Q4 2021 Capstone Green Energy Corp Earnings Call
[music].
Good day, ladies and gentlemen, and welcome to your Capstone Green Energy earnings Conference call and webcast for the financial results for the fourth quarter and full fiscal year 2021 ended on March 31.2021.
All lines have been placed in a listen only mode and there will be a question and answer 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 your host Mr. Colby Petersen corporate counsel, Sir the floor is yours.
Thank you very much.
Good afternoon, and thank you for joining today's fiscal 2021 for fourth quarter and full year conference call on the call with me today is Darren Jamison Capstone Green Energy's, President and Chief Executive Officer, and Eric Henken, Chief Financial Officer.
Today Capstone Green energy issued its earnings release for the fourth quarter and full year result.
<unk> for the fiscal 2021.
We will be referring to slides that can be found on our website under the investor Relations section during the call today I want to remind everyone that this conference call contains estimates and forward looking statements representing the company's views as of today June 10.2021.
Capstone disclaims any obligations to.
The update or revise these statements to reflect future events or circumstances, you should not place undue reliance on these forward looking statements because they involve known and unknown risks uncertainties and other factors that are in some cases beyond our control.
Please refer to the safe Harbor provisions set forth on slide 2 and in Capstone filings.
Ladies and exchange Commission for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements.
Please note that as Darren and Eric go through the discussion today when they mentioned EBITDA. They are referring to adjusted EBITDA and the reconciliations in our presentation appendix I would now like.
Like to turn the call over to Darren Jamison, President and Chief Executive Officer. Thank you Colby and good afternoon, everyone. Thank you for joining us today to review of our fourth quarter and full year fiscal 2021 results ending March 31.2021.
For getting into specific financial results I'd like to review recent financial highlights from the fourth quarter.
And provide an update on our adjusted EBITDA improvement initiatives. So.
So let's go ahead and start with slide 4.
On slide 4 we've outlined some of the financial highlights from the fourth quarter I will now run through each item, but I would like to draw your attention to a couple of of the more important events beginning with revenue.
Revenue was up nicely.
Nicely compared to last year's fourth quarter, although last year was very tough with COVID-19 related issues. The growth is still significant with revenue of $17.9 million for the quarter up from $11.6 million year over year.
Our key metric of adjusted EBITDA, excluding executive bonus was negative $1.9 million for the quarter compared.
2 of negative $5 million in the same period of the previous year, and we posted positive cash from operations of $5.1 million, including a 5 million legal settlement compared to cash used in operations of $4 million in the fourth quarter last year, so that the $9.1 million improvement year over year.
So even without the settlement we cross.
Crossover and the positive cash from operations for the quarter.
I know I've spoken about this frequently but having a solid balance sheet is critical to executing our growth strategy and build business relationships with larger customers I am happy to say the cash increased to $49.5 million compared to $15.1 million.
Compared to the end of last year.
Moving on to slide 5.
Slide 5 shows the full year fiscal 2021, we generated positive $1.7 million cash from operating activities compared to a loss of $19.7 million last year.
So we generated positive.
Positive cash of $1.7 million versus the loss of $19.7 million last year. This is extremely significant inflection point for capstone and represents the most of the cash generated in company history.
Revenue was down slightly 2% year over year, despite the ongoing numerous.
Dollars at external headwinds adjusted EBITDA loss, excluding executive bonus was only 4 million versus $13.2 million a year ago.
Also not to be overlooked is the fact that we refinance our Goldman Sachs..3 year term note at a lower rate and also upsized it by $20 million again, adding flexibility to our balance sheet.
Turning to slide 6.
The net result of our efforts is best shown on this slide we achieved 92, 5% of our stated adjusted EBITDA target I know we've talked about this every quarter throughout fiscal 2021, but here. We are finally with the results of all of those efforts despite the ongoing COVID-19 issues.
<unk> that of lasted much longer than we originally anticipated.
I am very proud of what we've accomplished in fiscal 2021, we.
We need to discuss the future of momentum we're carrying into fiscal 2022 as I have discussed we have done an excellent job in cost cutting and efficiencies in the business for now laser.
