Q4 2025 Capstone Green Energy Holdings Inc Earnings Call
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Good day, ladies and gentlemen.
Operator: Good day ladies and gentlemen. And welcome to the Capstone Green Energy Earnings Conference Call and Webcast for the financial results for the fourth quarter and full fiscal year 2025, ended on March 31st, 2025. All lines have been placed in a listen-only mode, and there will be a question and answer session following formal presentation. As a reminder, today's program will be recorded.
And welcome to the Capstone Green Energy earnings Conference call and webcast for the financial results for the fourth quarter and full fiscal year 2025 ended on March 31st 2025.
All lines have been placed in a listen only mode and there will be a question and answer session. Following the formal presentation.
As a reminder, today's program will be recorded.
Operator: At this time, it is my pleasure to turn the floor over to Mrs. Janet Duderstadt.
At this time it is my pleasure to turn the floor over to Mrs. Janet do this stuff.
Janet Duderstadt: Capstone's General Counsel, Johnnet, the floor is yours. Thank you very much. Good afternoon, and thank you for joining Capstone Green Energy Holdings Inc's fourth quarter and full fiscal year 2025 conference call. On the call with me today are Vince Canino, the company's President and Chief Executive Officer, and John Jurek, the company's Chief Financial Officer.
Capstone as general Counsel, Janet sorry as yours.
Speaker Change: Thank you very much good afternoon, and thank you for joining capstone in Green Energy Holdings, Inc, fourth quarter and full fiscal year 2025 conference call.
On the call with me today are Vince Casino, the company's President and Chief Executive Officer, and John <unk>, The Companys Chief Financial Officer.
On June 27th Capstone Green Energy Holdings, Inc. Issued its earnings release for its fourth quarter and full fiscal year 2025 financial results, which ended March 31 2025.
Johnnet: On June 27th, Capstone Green Energy Holdings, Inc. issued its earnings release for its fourth quarter and full fiscal year 2025 financial results, which ended March 31st, 2025. During today's call, we will be referring to slides that can be found on the company's website under the Investor Relations section.
Speaker Change: During today's call, we will be referring to slides that can be found on the company's website under the Investor Relations section.
Johnnet: This conference call contains forward-looking statements representing the company's views as of today, July 2, 2025. Other than as required by federal securities laws, the company disclaims any obligation to 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 provision set forth in Slide 2 of the slides accompanying this presentation in today's earnings release and in Capstone's filings with the Securities and Exchange Commission for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements.
Speaker Change: This conference call contains forward looking statements representing the company's views as of today July <unk> 2025.
Speaker Change: Other than as required by federal Securities laws. The company disclaims any obligation to 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.
Speaker Change: Please refer to the safe Harbor provisions set forth on slide two of the slides accompanying this presentation and today's earnings release and in Capstone filings with the Securities and Exchange Commission for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements.
Johnnet: Please note that as Mr. Canino and Mr. Jurek go through the discussion today, when they mention EBITDA, they are referring to adjusted EBITDA, which is a non-GAAP financial measure, and the reconciliations in the earnings release and the appendix to the presentation slides.
Speaker Change: Please note that as Mr. <unk>, Mr. Derek go through the discussion today when they mention EBITDA. They are referring to adjusted EBITDA, which is a non-GAAP financial measure and a reconciliation in the earnings release and the appendix to the presentation slides.
Vince Canino: I would like to now turn the call over to Vince Canino, the company's President and Chief Executive Officer. Thank you, Janet. Good afternoon, everyone. Thank you for joining today's earnings call, where in addition to covering our fourth quarter and full fiscal year 25 results, we will discuss some of the strategic initiatives we have in flight for the fiscal year 26 and beyond.
Vince: I would like to now turn the call over to Vince <unk>, the company's President and Chief Executive Officer.
Speaker Change: Thank you Janet and good afternoon, everyone.
Speaker Change: Thank you for joining today's earnings call, where in addition to covering our fourth quarter and full fiscal year twenty-five results. We will discuss some of the strategic initiatives. We have in flight for their fiscal year 'twenty six and beyond.
Vince Canino: If you turn to slide three, I would like to run through today's agenda. Today's call will cover Capstone's business environment, as well as our three-year roadmap, including details around some of the initiatives we launched in early March of 2024.
Speaker Change: If you turn to slide three I would like to run through today's agenda.
Speaker Change: Today's call will cover a capstone as business environment as well as our three year roadmap, including details around some of the initiatives. We launched in early March of 2024, and then I will turn it over to John <unk> for a detailed review of our Q4 and full fiscal year 'twenty five financial results. We will then come.
Vince Canino: Then I will turn it over to John Jurek for a detailed review of our Q4 and full fiscal year 25 financial results. We will then cover our perspective on what is turning out to be quite an exciting business climate.
Speaker Change: For our perspective on what is turning out to be quite an exciting business climate.
Speaker Change: We will then conclude with questions from our investors and analysts I do wish to remind you that today's presentation includes an appendix, which provides additional information for your purview.
Vince Canino: We will then conclude with questions from our investors and analysts. I do wish to remind you that today's presentation includes an appendix which provides additional information for your purview. Let's now move on to slide 5 to begin the discussion on Capstone's business environment. Turning to slide five.
Speaker Change: Let's now move onto slide five to begin the discussion on capstone business environment.
Speaker Change: Turning to slide five.
Vince Canino: Let's get straight to the point. What we accomplished in fiscal year 25 was absolutely transformative for Capstone. Although our revenue was almost $5.7 million less than fiscal 24, we improved adjusted EBITDA by almost $8.5 million. In the fourth quarter, revenue increased by $2.7 million compared to the same period last year. However, full-year revenue for fiscal 25 was softer than fiscal 24. As discussed in our Q3 earnings call, this decline was primarily driven by a combination of Chapter 11 restructuring and a slowdown in product orders following our emergence from Chapter 11, what we refer to as the Chapter 11 hangover.
Let's get straight to the point.
Speaker Change: What we accomplished in fiscal year 'twenty five was absolutely transformative for capstone.
Speaker Change: Although our revenue was almost $5 7 million less in fiscal 'twenty four we improved adjusted EBITDA by almost $8 5 million.
Speaker Change: In the fourth quarter revenue increased by 2.7 million compared to the same period last year. However, full year revenue for fiscal 'twenty five was softer than fiscal 'twenty four.
Speaker Change: As discussed in our Q3 earnings call. This decline was primarily driven by a combination of chapter 11 restructuring and a slowdown in product orders following our emergence from chapter 11.
We refer to as the chapter 11 hangover.
Speaker Change: This effect, which lasted longer than anticipated by our distribution network is not uncommon.
Vince Canino: This effect, which lasted longer than anticipated by our distribution network, is not uncommon. Customers often delay major capital expenditures on products associated with companies that have undergone such a restructuring. The good news is that we're now seeing positive momentum. Customer confidence is returning, and we've observed a meaningful uptick in order activity. One encouraging sign is the growing demand for larger power blocks, particularly from our C1000 product line, an emerging trend we'll discuss further in this call. We've made a bit of history here at Capstone. For the first time in our 37-year existence, we've delivered a full fiscal year of positive adjusted EBITDA.
Or is often delay major capital expenditures on products associated with companies that have undergone such a restructuring.
The good news is that we're now seeing positive momentum customer confidence is returning and we've observed a meaningful uptick in order activity.
Speaker Change: One encouraging sign is the growing demand for larger power blocks, particularly from our C. 1000 product line, an emerging trend will discuss further in this call.
We've made a bit of history here at capstone.
Speaker Change: For the first time in our 37 year existence, we've delivered a full fiscal year of positive adjusted EBITDA fits.
Vince Canino: Fiscal year 25 marks a significant milestone, and one we believe is the first of many to come. In Q4 alone, we generated $2.8 million in adjusted EBITDA, bringing our full year total to $7.9 million. While we have had stand-alone quarters of positive adjusted EBITDA in the past, this year stands apart. Fiscal 25 is the first time we've delivered all four quarters of positive adjusted EBITDA, culminating in our first-ever full-year positive result. This reflects the strength of the foundation we built, and we're not stopping here. We are confident that the financial discipline and operational focus we've instilled across the business will enable us to continue delivering strong results even in years with softer revenue.
Speaker Change: Fiscal year 'twenty five marks a significant milestone and one we believe is the first of many to come.
In Q4 alone we generated $2 8 million in adjusted EBITDA, bringing our full year total to 7.9 million.
While we have had standalone quarters of positive adjusted EBITDA in the past this year stands apart.
Speaker Change: Physical 25 is the first time, we've delivered all four quarters of positive adjusted EBITDA, culminating in our first ever full year positive result.
This reflects the strength of the foundation we've built.
And we're not stopping here.
Speaker Change: We are confident that the financial discipline and operational focus we've instilled across the business will enable us to continue delivering strong results even in years with software revenue.
Speaker Change: Turning to our technology.
Vince Canino: Turning to our technology. While wind, solar, and battery storage remain critical components of the global energy mix, long interconnection queues and the challenge of providing 24-7 power highlight the value of our solution. Our inverter-based generation technology is well positioned to meet the growing demand for energy systems that deliver resiliency, affordability, and sustainability. When you consider the total cost of ownership, also known as TCO, our solution becomes even more compelling. We'll spend some time later in this call walking through the key actions and decisions that helped us achieve this historic milestone year. Let's turn our attention to slide six.
While wind solar and battery storage remain critical components of the global energy mix long interconnection cues and the challenge of providing 24 seven tower highlight the value of our solution.
Speaker Change: Our inverter based generation technology is well positioned to meet the growing demand for energy systems that deliver resiliency affordability and sustainability when.
Speaker Change: When you consider the total cost of ownership also known as T. C O our solution becomes even more compelling.
Speaker Change: We will spend some time later in this call walking through the key actions and decisions that helped us achieve this historic milestone year.
Speaker Change: Let's turn our attention to slide six.
