Capstone Green Energy Announces Second Quarter and First Half Fiscal 2023 Financial Results
Capstone Green Energy Corporation (CGRN) reported its Q2 fiscal 2023 results, with revenues of $20.8 million, a 21% increase from $17.2 million in the same quarter last year. The company's Adjusted EBITDA improved to negative $2.2 million, an 18% year-over-year improvement. However, gross margins dropped to 11% due to supply chain costs. The EaaS rental business grew significantly, with 34 MW under contract, up 168% year-over-year. The recent Inflation Reduction Act is expected to enhance project incentives, supporting the company's growth strategy.
- Revenues increased 21% year-over-year to $20.8 million.
- Adjusted EBITDA improved 19% year-over-year.
- 34 MW of EaaS rental units under contract, up 168% year-over-year.
- Total cash rose to $23.8 million, an increase from $16.9 million.
- Gross margins fell to 11% from 25% in the previous quarter.
- Net loss increased to $4.9 million, up from $2.1 million in Q1 2023 due to higher supply chain expenses.
Second Quarter Revenues of
Second Quarter Adjusted EBITDA Improved
Second Quarter and First Half Fiscal 2023 Highlights:
-
Revenues for the second quarter ending
September 30, 2022 , were , up$20.8 million 11% from in revenue during the first quarter ended$18.7 million June 30, 2022 , and up21% from in the year-ago September quarter.$17.2 million
-
Revenues for the first half of fiscal 2023 totaled
, up$39.4 million 18% from from the first half of fiscal 2022, as the Company executes its EaaS growth strategy.$33.3 million
-
Gross margins for the second quarter ending
September 30, 2022 , were11% compared to25% in the first quarter, which endedJune 30, 2022 . Gross margins decreased primarily due to increased costs in the company's supply chain, specifically related to C1000 enclosures and the need to source alternative recuperator materials at a higher relative cost to meet customer delivery requirements.
-
Net loss of
for the second quarter ending$4.9 million September 30, 2022 , improved18% from a net loss of in the year-ago September quarter. Net loss increased from$6.0 million from the first quarter 2023, in large part due to approximately$2.1 million of additional supply chain expenses, freight and expediting charges.$1.6 million
-
Adjusted EBITDA improved
19% to negative from negative$2.2 million in the second quarter year-over-year but decreased from a positive$2.7 million for the first quarter ending$0.4 million June 30, 2022 , in part as a result of the approximately of additional supply chain expenses, freight and expediting charges.$1.6 million
-
Adjusted EBITDA improved
66% to negative for the first half of fiscal 2023 compared to negative$1.7 million in the first half of fiscal 2022 as a result of the continued growth of the high-margin EaaS business and reduced operating expenses offset by the additional supply chain expenses, freight and expediting charges.$5.0 million
-
EaaS long-term rental units and re-rental units under contract on
September 30, 2022 , totaled approximately 34 MW versus 12.7 MW onSeptember 30, 2021 , representing168% growth year-over-year. Today, the EaaS long-term rental units under contract are approximately 39 MW, representing significant progress toward the company's goal of 50 MW under contract byMarch 31, 2023 .
-
Total revenue from EaaS rentals was
for the second quarter, up$1.8 million or$1.2 million 200% from year-over-year. The gross margin for the EaaS rental business continued to be strong at$0.6 million 72% for the second quarter.
-
Gross product bookings for the second quarter ending
September 30, 2022 , were robust at , up from$15.4 million in the previous quarter ended$12.4 million June 30, 2022 , demonstrating the ongoing success of the company's current growth strategy.
-
The product Book-to-
Bill Ratio improved to 1.6:1 in the second quarter endingSeptember 30, 2022 . The ending product backlog onSeptember 30, 2022 , was , up$28.9 million or$4.1 million 16.5% from on$24.8 million June 30, 2022 .
-
Total cash as of
September 30, 2022 , was , up from$23.8 million as of$16.9 million June 30, 2022 . The increase of was primarily related to the net proceeds of the$6.9 million $7.3 million Lake Street public equity offering onAugust 23, 2022 .
-
Net cash provided by operating activities was
, primarily as a result of$0.9 million in cash provided by working capital as the company’s Days Sales Outstanding, or DSO, dropped from 123 days in the quarter ending$3.8 million June 30, 2022 , to 85 days in the most recent quarter.