We're focused on growing topline revenue as we exit COVID-19.
Now, it's going to move on to slide 7.
This is where the future begins with gross product bookings in the fourth quarter, we reached $12.7 million, which despite legacy COVID-19 impact was well above the fourth quarter last year and.
And represents a very nice 40% growth over that period.
For the prior quarter.
Even if you look at it sequentially, we made solid progress of 21% from the third quarter. This shows the direction, we're going and although many of these things we have accomplished have been hidden by the impact of the pandemic and our ongoing vendor per quality issue.
Our.
Proud and happy that we're coming out of Covid and the gross product bookings as the leading indicator of better times ahead.
I'll now turn the call over to Eric to provide more details on the solid fourth quarter financial results Eric.
Thanks Darren.
I will now review in detail our financials for the fourth quarter of fiscal 2000.
Which can be found on slides 9 through 11.
As a reminder of the company issued select preliminary fourth quarter results on.
On April 12, 2021, and the results released today are consistent with those preliminary results.
Starting on slide 9.
You will see our.
Our fiscal fourth quarter 2021 results compared to the fourth quarter of fiscal 2020.
Quarter over quarter, we improved in every line item.
With revenue, increasing $6.3 million of 54%.
Up to $17.9 million from $11.6 million last year.
Product.
The 20, <unk>, which is also our energy conversion product revenue increased $5.9 million to $10 million compared to $4.1 million in the prior year quarter.
Parts and service revenue, which is also our energy of the service revenue increased <unk> 4 million to $7.9 million compared.
Compared to $7.5 million.
And the great quarter.
Revenue was up primarily due to the prior quarter being heavily impacted at the start of the COVID-19 pandemic with project delays in site shutdowns.
Gross margin was negative $2.6 million.
For negative 14% of revenue compared to <unk> 5 million are.
In the prior set of revenue in the prior quarter.
Our gross margin was negative in the quarter because of the $4.9 million.
All of the reliability repair accrual for the replacement of remaining high risk failure parts and some of our fielded units due to a former supplier part defect.
Non-GAAP gross margin, which excludes.
For <unk>, depreciation and amortization stock based compensation expense and the.
The reliability repair accrual was $2.7 million.
15% of revenue compared $2.7 million of 6% of revenue in the prior quarter.
The increase in non-GAAP gross margin was primarily due to improvement in.
Of our factory protection plan margins.
Operating expenses were flat at $5.9 million compared to $6 million in the prior year quarter.
However, they were down to $1 million. If you exclude 1 time legal costs and executive bonus expense that existed in the fourth quarter of fiscal 2021, but not in fiscal 'twenty.
That decrease was primarily due to continued savings extending from our COVID-19 business continuity plan.
Net loss was $4.8 million compared to $6.9 million of the prior year quarter.
And adjusted EBITDA, excluding executive bonus was negative $1.9 million compared to negative $5 million in the fourth.
The quarter of fiscal 2020, an improvement of $3.1 million.
Turning to slide 10.
Slide 10 summarizes our full year of fiscal 2021 results over fiscal 2020.
2021 was significantly impacted by Covid as you know and was a very.
Tough year on every level.
Despite this we nearly kept full year revenue flat coming in at $67.6 million versus $16.9 million last year.
We feel this was quite an accomplishment given the environment.
Gross margin was $6.9 million or 10% of revenue.
Compared to 9.
$9 million or 13% of revenue in the prior year.
Non-GAAP gross margin was $12.8 million of <unk>, 19% of revenue compared to $10.2 million for 15% of revenue in the prior year.
The increase in non-GAAP gross margin as a percentage of revenue was primarily due to improvement in our factory protection plan margins as well as overhead.
<unk> cost savings from our COVID-19 business continuity plan.
Operating expenses decreased $5.1 million, the $28 million compared to $25.9 million in the prior year.
However, they decreased $6.6 million to $19.3 million. If you exclude 1 time legal costs related to the supplier.
Flyer settlement and executive bonus expense that existed in fiscal 2021, but not fiscal 2020.
This decrease was primarily due to cost savings from our COVID-19 business continuity plan.