Vince Canino: As we've seen in previous quarters, North America remains our strongest performing region, accounting for approximately two-thirds of total orders, both by megawatts and contract value for the year. Something very interesting happened this fiscal year compared to last. We saw strong growth driven by two key factors, improved price realization and a clear shift towards larger capacity units. This shift is evident in our product mix. In fiscal year 2024, our average bookings per unit was approximately $273,000. In fiscal year 2025, that number increased to $345,000 per unit, a significant uplift that reflects both market demand for higher capacity systems and the value customers see in our solution.
Speaker Change: We have seen in previous quarters, North America remains our strongest performing region accounting for approximately two thirds of total orders both by megawatts in contract value for the year.
Speaker Change: Something very interesting happened this fiscal year compared to last.
Speaker Change: We saw strong growth driven by two key factors improved price realization and a clear shift towards larger capacity units.
Speaker Change: This shift is evident in our product mix in fiscal year 2024 hour average bookings per unit was approximately $273000.
Speaker Change: In fiscal year 'twenty to 'twenty five that number increased to $345000 per unit a significant uplift that reflects both market demand for higher capacity systems and the value customers see in our solutions.
Vince Canino: Another noteworthy trend in our bookings is the inclusion of several rental buyouts and build-own-and-transfer units. This is a strong indicator of customer confidence. As clients engage with our Energy as a Service program and experience the performance and value of our systems firsthand, many are choosing to transition from rental to ownership. clearly seeing the return on invested capital. We are also seeing a notable rise in larger power block orders, particularly in the 5 to 6 megawatt range. This trend suggests that customers with large, critical loads are either facing grid resiliency challenges or are unable to secure utility power within the time frames their operations demand.
Speaker Change: Another noteworthy trend in our bookings is the inclusion of several rental buyouts and build own and transfer units. This is a strong indicator of customer confidence as clients engage with arrow energy as a service program and experienced the performance and value of our systems firsthand.
Speaker Change: Many are choosing to transition from rental to ownership.
Speaker Change: Clearly seeing the return on invested capital.
Speaker Change: We are also seeing a notable rise and larger power block orders, particularly in the five to six megawatt range. This trend suggests that customers with large critical loads are either facing grid resiliency challenges or are unable to secure utility power within the time frames. They are operating.
Speaker Change: <unk> demand.
Vince Canino: We will dive deeper into this issue of load constraints and customer demand later in this call.
Speaker Change: We will dive deeper into this issue of load constraints and customer demand later in this call.
Speaker Change: Let's now turn to slide seven.
Vince Canino: Let's now turn to slide 7. I'd like to highlight one of the standout strengths of our business model, our Energy as a Service, or EAAS, offering. Under this umbrella, we've developed four scalable, repeatable business models that are designed to meet a broad range of customer needs while generating recurring revenue. build, own, and transfer, lease-to-own paired with an embedded service contract, power purchase agreements, and our rental services model. As shown on this slide, we also delivered strong year-over-year revenue growth in this segment. A key driver of this success was the introduction of a rental OKR, which included several high-impact initiatives.
Speaker Change: I'd like to highlight one of them that standout strengths of our business model, our energy as a service or E E. A S offering.
Speaker Change: Under this umbrella we developed for scalable repeatable business models that are designed to meet a broad range of customer needs, while generating recurring revenue.
Speaker Change: Build own and transfer.
Speaker Change: We used to own paired with an embedded service contract power purchase agreements and our rental services model.
Speaker Change: As shown on this slide we also delivered strong year over year revenue growth in this segment.
Speaker Change: A key driver of this success was the introduction of a rental okay or which included several high impact initiatives.
Vince Canino: a more proactive contract renewal process, improved price realization through enhanced market pricing strategies, increased fleet availability, a robust new pipeline tool that allows our team to align opportunities with available assets and forecast future availability, and lastly, reduced downtime between rentals thanks to a better planning and faster maintenance turnaround. These improvements have meaningfully increased our operational efficiency and positioned us to profitably scale this model going forward. Complementing the OKR is our new rental dashboard, a powerful tool that gives the rental team real-time visibility into fleet performance with insights extending 12 months and beyond. This dashboard allows us to proactively manage upcoming contract expirations, better coordinate equipment movement, and respond more effectively to evolving customer demand.
Speaker Change: A more proactive contract renewal process improved price realization through enhanced market pricing strategies increased fleet availability, a robust new pipeline tool that allows our team to align opportunities with available assets and forecast future availability and lastly, reduce downtime between <unk>.
Speaker Change: <unk>, thanks to a better planning and faster maintenance turnarounds.
Speaker Change: These improvements have meaningfully increased our operational efficiency and positioned us to profitably scale this model going forward.
Speaker Change: Complementing the O K R is our new rental dashboard, a powerful tool that gives the rental team real time visibility into fleet performance with insights extending 12 months and beyond this dashboard allows us to proactively manage upcoming contract expirations better coordinated equipment movement and.
Speaker Change: Respond more effectively to evolving customer demands.
Vince Canino: Let's now move to slide 9. We've regrounded ourselves in our vision to become the premier clean energy provider in the distributed generation and microgrid space. At our core, Capstone exists to make the impossible possible. From our earliest days to today, we've achieved this by daring greatly to think beyond, boldly taking on challenges that others shy away from. We embrace failure as a necessary step in the innovation process, learning and iterating as we go. We know that achieving the extraordinary starts with doing ordinary things exceptionally well, which is why little things matter. This mindset has allowed us to build and refine a clean energy technology that many wrote off decades ago.
Speaker Change: Let's now move to slide nine.
Speaker Change: We've really grounded ourselves in our vision to become the premier clean energy provider in the distributed generation and Microgrid space.
Speaker Change: At Evercore capstone exists to make the impossible possible.
Speaker Change: Our earliest days to today, we've achieved this by Darren greatly to think beyond boldly taking on challenges that other shy away from.
Speaker Change: We embraced failure as a necessary step in the innovation process learning and Iterating as we go.
Speaker Change: We know that achieving the extraordinary starts with doing ordinary things exceptionally well, which is why the little things matter.
Speaker Change: This mindset has allowed us to build and refine a clean energy technology that many wrote off decades ago.
Vince Canino: Our four core technologies set us apart. Our proprietary recuperators, our oil-free bearings, our low-emissions combustion systems, and our advanced inverter-based power electronics. Together, these innovations enable us to deliver highly efficient, reliable electricity, and recoverable waste heat, all within a system that operates on a wide range of fuels, including those others consider waste. This positions us as a key player in the circular economy. Our microgrid systems capture waste gas from an industrial process and convert it into clean electricity, but we don't stop there. The waste heat from our systems is also recovered and transformed into usable thermal energy in the form of hot water, steam, or chilled water.
Speaker Change: Our four core technologies set us apart.
Speaker Change: Our proprietary recuperated.
Speaker Change: Our oil free bearings.
Speaker Change: Our low emissions combustion systems, and our advanced inverter based power electronics.
Speaker Change: Together these innovations enable us to deliver a highly efficient reliable electricity and recoverable waste heat all within a system that operates on a wide range of fuels, including those others considered waste.
Speaker Change: This positions us as a key player in the circular economy.
Speaker Change: Our micro grid systems capture waste gas from an industrial process and converted into clean electricity.
Speaker Change: But we don't stop there the waste heat from our systems has also recovered and transformed into usable thermal energy in the form of hot water steam or chilled water.
Vince Canino: And we do all of this across an unmatched operating range with flexibility and fuel tolerance that others simply cannot replicate.
Speaker Change: And we do all of this across an unmatched operating range with flexibility and fuel tolerance that others simply cannot replicate.
Speaker Change: Onto slide 10.
Vince Canino: On to slide 10. I'd like to take a moment to shift our focus to our three-pillar strategy, the framework that underpins how we drive financial strength and long-term value across the business. This strategy is more than a guide for our operations, it shapes how we deliver value to all our stakeholders, our employees, distribution partners, vendors, and most importantly, our shareholders. In fiscal year 2025, our primary focus was on the first pillar, financial health. It's the foundation for everything else. Without a strong financial base, we simply can't achieve the kind of sustainable excellence needed to reinvest in the business.
Speaker Change: I'd like to take a moment to shift our focus to where our three pillar strategy. The framework that underpins, how we drive financial strength and long term value across the business. This.
Speaker Change: This strategy is more than a guide for our operations. It shapes, how we deliver value to all our stakeholders our employees distribution partners vendors and most importantly, our shareholders.
Speaker Change: In fiscal year 'twenty twenty-five our primary focus was on the first pillar financial health.
Speaker Change: It's the foundation for everything else without a strong financial base, we simply can't achieve the kind of sustainable excellence needed to reinvest in the business.
Vince Canino: whether that's in advancing our technology, streamlining operations, or strengthening our company culture. Over the next three slides, I'll walk you through key accomplishments tied to this strategy, as well as the initiatives already underway for fiscal 26.
Speaker Change: Whether that's in advancing our technology streamlining operations or strengthening our company culture.
Speaker Change: Over the next three slides I'll walk you through key accomplishments tied to this strategy as well as the initiatives already underway for fiscal 'twenty six.
Speaker Change: Now onto slide 11.
Vince Canino: Now on to slide 11, the financial health pillar. As a team grounded in accountability, we've taken a hard look at our performance and given ourselves a report card. It was, without a question, a challenging year, especially early on when liquidity was tight and order volume hit historic lows. But the team didn't fold, we didn't give in, and we certainly didn't give up. We stepped up and leaned in, every minute, every day, committed to restoring discipline across the business. The very nature of doing so delivered stronger gross margins through price realization, coupled with driving cost-out measures to fight off supplier price increases.
Speaker Change: The financial health pillar.
Speaker Change: As a team grounded in accountability, we've taken a hard look at our performance and given ourselves a report card.
Speaker Change: It was without a question a challenging year, especially early on when liquidity was tight and order volume at historic lows.
Speaker Change: But the team didn't fold, we didn't give in and we certainly didn't give up we stepped up and leaned in every.
Speaker Change: Every minute every day committed to restoring discipline across the business. The very nature of doing so delivered stronger gross margins through price realization, coupled with driving cost out measures to fight off supplier price increases.
