AMSC - Earnings call transcript Q1 2018 | American Superconductor Corporation

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Operator

Good day, everyone, and welcome to AMSC's First Quarter 2018 Earnings Conference Call. This call is being recorded. [Operator Instructions]. With us on the call this morning are AMSC's President and CEO, Daniel McGahn; Senior Vice President and CFO, John Kosiba; and Manager of AMSC Investor Relations, Brion Tanous.

For opening remarks, I would like to turn the call over to Brion Tanous. sir. ahead, go Please

Brion Tanous

and fiscal our XXXX Todd, our to first quarter results. welcome you, call to discuss Thank

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

effective loss reconciliation cash flow unusual and inventory, operating and noncash cause to in are obligation flow of and net non-GAAP and to company's loss or effects other amortization Sinovel non-GAAP will the flow non-GAAP our operating fees, like found of net operating net net interest net be furnished events may referring zero of and non-GAAP we views adjustments, to we legal fair stock-based press value non-GAAP in GAAP cash before and income, net Non-GAAP fees to developments also operating last cost related cash acquisition tax compensation, charges X-K. we the financial tax cash subsequent GAAP operating warrants, these expenses, update the today's noncash cash settlement, net to or of intangibles, of any other be its can items. flow flow loss forward-looking specifically that call loss expense, expenses change, legal adjustments, to on flow and settlement, anticipates of issued disclaim before consumption AMSC change or statements. basis other items cash non-GAAP or While note night on unusual would and to metrics. A Sinovel loss adjustments SEC Form and of I release

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

Daniel McGahn

by information Thanks, update Brion, Wind and an business. begin September I'll good today and the June XX, on morning, financial our provide of a Sinovel results the second the then providing John end settlement which quarter, guidance review fiscal and ended everybody. will then provide Kosiba Grid fiscal for XXXX, XXXX. our of which quarter, and provide detailed first will XX, for for

agreement will Under we'll the equivalent we've and disputes AMSC comments, AMSC care entered of believe Sinovel from XXXX, to Wind our July On existing Following million X, a of paid that into up $XX say out million on the million. in to parties. money agreed to later pay million Austria over to a $XX our between periods. AMSC the million. previous The to the paid line $X analysts. in number open happy of of in anticipate fees China Sinovel first million. John installment. of of the We AMSC a We will in approximately settlement talking million agreement, settlement connection RMB owed the under July. Group $X in taxes resolve in of questions the terms $XX.X to We legal $X to taken bank first just be This is Austria. about $XX.X China installment the Austria. net with cash attorney's be amount all Xth Sinovel transferred in contingent to has we China. taxes all I'm of our

occurred of District XX within installment date Court be U.S. The delivered paid Sinovel, second Xth to the July. the against of after $XX which the million on months, the sentence is

has The this party, is second Mr. Wei. guaranteed second also a installment by Wenyuan been

will the clear Let Sinovel Mr. of me shares. our Sinovel settlement in Court This If do of settlement best hearing the happen. it AMSC really to public for This the move then Wei this him enables was the to very AMSC. wealthy, with facts, according Mr. He us decision At settlement deal than installment challenging us pay to talk Chinese Considering a DOJ and not nearly these of cash. the to our the and strengthens unpaid by Thanks million business. receive must to Xth wind million. the pay maximum is that to million, pay shareholders. to an District to founder bit agreed is. with be more This Peterson for of our fines closes formerly we that to probation a of $X who China. of agreement. we to $XX combined Wind the two is percentage on ongoing businessman, we ordered and the of was Sinovel pursuant for the Group settlement July, records, the of a is he Wei settlement one-year sheet. this balance Western and chapter well-known This for exchange revoked also operators. a the District who court The X% large settlement. the Sinovel XXXX, for of of turbine enabling keep catalyst stock growth sentenced owns This to the made about the their settlement amounted little Xth $XX of business. initiatives million. May, which Chairman a imposed The sentencing Sinovel U.S. on second our the the is by fine Judge Sinovel additional AMSC $X.X balance during terms the supports Wisconsin

to Turning June top quarter, than to quantities shipped June for than previous in business shipped the greater ECS results, be range. And our revenue XXXX, were the quantities of quarter. greater in quarter, the quarter, The quarter expect which be Inox the our quarter, we to first in September is quarter. which year June the next fiscal guidance Inox in of which of ECS is to the the quarter our March at is came to of

credit letters the Our forecast relies for primarily Inox. on received the timing from us to ECS shipments of of

