UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
| Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from _____ to _____.
Commission File Number:
American Superconductor Corporation
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | |
Non-accelerated filer ☐ | Smaller reporting company |
| Emerging growth company |
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Shares outstanding of the Registrant’s common stock:
Common Stock, par value $0.01 per share |
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Class |
| Outstanding as of August 2, 2024 |
AMERICAN SUPERCONDUCTOR CORPORATION
INDEX
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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AMERICAN SUPERCONDUCTOR CORPORATION
PART I — FINANCIAL INFORMATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, 2024 | March 31, 2024 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable, net | ||||||||
Inventory, net | ||||||||
Prepaid expenses and other current assets | ||||||||
Restricted cash | ||||||||
Total current assets | ||||||||
Property, plant and equipment, net | ||||||||
Intangibles, net | ||||||||
Right-of-use assets | ||||||||
Goodwill | ||||||||
Restricted cash | ||||||||
Deferred tax assets | ||||||||
Other assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | $ | ||||||
Lease liability, current portion | ||||||||
Debt, current portion | ||||||||
Contingent consideration | ||||||||
Deferred revenue, current portion | ||||||||
Total current liabilities | ||||||||
Deferred revenue, long-term portion | ||||||||
Lease liability, long-term portion | ||||||||
Deferred tax liabilities | ||||||||
Other liabilities | ||||||||
Total liabilities | ||||||||
Commitments and Contingencies (Note 16) | ||||||||
Stockholders' equity: | ||||||||
Common stock | ||||||||
Additional paid-in capital | ||||||||
Treasury stock | ( | ) | ( | ) | ||||
Accumulated other comprehensive income | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total stockholders' equity | ||||||||
Total liabilities and stockholders' equity | $ | $ |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
AMERICAN SUPERCONDUCTOR CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended |
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June 30, |
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2024 |
2023 |
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Revenues |
$ | $ | ||||||
Cost of revenues |
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Gross margin |
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Operating expenses: |
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Research and development |
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Selling, general and administrative |
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Amortization of acquisition-related intangibles |
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Change in fair value of contingent consideration |
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Restructuring |
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Total operating expenses |
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Operating loss |
( |
) | ( |
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Interest income, net |
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Other expense, net |
( |
) | ( |
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Loss before income tax expense |
( |
) | ( |
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Income tax expense |
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Net loss |
$ | ( |
) | $ | ( |
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Net loss per common share |
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Basic |
$ | ( |
) | $ | ( |
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Diluted |
$ | ( |
) | $ | ( |
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Weighted average number of common shares outstanding |
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Basic |
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Diluted |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
AMERICAN SUPERCONDUCTOR CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
Three Months Ended |
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June 30, |
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2024 |
2023 |
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Net loss |
$ | ( |
) | $ | ( |
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Other comprehensive (loss) gain, net of tax: |
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Foreign currency translation (loss) gain |
( |
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Total other comprehensive (loss) gain, net of tax |
( |
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Comprehensive loss |
$ | ( |
) | $ | ( |
) |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
AMERICAN SUPERCONDUCTOR CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE Three Months Ended June 30, 2024 AND 2023
(In thousands)
Common Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||||||
Number of Shares | Par Value | Paid-in Capital | Treasury Stock | Comprehensive Income | Accumulated Deficit | Stockholders' Equity | ||||||||||||||||||||||
Balance at March 31, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
Issuance of common stock – restricted shares | ( | ) | ||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||||
Issuance of common stock for 401(k) match | ||||||||||||||||||||||||||||
Repurchase of treasury stock | — | ( | ) | ( | ) | |||||||||||||||||||||||
Cumulative translation adjustment | — | — | — | — | — | |||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
Balance at June 30, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ |
Common Stock | Additional | Accumulated Other | Total | |||||||||||||||||||||||||
Number of Shares | Par Value | Paid-in Capital | Treasury Stock | Comprehensive Income (Loss) | Accumulated Deficit | Stockholders' Equity | ||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
Issuance of common stock – restricted shares | ( | ) | ||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | |||||||||||||||||||||||
Issuance of common stock for 401(k) match | ||||||||||||||||||||||||||||
Cumulative translation adjustment | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
Balance at June 30, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
AMERICAN SUPERCONDUCTOR CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended June 30, |
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2024 |
2023 |
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Cash flows from operating activities: |
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Net loss |
$ | ( |
) | $ | ( |
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Adjustments to reconcile net loss to net cash provided by (used in) operations: |
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Depreciation and amortization |
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Stock-based compensation expense |
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Provision for excess and obsolete inventory |
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Amortization of operating lease right-of-use assets |
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Deferred income taxes |
( |
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Change in fair value of contingent consideration |
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Other non-cash items |
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Changes in operating asset and liability accounts: |
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Accounts receivable |
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Inventory |
( |
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Prepaid expenses and other assets |
( |
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Operating leases |
( |
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Accounts payable and accrued expenses |
( |
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Deferred revenue |
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Net cash provided by (used in) operating activities |
( |
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Cash flows from investing activities: |
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Purchases of property, plant and equipment |
( |
) | ( |
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Change in other assets |
( |
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Net cash used in investing activities |
( |
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Cash flows from financing activities: |
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Repayment of debt |
( |
) | ( |
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Employee taxes paid related to net settlement of equity awards |
( |
) | ||||||
Net cash used in financing activities |
( |
) | ( |
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Effect of exchange rate changes on cash |
( |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
( |
) | ||||||
Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
$ | $ | ||||||
Supplemental schedule of cash flow information: |
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Cash paid for income taxes, net of refunds |
$ | $ | ||||||
Non-cash investing and financing activities |
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Right-of-use assets obtained in exchange for new lease obligations |
$ | $ | ||||||
Issuance of common stock to settle liabilities |
$ | $ |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
AMERICAN SUPERCONDUCTOR CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of the Business and Operations and Liquidity
Nature of the Business and Operations
American Superconductor Corporation (together with its subsidiaries, “AMSC®” or the “Company”) was founded on April 9, 1987. The Company is a leading system provider of megawatt-scale power resiliency solutions that orchestrate the rhythm and harmony of power on the grid™ and protect and expand the capability of the Navy’s fleet. The Company’s system level products leverage its proprietary “smart materials” and “smart software and controls” to provide enhanced resiliency and improved performance of megawatt-scale power flow.