Vince Canino: We maintained a sharp focus on ensuring every revenue stream contributed healthy margins. This was a key part of reinforcing our business discipline. As I mentioned earlier, we made meaningful progress in our commercial discipline, especially with our energy as a service segment, driven by a rigorous OKR process. In our long-term service agreement business, we transition from reactive parts replacement, without questioning why, to a data-driven root cause analysis approach. This shift allowed us to mitigate margin erosion, optimize customer applications, and strengthen collaboration. By identifying and correcting upstream and downstream behaviors, contributing to preventative failures, we've implemented solutions that improve performance, reduce downtime, and increase system availability.
Speaker Change: We maintained a sharp focus on ensuring every revenue stream contributed healthy margins. This was a key part of reinforcing our business discipline.
Speaker Change: As I mentioned earlier, we made meaningful progress in our commercial discipline, especially with their energy as a service segment driven by our rigorous okay our process.
Speaker Change: In our long term service agreement business, we transition from reactive parts replacements without questioning why to a data driven root cause analysis approach.
Speaker Change: This shift allowed us to mitigate margin erosion optimized customer applications and strengthen collaboration by.
Speaker Change: By identifying and correcting upstream and downstream behaviors contributing to preventative failures, we've implemented solutions that improve performance reduce downtime and increased system availability.
Vince Canino: The result, a win-win. We protect our margins while delivering a better, more reliable experience for our customers, building trust and reinforcing our brand in the process. On the operating discipline front, we started the year slower than we would have liked. Progress in 5S, lean practices, DFMA cost-out efforts, and production commitments fell short early on.
Speaker Change: The result, a win win.
Speaker Change: We protect our margins, while delivering a better more reliable experience for our customers building trust and reinforcing our brand in the process.
Speaker Change: On the operating discipline front, we started the year slower than we would've liked.
Speaker Change: Progress in five S lean practices DFM, a cost out efforts and production commitments fell short early on.
Vince Canino: I own that shortfall.
Speaker Change: I own that shortfall.
Vince Canino: That changed in Q3 with the arrival of John Tor, our new VP of Operations. Under his leadership, our manufacturing and supply chain teams are now aligned, focused, and moving with urgency. John has instilled a culture of velocity, accountability, and the notion that mediocrity is not acceptable. The impact is real. We are seeing meaningful progress across the board.
Speaker Change: That changed in Q3 with the arrival of John Tour, our new VP of operations.
Speaker Change: Under his leadership, our manufacturing and supply chain teams are now aligned focused and moving with urgency.
Speaker Change: John has instilled a culture of velocity accountability and the notion that mediocrity is not acceptable.
Speaker Change: The impact is real.
Speaker Change: We are seeing meaningful progress across the board.
Speaker Change: One of the most impactful initiatives under this pillar over the past year was our design for manufacturing and assembly or D. FMA program <unk>.
Vince Canino: One of the most impactful initiatives under this pillar over the past year was our Design for Manufacturing and Assembly, or DFMA, program. Led by our VP of Technology, Victor Kong, this initiative delivered outstanding results. While nearly 6% reduction in cost of goods sold in 2025 is impressive on its own, what truly stood out was the depth of cross-functional collaboration. This wasn't just an engineering or manufacturing effort. Sales, service, supply chain, and even finance were actively involved. That kind of broad ownership is what made the difference and significantly amplified our impact.
Speaker Change: Led by our VP of technology Victor Com. This initiative delivered outstanding results, while nearly 6% reduction in cost of goods sold in 25 is impressive on its own what truly stood out was the depth of cross functional collaboration.
Speaker Change: This wasn't just an engineering or manufacturing effort sales service supply chain and even in finance. We're actively involved that kind of broad ownership is what made the difference and significantly amplified our impact.
Vince Canino: We'll be sharing an example of one of our most exciting DFMA projects in just a moment.
Speaker Change: We'll be sharing an example of one of our most exciting D. FMA projects in just a moment.
Speaker Change: We've also made notable progress in our financial discipline.
Vince Canino: We've also made notable progress in our financial discipline. While we're not yet where we want to be, our ambition is to become a top quartile finance organization, and we've come a long way. Over the past year, we've navigated some of the most complex challenges in our history. We completed the restatement of previously issued financial statements and became current with our SEC filings. We received a clean resolution from the SEC investigation and we've successfully closed our Chapter 11 process. With those critical milestones behind us, our focus now turns to accelerating our journey toward top quartile performance.
Speaker Change: While we're not yet where we want to be our ambition is to become a top quartile finance organization and we've come a long way.
Speaker Change: Over the past year, we've navigated some of the most complex challenges in our history. We completed the restatement of previously issued financial statements and became current with our SEC filings. We received a clean resolution from the FCC investigation, and we successfully closed our chapter 11 process.
Speaker Change: With those critical milestones behind us our focus now turns to accelerating our journey toward top quartile performance.
Speaker Change: In parallel we've improved coordination and communication with our suppliers, a key enabler of operational and financial efficiency.
Vince Canino: In parallel, we've improved coordination and communication with our suppliers, a key enabler of operational and finance efficiency. But as with everything at Capstone, we remain committed to continuous improvement because we know there's still more work to be done.
Speaker Change: But as with everything a capstone, we remain committed to continuous improvement.
Speaker Change: Because we know there's still more work to be done.
Speaker Change: If I had to sum up fiscal year, 2020 five in a phrase.
Vince Canino: If I had to sum up fiscal year 2025 in a phrase, I would call it our Valley Forge moment. It was a test of resilience, determination, and grit. and across the organization, our people rose to meet it, leaning into the hard work of true transformation. Capstone is not the same company of the past. We've transformed how we think, how we act, and most importantly, how we win.
Speaker Change: I would call it our valley forge moment.
Speaker Change: It was a test of resilience determination and grit.
Speaker Change: And across the organization our people rose to meet it leaning into the hard work of true transformation.
Speaker Change: Capstone is not the same company of the past we've transformed how we think how we act and most importantly, how we win.
Speaker Change: Let's turn to slide 12, which highlights the second pillar of our strategy sustainable excellence.
Vince Canino: Let's turn to slide 12, which highlights the second pillar of our strategy, sustainable access. We have been intentional about strengthening our go-to strategy for our repeatable business models, especially in services, which include service agreements and the business models under Energy as a Service. We have also made targeted investments in capital equipment to enhance efficiency and improve our bottom line. Each project was selected for its strong ROI profile. These efforts are delivering meaningful savings, 75% cost out in one case, and enabling us to scale output with fewer bottlenecks. These projects will enhance operating income, strengthen business continuity, and improve our resilience across the board.
Speaker Change: We've been intentional about strengthening our go to strategy for our repeatable business models, especially in services, which include service agreements and the business models under energy as a service.
Speaker Change: We have also made targeted investments in capital equipment to enhance efficiency and improve our bottom line.
Speaker Change: Each project was selected for its strong ROI profile.
Speaker Change: These efforts are delivering meaningful savings, 75% cost out in one case and enabling us to scale output with fewer bottlenecks.
Speaker Change: These projects will enhance the operating income strength and business continuity and improve our resilience across the board.
Vince Canino: And lastly, we're planting seeds for future revenue growth through the development of new strategic partnerships linked to our transaction product portfolio. This strategy is centered on unlocking value from adjacent markets like battery storage, transformers, and absorption chillers. These initiatives position us for long-term diversified growth and create new channels to monetize our core technology.
Speaker Change: And lastly, we're planting seeds for future revenue growth through the development of new strategic partnerships linked to our transaction product portfolio there.
Speaker Change: This strategy is centered on unlocking value from adjacent markets like battery storage Transformers and absorption chillers.
Speaker Change: These initiatives position us for long term diversified growth and create new channels to monetize our core technologies.
Speaker Change: Slide 13 introduces the third pillar of our strategy revitalizing our culture and talent.
Vince Canino: Slide 13 introduces the third pillar of our strategy, revitalizing our culture and talent. These aren't just words on a slide, they reflect a deep intentional shift in how we attract, develop, and retain our people. From the first interaction in the recruiting process, through onboarding, and into career growth and leadership development, we are building a team that not only performs, but truly embodies our vision and our values. Many of you may recognize the accountability model popularized in the Oz Principle by Roger Connors, Tom Smith, and Craig Hickman. The core framework, see it, own it, solve it, do it, has served as a guide for countless high-performing organizations.
Speaker Change: These aren't just words on a slide.
Speaker Change: They reflect a deep intentional shift in how we attract develop and retain our people.
Speaker Change: From the first interaction in the recruiting process through onboarding and into career growth and leadership development. We are building a team that not only performs but truly embodies our vision and our values.
Speaker Change: Any of you may recognize the accountability model popularized in the odds of principle by Roger Connor as Tom Smith, and Craig Hickman.
Speaker Change: Our framework see it own it solve it do it has served as a guide for countless high performing organizations.
Vince Canino: At the heart of this transformation, we've taken that powerful premise and skillfully woven it into our own set of core values, which we call CLIMB. C. Courage to dare greatly. L. Little things matter. I. Iterate to success. M. Mutual trust amongst all. And B. Be your best. We call this our climb to accountability because living these values is how we build a resilient, high-performance culture. Let me be clear, we didn't invent these values this year. They've been part of Capstone's DNA for decades. Like unearthing a long-lost artifact, we simply brushed off the dust and rediscovered what has always been foundational to who we are.
Speaker Change: At the heart of this transformation, we've taken that powerful premise and skillfully woven it into our own set of core values, which we call client.
Speaker Change: C courage to dare greatly L little things matter.
Speaker Change: I iterate to success and mutual trust amongst all N B B your best.
Speaker Change: We call this our climb to accountability because living these values is how we build a resilient high performance culture.
Speaker Change: Let me be clear we didn't invent these values this year they.
Speaker Change: They've been part of Capstone is DNA for decades like unearthing, a long lost artifact, we simply brushed off the dust and rediscovered what has always been foundational to who we are.
Vince Canino: What's changed, what's different now, is how we've brought those values to light. We've embedded CLIMB into everything we do. From how we show up, to how we think, lead, and collaborate. From hiring and onboarding, how we evaluate both our successes and our failures.
Speaker Change: What's changed what's different now is how we brought those values to life, we've embedded climb into everything we do.
