Capstone Turbine Corporation (Nasdaq:CPST) reported results for its fourth quarter and fiscal year ended March 31, 2006 in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 14, 2006.
Fourth quarter revenue of $7.6 million, up 40% from prior year comparable quarter; Fiscal 2006 revenue increases to $24.1 million, an improvement of over 42% from the prior year.
Financial Summary
Capstone’s revenue for the fourth quarter ended March 31, 2006 increased to $7.6 million, up approximately 40% from the prior year comparable quarter, and up over 7% from the third quarter.
Revenue for the fiscal year ended March 31, 2006 was $24.1 million, an improvement of over 42% from the prior fiscal year.
The growth in revenue demonstrates the continued strengthening in Capstone’s distribution channel and the performance of its distribution base as a result of the strategy undertaken at the beginning of fiscal 2005. Backlog at the end of the fiscal year was $7.1 million, a decrease of approximately 13% from the prior fiscal year end, and approximately 29% from the prior quarter. The decrease in new orders is attributable to the delay in the New York City Department of Buildings’ Materials Equipment Acceptance application approval, issued May 24, 2006.
The reported gross loss for the 2006 fourth quarter was $3.2 million, or 43% of revenue compared to $1.8 million, or 34% for the 2005 fourth quarter. Included in the 2006 fourth quarter gross loss was $2.4 million of inventory write-downs, offset by $0.8 million of warranty recoveries.
The reported gross loss for the fiscal year ended March 31, 2006 was $10.5 million, or 43% of revenue, an improvement of approximately 8 points over the prior fiscal year. The improvement in the gross loss percentage reflects the increased revenue over fixed manufacturing costs, offset by the recorded inventory write-downs.
Research and development costs were $3.1 million for the fourth quarter, an increase of $0.5 million, or 17%, over the prior year comparable quarter. Expenses were higher primarily due to increased spending for development hardware.
Research and development costs were $11.0 million for the fiscal year ended March 31, 2006, a decrease of $0.7 million, or 6% from the prior fiscal year. The decrease is due to benefits received from cost sharing programs.
Selling, general and administrative costs were $6.2 million for the fourth quarter, an increase of $0.2 million, or 4% from the prior year comparable quarter. The increase was attributable to costs incurred for the company’s demonstration site in New York.
Selling, general and administrative costs were $27.7 million for the fiscal year ended March 31, 2006, an increase of $7.0 million, or 33% from the prior fiscal year. Approximately $2.0 million of the increase related to the Interstate Settlement Agreement completed during the third quarter. Additionally, $2.0 million of the increase related to increased professional fees and $0.5 million related to severance costs. Approximately $0.7 million of the increase related to the demonstration site in New York and $1.0 million to labor related costs, including salaries, recruitment and relocation expenses to support our continuous process improvement throughout the organization.
Capstone’s net loss was $11.8 million for the fourth quarter, or $0.12 per share, an increase of $1.8 million from the $10.0 million loss, or $0.12 per share, reported for the prior year comparable quarter.
Capstone’s net loss was $47.1 million, or $0.50 per share, for the fiscal year ended March 31, 2006, an increase of $7.6 million from the $39.5 million loss, or $0.47 per share, reported for the prior fiscal year. Included in the $0.50 per share net loss was the $2.0 million Interstate settlement charge.
Cash balances decreased by $5.5 million during the fiscal year ended March 31, 2006. The Company completed a registered direct offering of its common stock during the third quarter, resulting in net proceeds of approximately $39.2 million.
Cash and cash equivalents at the end of the fiscal year ended March 31, 2006 were $58.1 million.
Business Summary
John Tucker, Capstone’s President and CEO, said, “I am pleased with our top line growth during fiscal 2006. Fiscal 2007 will be another important year in which we plan to continue our top line growth in order to achieve our goal of generating positive cash flow by the end of the first quarter of fiscal 2008. As positive news toward achieving our goal, today we received another order through GSA for an aggregate value of approximately $1.4 million that will be installed in a variety of government facilities.”
Listed below is a brief summary of Capstone’s recent operating accomplishments:
Capstone shipped its first General Services Administration (GSA) order. The order is for C60 MicroTurbine units for use at an undisclosed United States Government location. Additionally, Capstone is shipping the first prototype liquid fuel C65 unit to the U.S Army Corps of Engineers Construction Engineering Lab (CERL) for their testing and evaluation. (May 31, 2006.)
Capstone received its first Materials Equipment Acceptance (MEA) approval from the New York City Department of Buildings (NYCDoB) MEA Division and the New York Fire Department. The NYCDoB has issued Capstone its first MEA number, 193-05-E. Capstone will now supply that issued MEA number with each distributed generation microturbine solution it installs in New York. The MEA approval will also be on every filed job site application for permits with the Department of Buildings and the New York Fire Department. These application filings are necessary to secure contractor work permits for citywide installations of Capstone Branded Microturbine equipment. (May 24, 2006.)
Capstone received an order for a nationally recognized health care facility totaling approximately $1.2 million of Capstone C65 Micro Turbine energy systems. The multi-pac cogeneration energy system will be installed in one of their facilities in California. (May 12, 2006.)
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