Updated: Bloom stock price drops, recovers after disclosure of fuel cell accounting error

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Bloom Energy stock rose more than 10 percent percent on Friday morning, days after the company reported an accounting error on one of its fuel cell financing options.

Shares dropped as much as 24 percent in after-hours trading on Wednesday, but recovered somewhat on Thursday.

The company, which had not disclosed a release date for year-end results, announced it would report earnings in March.

The company will restate certain prior period financial statements due to an accounting error related to its Managed Services Agreements, one of the company’s three customer financing options to acquire Bloom Energy servers.

The revenue for the Managed Services transactions will now be recognized over the duration of the contract instead of upfront. Additionally, these adjustments are unrelated to the service business, life of the servers, or service contracts. The adjustment has no impact on Bloom’s cash flows.

The total estimated change to net revenue amounts to less than 10 percent of the total revenue over the affected period for the first quarter of 2016 through the third quarter of 2019.

The company will revise financial statements to reflect the change.

Bloom has been the subject of criticism over the way it books revenue and accounts for upgrades to the fuel cells.

Shares of Bloom have been on a roller coaster, after rising into the $30 range and later falling into the threes. Of late, shares have been moving upward as the company makes its case for the always-on fuel cell servers to be used in microgrids that could provide essential services for hospitals, first responders and other essential services during outages.

John Doerr, lead independent director, said: “Bloom Energy has a long track record of groundbreaking innovation that is overseen by a highly engaged Board and experienced management team. We are committed to upholding the highest standards of oversight and compliance and remain focused on executing our long-term strategy and creating value for all stakeholders.”

Bloom also announced more details on its full-year and fourth quarter performance:

  • Backlog: Bloom closed the fourth quarter of 2019 with a record backlog of 1,983 systems, an increase of over 43 percent year-over-year; the backlog value includes $1.1 billion for product and installation revenue. It also includes $1.1 billion for service revenue, assuming that all service agreements for these systems renew over their full contract terms. The backlog does not include $2.1 billion of service revenue to be recognized for systems already in the installed base.
  • Cash Balance: Ending consolidated cash balance was $377.4 million, an increase of $19 million from the third quarter of last year.
  • Plans to refinance December 2020 debt are continuing with plans to complete the process in the first half of this year.

KR Sridhar, founder and CEO commented, “In the second half of 2019, Bloom Energy saw strong growth in the business. This momentum in customer engagement and demand continues to be driven by the attractiveness of our AlwaysON Microgrid offering in the face of continued grid outages and utility rate increases across the United States. We look forward to presenting our detailed Q4 and end of year results.”

Bloom is based in San Jose, CA and has its main manufacturing site in Newark. One of the largest arrays of Bloom fuel cells produce power that goes into the Delmarva Power system in northern Delaware.

A contract with the State of Delaware has led to Delmarva customers paying well above-market rates for Bloom power, due to declining wholesale electricity prices.

The contract, approved by the Delaware General Assembly, helped bring the Bloom manufacturing site to Newark but triggered a long-running controversy over the higher rates.

Employment at Bloom has fallen far short of the 900 jobs that had been projected. That has been partially offset by higher-than-projected pay for those employees.

Bloom spokeswoman Natalia Blank, issued the following statement on jobs at the Newark site and a report of job reductions.

“Our current workforce and job openings we’re hiring for is greater than 340. While every person and position is important, this action applied to a small percentage of our workforce in Delaware. We expect to continue to grow in Delaware and recruiting efforts are underway for new roles that meet our evolving business needs.

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