Capstone Green Energy (CGRNQ) 11 Nov 212022 Q2 Earnings call transcript

Good day, ladies and gentlemen. And welcome to your Capstone Green Energy Earnings Conference Call and Webcast for the Financial Results for the Second Quarter Fiscal Year 2022 ended on September 30, 2021. All lines have been placed in a listen-only mode, and there will be a question-and-session following the presentation.

As a reminder, today's program will be recorded. At this time, it's my pleasure to turn the floor over to, Mr. Counsel. Corporate Petersen, Colby is floor yours. the Sir,

much. Thank for and you afternoon, today's you fiscal very joining call. XXXX thank conference Good second quarter

XX, the quarter and Executive and the today Energy's On Capstone the Green XXXX. Chief me Securities Jamison, its Today, ended quarterly with Green earnings fiscal XX-Q issued Capstone with release Financial is Officer. for President its and XXXX Exchange Officer; Darren Chief September Commission Energy second Eric filed Hencken, and call report

referring during be that to be these events obligations the any today. XX, will the call today We to the or views statements update representing can to to reflect statements this want company's found November slides XXXX. under contains as website Capstone Investor I forward-looking or future today, revise estimates remind that disclaims circumstances. on the our everyone Relations and section call of

to on and today's Harbor in Officer. appendix the on now to factors Eric over referring to known like and are, uncertainties Exchange for are the EBITDA through go statements they place You could Jamison, expressed to call and forward-looking because concerning the these would not Chief cases, Provisions note implied I or EBITDA, forth the results and from some with in today, other they involve presentation they turn Please slides. actual release and Executive Securities and in our that Slide differ cause release discussion beyond President to reconciliations earnings those the materially undue refer the Darren should as by such control. to Darren mention risks, Please set when Commission unknown adjusted information statements. Capstone’s X factors reliance and and that Safe the in the filings earnings that

Good XXXX. for XXXX fiscal review you, September our results, XX, ending Thank today you joining a everyone. for second Thank Colby. afternoon, of quarter

to microgrid IBT cooling example XXXX. of can rate and growth clean, this kind our is Italy. provider its change energy competitive have of in efficiency. the We are growing shift reinforce annual is turn the ESCO compounded do CCHP will size to and anticipated A I the for heat improving back we addressable national with X. System, vehicle delivering our EV toward XX% and electric our the microgrid backdrop, April. a meet solutions everyone these advantages, the expanding XXXX total Day need first recent way the needs Slide been between fiscal then XXXX and we've and microgrid around microgrids since exceeded the to one solutions market remind over things with of markets power Capstone to solution, register energy the cutting charging a hydrogen announcement providing and perfect sea now Global enhancing our primary you please sharply of ourselves Capstone demand microgrids, positioned security. edge our billion globe. our some and of to power we and our cleaner overall want to needs as X, Setting the energy On in last Earth CAGR strategic a focused our to becoming for encompassing of on or insights, and Italy. technology microgrid integrated customers remained on distributor of and to If According meet Energy X develop energy Green Capstone customers reliable in ahead the business go for Markets the continue SXE partnered goals, our combined doing significant and systems distributed where to Slide goals Capstone epicenter is at meet energy stations with leverage Systems XXXX in

not important, is Our the growth equally driving growth. type more, so, but and around are strategic built initiatives if quality of

We part our Energy our are EaaS a focused goals increasing or We're and cash flows. on Service flow our it the achieving predictability recurring into intensely also of improving strategy. our as revenue here on translates as cash focused because our of meaningfully

Our and fiscal following global to 'XX shift leverage the goals are the to continue include items.

later our service diverse and in the detail energy this products more in First, offerings. discuss I'll presentation. broadening

on growing Second, our sales solution direct is revenue. top new focus team line

team microturbine headcount product continue rentals be traditional the offerings direct the solution add the well. term and generated and team, pleased into to newer both the sales to continue as products, we its long We of energy being by with pipeline green

to expanding XX, XXXX. and is fleet long megawatts. We that by the announced quarter, we the to during fleet megawatts XX.X grow grew XX second term the to Third December rental subsequently expect in megawatts XX.X to October fleet

quarter our field. March ended and increasing reserve availability a were the up we margins orders. There is million in replace parts repeat aftermarket and to drive for XXXX, Next XX, affected escalating parts. customer parts to $X.X defective the supplier set In satisfaction

this impact happier lead with to in failure repeat reduced rates significantly lead third the already quarter. and our and Obviously, lower orders. failure customers have rates our to lower happier we've expect expense. which business We program to warranty powerheads And completed customers, seen has the

gas environment. rental than working working inventory supply to for build can managing ensure specifically the fleet, our these challenging on turns also due has in we parts operating to inventory partially next up to expected, ramping manufacture list, continue capital product and COVID-XX to activities been chain and capital and use Focusing is on heavier extremely

support Next pre-program, is marketing or driving efforts. acquisition system and which is customer our DSS description distributor growing

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grid. First, that complete provide we or run can solution a the can to connected standalone microgrid

