Replies to post #8811 on Capstone Green Energy Corp (fka CGRNQ)

[DireWolf]

I think if you listen to the Q&A, they indicate that the suppliers were basically not taking CPST's forecasts seriously due to CPST's failure to meet their optimistic forecasts in the past.

Hence, when CPST actually hit their forecasts in Q3 and Q4, the suppliers were caught off guard and didn't have the raw materials to meet that forecasted demand for Capstone.

So it wasn't a legitimate issue per se, but rather it was an issue with the suppliers not trusting the forecasts that CPST was producing. According to Darren, they brought all the suppliers in for a conference, showed them the plant, and now they are all on board and "drinking the Kool-Aid".

[CaptWhizbang]

Demand in 4Q WAS a surprise!!! 41 million in new sales on top of a large backlog.

There is a big difference in ordering the parts you need and having too many parts on the shelf waiting to be used which is accounted for as a cost of materials. "In Time" supply is a delicate dance for the balance sheet.

CPST can't control their suppliers activities. I am sure the suppliers want as much business as posible, but I imagine suppliers have other customers they must supply also. Just like CPST, suppliers will have a production lines that have clients who have made contract delivery dates, and so CPST has to get in line. Suppliers were surprised with CPST's increased demand!

A number of these required parts are very likely high tech and not just stamped out parts. It all takes time.

Part of CPST's cost increases was due to overtime costs. That has never been mentioned as an issue before, but that is a good issue, imo. A true sign of growth. But never-the-less, that also is another new issue addressed on the plant floor this last quarter.

I think if you look at all the Sec Financial reports over the last several years, you will see consistant and steady growth, YOY. This year's annual numbers are a terrific culmination to my mind.

If you think only in terms of quarters, the 3Q was the best ever!
Positive gross margin was announced for the first time.

It is because of CPST's terrific growth, that CPST management is having to face these new problems as they come along. CPST is a company on the verge of profitability.

CPST's fantastic YOY growth over the last 4 years with the new management team, and all the improved important numbers in the Annual Report shows that, imo.

Most definitely not an endemic problem, imo!