Year-over-Year Quarterly Revenue Increases
32%
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 2018 ended September 30, 2017.
The company reported total revenue of $19.8 million for the
second quarter of fiscal 2018 and a net loss of $3.7 million, or
$0.09 per share. This compares with total revenue of $15.0 million
and a net loss of $5.9 million, or $0.19 per share, reported for
the second quarter of fiscal 2017. Weighted average shares
outstanding for the quarter ended September 30, 2017 were 42.9
million compared with 30.5 million in the year-ago quarter.
Operating expenses for the quarter decreased 8% to $5.9 million
from $6.4 million in the year-ago quarter. Operating expenses were
the lowest reported since the fourth quarter of fiscal 1999. The
Adjusted EBITDA loss improved 55% to $2.3 million for the second
quarter of fiscal 2018 from $5.1 million in the year-ago
quarter.
“Our second quarter and six-month year-to-date results are
in-line with our internal expectations and represent a significant
improvement over last year. In fact, our second quarter operating
expenses were the lowest in 18 years,” said Darren Jamison,
President and Chief Executive Officer of Capstone.
“Significant progress has been made on our multi-point strategic
profitability plan. We recently announced that we are expecting to
see an expansion of our accessories, parts and service business
over the next two quarters with increased revenue and improved
margins, lowering our operating expense target to $5 million a
quarter once our Chatsworth facility is subleased and expecting to
see $2.5 million in bad debt recovery in the next two quarters,”
said Mr. Jamison. “This represents significant successful execution
against our strategic plan, and when combined with the recently
confirmed shipment of the 5.2 MWs for a large pipeline project, the
Capstone team believes we have an opportunity to accelerate our
goal of reaching Adjusted EBITDA breakeven in the upcoming December
and/or March quarters,” said Mr. Jamison. “This is not our final
business destination as we are just getting rolling, but it would
mark a very significant milestone for all Capstone employees and
stakeholders,” added Mr. Jamison.
Business developments and milestones recently
achieved
- Capstone received a letter from The NASDAQ Stock Market stating
that the company had regained compliance with The NASDAQ Stock
Market’s minimum bid price listing requirement, Listing Rule
5550(a) (2). The letter was the result of Capstone’s share price
being at or above $1.00 per share for ten consecutive business days
from October 12 to 25, 2017.
- Capstone signed a 2-megawatt (MW) Factory Protection Plan (FPP)
multi-year contract with its Hawaiian Distributor Critchfield
Pacific for a global resort hotel chain on the island of Maui.
Total FPP long-term contract coverage for Capstone units operating
in Hawaii is now 74% as a result of the latest FPP
contract.
- Aerospace Industrial Development Corporation (AIDC), Capstone’s
exclusive distributor for Taiwan, secured its first C1000 Signature
Series order for a biogas project in Taiwan. The biogas-fueled
microturbine will be installed at a large piggery.
- Capstone executed a new agreement that appoints a new exclusive
oil and gas distributor in Russia. Under the terms of the
agreement, the company will grant Turbine International and its
affiliate, MTE Service, the sole distribution rights for Capstone’s
products and services in the Russian oil and gas sector in exchange
for $6.3 million in cash. Under the agreement, Turbine
International will pay Capstone $2.5 million in three payments by
February 1, 2018 and the payments will be recorded as bad debt
recovery. The remaining payments totaling $3.8 million are
scheduled to be paid over a three-year period beginning in August
2018.
- The Energy Innovation Center (EIC) in Pittsburgh, Pennsylvania
selected Capstone clean and green microturbines to retrofit its
building. The EIC worked with E-Finity Distributed Generation,
Capstone’s exclusive distributor for the Mid-Atlantic and
Southeastern United States, for the installation of two natural
gas-fueled C65 integrated cooling, heat and power (ICHP)
microturbines with Capstone’s integrated heat recovery modules
(HRMs).
