American Superconductor (AMSC) - 2023 Q3 - Quarterly Report

PART I—FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarterly period ended December 31, 2022, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, reporting a net loss of $9.6 million for the quarter and $28.2 million for the nine months, with total assets decreasing to $165.1 million and total liabilities increasing Condensed Consolidated Balance Sheets The balance sheets present the company's financial position, showing a decrease in total assets and an increase in total liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | Mar 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $165,072 | $173,887 | -$8,815 | | Total Current Assets | $94,165 | $94,336 | -$171 | | Cash and cash equivalents | $23,685 | $40,584 | -$16,899 | | Inventory, net | $38,725 | $23,666 | +$15,059 | | Total Liabilities | $77,865 | $64,498 | +$13,367 | | Total Current Liabilities | $68,053 | $53,964 | +$14,089 | | Deferred revenue, current | $34,239 | $22,812 | +$11,427 | | Total Stockholders' Equity | $87,207 | $109,389 | -$22,182 | Condensed Consolidated Statements of Operations The statements of operations detail the company's revenues, expenses, and net loss for the reported periods Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $23,881 | $26,799 | $74,241 | $80,126 | | Gross Margin | $517 | $3,572 | $4,708 | $10,201 | | Operating Loss | $(9,209) | $(4,380) | $(26,170) | $(16,182) | | Net Loss | $(9,581) | $(4,324) | $(28,171) | $(14,161) | | Net Loss Per Share (Basic & Diluted) | $(0.34) | $(0.16) | $(1.01) | $(0.52) | Condensed Consolidated Statements of Cash Flows The cash flow statements summarize the company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary for Nine Months Ended Dec 31 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(17,067) | $(15,925) | | Net cash used in investing activities | $(1,164) | $(7,056) | | Net cash provided by financing activities | $71 | $49 | | Net decrease in cash, cash equivalents and restricted cash | $(18,135) | $(22,983) | Notes to Financial Statements This section provides detailed explanations and additional information supporting the financial statements - The company has a history of recurring operating losses, with an accumulated deficit of $1.049 billion as of December 31, 2022, and cash and cash equivalents of $23.7 million at period-end[30] - In January 2023, a reduction in force affecting approximately 5% of its global workforce is expected to result in annualized cost savings of about $5 million starting in fiscal year 2023[33] Revenue by Segment (in thousands) | Segment | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Grid | $20,809 | $25,050 | $66,337 | $73,169 | | Wind | $3,072 | $1,749 | $7,904 | $6,957 | | Total | $23,881 | $26,799 | $74,241 | $80,126 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's financial performance, highlighting an 11% decrease in total revenues for the third quarter and a 7% decrease for the nine-month period ended December 31, 2022, primarily due to lower D-VAR revenues in the Grid segment, with gross margin falling significantly due to lower revenues, contract losses, unfavorable product mix, and supply chain inflation, resulting in an increased net loss and a $18.1 million decrease in cash, cash equivalents, and restricted cash Executive Overview This overview details the company's business units, operational challenges, and strategic cost-saving initiatives - The company operates through two business units: Grid, which enables utilities, industrial facilities, and renewable projects, and Wind, which enables wind turbine manufacturers[147] - Significant inflationary pressure in the supply chain and material sourcing delays have increased costs and reduced gross margins[153] - A reduction in force in January 2023, affecting about 5% of the workforce, is anticipated to generate approximately $5 million in annualized cost savings starting in fiscal 2023[154] Results of Operations This section analyzes the company's revenue performance, gross margin trends, and net loss for the reported periods Revenue Comparison (in thousands) | Period | Q3 FY2022 | Q3 FY2021 | % Change | 9M FY2022 | 9M FY2021 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $23,881 | $26,799 | -11% | $74,241 | $80,126 | -7% | | Grid Revenues | $20,809 | $25,050 | -17% | $66,337 | $73,169 | -9% | | Wind Revenues | $3,072 | $1,749 | +76% | $7,904 | $6,957 | +14% | - Gross margin decreased to 2% for the three months and 6% for the nine months ended Dec 31, 2022, down from 13% in both prior-year periods, attributed to lower revenues, contract losses, unfavorable product mix, and supply chain inflation[158] - Net loss increased to $9.6 million for the third quarter and $28.2 million for the nine-month period, compared to $4.3 million and $14.2 million in the respective prior-year periods, primarily due to increased operating loss from lower revenues and gross margins[172] Non-GAAP Financial Measure This section provides a reconciliation of GAAP net loss to non-GAAP net loss, adjusting for specific non-recurring or non-cash items Reconciliation of GAAP Net Loss to Non-GAAP Net Loss (in thousands) | Description | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Nine Months Ended Dec 31, 2022 | Nine Months Ended Dec 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net loss (GAAP) | $(9,581) | $(4,324) | $(28,171) | $(14,161) | | Stock-based compensation | 1,440 | 1,120 | 3,492 | 3,513 | | Amortization of acquisition-related intangibles | 696 | 690 | 2,096 | 1,979 | | Change in fair value of contingent consideration | (220) | (2,110) | (340) | (4,440) | | China dissolution | — | — | 1,921 | — | | Non-GAAP net loss | $(7,665) | $(4,624) | $(21,002) | $(12,428) | Liquidity and Capital Resources This section assesses the company's cash position, cash flow activities, and ability to fund future operations - As of December 31, 2022, the company had cash, cash equivalents, and restricted cash of $31.4 million, a decrease of $18.1 million from $49.5 million at March 31, 2022[180] - Net cash used in operating activities for the nine months ended December 31, 2022, was $17.1 million, an increase from $15.9 million in the same period of the prior year, primarily due to increased inventory purchases[181] - The company believes it has sufficient liquidity to fund operations for the next twelve months but acknowledges its liquidity is highly dependent on increasing revenues, controlling costs, and potentially raising additional capital[185] Quantitative and Qualitative Disclosures About Market Risk The company states that this item is not applicable for the reporting period - Not Applicable[192] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of December 31, 2022, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of December 31, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[193] - No changes in internal control over financial reporting occurred during the quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[194] PART II—OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and exhibits Legal Proceedings The company reports that there were no legal proceedings during the period - None[196] Risk Factors The company states there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended March 31, 2022 - There have been no material changes to the risk factors described in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2022[196] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no stock repurchase activity during the three months ended December 31, 2022 - The company did not repurchase any shares of its common stock during the three months ended December 31, 2022[198] Exhibits This section provides an index of the exhibits filed with the Form 10-Q, which includes certifications from the CEO and CFO as required by the Sarbanes-Oxley Act of 2002, and financial statements formatted in Inline XBRL - The report includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[202] - Financial statements and notes are provided in Inline XBRL format as part of the filing[203]