AMSC earnings call analysis

NASDAQ:AMSC Q4 2025 Earnings Call Transcript Generated on 6/9/2026 Keith | Conference Call Operator: Good day and welcome to the AMSC Fourth Quarter Fiscal 2025 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Nicole Goles, Director of Communications. Please go ahead. Nicole Goles | Director of Communications: Thank you, Keith. Good morning, everyone, and welcome to American Superconductor Corporation's fourth quarter and full fiscal year 2025 conference call. I am Nicole Goles, AMSE's Director of Communications. Joining me today are Daniel McGann, Chairman, President, and Chief Executive Officer, and John Kasiba, Senior Vice President, Chief Financial Officer, and Treasurer. Yesterday, after market closed, American Superconductor issued its earnings release for the fourth quarter and full fiscal year 2025. A copy of this release is available on the investor's page of the company's website at www.amsc.com. Remarks that management may make during today's call about American superconductors' future expectations, including future financial results, plans, and prospects constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors including those set forth in the risk factor section of American Superconductors' annual report on Form 10-K for the year ended March 31st, 2026, which the company filed with the Securities and Exchange Commission on May 27th, 2026, and the company's other reports filed with the SEC, which are also available on our website. The company disclaims any obligation to update these forward-looking statements. On today's call, management will refer to non-GAAP net income on non-GAAP financial measures. Tables of reconciliation of GAAP to adjusted financial measures can be found in the company's earnings release. With that, I will now turn the call over to Chairman, President, and Chief Executive Officer, Daniel McGann. Daniel? Daniel McGann | Chairman, President, and Chief Executive Officer: Thanks, Nicole. Good morning, everyone. And thank you for joining us. I will begin today by providing an update and sharing a few remarks on our business. John Kasiba will then provide a detailed review of our financial results for the fourth quarter and full fiscal year 2025. He will also provide guidance for the first quarter of fiscal 2026, which will end June 30, 2026. And following our remarks, we'll open up the line for questions from our analysts. We're really excited to report a record revenue quarter. Our fourth quarter closed a very successful fiscal 2025, and we delivered another year of significant growth. Revenue for the quarter came in at a new high, surpassing $85 million. We saw revenue grow by nearly 30% over the year-ago quarter. Our grid business revenue grew by more than 30%, over the year-ago quarter, while our wind business revenue increased by 15% for the same period. We delivered three recent record revenue quarters during the fiscal year, over $72 million for the first quarter, over $74 million in the third quarter, and now over $85 million in the fourth quarter. We have delivered seven consecutive quarters of GAAP profitability and 11 consecutive quarters of non-GAAP profitability. We believe these record results and continued profitability reflect the strong momentum and the discipline behind our success. The business is growing, the business is scaling, and the business has been consistently profitable. Now let's take a look at our order bookings for the quarter, which were extremely strong. Fourth quarter orders reached nearly $100 million, driven by strong utility and traditional energy demands. In the traditional energy sector, we are increasingly supporting the growing demand for reliable power across natural gas, coal and large industrial power applications. As these energy facilities expand and modernize, their operations rely on large motors, compressors and electrical systems that can create power quality and grid challenges. For example, LNG facilities cool natural gas into a liquid for easier transportation, then convert it back into gas for local distribution. These facilities utilize large motors, compressors, drives, and other heavy electrical loads that require certain level of power and can create harmonics, poor power factor, and voltage instability. To mitigate these electrical disturbances, we provide solutions which help the site maintain power quality and protect assets within their operations. Our offerings are for both power supplies and power quality solutions for this key market. Additionally, nearly 10% of our fourth quarter orders were driven by the data center sector within our utility market. This demand combined with our orders in traditional energy reflects a powerful tailwind across our core markets. We closed the fiscal year with a robust 12-month backlog of over $280 million. This represents nearly a 40% increase versus the year-ago 12-month backlog of $200 million. We believe that this puts us in great position to keep momentum going in the business for fiscal year 2026. Average quarterly orders in fiscal 2025 exceeded $70 million. This compares to about $60 million in the prior year, adjusting the numbers for the one-time Royal Canadian Navy order, which was more than $70 million itself. We booked a total of nearly $290 million of new orders in fiscal 2025 across larger projects, repeat customers, and increasing activity in our end markets. fiscal 2025 represented a significant step forward for our company. We completed the acquisition of Comtrafo, which broadened our transformer product portfolio and expanded our reach into Brazil and Latin America. We believe this acquisition creates new opportunities across utilities, transmission infrastructure, and grid expansion. We saw total revenue grow more than 30% to nearly $300 million. We saw revenue diversity across traditional energy, renewables, materials, military, utility, as well as some other sectors. Over half our sales came from traditional and renewable projects combined. The remainder came from materials at over 15%, followed by military and utility projects at over 10% each. A significant part of our strong performance was driven by our core business, which achieved approximately 25% organic growth for the fiscal year. We ended the year with over $145 million in cash. These accomplishments highlight the growing demand for our solutions, as well as our position as a trusted partner domestically and growingly abroad. We also made great strides in our military business. In fiscal year 2025, we completed the delivery of another ship protection system for the U.S. Navy San Antonio-class platform aboard the USS Richard McCool, Jr. Today, our power supplies play a critical role in the shipyards by providing steady, reliable power to vessels during assembly and docking when they're disconnected from other power sources. And principally, we are powering critical ship systems for the U.S. Navy. Through our renewable installations, we're facilitating the grid infrastructure needed to safely expand and integrate distributed power. This ensures utilities can maintain reliability without sacrificing performance. In our wind business, we showed year-over-year growth driven by INOX business and the proven capabilities of our two and three megawatt ECS. We believe the business is aligned and poised to deliver improvement. Now I'll turn the call over to John Kasiba to review our financial results for the fourth quarter and full fiscal year 2025, and provide guidance for the first quarter of fiscal 2026, which will end June 30, 2026. John? John Kasiba | Senior Vice President, Chief Financial Officer, and Treasurer: Thanks, Daniel, and good morning, everyone. Total revenues for the fourth quarter of fiscal 2025 were 86.4 million. This is an increase of 30% compared to the year-ago quarter of 66.7 million. Grid business revenues of $73.7 million increased by 33% versus the year-ago quarter, while our wind business unit revenues of $12.7 million increased by 15% versus the year-ago quarter. Moving on to the full fiscal year, our total revenues in fiscal 2025 were $299.2 million. This is an increase of 34% compared to fiscal year 2024 revenues of $222.8 million. In fiscal 2025, our grid business revenues increased by 34 percent and represented 84 percent of total revenue. The year-over-year increase is a result of organic growth as well as contributions from Comtropa. Wind business revenues increased 34 percent in fiscal 2025 and represented 16% of total revenue. The year-over-year increase is a result of increased ECS shipments to INOX for our 2-megawatt and 3-megawatt class ECS systems. Gross margin for the fourth quarter of fiscal 2025 was 27.3% compared to the year-ago quarter of 26.5%. Including in cost of goods sold in the fourth quarter was approximately $1.5 million of purchase accounting and non-cash adjustments related to Comtrapa. This had an impact of approximately 170 basis points on the quarter. For the full fiscal year, AM received generated gross margins of 30.5%. This was up from 27.8% in fiscal year 2024. This represents a gross margin expansion of 270 basis points over the prior year. Now moving on to operating expenses for the fourth quarter of fiscal 2025, research and development and SG&A expenses totaled $18.8 million. This was up from $15.6 million in the year-ago quarter. Approximately 20% of R&D and SG&A expenses in the fourth quarter of fiscal 2025 were non-cash. For the fiscal year, research and development and SG&A expenses totaled $73.4 million, compared with $54.5 million in fiscal 2024. The year-over-year increase is largely associated with the inherited operating expenses and one-time acquisition-related expenses from our recent acquisition of Comtrapa. Our net income in the fourth quarter of fiscal 2025 was $4.5 million, or $0.10 per share, This compares to $1.2 million, or $0.03 per share, in the year-ago quarter. Included in our fourth quarter fiscal 2025 net income was a $4.2 million loss on contingent consideration, a non-cash expense related to the likelihood of achieving Comtropo earn-out targets. Our non-GAAP net income for the fourth quarter of fiscal 2025 was $14.1 million, or $0.31 per share. This is compared to a non-GAAP net income of $4.8 million, or 13 cents per share, in the year-ago quarter. Included in our fourth quarter of fiscal 2025 net income and non-GAAP net income was a tax benefit of $5.3 million due to the release of the valuation allowance on deferred tax assets. For the full fiscal year, our net income was $133.8 million, or $3.12 per share. This compares to a net income of $6 million or $0.16 per share in fiscal 2024. Our non-GAAP net income for fiscal 2025 was $158.1 million or $3.68 per share. This compares to non-GAAP net income of $24 million or $0.65 per share for fiscal 2024. Included in our fiscal year 2025 net income and non-GAAP net income was a tax benefit of $118.4 million due to the release of a valuation allowance on deferred tax assets. We ended fiscal year 2025 with $147.6 million in cash, cash equivalents, and restricted cash. This compares with $85.4 million on March 31st, 2025. In the fourth quarter of fiscal 2025, we generated $9.3 million in operating cash flow. For the full fiscal year, we generated $23.1 million in operating cash flow. Now turning to our financial guidance for the first quarter of fiscal 2026, we expect our revenues will exceed $85 million. Our net income on that revenue is expected to exceed $3 million or $0.07 per share, and our non-GAAP net income is expected to exceed $8 million or $0.17 per share. Included in our net income and non-GAAP net income guidance is approximately $1.5 million of purchase accounting and non-cash amortization associated with the Comtropo acquisition that is expected to be expensed into cost of goods sold. These charges will taper down starting in Q2 FY2026. Once these non-cash purchase accounting charges fall off the amortization schedule, We expect Comtropo's gross margin will fall well within AMSE's gross margin. With that, I'll turn the call over to Daniel. Daniel McGann | Chairman, President, and Chief Executive Officer: Thanks, John. AMSE delivered a transformational year. During fiscal 2025, we grew organically while expanding throughout acquisition. Profitability improved this year, marking