Lowest Loss From Operations in 14 Quarters -
Bookings of $20.2M, Highest in Over a 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
fourth quarter and the full fiscal year ended March 31, 2017.
The company reported total revenue of $22.9 million
for the fourth quarter of fiscal 2017 and a net loss of $4.6
million, or $0.13 per share. This compares with total revenue of
$18.9 million and a net loss of $5.3 million, or $0.25 per share,
for the fourth quarter of fiscal 2016.
Operating expenses for the quarter decreased 15% to
$6.2 million from $7.3 million in the year-ago quarter. Weighted
average shares outstanding for the quarter ended March 31, 2017
were 34.9 million compared with 21.0 million in the year-ago
quarter.
“Capstone delivered top-line revenue growth as
sales from our product and aftermarket business continued to
expand. The renewed growth was driven by improving our vertical
market diversification and geographic expansion which specifically
has benefitted our FPP service contract business with higher
attachment rates compared to our historical oil and gas customers,”
said Darren Jamison, President and Chief Executive Officer of
Capstone.
The company reported cash, cash equivalents and
restricted cash increased $335,000 from the third quarter of fiscal
2017 to $19.7 million as of March 31, 2017. This compared to cash,
cash equivalents and restricted cash of $16.7 million as of March
31, 2016. Cash used in operating activities for the fourth quarter
of fiscal 2017 was $2.9 million as compared to cash used of $5.6
million in the third quarter of fiscal 2017 and $6.6 million used
in the fourth quarter of fiscal 2016.
“Operating expenses are down over 40% compared to
when we started our cost reduction initiatives in the first quarter
of fiscal 2016. This is the lowest level of operating expenses in
the past 14 years. Along with these substantial cost reductions,
improved revenue and positive changes in working capital, cash used
in operations decreased 47% over the third quarter of fiscal 2017,”
said Ms. Jayme Brooks, Capstone’s Chief Financial Officer and Chief
Accounting Officer.
Total revenue for fiscal 2017 was $77.2 million and
the net loss for fiscal 2017 improved to $23.9 million, or $0.75
per share, on lower revenue compared to fiscal 2016. Total
revenue for fiscal 2016 was $85.2 million and the net loss for
fiscal 2016 was $25.2 million, or $1.39 per share, in fiscal 2016.
The weighted average shares outstanding for the year ended March
31, 2017 were 32.1 million compared with 18.2 million in the
year-ago period.
Accessories, parts and service revenue increased 8%
to a record high of $28.9 million, or 37% of total revenue, in
Fiscal 2017 compared to $26.8 million, or 31% of total revenue, in
Fiscal 2016. Operating expenses for fiscal 2017 decreased 30% to
$26.1 million from $37.3 million in the year-ago period. Capstone
had bad debt recovery of $1.5 million during each of fiscal 2017
and 2016 primarily from BPC Engineering, one of our Russian
distributors.
The Adjusted EBITDA for the year ended March 31,
2017 was negative $22.3 million, or a loss of $0.70 per share,
compared to an Adjusted EBITDA of $20.2 million, or a loss of $1.11
per share, for the year ended March 31, 2016.
Mr. Jamison continued, “During the year, our
three-pronged business profitability plan continued to pay
dividends with the substantial reduction of operating expenses,
improved diversification, geographic expansion and rebuilding
momentum in our top line revenue. In addition, demand for our new
Signature Series microturbines continues unabated. Our book-to-bill
ratio improved to 1.1:1 for fiscal 2017 as we increased our
competitive CHP offering with our new roof mounted integrated heat
recovery modules.”
