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Fluence Energy (FLNC) is under pressure after cutting its FY26 guidance due to supply chain issues affecting its U.S. production, with revenue now expected at approximately $2.4 bln and adjusted EBITDA at a loss of approximately $(200) mln, reductions of $600 mln and $190 mln, respectively, from its prior outlook. FLNC provides energy storage products, operational services, and software used to support grid reliability, power quality, and growing electricity demand. The guidance cut is particularly notable as FLNC had just lowered its outlook with its Q3 (Jun) report in early August, largely due to manufacturing ramp delays.

• Execution: FLNC continued to face delays ramping its Houston contract manufacturing facility, which had already contributed to its Q3 guidance cut. Management now says it underestimated the complexity of the ramp, with production averaging less than one unit per day in August versus the 11 units per day assumed in its prior guidance. Production improved to roughly three units per day in early September.
• Bridge: More than 80% of the $600 mln revenue reduction reflects U.S. production issues, including $450 mln from delays and $65 mln of late-delivery penalties. The $190 mln EBITDA reduction includes $65 mln of penalties, $65 mln of gross margin shifted into FY27, and $60 mln of higher costs.
• Demand: FLNC says demand remains robust domestically and internationally, supported by utility and IPP demand and growing opportunities tied to data centers. In Q3, order intake nearly tripled yr/yr to $1.44 bln, while backlog reached a record $6.4 bln, up 14% q/q and more than 30% yr/yr.
• Next steps: FLNC appointed Bernerd Da Santos as COO and is implementing corrective actions across supply chain planning, manufacturing oversight, supplier resiliency, and contract manufacturer evaluation. For FY27, management is targeting delivery of its $2.9 bln backlog, no need for additional capital, and neutral-to-positive operating cash flow.

Briefing.com Analyst Insight

The guidance cut is significant and is driving the sharp move lower today, but particularly concerning is that this marks FLNC's second reduction in a short period of time, raising questions around execution and visibility. Management had sounded more upbeat about the Houston ramp following its Q3 report, but production subsequently came in well below the assumptions embedded in that revised outlook. Demand remains strong and backlog reached a record level in Q3, suggesting the issue is operational rather than demand-driven. Still, backlog conversion depends on FLNC's ability to improve production and consistently meet project milestones. Management's corrective actions and $2.9 bln FY27 backlog provide a path forward, but stronger production at Houston will likely be needed to rebuild confidence in the outlook.