an important milestone for us. After delivering seven consecutive quarters of GAAP profitability, and 11 consecutive quarters of non-GAAP profitability, we are now operating as a profitable company. And that includes adapting to normal financial items, such as tax expenses. As our company scales, and to the extent that we're unable to utilize our existing net operating losses, we expect items such as tax expenses to become more regular going forward. We are now seeing our financials reflect the characteristics of a more mature company. More importantly, this progress reflects the strength of the business and the customer relationships we've built over time. We've cultivated growing relationships with our customers across multiple projects that have increased in size, scope, and technical complexity. Today, we're delivering greater volumes to repeat customers. In addition, we are delivering integrated solutions that add unique value to the challenges customers face. By delivering integrated power systems, we ensure that certain products such as rectifiers, filters, statcoms, capacitor banks, and or transformers are designed to work together. This design simplifies integration and improves project reliability. We believe our integrated power systems help improve power quality and meet grid requirements from the start, avoiding extra costs, downtime, redesigns, expensive grid updates, or penalties from utilities. We are now providing our integrated power solutions to customers in the mining and utility sector. We believe our diverse bookings, strong balance sheet, and operational success in fiscal 2025 have set the stage for long-term improvement in the business. The business is in its strongest position ever, and we believe it's still getting better. We enter fiscal 2026 confident in achieving our goal to continue building a more resilient and profitable company. It is certainly nice to be talking about $85 million of revenue this quarter, considering we were talking about 30 million of revenues per quarter only three years ago. With that, let's turn our focus to fiscal 2026, starting with the growing opportunities in our power solutions. Global energy demand is accelerating, putting more pressure on the grid. Traditional energy, renewables, semiconductors, data centers, and defense are driving major investments in power infrastructure, while reshoring and aging infrastructure increase the need for reliability. This is creating strong demand for our power solutions as customers expand capacity, particularly in environments where harmonics voltage instability, and rapidly changing loads challenge grid performance. Our solutions are supporting applications across natural gas, mining, renewable heavy grids, and data centers. And we are participating in more utility projects. During fiscal 2025, we extended our utility presence into Latin America, as well as entering the data center market. These utility projects improve substation power quality to support demand, including that of data centers, stabilize voltage to enable expansion as thermal plants retire, reinforce transmission infrastructure to support industrial load growth, including large mining operations on vulnerable lines, and integrating renewables and distributed energy resources while supporting wind, rooftop, and community solar, and battery storage systems. Our products are designed to optimize reliability, maximize output, and enhance power quality. We are uniquely positioned to enable our customers to power facilities in ways that scale without adding complexity or size. We're not just responding to grid challenges. We're enabling the changes to support the changing environment. Additionally, our power supplies power critical ship systems. and deliver reliable power for shipyards and docked vessels. Our ship protection systems, or SPS, help naval vessels by reducing their visibility to enemy threats. Over the last several years, we've delivered on four out of the five SPS systems to the U.S. Navy's following vessels, the USS Fort Lauderdale, the USS Harrisburg, the USS Pittsburgh, And most recently, this fiscal 2025, delivered on the USS Richard McCool, Jr. We expect to begin our first delivery to the Royal Canadian Navy this fiscal year, 2026. We've continued to deliver advanced power solutions that keep naval operations running strong at the shipyard. In our wind business, we design and supply electrical control systems, or ECS, that make wind turbines more competitive and efficient. In fiscal 2025, we secured nearly $50 million in orders for our two and three megawatt ECS from INOX to service their growing demand. About 40% of these systems were shipped during the fiscal year, leaving our backlog in a great position. Our proprietary technology is helping INOX scale. supporting what they've called their strongest backlog in recent memory, with over three gigawatts of orders. In closing, fiscal 2025 was a defining year of execution and scale for our company. We delivered record revenue, growing more than 30% year over year, driven by 25% organic growth. We increased our workforce from 569 to 1,195 team members during the year, marking a new record employment level. We are surrounded by an exceptionally driven, innovative and accountable team that helps us take our service, value and company to the next power. We closed an acquisition backed by an ambitious team that is deeply inspired by our purpose to power progress. Operationally, We experienced momentum from powerful tailwinds. We expanded our 12-month backlog by 40% to over $280 million, giving us exceptional visibility into the next fiscal year while maintaining a strong balance sheet with over $145 million of cash. Strategically, we successfully diversified our revenue base by expanding our geographic footprint, expanding our product portfolio, and delivering integrated solutions. Furthermore, our initial entry to data centers quite early validates our ability to capture high-growth tailwinds. We closed a fantastic fiscal 2025 and are off to a very good start for fiscal 2026 with tremendous opportunities ahead of us. We are at the center of some of the most important transformations of our time, from defense to industrial growth from renewable integration to grid modernization. With a proven strategy, a strong capital position, and a unified organization, we believe we are exceptionally well positioned to drive long-term value for our customers. Our solutions are helping power the evolution of a grid that is fit for the future. A more reliable and resilient grid built to support and incorporate a broad mix of energy sources. We are executing on our vision and believe that our creativity can meet today's challenges and help us progress to a better future. This means using future-facing technologies to harmonize the world's desire for decarbonization with the need for more reliable, effective, and efficient power delivery. We are committed to powering progress by designing, developing, and deploying power control solutions that harmonize an increasingly complex energy system. Thank you for your continued trust and support. We look forward to sharing our progress with you in the months ahead and invite you to explore our new website, which better reflects the company AMSC has become. Keith, we can now open the line to any questions from our analysts. Keith | Conference Call Operator: Yes, thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press stars and two. At this time, we will pause momentarily to assemble the roster. And the first question comes from Eric Stein with Craig Hellam. Eric Stein | Analyst, Craig-Hallum Capital Group: Hi, Daniel. Hi, John. Good morning. Good morning. Hey, so can we just talk about the orders first? I mean, obviously a highlight of the quarter. And this is a pretty good step up. You referenced the 70 million average over the last previous four. So just curious, you know, how much of that is Comtrafo? Is this is there something that impacted this, you know, that's out of the ordinary? Or should we expect this to kind of be a new level as you, you know, as your business historically has kind of made these steps up over time? Daniel McGann | Chairman, President, and Chief Executive Officer: We're hoping it's a step up to the next level. I think to be blunt, so far in 2026, things have started out very well for us. These tailwinds are really driving the business. There's a part of it, but it's proportional for Comtrafo, so they're moving at the right pace. We're very excited about them and the prospects there in that market. It's a diverse set of orders. A lot of it is traditional energy. We highlighted 10% of it as data centers. Last quarter, we had 5%. with data centers, so that's a piece. I think we're just in the right place at the right time. The problems that we solve are paramount and being invested in by a number of parties. And we're very excited, Eric, about what the prospects bear for us for 2026. Eric Stein | Analyst, Craig-Hallum Capital Group: No, absolutely. Maybe just sticking with data center. So I know that last quarter, one thing you highlighted is that you had made a sale or delivered directly to a data center customer. I know historically you have been involved, but it is in support of utilities as they prepare for everything that's required there. And it sounds like the 10% this quarter was more skewed to utility. So maybe just kind of talk about that breakdown. Daniel McGann | Chairman, President, and Chief Executive Officer: Yeah, that was, again, I'm sorry. It was. That was. It was direct to utility, which is why we, sorry, direct to a data center, which is why we highlight it. There's additional utility business. And we do think that there will be a fit for us for the same application set in Latin America as well, and that's something that we're going to work on. Eric Stein | Analyst, Craig-Hallum Capital Group: Okay. Thank you for that clarification. And I guess this last thing, I mean, I know in some of your other applications, the way that they have played out over time is you get in, you prove the application, then eventually you are spec'd in. So I know it's still pretty early days, but is that kind of how you see this playing out in the data center space as well? Daniel McGann | Chairman, President, and Chief Executive Officer: That's what we hope. That's the playbook that we've run in the other markets, and we're seeing the beginning of that. We have a pretty robust pipeline of future orders for data center, which is why I'm opening my big mouth today, highlighting it again. We think it's part of the business. I'm always joyful... in the diversification that this opportunity presents. We're a well-diversified company in power, and I think that we're in a fantastic position, and it's really now incumbent on us, as you're getting at, you know, the order book, you know, seeing that grow certainly helps support the thesis that we're taking advantage of these tailwinds, which is what we want to continue to do. unspecified\ Okay, thank you. spk09 | Conference Call Operator: Thank you. And the next question comes from Colin Rush with Oppenheimer. Colin Rush | Analyst, Oppenheimer & Co.: Thanks so much, guys. Dan, can you talk a little bit about the Comtrafo integration and progress on qualifying the transformer product for the U.S.? I'm just curious about, from a product perspective, if there's a mixed headwind near term as you guys work through all the supply chain optimization and then how quickly we might be able to see some of those transformers sold into North America. Daniel McGann | Chairman, President, and Chief Executive Officer: Yeah, I don't see a headwind there. What I see is a company that is very excited to be part of us. What I see is a company that's operating exceptionally well, driven by a family that is super excited to be part of AMSC. I think the opportunities ahead of us combined are extraordinary, to be very blunt. I think in the near term, we tend to our knitting in Brazil. There's a huge opportunity. in the utility space and in the industrial space in Brazil alone. The main reason that we went forward with the acquisition of Comtrafo is the access to that opportunity and the expansion of the product line in the form of large power transformers. So I think that