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American
Superconductor Reports Fiscal 2006 Second Quarter and Six-Month Results
Westborough, MA, Nov.
9: American Superconductor Corporation
(NASDAQ:AMSC),
a leading electricity solutions company, today reported financial results for
its fiscal second quarter and six months ended September 30, 2005.
Revenues
for the second quarter of fiscal 2006 were $10.9 million, an increase of 14%
compared to revenues of $9.5 million for the second quarter of fiscal 2005.
The net loss for the second quarter was $6.8 million, or $0.21 per share,
compared with a net loss of $4.1 million, or $0.15 per share, for the same
period last year.
Revenues
for the first six months of fiscal 2006, ended September 30, 2005, were $23.1
million, up 4% from $22.2 million for the first six months of fiscal 2005. The net loss was $12.4 million, or $0.38 per share, compared
with a net loss of $9.0 million, or $0.33 per share for the same period last
year.
AMSC
ended the September 30, 2005 quarter with cash, cash equivalents, and short- and
long-term investments of $74.5 million and no long-term debt, compared to $81.5
million at June 30, 2005 and $87.6 million at March 31, 2005.
AMSC received $5.2
million in new orders and contracts during the second quarter. The Company’s total backlog of orders and contracts as of
September 30, 2005 was $18.4 million, compared to a backlog of $24.3 million at
June 30, 2005. Including revenue
recognized in the first two quarters of fiscal 2006, backlog that is expected to
be recognized as revenue in the second half of the year, and anticipated funding
increases of approximately $20 million now being finalized on two existing
government contracts, AMSC currently has visibility to approximately $46 million
of revenues for fiscal 2006.
Revenue
and Net Loss Forecasts Updated
In
May and August 2005, the Company forecasted revenues for fiscal 2006 of $55 to
$65 million – essentially flat year-over-year compared with fiscal 2005
revenues of $58.3 million due primarily to the approaching conclusion of two
major government contracts and the timing of their expected replacement with new
government contracts going forward.
“Taking
into account the orders and contracts that we anticipate closing this quarter,
in addition to our current revenue visibility, we are now targeting $55 to $60
million in revenues for fiscal 2006,” said Greg Yurek, president and CEO. “Additional orders and contracts that we anticipate
receiving in our fourth quarter are most likely to be recognized as revenue in
our next fiscal year beginning April 1, 2006.”
In
addition to updating its full-year revenue guidance, the Company also tightened
its forecast for the net loss for the fiscal year to be in the range of $21
million to $23 million with the related loss per share to be between $0.65 per
share and $0.70 per share, which is within the range of the Company’s
previously forecasted net loss of $18 to $23 million or $0.55 to $0.70 per
share.
Power
Electronic Systems Expecting Increased Orders; DVC™ Solution Announced
“We
anticipate closing a substantial number of additional orders in our third and
fourth fiscal quarters for power electronic systems,” Yurek said.
“The targeted additional orders in our third quarter are in the final
stages of the decision making process by customers, so we expect to know the
status of these orders by the end of December.
We have procured the necessary long lead time components in anticipation
of these orders, which should enable us to turn them quickly and ship the
systems before fiscal year end. To
the extent these orders are delayed beyond December, they will likely become
backlog for our next fiscal year along with other orders expected to close in
our fourth quarter. We expect the
mix of orders for the fiscal year to be relatively equal between utility, wind
farm and industrial applications.”
Yurek commented that
the Company expected this quarter to receive its first order from an electric
utility for a large-scale “Dynamic VAR Compensator,” or DVC™ system – an
extension of AMSC’s D-VAR® (“Dynamic-VAR”) product line.
DVC systems, which have been in use by AMSC’s customers for grid
interconnection of wind farms, are large scale, transmission-level reactive
power solutions built on AMSC’s patented D-VAR platform.
The DVC solution utilizes inverter-based FACTs (Flexible AC Transmission
systems) technology and proprietary fast-switched control of capacitors and
reactors.
DVCs provide
transmission-level dynamic reactive compensation in the range of tens of megaVARs
(MVARs) to several hundred MVARs, substantially increasing the market reach of
AMSC’s proprietary power electronic solutions for utility transmission grids.
