Good day, ladies and gentlemen, and welcome to the FuelCell Energy Fourth Quarter 2015 Results Call. At this time, all participants are in a listen-only mode. Following the speakers remarks, we will host a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would now like to turn the call over to Kurt Goddard, Vice President of Investor Relations. Sir, you begin.

Good morning, and welcome to the fourth quarter 2015 earnings call for FuelCell Energy. Yesterday evening, FuelCell Energy released financial results for the fourth 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. I would now like to turn the call over to Chip Bottone. Chip?

Thank you, Kurt. Good morning, everyone, and welcome. Please turn to Slide 4, recent highlights. Recent highlights include orders from repeat customers in our utility and on-site markets. In addition, we are executing on key strategic initiatives such as advancing our finance capabilities, expanding our global manufacturing capacity and developing new markets for our solutions. In November, we announced jointly with our existing utility customer, United Illuminating, that we will install a utility owned multi megawatt fuel cell power plant configured as a micro-grid. Our solutions are well suited for micro-grids a market with significant potential. We have the expertise to model, build and operate micro-grids, a unique capability and important differentiator. In October, we announced that we will install a 1.4 megawatt power plant for an existing customer Alameda County, California. The County will purchase power and heat under a 20-year power purchase agreement or PPA. Project like this demonstrate our ability to create real value for customers. They also demonstrate our ability to finance power projects and offer attractive financial options for our customers. These projects have contributed to our expanding total backlog of $381 million increasing both sequentially and year-over-year. Advancing power project finance is a key element of our business strategy. We continue to access new sources of capital providing our customers and our company with greater financial flexibility and returns. As we just announced, PNC Energy Capital extended the $30 million leasing tax equity facility. This facility provides capital for us to retain ownership of select projects while efficiently monetizing tax benefits. We are pleased to have a relationship with world class entity like PNC. In 2014, a $40 million committed five-year project finance facility was extended by NRG Energy. This provides construction period financing and project finance for terms up to five years. We…

Thank you, Chip. Good morning and thank you for joining our call today. Please turn to Slide 5 titled Financial Summary. FuelCell Energy reported total revenues for the fourth quarter of 2015 of $51.5 million, compared to $54.4 million for the prior year period. Gross profit for the fourth quarter of 2015 totaled $3.1 million, compared to $6 million for the same period last year. The gross margin percentage in the quarter was 6.1%, compared to 10.9% in Q4 2014. Total operating expenses were $11 million for the fourth quarter of 2015 comparable to the prior year period. Net loss to common shareholders for the fourth quarter was $9.7 million or $0.38 per basic and diluted share. This compares to $5.5 million or $0.24 per basic and diluted share in the fourth quarter of 2014. The per share net loss figures for both periods are adjusted for the 1-for-12 reverse stock split completed in early December. This action was undertaken pursuant to the shareholder approval granted in April 2015. Our 2015 proxy season explains the reasons for the reverse split and the expected advantages to the company and our shareholders. The company's total liquidity at October 31, 2015 was $123 million consisting of $85.7 million of cash and cash equivalents including restricted cash and availability of $36 million on a project finance facility extended by our partner NRG Energy. The cash balance at the end of the fiscal year does not include $10 million received from the State of Connecticut Department of Economic and Community Development in the month of November under an assistance agreement loan for the first phase of our North American manufacturing facility expansion. Backlog increased sequentially for the second consecutive quarter totaling $381 million. Backlog includes product sales orders of $91 million or 41 megawatts. Service…

