American Superconductor Corporation — Form 10-K Summary
Reporting period: Fiscal year ended March 31, 2022, filed June 1, 2022. The company labels this period fiscal 2021; it corresponds to the “2021 Q4” metadata. AMSC supplies grid-resiliency and power systems, U.S. Navy ship-protection systems, and wind-turbine electronics and engineering through its Grid and Wind segments.
Financial performance and liquidity
| Metric | FY ended Mar. 31, 2022 | Prior year |
|---|---|---|
| Revenue | $108.4 million | $87.1 million |
| Gross profit / margin | $13.5 million / 12% | $17.5 million / 20% |
| Operating loss | $21.1 million | $23.2 million |
| Net loss / diluted loss per share | $19.2 million / $0.71 | $22.7 million / $0.95 |
| Non-GAAP net loss | $17.1 million / $0.63 per share | $14.1 million / $0.59 per share |
| Cash used in operating activities | $19.0 million | $8.7 million |
| Cash, cash equivalents, marketable securities and restricted cash | $49.5 million | $80.7 million |
Revenue grew 24%, but cost of revenue rose 36%, reducing gross margin. Cash and cash equivalents were $40.6 million at year-end; the additional $8.9 million of restricted cash was not generally available for operations. Current assets were $94.3 million and current liabilities $54.0 million. Recorded debt was approximately $0.2 million; lease liabilities were $3.6 million.
- Grid: Revenue increased 40% to $98.9 million, reflecting NEPSI and Neeltran acquisition contributions and growth in D-VAR, VVO and ship-protection products. Segment operating loss widened to $20.7 million from $13.3 million.
- Wind: Revenue fell 42% to $9.6 million, mainly because prior-year Doosan electrical-control-system shipments did not recur. Segment operating loss narrowed to $1.6 million from $3.3 million.
Material changes, outlook and risks
- AMSC acquired Neeltran in May 2021 for total consideration of $16.4 million; it contributed $21.4 million of revenue and $3.4 million of net loss in the reported period. NEPSI, acquired in October 2020, also contributed to Grid growth. The acquisitions increased goodwill and acquisition-related amortization.
- The reported operating-loss improvement was partly affected by a $5.9 million gain from revaluing NEPSI contingent consideration, compared with a $3.1 million loss in the prior year. Excluding specified items, non-GAAP net loss worsened, reflecting lower gross margin and higher operating expenses.
- Supply-chain inflation, sourcing delays and higher employee absenteeism increased costs and reduced gross margin. Management cited COVID-19 impacts and the Russia-Ukraine war as sources of uncertainty.
- AMSC reported the Chicago REG installation became fully operational in August 2021. The company continues to face commercialization risk: REG adoption remains limited, and Amperium HTS wire has not been manufactured in commercial quantities.
- Management said liquidity was sufficient to fund operations and capital expenditures for the 12 months following issuance, while noting dependence on revenue growth, cost control and potential additional financing. The company has a shelf registration allowing offerings of up to $250 million through February 2024. No specific revenue or earnings guidance is provided in the filing.
- Key risks include recurring losses and operating cash outflows, customer and order concentration, government-contract funding or termination, supplier constraints, foreign-exchange exposure, and possible dilution if capital is raised. Fuji Bridex represented 14% of annual revenue and 31% of year-end receivables. A $5.0 million letter of credit for the ComEd project is collateralized by restricted cash.
- The independent auditor issued an unqualified opinion on the financial statements and identified revenue recognition and goodwill impairment as critical audit matters. Management concluded disclosure controls and internal control over financial reporting were effective; its internal-control evaluation excluded Neeltran, and the auditor did not attest to internal controls.
Important facts for investors to verify
- Whether Grid growth and acquisition integration can improve gross margins and reduce operating losses.
- Cash burn, collections and working-capital needs, including restricted cash and the Fuji Bridex receivable concentration.
- How much of the $78.4 million of performance obligations expected within 12 months converts to revenue and cash, given customer actions and Inox forecast dependencies.
- Whether REG, Navy ship-protection systems and HTS products achieve broader commercial adoption, and whether HTS wire can be produced at acceptable cost and quality.
- The effect of acquisition earnouts, purchase-accounting adjustments and possible future equity or debt financing on results and shareholders.