Capstone Turbine: Weighing The Positives ...
May be confirmation bias, but I think it's an excellent article because it touches upon all the headwinds we have discussed for so long (omitting only the R2K recent adjustment effects seen yesterday). So I guess I could criticize by saying "late to the table" on the headwinds.
But then it goes on to mention what we have also discussed: margin maintenance in spite of reduced revenue and adds a lot of coulds and mights which mirror other things we've discussed.
They omit the expansion into new markets and (effort towards?) increased penetration of (C)CHP applications on multiple continents, along with O&G and other applications expansion on multiple continents.
They should augment the article with a mention of the ~2MM cost reduction by restructuring because that will have long-term impact going forward, providing both a better ability to withstand reduced revenues at current levels without losing margin and the ability to see a very large margin improvement if revenues improve. That will happen just by dint of BPC payments (assuming that will happen) against their arrears if nothing else changes (i.e. all else holds steady). Any recovery in orders from BPC and/or continued new market growth (Afr., Mex., ...?) and we're off to the races.
Might even end up justifying those salaries and past bonuses.
BTW, maybe some of our accounting-savvy folks could confirm: revenue paid on the FPP in advance of performance of the service shows an increase in assets (receipts, flowing to COH?) and liabilities (unearned income?) which is converted to "profit" as the "unearned" portion is worked off?
If so, I think that's another incremental movement to profitability as performance of service revenue becomes , in effect, recognized?
Come to think of it, if I raised some good points, a comment linking to this post on the article would be good so other reders of the article could see the thoughts.
Last thought: perfect timing to let those "sell siders" that bought yesterday, if any, start distributing!
Bill