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develop space a is the the to key hydrogen the offerings energy. continue hydrogen our in green in We economy pillar as of here future and

run blend XXXX. as commercially XX% We've said to but where towards meet beyond is hydrogen hydrogen, here flexible, is offer the we we products by blend it The market market Our we the comes decarbonization and of on XX, not in microturbine point on we to XX% today the the market that, publicly natural that operate have future goal will March where be to for on want based able today. XXX% be can gas the just needs And to to XX% dictates. key the solutions. when be development fuel our systems intend systems money then spend

waste CNI needs solutions now offer efficiency and industrial can heat security, resiliency energy saving energy their or Hughes turbines and customers providing with megawatts custom the WasteXES. them or help commercial both to X solutions power of new and or money management recovery to XX whether a the with also megawatt our that partner or it's combined We Baker solutions C-XX food megawatt and new X and are through recycling new microturbine Laval solutions heat partner Alfa

turbine microturbine attention battery This offers energy Alfa of innovative reduction expand some right suite to Hughes and Capstone reduction storage meet a system with microturbine their they'll requirements. targets product, to power traditional Green as of to solution core new heat the X solution, Slide Slide and product needs, our Energy individual the cost which products energy one recovery very X. tailored shows images solutions as microgrid Baker both the of slide well systems, to energy solar our Laval green its offerings. custom resiliency turn DC and let's is continues our industrial hybrid power customers the similar some of products. products, carbon our Now

X. to going Slide to turn it's Now

key customer revenue. important because our offerings to it mentioned Capstone strategic end hand the Day This each in top goes As products of in expanded on I Corporation Turbine lines. Energy. four business we We portfolio from Green strategic line in our and is XXXX, our transition opportunity growth in with Earth goal meaningfully services accelerate business our Capstone reoccurring and now view to expand and growing revenue of use and hand

This is the Let's includes EaaS. parts, begin long or to among cash is also are transition subscription our steadier distributors margin our and business. be higher business contracts rental Service built line or business aforementioned long these term project Energy installation and includes cash critical to leasing, and Plan contracts, base common on financing. The revenue, FPP, this is Protection flow DSS service, first more as It a services, the spare continuing service all with PPAs fees. the higher elements of term Factory rates, flows, which lines our column a predictable visibility, margin reoccurring customer or

was EGT. range or built the And a foundation is is can from based core generating solution line our hydrogen. technology small on and on line microgrid The operate blended product which Energy turbine business These This biogas DC they forms microturbine and Baker all gas applications. for industrial electricity of Hughes Next fuels that larger natural now of to on Capstone to produce multiple Technologies Capstone is familiar high energy. CCHP, with. you're and CHP Generation CHP efficiency gas hybrid CCHP and and products thermal includes EGT wide

Solutions Moving to pillar, Energy Storage or ESS. next the

microgrid create specific to critical and and is to been storage, that Last business has energy evaluate that monitoring arrangements in emissions address. most Product solar for & HXS. additions meet Fuel flexibility need microgrid, which next the storage least, We'll maximize always be one to and to custom technologies source efficiencies, so combination Capstone needs. is lower software Sustainable a resilient continue is Hydrogen fuel nanogrid. We element of place resiliency even line the of customer's essential hydrogen module but energy using multiple energy big not our customers have a suppliers a we systems or tailored or to new

based solution and natural line hydrogen the gas product we new is run can mix release recently hydrogen safely XX% a have power a business commercially released natural importantly, XX% nitrogen of leveraging hydrogen by gas. Most available XXXX. for March commercial combined heat now on and target hydrogen, Our which XX% microturbine, XX,

hydrogen agreement. our working advance a our We are with soon thermal manufacturing Baker to their Solar solar commercialize look Hughes network to XX/X and to We're help and working enter also concentrated global and like marketing solutions. actively also services into solutions partners B+K and contract storage with

Now product as detail ongoing quarter financial the Only and Slide in good is our and up see ratio impacts line million to turn just recorded minute. despite most let's global X. focus for in up will as the the first Book-to-bill a and COVID-XX were was Total just for in of from quarter million quick gross orders the second rebound quarter, negative XX% on $XX.X highlights attention at continue the on provide $X.X the second compared overview you I'll revenue million give quarter the to from a new shipments X.X:X last $XX.X the Eric to top million $XX.X quarter. more results financial quarter pandemic. recently year, orders second him. continued in here a highlights I complete

X XXXX. XX.X we reminder fiscal to term from megawatts of against anything or an a company fleet end as during book-to-bill a increased X:X XX, continues can the rental to ratio, megawatts of XX.X anything as increase revenue the to this X:X view microturbine growth. the As March quarter year rental plan our to execute XX.X megawatts over fleet the be by favorable future over as indicator Long megawatt

we of new mind, year, critical. an so Eric long our planning end in up rentals to term announced expect to However, any and that's issues XX, the megawatts that take why fiscal the in more contracts XX.X fleet to recently highlight megawatts by not the XX.X XXXX. by With have getting megawatts to rental additional are X.X October, which December of for do will we

quarters, period things, now revenue, out Slide Slide its And two to months XX show In If we you you last turn XX, of better step the six year two, XX% four quarters compared at last moved not will remind quarter good starting than look the point I'll results, the are want you if helping on to to our same Based the factors previous the in to On we understand chart, four I'll one topline hold. is Slide but each over on key of last grow is an these the that take you XX. revenue we revenue. been right to revenue. the easy the year, has think up enough, which growth investors quarter. previous are in to direction. growth XX, on a good quickly And if strategy

is is goals our sales one of which direct the Jim First Crouse, Capstone team our new by year. lead strategic for

and in they're microgrid global term opportunity to deployments. national partnerships growth, new rental rollouts long we win better large customers, projects, larger a have tasked We initiative part customer large even with are all this of securing scale targeting