Thank you, Mike. Please turn to Slide 8 Preferred Power Generation. I’d like to share with you some insight as to why recent customers chose our solutions, the evolution and positioning of our offering and comment on the high level of activity that we have developed. Utility owned micro-grid projects are interesting in many ways. Town wide micro-grids are being pursued in the Northeast to mitigate extended storm related power outages. This new multi megawatt project with United Illuminating powers critical facilities in the town. The power plant will be located at a high school and will be the only power source for this micro-grid, highlighting the value of the reliable power generation in FuelCell. We will design, build and operate the micro-grid. If single source to execute and operate assures the exceptional value offered by this type of application is realized, this project is replicable for public and private businesses. Fuel cells can be the sole power source for micro-grids as the application illustrates. This can also be combined with other forms of power generation such as intermittent solar power as illustrated by a number of other micro-grids that include our FuelCell solutions already. Also, our solutions are an example of local economic development contributing to both the municipal and state tax base with property, sales, payroll and income taxes. The county of Alameda, California or repeat on-site customer, will be installing a 1.4 megawatt power plant in CHP configuration at the Santa Rita Jail. Under a 20-year PPA, our customer makes no upfront capital investment and pays on a per kilowatt hour basis only for the power produced at a price that is lower than the electric grid. Our PPA structure is ideally suited for customers that want to realize compelling operating savings without investment of their capital.…

[Operator Instructions] And our first question comes from the line of Sven Eenmaa with Stifel. Your line is now open.

Yes. Thanks for taking my question. Can you hear me?

Yes. Sven, good morning. This is Chip and Mike.

First, I wanted to ask, in terms of your energy revenues next year, what is the expected level of those revenues? What is expected gross margin of those revenues and how many megawatts do you intend to retain on your balance sheet to support those revenues?

Hi, Sven. Good morning. This is Mike. I’ll take that one. So, to answer your last question first, this new line from PNC Energy Capital is committed for $30 million of project. So, these will be 1.4 megawatt project, so that will be about three or four projects which will execute during the year. As we said in our release this morning, the first one is expected to be the UCI project which is built and is going through final commissioning now and there’s other projects which will come online during the year. On the slide we depicted revenue – total electricity revenue over the term, and these are generally 20-year PPAs that we enter into, are in the range of 18 million to 22 million. So, if you go over 20 years, it’s about $1 million a year of electricity revenue. So, as we think about these building up over this year, you’re adding four plus million a year of additional electricity revenue coming through our financial statements. Now that won’t all come through beginning in the first quarter, but it will come through over time.

And could you remind us what's the margin profile of that?

The margin profile as we showed on the slide, we expect margins for electricity sales to be in the low to mid 20% range which is higher than what we currently receive on service agreement which is mid-teens to low 20s, so improved margin profile from the company retaining these types of assets on balance sheet.

That's very helpful. Just to clarify on that PNC financing, which obviously is a positive for you guys, what is - since they will be providing a tax equity, will they take ownership of those plants at some point and you will have a turnkey sale as well or that's not the structure?

So, Sven the structure is, it’s a tax equity sale leaseback structure where PNC takes ownership of the assets through the sale leaseback structure under capital lease accounting which is what we’ll do on our financial statements. There is no revenue recognized from that sale, but you get the higher electricity revenue over time.

Got it. On the Beacon Falls project, what are the key dates for investors to look forward to hearing in terms of when is the siting decision expected and when do you guys have a decision of where they could go or no go in terms of construction here?

Seven, this is Chip. Let me take that. So, some of the key dates probably the one closest is the Siting Council on early January would put out a decision, which we expect that to be favorable based on the different meetings and public filings and things. As far as the - and there’s a bunch of work going on, contractual engineering and other things as well that we'll continue to work with O&G on, which will carry on until the bid day which currently is the latter part of January. Once the project is bid in and there’ll be others as well. That takes several months and there's back and forth questions and things like that. So, we could see an outcome of this thing in – some indication perhaps, the late first quarter or second quarter of 2016.

Got it.

I would just remind you though of one thing, that once you develop these projects, these are assets with a shelf-life. So there is - a good project will get finance one way or the other, is what I would say. So the fact that we’re developing this thing and frankly other people are spending money, there is more one ways to perhaps execute this contract, but right now the primary one focused on is biding into RFP.

That's very helpful. The last question from me is you indicated that, in terms of next year's outlook, you expect turnkey sales to pick up in the second half of the year. How many of those projects are currently in your backlog, or where do they stand in terms of your pipeline activity?

Sven, this is Mike. It’s a mixture and as Chip just mentioned, the Beacon Falls project, that’s a project that you could look to - that could come out of pipeline into backlog as that project progresses. That would be an EPC product sale to the owner of the project and other projects like that. So, I would say, it’s a mixture.