Net loss was $18.4 million compared to $21.9 million in the prior year.
And adjusted EBITDA, excluding executive bonus was the loss.
$4 million compared to a loss of $13.2 million of fiscal 2020.
An improvement of $9.2 million.
On slide 11.
You can see our select balance sheet and cash flow items.
The highlight here is cash and cash equivalents.
As of March 31, 2020.
The 1 we had $49.5 million in cash on hand up from $15..1 as of March 31.2020.
You can also see we managed working capital well with inventory decreasing to $13.7 million as of March 31, 2021 down from $22.7 million as of March 31, 2.
<unk> thousand 20.
Cash is critical to our strategic flexibility, we made great strides in fiscal 2021.
With that I'll turn it back over to Darren.
Thank you, Eric Let's go and focus on slide 13.
Peter will discuss the transition to capstone Green energy and what that means.
And now we will review of this recently in our virtual press release on Earth Day April 20 <unk>.
But I want to run through the highlights again.
We now view of our business and for key strategic business lines.
Let's begin with energy of the servers or Eas. This is critical to continuing our transition to a more predictable cash flows and higher margin.
At the segment includes long term rental contracts long term service contracts of our factory protection plan of Bp's installation services traditional service spare parts leasing power purchase agreements and project financing. It also includes our innovative distributor DS as subscription fee program.
The common denominators among.
This business our steady cash flows.
High visibility and improve margin rates.
Next is our energy conversion technologies or ECT. This is the backbone on which capstone was built and it's based on capstone core micro turbine technology that youre, all familiar with and can operate on a wide range of fuels. These products produced.
<unk> high efficiency, CHP, CHP generating electricity and multiple forms of thermal energy.
In addition, we have secured other key products to add to our offerings versus the Baker Hughes turbine lineup ranging from 5 megawatts of 16 megawatts. This gives us the solution for much higher power applications. This is important.
As many of our target customers loads are under 5 megawatts, but they also of other loads that are over 5 megawatts, which we were unable to easily address before now.
The other additions of <unk>, K and $24.7 solar depots case of our OEM partner in Europe, who is now moving into commercial production of their innovative decentralized CHP systems.
Invert mixed wood residues and electricity and heat from an externally fired capstone micro turbine.
And as many of you know we are also working with 24.7 solar on an extremely fired micro turbine running off solar collector.
We are in the process of assessing 27 solar to help commercialize their concentrated solar product.
And thermal storage solutions, using our manufacturing services and global channels to market.
Moving to energy storage solutions, our SS <unk>.
The storage is 1 of the first and most important additions to of micro grid or even nano grid will be using custom tailored combination of multiple technologies energy storage and monitoring software.
Software, the maximize energy efficiencies lower emissions and could create the resilient systems that meet customers' specific tailored needs.
Talk more about the fourth business line hydrogen in sustainable products in a few minutes.
In the meantime, let's transition to slide 14.
As I want to set out some of the business catalysts I expect.
Capstone Green energy.
I will run through a number of through every line, but I will touch on the highlights of some of the key points first of all we are beginning with the strong industry backdrop.
The Navigant research total of micro grid capacity is expected to grow multi fold over the next decade, reaching 20 gigawatts by 2028.
1 of just 3.5 gigawatts in 2019.
We all know are big market means big growth you can also see the same represented in the upcoming slide 15.
On 1 of the most important factors in our transformation from Capstone turbine Corporation to Capstone Green energy is that it creates a larger.
<unk> total available market or Tam for us to better leverage this industry growth instead of just supplying 1 component of our product of micro grid. We now provide a comprehensive solution and that is a critical difference going forward.
Our solution can encompass all of the parts of the Microgrid not just the micro turbine and this gives us significant opportunities to expand.
Our EAA of strategy as well.
We can't talk about EBITDA ads without mentoring our long term rental program. We are continuing to move into this market by expanding our rental fleet on a quarterly basis, which is backed by our improving balance sheet and expanded service offerings. This is about cash flow and margins, which is the centerpiece of our.
Transformation.
I also want to address that we.
So all of our solutions.