These unaudited condensed consolidated financial statements of the Company have been prepared on a going concern basis in accordance with United States generally accepted accounting principles (“GAAP”) and the Securities and Exchange Commission’s (“SEC”) instructions to Form 10-Q. Certain prior period amounts were reclassified to conform to the presentation in the current period. The going concern basis of presentation assumes that the Company will continue operations and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with GAAP have been or omitted pursuant to those instructions. The year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The unaudited condensed consolidated financial statements, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim periods ended June 30, 2024 and 2023 and the financial position at June 30, 2024; however, these results are not necessarily indicative of results which may be expected for the full year. The interim condensed consolidated financial statements, and notes thereto, should be read in conjunction with the audited condensed consolidated financial statements for the year ended March 31, 2024, and notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2024 filed with the SEC on May 29, 2024.
Liquidity
The Company has historically experienced recurring operating losses and as of June 30, 2024, the Company had an accumulated deficit of $
In January 2024, the Company filed a shelf registration statement on Form S-3 that will expire three years from the date on which it was declared effective, March 15, 2027 (the “Form S-3”). The Form S-3 allows the Company to offer and sell from time-to-time up to $
On January 31, 2024, the Company entered into an underwriting agreement with Oppenheimer & Co. Inc., as a representative of the several underwriters named therein, relating to the issuance and sale (the "2024 Offering") of
On August 1, 2024, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding shares of Megatran ("the "Acquisition"), for aggregate consideration in an amount equal to $
In recent periods, the Company has experienced inflationary pressure in its supply chain and some delays in sourcing materials needed for its products resulting in some production disruption, both of which have increased the Company’s cost of revenues and decreased gross margin. While the impact of inflation has been challenging, the Company has taken actions to limit this pressure, including adjusting the pricing of its products and services. Changes in macroeconomic conditions arising from various reasons, such as the ongoing wars between Russia and Ukraine and Israel and Hamas, inflation, rising interest rates, labor force availability, sourcing, material delays and global supply chain disruptions could have a material adverse effect on the Company’s business, financial condition and results of operation.
The Company believes that based on the information presented above and its quarterly management assessment, it has sufficient liquidity to fund its operations and capital expenditures for the next twelve months following the issuance of the unaudited condensed consolidated financial statements for the three months ended June 30, 2024. The Company’s liquidity is highly dependent on its ability to increase revenues, its ability to control its operating costs, and its ability to raise additional capital, if necessary. The impact of global sources of instability, including the wars between Russia and Ukraine and Israel and Hamas, on the global financing markets may reduce the Company's ability to raise additional capital, if necessary, which could negatively impact the Company's liquidity. There can be no assurance that the Company will be able to continue to raise additional capital, on favorable terms or at all, from other sources or execute on any other means of improving liquidity described above.
2. Revenue Recognition
The Company’s revenues in its Grid segment are derived primarily through enabling the transmission and distribution of power, providing planning services that allow it to identify power grid needs and risks, and developing ship protection systems for the U.S. Navy. The Company’s revenues in its Wind segment are derived primarily through supplying advanced power electronics and control systems, licensing its highly engineered wind turbine designs, and providing extensive customer support services to wind turbine manufacturers. The Company records revenue based on a five-step model in accordance with Accounting Standards Codification ("ASC") 606. For its customer contracts, the Company identifies the performance obligations, determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when (or as) control of goods or services is transferred to the customer. For the three months ended June 30, 2024 and 2023,
In the Company's equipment and system product line, each contract with a customer summarizes each product sold to a customer, which typically represents distinct performance obligations. A contract's transaction price is allocated to each distinct performance obligation using the respective standalone selling price which is determined primarily using the cost-plus expected margin approach and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company’s product sales transfer control to the customer in line with the contracted delivery terms and revenue is recorded at the point in time when title and risk transfer to the customer, which is primarily upon delivery, as the Company has determined that this is the point in time that control transfers to the customer.
