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  Title	Q3 2024 American Superconductor Corp Earnings Call
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  Published Date	Feb. 7, 2025, 1:11 a.m.
  Summary	YAHOO FINANCE CHARTBOOK 44 charts that explain markets and the economy right now Q3 2024 American Superconductor Corp Earnings Call Thomson Reuters StreetEvents Fri, Feb 7, 2025, 2:11 AM 26 min read I
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  Content	YAHOO FINANCE CHARTBOOK 44 charts that explain markets and the economy right now Q3 2024 American Superconductor Corp Earnings Call Thomson Reuters StreetEvents Fri, Feb 7, 2025, 2:11 AM 26 min read In This Article: AMSC -4.06% Participants Nicol Golez; Director of Communication; American Superconductor Corp Daniel Mcgahn; Chairman of the Board, President, Chief Executive Officer; American Superconductor Corp John Kosiba; Senior Vice President, Chief Financial Officer, Treasurer; American Superconductor Corp Eric Stine; Analyst; Craig Hallum Colin Rusch; Analyst; Oppenheimer Justin Clare; Director, Research Analyst; Roth Capital Partners LLC Presentation Operator Good morning and welcome to the AMSC third quarter. Fiscal 2024 financial results conference call. (Operator Instructions.) I would now like to turn the conference over to Nicol Golez , Director of Communications. Please go ahead. Nicol Golez Thank you, Gary. Good morning, everyone and welcome to American Superconductor Corporation's third quarter of fiscal year 2024. conference call. I am Nicol Golez. I am a Director of Communications on today's call. I'm joined by Daniel Mcgahn, Chairman, President and Chief Executive Officer and John Kosiba, senior Vice President, Chief Financial Officer and treasurer, American Superconductor issued its earnings release for the third quarter of fiscal year 2024, yesterday after the market closed For those who have not seen the release. A copy is available in the investors page of the company's website. The earnings release contains forward-looking statements with respect to future financial results. These statements are not guarantees of future performance. The company's actual results may differ materially from the anticipated events, performance or results expressed or implied by these forward-looking statements including due to the risk factors in the sec filings, which can also be accessed through the company's website. The company disclaims any obligation to update these forward-looking statements. Also on today's call management will refer to non-GAAP net income, a non-GAAP financial measure, tables of reconciliation of GAAP to adjusted financial measures can be found in the company's earnings release. With that, I will turn the call over to Chairman President and Chief Executive Officer Daniel mcgahn. Daniel. Daniel Mcgahn Thanks Nicol, and good morning everyone. I'll begin today by providing an update and sharing a few remarks on our business. John Kosiba will then provide a detailed review of our financial results for the third fiscal quarter which ended December 31, 2024 and will provide guidance for the fourth fiscal quarter which will end March 31, 2025. Following our comments will open up the line to questions from our analysts. We're really excited to share a quarter of outstanding financial results total revenue for the third quarter of fiscal year 2024 exceeded our guidance range and came in at a new record for us of over $60 million revenue grew over 55% versus the year ago period driven by both organic growth as well as the acquisition of NWL with strong performance in both grid and wind. The business really outperformed this quarter. We showed a new record level of revenue for John and I, we reported our second consecutive quarter of net income. We delivered our sixth quarter in a row of positive operating cash and we continue the rate at which we're booking orders to backlog. We ended the third quarter with $80 million in cash. Talking a bit more about revenue, total revenue for the past nine months is greater than total revenue for the entire previous fiscal year. This means that whatever we do in the fourth quarter will be year over year growth. Our grid revenue accounted for 85% of AMSC's total revenue and grew over 55% versus the year ago period. Almost 15% of the revenue came from our wind business which grew by almost 60% versus the year ago period. 55% and 60%. These are really big numbers. During our third quarter, we saw a wide range of product shipments. A third of our products shipped to renewables projects, about 10% were military and the remainder went into industrials. This quarter, we received over$ 57 million of new orders, 75% of which came from our grid business and 25% from our wind business. Our orders come from a diverse set of markets including renewables, industrials, utilities and military. We secured nearly $15 million in electrical control systems or ECS orders from our customer Inox Wind. They expect to receive these ECS over the course of the first half of fiscal year 2025. Timing really depends on our customer's payment schedule. It seems clear they are ramping up their production. We see continuous demand for Inox's 2 and 3 megawatt turbines as well as our 2 and 3 megawatt electrical control systems. We secured over $42 million of grid orders driven in large part by a diverse set of industrial projects. This puts our 12 month backlog above $200 million and total backlog above $300 million. We are pleased with these results and super excited about the rest of the fiscal year. Now I'll turn the call over to John Kosiba, to review our financial results for the third quarter of fiscal year 2024 and provide guidance for the fourth quarter of fiscal year 2024 which will end March 31, 2025. John. Story Continues John Kosiba Thanks