AMSC - Earnings call transcript Q3 2020 | American Superconductor Corporation

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Operator

Good day, and welcome to the American Superconductor Third Quarter Fiscal 2020 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. John Heilshorn of LHA. Please go ahead, sir.

John Heilshorn

Manish. you, Thank and Fiscal everyone, American Corporation's Superconductor Good Earnings welcome Conference Quarter XXXX Call. Third morning, to I'm John Heilshorn, of LHA Investor Relations, AMSC's record. Investor Relations agency and Financial Officer With McGahn, Treasurer. John call today's and Senior Chief President Kosiba, Chief us and Executive President, are Vice Officer; on Chairman, Daniel XXXX issued Superconductor fiscal release the market third quarter for American after the closed. earnings of its yesterday

of For available in is release, a those copy www.amsc.com. of you at Investors have the page not website yet seen the company's the

you of annual Exchange period report company Securities XX-Q the the year Form the ended XX, forward-looking other date with plans such filed reports December Securities as XXXX call, of and XXXX. that make Factors result Act X, of with the subsequent for Company’s management's Form the the which a statements would Litigation including differ of constitute Actual SEC. to Harbor I Safe various expectations management and the XX, company’s XXXX, and March about Private important to materially American set remind provisions on as forward-looking the remarks updated starting not any the June of may various for Before XXXX, Reform in Risk statements indicated the during XX-K American forward-looking ended filed Commission on forth like that representing in for factors, as may be Superconductor's and views the statements call today's of as under management's by These Superconductor's should represent today. those today as future only section purposes expectations, relied results upon from prospects those

warrants, comparable specifically amortization stock-based views income as and adjustments Non-GAAP the the cash call, the rate flow measures, unusual for effect management and expenses is events operating to other net loss relevant of defined that may non-GAAP fees before is unusual of financial the and settlement, metric. and of operating company anticipates forward-looking and cash non-GAAP defined company's loss, changes cause net will by at non-GAAP other company statements. of and calculated before company Non-GAAP the by company that third today's flow. cash of night to tax fiscal company's the any acquisition China loss The cash in developments flow the acquisition-related items. legal of to to furnished GAAP flow in as issued charges the refer X-K. non-GAAP value on these found update the compensation, certain of reconciliation the directly the noncash the can obligation company operating quarter SEC net to Also, non-GAAP subsequent intangibles, change, release press earnings disclaims the be Form measures consideration or last fair net loss most measures the contingent While XXXX on

All will SEC from Executive be over Daniel? at the of Daniel and American Superconductor's Chief I turn www.amsc.com. Chairman, filings President now to that, Officer, accessed website call can of page the With press its releases McGahn. and Investors

Daniel McGahn

Kosiba, by and units. XXXX. which fiscal third for quarter, provide today our which update begin the providing business Good will Grid December quarter, I’ll John. Thanks, an XX, XX, ended and results fiscal guidance the end will view everybody. detailed Wind John financial our morning XXXX fourth for on of a then provide March

more Following versus year than of results strong AMSC from quarter our our line third XX% period million. coming for during the quarter delivered to grew analysts. we’ll questions in by the open XXXX. the Revenue the ago comments, at fiscal up $XX.X

XXXX company. the revenue a quarter. And ago to product there cash to as the for great positive objective in milestone be We flow of this cash is company Brand the period. forecasted. a We Our one consistent, the growth driving strive be. sustainable more Grid breakeven This revenue We in sustainable operating the generated fiscal lines on we this $XX towards versus for flow XX% year grew Grid quarter operating this met segment basis. all a and XXXX to the quarter, We for is third contributed believe third of basis. ended goal reaching million progress fiscal that cash. our than on of demonstrates with quarter

that take this Grid third of NEPSI which priorities period our and announced business. growth state broaden the with steady power the now Wind profitable of and we're during correction in In reach market we our directly Please NEPSI. moment of accelerate review offering October, to acquisition quarter, to expand is transaction The business, our on Let's aligns market our the a our the strategic business product acquisition sector our occurred reporting today. addition of extends available expanding Grid of offerings, independent both Further, our market. our realize product industrial share.

