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DATE

Monday, June 8, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Jason Few
• Executive Vice President, Chief Financial Officer, and Treasurer — Michael S. Bishop

TAKEAWAYS

• Revenue -- $35.6 million, down 5% year over year, driven by lower service revenue and generation output; partially offset by higher product sales to Goongang Green Energy Company Ltd. in Korea and increased advanced technology revenue.
• Pipeline Growth -- Expanded to 4 gigawatts of submitted proposals, representing a greater than 250% increase quarter over quarter; average proposal size doubled from 65 megawatts to 130 megawatts.
• Data Center Opportunity -- 89% of the pipeline consists of potential data center customers, with emphasis on modular DC-native continuous power for AI and digital infrastructure applications.
• Manufacturing Capacity -- Planned expansion of the Torrington facility from 350 megawatts to 500 megawatts of annual capacity; total costs estimated at $200 million to $275 million, executed in alignment with backlog and demonstrated demand.
• New Product Introduction -- 12.5-megawatt modular energy block launched for utility-scale data center deployments; enables phased capacity additions and rapid deployment.
• Operating Loss -- Loss from operations was $77.9 million, compared to $35.8 million the previous year, primarily due to a $42.6 million non-cash impairment charge for the Groton project upgrade.
• Net Loss -- $77.6 million, versus $37.7 million in the prior-year quarter; net loss attributable to common stockholders of $78.7 million, or $1.45 per share.
• Adjusted EBITDA -- Negative $17.1 million, an improvement from negative $19.3 million year over year, reflecting ongoing cost reduction and operating efficiency efforts.
• Backlog -- $1.14 billion total; product backlog at $36.1 million, service backlog at $155.4 million, generation backlog at $928.5 million (weighted average contract term of 15 years), and advanced technology backlog at $15.4 million.
• Balance Sheet -- Closed the quarter with $440.9 million in total cash, cash equivalents, and restricted cash; $373.2 million unrestricted and $67.7 million restricted cash.
• Equity Financing -- Issued 10.9 million shares at $9.45 per share during the quarter for $100.4 million in net proceeds, and an additional 4.1 million shares after quarter-end at $13.31 per share, raising $52.9 million.
• Debt Position -- The company remains "essentially debt free apart from long term financings on specific project assets and service agreements," with no near-term maturities.
• Profitability Target -- Management confirmed the company targets adjusted EBITDA profitability upon achieving consistent annual production volumes at or above 100 megawatts.
• Project Margins -- Targeting 10%-20% margin on product sales (higher end if not performing EPC role), and service agreement margins "north of 20%," with service contracts generally larger over time than initial product sales.
• Strategic Partnerships -- Continuing module deliveries to Goongang Green Energy Company Ltd. and shipment of two carbon capture modules to ExxonMobil's Rotterdam facility, both expected to drive product revenue and validate technology.

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RISKS

• $42.6 million non-cash impairment charge taken due to the decision to upgrade the Groton project, substantially increasing operating loss this quarter.
• Decline in total revenue and backlog versus the previous year, attributed to completion of module exchanges, lower generation output from repairs, and ongoing conversion timing of pipeline to contracted backlog.

SUMMARY

Management highlighted a rapid increase in the data center-focused commercial pipeline, accelerated by AI-driven power demand and modular technology offerings. Expansion of manufacturing capacity to 500 megawatts was announced, with related capital expenditure aligned to confirmed demand and financial discipline policies. Cash reserves were materially strengthened via equity raises, ensuring funding for growth plans without near-term debt pressure. The quarter was marked by introduction of the 12.5-megawatt energy block product and continued execution of major international deliveries and carbon capture deployments.

• Jason Few described the company’s platforms as offering "community friendly" siting, fast deployment, and utility-scale reliability for data infrastructure customers.
• Michael S. Bishop said, "adjusted EBITDA for the second quarter of fiscal 2026 was negative $17.1 million an improvement from negative $19.3 million" as a result of operating efficiency and cost reduction.
• "We remain confident that our approach of leveraging a solid balance sheet commercial execution and targeted capacity expansion will accelerate our path to sustainable profitability," according to the call’s closing statement, referencing stringent cost controls and targeted expansion.
• Backlog declines were primarily driven by revenue recognition from multi-year contracts rather than new order shortfalls, per explicit management commentary.
• Incremental manufacturing scaling at Torrington will be paced "in line with contracted backlog market demand and structured capital support." rather than a binary increase.

