Company to host conference call tomorrow,
November 7 at 10:00 am ET
AMSC (Nasdaq: AMSC), a global solutions provider serving wind and
power grid industry leaders, today reported financial results for
its second quarter of fiscal 2018 ended September 30, 2018.
Revenues for the second quarter of fiscal 2018
were $14.9 million, compared with $11.0 million for the same period
of fiscal 2017. The year-over-year increase was driven by higher
Grid segment revenues and higher Wind segment revenues versus the
year ago period.
AMSC’s net income for the second quarter of
fiscal 2018 was $22.6 million, or $1.11 per share, compared to a
net loss of $7.3 million, or $0.38 per share, for the same period
of fiscal 2017. The Company’s non-GAAP net loss for the second
quarter of fiscal 2018 was $2.7 million, or $0.13 per share,
compared with a non-GAAP net loss of $8.0 million, or $0.42 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
September 30, 2018 totaled $56.3 million, compared with $26.9
million at June 30, 2018. The cash balance as of the end of
the second quarter of fiscal 2018 included $29.1 million of cash
proceeds received from the first payment required under the
settlement agreement with Sinovel. Operating cash flow in the
second quarter, excluding the first payment from the Sinovel
settlement, was $1.4 million. Please refer to the financial table
below for a reconciliation of GAAP to non-GAAP results.
“Our core operating business generated more than
$1 million of operating cash flow. Both of our business segments
delivered strong results in the second quarter of fiscal 2018,”
said Daniel P. McGahn, Chairman, President and CEO, AMSC. “The new
cost footprint of our Massachusetts facility along with the other
cost reductions taken over the past 2 years have resulted in a
stronger AMSC.”
Business OutlookFor the third quarter ending
December 31, 2018, AMSC expects that its revenues will be in the
range of $14 million to $16 million. The Company’s net loss
for the third 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 $6.3 million, or $0.31
per share. The Company expects operating cash flow, exclusive
of any legal fees and tax payments related the Sinovel Settlement,
to be from break-even to a burn of $2 million in the third quarter
of fiscal 2018. Please see below for a reconciliation of
forecasted GAAP operating cash flow to non-GAAP operating cash
flow. The Company expects cash, cash equivalents and
restricted cash on December 31, 2018, to be no less than $51
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, November 7, 2018, 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
http://www.amsc.com/investors. The live call also can be accessed
by dialing (334) 323-0522 and using conference ID 1591386. A replay
of the call may be accessed 3 hours following the call by dialing
(888) 203-1112 and using conference ID 1591386.
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 expected GAAP and non-GAAP
financial results for the quarter ending December 31, 2018, our
expected cash, cash equivalents and restricted cash balance on
December 31, 2018, 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, and we
cannot predict if and how successful Inox will be in executing on
SECI orders under the new central and state auction regime, and any
failure by Inox to succeed under this regime, or any delay in
Inox’s ability to deliver its wind turbines, could result in fewer
ECS 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 from 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 September
30, 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 September 30, |
|
Six Months Ended September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues |
|
|
|
|
|
|
|
Wind |
$ |
7,307 |
|
|
$ |
5,554 |
|
|
$ |
10,985 |
|
|
$ |
7,831 |
|
Grid |
7,569 |
|
|
5,495 |
|
|
16,498 |
|
|
12,140 |
|
Total
revenues |
14,876 |
|
|
11,049 |
|
|
27,483 |
|
|
19,971 |
|
|
|
|
|
|
|
|
|
Cost of revenues |
11,252 |
|
|
10,777 |
|
|
19,966 |
|
|
24,186 |
|
|
|
|
|
|
|
|
|
Gross margin |
3,624 |
|
|
272 |
|
|
7,517 |
|
|
(4,215 |
) |
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
2,264 |
