AMSC (Nasdaq:AMSC), a global solutions provider serving wind and
power grid industry leaders, today reported financial results for
its third quarter of fiscal 2014 ended December 31, 2014.
Revenues for the third quarter of fiscal 2014 were $21.3
million, compared with $20.6 million for the same period of fiscal
2013. The year over year increase in revenues was due to higher
Wind segment revenues, partially offset by lower Grid segment
revenues versus year ago results.
AMSC's net loss for the third quarter of fiscal 2014 decreased
to $6.4 million, or $0.07 per share, from $8.4 million, or $0.14
per share, for the same period of fiscal 2013. Net loss for the
third quarter of fiscal 2014 included a gain from a decrease in the
fair value of derivatives and warrants of $2.3 million, as well as
a charge of $0.5 million relating to the Company's ongoing
restructuring initiative.
Excluding these and other non-cash charges, the Company's
non-GAAP net loss for the third quarter of fiscal 2014 was $9.6
million, or $0.11 per share, compared with a non-GAAP net loss of
$5.7 million, or $0.09 per share, in the same period of fiscal
2013. 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, 2014
totaled $37.6 million, compared with $38.2 million at September 30,
2014. During the third quarter of fiscal 2014, the Company received
net proceeds under its At-Market Sales Facility (ATM), after
deducting sales commissions, of $1.0 million from the issuance of
approximately 0.8 million shares of common stock at an average
sales price of $1.22 per share. The ATM arrangement was terminated
on November 5, 2014. Also during the third fiscal quarter, the
Company completed an equity offering to a new investor, under which
it sold approximately 9.1 million units of common stock at an
offering price of $1.10 per common stock unit. Each unit consisted
of one share of common stock and 0.9 of a warrant to purchase one
share of common stock, or a warrant to purchase in the aggregate of
8.2 million shares. Net proceeds after deducting underwriting
commissions and expenses were approximately $9.1 million. The
Company also amended its senior term loan with Hercules Technology
Growth Capital, which provided for a new term loan of $1.5
million.
The Company is also announcing that its wholly-owned subsidiary,
AMSC Austria GmbH, has reached an agreement with Ghodawat Energy
Pvd Ltd (Ghodawat) to fully settle any and all disputes and claims
between the parties (including their respective parent and
affiliated companies), including all claims relating to the
arbitration award and the arbitration award for 7.45 million Euro
(approximately $8.5 million at current exchange rates). Payment is
expected to be made during the fourth quarter of fiscal 2014.
"During the third fiscal quarter, we grew revenues by 70%
sequentially. We've also put the arbitration with Ghodawat behind
us so that we can remain focused on the products, markets, and
customers that will drive our future growth," said Daniel P.
McGahn, President and CEO, AMSC. "Our baseline revenue is driven by
our two established product lines: electrical control systems for
wind turbines and D-VAR® reactive compensation systems. We also
remain focused on the proliferation of our two disruptive
solutions: ship protection systems for the U.S. Navy and Resilient
Electric Grid systems for electric utilities."
Business Outlook
For the fourth quarter ending March 31, 2015, AMSC expects that
its revenues will be in the range of $23 million to $25 million.
The Company's net loss for the fourth quarter of fiscal 2014 is
expected to be less than $6.0 million, or $0.06 per share.
Forecasted GAAP net loss in the fourth quarter includes
non-recurring gains of $2.0 million related to the recent
settlement with the Company's insurer pertaining to the Ghodawat
matter and $1.3 million related to the settlement with Ghodawat
itself that was announced today. AMSC expects that its non-GAAP net
loss (as defined below) for the fourth quarter of fiscal 2014 will
be less than $7.0 million, or $0.07 per share. For the full
fiscal year 2014, the Company expects revenues to be in the range
of $68 million to $70 million.
Conference Call Reminder
In conjunction with this announcement, AMSC management will
participate in a conference call with investors beginning at 10:00
a.m. Eastern Time today to discuss the Company's results and its
business outlook. Those who wish to listen to the live or archived
conference call webcast should visit the "Investors" section of the
Company's website at http://www.amsc.com/investors. The live call
also can be accessed by dialing 785-830-7991 and using conference
ID 2701273.
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.
Forward-Looking Statements
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 our expectations regarding the expected timing of our
settlement payment to Ghodowat; our expectations regarding our
financial results for the fourth quarter of fiscal 2014 and for the
full fiscal year 2014; 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 a history of operating losses, which may continue
in the future. Our operating results may fluctuate significantly
from quarter to quarter and may fall below expectations in any
particular fiscal quarter; we have a history of negative operating
cash flows, and we may require additional financing in the future,
which may not be available to us; Our Term Loans include certain
covenants and other events of default. Should we not comply with
these covenants or incur an event of default, we may be required to
repay our obligation in cash, which could have an adverse effect on
our liquidity; 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; 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;
Our success in addressing the wind energy market is dependent on
the manufacturers that license our designs; Our success is
dependent upon attracting and retaining qualified personnel and our
inability to do so could significantly damage our business and
prospects; We may not realize all of the sales expected from our
backlog of orders and contracts; Our financial condition may have
an adverse effect on our customer and supplier relationships;
Failure to successfully execute the consolidation of our Grid
manufacturing operations or achieve expected savings could
adversely impact our financial performance; Our business and
operations would be adversely impacted in the event of a failure or
security breach of our information technology infrastructure; We
may not be able to launch operations at our newly leased
manufacturing facility in Romania, and, if we are able to do so, we
may have manufacturing quality issues, which would negatively
affect our revenues and financial position; 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; 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 may acquire additional complementary businesses or
technologies, which may require us to incur substantial costs for
which we may never realize the anticipated benefits; Our success
depends upon the commercial use of high temperature superconductor
(HTS) products, which is currently limited, and a widespread
commercial market for our products may not develop; Growth of the
wind energy market depends largely on the availability and size of
government subsidies and economic incentives; We have operations in
and depend on sales in emerging markets, including 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; 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 in
various legal proceedings, 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 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; and we will not be able to maintain our
listing on The Nasdaq Global Select Market if we are unable to
regain compliance with The NASDAQ Stock Market LLC's minimum bid
price requirement of $1.00 per share.
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, 2014, 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, |
|
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
Revenues |
|
|
|
|
Wind |
$ 15,131 |
$ 13,545 |
$ 30,244 |
$ 42,937 |
Grid |
6,119 |
7,018 |
15,157 |
24,893 |
Total Revenues |
21,250 |
20,563 |
45,401 |
67,830 |
|
|
|
|
|
Cost of revenues |
18,094 |
15,863 |
43,953 |
56,461 |
|
|
|
|
|
Gross profit |
3,156 |
4,700 |
1,448 |
11,369 |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Research and development |
2,795 |
2,951 |
8,993 |
9,061 |
Selling, general and administrative |
7,550 |
8,232 |
23,534 |
27,741 |
Arbitration award expense |
-- |
-- |
10,188 |
-- |
Restructuring and impairments |
507 |
108 |
5,416 |
872 |
Amortization of acquisition related
intangibles |
39 |
84 |
118 |
247 |
Total operating expenses |
10,891 |
11,375 |
48,249 |
37,921 |
|
|
|
|
|
Operating loss |
(7,735) |
(6,675) |
(46,801) |
(26,552) |
|
|
|
|
|
Change in fair value of derivatives and
warrants |
2,288 |
535 |
3,048 |
1,890 |
Interest expense, net |
(525) |
(1,634) |
(1,555) |
(7,250) |
Other (expense) income, net |
(209) |
(341) |
379 |
(908) |
|
|
|
|
|
Loss before income tax expense |
(6,181) |
(8,115) |
(44,929) |
(32,820) |
|
|
|
|
|
Income tax expense |
172 |
302 |
363 |
733 |
|
|
|
|
|
Net loss |
$ (6,353) |
$ (8,417) |
$ (45,292) |
$ (33,553) |
|
|
|
|
|
Net loss per common share |
|
|
|
|
Basic |
$ (0.07) |
$ (0.14) |
$ (0.55) |
$ (0.55) |
Diluted |
$ (0.07) |
$ (0.14) |
$ (0.55) |
$ (0.55) |
|
|
|
|
|
Weighted average number of common shares
outstanding |
|
|
|
|
Basic |
87,645 |
62,309 |
82,284 |
60,578 |
Diluted |
87,645 |
62,309 |
82,284 |
60,578 |
|
UNAUDITED CONSOLIDATED
BALANCE SHEETS |
(In
thousands) |
|
December 31, |
March 31, |
|
2014 |
2014 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$35,983 |
$43,114 |
Accounts receivable, net |
10,778 |
7,556 |
Inventory |
26,536 |
20,694 |
Prepaid expenses and other current
assets |
11,705 |
9,004 |
Restricted cash |
1,508 |
2,913 |
Total current assets |
86,510 |
83,281 |
|
|
|
Property, plant and equipment, net |
58,257 |
64,574 |
Intangibles, net |
1,565 |
1,995 |
Restricted cash |
100 |
3,394 |
Deferred tax assets |
7,724 |
7,724 |
Other assets |
2,833 |
7,541 |
Total assets |
$156,989 |
$168,509 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$24,805 |
$21,764 |
Accrued arbitration liability |
10,323 |
-- |
Note payable, current portion, net of
discount of $306 as of December 31, 2014 and $555 as of March 31,
2014 |
3,694 |
6,240 |
Derivative liabilities |
3,914 |
2,601 |
Deferred revenue |
15,385 |
9,456 |
Deferred tax liabilities |
7,724 |
7,761 |
Total current liabilities |
65,845 |
47,822 |
|
|
|
Note Payable, net of current portion and
discount of $298 as of December 31, 2014 and $287 as of March 31,
2014 |
4,868 |
6,380 |
Deferred revenue |
2,906 |
990 |
Other liabilities |
895 |
1,058 |
Total liabilities |
74,514 |
56,250 |
|
|
|
Stockholders' equity: |
|
|
Common stock |
961 |
789 |
Additional paid-in capital |
983,406 |
966,390 |
Treasury stock |
(771) |
(370) |
Accumulated other comprehensive
income |
560 |
1,839 |
Accumulated deficit |
(901,681) |
(856,389) |
Total stockholders' equity |
82,475 |
112,259 |
|
|
|
Total liabilities and stockholders'
equity |
$156,989 |
$168,509 |
|
UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(In
thousands) |
|
Nine months ended
December 31, |
|
2014 |
2013 |
Cash flows from operating activities: |
|
|
Net loss |
$(45,292) |
$(33,553) |
Adjustments to reconcile net loss to net
cash used in operations: |
|
|
Depreciation and amortization |
7,298 |
8,052 |
Stock-based compensation expense |
4,620 |
7,328 |
Impairment of long lived assets |
3,464 |
-- |
Provision for excess and obsolete
inventory |
1,401 |
287 |
Loss on minority interest
investments |
644 |
789 |
Change in fair value of derivatives and
warrants |
(3,048) |
(1,890) |
Non-cash interest expense |
490 |
5,902 |
Other non-cash items |
(838) |
1,181 |
Changes in operating asset and liability
accounts: |
|
|
Accounts receivable |
(3,434) |
10,414 |
Inventory |
(7,598) |
8,682 |
Prepaid expenses and other current
assets |
(3,072) |
3,462 |
Accounts payable and accrued
expenses |
5,694 |
(8,445) |
Accrued arbitration liability |
10,328 |
-- |
Deferred revenue |
8,409 |
(20,575) |
Net cash used in operating
activities |
(20,934) |
(18,366) |
|
|
|
Cash flows from investing activities: |
|
|
Net cash provided by investing
activities |
4,355 |
4,398 |
|
|
|
Cash flows from financing activities: |
|
|
Net cash provided by financing
activities |
9,747 |
9,750 |
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
(299) |
369 |
|
|
|
Net decrease in cash and cash
equivalents |
(7,131) |
(3,849) |
Cash and cash equivalents at beginning of
year |
43,114 |
39,243 |
Cash and cash equivalents at end of
period |
$35,983 |
$35,394 |
|
RECONCILIATION OF GAAP
NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) |
(In thousands, except
per share data) |
|
|
|
|
|
|
Three months
ended |
Nine months
ended |
|
December
31, |
December
31, |
|
|
|
|
|
|
2014 |
2013 |
2014 |
2013 |
Net loss |
$(6,353) |
$(8,417) |
$(45,292) |
$(33,553) |
Stock-based compensation |
1,521 |
3,040 |
4,620 |
7,328 |
Arbitration award expense |
-- |
-- |
10,188 |
-- |
Amortization of acquisition-related
intangibles |
39 |
84 |
118 |
247 |
Restructuring and impairment charges |
507 |
108 |
5,416 |
872 |
Sinovel litigation |
-- |
-- |
-- |
(7) |
Consumption of zero cost-basis inventory |
(3,143) |
(1,142) |
(5,710) |
(3,635) |
Change of fair value of derivatives and
warrants |
(2,288) |
(535) |
(3,048) |
(1,890) |
Non-cash interest expense |
147 |
1,137 |
490 |
5,902 |
Non-GAAP net loss |
$(9,570) |
$(5,725) |
$(33,218) |
$(24,736) |
|
|
|
|
|
Non-GAAP loss per share |
$(0.11) |
$(0.09) |
$(0.40) |
$(0.41) |
Weighted average shares outstanding |
87,645 |
62,309 |
82,284 |
60,578 |
|
Reconciliation of
Forecast GAAP Net Loss to Non-GAAP Net Loss |
(In millions, except
per share data) |
|
|
|
Three months ending |
|
March 31, 2015 |
Net loss |
$(6.0) |
Stock-based compensation |
1.5 |
Arbitration award expense |
(1.3) |
Restructuring and impairment charges |
0.1 |
Non-cash interest expense |
0.1 |
Consumption of zero-cost inventory |
(1.4) |
Non-GAAP net loss |
$(7.0) |
Non-GAAP net loss per share |
$(0.07) |
Shares outstanding |
95.8 |
Note: Non-GAAP net loss is defined by the Company as net loss
before stock-based compensation; arbitration award expense;
amortization of acquisition-related intangibles; restructuring and
impairment charges; Sinovel litigation; 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, non-recurring or other 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 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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