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CPST (NASDAQ) 0.64 | up0.00 | Apr 24 2015 | 16:00 ET

Ask Management

Welcome to the "Ask Management" section of our site. "Ask Management" is your opportunity to submit a question to Capstone Turbine Corporation's management team.

Click here to submit a question right now!

NOTICE: All information submitted through this form is subject to editorial review and may or may not be responded to in the Ask Management section of our website.

This section of our web site contains "forward-looking statements," as that term is used in the federal securities laws, regarding future events or financial performance of the Company within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as "expects," "objective," "intend," "targeted," "plan" and similar phrases. These forward-looking statements are subject to numerous assumptions, risks and uncertainties described in Capstone's filings with the Securities and Exchange Commission that may cause Capstone's actual results to be materially different from any future results expressed or implied in such statements. We refer you to the Company's Form 10-K, Form 10-Q and other recent filings with the Securities and Exchange Commission for a description of these risk factors. Capstone cautions readers not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Capstone undertakes no obligation, and specifically disclaims any obligation, to release any revisions to any forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.



January 29, 2015

Question:

We work with GEM Energy, and have prospective customers who asked if there is any concern with Capstone's financial stability going forward.


Answer from Capstone Management:

As Capstone’s CEO, I am honored that your company is considering purchasing microturbines. We understand that customers and partners use many factors to evaluate current and prospective technologies.  We believe the use of standard financial metrics may not always give customers a full and accurate financial picture of a fast-growing company such as Capstone. 

While we have a history of operating losses, as do many companies that are developing new technologies, the financial trends that we have established over the last seven years, during one of the most difficult economic environments in recent memory, are the most indicative of the direction that Capstone is heading in.  These standard metrics sometimes overlook key forward-looking aspects of evolving companies like Capstone.

Capstone’s revenue CAGR for the last seven fiscal years was 30%. This revenue growth, fueled by a product backlog of over $170 million, has led to a gross margin improvement of almost 40 points over the last seven fiscal years.

Revenues for our current fiscal year have not met our expectations because of certain macroeconomic factors, primarily the price of oil and a strengthening United States dollar, both of which have had a negative impact on the timing of our product shipments.  Our backlog as of our recently completed third fiscal quarter is strong at $175.5 million and we have made considerable progress on strengthening Capstone’s overall financial position.

Our improved financial strength is highlighted in our third quarter fiscal 2015 margin, which was our ninth consecutive quarter of double digit margins and we achieved a record margin percentage of 20.3% on quarterly revenues that were down 19% year-over-year coupled with a slight cash build. 

We believe Capstone is set to be profitable once these macroeconomic factors ease and are expecting to be profitable on an EBITDA+ stock compensation basis at the completion of our current fourth quarter ending on March 31st. We believe that our cash position is strong and more than sufficient to see us through to profitability and into a very successful future.

January 22, 2015

Question:

Why has the stock been hit so hard, is there something wrong?


Answer from Capstone Management:

Capstone share price can be impacted by multiple microeconomic and macroeconomic factors. At a micro level shares can be impacted by press releases, investor road shows, investor conferences, analyst estimates and earnings reports. From a macroeconomic perspective Capstone, like many other clean tech stocks, often tracks changes in utility rates, government incentives or commodity prices.

Because oil, gas and other natural resources makes up a significant portion of our overall business, many investors link future company performance to overall oil prices. In June 2014, the price of Brent crude was approximately $115 per barrel and Capstone shares were trading in the mid $1.50 range. As of January 23, 2015, Brent crude had fallen by more than half, down to approximately $49 per barrel and Capstone stock closed at $0.59 cents per share.

Management stated on the most recent Q3 FY15 earnings call that it feels that the company has never been stronger or better positioned for success. Management believes this because the majority of its oil and gas revenue is derived from mid stream oil and gas opportunities and not up stream oil and gas opportunities; therefore, the drop in oil prices will not drive a similar sequential drop in Capstone future revenue. In addition, energy reform in Mexico has provided Capstone with three substantial orders in the last four months.

Finally, Capstone is working hard to diversify its geographical oil and gas sales by selling into previously underserved markets like South America, Africa and the Middle East. Also, Capstone is working to diversity its market verticals by growing its CHP and Renewables business.

January 11, 2015

Question:

The management of Capstone comes under scrutiny often on the yahoo message board. I wish you would defend yourself as I am beginning to wonder myself. We need more clarity! 


Answer from Capstone Management:

Capstone Management does not read or respond to blog posts or message boards.

Capstone Management communicates with stockholders through the “Ask Management” section of our website, investor road shows, investor conferences, quarterly earnings calls, press releases, periodic filings with the SEC, our Annual Report and the Annual Meeting of Stockholders. 

December 21, 2014

Question:

What is Capstone doing to take full advantage of the major market that exists in South Texas related to capturing flair gas?


Answer from Capstone Management:

It is not just South Texas because billions of cubic meters of natural gas are flared annually at oil production sites around the globe. Flaring gas wastes a valuable energy resource that could be used to support economic growth and progress in oil-producing countries. It also contributes to climate change by releasing millions of tons of CO2 to the atmosphere. As a result, Capstone has increased its sales and marketing efforts relating to the developing flare gas market in the U.S. and abroad. The global flare gas market is a huge opportunity that is well suited for our oil free air bearing technology. Capstone has recently hired a worldwide oil and gas manager located in Houston, Texas to coordinate our distributors’ efforts in the oil and gas industry in not only flare gas but all facets of the onshore and offshore exploration, production, compression and transmission of oil and gas.

December 17, 2014

Question:

What is the impact of the Russian Ruble collapse? Are you hedged for currency? Do you get paid in rubles or dollars? 


Answer from Capstone Management:

All Capstone sales are F.O.B. Capstone and transacted in U.S. dollars. Some Capstone international distribution partners and end use customers hedge U.S. dollars but Capstone is not involved in that activity.