This new margin and customers. supplier. Simply drive to lower quality put, warranty build repeat Second FPP is more about higher improved leading better is reliability, parts rates. cost

Key Third program four can new national in New the developed programs. is accounts per and year. Gold that that a Account least who customers on focus This megawatts is at growth key list targeted a deploy target pricing is

geographies, Next on for more new better not Six with our And hydrogen and adding to our ever continue see as need ultimate is to particularly are These means the marketing more Eastern which solutions. expanding product CHP prime hydrogen distributors. in reach customers of is a fire shots we services. -- Middle new we to XXX% our and new might that products goal East. base, trained microgrid Africa increasing might markets CCHP hydrogen interest large Europe, and services. operating and This goal the and our be distributors in on potential is with more digital and familiar release be

through and awareness of Capstone website markets. updates, do, this accomplishing unique Energy energy strategy branding customized in campaigns, our are overlooked We Green IndyCar marketing today's we which be cannot by building and what

positioned financial energy I'll factors, growth and the to will be these call leader for as executing With a quarter, these discuss six second Eric I by the against beyond goals. XXXX now to over Capstone details our believe results in turn fiscal green the of

Darren. Thanks

Now I'll financial detail fiscal for second XXXX. review results more the in our quarter of

XX% for quarter fiscal and up XXXX, in the XXXX, by the year XX of prior revenue heavily as of more XXXX. in see was the the quarter you of at will quarter $XX.X impacted million the had Slide revenue financial Turning accessories was COVID-XX to results second $X.X to million quarter project up million Product million compared second fiscal $X.X from fiscal list. second XX% which $XX.X

prior business plan, were year year plan. in by revenue parts from COVID-XX $X.X period, to the partially cost was travel expenses measures implemented to ago of lower a service service saving furloughs, ago in year we XX%, While revenue XXXX. as being operating up costs fee Gross and increased business parts. a long our and from down product period. subscription was and the million prior pay support volume due second term things, restrictions, and the our $X.X margin due of continuity among percentage distributor in XX% cuts, as where Total quarter which Again, was $X.X higher FPP our other to the contracts, million, $X.X lower in year expenses in XX% the COVID-XX of million rentals million continuity includes offset $X.X to million such due fiscal primarily

compared primarily expenses million fiscal the operating EBITDA fiscal a increase of quarter $X.X adjusted $X.X second a net Adjusted just XXXX. settlement negative fiscal loss Additionally, $X.X to in million in loss of the EBITDA discussed. million $X.X The was due the in we had the $X legal second to in of loss quarter. to increase million for Net related net was quarter negative of in quarter non-recurring XXXX second employment million XXXX. compared was

quarter expense from million Turing settlements discussed legal the fiscal benefited The benefits adjusted business COVID-XX XXXX $X.X above. expense related of gross to from The of removed continuity XX. from Slide plan, was reductions margin EBITDA. employment second plus the

revenue six $XX.X in financial XXXX, up the the see to which results compared You'll months million XXXX. six months million had the for at XX, September XX% $XX.X of ended first fiscal

year fiscal was As as operating to margin to months from Total in and to more by increased of the revenue the lower the ago year impacted million million the was percentage the in year the costs XX%, down first plan. Product million accessories $XX.X due the service $X.X $XX.X continuity the heavily was fiscal six six prior prior up period and plan. due of $XX.X in revenue expenses lower continuity million XXXX prior million parts year $XX.X XX% Again, was project of in COVID-XX $X.X primarily XXXX. the business from months due in first a period, Gross from X%, million business from to $XX.X live. in XX% up ago revenue while year COVID-XX expenses period. were million

and by to the the Adjusted forgiveness EBITDA period. benefited was that revenue. of period related quarter. was from EBITDA from PPP to offset the XX, in year again, $X.X partially Additionally, employment legal year million million compared the a $X loss million months in negative $X.X the compared plan, COVID-XX the $X operating we net loss was expense negative offset expenses related was Once to adjusted higher increasing of reductions prior year discussed period. for to in million net business the by of of the had prior million quarter. loss prior $X.X settlements increase The second our September $X.X income XXXX loan continuity last ended six partially in primarily That due the just million

changes you'll flow balance million to $XX.X well was anticipated building than working million $XX.X decreased XX, our $XX.X March $X.X sales to lower by for see XXXX. million in well the planned net used the Cash operating in quarters. million fleet to the in and due Slide loss, cash increases to the as of The rental growth product for use sheet select items. sales by coming primarily activities driven Turning as driven on as compared was inventory partially buildup quarter. as capital the cash product for quarter, Cash XX, the

