AMSC Reports Fiscal Third Quarter 2013 Financial Results

AMSC Reports Fiscal Third Quarter 2013 Financial Results  DEVENS, Mass., Feb. 6, 2014 (GLOBE NEWSWIRE) -- AMSC (Nasdaq:AMSC), a global solutions provider serving wind and power grid industry leaders, today reported financial results for its fiscal third quarter ended December 31, 2013.  Revenues for the third quarter of fiscal 2013 were $20.6 million, compared with $17.4 million for the same period of fiscal 2012. The year-over-year growth is due to higher revenues in the Company's Wind segment, primarily from customers in India and China. Wind revenue growth was partially offset by lower revenues in the Company's Grid segment due to lower D-VAR® revenues.  AMSC's net loss for the third quarter of fiscal 2013 narrowed to $8.4 million, or $0.14 per share, compared with a net loss of $20.1 million, or $0.38 per share, for the same period of fiscal 2012.  The Company's non-GAAP net loss for the third quarter of fiscal 2013 was $5.7 million, or $0.09 per share, compared with a non-GAAP net loss of $13.5 million, or $0.26 per share, for the third 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 December 31, 2013 totaled $41.7 million, compared with $32.8 million as of September 30, 2013. The sequential increase was driven primarily by financing activities conducted during the quarter, including a new $10.0 million senior term loan and $3.3 million in net proceeds after deducting sales commissions and offering expenses from the issuance of approximately 2.4 million shares of common stock at an average sale price of $1.51 per share under the At-the-Market (ATM) equity financing that was put in place in November 2013.  "I'm pleased with our performance in the third fiscal quarter. We increased revenues and cash, reduced our net loss, operating expenses, and cash burn year-over-year. We are managing our costs and our cash," said Daniel P. McGahn, AMSC President and CEO.  McGahn continued, "The long-term prospects in our key markets are promising, but we continue to anticipate challenges in the near term. Given the strategic cost-cutting measures we have taken over the past year, we have reduced our annualized operating expenses and net loss and we have achieved a slower cash burn. We are focused on achieving positive net cash flows on a quarterly basis. We believe this will occur by the end of fiscal year 2014."  Financial Guidance  For the fourth fiscal quarter ending March 31, 2014, AMSC expects that its revenues will exceed $16 million and that its net loss will be less than $16 million, or $0.24 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 fourth quarter of fiscal 2013 will be less than $12 million, or $0.18 per share. AMSC expects to have more than $38 million in cash, cash equivalents and restricted cash on March 31, 2014. This forecast does not assume any proceeds from the ATM in the fourth fiscal quarter.  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 785-830-1923 and using conference ID 8185757.  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, 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 our beliefs regarding our long-term prospects in our key markets, our anticipated lower operating expenses and net loss along with a slower cash burn, 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 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 India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these countries; changes in China's or India'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     Nine months ended                                December 31,           December 31,                                2013       2012        2013        2012                                                                 Revenues                                                         Wind                            $ 13,545  $ 6,808    $ 42,937   $35,321 Grid                            7,018     10,609     24,893     31,679 Total Revenues                  20,563    17,417     67,830     67,000                                                                 Cost of revenues                15,863    16,533     56,461     53,843                                                                 Gross profit                    4,700     884        11,369     13,157                                                                 Operating expenses:                                              Research and development        2,951     3,948      9,061      11,480 Selling, general and            8,232     10,769     27,741     36,304 administrative Restructuring and impairments   108       6,702      872        6,845 Amortization of acquisition     84        81         247        242 related intangibles Total operating expenses        11,375    21,500     37,921     54,871                                                                 Operating loss                  (6,675)   (20,616)   (26,552)   (41,714)                                                                 Change in fair value of         535       5,217      1,890      6,114 derivatives and warrants Interest expense, net           (1,634)   (4,553)    (7,250)    (10,191) Other expense, net              (341)     (109)      (908)      (1,252)                                                                 Loss before income tax expense  (8,115)   (20,061)   (32,820)   (47,043)                                                                 Income tax (benefit) expense    302       74         733        (683)                                                                 Net loss                        $(8,417) $(20,135) $(33,553) $(46,360)                                                                 Net loss per common share                                        Basic                           $(0.14)  $(0.38)   $(0.55)   $(0.89) Diluted                         $(0.14)  $(0.38)   $(0.55)   $(0.89)                                                                 Weighted average number of                                       common shares outstanding Basic                           62,309    52,792     60,578     51,966 Diluted                         62,309    52,792     60,578     51,966    UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands)                                                        December 31, March 31,                                                        2013         2013 ASSETS                                                               Current assets:                                                      Cash and cash equivalents                               $35,394      $39,243 Accounts receivable, net                                8,525        18,864 Inventory                                               25,167       33,473 Prepaid expenses and other current assets               19,538       22,469 Restricted cash                                         1,405        6,136 Total current assets                                    90,029       120,185                                                                     Property, plant and