AMSC Reports Fiscal Second Quarter 2013 Financial Results Focused on Achieving Positive Net Cash Flows by the Fourth Quarter of Fiscal Year 2014 DEVENS, Mass., Nov. 7, 2013 (GLOBE NEWSWIRE) -- AMSC (Nasdaq:AMSC), a global solutions provider serving wind and power grid industry leaders, today reported financial results for its fiscal second quarter ended September 30, 2013. Revenues for the second quarter of fiscal 2013 were $24.2 million, compared with $20.9 million for the same period of fiscal 2012. The year-over-year growth is due to higher revenues in both the Company's Wind and Grid segments. AMSC's net loss for the second quarter of fiscal 2013 narrowed to $14.6 million, or $0.24 per share, compared with a net loss of $15.9 million, or $0.31 per share, for the same period of fiscal 2012. The Company's non-GAAP net loss for the second quarter of fiscal 2013 was $10.8 million, or $0.18 per share, compared with a non-GAAP net loss of $16.0 million, or $0.31 per share, for the second quarter of fiscal 2012. Please refer to the financial table below for a reconciliation of GAAP to non-GAAP results. Cash, cash equivalents, and restricted cash at September 30, 2013 totaled $32.8 million, compared with $39.5 million as of June 30, 2013. "We are pleased with the year-over-year revenue growth and improved operating performance that we delivered during the second fiscal quarter," said Daniel P. McGahn, AMSC President and CEO. "We grew revenues by 16 percent year over year, improved gross margins nearly threefold and reduced our non-GAAP net loss by more than 30 percent. We continue to be focused on achieving our target of positive net cash flows on a quarterly basis by the end of fiscal year 2014." "Looking forward, we believe there are risks to achieving our full year revenue target, as a result of governmental factors impacting the renewable industries in Australia, China, and India. Wind projects in Australia are being impacted by political uncertainty from the recent election, causing delays for projects in our Grid segment. The recovery of the Chinese wind market is being slowed by the continued grid infrastructure challenges. In India, the regulatory framework intended to stimulate the wind industry was put in place six months after the beginning of the Indian fiscal year, which created uncertainty," continued McGahn. "We see these challenges as short-term and we continue to believe that the long-term growth opportunities remain for both our wind and grid businesses in established and emerging markets." Financing Arrangements During the second fiscal quarter, AMSC filed a shelf registration statement and amended certain terms of its convertible note with the note holder. As a result of this amendment, AMSC is now permitted to increase the amount of senior debt from $10 million to $15 million. In order to enhance liquidity, the Company may, subject to market and other considerations, seek additional debt and/or equity financing arrangements. There can be no assurance that the Company will be able to consummate any such financings on acceptable terms, if at all. Financial Guidance For the third fiscal quarter ending December 31, 2013, AMSC expects that its revenues will exceed $18 million and that its net loss will be less than $17 million, or $0.28 per share. This forecast excludes any impact from mark-to-market adjustments related to the Company's derivative liability and warrants. AMSC expects that its non-GAAP net loss for its third quarter of fiscal 2013 will be less than $12 million, or $0.19 per share. AMSC expects to have more than $25 million in cash, cash equivalents and restricted cash on December 31, 2013. Conference Call Reminder In conjunction with this announcement, AMSC management will host a conference call with investors beginning at 10:00 a.m. Eastern Time today to discuss the Company's results and its business outlook. To listen to the live or archived conference call webcast please visit the "Investors" section of the Company's website at http://www.amsc.com/investors. The live call also can be accessed by dialing 647-438-1131 and using conference ID 2611527. About AMSC (NASDAQ: AMSC) AMSC generates the ideas, technologies and solutions that meet the world's demand for smarter, cleaner ... better energy™. Through its Windtec™ Solutions, AMSC provides wind turbine electronic controls and systems, designs and engineering services that reduce the cost of wind energy. Through its Gridtec™ Solutions, AMSC provides the engineering planning services and advanced grid systems that optimize network reliability, efficiency and performance. The Company's solutions are now powering gigawatts of renewable energy globally and are enhancing the performance and reliability of power networks in more than a dozen countries. Founded in 1987, AMSC is headquartered near Boston, Massachusetts with operations in Asia, Australia, Europe and North America. For more information, please visit www.amsc.com. AMSC, Windtec, Gridtec, D-VAR, 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. 