continue business We Inox' status. monitor credit and to

introduced on of auctions has the in reports and the winning We backlog. We for and industry, are Inox the carefully bidders. of the consistently the key X the now auction is XXX auctions the delivering monitoring India, execution believe Wind been Inox new a nearly and gigawatt wind helping is SECI-X momentum process and megawatts. government gain of transparency This on projects. by SECI-X market backlog

continue and Wind We market market. seeing recovery about are of be the to our signs optimistic Indian

cost by asked Inox Wind encouraged to of projects. for support for fact and certain the engineering their has energy AMSC facilitate design that We levelized are lowering

stated of by even wind to levelized design. Inox encouraged are of by a desire further though. energy I be to turbine way We lower want clear cost the new also

are its We of turbine have not strategy doing forward long-term yet is part Wind in to however, well-positioned with requirements deploy signed to turbine a indicated Inox' Inox; an agreement India. power and integral so. believe new a support we new Inox We has look to

our business. We are diversifying Wind

Doosan to well-positioned Doosan X-megawatt a manufacture and X.X-megawatt are South Heavy has to our Korean license We support Industries. our customer, turbines.

is market penetrating Doosan, global forward closely team we and working wind to look with Our Wind Doosan. the offshore with potentially

business Wind We are anticipating XXXX. growth in fiscal from our

growth are our Grid. business by We diversifying through

quarter yet another quarter. was first strong Grid The

Our for as for D-VAR this benefits power. quarter reliable growth by transmission distribution our our and third catalyst fourth area segments, is comes market. similar business which a to of as recent power us fabs, in has we fiscal a from year. was D-VAR our Renewable an and and last seeing of the mills very performance clean, product, VVO segment And D-VAR where optimization, strong of Industrial Industrial the of require mines, projects base supported semiconductor or new volt focus know, the product and This you power focus. level been are addresses The

are sales of has positive an excellent product our our by utilities Our we encouraged and utilities the reaction about solution. done job to VVO educating team

orders its working we and Iowa, other utilities orders deploy VVO, Alliant other announced have to We on Energy with in many to be clear with opportunities plural. are

our fiscal grow to XXXX. in business We again expect Grid

is product after Grid funnel opportunities. aggressively opportunities those for and Electric Resilient our we Our significant are going of quite

specific lot work show to We which we of continue on utilities believe projects, with promise. major a

problems that REG to we Chicago. a last priority solves and The helping utilities about provides turning with Brion. have solutions come say that of say additional in to that had discussions opportunities back real with really And review In are new, us REG over here can fact, initial to understand some today. challenge utilities evaluate. the several that is the I all to years them

Brion Tanous

can. Yes, you

Daniel McGahn

have of approval all for we So this?

Brion Tanous

Dan. Yes, we do,

Daniel McGahn

terms of contract this agreement happy believe to a We conditions I'm mutual parties. that between have is you AMSC giving us with update. very ComEd comfortable the the ComEd and on and

for on be to subcontractors prospective to project subject this and flow about won't any to AMSC conditions signed to them. the have be topic clear, order revenue. yet, I upon approval agreed any this on contract questions answer terms with AMSC down this ComEd I by a Security by will collect we working the comment able Homeland to call. now are contract in not this time. to To do We of Department and be and cannot at further any

announced into the designed In we ship we platform. of San XXXX, Turning were to amphibious Navy. class Antonio September the

deployed long a have We materials Protection lead Navy System the the an been also U.S.S. we Ship be contract U.S. HTS-based for for to from awarded on announced

San upgraded U.S. LPD LPD San had XXth The items time the XX first between of LPD and of XX AMSC Antonio XXth LPD LPD XXth of by SPS Class funded and class Antonio Antonio will X be commissioning the be flight to San San Lauderdale, Antonio create XX XX will be XX Ultimately, vessel; system as also XX transport Class the fully for XX. scope, to vessels known the the San long of hulls. the be X Antonio SPS the XX to Fort lead XX. Antonio ships will class include be of is Congress. Class. the been is flight the Navy deployment Thirteen anticipate LPD class vessels. and a integration SPS. has expected is San amphibious vessels. Class vessel; expected XX potential We ship has LPD expected plans LPD LPD total for flight Antonio Navy, into is XX dock the designed X X ships funded flight vessel. using as XX by Congress. first a to has the on San our X the that those flight