Last year, we need we began by development of our own direct sales solution team focused on topline revenue growth. This internal sales team is poised to leverage existing larger clients and we need to hit more doubles and triples in our business.
Our business scale and topline revenue growth.
National and global customers are critical to executing this plan big customers lead the big orders.
A sample of some of our larger target customers, who already of capstone micro turbine installations as shown in our logo soup on slide 16.
When we talk about cash of the implications of meaningful we're graduating from survival of capital to growth capital and there are numerous opportunities to leverage the solid growth expected for micro grids for.
Furthermore, our strong balance sheet reduces customers' perception of risk, which leads from our orders.
With the stronger balance sheet access to capital we.
And drive for build more partnerships and acquisitions.
To help facilitate this today, we announced we are dedicating a high level of executive resource focus exclusively on the strategic opportunities.
Make no mistake today all of our efforts are based on revenue growth.
We can out of there, it's organic or through acquisition.
Moving to slide 17.
On slide 17, we've seen this before but we have set out our 6 key growth factors and.
And we want to mentioned of our shareholders of give an update on what we're doing.
First of the new direct sales team, which I mentioned, we started pre COVID-19. They are focused on micro grid products.
Rentals and large customer adoption.
Second is our new parts supplier, who has done an amazing job producing the part that we had quality issue before dropping failure rates dramatically. This is simply about building a better quality part leading to improved reliability, providing lower warranty expense higher service contract margins.
But most importantly, simply put maintaining happy customers remains repeat customers.
Third new target pricing programs. This is focused on national and key accounts, we developed a new gold key account program, which is focused on customers, who can deploy a lease for megawatts per year or 1 megawatt per quarter.
<unk> is adding of new distributors in new geographies in particular is the eastern Europe area Africa, and the Middle East. These large markets are prime for our micro grid services and solutions and we need the fire more shots on goal, which means more and better distributors.
Fifth of their new hydrogen product released with the goal of operating at 100% hydrogen the hydrogen.
<unk> economy is here and will run through this in greater detail in a moment.
Sixth is our expanding our digital marketing through our website updates customize marketing campaigns and unique in the car branding strategy.
Please go ahead move on to slide 18.
I want to spend a moment on hydrogen.
Hydrogen and our sustainable product business lines and strategy.
Fuel flexibility has always been a hallmark of capstone and so hydrogen is the next big fuel source, we need to address a new hydrogen solution business mine is leveraging the recently released first commercially available hydrogen base combined heat and power of micro turbine, which.
Can safely run on 10% hydrogen and 90% natural gas.
Importantly, we now have a target for commercial release of of 30% hydrogen 70% of natural gas product by March 31.
2022.
I will also be looking to work with Baker Hughes to advance our 100% hydrogen solution as quickly as possible.
COVID-19 set out some of our patents, we have around hydrogen and we intend to continue to develop of our hydrogen roadmap to a 100% and will develop more patents, obviously along the way.
Lastly, on slide 20, I want to talk a bit about our strategic transactions.
The Microgrid in energy as the service sector are expected to see significant growth.
Growth of the coming years, and we need to continue to position ourselves to maximize our opportunities acquisitions joint ventures or strategic transactions or partnerships should be significant part of that growth. This process begins by having the right people and we have announced today as I said, we are dedicating a high level senior executive to oversee corporate development.
Everything begins with building of target framework that includes the market geography culture technology, and we will be actively looking for additions in the hydrogen microgrid controllers rentals among others.
From there, we'll look to understand how these could fit into the overall capstone green energy strategy and how to leverage both.
Both businesses.
Operator at this time I would like to open the call up from calls from the analyst community.
Thank you ladies and gentlemen, the floor is open for questions. If you of any questions or comments. Please indicate so by pressing star 1 and we have a question coming from Rob Brown from Lake Street capital markets.
Your line of lives.
Good afternoon, Rob.
Hi, Jim.
Following up on your hydrogen strategy I know you're early into it in hiring people, but what are some of the kind of verticals or areas that you think that makes sense to add on to what youre doing in terms of expanding your core.
2 more.
Okay.
