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Sales of Capstone product sales in Asia.!
Please look at
http://www.ymatou.com/products?k=capstone+led
Question to everyone here on IHUB...
Enters CAPC the movie business lighting?
Please look at
https://www.capstonefilmlighting.com/a-la-carte-gear
and please compare the similarity in the company logo.
Thanks to all
Hoover CPC BR 30 LED Power Failure Lightbulb online at Sam`s Club!!!
https://www.samsclub.com/sams/br30-power-failure-light/prod20960052.ip?xid=plp:product:1:10
About this item
With one in every room you will never be caught in the dark again
Switch controlled feature allows bulb to continue working during power outages Features a built-in battery that recharges during normal usage
65 watt replacement that uses only seven watts.
Description
This LED Bulb features CPC Switch Technology that allows normal usage of the light during power failures. The light is powered by the internal rechargeable battery that recharges during normal usage, so you don't have to worry about it dying when you need it most! Simply turn the light on and off at the switch to maximize battery life. You will never have to worry about being left in the dark again.
Specifications
Built-in power failure feature
Built-in battery recharges during normal usage
No wiring required
65 Watt Replacement- Uses 7w
Daily use: 650 lumen 2,700K
Power failure: 70 lumen 6,500K
120 ° beam angle
30,000-hour bulb life
Manufacturer Info
For additional questions or concerns regarding this product, please contact the Manufacturer's Customer Service Department at 1.888.570.8889 M-F (9:00AM - 5:00PM EST)
Assembled Country
China
Assembled Size
3.75" x 3.75" x 5"
Component Country
Imported
Warranty Information
Capstone Industries Inc., warrants to the original retail purchaser,this product to be free of defects in material and workmanship for a period of up to one year from date of original purchase. Warranty applies only to the original purchaser of the product.Warranty is limited to consumer use and does not cover parts damaged due to normal wear, abnormal conditions, misuse, or accidents, and is limited to repair or replacement only. This limited warranty does not cover bulbs or batteries, or any part that may become defective due to mishandling. Warranty is effective only upon presentation of dated proof of purchase. Customers are responsible for all postage costs on returned merchandise. No shipping or handling charges will be reimbursed.
Webcast Transcript CAPC Q1 2017 May 16, 2017
http://capstonecompaniesinc.com/wp-content/uploads/2017/05/Transcript-CAPC-Q1-2017-May-16-2017.pdf
Stewart Wallach:
Thank you, Aimee. I appreciate that, and good morning to everyone. I appreciate your time with us today. Before
introducing Gerry McClinton to review the Q1 financial results, I’d like to take just a brief moment to highlight some
of the activities that contributed so favorably to this quarter’s results.
Q1 represented the most significant product line and brand expansion in the Company’s history. The products that
have shipped in Q1 were developed over the course of the last 12 to 18 months. As we did with our original accent
light strategy, we focused the new offerings on niches that were either underexploited or were in need of product
updates. The strategy and resulting product placements yielding 64.2% of the record-breaking Q1 revenues.
Moreover, the addition of the Duracell? branding expanded upon our strategy and further differentiates from that
of our Capstone Lighting? and Hoover? HOME LED branding programs.
At this time, I’d like to introduce Gerry McClinton to review the financials in detail, after which I will comment on
the Company’s outlook, followed by a question-and-answer session. Thank you.
Gerry?
Gerry McClinton:
Thank you, Stewart, and good morning, everyone. Another breaking quarter—record-breaking quarter. As we
review the first quarter 2017, we highly recommend that you’ve also review the 10-K report for 2016. The
Company’s financial results can fluctuate greatly from quarter to quarter, but the 10-K report reflects a full year’s
performance and discusses our strategic plans for the year. So, let’s review the numbers.
Net revenues. For the three months ended March 31, 2017 and 2016, net sales were approximately $6.8 million and
$2.1 million, respectively, an increase of $4.7 million from 2016. In the first quarter of 2017, the Company continued
to have a strong revenue performance in the accent light category in all three brands, including Duracell? LED
Lighting, Capstone? Lighting and Hoover? HOME LED.
During Q1 2017, the Company also provided $256,000 for consumer rebate allowances to support their transition
from old product to new product, as the Company shipped five new products in the quarter. I’d also like to highlight
the international sales for the first quarter 2017, which were approximately $574,000, representing 8.5% of revenue.
Cost of sales. For the three months ended March 31, 2017 and 2016, cost of sales were approximately $5.2 million
and $1.5 million, respectively, an increase of $3.7 million from the previous year. This represented 76.6% and 70.5%,
respectively, of revenue for the quarter. Now, manufacturing costs continued to remain stable in the period.
However, the percent of revenue comparison for 2017 and 2016 has been significantly impacted because of
adjustments in each period.
In Q1 ’17, if we eliminate the effect of the non-recurring cost of the $256,000 consumer rebate allowance, as it was
to support their transition of old goods into new product, then percentage to revenue reduces from 76.6% down to
73.8%. In the period ended March 31, 2016, cost of sales was positively impacted by a $94,000 adjustment for a
reversal of accrued allowances from the previous year. If we eliminate that non-recurring adjustment 2016, the cost percentage to revenue increases from 70.5% to 73.8% of sales. That’s the same percentage as the adjusted 2017 cost of sales.
Gross profit. For the three months ended March 31, 2017 and 2016, gross profit was approximately $1.6 million and
$614,000, respectively, an increase of $1 million in 2016. Gross profit as a percent of sales was 23.4% in the quarter
compared to 29.5% for the same quarter 2016. As noted in the cost of sales comments, adjustments can impact
individual quarterly results. However, the trailing twelve-month results reflect an average of the last four quarters
and are more representative of the trend. The gross profit for the trailing twelve-months was 23.6%.
During the quarter, with the shipment of five new products, the higher margin accent light category represented
40.3% of total revenue, with the new items representing 64.2% of revenue. As a result, the quarterly gross profit
percentage reflects a blended margin that was impacted by special introductory discounted pricing for the new
items. As an example, for one new category, we provided an additional introductory allowance, which reduced its
gross profit to just below 20%. The blended gross profit for other products was 24%, which is actually higher than
the trailing twelve-month gross profit.
