Q4 2020 American Superconductor Corp Earnings Call
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To everyone and welcome to the American Superconductor fourth quarter fiscal 2020 earnings Conference call. Today's call is being recorded and now at this time I'd like to turn the call over to John Heilshorn. Please go ahead.
Good morning. Thank you April good morning, everyone and welcome to American Superconductor in corporations fourth quarter and fiscal year 2020 earnings Conference call I am John Heilshorn of <unk> Investor Relations <unk> Investor Relations agency of record.
Today on the call are Daniel Mcgann, Chairman, President and Chief Executive Officer, and John <unk>, Senior Vice President Chief Financial Officer and Treasurer.
Superconductor issued its earnings release for the fourth quarter and full fiscal year 2020 yesterday after the market closed, but those of you who have not yet seen the release a copy is available in the investors page of the company's website at Ww Dot <unk> dot.
Dot com.
Before starting the call I'd like to remind you that various remarks that management may make during today's call about American superconductor as future expectations plans and prospects constitute forward looking statements for purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of 1095.
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 Superconductor as I reported on form 10-K for the year ended March 31, 2021, which the company filed with the Securities and Exchange Commission.
June 2021, and the company's other reports filed with the Securities and Exchange Commission.
These forward looking statements represent management's expectations only as of today and should not be relied upon as representing management's views as of any subsequent day to today, while the company anticipates that subsequent events and developments may cause the company's views to change the company specifically disclaims any obligation to update.
These forward looking statements.
On today's call match, what we refer to certain non-GAAP financial measures non-GAAP net loss and non-GAAP operating cash flow.
Non-GAAP net loss is defined by the company as net loss before stock based compensation amortization of acquisition related intangibles acquisition costs changes in fair value of contingent consideration of warrants and other noncash or unusual charges and the tax effect of the adjustments calculated at the relevant range.
For the company's non-GAAP metrics non.
Non-GAAP operating cash flow as defined by the company as operating cash flow before the China settlement net of legal fees and expenses.
The effect of adjustments and other unusual cash flows or items. The reconciliation of the non-GAAP measures to the mostly directly comparable GAAP measures can be found in our fourth quarter and full fiscal year 2020 earnings press release that the company issued and furnished to the SEC last night on form 8-K.
American Superconductor is press releases and SEC filings can be accessed from the investors page of its website at Ww Dot <unk> Dot com.
I will now turn the call over to Chairman, President and Chief Executive Officer, Daniel Mckenzie Daniel.
John and good morning, everyone.
First I hope all of you and your families are safe and healthy.
It certainly has been a challenging year for us all.
We're going to cover a lot of ground today so.
I guess buckle up and we'll try to go through the highlights as best as we can and.
Hopefully people will understand this is really a company that's headed in the same direction with more critical mass and more scale.
And we've had a very very long time.
I'll begin today with a recap of fiscal 2020, which ended March 31.2021.
John Kosiba will then provide a detailed review of our financial results for the fourth quarter and full fiscal year 2020.
He will also provide guidance for the first quarter of fiscal 2021, which will end June 32021.
Following our remarks, we'll open up the line to questions from our analysts.
The team here at the company really handled a difficult year very very well.
In fiscal 2020, our grid business grew by more than 40%.
This is our sixth year in a row of growth in our grid segment.
D Var group Sps grew and the prospects here seem great.
E V O brew and continues to gain traction our NFC acquisition contributed to revenues and rig is expected to come online this summer in Chicago.
The growth exceeded our own expectations and is a testament to our team's ability to execute.
Full year revenues for the entire MSC business increased by over 35% year over year driven by growth in grid.
In October 2020, we announced the acquisition of northeast Power Systems, Inc, or <unk>.
The acquisitions of Nazi directly aligns with our strategic priorities to accelerate profitable growth independent of our wind business broadened our product offerings and expand both market reach and market share.
Additionally, in May 2021, we announced the acquisition of <unk>, Inc.
The acquisition is a continuation of what we started with Nancy.
We expect that the old trans long standing relationship with Nancy.
It will allow us to expand our offering a proprietary power electronic products into the industrial market.
This deal is expected to give us more market more content and more channel for their products.
More market for our new energy power systems, Neil trial, as an extension of <unk> total addressable market Neil Trent expands the total addressable market for our new energy power systems to nearly $3 billion a year.
More content for our new energy power system orders.