pieces about of up our terms and the talk Grid energy systems, segment in forward, power protection new systems. ship will make Going that we

New and systems D-VAR NEPSI, power energy include VVO.

as were well. FYXXXX. We Grid growth our REG part driving of of for one. it'll the Grid fab. in are business of this is revenue yes, systems for this the to quarter, track another year for organic company. segment if United States, well the growth our part growth. new And renewable as power industrial on our by the the believe objective, semiconductor integrating achieve third sixth of Grid projects And be that sales year as is the revenues We frontend driven United in international Grid grid energy consecutive as principally States, In we

Going believe products, business revenues progress We of our state improve quality well sustainable capitalized that long-term addition our two consistent, expect importantly, overall strategic Grid our to and operating grid our accelerate breakeven our plans for diversification. ability portfolio correction execute further the quarter this and to addition our We to basis. to believe forward, demonstrates and power of and reach steady to offerings, product. business, we products that on achieve objective. filter additional growth further this and customer flow our should by cash of we're diversify this we region, a Most goal towards harmonic earnings, the expect Grid

continue be business. predictable We on focused and a diversified to building more

were said over all this and the manufacturing challenges that three macroeconomic quarters, pandemic physical crisis. at we we've beat in we to I'm and businesses can As in sites, operate in the implement operational during it have protocols our saying not demonstrated for the again, concerns discussed States. and I has our both production. early created last this the has the United pandemic on effectively it AMC separation early missed

to of quarter. In we slow, XXXX. of we're but day, what signs U.S., virus, harder who knows pandemic news each to the in up be just may each the now continues about is really However, going so variants the get this new against seeing to beginning there be

healthy cleaning our safe keep help is and which protocols for instituted to everyone offices have We paramount.

production be in strong opened to an thus, will business our people, customer essential and our be focused manufacturing We’re factories of for is locations, remain deemed the quality, throughout products to our service. pandemic. AMSC and operational continue

mechanisms Biden's energy the to what is power for efficiency clean and for new sector that dollars leverage financing control, investment tailwinds incentives we This operations. in maximize business. jobs, as in the our revolution. energy new and that extend plan intends tax energy good as news well develop reform clean private that to to very company. could solutions. generate are energy demand President is The energy seen our the We've We internal what impact perceive be plan positively we energy new our systems and to can our managing new

and you wind As primarily product on know energy our manufacturers. project turbine renewable D-VAR addressing for is developers focused installations

For of of environmental over first solutions. turbines of tens off significant spur our of thousands system utility, wind coast. benefits, in VVO Biden’s our installation his superior power plans traditional including offers administration the the to quality, term, cost thousands and turbines savings

their electric of new solar their next wind long-term new which our top new intermittently energy for The of power grids products The nature. are the We power heart utility manufacturers the quality our offering customers. wind new intends President's accommodate maintaining are The resource, installation of power on policy of administration We the and variable focuses energy with millions power provide solar transmission power partnered believe been capability systems connectivity has now strategy. distribution, also suited dynamic our well solar at the farm to turbine and panels, growth U.S. and this expansion spur challenge. generation tier grid systems, grid. is efficiency to including to also community of and rooftop enormous a while networks to comes enhance this in because Distribution systems address time. must great scale energy to

the John? third financial fourth quarter over will I'll John to Now end review for provide guidance quarter and XX, the for year Kosiba, XXXX. XXXX, call results of fiscal XXXX March of the which our who fiscal turn will

John Kosiba

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

Grid during business recent of more ECS Wind Our XX% revenues primarily ago business increase year Power than behind in a by increased XX% our quarter of Wind. ago, result or quarter unit versus quarter NEPSI. acquisition for total unit revenue revenues the versus increased Wind revenues economy the with our quarter, Systems unit in year unit business as doubled the shipments a of Inox Northeast XXX% while third to the was business XX%. from Grid accounted due revenues third generated

favorable Looking in in detail, in in is ago. a to quarter. in gross third of non-cash a operating of represent third were expenses our the NEPSI. fiscal up for in and in for expenses R&D was of quarter the the to sold and the more R&D of Approximately of P&L XXXX, Included of of the R&D purchase the ago the up margin year fiscal to expenses impact margin approximately to gross fiscal of negative acquisition Increase for accounting first XX%, non-cash from of primarily was in cost quarter quarter XXXX quarter fiscal non-cash. fiscal point shipments. ECS $XX.X SG&A a the in at $X.X third related were XX% was SG&A which the X% This higher adjustments third of period expenses operations. XXXX the for adjustments is addition $X.X AMSC’s million XXXX percentage included due SG&A the margin third NEPSI’s related and gross goods a year result million. same mix, million These product quarter the five XXXX The from quarter.

