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American Superconductor Reports Fiscal 2006
Third Quarter and Nine-Month Results
Westborough, MA, Feb. 2: American Superconductor Corporation (NASDAQ:
AMSC) today reported financial results for its fiscal third quarter and the
nine-month period ended December 31, 2005.
Revenues for the third quarter of fiscal 2006 were $13.5 million. The net loss
was $7.5 million or $0.23 per share. Revenues for the third quarter of fiscal
2005 were $23.2 million and the net loss was $2.5 million, or $0.09 per share.
Revenues for the first nine months of fiscal 2006, ended December 31, 2005, were
$36.6 million. The net loss was $19.8 million, or $0.61 per share. Revenues for
the first nine months of fiscal 2005 were $45.4 million and the net loss was
$11.5 million, or $0.41 per share.
NEW ORDERS AND BACKLOG: AMSC received $32.8 million in new orders and contracts
during the quarter ended December 31, 2005 -- more than the total amount of new
orders received in all of fiscal 2004 or during all of fiscal 2005. The
Company's total backlog of orders and contracts as of December 31, 2005 was
$37.1 million, more than double the backlog of $18.4 million at September 30,
2005.
"Based on the timing of shipments of orders in hand and expected this quarter,
and on the timing of the start of new government contracts, we currently
forecast revenues for the fiscal year to be in the range of $52 million to $57
million," said Greg Yurek, chief executive officer. "Some of the revenues that
we had earlier anticipated recognizing in the fourth fiscal quarter are now
expected to be recognized in the first quarter of the next fiscal year due to
timing issues."
The Company stated that with forecasted revenues in the range of $52 to $57
million, the corresponding range of net loss and net loss per share would be $22
to $25 million and $0.67 to $0.75 per share, respectively.
CASH POSITION: AMSC ended the third quarter of fiscal 2006 with $71.1 million of
cash compared to $74.5 million at September 30, 2005. The Company has no
long-term debt.
NEW WORLD RECORD ELECTRICAL PERFORMANCE FOR 2G HTS WIRE: The Company reported
this week, at the U.S. Department of Energy 2006 Wire Development Workshop, a
new world record for electrical performance for second generation (2G) HTS wire
made by AMSC's proprietary, low-cost manufacturing process. "AMSC's scientists
have been able to achieve an additional 11% increase in electrical performance
of our 2G HTS wire to 448 Amperes of electrical current per centimeter of wire
width -- approaching the benchmark of 500 Amperes per centimeter of width
required for broad commercial adoption, and well above the threshold of 300
Amperes per centimeter of width for commercial introduction," said Yurek. "We
plan to transfer these outstanding results to the manufacturing floor as quickly
as possible, and we expect higher performance levels to be embedded in wire
shipped to customers within one year. We believe this will further differentiate
our 2G product offering in the marketplace."
The Company also commented on its key benchmarks. "One year ago in our earnings
conference call we began providing, and updating at subsequent calls, key
benchmarks for our company and the industry through the fall of 2006," said
Yurek. "We have since achieved many of these very important benchmarks, which we
report here. Those that have not yet been achieved are on track to be completed
on schedule, and are included along with new benchmarks that we aim to achieve
by March 31, 2007."