INDUSTRY GLOSSARY

• Energy Block: A modular, scalable group of integrated fuel cell power units designed for utility-scale or large site deployment, enabling phased or rapid capacity additions for data centers and other high-demand applications.
• DC-native: Fuel cell technology that produces direct current electricity inherently, allowing integration with modern data center and computing loads without conversion losses typically associated with alternating current systems.
• Backlog: The total value of signed contracts for future product and service revenue yet to be recognized, including product sales, service agreements, power purchase agreements, and development partnerships.
• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, further adjusted for specific non-cash or one-time items, providing insight into underlying operating performance.

Full Conference Call Transcript

Michael S. Bishop: Thank you, operator. Good morning, everyone, and thank you for joining us on the call today. This morning, FuelCell Energy released our financial results for the second quarter of fiscal year 2026 and our earnings press release is available in the Investors section of our website at www.fuelcellenergy.com. In addition to this call and our earnings press release, we have posted a slide presentation on our website. This webcast is being recorded and will be available for replay on our website approximately 2 hours after we conclude. Before we begin, please note that some information that you will hear or be provided with today consists of forward looking statements within the meaning of the Securities Exchange Act of 1.93 thousand.

Such statements express our expectations, beliefs, and intentions regarding the future and include statements concerning our anticipated financial results, plans and expectations, regarding the continuing development, commercialization and financing of our fuel cell technology, our anticipated market opportunities, and our business plans and strategies. Our actual future results could differ materially from those being described in or implied by such forward-looking statements because of a number of risks and uncertainties. More information regarding such risks and uncertainties is available in the Safe harbor statement in the slide presentation and in our filings with the SEC, particularly the Risk Factor section of our most recent Form 10-K and any subsequently filed Quarterly reports on Form 10-Q.

During this call, we will be discussing certain non-GAAP financial measures, and we refer you to our website, our earnings press release and the appendix of the slide presentation for the reconciliation of those measures to GAAP financial measures. Our earnings press release and a copy of today's webcast presentation are available on our website under the Investors tab. For this call, I am joined by Jason Few, our President and Chief Executive Officer. Following our prepared remarks, the leadership team will be available to take your questions. I will now hand the call over to Jason for opening remarks. Jason?

Jason Few: Thank you, Mike, and good morning, everyone. Thank you for joining us today. Let me set the stage before we dive into the quarter. Demand for distributed baseload power and fuel cell solutions continue to accelerate and shift. AI, digital infrastructure, and high density compute are driving a step change in power demand, while grid timelines remain too slow to meet that need. Customers require proven scalable power that can be deployed without waiting years and that is where fuel cell energy is differentiated. As we review our second quarter financial and operational results, I want to focus on several key themes that demonstrate the momentum we are building and the strategic progress we are making.

The first is commercial execution. And our focus on the AI and data center market, The unprecedented power density requirements of AI infrastructure have exposed the severe limitations of the traditional grid creating an immediate need for reliable, behind the meter baseload generation. FuelCell Energy's DC-native continuous platform is a ready backbone for data centers. By natively outputting DC power and integrating high grade thermal exhaust for absorption chilling we offer a modular solution that bypasses multiyear grid interconnection queues and that we believe can dramatically improve data center power usage effectiveness or PUE. We are focused on architecting computing and energy as 1 system. Our pipeline has expanded to 4 gigawatts of submitted proposals.

As shown on slide 14, this represents a >250% increase over our first quarter pipeline. Which we believe reflects the increasing recognition of fuel cells as a critical solution for meeting near term and long term power needs. Average proposal size has grown from 65 megawatts to 130 megawatts in a single quarter. A 2x increase that reflects the scale at which data center customers and hyperscalers are now engaging. As transaction size increases, diligence expands proportionally. Extended timelines are often a function of scale. Our pipeline includes opportunities across data centers, distributed generation, utilities, and industrial applications spanning both domestic and international markets. Potential data center customers make up approximately 89% of our pipeline.

This is what gives us confidence in increasing the scale of our planned manufacturing capacity expansion at the Torrington facility from 350 megawatts to 500 megawatts of annual capacity. I will speak more about this in a moment. To better address this market, in a scalable, standardized, and modular way, this quarter, we introduced the 12.5-megawatt fuel cell energy block product shown on slide 7. This is not a small system aggregated up. It is a utility scale architecture scaled out. Our base energy block is 1.25 megawatts. Utility scale begins at 1 megawatt. Going from 1.25 megawatts to 12.5-megawatts to hundreds of megawatts is multiplication. Same architecture, same proven stack, same operating envelope.

