Q3 2019 Earnings Call
[music].
Good day and welcome to the American Superconductor third quarter fiscal 2000.
19 earnings conference call.
Today's conference is being recorded at this time I was like trying to convert over to Mr. John I was born please go ahead Sir.
Thank you Nick good morning, everyone and welcome to a very doctors third quarter fiscal 2019.
Oh.
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Customer relations.
Yeah.
Agencies.
With us as core data gathered chairman President and CEO John.
Senior Vice President.
American Superconductor issued its earnings release, the third quarter fiscal 2019 yesterday after the market clubs.
For those.
Does it need who have not yet seen their release copy is available in the investor is page of the company's website www dot A.C. dot com.
Well I started to call it back to remind you that various remarks that management may make during today's call about American superconductor, its future expectations plans and prospects.
Forward looking statements for purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act.
Actual results may differ materially from those indicated by such forward looking statements as a result, various important factors in those set forth risk factor section of American superconductor.
I report on form 10-K your ended March 30, Onest 19.
Well the FTC on June 520, 19 in subsequent reports that the company has filed with the FCC.
These forward looking statements represent management's expectations only as of today and should not be.
Slide upon as representing management's views as of eight days subsequent to today.
The company anticipates that subsequent to that develop and stay cost. The company is changed the company specifically disclaims any obligation to update these forward looking.
Also on todays call management board Herb certain non-GAAP.
Financial measures.
Got that lost and non-GAAP operating cash flow.
Oh, yeah, but that was supported by the company is that in California, I lost the for sale up an already that stock based compensation gain on the China settled but that amortization of acquisition related intangibles.
Hey.
Is it fair value or other unusual charges are items, and then that tax effect of the justice calculated relevant right.
Yeah.
Non-GAAP operating cash flows defined by the company operating cash flow before they try to celebrate that legal expenses.
But just any other.
Usual cash.
All right.
A reconciliation to the non-GAAP measures to the directly comparable GAAP measures can be found the third quarter fiscal 2019 earnings press release, the company issued at furnished to the FCC about 9.8 8-K.
All of American Superconductor <unk>.
I see filings can be accessed from the Investor Relations page of its website at www dot.
Uh huh.
With that I'll now turn the call over to chairman President and CEO, Jim again, Daniel Thanks, John.
Hi, good morning, everyone.
I'll begin today by providing an update.
Our grid and when business is a John can see but will then provide you with the detailed review our financial results for the third fiscal quarter, which ended on December 30, Onest 2019, and provide guidance for our fourth fiscal quarter, which will add March 31st 2020.
Following our comments will open up.
Why the questions for brand <unk> [noise].
At the top here I, just want to say I, probably have a team that's really rallied behind this idea of growing through grid and what you're going to see today as we go through the results and as we look forward in the next few quarters, it's really coming to fruition. This change in direction that many of you.
Have supported us through.
And we see what we think is the beginning of a lotta good news starting with today.
No revenues of nearly $18 million exceeded our guidance range for the third quarter fiscal 2019.
[laughter] revenues more than.
And then.
Third quarter fiscal 2019, when compared to the same period last year.
In fact, great revenues for the first three quarters.
This fiscal year.
Already surpassed freight revenues from the entire prior fiscal year.
Great that's great.
More than 30% order on core.
And for the first three quarters of this fiscal year or great businesses.
60%.
Our total business grew by more than 25% quarter to quarter and year on year.
We are executing on our.
I don't need to diversify our business.
Reduce volatility like gross.
<unk>.
That's the stars here.
We have maintained our sales Adam will further strengthen the our backlog.
I think our grid visibility well into fiscal 2000 twice.
In our.
Business, we began shipping 5.5 megawatt easy has to do some during the third quarter fiscal 2019.
Our deep our businesses game notable this fiscal year.
[noise] is being supported by a strong base a project.
In both the renewal and industrial segments.
The average size of our D var project has doubled.
