Thanks a lot.

Thank you.

[Operator Instructions] Your next question is from the line of Jeff Osborne from Cowen and Company. Your line is open.

Hey, Guys. Just a couple or actually one -- sorry -- the Connecticut 6524 program is Beacon Falls eligible for that?

Yes. Well, first of all, I should say, hello, Jeff. How are you this morning? But the answer is yes. A project like that would fall into that legislation, assuming Senator by the -- by the governor.

Perfect. Thank you.

Your next question comes from the line of Chris Souther from B Riley. Your line is open.

Hey, guys. Just a quick one then on module exchange timing for the rest of the year. Are there any other key module exchanges that you're expecting throughout the year, or how should we think about the timing of some of that?

Chris, thank you very much. Great question. This is Mike Lisowski. So, as you know, module replacements, they're in the ordinary part of our business and we do them when we need to do them. And the overall our build replacement plan remains unchanged. We're really focused around for specific projects going forward in the future that we're going to be making module exchanges. And that's really a mixture of lending between projects that are in our generation portfolio, as well as under service agreement. And our manufacturing plan is in alignment with supporting those module replacement. So we're well-positioned to support that.

Understood. And then just another one if I could hear, sorry, to kind of delay things. But I wanted to get a sense of the pipeline, if you could kind of break it down between people looking at what you guys are going to be doing with Toyota and seeing potential with some of these additional value streams versus they were distributed generation, and then some of the -- longer term opportunities, where -- if you could kind of break down the pipeline to kind of piggyback on Jed's question before?

Yeah. Thank you. We -- just to give you maybe a broad sense, right, in terms of how we think about that and the opportunity to pursue them, we see a lot of opportunities around the leveraging biogas, like we just talked about. We also see opportunity for our platform, as you think about edge data centers. When you think about the -- what an edge data center needs, it needs reliable power. It also needs a lot of chilling. And the fact that we can integrate with absorption chilling, it creates an opportunity for us. We're seeing opportunities across both education and healthcare sectors, food and beverage. As I described, we see opportunities around government sector i.e. military as the fortification of our installations across the U.S. continues to be an important priority for the administration. And across industrial and processed type for manufacturing, we're seeing growing demand for not only reliability, but frankly as a way to try to find authentic ways to try to really contribute to decarbonisation as opposed to what's typically done in terms of leveraging like virtual PPAs around renewable energy. And then we certainly anticipate when it comes to micro grids, both for commercial and industrial customers, but also for utilities, there's a -- an increasing desire to implement micro grid so that they can ensure that the central resources remain online. And with micro grid, having the opportunity to eliminate or significantly reduce a lot of the above-ground risks, we're seeing a lot more interested in those kinds of opportunities. And then certainly across growing demand around pharma and biotech as well, where we're seeing opportunity for reliable power generation. As you can imagine, those facilities require reliable power. A lot of money is spent in R&D and so having power available is critical. And then being able to leverage aspects of our platform like steam and their manufacturing process. So, again, really focusing on customer segments and opportunities where we can deliver enhanced value to the customer by really leveraging the full capabilities of our platform. So hopefully that gives you a sense of how we're seeing the opportunity across customer segments.

Okay. No. That's very helpful. Thanks guys.

Thank you.

Your final question comes from the line of Eric Stine from Craig-Hallum. Your line is open.

Good morning, everyone.

Good morning, Eric.

Good morning.

Hey, just wanted to touch on the product side of the business. I know that's clearly a focus. You talked about reengaging there, so maybe what have been some of the gating factors? What are some of the steps you're taking and maybe a timeframe to when you think that you start to see some traction there?

So, Eric, in terms of the product, are you talking about the sales pipeline? I am assuming …

No. I'm talking about just product sales. I mean, obviously, you're making great strides growing generation, but I know products -- selling product along with that as part of the mix is one of your objectives. So just thoughts there.

Yeah. So, as we -- as we've been working through our business strategy, one of the things that we focus the first several months, obviously, on fixing our balance sheet and creating some liquidity for the company are -- sales cycle generally for our utility scale projects range anywhere between 12 to 18 months. And so, if you think about where we are on that timeline, we fully anticipate that we'll start to convert projects that we have in our pipeline to sales and many of those opportunities kind of around the world are opportunities to actually be product sales. But obviously with each one of those -- we bundle a service agreement that runs could turn -- coterminous with the life of the asset. So that's generally as a 20 year kind of service agreement as well. So, we fully expect to start to see some of those convert to sales opportunities. And you'll see a mix of product sales in addition to what you've traditionally seen for us for a while now, PPA's as well.

Got it. Thank you.

There are no further questions. I'd now turn the call back over to Jason for closing remarks.

Jason, thank you. And thank you all again for joining us today. We will continue to execute on our powerhouse business strategy, working to deliver profitable growth and optimize returns. The FuelCell Energy team is excited about our work to deliver on our purpose, to enable the world to live a life and powered by clean energy. And we are committed to delivering long-term shareholder value. Thank you for joining our call today. And I hope everyone has a great day. Thank you.

That concludes today's conference call. Thank you everybody for joining. You may now disconnect.