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Edited Transcript of AMSC earnings conference call or presentation 7-Jun-18 2:00pm GMT

Q4 2017 American Superconductor Corp Earnings Call

WORCESTER Jul 3, 2018 (Thomson StreetEvents) -- Edited Transcript of American Superconductor Corp earnings conference call or presentation Thursday, June 7, 2018 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brion Tanous

CleanTech IR, Inc. - IR

* Dan McGahn

American Superconductor Corp. - President & CEO

* John Kosiba

American Superconductor Corp. - SVP & CFO

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Conference Call Participants

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* Philip Shen

ROTH Capital Partners - Analyst

* Carson Sippel

B. Riley FBR - Analyst

* Kristen Owen

Oppenheimer & Co. - Analyst

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Presentation

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Operator [1]

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Good day, everyone, and welcome to AMSC's fourth-quarter and full fiscal year 2017 earnings conference call. This call is being recorded. (Operator Instructions). With us on the call today are AMSC President and CEO, Daniel McGahn; Senior Vice President and CFO, John Kosiba; and Manager of AMSC Investor Relations, Brion Tanous. For opening remarks I would like to get the conference over to Brion Tanous.

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Brion Tanous, CleanTech IR, Inc. - IR [2]

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Thank you, Stephanie. And welcome to our call to discuss our fourth-quarter and full fiscal year 2017 results. Before we begin I'd like to note that various remarks management may make on this conference call about AMSC's future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our annual report on Form 10-K for the year ended March 31, 2018, which we filed with the SEC on June 6, 2018, and subsequent reports that we have filed with the SEC.

These forward-looking statements represent our expectations only as of today and should not be relied upon as representing our views as of any date subsequent to today. While AMSC anticipates that subsequent events and developments may cause the Company's views to change, we specifically disclaim any obligation to update these forward-looking statements.

I also would like to note that we will be referring on today's call to non-GAAP net loss -- our net loss before sale of minority investments, stock-based compensation, amortization and acquisition-related intangibles, consumption of zero cost basis inventory, changes in fair value of derivatives and warrants, non-cash interest expense, tax effect of adjustments, and other non-cash or unusual charges.

Non-GAAP net loss is a non-GAAP financial metric. A reconciliation of our non-GAAP to GAAP net loss can be found in the press release we issued in fullness to the SEC last night on Form 8-K. All of our press releases and SEC filings can be accessed from the Investors page of our website at www.AMSC.com. Now I will turn the call over to CEO, Dan McGahn.

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Dan McGahn, American Superconductor Corp. - President & CEO [3]

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Thanks, Brion, and good morning, everyone. I'll begin today by providing an overview of our financial results for the fourth quarter of fiscal 2017, which ended March 31, 2018. John Kosiba will then provide a review of our financial results for the fourth quarter and guidance for the first fiscal quarter of 2018, which will end June 30, 2018. Following our prepared remarks we will open up the line for your questions.

In fiscal 2017, AMSC grew its grid business by more than 20%, our third year in a row of growth in our grid segment. We expect revenue growth again in our grid business in fiscal 2018. We commercialized high temperature superconductor technology as represented by the U.S. Navy Ship Protection System order for the USS Fort Lauderdale LPD 28.

We diversified D-VAR. We grew D-VAR and we introduced VVO, which signals further diversification. And we believe we've moved the needle forward on opportunities to deploy our resilient electric grid product. However, our wind business underperformed in fiscal 2017.

In calendar 2017 total wind installations in India dropped to about one-third of what they were in 2016, from 5.5 GW in 2016 to just 1.8 GW in 2017. According to our partner, Inox, last year the wind industry faced a variety of issues ranging from high inventory to stranded assets to stuck projects with legacy power purchase agreements. We believe that these issues may be behind us.