-
To mitigate global supply chain shortages, parts price increases, and higher freight costs, the Company plans to enact a new across-the-board product, spare parts, and FPP service contract price increase on
January 30, 2023 in addition to remediating the recent higher costs associated with C1000 enclosures and recuperator materials.
"The top-line revenue growth in our second quarter is very encouraging and reinforces our belief in our strategic direction. However we faced a strong headwind in significantly higher C1000 enclosure costs and expensive alternative recuperator materials that we needed to procure in order to maintain our customers’ scheduled deliveries. We believe these cost increases are short-term and expect to work through both of these supply chain issues in the current quarter. We look forward to a return to more normal Adjusted EBITDA results in the fourth quarter and beyond as costs normalize,” said
“The most important take-away from our second quarter results is the continued growth of our EaaS rental business and the benefits it brings. Specifically, it drives higher margins, generates more constant and predictable revenue, and enables us to leverage a more streamlined staffing model relative to that of a traditional industrial manufacturing company. Furthermore, the solution is attractive to our customers across various industries as it helps them to manage capital costs and meet environmental impact targets directly, while generating an attractive return for Capstone and our stockholders," continued Jamison.
"Capstone’s key goals for the current fiscal year remain growing the top-line and achieving positive Adjusted EBITDA on a sustainable basis. We intend to accomplish this by accelerating the growth of our EaaS business and boosting balance sheet liquidity through a combination of revenue growth and leveraging the benefits from last year’s cost reduction efforts. We see several factors helping to drive the growth, including the efforts of our Capstone Direct Sales organization, expansion of our global Distribution network, and increased demand related to the US Inflation Reduction Act (IRA). Not only do we expect these factors to drive growth in the second half of this year, but we also expect to see continued tailwinds well into next year,” concluded
The signing of the Inflation Reduction Act (IRA) in September was pivotal event for Capstone and its customers. For example, the tax credit available to microturbine combined heat and power (CHP) projects, which is a common customer solution for Capstone, will increase from
Additionally, a bonus credit of
About
To date, Capstone has shipped over 10,000 units to 83 countries and estimates that in FY22 it saved customers over
For customers with limited capital or short-term needs, Capstone offers rental systems; for more information, contact: rentals@CGRNenergy.com.
For more information about the Company, please visit www.CapstoneGreenEnergy.com. Follow
Cautionary Note Regarding Forward-Looking Statements
This release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements regarding growth in the Company’s EAAS business, expectations regarding future costs (including the anticipated impact of cost reduction efforts), supply chain issues and liquidity and other statements regarding the Company's expectations, beliefs, plans, intentions, and strategies. The Company has tried to identify these forward-looking statements by using words such as "expect," "anticipate," "believe," "could," "should," "estimate," "intend," "may," "will," "plan," "goal" and similar terms and phrases, but such words, terms and phrases are not the exclusive means of identifying such statements. Actual results, performance and achievements could differ materially from those expressed in, or implied by, these forward-looking statements due to a variety of risks, uncertainties and other factors, including, but not limited to, the following: worldwide supply chain issues that affect the Company’s ability get direct material products on a timely and cost-effective basis cost; the ongoing effects of the COVID-19 pandemic; the availability of credit, compliance with the agreements governing the Company's senior secured indebtedness and the Company’s ability to refinance that indebtedness; the Company's ability to develop new products and enhance existing products; product quality issues, including the adequacy of reserves therefor and warranty cost exposure; intense competition; financial performance of the oil and natural gas industry and other general business, industry and economic conditions; the Company's ability to adequately protect its intellectual property rights; and departures and other changes in management and other key employees. For a detailed discussion of factors that could affect the Company's future operating results, please see the Company's filings with the
CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) (Unaudited) |
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2022 |
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2022 |
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Assets |
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Current Assets: |
|
|
|
|
|
|
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Cash and cash equivalents |
$ |
23,780 |
|
|
$ |
22,559 |
|
|
Accounts receivable, net of allowances of |
|
18,189 |
|
|
|
24,665 |
|
|
Inventories, net |
|
21,801 |
|
|
|
18,465 |
|
|
Prepaid expenses and other current assets |
|
7,039 |
|
|
|
5,519 |
|
|
Total current assets |
|
70,809 |
|
|
|
71,208 |
|
|
Property, plant, equipment and rental assets, net |
|
25,375 |
|
|
|
18,038 |
|
|
Non-current portion of accounts receivable |
|
1,109 |
|
|
|
1,212 |
|
|
Non-current portion of inventories |
|
2,277 |
|
|
|
1,680 |
|
|
Other assets |
|
11,735 |
|
|
|
8,635 |
|
|
Total assets |
$ |
111,305 |
|
|
$ |
100,773 |
|
|
Liabilities and Stockholders’ Equity |
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Current Liabilities: |
|
|
|
|
|
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Accounts payable and accrued expenses |
$ |
24,344 |
|
|
$ |
25,130 |
|
|
Accrued salaries and wages |
|
1,123 |
|
|
|
1,147 |
|
|
Accrued warranty reserve |
|
1,662 |
|
|
|
1,483 |
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|
Deferred revenue |
|
10,686 |
|
|
|
9,185 |
|
|
Current portion of notes payable and lease obligations |
|
3,215 |
|
|
|
675 |
|
|
Total current liabilities |
|
41,030 |
|
|
|
37,620 |
|
|
Deferred revenue - non-current |
|
915 |
|
|
|
981 |
|
|
Term note payable, net |
|
50,966 |
|
|
|
50,949 |
|
|
Long-term portion of notes payable and lease obligations |
|
12,321 |
|
|
|
5,809 |
|
|
Total liabilities |
|
105,232 |
|
|
|
95,359 |
|
|
Commitments and contingencies (Note 14) |
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Stockholders’ Equity: |
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Preferred stock, |
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— |
|
|
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— |
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Common stock, |
|
18 |
|
|
|
15 |
|
|
Additional paid-in capital |
|
954,750 |
|
|
|
946,969 |
|
|
Accumulated deficit |
|
(946,556 |
) |
|
|
(939,482 |
) |
|
|
|
(2,139 |
) |
|
|
(2,088 |
) |
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Total stockholders’ equity |
|
6,073 |
|
|
|
5,414 |
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Total liabilities and stockholders' equity | $ | 111,305 |
$ | 100,773 |
CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) |
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Three Months Ended |
Six Months Ended |
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2022 |
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2021 |
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2022 |
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|
2021 |
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Revenue: |
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Product and accessories |
|
$ |
10,603 |
|
|
$ |
8,465 |
|
|
$ |
19,770 |
|
|
$ |
16,854 |
|
Parts, service and rentals |
|
|
10,172 |
|
|
|
8,731 |
|
|
|
19,657 |
|
|
|
16,424 |
|
Total revenue |
|
|
20,775 |
|
|
|
17,196 |
|
|
|
39,427 |
|
|
|
33,278 |
|
Cost of goods sold: |
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|
|
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Product and accessories |
|
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12,496 |
|
|
|
8,797 |
|
|
|
21,387 |
|
|
|
17,790 |
|
Parts, service and rentals |
|
|
6,103 |
|
|
|
5,689 |
|
|
|
11,158 |
|
|
|
10,130 |
|
Total cost of goods sold |
|
|
18,599 |
|
|
|
14,486 |
|
|
|
32,545 |
|
|
|
27,920 |
|
Gross margin |
|
|
2,176 |
|
|
|
2,710 |
|
|
|
6,882 |
|
|
|
5,358 |
|
Operating expenses: |
|
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Research and development |
|
|
603 |
|
|
|
987 |
|
|
|
1,093 |
|
|
|
1,870 |
|
Selling, general and administrative |
|
|
5,107 |
|
|
|
6,438 |
|
|
|
10,026 |
|
|
|
11,762 |
|
Total operating expenses |
|
|
5,710 |
|
|
|
7,425 |
|
|
|
11,119 |
|
|
|
13,632 |
|
Loss from operations |
|
|
(3,534 |
) |
|
|
(4,715 |
) |
|
|
(4,237 |
) |
|
|
(8,274 |
) |
Other income |
|
|
(50 |
) |
|
|
(5 |
) |
|
|
(48 |
) |
|
|
660 |
|
Interest income |
|
|
26 |
|
|
|
6 |
|
|
|
32 |
|
|
|
11 |
|
Interest expense |
|
|
(1,356 |
) |
|
|
(1,278 |
) |
|
|
(2,718 |
) |
|
|
(2,513 |
) |
Gain (loss) on debt extinguishment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,950 |
|
Loss before provision for income taxes |
|
|
(4,914 |
) |
|
|
(5,992 |
) |
|
|
(6,971 |
) |
|
|
(8,166 |
