Document


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of


The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 6, 2018
American Superconductor Corporation
(Exact name of registrant as specified in its charter)
Delaware
 
000-19672
 
04-2959321
(State or other jurisdiction
 
(Commission
 
(IRS Employer
of incorporation)
 
File Number)
 
Identification No.)
 
114 East Main Street
Ayer, Massachusetts
 
01432
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code (978) 842-3000
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
 
 
 
 
 






Item 2.02.    Results of Operations and Financial Condition. 
On November 6, 2018, American Superconductor Corporation (the “Company”) announced its financial results for the second quarter ended September 30, 2018 of the Company's fiscal year 2018. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 2.02 of this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
 
Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits:
 
Exhibit
No.
 
Description
 
 
 
99.1
 


2



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
AMERICAN SUPERCONDUCTOR CORPORATION
 
 
 
Date:
November 6, 2018
By:
/s/ John W. Kosiba, Jr.
 
 
 
John W. Kosiba, Jr.
 
 
 
Senior Vice President and Chief Financial Officer
 


3
Exhibit
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AMSC Reports Second Quarter Fiscal 2018 Financial Results and Provides Business Outlook

Company to host conference call tomorrow, November 7 at 10:00 am ET

Ayer, MA – November 6, 2018 AMSC (Nasdaq: AMSC), a global solutions provider serving wind and power grid industry leaders, today reported financial results for its second quarter of fiscal 2018 ended September 30, 2018.

Revenues for the second quarter of fiscal 2018 were $14.9 million, compared with $11.0 million for the same period of fiscal 2017. The year-over-year increase was driven by higher Grid segment revenues and higher Wind segment revenues versus the year ago period.
 
AMSC’s net income for the second quarter of fiscal 2018 was $22.6 million, or $1.11 per share, compared to a net loss of $7.3 million, or $0.38 per share, for the same period of fiscal 2017. The Company’s non-GAAP net loss for the second quarter of fiscal 2018 was $2.7 million, or $0.13 per share, compared with a non-GAAP net loss of $8.0 million, or $0.42 per share, in the same period of fiscal 2017. 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, 2018 totaled $56.3 million, compared with $26.9 million at June 30, 2018. The cash balance as of the end of the second quarter of fiscal 2018 included $29.1 million of cash proceeds received from the first payment required under the settlement agreement with Sinovel. Operating cash flow in the second quarter, excluding the first payment from the Sinovel settlement, was $1.4 million. Please refer to the financial table below for a reconciliation of GAAP to non-GAAP results.

“Our core operating business generated more than $1 million of operating cash flow. Both of our business segments delivered strong results in the second quarter of fiscal 2018,” said Daniel P. McGahn, Chairman, President and CEO, AMSC. “The new cost footprint of our Massachusetts facility along with the other cost reductions taken over the past 2 years have resulted in a stronger AMSC.”
 
 

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AMSC Reports Q2FY18 Results
 
Page 2

Business Outlook
For the third quarter ending December 31, 2018, AMSC expects that its revenues will be in the range of $14 million to $16 million. The Company’s net loss for the third quarter of fiscal 2018 is expected not to exceed $6 million, or $0.29 per share. The Company's non-GAAP net loss (as defined below) is expected not to exceed $6.3 million, or $0.31 per share. The Company expects operating cash flow, exclusive of any legal fees and tax payments related the Sinovel Settlement, to be from break-even to a burn of $2 million in the third quarter of fiscal 2018. Please see below for a reconciliation of forecasted GAAP operating cash flow to non-GAAP operating cash flow. The Company expects cash, cash equivalents and restricted cash on December 31, 2018, to be no less than $51 million.

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 7, 2018, 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 (334) 323-0522 and using conference ID 1591386. A replay of the call may be accessed 3 hours following the call by dialing (888) 203-1112 and using conference ID 1591386.

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 expected GAAP and non-GAAP financial results for the quarter ending December 31, 2018, our expected cash, cash equivalents and restricted cash balance on December 31, 2018, 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 we cannot predict if and how successful Inox will be in executing on SECI orders under the new central and state auction regime, and any failure by Inox to succeed under this regime, or any delay in Inox’s ability to deliver its wind turbines, could result in fewer ECS shipments to 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; Lower prices for other fuel sources may reduce the demand for wind energy development, which could have a material adverse effect on our ability to grow our Wind business. 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, which could harm our business; Failure to achieve expected savings from the move of



AMSC Reports Q2FY18 Results
 
Page 3

our former Devens, Massachusetts manufacturing facility 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; Our contracts with the U.S. government are subject to audit, modification or termination by the U.S. government and include certain other provisions in favor of the government, and additional funding of such contracts may not be approved by the U.S. Congress; Tax reform in the U.S. may negatively affect our operating results; 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; Our business and operations would be adversely impacted in the event of a failure or security breach of our information technology infrastructure; If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data; We face risks related to our intellectual property; We face risks related to our legal proceedings; We face risks relating to our settlement with Sinovel; 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, 2018, Part II. Item 1A of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, 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.




