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Capstone Turbine Corporation F4Q10 (Qtr End 03/31/10) Earnings Call Transcript

Capstone Turbine Corporation F4Q10 (Qtr End 03/31/10) Earnings Call Transcript

Capstone Turbine Corporation (CPST)

F4Q10 (Qtr End 03/31/10) Earnings Call

June 14, 2010 4:45 pm ET


Jayme Brooks – VP, Finance & Chief Accounting Officer

Darren Jamison – President & CEO

Ed Reich – EVP & CFO

Jim Crouse – EVP, Sales

Mark Gilbreth – EVP, Operations and Chief Technology Officer


Sanjay Shrestha – Lazard Capital Markets

Eric Stine – Northland Capital Markets

Shawn Lockman – Ardour Capital

Shawn Severson – ThinkEquity



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Good day, ladies and gentlemen and welcome to Capstone Turbine Corporation earnings conference call for fourth quarter and fiscal year 2010 financial results ending March 31, 2010. My name is Stacey and I'll be your conference moderator for today. (Operator instructions) As a reminder, this conference call is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today’s call, Ms. Jayme Brooks, Vice President, Finance and Chief Accounting Officer. Please proceed.

Jayme Brooks

Thank you. Good afternoon and welcome to Capstone Turbine Corporation’s conference call for the fourth quarter and year ended March 31st, 2009. I am Jayme Brooks, your contact for today's conference call.

Capstone filed its annual report on Form 10-K with the Securities and Exchange Commission today, June 14, 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 or you can view all of our public filings on the SEC website at or on our website at

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 in 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 the Calnetix Power Solutions Microturbine Business, revenue growth and increased sales volume, our success in key markets, our ability to enter into new relationships with channel partners and distributors and other third parties, the energy-efficiency, reliability, and low cost of ownership of our products, and the expansion of production capacity and manufacturing efficiency.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties, included 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 recession can make it difficult or impossible for us to raise necessary funds and 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 our expand production capacity to meet demand for our products. We may not be able to obtain sufficient materials at reasonable prices. Our release of new products maybe delayed or new products may not perform as we expect.

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 relations 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 asset 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.

I will now turn over the call to Darren Jamison, our President and Chief Executive Officer.

Darren Jamison

Thanks, Jamie. Good afternoon and welcome everyone to Capstone’s fourth quarter and fiscal year ended March 31st, 2010 earnings call. With me today is Ed Reich, our Executive Vice President and Chief Financial Officer; Mark Gilbreth, our Executive Vice President, Operations and Chief Technology Officer; and Jim Crouse, our executive vice president of sales and marketing.

Today I will start the call with a general overview of the fourth quarter and fiscal 2010 annual results, and then turn over the call to Ed who will review the financial results. Ed will then turn the call back over to me and I will discuss what is happening in some of our key markets and update you on our progress toward our strategic objectives of positive gross margin and positive cash flow. As the operator mentioned, we will be using slides today in our presentation that can be found on the Capstone website under Investor Relations presentation section.

We’ve had an extremely busy quarter as the company continues to build positive momentum. Slides 2 and slide 3 of our presentation summarize some of the recent events. As we signed up new distributors in Japan, Nigeria, Pakistan and in the US. Specifically in the US, I am very pleased with our new distributor Western Energy Systems and that will be covering most of California, Oregon, Alaska and Hawaii. Western Energy is a very experienced company with a proven track record for selling and servicing GE Jenbacher natural gas internal combustion engines, and the combined heat and power and biogas projects.

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