Capstone Green Energy Reducing Operating Costs as the Business Model Shifts Towards Energy as a Service
Capstone Green Energy Corporation (NASDAQ: CGRN) has initiated a plan to reduce operating costs and adjust its business model to align with its growing Energy-as-a-Service (EaaS) sector. This includes temporary salary reductions for leadership, employee furloughs, and a shift to part-time for some staff. The goal is to achieve consistent positive adjusted EBITDA, fueled by higher-margin EaaS revenues. Capstone anticipates increased revenue from upcoming rental unit deployments, although there is a delay in revenue realization from these units.
- Initiatives to align cost structure support higher-margin EaaS revenue.
- Temporary salary reductions and staff adjustments aimed at cost savings.
- Focus on achieving consistent quarterly positive adjusted EBITDA.
- Revenue generation from rental units is delayed, impacting short-term earnings.
- Furloughing employees raises concerns about workforce stability.
Lower Operating Costs Combined with Rental Fleet Deployments to Improve Financial Performance
The Company has undertaken a holistic review of the organization, taking the growing EaaS business into account. EaaS adds diversity to the Company’s revenues and allows for a more streamlined staffing model that constitutes most of the operating cost reductions. Other measures taken to reduce expenses, until this spring when the Company expects to realize increased revenue from rental units yet to be commissioned, include temporary salary reductions for the
“We are committed to making the changes needed to increase our profitability through better alignment of our current cost structure to support our higher margin Energy-as-a-Service revenues,” said
The EaaS rental unit timeline includes a delay between the time of manufacture and the time revenue from that unit is realized. The microturbine rental unit is built, allocated by a signed rental contract, and then commissioned at the customer site, at which point it begins to generate revenue.
“These actions are designed to enhance our ability to execute on our business plans and serve our customers who are looking to outsource their energy management, while also lowering energy costs, increasing resiliency and reducing emissions,”
About
For customers with limited capital or short-term needs, Capstone offers rental systems; for more information, contact: rentals@CGRNenergy.com. To date, Capstone has shipped over 10,000 units to 83 countries and estimates that, in FY21, it saved customers over
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 the Company’s positive adjusted EBITDA goal and expectations for the Company’s expense reduction plan. 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: the timing of rental units generating revenue; further cost reduction efforts; the ongoing effects of the COVID-19 pandemic; the availability of credit and compliance with the agreements governing the Company's 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 the impact of pending or threatened litigation. For a detailed discussion of factors that could affect the Company's future operating results, please see the Company's filings with the
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