Total Revenue Year-Over-Year Increased 12%
Capstone Turbine Corporation (www.capstoneturbine.com) (Nasdaq:
CPST), the world’s leading clean technology manufacturer of
microturbine energy systems, reports financial results for its
fiscal second quarter ended September 30, 2018.
Financial Highlights of
Fiscal 2019 Second Quarter:
- Total revenue increased 12% year-over-year
- Product revenue increased 22% year-over-year
- Cash usage decreased 78% compared to prior year’s quarter,
excluding the net proceeds from equity transactions and the Carrier
royalty settlement
- Previously negotiated perpetual royalty settlement agreement
with Carrier paid in full
“We are encouraged that we have once again
achieved double-digit year-over-year revenue growth as we continue
to execute on our growth strategy and deliver on our strategic
objectives. Our aftermarket revenue faced some headwinds as our
previously announced California distributor transition disrupted
our FPP revenue in the quarter,” stated Darren Jamison, President
and Chief Executive Officer of Capstone. “We do, however, expect
our service revenue to see a rebound in the third quarter and
accelerate in the fourth quarter of fiscal 2019 as our service
business normalizes from the California distributor change out and
returns to growth,” added Mr. Jamison.
Total revenue for the second quarter of fiscal
2019 increased approximately 12% to $22.2 million from $19.8
million in the same period last year. For the second quarter of
fiscal 2019, product revenue increased 22%, to $14.9 million from
$12.2 million for the second quarter of fiscal 2018. Capstone’s
accessories, parts and service revenue in the second quarter of
fiscal 2019 decreased $0.3 million to $7.3 million compared to the
prior year quarter primarily due to the inability to recognize
revenue on certain service contracts because of the reassignment of
those service contracts from Capstone’s legacy California
distributor to Cal Microturbine.
Capstone’s Distributor Support System (“DSS
program”) revenue for the second quarter of fiscal 2019 was $0.3
million and is included in the above accessories, parts and service
revenue. The DSS program is funded by Capstone distributors and was
developed to provide improved worldwide distributor training, sales
efficiency, website development, company branding and provide
funding for increased strategic marketing activities.
Capstone’s results show new gross product orders
of approximately $10.8 million during the second quarter of fiscal
2019 generating a 0.7:1 book-to-bill ratio. Capstone received new
product orders from 23 different distributors and partners
representing 18 countries: the U.S., Canada, Mexico, Brazil,
Scotland, Germany, Italy, Austria, Spain, Australia, China, South
Korea, Japan, Russia, Kazakhstan, Malaysia, Brunei, and Iraq.
Capstone booked $27.0 million in gross product orders for the
six-month period ended September 30, 2018, compared to $22.2
million in the preceding six-month period ended September 30, 2017,
an increase of 22% period-over-period.
At September 30, 2018, Capstone had cash, cash
equivalents and restricted cash of approximately $18.3 million
compared to cash, cash equivalents and restricted cash of $19.6
million as of June 30, 2018. During the second quarter of fiscal
2019, Capstone effectively leveraged both its asset-based credit
facility with Bridge Bank and its at-the-market equity-offering
program to help cover its operations, including the previously
negotiated royalty settlement agreement of $3.0 million to Carrier.
Capstone reported that its cash usage during the second quarter of
fiscal 2019 was $4.3 million lower, which represents a 78%
reduction compared to prior year’s second quarter when excluding
the net proceeds from equity transactions and the Carrier royalty
settlement.
Capstone previously reported that during its
second quarter of fiscal 2019, the previously negotiated perpetual
royalty settlement agreement with Carrier was paid in full to
conclude Capstone’s royalty obligation. The payment of $3.0 million
during the second quarter was the last payment obligation under the
settlement agreement, and there are no future royalty payments owed
to Carrier. The settlement agreement also removed non-compete
language, which allows Capstone to design, market or sell its C200
System in conjunction with any energy system and compete with
Carrier products in the cooling, heating and power market (“CHP”).
By removing the non-compete language, this allows Capstone to enter
into strategic relationships with other global chiller
manufacturers to improve our competitiveness in the growing CHP
market.
Net loss for the second quarter of fiscal 2019
increased to $4.4 million, compared with a net loss of $3.7 million
for last year’s second quarter. Net loss per share was $0.07 for
the second quarter of fiscal 2019 compared with a net loss of $0.09
per share in the same period last year. Adjusted EBITDA for
the second quarter of fiscal 2019 was negative $3.3 million, or a
loss of $0.05 per share, compared to an Adjusted EBITDA of negative
$2.3 million, or a loss of $0.05 per share, for the second quarter
of fiscal 2018.