Yurek commented that he expects orders for DVC systems to add
significantly to the Company’s backlog and revenues going forward.
New
Government Contracts Anticipated
AMSC
expects to participate in two new U.S. Navy contracts for ship propulsion motors
and generators, both of which are expected to be initiated in the fiscal fourth
quarter. Yurek also highlighted new
efforts by the U.S. Department of Energy (DOE) to follow-up on the “Power
Delivery Research Initiative” (PDRI) that was included in the Energy Policy
Act of 2005. “The Energy Policy
Act of 2005 calls for the Department of Energy to carry out demonstration
projects on two superconductor cable projects – one for a controllable,
alternating current cable system, and one for a direct current cable system,”
Yurek said. “In August, subsequent to the passage of the Energy Bill,
DOE requested submission of ideas for a new series of superconductor
applications projects by September 16, 2005.
In December 2005, DOE is holding workshops to help determine how to
implement the PDRI projects. We
believe that these anticipated new superconductor cable projects, which we
expect will be started during the next year, will provide a substantial revenue
opportunity for AMSC.”
Production
Schedule for 344 Superconductors on Track
American Superconductor reported that it remains
on track to accomplish its manufacturing scale-up plan for its 344
superconductors, the industrial standard form of second generation (2G) high
temperature superconductor (HTS) wire. “We started regular processing of 100-meter lengths of 344
superconductors on schedule in September 2005 and we have also started to order
new full-scale manufacturing equipment for our pilot manufacturing line –
ahead of our original schedule,” said Yurek.
“We remain on track to achieve a manufacturing capacity of 300,000
meters per year of 344 superconductors by December 2007.”
The company reported that it has sold most of its
limited manufacturing capacity for 344 superconductors for the remainder of
fiscal 2006 and that current sales activities indicate that orders for fiscal
2007 should exceed AMSC’s current production capacity of 10,000 meters.
“Interest in 344 superconductors is strong,” said Yurek.
“The challenge for AMSC is to continue to scale up the manufacturing
operation for 344 superconductors while at the same time meeting the demand from
customers who are developing products such as fault current limiters, power
cables, rotating machines and electromagnet systems.”
On October 24, 2005, American Superconductor
named Suzuki Shokan Co. as its distribution partner for 344 superconductors in
Japan. Japan represents one of the
world’s largest markets for superconductor wires for applications in the power
transmission, industrial, medical and transportation sectors.
“We believe that at least a third of our output of 344 superconductors
in the next year will be sold in Japan and this new distribution agreement is
expected to help us achieve this goal,” Yurek said.
Key HTS
Benchmarks Being Met
The Long Island Power Authority (LIPA)
superconductor cable project, for which AMSC is the prime contractor and the
source of the first generation (1G) HTS wire for the cable, remains on track to
be installed during calendar year 2006 and to be energized in September 2006.
AMSC shipped half of the 1G HTS wire required for the cable system to
Nexans, the cable manufacturer for this project, in the second quarter of fiscal
2006. AMSC expects to ship the
balance of the order to Nexans this quarter, and cable fabrication by Nexans is
expected to be completed in the spring of 2006.
The advanced prototype SuperVAR® dynamic
synchronous condenser continues to undergo rigorous, accelerated life testing in
the Tennessee Valley Authority (TVA) grid in Gallatin, Tennessee, having
withstood over five million voltage events since it was synchronized with the
TVA grid. AMSC expects TVA to
release the first of the five commercial SuperVAR machines, which TVA had
previously ordered, to AMSC’s production floor by the end of December 2005.
Thereafter, AMSC plans to ship the first of the commercial SuperVAR
machines to TVA by the fall of 2006. AMSC
is continuing to conduct grid analyses for other utility customers where
SuperVAR may be the optimum grid solution.
The 36.5-MW (49,000
hp), 120 rpm HTS ship propulsion motor that is currently being built by AMSC and
Northrop Grumman is expected to be delivered to the Navy in September 2006. In
the near term, the superconductor rotor assembly is expected to be completed by
AMSC in the next quarter and subsequently shipped for final motor assembly and
testing.
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