AMSC 10-K Summary
Reporting period: Fiscal year ended March 31, 2020, compared with the year ended March 31, 2019. The filing was signed June 2, 2020. The filing’s MD&A contains inconsistent fiscal-year labels; figures below follow the audited financial statements and their stated dates.
Business context
American Superconductor Corporation (AMSC) supplies megawatt-scale power systems and services through its Grid and Wind segments. Grid includes utility and renewable-grid products, Navy ship-protection systems, and government-funded projects; Wind supplies turbine electrical control systems, designs, licenses, and support. Its core technologies include power electronics and high-temperature superconductor wire.
Key financial results
| Metric | FY ended Mar. 31, 2020 | FY ended Mar. 31, 2019 |
|---|---|---|
| Revenue | $63.8 million | $56.2 million |
| Gross profit / margin | $9.4 million / 14.8% | $14.0 million / 24.9% |
| Operating income (loss) | $(23.1) million | $34.0 million |
| Net income (loss) | $(17.1) million | $26.8 million |
| Basic earnings (loss) per share | $(0.81) | $1.32 |
| Cash used in operating activities | $16.5 million | Cash provided: $42.7 million |
- Revenue increased 14%. Grid revenue rose 45% to $49.6 million, while Wind revenue fell 35% to $14.3 million, primarily reflecting fewer ECS shipments to Inox, partly offset by Doosan shipments.
- Gross margin contracted substantially, which the company attributed primarily to a less favorable product mix.
- The prior-year profit was heavily affected by the $52.7 million net gain from the Sinovel settlement. AMSC received $57.5 million under that settlement in 2018; there was no comparable settlement gain in FY2020.
- FY2020 included a $4.6 million gain from changes in the fair value of warrants. All outstanding warrants had been exercised or expired by March 31, 2020.
- Non-GAAP net loss was $19.5 million, or $0.93 per share, versus $13.0 million, or $0.64 per share, in FY2019. These are company-defined non-GAAP measures.
Balance sheet, cash flow, and liquidity
- At March 31, 2020, cash, cash equivalents, marketable securities, and restricted cash totaled $66.1 million, down from $78.2 million a year earlier. Cash and marketable securities excluding restricted cash totaled approximately $59.9 million.
- Current assets were $94.3 million and current liabilities were $41.0 million. Total assets were $124.1 million; total liabilities were $51.9 million.
- The balance sheet reports no outstanding borrowings. Lease liabilities were $3.4 million following adoption of the lease accounting standard. Deferred revenue totaled $26.1 million, including current and long-term amounts.
- Operating cash use was $16.5 million. Investing activities used $36.6 million, principally reflecting $35.0 million of marketable-security purchases; financing activities provided $5.8 million, principally from warrant exercises.
- Inventory increased to $19.0 million from $12.1 million; accounts receivable increased to $17.0 million from $7.9 million. Inventory reserves were $1.3 million for the year.
- Management stated it believed available liquidity would fund operations and capital expenditures for the next 12 months, while noting that liquidity depends on revenue growth, cost control, collections, and potentially additional capital. The company had an accumulated deficit of $978.6 million.
Changes, outlook, risks, and notable items
- Inox contract exposure: Inox was delinquent on required letters of credit. On May 29, 2020, AMSC issued a default notice for failure to post €6.0 million of letters of credit. Inox had a 90-day cure period after receipt; AMSC could terminate the supply contract if the default was not cured. Termination or continued nonperformance could reduce revenue and liquidity and could lead to inventory write-offs. India’s COVID-related manufacturing closures added uncertainty.
- Customer and project concentration: Department of Homeland Security represented 10% of FY2020 revenue. At year-end, Fuji Bridex, DHS, and Doosan represented approximately 25%, 18%, and 17% of receivables, respectively.
- REG project: AMSC expects $9–$11 million of DHS funding over the ComEd Chicago project term, including up to $1 million to reimburse ComEd costs. AMSC posted a $5.0 million letter of credit backed by $5.0 million in escrow collateral. Hardware delivery was scheduled for late 2020 and system operation was expected in 2021.
- COVID-19: The company said the pandemic had not materially disrupted operations to date, but warned that prolonged disruption to AMSC, customers, or suppliers could materially harm business, liquidity, results, and access to capital.
- Other risks: The company cited recurring losses and negative operating cash flows, uncertain commercialization and adoption of REG and other superconductor systems, government funding and termination risks, supplier dependence, foreign-exchange exposure, international-market risks, and competition. It reported no material legal proceedings.
- Guidance: The filing does not provide a clear numerical revenue or earnings forecast. It describes expected project milestones and states management’s liquidity assessment; both depend on uncertain customer, funding, and pandemic developments.
- The independent auditor issued an unqualified opinion and concluded internal control over financial reporting was effective. AMSC has never paid cash dividends and did not anticipate doing so in the foreseeable future.
Important facts for investors to verify
- Whether Inox cured the €6.0 million letter-of-credit default, and the impact on orders, collections, inventory, and revenue.
- Whether the ComEd REG hardware delivery and 2021 operational target were achieved, and whether project funding and escrow collateral changed.
- Actual cash burn and available unrestricted liquidity after March 31, 2020, including any financing or cost reductions.
- Whether Grid growth can offset Wind weakness while improving gross margins and reducing operating losses.
- Whether receivables from major customers were collected and whether inventory reserves adequately reflect demand and obsolescence risks.
- Use the audited statements for period comparisons: portions of the MD&A label fiscal-year comparisons inconsistently.