Operating expenses: for the three months ended March 31, 2017 and 2016, total operating expenses were
approximately $1.2 million and $655,000, respectively, an increase of $537,000 or 82% compared to 2016.
The following is a summary of the major expenses arranged by category in the 2017 period compared to 2016.
Sales and marketing expenses. For the three months ended March 31, 2017 and 2016, sales and marketing expenses
were approximately $377,000 and $63,000, respectively. That’s an increase of $314,000. The increased expense
resulted mainly from the distribution of royalty payments of $233,000 for the branded licenses that did not occur
last year and the distribution of representative commissions that increased by $96,000 in 2017 from the previous
year.
Compensation expense. For the three months ended March 31, 2017 and 2016, compensation expense was
approximately $360,000 and $309,000, respectively, an increase of $51,000 or 16.6%. Compensation expense
increased as a result of staff payroll increases.
Professional fees. For the three months ended March 31, 2017 and 2016, professional expenses were approximately
$205,000 and $104,000, respectively. That’s an increase of $101,000 or 96.3%. The increased expense in the quarter
resulted from the hiring of an investment banker; increased investor relations including management’s attendance
at various investor shows; increased accounting fees; and the services of a sales consultant to support and develop
the U.S. sales operation effort.
Product development. For the three months ended March 31, 2017 and 2016, product development expenses were
approximately $72,000 and $36,000, respectively, an increase of $36,000. The expense increase is a result of new
product prototype development, including testing and certification and the development costs related to our lighting
technology. We also incurred additional costs related to artwork and package design and patent and trademark
services.
Other general and administrative. For the three months ended March 31, 2017 and 2016, other general and
administrative expenses were approximately $179,000 and $143,000, respectively, an increase of $36,000. The
increase is a result of increased bank processing fees associated to the higher revenue and general insurance liability
premiums.
Net operating income. For the three months ended March 31, 2017, the operating income was approximately
$387,000 compared to a loss of $41,000 in 2016. This is an improved performance of $428,000 over 2016.
Interest expense. For the three months ended March 31, 2017 and 2016 was approximately $22,000 and $58,000,
respectively, a reduction of $36,000 as compared to the period 2016. Despite having a substantial revenue growth
during the quarter, we’ve been able to curtail the need for increased borrowing by negotiating more favorable
payment terms with our overseas suppliers. This has substantially reduced the need and cost for purchase order
funding.
With the increased cash flow resulting from operational profits in 2016, we have also been able to substantially
reduce old director loans, which also reduced the interest expense. Now, effective May 1, 2017, we have negotiated
a 33.3% reduction in processing fees with Sterling National Bank associated with our bank loan. The new fee
structure will further assist in reducing bank funding costs.
Provision for income tax. For the three months ended March 31, 2017 and 2016, the provision for income tax was
approximately $128,000 and $0, respectively. With the first quarter profit, the Company’s NOLs have essentially
been used up and the Company now must accrue for income tax.
Net income. For the three months ended March 31, 2017, the Company had a net income of approximately $251,000
as compared to a net loss of $99,000 in the same period last year. The overall net income improvement in the
quarter ended March 31, 2017 of $350,000 compared to 2016 was a result of the $4.7 million increase in revenue,
resulting from the rollout of five new products. This performance was achieved after the Company provided
$261,000 of promotional allowances and $537,000 of increased operating expenses, mainly resulting from the
license royalty payments.
Liquidity and capital resources. Our principal sources of liquidity are cash-on-hand, cash generated from operations,
availability on our bank line and director funding when required. We believe that our borrowing capacity provides
the Company with the financial resources needed to expand operations and reinvest in our business.
In reviewing the first quarter 2017 balance sheet, you will note that the Company’s cash balance remains strong with
approximately $1.2 million. The Sterling bank debt remained at a zero, in spite of our substantial increase of revenue
and related party notes were reduced from $1.3 million down to $1.2 million. So, let’s review other funding activities.
Operating activities. For the quarter ended March 31, 2017, cash used in operating activity was approximately
$206,000 compared with approximately $1.8 million provided by operating activities in 2016. Net income of
approximately $251,000 in the quarter and a $1.2 million increase in accounts payable helped to offset cash used in
the quarter. Accounts receivable increased by approximately $1.5 million due to the higher revenue and inventory
increased by approximately $148,000.
The Company’s cash flow from operations are primarily dependent on our net income adjusted for non-cash
expenses and the timing of collections of receivables, levels of inventory and payments to suppliers. Sales are
influenced significantly by the timing and launch of new products into the marketplace and, in this first quarter of
2017, we have shipped five new products.
Investing activities. Cash used for investing activities in the quarter ended March 31, 2017 was approximately
$13,000 compared to $5,000 in 2016. The Company continues to invest in new product molds and tooling. With
the product expansion into new LED and home lighting categories, the Company’s future capital requirements may
increase.
Our Hong Kong Management Team has a task of continually reviewing and negotiating favorable payment terms
with factories, which will reduce the amounts of upfront cash required to have available when initiating a new project. Management believes that our cash flow from operations and additional borrowings will provide for these
necessary capital expenditures.
Financing activities. Cash used in financing activities in the first quarter 2017 was approximately $250,000 compared
to $1.7 million in the same period 2016. During the quarter, the Company was able to reduce director’s loans and
accrued interest by $137,000, some of which was outstanding since 2010 and 2013; maintain the Sterling bank loan
at zero balance; repurchase and retire $150,000 of Company shares; and retain the cash-on-hand balance of $1.2
million.
At March 31, 2017, the Company was in compliance with all agreements pursuant to existing credit facilities.
Management believes that our cash flow from operations, continued support from Sterling National Bank and
support from our directors will provide sufficient financial resources for the Company during 2017.
This concludes my financial summary for the first quarter 2017. I will now turn the call back to you, Stewart.
Stewart Wallach:
Thank you, Gerry. Appreciate the detail. To reiterate, the Company shipped five new product offerings in Q1,
including: our patented Capstone Power Control light bulb, our indoor LED surface mounted spotlight, our LED
motion sensor light, which is a dual-mode product, operates both through solar power and battery power; our
outdoor gooseneck fixture light, and our puck light with a new swivel base, directional base.