Daniel, and good morning everyone AMS generated revenues of 61.4 million for the third quarter of 2024 compared to 39.4 million in the year ago quarter. A great business unit accounted for 85% of total revenues while our wind business unit accounted for 15% grid business unit revenues for the third quarter increased by 56% versus the year ago quarter. This increase in revenue was primarily driven by the acquisition of NWL and increased shipments of new energy power systems. Our wind business unit for the third quarter increased by 58% versus the year ago quarter. This increase in revenue was primarily driven by additional shipments of electrical control systems. Looking at the P&L in more detail, gross margin for the third quarter of fiscal 2024 was 27% compared to 25% in the year ago quarter. The year increase in gross margin was primarily driven by higher revenues which improved factory utilization across our product lines. We also experienced a favorable product mix within both our grid and wind business units. Moving on to operating expenses. R&D and SG&A expenses for the third quarter of fiscal 2024 were $14.6 million compared to $10 million in the year ago quarter. The year over year increase is largely associated with the inherited operating expenses from our recent acquisition of NWL. Approximately 19% of R&D and SG&A expenses in the third quarter of fiscal 2024 were noncash. Our nonocap net income for the third quarter of fiscal 2024 was 6 million or $0.16 per share. Compared with nongaap net income of 900,000 or $0.03 per share in the year ago quarter. A net income in the third quarter of fiscal '24 was 2.5 million or $0.07 per share. This compares to a net loss of 1.6 million or $0.06 per share in the year ago quarter. As you can see our business has scaled nicely with the sharp increase in revenue over the past year. The increase in both non-GAAP net income and net income was primarily driven by the contribution margin associated with the increased [servicement]of our new energy power systems, increased windshield of ECs and the additional revenue from our NWL acquisition. Please see our press release issued last night for a reconciliation of GAAP to non-GAAP results. We ended the third quarter of fiscal 2024 with $80 million in cash, cash equivalents and restricted cash. This compares with $74.8 million September 30, 2024. We generated $5.9 million of operating cash flow in the third quarter of fiscal 2024 and CapEx in the quarter was 500,000. Now turning to financial guidance for the fourth quarter of fiscal 2024 we expect that our revenues will be in the range of $59 million to 63 million. Our net loss is expected not to exceed $1 million or $0.03 per share and our non-GAAP net income is expected to exceed $2.5 million or $0.07 per share with that. I'll turn the call back over to Daniel. Daniel Mcgahn Thanks John. We've now achieved two consecutive quarters of what I consider record breaking revenue levels. One of $50 million that was last quarter and now $60 million. And we're guiding to another possible record-breaking quarter as we approach the final quarter of fiscal year, 2024 total revenue for the past three quarters reached an impressive $156 million. This revenue surpasses our entire prior fiscal year. When we look at our compound annual growth rate, we have grown by more than 25% over the past three fiscal years. The business has demonstrated growth both organically and through our recent acquisition, let's discuss some additional benefits of the acquisitions. When combined, the team has done an excellent job of integrating and making the last several acquisitions work and work together. We now have a combined product offering for industrials that is very broad. We are providing power supplies for industrial equipment as well as industrial manufacturing capacity. We are providing capacitor banks and harmonic filters for these types of installations as well. We provide industrial power supplies for motor drives for a variety of applications from pumps to fans to compressors. The same product portfolio is being deployed to support and stabilize the grid's ability to integrate renewable energy by leveraging content from our prior acquisitions. We've expanded our ability to target industrial applications that were previously unattainable. Looking at the US political climate, there appears to be a lot of rhetoric which could translate into a better reality for us. Industry. In fact, over 85% of our grid revenue this quarter came from the United States. We believe we could be well positioned to benefit from the drive to manufacture in America. As most of our business is based in the US and supported by a mainly US supply chain. We may be presented with opportunities uniquely available to us. Given this fact, if we look back at the first term of the current administration, the drive towards reshoring American manufacturing capabilities was very strong and factually, the renewable energy industry in the US grew, I'll be for us, it's a very small part of our business overall. We see electricity needs driven in part by key industries such as artificial intelligence and data centres. This likely means that demand for electricity will continue to grow. To conclude our long-standing customer in India is starting to accelerate their business which could translate into growth for us. You can see that wind has been growing over the past several quarters. We see the orders from India this quarter giving us a clear path to continuing this trend in the near term. If we look out a bit further in time, we see a deep pipeline of projects for a variety of materials, be it mining or chemical processing and we have several potential semiconductor orders on the horizon. If we look even longer term, we see our business with the