Speaker Change: How we show up to how we think lead and collaborate from hiring and Onboarding, how we evaluate both our successes and our failures.
Vince Canino: This isn't just a culture shift, it's a game changer. We've moved from a mindset of fear of failure to one where we dare greatly to think beyond.
Speaker Change: This isn't just a culture shift it's a game changer, we've moved from a mindset of fear of failure to one where we dare greatly to think beyond.
Vince Canino: That change, powered by people who are fully committed and engaged, is what drives the financial results you're about to hear from John Jurek in just a few moments.
Speaker Change: That change powered by people, who are fully committed and engaged is what drives the financial results Youre about to hear from John jerk in just a few moments.
Vince Canino: Allow me to share a quick example. As we wrapped up this past fiscal year, the senior leadership team took a hard look at both our achievements and our misses. At one point, someone suggested we soften the word misses and call them opportunities. We caught ourselves. That moment became a powerful reminder of the importance of staying above the accountability line, of owning our setbacks, learning from them and committing to do better. It was a small moment, but a big signal that this mindset is now deeply embedded in how we operate. That right there is an experience that created a new behavior.
Speaker Change: Allow me to share a quick example.
Speaker Change: As we wrapped up this past fiscal year. The senior leadership team took a hard look at both our achievements and our Mrs.
Speaker Change: At one point someone suggested we saw from the word Mrs and call them opportunities.
Speaker Change: We caught ourselves.
Speaker Change: That moment became a powerful reminder of the importance of staying above the accountability line of owning our setbacks learning from them and committing to do better.
Speaker Change: A small moment, but a big signal that this mindset is now deeply embedded in how we operate.
Speaker Change: That right. There is an experience that created a new behavior and that's all culture change happens.
Vince Canino: And that's how culture change happens. That's how real sustainable results are achieved.
Speaker Change: That's how real sustainable results are achieved.
Vince Canino: I'd like to share a quick story that demonstrates how we iterate to success by atoning to the notion that little things matter. During a recent interview for a key finance leadership role, we walked a candidate through our core values. When we got to the last one, at the time, that last core value was phrased, be the best in all you do. She paused. She said, that sounds a bit too task-focused. What if it were be your best instead? Because being your best isn't just about the outcomes, it's about how you show up for your team, how you lead, and how you behave.
Speaker Change: I'd like to share a quick story that demonstrates how we iterate to success by a Tony to the notion that little things matter.
Speaker Change: During a recent interview for our key finance leadership role, we want to Canada through our core values. When we got to the last one at the time that last core value was phrased be the best and all you do.
Speaker Change: She paused.
Speaker Change: She said that sounds a bit to task focused what if it were be your best instead, because being your best isn't just about the outcomes. It's about how you show up for your team how you lead and how you behave.
Vince Canino: That insight landed, and we change that core value now to be your best, not because it was dictated from the top, but because someone spoke up with a better way of framing it. That's how we evolve our culture here, not by mandates, but through collaborative, responsive, and iterative process. and honestly that's what makes it fun. We're building something real together.
Speaker Change: That insight landed.
Speaker Change: And we changed that core value now to be your best not because it was dictated from the top but because someone spoke up with a better way of framing. It that's how we evolve our culture here not by mandates, but through collaborative responsive and iterative process.
Speaker Change: And honestly, that's what makes it fun.
Speaker Change: We're building something real together.
Speaker Change: Turning to slide 14, a key driver of our financial help this fiscal year was the successful launch of our D. S. M. A initiative.
Vince Canino: Turning to slide 14, a key driver of our financial health this fiscal year was the successful launch of our DFMA initiative. DFMA unlocked our ability to drive meaningful cost reductions across our product lines without compromising quality or the strength of our supplier relationship. What began with just five pilot projects last May has now grown into a company-wide effort with over 20 active DFMA initiatives underway. This expansion was made possible by an engaged, cross-functional team spanning engineering, operations, supply chain, finance, and more. To ensure swift execution, we used our OKR tool to create transparency, accountability, and open communication at every stage.
Speaker Change: D S M a unlocked our ability to drive meaningful cost reductions across our product lines without compromising quality or the strength of our supplier relationships.
Speaker Change: What began with just five pilot projects last May has now grown into a company wide effort with over 20 active D. F M E initiatives underway.
Speaker Change: This expansion was made possible by an engaged cross functional team spanning engineering operations supply chain finance and more.
Speaker Change: To ensure a swift execution, we used our okay, our tool to create transparency accountability and open communication at every stage.
Vince Canino: That structure helped us move quickly and efficiently, delivering real savings that directly contributed to our bottom line performance.
Speaker Change: That structure helped us move quickly and efficiently delivering real savings that directly contributed to our bottom line performance.
Speaker Change: Now onto slide 15.
Vince Canino: Now on to slide 15. As we did in our last earnings call, I want to share a real-life example that illustrates the tangible value of our DFMA program. One of our early DFMA targets were key components on our engines. These components were flagged based on simple but telling assessment of what we were paying for a set of components. When we performed a should-cost analysis, it became clear we had an opportunity to renegotiate pricing with the supplier. Unfortunately, the supplier chose not to engage in a meaningful way. So we took the next best path. we decided to insource these components.
Speaker Change: As we did in our last earnings call I want to share a real life example that illustrates the tangible value of our D. FMA program.
Speaker Change: One of our early D FMA targets.
Speaker Change: Or key components on Aero engines. These components were flagged based on simple, but telling assessment of what we were paying for a set of components.
Speaker Change: Well, we performed a should cost analysis. It became clear we had an opportunity to renegotiate pricing with the supplier.
Speaker Change: Unfortunately, the supplier chose not to engage in a meaningful way.
Speaker Change: So we took the next best path.
Speaker Change: We decided to in source these components.
Vince Canino: As you can see in this slide, the impact was significant. We will achieve a 75 percent cost reduction per set. Based on fiscal 25 production volumes, this change translates to nearly $500,000 in annual savings and a direct $500,000 improvement in EBITDA. The best part? The investment in this tube vendor will pay for itself in just five months based on current demand. Beyond the financial return, this initiative created engaging high value work for our production team, proving that DFMA isn't just about saving money, it's about building capability, driving innovation, and creating a more agile and empowered workforce.
Speaker Change: As you can see in this slide the impact was significant.
Speaker Change: We will achieve a 75% cost reduction per set based on physical twenty-five production volumes. This change translates to nearly 500000 in annual savings and a direct 500000 dollar improvement in EBITDA.
Speaker Change: The best part the.
Speaker Change: The investment in this two Bender will pay for itself in just five months based on current demand.
Speaker Change: Beyond the financial return this initiative created engaging high value work for our production team proving that D. FMA isn't just about saving money, it's about building capability driving innovation and creating a more agile and empowered workforce now.
John Jurek: Now I'd like to turn the call over to John Jurek. Thank you, Vince, and good morning, everyone. Fiscal year 25 has proven to be challenging in many aspects. But as Vince has stated, the financial results in the fourth quarter and for the full year reflect positively on the underpinnings of the business. I will now review in more detail the company's financial results for the fourth quarter. Moving to slide 17, you will see the summary financial results for the fourth quarter. Total revenue for the quarter was $27.1 million, compared to $24.3 million for the fourth quarter of fiscal year 24.
John Gerrick: Now I'd like to turn the call over to John Gerrick.
John Gerrick: John.
John Gerrick: Thank you Vince and good morning, everyone fiscal year twenty-five has proven to be challenging in many aspects, but as Vince has stayed at the financial results in the fourth quarter and for the full year reflect positively on the underpinnings of the business.
John Gerrick: I will now review in more detail the company's financial results for the fourth quarter.
John Gerrick: Moving to slide 17, you will see the summary financial results for the fourth quarter total revenue for the quarter was $27 $1 million compared to $24 3 million for the fourth quarter of fiscal year 'twenty for.
John Jurek: This represents a 12% increase to the top line. The revenue growth came from rental and service activities, with rental increasing by $2.2 million and service increasing by $900,000. Product and accessory sales remain steady, quarter over quarter, with a minor decline of $300,000. The top line improvement and shift in the sales mix delivered a gross profit of $7.5 million versus $2.6 million from the same quarter of the prior year. The current quarter's gross profit is 2.9 times that of the prior year and with a delivered gross margin of 28 percent. The dollar and margin improvements reflect the effects of the sales mix, improved pricing, improved utilization rates, and cost savings.
John Gerrick: This represents a 12% increase to the top line.
John Gerrick: The revenue growth came from rental and service activities with rental increasing by 2.2 million and service increasing by $900000 Prada.
John Gerrick: Product and accessories sales remained steady quarter over quarter with a minor decline of $300000.
John Gerrick: The top line improvement and shifting the sales mix delivered a gross profit of $7.5 million versus $2 6 million from the same quarter of the prior year.
John Gerrick: The current quarter's gross profit is 2.9 times that of the prior year and with a delivered gross margin of 28%.
John Gerrick: The dollar and margin improvements reflect the effects of the sales mix improved pricing improved utilization rates and cost savings.
John Jurek: Research and development expenses increased 33 percent to $800,000 for the quarter. The increase in R&D costs reflects the effort towards cost-out initiatives and new technology developed. SG&A expenses of $6.7 million in the fourth quarter increased $200,000 from the same quarter of the prior year. and our 25% of revenue. Included in the fourth quarter Fiscal 25 is a $900,000 accrual for the AIP bonuses resulting from the significant improvement in financial performance. Net income for the period was a loss of $100,000, which is $5.2 million improvement from the fourth quarter of fiscal 24. The improved financial performance delivered adjusted EBITDA of $2.8 million for the current quarter.
John Gerrick: Research and development expenses increased 33% to $800000 for the quarter. The increase in R&D costs reflects the effort towards cost out initiatives and new technology development.
John Gerrick: SG&A expenses of $6 7 million in the fourth quarter increased $200000 from the same quarter of the prior year.
John Gerrick: And our 25% of revenues.
John Gerrick: Included in the fourth quarter fiscal 25 is a 900000 dollar accrual for the AIP bonuses, resulting from the significant improvement in financial performance.