We believe the auction process for the wind industry introduced by the government of India last year is helping the market gain momentum and transparency after a nearly 18-month hiatus. Inox has been consistently winning in key wind auctions and now reports a backlog of 950 MW. We are carefully monitoring Inox's movement on the SECI-1 project. We are seeing signs of a recovery and continue to be optimistic about the Indian wind market.

The new policies are expected to enable the overall wind business to possibly reach higher levels than previously attained. According to the Indian Wind Turbine Manufacturers Association, the wind industry in India is on course to add 30 GW of new capacity in the next three years. This suggests that India is not only on course to exceed its goal of 60 GW of installed wind by 2022, but also appears to be on track to do so a full year ahead of the government's target deadline.

One simple reason for this is that the current auction-based tariffs are below the average rate of hydrocarbon based power, which is expected to provide a strong economic rationale for increasing renewable power generation in the country. Inox reported that they increased their backlog in March of 2018. To be clear, we are anticipating significant growth from our wind business in fiscal 2018 because of Inox's reported backlog.

We believe our new expanded relationship with Doosan opens up other business opportunities for us in East Asia, as well as the global offshore wind market, and is expected to allow for further potential diversification of future revenues within our wind business. So to repeat, we expect to grow our grid business again this year and we expect significant growth from our wind segment in fiscal 2018.

Fiscal year 2018 is expected to be a year of growth for AMSC. We are diversifying our business by growth through grid. The fourth quarter was another strong grid quarter for us. We achieved our fiscal 2017 objective of growing our grid revenues year-over-year. In fact, our grid business grew more than 20% in fiscal 2017. We expect to grow our grid business again in fiscal 2018 and, as you know, D-VAR is a large contributor to our grid business.

In the fourth quarter of fiscal 2017, our D-VAR business was supported by a strong base of projects in the renewable and industrial segments, very similar to our third-quarter performance. The catalyst of our recent D-VAR industrial segment growth comes from mines, mills and semiconductor fabs which require clean and reliable power. This has been an area of focus for us and we are seeing the benefits of this focus.

Our VVO product addresses power quality on the distribution grid. This new product solution is gaining traction with domestic utilities. We have now commissioned VVO units operating on multiple sites at utilities in the US including Alliant Energy in the state of Iowa which we announced. Our VVO pipeline is developing very nicely. We expect commercial shipments in the first quarter of fiscal 2018.

We believe the funnel of opportunities for our resilient electric grid product is significant. We continue to work with major utilities on specific projects which show a lot of promise, but these projects take time to mature. We hope to report back soon on progress with Chicago.

Beyond this year we are focused on the West and East coasts where multiple opportunities appear to be moving forward. We remain focused on commercializing our SPS with the Navy and we will remain focused on commercializing our REG product with utilities.

We are most excited about larger REG opportunities with other utilities that we believe will have a substantial yet unique need for our REG system. We believe there are issues facing utilities that simply cannot be solved using conventional power delivery systems. We believe our REG system can address those unique needs in a way that makes economic sense to utilities. We are working to help utilities understand that REG uniquely solves problems that are a priority today.

During the fourth quarter we began delivering the long lead time items for the USS Fort Lauderdale program, also known as LPD 28, during the fourth quarter. We anticipate shipping additional long lead time items during fiscal 2018.

We continue to pursue additional ship platforms for our ship protection system with the U.S. Navy. We believe the Navy understands that our HTS-based systems are an enabling technology that will support their efforts to electrify the fleet.

We continue to work with the Navy on SPS applications in more power delivery applications as well as propulsion applications utilizing our superconductor technology. We believe there may be opportunities to sell our SPS to certain foreign navies as well.

I'll turn the call over to John Kosiba to review our financial results for the fourth quarter and full fiscal year 2017 and provide guidance for the first fiscal quarter of 2018, which will end June 30, 2018. John?

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John Kosiba, American Superconductor Corp. - SVP & CFO [4]

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Thanks, Dan.