|
|
2,951 |
|
|
5,103 |
|
|
5,667 |
|
Selling,
general and administrative |
5,175 |
|
|
5,339 |
|
|
10,961 |
|
|
11,477 |
|
Amortization of acquisition-related intangibles |
85 |
|
|
— |
|
|
170 |
|
|
13 |
|
Change in
fair value of contingent consideration |
— |
|
|
(201 |
) |
|
— |
|
|
(201 |
) |
Restructuring |
93 |
|
|
(12 |
) |
|
403 |
|
|
1,328 |
|
(Gain) on
Sinovel settlement, net |
(28,720 |
) |
|
— |
|
|
(28,720 |
) |
|
— |
|
Total
operating (income) expenses |
(21,103 |
) |
|
8,077 |
|
|
(12,083 |
) |
|
18,284 |
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
24,727 |
|
|
(7,805 |
) |
|
19,600 |
|
|
(22,499 |
) |
|
|
|
|
|
|
|
|
Change in fair value of
warrants |
282 |
|
|
144 |
|
|
(182 |
) |
|
1,069 |
|
Gain on sale of
minority interest |
— |
|
|
951 |
|
|
— |
|
|
951 |
|
Interest income,
net |
232 |
|
|
54 |
|
|
433 |
|
|
45 |
|
Other income (expense),
net |
325 |
|
|
(796 |
) |
|
934 |
|
|
(2,170 |
) |
Income (loss) before
income tax (benefit) expense |
25,566 |
|
|
(7,452 |
) |
|
20,785 |
|
|
(22,604 |
) |
|
|
|
|
|
|
|
|
Income tax expense
(benefit) |
3,008 |
|
|
(171 |
) |
|
2,964 |
|
|
(71 |
) |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
22,558 |
|
|
$ |
(7,281 |
) |
|
$ |
17,821 |
|
|
$ |
(22,533 |
) |
|
|
|
|
|
|
|
|
Net loss per common
share |
|
|
|
|
|
|
|
Basic |
$ |
1.11 |
|
|
$ |
(0.38 |
) |
|
$ |
0.88 |
|
|
$ |
(1.26 |
) |
Diluted |
$ |
1.10 |
|
|
$ |
(0.38 |
) |
|
$ |
0.87 |
|
|
$ |
(1.26 |
) |
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding |
|
|
|
|
|
|
|
Basic |
20,313 |
|
|
19,060 |
|
|
20,240 |
|
|
17,925 |
|
Diluted |
20,581 |
|
|
19,060 |
|
|
20,560 |
|
|
17,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED CONSOLIDATED BALANCE
SHEET(In thousands, except per share
data)
|
September 30, 2018 |
|
March 31, 2018 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
56,169 |
|
|
$ |
34,084 |
|
Accounts
receivable, net |
7,622 |
|
|
7,365 |
|
Inventory |
16,235 |
|
|
19,780 |
|
Note
receivable, current portion |
3,000 |
|
|
3,000 |
|
Prepaid
expenses and other current assets |
3,339 |
|
|
2,947 |
|
Total
current assets |
86,365 |
|
|
67,176 |
|
|
|
|
|
Property,
plant and equipment, net |
10,582 |
|
|
12,513 |
|
Intangibles, net |
3,060 |
|
|
3,230 |
|
Note
receivable, long term portion, net of discount of $224 as of
September 30, 2018 and net of discount of $336 and deferred gain of
$105 as of March 31, 2018 |
2,776 |
|
|
2,559 |
|
Goodwill |
1,719 |
|
|
1,719 |
|
Restricted cash |
165 |
|
|
165 |
|
Deferred
tax assets |
506 |
|
|
542 |
|
Other
assets |
332 |
|
|
271 |
|
Total
assets |
$ |
105,505 |
|
|
$ |
88,175 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable and accrued expenses |
$ |
15,304 |
|
|
$ |
12,625 |
|
Derivative liabilities |
1,399 |
|
|
1,217 |
|
Deferred
revenue, current portion |
10,057 |
|
|
13,483 |
|
Total
current liabilities |
26,760 |
|
|
27,325 |
|
|
|
|
|
Deferred
revenue, long term portion |
7,891 |
|
|
8,454 |
|
Deferred
tax liabilities |
110 |
|
|
110 |
|
Other
liabilities |
98 |
|
|
57 |
|
Total
liabilities |
34,859 |
|
|
35,946 |
|
|
|
|
|
Stockholders'
equity: |
|
|
|
Common
stock |
216 |
|
|
211 |
|
Additional paid-in capital |
1,042,962 |
|
|
1,041,113 |
|
Treasury
stock |
(2,042 |
) |
|
(1,645 |
) |
Accumulated other comprehensive (loss) income |
(11 |
) |
|
883 |
|
Accumulated deficit |
(970,479 |
) |
|
(988,333 |
) |
Total
stockholders' equity |
70,646 |
|
|
52,229 |
|
Total
liabilities and stockholders' equity |
$ |
105,505 |
|
|
$ |
88,175 |
|
|
|
|
|
|
|
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)
|
Six Months Ended September 30, |
|
2018 |
|
2017 |
Cash flows from
operating activities: |
|
|
|
Net income (loss) |
$ |
17,821 |
|
|
$ |
(22,533 |
) |
Adjustments to reconcile net income (loss) to net cash used in
operations: |
|
|
|
Depreciation and amortization |
2,307 |
|
|
7,682 |
|
Stock-based compensation expense |
1,610 |
|
|
1,232 |
|
Provision
for excess and obsolete inventory |
514 |
|
|
351 |
|
(Gain) on
sale of minority interest |
— |
|
|
(951 |
) |
Change in
fair value of warrants |
182 |
|
|
(1,270 |
) |
Non-cash
interest (income) expense |
(112 |
) |