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 future expectations, plans, prospects, and additional financing arrangements for the Company, including without limitation our beliefs regarding our achievement of our target of positive net cash flows on a quarterly basis by the end of fiscal year 2014, our beliefs that there are risks to achieving our full year revenue target, our beliefs regarding the long-term growth opportunities for both our wind and grid businesses in established and emerging markets, our expectations regarding our future financial results and cash balance 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. Such factors include: We have experienced recurring operating losses and recurring negative cash flows from operations which raise substantial doubt about our ability to continue as a going concern. This substantial doubt has resulted in a qualified opinion from our auditors with an explanatory paragraph regarding our ability to continue as a going concern. We believe this opinion may have an adverse effect on our customer and supplier relationships; our success in addressing the wind energy market is dependent on the manufacturers that license our designs; we may not realize all of the sales expected from our backlog of orders and contracts; our business and operations would be adversely impacted in the event of a failure or security breach of our information technology infrastructure; 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 subassemblies of many of our Wind and Grid products, making us vulnerable to supply shortages and price fluctuations, which could harm our business; many of our revenue opportunities are dependent upon subcontractors and other business collaborators; if we fail to implement our business strategy successfully, our financial performance could be harmed; problems with product quality or product performance may cause us to incur warranty expenses and may damage our market reputation and prevent us from achieving increased sales and market share; new regulations related to conflict-free minerals may force us to incur significant additional expenses; our contracts with the U.S. government are subject to audit, modification or termination by the U.S. government and include certain other provisions in favor of the government; the continued funding of such contracts remains subject to annual congressional appropriation which, if not approved, could reduce our revenue and lower or eliminate our profit; we may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits; many of our customers outside of the United States are, either directly or indirectly, related to governmental entities, and we could be adversely affected by violations of the United States Foreign Corrupt Practices Act and similar worldwide anti-bribery laws outside the United States; we have limited experience in marketing and selling our superconductor products and system-level solutions, and our failure to effectively market and sell our products and solutions could lower our revenue and cash flow; we have experienced recurring losses from operations and negative operating cash flow; these factors raise substantial doubt regarding our ability to continue as a going concern; we have a history of operating losses, and we may incur additional losses in the future; our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter; we may require additional funding in the future and may be unable to raise capital when needed; our debt obligations include certain covenants and other events of default;. Should we not comply with the covenants or incur an event of default, we may be required to repay our debt obligations in cash, which could have an adverse effect on our liquidity; if we fail to maintain proper and effective internal controls over financial reporting, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data; we may be required to issue performance bonds or provide letters of credit, which restricts our ability to access any cash used as collateral for the bonds or letters of credit; changes in exchange rates could adversely affect our results from operations; growth of the wind energy market depends largely on the availability and size of government subsidies and economic incentives; we depend on sales to customers in China, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of China; changes in China's