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Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

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<h3>KEY POINTS</h3>
<ul>
<li>Capstone reported healthy revenue growth of 20.8% Y/Y, with a top-line figure of $20.8 million, compared with $17.2 million in 2Q22, primarily attributable to the continued growth of its high-margin EaaS business. 1H23 revenue totaled $39.5 million, up 18.5% from $33.3 million in 1H22. Complete results can be accessed&nbsp;here.</li>
<li>Gross margin decreased to 10.5% from 15.8% in 2Q22 and 25.2% in 1Q23. The big drop in margins was primarily due to the increased costs in the company’s supply chain, specifically related to C1000 enclosures and the need to source alternative recuperator materials at a higher relative cost to meet customer delivery requirements.</li>
<li>EaaS rental income was $1.8 million, up $1.2 million or 200% Y/Y. Gross margin for the EaaS rental business continued to be strong at 72% for the second quarter.</li>
<li>Net loss decreased to $5.0 million or ($0.30) per share from $6.0 million or ($0.40) per share in 2Q22. Sequentially, the increase of net loss by ~$3 million was in large part due to ~1.6 million of additional supply chain expenses, freight, and expediting charges.</li>
<li>The book-to-bill ratio improved to 1.6:1 from 1.4:1 in 1Q23 due to higher demand, increasing the product backlog by 16.5% Q/Q to $28.9 million. Total EaaS long-term rental units under contract on September 30, 2022, were ~39 MW versus 13.1 MW in 2Q22, representing 198% growth Y/Y. The company is targeting to cross 50 MW of the rental fleet in FY23.</li>
<li>Positive cash flow of $0.9 million from operating activities was mainly as a result of $3.8 million provided by working capital as CGRN’s Days Sales Outstanding (DSO) dropped to 85 days from 123 days in 1Q23.</li>
<li>Capstone will implement a second round of price increases for all its products and services in January 2023 (the first occurred in May 2022) to combat inflationary concerns and supply chain headwinds.</li>
<li>The Q/Q increase in cash balance by $6.9 million was primarily related to the net proceeds of the $7.3 million&nbsp;public equity offering&nbsp;in August 2022.</li>
</ul>
<h2>EARNINGS SNAPSHOT</h2>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/309/947/original/image_81682702821668561876451.png?1668561880" class="editor-image img-responsive" data-smartkarma-image-id="309947"></figure>
<h2>HIGHLIGHTS</h2>
<ul>
<li>2Q23 gross product bookings were $15.4 million, up $3 million from 1Q23, confirming the company’s current growth strategy.</li>
<li>The company reviewed four key pillars to achieve positive EBITDA for FY23. It has fully executed three, while making significant progress on the fourth, by: (1) decreasing operational expenditures by $4.3 million via a business restructuring to strengthen its high-margin EaaS segment; (2) raising product and service prices to combat inflationary pressure; (3) raising annual distributor fees from 3% to 5%; and (4) building the business around EaaS, which gives superior margins to traditional product sales.</li>
<li>DSO, the time taken to collect payment after a sale has been made, dropped to 85 days. This variation was largely due to improved accounts receivable collections that declined by nearly $6 million. Capstone expects to bring DSO back to 65 days (pre-COVID levels), along with tight inventory management, to free up cash for building high-margin rental units.</li>
<li>Inflation Reduction Act&nbsp;(IRA): The law raises the potential tax credit for microturbine projects from 10% to 30%. For projects that fulfill domestic content standards or are located in energy communities, a 10% bonus credit is offered. The IRA could improve the payback period for CGRN’s US CHP projects by two years, potentially improving results by $40-50 million annually.</li>
<li>Capstone focused on increasing aftermarket margins and enhancing the availability of replacement parts to increase customer satisfaction and repeat sales. The company’s&nbsp;Extensive Parts Remanufacturing (EPR)&nbsp;initiative has resulted in considerable cost savings. Remanufactured parts are often less hazardous to the environment and 40% less expensive than new ones.</li>
