Capstone Turbine Reports Fiscal Q2 2017 Financial Results
November 09 2016 - 4:15PM
25% Reduction in Net Loss Fueled by 33% Reduction
in Operating Expenses from Prior Year
Capstone Turbine Corporation (www.capstoneturbine.com)
(Nasdaq:CPST), the world’s leading clean technology manufacturer of
microturbine energy systems, reported financial results for its
second quarter of fiscal 2017 ended September 30, 2016.
The company reported total revenue of $15.0
million for the second quarter of fiscal 2017 and a net loss of
$5.9 million, or $0.19 per share. This compares with total revenue
of $17.9 million and a net loss of $7.9 million, or $0.48 per
share, reported for the second quarter of fiscal 2016. Operating
expenses for the quarter decreased 33% to $6.4 million from $9.6
million in the year-ago quarter. Weighted average shares
outstanding for the quarter ended September 30, 2016 were 30.5
million compared with 16.6 million in the year-ago quarter.
Darren Jamison, President and Chief Executive
Officer of Capstone, said, “Our focus remains fixed on diversifying
our customer base and geographic presence while increasing our
business in the CHP/energy efficiency markets. To support our sales
initiatives, we developed new strategic relationships to provide
financing options for our distributors and end use customers.”
“We continue to focus on areas where we can
reduce expenses and lean out our business. Also, we recently
completed a new capital raise that was intended to keep customers,
vendors and employees “tucked in” during these times when our
revenue has been less predictable due to the nature and timing of
our emerging CHP business. As a team, we remain firmly focused on
our path to profitability, lowering our expenses, building our
revenue, diversifying our business, launching new products and
partnerships, and strengthening our balance sheet,” added
Jamison.
Energy efficiency markets for the second quarter
were 81% of revenue compared with 68% in last year’s second
quarter, renewable energy was 11% compared with 6% of revenue in
last year’s second quarter and natural resources was 8% of revenue
compared with 26% of revenue in last year’s second quarter. Europe
and Russia accounted for nearly 70% of revenue this quarter
compared with 16% in last year’s second quarter, while the U.S. and
Canada accounted for 12% of revenue this quarter compared with 24%
of revenue in last year’s second quarter. Asia and Australia also
accounted for 12% of revenue for the quarter, compared with 43% of
revenue in last year’s second quarter.
Business developments and milestones
recently achieved
- Partnered with Sky Solar (Sky Group) for $50 million in
additional project capital (and an option for up to an additional
$100 million) for the second phase of the Capstone Energy Finance
joint venture (CEF). As our current pipeline for CEF nears the $40
million capacity, this added funding is expected to help expand our
business by providing financing options to global customers.
- Partnered with Acresis and Bridge Capital to put together a
product-financing program for Capstone distribution partners to
provide much needed working capital and growth capital for
well-qualified partners.
- Continued to move ahead with our product development roadmap
with a newly-patented multi-staged lean pre-vaporizing, pre-mixing
fuel injector providing ultra-low emissions that meet United States
Environmental Protection Agency (EPA) Tier 4 requirements for power
generation. Under this new program, exhaust emissions will be
required to be reduced by more than 90 percent.
- Developed new partnerships with the U.S. Department of Energy
(DOE) to provide funding in the amount of $335,000 for one year to
Argonne National Laboratory to conduct hydrogen and synthetic fuel
(“syngas”) testing on Capstone’s C65 and C200 microturbines at no
cost to Capstone. In addition, Capstone continued progress on our
flexible fuels program, with recent successful testing on
butane.
- Recent launch of the C200 Signature Series product. The all new
Signature Series products which include C200, C600, C800 and C1000
have the option for integrated heat recovery modules and two stage
air filtration, improved enclosure design, lower noise levels, 12
year marine grade paint and a new system control platform. In
addition, the first C1000 Signature Series products were recently
commissioned in the U.S. and Europe.