military, having the potential to expand further. The business grew organically in both wind and grid. The addition of NWL is working and has opened up a cadre of customers. We are seeing business opportunities in new areas with utilities for data centers and for pipelines for traditional energy. We believe that it is imperative not only to enable clean energy but to provide cleaner power for traditional energy as well. We are very well positioned as a company that has diversified has been growing at 25% when compounded annually over the past several years, it feels like we really have reached a new level at over $60 million of quarterly revenue for the company growing from having quarterly revenue in the $30 million range only two years ago. I am personally very excited about the future of the company. This is probably the most excited I have been. We believe we're in a tremendous position to take advantage of an ever-changing world. We are prepared to capitalize on the growing demand for energy and the need for a stable grid to support it. We have delivered another outstanding quarter and can see that the fundamentals of our business are well grounded. This is truly an exciting time for us here at AMSC. Our future facing technologies help harmonize the world desire for decarbonization and clean energy with the need for more reliable, effective and efficient power delivery. I look forward to reporting back to you at the completion of our fourth fiscal quarter and fiscal year end, Gary will now take questions from our analysts. Question and Answer Session Operator We will now begin the question and answer session to ask a question. (Operator Instruction.) Eric Stein, Craig Howell. Eric Stine Hi Daniel. Hi John. Daniel Mcgahn Hey, good to hear your voice. Good. Eric Stine Morning. So you mentioned a deep pipeline, obviously, you've got the backlog of $300 million plus has grown pretty substantially. Is there any way you can give more detail to, the description deep pipeline, whether it's, trying to quantify it how it's grown, over the last year or two and with the new acquisitions. Daniel Mcgahn Yeah, I think the simple way to look at it is that the pipeline growth rate is greater than the company's growth rate. The types of new opportunities that we're seeing really, I think the thing that shines most is the diversity of what we're doing. So one of the things we want to ensure that we do as we grow is to not concentrate and we've tried to really push as we brought more content in from the different acquisitions, to get them to work together, to get them to work in projects across a variety of industries. And that really is showing up in the pipeline. So I'm really, really jazzed about where, where we are, where we've been and where I think it looks like we're going to head to go. And I think we have multiple pathways here to growth, be it in India with wind, be it in the US with industrials and then longer term with the military, everything that we're now offering, not just ship protection but the whole suite of products that I think we're in a really great position to continue on the trend that we've established. Eric Stine Got it. And I mean, obviously, I would think it's, it's magnitudes larger than your current backlog. I mean, is it fair to say that with these acquisitions, it increased by a factor of, whatever the number is two X three X. Daniel Mcgahn Yeah, I don't, I don't know even the factor Eric, I just look at it and I look at the depth and the breadth, the deepness of our offering, the fact that the project sizes have grown, our content per project has grown, our engagement with customers has grown. And that, across the company, we realize that each of the different elements within the total business kind of had its own customer list. And we're now starting to see the ability to cross over through multiple product lines, offer one combined offering into these, these great customers that you've been able to serve and, and they're very excited that we can do more for them. And I think that really puts us in position to keep maintaining those great customer relationships that we've established. Eric Stine Got it. Okay, great color. Maybe last one for me, just on the wind side, you mentioned the orders received in this quarter. And I know Inox obviously, three plus gigawatt backlog that you are exclusively supplying. I mean, how do you envision kind of this playing out going forward? I know if we look back a number of years, you kind of got a large order from Inox and then worked it off over time and now I know you're focused on getting paid. And so they've been smaller but more frequent. I mean, is that kind of how we should expect things playing out going forward? Daniel Mcgahn Simply, yes, but you know, I think that if you go back in our history, Ina was young and our financial stability wasn't what it was today. So there is desired on both parties to make sure that we were committed to a long-term relationship. We have demonstrated a great long term relationship with Inox. I believe that will continue and hopefully will continue for, for a long time, they've really done a nice job in managing their business. We've told them not to worry about, big orders or things like that. Whatever that they need, we're ready to serve. We have a good contract terms that works for both sides. And they basically pay as they go and they give us an instruction and say, hey, we need this as soon as we can and here's the next batch. So, I think we're going to see going forward more of a batch to batch to meet their demand, clearly based upon. And you articulated, I think factually their backlog, that means more orders will come and hopefully they'll come at a certain pace. But that pace is really predicated on and it's really not in a it's Inox's customer's