SOURCE: Composite Technology Corporation

May 14, 2008 15:28 ET

Composite Technology Announces Quarterly Results

IRVINE, CA--(Marketwire - May 14, 2008) - Composite Technology Corporation (CTC) (OTCBB: CPTC) announced today results for the fiscal quarter ending March 31, 2008. Full results will be included in Form 10-Q to be filed with the Securities and Exchange Commission on or before May 19, 2008.

The Company recorded quarterly revenue for the second fiscal quarter of 2008 of $21.5 million, an increase of 155% compared to revenue of $8.4 million for the comparable fiscal 2007 quarter and an increase of 18% compared to the December 31, 2007 quarter's revenues of $18.2 million. For the six months ended March 31, 2008 revenues totaled $39.7 million, an increase of 126% over the similar 2007 period of $17.6 million.

Compared to the December 31, 2007 quarter, the GAAP net loss from continuing operations increased to $10.0 million or $0.04 loss per share from $7.4 million, or $0.03 loss per share, primarily due to increased research and development expenses related to our DeWind turbine business and in particular due to $2.4 million of charges related to the D8.2 60 hertz prototype installation and certification.

The net loss from continuing operations improved by $0.02 per share from $0.06 per share, or by $1.0 million from $11.0 million in the March 2007 quarter due to $2.5 million in gross margin increases on higher sales, $1.4 million lower interest and other expenses, and $3 million in higher operating expenses, primarily $5 million in increased DeWind research and development expenses and $0.4 million in sales and marketing expenses offset by a $2.5 million decrease in general and administrative expenses.

For the six months ended March 31, 2008 the GAAP net loss from continuing operations was $17.3 million or $0.08 loss per share as compared to $17.9 million or $0.10 per share from the six months ending March 31, 2007. The $0.6 million improvement was due to a $6.2 million improvement in gross margins offset by $6.2 million in increased operating expenses; primarily $6.7 million in increased DeWind research and development expenses, $1.0 million in increased sales and marketing expenses, offsetting a decrease of $1.8 million in general and administrative expenses; along with a decrease of $0.6 million in interest and other expenses.

During the quarter ending March 31, 2008, we determined that our E Service entity of which we owned 24.9% should be classified as discontinued operations. We incurred charges of $1.4 million for the quarter and six months ended March 31, 2008, or $0.01 loss per share from discontinued operations to write down the investment in the entity. We subsequently sold the remaining ownership stake for 0.5 million Euros, or approximately $0.8 million at March 31, 2008 exchange rates.

At March 31, 2008 we had cash and cash equivalents of $4.1 million. Subsequent to quarter end, we closed a significant financing with a direct investment by Credit Suisse Securities (Europe) Ltd. for a $10 million equity investment into the Company with an option for an additional $40 million, as described in Form 8-K filed with the Securities and Exchange Commission on May 9th.

"We are pleased with our continued progress in revenue growth and operations. Our CTC Cable business saw the expansion of our customer base beyond China with a $6 million rush order that was successfully completed in Poland as well as orders in the new markets of Mexico and Chile. We believe this will lead to more ACCC conductor orders in those markets, as well as the surrounding countries," commented Benton Wilcoxon, Chief Executive Officer for CTC. "In our DeWind business, we successfully installed, commissioned, and obtained certification of the 60 hertz version of our 2 megawatt D8.2 turbine in Texas and we established an insured extended warranty for the D8.2 model turbine to provide more security for our customers."

"Both of our businesses continue to track to greater than 100% year over year growth in revenues, with our CTC Cable business having its second consecutive quarter of profitability despite lower margins due to costs related to a rush order in a new market," said D.J. Carney, Chief Financial Officer of CTC. "We continue to invest in the commercialization of our new D8.2 turbine, which we believe will be assisted by the recent financing that we have received."

About CTC:

Composite Technology Corporation, based in Irvine, California, USA, develops, manufactures and sells innovative high performance electrical transmission and renewable energy generation products through its subsidiaries:

--  CTC Cable Corporation produces composite rod for use in its patented
    ACCC* (Aluminum Conductor Composite Core) conductors, which are "high
    efficiency conductors" for use in electrical transmission grid systems.
    ACCC conductors demonstrate less electricity line losses when compared with
    conventional conductors and when deployed in place of conventional
    conductors on existing systems, the higher efficiency of ACCC conductors
    enables power generators to reduce the amount of power they must generate
    while still delivering the same power to the customers.  They have also
    demonstrated significant savings in upgrade capital costs and operating
    expenses when substituted in grid systems for other conductors. ACCC
    conductors enable grid operators to reduce blackouts and brownouts,
    providing a 'reserve electrical capacity' by operating at higher
    temperatures without significant thermal sag of the lines. ACCC conductors
    are an innovative economical solution for reconductoring power lines,
    constructing new lines and crossing large spans. ACCC composite core is
    delivered to qualified conductor manufacturers worldwide for local ACCC
    conductor production and resale into local markets.
    
--  DeWind Inc. designs, produces, and sells the DeWind series of wind
    energy turbines, including the new 2 megawatt (MW) D8.2 model available in
    both 60Hz and 50Hz; the 2MW D8 model in 50Hz; and the 1.25MW D6 model in
    50Hz. The new D8.2 has been operating since early 2007 at Cuxhaven,
    Germany, and utilizes the advanced WinDrive® hydrodynamic torque
    converter developed by Voith AG in combination with a synchronous AC
    generator with high voltage output that is connected directly to the grid
    without the use of power conversion electronics. The first 60Hz D8.2 is now
    operating at Sweetwater, Texas, where it will initially be used for
    demonstration to North American customers. DeWind D8.2 turbines are now
    being assembled at TECO Westinghouse Motor Co., in Texas for our North and
    South American customers.
    

*ACCC is a trademark of CTC Cable Corporation

For further information visit our website: www.compositetechcorp.com. Investor Relations Contact: James Carswell, +1-949-428-8500.

This press release may contain forward-looking statements, as defined in the Securities Reform Act of 1995 (the "Reform Act"). The safe harbor for forward-looking statements provided to companies by the Reform Act does not apply to Composite Technology Corporation (the "Company"). However, actual events or results may differ from the Company's expectations on a negative or positive basis and are subject to a number of known and unknown risks and uncertainties including, but not limited to, competition with larger companies, development of and demand for a new technology, risks associated with a startup company, the ability of the company to convert quotations and framework agreements into firm orders, our customers' fulfillment of payment obligations under the respective supply agreement, our ability to deliver reliable turbines on a timely basis, general economic conditions, the availability of funds for capital expenditure by customers, availability of timely financing, cash flow, securing sufficient quantities of essential raw materials, timely delivery by suppliers, ability to produce the turbines and acquire their components, ability to maintain quality control, collection-related and currency risks from international transactions, the successful outcome of joint venture negotiations, or the Company's ability to manage growth. Other risk factors attributable to the Company's business may affect the actual results achieved by the Company, including those that are found in the Company's Annual Report filed with the SEC on Form 10-K for fiscal year ended September 30, 2007 and subsequent Quarterly Reports on Form 10-Q and subsequent Current Reports filed on Form 8-K that will be included with or prior to the filing of the Company's next Quarterly or Annual Report.

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