CHATSWORTH, CALIF.—Capstone Turbine Corp., the world’s leading clean technology manufacturer of microturbine energy systems, announced that it has recently signed a 2 megawatt (MW) Factory Protection Plan (FPP) multi-year contract with its Hawaiian distributor Critchfield Pacific for a global resort hotel chain on the island of Maui. This adds to the established, multi-year contract for the same resort hotel chain at a large property on the Hawaiian island of Kaui. Total FPP long-term contract coverage for Capstone units operating in Hawaii is now 74 percent as a result of the latest multi-megawatt FPP contract.
“We anticipate accelerated adoption of our microturbines at resort hotels in island locations like Hawaii that are subjected to inclement weather events such as hurricanes, typhoons or tropical storms,” said Jeff Foster, Capstone’s Senior Vice President of Customer Service and Quality. “These weather events can subsequently result in grid outages which are also driving the adoption of our industry-leading FPPs to guarantee high performance and availability of these critical on-site power generation assets. Large multi-year contracts like these are helping to boost the growth of our FPP revenue despite product headwinds from various macroeconomic events.”
Capstone’s FPP is a comprehensive maintenance program designed to give financial peace of mind to customers by setting the cost at a fixed rate for both scheduled and unscheduled maintenance for the life of the microturbine product. The FPP contract enables customers to have predictable and stable maintenance costs over the life of the equipment and protects the users from unscheduled maintenance expenditures.
Many Benefits from Microturbine Systems
“Hotel and resort owners in island locations are beginning to recognize the true value of on-site power generation for combined heat and power and combined cooling heat and power, or CHP/CCHP, especially after the devastating impact of the most recent round of hurricanes in the southeast U.S. and the Caribbean Islands,” said Darren Jamison, Capstone’s President and Chief Executive Officer. “Property owners are becoming more proactive by working to put on-site energy assets in place to guarantee the continued operations of their critical loads at their island-based hospitality facilities. Capstone microturbines are excellent for enabling both on-site prime power generation and CHP/CCHP. Capstone’s industry-leading comprehensive long-term FPP service contracts provide a complete end-to-end solution to cost-effectively assure operations at these higher risk island locations.”
“Now more than ever customers recognize the need to reduce operational risks of grid outages caused by unpredictable weather,” said Jim Crouse, Capstone Executive Vice President of Sales and Marketing. “The recent hurricanes are helping to bring forth a greater awareness to Capstone’s innovative microturbine product and service offerings, much as they had done so in the past within the greater New York area. Since the devastation of Hurricane Sandy in 2012, our local distribution partner in New York, RSP Energy Systems, currently has 81 percent of their fleet under long-term FPPs.”
“The combination of the increased market awareness of Capstone microturbines due to the recent hurricanes, and the benefit of both our highly reliable microturbine products for on-site generation and our industry-leading long-term FPP service contracts, are the foundation of our multi-point strategic path towards achieving Adjusted EBITDA breakeven in the near term,” said Jayme Brooks, Capstone’s Chief Financial Officer and Chief Accounting Officer.
Adjusted EBITDA is defined as net income before interest, provision for income taxes, depreciation and amortization expense, stock-based compensation expense and the change in warrant valuation. Adjusted EBITDA is not a measure of liquidity or financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities as a measure of our liquidity.