Good morning, everybody. AMSC generated revenues of $13.5 million for the fourth quarter of fiscal 2017, compared to $16.2 million in the year ago quarter. Our grid business unit accounted for 72% of total revenues for the fourth quarter. The year-over-year reduction in revenue is driven by reduced electrical control system shipments to Inox from our wind business unit, partially offset by higher grid business unit revenues.

Looking at the P&L in more detail, gross margin for the fourth quarter of fiscal 2017 was 22.2% compared to 17.5% in the year ago quarter. The year-over-year increase in gross margin was driven primarily by strong grid product margins as well as license and royalty revenue from our wind business unit during the period.

Our R&D and SG&A expenses for the fourth quarter of fiscal 2017 were $8.5 million compared to $9.8 million in the year ago quarter. The year-over-year decrease was driven by reduced expenses resulting from our fiscal 2017 reduction in force. Approximately 15% of our R&D and SG&A expenses in the fourth quarter were non-cash.

Our net loss in the fourth quarter of fiscal 2017 was $6.0 million or $0.30 per share compared to $6.9 million or $0.50 per share in the year ago quarter.

We ended the fourth quarter of fiscal 2017 with $34.2 million in cash, cash equivalents and restricted cash compared to $22.3 million as of December 31, 2017. The end of year cash balance includes net proceeds of $16.9 million from the sale of our Devens facility which closed in March 2018.

Our operating cash burn in the fourth quarter of fiscal 2017 was $12.6 million, which included a $700,000 make whole payment associated with the ITC acquisition. After excluding the make whole payment, our operating cash burn was $3.9 million, which was in line with our previous guidance and compares to $6.7 million in the previous quarter ending December 31, 2017.

The quarter-over-quarter reduction in operating cash burn was driven by a working capital benefit associated with grid collections within the quarter. On similar revenue profiles of the last two quarters, we believe a normalized quarterly operating cash burn would be in the range of $5 million to $6 million.

Turning to our financial guidance for the first quarter of fiscal 2018, we expect that our revenues in the first quarter of fiscal 2018 will be in the range of $11 million to $13 million. Our net loss on that revenue is expected to be less than $7 million or $0.34 per share and we anticipate an operating cash burn on that revenue of $6 million to $8 million. The forecasted operating cash burn for the first quarter reflects an expected increase in working capital as a result of the timing of certain grid product shipments within the period.

Though we may continue to experience lumpiness in our working capital requirements, we have improved our overall cost structure into fiscal 2018. We believe that this translates into a lower operating cash flow breakeven point. As a result we believe that as the business rebounds off these recent low revenue quarters, we are positioned to breakeven or generate cash at quarterly revenues of less than $25 million.

With that I'll turn the call back over to Dan.

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Dan McGahn, American Superconductor Corp. - President & CEO [5]

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Thanks, John.

Inox stated on their fourth-quarter call three important points that we believe positively impact our next several quarters.

One, they intend to ramp up production during the first half of this fiscal year specifically to meet SECI-1 requirements. So the first half of their year is commensurate with ours, so that would be the end of our second quarter.

Two, they intend to commission 300 MW before the end of the calendar year, again for SECI-1.

And three, they intend to manufacture wind turbines to support the 300 MW of SECI-2 wins in the second half of the fiscal year. And again, that's concurrent with ours and would go through March of next year.

We are comfortable and comforted by the fact that Inox has reestablished a healthy backlog of wind turbine business. We believe we are well positioned to support Inox's requirements.

We are focused on continuing to grow our grid business. We had a strong fourth quarter for grid. We are well positioned to grow grid again in fiscal 2018 and we expect to do so. Our D-VAR business is strong, our VVO pipeline is developing nicely, our REG solution should see demonstrable progress soon. And we expect to continue to deliver long lead time items for LPD 28 in addition to pursuing additional opportunities with the U.S. Navy.

