AMSC (Nasdaq: AMSC), a global solutions provider serving wind and
power grid industry leaders, today reported financial results for
its third quarter of fiscal 2018 ended December 31, 2018.
Revenues for the third quarter of fiscal 2018
were $14.1 million, compared with $14.9 million for the same period
of fiscal 2017. The year-over-year change was driven by lower Grid
segment revenues, partially offset by higher Wind segment revenues
versus the year ago period.
AMSC’s net income for the third quarter of
fiscal 2018 was $17.3 million, or $0.85 per share, compared to a
net loss of $4.2 million, or $0.21 per share, for the same period
of fiscal 2017. The Company’s non-GAAP net loss for the third
quarter of fiscal 2018 was $2.3 million, or $0.11 per share,
compared with a non-GAAP net loss of $3.4 million, or $0.17 per
share, in the same period of fiscal 2017. Please refer to the
financial table below for a reconciliation of GAAP to non-GAAP
results.
Cash, cash equivalents and restricted cash on
December 31, 2018 totaled $80.2 million, compared with $56.3
million at September 30, 2018. The cash balance as of the end
of the third quarter of fiscal 2018 included $25 million of cash
proceeds received from the final payment required under the
settlement agreement with Sinovel. Operating cash flow in the third
quarter, excluding the final payment from the Sinovel settlement,
was $0.9 million. Please refer to the financial table below for a
reconciliation of GAAP to non-GAAP results.
“During the third quarter we generated nearly $1
million in operating cash flow. We also received the final payment
from our legal settlement,” said Daniel P. McGahn, Chairman,
President and CEO, AMSC. “Our strong balance sheet is anticipated
to put us on a path towards predictable revenues and growth over
the long-term. We expect to complete our goals for this fiscal year
and further diversify and grow our revenue.”
Business OutlookFor the fourth
quarter ending March 31, 2019, AMSC expects that its revenues will
be in the range of $14 million to $16 million. The Company’s net
loss for the fourth quarter of fiscal 2018 is expected not to
exceed $6 million, or $0.29 per share. The Company's non-GAAP net
loss (as defined below) is expected not to exceed $5 million, or
$0.24 per share. The Company expects operating cash flow, exclusive
of any legal fees and tax payments related to the final Sinovel
settlement payment, to be a burn of $2 million to $4 million in the
fourth quarter of fiscal 2018. Please see below for a
reconciliation of forecast GAAP operating cash flow to non-GAAP
operating cash flow. The Company expects cash, cash equivalents and
restricted cash on March 31, 2019, to be no less than $76
million.
Conference Call ReminderIn
conjunction with this announcement, AMSC management will
participate in a conference call with investors beginning at 10:00
a.m. Eastern Time on Wednesday, February 6, 2019, to discuss the
Company’s financial results and 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 www.amsc.com.
The live call also can be accessed by dialing (888) 220-8451 and
using conference ID 8537690. A replay of the call may be accessed 3
hours following the call by dialing (888) 203-1112 and using
conference ID 8537690.
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 anticipation that our strong
balance sheet puts us on a path towards predictable revenues and
growth over the long-term, our expectations that we will complete
our goals for this fiscal year and further diversify and grow our
revenue, our expected GAAP and non-GAAP financial results for the
quarter ending March 31, 2019, our expected cash, cash equivalents
and restricted cash balance on March 31, 2019, 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. These important factors include, but are not limited
to: A significant portion of our revenues are derived from a single
customer, Inox Wind Limited ("Inox"), and we cannot predict if and
how successful Inox will be in executing on Solar Energy Corporate
of India ("SECI") orders under the new central and state auction
regime, and any related failure by Inox to succeed under this
regime, or any delay in Inox’s ability to deliver its wind
turbines, could result in fewer electric control systems shipments
to Inox; We have a history of operating losses and negative
operating cash flows, which may continue in the future and require
us to secure additional financing in the future; Our operating
results may fluctuate significantly from quarter to quarter and may
fall below expectations in any particular fiscal quarter; Our
financial condition may have an adverse effect on our customer and
supplier relationships; Lower prices for other fuel sources may
reduce the demand for wind energy development, which could have a
material adverse effect on our ability to grow our Wind business.