- Resumed sales growth in Russia through BPC Engineering as well
as additional new distributors in Russia and the CIS states,
including the first order from one of our new Russian
distributors.
Mr. Jamison concluded, “With approximately 9,000
units shipped, Capstone maintains a strong leadership position in
the marketplace. We believe new product innovations and financing
options, geographical expansion, diversifying our verticals and
reducing operating costs will all contribute to achieving our goals
in the quarters and years ahead.”
Financial Highlights of Fiscal 2017
Second Quarter:
- Net loss for the second quarter was $5.9 million, compared with
a net loss of $7.9 million in last year’s second
quarter.
- Loss per share of $0.19 compared to last year’s second quarter
loss of $0.48 (split adjusted). Weighted average shares outstanding
at the end of the second quarter of fiscal 2017 were 30.5 million
compared with 16.6 million in the year-ago second
quarter.
- Total revenue for the second quarter of fiscal 2017 was $15.0
million compared with $17.9 million in the year-ago second
quarter.
- Gross margin of $0.7 million was 5% compared to $1.9 million,
or 11%, in the year-ago fiscal second quarter.
- Operating expenses decreased 33% for the quarter to $6.4
million compared with $9.6 million in the year-ago second
quarter.
- Bad debt recovery was $0.5 million during the second quarter of
fiscal 2017 primarily from BPC Engineering, the company’s
distributor in Russia. There were no significant bad debt charges
or recoveries recorded during the second quarter of fiscal
2016.
- Cash and cash equivalents were $16.1 million as of September
30, 2016, compared to cash and cash equivalents of $15.6 million as
of September 30, 2015. Each of these balances includes $5 million
of restricted cash related to our Wells Fargo credit
facility.
- Inventories as of September 30, 2016 were $19.2 million
compared with $31.0 million at the end of the year-ago second
quarter, a decrease of $11.8 million.
- Accounts payable and accrued expenses were $12.1 million
compared with $25.1 million at the end of the second quarter fiscal
2016.
- As of September 30, 2016, borrowings on the Wells Fargo credit
facility were $6.2 million, a $9.0 million decrease from borrowings
as of September 30, 2015.
- Subsequent to the end of the quarter, the company entered into
a securities purchase agreement for gross proceeds of approximately
$7.5 million in an offering of a combination of common stock and
warrants.
- The company booked product net orders of approximately $8.9
million during the second quarter, for a 1.1:1 book-to-bill ratio,
compared with $8.4 million of product net orders received and
booked during the year-ago second quarter, which was a 0.7:1
book-to-bill ratio.
Conference Call and WebcastThe
company will host a live webcast today, November 9, 2016 at 1:45 PM
Pacific Time (4:45 PM Eastern Time) to provide the results of the
second quarter fiscal 2017 ended September 30, 2016. The company
will discuss its financial results and will provide an update on
its business activities. At the end of the conference call,
Capstone will host a question-and-answer session to provide an
opportunity for financial analysts to ask questions. Investors and
interested individuals are invited to listen to the webcast by
logging on to the company's investor relations webpage at
http://www.capstoneturbine.com. A replay of the webcast will be
available on the website for 30 days.
About Capstone Turbine
CorporationCapstone Turbine Corporation
(www.capstoneturbine.com) (Nasdaq:CPST) is the
world's leading producer of low-emission microturbine systems and
was the first to market commercially viable microturbine energy
products. Capstone has shipped approximately 9,000 Capstone
Microturbine systems to customers worldwide. These award-winning
systems have logged millions of documented runtime operating
hours. Capstone is a member of the U.S. Environmental
Protection Agency's Combined Heat and Power Partnership, which
is committed to improving the efficiency of the nation's energy
infrastructure and reducing emissions of pollutants and greenhouse
gases. A UL-Certified ISO 9001:2008 and ISO 14001:2004 certified
company, Capstone is headquartered in the Los Angeles area
with sales and/or service centers in the United States, Latin
America, Europe, Middle East and China.