We'll definitely hydrogen is an area, we see growth of and we're already seeing a lot of interest for both blended hydrogen renewable natural gas and then of 100% hydrogen I think if you look from a strategic standpoint, the ability to generate hydrogen as well as utilize the hydrogen makes sense so companies that of hydrogen.
100, <unk> would be something we'd probably take a look at.
But definitely I mean hydrogen I think is an area, we're actually surprised at how fast we're seeing new opportunities.
This is something that has really picked up a lot of momentum in the probably the last 18 months and we're seeing new developments new opportunities at a real dedication to hydrogen not just in the U S.
But Europe, we started to see it in Japan about a year ago, Australia. So we're seeing lots of governments and lots of customers very very interest in hydrogen and even customers today that we put in natural gas solutions for.
Are actually talking to us about hydrogen and the ability to convert our product the hydrogen or blended hydrogen in the future.
Okay. Thank you and then on the on the rental business.
How is that demand environment changed have you seen it improve the sort of of normalization or maybe just characterize the rental demand environment, yes. The rental demand it's been picking up nicely I think we're up to about 60 megawatts of pending opportunities obviously with the.
The target fleet size of the 20 megawatts. We're currently at 10.6.
Update the fleet size here in the next few weeks as we get through the end of the quarter. We continue to sign contracts negotiated contracts I would say the oil and gas is coming back online shelves of our biggest customer for rentals in the oil and gas space, but I think the recent.
Stabilization of oil prices and the increase in oil prices has helped.
We're definitely seeing some CHP applications and opportunities.
We're seeing a lot of grow houses opportunities as well as some bitcoin opportunities so definitely a robust kind of diverse pipeline of opportunities.
But we think we'll easily get to our 20 megawatt goal by the end.
For the year of Okay, and then last questions on the reliability repair accrual.
Could you just clarify the.
You know what the scope of that and.
And with that covers and just maybe some clarification on what that is.
Yes, as we move through the legal process. When we finally got completely for the diligence we saw that the.
Scope of the defective parts was larger than we thought.
And so we thought that we're mostly through that issue. So we went ahead and put that accrual in place to take care of all of the remaining units are still in the field with the assumption that the vast majority of them will fail at some point, we'll need to replace them.
<unk> the accrual amount.
The recovery, we got from the vendor of very similar to the.
<unk> roughly $4.9 million of recovered about $5 million of legal settlement through the process. So the good news is well failure rates were 1 per day the.
The last I'll call. It a year ago 18 months ago, we're down to 1 every 10 days, we are seeing the end of debt.
<unk> issue and so we will work for that the next 3 quarters I would say by December.
Should have no more of the old effective part of the field and that will really lead to more happy customers better margin rates more repeat customers.
Having a critical part tissue in the middle of the pandemic with the.
The technology.
Ours is challenging so we're very excited to get through both the the part tissue and the pandemic.
And really see what the the capstone Green energy.
Company can do going forward.
Okay. Thank you I'll turn it over.
Thanks, Rob.
Okay. Your next question is coming from Amit.
Paul from H.
All right.
Amit your line of life.
Thank you.
Alright, Thank you for taking my questions.
Darrin as you come out of this sort of pandemic of Covid environment.
Looking to the fiscal 2020 timeline.
Do you feel that.
Your line is strong enough for you can now get into the position to boost the revenue growth.
Yes, so I think that the.
The next this year is going to be a watershed year for us.
Coming out of Covid with the new direct sales team by building the rental fleet out the.
New hybrid products.
The by the energy of the battery storage products of the different solutions, we put in place the rebranding of the company.
I think we've kind of hitting on all cylinders not to use the phrase.
We're very excited about it the COVID-19 is still a problem for us our distributors in Europe are still struggling and we got some issues in Latin America still.
I think Australia shut down for a week recently.
India still a big burst and so we're not through Covid, there's still some issues here in the U S. But I think we can see the right at the end of the tunnel.
So I think Q1, and Q2 will be okay, but I think Q3, and Q4 are going to be blockbuster for us I think we're really going to get rolling in the back half of our fiscal year.
Understood and sort of with the new.
The branding et cetera, how has that been helping.
The sales team.