share XXXX loss per the Our the fiscal per of $X.X non-GAAP third $X.XX or for from $X.XX $X.X million, year in net down quarter or million, was quarter. ago share,

per share the per our in million $X.XX million loss with was associated the quarter acquisition. quarter the XXXX expense third share. items net or $X.X goods ago This NEPSI loss the compares Included or net $X.XX non-cash $X.X fiscal into million, were fiscal several of year Our in of third a which one was to I $X.X sold. XXXX non-cash of mentioned quarter. in adjusted first cost

we working compares expenses, cash ended fair cash million favorable operating last amortization cash the on the our $XXX,XXX with had our XXXX. a of within quarter third night primarily Inox positive and of restricted This non-cash Wind This within value of generated operating reconciliation was and fiscal issued third marketable intangibles. see non-cash the $X.X in for in Additionally, for the from GAAP consideration of September in press contingent $X.X ECS NEPSI quarter. XXXX a change with with Please fiscal We to million in XX, capital $XX.X release XXXX. non-GAAP expense the million We securities expense a $XX.X cash, with of the collections million quarter shipments result for associated equivalents, results. of associated flow cash.

working capital the and milestones reminder, fluctuates timing positions. quarter-by-quarter on a As depending inventory of the from payments

smooth in mentioned will of our a cash million three capital. of that $XX Year-to-date previous of for any burn on several over you is working fiscal $X.X I've looked to quarterly quarter if million variations quarters cash first out operating As XXXX, flow our the period revenue. at calls, tend operating

of million operating three $XX this the revenues operating compares on approximately million in cash The improvement operating over that to nearly business the within increase cash for period. revenue in million both on higher $XX improvement reference, units. burn year-over-year an first gross of and burn For flow margins wind quarters was by grid the the XXXX, of fiscal and $XX cash nine-month driven year-over-year

Okay.

quarter to Now moment for financial NEPSI and our to had results. the approximately business margin third of the summarize million a NEPSI’s unit a I'd take revenues, operating grid like breakeven impact accounted NEPSI in on was quarter. $X.X

in $X.X adjustments rate totaled three-year million historical adjustments, are average operating in and third included non-cash the an earlier, mentioned with When $XX million. accounting the annual purchase approximately XX%. were margins in financial these I As revenue business of quarter these excluding there we results the line approximately of several NEPSI’s earned results normalize run approaching

turning for of quarter XXXX. Now guidance financial to fourth fiscal the our

We expect in our million. most revenue be of range $XX the generated be expecting to from of We're our business revenues $XX our will grid million fourth to quarter unit.

not expecting fourth quarter. in the ECS to are Inox We any shipments

As our partner stand to new ready support in ECS. or two megawatt Daniel as was mentioned new we stock commissioned earlier, they of India, turbines

Our our is net loss share. $X.X loss loss net And share. from per expected net on non-GAAP million in loss is Chicago. or project or non-GAAP exceed for guidance per not $X.XX and expected $X expected includes DHS net REG to The revenue to not revenues our $X.XX million exceed net

with such for project cost margins overall gross compared business. base gross our DHS a when lower reminder, this And As has is share margins as project. to a

not impact to in are have have as to a project operating in We paid this periods. cash cash the on we fourth previous the the REG project quarter, expecting expenses most related negative of flows

cash the fourth to expects million $X operating of quarter to fiscal a of $X million XXXX. a the be flow result, As in company burn

with to I'll With back fourth expect to no securities marketable than that, We turn over call cash quarter Daniel. end equivalents, the million restricted and $XX in cash. cash, the less