political, social, regulatory and economic environment may affect our financial performance; our products face intense competition, which could limit our ability to acquire or retain customers; our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results; adverse changes in domestic and global economic conditions could adversely affect our operating results; we may be unable to adequately prevent disclosure of trade secrets and other proprietary information; our patents may not provide meaningful protection for our technology, which could result in us losing some or all of our market position; the commercial uses of superconductor products are limited today, and a widespread commercial market for our products may not develop; there are a number of technological challenges that must be successfully addressed before our superconductor products can gain widespread commercial acceptance, and our inability to address such technological challenges could adversely affect our ability to acquire customers for our products; we have not manufactured our Amperium wire in commercial quantities, and a failure to manufacture our Amperium wire in commercial quantities at acceptable cost and quality levels would substantially limit our future revenue and profit potential; third parties have or may acquire patents that cover the materials, processes and technologies we use or may use in the future to manufacture our Amperium products, and our success depends on our ability to license such patents or other proprietary rights; our technology and products could infringe intellectual property rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages and disrupt our business; we have filed a demand for arbitration and other lawsuits against our former largest customer, Sinovel, regarding amounts we contend are overdue. We cannot be certain as to the outcome of these proceedings; we have been named as a party to purported stockholder class actions and stockholder derivative complaints, and we may be named in additional litigation, all of which will require significant management time and attention, result in significant legal expenses and may result in an unfavorable outcome, which could have a material adverse effect on our business, operating results and financial condition; our 7% convertible note contains warrants and provisions that could limit our ability to repay the note in shares of common stock and should the note be repaid in stock, shareholders could experience significant dilution; our common stock has experienced, and may continue to experience, significant market price and volume fluctuations, which may prevent our stockholders from selling our common stock at a profit and could lead to costly litigation against us that could divert our management's attention;. These 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, 2013, and our other reports filed with the SEC, 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 Six months ended September 30, September 30, 2013 2012 2013 2012 Revenues Wind $14,691 $12,002 $29,392 $28,513 Grid 9,490 8,865 17,875 21,070 Total Revenues 24,181 20,867 47,267 49,583 Cost of revenues 22,611 20,384 40,598 37,310 Gross profit (loss) 1,570 483 6,669 12,273 Operating expenses: Research and development 3,083 3,621 6,110 7,532 Selling, general and 8,682 11,736 19,508 25,535 administrative Restructuring and impairments 751 16 764 143 Amortization of acquisition 82 80 164 161 related intangibles Total operating expenses 12,598 15,453 26,546 33,371 Operating loss (11,028) (14,970) (19,877) (21,098) Change in fair value of 886 3,285 1,355 897 derivatives and warrants Interest expense, net (3,505) (2,919) (5,617) (5,637) Other expense, net (635) (1,266) (566) (1,143) Loss before income tax expense (14,282) (15,870) (24,705) (26,981) Income tax (benefit) expense 341 79 430 (757) Net loss $(14,623) $(15,949) $(25,135) $(26,224) Net loss per common share Basic $(0.24) $(0.31) $(0.42) $(0.51) Diluted $(0.24) $(0.31) $(0.42) $(0.51) Weighted average number of common shares outstanding Basic 61,116 51,907 59,712 51,551 Diluted 61,116 51,907 59,712 51,551 UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands) September 30, March 31, 2013 2013 ASSETS Current assets: Cash and cash equivalents $25,867 $39,243 Accounts receivable, net 9,289 18,864 Inventory 24,474 33,473 Prepaid expenses and other current assets 19,337 22,469 Restricted cash 2,021 6,136 Total current assets 80,988 120,185 Property, plant and equipment, net 69,584 74,626 Intangibles, net 2,348 2,749 Restricted cash 4,901 4,820 Deferred tax assets 5,421 5,354 Other assets 9,283 9,020 Total assets $172,525 $216,754 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $22,724 $30,138 