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 rely upon third-party suppliers for the components
and sub-assemblies of many of our Wind and Grid products, making us
vulnerable to supply shortages and price fluctuations, which could
harm our business; Failure to achieve expected savings following
the move of our former Devens, Massachusetts manufacturing facility
could adversely impact our financial performance; We may not
realize all of the sales expected from our backlog of orders and
contracts; Our success depends upon the commercial use of high
temperature superconductor 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, economic incentives
and legislative programs designed to support the growth of wind
energy; 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, and
additional funding of such contracts may not be approved by the
U.S. Congress; Tax reform in the U.S. may negatively affect our
operating results; We have operations in and depend on sales in
emerging markets, including India, and global conditions could
negatively affect our operating results or limit our ability to
expand our operations outside of these markets; Our business and
operations would be adversely impacted in the event of a failure or
security breach of our information technology infrastructure; If we
fail to maintain proper and effective internal control 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 face risks
related to our intellectual property; We face risks related to our
legal proceedings; We face risks relating to our settlement with
Sinovel; 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, 2018, Part II. Item 1A of our Quarterly Report
on Form 10-Q for the quarter ended December 31, 2018, and our other
reports filed with the SEC. These important factors, 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 December 31, |
|
Nine Months EndedDecember
31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wind |
$ |
7,308 |
|
|
$ |
2,633 |
|
|
$ |
18,293 |
|
|
$ |
10,465 |
|
Grid |
6,826 |
|
|
12,300 |
|
|
23,325 |
|
|
24,439 |
|
Total
revenues |
14,134 |
|
|
14,933 |
|
|
41,618 |
|
|
34,904 |
|
|
|
|
|
|
|
|
|
Cost of revenues |
10,398 |
|
|
9,917 |
|
|
30,364 |
|
|
34,103 |
|
|
|
|
|
|
|
|
|
Gross margin |
3,736 |
|
|
5,016 |
|
|
11,254 |
|
|
801 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
2,470 |
|
|
3,023 |
|
|
7,573 |
|
|
8,690 |
|
Selling,
general and administrative |
5,347 |
|
|
5,486 |
|
|
16,308 |
|
|
16,964 |
|
Amortization of acquisition-related intangibles |
85 |
|
|
85 |
|
|
255 |
|
|
98 |
|
Change in
fair value of contingent consideration |
— |
|
|
272 |
|
|
— |
|
|
71 |
|
Restructuring |
47 |
|
|
1 |
|
|
450 |
|
|
1,328 |
|
(Gain) on
Sinovel settlement, net |
(24,978 |
) |
|
— |
|
|
(53,698 |
) |
|
— |
|
Total
operating (income) expenses |
(17,029 |
) |
|
8,867 |
|
|
(29,112 |
) |
|
27,151 |
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
20,765 |
|
|
(3,851 |
) |
|
40,366 |
|
|
(26,350 |
) |
|
|
|
|
|
|
|
|
Change in fair value of
warrants |
(2,475 |
) |
|
399 |
|
|
(2,658 |
) |
|
1,468 |
|
Gain on sale of
minority interest |
127 |
|
|
— |
|
|
127 |
|
|
951 |
|
Interest income,
net |
336 |
|
|
49 |
|
|
769 |
|
|
94 |
|
Other income (expense),
net |
124 |
|
|
(279 |
) |
|
1,058 |
|
|
(2,449 |
) |
Income (loss) before
income tax expense |
18,877 |
|
|
(3,682 |
) |
|
39,662 |
|
|
(26,286 |
) |
|
|
|
|
|
|
|
|
Income tax expense |
1,584 |
|
|
566 |
|
|
4,548 |
|
|
496 |
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
17,293 |
|
|
$ |
(4,248 |
) |
|
$ |
35,114 |
|
|
$ |
(26,782 |
) |
|
|
|
|
|
|
|
|
Net loss per common
share |
|
|
|
|
|
|
|
Basic |
$ |
0.85 |
|
|
$ |
(0.21 |
) |
|
$ |
1.73 |
|
|
$ |
(1.44 |
) |
Diluted |
$ |
0.83 |
|
|
$ |
(0.21 |
) |
|
$ |
1.71 |
|
|
$ |
(1.44 |
) |
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding |
|
|
|
|
|
|
|
Basic |
20,419 |
|
|
19,949 |
|
|
20,300 |
|
|
18,614 |
|
Diluted |
20,864 |
|
|
19,949 |
|
|
20,538 |
|
|
18,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED CONSOLIDATED BALANCE