In the Company's service and technology development product line, there are several different types of transactions and each begins with a contract with a customer that summarizes each product sold to a customer, which typically represents distinct performance obligations. The technology development transactions are primarily for activities that have no alternative use and for which a profit can be expected throughout the life of the contract. In these cases, the revenue is recognized over time, but in the instances where the profit cannot be assured throughout the entire contract then the revenue is recognized at a point in time. Each contract's transaction price is allocated to each distinct performance obligation using the respective standalone selling price which is determined primarily using the cost-plus expected margin approach. The ongoing service transactions are for service contracts that provide benefit to the customer simultaneously as the Company performs its obligations, and therefore this revenue is recognized ratably over time throughout the effective period of these contracts. The transaction prices on these contracts are allocated based on an adjusted market approach which is re-assessed annually for reasonableness. The field service transactions include contracts for delivery of goods and completion of services made at the customer's requests, which are not deemed satisfied until the work has been completed and/or the requested goods have been delivered, so all of this revenue is recognized at the point in time when the control changes, and at allocated prices based on the adjusted market approach driven by standard price lists. The royalty transactions are related to certain contract terms on transactions in the Company's equipment and systems product line based on activity as specified in the contracts. The transaction prices of these agreements are calculated based on an adjusted market approach as specified in the contract. The Company reports royalty revenue for usage-based royalties when the sales have occurred. In circumstances when collectability is not assured and a contract does not exist under ASC 606, revenue is deferred until a non-refundable payment has been received for substantially all the amount that is due and there are no further remaining performance obligations.
The Company's service contracts can include a purchase order from a customer for specific goods in which each item is a distinct performance obligation satisfied at a point in time at which control of the goods is transferred to the customer. This transfer occurs based on the contracted delivery terms or when the requested service work has been completed. The transaction price for these goods is allocated based on the adjusted market approach considering similar transactions under similar circumstances. Service contracts are also derived from ongoing maintenance contracts and extended service-type warranty contracts. In these transactions, the Company is contracted to provide an ongoing service over a specified period of time. As the customer is consuming the benefits as the service is being provided, the revenue is recognized over time ratably.
The Company’s policy is not to accept volume discounts, product returns, or rebates and allowances within its contracts. In the event a contract was approved with any of these terms, it would be evaluated for variable consideration, estimated and recorded as a reduction of revenue in the same period the related product revenue was recorded.
The Company provides assurance-type warranties on all product sales for a term of typically
to years, and extended service-type warranties are available for purchase at the customer's option for an additional term ranging up to additional years. The Company accrues for the estimated warranty costs for assurance warranties at the time of sale based on historical warranty experience plus any known or expected changes in warranty exposure. For all extended service-type warranties, the Company recognizes the revenue ratably over time during the effective period of the services.
The Company records revenue net of sales tax, value added tax, excise tax and other taxes collected concurrent with revenue-producing activities. The Company has elected to recognize the cost for freight and shipping when control over the products sold passes to customers and revenue is recognized. The Company has elected to recognize incremental costs of obtaining a contract as expense when incurred except in contracts where the amortization period would exceed twelve months. In such cases the long term amount will be assessed for materiality. As of June 30, 2024 and March 31, 2024, the Company's capitalized incremental contract costs were not material. The Company has elected not to adjust the promised amount of consideration for the effects of a significant financing component if the period of financing is twelve months or less. The Company has elected to recognize revenue based on the as invoiced practical expedient if there is a right to consideration from a customer in an amount that corresponds directly with the value of the Company's performance.
The Company’s contracts with customers do not typically include extended payment terms and may include milestone billing over the life of the contract. Payment terms vary by contract type and type of customer and generally range from
to days from delivery.
The following tables disaggregate the Company’s revenue by product line and by shipment destination (in thousands):
Three Months Ended June 30, 2024 | ||||||||
Product Line: | Grid | Wind | ||||||
Equipment and systems | $ | $ | ||||||
Services and technology development | ||||||||
Total | $ | $ | ||||||
Region: | ||||||||
Americas | $ | $ | ||||||
Asia Pacific | ||||||||
EMEA | ||||||||
Total | $ | $ |
Three Months Ended June 30, 2023 | ||||||||
Product Line: | Grid | Wind | ||||||
Equipment and systems | $ | $ | ||||||
Services and technology development | ||||||||
Total | $ | $ | ||||||
Region: | ||||||||
Americas | $ | $ | ||||||
Asia Pacific | ||||||||
EMEA | ||||||||
Total | $ | $ |
As of June 30, 2024 and 2023, the Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company's accounts receivable balance is made up entirely of customer contract related balances. Changes in the Company’s contract assets, which are included in “Unbilled accounts receivable” and “Deferred program costs” (see Note 7, “Accounts Receivable” and Note 8, “Inventory” for a reconciliation to the condensed consolidated balance sheets) and "Contract liabilities", which are included in the current portion and long-term portion of "Deferred revenue" in the Company’s condensed consolidated balance sheets, are as follows (in thousands):
Unbilled Accounts Receivable | Deferred Program Costs | Contract Liabilities | ||||||||||
Beginning balance as of March 31, 2024 | $ | $ | $ | |||||||||
Increases for costs incurred to fulfill performance obligations | — | — | ||||||||||
Increase (decrease) due to customer billings | ( | ) | — | |||||||||
