Capstone Energy+ NASDAQ: CEPL reported fiscal first-quarter 2027 revenue of $24.9 million for the quarter ended June 30, 2026, down from $27.9 million a year earlier, as lower product shipment volume and reduced rental utilization were partly offset by growth in parts and service revenue.
Despite the lower revenue base, the company increased gross profit 16% year over year to $8.8 million and expanded gross margin to 35% from 27%. Interim Chief Financial Officer John Miller said the results reflected favorable product mix, including sales of previously rented microturbine systems, ongoing product cost-reduction efforts and distribution-services contributions.
Capstone recorded operating income of about $1 million, compared with an operating loss of $200,000 in the prior-year quarter. Net income was approximately $37,000, compared with a $700,000 net loss a year earlier, marking the company’s fourth consecutive quarter of positive net income, according to Miller. Adjusted EBITDA, a non-GAAP metric, was $2.7 million, unchanged from the prior-year period.
The company reported a net loss per share of $0.03, versus a net loss per share of $0.04 in the prior-year quarter. Miller said that although consolidated net income was positive, earnings available to common stockholders included a $1 million non-cash reduction for cumulative paid-in-kind dividends on Series A convertible preferred stock.
Revenue Mix and Margins
Product and accessories revenue declined to $13 million from $15.7 million, primarily because of lower shipment volume. Rental revenue fell to $2.2 million from $4.2 million, which management attributed to lower fleet utilization amid uncertainty around oil prices.
Parts and service revenue rose 14% to $9.7 million from $7.9 million. Product and accessories gross margin increased to 31% from 8%, while parts and service gross margin declined to 41% from 53%. Miller said the decrease in parts and service margin reflected higher claims under Factory Protection Plan contracts and increased shipments of higher-cost parts associated with warranty claims.
Rental gross margin fell to 36% from 52% because of lower fleet utilization. Research and development expense increased to $1.2 million from $800,000, reflecting investments in product enhancements, cost reductions and development programs, including an 800-volt DC microturbine system for AI data center applications and a five-parts-per-million combustion liner.
Selling, general and administrative expense declined to $6.6 million from $6.9 million, as lower legal, consulting, rent and bad-debt expenses were partially offset by investment in sales capabilities.
Cash Flow, Inventory and Debt
Cash and restricted cash totaled $32.3 million at June 30, compared with $28.9 million at fiscal year-end. Operating activities provided $5.4 million of cash during the quarter, compared with $1.6 million of cash used in the prior-year period.
Miller said operating cash flow included a $3.7 million customer deposit related to an order scheduled for delivery at the end of the calendar year. Excluding that deposit, he said the company still saw a significant year-over-year improvement in operating cash flow.
Total inventory, including current and non-current inventory, rose to $29.9 million from $24.8 million at year-end. The increase reflected purchases of materials, accessories and parts, including long-lead-time materials intended to support future sales. Management said it is seeking to maintain inventory sufficient for customer deliveries while improving inventory turns and avoiding unnecessary working-capital use.
The company’s exit notes had an outstanding balance of $25.3 million and mature in December 2026. Miller said Capstone is evaluating alternatives to refinance or repay the notes before maturity. In response to a webcast question, he said the company’s plan is not to extend the note and that it is working on a commercial-bank refinancing option.
Data Centers and Commercial Pipeline
President and Chief Executive Officer Vince Canino said Capstone has continued discussions with companies across the data center ecosystem but has not yet signed a data center customer agreement. He said interest has grown in the company’s potential role in providing behind-the-meter power with lower emissions.
Canino emphasized the company’s view that its microturbine systems can offer a simpler deployment model for data centers, requiring a concrete pad, natural gas connection and electrical connection. He said the company’s low-emissions profile can allow customers in some cases to avoid emissions-abatement equipment and related costs.
During the question-and-answer session, Canino said Capstone’s commercial pipeline is growing, although certain commercial and industrial capital-expenditure decisions are taking longer than expected. He said projects are increasing in megawatt size, which can lengthen sales cycles, and that interest is increasing in energy-as-a-service structures, including lease-to-own arrangements and power purchase agreements.
Oil and gas activity has slowed, he said, contributing to rental revenue pressure as megawatts came off rent and did not return as quickly as expected. Still, Canino said the company expects the remaining quarters of fiscal 2027 to track with management’s expectations based on its pipeline.
Technology and Manufacturing Initiatives
Capstone said it continues to operate an 800-volt DC unit that prospective customers have observed under real-world conditions. The company is also preparing cold-weather test protocols for its five-PPM combustion liner, building a third test unit for its C250 engine program and developing a second heat recovery module prototype.
Canino said the company has increased the megawatts on its factory floor by nearly four times while maintaining a disciplined approach to capacity expansion. The company can add shifts as demand becomes committed, he said, but does not intend to build fixed costs ahead of confirmed customer orders.
Management said its priorities for the remainder of fiscal 2027 include profitable growth across diversified markets, further gross-margin improvement through cost reductions, stronger operating cash conversion and continued advancement of mission-critical technology programs.
About Capstone Energy+ (NASDAQ:CEPL)
Capstone Green Energy Corporation provides carbon reduction and on-site resilient green energy solutions. Capstone Green Energy Corporation, formerly known as Capstone Turbine Corporation, is based in VAN NUYS, CA.
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