Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 2
The PR is below; but difficult to read do to the way TMF's pages take cut-and-paste.

I've interspersed my initial take inside the PR below. Bottom line: Everything is 100% consistent -or, better - than what we've heard recently (including just two weeks ago at the AGM). EXCEPTION: One of the utility cable demos - in Columbus - is behind schedule being energized, for some reason; no scheduled for next month (was April). Nothing to be truly concerned about yet: the LIPA (Long Island) calbe project is a Much Bigger Deal near-term. It is bigger - 2000 feet of high-voltage cable, directly into the grid; sponsored by both DOE and LIPA.
The Columbus cable is much smaller, truly a test setup; but innovative in design, and may have a longer-term impact (but nothing to affect the next 12-24 months, IMO).

One thing that should jump out at you is the current burn rate: while they are not broke, and have no debt, it is a concern. HOWEVER, I am not concerned, simply because things truly are going to plan (or better). Their cash burn will come down substantially the rest of the year;

jp
the conference call is here, and is worth listening to a couple of times:

http://www.fulldisclosure.com/company.asp?ticker=AMSC&coid=86422&client=cb

http://tinyurl.com/zrzm8
American Superconductor Reports First Quarter Fiscal 2007 Financial Results
WESTBOROUGH, Mass.--(BUSINESS WIRE)--Aug. 8, 2006--American Superconductor Corporation

AMSC Wires Secures Orders for 9,960 Meters of 344 Superconductors to be Shipped in Fiscal 2007; Manufacturing Scale-up of 344 Superconductors Ahead of Schedule
Power Electronic Systems Revenue Forecast Revised Upwards to 50% Growth Year-Over-Year; Wind Energy Market Continues to Drive Sales Growth
SuperMachines(TM) on Track With World's First Superconductor Propulsion Motor for U.S. Navy and First Commercial SuperVAR(R) Systems for Power Grid Reliability

American Superconductor Corporation (NASDAQ: AMSC), a leading energy technologies company, today reported financial results for its fiscal first quarter ended June 30, 2006.

Revenues for the first quarter of fiscal 2007 were $14.0 million, and the net loss was $6.7 million, or $0.20 per share. This net loss includes approximately $800,000 of stock-based compensation expense, including stock option expenses for the first time in connection with the company's adoption of FAS 123(R) on April 1, 2006. This compares with approximately $100,000 of stock-based compensation expense in the first quarter of the prior fiscal year. Revenues for the first quarter of the previous fiscal year were $12.2 million and the net loss was $5.6 million, or $0.17 per share.

The company ended the first quarter of fiscal 2007 with no debt and $55.4 million in cash, cash equivalents and short-term investments compared with $65.7 million on March 31, 2006. The company expects its cash burn will be reduced significantly in the second half of fiscal 2007 and remains firmly on track to achieve its objective to exit fiscal year 2007 with at least $38 million in cash, cash equivalents and short-term investments.

AMSC(TM) booked $28.2 million in new orders and contracts during the quarter ended June 30, 2006, compared to $2.4 million of new orders in the prior-year quarter. The company's total backlog of orders and contracts as of June 30, 2006 was $37.1 million, compared with $23.8 million on March 31, 2006.

"Power Electronic Systems generated $12.1 million of new orders in the first quarter - a record for this business unit," said Greg Yurek, chief executive officer. "Additional orders were received in July, enabling us to revise our forecasted revenues for Power Electronic Systems upward from our previous target of 35% growth year-over-year. We now forecast 50% year-over-year revenue growth for this business unit in fiscal 2007. Demand for power electronic solutions for wind farms has been a key contributor to this growth, a trend that we see continuing. In addition, we believe an increasing amount of orders from electric utilities to enhance power grid throughput and reliability will be a key additional contributor to revenue growth in our next fiscal year."

The company said its SuperMachines business unit has made tremendous progress in the manufacture of the 36.5-megawatt HTS ship propulsion motor for the U.S. Navy, and that it expected all components for the motor to be delivered to a Northrop Grumman assembly and test facility in Philadelphia by the end of August, with factory testing to be underway by the end of September. "Operation of this motor will be another 'world's first' and is very important in positioning superconductor motors as the propulsion system of choice for U.S. Navy ships," said Yurek. "Not only will these HTS propulsion motors be smaller, lighter and more efficient than copper and permanent magnet motors of the same rating, we also expect them to be less costly than the competing products."

AMSC recently announced substantial progress in the development and manufacturing scale-up of its 344 superconductors, the company's brand name for second generation (2G) high temperature superconductor (HTS) wire. The AMSC Wires business unit now has orders for 9,960 meters of 344 superconductors for shipment in fiscal 2007. "Having essentially achieved its objective to book orders for shipment of 10,000 meters of 344 superconductors in fiscal 2007, the AMSC Wires sales force is now focused on building backlog for shipment of 344 superconductors for next fiscal year," Yurek said.