<li>The company’s primary objectives for FY23 are to generate steady revenue growth, notably from its rapidly growing EaaS business, achieve positive EBITDA for the entire fiscal year, and enhance its liquidity position beyond cost-cutting strategies.</li>
<li>Capstone expects more normalized adjusted EBITDA from 4Q23 onward as it believes recent cost increases are transitory while the company tries to overcome supply chain bottlenecks.</li>
<li>Our prior content on CGRN can be accessed&nbsp;here.</li>
</ul>
<h2>OUR PREVIOUS RESEARCH CONTENT</h2>
<h2>Initiation of Coverage Report</h2>
<p>11/02/22&nbsp;Transforming and Expanding the Business to Leverage the Fast-Growing Microgrid Megatrend</p>
<p>Extensive coverage on Capstone Green Energy Corp. assessing key opportunities, obstacles, technology, industry, risks, competition, financials, management profiles, etc.</p>
<h2>Management Series</h2>
<p>09/23/22&nbsp;EaaS – A Transformational Business Model and a Win-Win Proposition for All Participants</p>
<p>Exclusive conversation with Darren Jamison, President, and CEO of Capstone Green Energy Corp., about the recent success in EaaS business as a preferred business model and the impact of the Inflation Reduction Act on the company.</p>
<h2>Recent Update Notes</h2>
<p>08/11/21&nbsp;1Q22 Results: +13.3% Revenue Growth Despite Covid-19 and Supply Chain Challenges; Management Reiterates FY22 Priorities</p>
<p>The company delivered solid top-line growth despite ongoing COVID-19 and supply chain challenges. Revenue and EBITDA fell short of analyst estimates, but EPS beat by +$0.01 per share.</p>
<p>11/16/21&nbsp;2Q22 Results: Revenue Growth Rebounds +15.4%; Shift Towards Distributed Energy and Microgrids; Management Presents Key Growth Drivers</p>
<p>Despite the persistent negative impacts of COVID-19, new gross orders and shipments continue to rebound. Total revenue came in at $17.2 million, up by 15% Y/Y from $14.9 million in the second quarter of last year.</p>
<p>08/24/22&nbsp;1Q23 Results: Revenue Up 16% Y/Y, Gross Margin Improves 9.7% Y/Y; Focus on Key FY23 Objectives</p>
<p>Revenue grew 16.0% to $18.7 million from $16.1 million in 1Q22, primarily attributable to Energy-as-a-Service (EaaS) long-term rental services and product shipments.</p>
<h2>COMPANY OVERVIEW</h2>
<p>Capstone Green Energy Corp. (CGRN) is a leading provider of customized microgrid solutions and on-site energy technology systems focused on helping customers worldwide meet their environmental, energy savings, and resiliency goals. Capstone Green Energy focuses on four key business segments: energy-as-a-service (EaaS), energy conversion products, energy storage products, and hydrogen energy solutions. The company provides EaaS through its industry-leading factory protection plan (FPP) service program, microturbine rental fleet, and distributor support system (DSS). Energy conversion products include its existing microturbine products and additional energy conversion and storage products, including Baker Hughes industrial gas turbines. Its energy storage products segment will begin to manufacture modular hybrid energy stations and lithium-ion battery energy storage systems (BESS) to be sold either individually or combined as part of a custom microturbine-battery storage solution. Hydrogen solutions will focus on expanding the company's capability to use hydrogen as fuel in its gas microturbines with a development roadmap to a 100% hydrogen solution. The company was founded in 1988 and is headquartered in Van Nuys, California.</p>
<h2>The Technology</h2>
<p>A microgrid is a decentralized group of electricity sources and loads that normally operates connected to and synchronously with the traditional wide area main grid but can also disconnect and function autonomously (as an island) as physical or economic conditions dictate. This structure enables a microgrid to integrate various sources of distributed generation, especially renewable energy sources, providing emergency power through the island and connected modes. Microgrids have emerged from typical low-voltage AC grids using diesel generators to a mixture of distributed energy resource (DER) systems, including small-scale power generation and storage technologies primarily using renewable energy sources. These DER systems may include biomass, combined heat and power (CHP), fuel cells, hydroelectric, solar PV, and wind power. Microgrids aggregate and optimize these DERs and represent a key component of an emerging energy cloud focused on resilience and renewable energy integration. With the right set of control technologies, they not only provide energy at sites but also offer value upstream to the larger grid. The global microgrid market is expected to grow at a&nbsp;CAGR of 27%&nbsp;between 2021 and 2027 and should provide a backdrop of growth for Capstone.</p>