alone really is the focus and what's going to drive us. I do think the North American market will come. I am very excited about the prospects there. I'm very excited about the progress that we're making. And I look forward, Colin, that becomes a highlight of a future call. But right now we're trying to get the team to focus on let's take advantage of the Brazilian opportunity. Let's plant the seeds throughout Latin America to be able to expand the combined business in mining and in utilities throughout Latin America. and then be in position to be a qualified supplier for North American utilities. The third part will take time, but I'm very excited that we'll be able to demonstrate some progress hopefully along the way as that develops. So there's kind of a three-step focus on Brazil, expand throughout Latin America with the combined product offering, and then bring those large power transformers here to North America. Colin Rush | Analyst, Oppenheimer & Co.: Perfect. And then shifting gears a little bit into the military opportunity, I appreciate the level of detail on the ship protection systems, but I'm curious about the port opportunity and how quickly that might move. We're seeing pretty substantial numbers tossed around for budgets in the U.S., and I'm curious, given the portfolio that you have and the ability to really support incremental power out to the ports, how we might see that start to run through the grid business. Daniel McGann | Chairman, President, and Chief Executive Officer: Yeah, I think as we look at where we are given the conflicts in the world, given where we are with energy demands and prices for things, that we are seeing demand driven on the grid in a variety of areas. And the port thing is we initially started looking at shipyards and how we take our industrial power supplies and bring them there. I think that there is Further diversification that we're gonna see happen throughout energy infrastructure, all the way through to the delivery at the port. So it's an opportunity that we're positioned, we hope to take advantage of, and we're excited about that broader opportunity and more traditional power. spk09 | Conference Call Operator: Great, thanks so much, guys. Thank you. And the next question comes from Justin Clare with Ross Capital Partners. Justin Clare | Analyst, Ross Capital Partners: Hey, good morning. Thanks for taking our questions here. I wanted to follow up just on the data center opportunity. Wondering if you could just better help us understand how AMSE is participating here and where in the value chain. If you could share, you know, which types of products are being pulled forward by the data center related demand. And then is this primarily utility-side power quality equipment that's at the substation, or are you actually supplying equipment that is installed on the data center campus or within the facility itself? Daniel McGann | Chairman, President, and Chief Executive Officer: Let me try to unpack all that. So the data center wins that we've had direct to the data centers are principally for power quality at the data center as the data center is being constructed. What's being realized in the industry is that as data centers get larger, there is a persistent power quality problem that we can uniquely solve. It's very akin to what we do in semiconductors with semiconductor fabs. So it's managing voltage. It's managing harmonics. It's basically providing power quality. Now, that being said, we do think that there's an opportunity for power supplies at data centers. And part of the the mindset and shifting to have a more broad offering in transformers, a lot of transformers are getting sold into data centers. It puts us in the position now to be an offering, again, direct to data centers for there. We do also, kind of as a compliment, continue to see demand on the utility side to be able to further bolster the grid in part because of data center demand. So there's kind of a, what we used to say was kind of, we were kind of a, a second order driver to data centers. Now we kind of have a one-two punch. Support the data center directly and also be able to support the utilities as clusters of these grow and the grid itself gets more strained or constrained. Justin Clare | Analyst, Ross Capital Partners: Got it. Okay. I appreciate that. And then, you know, we're just looking through the 10K. We saw that the Asia Pacific grid revenue for fiscal 25, it increased almost six times year over year relative to fiscal 24. I was wondering if you could just help us understand what drove the magnitude of that growth. Was this concentrated in a few large projects or with specific customers, or does this reflect kind of a broader regional inflection in the demand you're seeing there? Daniel McGann | Chairman, President, and Chief Executive Officer: That's a good pickup in the tables and the detail. So on the grid side, you know, if you look on the wind side, you know that's really driven by INOX. On the grid side, it's a couple things. It's supporting some very large renewable projects in the region, which I won't say is brand new to us, but it's a bigger business opportunity this year, which helped drive some of that growth. But principally, it's semiconductor and in the material space. So we are actively promoting, not only in North America, but in Asia Pacific, those solutions and offerings. And we had a tremendous year in the Asia-Pac region overall. Got it. unspecified\ Okay. Good to see the strength. Appreciate the time. Thanks. Keith | Conference Call Operator: Thank you. And once again, please press star then 1 if you would like to ask a question. And the next question comes from Tim Moore with ClearStreet. Tim Moore | Analyst, ClearStreet: Thanks and congratulations on your order growth and backlog magnitude subsequent to the Contraffa contribution boost in the December quarter. Good job on the EBITDA margin expansion. I just want to kind of go into a thread on SG&A expense leverage. I mean, it's been an important part of our thesis. We know you'll expand gross margin with volume, but we know that SG&A seasonality seems to be the lowest percentage of revenue in the last three years in your fiscal fourth quarter. How do you think about SG&A as a percentage of revenues improving this fiscal year despite getting some traffic? John Kasiba | Senior Vice President, Chief Financial Officer, and Treasurer: Yeah, so if you look at our Q4 SG&A, I would say that, you know, that's a fairly good representation. If you back out to continuing consideration, obviously, we don't know what that will be quarter to quarter. But if you look at the research and development sales and marketing and regular G&A, you know, we feel pretty good. That's not a bad baseline to run into 2026. We'll have some growth as the business scales up. but not to the level of hopefully the revenue growth that we experience. Tim Moore | Analyst, ClearStreet: That's helpful. John Kasiba | Senior Vice President, Chief Financial Officer, and Treasurer: We've said several times that we still believe the business, we're still sized overall that we think the business can grow substantially before we have to really see substantial increases in SG&A. Tim Moore | Analyst, ClearStreet: That's a great driver. Incremental EBITDA margin, part of our thesis. And just switching gears, I know you've talked a lot about the backlog, but just please correct me if I'm wrong. Your backlog figure that you report in your release and talk about quarterly, that's the 12-month amount, right? Not the 18-month value that could be 75 or 100 million higher? Is that true? Daniel McGann | Chairman, President, and Chief Executive Officer: Yeah, the total backlog, I think, is about 375. Okay. Tim Moore | Analyst, ClearStreet: Okay. Daniel McGann | Chairman, President, and Chief Executive Officer: And the 12-month number we highlight because it gives people a good predictor of what the next four quarters could look like at any point in time. And, you know, our lead times are still kind of averaging in that 9 to 12 month, which means that we can continue to add orders to improve the forward-looking four quarters. Tim Moore | Analyst, ClearStreet: That's terrific. We know you're going to plan to add capacity in Brazil for Contrapo, but how comfortable are you with any capacity constraints in the U.S. and North America, given your backlog that's been growing? Do you need to add any more capacity? Daniel McGann | Chairman, President, and Chief Executive Officer: The good thing about the way the business is designed is to increase capacity, it's just increasing labor. going to more days and more shifts. And we're seeing some of that beginning in some of our factories. So we're really excited about the opportunities that our customers are presenting to us for challenging work for our employees. So we're very much in a we need to take care of our business now, operate very well, and service our customers. And that's coming back kind of in spades with bigger orders and more business from those customers. So the factories are set up to be able to scale, to be able to respond, and it's really principally driven by labor. Tim Moore | Analyst, ClearStreet: Great. Thanks, Dan. My last question is, now that Comtrapa integration is underway, you've had it for almost six months. We know you've got to do capacity planning, expansion there. How comfortable would the management team be to possibly make another acquisition this fiscal year, maybe something in North America, given your cash balance? Daniel McGann | Chairman, President, and Chief Executive Officer: Yeah, I think we'll see on that. I think we're still digesting Comtrafo. We're only four months into the relationship with them. It's really brought a whole new level of excitement because in North America, the team is very excited about some of the earlier comments that were made that I tend to say, well, let's take our time. But the team is very excited about the opportunities for Comtrafo in North America. to the point where I kind of try to slow it down and say, you know, hey, let's make sure, you know, we're taking advantage of all our opportunities. But I think the combined product offering throughout Latin America really is a huge winner. And I don't think that's something that we've probably talked a lot about. Hopefully, in the coming quarters, we'll have demonstrable success that we can highlight along the way. But we're a very different company than we were even a year or so ago. I mean, the total available market for us went up by 50%. I don't know if people appreciate that. The opportunity for this company and the tailwinds that we're seeing really is a unique time in history. And we're super excited and we're trying to be in position to take advantage of those opportunities as they come. Tim Moore | Analyst, ClearStreet: That's terrific color and clarity. Thanks. That's it for my questions. Keith | Conference Call Operator: Thank you. And that does conclude the question and answer session. I would like to turn the conference back over to Daniel again for any closing comments. Daniel McGann | Chairman, President, and Chief Executive Officer: I think one thing I'll say is in John's remarks, he made a very important reflection on gross margin. So that would be something I definitely would point out and say he really tried to explain things so you understand that gross margin will continue to improve probably incrementally. Really, but going forward, It's growing the top line and getting the leverage over the operating expenses that we're going to see really help drive profit. And that's what the team is focused on going forward. This has really been a transformative year for the company. I can't say that enough or in as many different ways. I don't think it's fully appreciated. I think within our employee base, they're just starting to really understand we are much bigger and broader. than we ever have been or ever thought we would be from a product lineup standpoint. The nearly $300 million in revenue, that represents really, it's 34% growth. I mean, it's extraordinary and really driven by the organic part of the business. We showed pretty significant improvement in gross margin, going from about 28 to about 30, right? So continuing to be able to move that. Delivering profit consistently, that's something that we're very proud of. but we know now we need to drive the leverage throughout the business. We believe we're positioned for growth given just where the FY26 backlog sits and having the acquired revenue from Catraffo. The expansion you can hear I'm just jubilant about in Latin America, the diversification of our revenue, and this is really driven by traditional energy and utility business. We're becoming now really about power, and the new tagline of the company is to the next power, AMSC. That's really purposeful. It's very powerful. And that's where we're headed. So we're excited. Hope that you are as well. We appreciate your time and attention and look forward to be able to talk to you in the coming months. Thank you. Be well. Thank you. Keith | Conference Call Operator: This concludes today's teleconference. Thank you for attending today's presentation. We now disconnect your lines. jsPDF 3.0.3 D:20260609232014-00'00'