Our third brand was launched in Q1 under license from Duracell?. Our growth over 2016 for the same period was
$4.7 million, which represents our fourth consecutive record-breaking quarter. We expanded product placement in
the Pacific Rim, through the efforts of our Capstone Hong Kong office, including HomePro in Thailand and Bunnings
in New Zealand, as part of our customer base.
We exceeded our guidance, as stated in April 2017 of $5.5 million by an estimated 20% and continued to build
backlog, which we expect to yield record Qs two and three. Our strong operating leverage remains a constant and
is expected to continue to drive earnings growth.
The launch of our third generation of accent lighting products further validates the sustainability of the category.
Not only did we bring this third generation to market under a new brand, but we also expanded the product features
and, most importantly, the product performance.
We remain resolute in meeting or exceeding consumers’ expectations.
In conclusion, before we address some questions that have come in by e-mail, I think it is important to acknowledge
all Capstone associates for their hard work and obvious achievements. It is through their perseverance and
exhaustive efforts that allows us to continue to benefit from the Company’s operating leverage. Management
remains committed to containing its overheads while pushing the limits in product innovation. Our momentum has
never been more obvious, as we complete this fourth consecutive record quarter.
On a side note, having just returned from the National Hardware Show, it was apparent that the new product
introductions, as well as the forward-looking product planning, were received quite well by our noted retail partners.
So, with that, I would like to personally thank our long-term shareholders for your continued support and, to our
new and potential shareholders, I’d like to welcome you to this exciting time in our company’s history. I think we’re
now ready for some questions.
Operator:
Thank you. We will now be conducting a question-and-answer session. Due to time constraints, we ask that all
callers limit themselves to one question. If you have additional questions, you may re-queue and those questions
will be addressed, time permitting.
If you would like to ask a question, please press star, one on your telephone keypad. A confirmation tone will indicate
your line is in the question queue. You may press star, two 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
star keys. One moment, please, while we poll for questions.
Aimee Gaudet:
Okay, in the meantime, we’d like to address some questions that came in via e-mail. First question. Based on your
recent PR, if Capstone already sells to all of the major big box customers, why the need to introduce to new potential
customers at the Las Vegas Hardware Show?
Stewart Wallach:
It’s important to point out that participation at a National Hardware Show is more of an opportunity for us to see
our international customer base, which is strong in attendance, but also introduce product concepts and directions
that we are contemplating from the market to our existing domestic customers, which allows us to gauge their level
of interest. As I said earlier, the response and the feedback we received was very favorable.
Aimee Gaudet:
Okay, great. Thank you. Next question. Are you waiting for the final report from Wilmington before committing to an IR plan?
Stewart Wallach:
Actually, Wilmington would not be involved in that end of our decision-making. We do have an IR plan in place. It includes investment conferences and continued PR when newsworthy. This effort is currently being managed internally and we are reviewing IR firms that would be a good fit for our company going forward.
Aimee Gaudet:
Okay, great. Gerry, maybe you can answer this question. Do you anticipate a 10% pretax margin for 2017?
Gerry McClinton:
I would say our range is going to be between 9% and 10% tax margin is our target. It has been reflected in past revenue filings.
Aimee Gaudet:
Okay, great. Next question. Which particular product campaigns have been a positive surprise in 2017? Are you
able to timely fill demand if needed?
Stewart Wallach:
It would be virtually impossible, at this point, to label that which would be a surprise. It’s simply too early in the
sales cycle to give a meaningful response. However, let’s focus on the success we’ve had in product placement. We
were successful in placement of all our new products. However, it’s important to point out that the consumer
response is the true indicator and that’s the results we’re waiting for, at this point in time.
Aimee Gaudet:
Okay, thank you. Next question. Is the social media campaign for Capstone products in the works?
Stewart Wallach:
Well, we continue to explore where social media can impact our business significantly. We are determined to better
maintain our Facebook presence. We’ve just actually concluded discussions on that point and we have created a
Twitter account that will allow for updating in the near future. However, again, we will explore where social media
can positively impact our business and that’s where we’ll place our efforts.
Aimee Gaudet:
Thank you. Next question. You stated in the 10-K that you may offer private label accounts to international
customers. Can you comment on the potential for revenue stream?
Stewart Wallach:
No, we can’t comment, at this time. It’s premature.
Aimee Gaudet:
Next question. Having just completed the International Hardware Show, were you pleased with the show and were
there any products that came out of it?
Stewart Wallach:
Well, as I now mentioned earlier in the webcast, we were pleased with the attendance but, most particularly, the
positive feedback we received from our channel leaders. I should point out, we have a lot of work to do, subsequent
to the show, and we anticipate following up with personal visits by midsummer.
Aimee Gaudet:
Okay. Last question is directed towards Gerry. So, it appears that international business has become rather stable
and you have mentioned growth opportunities that are being established through Capstone HK. Can you comment
on this and the potential revenue impact?
Gerry McClinton:
It would be difficult to forecast other revenue potentials only because we don’t have any point of sale data at these
early stages. However, Capstone Hong Kong has closed transactions with both HomePro in Thailand and Bunnings
in New Zealand, both leading home improvement chains.
Aimee Gaudet:
Okay, great.
Stewart Wallach:
Thanks, Gerry.
Operator:
A quick reminder, if you are with us on the phone line and would like to ask a question, please press star, one on
your telephone keypad.
One moment, please, while we poll for questions.
Thank you. Our first question comes from the line of Tomer Cohen with Five Roads Capital. Please proceed with
your question.
Tomer Cohen:
Thanks. My question is about the bath vanity light. I’m just curious if you can give us an update on how those are
progressing.
Stewart Wallach:
Yes, good question. Let me share with you, when we initially launched the feature-rich bath vanity light with the
Bluetooth, etc., and we did put it into the market for testing, we learned quite a bit, most of which, we learned about
the designs that are what we would call more mainstream. The initial designs we had were very contemporary and,
as such, were received only moderately well.
More importantly, the price position. The initial designs were pushing the limit at $120 to $140. At the recent
Hardware Show, we had a new development that was accomplished with our overseas team and that is that we
created a different approach to initiating the nightlight feature. I believe you’re familiar with that. The nightlight
feature being that we had integrated into the bath vanity light that, when you walk into a bathroom area at night,
late at night, that the light automatically goes on, triggered by a microwave sensor, and is a soft glow, just so you
could find your way in the dark.
