AMSC (Nasdaq:AMSC), a global solutions provider serving wind and
power grid industry leaders, today reported financial results for
its fiscal third quarter ended December 31, 2013.
Revenues for the third quarter of fiscal 2013 were $20.6
million, compared with $17.4 million for the same period of fiscal
2012. The year-over-year growth is due to higher revenues in the
Company's Wind segment, primarily from customers in India and
China. Wind revenue growth was partially offset by lower revenues
in the Company's Grid segment due to lower D-VAR® revenues.
AMSC's net loss for the third quarter of fiscal 2013 narrowed to
$8.4 million, or $0.14 per share, compared with a net loss of $20.1
million, or $0.38 per share, for the same period of fiscal
2012.
The Company's non-GAAP net loss for the third quarter of fiscal
2013 was $5.7 million, or $0.09 per share, compared with a non-GAAP
net loss of $13.5 million, or $0.26 per share, for the third
quarter of fiscal 2012. Please refer to the financial table below
for a reconciliation of GAAP to non-GAAP results.
Cash, cash equivalents, and restricted cash at December 31, 2013
totaled $41.7 million, compared with $32.8 million as of September
30, 2013. The sequential increase was driven primarily by financing
activities conducted during the quarter, including a new $10.0
million senior term loan and $3.3 million in net proceeds after
deducting sales commissions and offering expenses from the issuance
of approximately 2.4 million shares of common stock at an average
sale price of $1.51 per share under the At-the-Market (ATM) equity
financing that was put in place in November 2013.
"I'm pleased with our performance in the third fiscal quarter.
We increased revenues and cash, reduced our net loss, operating
expenses, and cash burn year-over-year. We are managing our costs
and our cash," said Daniel P. McGahn, AMSC President and CEO.
McGahn continued, "The long-term prospects in our key markets
are promising, but we continue to anticipate challenges in the near
term. Given the strategic cost-cutting measures we have taken over
the past year, we have reduced our annualized operating expenses
and net loss and we have achieved a slower cash burn. We are
focused on achieving positive net cash flows on a quarterly basis.
We believe this will occur by the end of fiscal year 2014."
Financial Guidance
For the fourth fiscal quarter ending March 31, 2014, AMSC
expects that its revenues will exceed $16 million and that its net
loss will be less than $16 million, or $0.24 per share. This
forecast excludes any impact from mark-to-market adjustments
related to the Company's derivative liability and warrants. AMSC
expects that its non-GAAP net loss for its fourth quarter of fiscal
2013 will be less than $12 million, or $0.18 per share. AMSC
expects to have more than $38 million in cash, cash equivalents and
restricted cash on March 31, 2014. This forecast does not assume
any proceeds from the ATM in the fourth fiscal quarter.
Conference Call Reminder
In conjunction with this announcement, AMSC management will host
a conference call with investors beginning at 10:00 a.m. Eastern
Time today to discuss the Company's results and its business
outlook. To listen to the live or archived conference call webcast
please visit the "Investors" section of the Company's website at
http://www.amsc.com/investors. The live call also can be accessed
by dialing 785-830-1923 and using conference ID 8185757.
About AMSC (NASDAQ: AMSC)
AMSC generates the ideas, technologies and solutions that meet
the world's demand for smarter, cleaner … better energy™. Through
its Windtec™ Solutions, AMSC provides wind turbine electronic
controls and systems, designs and engineering services that reduce
the cost of wind energy. Through its Gridtec™ Solutions, AMSC
provides the engineering planning services and advanced grid
systems that optimize network reliability, efficiency and
performance. The Company's solutions are now powering gigawatts of
renewable energy globally and are enhancing the performance and
reliability of power networks in more than a dozen countries.
Founded in 1987, AMSC is headquartered near Boston, Massachusetts
with operations in Asia, Australia, Europe and North America. For
more information, please visit www.amsc.com.
AMSC, Windtec, Gridtec, and Smarter, Cleaner … Better Energy are
trademarks or registered trademarks of American Superconductor
Corporation. All other brand names, product names, trademarks or
service marks belong to their respective holders.