<h2>End-Markets &amp; Applications</h2>
<p>Capstone Green Energy focuses on four key business segments: energy-as-a-service (EaaS), energy conversion products, energy storage products, and hydrogen energy solutions.</p>
<p>Energy-as-a-Service (EaaS):&nbsp;EaaS is a growth area for the company through its FPP service program, its ultra-low emission microturbine rental fleet, currently sitting at 34.4 MW, and its unique DSS subscription program allowing for increased marketing, branding, customer acquisition, documentation, and training of its worldwide distribution partners currently serving 83 countries. The company expects to grow its rental fleet to over 50 MW by March 2023.</p>
<p>Energy Conversion Products:&nbsp;In addition to its existing reliable microturbine products, Capstone offers additional energy conversion and storage products in the form of Baker Hughes 5 MW, 12 MW, and 16 MW&nbsp;industrial gas turbines.</p>
<p>Energy Storage Products:&nbsp;Capstone will begin to manufacture modular hybrid energy stations and lithium-ion BESS to be sold either individually or combined as part of a custom microturbine battery storage solution.</p>
<p>Hydrogen Solutions:&nbsp;Alternative fuels, in particular hydrogen, are increasingly important. Capstone continues to make headways in the hydrogen space. The company recently demonstrated that it could safely run on a 30% hydrogen / 70% natural gas mix without requiring costly hardware or software modifications. It is currently testing a 100% hydrogen-based product through its R&amp;D partnership with Argonne National Laboratory. This is a key milestone in developing a fuel-flexible, future-ready product that confirms net-zero emission goals.</p>
<h2>DISCLOSURES</h2>
<div></div>
<p>Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.<br><br>WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.<br><br>Shawn Severson, who is the writer of this report, covers the Emerging Growth &amp; Special Situations, BioEconomy, and ClimateTech &amp; Sustainable Investing sectors for WTR. Mr. Severson and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.<br><br>Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.<br><br>WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.<br><br>WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.<br><br>The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.<br><br>The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.<br><br>All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.</p>

KEY POINTS

Capstone reported healthy revenue growth of 20.8% Y/Y, with a top-line figure of $20.8 million, compared with $17.2 million in 2Q22, primarily attributable to the continued growth of its high-margin EaaS business. 1H23 revenue totaled $39.5 million, up 18.5% from $33.3 million in 1H22. Complete results can be accessed&nbsp;here.
Gross margin decreased to 10.5% from 15.8% in 2Q22 and 25.2% in 1Q23. The big drop in margins was primarily due to the increased costs in the company’s supply chain, specifically related to C1000 enclosures and the need to source alternative recuperator materials at a higher relative cost to meet customer delivery requirements.
EaaS rental income was $1.8 million, up $1.2 million or 200% Y/Y. Gross margin for the EaaS rental business continued to be strong at 72% for the second quarter.
Net loss decreased to $5.0 million or ($0.30) per share from $6.0 million or ($0.40) per share in 2Q22. Sequentially, the increase of net loss by ~$3 million was in large part due to ~1.6 million of additional supply chain expenses, freight, and expediting charges.
The book-to-bill ratio improved to 1.6:1 from 1.4:1 in 1Q23 due to higher demand, increasing the product backlog by 16.5% Q/Q to $28.9 million. Total EaaS long-term rental units under contract on September 30, 2022, were ~39 MW versus 13.1 MW in 2Q22, representing 198% growth Y/Y. The company is targeting to cross 50 MW of the rental fleet in FY23.