The initial nightlight design was very costly, as it incorporated a battery and extensive circuitry. We did come up
with a cost-down approach to that, introduced it just at the Hardware Show, and it was received very favorably.
Now we’re going to focus our attention to working with one to two of our retail accounts, as it relates to the designs
that they feel would be most meaningful.
Tomer Cohen:
Can you give me a sense for timeline for when the first designs will be on the shelves?
Stewart Wallach:
I would say that the initial design, considering we’re just in the design phase and those discussions are going to be
opening in the next month or so, during my personal visits, I would say, really, we’re talking the beginning of 2018.
Tomer Cohen:
Okay. Great, I’ll get back in queue.
Stewart Wallach:
Thanks, Tomer.
Operator:
Our next question comes from the line of Bill Chapman of Private Investor. Please proceed with your question.
Bill Chapman:
Good morning, everyone. Congratulations, also, on a very fine quarter. Your hard work is being reflected here. On your CPC bulb pricing, do you have flexibility, if you either determine it has to be at a lower price
point. Can you influence Sam’s or—tell me what your thoughts are on that?
Stewart Wallach:
Well, let me go back a little bit, if I can, for some people that may or may not know this, but the CPC bulb
development was over the course of two plus years and we were ready with the product in mid-2015, I believe. The
problem was that, at that point in time, Bill, retail price positions of LED bulbs started to drop feverishly and, today,
for instance, the same bulb that sold back then at $9.99, $10.99 today is selling for anywhere from $1.49 to $1.99.
So, when somebody looks at buying a power failure product and/or a bulb with additional features in it, they certainly are going to weigh and measure the impact of, what does that performance mean to me, relative to what
it’s going to cost me to have just a regular bulb?
On that note, we delayed the introduction of the product, we actually changed our manufacturer, we changed our
design and we did go through a significant cost-down exercise. The product that is hitting the market right now,
which is currently being shipped out to Sam’s Clubs, is the costed down version. I can comfortably tell you that our
product will be at retail in a very aggressive price position and is a quality product, more important than anything
else.
There are a number of emergency type bulbs that have surfaced in the marketplace over the course of that last year
and a half to two years, but none of which we believe have the integrity and the circuitry and the feature sets that
we’ve put into ours but, at the end of the day, this is all going to be determined shortly by how the consumer
responds to it. Do they want to pay a premium? Now, on that note, I can tell you that the price ranges on our bulb
should be very competitive and fall into the $10 to $12, $13 range at retail.
Bill Chapman:
Okay. That sounds way below what any competitor is charging. Is that true?
Stewart Wallach:
Well, to the best of our knowledge. There are some companies that are doing some direct online. We’ve taken a
look at the product. You know, again, claims of what a product does and doesn’t do are always something that the
consumer has to make the final decision and the vote but, at the end of the day, to the best of our knowledge, we
are substantially under the market for any recognized supplier of any consequence.
Bill Chapman:
Sam’s does not have any competing bulbs. It’s just yours only. Is that true?
Stewart Wallach:
In the area of power failure?
Bill Chapman:
Yes.
Stewart Wallach:
Yes, of course. Yes.
Bill Chapman:
Okay.
Stewart Wallach:
They would not carry a competing product.
Bill Chapman:
Yes, they’re committing to you to be the product for that category. Okay, just want to make sure.
Stewart Chapman:
Thank you.
Bill Chapman:
Let me ask you also real quick. I’m sorry, go ahead?
Stewart Wallach:
No, I said thank you. I’ve just, I see we have a number of callers…
Aimee Gaudet:
We have a number of...
Stewart Wallach:
I just wanted to make sure we were moving this ahead.
Bill Chapman:
Okay, one quick thing on your strategic initiative. Where are we at on this process?
Stewart Wallach:
The strategic initiative, that being with the Wilmington...
Bill Chapman:
The investment banker? Yes, that’s right.
Stewart Wallach:
Yes. In fact, we’re having meetings regularly. We are nearing in on some opportunities that they’ve identified. The
first step in that process will be for them to provide us phone interviews before action would be taken on any of
those measures, whether that be us looking at other companies, us looking at other product lines, etc. It’s important
that we remain independent on this, to the best of our abilities. So, we have not tried to skew the input by giving
them our opinion on these matters until they’ve finalized their assessment, which I would expect will be just in the
few weeks ahead.
Bill Chapman:
Okay. Thank you very much.
Stewart Wallach:
You bet, Bill. Good talking with you.
Operator:
Our next question comes from the line of George D’Angelo of Private Investor. Please proceed with your question.
George D’Angelo:
Hey, Stewart. Good morning.
Stewart Wallach:
Good morning, George.
George D’Angelo:
Thanks for a good quarter. Just wanted to see if, given you guys had a great first quarter, if you have any update to
the full-year guidance, I think 25% to 30% growth for 2017 that you gave on the last call.
Stewart Wallach:
Well, if you know, historically, I’m not comfortable with giving any extended guidance, only because the business is
such a dynamic one. However, what I am comfortable with saying, at this point, is that the backlog is building very
favorably.
It’s a very strong backlog, at this point and, again, depending on shipping windows, that’s why I lumped Qs two and
three together, because it’s very hard to define an exact quarter when, at the end of any one quarter, George, for
instance, we may have $1 million of containers sitting, waiting to be picked up at the dock and they end up being
picked up two days later and now they’re Q3 business activity.
What I will tell you is that we’re very, very comfortable with Q2 and Q3 being record quarters. Let me answer it that
way.
George D’Angelo:
Okay, great. Thank you. Thanks, guys.
Gerry McClinton:
Thanks, George. Appreciate it.
Operator:
Our next question comes from the line of Sean Marconi of Private Investor. Please proceed with your question.
Sean Marconi:
Hey, guys. Congrats on the good quarter.
Stewart Wallach:
Good morning, Sean.
Sean Marconi:
A couple of questions—hey, good morning. I have a couple of questions. So, obviously, you started with the Hoover?
co-branding deal with Sam’s Club, correct?
Stewart Wallach:
That’s correct.
Sean Marconi:
So, Capstone’s showing success with that brand selling inside of Sam’s Club. Obviously, Costco wanted to try to do
something similar with a co-brand deal with Duracell?. How did that Duracell? relationship come about?
