10-QPeriod: Q2 FY2020

Bloom Energy Corp Quarterly Report for Q2 Ended Jun 30, 2020

Filed August 4, 2020For Securities:BE

Summary

Bloom Energy Corporation's (BE) August 4, 2020, 10-Q filing highlights significant risks related to its substantial indebtedness and liquidity. The company carries approximately $645.7 million in total consolidated indebtedness as of June 30, 2020, with covenants in its debt agreements that impose operating and financial restrictions. These restrictions could limit Bloom Energy's flexibility in borrowing, paying dividends, incurring liens, making asset dispositions, and other crucial financial activities, potentially hindering its ability to fund future needs and respond to economic downturns. The filing also underscores the importance of maintaining customer and stakeholder confidence in the company's liquidity and long-term prospects. Factors such as limited operating history at scale, lack of profitability, and uncertainties surrounding its Energy Servers could negatively impact customer purchasing decisions and financing availability. Furthermore, Bloom Energy faces potential complexities with settling convertible debt obligations in cash if certain listing standards and stockholder approvals are not met, which could strain its financial position.

Financial Highlights

47 data points
Beta

Revenue

$187.86M

14.0% Gross Margin

Net Income

-$42.51M

-22.6% Net Margin

EPS (Diluted)

$-0.34

Total Assets

$1.28B

Cash & Equivalents

$144.07M

Free Cash Flow

-$19.49M

Financial Statements
Beta
Revenue$187.86M
Cost of Revenue$161.61M
Gross Profit$26.25M
R&D Expenses$19.38M
Operating Expenses$55.75M
Operating Income-$29.50M
Interest Expense$15.20M
Net Income-$42.51M
EPS (Basic)$-0.34
EPS (Diluted)$-0.34
Shares Outstanding (Basic)125.93M
Shares Outstanding (Diluted)125.93M

Key Highlights

  • 1Substantial consolidated indebtedness of approximately $645.7 million as of June 30, 2020, including both recourse and non-recourse debt.
  • 2Debt agreements contain covenants that impose operating and financial restrictions, limiting flexibility in borrowing, dividend payments, and other key financial actions.
  • 3The company emphasizes the critical need to maintain customer and stakeholder confidence in its liquidity and long-term business prospects due to factors like limited operating history and lack of profitability.
  • 4Potential risk of being unable to settle convertible debt obligations in cash due to listing standards and the need for stockholder approval, which could lead to default.
  • 5Net operating loss (NOL) carryforwards have expiration dates (starting in 2022 and 2028), and their utilization is subject to limitations under Section 382 of the IRS Code, potentially increasing future tax liabilities.
  • 6The company acknowledges the volatility of its Class A common stock price, influenced by numerous internal and external factors, and the potential for further decline due to substantial share sales.
  • 7Bloom Energy does not intend to pay cash dividends for the foreseeable future, intending to reinvest all earnings back into business development.

Frequently Asked Questions

As of June 30, 2020, Bloom Energy had approximately $645.7 million in total consolidated indebtedness. This substantial debt level, coupled with restrictive covenants in its debt agreements, may limit the company's financial and operating flexibility, its ability to incur additional debt, and its capacity to respond to market changes or pursue strategic opportunities.

The company must maintain customer confidence in its ability to meet debt obligations and sustain long-term operations. Factors such as its limited operating history, lack of profitability, and perceived uncertainty about its Energy Servers could deter customers, financing sources, and suppliers. Negative perceptions, even if unfounded, could significantly harm the business.

Yes, certain convertible debt securities may require cash settlement upon conversion due to NYSE listing standards, which could strain the company's cash position if stockholder approval for issuing additional shares is not obtained. Additionally, if an event of default occurs under its debt agreements, accelerated repayment could be triggered, and Bloom Energy cannot assure it would have sufficient liquidity to meet these obligations.

Bloom Energy has Net Operating Loss (NOL) carryforwards that will begin to expire in 2022 and 2028. The ability to utilize these NOLs to offset future taxable income is subject to limitations, including Section 382 of the Internal Revenue Code (related to ownership changes) and potential state law provisions. Its deferred tax assets are currently fully reserved with a valuation allowance, and if these NOLs and deferred tax assets expire unutilized, it could lead to higher future tax liabilities.