AMSC Looks Ahead After Trimming Losses
AMSC, the Devens company formerly known as American Superconductor, saw its losses shrink in its third quarter – three months that included a 25-percent reduction of its workforce.
Though the losses continue to pile up and revenue hit its lowest point in six quarters for the slimmed-down company, which is trying to claw back ground after losing its largest customer in 2011, there are some positive signs.
Among them, CEO Daniel P. McGahn said a number of key countries are fixing to install more wind generation this year, which could mean a stronger year ahead.
The Numbers
AMSC lost $20.1 million on $17.4 million in revenue during the third quarter.
It sounds bad, but it's been worse. Less than two years ago, after losing its largest customer, Sinovel Wind Group – which it has sued in Chinese court over alleged contract violations and intellectual property theft – AMSC lost more than $37 million on just $9 million in revenue, down from revenue of more than $97 million a year prior.
The third-quarter loss was less than AMSC had originally expected. In November, the company said it thought it would lose $24 million.
A positive sign: for the first three quarters of its fiscal year, AMSC's revenue is up 40 percent at $67 million compared to the same period last year.
Eye On China
As if losing a big customer wasn't enough, AMSC has been forced like many others in the wind sector to contend with a global slowdown in turbine manufacturing.
However, McGahn said Monday: "Silver linings are beginning to appear."
China is forecasting a 29 percent increase in wind turbine installations in calendar 2013 after two years of decreases, partially driven by stricter regulations that have led to federal oversight over wind projects.
In Korea, one of AMSC's clients is gearing up to begin making larger turbines. And in India, business has picked up with Inox Wind Ltd., which just placed a $30 million order for turbine electrical control systems, ASMC announced just prior to its earnings release at the close of the market Monday.
It was the fifth and largest order yet from Inox, which AMSC has been selling to since 2009.
With things looking a bit more promising, McGahn said AMSC expects revenue growth in its upcoming fiscal year, which begins in April.
"Based on the more positive trends we have seen begin to emerge in the wind market, we believe we can increase our annual revenues in fiscal 2013 by more than 25 percent," he said.
U.S. Wind Credit Could Help
Wind turbine makers were relieved when Congress elected at the last minute in December to continue a wind production tax credit.
McGahn said that may help AMSC sell more of its D-VAR technology, which connects wind and solar farms to the grid. D-VAR is connecting more than 4 gigawatts of renewable energy to the electricity grid in North America, he said.
And while AMSC's electric grid segment is about a quarter of the size of its wind business, McGahn said he is hopeful that major power outages like those caused by Super Storm Sandy are bringing more attention to the capabilities of superconductor wire, which AMSC also manufactures.
In a recent development, AMSC wire is being used in a German project involving that country's largest electricity provider to replace high-voltage equipment in urban areas.
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