AMSC - Earnings call transcript Q4 2017 | American Superconductor Corporation

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Operator

Good day, everyone, and welcome to AMSC's Fourth Quarter and Full Fiscal Year 2017 Earnings Conference Call. This call is being recorded. All participants will be in a listen-only mode until we reach the question-and-answer session. With us on the call today are AMSC President and CEO, Daniel McGahn; Senior Vice President and CFO, John Kosiba; and Manager of AMSC Investor Relations, Brion Tanous.

For opening remarks, I'd like to turn the conference over to Brion Tanous.

Brion Tanous

welcome full call fiscal and fourth discuss Stephanie, and quarter year you, to to our our Thank XXXX results.

discussed our SEC. I'd the on about Harbor Risk begin, management filed statements Factors for and as we like forward-looking the expectations today. that Report forward-looking be the note Before XXXX, and XX-K Safe section our differ as as March Private indicated X, those of our not by which June those of various for prospects ended may should to the Act These the a of constitute and upon any under represent only we XX, make future factors, subsequent from of as in Litigation provisions important on XXXX, of relied this representing XXXX. forward-looking AMSC's Annual of statements call views purposes statements materially Reform year conference Securities expectations, Actual have result reports Form we plans SEC various results filed the subsequent may today with such to remarks on that date with including

is today's of that before of we to these also loss of acquisition-related the may and stock-based non-GAAP events can views to we call consumption GAAP non-GAAP other issued release non-GAAP Non-GAAP tax to Form note to net Company's like would intangibles, net investments, zero of the or sale be change, anticipates reconciliation value night developments on interest forward-looking non-cash will compensation, AMSC specifically While referring SEC financial obligation subsequent any I to loss, effect disclaim on cause and update minority furnished statements. press amortization we that in metric. of adjustments be to inventory, last derivative a fair A X-K. loss the and expense, cost charges. loss basis or net and unusual net found non-cash changes of in our warrants,

our website press Dan and filings releases over will can of from McGahn. SEC www.amsc.com. our be now, at call of I accessed page CEO, the All And to Dan? the Investors turn

Daniel McGahn

good of and XXXX. the and which XX, will providing first XXXX, our guidance by ended the today for quarter for XXXX. review quarter fourth of XXXX financial fiscal will results of Brion, then XX, morning, I'll for results fiscal John of an March end Thanks, a everyone. the provide our June financial fiscal quarter begin fourth which Kosiba overview

grid fiscal than third growth remarks, a open the grew AMSC we it's by our XXXX questions. Following will business XX%, up more segment. our grid In row prepared for a in of line your in year

the growth fiscal as again technology D-VAR our Fort for we products. XXXX. Ship believe have represented D-VAR, grid commercialized introduced opportunities we the needle Protection high-temperature USS grid which Navy's System expect in moved We diversification. electric and to order diversified by signals we on our LPDXX. We Lauderdale, We resilient superconductor business VVO U.S. further deploy grew But the revenue in we forward

Inox key XX the believe year behind reports total winning wind of year India XXXX. industry Government to issues XXX XXXX, in were these of just about introduced a According believe XXXX However, backlog now X.X purchase faced been that has issues to after projects wind helping they the and of our transparency one-third by consistently the ranging installations last megawatts. partner with and month X.X a to us. what auction assets, in in legacy stuck agreements. power market We inventory Inox, From calendar to wind variety fiscal from XXXX. XXXX. dropped in Wind our India underperformed gigawatts in In for of a stranded process last the We is nearly gain industry wind hiatus. auctions maybe momentum gigawatts business to in the high

project. monitoring on SEC-X the We movement are Inox's carefully

of also XX gigawatts in clear, This We in be business. of be in offshore the possibly for business to business to expected allow is previously the diversification backlog. only believe on-track Wind India because are appears tariffs to course wind full next do recovery to so current which from of attained. Manufacturers our that significant of as reach three XXXX we industry reported wind it's higher reported XX auction-based a gigawatts renewable is are of According increased as us To that the business well within up overall seeing fiscal course the with is a installed hydrocarbon-based our add capacity One below relationship rationale are rate year XXXX. for be for and the that of Inox's ahead policies in levels revenues new and Asia, wind simple the expanded economic potential growth to reason optimistic provide of on wind other opens is market. years. anticipating in continue March goal deadline. increasing new to generation strong signs target Indian average the expected expected about XXXX enable wind The We Indian not East on of new opportunities backlog the suggests in exceed to India by this than are they is Association, wind but market to the Doosan for our future to of government's to global Inox power wind further country. their power the Turbine