Decrease due to cost recognition on completed performance obligations | — | ( | ) | — | ||||||||
Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations | — | ( | ) | |||||||||
Other changes and FX impact | ( | ) | ( | ) | ( | ) | ||||||
Ending balance as of June 30, 2024 | $ | $ | $ |
Unbilled Accounts Receivable | Deferred Program Costs | Contract Liabilities | ||||||||||
Beginning balance as of March 31, 2023 | $ | $ | $ | |||||||||
Increases for costs incurred to fulfill performance obligations | — | — | ||||||||||
Increase (decrease) due to customer billings | ( | ) | — | |||||||||
Decrease due to cost recognition on completed performance obligations | — | ( | ) | — | ||||||||
Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations | — | ( | ) | |||||||||
Other changes and FX impact | ( | ) | ||||||||||
Ending balance as of June 30, 2023 | $ | $ | $ |
The Company’s remaining performance obligations represent the unrecognized revenue value of the Company’s contractual commitments. The Company’s performance obligations may vary significantly each reporting period based on the timing of major new contractual commitments. As of June 30, 2024, the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next
The following table sets forth customers who represented 10% or more of the Company’s total revenues for the three months ended June 30, 2024 and 2023:
Three Months Ended | |||||||||
Reportable | June 30, | ||||||||
Segment | 2024 | 2023 | |||||||
Inox Wind Limited | Wind | % | % |
3. Stock-Based Compensation
The Company accounts for its stock-based compensation at fair value. The following table summarizes stock-based compensation expense by financial statement line item for the three months ended June 30, 2024 and 2023 (in thousands):
Three Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Cost of revenues | $ | $ | ||||||
Research and development | ||||||||
Selling, general and administrative | ||||||||
Total | $ | $ |
The Company issued
The estimated fair value of the Company’s stock-based awards, less expected annual forfeitures, is amortized over the awards’ service period. There were
The Company granted
4. Computation of Net Loss per Common Share
Basic net loss per share (“EPS”) is computed by dividing net loss by the weighted-average number of common shares outstanding for the period. Where applicable, diluted EPS is computed by dividing the net loss by the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period, calculated using the treasury stock method. Common equivalent shares include the effect of restricted stock, exercise of stock options and warrants and contingently issuable shares. Stock options and warrants that are out-of-the-money with exercise prices greater than the average market price of the underlying common shares and shares of performance-based restricted stock where the contingency was not met are excluded from the computation of diluted EPS as the effect of their inclusion would be anti-dilutive. For the three months ended June 30, 2024,
The following table reconciles the numerators and denominators of the earnings per share calculation for the three months ended June 30, 2024 and 2023 (in thousands, except per share data):
Three Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Numerator: | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Denominator: | ||||||||
Weighted-average shares of common stock outstanding | ||||||||
Weighted-average shares subject to repurchase | ( | ) | ( | ) | ||||
Shares used in per-share calculation ― basic | ||||||||
Shares used in per-share calculation ― diluted | ||||||||
Net loss per share ― basic | $ | ( | ) | $ | ( | ) | ||
Net loss per share ― diluted | $ | ( | ) | $ | ( | ) |
5. Goodwill and Other Intangibles
Goodwill
Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets when accounted for using the purchase method of accounting. Goodwill is not amortized but reviewed for impairment. Goodwill is reviewed annually on February 28th and whenever events or changes in circumstances indicate that the carrying value of the goodwill might not be recoverable.
There were no changes to goodwill during the three months ended June 30, 2024 or the year ended March 31, 2024.
The Company did
identify any triggering events in the three months ended June 30, 2024 that would require interim impairment testing of goodwill.
Other Intangibles
Intangible assets at June 30, 2024 and March 31, 2024 consisted of the following (in thousands):
June 30, 2024 | March 31, 2024 | |||||||||||||||||||||||||||
Gross Amount | Accumulated Amortization | Net Book Value | Gross Amount | Accumulated Amortization | Net Book Value | Estimated Useful Life | ||||||||||||||||||||||
Backlog | ( | ) | ( | ) | $ | |||||||||||||||||||||||
Trade name and trademarks | — | — | Indefinite | |||||||||||||||||||||||||
Customer relationships | ( | ) | ( | ) | ||||||||||||||||||||||||
Core technology and know-how | ( | ) | ( | ) | ||||||||||||||||||||||||
Intangible assets | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $
Expected future amortization expense related to intangible assets is as follows (in thousands):
Years ending March 31, | Total | |||
2025 | ||||
2026 | ||||
2027 | ||||
2028 | ||||
2029 | ||||
Total | $ |
The Company's intangible assets relate entirely to the Grid business segment operations in the United States.
6. Fair Value Measurements
A valuation hierarchy for disclosure of the inputs to valuation used to measure fair value has been established. This hierarchy prioritizes the inputs into three broad levels as follows:
Level 1 | - | Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. |
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Level 2 | - | Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). |
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Level 3 | - | Unobservable inputs that reflect the Company’s assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including its own data. |
The Company provides a gross presentation of activity within Level 3 measurement roll-forward and details of transfers in and out of Level 1 and 2 measurements. A change in the hierarchy of an investment from its current level is reflected in the period during which the pricing methodology of such investment changes. Disclosure of the transfer of securities from Level 1 to Level 2 or Level 3 is made in the event that the related security is significant to total cash and investments. The Company did not have any transfers of assets and liabilities from Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the three months ended June 30, 2024.
A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
Valuation Techniques
Cash Equivalents
Cash equivalents consist of highly liquid instruments with maturities of three months or less that are regarded as high quality, low risk investments and are measured using such inputs as quoted prices and are classified within Level 1 of the valuation hierarchy. Cash equivalents consist principally of certificates of deposits and money market accounts.
