Capstone Turbine (CPST) Reports Select Preliminary Results, Provides Update on COVID-19

Capstone Turbine Corporation (www.capstoneturbine.com) (NASDAQ: CPST), the world's leading clean technology manufacturer of microturbine energy systems, is providing an update on its emergency Business Continuity Plan and announcing select preliminary results for its fiscal fourth quarter ended March 31, 2020.

Update on COVID-19 Business Continuity Plan:

Capstone responded to the COVID-19 pandemic with a Business Continuity Plan (BCP) focused on its employees, customers, supply chain partners and shareholders. Circumstances surrounding COVID-19 continue to evolve at a rapid pace. The Capstone BCP is designed to keep employees safe, align with government guidelines, continue to support critical Aftermarket Factory Protection Plan (FPP) long-term service contracts and spare parts deliveries to Essential Critical Infrastructure Customers, such as Energy, Health Care, Wastewater Treatment, Food Manufacturing, etc., as well as to sustain two key business goals: cash flow and liquidity and reaching Adjusted EBITDA positive in the upcoming June quarter.

One key business goal of the Company is cash flow and liquidity. The internal goal for the most recent quarter was to finish the quarter with a minimum of $14.5 million in cash. In addition, it was critical that Capstone dramatically slow incoming raw materials to position the Company to potentially achieve positive working capital in the June quarter.

"I am pleased to report that our cash balance as of March 31, 2020, was $15.1 million and our inventory receipts during the quarter decreased by $4.6 million, or 36%, to $8.1 million compared to $12.7 million in the third quarter which should put us in position to potentially drive positive working capital next quarter," said Darren Jamison, President and Chief Executive Officer of Capstone.

Capstone's second key goal is to remain committed to its stated objective of reaching Adjusted EBITDA positive in the upcoming June quarter. In support of that goal, Company executives volunteered salary cuts and developed an aggressive furlough and cost control program, which will reduce operating expenses an estimated 25% in the short-term to support an Adjusted EBITDA positive quarter with strengthening aftermarket margins and the assumption of rebounding product shipments in June.

"In order to put the Company in the best possible position for success we have staged over 5.8 MW in finished goods and shipped as many FPP spare parts as possible during the end of this quarter to afford customer continuity of both parts supplies and unit shipments and also to lower the potential risks of not reaching our June Adjusted EBITDA positive goal," added Mr. Jamison.

Select Preliminary Financial Highlights of Fourth Quarter Fiscal 2020:

• Total cash and cash equivalents as of March 31, 2020, are estimated to be $15.1 million, down only $1.6 million from to $16.7 million as of December 31, 2019, despite lower revenues caused by the COVID-19 pandemic.
• The Company received $2.6 million from financing activities during the quarter as the company focused on liquidity as part of its COVID-19 Business Continuity Plan.
• Inventory receipts decreased by $4.6 million, or 36%, to $8.1 million in the fourth quarter compared to $12.7 million in the third quarter supporting improved liquidity and driving potential positive working capital in the upcoming quarter.
• Factory Protection Plan (FPP) long-term service contract revenue continued to expand despite impacts from the COVID-19 pandemic and was up 16% year-over-year.
• The Company allocated 0.6 MW of new production to grow its long-term microturbine rental fleet, which now stands at 7.6 MW, approaching its 10 MW goal.
• Pre-built 5.8 MW of Finished Goods and shipped an elevated level of FPP spare parts during the quarter to ensure customer continuity of both units and spare parts supplies.
• New gross product orders were approximately $9.1 million during the fourth quarter compared to $9.3 million in the previous third quarter.
• Book-to-bill ratio was 2.4:1 for the fourth quarter of fiscal 2020 on lower shipments compared to 1.2:1 in the third quarter of fiscal 2020 and 1.4:1 in the year-ago fourth quarter.
• Preliminary accessories, parts, aftermarket service, FPP long-term contracts, rentals, and Distributor Support System (DSS) revenue is approximately $7.3 million, down 21% from $9.2 million in the year-ago quarter primarily because of lower parts and accessories revenue due to the COVID-19 pandemic and weakness in the oil and gas market, but up approximately 9% on an annual basis to approximately $34.9 million for fiscal 2020 compared to $32.0 million in fiscal 2019.
• Total preliminary revenue for the fourth quarter of fiscal 2020 was approximately $11.3 million compared to $17.4 million in the third quarter of fiscal 2020 and $22.0 million in the same period last year as product shipments and global project construction slowed significantly as a result of the global COVID-19 pandemic, as well as continued weakness in the oil and gas market, which deteriorated further due to the recent decline in the price of oil.
• The decrease in product and aftermarket revenue is expected to negatively impact the net loss and Adjusted EBITDA results for the fourth quarter of fiscal 2020.

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