American Superconductor Corporation (AMSC) — Form 10-Q
Reporting period: Fiscal third quarter and nine months ended December 31, 2021. Unaudited results; dollar amounts are in millions unless stated otherwise.
Business context and results
AMSC provides grid power-resiliency and Navy solutions through its Grid segment, and power electronics, controls, designs and support for wind-turbine manufacturers through its Wind segment. Results include NEPSI and, from May 6, 2021, Neeltran, both Grid acquisitions.
| Metric | Quarter ended Dec. 31, 2021 | Prior-year quarter | Nine months ended Dec. 31, 2021 | Prior-year nine months |
|---|---|---|---|---|
| Revenue | $26.8 | $23.6 | $80.1 | $66.0 |
| Gross margin | $3.6; 13% | $4.0; 17% | $10.2; 13% | $14.5; 22% |
| Operating loss | $4.4 | $9.3 | $16.2 | $15.7 |
| Net loss | $4.3; $0.16 per share | $7.9; $0.31 per share | $14.2; $0.52 per share | $15.1; $0.65 per share |
| Operating cash flow | Not separately presented for the quarter | $(15.9) | $(4.9) |
Financial position and liquidity
- At December 31, cash and cash equivalents were $43.9; restricted cash was $8.7. Combined cash, cash equivalents and restricted cash totaled $52.6, down from $80.7 at March 31. No marketable securities remained.
- Current assets were $94.9 versus current liabilities of $51.8. Debt was approximately $0.2 in total, arising from acquired equipment-financing agreements. Lease liabilities totaled $3.5.
- Cash used in investing activities was $7.1, including $11.5 net cash paid for the Neeltran acquisition; financing provided less than $0.1. The prior-year financing inflow included $51.5 from an equity offering.
- Management said liquidity was sufficient for operations and capital expenditures for the next 12 months, while noting dependence on revenue growth, improved margins, cost control and potential access to capital. A shelf registration permits offerings of up to $250.
Material changes and management commentary
- Quarterly revenue rose 13%, chiefly as Grid revenue increased 47%, with Neeltran contributing. Nine-month revenue rose 21%, reflecting both acquisitions. Neeltran contributed $17.1 of revenue and $1.2 of net loss during the nine-month period.
- Wind revenue fell 73% in the quarter and 53% for the nine months, largely because prior-year Doosan electrical-control-system shipments did not recur. Grid revenue grew, but nine-month Grid operating loss increased to $14.9 from $8.4.
- Gross margin declined in both comparison periods. Management cited unfavorable product mix, supply-chain inflation, materials delays and COVID-related production disruption, as well as Neeltran purchase-accounting charges. The nine-month period included a $0.6 inventory fair-value step-up charge.
- GAAP net loss improved, but included a $2.1 quarterly and $4.4 nine-month gain from revaluing NEPSI contingent consideration, versus a $2.7 loss in each prior-year period. Non-GAAP net loss was $4.6 for the quarter and $12.4 for the nine months, worse than prior-year $3.4 and $8.5, respectively.
- At December 31, remaining performance obligations were approximately $80.6 expected to be recognized within 12 months and $8.0 over 13–60 months; timing is subject to customer actions. The filing provides no specific revenue or earnings guidance.
- AMSC reported inflation pressure, sourcing delays and elevated employee absenteeism associated with the Omicron variant. It also cautioned that prolonged disruption could materially affect operations, liquidity and results. The REG system on ComEd’s grid became operational in August 2021.
- AMSC notified Inox of royalty-payment and letter-of-credit defaults under agreements. Inox paid the cited €0.1 royalty during the cure period; the company said failure to provide €0.9 of required letters of credit within the cure period could permit termination of the supply contract, potentially reducing revenue and liquidity.
Key facts for investors to verify
- Whether margins recover as supply constraints, inflation, product mix and acquisition-related costs change.
- Whether operating cash burn moderates and the stated 12-month liquidity assessment remains supportable, including any need for additional financing.
- Inox’s compliance with letter-of-credit requirements, future turbine orders and the status of the related supply and licensing agreements.
- Conversion and timing of the $80.6 of near-term performance obligations, and the extent to which customer actions affect recognition.
- Final Neeltran purchase-price allocation, which was preliminary, and future changes in NEPSI contingent-consideration fair value.