Summary
Bloom Energy Corporation (BE) announced in an 8-K filing on February 12, 2020, that it will restate previously issued financial statements. This restatement is due to an accounting error related to its Managed Services Agreements (MSAs), where certain transactions that were previously recognized as sales subject to an operating lease should have been treated as financing transactions. The company, in consultation with its auditor PricewaterhouseCoopers LLP (PwC), determined that revenue recognition under these impacted MSAs was premature and should occur over the life of the agreements. This accounting change will result in a reduction of reported net revenue for the affected prior periods, ranging from $165 million to $180 million, with a corresponding increase in operating and net losses. Importantly, the company emphasizes that this restatement does not impact its cash flows, cash and cash equivalents, service business, fuel cell stack life, or service revenue. Bloom Energy also expects to remain in compliance with its financial covenants. The company plans to file its restated financial statements with its Form 10-K for the year ended December 31, 2019.
Key Highlights
- 1Bloom Energy is restating prior financial statements due to an accounting error in Managed Services Agreements (MSAs).
- 2The error involved misclassifying MSAs, which should be treated as financing transactions instead of sales with operating leases.
- 3This will lead to a decrease in reported net revenue for prior periods by an estimated $165 million to $180 million.
- 4Operating and net losses for prior periods are expected to increase by $20 million-$35 million and $55 million-$75 million, respectively.
- 5The restatement does not affect cash flows, cash balances, service business, or service revenue.
- 6Bloom Energy expects to remain in compliance with its financial covenants after the restatement.
- 7The company will file restated financial statements with its upcoming 2019 Form 10-K.