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Any statements in this release
about future expectations, plans, prospects, and our beliefs
regarding our long-term prospects in our key markets, our
anticipated lower operating expenses and net loss along with a
slower cash burn, our beliefs regarding our achievement of our
target of positive net cash flows on a quarterly basis by the end
of fiscal year 2014, our expectations regarding our future
financial results and cash balance and other statements containing
the words "believes," "anticipates," "plans," "expects," "will" and
similar expressions, constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements represent management's
current expectations and are inherently uncertain.
There are a number of important factors that could materially
impact the value of our common stock or cause actual results to
differ materially from those indicated by such forward-looking
statements. Such factors include: We have experienced recurring
operating losses and recurring negative cash flows from operations
which raise substantial doubt about our ability to continue as a
going concern. This substantial doubt has resulted in a qualified
opinion from our auditors with an explanatory paragraph regarding
our ability to continue as a going concern. We believe this opinion
may have an adverse effect on our customer and supplier
relationships; our success in addressing the wind energy market is
dependent on the manufacturers that license our designs; we may not
realize all of the sales expected from our backlog of orders and
contracts; our business and operations would be adversely impacted
in the event of a failure or security breach of our information
technology infrastructure; our success is dependent upon attracting
and retaining qualified personnel and our inability to do so could
significantly damage our business and prospects; we rely upon
third-party suppliers for the components and subassemblies of many
of our Wind and Grid products, making us vulnerable to supply
shortages and price fluctuations, which could harm our business;
many of our revenue opportunities are dependent upon subcontractors
and other business collaborators; if we fail to implement our
business strategy successfully, our financial performance could be
harmed; problems with product quality or product performance may
cause us to incur warranty expenses and may damage our market
reputation and prevent us from achieving increased sales and market
share; new regulations related to conflict-free minerals may force
us to incur significant additional expenses; our contracts with the
U. S. government are subject to audit, modification or termination
by the U.S. government and include certain other provisions in
favor of the government; the continued funding of such contracts
remains subject to annual congressional appropriation which, if not
approved, could reduce our revenue and lower or eliminate our
profit; we may acquire additional complementary businesses or
technologies, which may require us to incur substantial costs for
which we may never realize the anticipated benefits; many of our
customers outside of the United States are, either directly or
indirectly, related to governmental entities, and we could be
adversely affected by violations of the United States Foreign
Corrupt Practices Act and similar worldwide anti-bribery laws
outside the United States; we have limited experience in marketing
and selling our superconductor products and system-level solutions,
and our failure to effectively market and sell our products and
solutions could lower our revenue and cash flow; we have
experienced recurring losses from operations and negative operating
cash flow; these factors raise substantial doubt regarding our
ability to continue as a going concern; we have a history of
operating losses, and we may incur additional losses in the future;
our operating results may fluctuate significantly from quarter to
quarter and may fall below expectations in any particular fiscal
quarter; we may require additional funding in the future and may be
unable to raise capital when needed; our debt obligations include
certain covenants and other events of default;. Should we not
comply with the covenants or incur an event of default, we may be
required to repay our debt obligations in cash, which could have an