The pipeline of them.
Maybe get a bit more of understanding.
Visibility.
Some of you on a person.
Yes, and I know, we've got more than $100 million of pipeline of non kind of capstone core technologies. So baker.
Use of battery storage in the hybrid solution products and that will grow exponentially over the next several quarters, we got over $1 billion of traditional pipeline out there with our distributors. So as the direct sales force is now able to get on airplanes as we learn how to sell and apply the new products and the opportunities.
Youre going to see.
<unk> a lot more opportunity and as I said in my prepared remarks.
Net of selling just the micro turbines in the micro grid being able to sell of the battery storage the solar of the controls.
Your total revenue per project goes up your ability to provide a turnkey solution for a customer to be able to wrap the whole thing in a 20 year FPP factory protection plan.
For here very unique in a lot of customers are our anti natural gas so to be able to come in with other solutions talking about hydrogen talking about battery storage.
Talking about some of our other technologies.
Really helps us have a more comprehensive conversation with customers and educate them on all the different.
Pluses and minus.
As for technology, so very much more of a.
<unk> solutions sales program.
Very much more of a custom program not of kind of off the rack. So we can custom tailor solutions. Our balance sheet is key for the first time I think in the last 6 months I haven't had to talk to a customer about our balance sheet and of viability. So as we continue to grow our balance.
As of each of generating cash from from operating activities for the year is of great milestone for us I look at some of the fuel cell companies that are burning $10 million to $30 million of cash from operations on a quarter by quarter basis or more.
The dilution that they're putting out there. So I think we're in a unique position to have the business model that will generate cash and.
<unk>, both generate topline growth as well I think that'll make it unique in the kind of the clean tech space.
Makes sense.
And with respect to the occupancy margin.
How much more room do you see Darren to improve those margins from current levels of them have you already sort of implemented some of these efforts.
The something that is true.
Coming into play for US no. We've got lots more room on the margin side that the product margins right now are close to zero on any given quarter just because our volumes are so low so as our volumes pick back up again, we'll see the product margin increase we're working hard this year on our vendors and maximizing.
It sort of direct material costs, obviously COVID-19 has impacted our our pricing from our vendors logistics of RMS right now so the supply chain has been challenging over over the last 12 months of the Covid. So I think a lot of improvements in our supply chain costs will of improvements in our topline revenue, which will give us more purchasing power.
And then as we get the.
Our issues with the the bad parts out of the system, you'll see of margins right rates and improve on the service side of the business because of the part fails. It doesn't take out just the single part of takes out of collateral damage in other parts and so youre going to see improvements in our in our service margins each quarter going forward for the next couple of years in our product margins as well as we start to grow and so I think.
Definitely.
Margin expansion with both the improvements of the business the rental fleet as you know is the highest margin.
Business, we have so as we double the size of the rental fleet, that's going to have a nice impact so far.
Many of the room to grow on the margin side.
And that's all of that Darren I think another question the effective.
Thinking of it.
Yeah.
Once again, if there are any remaining questions or comments. Please indicate so by pressing star 1.
We've acquired coming from Shawn Severson from water tower of research Sean Your life.
Alright, thanks payback.
My question is about the.
The gross product.
Bookings in coming out of the quarter exiting the quarter at.
$12.7 how much at all of that that include what you mentioned in terms of the rebound in the oil I mean oil has only been recently up in activity has only been recently picking up so trying to understand.
If that was part of it or that's something to look forward to in the first quarter.
No I think we started to see the leading edge and in the fourth quarter, we should see more in the first quarter.
The oil and gas companies don't move that quickly. So I think youll see more bookings in oil and gas in Q2 and Q3.
Probably by Q4, we should be in really good shape of things continue the way they are continuing.
I think the more people are looking.
For.
Alternative energy solutions Green energy solutions greenhouse gas reduction obviously, the Paris climate accord in the at the mine infrastructure plan I think will be helpful to us. So I think all of that is heading the right direction.
But we've seen.
Growth in our bookings the last 4 quarters, we would hope to keep that going in Q1 and Q2.
But again.
I'm really excited especially of the back half of the year I think that as we sort of.