our speak fleet accounts XX.X the P&L. We a experienced And both receivable rental to Additionally, part five the million goals delayed a impact C-XXXX we the to why revenue. of growing slide revenue, the FPP percentage revenue. an $XXX,XXX period margin the of highlight sale quarter wanted spare defective rental. FPP a the a spare with plan rental accrued This COVID-XX a XX, sale think over with shows here I year of fleet parts approximately we Slide and due Over remediation as want our themselves impact continue in with approximately million of product replace C-XXXX sale recent generate and product which to approximately generate margin fourth five margin can sales, that's the year year. vendor to of approximately a of to megawatts in parts continued XX, approximately pandemic. margin of a fleet. for can revenue product our XX% of rental one we've margin C-XXXX Slide and the with mentioned to revenue, with we a it's that the percentage key XX% $X.X can sale C-XXXX a margin. we a collections generate XXXX. with to a $X.X been million numbers strategic rental of on financial of period, with a million products But why revenue field, contract the for XX% an C-XXXX for C-XXXX X show On $X.X fleet The there building the the earlier, illustrate contract as rental fiscal was

of column, XXXX. show then have On In take the the a we wanted million model, with additional of see all would and the million fleet we result. XXXX from the fleet. $X.X asset of We various shows back of At fiscal fiscal and rent. turn XX, We would quarter $X.X have added we in EBITDA. model positive million the XX.X in million $X.X would Slide revenue. XXXX the megawatt actuals to the an in the assume megawatt rental it see generated and negative QX ending a $X.X quarter have illustration or EBITDA with On have the of fleet in $X.X the positive the on were the further quarter right December was this the EBITDA making left adjusted column, $X.X million adjusted call on XX EBITDA Darren? that column, rental one a Darren. EBITDA additional step revenue approximately rental units revenue we what that XX, megawatt the but took We P&L quarter to adjusted generated in that we point, XX.X QX impact asset same million I'll X% an

At business revenue. profitability Eric, model Green and it's Capstone very of the as name growth Energy and Energy you, of the our line game from a Service recurring end the revenue for top increased day, the is Thank helpful.

our to higher realize transformation continue Capstone we we to As expect growth Energy Green levels.

on to about need are business segments and costs we rates, growth laser to evaluate previously, growth each turn We focused growth, fixed it quarterly part discussed we that, look of as future future to driving the on Slide let's our essential XX. our revenue As recurring potential. leveraging think for at it's higher Based and profitability.

point image and at rate business. a mature business expect portions newer of a traditional highlights business. First we other that our this lower distributor our grow That to is relatively global at

positive a expand pointed rental as key a Energy We the sustained and business long profitability driver cash we expect for out term as Eric to build Service quickly flows. as this we targeting as and fleet out, our are

focused microgrid is as new team to larger want rollouts, well we potential having as growth that our green as sales offerings, similar the and and view solution most on are after global product the pandemic. expanded high back to countries direct new U.S. Our customer build

Lastly, of our both help in could M&A products services Jeff growth as and facilities U.K. our having initiatives and and underutilized led us manufacturing the and view our U.S. high grow it we potential, Foster the strategic by a portfolio leverage

want Let's years. turn Today, consumers Slide Slide and goals of to older compared that Slide that business behavior customer do, adoption also statistics want highlighted XX. more younger our likely recent Sustainability what are comprises of eco to on customers the and summaries increased we and ethical this reliability CNI a a want generations. concerned According sustainable a energy quality. their work a customers are the supply, the save change brand. lower of XX, and the we've loyalty, Today, to From products end of to it carbon to second to trusted environment, solution they solutions to strategic product This competitive Working and manage our energy as at sustainable returned customer. meets Capstone Capstone our today. customers reasons, with with XX% energy of needs. flexible significantly power consumer XX% purchases. and package energy of most mind study, XX. buyers our footprint, This for each microgrid partner. their and Z, aware only they most consumers in increasingly to to we in helping can then their to behavior money. reliable reach helps Nielsen reduction Not the reduce only means Slide and a their willing an feeds from the some can what pay that solutions self-sufficient XX, want delivery, for term infrastructure. environmental management, to step into we enables are operation green smarter a help with the Gen remotely. also to Green the monitor customers as to keeping align all more microturbines practices is needs plant maintain XXX% to impact energy highest analyze eco comes to they long the is the customers with we design, Energy second carbon green customers said we users impact only every these way costs, customers a have energy X/X Most that be when Turn with key their their needs, hear of comprehensive aware is and to we would and mindsets deliver customers. the population will to the a build higher Capstone to which up plant able world's energy provider, the

million an tons carbon. you three to million approximately can estimated you turn of and that the customers If Slide XX, have over X XX. see Slide use last years, we saved $XXX end our

want XX. Let's Slide line points. last business catalysts run key out it for not of every to Capstone Slide expect slide the through Green sets some is the and to I Energy. go of some will XX but highlight our then I item,