year grid expect expect in fiscal we wind our is segment our growth a we from for year; growth XXXX XXXX. repeat, Fiscal expected to of year be this grow to significant So business and AMSC. to again

grid of our by grid The quarter for objective We are XXXX our us. We year-over-year. strong our business diversifying achieved quarter growth grid. fourth was fiscal growing another revenues through

our grew fiscal In grid XXXX. business fact, than in XX% more

quarter and performance. grid fiscal in a business the very for business. XXXX our The XXXX. the require industrial D-VAR again growth focus. an mills fiscal basic by our renewable similar know, business D-VAR In of strong a which comes And of we segments, and We fourth and has fabs quarter our grid as benefits focus our segment from contributor expect to area of our D-VAR was projects supported reliable is mines, to seeing you to grow been industrial in recent this clean of power. and catalyst semiconductor us third This are the large

quality grid. of VVO Our domestic solution gaining addresses product power traction utilities. distribution This new is the with product

the and Iowa have We now VVO announced. in utilities U.S. [indiscernible] energy in we commissioned on multiple State sites of including operating which units the

is very Our developing nicely. VVO pipeline

shipments XXXX. first for that significant. believe funnel fiscal the of commercial Grid in our the Electric quarter expect is We Resilient product We opportunities of

on on which Chicago. show utilities projects but of back progress specific take We continue work to report these a time to mature. with promise to with soon projects lot We major hope

the navy this where with SPS focused focused on West East are we and remained on opportunities moving we on and be commercializing commercializing multiple with Beyond appear our to utilities. year our We product remained the Coasts focused forward. REG

those utilities. facing using unique a be believe to a makes about system. utilities delivery believe REG have REG We systems. that are power conventional we will excited system larger cannot that opportunities needs unique are with way solved for We utilities our need economic our in We issues yet there REG substantial sense can other simply address believe that most

to understand solves working REG are uniquely We utilities priority are our have today. that that problems

anticipate items During additional fourth LPDXX fiscal delivering long the long the USS Program, time during the also shipping began fourth as Fort We quarter. quarter we lead time for Lauderdale during lead items the known XXXX.

technology will for to platforms the our systems the with continue enabling electrify their U.S. efforts the additional that navy ship an We fleet. HTS pursue based understands protection We ship support believe Navy. to system our are that

I'll navy believe We John applications, delivery the continue XXXX [ph] navies and end applications, propulsion our superconductor of which as XXXX. may SPS there full results the to and the certain to technology. fiscal XX, quarter opportunities will sell inward utilizing on as for to first financial be turn power fiscal work June review to the call our We fourth Kosiba for as well. of with year foreign quarter to guidance applications our provide well XXXX, John? SPS over

John Kosiba

the everybody. generated to Thanks, million quarter year-ago Dan, in quarter. $XX.X the AMSC good million of fourth compared XXXX revenues fiscal for $XX.X of morning

year-over-year Our accounted for unit in System Control Grid revenue The of Electrical driven business partially reduced revenues. business business our reduction by is unit XX% by Inox quarter. wind offset total from for higher grid the unit, to fourth revenues shipments

from margins, in our P&L margin the in detail, for strong The grid during fourth fiscal XXXX was license the more the as unit ago Looking XX.X% in as royalty XX.X%, compared quarter gross the by year-over-year period. and revenue increase product to quarter. margin was well gross wind primarily year business driven at of

the non-cash. of expenses year-over-year R&D for XXXX the from and ago million in to SG&A fiscal were quarter million by reduction quarter Our $X.X SG&A of in driven expenses in XXXX quarter. compared our decrease force. year resulting was reduced expenses and XX% Approximately fiscal our The R&D fourth the $X.X fourth were

loss $X.XX $XX.X year-ago of fiscal XXXX in fourth per Our $X.X the with per was share in net quarter share quarter million million of fiscal quarter. $X.X fourth of proceeds ended the the of equivalents or We to to of as The compared includes million or million of balance $X.XX December cash, the $XX.X year which sale XX, compared million March in our Devens and closed XXXX. facility end in restricted cash net XXXX. from $XX.X cash cash XXXX