"Perhaps our greatest technical and manufacturing engineering achievement so far this year has been the manufacture for the first time of 344 superconductors with commercial-grade electrical performance in long lengths made by a low-cost, high-volume manufacturing process. This is a breakthrough in electricity that paves the way to superconductor solutions for increased power grid throughput and reliability and puts us ahead of our development schedule for this product," Yurek said. "Demand for electricity around the world has never been higher, and it is expected to continue to increase to support economic growth in the U.S. and in emerging markets around the world. Recent blackouts in the U.S. have highlighted the need to continue to strengthen power transmission and distribution grids to meet this growing demand under all conditions, including during heat waves. I believe our 344 superconductors will be a core part of the solutions that are utilized to strengthen power grids around the world."

KEY BENCHMARKS FOR FISCAL 2007 CONFIRMED AND UPDATED

The company expects to achieve the following key benchmarks, which it first published in February 2006, by March 31, 2007:

Secure additional orders for AMSC's power electronics solutions (based on D-VAR(R) and PowerModule(TM) systems) to increase the amount of wind-generated electricity served by AMSC's products by 100% to 2 billion watts (2 gigawatts) of zero-emission electricity;
Revised Upward: Grow Power Electronics Systems revenues by approximately 50% in fiscal 2007 and achieve profitability in that business unit;

(this is at least the second time they've increased the prospects for the PES Division - the non-superconductor part of the business- in the last few months. At the AGM they were still saying a 35% increase " and profitable, and will remain so". Now it is "50%, and solidly profitable' from here on out.
Right now, provide power controllers for wind turbines (especially wind turbine sales to China) is driving this growth. The company also is looking to see how it can become a power module provider for large fuel cell installations.
Since the power module is made in 250 kw increments - and the only fuel cell company that is actively selling fuel cells that large (and larger, in multiples of 250kw) is FCEL/FuelCell Energy. Haven't seen any specific announcements vis a vis FCEL; but the numbers say that's the customer installation that AMSC must be focusing on to try to do for large fuel cell power what they are now doing for wind turbine power control).

Ship the world's first commercial SuperVAR synchronous condenser to TVA in December 2006; ship the second commercial SuperVAR system to TVA by March 31, 2007;
Secure additional new orders for SuperVAR systems for grid reliability applications;
By March 31, 2007, install, commission and qualify 70% of all full-scale manufacturing equipment needed to achieve a manufacturing capacity of 720,000 meters per year of the company's 2G HTS wire known as 344 superconductors, the latter rate to be achieved in December 2007;
Sell over 10,000 meters of 344 superconductors (2G HTS wire) to customers in fiscal 2007,

continuing to drive the migration from 1G to 2G HTS wire in the global marketplace;

Install and operate the world's first transmission voltage HTS power cable in the grid of Long Island Power Authority;

Obtain a new, large-scale HTS cable project under a contract with the U.S. Department of Energy as authorized by the Energy Policy Act of 2005;
.

While nothing is certain in this budget environment.....Congress mandated that DOE spend at least $140m on HTS cable demos, in last year's Energy bill. WHile the wires are only a portion of that, I know the company is determined to get a majority of the wires ordered for those awards.

Secure the company's first contract for a cable project that utilizes 344 superconductors;
Demonstrate the operation of the world's first fault current limiter prototype based on 344 superconductors;
Ship the world's first 36.5-MW HTS ship propulsion prototype motor to the U.S. Navy;


That's the good news. The bad news is, this is a non-militarized motor that will never see the water. BUT, it is the real deal; full-sized; and will undergo lots of testing by others in Philadelphia. It is a necessary step, and so far, no hiccups at ll.

Secure the first in a series of new U.S. Navy contracts for the design and manufacture of a militarized 36.5-MW HTS ship propulsion motor;


The -1000 new tech destroyer program has ordered the first two ships already, with normal copper wire motors. (The ship has a lot of aerospace technology in it; composite hull sections, for example). The Navy has not made a decision on motor type for the 3rd ship; AMSC is hoping that it will obviously be the first operational Navy order for a motors (two per ship).
The risks, however, are these:

While the Navy did not wait for the completion of testing on the first 5-MW ship test motor before ordering this 36.5 MW motor about to be delivered now to Philadelphia.....that doesn't mean they'll be just as comfortable making the jump to the first in history HTS ship motors - two of them, no less - in a ship program that Congress is already scrutizining because it is over budget; AND, which already has technical challenges in other areas un-related to motors.
In short, if the Navy and Congresscritters thought that they were already having enough fun with current -1000 destroyer technical and cost issues, it might be easy for them to convince themselves to delay the additional fun that might be brought on by installing history's first two HTS motors in the very next ship.
It might be even easier to not install them in the third and 4th ships 'until Northrop Grumman is done with the Philadelphia integrated testing........Why go ahead and order these things when we're about to conduct the first-ever full-size motor integrated testing?? Let's let the testing get done over the next year.....go the lower-risk route and put in standard motors for 3 and 4, work hard on the other tech and cost problems with the ships, while we finish the HTS testing to make sure we're not adding even more cost and schedule risk to a ship program already frought with problems. Assuming things work out, we can order HTS motors - with increased confidence and less risk - on hull numbers 5 and subsequent".