Stewart Wallach:
Well, it’s like any other licensing arrangement. You have to be vetted, and I can tell you the vetting process is quite
extensive, particularly a company like Duracell?, who is very strong in their licensing area. They’ve dedicated
tremendous amount of resources to their licensing department, so the vetting process is as difficult and as
challenging as anything I’ve seen and, of course, obviously, we’ve passed that. Their vetting process, being a strong
engineering company, does not just incorporate the stability of a company from its financial perspective, but also
you have to be able to meet the strong engineering criteria that they’ve put forward.
In fact, they’ve actually improved on parts of our product. We learned a bit from them. But the actual process that
initiated this was a collaborative effort between us and our client, where they actually recommended and felt that,
because they were putting such an increased dedication to the brand, that it would be suitable for us not to displace
Capstone in any way, but to enhance the performance of one particular category that they had such a long run with.
So, it was a collaborative effort and then, of course, we went through the rigorous qualification process.
Sean Marconi:
Yes, no, it’s interesting. I mean, I’ve been going to Costco quite a bit. I love Costco, anyways, but I would go even
frequently to do the proper due diligence on some of your products and I’ve noticed your gooseneck lamps.
Capstone branded lamps are now in the Costco’s here in Michigan and the Duracell? puck light product is also now
stocked in my Costco.
So, I recently bought some and testing them out and, so far, they’re working out pretty well. But I just, from a co-
branding perspective—how would you compare Duracell’s brand compared to Hoover’s brand? Do you have any
market data on how many more you may sell of…?
Stewart Wallach:
No, I...
Sean Marconi:
…Duracell? versus the Hoover??
Stewart Wallach:
Sean, at this point, I couldn’t comment on that. Keep in mind that the Hoover? HOME LED brand was something of
our making and of our design, so they were not openly licensing their brands. We actually thought that there was
strength in the brand, being an iconic brand, as it is, and the ability to extend that brand to other categories, following
a research project, which we had hired an independent company called Global Radius to do a market study for us. I
will tell you that study cost us somewhere around $20,000 before we ever even approached TTI.
So, at the end of the day, it’s doing exceedingly well, but I can’t speak in terms of comparisons because, one, we
don’t have experience with both of them and it would just be—Duracell? is one of the strongest brands in the entire
hardware department, but I couldn’t speak to what that actually translates to as a percentage, Sean. I couldn’t do
that
Operator:
Our next question comes from the line of Mike Schellinger with MicroCapClub. Please proceed with your question.
Mike Schellinger: Thanks to mikeonmicrocaps
Yes, thanks for taking my question. Your product portfolio, you’ve done a great job of diversifying it here and I was
wondering if you could comment with some kind of quantification, maybe, like how many products in 2016 were,
say, greater than 5% or 10% of revenue and where you expect to be at the end of 2017, or some other color to just let us know how the diversification is looking?
Stewart Wallach:
I think that we’ll be able to and we try to give you some feel for that by telling you that, in the Q1, 64% of our activity
was contributed by new products. That’s probably the best read, at this point, but I want to further that, Mike, by
saying, again, based upon the consumer response to that 64% of placement is where the future of the category is
evolved from.
So, I would say probably by the end of Q3, we would have a much better idea of how many of those products will be
leading us into 2018 and, at the same time, we are also introducing other products, just as we did before.
Our production and our development cycle is about 12 to 18 months. So, whereas you’re seeing right now products
that were developed 12 to 18 months ago, we also have a whole host of other products and extensions that have
been developed over the last 12 to 18 months that would surface into 2018 and ’19. But, in so far as how many of
those would represent what percent, I wish I could provide more color, but it is premature.
Operator:
Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of the question-and-answer
session. I would now like to turn the floor back over to Management for closing comments.
Stewart Wallach:
Thank you, Christine.
Well, I appreciate everybody participating. We also enjoy and appreciate the increased participation at your level
through questions-and-answer session.
We’re very, very bullish on the Company and we’re making some very great things happen. But I think it’s important,
particularly for the new shareholders to know that the Company is not an overnight sensation. We’ve been in
development for some time. We’re always focused on building sound business fundamentals and I think that we
are just now starting to really reap the rewards and acknowledge the potential of the Company.
So, I look forward to reporting further, later in the quarter, and we will always provide material updates and things
that are newsworthy. I think it’s important to point out and reiterate that I personally am very adverse to what I
consider to be fluff PR and non-material news, so we’ve been consistent about that for a number of years and it
seems to serve us well. So, we will continue material reporting but, most importantly, we look forward to continue
to post record results.
So, again, I thank you all for participating and have a great summer.
Operator:
Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank
you for your participation and have a wonderful day.
Capstone Companies, Inc.
350 Jim Moran Blvd. Suite 120 Deerfield Beach, FL 33442
Ph: (954)252-3440 ? Fax: (954)252-3442 ? Email: info@capstonecompaniesinc.com
www.capstonecompaniesinc.com
Capstone Light with Sound Bath Vanity Light
Hello tadhg,
To this day I have not found anything yet, where one can buy the CPC -
Capstone’s Power Control built-in power failure replacement bulb.
But the other new product:
Capstone Light with Sound Bath Vanity Light i have found on Amazon.
https://www.amazon.com/Capstone-Light-Sound-Bath-Vanity/dp/B01HTZVUPC/ref=sr_1_16/138-6032356-4129764?ie=UTF8&qid=1495050952&sr=8-16&keywords=Capstone
Price: $144.83
Light & sound - 3 LED lights with bluetooth technology
900 Lumens of soft white 2700k lighting
Motion activated nightlight
Built in moisture-resistant bluetooth speakers let you play your favorite music
Works with any bluetooth enabled device
I am sure the CPC will be contemporary sold on Amazon......
Revenues in the past 4 years for the second Quarter Results
2016
Total revenue 8.902 Million $
Gross profit margin 23.9 %
2015
Total revenue 0.290 Million $
Gross profit margin 18.4%
2014
Total revenue 1.181 Million $
Gross profit margin 29.9%
2013
Total revenue 1.027 Million $
Gross profit margin 19.2%
Capstone stated in the report of the first quarter of 2017:
“The continued strong interest in our LED lighting products produced another record backlog level at the end of the first quarter. The order activity and backlog level drives our expectation that the second quarter of 2017 will exceed the same prior-year period and be the strongest second quarter in company’s history.”
