November 7, 2017

AMSC Reports Second Quarter Fiscal 2017 Financial Results and Provides Business Outlook

Company to host conference call tomorrow, November 8 at 10:00 am ET

DEVENS, Mass., Nov. 07, 2017 (GLOBE NEWSWIRE) -- AMSC (NASDAQ:AMSC), a global solutions provider serving wind and power grid industry leaders, today reported financial results for its second quarter of fiscal 2017 ended September 30, 2017. 

Revenues for the second quarter of fiscal 2017 were $11.0 million, compared with $18.5 million for the same period of fiscal 2016. Revenues in both the Wind and Grid segments decreased year-over-year.

AMSC's net loss for the second quarter of fiscal 2017 was $7.3 million, or $0.38 per share, compared to  $7.3 million, or $0.53 per share, for the same period of fiscal 2016. The Company's non-GAAP net loss for the second quarter of fiscal 2017 was $8.3 million, or $0.44 per share, compared with a non-GAAP net loss of $8.2 million, or $0.60 per share, in the same period of fiscal 2016. Please refer to the financial table below for a reconciliation of GAAP to non-GAAP results.

Cash, cash equivalents and restricted cash on September 30, 2017 totaled $30.5 million, compared with $37.7 million at June 30, 2017.

"Our financial performance in the second quarter was at the middle of our expected range," said Daniel P. McGahn, President and CEO, AMSC. "We are pleased to see the wind market in India improving. We expect stronger revenues in the second half of fiscal 2017 for both our Wind and Grid segments."

Business Outlook
For the third quarter ending December 31, 2017, AMSC expects that its revenues will be in the range of $14.0 million to $18.0 million. The Company's net loss for the third quarter of fiscal 2017 is expected to be less than $8.0 million, or $0.40 per share.  The Company's non-GAAP net loss (as defined below) is expected to be less than $7.6 million, or $0.38 per share.  The Company expects a cash burn of $8.0 million to $9.0 million in the third quarter of fiscal 2017, including a $1.0 million capital investment related to the Massachusetts move anticipated to occur in the third quarter.

Conference Call Reminder
In conjunction with this announcement, AMSC management will participate in a conference call with investors beginning at 10:00 a.m. Eastern Time on Wednesday, November 8th to discuss the Company's financial results and business outlook. Those who wish to listen to the live or archived conference call webcast should visit the "Investors" section of the Company's website at http://www.amsc.com/investors. The live call also can be accessed by dialing 800-289-0438 and using conference ID 7795162.

About AMSC (NASDAQ:AMSC)
AMSC generates the ideas, technologies and solutions that meet the world's demand for smarter, cleaner … better energy™. Through its Windtec™ Solutions, AMSC provides wind turbine electronic controls and systems, designs and engineering services that reduce the cost of wind energy. Through its Gridtec™ Solutions, AMSC provides the engineering planning services and advanced grid systems that optimize network reliability, efficiency and performance. The Company's solutions are now powering gigawatts of renewable energy globally and are enhancing the performance and reliability of power networks in more than a dozen countries. Founded in 1987, AMSC is headquartered near Boston, Massachusetts with operations in Asia, Australia, Europe and North America. For more information, please visit www.amsc.com.