That is, in fact, what I would do if I were program manager of the new-tech destroyer program..

Establish a strategic business alliance for non-U.S. Navy and commercial marine applications of HTS ship propulsion motors and generators.


I"'m gonna give them another goal:
"Listen to jimpiccard and investigate novel aerospace applications for HTS onboard generators, since they are only a fraction of the size and weight of normal generators. This makes aerospace a great, premium customer for our technology. We promise to do exactly as jimpiccard says in the letter he sent us".

I have the letter half-written now (honest).

CONFERENCE CALL REMINDER
In conjunction with this announcement, AMSC management will participate in a conference call with investors beginning at 11:00 a.m. ET today to discuss the company's results and its business outlook. Those who wish to listen to the live conference call webcast should visit the "Investors" section of the company's website at www.amsuper.com/investors. The live call also can be accessed by dialing +1-913-312-1265 and using conference ID 3913743. A telephonic playback of the call will be available from 2:00 p.m. ET on August 8, 2006 through midnight ET on August 14, 2006. Please call +1-719-457-0820 and refer to conference ID 3913743 to access the playback.

Results Report for First Quarter Fiscal 2007

Selected Statement of Operations Data


Three Months ended
June 30,
--------
Revenues 2006 2005
------------ ------------
By business segment:
AMSC Wires $ 1,262,146 $ 2,928,144
SuperMachines 9,235,274 6,001,958
Power Electronic Systems 3,548,033 3,271,565

Total revenues 14,045,453 12,201,667

Operating loss:
By business segment:

AMSC Wires (4,416,992) (4,637,687)
SuperMachines (1,103,280) (64,292)
Power Electronic Systems (710,637) (1,037,453)
Unallocated corporate expenses (1,207,354) (609,792)

Operating loss (7,438,263) (6,349,224)

Interest and other income, net 714,819 710,788

Net loss ($6,723,444) ($5,638,436)

Net loss per share - Basic & Diluted ($0.20) ($0.17)

Weighted average shares outstanding 32,804,690 32,730,785


Note: Unallocated corporate expenses include $780,238 and $127,428 of
stock-based compensation expense for the three months ended June 30,
2006 and June 30, 2005, respectively.



Selected Balance Sheet Data


June 30, 2006 March 31, 2006
------------- --------------
Cash, cash equivalents and
marketable securities $ 55,392,992 $ 65,668,605
Selected current assets:
Accounts receivable, net 15,986,989 9,014,035
Inventory 7,815,522 9,006,034

Property, plant and equipment 92,623,990 90,014,466
Less: accumulated depreciation (45,956,396) (45,234,899)
------------- -------------
Property, plant and
equipment, net $ 46,667,594 $ 44,779,567

Total assets $ 130,928,228 $ 133,470,462

Accounts payable & accrued
expenses $ 17,702,695 $ 16,498,373
Deferred revenue $ 3,532,828 $ 1,872,126

Stockholders' equity $ 109,692,705 $ 115,099,963
About American Superconductor Corporation (NASDAQ: AMSC)

AMSC is the world's principal vendor of high temperature superconductor (HTS) wire and large rotating superconductor machinery, and it is a world-leading supplier of dynamic reactive power grid stabilization products. AMSC's HTS wire and power electronic converters are at the core of a broad range of new electricity transmission and distribution, transportation, medical and industrial processing applications, including dynamic reactive power grid stabilization solutions, large ship propulsion motors and generators, smart, controllable, superconductor power cables and advanced defense systems. The company's products are supported by hundreds of patents and licenses covering technologies fundamental to Revolutionizing the Way the World Uses Electricity(TM). More information is available at www.amsuper.com.

American Superconductor and design, AMSC, POWERED BY AMSC, and Revolutionizing the Way the World Uses Electricity are trademarks of and SuperVAR and D-VAR are registered trademarks of American Superconductor Corporation. All other trademarks are the property of their respective owners.

Any statements in this release about future expectations, plans and prospects for the company, including forecasted results for fiscal 2007 and other statements containing the words "believes," "anticipates," "plans," "expects," "will" and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. There are a number of important factors that could cause actual results to differ materially from those indicated by such forward-looking statements. Such factors include: uncertainties regarding the company's ability to obtain anticipated funding from corporate and government contracts, to successfully develop, manufacture and market commercial products, and to secure anticipated orders; the risk that a robust market may not develop for the company's products; the risk that strategic alliances and other contracts may be terminated; the risk that certain technologies utilized by the company will infringe intellectual property rights of others; the competition encountered by the company. Reference is made to these and other factors discussed in the "Risk Factors" section of the company's most recent quarterly or annual report filed with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent the company's views as of the date of this release. While the company anticipates that subsequent events and developments may cause the company's views to change, the company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the company's views as of any date subsequent to the date this press release is issued.

CONTACT: American Superconductor
Investors
Jason Fredette, 508-621-4177
investor@amsuper.com
or
Media
Rick Sheehy, 508-621-4454
news@amsuper.com
SOURCE: American Superconductor
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.