Regarding our new headquarters and US manufacturing facility, I'm pleased to announce that we have successfully completed the transition of our operations to our new building located in Ayer, Massachusetts. Our primary focus has been and will continue to be on our customers and employees.

As we mentioned last quarter, we've seen an uptick in demand for D-VAR. We timed the transition to avoid disruption to our customers.

Due to our cost reduction efforts in fiscal 2017 and continued cost management strategies going into fiscal 2018, we expect that we will have sufficient cash for our strategic initiatives in fiscal 2018. This is because we've improved our overall cost structure. And we have substantially reduced both our physical footprint and headcount. We believe that this translates into a lower operating cash flow breakeven point.

Based on this new cost footprint, we now have revenue scenarios that would be expected to have us generating positive operating cash flow on a quarterly basis at previously demonstrated revenue levels. As John said in his remarks, we believe our first-quarter cash burn guidance is an anomaly due to the lumpiness of cash collections during the first quarter. We expect that fiscal 2018 will be a growth year for AMSC.

And lastly, regarding the US Department of Justice criminal case against Sinovel, our current understanding is that the DOJ sentencing of Sinovel, which was originally scheduled for June 6, has been pushed out one month.

Stephanie, can we now open up the line to any questions from our covering analysts?

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Questions and Answers

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Operator [1]

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(Operator Instructions). Philip Shen, ROTH Capital.

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Philip Shen, ROTH Capital Partners - Analyst [2]

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First one is on Inox. Dan, I think you mentioned that we could see a ramp up in the second quarter. And we know about the 300 MW that Inox won that needs to be commissioned I believe by September. So I think Inox indicated that operations were restarted at three of the company's manufacturing facilities in April after a four quarter gap.

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Dan McGahn, American Superconductor Corp. - President & CEO [3]

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Right.

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Philip Shen, ROTH Capital Partners - Analyst [4]

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Can you talk about how those -- can you give us a little bit more granularity about ECS order flow for FQ1? It seems like with the guidance it might be a little bit limited in terms of shipments still for the first quarter -- fiscal quarter and that we should see a ramp up in FQ2. Is that a fair way of looking at it? If you can talk us through that that would be great.

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Dan McGahn, American Superconductor Corp. - President & CEO [5]

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I think that's a fair way to look at it. I think what's different this time -- if you go back to our call in September or our call for the December quarter, now we're doing the March quarter, we had communications with Inox that led us to believe they were going to start up production. And that's what their word said and I think that's what their belief was.

I think the thing this time is we have verification that customers are accepting goods; they are shipping wind turbines from the factory. So I think what's different let's say now versus say six months ago is that we don't just have the words and descriptions publicly from Inox that they intend to or that they will; we actually see that activity and we see wind turbines leaving their factory and going to the SECI-1 project.

So, I think this is kind of the point we've been at each quarter, which is we see the beginning of a ramp, we've been able to ship some product in previous quarters here as we've gone through this transition. We see a very direct ramp in Q2.

We would love to step back and talk about Q2 and what we believe, Phil, but we have gone one quarter at a time. We try to work very well with Inox to be able to meet whatever needs that they are going to present to us. But at the end of the day we want to make sure that they present payment prior to shipment.

So, we feel we are in a good situation with INOX to meet their immediate needs this quarter and what we perceive as a ramp starting in Q2 and going beyond that through SECI-1 and SECI-2. Our understanding is they do need new inventory for new ECS stock for at least part of SECI-1. I think some of the concerns that we have is what fraction of that is and we only really understand what they need by what they are willing to pay for.

So, what they're presenting us is a picture of back to production this quarter and then back to we'll say fuller levels of production next quarter. We're going to watch very attentively how they execute on SECI-1, because that may or may not have bearing on future projects. This is a whole new regime -- policy regime that's in place. So I think there's some learning curve in the market on getting connected on time and what all that means.