During the quarter, 5 new products were shipped which represented 64% of revenue. With the introduction of these new products, the quarter’s gross margin of 23.4% is a blended rate which reflects introductory promotional pricing to introduce the new items.
----------------------------------------------------------------------
My personal account for a possible second quarterly result in August 2017 is:
Assuming that at least the same sum with the previous products are achieved, we are again at least 8.902 million $.
The 5 new products represented 64% of revenue in the first quarter of 2017.
8.9 + 64 % (5.7) = 14,6 million $ at least
With a good margin (the Company believes that the component and production costs will continue to lower), better internalional sales
and a broader acceptance of the products by Duracell batteries, I think that we will generate about 2.5 million additional.
My personal estimate for the second quarter of 2017 is 17 Million $
Quarterly Report (10-q)
http://ih.advfn.com/p.php?pid=nmona&article=74593444
My picked Highlights from the full Quarterly Report
1
Nature of Business
Since the beginning of fiscal year 2007, the Company has been primarily engaged in the business of developing, marketing and selling consumer products through national and regional retailers and distributors in North America. Capstone currently operates in five primary product categories: Induction Charged Power Failure Lights; LED Night Lights and Power Failure Lights; Motion Sensor Lights; Wireless Remote Control Outlets and Wireless Remote Control Accent Lights. The Company's products are typically manufactured in China by third-party manufacturing companies.
2
The Company is a public holding company organized under the laws of the State of Florida. The Company designs and markets consumer oriented LED lighting products for distribution globally with a primary focus on the North American markets. The primary operating subsidiary is Capstone Industries, Inc., a Florida corporation located in the principal executive offices of the Company ("CAPI"). Capstone International Hong Kong, Ltd., or "CIHK", was established to expand its product development, engineering and factory resource capabilities in Hong Kong. Capstone's LED lighting portfolio consists of stylish, innovative and easy to use consumer LED lighting products, including power failure multi-function handheld lights, power failure multi-function nightlights, decorative nightlights, wireless motion sensor lights, remote control battery powered accent lights, remote control outlets, bath vanity lights and outdoor LED fixtures. The Company's products are sold under CAPI brand name, Capstone Lighting® as well as under a nationally recognized licensed brand named Hoover ® Home LED. The Company believes that LED is becoming increasingly more mainstream, and, as such, the Company believes that the component and production costs will continue to lower, which should allow a smaller innovative company like ourselves to capitalize on non-commodity products utilizing LED. The Company's focus is the integration of LED into most commonly used lighting products in today's home. Capstone is positioned well to participate in these expanded product categories which will fuel the Company's further growth.
3
Strategy
The global LED lighting market is undergoing a perceived significant transition driven by rapid adoption of energy efficient LED lighting products. LED lighting products offer numerous advantages for the user which are driving demand (improved light quality, durability, longer life, cooler temperatures, lower cost of operation). These advantages in addition to increased regulatory requirements banning inefficient lights have accelerated growth of LED products and are expected to continue to accelerate the adoption of energy efficient LED technologies going forward. According to Allied Market Research, in a forecast in September 2014, the global LED market is forecasted to grow to $42 billion by 2020.
4
Moreover, in 2014, Capstone also acquired the exclusive license and sub-license to an advanced power failure technology. The Company's proprietary technology is referred to as Capstone Power Control or CPC. It is a patented technology and the U.S. patents were issued August of 2016. The CPC was developed over a two-year period by a group of MIT PhD Engineers operating as AC Kinetics, a private company. This technology can potentially be incorporated into a host of products. The Company is exploring ways to commercialize this technology and whether it will result in any significant financial benefit is uncertain at the time of this report.
5
The Company has expanded CIHK's operations in Hong Kong, with personnel experienced in engineering and design, product development and testing, product sourcing, international logistics and quality control. These associates work with our OEM factories to develop and prototype new product concepts and to ensure products meet consumer product regulations and rigorous quality control standards. All products are tested before and during production by Company personnel. This team also provides extensive product development, quality control and logistics support to our factory partners to ensure on time shipments. In anticipation of possible Company growth, we have continued our investment in CIHK in an effort to ensure overseas factory performance meets stringent operational tolerances to maintain our competitiveness and operational excellence.
We have expanded our international sales by leveraging our relationships with our existing global retailers and by strengthening our international product offerings. Our Hong Kong office assists us in placing more products into foreign market channels as well. In 2016, we surpassed our initial expansion goal with product sales in Australia, Canada, Japan, South Korea, Taiwan and the United Kingdom. For the three months ended March 31, 2017 and 2016, international sales were $574,300 and $1,016,900, respectively. International sales for the three months ended March 31, 2017 and 2016 were 8.5% and 48.9% of net revenue.
6
The Company has established product distribution relationships with numerous leading international, national and regional retailers, including but not limited to: Amazon, Bunnings, Costco Wholesale, Home Depot, Home Pro, Sam's Club, The Container Store and Wal-Mart.
The Company introduced Capstone brands to markets outside the U.S., including Australia, France, Iceland, Japan, Mexico, New Zealand, South Korea, Spain, Taiwan, Thailand and the United Kingdom. This continues to be a promising distribution channel with international sales for the year ended December 31, 2016, increasing 100% up to $2.4 million from $1.2 million the same period in 2015 and representing 8% of net revenue in 2016 and 92% of net revenue originating in the United States.
7
Sales and Marketing
In order for continued sales growth in the retail market, the Company is focused on expanding its market share at existing accounts by expanding its portfolio of both branded and private label LED lighting products. The Company will also be targeting direct to retail clients through CIHK for products that fall outside Capstone's branded categories but are innovative and preferably exclusive to CIHK. This should allow for quicker revenue expansion as time consuming product and brand development efforts are the responsibility of the retailer.
Capstone depends on e-commerce efforts of Amazon and other on-line retail customers in lieu of pursuing our own aggressive in-house e-commerce effort. We believe this reliance on Amazon and other retail customer e-commerce is the most cost efficient and effective approach for the Company. We maintain a Facebook website at https://www.facebook.com/powerfailuresolutions/ and our sales staff may use Social Media from time to time to promote our products and brands. We have not developed a specific Social Media campaign based on third party sponsors or promotors.