This off the shelf product is another way we enable rapid deployment into grid constrained markets while shortening time to power for data center developers and will allow customers to add capacity in phases rather than overbuild upfront. Built for the scale, reliability, and speed required by AI infrastructure, we believe this commercial product will play a critical role in converting pipeline opportunities into executable transactions. Our priority remains disciplined conversion, We are focused on turning high quality opportunities into contracted backlog. Structuring projects with the right counterparties and financing support.

While 100-megawatt infrastructure to decisions are not made on a predictable schedule, our active negotiations focus on advancing those opportunities where we believe execution certainty and long term value creation are strongest. With the goal of converting submitted proposals into contracted backlog within this fiscal year. Second, operational discipline and manufacturing scale up. As just mentioned, we have begun the initial phase of our US manufacturing capacity expansion to meet growing power demand. Our Torrington, Connecticut facility is the heart of our operations, and we are making targeted investments to increase our annualized production capacity.

Given our engagement with potential customers, and the market context, we are increasing our plan capacity expansion from the 350 megawatts per year we had previously discussed to 500 megawatts of fuel cell manufacturing capacity per year. Overall costs associated with this full expansion of the facility will be in the range of $200 million to $275 million. Beyond that, we intend to expand capacity in line with contracted backlog market demand and structured capital support. Not ahead of it. We will execute this expansion in strict alignment with contracted backlog, market demand and structured capital support. With the goal of ensuring we do not build ahead of the market or compromise our stewardship of stockholder capital.

Third, our strategic and commercial partnerships continue to validate global scale. Our work in South Korea remains strong, with ongoing module deliveries to Goongang Green Energy Company Ltd. (GGE), and progress under our MOU with InuVerse for the AIVI Vegu data center. Our collaboration with ExxonMobil's low carbon solution business continues to progress. Which we believe the market has not yet valued. Our partnerships are transitioning from development to deployment. With the carbon capture module shipping to ExxonMobil's Rotterdam facility, we believe we are establishing the physical proof points required to commercialize this technology and unlock the massive total addressable market for point source emission reductions. Currently, 2 units are en route to Rotterdam, as slide 17 illustrates.

And we expect they will be delivered in June. Finally, the strength of our balance sheet enables us to take a measured disciplined approach to growth. Our strong liquidity position allows us to pursue these opportunities with discipline. Prioritizing execution, proof, and long term value creation. We closed the quarter with almost $441 million in total cash and cash equivalents. Providing ample runway to execute our business plans. We continue to build financing capacity to support growth. Across all these areas, we continue to emphasize proof, over promise. We are delivering measurable progress on our strategy.

Growing our pipeline, focusing on converting the pipeline into contracted backlog, increasing our revenue base reducing costs and focusing our resources on near term commercial opportunities with the goal of long term value creation. Another key area of focus is our strategic and commercial partnerships. Which continue to validate the global scale of market demand for our technology. We believe the decisive steps we have taken in commercial focus on AI product offerings, and manufacturing scale up are strengthening our foundation and positioning us to capitalize on opportunities during 1 of the most important energy use step changes in history. The world needs more power. Clean, resilient, affordable, and continuous power. And that is exactly what we deliver.

With that, I would like to turn the call back over to our CFO, Mike Bishop, to discuss our second quarter financial performance.

Michael S. Bishop: Thank you, Jason, and good morning, everyone. In the second quarter of fiscal 2026, we reported total revenues of $35.6 million compared to $37.4 million in the prior-year quarter, a decrease of approximately 5% year over year. This decrease was primarily due to lower service revenue as there were no module exchanges in the quarter and lower generation revenue resulting from lower output largely due to the fact that the Groton project was undergoing repairs.

These declines were partially offset by higher product revenues driven by scheduled module deliveries to Goongang Green Energy, or GGE in Korea, we expect deliveries of the remaining 6 GGE modules and the upcoming GGE generation or CGM deliveries to drive consistent product revenue in the second half of fiscal 2026. We also saw an uptick in advanced technology revenue in the quarter. Loss from operations was $77.9 million for the quarter, compared to $35.8 million in the second quarter of fiscal 2025. The higher loss was largely driven by a non cash $42.6 million impairment charge related to the Groton project, which we expect to upgrade utilizing 3 of our current generation 2.5-megawatt power blocks.

