Capstone Turbine Corporation (NASDAQ:CPST), the maker of clean-energy microturbines, announced Wednesday it has signed a nine-year service contract covering the company’s single largest combined heat and power installation.
In a statement, the company said that E-Finity Distributed Generation, its exclusive distributor for the Mid-Atlantic, southeastern US and the Caribbean, secured the long-term Factory Protection Plan (FPP) service contract covering five megawatts (MW) of microturbines.
Capstone has stressed that its aftermarket business is a big revenue driver and key component to help meet its long-term profitability goals.
READ: Capstone Turbine continues to convert major oil and gas customers to long-term service contracts
“I am extremely pleased with our Capstone aftermarket business, including long-term FPP service contracts, Distributor Support Systems (DSS) program, as well as our new long-term microturbine rental fleet as all three of these initiatives continue to deliver steady revenue growth and solid contribution margins,” said CEO Darren Jamison.
“While all of the offerings from our aftermarket business are important to Capstone, it is the FPP with its stable, predictable, long-term revenue and positive cash flow that really underpins both our near-term positive adjusted EBITDA plans and our long-term sustainability and profitability outlook.”
The five new Signature Series C1000’s are commonly ducted together to inject the turbines’ exhaust thermal energy directly into a drying process for a large ceramic tile manufacturer in the US. The nine-year FPP will provide comprehensive service coverage, including engine overhauls, as well as all scheduled and unscheduled maintenance at a fixed cost.
The microturbines, commissioned in late October 2019, are used for 24x7 electrical and thermal generation and are configured with Capstone Dual-Mode technology that will “island” the power plant and provide back-up electrical and thermal power-to-plant operations in the event of a local grid power outage.
“E-Finity sets the standard for aftermarket support for their large fleet of Capstone Microturbines, and with this win, they now have 54 MW under the Capstone innovative FPP program,” said Jeff Foster, Capstone’s senior vice president of customer service and product development.
“With this latest Energy Efficiency FPP contract coming on the heels of a number of large oil & gas FPP contracts, our flexible FPP offering has become the backbone for continuing the top-line growth of our high margin aftermarket business.”
Jen Derstine, vice president of marketing and distribution, said 54% of eligible customers are covered under an FPP contract.
“By securing this newest contract, we have set another record of having 263 MWs covered under long-term service contracts, which provides the backbone for recurring, predictable, profitable revenue streams for many years and is a great asset to all our stakeholders including our distribution partners who perform the work under the FPP contract on behalf of Capstone,” Derstine added.
Capstone, based in Van Nuys, California, offers a product line-up of microturbines that can produce anywhere from 30 kilowatts to 10 MWs 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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