Capstone Announces Financial Results

Capstone Turbine Corporation (Nasdaq:CPST) reported results for its second quarter ended September 30, 2006.

Revenue declined 48% to $2.9 million from the same quarter 2005, and 55% from the previous quarter. Although it received $2.5 million in new orders, sales to the European and Russian markets declined by $2.3 million from the first quarter.

Overall order backlog stands at $6.8 million, an increase of over 26% from the prior quarter, although decreased over 45% from the end of the prior year comparable quarter. In October, after the close of the second quarter, Capstone received an order for 1.6 megawatts ($1.4 million) from a major OEM customer.

“We are pleased with the traction we have experienced in Europe and Russia over the past year, despite lower sales this quarter. John Fink, our Executive Vice President, Sales and Service, is continuing to build momentum with our relationships in the New York market. We have increased our commitment to the New York market by expanding our lease to build out sales and service offices, warehousing, manufacturing and light component assembly work in Brooklyn,” said Mark Gilbreth, Capstone’s Interim President and CEO.

The reported gross loss for the second quarter was $2.3 million, or 79% of revenue compared to $1.1 million, or 19% of revenue from the prior year comparable quarter and $1.2 million, or 19% of revenue from the prior quarter. The increase in the gross loss and corresponding decline in the gross loss percentage reflects lower volume and increased warranty charges.

Capstone’s net loss was $10.4 million for the fiscal 2007 second quarter, or $0.10 per diluted common share, an increase of $1.1 million from the $9.3 million loss, or $0.09 per diluted common share, reported for the first quarter of fiscal 2007.

The Company will host a conference call today, Thursday, November 9, at 1:45 p.m. Pacific Time. Access to the live broadcast and a replay of the webcast will be available for 90 days through the Investor Relations page on the Company’s website.

Capstone produces low-emission microturbine systems, shipping over 3,500 systems worldwide. The company is based in the Los Angeles area with sales and/or service centers in New York, Mexico City, Milan, Nottingham, Shanghai and Tokyo.