ability to pay them at the rate that they're paying them. So, we are in a position right now. We see the wind business accelerating and I think with these additional orders and the timing that they've ascribed to our delivery, it means that, that, that pace should continue. Eric Stine All right. Thank you. Operator The next question is from Colin Rusch with Oppenheimer. Please go ahead. Colin Rusch Thanks so much guys. You know, if you start to digest some of the this growth, you know, there's and you know, just a question around capacity , and how you need to you know, capacitize the company to meet that, that demand and you know, what can we think about from an operating leverage perspective or manufacturing leverage perspective on that front? Daniel Mcgahn I think it's a fantastic question and it's one of the things that I concern myself with because we've been growing so nicely and so rapidly. You know, we want to make sure that our revenue outpaces the growth of fixed costs. I think we've demonstrated a great ability to do that. We think there's a lot of financial leverage in the business. We have said that we may need to at some point in the future, think about capacity expansion. But that cost of that project is, is relatively miniscule compared to the cash balance that we hold today. So we want to make sure we're in a position to go forward with growth. And we want to be able to have the manufacturing capability to do that. But I think directly that doesn't mean we need to expand fixed cost. At least certainly not at the rate that we have been growing revenue or hope to grow revenue. So we think it's a very nice, nicely constructive business. And, we're looking as we bring in each of these different acquisitions, we're looking to learn what each group does, maybe better or best practices out of the group and bring that to all of them. I think the team is very been very receptive to that and more and more. It's a one unified face to the customer, selling a stack of content that really is chosen by the customer and what they want give us as a scope of a, of a project. But I think our capacity today, we've been, we've had to be able to grow principally, as I said in the past, through labor. I do expect at some point in our future, we may have to spend some capital to be able to continue that. But again, it's not a huge project and it's something that we can afford given the very strong balance sheet of the company. Colin Rusch Excellent. And then the second question is really around the pipeline of acquisition targets, you guys have, clearly demonstrated a nice job in digesting some of that that new capacity and integrating those businesses. But it looks to us like there's maybe, a half a dozen or a dozen potential incremental targets. How are you guys thinking about that inorganic growth opportunity and you know, the, augmenting the portfolio of offerings from here? Daniel Mcgahn Yeah, I think what you said is, is accurate, we try to look for the right people with the right product ideally with the right profit leverage as well that would fit into our business model. And the last year, I'd say it has to be at the right price. So I think one of the things that the company has shown. It is great strength in, not chasing things at a very high price. So, we've been able to get what we think are great companies at great prices with great people and great products. And if we can continue to do that again and it fits in, that certainly work, I think with the uncertainty that's coming in the market here in the US, it's an opportunity for us because I think we're uniquely positioned to grow. But it may be an opportunity as well for potential targets where they may have some challenges in the near term and worry about their access to capital and, and working with a company like ours might be a good fit for them. So we'll see how that works right now. We're digesting NWL. We feel very comfortable with what the team's doing. We've been able to, to do growth organically and with the, with the addition of the revenue from NWL. But at some point, we need to turn and say, okay, can we continue to accelerate the rate of growth? Because we've demonstrated such a, such a nice rate, if we can continue that or come close to continuing that? I think that's in everybody's advantage and interest here. Okay, thanks so much. Colin Rusch Guys. Operator Again, if you have a question, please press star, then one, the next question is from Justin Clare with Roth capital partners. Please go ahead. Justin Clare Hi, good morning. Thanks. So wanted, wanted to start here. You had mentioned in your comments, potential opportunity here in data centers that, that you're exploring. I was wondering if you could just expand on you know, how you're viewing that market, how you might approach it, which, which products could be a good fit for data centers. And then do you have any visibility into, potential timing for, orders that you could capture there? That, that'd be helpful as well. Daniel Mcgahn Yeah, I think it's a great question. It's something that we were looking at internally. We've seen inbound coming from really all the different business lines that face utilities. And what we're finding is there's a certain number of utilities and you kind of know who they are based upon where these data centers are being built that are coming to us time and time again now with real distinct problems on the grid. So, what we foreshadow back a few quarters ago that really the opportunity for us is going to be that the grid needs to become more reliable, to be able to support this additional capability that seems like that's starting to come to fruition at least in the pipeline. So, we're seeing multiple projects, handfuls of projects from the same utilities that have the