American Superconductor Corporation
reported financial results for the second
quarter of fiscal 2003, ended September 30, 2002.
Net revenues for the second quarter of fiscal 2003 were $4.48 million
compared with $3.26 million for the second quarter of fiscal 2002. The
operating loss for the second quarter of fiscal 2003 was $10.50 million
compared with an operating loss of $10.47 million for the year-ago quarter.
Interest income was down sharply in the first half of the current fiscal year,
compared to the year-ago period, due to a lower cash balance and lower
interest rates in the current fiscal year, causing an increase in the net loss
for both the second quarter and the first half of the current fiscal year.
The net loss for the second quarter of fiscal 2003 was $10.22 million or $0.50
per share compared with a net loss of $9.12 million, or $0.45 per share for
the second quarter of fiscal 2002.
Net revenues for the first six months of fiscal 2003 were $7.34 million
compared with net revenues of $4.92 million for the same fiscal period last
year. The operating loss for the first six months of fiscal 2003 was $21.68
million, compared to $21.55 million for the same fiscal period a year ago. The
net loss for the first six months of fiscal 2003 was $21.05 million or $1.02
per share, compared with a net loss of $18.16 million or $0.89 per share for
the same fiscal period last year.
The Company ended the second quarter of fiscal 2003 with cash, cash
equivalents and long-term investments of $35.0 million and no long-term debt,
compared to $45.6 million as of June 30, 2002 and $68.2 million as of March
31, 2002. The quarterly rate of cash use ("cash burn") peaked at $28.3 million
for the quarter ended June 30, 2001. The cash burn rate during the subsequent
five quarters has trended downward to $10 million for the quarter ended
September 30, 2002 (to see a chart showing the company's cash, cash
equivalents and long-term investments, and the corresponding use of cash, as a
function of time, see http://www.amsuper.com/investors.htm).
"Our cash burn rate peaked in the June 2001 quarter as we were nearing
completion of the first phase of the build out of our commercial wire
manufacturing plant in Devens, Massachusetts," said Greg Yurek, chief
executive officer of American Superconductor. "Since then our quarterly cash
burn rate has fallen because we have lowered our operating costs and because
our rate of investment in the new wire plant has decreased as we near
commercial manufacturing startup. We expect our quarterly cash burn
continue to decrease going forward."
Yurek noted that revenue from the sale of two of the company's D-VAR(TM)
systems during the first half of the current fiscal year also had a positive
impact on cash burn during that period. "Each delivery of one of our Power
Electronic Systems products quickly converts existing inventory to cash," said
Yurek. "We expect to close additional orders and recognize revenue from sales
of this product line during the second half of this fiscal year. The
additional contribution to cash from sales of power electronic systems during
the second half is expected to be in the $5 million to $10 million range."
In May 2002, AMSC forecasted that revenue for the fiscal year ending March
31, 2003 would be in the range of $20 million to $28 million. "Our current
knowledge with respect to existing and pending orders and development
contracts suggests that we should achieve revenue in this range," continued
Yurek. "We currently have visibility to about $13 million in revenue for the
current fiscal year, which comprises the $7.34 million recognized as revenue
through September 30, 2002 and our current backlog for this fiscal year. We
are also nearing closure on additional new orders and development contracts
that should take us into the targeted revenue range."
The company also provided guidance in May 2002 that its cash, cash
equivalents and long-term investments would be about $35 million as of March
31, 2003. "As of now, depending on the timing of new orders and new
development contracts, our cash, cash equivalents and long-term investments at
March 31, 2003 should be in the $28 million to $35 million range," concluded
AMSC Mid-Year Business Update
During the first two quarters of fiscal 2003, AMSC achieved important
milestones in each of its three business units (HTS Wire, Electric Motors and
Generators, and Power Electronic Systems). Mid-year high
HTS Wire -
-- Acceleration of Second Generation HTS Wires - On October 29, 2002, AMSC
announced that it had shattered the goals established by the DOE for
December 2003 for both performance and length of second generation
coated conductor composite HTS wire. AMSC also stated that it was
accelerating its second generation wire development based on
reproducible performance results it had achieved using its proprietary
high volume, low cost second generation wire manufacturing methodology.
AMSC expects that its high performance second generation wire will be
two to five times lower in cost than first generation wire
-- New Development Contract - In September, AMSC received a $2 million
contract from the Department of Commerce's Advanced Technology Program
for continued development of second generation HTS wire. The funds
will be used to develop and implement novel thermal processing
equipment that AMSC expects will enable significant further performance
and cost improvements in its second generation wire
-- Update on Devens HTS Wire Manufacturing Facility - AMSC installed and
began use of most of the new equipment in its new commercial wire
manufacturing plant in Devens. Final qualification of the wire
manufacturing processes on the new equipment is nearing completion, and
the first saleable wire is scheduled to be produced in this plant in
December 2002 for shipment to certain customers.
AMSC had earlier projected that the Devens plant would operate at an
annual capacity of 1,000 to 1,500 kilometers of HTS wire by January
2003. Based on current market
demand, management has decided to hold
the January 2003 capacity to about 900 kilometers per year, thereby
saving on operating expenses and on additional capital costs. The
Devens facility is designed to be rapidly expandable by the addition of
certain pieces of equipment, which AMSC will do on a just-in-time basis
to meet customer needs. Currently, engineers and technicians who were
working toward creating higher wire production capacity have been
transferred to work on the acceleration of AMSC's second generation
wire development and production.