Question:

At one time in the distant past I worked for GE. My son is an executive in GE's Energy Division in Houston right now. It has my experience that anyone that extends credit to Nigerians sooner or later will have to write off a bad debt.

Answer from Capstone Management:

Capstone evaluates each distributor’s balance sheet, credit history and country risk before it extends credit to any distributor.

Question:

With a backlog over $100m and recent orders adding $45m, why can’t you accelerate your deliveries to achieve a qtr rev over $30m and gen a net profit?

Answer from Capstone Management:

Capstone ships product on customer required ship dates and only after a successful credit clearance from Capstone’s finance department. In addition, Capstone utilizes manufacturing slots by product model in an effort to better align inventory purchases and manufacturing schedules for product shipments and customer requirements.

Question:

Can you clarify how many publically announced Kenworth (Paccar) Capstone projects are active? I’ve seen references for Capstone/Kenworth/Fedex, Capstone/Kenworth/Costco.

Answer from Capstone Management:

Capstone is involved in two active development/demonstration programs with heavy duty truck manufacturers Kenworth and Peterbilt. Both companies have indicated that they will most likely perform field performance and drive cycle evaluations with key customers. Capstone will provide updates on the progress of these future development and demonstration programs on our quarterly earnings calls.

Question:

With the large increase in orders, can we expect the days outstanding to remain the same, increase or decrease in the next several quarters?

Answer from Capstone Management:

Capstone management is working diligently to reduce the company’s days sales outstanding (DSO) to approximately 60 days by tightening its credit standards, offering selected early payment discounts and improving its collection process. However, future results will depend heavily on the overall macro economic trends around the world and specifically in the European Union. 

Question:

Should Westport Innovations, Inc. be included in the list of competitors on that slide?

Answer from Capstone Management:

Westport Innovations is not currently a direct competitor of Capstone. Westport is a natural gas engine solution for the heavy-duty and light-duty vehicle market. Westport is primarily a natural gas mechanical drive solution provider, while Capstone is primarily a natural gas and liquid fuel electrical generation solution provider. Capstone’s vehicle solutions are targeted at electric vehicle range extenders, while Westport is a natural gas mechanical drive solution for traditional mechanical drive vehicle solutions.