Got it. Thanks very much.

Thank you. And our next question comes from the line of Carter Driscoll with FBR & Company. Your line is now open.

Good morning. Maybe you could elaborate on some of the discussions you had about New York pursuing a micro-grid strategy and maybe an update on the RFP activity you're expecting out of the island. And I have a couple of follow-ups.

Sure, Carter. Welcome. This is Chip. Let me take that. There is - specifically in New York, there’s a variety of things going on. At the highest level they are revising their strategy and talking about lot of different programs which are all - we're in the mix on that discussion which will have a favorable I think future to it. But specifically there are multiple types of programs that the state is doing. There's micro-grid projects that we’re involved with several of them. There is probably over 20 of them in the state either directly or through some other folks as well. LIPA themselves has multiple things going on from feed-in tariff projects that we’re participating in and trying to finalize to an RFP that's pretty sizeable for South Fork that we put proposals or proposal in for that. And then there is the expectation that LIPA specifically will have an RFP come-out this year sooner rather than later that will be even bigger. So if you kind of pull it all together, there is a lot going on in New York and I think more to come as they develop this REV document they call it in this year as well. Q – Carter Driscoll: So if I heard correctly, you did say you believe the RFP from LIPA is going to come out before the end of the year? A – Chip Bottone: Yes, well the end of '15 - I can’t tell you exactly when it will come out, I mean we are almost at the end of '15 but it was supposed to be out at the end of '15, it may come into '16 but there is already other RFPs that we responded to, it was my point, pretty sizable projects in Long Island and there is others in the works as well in New York. Q – Carter Driscoll: Okay. Obviously, with the two financiers in place, that certainly is going to help your execution on your kind of shift in strategy and diversification of revenue. Is there potentially any change with the exit of Mr. Crane from NRG, who is obviously a very high promoter of their clean strategy? Is there any potential change in that relationship you envision as they separate those assets or even if it's not necessarily clear what they're going to do? A – Chip Bottone: So Carter thanks for asking that question, we thought we might get that question on the call. So first let me turn it over to Mike to talk about, what we have in place right now and then I’ll give you some commentary on the business aspects of how we see things going forward here.

Yes Carter. The facility that we have with NRG is a committed facility with a five year term on it. We entered into that in 2014. So we’ve accessed the capital under that facility through 2019. We’re actively utilizing the facility on active project financing relationship with NRG and no changes whatsoever to that project finance facility. A – Chip Bottone: So Carter that’s kind what we have in place. The other thing I would say that we have a board member Chris Sotos who is on our board as well and that remains in place. What I would say about the commercial aspects of NRG is, there is a lot of talented people in that company, we know Mauricio, the new CEO and a bunch of other leaders. And why I think I’m not going to comment on their strategy, I would say in conversation we’ve had with them, they would agree with us that the things that we offer are very valuable as far as the portfolio. So, well they might be taking some actions on some of their other assets, I think we have a path forward with them to actually increase our working relationship on the commercial side of things and then they have other assets in place such as NRG Yield and other things that we put assets in. So I think from our perspective here, we’re looking forward to moving forward with those guys after they made some changes in personnel and some other things.

Okay. Maybe a question about the carbon capture. I know it's a process that is going to undertake over let's say the next 18 months. Do you - obviously the big deal that came out of Paris is still not necessarily nonbinding, but certainly a lot more verbal commitments from a number of countries to controlling the carbon issue. Do you see this issue changing the climate in the U.S. from a very top level? Do you envision a carbon tax coming down the pipe, or is this more reaction from utilities to the Clean Power Plan that has been finalized in this country? From a top level, it seems like a very interesting opportunity, and yet we've seen a lot of these kind of high-level pronouncements in the past, especially after Kyoto in 1997, and nothing really came from that. So, I guess I'm trying to get a sense of the magnitude of the real opportunity versus kind of the pie in the sky numbers that typically get thrown out there, and the timing of that versus the announcement you made with the DOE last quarter.