Note payable, current portion, net of discount of $260 as of September 30, 2013 and $458 as ofMarch 4,355 4,158 31, 2013 Convertible note, current portion, net of discount of $2,230 as of September 30, 2013 and$4,289 as of 7,255 4,610 March 31, 2013 Derivative liability 2,807 4,162 Adverse purchase commitments 962 1,440 Deferred revenue, current portion 11,490 29,805 Deferred tax liabilities 5,452 5,444 Total current liabilities 55,045 79,757 Note payable, net of discount of $16 as of September 1,138 3,367 30, 2013 and $95 as of March 31, 2013 Convertible note net of discount of $0 as of 926 5,881 September 30, 2013 and $600 as of March 31, 2013 Deferred revenue 1,374 1,340 Other liabilities 1,184 1,291 Total liabilities 59,667 91,636 Stockholders' equity: Common stock 640 603 Additional paid-in capital 936,086 923,847 Treasury stock (370) (313) Accumulated other comprehensive income 1,768 1,112 Accumulated deficit (825,266) (800,131) Total stockholders' equity 112,858 125,118 Total liabilities and stockholders' equity $172,525 $216,754 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Six months ended September 30, 2013 2012 Cash flows from operating activities: Net loss $(25,135) $(26,224) Adjustments to reconcile net income to net cash used in operations: Depreciation and amortization 5,343 6,628 Stock-based compensation expense 4,287 4,039 Restructuring charges, net of payments 161 (49) Provision for excess and obsolete inventory 192 421 Adverse purchase commitment recoveries, net — (8,309) Loss on minority interest investments 499 1,490 Change in fair value of derivatives and (1,355) (897) warrants Non-cash interest expense 4,765 4,443 Other non-cash items 892 350 Changes in operating asset and liability accounts: Accounts receivable 10,704 2,856 Inventory 9,315 (971) Prepaid expenses and other current assets 3,531 8,394 Accounts payable and accrued expenses (9,105) (14,900) Deferred revenue (18,873) (2,236) Net cash used in operating activities (14,779) (24,965) Cash flows from investing activities: Net cash provided by (used in) investing 3,443 (4,935) activities Cash flows from financing activities: Net cash (used in) provided by financing (2,266) 33,037 activities Effect of exchange rate changes on cash and 226 (280) cash equivalents Net (decrease) increase in cash and cash (13,376) 2,857 equivalents Cash and cash equivalents at beginning of year 39,243 46,279 Cash and cash equivalents at end of period $25,867 $49,136 RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) (In thousands, except per share data) Three months ended Six months ended September 30, September 30, 2013 2012 2013 2012 Net loss $(14,623) $(15,949) $(25,135) $(26,224) Adverse purchase commitment — (1,009) — (8,309) recoveries, net Stock-based compensation 2,152 2,044 4,287 4,039 Amortization of acquisition-related 82 80 164 161 intangibles Restructuring and impairment charges 751 16 764 143 Sinovel litigation (5) 304 (7) 424 Consumption of zero cost-basis (1,319) (401) (2,493) (788) inventory Change of fair value of derivatives (886) (3,285) (1,355) (897) and warrants Non-cash interest expense 3,093 2,161 4,765 4,443 Non-GAAP net loss $(10,755) $(16,039) $(19,010) $(27,008) Non-GAAP loss per share $(0.18) $(0.31) $(0.32) $(0.52) Weighted average shares outstanding 61,116 51,907 59,712 51,551 RECONCILIATION OF FORECAST GAAP NET LOSS TO NON-GAAP NET LOSS (In millions, except per share data) Three months ending Dec. 31, 2013 Net loss $(17.0) Amortization of acquisition-related intangibles 0.1 Stock-based compensation 2.8 Non-cash interest expense 3.3 Consumption of zero-cost inventory (1.2) Non-GAAP net loss $(12.0) Non-GAAP net loss per share $(0.19) Shares outstanding 61.8 Note: Non-GAAP net loss is defined by the company as net loss before adverse purchase commitments (recoveries) losses, net; stock-based compensation; amortization of acquisition-related intangibles; restructuring and impairment charges; Sinovel litigation costs; 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 or other non-recurring charges that it does not believe are indicative of its core operating performance. The company also regards non-GAAP net loss as a useful measure of operating performance and cash flow to complement operating loss, net loss and other GAAP financial performance measures. In addition, the company uses non-GAAP net loss as a factor in evaluating management's performance when determining incentive compensation and 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. CONTACT: AMSC Contact: Kerry Farrell Phone: 978-842-3247 Email: firstname.lastname@example.org AMSC Logo
AMSC Reports Fiscal Second Quarter 2013 Financial Results
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