adverse effect on our liquidity; if we fail to maintain proper and
effective internal controls over financial reporting, our ability
to produce accurate and timely financial statements could be
impaired and may lead investors and other users to lose confidence
in our financial data; we may be required to issue performance
bonds or provide letters of credit, which restricts our ability to
access any cash used as collateral for the bonds or letters of
credit; changes in exchange rates could adversely affect our
results from operations; growth of the wind energy market depends
largely on the availability and size of government subsidies and
economic incentives; we depend on sales to customers in China and
India, and global conditions could negatively affect our operating
results or limit our ability to expand our operations outside of
these countries; changes in China's or India's political, social,
regulatory and economic environment may affect our financial
performance; our products face intense competition, which could
limit our ability to acquire or retain customers; our international
operations are subject to risks that we do not face in the United
States, which could have an adverse effect on our operating
results; adverse changes in domestic and global economic conditions
could adversely affect our operating results; we may be unable to
adequately prevent disclosure of trade secrets and other
proprietary information; our patents may not provide meaningful
protection for our technology, which could result in us losing some
or all of our market position; the commercial uses of
superconductor products are limited today, and a widespread
commercial market for our products may not develop; there are a
number of technological challenges that must be successfully
addressed before our superconductor products can gain widespread
commercial acceptance, and our inability to address such
technological challenges could adversely affect our ability to
acquire customers for our products; we have not manufactured our
Amperium wire in commercial quantities, and a failure to
manufacture our Amperium wire in commercial quantities at
acceptable cost and quality levels would substantially limit our
future revenue and profit potential; third parties have or may
acquire patents that cover the materials, processes and
technologies we use or may use in the future to manufacture our
Amperium products, and our success depends on our ability to
license such patents or other proprietary rights; our technology
and products could infringe intellectual property rights of others,
which may require costly litigation and, if we are not successful,
could cause us to pay substantial damages and disrupt our business;
we have filed a demand for arbitration and other lawsuits against
our former largest customer, Sinovel, regarding amounts we contend
are overdue. We cannot be certain as to the outcome of these
proceedings; we have been named as a party to purported stockholder
class actions and stockholder derivative complaints, and we may be
named in additional litigation, all of which will require
significant management time and attention, result in significant
legal expenses and may result in an unfavorable outcome, which
could have a material adverse effect on our business, operating
results and financial condition; our 7% convertible note contains
warrants and provisions that could limit our ability to repay the
note in shares of common stock and should the note be repaid in
stock, shareholders could experience significant dilution; our
common stock has experienced, and may continue to experience,
significant market price and volume fluctuations, which may prevent
our stockholders from selling our common stock at a profit and
could lead to costly litigation against us that could divert our
management's attention. These and the important factors discussed
under the caption "Risk Factors" in Part 1. Item 1A of our Form
10-K for the fiscal year ended March 31, 2013, and our other
reports filed with the SEC, among others, could cause actual
results to differ materially from those indicated by
forward-looking statements made herein and presented elsewhere by
management from time to time. Any such forward-looking statements
represent management's estimates as of the date of this press
release. While we may elect to update such forward-looking
statements at some point in the future, we disclaim any obligation
to do so, even if subsequent events cause our views to change.
These forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date of
this press release.
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(In thousands, except
per share data) |
|
|
Three months
ended |
Nine months
ended |
|
December
31, |
December
31, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Revenues |
|
|
|
|
Wind |
$ 13,545 |
$ 6,808 |
$ 42,937 |
$ 35,321 |
Grid |
7,018 |
10,609 |
24,893 |
31,679 |
Total Revenues |
20,563 |
17,417 |
67,830 |
67,000 |
|
|
|
|
|
Cost of revenues |
15,863 |
16,533 |
56,461 |
53,843 |
|
|
|
|
|
Gross profit |
4,700 |
884 |
11,369 |
13,157 |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Research and development |
2,951 |
3,948 |
9,061 |
11,480 |
Selling, general and administrative |
8,232 |
10,769 |
27,741 |
36,304 |
Restructuring and impairments |
108 |
6,702 |
872 |
6,845 |
Amortization of acquisition related
intangibles |
84 |
81 |
247 |
242 |
Total operating expenses |
11,375 |
21,500 |
37,921 |
54,871 |
|
|
|
|
|
Operating loss |
(6,675) |
(20,616) |
(26,552) |
(41,714) |
|
|
|
|
|
Change in fair value of derivatives and
warrants |
535 |
5,217 |
1,890 |
6,114 |
Interest expense, net |
(1,634) |
(4,553) |
(7,250) |
(10,191) |
Other expense, net |
(341) |
(109) |
(908) |
(1,252) |
|
|
|
|
|
Loss before income tax expense |
(8,115) |
(20,061) |
(32,820) |
(47,043) |
|
|
|
|
|
Income tax (benefit) expense |
302 |
74 |
733 |
(683) |
|
|
|
|
|
Net loss |
$ (8,417) |
$ (20,135) |
$ (33,553) |
$ (46,360) |
|
|
|
|
|
Net loss per common share |
|
|
|
|
Basic |
$ (0.14) |
$ (0.38) |
$ (0.55) |
$ (0.89) |
Diluted |
$ (0.14) |
$ (0.38) |
$ (0.55) |
$ (0.89) |
|
|
|
|
|
Weighted average number of common shares
outstanding |
|
|
|
|
Basic |
62,309 |
52,792 |
60,578 |
51,966 |
Diluted |
62,309 |
52,792 |
60,578 |
51,966 |
|
|
UNAUDITED CONSOLIDATED
BALANCE SHEETS |
(In
thousands) |
|
December 31, |
March 31, |
|
2013 |
2013 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$35,394 |
$39,243 |
Accounts receivable, net |
8,525 |
18,864 |
Inventory |
25,167 |
33,473 |
Prepaid expenses and other current
assets |
19,538 |
22,469 |
Restricted cash |
1,405 |
6,136 |
Total current assets |
90,029 |
120,185 |
|
|
|
Property, plant and equipment, net |
67,163 |
74,626 |
Intangibles, net |
2,147 |
2,749 |
Restricted cash |
4,901 |
4,820 |
Deferred tax assets |
5,421 |
5,354 |
Other assets |
8,710 |
9,020 |
Total assets |
$178,371 |
$216,754 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$23,503 |
$30,138 |
Note payable, current portion, net of
discount of $677 as of December 31, 2013 and $458 as of March 31,
2013 |
6,272 |
4,158 |
Current portion of convertible note, net
of discount of $1,287 as of December 31, 2013 and $4,289 as of
March 31, 2013 |
9,125 |
4,610 |
Derivative liability |
2,587 |
4,162 |
Adverse purchase commitments |
429 |
1,440 |
Deferred revenue |
10,023 |
29,805 |
Deferred tax liabilities |
5,440 |
5,444 |
Total current liabilities |
57,379 |
79,757 |
|
|
|
Note Payable, net of current portion and
discount of $384 as of December 31, 2013 and $95 as of March 31,
2013 |
7,283 |
3,367 |
Convertible note, net of discount of $600 as
of March 31, 2013 |
-- |
5,881 |
Deferred revenue |
1,318 |
1,340 |
Other liabilities |
1,179 |
1,291 |
Total liabilities |
67,159 |
91,636 |
|
|
|
Stockholders' equity: |
|
|
Common stock |
673 |
603 |
Additional paid-in capital |
942,466 |
923,847 |
Treasury stock |
(370) |
(313) |
Accumulated other comprehensive loss |
2,127 |
1,112 |
Accumulated deficit |
(833,684) |
(800,131) |
Total stockholders' equity |
111,212 |
125,118 |
|
|
|
Total liabilities and stockholders'
equity |
$178,371 |
$216,754 |
|
|
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(In
thousands) |
|
|
Nine months ended
December 31, |
|
2013 |
2012 |
Cash flows from operating activities: |
|
|
Net loss |
$ (33,553) |
$ (46,360) |
Adjustments to reconcile net (loss)
income to net cash (used in) provided by operations: |
|
|
Depreciation and amortization |
8,052 |
10,143 |
Stock-based compensation expense |
7,328 |
5,968 |
Restructuring charges, net of
payments |
167 |
261 |
Impairment of long-lived and intangible
assets |
— |
4,507 |
Provision for excess and obsolete
inventory |
287 |
957 |
Adverse purchase commitment recoveries,
net |
— |
(8,428) |
Loss on minority interest
investments |
789 |
1,914 |
