I am sure that CPST is working through the orders and making the deliveries as required. Of course those delivery dates depend on the client's desired delivery dates and their ability to meet the billing requirements, not CPST's ability to deliver the product at a specific time.
Because of this, CPST can't power up production and then let the turbines sit on the dock just to clear the backlog, and then let the plant go dormant. Quarterly accounting of materials used, employee numbers and pay, etc., the revenue coming in from the deliveries is a delicate, balanced dance between a variety of issues that prevents wild swings in productivity that would threaten longevity of the company.
From 3Q CC:
Capstone built more C200 engines in the quarter than C65s for the first time in company history as we continue to ramp our C200 manufacturing output without adding additional direct labor or operating expenses.
Product shipments would've been higher for the quarter if not for the build constraints of the TA100 product as the TA100 manufacturing line was relocated, as previously planned, from Calnetix, Florida to the Capstone in California. However, I'm happy to report today that Capstone shipped the first California manufactured TA100 in late January and has plans to build at a rate of one per week for the balance of the quarter.
Our total product backlog increased to approximately $115 million or 130 megawatts. This continuing robust backlog puts Capstone in a very strong position to again deliver strong year-over-year revenue growth in both fiscal 2012 and sets us up very nicely for fiscal 2013.
The key metrics in Capstone's success are increasing C200 production rates, higher average selling prices, lower direct material costs and positive new order flow and of course, reduced cash usage. All these metrics continue to show improvement in the quarter with the exception of cash, which is somewhat of a challenge based on increased working capital demands on inventory and continued tightness in the European financial markets affecting receivable days outstanding, or DSO.
Collection for the quarter were lower than planned as one of our European distributors did not make their scheduled payment against their outstanding $1.9 million accounts receivables balance. As a result, Capstone booked a precautionary bad debt reserve of $1.9 million during the third quarter. I want to stress this is a noncash reserve, and it reflects as higher than usual SG&A expense for the third quarter.
Of course, CPST would love all the orders it can develope. As the world market improves, CPST will surely develope more sales. One C-1000 valued at more than $1 Million is not to be poo-pooed, imo. In the last two months CPST received orders of 2 C-1000s, 1 C-800, 1 C-600, and 1 C-65. Also intended follow-on orders were acknowledged.
One can guesstimate the value of these sales by the following. Not bad for two months: