Arthur BottoneThank you, Kurt. Good morning, everyone and welcome. It's a pleasure to speak with you today. I was elected to succeed Dan Brdar as President and CEO of FuelCell Energy. Under Dan's leadership for the last 10 years, FuelCell Energy evolved from primarily an R&D business into the world's leading fuel cell company. Thanks to his leadership, we are well-positioned to accelerate our growth and take full advantage of this important and expanding global market. My background is very pertinent to FuelCell Energy, I spent 25 years in Ingersoll Rand, a $14 billion global diversified industrial company in a variety of global business leadership roles including business unit President. The last several years, I focused on energy businesses that were very well aligned with the business model, global markets and potential clients of FuelCell Energy. I was appointed Senior Vice President and Chief Commercial Officer of FuelCell Energy in February of 2010, and have been focused very intensely on accelerating profitable revenue growth. I believe very strongly in FuelCell Energy's future and enthrilled to be leading this company as we progress to profitability. FuelCell Energy's first quarter financial results showed strong increase in revenue, along with significantly improved product cost ratio. Current activity in our key markets points to further ramp up production during 2011. I'll discuss our plans for growth and areas of focus, after Joe Mahler, our Chief Financial Officer, reviews our financial results for the quarter. Joe? Joseph Mahler Thank you, Chip and good morning, everyone. FuelCell Energy reported total revenues for the first quarter of 2011 of $28.1 million compared to $14.6 million in the same period last year. Product sales and revenues in the first quarter were $25.8 million, more than double the $12.8 million reported in the prior year. The company's product sales backlog including long term service agreements, totaled $159.2 million as of January 31, compared to $84.1 million as of January 31, 2010 for an increase of 89%.
For the first quarter of 2011, product order backlog totaled $78.9 million and backlog for long term service agreements totaled $80.3 million.For the first quarter of 2010, product order backlog was $58.3 million and backlog for long term service agreements totaled $25.8 million. Service agreements are for terms of one to 20 years, revenue was recognized on a pro-rata basis over the life of the agreement once the power plant begins commercial operations. The year-over-year growth in service revenue backlog reflects strong order volume in the second half of 2010 that was accompanied by customers entering into long term service agreements with us. Product margins improved over the prior year by $2.9 million. The product cost to revenue ratio was 1.09:1 in the first quarter, compared to 1.41:1 in the first quarter of 2010. The improvement in product margins and the cost ratio is due to lower product, commissioning and warranty costs. Lower product costs reflect ongoing cost reduction efforts as the power plants are gross margin profitable on a unit basis. First quarter 2010 costs included commissioning related costs in careers that did not reoccur in the first quarter of 2011. Research and development contract revenue was $2.3 million for the first quarter of 2011, compared to $1.8 million for the first quarter of 2010. The company's research and development backlog totaled $7.9 million as of January 31, 2011, compared to $11.9 million as of January 31, 2010. Total liquidity was $74.2 million at January 31, 2011, including total cash and investments in U.S. Treasuries of $70.2 million, and revolver availability of $4 million. Net cash used for the first quarter was $3.2 million compared to net cash used of $7.2 million in the first quarter of 2010, excluding net proceeds of $17.8 million from the registered direct offering of common stock in January and revolver borrowings $1 million during the first quarter. Capital spending for the first quarter was $300,000 and depreciation expense was $1.6 million. Read the rest of this transcript for free on seekingalpha.com