AMSC Reports Third Quarter Fiscal 2016 Financial Results and Provides Business Outlook
Feb 6, 2017
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DEVENS, Mass., Feb. 06, 2017 (GLOBE NEWSWIRE) -- AMSC (NASDAQ:AMSC), a global solutions provider serving wind and power grid industry leaders, today reported financial results for its third quarter of fiscal 2016 ended December 31, 2016. 

Revenues for the third quarter of fiscal 2016 were $27.1 million, compared with $25.8 million for the same period of fiscal 2015. Revenues in both the Wind and Grid segments increased year-over-year.

AMSC's net loss for the third quarter of fiscal 2016 decreased to $2.8 million, or $0.20 per share, from $3.0 million, or $0.22 per share, for the same period of fiscal 2015. The Company's non-GAAP net loss for the third quarter of fiscal 2016 was $2.9 million, or $0.21 per share, which was improved compared with a non-GAAP net loss of $4.9 million, or $0.36 per share, in the same period of fiscal 2015. Please refer to the financial table below for a reconciliation of GAAP to non-GAAP results.

Cash, cash equivalents and restricted cash at December 31, 2016 totaled $26.0 million, compared with $26.6 million at September 30, 2016.

"Revenues were seasonally stronger in our Wind segment in the third quarter, while our Grid revenues continued to achieve year-over-year growth," said Daniel P. McGahn, President and CEO, AMSC. "In the third quarter, we demonstrated significant improvement in our operating results relative to the first and second quarters of fiscal 2016, with positive operating cash flow in the third quarter. We expect our revenues in the fourth quarter of fiscal 2016 to be strong as well."

Business Outlook
For the fourth quarter ending March 31, 2017, AMSC expects that its revenues will be in the range of $22.0 million to $26.0 million. The Company's net loss for the fourth quarter of fiscal 2016 is expected to be less than $5.5 million, or $0.39 per share. The Company's non-GAAP net loss (as defined below) is expected to be less than $5.0 million, or $0.36 per share. The Company expects a minimal cash burn of less than $2.0 million in the fourth 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 today 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 888-240-1347 and using conference ID 6209539.

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 expectations regarding anticipated financial results, strong revenues in the fourth quarter 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, and shipments to Inox may not occur in the time frame we expect; 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 subassemblies of many of our Wind and Grid products, making us vulnerable to supply shortages and price fluctuations; 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 ("HTS") 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 and economic incentives; We have operations in and depend on sales in emerging markets, including India and China, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these countries; 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, 2016, 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
December 31,		 Nine months ended
December 31,
 2016 2015 2016 2015
Revenues         
Wind$18,248  $17,229  $36,822  $48,976 
Grid8,900  8,543  22,178  19,523 
Total revenues27,148  25,772  59,000  68,499 
          
Cost of revenues22,107  19,263  50,992  55,758 
          
Gross profit5,041  6,509  8,008  12,741 
          
Operating expenses:         
Research and development2,985  2,759  8,804  8,924 
Selling, general and administrative6,077  7,023  19,640  21,331 
Impairment loss—  —  —  779 
Amortization of acquisition related intangibles39  39  118  118 
Total operating expenses9,101  9,821  28,562  31,152 
          
Operating loss(4,060) (3,312) (20,554) (18,411)
          
Change in fair value of derivatives and warrants101  (1,092) 667  409 
Gain on sale of minority interest325  2,511  325  2,511 
Interest expense, net(89) (238) (331) (841)
Other income (expense), net873  (20) 481  (1,189)
Loss before income tax expense(2,850) (2,151) (19,412) (17,521)
          
Income tax (benefit) expense(82) 806  1,036  2,256 
            
Net loss$(2,768) $(2,957) $(20,448) $(19,777)
          
Net loss per common share         
Basic$(0.20) $(0.22) $(1.49) $(1.52)
Diluted$(0.20) $(0.22) $(1.49) $(1.52)
          
Weighted average number of common shares outstanding               
Basic13,792  13,539  13,746  13,052 
Diluted13,792  13,539  13,746  13,052 


UNAUDITED CONSOLIDATED BALANCE SHEET
(In thousands, except per share data)
 
   December 31,  
 2016		 March 31,
 2016
ASSETS     
Current assets:     
Cash and cash equivalents$25,063  $39,330 
Accounts receivable, net15,863   19,264 
Inventory19,442   18,512 
Prepaid expenses and other current assets3,097     5,778 
Restricted cash795   457 
Total current assets64,260   83,341 
      
