Capstone Turbine Announces Fourth Quarter and Year End Results
CHATSWORTH, Calif.--Feb. 7, 2002--Capstone Turbine Corporation (www.microturbine.com; Nasdaq:CPST), the world's leading microturbine power systems manufacturer, today reported revenue of $10.1 million for the quarter ended December 31, 2001, compared with revenue of $7.1 million for the fourth quarter of 2000.For the fourth quarter of 2001, Capstone's net loss was $14.6 million, or ($0.19) per share, compared to a net loss of $6.4 million, or ($0.08) per share, in the fourth quarter of 2000. The increase in net loss is primarily attributable to increased expenses related to expanding the Company's sales organization and increased overhead related to the expansion of its production capabilities.
For the full year 2001, Capstone reported revenue of $36.0 million, compared with revenue of $23.2 million in 2000. Capstone's net loss decreased to $46.9 million, or ($0.61) per share, for the year ended December 31, 2001, compared with a net loss of $591.3 million, or ($12.82) per share, for the prior year. The Company's net loss in 2000 was impacted by non-cash charges, triggered by the Company's initial public offering, totaling $559.9 million associated with recording the preferred stock deemed dividend and fair market value accretion.
"During 2001, Capstone shipped 38 megawatts of power, which was an increase of more than 50% over 2000," said Dr. Ake Almgren, President and CEO of Capstone Turbine Corporation. "Although some of the factors that created near-term demand in the first half of 2001 -- such as the energy shortage in California -- have abated, the fundamental drivers of demand for economically and environmentally beneficial distributed generation solutions continue to exist. Domestically, we still see growing levels of power consumption, high utility rates in significant regions, grid transmission constraints, increasing demand for more reliable and higher quality power, and both security and financial risks delaying or eliminating a number of large centralized power plant projects.
"In international markets, particularly Europe and Japan, demand is driven by a continuing interest in clean energy and maximized fuel efficiency, which also addresses global warming concerns. So we are optimistic about the future, and we believe that we can further grow megawatts shipped by 30% to 50% in 2002."
Financial Highlights
Capstone shipped 225 units, comprised of 145 of its 60-kilowatt systems and 80 of its 30-kilowatt systems, in the fourth quarter of 2001 for a total of 11.1 megawatts versus 7.5 megawatts in the fourth quarter of 2000. Gross margin in the fourth quarter of 2001 was negative $2.4 million, compared with a slightly less than break-even gross margin in the same period of 2000. The decrease in gross margin was primarily attributable to higher overhead costs and larger inventory charges in 2001. The overhead costs resulted primarily from the Company's new recuperator core manufacturing facility, and the inventory charges related to write-offs of certain materials in inventory rendered obsolete in part by product improvements. These factors offset the improvements in gross margin gained through increased shipments of the higher margin 60-kilowatt systems.
Research and development expenses decreased to $2.5 million, compared with $2.9 million in the fourth quarter of 2000. R&D expenses are reported net of contract offsets such as the U.S. Department of Energy advanced microturbine program. Contract offsets were $0.7 million in the fourth quarter of 2001 and $0.1 million in the same period a year ago.
Selling, general and administrative expenses increased to $10.8 million, compared with $6.8 million in the fourth quarter of 2000. The increase is primarily attributable to the continued expansion of the Company's sales and marketing organization and higher legal fees related to patent support efforts.
The Company reduced cash utilization to $10.8 million in the fourth quarter, substantially less than the $18.7 million used in the third quarter of 2001. Overall, the Company continues to be in a strong financial position. As of December 31, 2001, Capstone held approximately $171 million in cash and cash equivalents, with no long-term debt.
Inventory was reduced to $22.0 million from $27.0 million at September 30, 2001. The reduction in inventory is primarily attributable to improved inventory management processes put in place during the fourth quarter. Accounts receivable increased to $8.0 million at year-end 2001, compared with $7.6 million at the end of the third quarter.
Sales and Marketing Initiatives
"Since I joined Capstone in November, we have focused our efforts on transitioning the Company to a market-focused sales operation," said Capstone COO Norm Chambers. "We have realigned our sales organization to better support the needs of both the end users and our sales channel partners. We have assembled an experienced team to focus on reducing installation and commissioning costs, which have represented a significant portion of the total installed cost of our microturbines. We also have expanded the reach of our quality organization to look not only to the quality of our microturbines, but also to quality solutions for end users.
"Through the current structure of our sales and marketing organization, we feel that we are in a much better position to provide the necessary expertise and support to our business partners to ultimately drive volume sales," said Mr. Chambers.
"While it is clear we have some challenges ahead, I am very pleased with how the Company is adapting to better position itself for success in the marketplace," said Dr. Almgren. "With the additions we have made to the management team in the past few months, and our enhanced understanding of how to effectively drive our products into the commercial markets, I feel that we have a solid platform upon which to make clear progress in 2002."
