American Superconductor Corporation (NASDAQ: AMSC), a leading energy technologies company, y reported financial results for its fiscal third quarter ended December 31, 2006.
Revenues were $9.5 million, and the company’s net loss was $9.5 million, or $0.29 per share. In December 2006, the company announced that it expected revenues for the third quarter of approximately $9 million and a net loss of $9 million to $11 million as a result of funding delays from the U.S. Department of Energy (DOE) and a technical delay relating to the need to repair a crack in a non-superconductor component of the 36.5 megawatt motor being manufactured for the U.S. Navy. Revenues for the third quarter of the previous fiscal year were $13.5 million, and the company’s net loss was $7.5 million, or $0.23 per share.
Revenues for the first nine months of fiscal 2007 were $33.1 million, and the company’s net loss was $23.2 million, or $0.71 per share. Revenues for the first nine months of fiscal 2006 were $36.6 million, and the company’s net loss was $19.8 million, or $0.61 per share.
Earnings before interest, taxes, depreciation, amortization and stock-based compensation, or EBITDAS, was $(8.1 million) for the third quarter of fiscal 2007 and $(6.2 million) for the third quarter of fiscal 2006. EBITDAS was $(19.2 million) for the first nine months of fiscal 2007 and $(15.7 million) for the first nine months of fiscal 2006.
The company reaffirmed its forecast for revenues of $50 million to $52 million and a net loss of $29 million to $32 million, or $0.87 to $0.96 per share, for fiscal 2007. The company also said it expects to achieve positive EBITDAS within two years.
The company ended the third quarter of fiscal 2007 with no debt and $41.6 million in cash, cash equivalents and short-term investments, compared with $46.1 million on September 30, 2006 and $65.7 million on March 31, 2006.
The company’s total backlog of orders and contracts was $43.2 million on December 31, 2006. This compares with $37.1 million in backlog as of December 31, 2005. As previously announced, backlog increased to more than $65 million on January 5, 2007 as a result of the company’s acquisition of Windtec(TM). At least $17 million is expected to be recognized as revenue in the fourth quarter of fiscal 2007 and an additional $46 million is expected to be recognized as revenue in fiscal 2008. Based on new orders expected to be closed in the fourth fiscal quarter, total consolidated backlog is expected to increase to approximately $70 million as of March 31, 2007.
“Of the total backlog of $70 million expected as of March 31, 2007, we believe $60 million will be recognized as revenues in fiscal 2008,” said Greg Yurek, founder and chief executive officer. “This will provide us with a strong platform for growth entering fiscal 2008. Order growth thus far in the fourth quarter has been quite strong, particularly in our Power Electronic Systems business. Demand for wind energy solutions remains the key engine for growth in this business unit. We expect orders from utilities to begin gaining momentum in fiscal 2008 based primarily on traction with our Dynamic-VAR Compensator (DVC(TM)) solution. We also expect to secure new contracts in fiscal 2008 for the demonstration of superconductor cables and fault current limiters.”
“In addition to continuing to grow profits in our Power Electronic Systems business, which will reduce our consolidated losses, we expect to implement initiatives during the next 12 months that will enable us to achieve positive EBITDAS on a consolidated basis within two years,” said Yurek. “We intend to achieve this objective as we continue to scale up manufacturing of 344 superconductors, meet customer needs for superconductor rotating machines and expand our power electronics business globally.”
Recent Activities and Accomplishments
Superconductor power transmission cable for Long Island Power Authority (LIPA): The site for LIPA’s 138,000 volt (138kV) HTS cable system in Hauppauge, New York has now been fully prepared and the cryogenics system has been completed and is operating. Manufacture of the cables is expected to be completed this week and will begin going into the ground in the spring of 2007. Commissioning is scheduled for the summer of 2007.
36.5-megawatt (MW) superconductor motor: The crack that had formed in a non-superconductor component has been fully repaired and reassembly of the motor is nearly complete. Factory testing is planned to be underway in February and the motor is expected to be ready for acceptance by the U.S. Navy in March 2007.
First two commercial SuperVAR synchronous condensers: The first superconductor rotor has been shipped to the company’s motor subcontractor for final assembly. Both machines are expected to be delivered to the Tennessee Valley Authority by end of March 2007. Revenues for these products are expected to be recognized in the first quarter of fiscal 2008.
Acquisition of Windtec: On January 5, 2007, AMSC(TM) completed its acquisition of Windtec, an Austria-based designer and licensor of wind turbine systems and a provider of wind turbine electrical systems. Windtec reported that its unaudited revenues grew by almost 400 percent to approximately $13 million in calendar 2006 while generating net income of approximately $1 million, or eight percent of sales. Windtec brought to AMSC approximately $35 million in backlog as of January 5, 2007. It is now a wholly-owned subsidiary of AMSC and is operated by the company’s Power Electronic Systems business unit.
New Windtec customers: Windtec signed a contract with Doosan Heavy Industries & Construction Co., Ltd. in South Korea for the development of a 3-MW wind energy system valued at more than $2 million while ZELRI in China purchased a 1.65 MW wind energy system license for approximately $2 million. AMSC’s potential revenues from ZELRI for royalty payments and the sale of electrical components could exceed $30 million over the next several years.
Fault current limiter product development: AMSC and Siemens AG reported achieving commercial-grade performance levels for a medium voltage superconductor surge protection device known as a fault current limiter. The device was based on Siemens proprietary superconductor switching module technology, which utilizes coils fabricated with AMSC’s proprietary 344S superconductors. AMSC and Siemens also announced the extension of their strategic alliance to a third year.
Demonstrated world-record-level production rates for 344 superconductors that have commercial-grade electrical performance: AMSC is on track for initial volume production of commercial-grade product in December 2007, as planned. The company said it is also on track to have 70% of the full-scale manufacturing equipment installed, commissioned and qualified in the manufacturing process for 344 superconductors by March 31, 2007.
Received a $750,000 Phase II Small Business Innovation Research (SBIR) grant in January 2007: The U.S. Air Force is providing this funding for AMSC’s work in developing 344 superconductors.
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