Property, plant and equipment, net45,114   49,778 
Intangibles, net436   854 
Restricted cash140   934 
Deferred tax assets115   96 
Other assets176   315 
Total assets$110,241  $135,318 
      
LIABILITIES AND STOCKHOLDERS' EQUITY     
      
Current liabilities:     
Accounts payable and accrued expenses$18,354  $23,156 
Note payable, current portion, net of discount of $47 as of December 31, 2016 and $42 as of March 31, 2016    1,453   2,624 
Derivative liabilities2,560   3,227 
Deferred revenue15,997   12,000 
Total current liabilities38,364   41,007 
      
Note payable, net of discount of $133 as of March 31, 2016—   1,367 
Deferred revenue7,974   9,269 
Deferred tax liabilities63   63 
Other liabilities47   63 
Total liabilities46,448   51,769 
      
Stockholders' equity:     
Common stock143   141 
Additional paid-in capital1,014,365   1,011,813 
Treasury stock(1,371) (881)
Accumulated other comprehensive (loss) income(712) 660 
Accumulated deficit(948,632) (928,184)
Total stockholders' equity63,793  83,549 
Total liabilities and stockholders' equity$110,241  $135,318 



UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
 Nine months ended
December 31,
 2016 2015
Cash flows from operating activities:   
    
Net loss$(20,448) $(19,777)
Adjustments to reconcile net loss to net cash used in operations:       
Depreciation and amortization5,606  6,050 
Stock-based compensation expense2,266  2,542 
Impairment loss—  746 
Provision for excess and obsolete inventory1,074  1,835 
Write-off prepaid taxes—  289 
Gain from sale of minority interest investments(325) (2,155)
Change in fair value of derivatives and warrants(667) (409)
Non-cash interest expense127  290 
Other non-cash items(937) 694 
Changes in operating asset and liability accounts:   
Accounts receivable3,213  (7,156)
Inventory(2,294) 3,288 
Prepaid expenses and other current assets2,283  5,800 
Accounts payable and accrued expenses(4,031) (34)
Deferred revenue3,598  198 
Net cash used in operating activities(10,535) (7,799)
    
Cash flows from investing activities:   
Net cash provided by investing activities357  4,856 
    
Cash flows from financing activities:   
Net cash (used in)/provided by financing activities(3,657) 19,202 
    
Effect of exchange rate changes on cash and cash equivalents(432) (312)
    
Net (decrease)/increase in cash and cash equivalents(14,267) 15,947 
Cash and cash equivalents at beginning of year39,330  20,490 
Cash and cash equivalents at end of year$25,063  $36,437 



RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)
(In thousands, except per share data)
 
 Three months ended
December 31,		 Nine months ended
December 31,
 2016 2015   2016 2015
Net loss$(2,768) $(2,957) $(20,448) $(19,777)
Gain on sale of interest in minority investments, net of tax effect        (325) (2,354) (325) (2,354)
Stock-based compensation613  708    2,266  2,542 
Amortization of acquisition-related intangibles39  39  118  118 
Impairment loss—  —  —  779 
Consumption of zero cost-basis inventory(478) (1,543) (1,118) (3,612)
Change in fair value of derivatives and warrants(101) 1,092  (667) (409)
Non-cash interest expense30  83  127  290 
Tax effect of adjustments77   —  179  — 
Non-GAAP net loss$(2,913) $(4,932) $(19,868) $(22,423)
        
Non-GAAP net loss per share$(0.21) $(0.36) $(1.45) $(1.72)
Weighted average shares outstanding - basic and diluted13,792  13,539  13,746  13,052 


Reconciliation of Forecast GAAP Net Loss to Non-GAAP Net Loss
(In millions, except per share data)
 
 Three months ending
March 31, 2017
Net loss$(5.5)
Stock-based compensation 0.6 
Consumption of zero-cost inventory (0.1)
Non-GAAP net loss$(5.0)
Non-GAAP net loss per share$(0.36)
Shares outstanding 14.0 




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 derivatives and warrants; and other unusual charges, net of any tax effects related to these items. 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 also regards non-GAAP net loss as a useful measure of operating performance to complement operating loss, net loss and other GAAP financial performance measures. In addition, the Company uses non-GAAP net loss as a factor in evaluating management's performance when determining incentive compensation and to evaluate the effectiveness of its business strategies.

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 non-GAAP to GAAP net loss is set forth in the table above.

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