payment similar of The quarterly was a quarter million. excluding XX, burn to driven $X last operating in $X included was After million within our cash burn cold previous the was [ph] $X.X a be with profiles cash by with which of million ITC operating burn capital would fiscal normalized burn million, in-line associated quarter ending grid the December we quarter. cash associated $XXX,XXX guidance May quarters, XXXX. believe cold the compares million in revenue range $X.X was of and benefit previous fourth a with the payment, May reduction On operating operating working our which acquisition. to quarter-over-quarter $X.X two collections Our the cash the in XXXX the in

range for to $XX revenues that XXXX; fiscal million. the financial in to in of million of the Turning expect quarter the will guidance $XX of first XXXX our first our fiscal be we quarter

we our of this as We translates flow our we a may have working structure into requirements, grid shipments cash to experience result XXXX. capital cost a that timing we breakeven improved anticipate is believe within Though continue the operating product to $X a increase the the on for an in million. net burn operating quarter million forecasted loss than Our revenue working an $X cash cash reflects share, expected in $X per million and operating first of to capital or The that $X.XX burn be into expected revenue period. point. certain overall less lumpiness of in fiscal lower

result, As the less million. of the we With a rebounds we revenues that, I'll $XX recent turn breakeven positioned that low call generate cash these quarters, at or revenue are business of believe as Dan. to to over back quarterly than

Daniel McGahn

John. One, they we quarters. stated impact to Thanks, call of SECI-X on quarter half intend fourth the product fiscal to Inox important meet their requirements. our during year, believe first positively points several this up specifically that next three ramp

so So concurrent wind ours, would turbines quarter. they that's intend half with megawatts half with before the go SECI-X And to through the commission megawatts and the And SECI-X. first our of year. the Two, XXX would second of year. year, the fiscal of support again of manufacture next end second of intend to ours commensurate they the the be end calendar of is XXX in their year again, wins three, for March that to

has well by we're Inox business. that and are We a Inox's comfortable turbine We positioned re-established fact backlog requirements. comforted wind believe of to healthy support the

had we fourth and on fiscal We well positioned continuing expect do again are to business. grid, We our focused grow a we so. to grid quarter for to grid grow are strong XXXX

business our in lead soon. to LPDXX with pipeline is addition the demonstrable is our see to D-VAR long for Navy. opportunities solution Our time developing And continue additional U.S. pursuing REG strong, items progress deliver VVO we should nicely, to expect

announce transition operations our U.S. facility, in of I'm Air headquarters the new completed our our that pleased Massachusetts. we Regarding building located had to successfully manufacturing in new to

and customers primary been on focus Our and continue our has will to be employees.

XXXX, believe our reduced now we disruption to have and would we operating this efforts we've lower an fiscal mentioned in in we be quarterly continued that is a quarter, our that headcount. fiscal both transition cost XXXX our to cash reduction will demand to operating sufficient and revenue This point. overall last cost strategies positive improved we Based We this going expected demonstrated flow because substantially Due We previously management the for we D-VAR. cost uptick seen have we've basis in our on footprint, As have on have strategic cash initiatives that avoid revenue cost fiscal timed XXXX. physical and customers. new our for cash footprint expect translates structure us generating scenarios into flow levels. a breakeven to at into

As John lumpiness cash guidance in the an his first the of remarks, our is quarter. said quarter believe to collections due burn cash first we anomaly during

up line that for expect our our one month. out originally a We for Justice the from lastly, X current sentencing that XXXX can questions the regarding Stephanie, any analysts. Sinovel, been scheduled And fiscal U.S. covering Department is which was Criminal growth AMSC. we open understanding of will to pushed the be DoJ year has Sinovel Case of June now against

Operator

from [Operator ROTH question Instructions] comes Shen Capital. first with Philip Our

Philip Shen

you First in Inox needs Dan, second XXX by the could we won see the ramp-up that commissioned one Inox. that is be quarter I know a megawatts mentioned I and we believe September. to about think that

operations after four a So with quarter Inox gap. the I were indicated think through in Company's restarted facilities manufacturing April that

Daniel McGahn

Right.

