AMSC Beats, Still In Red - Analyst Blog
February 10 2012 - 7:00AM
Zacks
American Superconductor Corporation (AMSC) in
the third-quarter of fiscal year 2011 ending December 31, 2011,
reported an adjusted loss of 38 cents per share which beat the
Zacks Consensus Estimate of a loss of 47 cents. Earnings in the
reported quarter however came below the year-ago quarterly adjusted
loss of 33 cents per share.
Operational Statistics
American Superconductor’s total revenue of $18.1 million in the
reported quarter was below the $31.6 million in the year-ago
period. The downcast in revenues year-over-year was due primarily
to lower shipments from the Grid segment. However, revenue was
above the Zacks Consensus Estimate of $16.0 million for the
quarter.
Wind segment’s revenue of $10.1 million consisted of the bulk of
the quarterly revenue (56.1%). While Grid segment’s revenue of $7.9
million accounted for the rest (43.9%) of the quarterly
revenue.
American Superconductor digested a net loss of $26.3 million in
the reported quarter versus net loss of $18.2 million in the
year-ago period.
Financial Update
Cash and cash equivalents as of December 31, 2011, were $58.6
million versus $169.0 million as of December 31, 2010. Cash used in
operating activities during the first nine months of fiscal 2011
was $133.3 million versus $16.0 million of cash used in operating
activities in the year-ago period.
Looking Forward
Devens, Massachusetts-based American Superconductor offers an
array of proprietary technologies and solutions spanning the
electric power infrastructure, including generation to delivery to
end-use. The company is a lead player in megawatt-scale wind
turbine designs and electrical control systems.
American Superconductor’s performance was impacted by business
and contractual issues with its largest customer in China – Sinovel
Wind Group Co. Ltd. Earlier, American Superconductor’s revenue
growth largely depended on its customer Sinovel, China's largest
and the world's third largest wind turbine manufacturer. However,
since April 2011, Sinovel bogged down by high inventory levels
refused to accept further shipments from the company and was unable
to pay for past shipments.
American Superconductor sued Sinovel in November 2011, for
payments for past shipments, and compensation for infringement of
intellectual property rights. American Superconductor alleges that
Sinovel illegally obtained and used its proprietary technology to
upgrade its 1.5 megawatt wind turbines to meet proposed Chinese
grid codes. The matter is now sub-judice, with American
Superconductor seeking to recover more than $1.2 billion from
Sinovel through civil cases filed in various Chinese courts.
American Superconductor looking forward to the fourth quarter of
fiscal year 2011 ending March 31, 2012, expects net loss to be less
than $24 million, or $0.47 per share, adjusted net loss to be less
than $20 million, or $0.39 per share, and revenues to exceed $27
million.
AMSC estimates that it will have approximately $50 million in
cash, cash equivalents, marketable securities and restricted cash
on March 31, 2012. The company expects that its net cash usage will
be further reduced in subsequent quarters as revenues grow year
over year, working capital requirements are minimized and the
benefits of recent cost reduction efforts are fully realized. The
management believes that it has sufficient cash to fund its
operations for at least the next 12 months.
Consequently, we advise investors not to take any new position
over the Neutral-rated American Superconductor stock. In the near
term, its Zacks #3 Rank (Hold) clearly suggests a wait and watch
strategy. In the near-term, however, American Superconductor’s
Zacks #1 Rank (Strong Buy) peers, like RadiSys
Corporation (RSYS) and CalAmp Corporation
(CAMP) look attractive.
AMER SUPERCON (AMSC): Free Stock Analysis Report
CALAMP CORP (CAMP): Free Stock Analysis Report
RADISYS CORP (RSYS): Free Stock Analysis Report
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