Contingent Consideration
Contingent consideration relates to the earnout payment set forth in the Stock Purchase Agreement governing the acquisition of Northeast Power Systems, Inc ("NEPSI") that provides that the selling stockholders may receive up to an additional
The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of June 30, 2024 and March 31, 2024 (in thousands):
Total Carrying Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
June 30, 2024: | ||||||||||||||||
Assets: | ||||||||||||||||
Cash equivalents | $ | $ | $ | $ | ||||||||||||
Derivative liabilities: | ||||||||||||||||
Contingent consideration | $ | $ | $ | $ |
Total Carrying Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
March 31, 2024 | ||||||||||||||||
Assets: | ||||||||||||||||
Cash equivalents | $ | $ | $ | $ | ||||||||||||
Derivative liabilities: | ||||||||||||||||
Contingent consideration | $ | $ | $ | $ |
The table below reflects the activity for the Company’s contingent consideration derivative liability measured at fair value on a recurring basis (in thousands):
Acquisition Contingent Consideration | ||||
Balance at March 31, 2023 | $ | |||
Change in fair value | ||||
Settlement of contingent consideration | ( | ) | ||
Balance at March 31, 2024 | ||||
Change in fair value | ||||
Balance at June 30, 2024 | $ | |||
7. Accounts Receivable
Accounts receivable at June 30, 2024 and March 31, 2024 consisted of the following (in thousands):
June 30, 2024 | March 31, 2024 | |||||||
Accounts receivable (billed) | $ | $ | ||||||
Accounts receivable (unbilled) | ||||||||
Accounts receivable, net | $ | $ |
8. Inventory
Inventory, net of reserves, at June 30, 2024 and March 31, 2024 consisted of the following (in thousands):
June 30, 2024 | March 31, 2024 | |||||||
Raw materials | $ | $ | ||||||
Work-in-process | ||||||||
Finished goods | ||||||||
Deferred program costs | ||||||||
Net inventory | $ | $ |
The Company recorded inventory write-downs of $
Deferred program costs as of June 30, 2024 and March 31, 2024 primarily represent costs incurred on programs where the Company needs to complete performance obligations before the related revenue and costs will be recognized.
9. Prepaid and Other Current Assets
During fiscal 2022, the Company conducted an analysis as to whether it was entitled to employee retention credits (“ERC”) under the CARES Act as amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021. Based on the analysis, the Company determined that it was entitled to an ERC of approximately $
As accounting for payroll tax credits are not within the scope of ASC 740, Income Taxes, the Company has chosen to account for the ERCs by analogizing to the International Accounting Standards Board IAS 20, Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, an entity recognizes government grants only when there is reasonable assurance that the entity will comply with the conditions attached to them and the grants will be received. The Company evaluated its eligibility for the ERC and determined that it met all the criteria to claim a refundable tax credit against the employer portion of Social Security taxes for up to
The Company recorded a $
10. Property, Plant and Equipment
The cost and accumulated depreciation of property, plant and equipment at June 30, 2024 and March 31, 2024 are as follows (in thousands):
June 30, 2024 | March 31, 2024 | |||||||
Land | $ | $ | ||||||
Construction in progress – equipment | ||||||||
Buildings | ||||||||
Equipment and software | ||||||||
Furniture and fixtures | ||||||||
Leasehold improvements | ||||||||
Property, plant and equipment, gross | ||||||||
Less accumulated depreciation | ( | ) | ( | ) | ||||
Property, plant and equipment, net | $ | $ |
Depreciation expense was $
11. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at June 30, 2024 and March 31, 2024 consisted of the following (in thousands):
June 30, 2024 | March 31, 2024 | |||||||
Accounts payable | $ | $ | ||||||
Accrued inventories in-transit | ||||||||
Accrued other miscellaneous expenses | ||||||||
Accrued contract loss | ||||||||
Advanced deposits | ||||||||
Accrued compensation | ||||||||
Income taxes payable | ||||||||
Accrued product warranty | ||||||||
Accrued commissions | ||||||||
Total | $ | $ |
The Company generally provides a
to year warranty on its products, commencing upon delivery or installation where applicable. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience.
Product warranty activity was as follows (in thousands):
Three Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Balance at beginning of period | $ | $ | ||||||
Provisions for warranties during the period | ||||||||
Settlements during the period | ( | ) | ( | ) | ||||
Balance at end of period | $ | $ |
12. Income Taxes
The Company recorded income tax expense of $
Accounting for income taxes requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if, based on the technical merits, it is more likely than not the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company re-evaluates these uncertain tax positions on a quarterly basis. The evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision. The Company did June 30, 2024 and did have any gross unrecognized tax benefits as of June 30, 2024.
identify any uncertain tax positions in the three months ended
13. Contingent Consideration
On October 1, 2020 (the "NEPSI Acquisition Date"), the Company entered into a Stock Purchase Agreement (the "NEPSI Stock Purchase Agreement") with the selling stockholders named therein. Pursuant to the terms of the NEPSI Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding (i) shares of capital stock of NEPSI, and (ii) membership interests of Northeast Power Realty, LLC, a New York limited liability company, which holds the real property that serves as NEPSI's headquarters (the "NEPSI Acquisition"). NEPSI is a U.S.-based global provider of medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems. NEPSI is a wholly-owned subsidiary of the Company and is operated by its Grid business unit. The purchase price was $
The Company evaluated the NEPSI Acquisition earnout payment set forth in the NEPSI Stock Purchase Agreement, which is expected to require settlement in the Company's common stock, and determined the contingent consideration qualified for liability classification and derivative treatment under ASC 815, Derivatives and Hedging. As a result, for each period, the fair value of the contingent consideration will be remeasured and the resulting gain or loss will be recognized in operating expenses until the share amount is fixed.
