Capstone Turbine CEO Discusses F2Q11 Results - Earnings Call Transcript

Capstone Turbine (CPST)

F2Q11

Earnings Call

November 9, 2010 4:45 p.m. ET

Executives

Clarice Hovsepian - Corporate Counsel

Darren Jamison - President and CEO

Ed Reich - EVP and CFO

Mark Gilbreth - EVP of Operations and CTO

Analysts

Sanjay Shrestha - Lazard Capital Markets

Eric Stine - Northland Capital Markets

Shawn Severson - ThinkEquity

Walter Nasdeo - Ardour Capital

Presentation

Operator

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» Capstone Turbine Corporation F2Q10 (Qtr End 09/30/09) Earnings Call Transcript

Good day, ladies and gentlemen, and welcome to Capstone Turbine Corporation earnings conference call for second quarter fiscal year 2011 financial results, which ended September 30, 2010. [Operator Instructions.] During today's call, Capstone management will be referencing slides that can be located at www.capstoneturbine.com under the Investor Relations section.

I would like to now turn the call over to your host for today, Ms. Clarice Hovsepian, Capstone corporate counsel. Please proceed.

Clarice Hovsepian

Thank you. Good afternoon and welcome to Capstone Turbine Corporation's conference call for the second quarter ended September 30, 2010. I am Clarice Hovsepian, your contact for today's conference call.

Capstone filed its Annual Report on Form 10-Q with the Securities and Exchange Commission today, November 9, 2010. If you do not have access to this document and would like one, please contact Investor Relations via telephone at 818-407-3628 or email ir@capstoneturbine.com, or you can view all of our public filings on the SEC website at www.sec.gov or our website at www.capstoneturbine.com.

During the course of this conference call, management may make projections or other forward-looking statements 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.

These statements relate to, among other things, future financial performance and attaining profitability; the ability to reduce costs and improve inventory turns and contribution margins; higher average selling prices; continued growth in current market conditions; the availability of a line of credit; the success of the C200 and C1000 products; new products and technologies; compliance with certain government regulations and increased government awareness and funding of our products; growing market share and market adoption of our products; new applications for our products; growth in the oil and gas, office building, biogas, UPS and hybrid electric vehicle markets; the successful integration of Calnetix Power Solutions MicroTurbine business; revenue growth and increased sales volume; our success in key markets; negotiations with strategic partners; our ability to enter into new relationships with channel partners and distributors, and other third parties, and a successful implementation of those relationships; the energy efficiency, reliability, and low cost of ownership of our products; and the expansion of the production capacity and manufacturing efficiency.

These forward-looking statements are subject to numerous assumptions, risks, and uncertainties, including the following. Our expectations about expansion into key markets may not be realized. Certain strategic business initiatives and relationships may not be sustained, and may not lead to increased sales. We may not be able to reduce our manufacturing costs. The growth in our backlog has significantly exceeded our internal forecast. In order to meet this increased demand, we may need to raise additional funds to meet our anticipated cash needs for working capital and capital expenditures. The current economy could make it difficult or impossible for us to raise necessary funds or for our customers to buy our products. We may not be able to utilize our line of credit, for example, as a result of a failure to meet a financial covenant. We may not be able to expand production capacity to meet demand for our products. We may not be able to obtain sufficient materials on a timely basis or at reasonable prices. Our release of products may be delayed or new products may not perform as we expect. If we continue to fail to meet all applicable NASDAQ global market requirements and NASDAQ determines to delist our common stock, the delisting could adversely affect the market liquidity of our common stock, impair the value of your investment, and adversely affect our ability to raise needed funds. We have substantial accounts receivables and increased bad debt expense or delays in collecting accounts receivables could have a material adverse effect on our cash flows and results of operations. We may be unable to increase our sales and sustain or increase our profitability in the future. We may not be able to obtain or maintain customer, distributor, and other relationships that are expected to result in an increase in volume and revenue. We may not be able to comply with all applicable government regulations. We may not be able to retain or develop distributors in our targeted markets, in which case our sales will not increase as expected. We may not be able to successfully integrate the acquired Calnetix assets and achieve productive relationships with the distributors. And if we do not effectively implement our sales, marketing, service, and product enhancement plans, our sales will not grow and therefore we may not generate the net revenue we anticipate.

These are among many factors which may cause Capstone's actual results to be materially different from future results predicted 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 and other risk factors. Because of these risks and uncertainties, Capstone cautions you not to place undue reliance on these statements which speak only as of today. We undertake no obligation and specifically disclaim any obligation to release any revision to any forward-looking statements to reflect events or circumstances after the date of this conference call or to reflect the occurrence of unanticipated events.

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