- Capstone successfully winded down its $5.2 million field
retrofit program to upgrade non-Signature Series C1000 and C200
microturbines. The retrofit program was completed on schedule and
within budget. This program has provided a significant improvement
in demonstrated performance and reliability of the non-Signature
Series C1000 and C200 microturbines, which now approaches the
world-class performance and reliability of the Signature Series
C1000, C200 and the C65 and C30 microturbines.
- Capstone announced a new plan to further lower total operating
expense by an additional $500 thousand per quarter. As a result,
the new management quarterly total operating expense target is set
at $5 million. This includes the successful completion of its
consolidation plan for its two manufacturing facilities into a
single manufacturing facility allowing for an immediate increase in
operational efficiency and reduced facility expense when the exited
facility is subleased.
- Capstone’s energy financing joint venture, Capstone Energy
Finance, executed a five-year agreement with a large greenhouse
operation in Colorado. Multiple propane-fired C65 microturbines
will be installed in stand-alone mode at a remote location to
provide electricity for the Colorado greenhouse.
Financial Highlights of Fiscal 2018 Second
Quarter:
- Total revenue increased 32% to $19.8 million over the prior
year’s second quarter. Product revenue increased 49% to $12.2
million and accessories, parts and FPP revenue increased 12% to
$7.6 million over last year’s second quarter.
- Gross margin increased to $3.0 million, or 15% of revenue from
$0.7 million, or 5% of revenue, in the year-ago second
quarter.
- Operating expenses decreased 8% for the quarter to $5.9 million
compared with $6.4 million in the year-ago second
quarter.
- Net loss improved 37% to $3.7 million compared with a net loss
of $5.9 million in last year’s second quarter.
- Loss per share of $0.09 compared to last year’s second quarter
loss of $0.19. Weighted average shares outstanding at the end of
the second quarter of fiscal 2018 were 42.9 million compared with
30.5 million in the year-ago quarter.
- Adjusted EBITDA loss was $2.3 million, an improvement of 55%,
compared to $5.1 million a year ago second quarter. Adjusted EBITDA
loss per share of $0.05 compared to last year’s second quarter
Adjusted EBITDA loss of $0.17.
- Cash, cash equivalents and restricted cash were $15.2 million
as of September 30, 2017, compared to cash, cash equivalents and
restricted cash of $19.7 million as of March 31, 2017 and $16.1
million as of September 30, 2016.
- Subsequent to the end of the quarter, the company entered into
a warrant exercise agreement for net proceeds of approximately $1.7
million from the exercise of existing warrants which was not
dilutive to existing stockholders of the company calculated on a
fully diluted basis.
- Cash usage, excluding net proceeds from equity transactions,
during the first six-months of fiscal 2018 was $5.2 million lower,
representing a 38% reduction compared to the same period last
year.
- Inventories as of September 30, 2017 were $17.3 million
compared with $15.5 million as of March 31, 2017 and $19.2 million
at the end of the year-ago second quarter.
- As of September 30, 2017, borrowings on the revolving credit
facility were $9.6 million, compared to $11.5 million as of March
31, 2017 and $6.2 million as of September 30, 2016.
- The company booked product net orders of approximately $5.8
million during the second quarter, for a 0.5:1 book-to-bill ratio,
compared with $16.9 million of product net orders received and
booked during the prior quarter, which was a 1.3:1 book-to-bill
ratio and with $8.9 million of product net orders received and
booked during the year-ago second quarter, which was a 1.1:1
book-to-bill ratio.
“Although our book-to-bill ratio temporarily slowed compared to
the previous two quarters as our product mix shifted to smaller
65-kilowatt units during the quarter, recent hurricane activity is
driving additional near-term opportunities in Texas, Florida and
Puerto Rico,” added Mr. Jamison. “We had previously quoted projects
in these regions, however, as a result of the recent hurricanes the
project operators are looking to potentially accelerate their
project timelines,” added Mr. Jamison.
“We continue to manage the balance sheet and working capital
while focusing on our war on costs and making progress towards our
near-term goal of obtaining Adjusted EBITDA breakeven,” said Ms.
Brooks. “Last week we added an additional $1.7 million in cash to
our balance sheet with the exercise of warrants, which contributed
to our objectives of maintaining a strong balance sheet and working
to clean up our cap table,” added Ms. Brooks.