Change in fair value of derivatives and
warrants |
(1,890) |
(6,114) |
Non-cash interest expense |
5,902 |
8,404 |
Other non-cash items |
1,181 |
1,790 |
Changes in operating asset and liability
accounts: |
|
|
Accounts receivable |
10,414 |
6,085 |
Inventory |
8,682 |
(8,173) |
Prepaid expenses and other current
assets |
3,462 |
4,699 |
Accounts payable and accrued
expenses |
(8,612) |
(20,330) |
Deferred revenue |
(20,575) |
3,986 |
Net cash used in operating
activities |
(18,366) |
(40,691) |
|
|
|
Cash flows from investing activities: |
|
|
Net cash provided by investing
activities |
4,398 |
4,691 |
|
|
|
Cash flows from financing activities: |
|
|
Net cash provided by financing
activities |
9,750 |
32,262 |
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
369 |
(84) |
|
|
|
Net decrease in cash and cash
equivalents |
(3,849) |
(3,822) |
Cash and cash equivalents at beginning of
year |
39,243 |
46,279 |
Cash and cash equivalents at end of
period |
$ 35,394 |
$ 42,457 |
|
|
RECONCILIATION OF GAAP
NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) |
(In thousands, except
per share data) |
|
|
Three months
ended December 31, |
Nine months ended
December 31, |
|
2013 |
2012 |
2013 |
2012 |
Net loss |
$ (8,417) |
$ (20,135) |
$ (33,553) |
$ (46,360) |
Adverse purchase commitment recoveries,
net |
-- |
(119) |
-- |
(8,428) |
Stock-based compensation |
3,040 |
1,929 |
7,328 |
5,968 |
Amortization of acquisition-related
intangibles |
84 |
81 |
247 |
242 |
Restructuring and impairment charges |
108 |
6,702 |
872 |
6,845 |
Sinovel litigation |
-- |
(12) |
(7) |
411 |
|
|
|
|
|
Consumption of zero cost-basis inventory |
(1,142) |
(602) |
(3,635) |
(1,389) |
Change of fair value of derivatives and
warrants |
(535) |
(5,217) |
(1,890) |
(6,114) |
Non-cash interest expense |
1,137 |
3,867 |
5,902 |
8,404 |
Non-GAAP net loss |
$ (5,725) |
$ (13,506) |
$ (24,736) |
$ (40,421) |
|
|
|
|
|
Non-GAAP loss per share |
$ (0.09) |
$ (0.26) |
$ (0.41) |
$ (0.78) |
Weighted average shares outstanding |
62,309 |
52,792 |
60,578 |
51,966 |
|
|
RECONCILIATION OF
FORECAST GAAP NET LOSS TO NON-GAAP NET LOSS |
(In millions, except
per share data) |
|
|
Three months ending March 31,
2014 |
Net loss |
$ (16.0) |
Amortization of acquisition-related
intangibles |
0.1 |
Stock-based compensation |
3.5 |
Non-cash interest expense |
1.5 |
Consumption of zero-cost inventory |
(1.1) |
Non-GAAP net loss |
$ (12.0) |
Non-GAAP net loss per share |
$ (0.18) |
Weighted average shares outstanding |
68.0 |
Note: Non-GAAP net loss is defined by the company as net loss
before adverse purchase commitments (recoveries) losses, net;
stock-based compensation; amortization of acquisition-related
intangibles; restructuring and impairment charges; Sinovel
litigation costs; consumption of zero cost-basis inventory;
non-cash interest expense; change in fair value of derivatives and
warrants and other unusual charges; net of any tax effects related
to these items. The company believes non-GAAP net loss assists
management and investors in comparing the company's performance
across reporting periods on a consistent basis by excluding these
non-cash or other non-recurring charges that it does not believe
are indicative of its core operating performance. The company also
regards non-GAAP net loss as a useful measure of operating
performance and cash flow to complement operating loss, net loss
and other GAAP financial performance measures. In addition, the
company uses non-GAAP net loss as a factor in evaluating
management's performance when determining incentive compensation
and to evaluate the effectiveness of its business strategies.
Generally, a non-GAAP financial measure is a numerical measure
of a company's performance, financial position or cash flow that
either excludes or includes amounts that are not normally excluded
or included in the most directly comparable measure calculated and
presented in accordance with GAAP. The non-GAAP measures included
in this release, however, should be considered in addition to, and
not as a substitute for or superior to, operating income, cash
flows, or other measures of financial performance prepared in
accordance with GAAP. A reconciliation of non-GAAP to GAAP net loss
is set forth in the table above.
CONTACT: AMSC Contact:
Kerry Farrell
Phone: 978-842-3247
Email: kerry.farrell@amsc.com
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