Which is having a positive effect on gross margin.
Our manufacturing team is performing very well.
Our supply chain has been able to respond to the increasing demand for D var.
We anticipate that.
D var shipments should provide a strong base of grid revenues in the fourth quarter of this fiscal year and into next fiscal year.
This expectation is driven by the strong backlog that we have for D var as well as the overall grid business. In fact, we now have reported or.
Third consecutive quarters, which grid revenues comprised over 70% of total revenue or grid business today is larger than our total business was just a few quarters ago.
The catalyst of our recent D var industrial segment growth comes from the semiconductor manufacturing industry, which requires.
Clean reliable power.
Our D var performance in the renewable connectivity segment, both here and in the U.S. market.
The broad.
It's very strong and position.
Further Roe.
As domestic and international grid codes get more stringent we're seeing more.
Securities for our D var systems to connect wind farms to the transmission grid.
We are partnered with top tier wind turbine manufacturers.
To provide wind farm connectivity to the power grid in Australia.
As well as other.
We believe this excess as a result, the exceptional quality in high performance of our power electronic solutions.
In the third quarter, we announced $31 million, a new D var orders and expect to enter fiscal 2020 with a strong backlog of orders for.
Livery in fiscal 2020.
Our team our video product addresses our quality on the distribution grid.
Over the last years, there's been a rapid rise in distributed energy resources in particular distributed generation from photovoltaic solar PV isn't the former.
Residential rooftop small utility scale and commercial solar installations.
According to the solar Energy Industries Association, the install capacity of the U.S. reached approximately 70 gigawatts of solar PV in 2019.
As expected to more than double.
By 2025.
Installed wind capacity reached 100 Gigawatts in 2019 and is expected to increase by more than 50% by 2025.
In the U.S. both.
I Oh, sorry in the U.S.
2025.
Solar and wind capacity will generate enough electricity to power the equivalent of approximately tens of millions of American homes.
Globally, both the wind and solar markets are expected to add an additional 900 kilowatts up 2025.
Oh, it's focused principally on looking at solar.
We added the numbers for win so you understand in contrast, the solar opportunity has the potential to even bigger.
Season winds.
Because renewable energy is dynamic and intermittently variable in nature that's.
You should grids much now enhance their network capabilities to accommodate this.
Resource well, maintaining efficiency and superior power quality for their customers.
For the utility the B O system offers superior power quality.
Environmental benefits and significant.
Savings over traditional solutions.
In fiscal year 2019, we initiated a targeted commercial launch to make sure we ever product ready for it expected broader commercial launch in fiscal 2020.
Utilities are findings that are de Vito solution can cost effectively.
Improve the power quality on distribution lines that are becoming saturated with solar PV, whether from residential or commercial solar farms.
The traditional solution to this type of power quality problem is to reclaim doctor the distribution, Peter which is a very costly.
[music].
And these types of applications, maybe it was already proven to be as little as one eighth the costs.
Alternative because reconductoring, it's no longer necessary.
We have seen the contributing to our grid growth this fiscal year.
Turning to.
As you know, we formalized an agreement with comment.
I actually want to install our resilient electric grid or Reg system to link existing electric power infrastructure within the city of Chicago.
First Reg system in Chicago, we utilized Amos these technology to link existing electric power infrastructure with.
Their city.
We have fabricated Reagan stable for the calm and project and expect to deliver the entire projects hardware to comment in 2020.
We look forward to the successful energization of right, which is expected to occur still at 2021.
One.
We're also working with comment to evaluate a second potential project. The project that is expected to be four to six times larger than the current ones.
The proposed second project is anticipated to link multiple substations in Chicago.
We are working to expand Reg E. On Chicago, there are issues facing utilities that we believe simply cannot be solved using conventional power delivery systems climate change is increasing the intensity and number of fires floods in stores severe weather in an aging infrastructure or the leading.
Oh power outages in the United States.
