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Capstone Turbine Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 9, 2011 04:11PM
Capstone Turbine Corp. (CPST) filed Quarterly Report for the period ended 2011-06-30. Capstone Turbine Corp. has a market cap of $302.7 million; its shares were traded at around $1.14 with and P/S ratio of 3.7.
Highlight of Business Operations:
During the first quarter of Fiscal 2012, we booked total orders of $29.7 million for 196 units, or 33.2 megawatts, compared to $11.1 million for 75 units, or 11.4 megawatts, during the first quarter of Fiscal 2011. We shipped 170 units with an aggregate of 21.9 megawatts, generating revenue of $20.8 million compared to 98 units with an aggregate of 13.4 megawatts, generating revenue of $12.8 million during the first quarter of Fiscal 2011. Total backlog as of June 30, 2011 increased $30.7 million, or 36%, to $115.3 million from $84.6 million as of June 30, 2010. As of June 30, 2011, we had 695 units, or 129.9 megawatts, in total backlog compared to 703 units, or 94.4 megawatts, as of June 30, 2010. As of June 30, 2011 and June 30, 2010, all of the backlog was current and expected to be shipped within the next twelve months. The timing of shipments is subject to change based on several variables (including customer payments and changes in customer delivery schedules), many of which are not in our control and can affect our quarterly revenue and backlog. Our actual product shipments during the first quarter of Fiscal 2012 were: 19% for use in energy efficiency applications, 19% for use in renewable energy applications and 62% for use in oil, gas & other natural resources applications.
Revenue. Revenue for the first quarter of Fiscal 2012 increased $8.2 million, or 51%, to $24.3 million from $16.1 million for the first quarter of Fiscal 2011. The change in revenue for the first quarter of Fiscal 2012 compared to the first quarter of Fiscal 2011 included a $5.7 million increase in revenue from the North American market, a $2.5 million increase in revenue from the European market, a $0.8 million increase in revenue from the South American market and a $0.6 million increase in revenue from the Australian market, all primarily the result of our efforts to improve distribution channels. This overall increase in revenue was offset by a $1.4 million decrease in revenue from the Asian market because of lower sales volume in the region.
For the first quarter of Fiscal 2012, revenue from microturbine products increased $8.0 million, or 63%, to $20.8 million from $12.8 million for the first quarter of Fiscal 2011. Overall microturbine product shipments were 72 units (8.5 megawatts) higher during the first quarter of Fiscal 2012 compared to the first quarter of Fiscal 2011, totaling 170 units (21.9 megawatts) and 98 units (13.4 megawatts), respectively. Megawatts shipped and revenue during the first quarter of Fiscal 2012 increased as a result of higher sales volume of our C65 microturbine and further market adoption of our C1000 Series product line. Average revenue per unit for the first quarter of Fiscal 2012 was approximately $122,000 compared to approximately $130,000 per unit for the first quarter of Fiscal 2011.
Gross Margin (Loss). Cost of goods sold includes direct material costs, production and service center labor and overhead, inventory charges and provision for estimated product warranty expenses. The gross margin was $0.5 million, or 2% of revenue, for the first quarter of Fiscal 2012 compared to a gross loss of $0.5 million, or 3% of revenue, for the first quarter of Fiscal 2011. The improvement in gross margin of $1.0 million was the result of a $3.7 million benefit realized from a change in product mix, which reflects the sale of more microturbine products, parts and FPP during the first quarter of Fiscal 2012. The C30, C65, C200 and C1000 systems had better margins than in the same period last year as a result of higher average selling prices and all products had overall lower direct materials costs. The $3.7 million benefit related to product mix was offset by an increase in warranty expense of $1.1 million, production and service center labor and overhead expenses of $1.1 million and inventory charges of $0.5 million. Management has implemented certain initiatives to further reduce direct material costs and other manufacturing and warranty costs as we work to achieve profitability.
Research and Development (R&D) Expenses. R&D expenses include compensation, engineering department expenses, overhead allocations for administration and facilities and materials costs associated with development. R&D expenses for the first quarter of Fiscal 2012 increased $0.7 million, or 47%, to $2.2 million from $1.5 million for the first quarter of Fiscal 2011. R&D expenses are reported net of benefits from costsharing programs, such as Department of Energy (DOE) grants. There were approximately $0.2 million of such benefits during each of the first quarter of Fiscal 2012 and first quarter of Fiscal 2011. The overall increase in R&D expenses of $0.7 million resulted from increased salaries of $0.5 million and supplies of $0.2 million. Costsharing programs vary from period to period depending on the phases of the programs. Management expects R&D expenses in Fiscal 2012 to be slightly higher than in Fiscal 2011.
Selling, General, and Administrative (SG&A) Expenses. SG&A expenses increased $0.2 million, or 3%, to $6.6 million for the first quarter of Fiscal 2012 from $6.4 million for the first quarter of Fiscal 2011. The net increase in SG&A expenses was comprised of an increase in professional services expense, including legal, bank fees, and insurance of $0.4 million, offset by a decrease in facilities expense of $0.1 million and a decrease in marketing expense of $0.1 million. Management expects SG&A expenses in Fiscal 2012 to be higher than in Fiscal 2011 as we refine our distribution channels and advance general and administrative key initiatives.
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