lastly, Energy Foster added projects earlier. importance XXXX. positive have excited today we of all highlight want Operator? our all analysts. in well. the one far in strategic to things market addressable growth. the discussed again, strong and want fastest to for And But a significantly path pipeline a front sales dedicated some solution that, we the Direct revenue once us discussed I like With First Capstone business We team business we're questions M&A, we of by rental our of or to few the the are equal we're and rentals Green executives, stress take to EBITDA of recurring being nice that half characteristics. to to With before, TAM. portfolio, very products various discussed that's of extremely the has grew see rental new generated of again when our fiscal and total all, our transformed I'd in these our but senior of detail and to as I Jeff second close in consistent

question Lake [Operator Street Instructions] from Markets. Capital is the coming And from Brown Rob first

live. is line Your

the Good afternoon. nice growth. Good top in quarter progress line

you in if back megawatt detail the of to competence wanted your goal? that into more got kind the rental Just opportunities kind for you half could us leads on some the give XXXX year of and how of

Yes, call a margin us out a got both from distributors we through sales rates contracts. as with say rentals and is total sales. EBITDA more megawatts stressing our we closed in of pipeline growth I top are on well level. pointed no traditional over October, over a closing megawatts a We've importantly, growth those we huge than of absolutely, the rentals much, as new an In much close over very XXX the have the to for line and as revenue and X.X portion is opportunity want of keep announced robust from And of length rentals shorter. direct higher our expectation is quoted our today product pipeline the significant the organization. another

and grow the gas answer going a users March to traditional megawatts customers, and So some in grow Permian by prices for C&I upswing But to as customers. we'll business fleet we’re across oil oil be unique well. are December like CHP, seeing got back where barrel. opportunities and the miners work to or look in how March, board, elsewhere and very the seeing the that. as grow of today, a so hospitality to beyond XX XX business, starting I grow the XX question want industrial we're you opportunity and the We're continue gas We're and oil from starting an verticals product as megawatts put of that lots recently, where to feels much to by to we right us and maintain, per And to we think it. of or there growth megawatts about of kind into then to can for then highly most confident we've market that seen we end intense, cannabis is two end energy market $XX Bitcoin as the from

you do stabilize where kind the will like structure, you sort great, some on direction or cost another? Okay you. see cost one And thank of structure is do or this maybe way of things feel here

would that one? Eric, I on jump Yes,

legal quarter then Yes QX in had also, hits the if the remember, I expense, And look that got and you our we've million racing the settlements our at if mentioned, we was QX. you X.X specifically which quarter. the

out of you're more you around million quarterly $X pull the those if at OpEx. looking quarter, both So

the reasons sales there. direct in expanded add in general, standpoint, much in in facilities but There tactical CapEx the significant one And from recently. probably solution think didn't need. continue the in of expenses big analysis we one-time actual resources have we've the use had We've several cleanest an the the the the we where else. team, U.K. we we isn't both QX quarter and not to quarters in sales But last rentals of any I is U.S. here

lot to a see in don't what costs of I So compared year. new the last we've seen

thank Okay, you I'll again, it over. turn

Thanks, Rob.

Sameer question is Joshi Wainwright. from from coming H. C. next The

is live. line Your

Hey, Darren and Eric Congratulations great quarter. a for on thanks call. my taking

expect be the similar to respective expect gross similar or you margin we systems. to and rented into? to megawatt are there? you profile For If do these markets they segments the you five margins should the to Going similar they the in storage catalyst you sold, see see sell example, do profile to is XX expect what see as that are microturbines if forward,

be conversation when new its the products looking megawatts rate into going at X, module Yes, I interesting grows you selling were very, as we're they're cost that's are than the margins margin challenging to you have Hughes our an structure. XX and Baker know, manufacturers XX different turbines, a think solar market. The ourselves. company the going Obviously, a manufacture to

think then So very then be offering margin. solution all energy the storage, put bring product that benefits to tight it and bring we know, with together will unique, think, when battery solar, the But our and obviously you can customers. I FPP, somewhat those a we on I around and controls and

be So our I uplift competitors. faster we rentals, think depend we'll margin get our going think on to But from mix. a, The business. that's grow it's just positive compared obviously, highest margin that I to

than the faster business we and to the as flow. line importantly, blended margins parts that's XX% in to want but cash want in So But I grow range. XX% to other going we we grow more to general, of good want top see rentals think help,

to going that's us. that key think I so be And for

with change double not Our OpEx OpEx very we or our revenue, which is significantly going key. is little on triple to very line, I change could think

the nice to don't providers, the lead some our have stuffs. network of our - One we as things in most of also cases. with this product inventory all It's long not

in We're a has our office it in increasing also capacity his petting give at think at Kirk plants. I unique looking So a done he great team dynamic. manufacturing does job the us

our that And partners some absorb is manufacturing of so today, do network of some overhead maybe some we which helpful. help will our very can for

and the as products Our know, overhead very through on are we product margins, can absorption quarter. how driven you many put

was that no, three mentioned and yes question or inventory. color. And actually a two helpful have on you inventory Yes, part

build think the chain supply Eric but up supply rental chain guarding I both some you mentioned, and issues, for fleet. against also

may fiscal you see a we as into, in have inventory time. of XXXX at because some Should go cash So XX that into - megawatts move and buildup? of XXXX flow point target pressure

flow definitely, This defective money year. buildup. million we we already of had cash this happening $X for the things last because three spending seen which kind once, settlement part, Well at you've inventory had got the we're three, year, we've the pressure of year, money but the