This press release contains "forward-looking
statements," as that term is used in the federal securities laws,
about market growth in the energy efficiency market, achieving
profitability, diversifying our business, success of geographic
expansion, reduced costs and new product innovations and financing
options. Forward-looking statements may be identified by words such
as "expects," "objective," "intend," "targeted," "plan" and similar
phrases. These forward-looking statements are subject to numerous
assumptions, risks and uncertainties described in Capstone's
filings with the Securities and Exchange Commission that may cause
Capstone's actual results to be materially different from any
future results expressed or implied in such statements. Capstone
cautions readers not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
release. Capstone undertakes no obligation, and specifically
disclaims any obligation, to release any revisions to any
forward-looking statements to reflect events or circumstances after
the date of this release or to reflect the occurrence of
unanticipated events.
"Capstone" and "Capstone Microturbine" are
registered trademarks of Capstone Turbine Corporation. All
other trademarks mentioned are the property of their respective
owners.
Financial Tables Follow
|
CAPSTONE TURBINE CORPORATION AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands, except share
amounts) |
(Unaudited) |
|
|
|
|
|
|
|
September 30, |
|
March 31, |
|
2016 |
|
2016 |
Assets |
Current Assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
|
11,106 |
|
|
$ |
|
11,704 |
|
Restricted cash |
|
|
5,006 |
|
|
|
|
5,002 |
|
Accounts
receivable, net of allowances of $7,032 at September 30, 2016 and
$8,909 at March 31, 2016 |
|
|
12,750 |
|
|
|
|
13,575 |
|
Inventories |
|
|
16,955 |
|
|
|
|
16,126 |
|
Prepaid
expenses and other current assets |
|
|
2,208 |
|
|
|
|
2,636 |
|
Total
current assets |
|
|
48,025 |
|
|
|
|
49,043 |
|
Property, plant and
equipment, net |
|
|
2,796 |
|
|
|
|
3,537 |
|
Non-current portion of
inventories |
|
|
2,272 |
|
|
|
|
2,143 |
|
Intangible assets,
net |
|
|
805 |
|
|
|
|
941 |
|
Other assets |
|
|
240 |
|
|
|
|
228 |
|
Total |
$ |
|
54,138 |
|
|
$ |
|
55,892 |
|
Liabilities and Stockholders’
Equity |
Current
Liabilities: |
|
|
|
|
|
Accounts
payable and accrued expenses |
$ |
|
12,087 |
|
|
$ |
|
13,187 |
|
Accrued
salaries and wages |
|
|
1,829 |
|
|
|
|
1,880 |
|
Accrued
warranty reserve |
|
|
1,327 |
|
|
|
|
1,639 |
|
Deferred
revenue |
|
|
4,520 |
|
|
|
|
4,368 |
|
Revolving
credit facility |
|
|
6,178 |
|
|
|
|
9,459 |
|
Current
portion of notes payable and capital lease obligations |
|
|
50 |
|
|
|
|
361 |
|
Total
current liabilities |
|
|
25,991 |
|
|
|
|
30,894 |
|
Long-term portion of
notes payable and capital lease obligations |
|
|
33 |
|
|
|
|
74 |
|
Other long-term
liabilities |
|
|
179 |
|
|
|
|
184 |
|
Commitments and
contingencies |
|
|
|
|
|
Stockholders’
Equity: |