Financial Highlights of
Fiscal 2017 Fourth Quarter:
- Top-line revenue increased 21% to $22.9 million over the prior
year’s fourth quarter. Product revenue increased 30% to $15.2
million and accessories, parts and FPP service revenue increased 8%
to $7.7 million over last year’s fourth quarter
- Operating expenses for the quarter were reduced $1.1 million,
or 15%, to $6.2 million from $7.3 million in the year-ago fourth
quarter
- Net loss for the quarter improved $0.7 million, or 13%, to $4.6
million, or $0.13 per share, for the quarter from a net loss of
$5.3 million, or $0.25 per share, in the year-ago fourth
quarter
- Inventories decreased $1.2 million from the third quarter
primarily on lower finished goods on hand
- Cash generated in the fourth quarter of fiscal 2017, excluding
net proceeds from equity transactions and including changes in the
Wells Fargo credit facility, was $33,000 compared to cash used of
$7.1 million for the fourth quarter of fiscal 2016
- Bookings for the fourth quarter were $20.2 million compared to
$18.3 million in the year-ago fourth quarter
- Book-to-bill for the quarter was 1.3 compared to 1.6 in the
year-ago fourth quarter
Financial Highlights of Full Year Fiscal
2017:
- Accessories, parts and service revenue for fiscal 2017
increased 8% to a record high of $28.9 million or 37% of total
revenue, compared to $26.8 million, or 31% of total revenue, at 17%
lower product revenue levels
- Operating expenses for fiscal 2017 were reduced $11.3 million,
or 30%, to $26.0 million from $37.3 million in fiscal 2016
- Net loss for the year improved $1.3 million, or 5%, to $23.9
million, or $0.75 per share, for fiscal 2017 from a net loss of
$25.2 million, or $1.39 per share, in fiscal 2016
- Inventories decreased $2.8 million, or 15%, in fiscal 2017 on
lower finished goods and raw materials on hand
- Cash used for fiscal 2017, excluding net proceeds from equity
transactions and including changes in the Wells Fargo credit
facility, was $17.2 million compared to cash used of $28.3 million
for fiscal 2016
“The most recent quarter is confirmation of how we
continue to strengthen all aspects of our business, as we delivered
improving revenues, lower operating expenses, shrinking inventory,
stronger bookings and generated over $33,000 in cash in the fourth
quarter of fiscal 2017 compared to burning $7 million in the same
period last year. We have positioned ourselves well with a lower
cost structure and a more diversified business to achieve our goal
of Adjusted EBITDA breakeven in fiscal 2018. We have a renewed
confidence and optimism that profitably is within our grasp as we
execute against our strategic objectives to achieve product sales
growth in the CHP market that is in turn driving our higher margin
aftermarket service revenue,” added Mr. Jamison.
“With the measurable improvements that have been
made in nearly every aspect of the business, steady results are
materializing,” continued Mr. Jamison. “Our operating cost
structure for fiscal 2017 was reduced $11.3 million, or 30%, which
is remarkable when you look back at the operating costs for fiscal
2016 of $37.3 million. Through teamwork, relentless effort, and
firm execution, we can exceed our goals as we strive towards
Capstone’s profitability and beyond,” Mr. Jamison added.
“We firmly believe that we have cleared several
challenging macroeconomic and product reliability hurdles over
these past two fiscal years, and are diligently poising the company
for renewed growth and long-term sustainability in an ever-changing
macroeconomic environment,” said Mr. Jamison. “We look forward to
announcing the success of our fiscal 2018 key initiatives over the
next fiscal year,” concluded Mr. Jamison.
Conference Call and Webcast
The Company will host a live webcast today, June
13, 2017, at 1:45 PM Pacific Time (4:45 PM Eastern Time) to provide
the results of the fourth quarter and fiscal year ended March 31,
2017. 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 www.capstoneturbine.com. A replay of the
webcast will be available on the website for 30 days.
About Capstone Turbine
Corporation
Capstone 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 over 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 9001:2015 and ISO
14001:2015 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 Asia.
"Capstone" and "Capstone Microturbine" are
registered trademarks of Capstone Turbine Corporation. All
other trademarks mentioned are the property of their respective
owners.
Safe Harbor Statement
This press release contains “forward-looking
statements” regarding future events or financial performance of the
Capstone, within the meaning of the Safe Harbor provisions of the
Private Securities Litigation Reform Act of 1995.
These statements relate to, among other things,
increased revenue from our market vertical and geographical
diversification as well as aftermarket service revenue; benefits
from cost reduction initiatives and overall decrease in operating
expenses; the success and adoption of the Signature Series product
and accessories offerings; reaching key strategic initiatives;
attaining Adjusted EBITDA breakeven and profitability; as well as
experiencing renewed grown and sustainability.
Forward-looking statements may be identified by words such as
“believe,” “expect," "objective," "intend," "targeted," "plan" and
similar phrases.