John Gerrick: Net income for the period was a loss of $100000, which is 5.2 million improvement from the fourth quarter of fiscal 'twenty four.
John Gerrick: The improved financial performance delivered adjusted EBITDA of $2 8 million for the current quarter. These.
John Jurek: These numbers reflect the impact of the business improvements that have been driven across the organization throughout the year.
John Gerrick: These numbers reflect the impact of the business improvements that had been driven across the organization throughout the year.
John Gerrick: Moving to slide 18 for the full year results of fiscal year 'twenty five revenue for the year was $85 $6 million compared to $91 2 million for fiscal year 2020 for.
John Jurek: Moving to slide 18 for the full year results of fiscal year 25. Revenue for the year was $85.6 million compared to $91.2 million for fiscal year 2024. The sales of microturbine products and accessories declined by $8.9 million as sales at the beginning of the year were impacted by customer concerns arising from the restructuring. As mentioned in the discussion earlier today, the customer's concerns have diminished, and the business outlook for microturbine products is robust as we move forward. On the positive side, the top-line performance for the parts, service, and rentals increased by $3.3 million to $45.4 million for FY25 and is 53% of total revenue.
John Gerrick: The sales of micro turbine products and accessories declined by $8 9 million as sales at the beginning of the year were impacted by customer concerns arising from the restructuring.
John Gerrick: As mentioned in the discussion earlier today, the customers' concerns have diminished and the business outlook for micro turbine products is robust as we move forward.
John Gerrick: On the positive side, the topline performance for the parts service and rentals increased by $3 $3 million to $45 4 million for fiscal year 'twenty five and is 53% of total revenue the growth in this category resulted primarily from the increased utilization and price.
John Jurek: The growth in this category resulted primarily from the increased utilization and pricing of the rental fleet assets. Gross profit for fiscal 2025 was $23.3 million versus $14.3 million in fiscal 2024. The $9 million increase led to a 27% gross margin, which is an 11-point margin improvement from the prior year. The gross profit improvement is the result of higher pricing, improved utilization, and direct material cost reductions resulting from the cost out effort. Expenses for research and development were $2.7 million and 3% of total revenue for fiscal year 25. This is an increase from 2.5 million in fiscal year 24.
John Gerrick: <unk> of the rental fleet assets.
John Gerrick: Gross profit for fiscal 2025 was $23 $3 million versus $14 3 million in fiscal 'twenty for the.
John Gerrick: The $9 million increase led to a 27% gross margin, which is an 11 point margin improvement from the prior year.
John Gerrick: The gross profit improvement is the result of higher pricing improved utilization and direct material cost reductions, resulting from the cost out efforts.
John Gerrick: Expenses for research and development were $2 7 million and 3% of total revenue for fiscal year 'twenty five.
John Gerrick: This is an increase from 2.5 million in fiscal year 'twenty four.
John Gerrick: SG&A expenses decreased to $26 2 million for fiscal year, 'twenty five versus 32.2 million in fiscal year 'twenty four.
John Jurek: SG&A expenses decreased to $26.2 million for FY25 versus $32.2 million in FY24. The $6 million reduction results from decline of one-time charges related to restatement activities, debt restructuring and financing costs, and stock-based compensation expenses caused by the restructuring. Fiscal year 25 reported a net loss of $7.2 million compared to net income of $7.4 million in fiscal year 24. Fiscal year 24, though, included a $32.5 million gain from reorganizational items. Excluding the reorganizational gain, the net loss improved by $17.9 million from fiscal year 24 due to improved gross profit and reduced one-time expenses. Adjusted EBITDA for fiscal year 25 was $7.9 million, an increase of $8.4 million from fiscal year 24.
John Gerrick: The 6 million dollar reduction results from decline of one time charges related to restatement activities debt restructuring and financing costs and stock based compensation expenses caused by the restructuring.
John Gerrick: Fiscal year 'twenty five reported a net loss of $7.2 million compared to net income of $7 $4 million in fiscal year 'twenty for fiscal year 'twenty four though included a 32.5 million dollar gain from re organizational items.
John Gerrick: Excluding the reorganization will gain the net loss improved by $17 $9 million from fiscal year 'twenty four due to improved gross profit and reduced one time expenses.
John Gerrick: Adjusted EBITDA for fiscal year, 'twenty, five was $7.9 million, an increase of $8.4 million from fiscal year 'twenty four.
John Jurek: Fiscal Year 25 is the company's first time reporting full-year positive adjusted EBIT value. Looking forward, the gap between EBITDA and adjusted EBITDA will diminish as restatement, restructuring, SEC investigations, and shareholder litigation expenses have concluded during the first quarter of fiscal 26. Additionally, the company is pleased that the SEC concluded their investigation with no action taken against the company.
John Gerrick: Fiscal year 'twenty five as the company's first time reporting full year positive adjusted EBITDA.
John Gerrick: Looking forward the gap between EBITDA and adjusted EBITDA will diminish as restatement restructuring SCC investigations.
John Gerrick: And shareholder litigation expenses have concluded during the first quarter of fiscal 'twenty six.
John Gerrick: Additionally, the company is pleased that the S. E. C concluded their investigation with no action taken against the company.
John Gerrick: Now, let's turn to slide 19 for a review of select balance sheet items.
John Jurek: Now let's turn to slide 19 for review of Select Balance Sheet Ice. Cash-in-cash equivalents at March 31, 2025 were $8.7 million, an increase of $6.6 million from March 31, 2025. The increase was supported by $7.7 million of positive cash generated from operating activity. Accounts receivable net of allowances is $7 million and increased slightly from March 31 of 2024. Total inventories were $16.6 million and declined $4 million over the 12 months as the company's operational discipline focused on supply chain efficiencies and improving inventory returns. Lastly, accounts payable and accrued expenses were $17.2 million at March 31, 2025, a $1 million reduction from the prior year as expenses for one-time items and professional fees decreased.
John Gerrick: Cash and cash equivalents at March 31, 2025 were $8 $7 million, an increase of 6.6 million from March 31 of 'twenty 'twenty four.
John Gerrick: The increase was supported by $7.7 million of positive cash generated from operating activities.
John Gerrick: Accounts receivable net of allowances was $7 million and increased slightly from March 31 of 2024.
John Gerrick: Total inventories were $16 $6 million and declined $4 million over the 12 months as the company's operational discipline focused on supply chain efficiencies and improving inventory turns.
John Gerrick: Lastly, accounts payable and accrued expenses were $17 $2 million at March 31, 2025.
John Gerrick: A 1 million dollar reduction from the prior year as expenses for one time items and professional fees decreased.
John Gerrick: Turning to slide 21, I'd like to provide a quick update on our market and ticker symbol status. As we know this is an area of active interest to many of our shareholders.
John Jurek: Turning to slide 21, I'd like to provide a quick update on our market and ticker symbol status. As we know, this is an area of active interest to many of our shareholders. First, on the Form 211. This is the key filing required under the SEC Rule 15C2-11. to re-enable public trading of our stock. A sponsoring market maker has submitted the form on our behalf and we are currently awaiting approval. Once approved, we expect to uplift to the OTCQX, which is the highest tier on the OTC markets platform and known for greater transparency and investor confidence.
Speaker Change: First on the form to 11.
John Gerrick: This is the key filing required under the FCC rule 15 C to dash 11 two.
John Gerrick: To re enable public trading of our stock a.
John Gerrick: Sponsoring market maker has submitted the form or on our behalf and we are currently awaiting approval.
John Gerrick: Once approved we expect to uplift to the O T C. Q X, which is the highest tier on the OTC markets platform.
John Gerrick: And no for greater transparency and investor confidence.
John Jurek: We proactively submitted our application to the OTCQX market back in December of 2014. and it remains under review pending the completion of the Form 211 process. In parallel, we submitted our application for the newly defined OTC IQ market, which officially replaced the pink market on July 1, 2025, under the updated SEC regulatory framework. We are in good standing there and expect to remain listed on the market while we await OTCQX transition.
John Gerrick: We proactively submitted our application to the O T C culex market back in December of 'twenty, four and it remains under review pending the completion of the form 211 process.
John Gerrick: In parallel we submitted our application for the newly defined O T C IQ market, which officially replace the paint market on July one 2025 under the updated FCC regulatory framework. We are in good standing there and expect to remain listed on the market. While we are.
John Gerrick: Oh wait Oh T C Q X transition.
John Gerrick: Lastly on the FINRA named correction. Our company name is currently listed incorrectly as Capstone Green Energy Corporation due to an earlier CUSIP error, while the CUSIP itself was properly corrected thinner required additional documentation to accurately reflect the name of the new.
John Jurek: Lastly, on the FINRA name correction, our company name is currently listed incorrectly as Capstone Green Energy Corporation due to an earlier QSIP error. While the QSIP itself was properly corrected, FINRA required additional documentation to accurately reflect the name of the new company, Capstone Green Energy Holdings, Inc. We've submitted all supporting materials and are now awaiting final approval. The correction is important as it affects how our company is displayed on widely used financial data platforms like Bloomberg, Google Finance, MarketWatch, Yahoo, and MSN. We'll continue to keep shareholders informed as these processes progress. Our goal is to restore full market visibility and transparency as quickly as possible.
John Gerrick: Company Capstone Green Energy Holdings, Inc. We've.
John Gerrick: We've submitted all supporting materials and are now awaiting final approval.
John Gerrick: The correction is important as it affects how our company is displayed on widely used financial data platforms like Bloomberg, Google Finance, Marketwatch, Yahoo, and M. S N.
John Gerrick: We'll continue to keep shareholders informed disease processes progress our goal is to restore full market visibility and transparency as quickly as possible.
Vince: With that I will turn the presentation back to Vince.
Vince Canino: With that, I will turn the presentation back to Vint.
Speaker Change: Thank you John.
Vince Canino: Thank you, John. Turning to slide 23, I want to share our perspective on current market dynamics and how we plan to position Capstone to capitalize on these emerging opportunities. Goldman Sachs' Equity Research Report, issued on April 28, 2024, highlights the accelerating energy demands being driven by AI and data center growth, particularly here in the U.S. The numbers are striking. According to the Goldman Sachs report, the cager for power demand related to data centers is projected to grow at double-digit rates through 2030. What's even more compelling is the projected incremental demand for gas-fired power generation. An estimated 28 gigawatts of additional capacity is needed in the U.S.