Daniel McGahn

John. Thanks,

and the about continue of part business want growth energy doing prospects As I business, executing our strategy of diversification. this very onset, growth to said at new on of part our We're power really our in our well. excited and our is

areas other to the on touch business. Let's of Turn SPS.

the Jr. VVO's LPD protection Honor for the for recipient Class. systems known class. Antonio platform. ship M. is is Antonio San ship also named for our USS transport ship January, ship Navy the ship The SPS XX, or and contracts announced for USS and an protection warfare Richard amphibious of XX our baseline dock officer the LPD system be become We of Miles know, as XXth you As will contract McCool Medal LPD has SPS fourth Jr. Richard the Antonio U.S. McCool, after San This or in design San the Class

from million SPS Antonio for class Our $XX the per San value approximately in represents vessel. revenue

Our LPD include of LPD SPS current LPD XX. orders backlog XX, LPD XX, now XX and

about expand while we’ve our happy, of the very From we manufacturing focused on the wins. busy after full are systems. we're orders. the a and out the We've total, times the several San ships, as systems. is continuing Our we team talked to multiple expected our In for plan future size SPS concurrent perspective, planning we capability design deliver be were we And class XX of business been Antonio first opportunity in to built capacity there very producing in these have past. had this

win potential, deployment pursuing class first were actively vessels $XXX the design with classes of these SPS. with San Navy of or our have of the ship. additional this We class of the and We Antonio engaged four now on for million our million $XX is $XX million for Navy.

the have of SPS our done We potential engineering some deployment class ship. in for a of next

this very work to are We to of procurement. about Navy In and each prior into opportunity work case, U.S. expand the excited engineering more we fleet. the do have to ahead

changes to work protection components that the the and all the is show ship. We our indeed. common of have make ship up exciting system to This our fit build

procurement. our In proceed addition, see again, here, to would an we're is forward phase We working that there Degassing but engineering place. hard interest to bring Systems any

to grid. REG, to July In system that Chicago's We Ground the Resilient announced Electric announced of and we been install asset has Break our construction first a that ComEd power Grid within Resilient system. gotten agreed its electric system. permanent XXXX, Grid previously as Turning Electric REG ComEd for

ComEd are have energization XXXX very, to providing schedule. to per well. all our and Things assistance hardware and comments in delivered are on We progressing anticipate during now the construction. technical We're very project schedule

We utilities many our ComEd, to to-date first U.S. our on are are execution watch excited success. excited with this project about

Turning to winds.

partner of third two shipped Wind. our fiscal onshore XXXX, megawatt the ECS to wind Inox During quarter we

compliance India, development ready new megawatt mentioned or a Inox two We we've stock with This supply sure. for megawatt our two stand partner as they commission ECS. October, in is As encouraging very in turbines need new the support contracts. regain of to

is turbine in new megawatt lower has Inox's in constructing levelized indicated We commission completing desire this the a turbine of in to of class competitive class an are also Indian the designed process prototype appears Inox that encouraged cost end, for turbine to by They towards now India. new for megawatt way deploy commissioning long-term the market. designed. India. three great Inox wind conditioning we the stated is a megawatt turbine. type wind energy certification three is environment turbine of operating integral further the is a will The expect then turbine. working prototype the by and test Once three tariff construction class of its XXXX. a strategy To to be for a fit and seek Inox three Inox and have in part new that complete, of we then megawatt to power platform class

their build doing anticipated better We in already initial three three place supply and market expect We production than be we're the chain support and believe in well to megawatt class in Overall, forward look order XXXX to work requirements India class turbine. to a and ECS the positioned set XXXX. support put with to so. Inox's production in appears megawatt position growing to Inox demand the for

We Industry service through South partner market our offshore the see. wind We Korea. in will Heavy Doosan

wind offshore does market the wind megawatt Korean X.X opportunity turbine. for Doosan's offshore for units ECS of global a long-term supplier The as market. presents exclusive the wind us are South We

Doosan’s turbine. megawatt shore order production completed the for We initial ECF X.X off of have

the sources of mandated share electric this has part Korea publicly renewable of this accelerating its has to plan a desire secure of from and power wind market. supplies long-term development Doosan large South as Korean power energy expressed South

Our conclusion, fiscal the in as market we team forward penetrating is closely wind move end the and global working with XXXX, offshore March. will end to potentially In we look year which with Doosan. our towards Doosan of

our revenue segment driving company. for Our grid growth is

We quarter. million the flow positive $X.X of in are report third pleased operating cash to

We are and now marketing into integrating industrial static into and company power correction are NEPSI systems the selling markets.

hardware on REG to delivered are has team REG the Chicago we and Our schedule.

