Capstone Green Energy Corporation on Nasdaq: CGRN
Capstone Green Energy Corporation on Nasdaq: CGRN
Operating Expenses Drop to Lowest Level in 14 Years - Aftermarket Service Business Complements and Strengthens Business Operations
Net Income Impacted by One-Time Non-Cash Warranty Reserve and Non-Cash Warrant Liability Valuation
Conference Call and Webcast to Be Held Today at 1:45 PM PT, 4:45 PM ET
CHATSWORTH, Calif., Feb. 09, 2017 (GLOBE NEWSWIRE) -- Capstone Turbine Corporation (www.capstoneturbine.com) (Nasdaq:CPST), the world’s leading clean technology manufacturer of microturbine energy systems, reported financial results for its third quarter of fiscal 2017 ended December 31, 2016.
The company reported total revenue of $20.2 million for the third quarter of fiscal 2017 an increase of 35% from $15.0 million for the second quarter of fiscal 2017. Additionally, the company reported that the factory protection plan (“FPP”) service contract backlog continued to grow during the quarter and achieved record levels of $77.2 million and that service revenue for the quarter was $3.7 million with a service gross margin of 35%.
Operating expenses for the third quarter of fiscal 2017 were $6.1 million, which are down $3.8 million, or 38%, from the year-ago quarter and down an additional $0.3 million, or 5%, compared to prior quarter.
Darren Jamison, President and Chief Executive Officer of Capstone, said, “We have full confidence in our business profitability plan and believe that our results show the solid progress we have made to develop new revenue and growth opportunities, and we continue to grow our aftermarket service business, while at the same time streamlining our organization and reducing our cost structure to levels not seen in fourteen years.”
The company continues to focus on expanding into new geographical markets to achieve a target market vertical mix of 40% energy efficiency, 40% natural resources and 20% renewable energy and other. Progress was made during the third quarter of fiscal 2017, as the company shipped its first products into Qatar and Libya. The company also improved the vertical market mix, with product shipments from efficiency markets comprising 53% of revenue compared with 71% in last year’s third quarter, natural resources comprising 38% of revenue compared with 22% of revenue in last year’s third quarter and renewable energy and other comprising 9% of revenue compared with 7% of revenue in last year’s third quarter.
As previously announced, cash used in the third quarter of fiscal 2017, excluding net proceeds from equity issuances, decreased 56% over the prior quarter. Cash and cash equivalents increased $3.3 million to $19.4 million as of December 31, 2016, compared to cash and cash equivalents of $16.1 million at the end of the prior quarter. Each of these balances includes $5 million of restricted cash related to the Wells Fargo credit facility, and the December cash balance includes net proceeds from equity issuances that occurred during the third quarter.
“We remain focused on minimizing our cash burn by controlling our operating expenses and tightly managing our working capital. We have lowered our operating expenses 38% from last year’s third quarter levels and we remain committed to streamlining our cost structure and increasing our margins with better materials pricing, work flow efficiencies and matching our organizational size to expected future activity levels,” added Mr. Jamison.
During the third quarter of fiscal 2017, the company decided to retrofit proactively select fielded non-Signature Series C200 microturbines in order to improve performance, reliability and customer satisfaction. This proactive retrofit program has the potential to decrease significantly future warranty and FPP expense. As a result of this decision, the company recorded a one-time non-cash warranty charge of approximately $5.2 million, which was offset by the proactive retrofits performed in the third quarter, leaving a warranty reserve liability at the end of the quarter of approximately $3.0 million remaining for future proactive retrofits. However, as a result of this one-time warranty charge, the timing of inventory adjustments and the closeout of certain purchase agreements, the gross margin for the third quarter of fiscal 2017 was negative 20% compared to 5% in the prior quarter.
The company also recorded a non-cash benefit of $1.8 million for the change in the fair value of the warrant liability during the third quarter of fiscal 2017. This decrease in net loss was the result of the adoption of Accounting Standards Codification 815 “Derivatives and Hedging” which affects the company’s accounting for warrants with certain anti-dilution provisions. Net loss for the third quarter was $8.9 million, compared with a net loss of $6.0 million in last year’s third quarter. Capstone’s net loss for the third quarter before considering the non-cash warrant liability benefit would have been $10.7 million (calculated by subtracting the $1.8 million warrant liability benefit from the $8.9 million reported net loss), or $0.31 basic loss per share ($0.33 diluted loss per share), (calculated by subtracting a $0.05 basic and diluted gain per share attributable to the warrant liability benefit from the reported $0.26 basic loss per share ($0.28 diluted loss per share)), compared to the $6.0 million, or $0.34 basic and diluted loss per share (split adjusted) for the third quarter of fiscal 2016, which did not include a warrant liability benefit.