John Gerrick: Turning to slide 23, I want to share our perspective on current market dynamics and how we plan to position capstone to capitalize on these emerging opportunities.
John Gerrick: Goldman Sachs Equity Research report issued on April 28, 2024 highlights the accelerating energy demand is being driven by AI and data center growth, particularly here in the U S. The numbers are striking.
John Gerrick: According to the Goldman Sachs report, the cage or for power demand related to data centers is projected to grow at double digit rates through 2030.
John Gerrick: What's even more compelling is the projected incremental demand for gas fired power generation, an estimated 28 gigawatts of additional capacity is needed in the U S alone over the next five years.
Vince Canino: alone over the next five years. This creates a major opportunity for reliable distributed power solutions, and that's exactly where Capstone plays. Our flexible, efficient, oil-free, and clean micro-turbine systems are uniquely suited to meet the resiliency, scalability, and sustainability needs of mission-critical applications like data As this demand continues to scale, we are actively evaluating how to deepen our presence in this space, whether through new partnerships, product adaptations, or expanded service models under our energy as a service umbrella.
John Gerrick: This creates a major opportunity for reliable distributed power solutions, and that's exactly where capstone place.
John Gerrick: Our flexible efficient oil free and clean micro turbine systems are uniquely suited to meet the resiliency scalability and sustainability needs of mission critical applications like data centers.
John Gerrick: As this demand continues to scale, we are actively evaluating how to deepen our presence in this space whether through new partnerships product adaptations or expanded service models under our energy as a service umbrella.
John Gerrick: Turning to slide 24.
Vince Canino: Turning to slide 24, as exciting as the data center power market is, there's another opportunity emerging in parallel, and it's one we are uniquely positioned to address. As data centers consume more and more grid power, the commercial and industrial CNI sector will increasingly face load constraints and resiliency challenges. At the same time, the rising demand will put pressure on utilities to upgrade infrastructure, which inevitably leads to higher electricity prices. This creates a very real and growing need for distributed combined heat and power solutions, particularly in the sectors like manufacturing, healthcare and hospitality, where high resiliency and energy cost savings are non negotiable.
John Gerrick: As exciting as the data center power market is theres another opportunity emerging in parallel and its one we are uniquely positioned to address.
John Gerrick: As data centers consume more and more grid power, the commercial and industrial C&I sector will increasingly face load constraints on resiliency challenges.
John Gerrick: At the same time, the rising demand will put pressure on utilities to upgrade infrastructure, which inevitably leads to higher electricity prices.
John Gerrick: This creates a very real and growing need for distributed combined heat and power solutions, particularly in the sectors like manufacturing health care, and hospitality, where high resiliency and energy cost savings are non negotiable.
Vince Canino: With a favorable spark spread in much of the C&I market, distributed code generation becomes extremely attractive investment, delivering both energy savings and sustainability. The Electric Power Research Institute, also known as EPRI, released a study on May 29, 2024, reinforcing this trend. It projects that data centers could consume up to 9% of the U.S. utility electric load, a staggering number. That level of demand will create grid constraints across all market segments, including residential. With many renewable energy projects stuck in interconnection queues, as well as lead times for large-scale gas turbines stretching into years, utilities will struggle to respond fast enough.
John Gerrick: With a favorable spark spread and much of the C&I market distributed cogeneration becomes extremely attractive investment delivering both the energy savings and sustainability.
John Gerrick: The electric Power Research Institute also known as a pre released a study on May 29th 'twenty 'twenty four reinforcing this trend.
John Gerrick: It projects that data centers could consume up to 9% of the U S utility electric load a staggering number.
John Gerrick: That level of demand will create grid constraints across all market segments, including residential.
John Gerrick: With many renewable energy projects stuck in the interconnection Qs as well as lead times for large scale gas turbine stretching into years utilities will struggled to respond fast enough.
Vince Canino: That puts even more pressure and opportunity on distributed generation to step in and bridge the gap. This convergence of factors strengthens our conviction that Capstone's microturbine-based CHP solutions are not only relevant, but critical in the evolving energy landscape. As such, we are keenly focused on this evolving shift in the power industry and are realigning resources to take advantage of this opportunity.
John Gerrick: That puts even more pressure and opportunity on distributed generation to step in and bridge the gap.
John Gerrick: This convergence of factors strengthens our conviction that capstone is micro turbine based CHP solutions are not only relevant but critical in the evolving energy landscape.
John Gerrick: As such we are keenly focused on this evolving shift in the power industry and are realigning resources to take advantage of this opportunity.
John Gerrick: Turning to slide 25.
Vince Canino: Turning to slide 25, this is a great example of the value proposition Capstone brings to the table. and it clearly illustrates both the efficiency and environmental benefits of our CHP solution. While this specific case study is based on a data center application, the model applies just as well to manufacturing facilities, hospitals, hotels, or any commercial operation with consistent energy and thermal loads. At 100 megawatts, the Capstone CHP system delivers some compelling outcomes. It reduces CO2 emissions by over 200 tons. showing a significant environmental benefit compared to traditional grid-supplied power. It also delivers a 30 percent energy surplus, equating to 30 megawatts in this case, of additional usable energy, a powerful advantage in any energy-constrained environment.
John Gerrick: This is a great example of the value proposition capstone brings to the table.
John Gerrick: And it clearly illustrates both the efficiency and environmental benefits of our CHP solutions.
John Gerrick: While this specific case study is based on a data center application. The model applies just as well to manufacturing facilities hospitals hotels or any commercial operation with consistent energy and thermal loads at.
John Gerrick: At 100 megawatts, the capstone CHP system deliver some compelling outcomes.
John Gerrick: It reduces C O two emissions by over 200 tons.
John Gerrick: Showing a significant environmental benefit compared to traditional grid supplied power.
John Gerrick: It also delivers a 30% energy surplus equating to 30 megawatts in this case of additional usable energy a powerful advantage in any energy constrained environment.
Vince Canino: and perhaps most impressive, the entire system fits within just two acres of land. For context, many large gas turbine peaker power plants can only support about 18 megawatts per acre. That means we're delivering more than five times the power density, thanks to our modular multi-bay architecture. That modularity also enables us to offer integrated and active redundancy, which significantly enhances resiliency and uptime for mission-critical operations. This slide isn't just a data point. It's a real-world representation of how Capstone's technology solves for cost, Carbon land use, and reliability in a single scalable package.
John Gerrick: And perhaps most impressive the entire system fits within just two acres of land for context, many large gas turbine peak or power plants can only support about 18 megawatts per acre that means we're delivering more than five times. The power density thanks to our modular multi bay architect.
John Gerrick: Sure.
John Gerrick: That modularity also enables us to offer integrated inactive redundancy, which significantly enhances the resiliency and uptime for mission critical operations.
John Gerrick: This slide isn't just a data point, it's a real world representation of how capstone is technology solves for cost carbon.
John Gerrick: Land use and reliability and a single scalable package.
John Gerrick: Slide 26 sets the stage for how we intend to play and win in the evolving energy landscape.
Vince Canino: Slide 26 sets the stage for how we intend to play and win in the evolving energy landscape. We are leveraging a key strength, our existing global distributor network. These are trusted partners who are deeply skilled at shaping Capstone's product and services into tailored solutions for customers seeking resiliency, affordability, and sustainability. What we've learned over the years is many of these customers become repeat buyers and that's opened the door to national and global account opportunities. In response, we've built a governance and compensation model that incentivizes and supports our distributors to expand their role as trusted advisors.
John Gerrick: We are leveraging a key strength our existing global distributor network. These are trusted partners, who are deeply skilled at shaping capstone product and services into tailored solutions for customers seeking resiliency affordability and sustainability.
John Gerrick: What we've learned over the years as many of these customers become repeat buyers and that's opened the door to national and global account opportunities. In response, we've built a governance and compensation model that incentivizes and supports our distributors to expand their role as trusted advisors.
Vince Canino: This is a natural evolution of our distribution model, and one that positions us well for scalable, relationship-driven growth.
John Gerrick: This is a natural evolution of our distribution model and one that positions us well for scalable relationship driven growth.
Vince Canino: Another key area where we differentiate is our ability to run on alternative fuels, what we refer to as our blue ocean. Unlike many other distributed generation manufacturers, we've engineered our combustion systems to handle a wide variety of non-traditional fuels across a broad operating range. The latest fuel we have been working on is hydrogen. We've already demonstrated successful continuous operation from 35% up to 100% hydrogen. While we see hydrogen as a longer-term market play, we believe that with continued private and public investment, it will become a viable solution in multiple use cases, and we will be ready.
John Gerrick: Another key area, where we differentiate is our ability to run on alternative fuels, what we refer to as our Blue Ocean.
John Gerrick: Unlike many other distributed generation manufacturers, we've engineered our combustion systems to handle a wide variety of non traditional fuels across a broad operating range. The latest fuel we have been working on it is hydrogen.
John Gerrick: We've already demonstrated successful continuous operation from 35% up to 100% hydrogen while we see hydrogen as a longer term market play we believe that with continued private and public investment it will become a viable solution in multiple use cases, and we will be ready.
Vince Canino: The third space where we see exponential opportunity is what we call our big sky market. Of course, data centers are at the top of that list, given their massive and growing power demands. But there's more. Ports and terminals are under increasing pressure to cut emissions and move toward net zero. These sites face space and grid limitations, which makes our mobile power-on-the-go solutions especially valuable. We're developing clean, compact, and mobile systems that can serve the dynamic energy needs of terminal operators. And finally, microgrids, not just for remote or renewable deployments, but also as a solution to grid constraints.
John Gerrick: The third space, where we see exponential opportunity is what we call our big Sky markets.
John Gerrick: Of course Datacenters are at the top of that list given their massive and growing power demands, but theres more.
John Gerrick: <unk> <unk> terminals are under increasing pressure to cut emissions and moved toward net zero.