NASDAQ:AMSC Q3 2025 Earnings Call Transcript Generated on 6/9/2026 Bailey | Conference Operator: Good day and welcome to the AMSC Third Quarter Fiscal 2025 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Nicole Goles, Director of Communications. Please go ahead. Nicole Goles | Director of Communications: Thank you, Bailey. Good morning, everyone, and welcome to American Superconductor Corporation's third quarter of fiscal year 2025 conference call. I am Nicole Goles, AMSE's Director of Communications. Joining me today are Daniel McGann, Chairman, President, and Chief Executive Officer, and John Kasiba, Senior Vice President, Chief Financial Officer, and Treasurer. Yesterday, after market closed, American Superconductor issued its earnings release for the third quarter of fiscal year 2025. A copy of this release is available on the investor's page of the company's website. at www.amsc.com. Remarks that management may make during today's call about American superconductors' future expectations, including expectations regarding the company's financial results, plans, and prospects constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including those set forth in the risk factors section of American Superconductors' annual report on Form 10-K for the year ended March 31, 2025, which the company filed with the Securities and Exchange Commission on May 21, 2025, and the company's other reports filed with the SEC, all of which are available on our website. The company disclaims any obligation to update these forward-looking statements. On today's call, management will refer to non-GAAP net income or non-GAAP financial measure. Tables of reconciliation of GAAP to adjusted financial measures can be found in the company's earnings release. With that, I will now turn the call over to Chairman, President, and Chief Executive Officer, Daniel McGann. Daniel? Daniel McGann | Chairman, President & Chief Executive Officer: Thanks, Nicole. Good morning, everyone. I will begin today by providing an update and sharing a few remarks on our business. John Kasiba will then provide a detailed review of our financial results for the third fiscal quarter, which ended December 31, 2025, and will provide guidance for the fourth fiscal quarter, which will end March 31, 2026. Following your comments, we'll open up the line to questions from our analysts. We are excited to share a quarter of outstanding financial results. Total revenue for the third quarter of fiscal year 2025 exceeded our guidance range and came in at over $74 million. Revenue grew over 20% versus the year-ago period, driven by organic growth as well as a few weeks of contributions from the acquisition of Contrapo, which we closed on December 5, 2025. The business outperformed this quarter. We delivered our sixth consecutive quarter of profitability and our 10th consecutive quarter of non-GAAP profitability. Strong market demand drove bookings, resulting in a robust 12-month backlog of over $250 million. Gross margins again topped 30 percent, and we closed the quarter with a strong balance sheet of over $145 million in cash after acquiring Comtropo. Total revenue for the past nine months is nearly total revenue for the entire previous fiscal year. This means that most of what we do in the fourth quarter will contribute to year-over-year growth. Our grid revenue accounted for 85 percent of AMSC's total revenue and grew over 20 percent versus the year-ago period. Nearly 15 percent of the revenue came from our wind business which grew by 25% versus the year-ago period. During our third quarter, we generated revenue across a diverse set of sectors. Traditional energy accounted for nearly one-third of shipments. Renewables represented about one-quarter. Military and utility markets each contributed over 15%. and materials, including semiconductors, made up more than 10 percent of revenue. Additionally, we delivered into a data center project this quarter. We've talked about this for the past couple of quarters. We believe this delivery marks an important milestone for additional potential opportunities in this market. We said we were going to deliver on a data center order and we did, but please remember these projects make up about 5% of total revenue. Our revenue mix is well diversified and we expect our recent acquisition to strengthen our reach to utilities while expanding our overall end market exposure. This quarter we did record a significant tax benefit due in large part to our recent history of sustained profitability and our forecasted future earnings outlook. This is an important moment in the history of our company's financial progress, and John will get into more details later in the call. Now I'll turn the call over to John Cassiba to review our financial results for the third quarter of fiscal year 2025 and provide guidance for the fourth quarter of fiscal year 2025, which will end March 31st. John? John Kasiba | Senior Vice President, Chief Financial Officer & Treasurer: Thanks, Daniel, and good morning, everyone. AMSE generated revenues of $74.5 million for the third quarter of fiscal 2025, compared to $61.4 million in the year-ago quarter. Our grid business unit accounted for 85% of total revenues, while our wind business unit accounted for 15%. grid business unit revenues of $63.2 million increased by 21% in the third quarter versus the year-ago quarter. The increase in revenue was primarily driven by organic growth within our new energy product lines, as well as the addition of Comtrapa revenues, which totaled $4.6 million in the quarter. Please note that Comtrapa revenue and associated financial activity in the quarter was for a partial period from the date we closed on December 5, 2025, through the end of the quarter. There were approximately 19 days of contraffault financial activity included in our Q3 results. Our wind business unit revenues of $11.3 million increased by 25 percent over the same time period. The increase in revenue was primarily driven by additional shipments of electrical control systems. Looking at the P&L in more detail, Gross margin for the third quarter of fiscal 2025 was 31%, compared to 27% in the year-ago quarter. This marks the third sequential quarter with gross margins exceeding 30%. Included in cost of goods sold in the third quarter of fiscal 2025 is approximately $400,000 in non-cast adjustments related to the purchase and accounting for the acquisition of Comtrapro. The year-over-year increase in gross margin was primarily driven by higher revenues, a favorable product mix, both within our grid and wind business units. Moving on to operating expenses, R&D and SG&A expenses for the third quarter of fiscal 2025 were $19 million compared to $14.6 million in the year-ago quarter. The year-over-year increase includes the acquired operating expenses of our recent acquisition, Comtropo, Additionally, there was approximately $1.2 million of acquisition-related expenses to complete the Contrapo acquisition. Approximately 20% of R&D and SG&A expenses in the third quarter of fiscal 2025 were non-cash, compared to 19% in the year-ago quarter. Our net income for the third quarter of fiscal 2025 was $117.8 million, or $2.68 per share. Our non-GAAP net income for the third quarter of fiscal 2025 was $123.5 million, or $2.81 per share. Included in our third quarter net income and non-GAAP net income was a tax benefit of $113.1 million due to the release of a valuation allowance on deferred tax assets. Excluding this tax benefit, net income in the third quarter of fiscal 2025 was $4.7 million or $0.11 per share. This compares to net income of $2.5 million or $0.07 per share in the year-ago quarter. Excluding the tax benefit, non-GAAP net income was $10.5 million or $0.24 per share. This compares to a non-GAAP net income of $6 million or $0.16 per share in the year-ago quarter. Please see our press release issue last night for a reconciliation of GAAP to non-GAAP results. We ended the third quarter of fiscal 2025 with $147.1 million in cash, cash equivalents, and restricted cash, which compares with $218.8 million on September 30, 2025. Included in the quarter was the acquisition of Comtropo, which included cash consideration of $88.3 million. We generated $3.2 million of operating cash flow in the third quarter of fiscal 2025. Our CapEx for the quarter was $900,000. I would like to note it would not be unusual for CapEx to exceed $1 million a quarter, and at times it may even exceed a couple million dollars in a quarter as we scale up production, particularly within our power transformer lines, which are seeing high levels of demand. Now turn into our financial guidance to the fourth quarter of fiscal 2025. We expect that our revenues will exceed $80 million. Our net income is expected to exceed $3 million, or $0.07 per share. And our non-GAAP net income is expected to exceed $8 million, or $0.17 per share. With that, I'll turn the call back over to Daniel. Daniel McGann | Chairman, President & Chief Executive Officer: Thanks, John. We're very pleased with this quarter's result and super excited about the rest of the fiscal year. We believe going forward the company has the capability to deliver consistent profit. We achieved two quarters of what I consider record-breaking revenue levels. One of over $72 million, that was our first quarter earlier this year, and now over $74 million in the quarter that just ended. And we're guiding to another possible quarter that could become another record-breaking quarter for our fourth quarter. As we approach the final quarter of fiscal year 2025, total revenue for the past three quarters reached an impressive $212 million. With three quarters completed, our revenue nearly matches our total revenue for the entire prior fiscal year. The business has demonstrated growth both organically as well as through our recent acquisition. Let's discuss some additional benefits that we expect of the acquisition when combined. The team has done an excellent job of integrating and making the last several acquisitions work and work together. The acquisition of Comtrafo strengthens our utility position and positions us to capture opportunities in Brazil and the broader Latin American markets. Comtrafo brings 30 years of operating history, a manufacturing presence in Brazil, and deep relationships with utility customers across one of the world's fastest growing electricity markets. Comtrafo expands our transformer offering to include distribution and large power transformers up to 250 MVA. With their strong local demand, driven by government-led grid investment, we can now serve critical transmission and grid expansion needs that we could not previously address. In closing, this was an exceptional quarter for our company. The results reflect the strength of our core business and the discipline of our operations. We delivered strong financial results and remain focused on execution. The business grew organically and the addition of Comtrafo opens new possibilities. Overall, we are truly excited about this business. We are developing business opportunities in new areas with utilities for data centers and for pipelines for traditional energy. We are very well positioned as a company that has diversified and has been growing. I am personally very excited about the future of the company. We believe we are in a tremendous position to take advantage of our end markets. We are prepared to capitalize on the growing demand for energy and the need for a stable grid to support it. We have delivered another outstanding quarter, and we can see the fundamentals of our business are well grounded. This is an exciting and positive moment for us here at AMSC. Our future-facing technologies help harmonize the world's desire for decarbonization and clean energy with the need for more reliable, effective, and efficient power delivery. We're now focused not only on the American market, but on the entire Americas. I look forward to reporting back to you at the completion of our fourth fiscal quarter and fiscal year end. We'll now take questions from our analysts. Bailey | Conference Operator: We will now begin the question and answer session. Please limit yourself to two questions. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Justin Clare with Roth Capital Partners. Please go ahead. Justin Clare | Analyst, Roth Capital Partners: Hi, good morning. Thanks for taking the time here. Good morning, John. Morning. So I wanted to start out just on the data center opportunity. So you mentioned that you have delivered a solution to a data center project here. And so just wondering if you could speak to the scope of the engagements, which products were involved, and then just within your portfolio, which solutions do you see as kind of the strongest fit for the data center application at this point in time? And then I guess just lastly, is the opportunity largely at the utility substation that you see at this point, or is this inside the data center facility? Daniel McGann | Chairman, President & Chief Executive Officer: Yeah, let me talk a little bit about what we're doing. So it represented about 5% of revenue in the quarter, so on the 74-75 that we did. So a significant project. It's something that we were telegraphed and that we thought would happen. And really the only reason we're talking about it is because I get asked the question wherever I go about data centers and what are you going to do. What we're finding is as these data centers get bigger, particularly when they're areas where they have a weaker grid, what we can do is modulate the instantaneous change in voltage. And we do that through a very compact footprint. So the more that they're loading equipment in for managing thermal load, HVAC, the more that they have higher computing power and they're worried about very small disruptions, similar to what we do in a semiconductor fab, the more we think we fit. And we think that the footprint may be a unique competitive advantage that makes it easy for either the utility or the data center construction project to buy the equipment from us. So in this case, this is really our first win in the construction of a data center. Alongside this in this current quarter, we also helped a utility that has a lot of data centers and has some challenges coming from them. So I think the answer to part of your question, Justin, is yes to both. I think that there are opportunities for us going forward in data center construction projects, but also to help support challenges with utility. That's no different than what we see in semiconductor. It's no different than what we see in mining. The market and the investment drives the need. And then the question is, where does the solution physically fit? Where does it fit within the grid? Is it on the pad that sits as part of the data center? Or is it somewhere in the grid that's supporting that effort? So it's really no different application than what we do for SEMI, what we've done for a lot of other industrials. What we're finding is that there are changes in induction at the site that we can modulate what we think in a very unique way. It's one data point, however, right? So it's hard for us to say, you know, this is the white paper and here's how we're going to analyze the return on investment for the customers. Those are all things that we're going to figure out. What we found is there are a number of data center operators and a number of data center builders that have approached us looking for exactly the type of solution that we uniquely offer. So I'm very opportunistic and optimistic that this could become a part of the business. But again, we like diversity in what we do. Did I get to all the different pieces, Justin? If I didn't, I apologize and you can ask it again. Justin Clare | Analyst, Roth Capital Partners: Yeah, no, I think you got to everything there. So yeah, I definitely appreciate that explanation. And I guess just thinking through it a little bit, just how significant do you think the growth opportunity might be here? And I'm just wondering, has your solution been installed and is now operating effectively with this project, or is that coming in the next few months? Daniel McGann | Chairman, President & Chief Executive Officer: just wondering if this kind of proves out that your solution is effective and then others can see the effectiveness and this could potentially lead to um you know upside in your orders here yeah i just i think the hardest part for people that follow us is to realize so much of what we do is industrial construction so there's a pacing that things go through a year to be able to build so i'm pleased to announce we got the order i'm pleased to announce that we delivered on the order But that's as far as we can take it. We're not at the point where it's going to operate and we'll get all the learning out of it. That's all going to come. It's a customer that knows us well, that we know well, and we'll try to use that as best as we can to try to market, you know, having a bona fide solution in the wild that works. But again, simplistically, This is no different than what we do in all the other markets. I think that there's an interesting need. I think the form factor and the speed that we can go to market really becomes a critical advantage here. If I speak more broadly, we have a huge pipeline of larger orders. I keep talking about order expansion, and we used to talk about cross-selling. Now we just talk about selling. We have hundreds of millions of dollars of opportunity across all the different areas that we have tailwinds in. We have probably in a dozen or two projects that are very large, we have several hundred million of potential business, not just for data centers, but for mines, for semiconductor, for traditional energy, that the business is really working. The business is expanding because we're being relied on to deliver more content into larger projects. That's what we've been talking about for the past few years. That trend seems positioned to continue to grow. And data centers will be a part of it. I hope to not have to talk about it every conference call because it's a piece of the business, and it's something that people get excited about. But we're not a data center stock, and we shouldn't be thinking of ourselves as a play just in one area. This is really a diversified company that's focused on the problem with energy, which is the grid designed today to be able to meet those needs and those demands that many uses and many sources of generation require to have a very effective and reliable and resilient grid. Justin Clare | Analyst, Roth Capital Partners: Okay. Yes, understood. Got it. Thank you. Bailey | Conference Operator: Our next question comes from Eric Stein with Craig Hallam. Please go ahead. Eric Stein | Analyst, Craig Hallam & Co.: Hi, everyone. Maybe we could just talk about traditional energy. I believe that was a third of the quarter, and obviously that's been a pretty increased focus here over the last year plus. I mean, as we think about that, can you just talk to us about kind of where you're selling, where you play in there? I mean, should we view that as cyclical, that it's more, you know, that swings in oil prices are have an impact, or is it insulated because it's more tied to traditional infrastructure? That would be helpful for me to clarify my thinking. Daniel McGann | Chairman, President & Chief Executive Officer: Yeah, I think it's more insulated in that it's persistent demand. In general, I think what's changed in the American economy is that traditional energy is no longer considered something that people don't want to invest in. But creating... cleaner energy in a traditional way is something we can help. Powering pipelines that move, you know, liquid and natural gas and things like that are an area that we fit in. And as well as kind of general oil processes, being able to take from extraction at the latest source and moving downstream, midstream and endstream, the types of processes that move and refine energy that create other byproducts, all are becoming more and more energy dependent. So you need energy to be able to move and process the traditional energy sources. And that's really where we come in. So we see it as a long-term kind of persistent trend for us. The climate is really more apropos there. We think there's a fit definitely in North America. We think there's a potential fit. in Latin America as well as we look at quarters and years. The other part I'll say, you know, Eric, take, you know, realize and take everything I say with a little bit of a grain of salt. Our lead times are nine, 12 months for many products, right? So anything that we're going to do today that we think is exciting is really going to affect the financials a year plus out. Eric Stein | Analyst, Craig Hallam & Co.: Okay. Yeah, no, that's very helpful. That makes sense. Maybe, you know, just as you think about growth in the business, now you're guiding to 80 million plus, a new level on a quarterly perspective. You know, I know capacity is less of an issue than I think in the past. You've talked about labor. I mean, any updates you can share there, you know, it clearly is an area which maybe is a bit of a push point, but just that'd be great, an update. Daniel McGann | Chairman, President & Chief Executive Officer: Yeah, I think the team's done very well at hiring. I feel like all the factories are being utilized very well. We have a lot of demand. We have a lot of bigger demand. So we feel really good. I think the new wrinkle in our portfolio is Brazil and the very strong potential demand there and the need potentially for some more expansion. And John kind of almost directly said that given his CapEx guidance that We believe the business is positioned to ramp, and we may have to expand capability, particularly in Brazil, to be able to go meet all of that demand two, three, four, five years out. So there's a longer-term plan that we want to be able to implement. We're at a point where the business really is driving us. We have a multiple set of very strong tailwinds that are pushing us, And we just need to be able to react to the market. If we do a good job for existing customers, they're going to come back again and again as they have, and they come back with harder and bigger problems for us to solve. Eric Stein | Analyst, Craig Hallam & Co.: Got it. And maybe the last one for me, I know, well, data center. I mean, is that something, as we think about that, similar to semiconductor where potentially if it's a large data center operator or EPC that you potentially are specced in or do you view it as it's a little more lumpy and then it would be kind of not one-off projects but it would be more based on different projects moving forward rather than a few key partners? Daniel McGann | Chairman, President & Chief Executive Officer: Yeah, I don't think I have clear visibility on that. Our EPC customers tend to try to design this in and we see a print that has our rectangle on it and that's what we try to do. Obviously, doing one of these, we're not at that level yet. Do I think this has the potential for that? Yeah. If this market grows faster than other markets, we'll have to invest in them to make sure that they grow to be able to maintain the diversity part of the portfolio. That's tremendously valuable. It's a stabilizing effect on the business and allows us to grow on multiple fronts in parallel. Justin Clare | Analyst, Roth Capital Partners: Okay, thanks. Our next question comes from Tim Moore with Clear Street. Bailey | Conference Operator: Please go