“The second quarter had several significant
achievements. We are seeing product and total revenue growth return
to double-digits because of our efforts to expand into multiple
market verticals and geographies, lower cash usage year-over-year
and the settlement of the perpetual royalty agreement with Carrier,
which will allow us to form new strategic chiller relationships. We
strongly believe all of these achievements will positively affect
the long-term success of the business,” concluded Mr. Jamison.
Conference Call and WebcastCapstone will host a
live webcast November 6, 2018, at 1:45 PM Pacific Time (4:45 PM
Eastern Time) to provide the results of the second quarter fiscal
2019 ended September 30, 2018. Capstone 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 Capstone’s
investor relation’s 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 DQS-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.
For more information about the company, please visit
www.capstoneturbine.com. Follow Capstone Turbine on Twitter,
LinkedIn and YouTube.
Safe Harbor StatementThis 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,” “believes,” “anticipates,”
“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.
Financial Tables Follow
CAPSTONE TURBINE CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands, except share
amounts)(Unaudited)
|
September
30, |
|
March 31, |
|
2018 |
|
2018 |
Assets |
|
|
|
|
|
Current Assets: |
|
|
|
|
|
Cash and cash
equivalents |
$ |
12,303 |
|
|
$ |
14,408 |
|
Restricted cash |
|
6,000 |
|
|
|
5,000 |
|
Accounts receivable, net of allowances of $5,828 at
September 30, 2018, and $5,744 at March 31, 2018 |
|
16,531 |
|
|
|
15,968 |
|
Inventories, net |
|
15,477 |
|
|
|
15,633 |
|
Prepaid expenses and other current assets |
|
4,967 |
|
|
|
2,803 |
|
Total current assets |
|
55,278 |
|
|
|
53,812 |
|
Property, plant and equipment, net |
|
2,831 |
|
|
|
2,859 |
|
Non-current portion of inventories |
|
1,109 |
|
|
|
1,041 |
|
Intangible assets, net |
|
299 |
|
|
|
411 |
|
Other assets |
|
3,125 |
|
|
|
250 |
|
Total assets |
$ |
62,642 |
|
|
$ |
58,373 |
|
Liabilities and Stockholders’
Equity |
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
Accounts payable and accrued expenses |
$ |
14,055 |
|
|
$ |
13,503 |
|
Accrued salaries and wages |
|
1,562 |
|
|
|
1,588 |
|
Accrued warranty reserve |
|
2,242 |
|
|
|
1,682 |
|
Deferred revenue |
|
5,497 |
|
|
|
6,596 |
|
Revolving credit facility |
|
12,496 |
|
|
|
8,527 |
|
Current portion of notes payable and capital lease
obligations |
|
39 |
|
|
|
192 |
|
Total current liabilities |
|
35,891 |
|
|
|
32,088 |
|
Deferred revenue - non-current |
|
1,284 |
|
|
|
— |
|
Long-term portion of notes payable and capital lease
obligations |
|
111 |
|
|
|
130 |
|
Other long-term liabilities |
|
390 |
|
|
|
396 |
|
Total liabilities |
|
37,676 |
|
|
|
32,614 |
|
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, 67,817,994 shares issued and 67,607,817 shares
outstanding at September 30, 2018; 57,062,598 shares issued and
56,916,646 shares outstanding at March 31, 2018 |
|
68 |
|
|
|
57 |
|
Additional paid-in capital |
|
898,108 |
|
|
|
889,585 |
|
Accumulated deficit |
|
(871,479 |
) |
|
|
(862,225 |
) |
Treasury stock, at cost; 210,177 shares at September
30, 2018, and 145,952 shares at March 31, 2018 |
|
(1,731 |
) |
|
|
(1,658 |
) |
Total stockholders’ equity |
|
24,966 |
|
|
|
25,759 |
|
Total liabilities and stockholders' equity |
$ |
62,642 |
|
|
$ |
58,373 |
|
|
|
|
|
|
|
|
|
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, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Product, accessories and
parts |
$ |
18,627 |
|
|
$ |
16,005 |
|
|
$ |
35,712 |
|
|
$ |
31,496 |
|
Service |
|
3,547 |
|
|
|
3,769 |
|
|
|
7,651 |
|
|
|
7,518 |
|
Total revenue |
|
22,174 |
|
|
|
19,774 |
|
|
|
43,363 |
|
|
|
