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

AYER, Mass., June 06, 2018 (GLOBE NEWSWIRE) -- AMSC (AMSC), a global solutions provider serving wind and power grid industry leaders, today reported financial results for its fourth quarter and full year fiscal 2017 ended March 31, 2018. 

"Fiscal 2017 marked the year we commercialized AMSC's high-temperature superconductor technology as represented by the U.S. Navy's Ship Protection System order for the USS Fort Lauderdale. Our grid business grew by more than 20% in fiscal 2017 - our third year in a row of growth in our grid segment. We expect revenue growth again in our grid business and are anticipating improved conditions in India's wind power industry in fiscal 2018," said Daniel P. McGahn, President and Chief Executive Officer of AMSC. "We expect fiscal 2018 to be a year of revenue growth for AMSC."

Revenues for the fourth quarter of fiscal 2017 were $13.5 million, compared with $16.2 million for the same period of fiscal 2016. The year-over-year decrease was due to lower Wind segment revenues, primarily driven by fewer shipments of electrical control systems to Inox, partially offset by higher Grid segment revenues versus year ago results.

AMSC’s net loss for the fourth quarter of fiscal 2017 was $6.0 million, or $0.30 per share, versus $6.9 million, or $0.50 per share, for the same period of fiscal 2016. The Company’s non-GAAP net loss (as defined below) for the fourth quarter of fiscal 2017 was $5.0 million, or $0.25 per share, which decreased compared with a non-GAAP net loss of $7.1 million or $0.51 per share, in the same period of fiscal 2016. Please refer to the financial table below for a reconciliation of GAAP to non-GAAP results.

Revenues for the full fiscal year 2017 were $48.4 million as compared to $75.2 million in fiscal year 2016. AMSC reported a net loss for fiscal 2017 of $32.8 million, or $1.73 per share, compared to a net loss of $27.4 million, or $1.98 per share in fiscal 2016. The Company's non-GAAP net loss for full year fiscal 2017 was $32.2 million or $1.70 per share, compared with a non-GAAP net loss of $27.0 million, or $1.95 per share, for fiscal 2016.

Cash, cash equivalents and restricted cash at March 31, 2018 totaled $34.2 million, compared with $22.3 million at December 31, 2017. Operating cash burn in the fourth quarter of fiscal 2017 was $4.6 million.

Business Outlook
For the first quarter ending June 30, 2018, AMSC currently expects that its revenues will be in the range of $11 million to $13 million. The Company’s net loss for the first quarter of fiscal 2018 is expected to be less than $7.0 million, or $0.34 per share. The Company's non-GAAP net loss is expected to be less than $6.1 million, or $0.30 per share. The Company expects an operating cash burn of $6 million to $8 million in the first quarter of fiscal 2018.

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 tomorrow, June 7, 2018, to discuss market trends, and the Company's recent accomplishments, 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 877-260-1479 and using conference ID 6971737. A replay of the call may be accessed 3 hours following the call by dialing: 888-203-1112 and using conference ID 6971737.

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

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

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any statements in this release about our expectation that our grid business will grow revenue again in fiscal 2018, our expectation of improved conditions in India's wind power industry in fiscal 2018, our expectation that fiscal 2018 will be a year of revenue growth, our expected financial results for the quarter ending June 30, 2018, our expected operating cash burn during the quarter ending June 30, 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 when Inox’s demand dislocation will be resolved, and to the extent resolved, how successful Inox will be under India’s new central and state auction regime; 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 successfully execute the move of our former Devens, Massachusetts manufacturing facility or achieve expected savings following the move could adversely impact our financial performance; We may not realize all of the sales expected from our backlog of orders and contracts; Our success depends upon the commercial use of high temperature superconductor products, which is currently limited, and a widespread commercial market for our products may not develop; Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy; We have operations in and depend on sales in emerging markets, including India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these markets; We face risks related to our intellectual property; We face risks related to our legal proceedings; and the important factors discussed under the caption "Risk Factors" in Part 1. Item 1A of our Form 10-K for the fiscal year ended March 31, 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.

 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 
  Three Months Ended March 31,   Twelve months ended March 31,
  2018   2017   2018   2017
Revenues              
Wind $ 3,828     $ 10,447     $ 14,294     $ 47,269  
Grid 9,670     5,748     34,109     27,926  
Revenues 13,498     16,195     48,403     75,195  
               
Cost of revenues 10,504     13,360     44,608     64,352  
               
Gross profit 2,994     2,835     3,795     10,843  
               
Operating expenses:              
Research and development 2,904     3,736     11,594     12,540  
Selling, general and administrative 5,614     6,048     22,577     25,688  
Amortization of acquisition related intangibles 85         183     157  
Loss on contingent consideration         71      
Restructuring and impairment 199     39     1,527      
Total operating expenses 8,802     9,823     35,952     38,385  
               
Operating loss (5,808 )   (6,988 )   (32,157 )   (27,542 )
               
Change in fair value of derivatives and warrants (762 )   636     706     1,304  
Gain on sale of minority interests 216         1,167     325  
Interest income (expense), net 53     (52 )   147     (383 )
Other (expense) income, net (351 )   (415 )   (2,800 )   65  
               
Loss before income tax expense (6,652 )   (6,819 )   (32,937 )   (26,231 )
               
Income tax expense (657 )   106     (161 )   1,142  
               
Net loss $ (5,995 )   $ (6,925 )   $ (32,776 )   $ (27,373 )
               
Net loss per common share              
Basic $ (0.30 )   $ (0.50 )   $ (1.73 )   $ (1.98 )
Diluted $ (0.30 )   $ (0.50 )   $ (1.73 )   $ (1.98 )
               
