Cash Used in Operating Activities Down 76% -
Lowest in Past 6 Quarters
Capstone Turbine Corporation (www.capstoneturbine.com)
(NASDAQ:CPST), the world’s leading clean technology manufacturer of
microturbine energy systems, reported financial results for its
first quarter of fiscal 2018 ended June 30, 2017.
The company reported total revenue of $19.2 million
for the first quarter of fiscal 2018 and a net loss of $4.1
million, or $0.10 per share. This compares with total revenue of
$19.1 million and a net loss of $4.5 million, or $0.17 per share,
for the first quarter of fiscal 2017. Although total revenue for
the first quarter of fiscal 2018 increased $0.1 million to $19.2
million from the first quarter of fiscal 2017, service revenue for
the first quarter of fiscal 2018 increased $0.4 million, or 12%, to
$3.7 million from $3.3 million for the first quarter of fiscal
2017.
Cash used in operating
activities decreased 76% to $0.7 million for the
first quarter of fiscal 2018 compared to the fourth
quarter of fiscal 2017, which was the lowest cash used in
operating activities in the past six quarters. Working capital
change for the first quarter of fiscal 2018 was positive $1.9
million as compared to a negative $0.5 million working capital
change for the fourth quarter of fiscal 2017. The company reported
that its cash, cash equivalents and restricted cash decreased $0.6
million during the first quarter of fiscal 2017 to $19.1 million as
of June 30, 2017.
Orders for new products for the first quarter of
fiscal 2018 were positive with a book-to-bill ratio of 1.3 to 1.
Capstone booked $37.1 million in net product orders for the
six-month period ended June 30, 2017 compared to $20.4 million in
the preceding six months, an increase of 82% period-over-period
indicating a rebound in the business.
“At first glance, the first quarter financial
results of fiscal 2018 look very similar to that of the first
quarter of fiscal 2017, however, the first quarter of fiscal 2017
benefited from almost a million dollars in bad debt recovery,” said
Ms. Jayme Brooks, Capstone’s Chief Financial Officer and Chief
Accounting Officer. “When you exclude bad debt recovery from our
operating expenses for both periods, our net loss improved by
approximately $1.3 million from a net loss of $5.4 million in the
first quarter of fiscal 2017 to $4.1 million for the first quarter
of fiscal 2018 on similar revenue levels. This highlights the
overall improvement in our underlying business during the first
quarter of fiscal 2018 compared to the year-ago first quarter,”
added Ms. Brooks.
Operating expenses for the first quarter of fiscal
2018 decreased 18% to $6.1 million from $7.4 million in the
year-ago quarter. Operating expenses excluding bad debt recovery
decreased 27% for the first quarter of fiscal 2018 to $6.1 million
from $8.3 million for the first quarter of fiscal 2017. Bad debt
recovery for the first quarter of fiscal 2017 was $0.9 million
compared to $13 thousand for the first quarter of fiscal
2018.
“This year’s first quarter results reflect a solid
start to the current fiscal year as we continue to see an increase
of orders from a diverse mix of markets for the second consecutive
quarter. Other positive contributing factors to note are having a
progressive aftermarket service business with a record level of
long-term service contract revenue and the decrease in our
operating expenses primarily as a result of our ongoing war on
costs. We absolutely believe that we are on the path to deliver
strong sustainable growth and near-term profitability,” said Darren
Jamison, President and Chief Executive Officer of Capstone.
“Several of our new fiscal 2018 growth programs are
expected to contribute to the company’s future positive working
capital, such as the new Sell-to-Win bundled ICHP program with its
5 and 9-year prepaid service contracts and the growing adoption of
Signature Series retrofit upgrade kits for fielded C1000 Series
systems. These programs are specifically designed to grow revenue,
improve margins and generate positive working capital,” said Jeff
Foster, Capstone’s Senior Vice President of Customer Service.
The Adjusted EBITDA for the first quarter of fiscal
2018 was negative $3.4 million, or a loss of $0.08 per share,
compared to an Adjusted EBITDA of negative $3.7 million, or a loss
of $0.14 per share, for the first quarter of fiscal
2017. Weighted average shares outstanding for the quarter
ended June 30, 2017 were 41.1 million compared with 27.2 million in
the year-ago quarter.
Mr. Jamison continued, “The loss from operations in
the first quarter of fiscal 2018 was $3.9 million, an improvement
of 11% compared to the first quarter of fiscal 2017. Moreover, this
quarter’s loss from operations was the lowest in the past 15
quarters and I expect it will decrease even further as we ship the
recently booked product orders and our new sales and service
initiatives deliver increased revenue in the back half of fiscal
2018.”
“Compared to the first quarter of fiscal 2017, both
our loss from operations and Adjusted EBITDA continued to improve
this quarter, especially when you exclude the bad debt recoveries.
I believe that the higher gross margins generated from our growing
aftermarket service business, the rebound in our product shipments
and the continued decline in our operating expenses gives Capstone
a clear path to profitability,” added Mr. Jamison.