39,014 |
|
Cost of goods sold: |
|
|
|
|
|
|
|
|
|
|
|
Product, accessories and parts |
|
16,945 |
|
|
|
13,549 |
|
|
|
32,575 |
|
|
|
27,586 |
|
Service |
|
3,192 |
|
|
|
3,209 |
|
|
|
6,929 |
|
|
|
6,173 |
|
Total cost of goods sold |
|
20,137 |
|
|
|
16,758 |
|
|
|
39,504 |
|
|
|
33,759 |
|
Gross margin |
|
2,037 |
|
|
|
3,016 |
|
|
|
3,859 |
|
|
|
5,255 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
891 |
|
|
|
1,139 |
|
|
|
1,822 |
|
|
|
2,288 |
|
Selling, general and administrative |
|
5,308 |
|
|
|
4,796 |
|
|
|
10,962 |
|
|
|
9,757 |
|
Total operating expenses |
|
6,199 |
|
|
|
5,935 |
|
|
|
12,784 |
|
|
|
12,045 |
|
Loss from operations |
|
(4,162 |
) |
|
|
(2,919 |
) |
|
|
(8,925 |
) |
|
|
(6,790 |
) |
Other income (expense) |
|
(7 |
) |
|
|
14 |
|
|
|
(21 |
) |
|
|
4 |
|
Interest income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9 |
|
Interest expense |
|
(186 |
) |
|
|
(98 |
) |
|
|
(304 |
) |
|
|
(319 |
) |
Change in warrant valuation |
|
— |
|
|
|
(657 |
) |
|
|
— |
|
|
|
(657 |
) |
Loss before provision for income taxes |
|
(4,355 |
) |
|
|
(3,660 |
) |
|
|
(9,250 |
) |
|
|
(7,753 |
) |
Provision for income taxes |
|
2 |
|
|
|
7 |
|
|
|
5 |
|
|
|
7 |
|
Net loss |
$ |
(4,357 |
) |
|
$ |
(3,667 |
) |
|
$ |
(9,255 |
) |
|
$ |
(7,760 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share—basic and diluted |
$ |
(0.07 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.18 |
) |
Weighted average shares used to calculate basic and diluted net
loss per common share |
|
65,065 |
|
|
|
42,941 |
|
|
|
63,422 |
|
|
|
42,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPSTONE TURBINE CORPORATION AND
SUBSIDIARIESRECONCILIATION OF NON-GAAP FINANCIAL
MEASURE(In thousands)
|
|
Three months
ended |
|
Six months
ended |
Reconciliation of Reported Net Loss to EBITDA
and Adjusted EBITDA |
|
September
30, |
|
September
30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net loss, as
reported |
|
$ |
(4,357 |
) |
|
$ |
(3,667 |
) |
|
$ |
(9,255 |
) |
|
$ |
(7,760 |
) |
Interest expense |
|
|
186 |
|
|
|
98 |
|
|
|
304 |
|
|
|
319 |
|
Provision for income taxes |
|
|
2 |
|
|
|
7 |
|
|
|
5 |
|
|
|
7 |
|
Depreciation and amortization |
|
|
281 |
|
|
|
279 |
|
|
|
568 |
|
|
|
583 |
|
EBITDA |
|
$ |
(3,888 |
) |
|
$ |
(3,283 |
) |
|
$ |
(8,378 |
) |
|
$ |
(6,851 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
224 |
|
|
|
154 |
|
|
|
451 |
|
|
|
307 |
|
Restructuring charges |
|
|
369 |
|
|
|
219 |
|
|
|
772 |
|
|
|
219 |
|
Change in warrant valuation |
|
|
— |
|
|
|
657 |
|
|
|
— |
|
|
|
657 |
|
Adjusted EBITDA |
|
$ |
(3,295 |
) |
|
$ |
(2,253 |
) |
|
$ |
(7,155 |
) |
|
$ |
(5,668 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To supplement the company’s unaudited financial
data presented on a generally accepted accounting principles (GAAP)
basis, management has used EBITDA and Adjusted EBITDA, non-GAAP
measures. These non-GAAP measures are 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 these non-GAAP measures
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.
EBITDA is defined as net income before interest,
provision for income taxes, and depreciation and amortization
expense. Adjusted EBITDA is defined as EBITDA before stock-based
compensation expense, restructuring charges and the change in
warrant valuation. Restructuring charges includes facility
consolidation costs and costs related to the company’s cost
reduction initiatives.
EBITDA and Adjusted EBITDA are not measures of
the company’s 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
its 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 the company’s GAAP results and
by using EBITDA and 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.comIntegra Investor
RelationsShawn M. Severson415-226-7747cpst@integra-ir.com |
|
|
|
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