SHEET(In thousands, except per share
data) |
|
|
|
|
|
December 31, 2018 |
|
March 31, 2018 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
80,042 |
|
|
$ |
34,084 |
|
Accounts
receivable, net |
8,055 |
|
|
7,365 |
|
Inventory |
14,006 |
|
|
19,780 |
|
Note
receivable, current portion |
3,000 |
|
|
3,000 |
|
Prepaid
expenses and other current assets |
4,091 |
|
|
2,947 |
|
Total
current assets |
109,194 |
|
|
67,176 |
|
|
|
|
|
Property,
plant and equipment, net |
9,808 |
|
|
12,513 |
|
Intangibles, net |
2,975 |
|
|
3,230 |
|
Note
receivable, long term portion, net of discount of $168 as of
December 31, 2018 and net of discount of $336 and deferred gain of
$105 as of March 31, 2018 |
2,832 |
|
|
2,559 |
|
Goodwill |
1,719 |
|
|
1,719 |
|
Restricted cash |
165 |
|
|
165 |
|
Deferred
tax assets |
1,438 |
|
|
542 |
|
Other
assets |
373 |
|
|
271 |
|
Total
assets |
$ |
128,504 |
|
|
$ |
88,175 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable and accrued expenses |
$ |
17,681 |
|
|
$ |
12,625 |
|
Derivative liabilities |
3,875 |
|
|
1,217 |
|
Deferred
revenue, current portion |
9,929 |
|
|
13,483 |
|
Total
current liabilities |
31,485 |
|
|
27,325 |
|
|
|
|
|
Deferred
revenue, long term portion |
8,133 |
|
|
8,454 |
|
Deferred
tax liabilities |
110 |
|
|
110 |
|
Other
liabilities |
97 |
|
|
57 |
|
Total
liabilities |
39,825 |
|
|
35,946 |
|
|
|
|
|
Stockholders'
equity: |
|
|
|
Common
stock |
217 |
|
|
211 |
|
Additional paid-in capital |
1,043,815 |
|
|
1,041,113 |
|
Treasury
stock |
(2,101 |
) |
|
(1,645 |
) |
Accumulated other comprehensive (loss) income |
(65 |
) |
|
883 |
|
Accumulated deficit |
(953,187 |
) |
|
(988,333 |
) |
Total
stockholders' equity |
88,679 |
|
|
52,229 |
|
Total
liabilities and stockholders' equity |
$ |
128,504 |
|
|
$ |
88,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands) |
|
|
|
|
|
|
|
|
|
Nine Months Ended December 31, |
|
2018 |
|
2017 |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net
income (loss) |
$ |
35,114 |
|
|
$ |
(26,782 |
) |
Adjustments to reconcile net income (loss) to net cash used in
operations: |
|
|
|
Depreciation and amortization |
3,455 |
|
|
9,239 |
|
Stock-based compensation expense |
2,402 |
|
|
2,115 |
|
Provision
for excess and obsolete inventory |
686 |
|
|
415 |
|
(Gain) on
sale of minority interest |
(127 |
) |
|
(951 |
) |
Change in
fair value of warrants and contingent consideration |
2,658 |
|
|
(1,397 |
) |
Non-cash
interest (income) expense |
(168 |
) |
|
19 |
|
Other
non-cash items |
(1,692 |
) |
|
81 |
|
Changes
in operating asset and liability accounts: |
|
|
|
Accounts
receivable |
(724 |
) |
|
(3,576 |
) |
Inventory |
3,320 |
|
|
180 |
|
Prepaid
expenses and other current assets |
(1,380 |
) |
|
647 |
|
Accounts
payable and accrued expenses |
4,603 |
|
|
638 |
|
Deferred
revenue |
(361 |
) |
|
(862 |
) |
Net cash
provided by/(used in) operating activities |
47,786 |
|
|
(20,234 |
) |
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Net cash
provided by/(used in) investing activities |
(650 |
) |
|
(1,056 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Net cash
provided by/(used in) financing activities |
(385 |
) |
|
15,188 |
|
|
|
|
|
Effect of exchange rate
changes on cash |
(792 |
) |
|
636 |
|
|
|
|
|
Net increase in cash,
cash equivalents and restricted cash |
45,959 |
|
|
(5,466 |
) |
Cash, cash equivalents
and restricted cash at beginning of period |
34,248 |
|
|
27,744 |
|
Cash, cash equivalents
and restricted cash at end of period |
$ |
80,207 |
|
|
$ |
22,278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP NET INCOME (LOSS) TO
NON-GAAP NET LOSS(In thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Nine Months EndedDecember 31, |
|
2018 |
|
2017 |
|
2018 |
|
|
2017 |
|
Net income (loss) |
$ |
17,293 |
|
|
$ |
(4,248 |
) |
|
$ |
35,114 |
|
|
$ |
(26,782 |
) |
Sale of minority
investments |
(127 |
) |
|
— |
|
|
(127 |
) |
|
(951 |
) |
Stock-based
compensation |
792 |
|
|
883 |
|
|
2,402 |
|
|
2,115 |
|
(Gain) on Sinovel
settlement, net |
(24,978 |
) |
|
— |
|
|
(53,698 |
) |
|
— |
|
Amortization of
