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CPST: Aftermarket Service Opportunity Driving Growth and Margin Expansion

IN FOCUS: CAPSTONE’S AFTERMARKET SERVICE OPPORTUNITY DRIVING GROWTH AND MARGIN EXPANSION.

The alphaDIRECT Insight

As Capstone drives to reach profitability, the aftermarket continues to play an important role in achieving this objective. Specifically, aftermarket service contracts will help drive margin expansion as these contracts generally carry attractive margins relative to equipment sales alone. As the service contract attach rates increase, the favorable mix should help to drive overall expansion for the company. This is especially critical for markets such as CHP/energy efficiency and renewable energy, where service contracts are more relevant vs. other markets such as the oil and gas sector. Customers in the oil and gas sector have stronger technical knowledge with internal maintenance resources, often due to stringent reliability and safety requirements. Other markets, however, lack the expertise and technical personnel and the growing demand to manage maintenance is creating a significant opportunity for Capstone.

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