<unk> is an extension of the content we can sell into these markets. For example, if we look at a chemical plant in an industrial setting will be a need for static voltage management as well as rectifiers with Transformers and certainly for harmonic filters.
Nancy would sell into these projects without the ability to sell a transformer rectifier.
Adding Neil trend is expected to provide <unk> with the opportunity to sell both.
This is an expansion of content per sale and could be on the order of 2 to 3 times larger per order. We liked the sales leverage more products same direction same markets more content per sale.
More content for Neil more channel for Neil trim products Neocon doesn't sell much outside North America, but historically we have.
This opens the possibility for growth coming from more channel to market for Neogen products.
We acquired Neil true out about a month ago for a total consideration of approximately $16 million, which means we paid approximately 1 times trailing 12 month revenue.
We anticipate this transaction to be additive to our operating cash flow and be accretive to earnings per share within the next year.
We really like that we took what we had with D var, which we doubled over the past several years to nearly 40 million this year.
We added Nazi which prior to our acquisition had a 3 year average of approximately $25 billion of revenue per year and now at Neal trend was $16 million of revenue in calendar 2020.
Assuming that these revenues.
<unk> continue we believe we've created an $80 million per year, New energy power systems business that is expected to have a diversified set of markets that we will serve and good prospects for growth at healthy margins.
Realize we just reported on an 87 million dollar business for the entire company.
This may not be fully understood in the market, but now you see why we really like adding Neil trip.
<unk>, New energy power systems business is expected to play an important role in accelerating us to begin.
Operating cash flow positive.
And positioned us for more dramatic growth.
<unk> grid revenue in fiscal year, 2020 was more than 80% of our business achieved through organic growth as well as strategic M&A.
Few years ago grid revenue was less than 30% of our business.
As we enter fiscal 'twenty 'twenty 1.
We expect revenue growth again in both our grid and our overall business.
Our new energy power systems business backlog is strong we just announced over $19 million of new orders, we are seeing some benefits already from cross selling.
Our team along with Con Ed is planning to energize the Reg system in Chicago This summer right on comments schedule.
We are manufacturing ship protection systems for the San Antonio Class ship platform L. P D with our first deliveries expected in 2021.
We are supporting IMAX with commissioning in the field and providing ECS product as they need and pay for it.
And as a result, we again expect revenue growth in fiscal 'twenty 'twenty 1.
During the COVID-19 pandemic MSC demonstrated once again that it can operate effectively through a challenging environment. We were early to implement physical separation protocols at our manufacturing sites and have not missed a beat and production. In addition to focusing on strong customer service and product quality.
<unk> been focusing on costs and that means establishing a broader supply chain, which provides us with the flexibility to source key components from multiple sources.
This has really helped to keep continuity of component supply.
We are considered an essential business and have been open and operational throughout the pandemic.
We are a resilient company that has overcome crisis before our strong balance sheet allows us to navigate this period of uncertainty and is expected to enable us to capitalize on the long term opportunities driving our industry when conditions normalize.
So qualitatively as of June 3rd our business does not show slowing demand, but we are mindful that customers may push out future projects because of external circumstances affecting them, while the pipe delek has not materially affected our grid business to date.
It still remains a risk to all businesses and the overall economy, we expect the markets we serve to remain fluid in the coming months and year and we plan to remain nimble and ready to adjust to these dynamics. We are focused on what we can control.
When we talked about cash flow breakeven a few years ago.
We had scenarios many of which had about 50% of our business coming from wins.
We are focused on growing grid and now I've added Nancy Ann Neale Triana revenues as well as our fixed costs.
We believe that with a nominal return and wind growth in new energy power systems or additional shifts we have multiple opportunities to get us to sustainable cash flow breakeven and then add potential pathways for future growth.
We believe that there are several scenarios to get us to cash flow breakeven.
Through a different route.
More new energy power systems.
A modest with business.
This includes the additional fixed costs from our acquisitions, which is about $6 billion.
This raises our breakeven level by at least $30 million annually.
Just doing the math net net however.
We believe this path gets us there faster.
And more in our control.
We have more work to do with Neil trap and Nancy and the certainly require some time, but we wanted to give you a general sense.
We will update you as we make progress on this work. Please realize we closed nailed trend that deal was only closed about a month ago.
Now I'll turn the call over to John Kosiba to review, our financial results for the fourth quarter and full fiscal year 2020, and provide guidance for the first quarter of fiscal 2021, which will end June 32021, John.