John Gerrick: These sites face space and grid limitations, which makes our mobile power on the go solutions, especially valuable we're developing clean compact and mobile systems that can serve the dynamic energy needs of terminal operators.
John Gerrick: And finally micro grids, not just for remote or renewable deployments, but also as a solution to grid constraints, Utah.
Vince Canino: Utilities are struggling to protect their overloaded distribution transformers, many of which serve CNI and residential neighborhoods. With millions of these small transformers at risk of failure, we see an exciting opportunity. Capstone's quiet, clean, plug-and-play microgrid solutions combined with battery energy storage can help protect utility infrastructure, extend equipment life, and unlock new revenue opportunities, all while supporting the transition to a more reliable and distributed grid. We find these opportunities not just compelling, but essential to the future of distributed energy, and Capstone is poised to solve this trilemma known as resiliency, affordability, and sustainability.
John Gerrick: Utilities are struggling to protect their overloaded distribution transformers, many of which serve C&I and residential neighborhoods.
John Gerrick: With millions of these small transformers at risk of failure, we see an exciting opportunity.
John Gerrick: Got stones quiet clean plug and play micro grid solutions combined with battery energy storage can help protect utility infrastructure extend equipment life and unlock new revenue opportunities all while supporting the transition to a more reliable and distributed grid.
John Gerrick: We find these opportunities not just compelling but essential to the future of distributed energy and capstone is poised to solve this trilemma known as resiliency affordability and sustainability.
John Gerrick: And with that we would like to turn the call over for questions.
Operator: And with that, we would like to turn the call over for questions. Thank you. At this time we will be conducting our question and answer session. If you would like to ask a question please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the crescent. and you may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start. Once again, that's star 1 if you wish to ask a question.
Speaker Change: Thank you at this time, we will be conducting our question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
John Gerrick: A confirmation tone will indicate your line is in the question queue.
John Gerrick: And you May press Star two if you would like to remove your question from the queue.
John Gerrick: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
John Gerrick: Once again Thats Star one if you wish to ask a question.
Operator: One moment, please, while we pause.
John Gerrick: One moment, please while we poll for questions.
John Gerrick: Good afternoon. This is Kimberly and I will not be reading off the questions to both Vince and John.
Kimberly Long: Good afternoon. This is Kimberly Long.
Kimberly Long: I'll be reading off the questions to both Vince and John.
Kimberly Long: I'd like to call out the first question that we've received, which is, when will CGEH meet the higher standards of the OTCQX or the OTCQB markets? And since we've received several different questions that kind of pertain to the same topic, we're going to combine them.
Speaker Change: I'd like to take a pause.
John Gerrick: The first question that we've received which is when well see G. H meet the highest standards.
John Gerrick: O T C.
John Gerrick: Or the OTC market.
John Gerrick: Since we've received several are.
John Gerrick: Different.
John: Questions that pertain to the same topic, we're going to combine them and with this particular question I'm going to turn it over to John So he can answer it.
John Jurek: And with this particular question, I'm going to turn it over to John so he can answer it. Thanks, Kim. So our progress towards uplifting our shares to a higher level market has been ongoing as we outlined in the material presented. We do not have a specific date that we would be able to be listed on the OTCQX market. Everything that the company has been requested to perform to allow us to progress to that level has been completed and we are just awaiting the completion of the review process by the market and by.
John: Thanks Kim.
Speaker Change: Our progress towards.
Speaker Change: Uplifting our shares to a higher level market as has been ongoing as we outlined in the material presented.
Speaker Change: We do not have a specific date that we would be able to be listed on the OTC <unk> market ever.
Speaker Change: Everything that the company has been requested to perform to allow us to progress to that level has been completed and we are just awaiting the completion of the review process.
Speaker Change: The market and buy syndrome.
Speaker Change: Okay.
John: Excellent. Thank you John next question I'm going to direct to you as well.
John Jurek: Thank you, John. Next question, I'm going to direct to you as well.
John: What is management doing to increase more analysts following.
John Jurek: What is management doing to increase more analysts following? Uh, yeah, so, uh, where we are as far as more analyst follow-ins. We've been having calls with several of the analysts. We've been engaging with prior analysts that had provided coverage for the company. And we are looking to facilitate that process even more so as we go into the second quarter of fiscal 27.
John: Yes so.
Speaker Change: We're where we are as far as more analysts fault lines we.
Speaker Change: Having calls.
Speaker Change: Calls with several of the analysts we've been engaging with prior analysts that had provided coverage for the company and we are looking to facilitate that process even more so as we go into the second quarter of fiscal 'twenty six.
Speaker Change: Next question.
John Jurek: Next question. Is management trying to refinance both the short and long-term debt zone?
Speaker Change:
Speaker Change: Nashville trying to refinance both the short and long term debt.
John: John I'll turn this one to you.
John Jurek: John, I'll turn this one to you. Yes. So, yes, our goal moving forward is to refinance the debt. We have two tranches of debt, one maturing in December of 25 and a larger tranche maturing in December of 26. Currently we're focused on the refinancing of the initial tranche, plus adding some additional liquidity through a line of credit structure, and that initiative is on the way. Okay, excellent.
John: Yes, so yes.
John: Our.
John: Our goal moving forward is to refinance the debt.
John: We have two tranches of debt one maturing in December of 'twenty five in a larger tranche.
John: Maturing in December of 'twenty six currently we're focused on the refinancing of the initial tranche plus.
John: Adding some additional liquidity through a law.
John: Line of credit structure.
John: And that that initiative is on the way.
John: Okay. The next question I'm going to direct towards fence.
Vince Canino: The next question I'm going to direct towards Vince.
Vince Canino: Are ARP distributors still required to submit payment before turbines are shipped? Thanks, Kim. Yes, they are.
John: Our distributors still required to submit payment before turbines are shipped.
Speaker Change: Thanks Kim.
Speaker Change: Yesterday, our this is all part of our financial discipline.
Vince Canino: This is all part of our financial discipline, and so we've significantly changed terms with distributors. Some of them do have some payment terms, but all in all, almost every distributor must submit payments before units ship.
Speaker Change: So we've significantly changed terms with distributors.
Speaker Change: Some of them do have some payment terms, but all in all.
Speaker Change: Almost every distributor must submit payments before unit ship.
Speaker Change: Excellent.
Speaker Change: <unk>.
Vince Canino: Next question.
Speaker Change: Next question.
Vince Canino: I'm going to also direct to you, Vince. Did the tariff increase inventory costs in Q4? Will they going forward?
Speaker Change: Also direct to you.
Speaker Change: Did the tariff increase inventory cost in Q4, well they going forward.
Vince Canino: So the tariff question is a very interesting one. We were affected by the tariffs. The good news is a high percentage of our product is made here in the USA. So our exposure to other low-cost countries and the tariffs outside of the US, they did in fact significantly increase, but we've been able to manage that so far. The other really good part about this, and rather than run away from it, we've leaned into it, it's forced us to rethink some of our supply chain strategies. And as such, we're finding and uncovering some really interesting cost-savings measures that are bringing some of those components back here in the US.
Speaker Change: So the tariff question is a very interesting one.
Speaker Change: We were affected by the tariffs the good news is a high percentage of our product is made here in the USA. So our exposure to other low cost countries and the tariffs outside of the U S. They did in fact significantly increase but we've been able to manage that so.
Speaker Change: So far.
Speaker Change: The other really good part about this.
Speaker Change: And rather than then run away from it we've leaned into it it's forced us to rethink some of our supply chain strategies and as such we're finding and uncovering some really interesting cost savings measures that are bringing some of those components back here in the U S.
Vince Canino: So all in all, we're going to come out of this in better shape, we think, especially in terms of business continuity. But yes, we did have an impact in some costs, but we've been able to manage.
Speaker Change: So all in all we're going to come out of this and in better shape, we think especially in terms of business continuity.
Speaker Change: But yes, we did have an impact in some costs, but we've been able to manage that.
Speaker Change: Excellent. Thank you. Your next question I'm going to also drive to you that the rental utilization rate was 98% for Q3 was similar in Q4, yes. It was it was actually slightly above.
Vince Canino: The rental utilization rate was 98% for Q3, was it similar in Q4? Yes, it was. It was actually slightly above. But as we continue to go forward, as we mentioned earlier in the call, we've had a number of rental buyouts, and so as our fleet size starts to go down, which we are looking to rebuild again, we'll see that utilization rate fluctuate. Based on that.
Speaker Change: But as we as we continue to go forward as we mentioned earlier in the call we've.
Speaker Change: We had a number of rental buyouts and so as our fleet size starts to go down which we are looking to rebuild again, we will see that utilization rate fluctuate based on those things.
Speaker Change: Next question I'm going to direct at John.
John Jurek: Next question I'm going to direct at John, was the AR collection rate good in Q1 that just ended? Thanks, Kim. Yes, you know, as Vince has mentioned, we've changed some of the terms with distributors. and we are seeing much better collectability and collection rates from our customers at this time. It's been a very positive effect and very helpful for our liquidity as we've made those changes. Thank you, John.
Speaker Change: Once the AOR collection rate good in Q1 that just ended.
Thanks Kim.
Speaker Change: Yes.
Speaker Change: As mentioned, we've changed some of the terms with distributors.
And we are seeing much better collectability and collection rates from our.
Speaker Change: Customers at this at this time, it's been a very positive effect.
Speaker Change: Helpful for our liquidity.
Speaker Change: As we've made those changes.
Speaker Change: Thank you John Okay. The next question I'm going to direct that edge will constitute budget eliminate the tax advantages that we expected before.
Vince Canino: Okay, the next question I'm going to direct at Vince. Will Trump's new budget eliminate the tax advantages that were expected before? Well, I'm going to answer this in two parts. The first part is that we are going to be a company that is benign to any administration and policy. Our goal is to provide solutions to the market space when it comes to electricity and thermal energy and things like that. So what happens with policy, we want to be able to navigate our way through. In terms of the tax advantages that did exist, the ITC, we found very little utilization of that.
Speaker Change: Well I'm going to answer this in two parts. The first part is that we are going to be a company that is but not to any administration and policy.
Speaker Change: Our goal is to provide solutions.
