11.8.2006: Meldung: Catalytica Energy Systems, Inc.: Financial Results for the Second Quarter and First Six Months of 2006

Catalytica Energy Systems Reports Significantly Improved Financial Results for the Second Quarter and First Six Months of 2006; Raises Full-Year Guidance
Backlog for SCR Services Business Reaches $3.8 Million

GILBERT, AZ, Aug 10, 2006 -- Catalytica Energy Systems, Inc., a provider of innovative emissions solutions for the power generation and transportation industries, today reported financial results for the second quarter and six months ended June 30, 2006, including robust revenue growth in its SCR services business and a significant improvement in total cash usage.

Total revenues for the second quarter of 2006 grew 26% to $957,000, from total revenues of $762,000 in the same period of the prior year. Revenues during the most recent quarter were comprised entirely of sales from the Company"s SCR catalyst and management services business (SCR-Tech). Total costs and expenses for the quarter decreased to a historical low of $4,055,000, from $4,416,000 reported in the second quarter last year, reflecting the benefit of cost reduction activities initiated by the Company during the second half of 2005. The combination of revenue growth and reduced operating expenses contributed to a 17% improvement in net loss for the quarter of $2,890,000, or a loss of $0.16 per share, compared with $3,490,000, or a loss of $0.19 per share, in the same quarter last year.

Total consumption of cash, cash equivalents and short-term investments (collectively referred to as "cash") during the quarter decreased 64% to $846,000, from $2,336,000 in the second quarter of 2005. Cash consumption during the most recent quarter was favorably impacted by the Company"s continued progress in maintaining a streamlined cost structure throughout the organization and the collection of outstanding receivables generated by increased sales.

Total revenues for the six months ended June 30, 2006 grew 91% to $3,936,000, from total revenues of $2,061,000 in the corresponding period of the prior year. The significant growth in revenues was driven by increased sales of SCR catalyst and management services, which accounted for all of the Company"s revenues during the first half of 2006. Net loss in the first six months of 2006 was $4,615,000, or a loss of $0.25 per share, a 34% improvement over a net loss of $7,028,000, or a loss of $0.39 per share, in the first half of 2005.

Total cash consumption for the six months ended June 30, 2006 was $3,601,000, down 38% from $5,792,000 in the same period last year. At June 30, 2006, the Company"s cash position totaled $17,731,000.

"Our restructuring and cost-reduction activities initiated last September, together with a re-positioning of our SCR-Tech business over the past year, has enabled solid progress toward our three primary objectives outlined at the beginning of the year -- driving the business commercially, value creation and sustainability," stated Rob Zack, president and CEO of Catalytica Energy Systems. "Our sharpened focus and improved operating cost structure have both strengthened our ability to capitalize on near-term revenue opportunities and positioned us to achieve a considerable reduction in cash consumption this year, as demonstrated by our significantly improved financial performance in the first half of 2006.

"We are especially pleased with the performance of our SCR-Tech business, and the exciting growth prospects we see ahead in the developing market for SCR services. Sales activity at SCR-Tech continues to strengthen. In fact, just last month we secured our largest order to date -- totaling $1.9 million -- and we continue to pursue a growing number of new order prospects."

Improved 2006 Financial Outlook

Based upon a continued increase in sales activity at SCR-Tech, Catalytica Energy Systems anticipates that its full-year revenues will exceed prior expectations. Accordingly, full-year revenues are now projected to range from $6.0 to $7.0 million, compared with the Company"s previous guidance for full-year revenues in the range of $5.5 to $6.5 million. This revised guidance is subject to, and could be affected by, the timing associated with completing various projects.

Catalytica Energy Systems also expects to achieve significant improvements in its full-year cash usage. Based upon its expectations for increased revenues and collection of receivables, combined with the net cash proceeds from the recent sale of its Arizona facility, and the prospects for closing a sale of its Xonon Cool Combustion(R) technology and related gas turbine assets, the Company is now projecting full-year cash consumption in the range of $4.5 to $6.0 million, down from its previous guidance for total cash consumption in the range of $7.0 to $9.0 million.