Thanks, Daniel and good morning, everyone.
Total revenues for the fourth quarter of fiscal 2020, or 21.2 million. This is an increase of 17% compared to the year ago quarter of $18.1 million.
Grid business revenues of $19.4 million increased by 49% versus the year ago quarter, while our wind business revenues were $1.8 million for the fourth quarter of fiscal 2020.
Moving on to the full fiscal year total revenues for fiscal 2020 were $87.1 million.
As a 36% growth in revenue from the previous year.
The revenue growth was led by our grid business, which experienced a 42% year over year increase thanks to growth from our D. Var E V O and Sps product lines.
Additionally, our M C product line contributed to our revenue growth in both the third and fourth quarters of fiscal 2020.
Grid business revenues represented 81% about total fiscal 2020 revenues.
This marks the sixth consecutive year of grid revenue growth.
Wind business revenues increased 16% in fiscal 2020, primarily as a result of increased shipments to IDEXX and growth to our spare parts and service business.
Gross margin for the fourth quarter of fiscal 2020 was 13, 9%, which was flat compared to the year ago quarter.
For the full fiscal year 2020, MSC generated gross margins of 20%. This is up from 14, 8% in fiscal 2019.
The year over year increase in gross margin was primarily result of a favorable product mix and improved overhead absorption driven by higher total revenues for the year.
Additionally, during fiscal 2020 wind revenue experienced a favorable shift in product mix with growth in both IMAX ECS shipments and our spare parts and service business, which positively impacted both revenue and contribution margins for the year.
Moving on to operating expenses research and development and SG&A expenses totaled $9.5 million for the fourth quarter of fiscal 2020. This is up from $8.6 million in the year ago quarter.
Approximately 10% of R&D and SG&A expenses in the fourth quarter were noncash.
For the full fiscal year operating expenses grew modestly as a result of our acquisition of Pepsi in the third quarter of fiscal 2020.
Research and development and SG&A expenses totaled $36.3 million in fiscal 2020, compared with $32.2 million in fiscal 2019.
Approximately 14% of R&D and SG&A expenses in fiscal 2020 were noncash.
Our net loss in the fourth quarter of fiscal 2020 was $7.6 million or <unk> 29 per share compared to $5.9 million or <unk> 27 per share in the year ago quarter.
Our non-GAAP net let excuse me our non-GAAP net loss for the fourth quarter of fiscal 2020 was $5.6 million or 21 per share compared with non-GAAP net loss of $5.1 million or 24 cents per share in the year ago quarter.
For the full fiscal year 2020, our net loss was $22.7 million or <unk> 95 per diluted share. This compares to a net loss of $17.1 million or $1.3 per.
Diluted share in fiscal 2019.
For the full fiscal year 2020, our non-GAAP net loss was $14.1 million or 59 cents per share. This compares to a non-GAAP net loss of $19.5 million or <unk> 93 per diluted share in fiscal 19.
The year over year improvement to our non-GAAP results as a result of improved gross margins in both our grid and wind business segments.
Yeah.
We ended the fiscal year 2020, with $80.7 million in cash cash equivalents marketable securities and restricted cash.
This compares with $84.4 million on December 31st 2020.
In the fourth quarter of fiscal 2020, we consumed $3.8 million in operating cash flow.
For the full fiscal year, our operating cash burn was $8.7 million on $87 million of revenue. This represents an $8 million year over year improvement basically gotten a cash burn in half in fiscal 2020.
This conversion is well within our expected operating results on that revenue profile.
I'd like to take a moment to provide a quick summary of the Neil Chapman transaction.
On May 6 'twenty 'twenty, 1 MSC, a quiet Neil training, a private Connecticut based company that supplies rectifiers, and transformers to industrial customers the.
The total consideration paid for this acquisition was approximately $16.4 million the.
The consideration comprised of $4.5 million in cash paid directly to the sellers Cup.
Coupled with MSC issuing 301556.
Restrict thousand restricted shares of <unk> common stock to the sellers whoever that having a value of approximately $4.3 million.
And lastly, MSC paid $7.6 million directly to Neil trailed lenders at closing to extinguish all outstanding they will trend up.
Neil trend generated approximately $16 million in calendar 2020 revenue.
And as Dan mentioned, the transaction is anticipated to be additive to amc's operating cash flow and accretive to earnings per share within the next year.