Philip Shen

us would the that up can at ECS that little How and -- for still should in of a be that, those -- So a the Is granularity it? bit give of first us seems QX. It shipments that fiscal like order fairway in great. with quarter see you we limited flow for be ramp bit if FQX. terms talk about looking you might a through quarter, you little can more it guidance a

Daniel McGahn

that's think a fair look it. way I to at

this I word us and for going that and time, that's Inox, we production I different they doing to that's -- what's said start a belief up while go September, call the quarter, now think for the if were March with to took back in communications in what quarter you believe we're their our our think was. December had to what the call --

they I the goods, we verification time turbines accepting think are that thing this shipping have factory. the wind is customers are from

what's six descriptions or leaving think to wind words their have say just to Inox we activity SECI-X say let's factory, -- we months the -- from is project. I So that they the that actually versus publicly don't different and going the turbines ago and that see now that will see intent we

at they this sure beginning to quarters meet of to to point of to we talk as but So the the step that time, shipment. present I ramp what to the one think at this QX but gone payment gone well love Phil we've able want and to able day which is quarter be try is we that at work We to and products end to direct kind ship we we've about the believe a us we a with Inox been quarter here been that ramp, going would QX. make are of see whatever very we've a they see through We needs present some prior out transition. very each to previous in in we've

immediate we meet So Inox in quarter going we're as QX starting what this beyond a with feel ramp SECI-X to that SECI-X. needs we through situation and good perceive in and a their and

new understanding stock of Our part new need do ECS inventory for least at SECI-X. is for they

have of by what is is, understand to they -- we we the that what only pay really and that I think need willing of some concerns what for. are fraction they

bearing to then attentively we'll this production execute presenting that's of quarter may This regime not policy back watch projects. We're whole a new have So next going or how think further future on is we say the place, well, quarter. year in call to market SECI-X by on on to that time will they regime in so on they first I curve very a but the production back their in the deliver what learning is because us there of -- everything some on may most to as -- which their picture the are and levels you as prepared act December sometime connected our quarter. sentiments they to for remarks means producing which the be of be getting with and first they delivering intend that investors over Inox said, of the able basically what half year SECI-X, is that all know, in half shared recent and are

quarter. onto same of which So the of SECI-X fulfilled that over December could is into really building be but October product hopefully and half then they and October. are the the March second the would that And maybe, amount demand year, for November the probably be

yes, So see coming we trying megawatt ramp say and long demand answer winded XXX present why ramp we're reason that Phil coming. that to the basically see to we as that

Philip Shen

backlog they -- for XXX remarks I a it just as you XXX think And backlog to then bigger how that two serve for in Inox, megawatts much kind mentioned -- or prepared fulfill you to megawatts, specifically years? to of everybody, of that should size do picture expect that expect of on would you that do entire have that -- And in serve? well be you be but able your

Daniel McGahn

timing understand. XX make something timing Will months, Yes, range in in think seems try that months that's or probably another it be of just I we XX the sense to fulfilled given projects. the to

are the megawatts to that extending some Up those SECI-X SECI-X to which three some know megawatts on a users these had also of they've SECI selling customers, quarter customers have next of successive think their other is of kind explained public for that have up XXX developed. working we Adani, the two they Adani multiple are XXX had. that already of them even for projects they this March think potential -- of and they top follow also I the means For added backlog that of they expand call with out turbines XXX SECI-X, where with SECI is wins don't what the I Inox these earlier in be is additional first that closely, projects, to relationship next, and specifically they that their them they

the SECI-X been projects secure SECI-X. to buyers We at for that they've also turbine understand least for that wind developed, and of part able are end

translate do we're constraints you tried as to their for us business, they've this wind working which to why capital for their as is year. So can and lets significant calling for growth they derisk and improvement much lower into

Philip Shen

One Sinovel know it on. pass other quick the delayed be another hearing. like question on I'll I month, may then and it it sounds

So concluded. does sensing so [indiscernible] that now or out expected tough is that you to for possible through does it's the are you now is could could mean mean is [ph] Xth in guessing the but be far describe can date What of that the fares And August? what guys? And team date the help the understand. July talk us can to be probabilities as I'm play you scenarios

Daniel McGahn

right point understand. this we comfort I know believe what talk try we can get and now and at to and people what on I

people the to regards because I stuff date, case so dates the for Department our and U.S. tend in the really case, So it's just and because to it's understand of think that announce not case. Justice on it's call not public we this

We between really the privy to scenes and behind prosecution aren't defense. the dealings

to information limited. we best victim at us the so and a We flow witness, are are is

of court. is So July of Xth was the June my in because court the was the the now -- of that is and the was understanding of reasoning -- that Xth the scheduling given the that from date

July. understanding it had the moved Xth June a So on Xth judge the conflict out to of they I my the of so is guess

fine it to understanding sentencing a on and the what restitution is, should should should us. include include Our direction happen

become number the it U.S. I having once whatever is the convictions, that well, be and in poster the trade in I Chinese ways bodes issues child current conviction established, intellectual think U.S. that of a there to regards what we've is out administration government Having case are think is many are. for the part a the this [indiscernible] clear China. of to gives theft a for lot property under two understand there where number that these might criminal damages that, endpoint government

there that leverage company idea three-letter in has president IP to trade one is of part being XXX imbalance. our presented $X are helps issue us. a company And is a to understanding I issue trade this administration over sanctions an Action, over theft the other. to against actually way some issues is China is the the they have use the set China has fines, of billion principally and that is these As there an additional fine and it, that There so that today some think secondarily,

of guilty claims forced but four-letter value our the that of I through the number in process gets our China, court company $X.X billion facts China -- and is restitution a claims this verdict only not the setting the of hope the Our also IP hopefully of and transfer. in a think vindicates the claims damages the makes lot the

So helpful. hopefully, that's

Operator

FBR. [Operator next Carter with B.Riley question Our from Instructions] Driscoll comes

Unidentified Analyst

[ph] Carson Can you quick for for is through question. thanks This us the BASF provide taking my update? Carter Driscoll, on

Daniel McGahn

technically tend to pay, worry a between with past than develop relationship we've BASF. a is hope much the is on about help here important, they not is separate companies that process, and which we world to the strategy I with the that contract. belief can certainly dealing like company in don't we've with lot continue is, been think I said Everything them I that our potentially technical on am even they progress could to to through cost, a a that's There I be do we understanding new Silk but really We agreement. -- non-disclosure the about to could make not we've given to second the that The be actually nothing that's are lower but privy I that that source, that potentially think report. a the good, contracts think -- the signed can due is the [ph] they dealing confidentiality a that continue they in which western to Road not say work,

Unidentified Analyst

both some you And you if more on or pursuing additional utility that that? focused additional other coast the earlier opportunities, mentioned then are those east coast. over Can you the or name commentary also, one and of say west you on you're not, any about can

Daniel McGahn

we've to the is Washington focus hopefully, demonstrable on literally here. evidence to at our move What dozen this DC, to hope the and for we're forward trying Seattle near-term get contracts. two And see Boston many us. U.S. conversations is do paperwork And are we close there mean, there different with is I announced and mature announced eventually in more and these is point REG Chicago in more utilities that, Sure. there in San we've we're the can identified. projects time and very a we've Francisco. there We that than dozen these to move to probably obviously, is, the than milestone really behind and need utility let's first a and utilities at trying

Operator

with questioner next Co. & Oppenheimer is Colin Rusch Our

Unidentified Analyst

Colin. on Kristen is for This

wanted grid of that that greater segment? a And the see into just the if activity? some where bit color And mix heightened in wondering for growth to or I sort I more. on seeing the maybe dig quoting little we're bit provide velocity more you segment, on quoting you're product a then could little those activity grid where opportunities in was While you

Daniel McGahn

protection We've really the added then products within lines top with product three utilities. but breakout new share comprises the that D-VAR from We D-VAR. ship with don't VVO, -- for systems lion really for the electric really of principally, of you it resilient grid grid comes know, and the Navy on the grid

growing we're kind industrial diversification D-VAR So wins, until wins revenue from from currently, segment. coming principally of we segment larger the initially is seeing the to coming coming from industrial see the D-VAR, and and it's healthy

we've want and grow able to levels we and been maintain that of coming growth saying this in upto that in revenue record off uptake need level D-VAR based and to we're So we've get seen see the and we grid production the now last around to be for kind this influence and some timing in the we've here. in our year call in an at move that that's and of of that upon Massachusetts this hinted able

very in potential see year. from revenue adding we to D-VAR we this So grow believe then with the we're healthy VVO. And