AMSC, Windtec, Gridtec, and Smarter, Cleaner … Better Energy are trademarks or registered trademarks of American Superconductor Corporation. All other brand names, product names, trademarks or service marks belong to their respective holders.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any statements in this release about our expectation that our Wind and Grid segments will generate stronger revenues in the second half of fiscal 2017, our expected financial results for the quarter ending September 30, 2017, our expected cash burn during the quarter ending September 30, 2017, our anticipated move of our Devens facility, and other statements containing the words "believes," "anticipates," "plans," "expects," "will" and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements represent management's current expectations and are inherently uncertain. There are a number of important factors that could materially impact the value of our common stock or cause actual results to differ materially from those indicated by such forward-looking statements. These important factors include, but are not limited to: A significant portion of our revenues are derived from a single customer, Inox; We have a history of operating losses and negative operating cash flows, which may continue in the future and require us to secure additional financing in the future; Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter; Our financial condition may have an adverse effect on our customer and supplier relationships; Our success in addressing the wind energy market is dependent on the manufacturers that license our designs; Our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects; We rely upon third-party suppliers for the components and sub-assemblies of many of our Wind and Grid products, making us vulnerable to supply shortages and price fluctuations; Failure to successfully execute any move of our Devens, Massachusetts manufacturing facility or achieve expected savings following any move could adversely impact our financial performance; We may not realize all of the sales expected from our backlog of orders and contracts; Our success depends upon the commercial use of high temperature superconductor products, which is currently limited, and a widespread commercial market for our products may not develop; Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy; We have operations in and depend on sales in emerging markets, including India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these markets; We face risks related to our intellectual property; We face risks related to our legal proceedings; and the important factors discussed under the caption "Risk Factors" in Part 1. Item 1A of our Form 10-K for the fiscal year ended March 31, 2017, and our other reports filed with the SEC. These important factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made herein and presented elsewhere by management from time to time. Any such forward-looking statements represent management's estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
    
 Three Months Ended
September 30,
 Six Months Ended
September 30,
 2017 2016 2017 2016
Revenues       
Wind$5,554  $12,898  $7,831  $18,573 
Grid5,495  5,609  12,140  13,279 
Total revenues11,049  18,507  19,971  31,852 
        
Cost of revenues10,777  16,404  24,186  28,886 
        
Gross margin272  2,103  (4,215) 2,966 
        
Operating expenses:       
Research and development2,951  2,867  5,667  5,819 
Selling, general and administrative5,339  6,347  11,477  13,563 
Amortization of acquisition-related intangibles  39  13  78 
Change in fair value of contingent consideration(201)   (201)  
Restructuring(12)   1,328   
Total operating expenses8,077  9,253  18,284  19,460 
        
Operating loss(7,805) (7,150) (22,499) (16,494)
        
Change in fair value of warrants144  1,244  1,069  567 
Gain on sale of minority interest951    951   
Interest income (expense), net54  (107) 45  (243)
Other expense, net(796) (518) (2,170) (393)
Loss before income tax (benefit) expense(7,452) (6,531) (22,604) (16,563)
        
Income tax (benefit) expense(171) 794  (71) 1,117 
        
Net loss$(7,281) $(7,325) $(22,533) $(17,680)
        
Net loss per common share       
Basic$(0.38) $(0.53) $(1.26) $(1.29)
Diluted$(0.38) $(0.53) $(1.26) $(1.29)
        
Weighted average number of common shares outstanding       
Basic19,060  13,769  17,925  13,723 
Diluted19,060  13,769  17,925  13,723 
            


 
UNAUDITED CONSOLIDATED BALANCE SHEET
(In thousands, except per share data)
    
 September 30,
 2017
 March 31,
 2017
ASSETS   
Current assets:   
Cash and cash equivalents$30,320  $26,784 
Accounts receivable, net8,193  7,956 
Inventory15,983  17,462 
Prepaid expenses and other current assets3,323  2,703 
Restricted cash  795 
Total current assets57,819  55,700 
    
Property, plant and equipment, net36,438  43,438 
Intangibles, net3,496  301 
Goodwill1,711   
Restricted cash165  165 
Deferred tax assets538  407 
Other assets381  233 
Total assets$100,548  $100,244 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
    
Current liabilities:   
Accounts payable and accrued expenses$14,016  $14,490 
Note payable, current portion, net of discount of $19 as of March 31, 2017  1,481 
Derivative liabilities1,224  1,923 
Deferred revenue16,069  14,323 
Total current liabilities31,309  32,217 
    
Deferred revenue8,325  7,631 
Deferred tax liabilities125  125 
Other liabilities137  45 
Total liabilities39,896  40,018 
    
Stockholders' equity:   
Common stock211  147 
Additional paid-in capital1,039,458  1,017,510 
Treasury stock(1,645) (1,371)
Accumulated other comprehensive income (loss)718  (503)
Accumulated deficit(978,090) (955,557)
Total stockholders' equity60,652  60,226 
Total liabilities and stockholders' equity$100,548  $100,244 
        