Yeah.
Now turning to our financial guidance for the first quarter of fiscal 2021.
We expect that our revenues will be in the range of $22 million to $26 million a.
Net loss on that revenue is expected to be no more than $6.5 million or <unk> 24 cents per share.
Our non-GAAP net loss is expected to be no more than 46, $4.6 million or <unk> 17 per share.
We anticipate operating cash flow to be a burn of $4 million to $6 million in the first quarter of fiscal 'twenty 1.
Operating cash burn in the quarter includes approximately $2 million and additional working capital.
This increase in working capital that is being driven by our wind business and our recent acquisition of Neil trends, we believe the increase in working capital or for both wind and then Neil trend is necessary to support the revenue growth that is expected in the year ahead.
As a reminder, our working capital will fluctuate from quarter to quarter dependent on the timing of milestone payments and inventory positions within each business.
We expect to end the first quarter of fiscal 'twenty 'twenty, 1 with no less than $60 million in cash cash equivalents marketable securities and restricted cash.
The ending cash balance contemplates approximately $12 million, which was invested in the Neil from that acquisition, which happened in the quarter.
With the recent acquisitions of NFC enabled trend our revenue profile and associated operating operating results are evolving.
We expect that net Z and they'll neofan will have a meaningful positive impact on our revenue in fiscal 'twenty 1.
The contribution margins of these product families are expected to be similar in nature to our existing and new energy product lines.
We expect we haven't absorbed approximately $5 million in annualized fixed manufacturing overhead expenses related to the 2 factories in New York, and Connecticut with approximately $6 million in annualized cash related R&D and SG&A expenses associated with the 2 acquisition.
Lastly, I'd like to take a moment to explain the amendment to our form S..3 which was filed in conjunction with our 10-K.
On February 26, 2021, we filed an automatic shelf registration statement on form.
S 3 with the SEC.
We replaced our previously filed form S..3 registration statement, which expired on February 15th 2021.
At that time, we were a well known seasoned issuer or <unk>, because we had a market flow in excess of $700 million as a result, our S..3 registration statement became effective automatically upon filing.
Well I tell them with eligibility.
Alrighty is reevaluated during the 60 days prior to filing our 10-K, because our market flow was at <unk>.
Cause I have market book was not at least 700 million during that 60 day period, we were no longer a wix upon the filing of our 10-K and needed to amend our existing automatic shelf registration statement by filing a post effective amendment to convert automatic shelf registration statement to a regular.
Shelf registration, which we did yesterday, we view this as an administrative procedure and part of normal Treasury management.
With that I'll now turn the call back over to day.
Thanks, Jeff.
Yeah.
In fiscal 2020 or grid team performed again grid revenue grew by over 40% driven by a new energy power systems at our ship protection system.
Our new energy power systems, which includes D var, <unk>, an FC and going forward in fiscal year 2021, Neil Trent.
Is supported by an expected strong base of projects in the renewable and industrial segments.
We are growing and diversifying revenues by geography and by market.
The diversification into industrial is what we planned with the acquisitions.
Our growing list of repeat customers is a testament to the quality and performance of Msc's products and people.
We're focused on supporting our customers' needs and maintaining a timely flow of product from our factory to the customer's site.
Our manufacturing team is performing very very well.
We anticipate that the new energy power systems should provide a strong base of grid revenues.
This expectation is driven by our strong grid backlog.
Fiscal 2020 was a strategically important year for Reg.
We broke ground on Chicago's first resilient electric grid system in July 2020.
We completed the fabrication of the Reg cable and system for combat, which utilizes a M. A c's proprietary imperium superconductor wire.
And we delivered the Reg hardware to the site in Chicago on time.
We anticipate the Reg system to be energized this summer.
We believe many utilities are interested in seeing the performance of our product in Chicago.
We're also developing opportunities to deploy our reg product in other utilities across the country and we believe the <unk> operation of this first Reg system in Chicago could be a catalyst for exelon and other utilities to begin deploying our state of the art solution.
With the first system deployed we believe that future deployments of rag will be de risked.
U S utilities are focused on the execution of this first Chicago project as are we.
Our ship protection system is the Navy's baseline Degassing design for the San Antonio Class ship platform L. P D.
In fiscal 'twenty, 'twenty, we announced 2 separate delivery contracts for our Sps systems.
These 2 contracts represent our third and fourth ship protection system orders for deployment on L. P. D 31, and L. P D 29.
