Capstone Turbine Corporation (Nasdaq:CPST)reported results for its first quarter ended June 30, 2006 in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2006.
Capstone’s revenue for the fiscal 2007 first quarter was $6.6 million, representing an increase of over 70% from $3.8 million for the prior year comparable quarter. However, this represents a decrease of 13% from the fourth quarter fiscal 2006 revenue of $7.6 million.
“The year-over-year growth in revenue indicates that demand for microturbines is growing; however, new sales from the New York market are not increasing as quickly as originally planned. The delay in the MEA approval and extended product demonstrations have resulted in a longer than anticipated sales cycle. We remain confident that the New York market offers Capstone a substantial opportunity to grow; therefore, we have redoubled our efforts in this market,” said Mark Gilbreth, Capstone’s Interim President and CEO.
Backlog at the end of the first quarter was $5.4 million, a decrease of over 55% from the end of the prior year comparable quarter and approximately 24% from the end of the prior quarter. The decrease in backlog reflects improved lead times from order to shipment and a relatively flat order rate for the last three quarters.
The reported gross loss for the first quarter was $1.2 million, or 19% of revenue compared to $3.4 million, or 90% of revenue from the prior year comparable quarter and $3.2 million, or 43% of revenue for the fiscal 2006 fourth quarter. Over the past year Capstone improved its gross loss by 71 points and by 24 points from the prior quarter due to higher volume and improved reliability.
Research and development costs were $2.8 million for the fiscal 2007 first quarter, an improvement of $0.3 million, or 10%, from the prior quarter. The improvement was primarily related to lower spending on development hardware and reduced payroll costs.
Selling, general and administrative costs were $5.9 million for the fiscal 2007 first quarter, an improvement of $0.3 million, or 4% from the prior quarter. Included in SG&A expenses in the quarter ended June 30, 2006 was $0.7 million of non-cash stock compensation primarily related to the Company’s adoption of Statement of Financial Accounting Standards (“SFAS”) 123R during the first quarter of fiscal 2007. Net of the non-cash stock compensation charges, SG&A expenses decreased approximately $0.8 million compared to the same period last year. The improvement was primarily related to reduced payroll and related costs.
Capstone’s net loss was $9.3 million for the fiscal 2007 first quarter, or $0.09 per diluted common share, an improvement of $2.5 million from the $11.8 million loss, or $0.12 per diluted common share, reported for the fourth quarter of fiscal 2006. The first quarter fiscal 2007 net loss includes an aggregate of approximately $0.8 million of stock-based compensation expense due primarily to the Company’s adoption of SFAS 123R on April 1, 2006. Excluding the increased costs associated with the implementation of SFAS 123R, total operating expenses included in the fiscal 2007 first quarter net loss improved $1.1 million, or 12%, over the prior quarter as a result of the Company’s continuing efforts to reduce expenses.
Cash balances decreased by $9.3 million during the first quarter of fiscal 2007. As of June 30, 2006, cash and cash equivalents were $48.8 million.
Mr. Gilbreth added, “The foundation for operational success is in place. The task ahead of us now is to further develop and expand our sales in our key markets.”
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