We are SPS the Antonio first for was our platform class of manufacturing for in our the ship SPS ship and delivery LPD San expected XXXX.

Inox and in field megawatt are supporting as Inox We needed. the with commissioning products two ECS provided have more as

We have announcing ECS to completed offshore for wind for order and our of megawatt our order forward Doosan first next production production look X.X the market.

revenue grow able AMSC pandemic. the pleased to fiscal at our XXXX. what team of We far here in global accomplish year expect to so year, grid with again especially was this I'm in a middle very

listen Today, the this the million of to John $XX revenues about you one the on revenue than $XX entire about our million. that million If dramatically last $XX we burn of year at million. were nine comments stand is months different into for The year made, $XX year year. last

was should think that. focus a and I made that people John that point key on

thank their our strategy. analysts. from believe work of the to I our we again, fourth And fiscal following execute we of take forward XXXX. I'd on look hard questions are our for Manish well-capitalized that growth personally to now through you dedication. forward, reporting to quarter Going grid and completion our we'll employees like

Operator

you. Instructions] of Shen our take [Operator first ahead. go Capital Please question Partners. from We'll Thank Philip ROTH

Philip Shen

guys. for questions. the Hey, Thanks

one on is NEPSI. first The

color playing on now give wondering customer you is was more your how some I Just offering with could combined the if base.

you it kind offering, was energy beginning in changed versus momentum for the and your of had new pipeline has guys product So of how quarter? pre-NEPSI the what what the

Daniel McGahn

I really teams. already feel synergies the growth. the kind of hit about for working Yes, We tremendously it show depth the some that's Phil the we pipeline They're integration excited think team together. the working of extraordinarily some signs at well continues to and leverage well, of between

more the think comfortable I We're really talk the a – necessarily together. nice we fit. a quarter. focus When on has working together. the I diversification already is the in future of long-term quarters team. the focused key really excited next been next teams very a that the about are the think And pipeline But lot a this for

Philip Shen

And What purchasing do update what specifically, VVO bunch forward? on expect follow going you Or Dan. you're of as getting? Thanks. is a the made standard there have on for Thanks, follow there? then utility Great. you on it can And to kind give many these a how an so, if secure activity up into of kind orders utilities? you us of

Daniel McGahn

about Yes, I remain VVO. tremendously excited

think We've been have with projects really that's I able on a now show been they need already, very today for. both quickly, that for where perfect grid. of the to the looking were deliver critical fit something results they able we've to a utilities the

selling seeing there's for think utilities with systems we're REG. to as with also I there. well be the to that the us But upside utilities going as of sell penetrate offerings, of larger REG, lot a also type able NEPSI certainly to help to potentially think is I

a So of strategy we to important look on VVO very becomes utilities demand. how the serve as piece

have really to has power where able to been business, demonstrate utilities, in As more the lot of That's renewable industrial. for to work you definitely the We're VVO hear further with and the we looking energy us. systems have reconnection business into expand the been it's really part diversified and of new a for future. them, that

distributed And year-to-year dramatically grid tailwinds were VVO generation. in that net-net, really strong this happen. with I key a making the needs So, really think are VVO. And We we support mentioned think actor year. the to The progress evolve be in happy opportunity. with we tremendous a able the is lot of to there's to do as this behind outset,

Philip Shen

there forward. hearing forward Great. pass more it Thanks, We I'll on. progress Dan. on going to look

Operator

of take now We'll Rusch you. question next Colin Thank Please go from our Oppenheimer. ahead.