The annual cost and power outages in the U.S. is estimated to exceed $25 billion and that annually.
Cost estimates for power outage recovery storms have now been reported.
Oh.
Billions of dollars.
Sure.
We believe our ranking system can address those unique needs in a way that makes economic sense to utilities, we're working to help utilities across the United States.
Understand that Reg uniquely solves problems that arc <unk> priority today.
Regs physical properties allow the electric grid to be resilience and efficient without a digital or computer footprint in other words without the cyber security risks posed by some recent efforts to modernize the grid.
We continue to pursue specific projects with Boston.
San Francisco, Washington, D.C., as well as Chicago and several other cities.
With the first system secured we believe the future deployments of regs, Greg will be de risk, we anticipate growth from a REIT business in fiscal 2019.
Turning to the Navy our ship protection system is now the U.S. Davies baseline design for the San Antonio Class ship platform called LPD.
From a capacity perspective, we are planning to manufacture multiple Sps systems concurrently.
This fiscal year.
We focus.
On putting into place the capabilities to deliver on the backlog we have already established Sps systems for LPD 28, and LPD 30.
S.P.S. contributed to our grid segment revenues in the third quarter fiscal 2019.
We are working closely with the Navy to understand the program timing for orders that we anticipate for LPD 29, and LPD 31.
We anticipate our S.P.S. has the potential for deployment on a total of approximately 15 future shifts in this class.
We believe our S. P S for the San Antonio Class. It represents a potential revenue stream of about $150 million over the remaining design life of the San Antonio class.
The San Antonio classes are first design win the Navy.
The baby has identified the next classes ship for deployment of our S.P.S. system.
We are pursuing additional classes of vessels with the U.S. daily such as aircraft carriers destroyers brigades littoral combat ships and support vessels.
We believe that were in position to get more ask yes orders in the future.
With a beachhead established on the San Antonio Class, our strategy is to expand into additional platforms and navies.
Our long term vision is to expand HTS technology into the fleet.
Through a variety of applications for power propulsion and protection equipment.
Turning to do some headwinds.
In 2017, we signed an agreement for a 5.5 megawatt offshore wind turbine design with South Korea wind turbine manufacturers do stop.
Under the agreement M. A C of the exclusive supplier of electrical control systems produced on 5.5 megawatt offshore wind turbine.
29 team, we received a 9 million dollar order.
Four or 5.5 megawatt E C. S units, which we are now supply do sawn wit.
We expect to complete shipments under this order by no later than fiscal year 2020.
As part of the South Korea.
South Korea's ministry of trade industry and energy strategy.
Renewables are targeted to generate 20% South Korean electricity.
By 23.
And at least 30% by 2040.
Do you expect it added when capacity by 2030 is in the range of 13 to 17 Gigawatts.
To date, there are approximately nine large scale offshore wind farms in the development pipe.
Which totaled nearly nine gigawatts of wind capacity.
We understand do some will supply wind turbines for the south Western offshore wind project, It's a 2.5 gigawatts development as well as the goods on offshore wind project, which is a one gigawatt wind farm being.
Developed.
We have a strong working relationship with do song, we believe we're well positioned to support their short term and long term plans.
Our when team is working closely with Tucson, and together, we look forward to potentially penetrating the global offshore wind market.
On to India. We are monitoring IMAX is execution on the cecchi to project as a reminder, I Inox, one 300 megawatts from the second to auction.
According to IMS Knox delays with the build out of the grid in India has negatively impact.
All wind turbine manufacturers in India.
For our.
Supply agreement I Knox's required the post letters of credit before MSC will ship easy task orders.
Last quarter, you report I Knox as delinquent on its obligation to post letters of credits percept subsidies, yes that I inox forecasted to purchase onto the terms of the two megawatts applied.
Contract well does remain delinquent on the strategic two megawatts supply agreement the company did pay past due amounts on open invoices.
