Capstone Announces Third Quarter Results
25 October 2000
Capstone Announces Third Quarter Results
CHATSWORTH, Calif.--Oct. 24, 2000--Capstone Turbine Corporation , a leading producer of low-emission microturbine systems, today reported revenue of $6.2 million for the third quarter ended September 30, 2000, compared with revenue of $759,000 for the third quarter of 1999. The increase in revenue reflects greater sales to a larger customer base, which has resulted from the Company's expanding marketing efforts."We made great progress in the third quarter and were able to achieve a number of important milestones that are key to the long-term growth of the Company," said Dr. Ake Almgren, President and CEO of Capstone Turbine Corporation.
Quarterly highlights
-- | Capstone shipped its first commercial 60-kilowatt microturbine power system. |
-- | Capstone was awarded a $10 million grant by the United States Department of Energy to develop an Advanced Microturbine System. |
-- | Capstone moved into a new 100,000 sq. ft. facility in Los Angeles that has the capacity to produce up to 20,000 Capstone MicroTurbine systems per year. |
-- | Capstone announced a licensing agreement with Solar Turbines Incorporated to acquire the manufacturing technology and fixed assets to produce recuperator cores, an integral part of the Capstone MicroTurbine system. |
-- | Capstone signed distribution agreements covering 756 units. Agreements were signed with American Energy Savings (126 units), Cinergy Corp. (52 units), Energy Co-Opportunity (76 units), The Hanover Co. (100 units), Harza Engineering Co. Inc. (250 units), Mariah Energy (126 units), and RealEnergy, Inc. (26 units). |
"As evidenced by the distribution agreements we signed during the quarter with some of the leading players in the energy, engineering and oil and natural gas industries, we are seeing strong and growing demand for our microturbine systems," said Dr. Almgren.
"Shortly after the quarter ended, we had some exciting developments in regards to the hybrid electric vehicle market. Capstone entered into an agreement with Hyundai Motor Co. and Enova Systems to develop and integrate a series of hybrid electric drive systems that utilize our microturbines. The first prototype hybrid model is expected to be produced in the first half of 2001 and Hyundai plans to install the hybrid drive system in its Santa Fe sport-utility vehicle for testing and evaluation, and then expand the application to commercial buses in 2002," said Dr. Almgren.
Dr. Almgren noted that while the Company experienced a temporary slowdown in production while it transitioned to its new facility, Capstone shipped 211 units in the third quarter. "During this period, our backlog grew to 890 units, as well," added Dr. Almgren.
"From a research and development perspective, we achieved a major milestone by shipping our first 60-kilowatt microturbine system," said Dr. Almgren. "We expect to ramp-up shipments of the 60-kilowatt system in the fourth quarter and continue that trend next year. Our current research and development efforts are focused on multiple additional 60-kilowatt product releases, which include stand-alone operation, dual-mode operation, and operation on additional gaseous and liquid fuels."
Quarterly Financials
Capstone posted revenues of $6.2 million for the third quarter, as compared with $759,000 in the comparable prior year quarter. Capstone reported a net loss attributable to common shareholders of $8.1 million, or $0.11 per share, for the third quarter. This compares with a net loss of $11.4 million, or $4.85 per share, for the same period of 1999.
The decrease in the net loss per share was primarily attributable to revenue growth resulting from an increase in the number of units shipped, 211 in the third quarter 2000, compared with 22 units in the same period of 1999.
Research and Development expenses increased to $3.0 million, compared with $2.3 million in the third quarter of 1999. Research and development expenses related primarily to the development of the Company's 60-kilowatt microturbine system and the broadening of its existing product line for new fuel types and applications.
SG&A increased to $7.2 million, compared with $2.7 million in the third quarter of 1999. This increase is primarily attributable to expanding sales and marketing efforts, including the hiring of additional employees and general overhead expenses. The Company anticipates that this trend will continue as it enters into new markets and develops expanded sales and marketing programs. $1.8 million of the increase was attributable to non-cash charges relating to stock-based compensation expense and marketing rights amortization.
Company Overview and Outlook
"During the third quarter, we took steps to begin production of a key component of our microturbines -- the recuperative core. When complete, we will have eliminated a key supply risk affecting the company," said Jeff Watts, Chief Financial Officer. "Having exercised our rights under our agreement with Solar Turbine Inc., we expect to begin working in a collaborative manner with Solar to manufacture recuperator cores in our own facilities. As a result, Capstone should add another substantial competitive advantage by having the only automated recuperator core manufacturing processes in the world.
"We are also pleased that we have been able to achieve diversification within the total sales of our microturbine systems," said Mr. Watts. "We are diversified geographically, as we ship roughly two-thirds of our production into the North American market and one-third into the rest of the world, primarily Japan and Western Europe.