ahead. Tim Moore | Analyst, Clear Street: Thanks, and congratulations on your revenue growth and operating leverage. That was very nice to see. My first question for you is about the potential to cross-sell and bundle to customers. You've done that extremely well on oil and gas to target upstream, midstream, and downstream power systems. I'm maybe curious if you can shed some light on maybe what end markets make the most sense to cross-sell near-term besides oil and gas. Is there potential in mining or chemicals, or just your overall thoughts on end markets to really get that through? Daniel McGann | Chairman, President & Chief Executive Officer: Yeah, it's pretty much everything, Tim. The way the business is now aligned is we no longer cross-sell, we just sell. So we have combined solutions that come from the family of acquisitions that we have that we're now presenting. In some cases, they're $10 million projects. In some cases, they're $25 million projects. We're presenting a combined offering to be able to manage voltage, to be able to transform voltage. to be able to modulate ACDC power flows, and to be able to do all of those features and functions for customers. So we no longer have to sell them as separate. We do, because many of our customers think of them that way. But as for the larger projects, I'll say more established customers, they like where we've had it with what we've added. And it's for mining. It's for traditional energy. It's for semiconductor energy. to some extent it's even for renewable projects as we see them. Wherever we can, we want to be valuable to our customer. And if we can keep demonstrating that value, both from what the product does and what our engineers can help solve or de-risk for the end customer, that's where we win and that's why we win. Tim Moore | Analyst, Clear Street: That's terrific color. Thanks for elaborating on that. Switching gears to my second question. I mean, you're clearly busy integrating Contrapo in Brazil. And I know some comments are made on CapEx there, and they've got a great factory that you can expand. The organic growth is awesome there, and the backlog is quite big. So can you maybe just give us a little bit more color on the near-term plan on increasing output there? And then just on the topic of acquisitions, How comfortable do you need to be with integration there? Maybe how many quarters in until you maybe consider doing your next acquisition given you're sitting on a lot of cash right now? Daniel McGann | Chairman, President & Chief Executive Officer: Yeah, it's hard, Tim, at this point to speculate. We're 19 days in plus the days we have in January. So it's early days for us. It'll take us some time to be able to digest and leverage. We have a huge opportunity just in Brazil alone that we want to go after with everything that the company has to offer there. So I think, you know, we'll take our time and we'll be, as we have been with each of them, we want them to run as they've run because we like the culture. We like the financials. That's true of all the acquisitions we've done. And then over time, how do we do more together? And that becomes the question that helps affect things two, three years out from now. So, you know, I don't anticipate we're going to turn around and do another acquisition right away. But we do have a lot of inbound. We do have a list. We are working. It's becoming, you know, the business is evolving to we have an operation business and then an opportunistic part led by John here to say, okay, what can we add to the portfolio and how do we do that? We're also looking, and you can hear it in my tone, at combining product to basically come up with whole new sets of opportunities for us. And that's taken some R&D investment to be able to do all those things. So the company is evolving and maturing in all the right ways. Tim Moore | Analyst, Clear Street: That's great color and comforting that you want Russians in the next acquisition so you're ready. But thanks a lot. Justin Clare | Analyst, Roth Capital Partners: Thanks, Tim. Bailey | Conference Operator: Our next question comes from Colin Rush with Oppenheimer. Please go ahead. Colin Rush | Analyst, Oppenheimer: Thanks, Tim. Thanks so much, guys. I have a few. We'd love to just get a quick read on working capital and how that transitions over time. Obviously, with the acquisition, you've got a substantial amount of inventory and some receivables that grew in the core. We'd love to understand how that trends over the next few quarters. John Kasiba | Senior Vice President, Chief Financial Officer & Treasurer: Yeah, good question, Colin. We have had a, I don't want to call it a drain on working capital, but we have invested into the growth of the company over the last couple of quarters. To the extent we continue that growth and if we can maintain elevated levels of growth, then we'll continue to invest in working capital. If growth tapers to call it single-digit growth, then we would see working capital probably turn favorable. So it's difficult to tell depending on our growth strategy, but if working capital is an investment, I can assure you it's to support growth. Colin Rush | Analyst, Oppenheimer: Okay. Okay. And then, you know, we haven't talked about some of the military opportunities. Certainly, you know, there's an awful lot of activity in Washington right now around enhanced military capabilities. Can you just talk a little bit, you know, outside of the ships, you talked about ports and infrastructure being a meaningful growth opportunity. You know, in your sales pipeline, what are you seeing these days and how do you see that starting to flow through into the P&L over the next couple of years? Daniel McGann | Chairman, President & Chief Executive Officer: Yeah, I think, you know, just topically for the quarter, Colin, we had a good percentage in military, more than 15%. I think typically it's closer to 10% quarter to quarter, and that was because we're doing a bunch of things at once within the quarter, which is good. And that helps strengthen quarters. I think longer term, we're kind of front and center in some of the critical problems that ports have, and those opportunities are going to be persistent and kind of long-term. But I'd say there's nothing I'll say specifically that's going to change the trajectory of that business in the next two to four years. Colin Rush | Analyst, Oppenheimer: Awesome. And then just a final one on the R&D roadmap. As your customer intimacy has improved, you're getting a look at what the real needs are for a bunch of these applications in a different way. And obviously, you guys have capabilities around customization for given applications. But we'd love to understand how you're thinking about the cadence of evolving the product suite and Um, just the leverage that you have out of the existing designs to meet, uh, all the opportunities that you're seeing with your customers. Daniel McGann | Chairman, President & Chief Executive Officer: Yeah, I'll just, I'll speak by example. So we're working towards a project for a very large mine and there's opportunities at the site, but there's also opportunities with the utility that the grid's going to need to be improved. So I think our capability has matured now to the point where we really understand the problems. that capital investment will cause in capacity from an electricity standpoint. So we try to just start with that as the premise and then work backwards and say, okay, what are going to be all the electrical challenges that this CapEx investment or this end customer is going to create, not just locally, but more broadly in the utility? So being able to combine our capabilities into products that are more proprietary, more defensible, more valuable to customers. That's what we're trying to push things as much as we can. Justin Clare | Analyst, Roth Capital Partners: Okay. Thanks, guys. Bailey | Conference Operator: This concludes our question and answer session. I'd like to turn the conference back over to Daniel McGann for closing remarks. Daniel McGann | Chairman, President & Chief Executive Officer: Thanks, Bailey. As we look forward to the future, it's clear that the opportunities ahead are vast. We stand ready to capitalize on the rising demand for energy and the critical need for a dependable grid to support it. We reached another recent record quarter with revenue levels of over $70 million, and we guide it for our next quarter to potentially exceed $80 million. The business has already demonstrated a strong year through the first nine months into the fiscal year. We see more traditional energy and utility projects, including those driven by data center demand, on the horizon. In the longer term, we have a very strong pipeline of materials and semiconductor projects as well. I look forward to talking to you again when we report our full year results. Thank you, everybody, for your support and attention, and have a great day. Bailey | Conference Operator: The conference has now concluded. Thank you for attending today's presentation. 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NASDAQ:AMSC Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Good morning, and welcome to the AMSC second quarter fiscal 2025 financial results call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I'd now like to turn the conference over to Nicole Coles, Director of Communications. Nicole Valdez | Director of Communications, American Superconductor Corporation: Please go ahead. Thank you, Jason. Good morning, everyone. And welcome to American Superconductor Corporation's second quarter of fiscal year 2025 conference call. I am Nicola Valdez, AMC's Director of Communications. President and Chief Executive Officer, and John Conceiva, Senior Vice President, Chief Financial Officer, and Treasurer. Nicole Valdez | Director of Communications, American Superconductor Corporation: Yesterday, after the market closed, American Superconductor issued its earnings release for the second quarter of fiscal year 2025. A copy of this release is available on the investor's page of the company's website at www.amsc.com. During today's call... Remarks that management may make about American superconductors' future expectations, including expectations regarding the company's future financial results, plans, and prospects constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various factors, including those set forth in the risk factor section of American Superconductors Form 10-K for the year ended March 31st, 2025, which the company filed with the Securities and Exchange Commission on May 21st, 2025. as well as their other filings, all of which are available on our website. The company disclaims any obligation to update these forward-looking statements. On today's call, management will refer to non-GAAP net income on non-GAAP financial measure. Tables of reconciliation of GAAP to adjusted financial measures can be found in the company's earnings release. With that, I will now turn the call over to Chairman, President, and Chief Executive Officer, Daniel McGann. Daniel? Daniel McGahn | Chairman, President, and Chief Executive Officer: Thanks, Nicole, and good morning, everyone. I will begin today by providing an update and sharing a few remarks on our business. Chairman John Cassiba will then provide a detailed review of our financial results for the second Nicole Valdez | Director of Communications, American Superconductor Corporation: which end at September 30, 2025, and provide guidance for the third fiscal quarter, which will end December 31, 2025. Following our comments, we'll open up the line to questions from our analysts. with revenue of nearly $66 million. This is our third consecutive quarter performing at this higher revenue level. Second quarter revenue grew more than 20% year over year. strong execution across our grid and wind businesses. Our grid business delivered strong growth of over 15% compared to last year's quarter. Our wind business also posted an impressive growth of over 50% from the year-ago period. We delivered our fifth consecutive quarter of profitability and our ninth consecutive quarter of non-GAAP profitability. Gross margins top 30% again. And we closed the quarter with a strong balance sheet of over $215 million in