Colin Rusch

this to that little gotten a P&L? seems that roll It might process Thanks bit class into meaningful you guys. the so seeing of shifts we Could you've another begin through design about at start and talk point. how much the Navy

Daniel McGahn

Sorry, Colin.

Your meaningful line profit, I product… heard up bit. is something a said but breaking you about which know I that little don't

Colin Rusch

ship, the on revenue towards see right? process start we start might of Navy and guys? So, how some the Navy design to and, quickly flow Yes, to that you

Daniel McGahn

with I Antonio, per XX it's we levels four per hard predict. at – right. about think on that's trying San million We're year relative are to because order, we shift. We're have that where obviously elevated to

that So we're deliver be trying deal systems. to and with demand to able

part think we So of from To in look year it. get what on is horizon. more standpoint this important a telegraphed platform know the meaningful platform. is be and think the business the I work term what that as crucial the next I We're we multi-year I longer today, but last becomes doing we even telegraphed engineering next into will time call

get can't on take it's long going handicap to I a to Now, how procurement. to

that typically think to and you're I going at kind on, we is when with looking but do give the to through of year go year, determine model. how stuff a Navy get looking half buy what you advance kind and is which whole flow to number of inserted the revenue a to they're specific your in

half got we we and platform. might year, So deliver It the for revenue. before year order to an a be another have a

Navy, able on to we've XXXX of are U.S. that about first what optimistic Navy from to the just delivery feedback the help been but systems, very system. the foreign So the not additional excited we come navy do us it's will selling And really date. to an think We're the as with us important has the well. I in Navy milestone to because what

Colin Rusch

project you speak benchmark to going? move the Okay. incredibly you moving That's obviously And then forward are a on those this meaningful the little at Can potential industry which on forward are conversations to geographies evaluating how other pilot with pace a REG helpful. projects? for folks the with the is in guys. side, And

Daniel McGahn

product their utilities, Yes, to increase, the ComEd very number utilities. as for market being help – continues for to trying is a hail future. this cheerleader I'd They're of important trying they're a for particularly great say us the have to to

a future. They've the tremendous doesn’t a been to their about literally get And is of need they're the since REG other really think product talking really of it that. extremely us think that I that's They in us. it, value company. for supportive grid part our to utilities the because compelling to key out

deliver get it what orders one. on hope So happens time, from is to then energized positioned we're take the we we and this all broader

tuned. stay So

Colin Rusch

guys. so much Thanks

Daniel McGahn

Thanks Colin.

Operator

Thank you. We'll take go from our question of Craig-Hallum. now next Stein ahead. Eric Please

Aaron Spychalla

Good It's Aaron taking Daniel Spychalla and questions. morning, Eric. Yes. Thanks the for for John. on

Daniel McGahn

Hi, Eric. Good morning.

Aaron Spychalla

– on megawatt on is Inox, first focus that first now on the good morning. three Maybe Maybe platform. the

steps here talked about and kind a of look kind you're You more that a through that how over the bit detail bit give can needed? business little you little coming can those quarters just are prototype design commissioning, thinking but on as we of progress

Daniel McGahn

yet. chain, to didn't need build them calling now megawatt start supply order today yet type working taking have with to but for we're three turbine megawatt. What to demonstrated get was for certification to an actively They telegraphing start the the orders the don't Inox or supply we is they're two chain. that

think with forward quarter table through the critical the set megawatt. were events relationship three during going happened really the to the getting I that So the for

So they all I choose is can some say at point.

We production And they XXXX. conference their already We expect market to calls their there to here initial improving to an be megawatt. on three for the based demand the somewhat for overall, in seems have be order know investors.

