8-KEarnings & ResultsFinancial EventsExhibits & Filings

Bloom Energy Corp 8-K Report, Financial Results (Feb 12, 2020)

Filed February 12, 2020For Securities:BE

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.

Frequently Asked Questions

Bloom Energy is restating its financial statements due to an accounting error in how it recognized revenue from certain Managed Services Agreements (MSAs). The company and its auditor, PwC, determined that these MSAs should have been accounted for as financing transactions rather than as sales subject to an operating lease, meaning revenue should be recognized over the life of the agreement, not upfront.

The restatement is expected to decrease reported net revenue for the affected prior periods by $165 million to $180 million. Consequently, operating losses are expected to increase by $20 million to $35 million, and net losses by $55 million to $75 million for those periods. The revenue will now be recognized over the term of the MSAs.

No, the company explicitly states that this accounting change relates solely to the timing of revenue recognition and does not impact its total cash flows, cash and cash equivalents, service business, fuel cell stack life, or service revenue. The economic substance of the transactions remains unchanged.

Bloom Energy anticipates that it will be in compliance with all of its financial covenants under its credit facilities and notes after giving effect to the restatement.