American Superconductor Corporation (AMSC) reported results for its first quarter fiscal 2012 ending June 30, 2012. In the reported quarter, the company incurred an adjusted loss of 24 cents per share, which came in line with the Zacks Consensus Estimate. Loss in the reported quarter was better than the year-ago quarterly adjusted loss of 68 cents per share.
On a reported basis, the company digested a net loss of 20 cents per share versus a net loss of 74 cents per share, which included aggregate one-time asset write-downs, impairments and accrued charges.
In the reported period the variance of 4 cents between reported and adjusted earnings was due to the effect of adverse purchase commitment recoveries of 14 cents. This was partially offset by 5 cents from change in fair value of derivatives and warrants; 4 cents from non-cash interest expense; and 1 cent from other items.
American Superconductor’s total revenue of $28.7 million in the reported quarter rose more than two-fold versus the year-ago quarterly revenue of $9.1 million. Reported quarterly revenue was also higher than the Zacks Consensus Estimate of $28.0 million. The revenue upside was driven by strong growth in both the Wind and Grid reporting segments. American Superconductor digested a net loss of $10.3 million in the reported quarter versus a net loss of $37.7 million in the year-ago period.
Cash and cash equivalents as of June 30, 2012, were $60.5 million versus $46.3 million as of March 31, 2012. Cash used in operating activities during the three-month period ending June 30, 2012, was $11.6 million versus $57.8 million of cash used in operating activities during the three-month period ending June 30, 2011.
Founded in 1987, Boston, Massachusetts-based American Superconductor has operations spread in Asia, Australia, Europe and North America. The company offers an array of proprietary technologies and solutions spanning the electric power infrastructure, including generation to delivery to end-use. The company is a lead player in megawatt-scale wind turbine designs and electrical control systems.
American Superconductor’s performance was impacted by business and contractual issues with its largest customer in China – Sinovel Wind Group Co. Ltd. Earlier, American Superconductor’s revenue growth largely relied on its customer Sinovel, China's largest and the world's third largest wind turbine manufacturer. However, since April 2011, Sinovel bogged down by high inventory levels refused to accept further shipments from the company and was unable to pay for past shipments.
American Superconductor sued Sinovel in November 2011, for payments for past shipments, and compensation for infringement of intellectual property rights. American Superconductor alleges that Sinovel illegally obtained and used its proprietary technology to upgrade its 1.5 megawatt wind turbines to meet proposed Chinese grid codes. The matter is now sub-judice, with American Superconductor seeking to recover more than $1.2 billion from Sinovel through civil cases filed in various Chinese courts.
American Superconductor, looking forward to the quarter ending September 30, 2012, expects that its revenues will exceed $20 million. The company expects that its net loss for that quarter will be less than $22 million, or 43 cents per share. The company also estimates that it will have more than $70 million in cash, cash equivalents, marketable securities and restricted cash on September 30, 2012.
In the near term, the Zacks #2 Rank (Buy) clearly suggests a window for short-term gains. Over the longer run however we maintain our market Neutral recommendation on the American Superconductor stock. American Superconductor competes with Anaren Inc. (ANEN), AVX Corporation (AVX) and Rogers Corporation (ROG).
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