Financial Highlights of
Fiscal 2018 First Quarter:
- Total revenue for the first quarter of fiscal 2018 was $19.2
million, an increase of 1% compared with $19.1 million in the
year-ago first quarter
- Cash used in operating activities decreased 76% to
$0.7 million for the first quarter of fiscal
2018 compared to the fourth quarter of fiscal 2017, which
was the lowest cash used in operating activities in the past
six quarters
- Accounts receivable decreased 28% to $12.2 million from $17.0
million as of March 31, 2017
- Net product orders for the first quarter were $16.9 million
compared to $10.9 million in the year-ago first quarter
- Book-to-bill for the quarter was 1.3 to 1 compared to 0.9 to 1
in the year-ago first quarter
- The number of megawatts shipped for the first quarter grew
approximately 4% compared to the first quarter of fiscal 2017
- Total operating expenses in the first quarter of fiscal 2018
were $6.1 million, down 18% year over year – excluding bad debt
recoveries in each period, operating expense were down 27%
year-over-year
- Loss from operations in the first quarter of fiscal 2018 was
$3.9 million, down 11% compared to the first quarter of fiscal
2017
- The loss from operations in the first quarter of fiscal 2018
was the lowest in the last 15 quarters indicating an improvement in
the overall business
- Net loss for the first quarter of fiscal 2018 compared to the
year-ago first quarter improved $0.4 million, or 9%, to $4.1
million, or $0.10 per share from a net loss of $4.5 million, or
$0.17 per share
- Net loss, excluding bad debt recovery, improved $1.3 million on
similar revenue levels for the first quarter of fiscal 2018
compared to first quarter of fiscal 2017
“You have three ways to drive profitability in a
business: higher revenue, better margins and lower operating costs.
At Capstone, we are employing all three of these strategies to help
us reach profitability as quickly as possible. We are driving
future revenue growth through our new Signature Series product
lineup and new Sell-to-Win bundled ICHP program, which is heavily
concentrated on the energy efficiency market. Furthermore, we
expect to drive future revenue growth through our Capstone Energy
Finance business, which as it comes online, will start contributing
to the overall top-line. As it relates to margin, our aftermarket
service business revenue, which includes long-term comprehensive
factory protection plan (FPP) service contracts, spare parts and
product accessories, is growing as a percentage of total revenue
and carries higher margins compared to our new microturbine
products. Last, as it relates to operating cost, we have
substantially reduced our marketing and service expenses by
transferring those associated costs and responsibilities from
Capstone directly to our distribution channel and we have
substantially reduced our development efforts. Once Capstone is
completely consolidated under one roof, we will realize an
additional decrease in our annual operating expenses and see an
additional boost in productivity and efficiency,” Mr. Jamison
concluded.
Conference Call and Webcast
The Company will host a live webcast today, August
9, 2017, at 1:45 PM Pacific Time (4:45 PM Eastern Time) to provide
the results of the first quarter fiscal 2018 ended June 30, 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 EBITA 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. Other factors, such
as general economic conditions, including currency exchange rate
fluctuations, also may have an effect on the results of our
operations. For a more complete description of the risks
noted above and other risks that could cause our actual results to
differ from our current expectations, please see the section
entitled “Risk Factors” in Capstone’s Annual Report on Form 10-K
for the fiscal year ended March 31, 2017.
The forward-looking statements in this press
release represent our views as of the date of this press
release. We anticipate that subsequent events and developments
may cause our views to change. However, while we may elect to
update these forward-looking statements at some point in the
future, we have no current intention of doing so except to the
extent required by applicable law. Therefore, these
forward-looking statements do not represent our views as of any
date other than the date of this press release.
Financial Tables Follow
CAPSTONE TURBINE CORPORATION AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(In thousands, except share
amounts) |
|
|
|
June 30, |
|
March 31, |
|
|
|
2017 |
|
|
2017 |
|
|
Assets |
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
14,139 |
|
|
$ |
14,191 |
|
|
Restricted cash |
|
|
5,000 |
|
|
|
5,514 |
|
|
Accounts
receivable, net of allowances of $6,804 at June 30, 2017 and $6,845
at March 31, 2017 |
|
|
12,231 |
|
|
|
17,003 |
|
|
Inventories |
|
|
15,438 |
|
|
|
14,538 |
|
|
Prepaid
expenses and other current assets |
|
|
2,583 |
|
|
|
3,073 |
|
|
Total
current assets |
|
|
49,391 |
|
|
|
54,319 |
|
|
Property, plant and
equipment, net |
|
|
2,007 |
|
|
|
2,115 |
|
|
Non-current portion of
inventories |
|
|
887 |
|
|
|
961 |
|
|
Intangible assets,
net |
|
|
583 |
|
|
|
651 |
|
|
Other assets |
|
|
302 |
|
|
|
225 |
|
|
Total
assets |
|
$ |
53,170 |
|
|
$ |
58,271 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
13,590 |
|
|
$ |
14,719 |
|
|
Accrued
salaries and wages |
|
|
1,374 |
|
|
|
1,819 |
|
|
Accrued
warranty reserve |
|
|
3,073 |
|
|
|
3,766 |
|
|
Deferred
revenue |
|
|
5,877 |
|
|
|
5,050 |
|
|
Revolving
credit facility |
|
|
9,484 |
|
|
|
11,533 |
|
|
Current
portion of notes payable and capital lease obligations |
|
|
128 |
|
|
|
302 |
|
|
Total
current liabilities |
|
|
33,526 |
|
|
|
37,189 |
|
|
Long-term portion of
notes payable and capital lease obligations |
|
|
23 |
|
|
|
26 |
|
|
Other long-term
liabilities |
|
|
147 |
|
|
|
158 |
|
|
Total
liabilities |
|
|
33,696 |
|
|
|
37,373 |
|
|
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, 42,388,199
shares issued and 42,268,594 shares outstanding at June 30, 2017;
38,920,174 shares issued and 38,803,630 shares outstanding at March
31, 2017 |
|
|
42 |
|
|
|
39 |
|
|
Additional paid-in capital |
|
|
877,364 |
|
|
|
874,697 |
|
|
Accumulated deficit |
|
|
(856,291 |
) |
|
|
(852,199 |
) |
|
Treasury
stock, at cost; 119,605 shares at June 30, 2017 and 116,544 shares
at March 31, 2017 |
|
|
(1,641 |
) |
|
|
(1,639 |
) |
|
Total
stockholders’ equity |
|
|
19,474 |
|
|
|
20,898 |
|
|
Total
liabilities and stockholders' equity |
|
$ |
53,170 |
|
|
$ |
58,271 |
|
|
CAPSTONE TURBINE CORPORATION AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share
amounts) |
|
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
|
2017 |
|
|
2016 |
|
|
Revenue: |
|
|
|
|
|
|
|
Product,
accessories and parts |
|
$ |
15,491 |
|
|
$ |
15,783 |
|
|
Service |
|
|
3,749 |
|
|
|
3,282 |
|
|
Total revenue |
|
|
19,240 |
|
|
|
19,065 |
|
|
Cost of goods
sold: |
|
|
|
|
|
|
|
Product,
accessories and parts |
|
|
14,037 |
|
|
|
13,637 |
|
|
Service |
|
|
2,964 |
|
|
|
2,429 |
|
|
Total cost of goods
sold |
|
|
17,001 |
|
|
|
16,066 |
|
|
Gross margin |
|
|
2,239 |
|
|
|
2,999 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
|
|
1,149 |
|
|
|
1,621 |
|
|
Selling,
general and administrative |
|
|
4,960 |
|
|
|
5,746 |
|
|
Total
operating expenses |
|
|
6,109 |
|
|
|
7,367 |
|
|
Loss from
operations |
|
|
(3,870 |
) |
|
|
(4,368 |
) |
|
Other expense |
|
|
(10 |
) |
|
|
(16 |
) |
|
Interest income |
|
|
9 |
|
|
|
5 |
|
|
Interest expense |
|
|
(221 |
) |
|
|
(134 |
) |
|
Loss before income
taxes |
|
|
(4,092 |
) |
|
|
(4,513 |
) |
|
Provision for income
taxes |
|
|
— |
|
|
|
3 |
|
|
Net loss |
|
$ |
(4,092 |
) |
|
$ |
(4,516 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common
share—basic and diluted |
|
$ |
(0.10 |
) |
|
$ |
(0.17 |
) |
|
Weighted average shares
used to calculate basic and diluted net loss per
common share |
|
|
41,081 |
|
|
|
27,171 |
|
|
CAPSTONE TURBINE CORPORATION AND
SUBSIDIARIES |
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURE |
(In thousands) |
|
|
|
Three months ended |
|
Reconciliation of Reported Net Loss to Adjusted
EBITDA |
|
June 30, |
|
|
|
2017 |
|
|
2016 |
|
|
Net loss, as
reported |
|
$ |
(4,092 |
) |
|
$ |
(4,516 |
) |
|
Interest |
|
|
221 |
|
|
|
134 |
|
|
Provision
for income taxes |
|
|
— |
|
|
|
3 |
|
|
Depreciation and amortization |
|
|
304 |
|
|
|
407 |
|
|
Stock-based compensation |
|
|
154 |
|
|
|
238 |
|
|
Change in
fair value or warrant liability |
|
|
— |
|
|
|
— |
|
|
Adjusted EBITDA |
|
$ |
(3,413 |
) |
|
$ |
(3,734 |
) |
|
|
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.
CONTACT:
Capstone Turbine Corporation
Investor and investment media inquiries:
818-407-3628
ir@capstoneturbine.com
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