to SPS class for the vessel. $XXX San equate design is installed flight and the X the are class Class. to SPS $XX win Antonio revenue with revenue remaining per Navy. LPD the of Antonio We X approximately We have on This X San would first flight expected over stream Antonio San to vessels million represent XX our planning vessels. should million AMSC's be in LPD believe then The our a life of

can designed couldn't magnetic with about Navy. the and to We Systems with to more our lighter weight, has systems such XX%. the degaussing vessels to damage this on worked ship. operate date as HTS electrical AMSC of up the reduce required which degaussing team undersea reduce with are ability HTS-based pursuing mines for can I HTS the more up advanced XX% platforms Ship on version to overall signature can to detect the technology with systems. be enabling to degaussing a with U.S. efficient by success Navy. and the AMSC of power the U.S. limitations. is ship, Navy These power are by weight a and power to Protection additional systems the systems reduce degaussing systems develop an classes excited interfere weight

our include are aircraft working Other frigates, penetrate carriers, platforms SPS. limited We destroyers, not with are combat ships. vessel littoral other hard and platforms to but to Navy HTS-based

fiscal XXXX. of John as for will Now our our XXXX fiscal quarter discuss results Kosiba first financial provide second guidance for well John? ending as the September quarter financial XX,

John Kosiba

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

the to in Our year unit quarter ago Grid our first for Grid in XX%. the unit XX% unit in to quarter year of Inox. primarily the versus systems business unit accounted due increased total accounted revenues the as business shipments by for increased business business revenues while ago The D-VAR for of XX% quarter Wind the quarter quarter, result first revenues. a revenues Wind higher versus increased by XX% ECS first

newly result a units our Looking mix for the both to the first addition XX%, the quarter XXXX as primarily year-over-year air compares in in due versus the and at gross factory fiscal year-ago XX% as detail. with move as increase P&L was the the fixed a Gross in first revenue factory favorable product to quarter XX% in well reduced the leased to which quarter. year increased and in ago previous business the was Wind The facility. quarter quarter margin more margin for of in negative of Grid overhead

Additionally, $X.X $X.X expenses we in year decreased cost were headcount. period for noncash. down were due XXXX compensation SG&A ago, first Approximately XX% revenues. and had of of of quarter fiscal by accelerated from included in quarter year-ago fiscal same the XXXX million quarter, for R&D $X.X million. the SG&A lower a the was driven approximately This in overall million our first of to the of R&D depreciation primarily expense and expenses

year $XX.X quarter. loss in million or share per or per XXXX ago quarter Our share. compares This was in $X.XX the first with net $X.X $X.XX fiscal of the million

share per loss equivalents the XXXX a $X.XX first to $X.X net issued last with $X.XX fiscal of million of release XXXX. with night compares non-GAAP non-GAAP as XXXX GAAP or cash $XX.X see ended This ago cash. press quarter. with the per for million and in of cash, was our million Our for compared in March million or the $XX.X restricted of results. quarter share We year fiscal quarter $XX.X reconciliation XX, first Please

operating This previous was burn was $X.X our guidance. Our cash line million. with in

of Turning to XXXX. quarter our financial guidance second for the

expect $XX will that to be We revenues the our of $XX range million. million in

expenses burn flow, The received $X.XX loss exceed million be settlement. Sinovel operating to from net second is $XX add $X net be $X is breakeven ending the also the taxes to not expected you balance company proceeds operating cash exclusive company to share. Sinovel settlement in less from we a expects and flow proceeds of from any non-GAAP Sinovel settlement, The expecting per the Our the million by quarter after of million. proceeds from company the After than or net cash $XX should forecast, the no million. net to cash our anticipate cash

gain, approximately Included or of is to income net this net Sinovel, XXXX settlement. offset net than for net quarter nest associated million share. press no our in of million guidance associated and with night. Our flow, expected to of partially non-GAAP million taxes loss $XX flow the Please be with less operating $X.XX our per and in with second our settlement expected operating see is $XX income our net cash GAAP provided non-GAAP the we respectively, approximately release cash issued $X GAAP by loss the reconciliation an

let's to of contract Now settlement. through walk moment take the you the a Sinovel

this in is settlement wholly-owned with not as quarter RMB. be income as XXXX, a AMSC's any $XX.X the operating there USD second to associated of million other equivalent And expected expected the The in During settlement. reported be Chinese result, subsidiary revenue fiscal received statement. to is income

transferred In balances. settle approximately into in his prior we risk XX Austrian of AMSC taxes is USD denominated China subsidiary's outstanding USA. taken exchange wholly-owned to and to bank is Austrian Austria mentioned subsidiary transferred This in periods. limit expected USD. money intercompany account our The with have remarks, the Sinovel, to we following July, all believe China settlement our million for foreign between in AMSC cash now in AMSC As movements opening of Dan care any