During the third fiscal quarter I Inox is working to regain compliance with our strategic two megawatt supply agreement. We believe our inox is working through their.
Worry of two megawatts yeah.
Turbines.
Due to the slow down in the Indian Windmark last year.
Now I'd like John C., but to discuss our financial results for the third quarter fiscal 2019, as well as provide financial guidance for our fourth fiscal quarter ending March 30.
First 2020.
Oh, Thanks, Daniel Good morning, everyone.
[noise] Amnesty generated revenues of 17.9 million for the third quarter fiscal 2019, compared to 14.1 million in a year ago quarter.
Great business accounted for 85% of total revenues.
[noise] written business unit revenue of 15.2 million more than doubled versus a year ago quarter with 123% year over year growth.
The bar.
Oh.
Yes, and Greg each contributed to growth in the third quarter fiscal 2019.
[noise] a wind business revenue up 2.7 million was driven primarily by easiest shipments to do is done and spare parts shipments to our when licensees and their customers.
Looking at the piano in more detail gross margin for the third quarter fiscal 2019 was 9%.
<unk>.
Yes, just 26% and a year ago quarter.
The decrease in gross margin in the third quarter fiscal 2019 was primarily due to a less favorable product mix and increased revenue from our cost share project with DHS, but the Chicago right project.
Research and development and testing the expenses.
Third quarter fiscal 2019, or 8.1 million compared to 7.88 million in the year ago period.
Approximately 13% about R&D and SGN a expenses in the third quarter fiscal 2019 or non cash.
Our net loss in the.
Third quarter fiscal 2019 was 6.8 million or 32 cents per share. This compares to a net income up 17.3 million or 85 cents per share in a year ago quarter.
As a reminder, the net income in the year ago quarter included a net gain on the China's element of 22.8 million.
Our non-GAAP net loss for the third quarter fiscal 2019 was 6.7 billion or 32 cents per share compared with a non-GAAP net loss of 22.3 million or 11 cents per share in the year ago quarter.
Please see our press release issued last night for a reconciliation of GAAP to non-GAAP results.
Our GAAP operating cash burn in the third quarter fiscal 2019 was seven point Threemillion.
During the quarter, we paid a total of 2.7 million income and withholding taxes related to the settlement when excluding these settlement related tax payments operating cost Brian was 4.6 million.
On November 13.
In 2019, Hudson Bay capital exercise warrants to purchase an aggregate of 786000 restricted shares of the company's common stock at an exit exercise price of $7. An 81 cents per share I think they paid an aggregate of 6.1 million the company in connection with a warrant.
<unk>.
The remaining on exercise Hudson Bay capital warrants expire on November 13, 2019.
As of December 31st 2019, Amnesty does not have any outstanding warrants.
We ended the third quarter fiscal 2019 with 66.3 million in cash.
Cash equivalents marketable securities unrestricted cash this compares with 68.6 million at September Thirtyth 2019.
Turning to our financial guidance for the fourth quarter fiscal 2019, we expect that our revenues will be in the range of 17 to 20 million a net loss on that.
Revenue was expected not to exceed 6 million or 28 cents per share and non-GAAP net loss as expected not to exceed 5 million or 23 cents pressure.
The company expects operating cash flow to be a burn up to 1 million in the fourth quarter fiscal 2019. This guidance does not include any tax payments other costs.
So the China settlements.
We expect to end the fourth quarter fiscal 2019 with no less than 61 million in cash cash equivalents in marketable securities unrestricted cash.
With that I'll turn the call back over the Daniel.
Thanks, John.
To conclude today.
[noise], great revenues more than doubled.
In the third quarter fiscal 2019, when comparing to the same quarter last year.
Our grid business grew more than 30% sequentially in the third quarter.
And for the first three quarters in fiscal <unk> of this fiscal year.
Our grid businesses up almost 60%.
In fact nine months into this fiscal year weve already met or objective of grid growth.
And because of our strong backlog, we are bullish going into fiscal year 2020.
