Transforming and Expanding the Business to Leverage the Fast-Growing Microgrid Megatrend



KEY POINTS
  • Capstone has advanced its position in the fast-growing microgrid or distributed energy resources (DER) industry through its transformation into a comprehensive energy solutions provider renamed Capstone Green Energy.
  • Their proprietary microturbine energy technology solution remains the cornerstone, but now the company has expanded the toolbox to leverage the fast-growing microgrid industry with alternative energy conversion products, energy storage products, and advanced hydrogen products to provide customers a total green energy solution.
  • According to Capstone, its platform can reduce energy costs, ensure power availability, and meet CO2 reduction goals with a near-zero emissions profile, which also positions the product within a customer's Environmental, Social & Governance (ESG) framework.
  • It is likely that broader industry trends, driven by regulation as well as corporate responsibility, will continue to favor technologies and services that will help companies reduce their carbon footprint.
  • The global microgrid market is expected to grow at a CAGR of 19% over the period of 2020-2025 driven by increased deployment of renewable energy sources in microgrids.
  • Capstone's business has pivoted over the last 12 months to increasingly focus on developing an energy as a service business (EaaS) around its core energy technology platform, culminating in the company's formal transition to Capstone Green Energy.
  • If the company can continue to execute on an EaaS strategy, it should lead to more predictable and stable cash flows, despite product orders and backlog experiencing construction-related variability quarter to quarter.
  • The company recently reached adjusted EBITDA breakeven following a multi-year cost cutting and business efficiency effort. The shift to EaaS has also acutely demonstrated its importance and positive impact on profitability.
  • In addition to the existing global distributor sales model, Capstone has initiated a direct national account effort, which management believes will better target more substantial corporate accounts with the potential to land larger orders for multiple customer locations.

CHARTING THE PATH

Capstone has advanced its position in the fast-growing microgrid or distributed energy resources (DER) industry through its transformation into a comprehensive energy solutions provider renamed Capstone Green Energy.

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