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Capstone Turbine Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: February 9, 2012 04:57PM

Capstone Turbine Corp. (CPST) filed Quarterly Report for the period ended 2011-12-31. Capstone Turbine Corp. has a market cap of $353.2 million; its shares were traded at around $1.43 with and P/S ratio of 4.4.



Highlight of Business Operations:

During the three months ended December 31, 2011, we booked total orders of $23.3 million for 102 units, or 26.5 megawatts, compared to $20.0 million for 73 units, or 21.2 megawatts, during the three months ended December 31, 2010. We shipped 136 units with an aggregate of 23.5 megawatts, generating revenue of $21.9 million compared to 171 units with an aggregate of 20.0 megawatts, generating revenue of $18.8 million during the three months ended December 31, 2010. Total backlog as of December 31, 2011 increased $30.4 million, or 36%, to $115.1 million from $84.7 million as of December 31, 2010. As of December 31, 2011, we had 641 units, or 129.8 megawatts, in total backlog compared to 569 units, or 94.6 megawatts, as of December 31, 2010. As of December 31, 2011 and December 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 three months ended December 31, 2011 were: 23% for use in energy efficiency applications, 11% for use in renewable energy applications, 63% for use in oil, gas & other natural resources applications, 1% for use in critical power supply applications and 2% for use in mobile products applications.

Revenue. Revenue for the three months ended December 31, 2011 increased $3.3 million, or 14%, to $27.5 million from $24.2 million for the three months ended December 31, 2010. The change in revenue for the three months ended December 31, 2011 compared to the three months ended December 31, 2010 included increases in revenue of $2.3 million from the North American market, $1.6 million from the European market, $0.9 million from the African market and $0.2 million from the Australian market, primarily because of our continued efforts to improve distribution channels. This overall increase in revenue was offset by decreases in revenue of $1.2 million from the Asian market and $0.5 million from the South American market because of lower sales volume in these regions. Lower sales volume primarily reflected non-recurring microturbine product sales for specific projects that had occurred in the same period last year.

Gross Margin. Cost of goods sold includes direct material costs, production and service center labor and overhead, inventory charges and provision for estimated product warranty expenses. Gross margin was $2.3 million, or 8% of revenue, for the three months ended December 31, 2011 compared to a gross margin of $0.9 million, or 4% of revenue, for the three months ended December 31, 2010. The improvement in gross margin of $1.4 million was the result of a $2.9 million benefit realized from a change in product mix, which reflects the sale of higher priced microturbine products, increased FPP contract enrollments offset by lower sales of microturbine parts during the three months ended December 31, 2011.All microturbine products had better margins than in the same period last year as a result of higher average selling prices and overall lower direct material costs. The $2.9 million benefit related to product mix was offset by increases in production and service center labor and overhead expenses of $0.5 million, royalty expense of $0.4 million, warranty expense of $0.4 million and inventory charges of $0.2 million. Management has implemented certain initiatives to further reduce direct material costs and other manufacturing and warranty costs as we work to achieve profitability.

Gross Margin. The gross margin was $4.5 million, or 6% of revenue, for the nine months ended December 31, 2011 compared to a gross margin of $0.5 million, or 1% of revenue, for the nine months ended December 31, 2010. The improvement in gross margin of $4.0 million was the result of a $10.2 million benefit realized from higher overall volume, improved average selling prices and lower direct material cost during the nine months ended December 31, 2011. All microturbine products had better margins than in the same period last year as a result of higher average selling prices and overall lower direct material costs. The $10.2 million benefit was offset by an increase in production and service center labor and overhead expenses of $2.6 million, warranty expense of $1.8 million, royalty expense of $0.9 million and inventory charges of $0.9 million. Management has taken initiatives to further reduce direct material costs and other manufacturing and warranty costs as we work to achieve profitability.

Selling, General, and Administrative Expenses. SG&A expenses for the nine months ended December 31, 2011 increased $2.5 million, or 13%, to $21.5 million from $19.0 million for the nine months ended December 31, 2010. The net increase in SG&A expenses was comprised of an increase of $1.9 million in bad debt expense, $0.5 million in professional services expense, which includes accounting and legal expenses, $0.4 million in marketing expense and an increase of $0.4 million related to consulting expense, offset by a decrease of $0.3 million related to travel expense, $0.3 million in salary expense and $0.1 million in facilities expense. Management expects SG&A expenses in Fiscal 2012 to be higher than in Fiscal 2011 as we refine our distribution channels and incur higher commissions on increased sales.

Read the The complete Report



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