Piper Jaffray Fourth Annual Clean Technology & Renewables Conference. February 19, 2009

Transcription

1 Piper Jaffray Fourth Annual Clean Technology & Renewables Conference February 19, 2009

2 Safe Harbor Statement During the course of this presentation, we may make projections or other forward-looking statements regarding future events or financial performance of the Company within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including: reference to the potential market for our products; future results of operations and achieving profitability; sales expectations; distribution capabilities and agreements with certain new distributors; manufacturing improvements and cost reductions; increased production capacity; low emissions, energy efficiency and reliability of our products; our business initiatives and relationships with third parties and related expanded market opportunities; the advantages of our products over our competitors and competing technologies; expanded aftermarket service and remanufacturing business; compliance with government regulations; new products and product platforms, including our C200 and C1000 products; the application of our products in the solar market; and the value and savings to be realized by our customers. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which may cause Capstone's actual results to be materially different from future results predicted or implied in such statements, including: our expectations about expansion into additional markets; new applications of our products may not be realized; certain strategic business initiatives may not be sustained and may not lead to increased sales; we may not be able to reduce costs, improve customer satisfaction, or increase our cash flow or profitability; our release of new products such as the C200 and C1000 may be delayed or new products may not perform as we expect; we may not be able to comply with all applicable government regulations; we may not be able to obtain or maintain customer, distributor and other relationships that result in an increase in volume and revenue; and we may not be able to retain or develop distributors or dealers in our targeted markets, in which case our sales would not increase as expected and product quality expectations may not be met. We refer you to the Company's Form 10-Q, Form 10-K and other recent filings with the Securities and Exchange Commission for a description of these and other risk factors. Because of the risks and uncertainties, Capstone cautions you not to place undue reliance on these statements, which speak only as of today. We undertake no obligation and specifically disclaim any obligation to release any update or revise any forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events. 1

3 President Signs Stimulus Package Long-Term Extension and Modification of Renewable Energy Production Tax Credit. Certain wind facilities would qualify for the renewable energy production tax credit if placed in service by Dec. 31, 2012 and certain other qualifying facilities involving biomass, geothermal, small irrigation, hydropower, landfill gas, waste to energy and marine renewable facilities will qualify if placed in service by Dec. 31, The estimated cost over 10 years is $13.1 billion. (Waller Lansden; February 2009) Building operations account for 43% of U.S. greenhouse gas emissions. More than either the transportation or industrial sectors. (Oak Ridge National Laboratory; 2005) With Democrats committed to aggressive efforts to curb oil consumption and put the US on track to reduce emissions of greenhouse gases, business hostility to proposals to cap emissions is giving way to efforts by industries to profit from a green tilt in government policy. (WSJ, November 5, 2008; A4) Demand for electricity in the U.S. is increasing three times as fast as resources are being added. U.S. is on track for a shortfall of about 81 GW in 2015 (equivalent to 160 large power plants). (North American Electrical Reliability Corporation; 2006) 2

4 Capstone s Microturbine Over $100M invested in product development 95 U.S. Technology Patents Air bearing technology One moving part No coolants, oils or grease Flexible and economic technology Flexible configuration Lightweight & small footprint Multi-fuel capability Cost competitive positioning Capstone value proposition Low total cost of ownership Ultra low emissions High reliability Minimal scheduled maintenance Spring Foil Shaft 3

5 MicroTurbine Competition Turbec (100kW) Ingersoll-Rand (250kW) Elliott Energy Systems (100kW) MicroTurbine Industry Leader With Majority Market Share 4

6 Current Market Segments Large Retailers Hospitals Telecom Office Buildings Hotels U.S. Gov t Schools Hybrid EV Landfills Digesters Waste Water Plants Oil & Gas 5

7 C200 & C1000 Product Competitive Pricing Low maintenance High reliability High efficiency Ultra low emissions Built-in redundancy Small Footprint Market Potential $ Millions 3,500 3,000 2,500 2,000 1,500 1, C200/C1000 Market Expansion Microturbine Market kw.3-1 MW 1-5 MW 5-10 MW MW MW Source: Resource Dynamics Corporation (extrapolated based on industrial uses) Piston Engine Price, Fuel Cell Emissions, Turbine Reliability 6

8 UTC Relationship Worldwide OEM Partner for PureComfort Private labeling Capstone Microturbines Match with Carrier Absorption Chiller for CHP/CCHP Markets Focus on big customers: Wal-Mart Tesco IBM Marriot International/Ritz Carlton Development Partner for C200 Systems $12.8 in cash and engineering support 7