Following is a summary of the key assumptions used in a Monte Carlo simulation to calculate the fair value of the contingent consideration related to the NEPSI Acquisition:
June 30, | ||||||||||||||||||||
Fiscal Year 2024 | 2024 | |||||||||||||||||||
Revenue risk premium | % | |||||||||||||||||||
Revenue volatility | % | |||||||||||||||||||
Stock Price | $ | |||||||||||||||||||
Payment delay (days) | ||||||||||||||||||||
Fair value (millions) | $ | |||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
Fiscal Year 2023 | 2024 | 2023 | 2023 | 2023 | 2023 | |||||||||||||||
Revenue risk premium | % | % | % | % | % | |||||||||||||||
Revenue volatility | % | % | % | % | % | |||||||||||||||
Stock Price | $ | $ | $ | $ | $ | |||||||||||||||
Payment delay (days) | ||||||||||||||||||||
Fair value (millions) | $ | $ | $ | $ | $ |
The Company recorded losses of $
14. Debt
As part of the acquisition of Neeltran, the Company identified e was less than $
15. Leases
Operating Leases
All significant lease arrangements are recognized at lease commencement. Operating lease right–of-use assets and lease liabilities are recognized at commencement. The operating lease right-of-use asset includes any lease payments related to initial direct cost and prepayments and excludes any lease incentives. Lease expense is recognized on a straight-line basis over the lease term. The Company enters into a variety of operating lease agreements through the normal course of its business, but primarily real estate leases to support its operations. The real estate lease agreements generally provide for fixed minimum rental payments and the payment of real estate taxes and insurance. Many of these real estate leases have one or more renewal options that allow the Company, at its discretion, to renew the lease for varying periods up to
years or to terminate the lease. Only renewal options or termination rights that the Company believed were likely to be exercised were included in the lease calculations.
The Company also enters into leases for vehicles, IT equipment and service agreements, and other leases related to its manufacturing operations that are also included in the right-of-use assets and lease liability accounts if they are for a term of longer than twelve months. However, many of these leases are either short-term in nature or immaterial. The Company has made the policy election to exclude short-term leases from the condensed consolidated balance sheet.
Finance Leases
As of June 30, 2024, the right-of-use asset related to the finance lease is fully amortized, and is included in the property and equipment, net on the Company's condensed consolidated balance sheet.
Finance lease right-of-use assets and lease liabilities are recognized similar to an operating lease, at the lease commencement date or the date the lessor makes the leased asset available for use. Finance lease right-of-use assets are generally amortized on a straight-line basis over the lease term, and the carrying amount of the finance lease liabilities are (1) accreted to reflect interest using the incremental borrowing rate if the rate implicit in the lease is not readily determinable, and (2) reduced to reflect lease payments made during the period. Amortization expense for finance lease right-of-use assets and interest accretion on finance lease liabilities are recorded to depreciation expense and interest expense, respectively in the Company's condensed consolidated statement of operations.
Supplemental balance sheet information related to leases at June 30, 2024, and March 31, 2024 are as follows (in thousands):
June 30, 2024 | March 31, 2024 | |||||||
Leases: | ||||||||
Right-of-use assets – Operating | $ | $ | ||||||
Total right-of-use assets | ||||||||
Lease liabilities – ST Operating | $ | $ | ||||||
Lease liabilities – LT Operating | ||||||||
Total lease liabilities | $ | $ | ||||||
Weighted-average remaining lease term | ||||||||
Weighted-average discount rate | % | % |
The costs related to the Company's finance lease are not material. The costs related to the Company's operating leases for the three months ended June 30, 2024 and 2023 are as follows (in thousands):
Three Months Ended | ||||
June 30, 2024 | ||||
Operating Leases: | ||||
Operating lease costs – fixed | $ | |||
Operating lease costs – variable | ||||
Short-term lease costs | ||||
Total lease costs | $ |
Three Months Ended | ||||
June 30, 2023 | ||||
Operating Leases: | ||||
Operating lease costs – fixed | $ | |||
Operating lease costs – variable | ||||
Short-term lease costs | ||||
Total lease costs | $ |
The Company’s estimated minimum future lease obligations under the Company's leases are as follows (in thousands):
Leases | ||||
Year ending March 31, | ||||
2025 | $ | |||
2026 | ||||
2027 | ||||
2028 | ||||
2029 | ||||
Thereafter | ||||
Total minimum lease payments | ||||
Less: interest | ( | ) | ||
Present value of lease liabilities | $ |
16. Commitments and Contingencies
Legal Contingencies
From time to time, the Company is involved in legal and administrative proceedings and claims of various types. The Company records a liability in its condensed consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary to make the condensed consolidated financial statements not misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in its condensed consolidated financial statements.
Other
The Company enters into long-term construction contracts with customers that require the Company to obtain performance bonds. The Company is required to deposit an amount equivalent to some or all the face amount of the performance bonds into an escrow account until the termination of the bond. When the performance conditions are met, amounts deposited as collateral for the performance bonds are returned to the Company. In addition, the Company has various contractual arrangements in which minimum quantities of goods or services have been committed to be purchased on an annual basis.