But as in the prepared remarks we echoed the sentiments that Inox shared with their investors on their most recent call, which basically said the first half of the year, which is our first half of the year as well, they will be producing and delivering for SECI-1. They intend to be able to deliver everything by sometime in the December quarter. So, that could hopefully be October into November maybe, but probably October.

And then they are on to building product for SECI-2, which is the same amount of demand and that that would be fulfilled over really the second half of the year, the December and the March quarter.

So, it's a long winded answer, Phil, to basically say, yes, we see that ramp coming. And we are trying to present that 600 MW demand as the reason why we see that ramp coming.

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Philip Shen, ROTH Capital Partners - Analyst [6]

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Great. Thanks for the color, Dan. And then bigger picture for Inox specifically. I think they have a backlog of 950 MW. You mentioned that in your prepared remarks as well. But just to kind of size it for everybody, you should be able to serve that entire 950 MW or how much of that backlog do you expect to serve and do you expect to fulfill that in two years?

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Dan McGahn, American Superconductor Corp. - President & CEO [7]

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Yes, I think that's another timing with this to try to understand will it be fulfilled in 18 months or 24 months. Probably something in that range seems to make sense given the timing of the projects. For those of you that don't follow Inox closely, they had three successive wins in the March quarter which I think added this additional 350 MW on top of the 600 that they already had. Up next I think is SECI-5.

Also up next for them is, they kind of explained on their call that they are also working with multiple customers, and what that means is the potential to expand their backlog even for some of these earlier SECI projects, specifically SECI-3 and SECI-4 where extending to some of these other customers.

We know they have a public relationship with Adani; out of the first two SECI projects they have 100 MW of turbines that they are selling to Adani to be developed. We also understand that they've been able to secure buyers for the end wind turbine projects that are developed at least for SECI-1 and part of SECI-2.

So, they've tried to do as much as they can to de-risk their business, lower their working capital constraints, and that should translate into significant improvement for us, which is why were calling for growth in wind for this year.

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Philip Shen, ROTH Capital Partners - Analyst [8]

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Great, thanks, Dan. One other quick question on Sinovel and then I'll pass it on. I know it sounds like it may be delayed another month, the hearing. Does that mean the date now is July 6 or does that mean the date is now in August?

And can you talk through the scenarios of what the possible sentencing could be? Or after sentencing is concluded what are the scenarios that could be -- that could play out for you guys? And I'm guessing it's tough to ascribe probabilities, but insofar as you can help us understand (multiple speakers).

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Dan McGahn, American Superconductor Corp. - President & CEO [9]

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I can tell you now what I believe at this point and try to give people comfort on what we know and what we understand. So in regards to the date, I think it's public. And we tended to not really announce the dates and stuff for this case because it's not our case, just so people understand that on the call because it's a US Department of Justice case.

We aren't really privy to the behind-the-scenes dealings between the prosecution and the defense. We are the victim and we are a witness. So information flow to us is at best limited. So my understanding is that the date that was June 6 is now July 6. And the reasoning that was given from the court was it was because of the scheduling of the court. So my understanding is I guess the judge had a conflict on June 6 so they moved it out to July 6.

Our understanding on what should happen is the sentencing should include a fine and it should include restitution direction to us. I think that once a number is established, whatever that number might be, it gives a clear endpoint for the US government and the Chinese government to understand what the damages are. Having two criminal convictions, having a US case conviction under this current administration I think bodes well.

There is a lot of these trade issues that are out there. We are front and center as part of that. In many ways we have become the poster child for intellectual property theft in regards to China. As part of this 301 action our understanding is the way that the administration has presented some of these trade issues to China is there is principally an issue over IP theft, and secondarily an issue over trade imbalance. And the idea is to use one to leverage the other.

There is a three letter company in China that they have sanctions and fines. I think today that company actually has a $1 billion fine against it, so there's some additional precedent being set that helps us.