Adjusted EBITDA is defined as net income before interest,
provision for income taxes, depreciation and amortization expense,
stock-based compensation expense, the change in warrant valuation
and restructuring charges. 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.
Conference Call and WebcastThe company will
host a live webcast today, November 2, 2017, at 1:45 PM Pacific
Time (4:45 PM Eastern Time) to provide the results of the second
quarter fiscal 2018 ended September 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 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 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.
This press release contains "forward-looking statements," as
that term is used in the federal securities laws. 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
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except share
amounts)(Unaudited) |
|
|
|
|
|
|
|
|
|
|
September 30, |
|
March 31, |
|
|
|
2017 |
|
|
2017 |
|
|
Assets |
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
10,156 |
|
|
$ |
14,191 |
|
|
Restricted cash |
|
|
5,000 |
|
|
|
5,514 |
|
|
Accounts
receivable, net of allowances of $6,773 at September 30, 2017 and
$6,845 at March 31, 2017 |
|
|
13,248 |
|
|
|
17,003 |
|
|
Inventories |
|
|
16,274 |
|
|
|
14,538 |
|
|
Prepaid
expenses and other current assets |
|
|
2,545 |
|
|
|
3,073 |
|
|
Total
current assets |
|
|
47,223 |
|
|
|
54,319 |
|
|
Property, plant and
equipment, net |
|
|
2,232 |
|
|
|
2,115 |
|
|
Non-current portion of
inventories |
|
|
994 |
|
|
|
961 |
|
|
Intangible assets,
net |
|
|
523 |
|
|
|
651 |
|
|
Other assets |
|
|
331 |
|
|
|
225 |
|
|
Total
assets |
|
$ |
51,303 |
|
|
$ |
58,271 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
14,096 |
|
|
$ |
14,719 |
|
|
Accrued
salaries and wages |
|
|
1,834 |
|
|
|
1,819 |
|
|
Accrued
warranty reserve |
|
|
2,562 |
|
|
|
3,766 |
|
|
Deferred
revenue |
|
|
4,999 |
|
|
|
5,050 |
|
|
Revolving
credit facility |
|
|
9,575 |
|
|
|
11,533 |
|
|
Current
portion of notes payable and capital lease obligations |
|
|
14 |
|
|
|
302 |
|
|
Total
current liabilities |
|
|
33,080 |
|
|
|
37,189 |
|
|
Long-term portion of
notes payable and capital lease obligations |
|
|
20 |
|
|
|
26 |
|
|
Other long-term
liabilities |
|
|
136 |
|
|
|
158 |
|
|
Total
liabilities |
|
|
33,236 |
|
|
|
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, 44,959,744
shares issued and 44,813,869 shares outstanding at September 30,
2017; 38,920,174 shares issued and 38,803,630 shares outstanding at
March 31, 2017 |
|
|
45 |
|
|
|
39 |
|
|
Additional paid-in capital |
|
|
879,639 |
|
|
|
874,697 |
|
|
Accumulated deficit |
|
|
(859,959 |
) |
|
|
(852,199 |
) |
|
Treasury
stock, at cost; 145,875 shares at September 30, 2017 and 116,544
shares at March 31, 2017 |
|
|
(1,658 |
) |
|
|
(1,639 |
) |
|
Total
stockholders’ equity |
|
|
18,067 |
|
|
|
20,898 |
|
|
Total
liabilities and stockholders' equity |
|
$ |
51,303 |
|
|
$ |
58,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPSTONE TURBINE CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
data) (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product,
accessories and parts |
|
$ |
16,005 |