Positive cash flow of $0.9 million from operating activities was mainly as a result of $3.8 million provided by working capital as CGRN’s Days Sales Outstanding (DSO) dropped to 85 days from 123 days in 1Q23.
Capstone will implement a second round of price increases for all its products and services in January 2023 (the first occurred in May 2022) to combat inflationary concerns and supply chain headwinds.
The Q/Q increase in cash balance by $6.9 million was primarily related to the net proceeds of the $7.3 million&nbsp;public equity offering&nbsp;in August 2022.

EARNINGS SNAPSHOT

HIGHLIGHTS

2Q23 gross product bookings were $15.4 million, up $3 million from 1Q23, confirming the company’s current growth strategy.
The company reviewed four key pillars to achieve positive EBITDA for FY23. It has fully executed three, while making significant progress on the fourth, by: (1) decreasing operational expenditures by $4.3 million via a business restructuring to strengthen its high-margin EaaS segment; (2) raising product and service prices to combat inflationary pressure; (3) raising annual distributor fees from 3% to 5%; and (4) building the business around EaaS, which gives superior margins to traditional product sales.
DSO, the time taken to collect payment after a sale has been made, dropped to 85 days. This variation was largely due to improved accounts receivable collections that declined by nearly $6 million. Capstone expects to bring DSO back to 65 days (pre-COVID levels), along with tight inventory management, to free up cash for building high-margin rental units.
Inflation Reduction Act&nbsp;(IRA): The law raises the potential tax credit for microturbine projects from 10% to 30%. For projects that fulfill domestic content standards or are located in energy communities, a 10% bonus credit is offered. The IRA could improve the payback period for CGRN’s US CHP projects by two years, potentially improving results by $40-50 million annually.
Capstone focused on increasing aftermarket margins and enhancing the availability of replacement parts to increase customer satisfaction and repeat sales. The company’s&nbsp;Extensive Parts Remanufacturing (EPR)&nbsp;initiative has resulted in considerable cost savings. Remanufactured parts are often less hazardous to the environment and 40% less expensive than new ones.
The company’s primary objectives for FY23 are to generate steady revenue growth, notably from its rapidly growing EaaS business, achieve positive EBITDA for the entire fiscal year, and enhance its liquidity position beyond cost-cutting strategies.
Capstone expects more normalized adjusted EBITDA from 4Q23 onward as it believes recent cost increases are transitory while the company tries to overcome supply chain bottlenecks.
Our prior content on CGRN can be accessed&nbsp;here.

OUR PREVIOUS RESEARCH CONTENT
Initiation of Coverage Report
11/02/22&nbsp;Transforming and Expanding the Business to Leverage the Fast-Growing Microgrid Megatrend
Extensive coverage on Capstone Green Energy Corp. assessing key opportunities, obstacles, technology, industry, risks, competition, financials, management profiles, etc.
Management Series
09/23/22&nbsp;EaaS – A Transformational Business Model and a Win-Win Proposition for All Participants
Exclusive conversation with Darren Jamison, President, and CEO of Capstone Green Energy Corp., about the recent success in EaaS business as a preferred business model and the impact of the Inflation Reduction Act on the company.
Recent Update Notes
08/11/21&nbsp;1Q22 Results: +13.3% Revenue Growth Despite Covid-19 and Supply Chain Challenges; Management Reiterates FY22 Priorities
The company delivered solid top-line growth despite ongoing COVID-19 and supply chain challenges. Revenue and EBITDA fell short of analyst estimates, but EPS beat by +$0.01 per share.
11/16/21&nbsp;2Q22 Results: Revenue Growth Rebounds +15.4%; Shift Towards Distributed Energy and Microgrids; Management Presents Key Growth Drivers
Despite the persistent negative impacts of COVID-19, new gross orders and shipments continue to rebound. Total revenue came in at $17.2 million, up by 15% Y/Y from $14.9 million in the second quarter of last year.
08/24/22&nbsp;1Q23 Results: Revenue Up 16% Y/Y, Gross Margin Improves 9.7% Y/Y; Focus on Key FY23 Objectives
Revenue grew 16.0% to $18.7 million from $16.1 million in 1Q22, primarily attributable to Energy-as-a-Service (EaaS) long-term rental services and product shipments.