Getting inputs from all of these revenue sources and some of the new implementations of the new things, we've done sort of contributing the back half of the year of as I said could be it could be really exciting for us.
That's actually lead into my next question is regarding when you look at technology in the services.
To expand the expansion as part of the Microgrid solutions company.
There are the best acquisition candidates just in terms of driving margin for you I mean, it doesn't make sense to 2.5 something in the storage something as you look at all of the different components since you could you.
Can supply into a.
Micro grids of trying to tie that back to your acquisition strategy and obviously the new the New addition, there.
The first step is we put 10000 micro turbines all of the world. Most of those are in some form of the micro grid.
The first step for our distributors and direct sales force has to go try.
By our new products to our existing customer base and so can we add battery storage 2 of CHP installation that doesn't have battery storage today now many of our sites like.
Do have battery storage already but I would say more than half of them do not so I think that that's kind of step 1 I think battery storage is definitely interesting from an M&A perspective, I think controls.
There is there are some improvements we can do 1 of the Microgrid controller side and some interesting technologies out there.
I think there could be something around hydrogen we take a look at.
The rentals growing the rental business is important if we can look at of an acquisition in the right area of an existing rental company that we could swap.
Swap out their traditional engine based.
<unk> for our micro term based solutions that would be an interesting opportunity for us.
And then service wise, if there is something service wise it makes sense for us and so I think we've got a pretty wide open for you.
Here, we've got of balance sheet now I think we've got of business will start generating cash from showing that we just did in the last year.
Putting Jeff Foster 1 of our.
Our top executives solely focused on this ratio of our commitment and that we're going to look for the right thing to do now we don't want to do an acquisition of strategic partnership just for the sake of doing it needs to be accretive it needs to make us more profitable and these make us more competitive.
But I think theres a lot out there.
Some of the Green energy theft company wiser.
Price up a little bit right now from a market cap perspective, but I think that those things are cyclical. So we'll look for the right time and the right opportunity.
The next question is on the rental business, obviously, the lay the groundwork has been waived or anything you've done quite well in the oil and gas industry and can you maybe remind us why that is done.
So why.
R R.
The tip of the sphere, so to speak of the rental business and then why arent other sectors of adopting this because you know you still have the same and the value proposition of the value proposition why not more industrial complexes are of our universities or hospitals or commercial environments.
I got the oil and gas is 1 where they used rentals quite frequently.
Kind of if they don't have utility they'll bring rental machines in their use of renting equipment, whether it's compressors or generators. So I think it's 1 where.
They are already in the process are in the business of renting generators and as a matter of just penetrating the market I think the the heavy.
I think it was in the oil and gas space towards ESG, and lower emissions and lowering the carbon footprint is going to drive more rental opportunity.
You've seen what's happened recently with some of the big majors and some of the.
Impacts they've had for folks looking for them to.
The green are quicker so.
I think that's going to be a good focus for us.
If you look at some of the industrial applications. If you do CHP in the rental of application you've got the chiller that you've got to deal with so in some cases, we're looking at potentially buying the children renting it under the longer term rental we are quoting some industrial applications, but in order to make the the rental work with the equipment, we have to put into the rental you're probably looking at a 7.
10 year rental to make it work out which we've quoted and I think we'll do some here we've got of hospitality customer we may do a 10 year rental for <unk>.
<unk> absorption chiller, so I think I think definitely those will come they are a little more complicated rental the in your traditional oil and gas rental I do think the.
The cannabis industry of the greenhouse industry is 1 we've rented several machines.
The 7% to I think we'll do so for more.
They are growing very quickly and they quickly outpaced the local grid as far as energy demands and then bitcoin is 1 with the changes going on in China with their own digital currency, we're seeing a lot of the bitcoin farmers move over to the U S and so thats, creating energy demand it's the <unk>.
These are the trouble meeting.
Genes into the that can also be an opportunity for us.
I'm just trying to understand the delineate between rental business of energy as a service strategy by basically providing an off take agreement of our working with the potential customer like that.
Is the tipping point of hurdle that you get to a set of renting the equipment you can sell them energy.