|
|
|
|
|
Preferred
stock, $.001 par value; 10,000,000 shares authorized; none
issued |
|
|
|
|
|
Common
stock, $.001 par value; 515,000,000 shares authorized, 30,794,703
shares issued 30,678,284 shares outstanding at September 30, 2016;
23,857,516 shares issued and 23,753,873 shares outstanding at March
31, 2016 |
|
|
31 |
|
|
|
|
24 |
|
Additional paid-in capital |
|
|
866,878 |
|
|
|
|
853,288 |
|
Accumulated deficit |
|
|
(837,336 |
) |
|
|
|
(826,955 |
) |
Treasury
stock, at cost; 116,419 shares at September 30, 2016 and 103,643
shares at March 31, 2016 |
|
|
(1,638 |
) |
|
|
|
(1,617 |
) |
Total
stockholders’ equity |
|
|
27,935 |
|
|
|
|
24,740 |
|
Total |
$ |
|
54,138 |
|
|
$ |
|
55,892 |
|
CAPSTONE TURBINE CORPORATION AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share
data) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Product,
accessories and parts |
|
$ |
|
11,518 |
|
|
$ |
|
14,689 |
|
|
$ |
|
27,301 |
|
|
$ |
|
38,835 |
|
Service |
|
|
|
3,480 |
|
|
|
|
3,216 |
|
|
|
|
6,762 |
|
|
|
|
6,050 |
|
Total revenue |
|
|
|
14,998 |
|
|
|
|
17,905 |
|
|
|
|
34,063 |
|
|
|
|
44,885 |
|
Cost of goods
sold: |
|
|
|
|
|
|
|
|
|
|
|
|
Product,
accessories and parts |
|
|
|
11,341 |
|
|
|
|
13,147 |
|
|
|
|
24,978 |
|
|
|
|
33,061 |
|
Service |
|
|
|
2,987 |
|
|
|
|
2,830 |
|
|
|
|
5,416 |
|
|
|
|
5,211 |
|
Total cost of goods
sold |
|
|
|
14,328 |
|
|
|
|
15,977 |
|
|
|
|
30,394 |
|
|
|
|
38,272 |
|
Gross margin |
|
|
|
670 |
|
|
|
|
1,928 |
|
|
|
|
3,669 |
|
|
|
|
6,613 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development |
|
|
|
1,350 |
|
|
|
|
2,872 |
|
|
|
|
2,972 |
|
|
|
|
5,288 |
|
Selling,
general and administrative |
|
|
|
5,036 |
|
|
|
|
6,705 |
|
|
|
|
10,782 |
|
|
|
|
14,794 |
|
Total
operating expenses |
|
|
|
6,386 |
|
|
|
|
9,577 |
|
|
|
|
13,754 |
|
|
|
|
20,082 |
|
Loss from
operations |
|
|
|
(5,716 |
) |
|
|
|
(7,649 |
) |
|
|
|
(10,085 |
) |
|
|
|
(13,469 |
) |
Other (expense)
income |
|
|
|
(27 |
) |
|
|
|
(36 |
) |
|
|
|
(43 |
) |
|
|
|
(38 |
) |
Interest income |
|
|
|
7 |
|
|
|
— |
|
|
|
12 |
|
|
|
— |
Interest expense |
|
|
|
(129 |
) |
|
|
|
(197 |
) |
|
|
|
(263 |
) |
|
|
|
(347 |
) |
Loss before income
taxes |
|
|
|
(5,865 |
) |
|
|
|
(7,882 |
) |
|
|
|
(10,379 |
) |
|
|
|
(13,854 |
) |
Provision for income
taxes |
|
|
— |
|
|
— |
|
|
|
3 |
|
|
|
|
3 |
|
Net loss |
|
$ |
|
(5,865 |
) |
|
$ |
|
(7,882 |
) |
|
$ |
|
(10,382 |
) |
|
$ |
|
(13,857 |
) |
Net loss per common
share—basic and diluted |
|
$ |
|
(0.19 |
) |
|
$ |
|
(0.48 |
) |
|
$ |
|
(0.36 |
) |
|
$ |
|
(0.84 |
) |
Weighted average shares
used to calculate basic and diluted net loss per
common share |
|
|
|
30,498 |
|
|
|
|
16,578 |
|
|
|
|
28,843 |
|
|
|
|
16,552 |
|
CONTACT:
Capstone Turbine Corporation
Investor and investment inquiries:
818-407-3628
ir@capstoneturbine.com
INVESTORS:
Dian Griesel Int’l
Cheryl Schneider
212-825-3210
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