equipment, net                      67,163       74,626 Intangibles, net                                        2,147        2,749 Restricted cash                                         4,901        4,820 Deferred tax assets                                     5,421        5,354 Other assets                                            8,710        9,020 Total assets                                            $178,371     $216,754 LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                     Current liabilities:                                                 Accounts payable and accrued expenses                   $23,503      $30,138 Note payable, current portion, net of discount of $677 as of December 31, 2013 and $458 as of                  6,272        4,158 March 31, 2013 Current portion of convertible note, net of discount of $1,287 as of December 31, 2013 and$4,289 as of March   9,125        4,610 31, 2013 Derivative liability                                    2,587       4,162 Adverse purchase commitments                            429          1,440 Deferred revenue                                        10,023       29,805 Deferred tax liabilities                                5,440        5,444 Total current liabilities                               57,379       79,757                                                                     Note Payable, net of current portion and discount of $384 as of December 31, 2013 and $95 as of March 31,    7,283        3,367 2013 Convertible note, net of discount of $600 as of March   --           5,881 31, 2013 Deferred revenue                                        1,318        1,340 Other liabilities                                       1,179        1,291 Total liabilities                                       67,159       91,636                                                                     Stockholders' equity:                                                Common stock                                            673         603 Additional paid-in capital                              942,466      923,847 Treasury stock                                          (370)       (313) Accumulated other comprehensive loss                    2,127       1,112 Accumulated deficit                                     (833,684)   (800,131) Total stockholders' equity                              111,212      125,118                                                                     Total liabilities and stockholders' equity              $178,371     $216,754    UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)                                                 Nine months ended December 31,                                                2013            2012 Cash flows from operating activities:                           Net loss                                        $ (33,553)      $ (46,360) Adjustments to reconcile net (loss) income to                   net cash (used in) provided by operations: Depreciation and amortization                   8,052           10,143 Stock-based compensation expense                7,328           5,968 Restructuring charges, net of payments          167             261 Impairment of long-lived and intangible assets  —               4,507 Provision for excess and obsolete inventory     287             957 Adverse purchase commitment recoveries, net     —              (8,428) Loss on minority interest investments           789             1,914 Change in fair value of derivatives and         (1,890)         (6,114) warrants Non-cash interest expense                       5,902           8,404 Other non-cash items                            1,181           1,790 Changes in operating asset and liability                        accounts: Accounts receivable                             10,414          6,085 Inventory                                       8,682           (8,173) Prepaid expenses and other current assets       3,462           4,699 Accounts payable and accrued expenses           (8,612)         (20,330) Deferred revenue                                (20,575)        3,986 Net cash used in operating activities           (18,366)        (40,691)                                                                Cash flows from investing activities:                           Net cash provided byinvesting activities       4,398           4,691                                                                Cash flows from financing activities:                           Net cash provided by financing activities       9,750           32,262                                                                Effect of exchange rate changes on cash and     369             (84) cash equivalents                                                                Net decrease in cash and cash equivalents       (3,849)         (3,822) Cash and cash equivalents at beginning of year  39,243          46,279 Cash and cash equivalents at end of period      $ 35,394        $ 42,457    RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS) (In thousands, except per share data)                                 Three months ended     Nine months ended                                 December 31,           December 31,                                2013       2012        2013        2012 Net loss                        $(8,417) $(20,135) $(33,553) $(46,360) Adverse purchase commitment     --        (119)      --         (8,428) recoveries, net Stock-based compensation        3,040     1,929      7,328      5,968 Amortization of                 84       81         247       242 acquisition-related intangibles Restructuring and impairment    108       6,702     872       6,845 charges Sinovel litigation              --        (12)      (7)       411                                                                 Consumption of zero cost-basis  (1,142)   (602)      (3,635)    (1,389) inventory Change of fair value of         (535)     (5,217)   (1,890)    (6,114) derivatives and warrants Non-cash interest expense       1,137     3,867     5,902      8,404 Non-GAAP net loss               $(5,725) $(13,506) $(24,736) $(40,421)                                                                 Non-GAAP loss per share         $(0.09)  $(0.26)  $(0.41)   $(0.78) Weighted average shares         62,309    52,792     60,578     51,966 outstanding    RECONCILIATION OF FORECAST GAAP NET LOSS TO NON-GAAP NET LOSS (In millions, except per share data)                                                 Three months ending                                                 March 31, 2014 Net loss                                        $(16.0) Amortization of acquisition-related intangibles 0.1 Stock-based compensation                        3.5 Non-cash interest expense                       1.5 Consumption of zero-cost inventory              (1.1) Non-GAAP net loss                               $(12.0) Non-GAAP net loss per share                     $(0.18) Weighted average shares outstanding             68.0  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: kerry.farrell@amsc.com  AMSC Logo