So, there's lot to answer there Carter to give it a shot. So first of all, without that new announcement I can just tell you that the people that have assets in the U.S. are taking action whether there is agreement on that or whether there is complete adoption of the clean power plant because we’re talking to these people. So they know that if you can, you do, we’re looking for those affordable solution it doesn’t create other problems and as you probably know in the field of carbon capture there has been quite a few projects out there that were expensive and were high cost and perhaps didn’t go as planned. I can tell you our reception from big utility companies in United States that have coal fired power plants with our strategy, with our price points of things like that, it’s been absolutely come talk to us, which is kind of nice. So I would say that that’s going down a very positive path and I’m satisfied with that and our plan is to go after the people that could really use our solution in large scale. So, for example this project that we have with the Department of Energy, we’re going to leverage that into a much bigger play which is really my comment. I think relative to the discussions in Paris what that's really done has naturally brought more interest outside of the United States to places like China, Korea, parts of Europe that perhaps had a different game plan now. It's not binding but I can just tell you that we have technologies in this country, in this company in fact that could do a terrific job for the folks in those other countries and we will be working that pretty hard. So I think that’s giving us a kind of nice wind in our sail relative more to international application of this but the market in the U.S. is going to move forward anywhere and we’re in a pretty good position to capture that.

Perfect. I appreciate that commentary. I’ll get back in the queue.

Thank you. And our next question comes from the line of Jeff Osborne with Cowen and Company. Your line is now open.

Good morning guys, and thanks for all the detail so far. I just had a couple of quick questions here. One is on the PNC front and just general financing that you're in discussions with today. Can you just talk about what the expected returns are relative to, say, the more mature wind and solar industry that banks obviously know well? Obviously, with Bridgeport up and running, there's probably an increase in some comfort versus two or three years ago, but I'm just trying to get a sense of what the perceived risk premium is for fuel cell technology from you folks versus, again, wind and solar. A – Mike Bishop: Sure, good morning Jeff, thanks for joining the call. So, we’ve been obviously active for a while with PNC and others really understanding the marketplace chose PNC as a partner given their strong experience in the renewable and clean energy space, they’re obviously very active in solar. Our program is modeled after solar program with essentially 10-year sale leaseback structures, with the 100% loan-to-value type structure, fully monetizing the tax benefits and it’s something that we expect to grow with PNC overtime. The $30 million is representative of project that we have – have in development but expect to continue to grow this out. So we’re not going to get into exact details of the term Jeff, but I can tell you it’s comparable to what they’ve done with other players and other clean energy industries. Q – Jeff Osborne: Great. That's good to hear. Maybe for Chip, can you talk about the POSCO relationship? You highlighted the manufacturing on the call, but what are you seeing from their efforts in the IPP space, both in Korea as well as from a broader Asia perspective of driving demand, especially…

Right. So anyway, so back to POSCO, so, I mean, just operationally, I think I shared on the call where they’re at. They are doing what we said we’re going to do. I would say that from their perspective, I think we’re talking about perhaps some new technologies there that would enable them on top of what they’ve already built here, but new technologies that would allow them to continue to grow that pipeline of activity. And as you may recall they typically have projects that are pretty large, you know, they were the ones that did the large projects in the world. So I can’t go into the details of their pipeline, but their typical projects are 20 megawatts plus when they do something. So, but I would say that they’re going to execute on that. And I would see that we talk to them about more technology that allows them to both lower their LCOE, localized cost of electricity, or some of these other markets that just clearly demand for such as hydrogen or perhaps carbon capture out there in Asia.

Got it. I just had two other quick ones, one for Mike. What is the kind of the key parameters that you would have us look at for achieving the upper end of the guidance range versus the lower? Is it a positive outcome with Beacon Falls and some percentage of completion revenue that would flow through late in the year for that to get to the upper end, or is there some other like the Killingsley site or something from Long Island that might mature? What are we thinking of that?

I’d say, all of the above, certainly Beacon Falls is the biggest example of that, but as Chip mentioned and you just mentioned there is other projects under development on the utility side of the meter. Now on the customer side of the meter as we’ve described we will put a pool of assets into this sale-leaseback structure. However, we’re still actively looking to sell projects to end users or project developers as well. So you’d expect to see some of those types of projects come through revenue recognition later in the year or two.

