Capstone Turbine Corporation (NASDAQ:CPST) said Monday that it expanded its microturbine rental business by scoring a 1 megawatt long-term rental contract with an oil and gas exploration company focused on Alaska.
The deal was secured by the Van Nuys, California-based company’s longtime distribution partner, Horizon Power Systems.
Horizontal is Capstone’s exclusive distributor for Colorado, Idaho, Montana, New Mexico, Oklahoma, Utah, Wyoming, Alberta, British Columbia, Northwest Territories, Saskatchewan and the Yukon.
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The company said the long-term rental contract with the Alaska oil explorer is in addition to the current C1000 series microturbine rental fleet of 4.6 megawatts and the previously announced 1.6 megawatts expected to be deployed in September.
Expanding the aftermarket business
Expanding Capstone's aftermarket business, which includes the long-term rental program, is key to near-term profitability goals for the company. The company said in a statement that at least 98% of Capstone's fiscal 2019 gross margin came directly from the aftermarket business.
"The expansion of our long-term rental fleet from our initial start of 3.6 megawatts last fall, to a total of 6.2 megawatts, puts us well on our way to reaching our strategic goal of 10 megawatts," said CEO Darren Jamison. "Long-term rentals are a critical part of our 100% expense absorption plan and are expected to help us reach our near-term profitability goals."
Capstone offers a product lineup of microturbines that can produce anywhere from 30 kilowatts to 10 megawatts of power, operating on a variety of gaseous or liquid fuels. To date, Capstone has shipped over 9,000 units to 73 countries.
"Natural gas generators are gaining popularity in the rental market due to their lower emission profile compared to the high environmental impact of diesel rental generators,” said Jim Crouse, executive vice president of sales and marketing at Capstone. “Capstone microturbines are recognized as the low emission leader in the stationary power space."
Jeff Foster, senior vice president of customer service and product development at Capstone, said Horizon’s success in landing the long-term deal “further improves” Capstone’s high margin “recurring aftermarket revenues.”
Contact Uttara Choudhury at [email protected]