This was a strategic decision with the goal of ensuring high reliability for the Navy based customer following the upgrade. Net loss was $77.6 million in the second quarter of fiscal 2026 compared to a net loss of $37.7 million in the second quarter of fiscal 2025. Net loss attributable to common stockholders was $78.7 million or $1.45 per share compared to $38.8 million or $1.79 per share in the prior-year period. On a non-GAAP basis, adjusted EBITDA for the second quarter of fiscal 2026 was negative $17.1 million an improvement from negative $19.3 million in the second quarter of fiscal 2025. This 12% year over year improvement in adjusted EBITDA reflects our progress on cost reduction and operating efficiency.

We have included reconciliations of our non-GAAP financial measures, including EBITDA and adjusted EBITDA in the appendix of our earnings press release for reference. Backlog totaled $1.14 billion as of April 30, 2026, compared to $1.26 billion as of April 30, 2025. This change was primarily due to revenue recognized on long term contracts over the past year partially offset by new orders added to backlog. Turning to the composition of backlog as of quarter end, product backlog was $36.1 million primarily reflecting remaining repowering module deliveries in Korea that are scheduled to be recognized as revenue in the second half of this year.

Service backlog was $155.4 million comprised of future revenue from our long term service agreements on customer owned power plants. Generation backlog was $928.5 million representing future revenue from company owned projects under long term power purchase agreements. This portion of our backlog has a weighted average remaining contract term of approximately 15 years underscoring the long lived nature of these assets. Lastly, advanced technology contract backlog was $15.4 million the majority of which is tied to our joint development work with ExxonMobil Technology and Engineering Company.

Operating expenses for the second quarter were $65 million up from $26.4 million in the same quarter last year This increase was primarily a result of the $42.6 million non cash impairment charge that I mentioned earlier. it is important to contextualize, this charge relates to our decision to upgrade the 7.4-megawatt Groton Navy project with our current generation 2.5-megawatt power blocks with the goal of ensuring high reliability baseload power for a critical US government asset. Excluding this charge, our core operating expenses declined year-over-year, demonstrating our continued cost discipline and progress on our path towards sustainable, positive adjusted EBITDA results. Turning to the balance sheet and liquidity.

We ended the quarter with $440.9 million of total cash, cash equivalents and restricted cash. This includes $373.2 million of unrestricted cash and $67.7 million of restricted cash providing a strong liquidity position to support our growth. During the second quarter, we utilized our at the market equity program selling approximately 10.9 million shares at an average price of $9.45 per share for net proceeds of $100.4 million Subsequent to quarter end, we sold an additional 4.1 million shares at an average price of $13.31 per share raising net proceeds of $52.9 million. These actions have significantly bolstered our cash resources while preserving a conservative capital structure.

We remain essentially debt free apart from the long term financings on specific project assets and service agreements, and we have no near term debt maturities. Our strong balance sheet has positioned us to invest in near term growth opportunities with a disciplined approach. As Jason mentioned, we are increasing our production levels and expanding our manufacturing capacity with the goal of meeting the accelerating demand for resilient, continuous distributed power especially in the AI and high density data center market. In closing, we are executing our strategy with financial discipline and focus, balancing growth initiatives with rigorous cost control and efficient capital allocation.

We remain confident that our approach of leveraging a solid balance sheet commercial execution and targeted capacity expansion will accelerate our path to sustainable profitability. We have made tangible progress this quarter on our objectives. Thank you for your attention. With that, I will now turn the call over to the operator. for Q&A.

Operator: Thank you. We will now begin the Q&A session. If you have dialed in and would like to ask a question, please press 1. On your telephone keypad to raise your hand and join the queue. If you would like to withdraw your questions, simply press 1 again. We will take our first question from Jason Tilchin with Canaccord Genuity.

Analyst (Jason Tilchin): Good morning, and thanks for taking my questions. To start, I was hoping, in the deck, you laid out a number of the benefits that you think that the use of your fuel cell type technology will provide to data centers Just curious. In the conversations with potential customers, which of those various benefits and advantages are resonating the most at the moment? That would be really helpful, to start.

Jason Few: Jason, good morning, and thank you for the question. I think if you look at our platform and the conversations we are having with customers, 1 of the big advantages that clearly stand out is just our long history in providing utility scale. Platforms first and foremost. If you look at even the material we provided in the deck, we just give-- you know, we show 5 examples with a combined 50-year operating history at utility scale. And so when you when you look at essentially taking the grid and moving it behind the meter, that is a real strong selling point for us because that is effectively what we are doing.

Obviously, time to power remains critically important in our ability to deliver quickly. And not only deliver quickly, but to get through the permitting hurdles that more traditional generation, clearly faces when it comes to communities as well as just permitting on things like, title 5, which are not issues for us. So we offer a community friendly, platform. The other big piece is we think we are getting a lot of interest in our 12.5-megawatt you know, building block that we have announced. And, just the long term capital preservation from an investment in our technology given that we are native DC.

And as the racks move that direction, GPUs go that direction, that investment that a customer makes is still a solid 1 and will certainly continue to be important for the AI factory. In the future?

Analyst (Jason Tilchin): Great. that is really helpful. And maybe 1 follow-up to that. Is there anything else you can share in terms of the steps that are needed either on your side or on the customer side or the prospective customer side, and or sort of key milestones you are looking towards to get some of that pipeline converted into those signed agreements as you talked about and maybe potential timelines beyond just the sort of framework that you mentioned in the prepared remarks around sort of some point this fiscal year?

Jason Few: Yeah. I think if you as we look at it and the conversation that we are having, certainly as the transaction sizes have increased and we talked about a 200% increase in the average size of the proposals that we are responding to that increases diligence. It expands proportionately to the size of those transactions. So we see these timelines really as function of scale. But, you know, the as you look at the milestones that you go through, it is 1, clearly being in the opportunity and having a chance to engage with the customer and lay out our technology.

Work through the technological questions that a customer has, and then just being able to really demonstrate our long history of providing utility scale solutions that have, had continuous runtime For example, 1 of our largest has, you know, continuously run for 13 years. That is a really strong technical hurdle that we are able to cross given what our platform has done over the last 23 plus years. Great.

Analyst (Jason Tilchin): that is very helpful. Thank you very much.

Jason Few: Thank you.

Operator: We will take our next question from Mark Strouse at JPMorgan.

Analyst: Good morning. Thank you very much for taking our questions. I just had a couple for Mike, if I may. Wanted to ask about the target for profitability. Or should we still think about that around 100 megawatts or so? I am just curious if the increase in capacity that you are targeting, if that changes the target at all?

Michael S. Bishop: Good morning, Mark, and thanks for the question. Noel. The increase in capacity does not change that target. The company has been consistently looking at once we achieve consistent production volumes at or above 100 megawatts, on an annualized basis, we are targeting getting to adjusted EBITDA positive. Okay. Thank you. And then with the capital raises that you mentioned recently, obviously, your balance sheet is in good shape. You are spending on CapEx, I am just curious should investors completely rule out additional capital raises from here? Do you do you think you are in a sufficient spot, or anything else to expect near-term? Thank you. Noel.

As Jason and I said in our prepared remarks, we are comfortable with our current balance sheet. And investing in capacity expansion for growth. The company looks at a number of ways to continue to finance growth. We have obviously done project financing, we have financed service agreements, and we have looked to the equity markets periodically, but again comfortable with our current liquidity position.

Operator: We will take our next question from Ryan Pfingst at B. Riley Securities.

Analyst: Hey, guys. Thanks for taking the questions. First, just curious how much the introduction of the 12.5-megawatt power block solution has accelerated customer conversations. Since you announced that in late March.

Jason Few: Alright. Thank you, and good morning. it is been a really strong adder to the conversations that we are having because you are able to really demonstrate to the customer, 1, time to power, being able to do that in a 12.5-megawatt block size, is really attractive in terms of the way that data centers think about the overall power domain and the way in which they want to scale in a modular fashion. The other big piece of that is that you create better economics because your ability to actually leverage a lot of the balance of plant across a larger block of power.

So that has become a really strong selling point from a customer perspective But that being said, you know, I would say that you know, what continues to be a really strong selling point is modularity. And the ability to actually scale at the customer demand as opposed to having the customer overbuy from where the real demand is, and we are able to do that with the 12.5-megawatt block. In addition to our, you know, 1.25- or 2.5-megawatt block sizes as well.

