American Superconductor Corporation (NASDAQ:AMSC) Q2 2019 Earnings Conference Call - Final Transcript

Nov 06, 2019 • 10:00 am ET

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American Superconductor Corporation (NASDAQ:AMSC) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Daniel McGahn

our Grid and Wind business units. John Kosiba will then provide a detailed review of our financial results for the second fiscal quarter, which ended September 30, 2019, and provide guidance for the third fiscal quarter, which will end December 31, 2019.

Following our comments, we will open up the line to questions from our analysts. In fiscal 2019, we're focused on building a more predictable and diversified business. We are anticipating significant growth from our Grid segment. Revenues for the second quarter of fiscal 2019 came in at the upper end of our guidance range. Grid revenues increased over 50% when compared to the same period last year. Grid growth was driven by strong D-VAR shipments, revenue from our SPS product for the U.S. Navy, VVO shipments to utilities and from our REG deployment project.

In our Wind business, Doosan intends to enter the offshore wind market in Korea with our 5.5-megawatt product. In India, we continue to support Inox with our 2-megawatt onshore product. We remain vigilant at managing our operations. Our operating cash burn was better than our guidance range. And our ending cash balance was above guidance.

At the halfway mark for our fiscal year, our Grid business is performing at a very high level. We are delivering against a strong backlog of grid orders. Since the start of the fiscal year, we have maintained our sales momentum, while further strengthening our backlog and extending our grid visibility into fiscal 2020.

D-VAR shipments to both industrial applications and to renewable applications were both strong in the second quarter for fiscal 2019. We anticipate D-VAR shipments should provide a continued strong base of grid revenues for the rest of the fiscal year. In the renewables segments, our D- VAR product is connecting wind farms to the transmission grid.

In the Industrial segment, D-VAR is stabilizing electrical power for sensitive industrial operations such as semiconductor manufacturing. In addition to our D-VAR strength, we're starting to see real momentum with our VVO product. And we are seeing repeat orders from utility customers and are beginning to deliver multiple units to multiple customers. We are very encouraged by this. The work we've done with utilities is paying off. We expect VVO to contribute to our grid growth in fiscal 2019.

Turning to our Ship Protection System product for the U.S. Navy. Our efforts in fiscal 2019 are focused on putting into place the capability to deliver on our contracts for LPD 28 and LPD 30. At the same time, we've begun generating revenue on these contracts. We are anticipating another San Antonio Class SPS order when it is released. This could be LPD 29 or LPD 31.

Other Navy platforms that we are pursuing for our SPS product include, but are not limited to, destroyers, aircraft carriers, frigates and Littoral Combat Ships. We are anticipating additional SPS orders for the San Antonio Class. And from a capacity perspective, we are planning for the manufacturer of multiple SPS systems concurrently.

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