Inox. XXXX but the very we're megawatt two, not optimistic the for in only three So about

Aaron Spychalla

lot. issues the helped you know any on? you're seeing a maybe question All that Can just right. has focus chain. given kind on next going you that talk my and I And localizing been what's then it's supply of been about if for a big there

Daniel McGahn

those issues seen chain done across a challenges. in our team tremendous trying has job to lines. The COVID overcome We've product supply our with

beat missed haven't a in We production.

wind the We able to due a to the and the our at to timely really it that haven't on the need deliver COVID, financials specifically be the but the we think with longer to beat volumes suppliers certainly megawatt. I gets missed be it three goes, harder

You're the parts, into some not about chain new brand-new brand-new but cases have completely pieces known, a creating in themselves. brand-new are you're [indiscernible], talking to go brand all suppliers supply that

order we challenging. that to able of develop it and suppliers best as Inox manage So trying be the the be the timetable through travel to At build the to book us strikes as that of for we're the for can. their the do need during I'll there has and because but and internationally us. day, you also the suppliers, like demands say they been can't pandemic, really end

Aaron Spychalla

then balance All last mean is it given phase? be there? the priorities sheet, talk of for we Or little on kind preparing there? pipeline acquisitions I can just the that that just bit strength it thinking anything as REG more maybe next else you to moves should right. the And the about a

Daniel McGahn

want grow diversification. the We reduction continue company. We scale want that's are to the period period We the volatility to to that think valuable that diversify. all for of the company. think revenue to and things We tremendously

The by the make integration selection really sparked has the with I guys to who here by was support of go of these presented the us. think idea NEPSI John team very went down well. that going the path gone really after

companies. that integrate and confident So, can we very were we buy

may that one we path scale. need So to that be

ways scale management and we're for markets today and renewables are in also have organic have grid, think able tremendous infrastructure the a that be company. at internally industrial. critical looking and type we serving that grow to platform power of that We at parallel needs within We to the

been keep all to so the want just we have going far. we directions in successful So, that

Aaron Spychalla

Understood. for questions. Thank taking you the

Operator

Dorsheimer go take of Thank Please you. We'll next our question from ahead. Jed now the Genuity. Canaccord

Jed Dorsheimer

say, that? if thanks. I guess if – technology. the to wondering on – a Dan. Hi, pressure. be just understand my you you because – REG, for What's resiliency, the the could I I beyond should question, could REG could the proposition under for value pull I of seem Thanks improvement utility was to taking I articulate utility

Daniel McGahn

Yes, it's pull strong is very very the clear. and

tremendously other build against we're bring So, what in core are substations, is spends substations, all capital urban competing transition really new more that expensive. upgrade to

lower quicker, is of out in REG ways economical do get the to on risk traditional substation, we at the need much of system. the building grid what very So, way able and assets, see more more way is simple just It's capacity really and is it's and when to it's utilities it, to be expand moving needed. our it's means to they many to out. capability a understand how very where power And to to a elegant way needed focused existing to within share a un-traffic

the rate kind how they versus much would the spend. get utility And how And utilities standpoint, very will it’s of capital like a full the communicate project. at benefit – REG, from as product. capital payer So, a our what's positive, it's, it to they kind of positive really

Jed Dorsheimer

fully I value proposition. it. I'm the not Got guess, understanding still

how that I'm utility, I'm do a should just budget, up budget reallocate reallocation how assets I'm for my and for a the of curious, allocation a I REG? I amount and green under decent to about set adding to you solar have and if think resources kind business? versus So, of to, pressure of I to wind example, REG to improving,

Daniel McGahn

Yes, the different that about you disparate. are and problems talking

grid particularly solve on So, the the system. trying urban the we're in itself, problem is to

is high what you as you a and know, are permitting, as of of So, is when doing downtown them could a brand-new look at land a hundreds I substation don't dollars for pick say, It's much in prohibitive. Chicago, acquisition the to billion build let's to and that. highly city, costly, all millions be big

exactly a be be grow it things of substations. simply it REG that neighborhoods, green, gentrification breakers distributed needs the Jed of REG As through But they it able be thereafter. we're do trying is to solution upgrade capacity and a be more additional a are much natural to on reliability leverage those and focus the to cost-effective within evolve of cost. things to through provide grid as show the be it the where projects trying through they We're to through utility to at their see they generation, need to or change is grid, way to same a cheaper that types

Jed Dorsheimer

it. that’s Got by way, And Dan. helpful the

the this up look look solution city-based you at in have things tearing have to finish your you point, having guess I if add versus that of cost-effective an is is when existing just – I more substation an infrastructure, a existing at right? streets So, it terms nature, to should city, you largely that and of