8
CONSOLIDATED OVERVIEW OF OPERATIONS
Revenue, net
For the 3 months ended March 31, 2017 and 2016, total net sales were approximately $6,752,200 and $2,078,200, respectively, an increase of $4,674,000 or 224.9 % from the previous year.
In the 3 months ended March 31, 2017 the Company continued to have a very strong revenue performance in the Accent Light Category in all three-brands including Duracell LED Lighting, Capstone Lighting and Hoover Ò HOME LED. In the quarter ended March 31, 2017, the Company provided $256,100 for marketing and rebate allowances for product promotions. International sales for the 3 months ended March 31, 2017, and 2016 were approximately $574,300 or 8.5% of net revenue as compared to $1,016,900 or 48.9% of net revenue for the same period in 2016.
Gross Profit
For the 3 months ended March 31, 2017 and 2016, gross profit was approximately $1,579,500 and $613,600 respectively, an increase of $965,900 or 157.4% from the same period in 2016. Gross profit as a percentage of sales was 23.4% in the quarter compared to 29.5% for the same quarter in 2016. As noted in the Cost of Sales comments, adjustments can impact individual quarterly results, however the trailing 12 months' results reflect an average of the last four quarters and are more representative of the trend. The gross profit for the trailing 12 months is 23.6%.
Net Operating Income
For the 3 months ended March 31, 2017 the operating income was approximately $387,500 compared to a loss of $41,200 in 2016. This is an improved performance of $428,700 over the same period 2016.
Net Income
For the 3 months ended March 31, 2017, the Company had a net income of approximately $250,700 as compared to a net loss of $98,900 in the same period last year.
The overall net income improvement in quarter ended March 31, 2017 of $349,600 compared to 2016, was the result of the $4,674,000 increase in revenue, resulting from the rollout of 5 new products.
Capstone Companies, Inc. Reports First Quarter 2017 Revenue of $6.8 Million
Capstone Companies, Inc. (CAPC) (“Capstone” or the “Company”), a designer of innovative LED lighting solutions including power failure lighting, today reported its financial results for the first quarter 2017.
Stewart Wallach, Capstone’s CEO, commented, “Our brand strategy is working and has created differentiation for retailers in competing channels enabling the Company to expand penetration in the channel for long term growth.
“The continued strong interest in our LED lighting products produced another record backlog level at the end of the first quarter. The order activity and backlog level drives our expectation that the second quarter of 2017 will exceed the same prior-year period and be the strongest second quarter in company’s history.”
First Quarter Highlights
Revenue of $6.8 million exceeded guidance of $5.5 million, and more than tripled from $2.1 million in the prior-year period. Gross profit more than doubled to $1.6 million over the prior-year period
First quarter revenue of $6.8 million improved $4.7 million over the first quarter of 2016. With this record quarter behind us, the trailing 12 performance puts the revenue at $35 million which would be an increase of 15% compared to 2016 year-end.
During the quarter, 5 new products were shipped which represented 64% of revenue. With the introduction of these new products, the quarter’s gross margin of 23.4% is a blended rate which reflects introductory promotional pricing to introduce the new items. Gross profit doubled to $1.6 million over the prior-year period.
Total Operating Expenses were $1.2 million up from $655 thousand in 2016. The operating expense increases were mainly the result of increased royalty payments due to higher revenues.
The Company repurchased and retired $150 thousand of company stock and paid down $137 thousand of old director loans during the quarter. Income from operations increased to $387 thousand as compared from a loss of $41 thousand in 2016. That is an operating improvement of $428 thousand from the prior year period.
On Ebay
http://www.ebay.com/itm/Capstone-6-LED-Wireless-Puck-Lights-with-Remote-Control-White/322474922610?_trksid=p2045573.c100508.m3226&_trkparms=aid%3D555017%26algo%3DPL.CASSINI%26ao%3D1%26asc%3D41376%26meid%3D561879220c4e41069ec250c663727945%26pid%3D100508%26rk%3D1%26rkt%3D1%26
Capstone 6 LED Wireless Puck Lights with Remote Control White are a
Top selling product with a 4,8 of 5 star rating.
Where to Purchase the products of Capstone Industries
And also at EBAY
http://www.ebay.com/sch/i.html?&_from=R40&_trksid=p2322090.m570.l1313.TR0.TRC0.H1.TRS0&_nkw=%20Capstone
On Ebay, they can even keep track of how many Capstone products so far Have been sold.
The 6 LED Puck Lights Wireless with Remote Control and Batteries sell very well.
and Amazon
https://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Daps&field-keywords=+Capstone
@ URAN
Sure, the Corporate Website of Capstone Companies (CAPC) is
http://www.capstonecompaniesinc.com/" rel="nofollow" target="_blank" >http://www.capstonecompaniesinc.com/
But detailed information about their products can only be found at the
100% subsidiary Capstone Industries.
http://www.capstoneindustries.com/" rel="nofollow" target="_blank" >http://www.capstoneindustries.com/
I think, Capstone needs a direct Link from
http://capstonecompaniesinc.com/brands/products/" rel="nofollow" target="_blank" >http://capstonecompaniesinc.com/brands/products/
to
http://www.capstoneindustries.com/" rel="nofollow" target="_blank" >http://www.capstoneindustries.com/
Here you can get for example detailed information about the CPC LED bulbs.
Capstone Power Control BR30 Replacement LED Bulb
Be prepared during any power outage with Capstone’s Power Control (CPC) BR30 (65 watt equivalent) built-in power failure replacement bulb. Our (worldwide patent pending) power failure detection and on/off switchable back-up battery lighting technology exemplifies innovation, convenience and affordability.
CPC provides extended light hours during power failure because it can be switched on or off as needed. It works for lamps, ceiling lights, chandeliers, wall fixtures and other fixtures with single or multiple bulbs on the same circuit. Switch ability allows for days of lighting.
During a power outage, our CPC switch technology allows for normal usage of light by simply turning ON or OFF at the switch.
Simply replaces existing 65 watt bulbs
Built-in battery recharges during normal use.
LEDs last up to 30,000 hours
Brightness: 600 lumens daily use
Non-dimmable
Use with existing fixtures – NO WIRING REQUIRED
CPC Switch Technology extends rechargeable battery life in power failure mode.
CPC works with a single or multiple bulbs on the same circuit.