We have the advantage of supporting our expected growth.
With a very strong balance sheet.
Operator, we'll now take questions from our Alice.
Thank you if he would like last question. Please signal by pressing star one on your telephone keypad, using a speaker phone eating they try and turned out to life.
Women.
Again press Star one glass.
A question and we'll pause for just a moment everyone an opportunity to signal.
[noise] Andy first question comes from Eric Stine with Craig Hallum. Please go ahead Sir.
Yeah. Good morning, it's Aaron Spychalla for Eric Thanks for taking the questions.
Very good morning.
Good morning, maybe first.
On D. Var, you know obviously the notable acceleration in 2019 on the order fronts 55 million plus can you just kinda talk about the pipeline there and thoughts on your outlook as we get into 2020, and then just anything on the penetration or kind of share with your existing customers like a best us and just overall in the market there.
Yeah. So first just correct.
Correct, Yes, 55 million I think what's the run rate that's for grid in totality not just D. Var Ah, we don't breakout or a specific segment, but to give you. Some color you know what we're seeing is we're seeing an increasing the value of the projects that we're taking.
Which means for the same sales effort, you're you're reading more.
That should also translate hopefully into a bit healthier margins as we do that we've seen penetration into this industrial segment.
We see that continuing over the next years, given where they are in their build out and cycle for capital.
We did mention and maybe but not strongly enough, but I'll go back.
I can say, we are working with now several not one but several top tier manufacturers of winter.
We're now riding along in the project so they're developing that's another channel to market to help expand revenues and accelerate growth. There. So we're trying to do what we can to accelerate and continue to accelerate the growth.
D var and grid and then layer on the additional products that go.
Right, and then S.P.S., which is part of grid as well.
Right understood. Thanks for the color and then maybe second on Reg following for Grilling last year can you just kinda talk about how the conversations with utilities of seven maybe change since then.
Do you think some move forward prior to Chicago being completed or is that kind of a proof point that others are waiting and.
I personally think that Chicago is the proof points and we're focusing our t. one delivery, we talked about we manufactured key components already where the system, which is meeting that we're getting some noticeable reg.
Revenue to remind you know one of the things that.
Cost sharing arrangement it does have a little drag on on a gross margin.
So I just want to remember, though the highlight that with you.
What we're focused on what he said I imagine.
<unk>.
Projects, the FERC really really has expedited.
Kind of the feeling throughout the organization that recovery is not only possible, but certain and in utility land. That's a big risk reduction. So I think that that certainly is helping us.
I know that utilities don't move.
At quarter to quarter speed. These are multi year projects out there looking you have to fix problems that have exhausted their grid for sometime Bob. So we believe we remain persisted and those those those orders will come but the first project in Chicago really is the proof point.
Right understood. Thanks for the color and congrats on all the.
Yes and grid.
Thank you.
Thank you and the next question comes from a Colin Rusch with Oppenheimer. Please go ahead Sir.
Thanks, So much guys that's encouraging to hear about do not forget for project can you talk a little bit about their revenue opportunity for you guys related to.
Three and half gigawatt pipeline projects that they're working on and any sort of expectations around the timeframe for how they don't get shipped and built out.
Yeah, you know to be brought you know we don't have a second order a follow on order yet for the 5.5 megawatt it looks like the market is setting up where they're going to need product I don't know if it's very soon but.
Should be relatively soon.
Decides it's really focused on trying to execute well what needs first project.
I hope that that translates the very large market share for them in Korea, So, we're making sure that where they're going to be able to support them in the field as they start to erect wind turbines.
That's an important.
Milestone for them and for us for sure.
The numbers out of Korea, or very big the challenge always has been I.
I don't think the desire of the Korean government. They go afforded do these but it's really been the timing and I think what we have to do in many ways just like Chicago, We Gotta go step by.
