VAN NUYS, Calif. -- Capstone Turbine Corp. continues to expand its long-term microturbine rental business with an additional 1.6 MWs on top of the initial 3.6 MWs deployed last fall with one of the world’s largest oil and gas producers. The additional follow-on long-term rentals were secured by Capstone’s distribution partner, Lone Star Power Solutions, its exclusive Distributor for Texas, Arizona and the Gulf States.

Expanding Capstone’s aftermarket business, which includes the long-term rental program, is an important element for the company achieving its near-term profitability goals. This is illustrated by the fact that 98% of Capstone’s fiscal 2019 gross margin came from the aftermarket business, which was only 38% of Capstone’s fiscal 2019 revenue.

"Our aftermarket business should continue to grow this year with the expansion of our long-term rental fleet from our initial start of 3.6 MWs to a total of 5.2 MWs with our future target of 10 MWs," said Darren Jamison, Capstone’s President and Chief Executive Officer. "At 10 MWs, our annual revenue from our long-term rental fleet would be approaching approximately $7 million a year. Rentals are key as the recurring revenue stream they generate will improve our expense absorption and gross margin, and help us reach our near-term profitability goals," added Jamison.

The large oil and gas company sought a flexible and scalable energy solution that could be quickly and easily deployed and increase power capacity and accommodate the growing energy needs of its Permian basin installations. Capstone microturbines are reliable, modular and inherently redundant by design, as well as easily expanded or relocated to accommodate changes in customer’s future site loads.

"Natural gas generators are gaining popularity in the rental market due to their lower emission profile compared to the high environmental impact of diesel rental generators. Capstone microturbines are recognized as the low emission leader in the stationary power space," said Jim Crouse, Capstone’s Executive Vice President of Sales and Marketing.

"It is great to get another long-term rental contract as it further improves our high-margin recurring aftermarket revenues," said Jeff Foster, Capstone’s Senior Vice President of Customer Service and Product Development. "Performance of our initial rental units was key to this key customer expanding its microturbine rental fleet with Capstone," concluded Foster.

Source: Capstone
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