So in that that's inventory taking replace part to field. the

sure rentals and current happening. sales, in remarks, year. in that any We we're the make any more then product not supply So everything we to in can built And in for And extremely deployed have we prepared quarter it's is this I so shipping that XX. impacting. should through that There circuit not by not mentioned boards you that's finish that printed rental steel, is this units then We happening wood, is electronics, rental are, sure copper, stainless you controls, batteries, things are we or in fiscal obviously fleet the many need fleet we roof. as costs December make short-term my that's that handle simultaneously third steel, business new but And building challenging. its than know, issue lose to have from know, building this the always up. chain COVID

so find open our market the out and go to can buy second definitely creative, get had get we on supply, of we've And hands whatever sources on. materials

whatever inventory those and orders office growth it’s hate able we Kirk as a think to fulfill we inventory our his turns, have hit to not can cycle been significant be we to grab or have of supply just get, So to of regardless team business. yes, scrambling issues. of rentals those this, it, fairly because definitely We'd make chain we sure

orders sold, also Understood size the that color one sales got it. last larger on the of customers, larger direct is better a And systems it this then team wanted being in for me, of one these that? customers the targeting terms that for is just targeting

Yes, customers. going specifically experience technology. after so they're who already Capstone with customers We task with are selling have larger to the

four Gold scale per you have we a level Key customers, industrial rollout. if do part can done now one We've and year, kind in we to to larger trying So and We're distributors. at can megawatts multiyear take project the customers, of hotels, Account higher a one least rollouts. they a see folks leverage think specifically developed know, for relationship program, our that of hospitals, world maybe a of that is,

that so at. And limits kind folks the looking we're of of some

I so, and reduction carbon have capsule are goals, pressures, who set find folks experience. it's to trying really microturbine those already And a good the ones think have a know, targeting have that you ESG

a lot So can Marriott's. carpets, it's a got talking be, got line. as Capstone and got if New well. sites of across in of reduction, as we and who's a with anybody mean, IndyCar America. be, a is it experience, relationship in But great want them, goal example help ideas DHL love I help the have other who's to North about brand find up we Mohawk that ESG, to York, carbon as hotel a and from are any know, project They've know, good we'd an you and you to them it can customer we them then Pepsi some chains far flange folks

the toward to always have Honda's as and IndyCar going be goals. think, of great to them bigger another about far as helping size bigger So product, projects. I another tend We're wherever some to But meet doesn't help their help. of case. that talking we're want carbon they you customers example, partner, them products

micro the a and product want a to to put XX they more We that are. looking not to We partner. turbines, to they and green at and them the whatever for. we're the And sell want project, we equipment requirements customers, a close to are to as project program want energy year for we based just whether get maintain XX battery put a Baker, know, FTP solar, want savings the biogas, we around stop And shop carbon so, Hughes, long-term solutions, relationship micro solution be think you or be savings best it's their XX, I look place. going make in monitor the grid their importantly, their one sure storage, financial

my taking call. for Darren Thanks sense. makes that Yes,

No problem Sameer.

Tower [Operator Instructions] The next from Water Research. question is from Severson coming Shawn

live. is line Your

Hey hello, everyone.

Hi Shawn.

or and So you I it be what as growth a can of a obviously, was even view if to you from couldn't or expectations pick if utility this charge anybody's for a, that intrigued one-off particularly aware think develop with you know, and garage, like really understand will are application? you you just EV? that to something problems you this as Darren or how point you charging as for close with the the EV up massive or I do to in have a win I this Yes, come is can meaningful this about and everybody's mean, with, run partnering company know, do and a like parking would people trying develop

CHP/CCHP, growth Yes, enough there's as for us. and where power, got an no I or not with we've locations in area vehicle in charging, combined vehicle area seen you've a electric think electric charging definitely, demand. play best remote We is

then, on you of with, definitely, amount need system. they So I to some those in application or and you retail put large a don't great got who've a in employees, to also vehicles, limited CHP utility of or customers a charging I station, storage, utility, large additional there's consumers, infrastructure of want parts vehicle But space. a big solar residential where the see rigs a charge put charge that's think know, larger trucks, then to battery or think some you and is and playing campuses,

expansion this area I And for us. of think is so an definitely,

think amount to at need some going the are for of not out, bit, standards street. hit we the you of the local vehicles, of going as quite to utilities if and the a I some you’re be pointed electric could the markets on ready change requirements the, that and

it's going to the right. CHP for But you, it of need part really

that? say you industrial something or like, complexes campuses like So or

would - remote sweet Yes applications. be absolutely that or spot our

Yes.