Analyst: Appreciate that. And then maybe going back to the EBITDA positive target and how you are thinking about operating leverage, what do you expect for growth in OpEx as you potentially scale revenue here with data center demand? And the operating leverage that you are expecting to see?

Michael S. Bishop: Ryan, it is Mike. I will take that 1. So as you know, the company has done a fair amount of work around our operating cost structure with the goal to get to that adjusted EBITDA positive target. As a result, we would not expect to see significant increases in operating expenses. There will certainly be some modest growth related to inflation, but we are comfortable with our current cost structure and absolutely expect to get leverage from it.

Analyst: Great. I appreciate that, guys. I will turn it back.

Jason Few: You.

Operator: We will move next to Dushyant Ailani at Jefferies.

Analyst (Dushyant Ailani): Hey, guys. Thanks for taking my question. Just the first 1, I know you guys have talked about it briefly, but the ramp to 500 megawatts, you talked about in the next 24 months. How do we think about the cadence? Is it going to be in 100-megawatt blocks? Or how do we think about it over the next 12 months? Or do we just see a immediate bump from 100 to 500 in 2 years?

Jason Few: Yeah. Sean, thank you for the question. Yes, you will see us unlock capacity as we scale from where we are today to that 500-megawatt for example, 1 of the things we have talked about is, you know, implementing our high volume tape caster. That gives us the ability actually to have tape casting capacity to fulfill that 500-megawatts. As an example. And as we expand and add additional conditioning capacity, you know, we will start to unlock more volume. And so the way we really think about it, if you think about it and kind of work backwards, we look at all of the areas of constraint where we are kind of maxed out.

How do we unlock that capacity as we scale to 500? So we anticipate that we will incrementally add more volume all the way to the 500. It will not be a binary 100 to 500 cut.

Analyst (Dushyant Ailani): Got it. that is helpful. And then maybe just quickly on the Groton repairs. Are there potential for other upgrade opportunities across your portfolio, or would this be the only 1?

Jason Few: This is the 1 that we see because what we are doing is we are changing it to our standard energy block. And across the rest of our portfolio, that is what we have deployed. And from our perspective, we looked at the importance of the US military operation in Groton and this is a nuclear submarine base and a microgrid is part of hardening that facility. And for us, to play a role in that and to deliver really strong, operational technology is really what anchors this decision. And so this is the 1 area where we see that we will switch out to our standard platform. And so we will be standard across our entire fleet.

Analyst (Dushyant Ailani): Okay. Thank you.

Jason Few: Thank you.

Operator: We will move next to Colin Rusch at Oppenheimer.

Analyst (Colin Rusch): Could you talk a little bit about the siting flexibility that you are enabling for your customers and how that is impacting some of the conversations that you are having with the data center customers?

Jason Few: Hey, Colin. Good morning, and thank you for that question. Yeah. We think 1 of the really strong value propositions of our platform is the fact that we are community-friendly technology. So when you think about the following you know, few items, you are not gonna run into title 5 issues so we are not going to create air pollution to the local community. that is a positive. If you look at some of the you know, complaints that you see from some communities, it is around noise. Well, we operate at a level that is similar to a home air conditioner.

So we are not gonna run into noise related issues We are modular in terms of our scalability, so we are very efficient in terms of land use. In addition, to that, we also have the ability to, you know, bring down overall energy consumption by leveraging the thermal output of our platform and, you know, delivering a product that can actually help cool the data center by leveraging our thermal energy and integration with absorption chilling. So we see a number of factors that create positives for data center developers and then certainly, see those positives play out in terms of the community reaction to our technology.

Analyst (Colin Rusch): Super helpful. And then just turning, you know, to a different market in Europe. You know, there is been an awful lot of activity looking at moving towards leveraging some of the peak power capacity as well as moving towards energy independence, you know, from some of the international volatility that we are seeing in the macro environment. I am just curious how the pipeline is starting to move in Europe and if there is any meaningful opportunities we should be attending to over there.

Jason Few: I think if you look at our pipeline today, it is clearly weighted toward The US. We do see a change in attitude taking place in Europe in a bigger acceptance starting to emerge around natural gas and the importance that it is gonna play in helping them build out data centers and in addition to that, also having the energy that they need from a reliable continuous energy resource We continue to focus on global market opportunity, and we are certainly even seeing a lot of, you know, some of the larger data center developers here in The US that also have a significant European presence.