About Capstone Turbine
Capstone Turbine Corporation (www.microturbine.com; Nasdaq: CPST) is the world's leading producer of low-emission microturbine systems. In 1998, Capstone was the first to offer commercial power products utilizing microturbine technology, the result of more than ten years of focused research. Capstone Turbine has sold and shipped 2,000 commercial production Capstone MicroTurbine systems to customers worldwide. These award-winning systems have logged more than one million hours of operation serving, among others, the following applications:
| -- | Hybrid electric vehicles (HEVs): onboard generation |
| -- | Resource recovery: converting oilfield, landfill and sewage waste gases into electricity |
| -- | Micro-cogeneration: combined heat/power/chilling/drying solutions |
| -- | The 9s market: power security, quality and reliability |
This press release contains "forward-looking statements," as that term is used in the federal securities laws, about Capstone's business, with regard to the expected level of shipments and its ability to reduce the total cost of ownership for its products. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause Capstone's actual results to be materially different from any future results expressed or implied in such statements. Such factors include, but are not limited to: 1) market acceptance and quality of Capstone's technology and products; 2) the size, timing, shipment and pricing of individual orders; 3) the ability of Capstone to successfully execute its production and marketing plans; 4) the ability of Capstone's sales channel partners to provide quality and cost effective solutions for customers; 5) the Company's ability to develop additional microturbine product releases; and other factors detailed in the Company's filings with the Securities and Exchange Commission. Capstone cautions readers not to place undue reliance on these 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 Turbine Corp." is a registered trademark of Capstone Turbine Corporation. All other trademarks mentioned in this press release are the property of their respective owners.
CAPSTONE TURBINE CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31,
2000 2001
Assets
Current Assets:
Cash and cash equivalents $236,947,000 $170,868,000
Accounts receivable, net of allowance
for doubtful accounts of $85,000 in 2000
and $163,000 in 2001 3,664,000 8,016,000
Inventory 14,123,000 21,973,000
Prepaid expenses and other current assets 1,689,000 1,422,000
Total current assets 256,423,000 202,279,000
Equipment and Leasehold Improvements:
Machinery, equipment, and furniture 13,664,000 22,895,000
Leasehold improvements 3,055,000 9,235,000
Molds and tooling 1,331,000 4,534,000
18,050,000 36,664,000
Less accumulated depreciation and
amortization 6,434,000 9,362,000
Total equipment and leasehold
improvements 11,616,000 27,302,000
Deposits on Fixed Assets 6,649,000 2,550,000
Other Assets 302,000 242,000
Intangible Assets, Net 27,028,000 21,881,000
Total $302,018,000 $254,254,000
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 4,728,000 $ 3,490,000
Accrued salaries and wages 1,135,000 1,440,000
Other accrued liabilities 1,282,000 1,263,000
Accrued warranty reserve 5,589,000 4,145,000
Deferred revenue 4,064,000 1,471,000
Current portion of capital lease obligations 1,497,000 1,308,000
Total current liabilities 18,295,000 13,117,000
Long-Term Portion of Capital Lease
Obligations 3,999,000 2,525,000
Other long-term liabilities 342,000 1,158,000
Commitments and Contingencies -- --
Stockholders' Equity:
Common stock, $.001 par value; 415,000,000
shares authorized; 75,771,303 and 77,207,383
shares issued and outstanding at
December 31, 2000 and 2001 76,000 77,000
Additional paid-in capital 516,738,000 521,668,000
Accumulated deficit (237,432,000) (284,291,000)
Total stockholders' equity 279,382,000 237,454,000
Total $302,018,000 $254,254,000
CAPSTONE TURBINE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Years Ended
December 31, December 31,
2000 2001 2000 2001
Revenues $ 7,134,000 $10,145,000 $23,163,000 $35,956,000
Cost of Goods Sold 7,157,000 12,569,000 27,815,000 39,602,000
Gross Loss (23,000) (2,424,000) (4,652,000) (3,646,000)
Operating Costs and
Expenses:
Research and
development 2,903,000 2,487,000 11,319,000 10,658,000
Selling, general and
administrative 6,803,000 10,765,000 24,067,000 40,780,000
Total operating
costs and
expenses 9,706,000 13,252,000 35,386,000 51,438,000
Loss from
Operations (9,729,000) (15,676,000) (40,038,000) (55,084,000)
Interest Income 3,582,000 1,079,000 9,589,000 8,690,000
Interest Expense (182,000) (128,000) (915,000) (585,000)
Other Income
(Expense) (28,000) 83,000 (59,000) 121,000
Loss Before Income
Taxes (6,357,000) (14,642,000) (31,423,000) (46,858,000)
Provision for
Income Taxes 1,000 1,000
Net Loss (6,357,000) (14,642,000) (31,424,000) (46,859,000)
Preferred Stock
Dividends and
Accretion (559,862,000)
Net Loss
Attributable to
Common
Shareholders $(6,357,000) $(14,642,000)$(591,286,000)$(46,859,000)
Weighted Average
Common Shares
Outstanding 75,474,465 77,098,076 46,107,074 76,694,670
Net Loss Per Share
of Common Stock
-- Basic
and Diluted $ (0.08) $ (0.19)$ (12.82)$ (0.61)