|
19 |
|
Other
non-cash items |
(727 |
) |
|
(97 |
) |
Changes
in operating asset and liability accounts: |
|
|
|
Accounts
receivable |
(279 |
) |
|
124 |
|
Inventory |
1,278 |
|
|
1,354 |
|
Prepaid
expenses and other current assets |
(572 |
) |
|
85 |
|
Accounts
payable and accrued expenses |
2,166 |
|
|
(770 |
) |
Deferred
revenue |
(593 |
) |
|
1,235 |
|
Net cash
provided by/(used in) operating activities |
23,595 |
|
|
(13,539 |
) |
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Net cash
provided by/(used in) investing activities |
(411 |
) |
|
484 |
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Net cash
provided by/(used in) financing activities |
(325 |
) |
|
15,188 |
|
|
|
|
|
Effect of exchange rate
changes on cash |
(774 |
) |
|
608 |
|
|
|
|
|
Net increase in cash,
cash equivalents and restricted cash |
22,085 |
|
|
2,741 |
|
Cash, cash equivalents
and restricted cash at beginning of period |
34,249 |
|
|
27,744 |
|
Cash, cash equivalents
and restricted cash at end of period |
$ |
56,334 |
|
|
$ |
30,485 |
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP NET INCOME (LOSS)
TO NON-GAAP NET LOSS(In thousands, except per
share data)
|
Three Months Ended September
30, |
|
Six Months Ended September
30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net income (loss) |
$ |
22,558 |
|
|
$ |
(7,281 |
) |
|
$ |
17,821 |
|
|
$ |
(22,533 |
) |
Sale of minority investments |
— |
|
|
(951 |
) |
|
— |
|
|
(951 |
) |
Stock-based compensation |
825 |
|
|
478 |
|
|
1,610 |
|
|
1,232 |
|
(Gain) on Sinovel settlement, net |
(28,720 |
) |
|
— |
|
|
(28,720 |
) |
|
— |
|
Amortization of acquisition-related intangibles |
85 |
|
|
— |
|
|
170 |
|
|
13 |
|
Change in fair value of warrants and contingent consideration |
(282 |
) |
|
(346 |
) |
|
182 |
|
|
(1,270 |
) |
Non-cash interest expense |
— |
|
|
— |
|
|
— |
|
|
19 |
|
Tax effect of adjustments |
2,829 |
|
|
114 |
|
|
2,829 |
|
|
123 |
|
Non-GAAP net loss |
$ |
(2,705 |
) |
|
$ |
(7,986 |
) |
|
$ |
(6,108 |
) |
|
$ |
(23,367 |
) |
|
|
|
|
|
|
|
|
Non-GAAP net loss per share - basic |
$ |
(0.13 |
) |
|
$ |
(0.42 |
) |
|
$ |
(0.30 |
) |
|
$ |
(1.30 |
) |
Non-GAAP net loss per share - diluted |
$ |
(0.13 |
) |
|
$ |
(0.42 |
) |
|
$ |
(0.30 |
) |
|
$ |
(1.30 |
) |
Weighted average shares outstanding - basic |
20,313 |
|
|
19,060 |
|
|
20,240 |
|
|
17,925 |
|
Weighted average shares outstanding - diluted |
20,313 |
|
|
19,060 |
|
|
20,240 |
|
|
17,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP OPERATING CASH
FLOW TO NON-GAAP OPERATING CASH FLOW(In
thousands)
|
Three months ending |
|
September 30, 2018 |
Operating cash flow |
$ |
30,481 |
|
Sinovel settlement (net of legal
fees and expenses) |
|
(30,336 |
) |
Tax effect of
adjustments |
|
1,247 |
|
Non-GAAP operating cash
flow |
$ |
1,392 |
|
|
|
|
Reconciliation of Forecast GAAP Net Loss
to Non-GAAP Net Loss(In millions, except per share
data)
|
Three months ending |
December 31, 2018 |
Net loss |
$ |
(6 |
) |
Stock-based
compensation |
|
1 |
|
Amortization of
acquisition-related intangibles |
|
— |
|
(Gain) on Sinovel
settlement, net |
|
(1 |
) |
Tax effect of
adjustments |
|
— |
|
Non-GAAP net loss |
$ |
(6 |
) |
Non-GAAP net loss per
share |
$ |
0.31 |
|
Shares outstanding |
|
21 |
|
|
|
|
|
Reconciliation of Forecast GAAP Operating
Cash Flow to Non-GAAP Operating Cash Flow(In
millions)
|
Three months ending |
|
December 31, 2018 |
Operating cash flow |
$ |
(5 |
) |
Sinovel settlement (net
of legal fees and expenses) |
|
2 |
|
Tax effect of
adjustments |
|
1 |
|
Non-GAAP operating cash
flow |
$ |
(2 |
) |
|
|
|
|
Note: Non-GAAP net loss is defined by the
Company as net income (loss) before; sale of minority investment;
stock-based compensation; amortization of acquisition-related
intangibles; change in fair value of warrants and contingent
consideration; non-cash interest expense; Gain on Sinovel
settlement; 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 December 31,
2018, 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 December 31, 2018, 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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