As of June 30, 2024, the Company had $
17. Business Segments
The Company reports its financial results in
reportable business segments: Grid and Wind. In accordance with ASC 280, Segment Reporting, the Company aggregates operating segments into one reporting segment for financial reporting purposes due to their similar operating and financial characteristics. The Company's operating segments reflect the way in which internally-reported financial information is used to make decisions and allocate resources.
Through the Company’s power grid offerings, the Grid business segment enables electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute smarter, cleaner and better power through its transmission planning services, power electronics, and superconductor-based systems. The sales process is enabled by transmission planning services that allow it to identify power grid congestion, poor power quality and other risks, which helps the Company determine how its solutions can improve network performance. These services often lead to sales of grid interconnection solutions for wind farms and solar power plants, power quality systems, and transmission and distribution cable systems. The Company also sells ship protection products to the U.S. Navy through its Grid business segment.
Through the Company’s wind power offerings, the Wind business segment enables manufacturers to field highly competitive wind turbines through its advanced power electronics and control system products, engineered designs, and support services. The Company supplies advanced power electronics and control systems, licenses its highly engineered wind turbine designs, and provides extensive customer support services to wind turbine manufacturers. The Company’s design portfolio includes a broad range of drive trains and power ratings of 2 megawatts ("MWs") and higher. The Company provides a broad range of power electronics and software-based control systems that are highly integrated and designed for optimized performance, efficiency, and grid compatibility.
The operating results for the two business segments are as follows (in thousands):
Three Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Revenues: | ||||||||
Grid | $ | $ | ||||||
Wind | ||||||||
Total | $ | $ |
Three Months Ended June 30, | ||||||||
2024 | 2023 | |||||||
Operating income (loss): | ||||||||
Grid | $ | $ | ( | ) | ||||
Wind | ( | ) | ||||||
Unallocated corporate expenses | ( | ) | ( | ) | ||||
Total | $ | ( | ) | $ | ( | ) |
The accounting policies of the business segments are the same as those for the consolidated Company. The Company’s business segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities. The Company evaluates performance based upon several factors, of which the primary financial measures are segment revenues and segment operating loss. The disaggregated financial results of the segments reflect allocation of certain functional expense categories consistent with the basis and manner in which Company management internally disaggregates financial information for the purpose of assisting in making internal operating decisions. In addition, certain corporate expenses which the Company does not believe are specifically attributable or allocable to either of the two business segments have been excluded from the segment operating loss.
Unallocated corporate expenses consisted of net losses of $
Total assets for the two business segments as of June 30, 2024 and March 31, 2024, are as follows (in thousands):
June 30, 2024 | March 31, 2024 | |||||||
Grid | $ | $ | ||||||
Wind | ||||||||
Corporate assets | ||||||||
Total | $ | $ |
18. Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about a reportable segment’s expenses. Following the release of ASU 2023-07 in November 2023, the effective date will be annual reporting periods beginning after December 15, 2024. As of June 30, 2024, the Company is evaluating the impact on its condensed consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in ASU 2023-09 address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. Following the release of ASU 2023-09 in December 2023, the effective date will be annual reporting periods beginning after December 15, 2024. As of June 30, 2024, the Company is evaluating the impact on its condensed consolidated financial statements.
In March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements. The amendments in ASU 2024-02 contain amendments to the Codification that remove references to various FASB Concepts Statements. Following the release of ASU 2024-02 in March 2024, the effective date will be annual reporting periods beginning after December 15, 2024. As of June 30, 2024, the Company is evaluating the impact on its condensed consolidated financial statements.
19. Subsequent Events
The Company has performed an evaluation of subsequent events through the time of filing this Quarterly Report on Form 10-Q with the SEC and has determined that, other than as reported herein and described below, there are no such events to report.
Acquisition of Megatran
As described in Note 1, Nature of the Business and Operations and Liquidity, on the Acquisition Date, the Company acquired all of the issued and outstanding shares of capital stock of Megatran. Megatran is a U.S.-based global provider of engineered power conversion solutions for demanding industrial and military applications.
Pursuant to the Stock Purchase Agreement, the Company acquired all of the issued and outstanding shares of Megatran, for aggregate consideration in an amount equal to $
The Acquisition completed by the Company subsequent to the three months ended June 30, 2024 has been accounted for under the purchase method of accounting in accordance with ASC 805, Business Combinations. The Company allocated the purchase price to the assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition. The excess of the purchase price paid by the Company over the estimated fair value of net assets acquired has been recorded as goodwill.
