American Superconductor Corp. (NASDAQ: AMSC), is restructuring to transition the company’s high temperature superconductor (HTS) products to the manufacturing stage and accelerate the company’s drive to profitability.
The company will reduce its workforce, consolidate facilities and streamline operations to achieve cost savings of $4 million in the fiscal year ending March 31, 2008.
The company said it is on track to cut its cash burn in half in FYMarch’08 because of reduced spending to scale up manufacturing of HTS wire; the increasing positive cash flow from AMSC Power Systems; and the cost reduction actions. AMSC expects to have a strong cash position as it enters the next fiscal year, and that it is on plan to achieve positive EBITDAS in FYMarch’09.
“Having achieved a series of recent successes on the HTS side of our business, including the completion of factory acceptance testing of our 36.5 MW HTS motor, we are taking action to transition fully to the manufacturing stage with HTS products while also reducing expenses and cash burn,” said Greg Yurek, founder and CEO. “From a cost perspective, we have streamlined our business units, consolidated facilities and realigned global headcount consistent with near term revenue and profit opportunities. These actions will yield substantial savings in the quarter beginning April 1, 2007.
“These changes are strategically important, and we believe they will provide dramatic benefits,” Yurek added. “AMSC has built a significant portfolio of technology, patents and know-how related to HTS rotating machines – machines we have built and tested to verify our technology. It has never been our plan to invest in the substantial infrastructure needed to manufacture large-scale motors, generators, synchronous condensers, industrial motors and wind generators. Instead, we have utilized an outsourcing model.
“Going forward, AMSC Superconductors plans to license designs for HTS rotating machines to companies that have the infrastructure to manufacture these systems. As is the case with our new Windtec subsidiary and its wind energy system licenses, AMSC would receive license and consulting service fees from these companies and would benefit from a growing stream of royalty payments and revenues from the sale of HTS wire and coils to its licensees.”
AMSC Superconductors will operate out of the company’s 355,000 square-foot manufacturing facility in Devens, Massachusetts. The company’s SuperMachines facility in Westborough, Massachusetts will be vacated and its remaining core of HTS rotating machine engineers and equipment will be relocated from Westborough to Devens as of March 31, 2007. The remaining six months of the lease on the SuperMachines facility in Westborough will be written off as of March 31, 2007.
Since December 31, 2006, AMSC increased its headcount from approximately 238 to 288 primarily as a result of its January 5, 2007 acquisition of Austria-based Windtec. In conjunction with the reorganization and consolidation of facilities, AMSC today reduced its Massachusetts staff by 37 employees, or approximately 13 percent of the company’s overall headcount.
The company plans to increase headcount at AMSC Power Systems in the months ahead through its previously announced acquisition of Power Quality Systems, Inc. and through additional strategic hires for the company’s Wisconsin and overseas operations to support rapid revenue growth.
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