) |
Provision for income taxes |
|
|
4 |
|
|
|
2 |
|
|
|
6 |
|
|
|
10 |
|
Net loss |
|
|
(4,918 |
) |
|
|
(5,994 |
) |
|
|
(6,977 |
) |
|
|
(8,176 |
) |
Less: Deemed dividend on purchase warrant for common shares |
|
|
97 |
|
|
|
— |
|
|
|
97 |
|
|
|
— |
|
Net loss attributable to common stockholders |
|
$ |
(5,015 |
) |
|
$ |
(5,994 |
) |
|
$ |
(7,074 |
) |
|
$ |
(8,176 |
) |
|
|
|
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|
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|
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Net loss per common share attributable to common stockholders—basic and diluted |
|
$ |
(0.30 |
) |
|
$ |
(0.40 |
) |
|
$ |
(0.44 |
) |
|
$ |
(0.58 |
) |
Weighted average shares used to calculate basic and diluted net loss per common share attributable to common stockholders |
|
|
16,785 |
|
|
|
15,167 |
|
|
|
16,056 |
|
|
|
14,202 |
|
CAPSTONE GREEN ENERGY CORPORATION AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURE (In thousands, except per share data) (Unaudited) |
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Three Months Ended
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Six Months Ended
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Reconciliation of Reported Net Loss to EBITDA and Adjusted EBITDA |
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|
2022 |
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|
2021 |
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|
2022 |
|
|
2021 |
|
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Net loss, as reported |
|
$ |
(4,918 |
) |
|
$ |
(5,994 |
) |
|
$ |
(6,977 |
) |
|
$ |
(8,176 |
) |
Interest expense |
|
|
1,361 |
|
|
|
1,278 |
|
|
|
2,723 |
|
|
|
2,513 |
|
Provision for income taxes |
|
|
4 |
|
|
|
2 |
|
|
|
6 |
|
|
|
10 |
|
Depreciation and amortization |
|
|
831 |
|
|
|
458 |
|
|
|
1,526 |
|
|
|
844 |
|
EBITDA |
|
$ |
(2,722 |
) |
|
$ |
(4,256 |
) |
|
$ |
(2,722 |
) |
|
$ |
(4,809 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Gain on debt extinguishment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,950 |
) |
Additional PPP Loan forgiveness |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(660 |
) |
Stock-based compensation and other expense |
|
|
154 |
|
|
|
780 |
|
|
|
386 |
|
|
|
1,650 |
|
Debt compliance costs/legal settlements |
|
|
387 |
|
|
|
750 |
|
|
|
587 |
|
|
|
750 |
|
Adjusted EBITDA |
|
$ |
(2,181 |
) |
|
$ |
(2,726 |
) |
|
$ |
(1,749 |
) |
|
$ |
(5,019 |
) |
To supplement the company’s unaudited financial data presented on a generally accepted accounting principles (GAAP) basis, management has presented Adjusted EBITDA, a non-GAAP financial measure. This non-GAAP financial measure is among the indicators management uses as a basis for evaluating the company’s financial performance as well as for forecasting future periods. Management establishes performance targets, annual budgets and makes operating decisions based in part upon this metric. Accordingly, disclosure of this non-GAAP financial measure provides investors with the same information that management uses to understand the company’s economic performance year-over-year.
EBITDA is defined as net income before interest, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA before gain on debt extinguishment, additional PPP loan forgiveness, stock-based compensation, consulting and legal expenses related to compliance with debt covenants, and legal settlements. Gain on debt extinguishment and additional PPP loan forgiveness relates to the Paycheck Protection Program loan forgiveness. Stock-based compensation and other expense includes expense related to stock issued to employees, directors, vendors, and for extraordinary, non-recurring expenses.
Adjusted EBITDA is not a measure of the company’s liquidity or financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities as a measure of its liquidity.
While management believes that the non-GAAP financial measure provides useful supplemental information to investors, there are limitations associated with the use of this measure. The measures are not prepared in accordance with GAAP and may not be directly comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation. Management compensates for these limitations by relying primarily on the company’s GAAP results and by using Adjusted EBITDA only supplementally and by reviewing the reconciliations of the non-GAAP financial measure to its most comparable GAAP financial measure.
Non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in
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Investor and investment media inquiries:
818-407-3628
ir@CGRNenergy.com
Source:
FAQ
What were Capstone Green Energy's revenues in Q2 2023?
How did Capstone's Adjusted EBITDA perform in Q2 2023?
What is the current status of EaaS rental units for CGRN?