The total purchase price of approximately $
Cash payment | |
Issuance of 1,297,600 shares of Company’s Common Stock |
At the Acquisition Date, in addition to the $
The following table summarizes the allocation of the purchase price based on the estimated fair values of the assets acquired and liabilities assumed and related deferred income taxes in connection with the Acquisition (in millions):
Cash and cash equivalents | $ | |||
Investment in joint venture | ||||
Prepaid and other current assets | ||||
Accounts receivable | ||||
Inventory | ||||
Property plant and equipment | ||||
Accrued expenses | ( | ) | ||
Accounts payable | ( | ) | ||
Deferred revenue | ( | ) | ||
Other | ( | ) | ||
Deferred tax liability | ( | ) | ||
Net tangible assets/(liabilities) | ||||
Backlog | ||||
Customer relationships | ||||
Net identifiable intangible assets | ||||
Goodwill | ||||
Total purchase consideration | $ |
The fair value of the financial assets acquired includes receivables with a fair value of $
Inventory includes a $
Backlog of $
Customer relationships of $
Goodwill represents the value associated with the acquired workforce and expected synergies related to the business combination of the two companies. Goodwill resulting from the Acquisition was assigned to the Company’s Grid segment. Goodwill recognized in the Acquisition is not deductible for tax purposes. This purchase price allocation is preliminary and has not been finalized as the analysis on the assets and liabilities acquired, primarily the tax related liability may require further adjustments to our purchase accounting that could result in a measurement period adjustment that would impact the Company's reported net assets and goodwill as of August 1, 2024. Material changes, if any, to the preliminary allocation summarized above will be reported once the related uncertainties are resolved, but no later than August 1, 2025. The $
Unaudited Pro Forma Operating Results
The unaudited pro forma condensed consolidated statement of operations for the year ended March 31, 2024 and three months ended June 30, 2024 is presented as if the Acquisition had occurred on April 1, 2023 and April 1, 2024, respectively.
Three months ended June 30, | Year Ended March 31, | |||||||
2024 | 2024 | |||||||
Revenues | $ | $ | ||||||
Operating loss | ( | ) | ( | ) | ||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Net loss per common share | ||||||||
Basic | ||||||||
Diluted | ||||||||
Shares - basic | $ | ( | ) | $ | ( | ) | ||
Shares - diluted | $ | ( | ) | $ | ( | ) |
The pro forma amounts include the historical operating results of the Company and Megatran with appropriate adjustments that give effect to acquisition related costs, income taxes, intangible amortization resulting from the Acquisition and certain conforming accounting policies of the Company. The pro forma amounts are not necessarily indicative of the operating results that would have occurred if the Acquisition and related transactions had been completed at the beginning of the applicable periods presented. In addition, the pro forma amounts are not necessarily indicative of operating results in future periods.
AMERICAN SUPERCONDUCTOR CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
American Superconductor®, Amperium®, AMSC®, D-VAR®, PowerModule™, D-VAR VVO®, PQ-IVR®, SeaTitan®, Gridtec™ Solutions, Windtec™ Solutions, Smarter, Cleaner...Better Energy™, orchestrate the rhythm and harmony of power on the grid™, actiVAR®, armorVAR™, NEPSI™ and Neeltran™ and SafetyLOCK™ are trademarks or registered trademarks of American Superconductor Corporation or our subsidiaries. We reserve all of our rights with respect to our trademarks or registered trademarks regardless of whether they are so designated in this Quarterly Report on Form 10-Q by an ® or ™ symbol. All other brand names, product names, trademarks or service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective holders.
Executive Overview
We are a leading system provider of megawatt-scale power resiliency solutions that orchestrate the rhythm and harmony of power on the grid™, and protect and expand the capability of our Navy's fleet. Our solutions enhance the performance of the power grid, protect our Navy’s fleet, and lower the cost of wind power. In the power grid market, we enable electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute smarter, cleaner and better power through our transmission planning services and power electronics and superconductor-based systems. In the wind power market, we enable manufacturers to field highly competitive wind turbines through our advanced power electronics and control system products, engineering, and support services. Our power grid and wind products and services provide exceptional reliability, security, efficiency and affordability to our customers.
Our power system solutions help to improve energy efficiency, alleviate power grid capacity constraints, improve system resiliency, and increase the adoption of renewable energy generation. Demand for our solutions is driven by the growing needs for modernized smart grids that improve power reliability, security and quality, the U.S. Navy's effort to upgrade onboard power systems to support fleet electrification, and the needs for increased renewable sources of electricity, such as wind and solar energy. Concerns about these factors have led to increased spending by corporations and the military, as well as supportive government regulations and initiatives on local, state, and national levels, including renewable portfolio standards, tax incentives and international treaties.
We manufacture products using two proprietary core technologies: PowerModule™ programmable power electronic converters and our Amperium® high temperature superconductor ("HTS") wires. These technologies and our system-level solutions are protected by a robust intellectual property portfolio consisting of patents and patent applications worldwide and rights through exclusive and non-exclusive licenses.
We operate our business under two market-facing business units: Grid and Wind. We believe this market-centric structure enables us to more effectively anticipate and meet the needs of power generation project developers, the Navy's ship protection systems, electric utilities and wind turbine manufacturers.
• |
Grid. Through our Gridtec™ Solutions, our Grid business segment enables electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute power with exceptional efficiency, reliability, security and affordability. We provide transmission planning services that allow us to identify power grid congestion, poor power quality, and other risks, which help us determine how our solutions can improve network performance. These services often lead to sales of our grid interconnection solutions for wind farms and solar power plants, power quality systems and transmission and distribution cable systems. We also sell ship protection products to the U.S. Navy through our Grid business segment. |
• |
Wind. Through our Windtec™ Solutions, our Wind business segment enables manufacturers to field wind turbines with exceptional power output, reliability and affordability. We supply advanced power electronics and control systems, license our highly engineered wind turbine designs, and provide extensive customer support services to wind turbine manufacture |