|
|
$ |
11,518 |
|
|
$ |
31,496 |
|
|
$ |
27,301 |
|
|
Service |
|
|
3,769 |
|
|
|
3,480 |
|
|
|
7,518 |
|
|
|
6,762 |
|
|
Total revenue |
|
|
19,774 |
|
|
|
14,998 |
|
|
|
39,014 |
|
|
|
34,063 |
|
|
Cost of goods
sold: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product,
accessories and parts |
|
|
13,549 |
|
|
|
11,341 |
|
|
|
27,586 |
|
|
|
24,978 |
|
|
Service |
|
|
3,209 |
|
|
|
2,987 |
|
|
|
6,173 |
|
|
|
5,416 |
|
|
Total cost of goods
sold |
|
|
16,758 |
|
|
|
14,328 |
|
|
|
33,759 |
|
|
|
30,394 |
|
|
Gross margin |
|
|
3,016 |
|
|
|
670 |
|
|
|
5,255 |
|
|
|
3,669 |
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development |
|
|
1,139 |
|
|
|
1,350 |
|
|
|
2,288 |
|
|
|
2,972 |
|
|
Selling,
general and administrative |
|
|
4,796 |
|
|
|
5,036 |
|
|
|
9,757 |
|
|
|
10,782 |
|
|
Total
operating expenses |
|
|
5,935 |
|
|
|
6,386 |
|
|
|
12,045 |
|
|
|
13,754 |
|
|
Loss from
operations |
|
|
(2,919 |
) |
|
|
(5,716 |
) |
|
|
(6,790 |
) |
|
|
(10,085 |
) |
|
Other income
(expense) |
|
|
14 |
|
|
|
(27 |
) |
|
|
4 |
|
|
|
(43 |
) |
|
Interest income |
|
|
— |
|
|
|
7 |
|
|
|
9 |
|
|
|
12 |
|
|
Interest expense |
|
|
(98 |
) |
|
|
(129 |
) |
|
|
(319 |
) |
|
|
(263 |
) |
|
Change in warrant
valuation |
|
|
(657 |
) |
|
|
— |
|
|
|
(657 |
) |
|
|
— |
|
|
Loss before income
taxes |
|
|
(3,660 |
) |
|
|
(5,865 |
) |
|
|
(7,753 |
) |
|
|
(10,379 |
) |
|
Provision for income
taxes |
|
|
7 |
|
|
|
— |
|
|
|
7 |
|
|
|
3 |
|
|
Net loss |
|
$ |
(3,667 |
) |
|
$ |
(5,865 |
) |
|
$ |
(7,760 |
) |
|
$ |
(10,382 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share—basic and diluted |
|
$ |
(0.09 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.36 |
) |
|
Weighted average shares
used to calculate basic and diluted net loss per
common share |
|
|
42,941 |
|
|
|
30,498 |
|
|
|
42,606 |
|
|
|
28,843 |
|
|
|
|
|
|
|
|
CAPSTONE TURBINE CORPORATION AND
SUBSIDIARIESRECONCILIATION OF NON-GAAP FINANCIAL
MEASURE(In thousands) |
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
Reconciliation of Reported Net Loss to Adjusted
EBITDA |
|
September 30, |
|
September 30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net loss, as
reported |
|
$ |
(3,667 |
) |
|
$ |
(5,865 |
) |
|
$ |
(7,760 |
) |
|
$ |
(10,382 |
) |
Interest
expense |
|
|
98 |
|
|
|
129 |
|
|
|
319 |
|
|
|
263 |
|
Provision
for income taxes |
|
|
7 |
|
|
|
— |
|
|
|
7 |
|
|
|
3 |
|
Depreciation and amortization |
|
|
279 |
|
|
|
396 |
|
|
|
583 |
|
|
|
802 |
|
Stock-based compensation |
|
|
154 |
|
|
|
241 |
|
|
|
307 |
|
|
|
479 |
|
Restructuring charges |
|
|
219 |
|
|
|
|
|
|
219 |
|
|
|
|
Change in
warrant valuation |
|
|
657 |
|
|
|
— |
|
|
|
657 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
(2,253 |
) |
|
$ |
(5,099 |
) |
|
$ |
(5,668 |
) |
|
$ |
(8,835 |
) |
|
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, the change in warrant
valuation and restructuring charges. Restructuring charges includes
one-time costs related to our cost reduction
initiatives. 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 CorporationInvestor
and investment media
inquiries:818-407-3628ir@capstoneturbine.com
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