Yes, no I think we offer all of it and so I think it just depends on what the customers' appetite is so we can we can sell of the energy. We can do kind of power by the hour. We can do of PPA we.
We can do kind of of hybrid financing solution, where they.
They pay like an activation charge upfront and then we do a 7 year rental we can offer a buy.
Buy out option that year 5 in the year, 7%.
So I think thats part of what we can do having a balance sheet now.
And have an ability to kind of custom tailor solutions for customers and the hard part is really just trying to find 1 of the customers needs are.
Are they renting the facilities they own the facility or they can be expanding their energy needs or they can be reducing their energy needs.
How important is carbon reduction versus energy savings versus the resiliency.
So I think it's more complicated because we've got a lot of solutions, but at the end of the day of allows us to really.
Not be a 1 size fits all we go in and custom tailor a solution for the end users and our goal is again, whether were talking to of DHL or of Magna.
Our.
Marriott, we want we want to go into 1 project, we want to do a large scale rollout and we want to be of long term partner and if we make less money on 1 project. So be it we're dedicated to the long term overall relationship.
Great. Thanks, I'll step back in the queue.
Thanks, John.
We have no further questions.
<unk> in Q I would like to turn the floor back to Darren Jamison for closing remarks, Rob and John Great questions. You touched on a lot of things I wanted to talk about of my summary al.
I'll just say overall good.
Good quarter, great year, especially considering the COVID-19 situation.
Considering the fact, we had the.
Longer than we anticipated.
Issue on the parts of the liability issue.
We've built on.
We built the business we changed the business we've improved the business.
If you look at it of short term basis revenue $17.9 million versus the $1.6 a year ago.
The quarters have had COVID-19, obviously, it's better now than it was a year ago.
Positive cash from operations of $5.
8 of them for the quarter again, I know everybody loves revenue I'm old fashion, I think you take cash and profit to the bank net revenue of the bank.
I think investors hopefully, we will start giving us a little more credit for generating positive cash from operations as opposed to burning cash every quarter like some of the other folks in our space I think for 49 point.
$1 million.
As the largest balance sheet, we've had in a long long time for.
For the full year generating $1.7 million of positive cash versus the loss of $19..8 that's very very significant year over year in what was a challenging year revs.
The revenue down 2% year over year is disappointing, we actually hope to be flat or slightly up.
But considering the headwinds.
For him pretty good revenue.
Outcome and again, a lot of companies would love to be flat year over year.
The COVID-19 environment.
Refinancing Goldman Sachs.
Almost half of the much lower rates and adding $20 million during the pandemic I think is of great outcome and Eric and his team did a great job renegotiating that then the folks of Goldman Sachs of and nothing but the top shelf.
The gentlemen that work with.
Product bookings again, $12.7 million for for the fourth quarter is great.
3 quarters, we've seen increased energy and quotation activity and better bookings. The Baker Hughes. The arrangement is very exciting to be able to offer a 5% to 16 megawatt solution with a.
And as the high caliber of Baker Hughes is exciting for <unk>.
The megawatt turbine project turnkey is going to add 15% to our topline revenue for the year for I mean these are the these are big machine. These are big projects.
New battery storage and hybrid micro turbine products.
I'll get into more of that in the next couple of calls we start selling.
The key technologies will detail them, a little more we don't want to completely tip, our hand from a competitive standpoint.
These products are going right at some people in our space like polar power and other folks that have similar technologies. So.
We'll get a little further out along the on the playing field before we get the too much information about what we're doing.
Some of the very very excited to be able to work with customers give them custom solutions be their 1 stop shop, we really want to make sure that where the energy supplier for green energy for carbon reduction for resiliency and that we're not doing a project we're working on the long term relationship.
We're there for them for the next 15 to 20 years.
So very happy with the year.
Very much looking forward. The next year very excited about capstone Green energy and creating smarter energy for a cleaner future for all of our customers and with that we'll talk to everybody. After the first quarter. Thank you.
Thank you ladies and gentlemen, this does conclude today's conference call you may disconnect your phone.
At this time and have a wonderful day.
Thank you for your participation.
Okay.