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Capstone Reports 2nd Quarter Fiscal 2021 Financial Results

Source: www.gulfoilandgas.com 11/10/2020, Location: North America

Capstone Turbine Corporation, the world's leading clean technology manufacturer of microturbine energy systems, reports financial results for its fiscal 2021 second quarter ended September 30, 2020.

Financial Highlights of Fiscal 2021 Second Quarter:
- $1.9 million positive Cash from Operating Activities representing a $3.7 million improvement quarter-over-quarter and $8.2 million improvement year-over-year as the company benefited from its Energy as a Service (EaaS) business model.
- New Gross Product orders of $9.8 million in the second quarter compared to $5.5 million in the first quarter representing a positive Book-to-Bill Ratio of 1.4:1 as the business begins to rebound from the impacts of the COVID-19 pandemic.
- Total revenue in the quarter was $14.9 million, up 5%, compared to $14.2 million in the first quarter.
- Gross margin as a percentage of revenue was 17%, an increase of 2 percentage points, compared to the prior year second quarter, despite a 28% drop in total revenues related to the ongoing negative impacts of the COVID-19 pandemic.
- Net loss for the six months ended September 30, 2020, was $6.0 million, a 40% improvement, when compared to $10.0 million for the six months ended September 30, 2019.
- The Company continued to execute against its $10 million fiscal year-over-year Adjusted EBITDA improvement goal, posting a $4.2 million improvement for the six months ended September 30, 2020, compared to the six months ended September 30, 2019, excluding a non-cash provision for a potential payout under the annual Executive Bonus Plan.
- Total Inventory decreased by $3.7 million, or 19%, to $15.5 million at September 30, 2020, compared to $19.2 million as of June 30, 2020, and decreased $7.2 million, or 32%, compared to $22.7 million as of March 31, 2020, supporting improved liquidity and positive working capital during the second quarter.
- Total cash and cash equivalents as of September 30, 2020, were $16.8 million, an increase of $0.6 million, compared to $16.2 million as of June 30, 2020, despite ongoing impacts from the COVID-19 pandemic, including no cash provided by financing activities.

Additionally, following the end of the quarter, on October 1, 2020, Capstone entered into an agreement to upsize its current Goldman Sachs $30.0 million note to $50.0 million, at a significantly reduced interest rate and for a new 3-year term.

"I am pleased that we continue to make significant progress against our stated goal of improving Adjusted EBITDA ten million dollars year-over-year despite the ongoing adverse impacts caused by the pandemic. In the first half of our fiscal year, we achieved a $4.2 million improvement in Adjusted EBITDA year-over-year," said Darren Jamison, President and Chief Executive Officer of Capstone Turbine. "Not only are we making excellent strides in improving our Adjusted EBITDA performance amid external headwinds, in the second quarter, we also generated positive cash from operations for the first time in eleven quarters without any dilutive financing during the period," added Mr. Jamison.

"I'm extremely pleased that we delivered a positive adjusted EBITDA quarter in the first quarter of fiscal 2021 despite COVID-19, and continued momentum into the second quarter of fiscal 2021 by generating positive cash from operations," stated Eric Hencken, Chief Financial Officer of Capstone Turbine. "This clearly demonstrates the importance of our EaaS strategy and shows the impact it can have on cash flow and profitability even during the most challenging and unpredictable economic environments," concluded Mr. Hencken.

Financial Results for Fiscal 2021 Second Quarter
Total revenue for the quarter increased $0.7 million sequentially, from $14.2 million in the first quarter to $14.9 million in the second quarter, primarily due to improving product revenue as the impact of COVID-19 continues to subside, but decreased $5.8 million compared to total revenue of $20.7 million in the year-ago second quarter. The year-over-year decrease in revenue was primarily the result of lower product, parts, and accessories volume as project schedules were adversely impacted by the global COVID-19 pandemic.

Gross margin percentage increased to 17% compared to 15% in the prior year's second quarter primarily due to improving service margins and lower warranty expenses.

Gross margin percentage for the six months ended September 30, 2020, was 20%, up from 15% for the six months ended September 30, 2019, primarily due to improving service margins, lower warranty expenses, and lower overhead from the Company's COVID-19 Business Continuity Plan (BCP), despite revenues being down 27% as a result of business disruptions caused by the COVID-19 pandemic.

Operating expenses in the second quarter of fiscal 2021 were $5.5 million, an increase of $1.6 million, from $3.9 million in the previous quarter, primarily due to marketing spend related to our IndyCar racing sponsorship as well as an accrual for Executive Bonuses. Additionally, Capstone brought certain employees back during the quarter that had been furloughed as a result of the Company's COVID-19 BCP.

Operating expenses for the six months ended September 30, 2020, were $9.4 million, down 31%, compared to $13.6 million for the six months ended September 30, 2019, primarily due to lower costs from the Company's COVID-19 Business Continuity Plan.

Net loss was $4.2 million for the second quarter of fiscal 2021, compared to a net loss of $4.4 million in the year-ago quarter.

Adjusted EBITDA excluding Executive Bonus was negative $1.9 million for the second quarter of fiscal 2021 compared to an Adjusted EBITDA excluding Executive Bonus of negative $2.2 million for the year-ago quarter.

Adjusted EBITDA excluding Executive Bonus for the six months ended September 30, 2020, increased $4.2 million, to negative $1.4 million compared to negative $5.6 million Adjusted EBITDA excluding Executive Bonus for the six months ended September 30, 2019. Capstone has a previously stated goal of improving Adjusted EBITDA excluding Executive Bonus, by $10 million year-over-year, despite the ongoing COVID-19 pandemic. Cash and cash equivalents increased to $16.8 million as of September 30, 2020, up from $16.2 million as of June 30, 2020. No cash was provided by financing activities during the quarter, and the Company generated positive cash from operations for the first time in eleven quarters despite the ongoing COVID-19 pandemic.

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