Step here, let's get these first turbines operational but help support or do something with their business development efforts by having a very good product you will and the belief is that as we get later in this decade, the Korean market on an annual basis should expand to what looks like an excess of like other gigawatt here.
The hope here, we're playing for is that do so I can get a very large market share in that market, then that would be great for us, but I don't see it's something that's going to turn let's say the next couple of few quarters, but as we start to look to 2021 of them beyond we think it can become even more important part of our business.
Okay.
Oh, that's super helpful. And then just looking at the gross margins you know as you see the.
You know the product mix shifts and revenue scaling a little bit how should we think about the cadence of gross margin improvement that you scale rep no little better.
Yeah, I think I'll say kind of high level and then John if you want to add some additional color.
The thing that everybody has to remember is you know when you look at our numbers look at trailing quarters and then look at the next few quarters, how they're going to come <unk> margin will still bounce around a little bit in projects.
But we are.
Embarking on a cost share arrangement with Greg.
We are in their early days, though.
I'm getting into production.
The ship protection systems.
Basically the first articles well cost more than articles that are procure later in the cycles. We're doing multiple units. So as we see revenues expand because of these multiple products.
We're trying to do what we can't went D var to manage maintain and potentially grow those margins well, we realize that were birthing. Some new products that are not going to be up the margins today that they're going to be in the future. So we just have to be able to whether through that and always look for you know cost.
As a as a key thing to drive over time, it's not something that we can do let's say a 2020, but as we get a more diversified business. We want to continue to be able to work on margin John Yeah, I mean, I think I.
Calling the other thing to keep in mind is.
So over simplify it you know to the extent that.
Revenue was driven by.
By increased revenue in wind and D. Var, that's going to obviously you don't have a positive impact on the gross margin because they have a higher contribution margins.
The extent that revenues driven by increased in Ray guar. Some of the other early adoption products are those all have the same accelerate or gross profit.
Okay. That's helpful. And then just fallen from me can you can you just speak to the compared to the supply chain to sports you guys. As you ramp up you know I should things accelerate a little bit whether it's in the wind de our video or S.U.S. side at all and is your supply chain ready to support your and that sort of acceleration.
You're not plug in our place.
Uh huh.
[laughter] I'm just trying to not just because it's something that's paramount to us it's something we've put a lot of focus on our long term strategic partners on our supply chain.
We know we see increase in demand coming across our product lines, we have a team dedicated to.
Focus and to make sure that we don't have any missteps on the supply chain as we grow that isn't to say that they won't happen, but ask me challenges and we have had challenges about you've been able to reconcile them.
Asked about the they don't.
So you know what we want to do is focus on making sure.
We're delivering a great product to customers and supporting that great <unk>.
To make sure that we're able to build more and more of those.
Well, we ramped up a lot in the way of production capability here and it's really through the supply chain column that it's making sure people understand.
You know we.
We need 10, 20, 30% more depending upon.
How the order book starts to the flow over time.
Okay. That's super helpful guys. Thank you so much.
Thank you and the next question comes from Chip Moore with Canaccord. Please go ahead Sir.
Good morning, Thanks, a lot ecollege.
And so on the strong grid revenues.
Yeah, maybe we can start with a question we're asking all our companys guys just any impacts on your customers or supply chain.
From what's going on over in China, and the extended lunar new year there.
There's something going on in China.
It doesn't impact our business at all everything we do here. We have all are good products made in the U.S., we really have no exposure.
When we think about supply chain you know Ross.
China is a five letter word that said our past and we are an interesting play we believe that.
It's a business that's growing without impact either from supply from China or market from China, or any turmoil that China would or would it be tribute now the old broader markets I guess always up turbulence that may be induced by China either through the.
The catastrophe, that's going on now or or.
The only with the the trade issues, but I don't know how to save more clearly as you know were nice pure play away from China. If people want to think of us that way I think that's a good way to consider us.
Yeah got it perfect then.
Maybe we can talk a little bit more about.
