Capstone Further Lowers its Quarterly Operating Expense Target on Engineering Restructuring
10 October 2017 - 11:30PM
Capstone Turbine Corporation (www.capstoneturbine.com)
(Nasdaq:CPST), the world's leading clean technology manufacturer of
microturbine energy systems, announced today that it is further
lowering its quarterly operating expense target from $5.5 million
per quarter to $5.0 million per quarter after a restructuring of
the company’s engineering assets and other cost reduction
activities.
This new restructuring places all of Capstone’s engineering
assets into one new Technical Solutions Group (TSG) reporting
directly to Darren Jamison, Capstone’s President and Chief
Executive Officer. This restructure moves Capstone from a higher
cost three-department research and development, sales engineering
and technical services organizational structure to a single
consolidated department resulting in a lower cost and more
efficient product optimization and enhancement structure. The new
TSG consolidates engineers from three different departments to work
collaboratively together to support current products, accessories,
unique applications, product certifications, product reliability,
product derivatives and enhanced product functionality.
As part of its strategic Adjusted EBITDA breakeven plan,
Capstone initially reduced its quarterly operating expenses from
$10.5 million in Q1 of fiscal 2016 to $6.1 million in Q3 of fiscal
2017, representing an overall 42% reduction in operating expenses
from historical levels. The new engineering restructuring and other
cost reduction activities further reduce operating expenses by
approximately $500,000 a quarter, resulting in a total operating
expense reduction greater than 50% once realized.
“We need to drive Capstone to profitability as quickly as
possible in order to fuel Capstone’s launch to the next level of
product development and market penetration,” said Darren Jamison.
“We do this by making our existing microturbine technology more
marketable, reliable and easier to install and service. The work of
this new Technical Solutions Group should result in lower operating
costs, increasing revenue and improved customer satisfaction,”
added Mr. Jamison.
Under our new Combined Heat and Power (CHP) balanced service
business model, management has outlined a path to grow quarterly
accessories, parts and service revenue to $10.0 million per quarter
at a 50% gross margin to essentially cover the company’s quarterly
operating expenses with higher margin recurring revenues. This
approach substantially drops the quarterly revenue required to
reach breakeven as compared to Capstone’s previous oil and
gas-focused business model that was comprised of lower margin
quarterly product revenue.
“This latest engineering restructuring and the pending sub-lease
of our Chatsworth facility are key factors to reducing our
quarterly operating expenses to a level where our growing
aftermarket service business can essentially cover our operating
expenses and drive the business to profitability,” concluded Mr.
Jamison.
Adjusted EBITDA is defined as net income before interest,
provision for income taxes, depreciation and amortization expense,
stock-based compensation expense and change in fair value of
warrants. Adjusted EBITDA is not a measure of our 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 our liquidity.
About Capstone Turbine Corporation
Capstone 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 UL-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.
This press release contains "forward-looking statements," as
that term is used in the federal securities laws, including
statements about Capstone’s quarterly operating expense target,
restructuring of Capstone’s engineering assets and other cost
reduction activities. Forward-looking statements may be identified
by words such as "expects," "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.
"Capstone" and "Capstone Microturbine" are registered trademarks
of Capstone Turbine Corporation. All other trademarks
mentioned are the property of their respective owners.
CONTACT:Capstone Turbine CorporationInvestor and investment
media inquiries:818-407-3628ir@capstoneturbine.com
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