AMSC Reports Q2FY18 Results
 
Page 4



UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 
Three Months Ended
September 30,
 
Six Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Revenues
 
 
 
 
 
 
 
  Wind
$
7,307

 
$
5,554

 
$
10,985

 
$
7,831

  Grid
7,569

 
5,495

 
16,498

 
12,140

         Total revenues
14,876

 
11,049

 
27,483

 
19,971

 
 
 
 
 
 
 
 
Cost of revenues
11,252

 
10,777

 
19,966

 
24,186

 
 
 
 
 
 
 
 
Gross margin
3,624

 
272

 
7,517

 
(4,215
)
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
   Research and development
2,264

 
2,951

 
5,103

 
5,667

   Selling, general and administrative
5,175

 
5,339

 
10,961

 
11,477

   Amortization of acquisition-related intangibles
85

 

 
170

 
13

   Change in fair value of contingent consideration

 
(201
)
 

 
(201
)
   Restructuring
93

 
(12
)
 
403

 
1,328

   (Gain) on Sinovel settlement, net
(28,720
)
 

 
(28,720
)
 

      Total operating (income) expenses
(21,103
)
 
8,077

 
(12,083
)
 
18,284

 
 
 
 
 
 
 
 
Operating income (loss)
24,727

 
(7,805
)
 
19,600

 
(22,499
)
 
 
 
 
 
 
 
 
Change in fair value of warrants
282

 
144

 
(182
)
 
1,069

Gain on sale of minority interest

 
951

 

 
951

Interest income, net
232

 
54

 
433

 
45

Other income (expense), net
325

 
(796
)
 
934

 
(2,170
)
Income (loss) before income tax (benefit) expense
25,566

 
(7,452
)
 
20,785

 
(22,604
)
 
 
 
 
 
 
 
 
Income tax expense (benefit)
3,008

 
(171
)
 
2,964

 
(71
)
 
 
 
 
 
 
 
 
Net income (loss)
$
22,558

 
$
(7,281
)
 
$
17,821

 
$
(22,533
)
 
 
 
 
 
 
 
 
Net loss per common share
 
 
 
 
 
 
 
   Basic
$
1.11

 
$
(0.38
)
 
$
0.88

 
$
(1.26
)
   Diluted
$
1.10

 
$
(0.38
)
 
$
0.87

 
$
(1.26
)
 
 
 
 
 
 
 
 
Weighted average number of common shares outstanding
 
 
 
 
 
 
 
   Basic
20,313

 
19,060

 
20,240

 
17,925

   Diluted
20,581

 
19,060

 
20,560

 
17,925



AMSC Reports Q2FY18 Results
 
Page 5

UNAUDITED CONSOLIDATED BALANCE SHEET
(In thousands, except per share data)

 
September 30,
2018
 
March 31,
2018
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
56,169

 
$
34,084

Accounts receivable, net
7,622

 
7,365

Inventory
16,235

 
19,780

Note receivable, current portion
3,000

 
3,000

Prepaid expenses and other current assets
3,339

 
2,947

Total current assets
86,365

 
67,176

 
 
 
 
Property, plant and equipment, net
10,582

 
12,513

Intangibles, net
3,060

 
3,230

Note receivable, long term portion, net of discount of $224 as of September 30, 2018 and net of discount of $336 and deferred gain of $105 as of March 31, 2018
2,776

 
2,559

Goodwill
1,719

 
1,719

Restricted cash
165

 
165

Deferred tax assets
506

 
542

Other assets
332

 
271

Total assets
$
105,505

 
$
88,175

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
15,304

 
$
12,625

Derivative liabilities
1,399

 
1,217

Deferred revenue, current portion
10,057

 
13,483

Total current liabilities
26,760

 
27,325

 
 
 
 
Deferred revenue, long term portion
7,891

 
8,454

Deferred tax liabilities
110

 
110

Other liabilities
98

 
57

Total liabilities
34,859

 
35,946

 
 
 
 
Stockholders' equity:
 
 
 
Common stock
216

 
211

Additional paid-in capital
1,042,962

 
1,041,113

Treasury stock
(2,042
)
 
(1,645
)
Accumulated other comprehensive (loss) income
(11
)
 
883

Accumulated deficit
(970,479
)
 
(988,333
)
Total stockholders' equity
70,646

 
52,229

Total liabilities and stockholders' equity
$
105,505

 
$
88,175



AMSC Reports Q2FY18 Results
 
Page 6


UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 
Six Months Ended
September 30,
 
2018
 
2017
Cash flows from operating activities:
 
 
 
   Net income (loss)
$
17,821

 
$
(22,533
)
   Adjustments to reconcile net income (loss) to net cash used in operations:
 
 
 
      Depreciation and amortization
2,307

 
7,682

      Stock-based compensation expense
1,610

 
1,232

      Provision for excess and obsolete inventory
514

 
351

        (Gain) on sale of minority interest

 
(951
)
        Change in fair value of warrants
182

 
(1,270
)
        Non-cash interest (income) expense
(112
)
 
19

        Other non-cash items
(727
)
 
(97
)
Changes in operating asset and liability accounts:
 
 
 
         Accounts receivable
(279
)
 