Our hope is that our four letter company gets restitution through this process. And I think the court setting a number makes a lot of our claims in China, the 1.2 billion in claims in China, hopefully not only vindicates the facts of the guilty verdict but also the claims of the damages and the value of the forced IP transfer. So hopefully that's helpful, Phil.

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Philip Shen, ROTH Capital Partners - Analyst [10]

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Yes, that is. Thanks, Dan. I'll pass it on.

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Operator [11]

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(Operator Instructions). Carter Driscoll, B. Riley FBR.

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Carson Sippel, B. Riley FBR - Analyst [12]

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Hi, this is Carson Sippel on for Carter Driscoll. Thanks for taking my question. Can you provide us with a quick BASF update?

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Dan McGahn, American Superconductor Corp. - President & CEO [13]

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There's not much we can say technically due to the confidentiality that we signed between the companies. But our understanding is they continue to do work, they continue to pay, which I think is important that they honor the contract.

We tend to not worry about that in the Western world, which I think is good. I think we've been through a lot dealing with contracts on the silk road, which is separate certainly than dealing with a relationship company like BASF.

Everything that we said in the past about the belief and the strategy here is the hope that we can help them to develop a process, potentially that could be lower cost, potentially they could be a second source -- but nothing really new to report. The technical progress that they make I'm actually not even privy to given the nondisclosure agreement.

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Carson Sippel, B. Riley FBR - Analyst [14]

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Right, okay, makes sense. Thank you. And then also you mentioned earlier that you are pursuing additional utility opportunities both on the West and East coasts. Can you name some of those or, if not, can you say you are focused more on one coast over the other or any additional commentary about that?

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Dan McGahn, American Superconductor Corp. - President & CEO [15]

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Sure, we've announced Boston and Washington DC. We've announced Seattle and San Francisco and obviously we're trying to move Chicago forward here hopefully in the very near term. There are more utilities than that, there's more than a dozen and there's probably close to two dozen different projects we've identified.

What we're trying to focus on literally at this point in time is let's get the milestone with the first utility behind us. We do see evidence that there really is a demonstrable need for REG at many utilities in the US. And our hope is we can move these and mature these conversations to paperwork and eventually to contracts.

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Carson Sippel, B. Riley FBR - Analyst [16]

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Great, thank you.

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Operator [17]

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Colin Rusch, Oppenheimer & Co.

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Kristen Owen, Oppenheimer & Co. - Analyst [18]

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Good morning. This is Kristen on for Colin. While we are on the grid segment, just sort of wanted to dig into that a little bit more. And I was wondering if you could provide a little bit more color on the product mix in the grid segment and then where you see those greater opportunities for growth, where you're seeing heightened quoting activity or maybe some velocity in that quoting activity.

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Dan McGahn, American Superconductor Corp. - President & CEO [19]

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Yes, we don't really break out the product lines within grid, but really grid would comprise of D-VAR principally, the lion's share comes from D-VAR. We've added really the three new products on top of that with VVO, with the ship protection systems for the Navy and then resilient electric grid for utilities.

So, kind of currently the revenue we see growing is coming initially and principally from D-VAR. It's coming from diversification of D-VAR into the industrial segment. And we are seeing healthy wins, larger wins coming from the industrial segment. So, we've been able to get the grid revenue up to record levels and be able to maintain in around that. And we're saying that we now want to grow off of this level.

And we see growth coming in D-VAR this year and that's based upon -- we kind of hinted at this last call -- that we've seen an uptake in the need for production and that influenced some of our timing in the move in Massachusetts here. So we see D-VAR very healthy with the potential to grow this year and then we are adding in revenue we believe from VVO.

So we talked in the prepared remarks about Alliant. We have an announcement out about them, the first utility we can name. We have a number of orders. We are going to continue to build that backlog. We said definitively in Q1 we are going to see commercial revenue from VVO. We are delivering to the Navy on LPD 28, so we'll see revenue which should spell some growth for the grid segment from the Navy.