So the QX utility we that we have prepared revenue LPDXX, recognize we're commercial so talked see in We're Alliant, a then remarks to going if the about should we've from VVO. would navy. to we for this of able spell have growth in can announcement we from said build And we're name, move delivering we'll we'd see going the first orders, to revenue to about first them, be an REG, navy backlog, continue the the number definitively with on grid project some start which to hope the for the segment forward we're revenue year. to

each on one up year-to-year. that that nice growth add some spell base all from get some then we growth three So Is to and the through all helpful? incremental added could being top, the grid adding growing you have new products

Unidentified Analyst

other you moving any briefly seeing Are you beyond opportunities or is. any any forward the progress -- seeing That you foreign further U.S. Navy; some navies? are mentioned with

Daniel McGahn

at to have deeper because exporting from growth understand some of be next And to in don't we a or purposely than to which at I I mind of past, we've what for quarter but allied highlight set We've navies. quarter quarters with have come some little there and this additional don't some to see time the could the that look in been said this navy have don't want secure that and really to potentially that here until I a order that do export the activity specific is foreign navies. are sort degree the I of indications timing broader. confidence protection this discussions further programs going it multiple do expectation and different an think it's we I with secure able should we navies out foreign I license technology didn't in we're today

Unidentified Analyst

And wind then traction for the further Doosan. or in just relationship you diversification seeing question any the opportunities segment? Are with the on there last

Daniel McGahn

headed and see is in we Asia; is project. Korea how it not Korea and investing, as because outside also where we them we so some see think Doosan I learn as time bidding this call East projects quoting on South the Japan Yes, Asia Korean and we government Asia more Doosan East just about Southeast

are which machine forecasted important translates assuming their the systems demand the first the are they get revenue close able to is this become orders Really megawatt control that they noticeable, to for business Doosan. for year So into X.X mission us is and giving to us. to

did we ago, that with things that several performance when to the we've of from just latest make is looked will and get learning, us. that we we've put and and protection years prototype Doosan the on back of diversions one So in at greatest gone we've want Hyundai not sure on initial lot back but the the up

So the -- certainly quarters is, And we'll within make to those known we hope all. three, to see expectation initial four, deliveries those five next Doosan. as our make you to we

Operator

[Operator Instructions]

Daniel McGahn

that So draw note a I we'll to on think close.

days, I have. a that here to will is next we conversation of over be think a think that talk lot people think there the the little and I as disconnect I of more a we bit

as as clear We to certainly for revenue greater that new grid and even for should in that now business growth fractions see and grid, a well see year. grid grid have for and we Doosan, in become years have for growth see wind it which prospects we're trying see early and coming. three the growth business as able indications a We've the is we for as core potentially add-in our is do to past revenue greater we growing, fourth. We Inox been grow this

us and QX, remind in come. you is, cash little have working that scenarios fast I we're to translates a the of think is from on the about as quarterly part as the challenging to $XXX demand John have of of an we look breakeven part challenge we think a burn seeing, with want better we're million. we a million is lot will say, probably you how to think of it below how at below we bit and capital done believe one revenue which messages. basis you these I The that which The The amount a heavy projecting talked today's -- $XX anomaly. most levels. lumpiness align of I we've cost that of Inox

not grow, for best but the and grow. we want the continue So if to be our saying results that shareholders if QX going that need be simply sure persistent together, company to certain we probably ask place to to see burn cause manage revenue think realize QX, showing that that the level is overall this coming certainly would all it the demand tend we're paying questions. do in and We better they we're and Inox to you because a I guide make the lot we not for seeing for by quarter-to-quarter to that's add risk of QX, to us

going better those we're answer the lot questions, think and QX a seeing QX beyond. out to I of put a and delivering we've QX, for numbers on and QX

very everybody So and with talk I'll soon. say you we'll that, thank to

Operator

today's concludes presentation. This you, and ladies gentlemen. Thank

You may now disconnect.

American Superconductor (AMSC) 7 Jun 182017 Q4 Earnings call transcript