"We are diversified in the number of sales made for each application of our microturbine systems. Shipments are spread pretty evenly among the core applications, which include resource recovery, micro-cogeneration, backup and stand-by power/peak shaving, and hybrid electric vehicles.
"And from both a geographic perspective and an application perspective, we are diversified by customer. We will continue to work to achieve a high level of diversification within our current markets, while also identifying new and emerging markets. An emerging market about which we are particularly excited is the Power Quality and Reliability market, otherwise known as the `9s market.' This market focuses on the provision of a reliable primary or back-up power supply for increasingly electricity-dependent enterprises. We expect to see substantial growth in this market in the years to come," said Mr. Watts.
CAPSTONE TURBINE CORPORATION STATEMENT OF OPERATIONS (Unaudited) Three Nine Months Ended Months Ended September 30, September 30, 1999 2000 1999 2000 Revenues $ 759,000 $ 6,197,000 $ 1,315,000 $ 16,029,000 Cost of Goods Sold 1,990,000 7,278,000 4,570,000 20,658,000 Gross Profit (Loss) (1,231,000) (1,081,000) (3,255,000) (4,629,000) Operating Costs and Expenses: Research and development 2,259,000 2,953,000 6,681,000 8,416,000 Selling, general and administrative 2,748,000 7,203,000 7,818,000 17,264,000 Total operating costs and expenses 5,007,000 10,156,000 14,499,000 25,680,000 Income (Loss) from Operations (6,238,000) (11,237,000) (17,754,000) (30,309,000) Interest Income 133,000 3,385,000 350,000 6,007,000 Interest Expense (151,000) (197,000) (463,000) (733,000) Other Income (Expense) 3,000 (32,000) 5,000 (31,000) Profit (Loss) Before Income Taxes (6,253,000) (8,081,000) (17,862,000) (25,066,000) Provision for Income Taxes - - 1,000 1,000 Net Income (Loss) (6,253,000) (8,081,000) (17,863,000) (25,067,000) Preferred Stock Dividends, Accretion, and Repurchase (5,167,000) - (6,287,000) (559,862,000) Net Loss Attributable to Common Shareholders $(11,420,000) $(8,081,000) $(24,150,000) $(584,929,000) Weighted Average Common Shares Outstanding 2,352,736 74,931,668 2,267,993 36,317,944 Net Loss Per Share of Common Stock - Basic and Diluted $ (4.85) $ (0.11) $ (10.65) $ (16.11) -0- CAPSTONE TURBINE CORPORATION BALANCE SHEETS December 31, September 30, 1999 2000 (Unaudited) Assets Current Assets: Cash and cash equivalents $ 6,858,000 $ 229,783,000 Accounts receivable, net of allowance for doubtful accounts of $50,000 at December 31, 1999 and $85,000 at September 30, 2000 2,425,000 3,384,000 Inventory 8,803,000 10,976,000 Prepaid expenses and other current assets 2,217,000 1,440,000 Total Current Assets 20,303,000 245,583,000 Equipment and Leasehold Improvements: Machinery, equipment and furniture 11,824,000 13,336,000 Leasehold improvements 137,000 2,902,000 Molds and tooling 541,000 994,000 12,502,000 17,232,000 Less accumulated depreciation and amortization 4,570,000 6,203,000 Total equipment and leasehold improvements 7,932,000 11,029,000 Deposits on fixed assets 3,374,000 5,296,000 Other assets 422,000 752,000 Intangible assets, net 4,896,000 26,856,000 Total $ 36,927,000 $ 289,516,000 Liabilities and Stockholders' (Deficiency) Equity Current Liabilities: Accounts payable $ 1,728,000 $ 4,581,000 Accrued salaries and wages 677,000 1,026,000 Other accrued liabilities 2,340,000 978,000 Accrued warranty reserve 3,168,000 6,037,000 Deferred revenue 4,696,000 5,951,000 Current portion of capital lease obligations 1,400,000 1,582,000 Total current liabilities 14,009,000 20,155,000 Non-current Liabilities: Long-term portion of capital lease obligations 4,499,000 4,381,000 Other long-term liabilities - 161,000 Accrued dividends payable 6,175,000 - Total non-current liabilities 10,674,000 4,542,000 Commitments and Contingencies Total redeemable preferred stock 156,469,000 - Stockholders' (Deficiency) Equity: Common stock, $.001 par value; 415,000,000 shares authorized; 2,377,826 and 74,938,602 shares issued and outstanding at December 31, 1999 and September 30, 2000, respectively 2,000 75,000 Additional paid in capital - 495,818,000 Accumulated deficit (144,227,000) (231,074,000) Total stockholders' (deficiency) equity (144,225,000) 264,819,000 Total $ 36,927,000 $ 289,516,000