124

         Inventory
1,278

 
1,354

         Prepaid expenses and other current assets
(572
)
 
85

         Accounts payable and accrued expenses
2,166

 
(770
)
         Deferred revenue
(593
)
 
1,235

   Net cash provided by/(used in) operating activities
23,595

 
(13,539
)
 
 
 
 
Cash flows from investing activities:
 
 
 
   Net cash provided by/(used in) investing activities
(411
)
 
484

 
 
 
 
Cash flows from financing activities:
 
 
 
   Net cash provided by/(used in) financing activities
(325
)
 
15,188

 
 
 
 
Effect of exchange rate changes on cash
(774
)
 
608

 
 
 
 
Net increase in cash, cash equivalents and restricted cash
22,085

 
2,741

Cash, cash equivalents and restricted cash at beginning of period
34,249

 
27,744

Cash, cash equivalents and restricted cash at end of period
$
56,334

 
$
30,485









AMSC Reports Q2FY18 Results
 
Page 7

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET LOSS
(In thousands, except per share data)
 
Three Months Ended
September 30,
 
Six Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Net income (loss)
$
22,558

 
$
(7,281
)
 
$
17,821

 
$
(22,533
)
Sale of minority investments

 
(951
)
 

 
(951
)
Stock-based compensation
825

 
478

 
1,610

 
1,232

(Gain) on Sinovel settlement, net
(28,720
)
 

 
(28,720
)
 

Amortization of acquisition-related intangibles
85

 

 
170

 
13

Change in fair value of warrants and contingent consideration
(282
)
 
(346
)
 
182

 
(1,270
)
Non-cash interest expense

 

 

 
19

Tax effect of adjustments
2,829

 
114

 
2,829

 
123

Non-GAAP net loss
$
(2,705
)
 
$
(7,986
)
 
$
(6,108
)
 
$
(23,367
)
 
 
 
 
 
 
 
 
Non-GAAP net loss per share - basic
$
(0.13
)
 
$
(0.42
)
 
$
(0.30
)
 
$
(1.30
)
Non-GAAP net loss per share - diluted
$
(0.13
)
 
$
(0.42
)
 
$
(0.30
)
 
$
(1.30
)
Weighted average shares outstanding - basic
20,313

 
19,060

 
20,240

 
17,925

Weighted average shares outstanding - diluted
20,313

 
19,060

 
20,240

 
17,925


RECONCILIATION OF GAAP OPERATING CASH FLOW TO NON-GAAP OPERATING CASH FLOW
(In thousands)
 
Three months ending
 
September 30, 2018
Operating cash flow
$30,481
Sinovel settlement (net of legal fees and expenses)
(30,336
)
Tax effect of adjustments
1,247

Non-GAAP operating cash flow
$1,392

Reconciliation of Forecast GAAP Net Loss to Non-GAAP Net Loss
(In millions, except per share data)
 
Three months ending
December 31, 2018
Net loss
$(6)
Stock-based compensation
1

Amortization of acquisition-related intangibles

(Gain) on Sinovel settlement, net
(1
)
Tax effect of adjustments

Non-GAAP net loss
$(6)
Non-GAAP net loss per share
$0.31
Shares outstanding
21




AMSC Reports Q2FY18 Results
 
Page 8

Reconciliation of Forecast GAAP Operating Cash Flow to Non-GAAP Operating Cash Flow
(In millions)
 
Three months ending
 
December 31, 2018
Operating cash flow
$(5)
Sinovel settlement (net of legal fees and expenses)
2

Tax effect of adjustments
1

Non-GAAP operating cash flow
$(2)


Note: Non-GAAP net loss is defined by the Company as net income (loss) before; sale of minority investment; stock-based compensation; amortization of acquisition-related intangibles; change in fair value of warrants and contingent consideration; non-cash interest expense; Gain on Sinovel settlement; tax effect of adjustments; and other unusual charges or 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 is not able to provide the change in fair value of warrants 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, and therefore the Company's non-GAAP net loss guidance does not include the impact from any change in fair value of warrants. Actual non-GAAP net loss for the fiscal quarter ending December 31, 2018, including the above adjustments, may differ materially from those forecasted in the table above.
Non-GAAP operating cash flow is defined by the Company as operating cash flow before: Sinovel settlement (net of legal fees and expenses); tax effect of adjustments; and other unusual cash flows or items. The Company believes non-GAAP operating cash flow assists management and investors in comparing the Company’s operating cash flow across reporting periods on a consistent basis by excluding these non-recurring cash items that it does not believe are indicative of its core operating cash flow. Actual non-GAAP operating cash flow for the fiscal quarter ending December 31, 2018, including the above adjustments, may differ materially from that 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 Contacts
Investor Relations Contact:
LHA Investor Relations
Sanjay M. Hurry
(212) 838-3777
amscIR@lhai.com

Public Relations Contact:
RooneyPartners LLC
Bob Cavosi
646-638-9891
rcavosi@rooneyco.com   

AMSC Communications Manager:
Nicol Golez
Phone: 978-399-8344
Email: Nicol.Golez@amsc.com