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American Superconductor Provides
Updated Financial Forecasts for Fiscal 2007
- Revenue Guidance for Fiscal 2007
Reaffirmed
- Net Loss Expected to Increase Due
to Timing, Government Funding Issues and Higher Than Planned Expenses on Navy
Motor Development Program
- Revenue Forecast for Power Electronic Systems Business Increased
Westborough, MA, December 18: American Superconductor
Corporation (NASDAQ:AMSC),
a leading energy technologies company, announced today that it is revising its
forecasted operating results for the third quarter and the full fiscal year 2007
as a result of several factors, summarized below.
Summary of Issues and AMSC Actions
DOE Funding: AMSC announced that it has not yet
received planned incremental funding and has received only partial payments from
the U.S. Department of Energy (DOE) for costs incurred under its program to
install a high temperature superconductor (HTS) power transmission cable in the
grid of Long Island Power Authority (LIPA). Payments from the DOE have been
delayed and reduced on a monthly basis because the U.S. Congress did not
complete passage of the Energy and Water appropriations bill prior to its recess
on December 8, 2006. As a result, funding from the DOE is being handled under a
"Continuing Resolution" until at least February 15, 2007.
The net effect will be lower revenue recognition
and cash collections in the company's third fiscal quarter. It is possible that
these delays could carry through most or all of the fourth fiscal quarter if the
new Congress does not quickly resolve appropriations for 2007. Revenues on the
DOE-LIPA cable project are reported under the company's AMSC Wires business
unit, which is on or ahead of schedule in all other aspects of its business,
including wire manufacturing scale up, wire shipments, and technology
development.
Regardless of these funding delays, AMSC is
moving forward with this important project. The superconductor cable and
ancillary equipment are currently in the final stages of manufacturing, the site
preparation work is nearly complete, and the cable is expected to be
commissioned in the summer of 2007 on Long Island.
Navy Motor Program: Acceptance of the
36.5-megawatt (MW) superconductor motor by the U.S. Navy in Philadelphia, which
had been expected to occur near year end 2006, is now expected to take place in
March 2007 based on the need to repair a crack in a non-superconductor component
of the motor. The motor was disassembled on site in Philadelphia, a methodology
for the repair of the component was determined, and the solution is now being
implemented. Reassembly of the motor is expected in January, with factory
testing expected to continue into February, prior to acceptance of the motor by
the Navy. The costs for solving this problem are expected to be approximately $3
million. Because cash payments by the Navy are dependent upon meeting certain
milestones, which have now been delayed by several months, cash collections from
the Navy are expected to be deferred to the fourth quarter of fiscal 2007 and to
the first quarter of fiscal 2008. The total amount of revenues AMSC's
SuperMachines business unit will receive for the program will be unaffected.
Revenues recognized on the program on a percentage of completion basis are
expected to be significantly greater in the fourth quarter compared with the
third quarter of fiscal 2007 as a result of the timing of the work on the
program.
SuperVAR(TM) Synchronous Condenser: Shipment of
the first commercial SuperVAR synchronous condenser by SuperMachines to
Tennessee Valley Authority (TVA) is expected to occur by the end of January
2007, about one month later than previously expected due to an issue with a
portion of the product's electrical insulation, which has now been resolved. The
second SuperVAR is on schedule to ship to TVA by end of March 2007 as originally
planned.
Revenue for both SuperVAR systems, which totals
approximately $1.9 million, is now expected to be recognized in the first
quarter of fiscal 2008 due to a delay by TVA in receiving third-party materials
and components necessary to prepare the site for installation of the SuperVAR
systems.
Third Quarter Revenue and Net Loss
The company reported that the delay in receiving
DOE funding for the LIPA cable project and the delay in the motor delivery to
the Navy to the fourth fiscal quarter and the associated increased costs would
reduce revenues and increase losses in the third fiscal quarter relative to the
company's budget. Revenues for the third quarter are expected to be
approximately $9 million. The company's net loss for the third fiscal quarter is
expected to be approximately $9 million to $11 million, or $0.28 to $0.33 per
share. The company's financial results are expected to improve significantly in
the fourth fiscal quarter of 2007 as additional revenues are recognized on
existing programs.
Full Year Net Loss Forecast
Primarily as a result of the aforementioned
issues, the company is adjusting its fiscal year 2007 forecasts for net loss
from a range of $23 to $27 million, or $0.68 to $0.79 per share, to a range of
$29 million to $32 million, or $0.87 to $0.96 per share. The company also said
its ending cash balance as of March 31, 2007 may be less than the $38 million it
previously forecast due to possible deferred cash collections from the U.S. Navy
and the DOE into the first quarter of fiscal 2008.
Full Year Revenue Forecast
The company reaffirmed its forecast for total
revenues of $50 million to $52 million for fiscal 2007. AMSC said that while
revenues for its SuperMachines and AMSC Wires business units are expected to be
below its budget in both the third quarter and full fiscal year due to the
aforementioned issues, sales at its profitable Power Electronic Systems business
continue to grow rapidly. The company today increased its revenue forecast for
the Power Electronic Systems business unit from approximately $22.5 million for
fiscal 2007 to approximately $25 million, which represents 67% growth year over
year. None of this increase in revenues is associated with the acquisition of
Windtec, which the company expects to close in January 2007. AMSC reaffirmed
that it expects revenues for its Power Electronic Systems business, with the
inclusion of Windtec, to double to approximately $50 million in fiscal 2008 with
approximately 10% operating profits.
About American Superconductor Corporation
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,
alternative electricity generation, transportation, medical and industrial
processing applications, including dynamic reactive power grid stabilization
solutions, large ship propulsion motors and generators, wind energy systems,
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.
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