KEY BENCHMARKS ACHIEVED: The following are benchmarks that have been set and
updated by the Company during the last 12 months, and which have been achieved
to date:
* Obtain a release to production and ship the first commercial SuperVAR(R)
synchronous condenser to the Tennessee Valley Authority (TVA):
-- TVA released two SuperVAR synchronous condensers to commercial production in
January 2006. This is the world's first commercial HTS grid solution and is of
tremendous significance to the Company and the emerging HTS industry; shipment
of the first SuperVAR system is expected by December 2006 (see fiscal 2007
benchmarks);
* Form a strategic alliance for the development of fault current limiters based
on 2G HTS wire:
-- Established a strategic alliance with Siemens in February 2005;
alliance renewed for one year in February 2006 based on exceeding first-year
technical performance expectations;
* Secure first generation HTS wire orders for two additional power cable
projects:
-- Received wire orders for three power cable projects during last 12 months (Ultera(TM)
a Southwire/nkt cables joint venture for American Electric Power in Columbus,
Ohio; Condumex Cables, a division of
Grupo Condumex for Mexico; and LS Cable Co. for Korea);
* Demonstrate a repeatable production process for manufacturing 4-centimeter
wide 2G HTS material and ship 2G HTS wire to customers:
-- Started regular, repeatable processing of 4-centimeter wide strips in
September 2005 including slitting the strips into eight "344 superconductors"
per 4-cm strip; shipped first 1,000 meters of 344
superconductors to customers in third fiscal quarter;
* Start ordering full-scale manufacturing equipment for 2G HTS wire production
in the fourth fiscal quarter ending March 31, 2006:
-- Started ordering equipment ahead of schedule in third fiscal quarter based on
successes in processing of 344 superconductors;
* Win a series of substantial multi-year contracts from the U.S. Navy and from
the U.S. Department of Energy:
-- Northrop Grumman/AMSC strategic business alliance won first of a series of
new U.S. Navy contracts in December 2005 for the design, development and
manufacture of a 40-megawatt ship propulsion
generator; additional contracts expected in next 3 to 12 months (see fiscal 2007
benchmarks).
KEY BENCHMARKS SET FOR FISCAL 2007: The Company expects to achieve the following
key benchmarks, many of which are new, during the next 14 months (by the end of
the fiscal year ending March 31, 2007) in order to continue to strengthen the
platform for profitable growth in the future:
* Ship world's first commercial SuperVAR synchronous condenser to TVA by
December 2006; ship second commercial SuperVAR system to TVA by March 31, 2007;
* Secure additional new orders for SuperVAR systems;
* 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 based on first generation
wire under a contract with the U.S. Department of Energy as authorized
by the Energy Policy Act of 2005;
* 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;
* Sell over 10,000 meters of 344 superconductors to customers, continuing to
drive the migration from 1G to 2G HTS wire in the global marketplace;
* As of March 31, 2007, install, commission and qualify 70% of all full-scale
manufacturing equipment needed to achieve a yielded output of 344
superconductors at a rate of 300,000 meters per year (the latter rate to be
achieved by December 2007);
* Ship world's first 36.5-megawatt (MW) HTS ship propulsion motor to the U.S.
Navy;
* Secure the first of a series of new U.S. Navy contracts for the design and
manufacture of a militarized 36.5-megawatt HTS ship propulsion motor;
* Establish a strategic business alliance for non-U.S. Navy and commercial
marine applications of HTS ship propulsion motors and generators;
* Secure additional orders for AMSC's power electronics solutions (D-VAR(R)
systems 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 by March 31,
2007;
* Achieve a growth rate of at least 25% for Power Electronics Systems revenues
in fiscal 2007.
The Company commented on the growing market for its power electronics product
line for wind-generated electricity. "The rapidly growing market for
wind-generated electricity continues to provide a great sales growth opportunity
for our Power Electronic Systems business," Yurek said. "We currently have an
installed base and orders in hand for D-VAR systems and PowerModule solutions to
serve over one billion watts, or one gigawatt, of zero-emission, wind-generated
electricity. These products are used to meet grid interconnection standards,
which are being adopted by more and more countries that are installing wind
farms, and to regulate voltage of the wind- generated electricity. We expect to
have an installed base and orders in hand to be serving double that amount of
wind-generated electricity, or 2 billion watts, by March 31, 2007."
LAUNCHING GROWTH FROM A STRENGTHENED BUSINESS PLATFORM:
Commenting on the benchmarks already achieved, and those expected to be achieved
in the next 14 months, Yurek said: "Our team has made tremendous progress over
the last year in developing, testing and deploying our HTS-based products, in
winning new government contracts, and in growing sales of our power electronics
systems. These successes are at the core of our process for building the
platform for revenue growth and profitability in the future. We have the
internal capabilities, strategic alliance partners, a broad and deep patent
portfolio, a leadership position in the markets addressed by our products and
solutions, and a strong balance sheet. I believe these factors will help ensure
strong long-term growth."
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