Oh getting ready for albeit of a broader launch here. This year can you talk about early rate receptivity in some of the traction you're seeing on the distribution side.
Yeah. The nice thing we see is when we go to these trade shows now we don't have to present the utilities are presenting our product as a key thing just fix their challenges.
So we've seen you know.
What we think are very important utilities out there really marketing for us and author simply doing is reporting on the excellent results that we've had with multiple installations with them. So.
The good part about Oh is it shouldn't be less.
Volatile.
Because you have a.
A price point, that's on the lower end of all of our products.
But the counter is true they need to sell a lot of him to move the needle. So we think we're in a very good position, where we know we have a product that really solves a real problem in the market and that problem is only going to exacerbating grow.
Overtime. So we have the support of many utilities now that are out talking to other utilities on our behalf not in our direction just simply they're very satisfied and excited by the experiences.
And there aren't that many cool do things on the grid. So for utility engineers to be go out and talk about rank, which they do or to go out talking about B O.
They certainly do there's very little opportunities for these smart guys to say Wow you know the grid is changing we really are being proactive.
Just to break more renewables on the grid and bring more resiliency through the grid and that's really where are our sweet spot business.
That's great and one last one for me.
Guys on the Navy a you know you alluded to potential for some more wins there how should we think about timing and and really how should we think about potential wins, you know outside of the San Antonio class.
Yeah, it's hard to start with timing I know the Tommy went through they get L.P.D. and how how.
How challenging that was took a lot of effort I think the thing that we wanted to report today was.
Yeah, we've been basically directed by the Navy that we understand where we're going to put the next system I don't know on what whole number I don't know what what date, we still focused principally.
On forward fit meeting we're trying to.
Take a an existing type of ship that they're building a new wanted and serve our hardware in.
I had the privilege to go down to be part of the team to actually see the ship the that were considered for and I am impressed with our engineering capability, what we're able to do into miniaturized make think small to really make it easy for the.
Me too to increase the level of protection on the ships.
The things that we're doing I'm, just so proud of as an American.
That we're really focused on here protecting them American sellers at sea and I think this is gonna be a very important thing not just for LPD, but for many many should platforms in the future. It's just hard.
For us to handicap or tell you specifically when that's going to happen, but I think there has been a little bit of a positive turn because we know we're gonna go next.
So bear I was greater than one when yep.
All right appreciate it thanks.
Thank you and our next question comes from Philip Shen with Roth Capital Partners. Please go ahead.
Hi, this is stable or take I'm on for Phil.
I think I think you mentioned that you have $31 million wasn't <unk> backlog can you provide some additional color and overall great backlog.
From color on the mix and timing.
So the 31 I think are the announced a worse that's right through the different press releases you want I'm talking about the backlog that we.
And Oh, yeah, it could provide some additional called on that.
Yeah, So we haven't excess over $50 million and backlog.
And what we do as we say that will be.
Backlog will be generated over the next 12 months.
We don't really break it down one of the challenges that we do have an are.
Backlog as we have to make an estimate on we have a large order from iron oxide as we mentioned where they are we have to predict what would turn into revenue within a year with other than the backlog.
Obviously, given your tone, we probably don't have much of that in there.
We don't really break it down by product, what we see as the overall order book is.
Sandy we see growth in grid, we see growth across all the products and grid.
April able its you know 76.2 million is the total 12 month backlog to be more precise.
Okay, great. Thank you and how do you expect a good revenue trend by quarter throughout calendar 2000.
It's a good question that's something that you know, we always have to struggle with because we want to make sure that we're delivering on projects that were working on it and entering said new products as projects as customers need them, there's been a historical lumpiness to two parts of the grid business, specifically D var.
I don't see that going away.
I do see a dampening so the volatility will be.
<unk>.
But you know we're reporting today 50 plus million is grid.
Feel it that's now going to happen for the next few quarters, and we're gonna grow off of that.
You look at trailing trends, we've been growing grid.
