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Capstone Turbine Corporation

Capstone Turbine's fiscal 2Q revenue higher vs previous quarter

Capstone also reported that adjusted EBITDA (earnings before interest, tax, depreciation and amortization) improved 35% sequentially from 1Q

Capstone Turbine Corporation - Capstone Turbine's fiscal 2Q revenue higher vs previous quarter
Total 2Q revenue was $20.7 million, an increase of $1.5 million, or 8% sequentially, from previous quarter

Capstone Turbine Corporation (NASDAQ:CPST) reported fiscal 2020 second-quarter results after the bell Thursday, noting that revenue was slightly higher than the previous quarter.

The maker of clean-energy microturbines said total revenue for the quarter was $20.7 million, an increase of $1.5 million, or 8% sequentially, from $19.2 million in the previous quarter.

Capstone also reported that adjusted EBITDA (earnings before interest, tax, depreciation and amortization) improved 35% sequentially from the first quarter. 

READ: Capstone Turbine wins second microturbine order in Manhattan’s Hudson Yards district

"Our Adjusted EBITDA loss dropped to $2.2 million, down 35% sequentially, from $3.4 million as we push to make good on our stated goal of achieving sustainable positive Adjusted EBITDA in the June 2020 quarter," said CEO Darren Jamison in a statement.

Here are some other highlights of the company’s 2Q: 

  • Product revenue grew 19% sequentially to $12 million.
  • New gross product book-to-bill ratio was 1.0:1, up from 0.7:1 in the year-ago quarter.
  • Rental fleet revenue grew 52% sequentially, and this high margin long-term rental fleet now stands at 6.2 megawatts (MW).
  • Total gross margin increased $1.1 million, or 55%, to $3.1 million compared to $2 million in the year-ago quarter despite lower revenues.
  • Gross margin percentage expanded by 67% to 15% from 9% in the year-ago quarter but was flat on a sequential basis because of business mix.

Capstone had previously announced its near-term goal of reaching positive adjusted EBITDA by focusing on improving the business in areas that it has direct control of, which are not impacted by externalities such as project delays, macroeconomic conditions, geopolitical events, exchange rates, crude oil prices, and trade wars, among other issues.

During the recent 1Q earnings call, the company outlined a gross margin growth strategy that would produce an estimated $5.4 million or a 24% gross margin in the quarter ending June 30, 2020.

Last month the company further announced that it is executing effectively on its multiple strategic business initiatives, and it now expects to lower its average quarterly operating expenses by 16% to 24% from an average of $6.8 million over the past two quarters to a range of $5.2 million to $5.7 million beginning in the fourth quarter of fiscal 2020, which would potentially generate a positive adjusted EBITDA result during the first quarter for fiscal 2021, which ends on June 30, 2020.

"The Capstone Leadership Team is successfully executing our multiple strategic initiatives, which should lead to a reduced quarterly cash burn, improved gross margins, lower direct material costs, and lower operating expenses. We expect to accomplish this on a conservative revenue assumption and only modest top-line growth," said Jamison.

The current management focus is on the following areas to improve the business:

  • Lower average quarterly operating expenses from $6.5 million to a range of $5.2 to $5.7 million per quarter.
  • Reduce direct material costs $3 million on an annual basis.
  • Expand the current 6.2 megawatts (MW) factory long-term rental fleet to 10 MW.
  • Improve Factory Protection Plan attachment rates from 38% to 45%.
  • Grow the new Distributor Support System program.
  • Increase aftermarket spare parts margins.

Capstone, based in Van Nuys, California, offers a product line-up of microturbines that can produce anywhere from 30 kilowatts to 10 megawatts of power, operating on a variety of gaseous or liquid fuels. To date, Capstone has shipped over 9,000 units to 73 countries.

Contact the author: [email protected]

Follow him on Twitter @PatrickMGraham

 

Quick facts: Capstone Turbine Corporation

Price: 2.59 USD

Market: NASDAQ
Market Cap: $21.79 m
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