We quarter reflected cash sheet consolidated XXXX. to to for be Austria of second expect on most balance our AMSC fiscal of the the paid

taxable Austria amounts to gain have Austria of the that AMSC money associated AMSC received be majority expect carryforwards received from loss be AMSC China. offset that does we applied expect the the will income. can by with We

to adequate position our in cash its As All scenario operations. factor taxes to After will reminder, loss XX%. a business manage likely in is the those in in paying portion its of see where taxes. XXXX. AMSC its Austria of expects we maintain to carryforwards, million we rate jurisdictions $X expected taxable the fiscal a paid cash in all global be we are million $X QX to run

from dividend the dividend, to the There result Dan. is time which may back on withholding to Austria back I'll is from any time, USA. tax that As transferred the a Austria to turn a is over With when payable USA. AMSC X% money AMSC dividend cash declared call to

Daniel McGahn

Inox' to on Based tends - John. auction quarter. Thanks, second support the from our comments, SECI-X during commitments public intends Inox

the are they turbines is site. have understanding shipped and to Our shipping

Inox stated of to wind Inox half XXX in second of XXX Additionally, planning the to our turbines another is this year. they deliver that megawatts quarter. their support has SECI-X must megawatts commission fiscal third during wins

We healthy that by turbine are reestablished fact a backlog of the has Inox business. comforted wind

Inox backlog. gigawatt X I of As almost mentioned, has

to quarter Inox' a We well-positioned for Grid. requirements. had strong support are We first

again in We fiscal expect to revenue grow Grid XXXX.

business D-VAR Our strong. is

we pipeline lead We VVO long are to market time delivering nicely, very XX. is items delivering and developing the LPD and are our for

the additional pursuing are opportunities Navy. We with

our that We are hard is their dedication. employees, goals to work of executing and credit the and our to against due

reporting quarter. from next sheet quarter our improving second as said, where we operating will at breakeven analysts. significantly potentially to scenarios see cash are we of to Todd, questions take XXXX. you now our balance the an I our fiscal completion of look John basis we back We and, forward flow on

Operator

our Instructions]. Philip [Operator We'll question Shen with Partners. Roth take first Capital from

Unidentified Analyst

This is Phil today. Jeff [indiscernible] for on

the great here, on the I the Navy. So making to And That's ComEd. question wanted progress you're first to hear. congratulations with off with start

So the use if revenue be solution. could when be get the sense if all your for we million wondering you when revenue a that you XX mentioned of contracts? potential built ships to recognized, can could talk win for SPS $XXX those I was of could so could naval those were in ships you about timing of just

Daniel McGahn

Sure.

that, long on the walk have I XX for parts least through can of So clarity we because at it. lead

So last at year. lead LPD $X about recognizing it, was of That on let's XX% elements the began about XX revenue the end million, long we contract. was, called of

anticipating lead the remainder lead of are We it we the when long elements long was of announced the we the delivering originally about XX% year, contract. this total which said

go ship and being why to are where really interest It funded. sure standpoint, in understanding with are Navy has to and the that are look scheduled make for, able to has planned we Mississippi XXXX, reason the We gets shipyard continues is delivery Navy. say the important the XX to labor a important this of built. about national LPD XXXX and in year is is they a when occurs of My that XX keep to ship components, the sure being XX the made and an and Congress a release platform, we'll been important to ships XXXX. engaged, subsequent Most handed that this that over we've Navy the LPD about release it that in for they believe balance discussions given which really offset for forward with ship, from from I the regularly Every give was ship update the basically ship in in is construction. the that's it's into shipyard

announcement LPD business the other think of derisking element our the for XX. has been I

class. hull a will and considered consistent So the as - is San new with now Antonio current new a what Antonio the was of San once completely modified variant potentially class, be current

design that to people new ships, So the ships. And able that to in hull go that expand a flight business get Navy we specifically X able with been design. tried into understand we telegraph to speak through would they current able we so want call success the we're same to LPD. are that to We then trying the be have to in of

that, is and it costs hardware to So cycle service we high, at from for XX to the the in cycle. let's the manage in money the system cycle. in hardware Where At what a the revenue initially were is we're attention want some with ship. shipyard we've want hope, transferred is to that the of date, to we are they to comes scope to hardware LPD the save technology establish challenge help That the The cost cost point build It that future, say, incumbent call have we is, sure relative prepared insignificant the least of in has additional with earlier been we the build happens ability system really installation manage are into level, expensive learning a point I necessarily our revenue beyond, is that cost. and the we we have point talking going the associated basic our labor. to for from is, can installation the the the XX basis, that relatively build remarks, gotten where about to ship all of solution. that the half able incumbent that, the our at make to but a and the Navy knowledge them to the shipyard. XX, very LPD do I At think the installation latter won't a mean doesn't in compared really to will it confirm

our cycle and able where in At some sure that to start with discontinuity however, trying at that, point be have a potentially realize ways we future being make value XX see that sold, well. make what goes find board sure LPD have to be And make the help successful. order why revenue will So revenue we're that that and is to is, interest look point on we've really we the in installation in Justin? that that's in seen to sure to time that Does to some for we're and need heightened make able means earlier we fully to the sense, that the Navy in team we've on forward. build pulled you'll to the to installation happens a

Unidentified Analyst

Yes, sense. a helpful? other that you with win any Navy. that make And classes ships just classes could of And many the on that be would be may of discussions ships? about of be you could when accelerated follow how this and sense having other for happen timing Has potentially designed into, the

Daniel McGahn

simple is I first in. win, the first your deployed the what Navy and the question think the answer to qualified Getting technology technology highlights what on ship, the getting - invested fully the yes. they've getting really design

the those All other in facts facilitate fleet. change I rehash and just well, carriers net XX-K, through to a on all of know market is and kind to XX, problem. in but has and million make year. per $XX I ship. remarks on to at not ships about The of the won't more of through the gone a If X, from XX the intent have able such. they're XX potential year. LPD, to a from per prepared We range. a just average the kind to market ships but In to be happened frigates past talk that's a today. other XXX that they the went our I want destroyers to and all, understands the which has the technology and want even a decade, technology are We've the known deployment throughout it of they in plan, the the next We million use happened of is XX advanced ships the those Phil some that As upon depending it this and now solve Navy, math hinted design long-term building $XXX the year ships. annual pretty in about some year, public acceleration building for qualification year, value we of in you the in

that for So of you. do that's out kind loud math

talked like $XXX talking million load stream, of we're I of per year, get and at about those may dislocation normal don't once then that reiterate the that is kind of for be these we there cycle. to the some ships, So staff is value base everybody. forward we've ships potential roughly to that equations production about for mentioned, which so before ten some I future in want more additional and But hope revenue the

to isn't just some we can more and it's the will shareholders hope So Navy fully the inside thinking bigger should business be double that to where to be by find part the It's export. only we with where procedure And to of in suppliers export. and the to And can are more of think people we book. maybe commonplace we're the appreciate whole placed of be our And ostensibly Defense we on also you new we becoming current requirements But trying a a and do of systems. to about building group us operation market a for Department but positively and design back want shareholders to technology for build base of we able to term, as the to business. look point business are export kinds sure the with this these you're accordance at of allies, in a market ship ways the explain able on come ability there's through, the imagine to go in I that lack order to as everything supplier. to forward by a we that better this a of refreshing make that future to

Unidentified Analyst

Great.

like shift Okay, business. great. to Grid And to then I'd your

I give us relationship? if through it Grid you see a ahead what becoming representing wondering going was you kind opportunity solutions XX% supply XX-Q, sense that a Vestas you of revenue yours, and with by just in from customer your you more SECI-X. like can meaningful product of looks is Just of see of the that ahead Vestas

Daniel McGahn

Sure.

we business stars or and the that and this distribution before, the audience but I substation, for power inside a our turbine Grid the So is the transmission Grid grid. think said the Wind at our business generation to really for few times clarity connects

when Grid. green D-VAR, gateway a it's the we Grid as ultimately, the Grid we So interconnection, onto power sell come solution the sell a it for it's to because,

you a in you to significant have back with geographies We time our is trying relationship periods that can geographies, be time for over in specific the business there need a isn't been these seems they and that historical solution. and can developing to actively have see Vestas go first some a out customer. this certain in Vestas, promote

and You're Grid into compensation enter more voltage dramatic a trying for reactive support. at a there need becomes to weak

not fully energy So to content the future product though We market better help we've that on cleaner, the them. the to are content be basis appreciate to means to Vestas. people through to past to have find deliver pathways to call to for whatever in forward afforded and sold be smarter, in deliver we said X this that, have a really or some a to even go years, X want we us. channels able they good past continue may to supplier to on That hope the for