Got it. And I just had a question on the tri-state RFP, and certainly some of the comments were interesting within NRG energy supporting the use of fuel cells for it a couple months ago with the responses. But can you just talk about, if you were to get a favorable outcome with Beacon Falls, how the field construction timeline - I think that goes through 2019 with the multiple segments of that matches up with expectations of the RFP from a power delivery perspective? So is there any gaps of like when you might have, say, call it a 20 megawatt block done with Beacon Falls that isn't participating in the actual RFP process, and so there is a disconnect between mechanical completion versus actually delivering electrons?

Jeff, this is Chip. Let me try to take that. First of all, there is certainly one RFP that’s out on the street right now in Connecticut that you’re referring to, that’s what we called the large RFP that’s basically 20 megawatts and above, okay. So right now the plan is that we will bid that in there with O&G being the lead, because they own the property and are the developer there. But yes, that’s going to be – its 63 megawatt, its several hundred million project, right, just a construction piece, not to mention the operating pieces even more, but the – if they start in 2016, I would see us - we have a mapped out plan with those guys based on other improvements we have to make to that site over basically the next 12 to 18 months. But in addition to that, we expect a 2 to 20 megawatt RFP to come out in Connecticut still in 2016. And then we have other projects that we have developed which are sizeable, greater than 10 megawatts and some might be bigger than 20 that we have the option to put into this upcoming RFP, wait till the other RFP by making them under 20 megawatts. So, we’re working very carefully with all the different projects and people that we have here to make sure that we can execute on these projects when we do it. And of course then there’s a whole discussion right now going on in Washington about the extender tax bills and things like that Jeff that we should get some color on that hopefully by the end of the year, see how that comes out which could modify our plan to production or deployment strategy depending on where that comes out.

Got it. If I could sneak one more in, I know I said it was the last one prior, but I think you made reference Chip on the call that there's now more political support - I forget the words you used - in Germany as it relates to the feed-in tariffs or whatever. Can you touch on that? I missed that in the news, or maybe I missed heard you on the call. But what is the political environment in Germany as it relates to fuel cell power generation as it relates to E.ON and others? A –ChipBottone: Yes. So let me start with E.ON. I mean obviously their business model now after they make the split Jeff, is try to be on they wants to continue to focus on distributed generation, we are doing there - there are several projects that we are talking to them about and that’s been very helpful. The specific law that I was referring to that just got modified in a favorable way is that there was a bunch of laws. But the CHP bonus is what I was referring to. The thinking for that that would run out at the end of 2015 and then you had your grandfather as long as you put projects in a ground by June of 2016. That has been modified with effort frankly from our folks who really lead the industry over there to something that now runs through 2017. But more importantly to that, they’ve said, the government also said that, short of that, when that expires, they want a program that continue to drive deployment of these kind of clean energy technology. So I am pretty pleased about how that worked out.

Excellent. I appreciate the detail. Thank you.

Thank you. And I’d now like to turn the call back over to Chip Bottone for any closing remarks.

Thank you everybody for joining today and specifically to Sven, Carter and Jeff for the questions. As you can see here, we’ve been busy in this quarter and are very optimistic about what we have in front of us here. I think this recent announcement with PNC that really has a material impact on our ability to execute projects quickly and with continuing improved margin, it was always our strategy. As far as activity goes, specifically we have talked about $2 billion pipeline. I had to tell you that half of billion dollars of that was an increased quarter-over-quarter. So that’s where we’ve been spending our time which I think is time well spent. So as we align all these things we are doing here, Mike gave you the guidance that we talked about. We’re just satisfying the customers that we take onboard and I think our folks are doing a good job of executing this projects. With that said, we will be happy to talk more about that to next earnings call for the first quarter in 2016. With that said, I wish everybody a happy holiday and we will see on that call – for the first quarter of 2016. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. That does conclude the call. You may all disconnect. Everyone have a wonderful day.