Capstone Green Energy Corporation

November 13th, Capstone Green Energy Holdings, Inc. issued its earnings release for its second quarter fiscal year 26 financial results, which ended September 30th, 2025. During today's call, we will be referring to slides that can be found on the company's website under the investor relations section. This conference call contains forward-looking statements representing the company's views as of today, November 13th, 2025. Other than as required by federal securities laws, the company disclaims any obligation to update or revise these statements to reflect future events or circumstances. You should not place undue reliance on these forward-looking statements because they involve known and unknown risks, uncertainties, and other factors that are, in some cases, beyond our control. Please refer to the safe harbor provisions set forth in slide two of the accompanying presentation in today's earnings release and in Capstone's filings with the Securities and Exchange Commission for information concerning factors that could cause actual results to differ materially from those expressed or implied by such statements. Please note that as Mr. Canino and Mr. Miller go through the discussion today, when they mention EBITDA, they're referring to adjusted EBITDA, which is a non-GAAP financial measure. And the reconciliation to net loss can be found in the earnings release and the appendix to the presentation slides. I would now like to turn the call over to Vince Canino, the company's president and chief executive officer.

Thank you, Janet, and good afternoon, everyone. Thank you for joining today's earnings call. Let's start with what's most important. Capstone is evolving, and that's a sign of strength and progress. Recently, our chairman of the board and CFO have transitioned from their roles. Leadership transitions are a natural part of a company's growth. especially during periods of strategic advancement. These changes reflect our commitment to building the strongest possible team to lead Capstone into its next phase of expansion and value creation. As we move forward, we are fortunate to have a deep and talented leadership bench. We've appointed highly experienced professionals to these roles on an interim basis while we conduct a thoughtful, deliberate search for permanent successors. This process represents our commitment to excellence and to ensuring we have the right leaders in place to drive sustained performance and shareholder value. We want to sincerely thank Bob Flexen and John Jurek for their contributions and dedication. Because of their efforts, we enter this next chapter from a position of strength, ready to capitalize on market opportunities, expand our capabilities, and continue delivering value to our investors. Capstone is in an exciting era of growth and transformation, aligned with new energy market requirements. With a strong foundation, a clear strategic vision, and an energized team, we are confident in our trajectory and optimistic about what's ahead. Now, let's move on to our financial dashboard on slide four, where the momentum behind our performance is clear and compelling. Capstone's growth story is accelerating. Stronger margins, stronger balance sheet, stronger outlook. Here are some key highlights of what we've achieved. First, six consecutive quarters of positive adjusted EBITDA, clear proof of operational discipline and business scalability. Second, 15-plus million in adjusted EBITDA generated over six quarters, with multiple quarters achieving double-digit margins and this quarter setting an all-time high. Third, year-over-year growth with products revenue up 43 percent and energy as a service up 25 percent, which demonstrates strong top-line growth across both core and recurring revenue segments. Fourth, disciplined cost management and margin expansion, which is driving sustained profitability and positioning us to navigate upcoming financial obligations with confidence. In short, Capstone is entering a new phase of growth, stronger fundamentals, a clear strategic path, and increasing shareholder value. Let's move to slide five. Over the trailing 12 months, our product revenue has increased by more than 37%. This is a significant milestone, not just in terms of growth, but in how it reshapes our overall revenue mix. Product now represents over 50% of our total revenue, marking a pivotal shift in our business model. On the margin transformation front, historically, product revenue tended to dilute gross profit and EBITDA. But today, that dynamic has completely reversed. Thanks to improvements through our DFMA program, stronger price realization, and productivity gains from our lean manufacturing initiatives, We've turned product margins from negative to double-digit positive. The margin transformation is just not a financial win. It's a strategic win as it is a sign of a healthy business. It validates our operational discipline and positions us for scalable, profitable growth. Meanwhile, our service business remains steady and forecastable, providing a reliable foundation. With both engines firing, On a trailing 12-month basis, we are well on our way to surpassing $100 million in total revenue. And we are not stopping there. Our microgrid business continues to expand, and with the launch of our strategies and AI infrastructure and data center environments, we are poised for a step change in growth. We'll dive deeper into those opportunities later in the call. As we turn to slide six, I want to highlight the encouraging upward trends in both gross profit and net income. These are critical indicators of our continued success, showing that we are not only driving top line growth, but also strengthening our financial foundation. The sustained improvement in gross profit is a direct result of our strategic focus under the financial health pillar. Through enhanced financial, operational, commercial, and business discipline, particularly within product operations, we've delivered a remarkable turnaround. By prioritizing price realization, DFMA-driven cost optimization, and strategic volume mix, we not only transformed product margins, but also lowered component costs across our service agreement and energy as a service segments, creating a unique and sustainable margin expansion. In addition, our sustained excellence pillar continues to drive margin improvements through a robust root cause analysis process within our service agreement business. Using a disciplined five-wide process and fishbone diagrams, we analyze and resolve the underlying causes, thus improving system reliability and delivering greater long-term savings for our customers. Moving to slide seven, as customary, we have our DFMA shout out for the quarter. Now remember, DFMA stands for Design for Manufacturing and Assembly. One of the key intellectual property components critical to achieving our exceptionally clean emissions performance is our injector tubes, which are an integral part of our combustion system and technology. Years ago, Capstone outsourced the assembly of these injectors. which led to higher component costs and delivery delays, challenges that often arise when relying on suppliers balancing our work against their other revenue streams. As part of our R&D initiatives exploring the use of hydrogen and other waste stream blends, the team decided to run these injector tubes through our DFMA process. The analysis went beyond simple material costs. It included a comprehensive labor and flexibility review. By redesigning the necessary fixtures and jigs, the team enabled us to bring this component back in-house, resulting in a 44 percent cost saving. Once again, DFMA delivers real, measurable value. Now, I would like to turn the call over to John Miller, our Interim Chief Financial Officer.

Over to you, John. John Miller Thank you, Vince, and good afternoon, everyone. There are a lot of positives in the quarter as Capstone continues to improve its financial health, reporting six consecutive quarters of positive adjusted EBITDA. The resilience of the business, the evolving dynamics in the power markets, and the commitment from the employees and distributors have changed the trajectory of Capstone. The company, its distributors, and employees are poised to deliver innovative solutions to solve the power needs globally. Now let me discuss the company's financial results for the second quarter of fiscal 26. Moving to slide eight, you'll see the summary financial results for the second quarter. Total revenue was $28.4 million compared to $22.7 in 2025. This represents a 25 percent increase to the top line. The improvement in product and accessories revenue to $16.1 million during this period reflects a continuing increase in customer sentiment were capstone products following the restructuring and the resilience and adaptability to capstone product to meet changing market demands. Improvement in rental revenue to $4.4 million is due mainly to demand for remote power in the oil and gas space, and parts and service sales remain steady on a quarter-over-quarter basis. Top-line growth delivered a gross profit of $9 million for the quarter versus $7 million in 2024. The current quarter's gross margin was 32%, versus 31 percent for the period in 2024. Gross profit dollars and steady margin improvements reflect the effect of the sales mix, strategic price increases, improved utilization rates, and ongoing cost savings from RDFMA initiatives. R&D expenses were 3 percent of revenue for the current quarter. The increase in R&D reflects the ongoing efforts toward cost-out initiatives and new technological development. SG&A expenses of $6.8 million increased $0.4 million from 2025 and are 24% of revenue. Included in the second quarter was a $0.5 million accrual for an incentive compensation expense. Non-recurring expenses for the quarter were $1.4 million versus $2.1 million in 2024, a reduction of $0.7 million. Net income for the period was $0.8 million, which is a $1.2 million improvement from the loss in fiscal 25 of $0.4 million. Improved financial performance delivered adjusted EBITDA of $4.5 million for the current quarter. Now let us turn to Slide 9 for a review of select balance sheet items. Cash and equivalents were $7.7 million, a decrease of $1 million. The decrease was primarily caused by use of cash in operating activities of $1 million. Accounts receivable were $14.3 million, an increase of $7.2 million caused by higher sales in the quarter and the receivables assumed in the acquisition of CalMicro. Total inventories were $20.3 million and declined $0.2 million from year end from the operational disciplined efforts focused on supply chain efficiency and inventory turns. Lastly, accounts payable and accrued expenses were $19.9 million, $4.4 million increase of March $31.25, resulting from the higher level of business activity in the quarter. Lastly, I want to highlight an important milestone in our capital markets progress. Capstone Green Energy has now been upgraded to the OTC QX market, the highest tier of the OTC markets platform. This upgrade enhances the visibility of our stock and improves access for a broader set of investors and reflects the meaningful operational and financial progress we've delivered over the past several quarters. Our updated company name and ticker information are displayed accurately on the OTC Markets platform. We expect other major financial data services to reflect these updates as they complete their normal refresh cycles. We will continue to focus on the goal of ultimately qualifying for and achieving a listing on a national exchange such as NASDAQ or the New York Stock Exchange. The list remains a longer-term objective We believe the progress we are making today is building the foundation necessary to pursue that opportunity. With that, I'll turn the presentation back to Vince. Thank you, John.