same problems that we can uniquely solve. So it could be that they need some level of capacity to be able to buffer power. They need maybe improved power quality, they need, they may need to have more power supplied to a specific area. And in all those cases, we have an offering that, that fits really nicely. Again, it doesn't mean that we're going to be part of the CapEx to build the building, but we're going to be part of the CapEx to build the grid out to be able to support the capacity that's going in into that project. So, that's, relatively new for us. That's exciting. I think the hard part Justin with me always is, well, what's the timing and what's the pacing? I think that's to be determined. I think it's up to our team to try to turn these prospects into projects that are funded and, and are going to use our, our product. So, you know, usually I'd say stay tuned, I think it becomes part of the growth story, certainly not in the next maybe year or so because the lead time for these things are more than a year. But I think as you look at the overall trajectory, as we look at it, out a few years, I think it's very positive for us and that this would be one area that potentially could drive that future growth. Justin Clare Okay. Got it. Yeah, that's no that's helpful the detail there. So then maybe just shifting over to your semiconductor business and the opportunity there, it looked like, toward the end of the Biden administration, there was a rush to allocate funds under the Chips Act. And so wondering how that opportunity is evolving here. How is demand trending and do you see the potential for an acceleration as the Chips Act funding starts to get dispersed here? Daniel Mcgahn Yeah, I think that's the exact way to look at it is that the policy has been enacted, the funding has happened and now projects are being constructed. I was looking at a bunch of stuff the past few days and we look at all the names we're trying to support, not just the ones that we've mentioned. There is and I was trying to be deliberate about it in the prepared remarks. There are a series of kind of key large orders from semi that are right in our crosshairs that we want to get over the line. These are all for projects that are ready to construct fully financed to construct. It was really out without any risk around the timing. I think longer term, what we're hearing from our semiconductor customers are is the need for increased capacity is there. So I think in the longer term, I think that will translate into, more pipeline and more projects for us in the future as well. But in the relatively near term, we have, we have a number of opportunities we're trying to get over the goal line here that we think would be nice for the business in the next year or so. Justin Clare Okay. Great. Then just one more. We have heard that there are some challenges relating to permitting, particularly for wind projects, but also for solar projects. This follows the President's executive order on permitting for when projects. Wondering if you could share, are you seeing any change in terms of order flow for your renewables business in the US? As a result of this, or do you see any potential challenges ahead here? Daniel Mcgahn Yeah, it's such a small part of our business. We do not do a lot of business in the US in renewables. So from a diversity and from a position of strength, we do win India, and then, and we report that as a segment and we said that's 15% of the business. But the rest of renewables that would occur in the US are, are a small fraction of that. So, I think if in the future there, there's a drive to do more renewables, we stand ready and have it, but it's not been part of our business, the past quarters or a year or two or so. So it's not something that we really concern ourselves. And I think for our audience, it's not something that you're investing in us, for us. It's really about becoming more about hardening the grid, strengthening the grid for a lot of these industrial capacity projects that, that we think are really going to start to take off here in the, in the coming year and years. Okay. That's. Justin Clare Helpful. Thanks, I'll pass it on. Operator This concludes our question-and-answer session. I would like to turn the conference back over to Daniel mcgahn for any closing remarks. Daniel Mcgahn What a great quarter. We're really, really happy. We, this is a point that we had hoped to get to. And I think when John and I looked at this back of ways, we thought we'd be here a year or two from now. So we think we're well ahead of schedule. We think the business really is outperformed. Even our own optimistic look. So as we look towards the future, it's clear, the opportunities ahead of us are really vast. We stand ready to capitalize on that rising demand for energy and the critical need for a dependable grid to support it. We reached another consecutive recent record quarter with the revenue levels. Now, over $60 million a quarterly basis, the business has already demonstrated revenue growth with only nine months into the fiscal year. This means we're close to doubling revenue from our fiscal year '22 level. Only two years later, we see more industrials including chips as well as the wind on the horizon. Really out of India. I believe our business is at an exceptionally strong position and I'm really excited to talk about some new markets for us today. Data centers, more traditional energy. These are all things that require our product that we think we can benefit our, our key customers with. I look forward to talking to you again when we report our full fiscal year results next time. Thank you all. Have a good day. View Comments Terms and Privacy Policy Your Privacy Choices Recommended Stories
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