And then if we are able to move forward with the first project for REG the hope would be we'd start to recognize revenue this year. So you add all that up, you've got the base growing and then you have the three new products all being added on top. Adding some incremental growth from each one could spell some nice growth for grid year-to-year. Is that helpful?

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Kristen Owen, Oppenheimer & Co. - Analyst [20]

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That is. Are you seeing any -- you briefly mentioned some further opportunities beyond the U.S. Navy. Are you seeing any progress moving forward with any other foreign navies?

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Dan McGahn, American Superconductor Corp. - President & CEO [21]

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We've been able to secure export license for multiple navies, which I think is a little different than what we said in the past; it's a little broader. And we are in discussions with some specific programs to look at exporting some of this [mine] protection technology to allied navies.

I didn't highlight it today purposefully because I really don't understand the timing and I don't want to set the expectation that we are going to secure an order with a foreign Navy this quarter or next quarter until I have a deeper degree of confidence. And I don't have that at this time. But we do have activity and we do see indications that there should be some additional growth here in the further out quarters that could potentially come from foreign navies.

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Kristen Owen, Oppenheimer & Co. - Analyst [22]

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That's helpful. And then just a last question on the relationship with Doosan. Are you seeing any traction there or opportunities for further diversification in the wind segment?

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Dan McGahn, American Superconductor Corp. - President & CEO [23]

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I think as we learn more about where Doosan is headed and how the Korean government is investing, we also see Doosan bidding on projects outside South Korea in East Asia. So we called it East Asia this time, and not just Korea, because we see them in Southeast Asia and Japan quoting some projects.

So they are giving us forecasted demand, which is noticeable, become important to revenue assuming they're able to close their orders and that translates into business for us. Really the mission this year is to get the first control systems for the 5.5 MW machine to Doosan.

So, one of the things that we did is when we put up the initial prototype back with Hyundai several years ago, we've gone back and we've looked at a lot of the learning not just on performance but on protection. And we want to make sure the latest and greatest is in the versions that Doosan will get from us.

So, our expectation is within the next three, four, or five quarters we hope to see initial deliveries to Doosan. And as we make those we'll certainly make those known to you all.

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Operator [24]

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(Operator Instructions).

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Dan McGahn, American Superconductor Corp. - President & CEO [25]

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So, I think on that note I think we will draw to a close. I think there's a little bit of a disconnect and, I think as we talk to more people here over the next days, I think that will be a lot of the conversation that we have.

We have a new core business that is growing which is grid. The revenue fractions now have become greater and greater for grid and we see clear prospect for growth for grid even as early as this year. We've been able to grow grid the past three years and we're trying to do it a fourth.

We see indications in our wind business that we should see growth as well for Inox and add-in revenue potentially for Doosan. We see growth certainly coming. I think the challenge that we have and I think that most of you as you look at us say how fast and how heavy will the demand from Inox come?

The part we want to remind you of is we've done a lot to better align costs with these revenue levels. The breakeven as we are saying, we have scenarios below $25 million on a quarterly basis which translates to below $100 million. John talked a little about lumpiness of working capital, which I think is probably one of the challenging parts of today's message is the amount of cash burn that we are projecting in Q1. We believe it is an anomaly.

So if you add all this together, we see better results coming in Q2, Q3, Q4 for certain if we're saying that we're going to grow. We tend not to guide and simply because we want to make sure that Inox is showing that they need that demand by paying for it. And we think that's probably the best place for the Company to be to manage our overall risk.

But I do realize that seeing the revenue level quarter to quarter not grow and the burn continue to be persistent certainly would cause shareholders to ask us a lot of questions. I think we're going to answer a lot of those questions delivering on the numbers we put out for Q1 and seeing a better Q2, Q3 and Q4 and beyond. So with that I'll say thank you and we'll talk to everybody very soon.

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Operator [26]

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Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect.