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CG

Capstone Green Energy Holdings, Inc. (CGEH)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY2026 revenue rose to $27.9M, up $12.3M YoY on stronger product shipments and higher rental utilization; gross margin expanded to 27% (+300 bps YoY), and Adjusted EBITDA reached $2.7M (fifth consecutive positive) .
  • Sequentially, revenue increased vs Q4 FY2025 ($27.1M), gross profit was flat ($7.6M vs $7.5M), and EPS improved YoY to $(0.04), though operating cash flow turned negative ($1.6M used) .
  • Management highlighted momentum in microgrids and data center/AI opportunities, continued price realization, and DFMA cost-out driving margin gains .
  • Catalysts: (1) Cal Microturbine California distributor acquisition (closed Aug 13, 2025) with $10M consideration plus contingent payments, resolving arbitration and consolidating West Region operations ; (2) Q2 FY2026 pre-announcement indicated ~$28.4M revenue and $0.8M net income, plus leadership changes (CFO transition; Chair change) .

What Went Well and What Went Wrong

What Went Well

  • Revenue growth and mix: Q1 revenue increased by $12.3M YoY on higher product/accessory demand and rental utilization; average price per MW shipped increased to ~$1.8M vs ~$1.3M last year .
  • Margin expansion and EBITDA: Gross margin improved to 27% (+300 bps YoY) driven by pricing and DFMA cost-out; Adjusted EBITDA rose to $2.7M from $0.7M YoY (fifth straight positive) .
  • Strategic positioning: CEO emphasized microgrid leadership and growing relevance to data centers and distributed generation; “premier provider” narrative underscores resilience and low emissions proposition .
  • Backlog and book-to-bill: Ending backlog increased to ~$24.6M with book-to-bill 1.07:1, supporting near-term visibility .

What Went Wrong

  • Liquidity and going concern: Cash fell to $6.6M (from $8.7M at Mar 31), operating cash flow used $1.6M, and management disclosed substantial doubt about going concern amid debt maturities and liquidity covenants .
  • Concentration and regional softness: Cal Micro accounted for 47% of Q1 revenue and 33% of receivables; Europe and Australia were weaker due to anti-gas sentiment and supply dynamics .
  • ICFR material weakness: Controls over FPP service contracts remained ineffective; remediation in progress .
  • Debt load and covenant sensitivities: Exit notes outstanding ~$32.7M with near-term maturities and stepped-up liquidity requirements; prior waivers highlight covenant sensitivity .

Financial Results

MetricQ1 2025Q4 2025Q1 2026
Revenue ($USD Millions)$15.6 $27.1 $27.9
Net Income (Loss) ($USD Millions)$(3.94) $(0.13) $(0.70)
Diluted EPS ($USD)$(0.21) $(0.01) $(0.04)
Gross Profit ($USD Millions)$3.79 $7.51 $7.56
Gross Margin (%)24% 28% 27%
Operating Expenses ($USD Millions)$7.33 $7.49 $7.74
Adjusted EBITDA ($USD Millions)$0.73 $2.83 $2.70

Segment revenue breakdown:

Segment Revenue ($USD Millions)Q1 2025Q4 2025Q1 2026
Product & Accessories$5.42 $15.32 $15.72
Parts & Services$7.84 $7.71 $7.94
Rentals$2.38 $4.02 $4.21
Total$15.64 $27.05 $27.87

Key KPIs:

KPIQ1 2025Q4 2025Q1 2026
Cash And Equivalents ($USD Millions)$3.98 $8.67 $6.63
Backlog ($USD Millions)$12.4 —$24.6
Book-to-Bill (x)0.7 —1.07

Non-GAAP adjustments (Q1 FY2026):

  • EBITDA $1.244M; Adjusted EBITDA adds stock comp $0.349M, restructuring $0.189M, financing $0.055M, restatement/SEC $0.337M, M&A $0.549M; Adjusted EBITDA $2.698M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Company guidanceFY2026 / Q1 FY2026Not providedNot providedMaintained (no formal guidance)

Note: Management did not issue numerical revenue/EPS/margin guidance in the Q1 FY2026 press release or 10-Q .

Earnings Call Themes & Trends

TopicQ3 FY2025 (Call)Q4 FY2025 (PR)Q1 FY2026 (PR/10-Q)Trend
AI/data centersIdentified as a “hot market”; exploring solutions; microgrid blocks to bridge power constraints Emphasized strategic positioning and cost discipline; no specific AI numbers CFO notes customer confidence and opportunity for increased participation in evolving data center segments Building opportunity set
Supply chain & tariffsMonitoring tariffs; steel/aluminum impact; modeling scenarios; potential benefit vs EU-made competitors DFMA and pricing improved margins; operational discipline DFMA cost-out cited as margin driver; tariff risk flagged in MD&A Manageable risk; continued focus
Product performance & marginsDFMA program driving cost-out; focus on product margins; absorption benefits with higher volumes Gross margin +17 pts YoY in Q4; price increases and efficiencies Gross margin +3 pts YoY; price realization and mix drove gains Improving
Regional trendsNorth America strength (IRA, grid constraints); Europe softness; bookings +54% YoY Services/rentals strong; Europe instability weighed on FY25 U.S./Canada +$14.1M; Europe/Australia down; distributor concentration (Cal Micro) North America strong; Europe weak
Regulatory/legalCARB inquiry context; litigation; reorg-related items SEC investigation closed with no action; covenants compliant Going concern risk; covenants/waivers; arbitration resolved via Cal Micro acquisition Mixed (risk reduced via acquisition)
R&D executionElectronics refresh; hydrogen blends; DC output; monitoring systems Continued tech and cost initiatives Hydrogen, DC output solutions; 100% H2 C200 in development Progressing

Management Commentary

  • CFO: “Capstone’s resilience… delivered the fifth straight quarter of positive Adjusted EBITDA on improved product and rental revenues… price increase and DFMA cost-out programs delivered gross profit and gross margin increases… providing an opportunity for increased participation in the evolving data center and microgrid segments.”
  • CEO: “Foundational strides… uniquely position us… as surge in distributed generation and microgrid growth gains momentum… steadfast commitment to reducing the world’s carbon footprint in a sustainable and responsible way.”
  • 10-Q focus: Backlog improved, book-to-bill >1, margin gains from pricing and mix; hydrogen/DC output roadmap advancing .

Q&A Highlights

Note: Q1 FY2026 transcript was not available in our document set; highlights below are from Q3 FY2025, the most recent call.

  • End-market focus: Oil & gas strength across rentals/new units; data centers present sizable opportunities, with modular microgrid blocks to address multi-MW expansions; EV charging as another growth vector .
  • Margin strategy: DFMA-driven cost reductions and absorption from higher volumes targeted to expand product margins; pricing discipline across rentals and LT service agreements .
  • Tariffs: Material impact on components (steel/aluminum), mixed competitive implications vs EU suppliers; scenario modeling ongoing .
  • Lead times & supply chain: Delivery times ~13–14 weeks; pushing suppliers to reset extended lead-time paradigms from COVID era .
  • Capital/notes: Active refinancing discussions for notes due Dec 2025; exploring capital raise options post uplisting in OTC tiers .

Estimates Context

  • S&P Global consensus for Q1 FY2026 EPS and revenue was not available; therefore, estimate comparison to Street consensus could not be performed.*
  • Actuals delivered: Revenue $27.9M and Adjusted EBITDA $2.7M per company disclosures . Street estimate counts were unavailable.*

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Execution improving: Price realization and DFMA cost-out expanded gross margin to 27% and sustained positive Adjusted EBITDA for five straight quarters .
  • Demand visibility: Backlog and book-to-bill (1.07x) support near-term shipments; North America momentum offsets Europe softness .
  • Strategic consolidation: Cal Micro acquisition resolves legal dispute, strengthens West Region distribution, and includes favorable cash funding structure with contingent consideration .
  • Liquidity watch: Operating cash outflow ($1.6M), low cash ($6.6M), covenant sensitivity, and going concern disclosure require near-term focus on refinancing and working capital .
  • Concentration risk: High reliance on Cal Micro in Q1 (47% of revenue); acquisition mitigates distribution risk but increases integration focus .
  • Technology roadmap: Hydrogen and DC output innovations broaden addressable markets (EV charging, microgrids); supports data center/AI opportunities .
  • Potential positive catalyst: Q2 FY2026 prelims point to ~$28.4M revenue and $0.8M net income, with leadership transitions; monitor for sustained profitability and cash trajectory .