cash. Overall, we posted a quarter of very strong results. Revenue came from a broad mix of sectors. Daniel McGahn | Chairman, President, and Chief Executive Officer: About one quarter of our sales came from traditional energy projects, with another quarter from renewable energy projects. Materials projects, which include semiconductor, accounted for over one-fifth, while military and other industrial sectors made up the remaining portion. This diverse mix of revenue reflects the growing demand across our end markets and the reach of our technology. We are being designed into more and more projects where our proprietary technology has become the go-to solution, which is a great validation of the value we bring. Our technology has gained a strong foothold across multiple sectors. I'll now turn the call over to John Kasiba to review our financial results for the second quarter of fiscal 2025 and provide guidance for the third quarter of fiscal 2025, which will end December 31st, 2025. John. John Kasiba | Senior Vice President, Chief Financial Officer, and Treasurer: Thanks, Daniel. Good morning, everyone. AMSE generated revenues of $65.9 million for the second quarter of fiscal 2025, compared to $54.5 million in the year-ago quarter. Our grid business unit accounted for 83% of total revenues, while our wind business unit accounted for 17%. Grid business unit revenues increased by 16% in the second quarter versus the year-ago quarter. The increase in revenue was primarily driven by the organic growth within our new energy product lines. Wind business unit revenues increased by 53% over the same time period. The increase in revenue was primarily driven by additional shipments of electrical control systems. Looking at the P&L in more detail, gross margin for the second quarter of fiscal 2025 was 31%. compared to 29% in the year-ago quarter. This increase in gross margin was primarily due to a favorable product mix, particularly within our grid business unit. This is now two consecutive quarters with gross margins exceeding 30%. Now, moving on to operating expenses. R&D and SG&A expenses for the second quarter of fiscal 2025 were $17.1 million compared to $13.2 million in the year-ago quarter. This increase is primarily driven by the incremental NWL operating expenses and higher stock compensation expense. Approximately 21% of R&D and SG&A expenses in the second quarter of fiscal 2025 were non-cash. We generated non-GAAP net income for the second quarter of fiscal 2025 of $8.9 million, or 20 cents per share, compared with a non-GAAP net income of $10 million, or 27 cents per share, in the year-ago quarter. Our net income on the second quarter of fiscal 2025 was 4.8 million or 11 cents per share. This compares to net income of 4.9 million or 13 cents per share in the year-ago quarter. Included in both net income and non-GAAP net income in the year-ago quarter was the release of a $5.1 million valuation allowance. due to the recording of the deferred tax liability from the acquisition of NWL. This was a non-cash benefit in last year's results. Please see our press release issued last night for a reconciliation of GAAP to non-GAAP results. We ended the second quarter of fiscal 2025 with $218.8 million in cash, cash equivalents, and restricted cash. We generated operating cash flow in the second quarter of fiscal 2025 of $6.5 million. Now turning to our financial guidance for the third quarter of fiscal 2025, we expect that our revenues will be in the range of $65 to $70 million. Our net income on that revenue is expected to exceed $2 million, or $0.05 per share, and our non-GAAP net income is expected to exceed $6 million, or $0.14 per share. With that, I'll turn the call back over to Daniel. Daniel McGahn | Chairman, President, and Chief Executive Officer: Thanks, John. We have sustained an average quarterly revenue above $65 million for the past three quarters. And you can see we're bullish with our expectation that this trend could continue next quarter. As is common in our business, timing plays a key role in quarterly results. Some quarters benefit from accelerated timing of projects or earlier deliveries. Others see projects shift into the next quarter or next period. Typically, our 12-month backlog represents about nine months of business. The team is always selling projects out six, nine, or 12 months, and in some cases, beyond 12 months. Our lead times have been reduced for the overall business. And we see this as a competitive advantage. We are growing. We are executing with discipline and focus. And we have tremendous tailwinds at our back. Our results reflect our progress in scaling the business, diversifying revenue, and driving outstanding financial performance. For our second quarter, we saw Strong order demand across energy and military markets. Most of our orders came from traditional energy and renewables, making up nearly 65% of total orders. Military followed at roughly 15%, with the rest driven by materials such as metals, mining, and as well as other markets. This demand is supported by powerful tailwinds across multiple sectors with significant investments projected for 2025. In energy, traditional energy like oil and gas are expected to see over $1 trillion in capital spending, while renewables are attracting more than $750 billion. International growth, particularly in renewables, adds another layer of long-term opportunity. In materials, the global mining project pipeline exceeds $1 trillion. Investments in semiconductors and global data centers together are expected to top $650 billion. And in military, defense spending is projected to reach nearly $3 trillion. These sectors represent massive long-term capital investments. We believe we are well positioned to benefit with our broad product portfolio across power electronics, grid infrastructure, and military systems. We see steady growth in demand. Over the past four quarters, we've averaged over $60 million in new orders per quarter. That is an improvement from the prior four quarters, which averaged over $45 million per quarter when we exclude the exceptional order we received from the Royal Canadian Navy. We've closed the quarter with a strong pipeline of opportunities and a 12-month backlog of well over $200 million. We did win a new contract with the US Navy to begin design for a whole new class of product that we will hopefully talk about in the future. As we look ahead, we did mention last quarter about a coming acceleration in our military business We see this coming. We expect revenue to be driven by strong activity in materials, particularly semiconductors, along with increasing investments in data center infrastructure. We may even see another acceleration in the coming quarters in this part of our business. We are benefiting from power-intensive materials manufacturing. These are the feedstocks of the future. Our semiconductor offering performs exceptionally well, helping protect fabs from power variability and supporting the rapid build-out we're seeing in that market. We are just beginning in data centers. We have served grid projects to help support a more resilient grid and now hope to begin to deliver directly to data center construction projects. In addition, we've broadened our reach beyond renewables to include traditional energy projects. That diversification is making our business stronger and more resilient across multiple sectors. We are prepared to capitalize on the growing demand for energy and the need for a stable grid to support it. We are excited about the future. and we believe we're exceptionally well positioned to capitalize on the opportunities ahead. After an acceleration in the first quarter, the business performed nicely in the second quarter. We are guiding to another strong quarter ahead. Our third quarter is off to a great start, supported by healthy new orders. The business is seeing tailwinds across the energy and materials markets. expansion in material capacity and build out of data centers could further accelerate this part of our business. Given our backlog and balance sheet, the business is very well positioned for what might lie ahead. Our future facing technologies help harmonize the world's desire for decarbonization and and clean energy with the need for more reliable, effective, and efficient power delivery. I look forward to reporting to you again following the completion of our third fiscal quarter of 2025. Jason, we will now take questions from our analysts. Operator | Conference Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question comes from Eric Stein from Craig Hallam. Please go ahead. Eric Stein | Analyst, Craig Hallum: Hi, Daniel. Hi, John. Hey, Eric. Good morning. Good morning. So wondering if we could start, you know, so obviously you talked about, you know, you've been above 60, 65 million here for a couple quarters, and the typical cadence of your business has been you're at a level, those orders pick up, you see that, you know, then your revenues obviously pick up. And so I'm just curious, you know, thoughts given your macro tailwinds, how you're positioned, expanded offering, you know, what you're seeing on the order front? and what that implies about kind of that next step up for the company. Daniel McGahn | Chairman, President, and Chief Executive Officer: Yeah, I think the next step is going to be determined on how all this cadence comes together at a single point in time. But, you know, we do see an acceleration coming in military, not only from new orders that I mentioned, but also based upon, you know, the more complete offering that we now have, not only protecting ships, but powering ships, and powering the construction of the ships. So there's a bunch of opportunities there for us. I did mention that we do see a potential acceleration, kind of similar like we did in Q1, with semiconductor build-out. We have a pretty robust pipeline and backlog of orders there. And in data centers, we hope to announce at some point in the relatively near future that we've delivered on our first project to the construction of a data center. We think that opens up a whole other opportunity for us, but it's very early days there. So I think it's always hard for me to tell you definitively what it's going to look like to get to 75 or to 80 and beyond, but I think when you look at the macro environment that we're in, Everything is at our back right now. We see that with the pipeline. We see that with the cadence of the orders. We see that the operation is being able to deliver timely to customers. I mentioned that our lead times are shrinking. That's a good sign, I think, in our business. It gives us a competitive advantage, we think. So as we start today, we think that the opportunities for us are bigger and brighter than they were even a quarter ago. Eric Stein | Analyst, Craig Hallum: Got it. Maybe just digging in on the data center piece, I mean, obviously top of mind in the market. I know it's early days, but I mean, is that something that you envision eventually becomes where you're specced in like you have been with some of the semiconductor fabs with that data center provider? Daniel McGahn | Chairman, President, and Chief Executive Officer: Yeah, I think that's where we're hoping to go. I don't know how long it will take. But when you think about design wins, we're specced in a variety of systems for the military. We're specced into a number of chip makers for fabs. We don't talk a lot, but we're specced into a lot of utilities. where our products are things that they can basically purchase on order as opposed to doing a whole design work and selling them on the efficacy of the technology. That's been a huge transformation of the pipeline for utilities. Some of that's driven by data center, really the data center impact on the grid. But now we're seeing that EPCs that we've worked with for many years are getting more and more involved with data centers, and they're attempting to pull us along with them. Our hope is that customers that are very familiar with us, as they get more involved with construction and data centers, are going to turn to us like they have in other industries as a known and trusted supplier. So we think there's a very nice opportunity there. How long it takes to pay off, I don't know. I think what we're