We're working very closely with the Navy and our supply chain to ensure timely delivery of our Sps orders.
We expect to deliver the first system in fiscal 2021.
We are prepared for the next Sps order and are planning for concurrent manufacturer of multiple Sps orders. So this means we now have orders on the books for Elpida 28 L. P. D. Twenty-nine L. P E 30, and <unk> 31 for ships.
We anticipate our Sps has the potential for deployment on a total of approximately 15 future ships in this class.
We believe our Sps for the San Antonio Class alone could represent a potential revenue stream from about $150 million for the class of ship.
The approximately $40 million, we already have the 4 ships. We believe we could see up to an additional $110 million in potential future orders for this class of ship.
The San Antonio classes, our first design win with the U S Navy.
We believe we've identified the next opportunity.
The San Antonio Class for Sps.
We intend to report on that potential opportunity just as soon as we can.
We expect opportunities to sell our Sps to allied navies as well and are actively working to make that happen.
As I said on the last call.
We need to see product engineering before procurement.
We are very excited about the prospects that some of this engineering work could begin soon potentially on multiple ship platforms.
I wish I could say more to convey my excitement here, but I really am excited.
Sometimes it's hard to deal with disclosures and facts and contracts and such but we're making tremendous progress on moving the product forward within the Navy.
I do however, realize that Davies are not the fastest adopters of new systems. So please be patient with our ability to deliver news around this product line, but please realize we're tremendously excited at the prospects for some engineering work coming our way.
On the wind side in fiscal 2020, we completed shipping our first order of 5 megawatt class ECS to our Korean partner do you saw heavy industries.
This order represents our entry into the offshore wind market with a 5 megawatt class turbine.
Proving our capabilities and establishing a foothold in this market segment.
We believe southeast Asia is a geography, well suited for our 5 megawatt class wind turbine and for our partner Tucson.
In fiscal 2020, we saw and we still see in fiscal 2021 uncertainty in the Indian wind market ended IMAX.
Okay.
We stand ready to support our partner in India as they need support commissioning new turbines or need new stock of 2 megawatt ECS.
We are hopeful that fiscal 2021 will be the year that IMAX begins transitioning to our 3 megawatt ECS platform.
This transition if it happens is anticipated to be signaled by a 3 megawatt ECS supply contract with IMAX.
In the meantime, we have diversified our business through grid.
And we are growing overall revenue without <unk>.
I'd actually expect 'twenty 'twenty, 1 to be better than 'twenty, 2020 'twenty 2 to certainly be better EBIT still.
I'm often asked how will you grow the company, let me tell you what I believe.
Yeah.
We're gonna grow through the leverage created within the new energy power system as part of our grid business expansion. The total available market expansion of content expansion of channel.
We're gonna grow through the reemergence of our wind business, which we are preparing for.
We're going to grow through the acquisition of additional ship platform wins.
We are going to grow through the emergence of Reg as a critical product for critical infrastructure in this country.
And as we have demonstrated we have the opportunity to continue to expand inorganically, where it makes strategic sense.
Our momentum is very strong and.
In fiscal 'twenty 'twenty, we exceeded our own expectations, we grew our grid business by over 40% and grew significantly organically.
We grew total company revenues by over 35% year over year.
We have diversified our business by geography.
By market.
In fiscal 'twenty 'twenty, our revenue mix consisted of more than 80 per cent grit. Just a few years ago grid revenues were less than 30 per cent. The grid business itself is larger today.
So the entire business was just 2 years ago.
We expect year over year growth in grid in fiscal 2021.
We are weathering the pandemic price as well.
This is something unique about our company, we are aggressively managing that which we can control.
In fiscal 'twenty 'twenty, 1 we expect that AFC will continue to execute our strategy of delivering a more sustainable and diversified business.
Our culture is inherently innovative always accountable to our customer we strive to be constantly collaborating we try to hire the best and brightest and we listen and learn from the markets we serve.
I'm grateful for our team's commitment and delivery on a successful fiscal year 2020, I look forward to reporting to you again following the completion of our first quarter of fiscal 2021.
April could you now open up the line to questions from our covering analysts.
Sure if you'd like to ask a question simply press the star key followed by the digit 1 on your telephone keypad also if you're using a speaker phone. Please make sure. Your mute function is turned off to a nice signal to reach our equipment once they get press star 1 at this time, we will pause for a moment.
And we'll first hear from Colin Rusch.
The timer thanks.
Thanks, so much guidance.
You know with the integration of a couple of new businesses with complementary solutions could you talk about the potential to optimize the design of those products.
Simplify yeah some of the interoperability derisk the supply chain and then some of the cost savings that you might see what I've.
I've seen some of those assets.
Sure Collin, let me unpack the different pieces to it from kind of go kind of what what our priority order are.
1 of the Differentiators of it if it's a D var or a b b O or an FC product or Aneel trio product.
Because energy density so.
And almost every type of a market that we serve we sell the ability to do less civil engineering to do less overall cost on construction because of the footprints of the product are significantly smaller.
Then a potential alternative and that's true across all of those classes will probably frankly speaking it's true of our ship protection systems as well, it's about density at about being able to do more than what the company can do.
So I do see the potential for some supply chain leverage.
There are some commonality and components are certainly some commonality and suppliers.
There is definitely on the front end commonality of customer base, which is where we think we will see most of the initial leverage coming from.
So I can imagine integration of the supply chain should potentially yield some benefit.
We don't have on the books a program in R&D to look at a new class of product that combines the functionalities.
That's obviously something that we could consider in the future, but would come at a cost right. So given where the business is we're trying to be able to grow through the front end leverage be able to produce.
And continue to produce a good margins and improve margins over time.
Through <unk>.
Engineering really of the supply chain.
And you do get on a potential leverages the future of.
A combination of some of the functionality of the product now that being said.
We do have a few customers that are interested already in seeing integration of what we do with D var and what next he does with filters and Capex. So.
When you think about the way that these products are constructed it's very much the same there's a mechanical or closure of metal closure that that puts it all together. If we can imagine you know basically having a series of a base, where you have the different components it and depending upon what the customer wants that may be a pathway that.
Doesn't involve a lot of R&D.
But I want to say clearly you know we're not looking to invest further in R&D to further hone or develop next generation products. In these classes today, we're focused really on growing this business getting the leverage that we can particularly on the front end.
The sales channel.
Thanks, so much.
Business, obviously, you guys are going through a process with which implementation.
But can you give us a sense of the pipeline of interest level, you know obviously its lean more towards a net zero economy increases.
Increase reliability at our reliance on them.
Electrical infrastructure reliability from Tom.
A very important element of what happens here and so I'm curious like how those conversations are evolving.
Alright electricity.
Yes.
Yeah, I think what we're seeing is some early indicators that the economy is really positioned well for a rebound in the coming call. It year, you can see our ability to convert pipeline and the orders demonstrated we just put out a release of yesterday are where we have a 19 billion new orders in the new energy power are part of the <unk>.
That doesn't include anything from meal trend going forward certainly it will.
So our pipeline continues to expand we do see the beginning of cross selling leverage, meaning basically where we're presenting an FC product that we're able to sell the D var product alongside it or presenting Neil trainer in Hep C product and they're able to sell the <unk>.
Other pieces of the business as well so.
Those are all great prospects in the short term given the fact that we're only into this a few months in the case of the FCC and really 1 month in the case of Aneel true.
Perfect. Thanks, guys.
Thanks Colin.
Next we'll hear from.
Eric Stine of Craig Hallum.
Hi, Daniel Hi, John.
Hey, Eric how are you doing today hi, good morning, Hey, So just maybe just coming back to NEP C. N N Neil trend I and I know, it's early with Neil trend, but would love to hear just some some thoughts or feedback you've gotten from the market regarding them being under your umbrella and then.
Are there other areas that would be logical to add to your offering you know given you've done these to further expand I guess into well both renewable energy, but more so in industrial.
Yeah. So I mean, let's go back through kind of how how all of this came to being you know we have a relationship where we had done work with Nancy.
Realize that are both selling into the same either kind of project or a same exact project.
It would seem to make logical sense to expand our market expand content by bringing up the house.
As we sat down with the guys at NEP seat, we ask from the same kind of question do you see companies that are doing the same kinds of thing with you. They may not necessarily need a D var, but they need what you guys do and then obviously the customer needs with the target company would be offering as well and that's really where we were introduced with the idea of Neil Trent we.
Know them because they've been around a long time.
We know that they are very respected in the market. They have a very very well controlled niche a lot of what they do with similar as I said earlier, you know in the packaging and making it smaller.