If you go forward.
You have to assume we're going to continue to grow at that rate or higher just based upon the trajectory the past few quarters a bit on the backlog supports it as we're saying we have healthy backlog well into 20, Twond, we really sit in a very good position here as we look at December and as we give you afford numbers for.
For barge forgive me just some color a little further out here that things are going to be very good continuing for grid, but but please don't assume that there's going to necessarily be quarter on quarter growth. The grid. The overall trajectory will certainly be up.
Okay, great. Thank you I.
I mean, the good sound like it is doing great and we.
I thought a spike in EMEA create revenue in the quarter to $5 million.
Very little in the prior two quarters can you tell as both a key driver here and should we expect to strengthen them yet.
Good day, and yet or.
Of course, there something something broke up able when you said you said something something 5 billion in the quarter.
Yeah, I don't know when I refer you to we thought like in EMEA grid revenues in the quarter to $5 million, which is very little into part two quarters.
And I was wondering what was a key driver here should we expect the strength Oh, you're going to regional you're picking the right I understand okay.
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Very specific to one when do you about project.
No I wouldn't I wouldn't trend off a business is project by project basis.
Yeah that was a good project bars, but I wouldn't I.
I wouldn't say that email or all the time is gonna be representing.
20% about revenue, but you are seeing that when customer show.
For region show up.
That those individual dumpers on a project base are growing and that's I think important also realized we've opened up we think some additional channel to market by being able to sell with multiple wind turbine manufacturers top tier when durbin.
Great. Thank you <unk> one.
Last one for me so with the success you are seeing the grid. When do you think you can turn the corner and generate positive operating profit for the good business do you see this in the next four quarters professionally.
We don't really forecast out that far I mean, what we want to do as if we continue to grow revenue, we continue to get traction with the with D var at all the new.
Alex business should continue to take care of itself. So we're trying to do is to deliver the momentum.
On the order side be able to meet customer needs are going to be it in the numbers, we think should take care of themselves over overtime, but we don't have any specific dates out there.
Okay, great. Thank you.
Thank you and we have no additional questions at this time I would turn the call back over to Mr. Mcgann for closing remarks.
Thank you appreciate it.
Just to kind of go back and step back kind of big picture and frame, where we are.
We had what I think was a very nice analyst day in New York.
Recently, and we kind of introduced the new framework to think about the company rameses products really orchestrate the rhythm in harmony.
Our from generation to consumption, helping to create a super great.
That enables more clean power generation and providing a more resilient grid.
That's what we're trying to deliver or D. Var business today is very strong both on renewable and industrial side.
We're delivering BB out to the market and we keep building the pipeline of potential projects or do you go I.
I think a key point today for people to realize we have manufactured.
Some of the key components for the Reg system for Chicago, and what that means from my standpoint is lowering risk of our ability to make sure we executed delivery and from John standpoint, you have a little bit of little bit revenue due to that program.
Similarly, when we look at the Navy side of our business.
Help enable super Shipset protected expand the current capabilities that enable fleets. So today, we offer ship protection systems and are currently focused on putting into place the capabilities to deliver on our backlog for LPD 28, and I'll be very we do see more orders coming not only for LPD, but you get to at more as.
Well in the future, we do look forward to offering power delivery systems within the ship.
Vision to power generation at Mein Schiff electric propulsion.
In conclusion, what we've done here as we transitioned our revenue mix towards what we believe is a more predictable recurring revenue base by growing written business.
We've achieved year over year revenue growth without items.
Our effort to diversify our business towards grid is really working to be clear, we're going to continue to support our when partners in South Korea, and India with the objective of growing both onshore and offshore wind business, we're executing against.
Store goals, and that's really to the credit over employees hard work dedication.
And John and I look forward to reporting back to you at the completion of our fourth fiscal quarter of 2019. Thank you everyone.
Thank you ladies and gentlemen. This concludes today's presentation you may now disconnect.
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