These forward-looking statements are subject to
numerous assumptions, risks and uncertainties described in
Capstone's Form 10-K, Form 10-Q and other recent 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. Because of the risks
and uncertainties, Capstone cautions you not to place undue
reliance on these statements, which speak only as of today.
Capstone undertakes no obligation, and specifically disclaims any
obligation, to release any revision to any forward-looking
statements to reflect events or circumstances after the date of
this conference call or to reflect the occurrence of unanticipated
events.
Financial Tables Follow
CAPSTONE TURBINE CORPORATION AND
SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (In thousands, except share
amounts) |
|
|
|
|
|
|
|
|
|
March 31, |
|
March 31, |
|
|
|
2017 |
|
|
2016 |
|
|
Assets |
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
14,191 |
|
|
$ |
11,704 |
|
|
Restricted cash |
|
|
5,514 |
|
|
|
5,002 |
|
|
Accounts
receivable, net of allowances of $6,845 at March 31, 2017 and
$8,909 at March 31, 2016 |
|
|
17,003 |
|
|
|
13,575 |
|
|
Inventories |
|
|
14,538 |
|
|
|
16,126 |
|
|
Prepaid
expenses and other current assets |
|
|
3,073 |
|
|
|
2,636 |
|
|
Total
current assets |
|
|
54,319 |
|
|
|
49,043 |
|
|
Property, plant and
equipment, net |
|
|
2,115 |
|
|
|
3,537 |
|
|
Non-current portion of
inventories |
|
|
961 |
|
|
|
2,143 |
|
|
Intangible assets,
net |
|
|
651 |
|
|
|
941 |
|
|
Other assets |
|
|
225 |
|
|
|
228 |
|
|
Total
assets |
|
$ |
58,271 |
|
|
$ |
55,892 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
14,719 |
|
|
$ |
13,187 |
|
|
Accrued
salaries and wages |
|
|
1,819 |
|
|
|
1,880 |
|
|
Accrued
warranty reserve |
|
|
3,766 |
|
|
|
1,639 |
|
|
Deferred
revenue |
|
|
5,050 |
|
|
|
4,368 |
|
|
Revolving
credit facility |
|
|
11,533 |
|
|
|
9,459 |
|
|
Current
portion of notes payable and capital lease obligations |
|
|
302 |
|
|
|
361 |
|
|
Warrant
liability |
|
|
2,917 |
|
|
|
— |
|
|
Total
current liabilities |
|
|
40,106 |
|
|
|
30,894 |
|
|
Long-term portion of
notes payable and capital lease obligations |
|
|
26 |
|
|
|
74 |
|
|
Other long-term
liabilities |
|
|
158 |
|
|
|
184 |
|
|
Total
liabilities |
|
|
40,290 |
|
|
|
31,152 |
|
|
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, 38,920,174
shares issued and 38,803,630 shares outstanding at March 31, 2017;
23,857,516 shares issued and 23,753,873 shares outstanding at March
31, 2016 |
|
|
39 |
|
|
|
24 |
|
|
Additional paid-in capital |
|
|
870,457 |
|
|
|
853,288 |
|
|
Accumulated deficit |
|
|
(850,876 |
) |
|
|
(826,955 |
) |
|
Treasury
stock, at cost; 116,544 shares at March 31, 2017 and 103,643 shares
at March 31, 2016 |
|
|
(1,639 |
) |
|
|
(1,617 |
) |
|
Total
stockholders’ equity |
|
|
17,981 |
|
|
|
24,740 |
|
|
Total
liabilities and stockholders’ equity |
|
$ |
58,271 |
|
|
$ |
55,892 |
|
|
CAPSTONE TURBINE CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
Years Ended March 31, |
|
|
|
2017 |
|
|
2016 |
|
|
Revenue: |
|
|
|
|
|
|
|
Product,
accessories and parts |
|
$ |
63,325 |
|
|
$ |
73,116 |
|
|
Service |
|
|
13,844 |
|
|
|
12,095 |
|
|
Total revenue |
|
|
77,169 |
|
|
|
85,211 |
|
|
Cost of goods
sold: |
|
|
|
|
|
|
|
Product,
accessories and parts |
|
|
64,453 |
|
|
|
61,866 |
|
|
Service |
|
|
10,927 |
|
|
|
10,578 |
|
|
Total cost of goods
sold |
|
|
75,380 |
|
|
|
72,444 |
|
|
Gross margin |
|
|
1,789 |
|
|
|
12,767 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
|
|
5,388 |
|
|
|
10,152 |
|
|
Selling,
general and administrative |
|
|
20,651 |
|
|
|
27,106 |
|
|
Total
operating expenses |
|
|
26,039 |
|
|
|
37,258 |
|
|
Loss from
operations |
|
|
(24,250 |
) |
|
|
(24,491 |
) |
|
Other expense |
|
|
(470 |
) |
|
|
(40 |
) |
|
