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Capstone Turbine wins more long-term service contracts with oil and gas customer

The oil and gas customer's entire fleet of 22 microturbines are now covered under Capstone's factory protection plan

Capstone Turbine Corporation - Capstone Turbine wins another long-term service contract
The company aftermarket business is a key strategic profitability initiative

Capstone Turbine Corporation (NASDAQ:CPST), the maker of low-emission, clean-energy microturbines, announced Wednesday that it has won more long-term service contracts. 

E-Finity Distributed Generation, Capstone’s exclusive distributor for the mid-Atlantic and southeastern US as well as the Caribbean, secured a factory protection plan (FPP) long-term service contracts in the Marcellus and Utica shale regions in the Appalachian Basin covering an additional 2 megawatts (MW) of microturbines for Capstone’s single largest oil and gas end-use customer. 

The customer’s entire Capstone fleet -- consisting of seven C30’s, 39 C65’s, one C200, five C600’s, two C800’s and seven C1000’s -- are now covered under Capstone’s aftermarket service product providing years of comprehensive service coverage, including scheduled and unscheduled maintenance. 

READ: Capstone Turbine beefs up board with addition of energy industry veteran Denise Wilson

The 14.5 MW of Capstone microturbines, commissioned between 2012-2019, are used for 24-7 prime power in multiple midstream central gathering facilities in the Appalachian Basin.

"Improving our FPP service contract attachment rates from today’s approximately 38% to 45% in the near-term is one of our most critical strategic profitability initiatives, which should lead to a reduced quarterly cash burn and improved gross margins,” said CEO Darren Jamison in a statement.

“By securing this newest contract, our aftermarket business segment, including our high margin rental fleet, is expected to be the backbone for Capstone’s planned recurring, predictable, and profitable revenue and free cash flow for many years.”

Jeff Foster, senior vice president of customer service and product development, said the company recently updated its innovative and flexible FPP service product offering, providing both multiple standard service options for up to 20 years and also standard options for Capstone’s many product configurations and applications. 

“The high adoption rate of our FPP, especially with our continued wins in the oil and gas market, is continuing to drive our profitable aftermarket business to new highs,” he said. 

Capstone, based in Van Nuys, California, offers a product line-up 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.

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NASDAQ:CPST
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