Unidentified Analyst

the Or in from is one offshore great. then offshore question opportunity something target for to to Okay, offshore that you they're market? last introduce Do gigawatts design that me. of that with seems more XXXX. Inox? There about And an market, you pursue India could discussions an be in maybe see XX Wind just considering

Daniel McGahn

to to with of delivered not demonstrated us. we something technology, quantity turbines our delivered opportunity can And could able want digest utilized the get plans. market make does record the to for We represent does those we - at certainly to in hopefully at Korean X-megawatt obvious turbines. the whatever very set an a to that there in Doosan. in We've the of our technology end into for we're We as a kind the of through sure We in see the business great be in support South market, multiple We Indian to able going yet. prototype company - pursue, Inox units exportation it's early date with Currently, then If to of we hope opportunity proving can, kind geographies, something it market. track is that the we more forward. you It and be want the we make X.X, in and production a the want is We an hope to market. the demonstrated comfortable offshore in South respect India. be certainly really be unique been Wind should clear, to certainly at have already to that level. future. see up Inox' of the Korea India global Inox' outside do way want in have transition see But of be sure production that, It's we we wishes. large we're

Operator

our take Rusch question with Colin We'll next from Oppenheimer.

Colin Rusch

chain you Navy support of in the ramp Can your preparedness talk both supply and Grid business? about the the business the to

Daniel McGahn

you I'm question. happy it. a It's asked good really

stuff also, on periods where had focused to revenues we and and a we've we've grid in develop ramp revenue to back. able way the ramp to D-VAR the Navy, had about come the that isn't think be product up with we So

as So to to chain see we've very the our geographies market and market new support delivery we for and changes expansion relationships the with be able and supply D-VAR. into have had good of to it suppliers

comfortable be potential we that chain at that this to able could So the very feel supply established point the market with with deal I us.

potential We're those of be expand on We with we orders. deliver case 'XX beyond. a see try early comfort. growth very new the XXXX orders. a company VVO some and orders, really up will We're to the ability still you VVO, it's really an But in to controlled in at just can't looking for new really as in in first stage on additional give still product. the so think launch set doing a our any chain, I to to 'XX supply I got we

Some the of D-VAR are suppliers supply the part similar for of chain.

delivery, we've REG VVO the you to going not speculation. It's chain. risk But don't technology something supply know, John manage believe a the think time we I have just that have about reason to the about So managed a the at time but additional any are supply presents have I in about supply guys that to to this in we think it's that and past I see options. we're to risk chain. we would the and spent But magnitude point with of VVO deal challenge trying great of no different chain, a

capable We lot cable have We've the we've the refrigeration of REG, for supply calls what acquisition our a not lot now helps but sure we talked risk. REG. Nexans On for deal to the have to what these just of that trying with longer-term presents pathway ready, wire. kind solution that want has well is qualified publicly is fully the about mitigate we're which BASF, make for a to possibilities. potentially of to additional deliver for an utilities as to stated do some a A chain source able,

by Navy the very are of side, large a us. On systems fraction made final the

the very So supply chain have control Again, a with risks these. we've we we've it I way and component unique, but that something see demonstrated think don't in I we're unique, and done unique done almost to then it's we're dealing any with we've suppliers if that is product in level all is of the lot really cases, very system the the same D-VAR. there, assembling not

we can that something So But eventually well. it's monitor. think very managed I be continually,

Colin Rusch

give and focus point? at a spending going Could you Yes, where the helpful. - super where getting and spending around in That's that breakdown R&D us a this right the then question in and percentage that's now? just is

John Kosiba

of is the The So Colin, the Grid spend, We spend what on don't publicly, side two on stable last the R&D we it our vast the but on spend is it's R&D quarters. the vast pretty grid can down is you majority the majority of R&D break business. of tell over been business. the

Operator

We'll from our question with B. Riley next FBR. take Driscoll Carter

Carter Driscoll

you to congratulations But just, at some - think and bonds to the they high-level, strong strength of against the the about behind position the a all, can't ComEd. address about allocate potentially I we support in know talk don't a with I perpetrated contract long, newfound Sinovel been or pending been going - talked cash If I you're past, where in you. the of spend. want process advocate terms you. for long on that First to in new it's putting your you priorization rollout. contract know of

to ramp buckets be wait Inox of just get get to to a to Just Just reallocate that to for kind whether how digest new spend to. you sense of Colin new how as and and trying to R&D going you're trying alluding now? of was back? a of going really to you're balance going sit Are it'll be sense put use