Business Developments and Milestones Recently Achieved:
Mr. Jamison concluded, “As a team, we remain firmly focused on shortening our path to profitability by lowering our expenses, growing our product and service revenues, diversifying our business, launching new products, creating new partnerships and managing our balance sheet.”
Financial Highlights for the Third Quarter of Fiscal 2017:
Conference Call and Webcast
The company will host a live webcast today, February 9, 2017 at 1:45 PM Pacific Time (4:45 PM Eastern Time) to provide the results of the third quarter of fiscal 2017 ended December 31, 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 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 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 Asia.
This press release contains "forward-looking statements," as that term is used in the federal securities laws, about reducing costs generally, diversifying our business, increasing margins, achieving profitability, the impact of the retrofitting of non-Signature Series C200 microturbines on warranty and FPP expense, the execution by CEF of power purchase agreements, and the impact of the recovery in oil prices on our project pipeline. 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)|
|December 31, 2016||March 31, 2016|
|Cash and cash equivalents||$||14,361||$||11,704|
|Accounts receivable, net of allowances of $7,050 at December 31, 2016 and $8,909 at March 31, 2016||13,213||13,575|
|Prepaid expenses and other current assets||3,339||2,636|
|Total current assets||50,654||49,043|
|Property, plant and equipment, net||2,829||3,537|
|Non-current portion of inventories||1,949||2,143|
|Intangible assets, net||736||941|
|Liabilities and Stockholders’ Equity|
|Accounts payable and accrued expenses||$||12,126||$||13,187|
|Accrued salaries and wages||1,430||1,880|
|Accrued warranty reserve||4,311||1,639|
|Revolving credit facility||8,665||9,459|
|Current portion of notes payable and capital lease obligations||476||361|
|Total current liabilities||34,051||30,894|
|Long-term portion of notes payable and capital lease obligations||30||74|
|Other long-term liabilities||168||184|
|Commitments and contingencies|
|Preferred stock, $.001 par value; 10,000,000 shares authorized; none issued|
|Common stock, $.001 par value; 515,000,000 shares authorized, 35,841,462 shares issued and 35,724,994 shares outstanding at December 31, 2016; 23,857,516 shares issued and 23,753,873 shares outstanding at March 31, 2016||36||24|
|Additional paid-in capital||870,001||853,288|
|Treasury stock, at cost; 116,468 shares at December 31, 2016 and 103,643 shares at March 31, 2016||(1,639||)||(1,617||)|
|Total stockholders’ equity||22,153||24,740|
|CAPSTONE TURBINE CORPORATION AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|(In thousands, except per share data)|
|Three Months Ended||Nine Months Ended|
|December 31,||December 31,|
|Product, accessories and parts||$||16,540||$||18,239||$||43,841||$||57,074|
|Cost of goods sold:|
|Product, accessories and parts||21,828||14,979||46,806||48,039|
|Total cost of goods sold||24,184||17,408||54,578||55,680|
|Gross margin (loss)||(3,999||)||4,051||(329||)||10,664|
|Research and development||1,282||2,905||4,254||8,193|
|Selling, general and administrative||4,848||7,002||15,631||21,796|
|Total operating expenses||6,130||9,907||19,885||29,989|
|Loss from operations||(10,129||)||(5,856||)||(20,214||)||(19,325||)|
|Change in fair value of warrant liability||1,777||—||1,777||—|
|Loss before income taxes||(8,909||)||(6,015||)||(19,288||)||(19,869||)|
|Provision for income taxes||—||—||3||3|
|Net loss per common share|
|Weighted average shares used to calculate net loss per common share|
CONTACT: Capstone Turbine Corporation Investor and investment media inquiries: 818-407-3628 firstname.lastname@example.org
Released February 9, 2017