Capstone Power Control A19 Replacement LED Bulb
Be prepared during any power outage with Capstone’s Power Control (CPC) A19 (40 watt equivalent) built-in power failure replacement bulb. Our (worldwide patent pending) power failure detection and on/off switchable back-up battery lighting technology exemplifies innovation, convenience and affordability.
CPC provides extended light hours during power failure because it can be switched on or off as needed. It works for lamps, ceiling lights, chandeliers, wall fixtures and other fixtures with single or multiple bulbs on the same circuit. Switch ability allows for days of lighting.
During a power outage, our CPC switch technology allows for normal usage of light by simply turning ON or OFF at the switch.
Simply replaces existing 40 watt bulbs
Built-in battery recharges during normal use.
LEDs last up to 30,000 hours
Brightness: 470 lumens daily use
Non-dimmable
Use with existing fixtures – NO WIRING REQUIRED
CPC Switch Technology extends rechargeable battery life in power failure mode.
CPC works with a single or multiple bulbs on the same circuit.
Now let the games begin for CAPC....
COMPANY STRUCTURE
Our overarching global structure is built upon the operating subsidiaries being independently self-sustaining, while synergistically collaborating with each other for the efficient expansion and optimization of the overall organization. Each aspect of the company’s structure is designed to take advantage of emerging opportunities and niche consumer product solutions on national and international levels.
A part of the product videos on youtube
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COMPANY OVERVIEW
Capstone Companies, Inc. (CAPC) is a public holding company organized under the laws of the State of Florida. The company is a leading designer, manufacturer and marketer of specialty LED lighting solutions and innovator of other specialty consumer products which are distributed globally, countries including Australia, Iceland, Japan, Korea, Mexico, North America, South America, Spain, Taiwan and United Kingdom.
The company develops, manufactures and sells a broad range of stylish, innovative and easy to use LED lighting products including bath vanity lights, multi-task lights, patented power failure light bulbs, portable accent lighting, power failure multi-function handheld lights, power failure plug-in decorative lighting, multi-function nightlights, outdoor LED fixtures, under cabinet lighting and wireless motion sensor lights. The power failure lighting and security products were initially sold under its wholly – owned subsidiary Capstone Industries’ brand name through 2015.
In 2015 the company secured the N.A. trademark license for the Hoover® brand for LED lighting products. The Hoover® name is a 100 year old household icon and one of the most trusted brands in America. The addition of this brand allows for flexibility and differentiation within the Companies’ varying channels including noted big box retailers as Costco, Home Depot, Lowes, Office Depot, Sam’s Club, Target and Walmart. CAPC Corporation seeks to deliver strong, consistent business results and superior shareholder returns by providing consumers on a global basis with unique products that make their lives simpler and safer.
The company oversees the manufacturing of its products, which are currently all made in China by contracted OEM manufacturers, through its two wholly owned operating subsidiaries; (a) Capstone Industries, Inc., a Florida corporation organized in 1997 and acquired on September 13, 2006 (“Capstone”) (b) Capstone International Hong Kong Limited (“Capstone HK”) and (c) Capstone Lighting Technologies, a Florida limited liability company (“CLTL”)
CAPSTONE INTERNATIONAL HK
The Hong Kong based Capstone International HK subsidiary has been expanded to provide a broad suite of sourcing services to include project and logistics management. While being the main provider of these services to Capstone Industries, the company believes that its overseas relationships can be leveraged to serve a broader client base. The expansion includes a focus on quality control, product development /engineering and manufacturing to encompass packaging and printing. A sourcing partner is an invaluable asset to many companies lacking production expertise or manufacturing relationships in the Pacific Rim area. This is especially true for product manufacturing that must be
produced cost effectively within rigid quality specification standards.
Beyond sourcing, Capstone International HK is in an envious position to independently identify, develop and market emerging products and technologies internationally. These opportunities can reach fruition through partnerships,
licensing arrangements or independently developed through internal resources, leading to expanded product offerings
and sales in the Asian and European markets in addition to new channels within the Americas. Larry Sloven will be leading the International HK business unit, having resided in this region for 20 plus years mastering the skills of business development, relationship building and the cultural communication nuances of the surrounding Asian markets.
CORPORATE STRATEGY
Our corporate mission is to develop and maintain positions of innovation and technical leadership by continually introducing new ideas and concepts to our consumer product categories, while maintaining competitive value pricing. Leveraging our product successes and expanding sales channels is key as our brands continue to gain traction at retail by merchandisers, buyers and consumers. Toward that end, the company completed a re-branding effort for its Capstone branded product that enhances its image further and is more reflective of its unique product innovations and technology advancements.
In 2012 the Company executed a strategy to further nourish the company’s product development endeavors. The company made an investment in AC Kinetics, Inc., to confidentially explore and develop certain inventive concepts the company has conceived. These concepts are typically very complex and will yield intellectual property which will further distance the companies’ products from off–the-shelf products commonly marketed at retail. (Read more about AC Kinetics)
The company plans to maximize its proprietary technologies through select licensing arrangements and considers selective acquisitions or investments in businesses with superior technology / product development capabilities – or that could benefit from our leadership capabilities and strategic direction.
http://www.capstoneindustries.com/index.php/product-category/power-failure-led-indoor-lighting/
http://www.capstoneindustries.com/index.php/product-category/power-control-led-indoor-lighting/
http://www.capstoneindustries.com/index.php/product-category/hoover/
http://www.capstoneindustries.com/index.php/product-category/led-outdoor-lighting/
http://www.capstoneindustries.com/index.php/product/wireless-led-security-light/
Urgent, please take a look on the homepage of CAPC.
http://www.capstoneindustries.com/
Capstone Industries finally revised and updated the homepage.
All new product lines with well readable image information are listed.
Make a face like this and get happy
HELLO all you people.
I`m located in Hamburg Germany. I own CAPC since 2002 as they are
traded under the name China Direct Trading Corporation (CHDT) and with a
business of generators and STP - Tools. I read your postings every week
since round about 10 Years as a non active user without registration on
IHUB.
Today I got a Registration on IHUB. Congratulations to Townie, Uranium and
running bull for the great job all the years.
YES CAPC are on a good way, they finally got through.
I apologize for spelling mistakes, I only had English at school.