We are working with them on our technology as a way to not only deliver the power that they need in Europe, but, again, going back to that the same conversation we just had around community friendly, being able to get cited, you know, getting through a lot of the, the environmental issues that are that are a big consideration in the European markets. We are seeing that play well as we look at those opportunities. There and in and in Asia.

Analyst (Colin Rusch): Perfect. Thanks, guys. Thank you. And we will take our next question from Noel Parks at Tuohy Brothers.

Analyst (Noel Parks): Hi, good morning. You know, just trying to wrap my head around the doubling of proposal size and the tripling of the pipeline in the course of the quarter I wonder if you can just sort of characterize what that looks like compared to our last call 3 months ago. just inbound calls. Just how has that manifested itself? You know, that, you know, in this particular quarter, you have seen, such a ramp up.

Jason Few: Yeah. Noel. Thank you. Good morning to you as well. Look. We have a direct sales team that is focused on data center and the overall AI factory opportunity as a segment. And that team is very focused on working across data center developers, powered land developers, hyperscalers, the GPU providers. And, you know, as well as well. So it is that engagement and creating more awareness of our technology, our differentiation and advantages, that is really driving that. In addition to just the more significant engagement that the team is having now that we have, you know, really shifted a big part of our focus toward this opportunity.

And so they are coming through, our direct channel, In addition to that, we have a very robust omnichannel, if you will, in terms of our website presence and the things that we do to drive interest and awareness of our technology You know, we recently published a data center white paper that is been well received. A lot of our podcasts and other things that we have been doing, those have all been well attended.

And so as we think about creating surround sound around our technology, our advantages in the market, We are starting to see that pay off in terms of our ability to engage deep in at a more deep level with customers and submit larger, proposals. Great.

Analyst (Noel Parks): Thanks. And, you know, I was wondering, is the standardized power block is that currently expected to be a meaningfully higher margin module out of the gate is that only going to be over time just through your normal process of efficiency gonna have an impact, would you say?

Michael S. Bishop: Good morning. Noel, I will take that 1. So the way that we look at our business model here is there is really 2 key elements as we are converting these proposals into backlog. You would expect to see product backlog where we are delivering the platform to our customers that would result in future product sales. We target in the 10% to 20% margin. If we are not the EPC, we are towards the higher end of that margin. If we are involved in the EPC process, we are towards the lower end because we are out working with others.

And then as importantly, we will bring in service backlog as well These are 15 to 20 year long term agreements And generally, the size of that service agreement is significantly higher than the than the initial product sale is as we are, taking care of our customers over a long period of time. and we target a margin for service agreements north of 20%. So as we as we are putting together models here going into the future, those are the targets that the company looks at.

Analyst (Noel Parks): Okay. Great. Thanks a lot.

Jason Few: Thank you.

Operator: And that concludes our Q&A session. I will now turn the conference back over to Jason Few for closing remarks.

Jason Few: Audra, thank you. And thanks everyone, for joining us today. In summary, the second quarter reflects continued progress in several key areas. Strong commercial momentum, and expansion of our pipeline to over 4 gigawatts of submitted proposals, operational discipline, cost reductions, and action in support of our manufacturing capacity scale up to 500 megawatts at Torrington. A step closer to demonstrating our unique carbon capture capabilities and financial strength with a solid balance sheet and strategic financing partnerships. More importantly, these results reinforce a broader point. point. We have already proven the value of distributed baseload power in real world utility scale applications over many years.

We have demonstrated nearly 50 years of cumulative utility scale run time across just 5 of our installations shown on slide 9. What is changing is the scale and urgency of demand. Particularly in power constrained digital infrastructure markets. Our differentiated platform including modular deployment continuous power, native DC capability, thermal integration, and a disciplined path to scale positions us to meet that need. what is changing is who needs it. How urgently, and at what scale. We remain committed to disciplined execution converting our pipeline thoughtfully advancing vital programs like carbon capture, and continuing to scale our platform production capacity for the long term.

Before we conclude, I want to thank our team members customers, partners and shareholders for their continued support. The team at FuelCell Energy remains focused on executing our strategy advancing our technology, and delivering reliable, resilient power solutions that strengthen energy infrastructure around the world. Thank you again for your time today, and we look forward to updating you on our progress next quarter.

Operator: Thank you. And this concludes today's conference call. Thank you for your participation. You may now disconnect.