Weighted average number of common shares outstanding              
Basic 20,044     13,981     18,967     13,804  
Diluted 20,044     13,981     18,967     13,804  
                       


 
CONSOLIDATED BALANCE SHEET
(In thousands, except per share data)
 
  March 31,
 2018
  March 31,
 2017
ASSETS      
Current assets:      
Cash and cash equivalents $ 34,084     $ 26,784  
Accounts receivable, net 7,365     7,956  
Inventory 19,780     17,462  
Note receivable, current portion 3,000      
Prepaid expenses and other current assets 2,947     2,703  
Restricted cash     795  
Total current assets 67,176     55,700  
       
Property, plant and equipment, net 12,513     43,438  
Intangibles, net 3,230     301  
Note receivable, long term portion, net of discount of $337K, and net of deferred gain of $105K as of March 31, 2018 2,559      
Goodwill 1,719      
Restricted cash 165     165  
Deferred tax assets 542     407  
Other assets 271     233  
       
Total assets $ 88,175     $ 100,244  
       
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
       
Current liabilities:      
Accounts payable and accrued expenses 12,625     14,490  
Note payable, current portion, net of discount of $19 as of March 31, 2017     1,481  
Derivative liabilities 1,217     1,923  
Deferred revenue, current portion 13,483     14,323  
Total current liabilities 27,325     32,217  
       
Deferred revenue, long term portion 8,454     7,631  
Deferred tax liabilities 110     125  
Other liabilities 57     45  
Total liabilities 35,946     40,018  
       
Stockholders' equity:      
Common stock, $0.01 par value, 75,000,000 shares authorized; 21,138,689 and 14,713,839 shares issued at March 31, 2018 and 2017, respectively 211     147  
Additional paid-in capital 1,041,113     1,017,510  
Treasury stock, at cost, 165,094 and 97,529 shares at March 31, 2018 and 2017, respectively (1,645 )   (1,371 )
Accumulated other comprehensive (loss) income 883     (503 )
Accumulated deficit (988,333 )   (955,557 )
Total stockholders' equity 52,229     60,226  
       
Total liabilities and stockholders' equity $ 88,175     $ 100,244  
               


 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
  Twelve months ended March 31,
  2018   2017
Cash flows from operating activities:      
       
Net loss $ (32,776 )   $ (27,373 )
Adjustments to reconcile net loss to net cash used in operations:      
Depreciation and amortization 11,459     7,519  
Stock-based compensation expense 2,692     2,892  
Impairment of minority interest investments      
Provision for excess and obsolete inventory 434     1,615  
(Recovery)/Write-off prepaid taxes (82 )    
Gain on sale from minority interest investments (1,167 )   (325 )
Loss from minority interest investments      
Change in fair value of warrants and contingent consideration (635 )   (1,304 )
Non-cash interest expense 19     156  
Other non-cash items 793     (940 )
Changes in operating asset and liability accounts:      
Accounts receivable 1,145     11,143  
Inventory (2,423 )   (815 )
Prepaid expenses and other current assets 558     2,729  
Accounts payable and accrued expenses (2,956 )   (7,938 )
Deferred revenue (1,888 )   1,426  
Net cash used in operating activities (24,827 )   (11,215 )
       
Cash flows from investing activities:      
Net cash provided by investing activities 16,397     192  
       
Cash flows from financing activities:      
Net cash provided by (used in) financing activities 15,278     (1,130 )
       
Effect of exchange rate changes on cash and cash equivalents 452     (393 )
       
Net (decrease)/increase in cash and cash equivalents 7,300     (12,546 )
Cash and cash equivalents at beginning of year 26,784     39,330  
Cash and cash equivalents at end of year $ 34,084     $ 26,784  
               


 
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)
(In thousands, except per share data)
 
  Three Months Ended March 31,   Twelve months ended March 31,
  2018   2017   2018   2017
Net loss $ (5,995 )   $ (6,925 )   $ (32,776 )   $ (27,373 )
Gain on sale of interest in minority investments (216 )       (1,167 )   (325 )
Stock-based compensation 578     626     2,692     2,892  
Amortization of acquisition-related intangibles 85     39     183     157  
Consumption of zero cost-basis inventory (220 )   (254 )   (734 )   (1,373 )
Change in fair value of derivatives and warrants 762     (636 )   (635 )   (1,304 )
Non-cash interest expense     $ 28     19     156  
Tax effect of adjustments 35     41     177     220  
Non-GAAP net loss $ (4,971 )   $ (7,081 )   $ (32,241 )   $ (26,950 )
               
Non-GAAP net loss per share $ (0.25 )   $ (0.51 )   $ (1.70 )   $ (1.95 )
Weighted average shares outstanding - basic and diluted 20,044     13,981     18,967     13,804  
                       


 
Reconciliation of Forecast GAAP Net Loss to Non-GAAP Net Loss
(In thousands, except per share data)
 
  Three months ending
  June 30, 2018
Net loss $ (7,000 )
Stock-based compensation   900  
Amortization of acquisition-related intangibles   100  
Consumption of zero-cost inventory   (100 )
Tax effect of adjustments    
Non-GAAP net loss $ (6,100 )
Non-GAAP net loss per share $ (0.30 )
Shares outstanding   20,100  
       

Note: Non-GAAP net loss is defined by the Company as net loss before gain on sale of interest in minority investments; 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 is not able to provide the change in fair value of warrants and contingent consideration on a forward-looking basis without unreasonable efforts because the calculation for that change is primarily driven by the closing price and volatility of the Company's stock at the end of each fiscal quarter, which cannot be reasonably estimated at this time. The Company 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 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