a hydrogen, that's if source solution. can are renewable on and and applications that definitely or campus can applications neat up But charge set great. perfect remote settings run we hydrogen be we If or good. Yes, a create vehicles would biogas

be there it same right, of like which next This next I you getting look terms be in going the go agreements? on of to the customers, to mix fill in trends rentals, any size were from your would XX of to if and and would more you Is next think that that say see reasonable. bigger ball question through to room XX of mix industries the the pipeline Is tranche likely same there it rental that here terms year? to put crystal out the the in is

out we're as the think look side we didn't we’re at there. realize bigger opportunities that we rental on I seeing Yes, it,

use think in a Caribbean, likelihood I we or end rental interesting there's in or a permanent bigger certain XX rent a months, So machine world rentals area is of the high plant. some machine a especially with later, bigger another rental there's opportunities, for a very Or then seen we've LT-X put larger in fleet, they up purchase power. the or with parts our for

think that's I So very interesting.

really how that opportunity an big think I arms new our still cannabis and us get to are around be. Bitcoin the can markets for too

us have and kind years megawatts that business This mousetrap expanding, I We that pipeline with traditional is weren't definitely, so business to essentially ago, like. of in, evolving. kind And or a found, excited way. to better, be it's market for start-up better we it's opportunities. what think months XX the our fits the two the and and but XXX about got we ago, for product oil C&I and very, and a more the those look you a a But more go our to over gas engines. know of issues competitive customers really address very of definitely we're and internal this than combustion it better. still traditional flat treat where know, spots that in need we've finding can We've

Our lifecycle the anything costs on are superior to most market.

older Our product technologies are. with much sales prices are more our rental than rates dirtier competitive

huge So I think a margin area impact has cash it's for obviously for a very and growth us. us revenue flow recurring good and

question Thanks, Darren. rentals around picture, grid is last My bigger deployment. and guess, I and micro

yet? behind same of principles up that any broader what of sense it's in companies grid, you service a sheet strain rentals. to a as a too is your basically balance doing and, micro in the grid energy mean, sources, the alley to context into you're make supply not or much of from it that just, big rent are USB generators, you know the power things into fit storage, and to, that being, fit rental the micro I that does solar wrapped So and you you one are opportunities know, in context? when that? know, all talking power Does business there you're around about, too and using somebody that Is and other things how and

looking No, their - at, lease properties, lot that of think hindrance a definitely, customers them. and our area we're for a becomes an it's I

they've property, sure, amount left lease, the of of got, renting in a want lot them want with uncertainty only a be And stay looking But ex they and them the not do they're sense. years makes Definitely they're going cut own and costs. their their they know you of especially the energy that on system so, if facility. to or leasing and to and world, today, green to system a don't

or reduce solution see yet we're micro think we reason complete so happen And we I'm to think, market. energy lease. five-year grid, a I've high but a that see got a at and couldn't. customer battery And need a year, rented But yet, that no solution cost I says, my I storage next the PV look, I footprint, there's that or haven't going, in we'll carbon we'll only

a we think that efficiency my move going could products for, partners the in solution products So so my around rental happen. a And I certainly energy me give customer-to-customer. from to long-term needs. those on is looking grid right that micro reduction that that five-year , carbon meets are for that We're

a our get we become, more So I Energy into behind - products. stand flexible we can think the still the but as more Service,

have what of who is energy, think kind you the to the outcome in and want. the they I business want, of about morning one somebody the that have shop either right result rent the right issue. be make o'clock they when customers And product, sure going two know, at that's and green really there or an They buy. stop cares will their of

Great, thanks, Darren.

you. Thank

question next is is Michael, The coming from from line live. Noble Michael Markets. Heim Capital your

Thanks, issues was answered I timing gross builds. or negative of the the have product margins I inventory you overhead think might to kind ask about going that But about talking for division. and

help when margins gross Let of margin and as service? past view question this near the back that's that's division double-digits? low to issues? to grow maybe rephrase this the getting there get more the a some we parts you we is a timing me Do see of Or kind other should that division way, business is the really

to I barrel, going to low or a we We the that the the in building level definitely FPP our having and margins was a know, times of think that are, it $XXX we to margin when But enables profitable parts spare If program were positive are we're were No, definitely, two mid-XXs. business, the fleet. But be doing XX% when just XX%. product quarter our three seeing, It's we're we see not, because mid-teens. rental Mercedes you margins a in cranking can today. Chevy. oil products a very never out, XX% against selling and

parts the without, business, when gives I the of margin think does in amounts question, of of combustion go utility the after treatment. your so huge part when greener, our ability limited up really in us as second higher continuously, and enables run engines And are changes rates having energy you their those becomes to the products said internal

