Third Quarter Revenues of $19.6M; Fiscal 2023 Year-to-Date Revenues up 9.5%, $59.0M Compared to $53.9M in Fiscal Year 2022
Third Quarter Net Loss is $5.2M; Adjusted EBITDA Loss of $1.7M Improved 43% Year-over-Year; Fiscal Year 2023 Year-to-Date Adjusted EBITDA Improved 57%
Rental units under contract increased 126% to 40 MW versus December 2021
Capstone Green Energy Corporation, announced its financial results for the third quarter ended December 31, 2022, as the Company continues to execute on its Energy-as-a-Service (EaaS) business plan.
“Revenue for the third quarter was $1.0 million less compared to the same period last year; however our year-to-date revenue is up 9.5%, when compared to the first nine months of the prior year. This revenue growth is largely attributed to our Energy as a Service (EaaS) business which continues to grow, despite a very tough supply chain environment. Although product shipments during the third quarter were challenged as we continue to battle supply chain disruptions and higher costs, I expect this will begin to be offset by our price increases implemented at the end of January,” said Darren Jamison, President, and Chief Executive Officer of Capstone Green Energy.
Third Quarter and Nine Months Fiscal 2023 Highlights:
• Revenues for the third quarter ending December 31, 2022, were $19.6 million, down 6% from $20.8 million in revenue during the second quarter ended September 30, 2022, and down 5% from $20.6 million in the year-ago third quarter.
• Revenues for the first nine months of fiscal 2023 totaled $59.0 million, up 9.5% from $53.9 million from the nine months of fiscal 2022.
• EaaS business (Factory Protection Plan (FPP) Service, Spare Parts and Rentals) revenues were up 18% for the nine months of fiscal 2023 mainly due to higher rental and FPP revenues.
• Gross margins for the third quarter ending December 31, 2022, were 14% compared to 11% in the second quarter ending September 30, 2022 and 11% in the year ago third quarter ended December 31, 2021. Gross margins increased primarily due to a greater proportion of revenue from the higher-margin rental fleet offsetting increased costs in the company's supply chain.
• Gross margins for the nine months of fiscal 2023 increased to 16% from 14% for the nine months of fiscal 2022, but were below Company expectations of 25% because of ongoing supply chain expenses, freight and expediting charges.
• Net loss was $5.2 million for the third quarter ending December 31, 2022, compared to a net loss of $5.1 million in the same quarter last year. Prior year net loss included a $2.6 million benefit from the Paycheck Protection Program loan forgiveness. Without such forgiveness, the net loss would have been $7.7 million. The improvement in the current quarter is mainly due to higher gross margin.
• Adjusted EBITDA for the third quarter ending December 31, 2022, improved 43% to negative $1.7 million from negative $3.0 million in the third quarter last year, primarily due to higher gross margin contribution from the EaaS business.
• Net loss was $12.2 million for nine months ending December 31, 2022, compared to a net loss of $13.3 million in the same period last year. Prior year net loss included a $2.6 million benefit from the Paycheck Protection Program loan forgiveness. Without such forgiveness, the net loss would have been $15.9 million.
• Adjusted EBITDA improved 57% to negative $3.5 million for nine months ended December 31, 2022, compared to negative $8.1 million for the same period last year driven by solid execution in our high-margin EaaS business and ongoing cost reduction efforts, offset by ongoing supply chain expenses, freight and expediting charges.
• EaaS long-term rental units and re-rental units under contract on December 31, 2022, totaled approximately 40 MW versus 17.7 MW on December 31, 2021, representing 126% growth year-over-year.
• The Company remains on track to reach its goal of 50 MW under contract by March 31, 2023.
• Gross product bookings for the third quarter ending December 31, 2022, were $6.9 million, down from $16.3 million in the previous quarter ended September 30, 2022, as bookings slowed in December.
• Total cash as of December 31, 2022, was $16.6 million, down from $23.8 million as of September 30, 2022. The decrease of $7.2 million was primarily related to the net loss and manufacturing of 4.6 MW of new rental assets for the growing EaaS rental fleet.
• Net cash used by operating activities was $4.9 million, primarily as a result of net loss funding and $1.7 million in cash used by working capital mainly due to the purchase of long lead-time inventory.
• The Company’s Days Sales Outstanding, or DSO, dropped from 85 days in the quarter ending September 30, 2022, to 66 days in the most recent quarter.
• To mitigate global supply chain shortages, parts price increases, and higher freight costs, the Company enacted an across-the-board product, spare parts, and FPP service contract price increase on January 30, 2023.
“We project a confluence of positive events over the next 12 months with new price increases taking effect, the Inflation Reduction Act (IRA) taking hold, and new markets like EV charging gaining increasing momentum. Our centerpiece will remain our EaaS rental business and the benefits it brings us including higher margins, predictable revenues, and consistent cash flow while transitioning us away from being only a manufacturing company. Our progress since implementing this major strategic shift is demonstrated in our results as we have effectively marched towards our goal of 50 MW. The numbers show our customers both need and want this solution and that we can provide it, solving both our customer’s needs and driving returns for our stockholders,” continued Mr. Jamison.
“Our overall financial goals are unchanged, and we are focused on growing revenue and reaching positive Adjusted EBITDA on a sustainable basis. EaaS is a pivotal factor in achieving this goal in conjunction with our ongoing price increases and cost control initiatives. There are several drivers as we look ahead including the IRA (and similar global initiatives), leveraging Capstone’s Direct Sales organization, targeting large global customers, and growing our global Distribution network to reach more geographies,” concluded Mr. Jamison.