Business Updates

Catalytica Energy Systems" SCR-Tech business continues to make solid progress in penetrating the developing market for SCR catalyst services and securing new business. The backlog for SCR catalyst and management services at July 31, 2006 reached a record high of $3.8 million. We define backlog as firm purchase orders and deferred revenue expected to be recognized as revenue within 18 months.

With respect to Catalytica Energy Systems" development of emissions control solutions for new, over-the-road diesel engine applications, demonstration projects and test activities are ongoing with leading diesel industry companies and with a government agency evaluating the Company"s technology as a prospect for meeting impending diesel emissions regulations in the U.S. and Japan.

Mr. Zack commented, "Recognizing that we do not have the capital or the resources necessary to commercialize a fully integrated emissions reduction product for the diesel market on our own, we have continued to stress the importance of solidifying partnerships within the diesel industry for the success of our technology in the marketplace. We previously indicated that without firm diesel industry commitments or other strategic alternatives by mid-year, we would consider downsizing or discontinuing our development efforts in this area. Mid-year is now upon us, and we are currently in the process of evaluating the various opportunities and alternatives before us. We expect to announce further developments on this front within the next several months."

Other Recent Developments

In July, Catalytica Energy Systems announced the signing of a definitive agreement for the sale of its Xonon Cool Combustion technology and associated gas turbine assets to Kawasaki Heavy Industries, Ltd. for $2.1 million. This transaction is expected to be completed during the third quarter, subject to customary closing conditions, the delivery of assets and the securing of certain consents from government agencies. Catalytica Energy Systems expects to receive approximately $1.9 million in net cash proceeds from the sale.

Also in July, Catalytica Energy Systems completed the sale of its Gilbert, Arizona headquarters facility for $4,815,000. The Company also received additional payments totaling $25,000 for the sale of certain personal property. After reimbursement of the loan securing the building, payment of its share of various closing costs, related expenses and real estate commissions, and base rent to lease space at the facility through October 2006, Catalytica Energy Systems received net cash proceeds from the sale of approximately $1.85 million and recorded a gain of $660,000. The Company expects to relocate its corporate headquarters to a smaller site in the Phoenix metropolitan area by the end of October.

Catalytica Energy Systems will host a conference call and webcast today, Thursday, August 10, 2006, at 4:45 PM Eastern Time (1:45 PM Pacific Time) to discuss its financial results along with an update on the business and its outlook for the remainder of 2006. Interested parties are invited to listen to the call over the Internet by accessing the Company"s website at www.CatalyticaEnergy.com. Webcast participants should allot extra time before the webcast begins to register, and, if necessary, download and install audio software. Alternatively, interested parties may access the call by dialing 1-866-202-3048 (1-617-213-8843 for international callers), using passcode 24864075. An archived version of the webcast will be available for replay on the Company"s website beginning approximately two hours following the conclusion of the live call and continuing for a period of 30 days. A replay of the call will also be available via telephone through August 17, 2006. To access the replay, dial 1-888-286-8010 ( 1-617-801-6888 for international callers), using passcode 78914601.

About Catalytica Energy Systems

Catalytica Energy Systems provides innovative products and services to meet the growing demand for emissions control solutions in the power generation and transportation industries. Through its SCR-Tech subsidiary (www.SCR-Tech.com), the Company offers a variety of services for coal-fired power plants using selective catalytic reduction (SCR) systems to reduce nitrogen oxides (NOx) emissions. These services include SCR catalyst management, cleaning and regeneration, as well as consulting services to help power plant operators optimize efficiency and reduce overall NOx compliance costs. Catalytica Energy Systems" other business activities include the design, development and manufacture of advanced products based on its proprietary catalyst and fuel processing technologies to offer cost-effective solutions for reducing emissions from combustion-related applications. The Company"s Xonon(R) Diesel Fuel Processing technology is designed to facilitate a significant reduction in particulate matter and NOx emissions from mobile and stationary diesel engines by improving the performance of diesel particulate filters and NOx adsorber catalyst systems. Find Catalytica Energy Systems on the Worldwide Web at www.CatalyticaEnergy.com.

Editor"s Note: Xonon and Xonon Cool Combustion are registered trademarks of Catalytica Energy Systems, Inc., Gilbert, AZ, USA

Megan Meloni
Investor Relations
(650) 940-6253

SOURCE: Catalytica Energy Systems, Inc.
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