Interest income |
|
|
31 |
|
|
|
— |
|
|
Interest expense |
|
|
(536 |
) |
|
|
(640 |
) |
|
Change in fair value of
warrant liability |
|
|
1,323 |
|
|
|
— |
|
|
Loss before income
taxes |
|
|
(23,902 |
) |
|
|
(25,171 |
) |
|
Provision for income
taxes |
|
|
19 |
|
|
|
20 |
|
|
Net loss |
|
$ |
(23,921 |
) |
|
$ |
(25,191 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common
share—basic and diluted |
|
$ |
(0.75 |
) |
|
$ |
(1.39 |
) |
|
Weighted average shares
used to calculate basic and diluted net loss per
common share |
|
|
32,074 |
|
|
|
18,162 |
|
|
CAPSTONE
TURBINE CORPORATION AND SUBSIDIARIESRECONCILIATION
OF NON-GAAP FINANCIAL MEASURE(In
thousands) |
|
|
|
|
|
|
|
|
|
Reconciliation of Reported Net Loss to Adjusted
EBITDA |
|
Fiscal Year ended March 31, |
|
|
|
2017 |
|
|
2016 |
|
|
Net loss, as
reported |
|
$ |
(23,921 |
) |
|
$ |
(25,191 |
) |
|
Interest |
|
|
505 |
|
|
|
640 |
|
|
Provision
for income taxes |
|
|
19 |
|
|
|
20 |
|
|
Depreciation and amortization |
|
|
1,577 |
|
|
|
1,746 |
|
|
Stock-based compensation |
|
|
810 |
|
|
|
2,570 |
|
|
Change in
fair value or warrant liability |
|
|
(1,323 |
) |
|
|
— |
|
|
Adjusted EBITDA |
|
$ |
(22,333 |
) |
|
$ |
(20,215 |
) |
|
To supplement the Company’s unaudited financial
data presented on a generally accepted accounting principles (GAAP)
basis, management has used Adjusted EBITDA, a non-GAAP
measure. This non-GAAP measure is among the indicators
management uses as a basis for evaluating the Company’s financial
performance as well as for forecasting future periods.
Management establishes performance targets, annual budgets and
makes operating decisions based in part upon these metrics.
Accordingly, disclosure of this non-GAAP measure provides investors
with the same information that management uses to understand the
Company’s economic performance year over year. The presentation of
this additional information is not meant to be considered in
isolation or as a substitute for net income or other measures
prepared in accordance with GAAP.
Adjusted EBITDA is defined as net income before
interest, provision for income taxes, depreciation and amortization
expense, stock-based compensation expense and change in fair value
of warrant liability. Adjusted EBITDA is not a measure of our
liquidity or financial performance under GAAP and should not be
considered as an alternative to net income or any other performance
measure derived in accordance with GAAP, or as an alternative to
cash flows from operating activities as a measure of our
liquidity.
While management believes that the non-GAAP
financial measures provide useful supplemental information to
investors, there are limitations associated with the use of these
measures. The measures are not prepared in accordance with
GAAP and may not be directly comparable to similarly titled
measures of other companies due to potential differences in the
exact method of calculation. Management compensates for these
limitations by relying primarily on our GAAP results and by using
Adjusted EBITDA only supplementally and by reviewing the
reconciliations of the non-GAAP financial measures to their most
comparable GAAP financial measures.
Non-GAAP financial measures are not in accordance
with, or an alternative for, generally accepted accounting
principles in the United States. The Company’s non-GAAP
financial measures are not meant to be considered in isolation or
as a substitute for comparable GAAP financial measures, and should
be read only in conjunction with the Company’s consolidated
financial statements prepared in accordance with GAAP.
Capstone Turbine Corporation
Investor and investment media inquiries:
818-407-3628
ir@capstoneturbine.com
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