acquisition-related intangibles |
85 |
|
|
85 |
|
|
255 |
|
|
98 |
|
Changes in fair value
of warrants and contingent consideration |
2,475 |
|
|
(126 |
) |
|
2,658 |
|
|
(1,397 |
) |
Non-cash interest
expense |
— |
|
|
— |
|
|
— |
|
|
19 |
|
Tax effect of
adjustments |
2,163 |
|
|
19 |
|
|
4,991 |
|
|
142 |
|
Non-GAAP net loss |
$ |
(2,297 |
) |
|
$ |
(3,387 |
) |
|
$ |
(8,405 |
) |
|
$ |
(26,756 |
) |
|
|
|
|
|
|
|
|
Non-GAAP net loss per
share - basic |
$ |
(0.11 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.41 |
) |
|
$ |
(1.44 |
) |
Weighted average shares
outstanding - basic |
20,419 |
|
|
19,949 |
|
|
20,300 |
|
|
18,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP OPERATING CASH FLOW TO
NON-GAAP OPERATING CASH FLOW(In
thousands) |
|
|
|
|
|
Three months ending |
|
Nine months ending |
|
December 31, 2018 |
|
December 31, 2018 |
Operating cash
flow |
$ |
24,191 |
|
|
$ |
47,786 |
|
Sinovel settlement (net
of legal fees and expenses) |
|
(24,388 |
) |
|
|
(54,724 |
) |
Tax effect of
adjustments |
|
1,130 |
|
|
|
2,377 |
|
Non-GAAP operating cash
flow |
$ |
933 |
|
|
$ |
(4,561 |
) |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Forecast GAAP Net Loss to
Non-GAAP Net Loss(In millions, except per share
data) |
|
|
|
Three months ending |
March 31, 2019 |
Net loss |
$ |
(6 |
) |
Stock-based
compensation |
|
1 |
|
Amortization of
acquisition-related intangibles |
|
— |
|
(Gain) on Sinovel
settlement, net |
|
— |
|
Tax effect of
adjustments |
|
— |
|
Non-GAAP net loss |
$ |
(5 |
) |
Non-GAAP net loss per
share |
$ |
(0.24 |
) |
Shares outstanding |
|
21 |
|
|
|
|
|
|
|
Reconciliation of Forecast GAAP Operating Cash
Flow to Non-GAAP Operating Cash Flow(In millions) |
|
|
|
Three months ending |
|
March 31, 2019 |
Operating cash
flow |
$ |
(6 |
) |
Sinovel settlement (net
of legal fees and expenses) |
|
2 |
|
Non-GAAP operating cash
flow |
$ |
(4 |
) |
|
|
|
|
Note: Non-GAAP net loss is defined by the
Company as net income (loss) before; sale of minority investments;
stock-based compensation; gain on Sinovel settlement, net,
amortization of acquisition-related intangibles; changes in fair
value of warrants and contingent consideration; non-cash interest
expense; tax effect of adjustments; and other unusual charges or
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 is
not able to provide the change in fair value of warrants on a
forward-looking basis without unreasonable efforts because the
calculation for that change is primarily driven by the closing
price and volatility of the Company's stock at the end of each
fiscal quarter, which cannot be reasonably estimated at this time,
and therefore the Company's non-GAAP net loss guidance does not
include the impact from any change in fair value of warrants.
Actual non-GAAP net loss for the fiscal quarter ending March 31,
2019, including the above adjustments, may differ materially from
those forecasted in the table above.
Non-GAAP operating cash flow is defined by the
Company as operating cash flow before: Sinovel settlement (net of
legal fees and expenses); tax effect of adjustments; and other
unusual cash flows or items. The Company believes non-GAAP
operating cash flow assists management and investors in comparing
the Company’s operating cash flow across reporting periods on a
consistent basis by excluding these non-recurring cash items that
it does not believe are indicative of its core operating cash flow.
Actual non-GAAP operating cash flow for the fiscal quarter ending
March 31, 2019, including the above adjustments, may differ
materially from that forecasted in the table above.
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
GAAP to non-GAAP net loss is set forth in the table above.
AMSC ContactsInvestor Relations Contact:LHA
Investor RelationsSanjay M. Hurry(212) 838-3777amscIR@lhai.com
Public Relations Contact:RooneyPartners LLCBob
Cavosi646-638-9891rcavosi@rooneyco.com
AMSC Communications Manager:Nicol GolezPhone: 978-399-8344Email:
Nicol.Golez@amsc.com
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