9 PureComfort TM Solutions Aurora, CO 360kW, 160RT 1 Outdoor installation San Francisco, CA 240kW, 120RT 1 Outdoor installation Simi Valley, CA 960kW, 420RT 1 Outdoor installation Mount Kisco, NY 240kW, 120RT 1 Roof-mounted skid Providence, RI 240kW, 120RT 1 United Kingdom 80kW trigen 130kW Indoor mechanical room Outdoor installation 1 RT = refrigeration tons 8

10 Value Comparison First Cost Total Cost of Ownership $10,000 $4,000 $9,000 $3,000 $ Per K $8,000 $7,000 $6,000 $5,000 $4,000 $ Per kw $2,000 $1,000 $- $(1,000) Solar PV Fuel Cells Wind Recip CHP Microturbine CHP $3,000 $(2,000) $2,000 $1,000 $- Solar PV Fuel Cells Wind Microturbine Recip Equivalent Cars Removed (CO2) for 1 MW Project $(3,000) $(4,000) $(5,000) $(6,000) Number of Cars 1,200 1, Best Value Proposition 1. Microturbine Combined Heat & Power 2. Reciprocating Combined Heat & Power 3. Wind Turbine 4. Fuel Cells 5. Solar PV 0 Solar PV Wind Recip Fuel Cells Microturbine Source: CA Statewide SGIP Program Statistics Assumptions: Capstone C200 System, Combined Heat and Power Systems, Natural Gas Fueled, California Emission Standards, Initial Investment Data: CA Statewide SGIP Program Statistics through Q4 2007, Analysis assumes no incentives 9

11 Gas Turbine Comparison Solar Turbines Mercury Capstone C200 Capstone C1000 Electrical Efficiency (%) Elliott TA100R Ingersol Rand MT250 OPRA Turbines OP16-3B (DLE) Solar Turbines Saturn 20 Kaw asaki GPB15D Dresser-Rand KG2-3E Dresser-Rand KG2-3C General Electric GE5-1 (DLN) Siemens SGT-100 Solar Turbines Centaur 50 Rolls Royce 501-KB7S Solar Turbines Centaur 40 Kaw asaki GPB60D Rolls Royce 501-KB5S Kaw asaki GPB30D Power Output (MW) Capstone offers the highest efficiency alternatives below 4.5 MW Source: Company Websites. Data and results are based on publicly available information from manufacturers and except for Capstone s products, not from Capstone tests. 10

12 Capstone Value Proposition 6 hrs planned maintenance per year Scheduled/unscheduled maintenance $0.015 / kw-hr Average uptime 99% Op. Hours Item Action 8,000 Air/Fuel Filters, Igniter Inspect, Replace 20,000 Injectors, Batteries Replace 40,000 Engine/Generator, Injectors, Batteries Overhaul 120 hrs planned maintenance per year Scheduled/unscheduled maintenance $0.018 to / kw-hr Average uptime 82% Op. Hours Item Action 1,000 2,000 Air & Oil Filters, Oil, Spark Plugs Inspect or Replace 1,500 Top End Inspect 20,000 Top End Overhaul 40,000 Bottom End Overhaul Maintenance Costs 25% Lower on Average = Lower TCO 11

13 Capstone Value Proposition Relative NOx Emissions CARB Natural Gas Emission Standard Units Reduction NOx lb/mwh % CO lb/mwh % VOC lb/mwh % CARB 2007 is an extremely stringent emissions standard that exceeds the requirements of federal standards US Grid Avg NG Recip Only Microturbines, Fuel Cells, Solar and Wind meet standard Source: EPA and ASME Capstone Emissions Less Than 1/10 th of Internal Combustion Engines C200 12

14 New Products Driving Backlog MW Megawatts C1000 C200, 600, 800 C65 C MW 10 0 Dec 2007 Dec

15 Growing Revenue & Backlog $80 $70 $60 $50 $40 $30 $20 $10 $- Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 14

16 Clear Path to Profitability Product Acceptance Increased Production Profitability Q3 Backlog $57M Y/Y Revenue 50% growth Multiple Markets Not experiencing order cancellations C200 production rates Increased Robotics Tier One Suppliers Just in Time Deliveries Significant Inventory Reduction 4,000 unit maximum capacity C200/C1000 direct material improvement of 30% Overhead reductions Gross margin 35-40% by end FY2010 Operating expense lower by 15% 15

17 Positioned For Growth Strong International market drivers U.S. Policy now focusing on energy efficiency and renewable power Positioned as Green ultra low emission and highly efficient technology New C200 product enables a megawatt solution in a $4 Billion Annual Market Q3 09 backlog up over 332% from Q