So it just kind of all fit nicely together right and it continues the push into industrial so you can see in the press release, we highlighted.
There's expansion with the orders in semiconductor, which is great expansion of orders and renewables, which includes also you know orders for from FSC, they're in areas that they they weren't fully focused on but now today combined with we certainly have a great channel to market is there.
So that's you know that's kind of where we stand today to add other pieces.
Sure you know I think right now what we're focused on is we want to make sure that the organization on the grid side can deliver the growth that we think is potentially here in this part of the business.
Certainly you know we have an offering inside the wind turbine and our wind business and we have offerings inside shifts with the ship protection part of our business.
We could expand in any of those dimensions, but I think for right now what we're going to focus on as you know the integration of the.
The industrial part of the business in the front end overall on the front end.
Continue to focus on getting the next Sps platform continue to focus on servicing our wind customers at least for now.
Yeah, no understood very helpful. Maybe just turning to to V. V. O. I know there was a component of the order announcement yesterday can you just give us an update where things stand maybe in terms of number of utilities that you are shipping to and I know the ultimate goals that you know this would just be part of regular order per.
Turns it'd be a stocked item for utilities maybe.
Maybe where you stand in that process.
Yeah, I think you know frankly speaking BVA was the 1 part of the business that may have seen some.
Some order flow and some pipeline development limited by Covid simply because of the access to labor at the utility to do these projects typically our utility looks at us. They wanted to do you know 1 or a few on their own get some operating history for some months and then look at replicating so we've been able to do.
That was a number of utilities, we've been able to expand the number of utilities that are we have additional product with as well.
But you know it's hard it's hard to attribute things to COVID-19 or not because you don't know the world without it right, but certainly we've had projects that have gone through some delays with B B O specifically, just simply because of access to labor and prioritization of that labor.
That being said you can go back and they look at the order book, we just put it with the 19 were $19 million of orders, there's a nice chunk of that for B B O. Its really re re validating the application for rooftop solar and it really seems like the guys at F C.
And we'll see with Neil Trent are excited about the industrial prospects for BBA, which we've done some some business today so.
That's about as much color as I, probably can provide you with today.
Okay.
Got it maybe last 1 just for.
John just on the margin side, you know maybe just some of the puts and takes fourth quarter was down and in and just some details there and obviously your guidance implies.
A rebound in the first quarter. So maybe just some details there and in the thought process in that outlook.
Sure.
So you're right in Q4, our gross margin was down.
Around 15%.
There was a fair amount of revenue associated with our the progress we made in combat and EHS and if as you recall, that's a car share project. So that will have a drain on the gross profit.
And our price and quite frankly, our business quarter to quarter. I mean, you can see the fluctuation in our gross profit from quarter to quarter.
Because of the nature of our business where project based.
There was nothing in there that alarms us when we look at the total backlog and the total revenue profile for the year and when we look ahead.
You know we did come in at 20 per cent per year. So we feel pretty good about that we hit that threshold of 20% gross profit.
So as we finished the Comed project off this year.
That drain will go with that.
Right on the Mark on the gross margin will subside and so that could smooth out gross profit in the future a little bit.
But realize the counter to what he said with the revenue profile, Eric because theres a whole created but we don't really don't see you know, we're basically done with the project from a billing and from a delivery standpoint.
So that means we don't have plan revenues really for <unk> going forward.
For this year, because we don't have the next projects teed up yet.
So then if you deal with it year to year growth, we're kind of starting down.
And a whole with without that additional rig revenue.
Okay. That's helpful. Thanks, a lot zone.
And that does conclude the question and answer session. At this time I'll turn the call over to Daniel for closing comments.
Thanks April and fiscal 'twenty 'twenty, we grew grid.
More than really what we had anticipated.
We're executing on our vision to create a super grid and a super ship.
Super grid that enables more renewables on and resiliency for our grid.
And a super shifts that allows for greater resiliency and operational capability for our fleet.
We provide the control technology that helps orchestrate the rhythm and harmony of power on the grid and protection expands the capability and resiliency of our Navy fleet.
We will continue to work hard to deliver resiliency to our power grid, a navy fleet and hopefully that's music to the years not only of our customers, but the markets that we serve.
John and I look forward to reporting back to you at the completion of our first fiscal quarter of 2021. Thank you everybody have a good day and stay safe.
That does come from today's conference. Thank you all for your participation you may now disconnect.
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