Daniel McGahn

to where you exactly to is. changing more REG needs how new to backbone kind distributed And At focused that higher us. what the more because grid the have grid value means city, evolve that's tells the of we generation on side And distribution grid the the such think Chicago and on now that's designed to about downtown around. differently. driving be the urban comes think distribution with the build We're the electric that is distribution grid spread least going on in vehicles towards demand

Jed Dorsheimer

I you. acquisition. helpful. like business that respect at just decline steep I is the and QX, core D-VAR great looks I'm has of going a the curious business But look to a Got NEPSI is experience is just it. NEPSI kind if it with That's of core been declining? sort or just guess in it Thank to what

Daniel McGahn

be with I not to any Grid look growing. year-to-year the both. I'll to it’s and when. We direct with NEPSI well. we've John shipped missed made No, business Grid entirely, ECS organic it’s adding tremendously Jed, you. think is comment, doing a Inox, is you're

unique QX and for is is are be seeing allow wind to in position not from is for we you mentioned growing is NEPSI which had tremendously able is a you We're adding VVO the burn that everything revenue where growing. is the growing, NEPSI, D-VAR to high. John And weakness the can in hope are that So, Really growing. grow. in a be that number still we to have standpoint, going March winds and the in we've even with numbers, burden well, line those high. very is in quarters as for look with were the have that ECS prior quarters, we at right three, good have news, line of quarters if those prior think, right quarters, us explode. is lot where we years, been People the that difficult though financially. I with revenue is very in four a done they The didn't

Jed Dorsheimer

Yes, half. but math, mean, me QX, help I the D-VAR I it was mean, because like I look hear with if you just cut at that, looks I maybe with in

missing for stable. because I at guess, is QX… you had I So, SPS fairly say NEPSI the what does $X.X you that million are it, when it am I guess you look if missing, as and

Daniel McGahn

SPS is growing.

is are D-VAR extent where is you that I think additional of were where in was you for and revenue have the pulled you part have an to there missing that second acceleration QX, forward. planned QX, QX QX revenue some especially

XX%, for look we averages, see at quarter XX% XX%. all four you in the as lines trailing in growth, still three, when as product net-net XX%, cases So, some much

Jed Dorsheimer

Okay. take you. I'll it offline. Thank

Daniel McGahn

Sure.

Operator

Mr. There are back the this to call remarks. further Thank any time. for closing or additional at like you. no over Thank Daniel questions turn to McGahn I would you.

Daniel McGahn

a ended positive XXXX acquisition quarter we for $XX. our equity note. the on lot the Thank to stock, which net common shares delivered NEPSI; $XX at we of cash third of had in over we X.X concluded you. announced strong We offering fiscal really We and million proceeds of an flow; of just million operating issuance priced

product. through default X-K performance feel Inox's that. you which with of We the the October don't involved on I hope the in happy went details with X, compliance about business. those published So

looking try which Inox. for we are say fourth Cool, with U.S. here think look in great AMSC's to at great, understand I our M. finish kind Fourth And get a Navy, Ship with the in recently the We're by position Contract really of where XXXX. we to as most Richard out like strongly the just I saying and announced Protection McCool, I we System you guess.

times prospects three big delivering a big energy XXXX. look I at year is XXXX said XXXX, XXXX the power we're you said, these I if everything But is I many how a delivering new don't for megawatts, XXXX systems. as REG, think we the listen XXXX, I to year that know SPS, we're for

in are wonderful a business. as a We position

ourselves. because pandemic, have do trying I the we're and a could our things of realize isn't supply something and all to necessarily that Sometimes to that affected we temper I chain the that day are would enthusiasm be created any problem hopes desires if middle in my but we fix change

be as weeks balance knowing So, to be can I'm able kind of a my in some overall how trying to hard for is to just something exuberance us. get business,

be XXXX. and come the next soon. you We'll interested So, talk time. to And everybody's we're we'll on to really full the year in able company. Appreciate you to excited about back report

Operator

this today's Thank concludes call. Ladies and you gentlemen, participation. for your

disconnect. now may You

American Superconductor (AMSC) 4 Feb 212020 Q3 Earnings call transcript