 
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
  
 Six Months Ended
September 30,
 2017 2016
Cash flows from operating activities:   
Net loss$(22,533) $(17,680)
Adjustments to reconcile net loss to net cash used in operations:   
Depreciation and amortization7,682  3,735 
Stock-based compensation expense1,232  1,653 
Provision for excess and obsolete inventory351  671 
Gain on sale of minority interest(951)  
Change in fair value of warrants and contingent consideration(1,270) (567)
Non-cash interest expense19  98 
Other non-cash items(97) (103)
Changes in operating asset and liability accounts:   
Accounts receivable124  7,118 
Inventory1,354  (8,696)
Prepaid expenses and other current assets85  2,843 
Accounts payable and accrued expenses(770) (4,481)
Deferred revenue1,235  4,497 
Net cash used in operating activities(13,539) (10,912)
    
Cash flows from investing activities:   
Net cash provided by/(used in) investing activities1,279  (368)
    
Cash flows from financing activities:   
Net cash provided by/(used in) financing activities15,188  (2,490)
    
Effect of exchange rate changes on cash and cash equivalents608  (298)
    
Net increase/(decrease) in cash and cash equivalents3,536  (14,068)
Cash and cash equivalents at beginning of year26,784  39,330 
Cash and cash equivalents at end of year$30,320  $25,262 
        


 
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)
(In thousands, except per share data)
   
 Three Months Ended
September 30,
Six Months Ended
September 30,
 2017 20162017 2016
Net loss$(7,281) $(7,325)$(22,533) $(17,680)
Sale of minority investments(951)  (951)  
Stock-based compensation478  653 1,232  1,653 
Amortization of acquisition-related intangibles  39 13  78 
Consumption of zero cost-basis inventory(340) (482)(396) (640)
Change in fair value of warrants and contingent consideration(346) (1,244)(1,270) (567)
Non-cash interest expense  42 19  98 
Tax effect of adjustments114  77 123  102 
Non-GAAP net loss$(8,326) $(8,240)$(23,763) $(16,956)
       
Non-GAAP net loss per share$(0.44) $(0.60)$(1.33) $(1.24)
Weighted average shares outstanding - basic and diluted19,060  13,769 17,925  13,723 
           


 
Reconciliation of Forecast GAAP Net Loss to Non-GAAP Net Loss
(In thousands, except per share data)
   
 Three months ending 
 December 31, 2017 
Net loss$(8,000) 
Stock-based compensation 700  
Amortization of acquisition-related intangibles   
Consumption of zero-cost inventory (300) 
Tax effect of adjustments   
Non-GAAP net loss$(7,600) 
Non-GAAP net loss per share$(0.38) 
Shares outstanding 20,100  
     

Note: Non-GAAP net loss is defined by the Company as net loss before stock-based compensation; amortization of acquisition-related intangibles; consumption of zero cost-basis inventory; non-cash interest expense; change in fair value of warrants and contingent consideration; tax effect of adjustments; and other unusual charges. The Company believes non-GAAP net loss assists management and investors in comparing the Company's performance across reporting periods on a consistent basis by excluding these non-cash, non-recurring or other charges that it does not believe are indicative of its core operating performance. The Company is not able to provide the change in fair value of warrants and contingent consideration on a forward-looking basis without unreasonable efforts because the calculation for that change is primarily driven by the closing price and volatility of the Company's stock at the end of each fiscal quarter, which cannot be reasonably estimated at this time.  The Company does not expect to adjust non-GAAP net loss for non-cash interest expense in future quarters due to the repayment of the Company's term loan during the first quarter of fiscal 2017.  Actual non-GAAP net loss for the fiscal quarter ending December 31, 2017, including the above adjustments, may differ materially from those forecasted in the table above.

Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measures included in this release, however, should be considered in addition to, and not as a substitute for or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP net loss is set forth in the table above.

AMSC Investor Relations
Brion D. Tanous
Phone: 424-634-8592
Email: Brion.Tanous@amsc.com

AMSC Public Relations
Nicol Golez
Phone: 978-399-8344
Email: Nicol.Golez@amsc.com


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