COMPANY OVERVIEW
Capstone Green Energy Corp. (CGRN) is a leading provider of customized microgrid solutions and on-site energy technology systems focused on helping customers worldwide meet their environmental, energy savings, and resiliency goals. Capstone Green Energy focuses on four key business segments: energy-as-a-service (EaaS), energy conversion products, energy storage products, and hydrogen energy solutions. The company provides EaaS through its industry-leading factory protection plan (FPP) service program, microturbine rental fleet, and distributor support system (DSS). Energy conversion products include its existing microturbine products and additional energy conversion and storage products, including Baker Hughes industrial gas turbines. Its energy storage products segment will begin to manufacture modular hybrid energy stations and lithium-ion battery energy storage systems (BESS) to be sold either individually or combined as part of a custom microturbine-battery storage solution. Hydrogen solutions will focus on expanding the company's capability to use hydrogen as fuel in its gas microturbines with a development roadmap to a 100% hydrogen solution. The company was founded in 1988 and is headquartered in Van Nuys, California.
The Technology
A microgrid is a decentralized group of electricity sources and loads that normally operates connected to and synchronously with the traditional wide area main grid but can also disconnect and function autonomously (as an island) as physical or economic conditions dictate. This structure enables a microgrid to integrate various sources of distributed generation, especially renewable energy sources, providing emergency power through the island and connected modes. Microgrids have emerged from typical low-voltage AC grids using diesel generators to a mixture of distributed energy resource (DER) systems, including small-scale power generation and storage technologies primarily using renewable energy sources. These DER systems may include biomass, combined heat and power (CHP), fuel cells, hydroelectric, solar PV, and wind power. Microgrids aggregate and optimize these DERs and represent a key component of an emerging energy cloud focused on resilience and renewable energy integration. With the right set of control technologies, they not only provide energy at sites but also offer value upstream to the larger grid. The global microgrid market is expected to grow at a&nbsp;CAGR of 27%&nbsp;between 2021 and 2027 and should provide a backdrop of growth for Capstone.
End-Markets &amp; Applications
Capstone Green Energy focuses on four key business segments: energy-as-a-service (EaaS), energy conversion products, energy storage products, and hydrogen energy solutions.
Energy-as-a-Service (EaaS):&nbsp;EaaS is a growth area for the company through its FPP service program, its ultra-low emission microturbine rental fleet, currently sitting at 34.4 MW, and its unique DSS subscription program allowing for increased marketing, branding, customer acquisition, documentation, and training of its worldwide distribution partners currently serving 83 countries. The company expects to grow its rental fleet to over 50 MW by March 2023.
Energy Conversion Products:&nbsp;In addition to its existing reliable microturbine products, Capstone offers additional energy conversion and storage products in the form of Baker Hughes 5 MW, 12 MW, and 16 MW&nbsp;industrial gas turbines.
Energy Storage Products:&nbsp;Capstone will begin to manufacture modular hybrid energy stations and lithium-ion BESS to be sold either individually or combined as part of a custom microturbine battery storage solution.
Hydrogen Solutions:&nbsp;Alternative fuels, in particular hydrogen, are increasingly important. Capstone continues to make headways in the hydrogen space. The company recently demonstrated that it could safely run on a 30% hydrogen / 70% natural gas mix without requiring costly hardware or software modifications. It is currently testing a 100% hydrogen-based product through its R&amp;D partnership with Argonne National Laboratory. This is a key milestone in developing a fuel-flexible, future-ready product that confirms net-zero emission goals.
DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  Shawn Severson, who is the writer of this report, covers the Emerging Growth &amp; Special Situations, BioEconomy, and ClimateTech &amp; Sustainable Investing sectors for WTR. Mr. Severson and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.  WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.  The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

2Q23 Results: Revenue Up 20.8% Y/Y, Gross Margin Drops to 10.5% on High Input Costs; EaaS Rental Business Shines