Speaker Change: Two the market space when it comes to electricity and thermal energy and things like that so what happens with policy, we want to be able to navigate our way through each of those.
Speaker Change: In terms of the tax advantages that did exist.
Vince Canino: The ITC.
Speaker Change: We found very little utilization of that so in the end you know.
Vince Canino: So, in the end, you know, this will go away. We don't think it's going to really affect our overall business because we didn't see a lot of loans.
Speaker Change: This this will go away, we don't think it's got a really affect our overall business because we didn't see a lot of leverage.
Speaker Change: Excellent.
Vince Canino: Next question for you Vince, can we expect to see data center orders in the future? I sure hope so. No, look, it's a great space. We believe we have something to offer. As we showed in the slide, we realize the hyperscale space, you know, when they're looking for three, four, 500 megawatts, we're not going to be playing in that space. But we're a good answer for their day one problems in the hyperscale where they can't get power for two or three years and we can come in and supply enough power and cooling for two or three data halls in a very short period of time.
Speaker Change: Next question prevents can we expect to see data center orders in the future.
Speaker Change: I sure hope so.
Speaker Change: No.
Speaker Change: It's a great space, we believe we have something to offer.
Speaker Change: As we showed in the slide we realized the Hyperscale space.
Speaker Change: You know when Theyre looking for three or four or 500 megawatts. We're not we're not going to be playing in that space, but we're a good answer for their day, one problems in the hyper scale, where they cant get power for two or three years, and we can come in and supply enough power and cooling for two or three data halls in a very short period of time.
Vince Canino: When you look at the COLOs and you look at the EDGE data centers, that's where we think we can certainly play. Another great place that we can play is in expansion. If a data center is running out of roof space but need more cooling, again, our CHP application makes a lot of sense in addition to providing the energy to that data center. So we expect a season of activity here. The data centers, we have to remember, are what I call late pragmatism. They don't just jump on board to any product. They have a very thorough vetting process and we're going through those vetting processes.
Speaker Change: When you look at the Colo and you look at the edge data centers, that's where we think we can certainly play another great place that we can play as an expansion. If a data center is running out of roof space, but need more cooling again, our CHP application makes a lot of sense.
Speaker Change: In addition to providing the energy to that datacenter. So so we expect to see some activity here. The data centers, we have to remember are our what I call late pragmatists.
Speaker Change: Just jump onboard to any any product they do they have a very thorough vetting process and we're going through those vetting processes.
Vince Canino: We should be seeing some orders hopefully down the road.
Speaker Change: Be.
Speaker Change: Seeing some orders hopefully down the road.
Speaker Change: Yeah.
John: Okay. The next question I'm going to get into John <unk> John.
John Jurek: Okay, the next question I'm going to give to John jerk. John, how about some insider buys of stock along with employee to show confidence in our company? Thanks, Kim. Insider buying of stock, it's an individual choice. I think it's definitely well warranted at this point in time. There's a lot of upside that we see with our business that we're planning for, as Vince has outlined previously today. Excellent, thank you.
Speaker Change: Johnny how about incentivize our stock along with employee to show confidence in our company.
John: Yeah.
John: Thanks Kim.
John: Or buying a stock it's an individual choice I think it's it's definitely well warranted at this point in time, there's a lot of upside.
John: That we see with our business.
John: That we're planning for as Vince has outlined previously today.
Speaker Change: Excellent. Thank you. So then the next question I'm going to I'm going to hand over to defense. It's a CHF 50 prototypes still an option for future sales and deployment.
Vince Canino: So then the next question I'm going to hand over to Vince. Is the C250 prototype still an option for future sales and deployment? Absolutely, yes. That's actually in our plans this year. We are dusting it off, and we've got a team that we're putting together, and we want to see the launch of that product by the end of the year.
John: Absolutely yes.
John: That's actually in our plans this year.
John: We are we are dusting it off and we've got a team that we're putting together and we wanted to see the launch of that product by the end of this fiscal year.
John: Excellent. So I'm going to also have this next question to you as well.
Vince Canino: I'm going to also hand this next question to you as well, Vince. Can capstone ramp up production if sales pick up? We're ready. This is what we talked about. You know, we didn't get a great grade in the operational discipline, but now with the new leadership and the new team in place, we're working hard through 5S and lean manufacturing. We're actually doing a whole new floor layout as we speak so that we can actually increase our capacity. We've got a lot of potential in this facility, believe it or not, and once we get it leaned out properly, we should be able to go to 2 and 3 shifts.
John: Capstone ramp up production sales pick up.
John: We're ready.
John: This is what we talked about you know we didn't get a great grade and the operational discipline.
John: But now with the new leadership and the new team in place, we're working hard through five S and lean manufacturing we're actually.
John: Doing a whole new flora floor lay out as we speak so that we can actually increase our capacity. We've got a lot of potential in this facility and believe it or not and once we get it leaned out properly.
John: We should be able to we can go to two and three shifts we can definitely handle a significant amount of capacity here.
Vince Canino: We can definitely handle a significant amount of capacity here.
Vince Canino: Excellent.
John: Excellent.
John: Next question is there any progress being made in Europe relative to net sales.
Vince Canino: Next question, is there any progress being made in Europe relative to new sales? Yeah, you know, Europe's been a tough one. With the anti-gas movement, it really has put a damper, and also the war in Ukraine. That's been a big challenge for Europe. I just came back from Europe. We met with one of our adaptive technology partners, and we are seeing something really exciting that could change the game and reinvent ourselves for the European market. There, we look at taking waste streams and turning them into some useful energy. And so there's some technologies out there that we're working together with that we think could really be exciting, especially for the European market.
John: Ah, Yes, Europe's been a tough one.
John: With the anti gas movement.
John: It really has put a damper on and also the war in Ukraine.
John: That's been a big challenge for Europe, I, just came back from Europe, we met with one of our adaptive technology partners and we are seeing something really exciting that could change the game in Riyadh reinvent ourselves.
John: For the European market.
John: There, we looked at taking waste streams and turning them into something useful energy and so there are some technologies out there that we're working together with that we think could really be exciting, especially for the European market.
Vince Canino: Excellent.
Speaker Change: Excellent. So we had several questions on this particular topic I'm going to combine it into one.
Vince Canino: So we had several questions on this particular topic. I'm going to combine it into one.
Vince: Vince I'll hand, it over to you.
Vince Canino: Vince, I'll hand it over to you. What is the outlook for sales with the new demand for electric shortage because of the demand for AI? Well, I think all you have to do is go to the last few slides of this call. It's very real. We're seeing that obviously in the bigger power block orders where the data centers and take Virginia for example, where the data centers are consuming a large amount of that electricity and it's showing in the residential and the commercial space. And so, we think that not only can we serve the data center space, but we can certainly serve the C&I space that's...
John: What is the outlook for sales with the new demand for electric shortage because.
Speaker Change: Demand for AI.
Vince: Well I think all you have to do is go to the last few slides of this call.
Vince: It's very real where we're seeing that obviously in the bigger power block orders.
Vince: Where the data centers and take Virginia for example, where the data centers are consuming a large amount of that electricity.
Vince: And.
Vince: And it's and it's showing in the residential and the commercial space and so we think that not only can we serve the data center space, but we can certainly serve the C&I space that's going to be.
Vince Canino: also faced with these power constraints. So, it's very real. AI is something that people are still trying to sort out, but it basically quadruples the amount of energy consumption that a normal data center would use. So, as a result of that, something's got to give. So, we see that as a time for us to step in and deliver.
Vince: <unk> also faced with these power constraints so.
Vince: It's very real.
Vince: AI is is something that people are still trying to sort out, but it's basically quadruples the amount of energy consumption at a normal data centers would use.
Vince: As a result of that Something's got to give so we see that as well.
Vince: Time for us to step in and deliver.
Vince: Excellent well we are at the top of the hour we have several other questions, but we will need to we don't need to turn it over to you for closing remarks.
Vince Canino: Well, we are at the top of the hour. We have several other questions, but we will need to turn it over to you, Vince, for closing remarks. Um, sure. Thanks, Kim. Uh, you know, again, uh, this, uh, coming into the beginning of fiscal 25 and a tight liquidity situation, I can't say enough about the team here, not only just the senior leadership team, but every associate that has hung in with Capstone, the number of folks here that have been here for 20 plus years that didn't give up and didn't give in. And, uh, with a fresh look at things, uh, we've delivered some pretty good results.
Speaker Change: Sure. Thanks, Kevin.
Speaker Change: Again this are.
Vince: Coming into the beginning of fiscal 'twenty, five and a tight liquidity situation.
Vince: Can't say enough about the team here.
Vince: Not only just the senior leadership team, but every associate that has hung in with capstone. The number of folks here that have been here for 20, plus years that didn't give up and didn't give in.
Vince: And with a fresh look at things we've delivered some pretty good results could we have done better sure. We can always do better but that's the way. We think is that we will celebrate the wins, but we will not give up and we can always figure out a way to get better and better each and every day.
Vince Canino: Uh, could we have done better? Sure. We can always do better. But that's the way we think, is that we'll celebrate the wins, but we will not give up and we can always figure out a way to get better and better each and every day. At the end of the day, this is about sustainability. It's not just a one-year performance, and we're not going to be a one-hit wonder. We need to be an organization that continually delivers, uh, not only on the financial performance, but our presence in the marketplace. And how do we reshape the energy landscape?
Vince: At the end of the day. This is about sustainability, it's not just a one year performance and we're not going to be a one hit wonder we need to be an organization that continually delivers.
Vince: Not only on the financial performance, but our presence in the marketplace and how do we reshaped the energy landscape. So that's the way we're headed and we're really excited for what we're about to do in fiscal 'twenty six.
Operator: So that's the way we're headed, and we're really excited for, uh, what we're about to do in fiscal 26. Thank you.
Vince: Thank you.
Vince: Thank you ladies and gentlemen, this does conclude today's call you may disconnect. Your lines at this time and have a wonderful day and we thank you for your participation.
Thank you ladies and gentlemen. This does conclude today's call. You may disconnect your lines at this time and have a wonderful day and we thank you for your participation.
Vince: Yeah.