I a in day cost Our in Caterpillar Obviously, a year. improve. will than competitiveness megawatt engines more do builds

fact scale XX% companies is business probably reasonable to margin when build definitely, that we're But the scale actually small huge So think, with batch a impressive. again. expectation I is against competing XX% such pretty this these we

the would Eric, quarter-over-quarter? large then in and you address Okay, rise share count

the didn't We use or our offering quarter. - any at during do market the offering

don't think very much. went So it I up

were numbers on the that I in those? average am XX I'm Because around versus wrong quarter looking June XX million million at

were I as XX the in think around we well. quarter million June

then with maybe gives do position or get finally, see cash as uncomfortable we cash start your little position? level the a And a what bit Okay. little you lower, to

the this Yes, I the got in think if you look cash heavy usage, internal plan. cash we were that flow we plan two Again, year, fiscal at, for this we're first a settlements, time. quarters the for year back, fleet building you it the over cash then as and spending rental in cash last million get out $X the year, a, beginning, our

a the Our is, shortest on is XX is to the the contract simple plus with payback on our longest year two and three about years depending years rental units asset.

as different been lot heavily a I fairly of has be has a with But working still And, in more COVID. depending flow expected Eric supply chain mentioned been So we we this obviously, to where sluggish distributors heavy the the because things, our AR world. COVID mentioned. obviously, fairly are cash that you challenging of thought, are impact. means capital than issues, year,

Italy, If in you're in you're you're struggling. Colombia, India, Mexico if Australia, if in even

smaller, XX moving will shorter better approach range, burn perspective cash we I QX. QX should I better neutral should a in megawatts, So those that And and cash QX. think as term the we be into and issues, from think are be be EBITDA

cash going from a concerned get as forward. we okay, overly units of not be amount we're So and cash perspective. positive, up we're quarter, sheet the that balance to pretty EBITDA every fair confident rental are we're Because about profitable and throwing going

you. Okay, thank

you. Thank

to now Darren to for Jamison closing back I'd turn the remarks. call like

But lot Well and talk the of thanks, that the hit assembled leadership we're A was performing to I I'm closing a kind the challenging I chain of have going simplest starting I environments because sales lot with of some you plant. COVID-related limitations that see doing. still starting to team would on We're questions, haven't folks as guys. very should COVID happy one every and go - the met person business at about say better. guess our and flights. to be we've We're thing you of be we airplanes supply customers. know, issues. the able customers of more to see remarks. get Despite, is things getting planned. good our with direct work in yet on Still here

process I are where commissioned. the is under still the interesting commissioned being is are in great shown themselves that of lot units or we've being results. think Even fleet a or rental and with yet last quarters things what the in two done is over lot of haven't today, our three contract a of there's

couple seen fairly haven't our building the you rental or the So they're our the Obviously substantially fleets impact on quarters. revenue next EBITDA.

partners, in margins those complete yet, lot storage battery project micro on all PV and or QX. are fairly pick large new a press A or rental grid network seen significant the you of know, yet, a are going revenue you up, haven't So to a coming. solution release the QX, a project, QX,

I expand an know, coming our turbines look year-over-year we've that can down of we a pipe XX%, strong, products developed have that order, give think you relationship so, increase getting you excited with some with and our Hughes XX relationship, very that fleet. our the got happy into excited idea, revenue very rental started right Baker they hope projects to interesting are you XX megawatt one that selling one to pipeline Baker very these we've is their to levels revenue, To that the with very Hughes win. are at

the, level, of are getting And the you Board confident how increasing strength we'll I'm As to XX% I us. which to hydrogen engineering March like hydrogen be projects, the, and help into hearing government discuss factors. doing of frankly, then areas are us numbers big more hydrogen to develop spend can see XXX% Those to hydrogen, our for hydrogen be at there driven price more the hydrogen a we'll hydrogen blending. And for that's DOE should highly quarter. team by great every poured at that mentioned, the the XX. be money will biogas and reduce important. job and U.S. We're look that have hydrogen produce we will product, is a really price fast very by market of projects prepared Don

very that's So interesting.

distributors. build back would that better of and is got our framework U.S. impact those to any be the of impact really we're going Biden looking do, seen up. administration program. Europe haven't a for see Obviously, has stuff We very coming new to the I his customers in on spilled the lot Capstone positive that limited back for But think in our and green

program side going getting changing think solutions. his at opportunities. there's We've interesting be to on for horizon. started to again, is be Jeff to get us can different all We're think build want but the back our We're I look portfolio I I focus place energy, and quarter-in, And we build for and quarter-out, our positive back think, to been seeing the every we game out really the M&A there. the three very shareholders. times, then just do with we better EBITDA result green worldwide, team excited is a so think the some to there and things that'll quarter, right And there

in excited look yet unfortunately if work that at me, for in very I've see we're shortly. that results, years. right hard window I we will bought And I'm you of lot that there's bought ever XX so form, see than And more to now can't a last we the see doing stock our opened but

bright, of to energy that in energy not the is So of tells energy am for the only but see future excited you Capstone, efficiency, Capstone I in where Thank add because for my I you. our we're is to be I'll extraordinarily forward and quarter. to the look close ahead the the world part it. talking excited everybody and is third resiliency, With call personal going, anybody space, that that, how green position shares, and in go to

and call. Thank this conference you, gentlemen, ladies conclude today's does

have lines your for time You this day. your disconnect at may wonderful and phone Thank you a participation.