Daniel McGahn

always be, Sure, pragmatic. I think very to tend we're as we

business we're how ongoing thinking sustainable in the is the balances is, way. think an on I needs whatever operate it basis cash it about a to

are that in the to with won't. improved improve that want near-term. We still in levels existing talked demonstrate revenue Wind coming happen, that things to levels see need those believe any growth that make very in we growth reason to we revenue and they We attempting Grid not high business to we grow that sure year. and that this We've to about the have

It objectives ultimately now want in for can think trying to is we've think want deliver state. and We something to and really not on that next and to we with the and maybe accelerate we push certainly capital and on near-term that mind, habitual we time we demonstrate won't we that things. their to have won't the help get and doesn't is us REG which That further the I. an We specifically objectives for We it sustainable as project with we see have look before ability it getting all maybe bonding. doesn't that point have now. mission and anticipated coming. doesn't people in mean over-deliver take that we been would to John to at that have than important them help we flows cash tendency do off interest operating REG, to, have we shareholders to with - and faster that basis. the out I access do more mean doesn't to really on a with the maybe That's chew. capital bite don't continual mean the start eventually the more the out for right because to burn That certainly than company the we

home, of net, million. expecting so probably payment additional like gross $XX you, on the payments Jackson So the of additional have for of keeping something the the at we're math then out this we similar those $XX $XX Road to between about you remind some coming million million facility, that and and score

about segments. accelerate time. demonstrated want thinking on there's be We need advantage growth strategic to of do. of So in take there's moments if history We're first have able cash And we said all business need something makes Chicago, continue deliver in what then our that deliver growth, a we let's sense of to on coming. foremost those to deliver we to to to more on and we trying

kind quarters with We here further of couple have next comfortable you Inox of that. and everybody stability do over to a getting getting the lot as with stated

have races near in and revenues burn increase term. of going So to the the higher very the not to we're potentially to

business, want Our of been we've business accelerated and number is to growth. demonstrate deliver to just look years at - after we the then this

Carter Driscoll

you a technology and least a be long you Would for partnership assuming relatively Maybe time. Okay, it's talk you but know anticipate once a about contract by that's a can't signed? they've period having mean, - potential at problem ComEd, about review with this very get do I I you DHS? for talk do you short contract?. advocated that been helpful. DHS any commercial with an can

Daniel McGahn

funding, the coming end fiscal they that's here have and is things we're allocated speculate. can as Yes, and really you're usually. is scope doing modifying before all appropriated, taking we're fall, get doing it's work going contemplated. to authorized, lot of to up period government, the of a already project already We've I the a talked in it's so and year you're that include the what know them can't to already I done really

I of number So a at looking we that. foremost, I it have could through first take. the forward our we That's to an have changing all suppliers, long to months. expect people know on we it It to take But you're vehicle, go mentioned. the it will you're and and perfunctory want our changing to extraordinary review that the contract long period doing sure as of don't I not an could still at take all make how to side. move has it really appendix. and weeks, And focus need time, look don't but take that is with can team

said we You can already. remarks that prepared the hear

to ready for us way and to close go. cost revenue. Because we're allows So recovery us Vehicle a to get really the DHS really

we us need nature for able we past, In collect ways in revenue, terms So that be utility. of given it's commercial talked the of the that some place. to needs about the in the secondary order to almost to the in

Carter Driscoll

this have does PEC? by to And rate-based be the

Daniel McGahn

make got I can't can't go at to back additional questions this I time time. any answer I've and this to, at comment any

Carter Driscoll

incrementally tariffs in particular you on any Are seeing enough. any it adding Fair the steel D-VAR. from aluminum and cost? Is impact

Daniel McGahn

potential actually our we growth dynamics business for where see industries. in is No, the of those changing

segment we of coming these mines we see in of tariffs. acceleration semiconductor a fabs, potential because growth mills So the support and but industrial and

of nature the state it's us present interesting produced those and to could in for power with industries. production the that in, quality that that deal opportunities some may the nation So issues happen

see it's way to it that coming the a on to able a revenues over additional I accelerate a see to business. be really we're revenue don't to we planned would for. We've think tried find years, and way if haven't people that effect So as cost demonstrate where that the

Carter Driscoll

I Just two quick may. ones, if

charging VVO impact of for territory? specific potential and then of being gotten pulling in rooftop at demand some So for utilities from allocations the kind the that as any do have you California the in EV] see mandate least California

Daniel McGahn

I the Yes, yes. simple answer think is

problems very is we're works, this want the not trying on field. validated do don't and product, of in buy could we we're are risk get And to to Make want sure sure in we what deliberate a on because 'XX, is lot step-by-step, of as go accelerate then making very be But a number a being want, which number 'XX. product driver VVO. terms really in With for We retire what focused commercial into again, we collecting growth California sets they what that pragmatic. we in focus as we them. but forward, that some a and got revenue accelerate lot so that and we with a you these utility have changes think, them don't we're delivery to finite that many get we you've we of we want new the releasing that accelerate that product but to a deal want to you in on year in I revenue new situation where the to field a revenues, more then we're like field.

is want be the record those again the to of should part customers, other have we help revenues. we want those is accelerate to which The markets make some able demonstrated show to data be sure of feature able to to and and set for ready

Carter Driscoll

you. for one last the And

quarter. your You're this imply model lowered? your hitting implying operating that breakeven has that point potentially Does been or breakeven

Daniel McGahn

focused on want talked in have grow is remains the I with to the No, don't capital period. for changes target we're No, on us seeing XX which revenue, better scenarios fast But that. that inventory to on to please to the think hopefully adjustments as lower reduced can. a working a about as allows we've demand you level on numbers period around in we we're model, burn. that in would we take basis, your What return revenues that in temporarily know Inox, some that to, a quarterly and

the quarter... to from Carter, So remind last you just

Carter Driscoll

sorry, changes for anything at capital to working that breakeven, is allowed that potentially reasonable? largely period so you reach this to least than I'm more else it's Yes, one

John Kosiba

Yes.

related due to getting again we we're so than of higher And particularly that some strain quarter to projects. last capital quarter, We're recovery the highlighted to Grid that burn little I to. side D-VAR was a guiding that to expected last backtrack working some quarter's in the on would've the

you operating QX provide for flow actuals between demonstrated guidance out the view smooth at and that two, and gives and of then will the capital a [indiscernible] reflective QX, look you quarters that if that the by cash you probably hiccup So for two that more revenue. working

Daniel McGahn

back forward level year inventory are. happy even how to means and done and current beyond, John, on breakeven more can can upon we try great help walk and and with grow working going some and more that calls to what then the some I there, quarters us through in to levels time, this spend there the And from are where quickly is, explain to of capital depends us. get again adjustments that think has Carter, where a and to what then job businesses people hurt Really you. to and we the go to maybe

Carter Driscoll

fine. That's

pull the Just D-VAR in fiscal is $XX - you I'm to last you through 'XX? million expect sorry in earned, that that

John Kosiba

You're VVO... talking the orders about

Carter Driscoll

the one. Yes, most recent

Daniel McGahn

fraction either there in a way. It's 'XX is and a 'XX. healthy There's outside fraction

the is We're of it's of book, to that. now see So what shows and to order - you to it really what going an is which people acceleration grow through Grid evidence we're listen. trying get

we that appreciate, about it start of orders, numbers. didn't on really talking lot before the people think impact a really we I has financial got D-VAR a

Operator

ongoing in questions no queue. Speakers [Operator Instructions]. showing further

Daniel McGahn

mind. I wrap go we'll don't Todd, you Well Great. if the think up call, to

lot a good company from think of the I news today.

And to the in And look of said going what said. shows hear revenue quarter we're pre-telegraphed we the quarter, QX. in confident, at we very us the kind we The we're going burn to be. this being We be and thought think kind we're where manage again of I what end it to series of we came able first might do really higher for you is that a going good did what like. that well next burn of again, was to the range. news very

business share to business the Grid Navy, I good REG. the VVO, with and some mature in revenue. with with the We've we to want forward, is position keep able been for significant be happy able Going mature to time. we've D-VAR, The haven't of period able strength a news with a balance that able to of been we're in growing now was to we sheet been

everything in and all, good feels for looks us. all very So

for at point, a of is limited gone one day and new our it's we're for with us. able really think to past I that, and the freedom specter our of were employees, our company think degrees

quickly accelerate yet and growth So it everybody. to as to and get able to talk as rationally being a trying really be Thanks, good forward to months in as to is to report again able we news. to grow thing additional can. but few Look hope you this

Operator

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

You may now disconnect.

American Superconductor (AMSC) 1 Aug 182018 Q1 Earnings call transcript