optimistic is that there are so many positive signs in our business that the business should continue to improve. I understand always the question is the cadence, and you have it right. We've gotten to a level. This is a great level for us to be at. I think we finally demonstrated the level of profitability we can get at this level, and now we're looking to kind of continue to push with our key customers to expand our order book, and I see that coming in the coming quarters. Okay, thanks. Operator | Conference Operator: Our next question comes from Colin Rush from Oppenheimer. Please go ahead. Colin Rush | Analyst, Oppenheimer: Thanks so much, guys. Given some of your advantages around having compact form factors, your ability to deal with high voltage, and some noisy power, along with some of the expertise that you guys have around DC-to-DC architectures and where the data centers are going in terms of how they're being built out, can you just talk a little bit about how you see your competitive advantage in that data center opportunity, given where the technology is headed and some of the legacy IP that you guys bring to the table. Daniel McGahn | Chairman, President, and Chief Executive Officer: Have you been on some of our sales calls recently, Colin? Nicole Valdez | Director of Communications, American Superconductor Corporation: I mean, listen, we see the alignment, but... Daniel McGahn | Chairman, President, and Chief Executive Officer: Yeah, but I mean, you're talking about kind of how we go about marketing what we have. I think the idea of noisy, less resilient grids are a key in the data center market. I think first and foremost, what we've really discovered is a lot of it's about time and speed. So being able to build things quickly, being able to focus on lead time, Being able to focus on our supply chain, you know, if that part of the business starts to ramp, that's been, I'll say, something that the team has had some focus on. I hope that we can talk about more specifically what we're doing. I think as we kind of figure out where our fit is, I think that there is an opportunity for an offering across our businesses. So not thinking... the individual elements but a combined offering. And I think order sizes could be quite large in the data center area. But you have it right. It's about the noisiness of the system, and it's about quieting it quickly and being able to deliver stuff to site that fits in well. You mentioned the compact nature of it. So speed and size is kind of really paramount, we think, in this application, and that's really the strength of our technology. Colin Rush | Analyst, Oppenheimer: That's super helpful. And then, you know, broadly speaking, you know, the customer base is diversified. You know, your end market exposure is diversified. But the military history here is pretty meaningful for the company in terms of what your opportunity set is. Can you talk a little bit about, you know, you've got the ship protection system business, but there's also the port opportunity. You know, how much progress are you making around the non-ship military exposure in terms of resilience for some of the infrastructure that, you know, the Department of Defense is looking for in its, you know, kind of asset base over the course of the next, call it four to five years? Daniel McGahn | Chairman, President, and Chief Executive Officer: Yeah, there's kind of... three flavors to what we're offering. There's the protection, which is the superconductor-enabled technology. There's powering critical ship systems, which we have a number of design wins there. Many of the ships that were on with power supplies are the same size or bigger, what we're doing in protection. So that's a very important part of the business. And the third part, as you mentioned, for ports or for construction, That's an area that we see acceleration potentially coming. We're designed in for a number of shipmakers. We've been able to take the relationships we have in helping to build the ship with capability to now powering the capacity to build those ships. So that's an area that there's investment that is forthcoming. There are pieces of our backlog that represent that, but we think that there's some order pipeline that can help that grow. And that's why last quarter, this quarter, you know, I see the signals of an acceleration on the military side, you know, coming. I think, again, to go back to the previous question, for us, it's always hard to kind of predict when the timing comes. We know when need dates are. We know, you know, what our build cycle is going to be and We try to map those two together for the customer and deliver what they need when they need it. Nicole Valdez | Director of Communications, American Superconductor Corporation: Thanks so much, Daniel. Daniel McGahn | Chairman, President, and Chief Executive Officer: Thanks, Colin. Operator | Conference Operator: Again, if you have a question, please press star, then 1. And our next question comes from Justin Clare from Roth Capital Partners. Please go ahead. Justin Clare | Analyst, Roth Capital Partners: Hi, good morning. Thanks for the time. Good morning, Justin. Sure. Good morning. So I guess I also wanted to just follow up on the data center opportunity and just wanted to see, you know, are you currently engaged with utilities on that opportunity or data center developers? And then wondering if that is something you see as more at the substation level, or do you see the ability to kind of offer a solution within the Dana Center? Any added detail you could share on the specifics of the solution that might be a good fit for that end market? Daniel McGahn | Chairman, President, and Chief Executive Officer: Yeah, I think the good news today, and maybe I can say it more clear than the last quarter, is that the answer to your question is D, all of the above. We started with the relationships with utilities to be able to fortify the grid. So challenges that are happening on the grid side because of the rapid build-out and demand for power from data centers. We're now seeing bids where there's direct offering to the construction of a data center that will be directly with the developer and And in many cases, it's an engineering procurement construction company that knows us well that we know well. So that puts us in a good position where we're not trying to sell the efficacy of technology. It's more about lead time and how can we get product into the field faster. The feature set, it's really, and that's what we're talking about with the previous question, it's really managing the noisiness that can come from the grid or can cause disruptions for the data center. It's very similar to, not quite identical, but similar to what we do for a semiconductor fab, where you're trying to deal with the speed of transient changes in the power flow. Those are even more critical for data centers even than a semi-fab. So as they're trying to build those out more rapidly, they're trying to find simple solutions for their problems that they can get to quickly. So that's why we're excited about it. I hope to talk about that market more in the future. I think it is early for us, but I'm hoping that we talk about some wins and some deliveries soon. in the coming quarters. Justin Clare | Analyst, Roth Capital Partners: Okay, great. And then you mentioned the semiconductor market and the orders there. I'm wondering for the data center and market here, would you anticipate the order sizes being similar to those in the semiconductor market? And then I guess while we're on it, I wonder if you could just speak to the trend in orders for semis, it sounds like, you know, historically those order sizes have been increasing. Is that trend continuing at this point? Daniel McGahn | Chairman, President, and Chief Executive Officer: Yeah, simple order magnitude with the semiconductor fab, we offer anywhere from 2 million to 10 million of content. We've gotten orders within those ranges, you know, to the low end and certainly to the high end. That's what's helped, I think, the financials and the scale there. On the data center side, we have projects that are exactly in that same range and larger. I think that what we need to do is kind of crawl before we walk and walk before we run. We want to get to the point where we can deliver, we'll say, first systems into the construction of data center. And then I think the opportunity there is certainly possible for larger and larger order sizes. I don't know what those will be until we get them, but certainly we hope to be able to talk about those in the future. Nicole Valdez | Director of Communications, American Superconductor Corporation: Okay. Justin Clare | Analyst, Roth Capital Partners: And then just one more follow up on the military business. You mentioned that you had wanted a new contract with the US Navy for a new class of ship. I'm wondering, did that show up in the backlog this quarter or is that something you anticipate in the future? And then just thinking through the magnitude of the potential impact, you've been on one class of ship so far. If you're seeing a new class of ship now, could you potentially double the ship protection business? Any sense for the magnitude of the impact here would be helpful. Daniel McGahn | Chairman, President, and Chief Executive Officer: So the contract that we won is for the design of a completely new class of product, not for protection. The order of magnitude of it is greater than ship protection, but the time it will take to develop and deliver and test and qualify, that's not in the immediate future. We're at a step where we're looking to design, look to be able to understand what the value and the efficacy are there, and then get them to the point where you do pre-production product and do all the things we've had to do on the protection side. I don't want to get people so excited that in the coming quarters you're going to see that driving a ramp in the military part of our business. What's going to drive the ramp in our military business is more powering ship systems and powering the port and the construction of ships. That's what we see kind of in the very near term. So part of why we don't put a press release out about this order and things, because I don't want people asking for an update every quarter, every year, where we are. A lot of the technology that we're going to work on for the U.S. military will be at a level of clearance. We're not going to be able to talk about it. So we're wildly excited inside the company on this win. It's been many years in the making. There's been a whole huge team that's been after it. This has been a big part of their drive and desire to help diversify our offering for the U.S. Navy. But we're really just at a design point. So we think we have the right idea. We think it's a long-term fit for the U.S. Navy, but it will take time to go through you know, all the process steps to eventually get into something in production that delivers real revenue. Daniel McGahn | Chairman, President, and Chief Executive Officer: Okay. God, I appreciate it. Thanks. Operator | Conference Operator: There are no more questions in the queue. This concludes our question and answer session. I would like to turn the conference back over to Daniel McGahn for any closing remarks. Daniel McGahn | Chairman, President, and Chief Executive Officer: Really excited in the company, and I hope that comes through. I think every quarter as we go and be able to put up great numbers again just bolsters our confidence, the ability to deliver products to great customers. You know, in just one year, we've moved from break-even to meaningful and consistent profitability. We're incredibly proud of that. We believe that's a strong indicator of how the business is scaling and how we're executing across our core markets. We're highly confident in our direction and look forward to building on this progress in the quarters ahead. The market is enabling extraordinary opportunities for us, and we hope to be able to talk to you about progress in future quarters on those as well. Thank you for your time and your patience with us and we'll talk to you soon. Operator | Conference Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. jsPDF 3.0.3 D:20260606085942-00'00'