Q4 2023 American Superconductor Corp Earnings Call
[music].
Good morning, and welcome to the a M. S C fourth quarter fiscal 2023 financial results Conference call.
Speaker Change: All participants will be in listen only mode.
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Speaker Change: Now, let's turn the conference over to John Heilshorn of L. H eight. Please go ahead.
Thank you Gary Good morning, everyone and welcome to American Superconductor Corporation's fourth quarter and full fiscal 2023 earnings conference call I'm, John Heilshorn of L. A J investor relations.
<unk> Investor Relations agency of record.
On todays call are Daniel again, Chairman, President and Chief Executive Officer, and Daniel because Ebola Pardon me, John Kosiba, Senior Vice President and Chief Financial Officer, and Treasurer, Brian.
American Superconductor issued its earnings release for the fourth quarter and fiscal year 2023 yesterday. After the market close those of you who have not yet seen the release a copy is available in the investors page of the company's website at www Dot ASC 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, including expectations regarding the company's first quarter of fiscal 2014 for financial performance plans and prospects constitute forward looking statements for purposes of the safe Harbor provision.
Speaker Change: The private Securities Litigation Reform Act of 1995 <unk>.
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, 2020 for which the company filed with the Securities and Exchange Commission on May 29, 2024.
The company's other reports filed with the SEC.
These forward looking statements represent management's expectations only as of today and should not be relied upon as representing management views of any date subsequent to today, while the company anticipates that subsequent events and developments may cause the company's views change the company specifically disclaims any obligation to update. These forward looking statements also on today's call.
Speaker Change: Management will refer to non-GAAP net income loss on a non-GAAP.
non-GAAP financial measure.
The company believes non-GAAP net income loss assist management and investors and comparing the company's progress across reporting periods on a consistent basis by excluding these noncash nonrecurring.
Speaker Change: Recurring or other charges and it does not believe are indicative of its core operating performance.
Reconciliation of GAAP net loss to non-GAAP net income loss can be found in the fourth quarter and full fiscal year 'twenty two or three earnings press release, the company issued and furnished yesterday last night on form 8-K.
All of American Superconductor as press releases SEC filings can be accessed from the investors page of its website at Ww does ASC dot com.
With that I will now turn the call over to Chairman, President and Chief Executive Officer, Dan Mccann, Daniel Thanks, John and good morning, everyone and thank you for joining us.
I'll begin today by providing an update and sharing a few remarks on our business.
John Kosiba will then provide a detailed review of our financial results for the fourth quarter and full fiscal year 2023.
John W. Kosiba: He will also provide guidance for the first quarter of fiscal 2024, which will end June 32024.
Following our remarks, we'll open up the line to questions from our analysts.
I'll begin with a brief recap of our fourth quarter before discussing fiscal year 2023.
Our fourth quarter results exceeded our forecast by nearly every measure.
Remarkable revenue growth in both grid and wind segments, and a third consecutive quarter of non-GAAP net income.
We saw revenue grow by more than 30% against the year ago period, as we reached a record.
Level recently.
Our revenue, surpassing $40 million, both wind and grid grew.
Our wind business revenue increased significantly by more than 125% over the year ago quarter, while our grid business revenue grew more than 20% for the same period.
We believe this unprecedented quarterly revenue level and product mix illustrates our ability to generate cash through the improved operating leverage now built into our business.
In the March ending quarter, our fourth quarter, we saw dramatic operating cash flow improvement when compared to our operating cash burn in the year ago quarter.
Gross margins doubled when compared to the year ago quarter.
We are being pushed by customers to accelerate shipments.
Our manufacturing team and supply chain has been able to respond.
We see this in wind ship protection and new energy across the entire business.
Fiscal year 2023.
It was one of continued business diversification outstanding operational performance and strong overall growth.
We saw total revenue grew over 35% to nearly a $146 million.
During the year, we booked on average over $37 million of new orders per quarter.
We booked over $39 million of new orders during our fourth quarter.
Although as fourth quarter orders over $33 million came from our new energy power systems.
John W. Kosiba: Our robust 12 months backlog stands at $140 million at the end of March.
We have decided to move away from issuing new energy power systems orders press release.
We're reporting orders during our earnings call. The initial purpose of these press releases wants to have you understand and value our company's grid growth, we talked a lot about growth through grid.
We feel we're past that point with growth now coming from both our new energy power systems and ship protection systems in our grid segment as well as the return of growth.
In our wind segment.
John W. Kosiba: All parts of our business are now positioned.
For growth.
Our perspective order sizes are increasing and as I've mentioned the balance sheet is supporting this.
In fiscal year 2023 we saw diverse revenue and renewable industrial mining Navy projects as well as semiconductor.
About one third of our sales were two renewable projects industrial represented about a quarter metals mining and materials were over 15%.
John W. Kosiba: And the Navy was just over 10%.
Semiconductor projects accounted for nearly 10%.
Our diverse orders for the power grid include military resiliency markets.
The orders serving the U S. Military represented an exciting new opportunity for a M. A c's new energy power systems.
These orders have come in are expected to continue to come from serving the U S military by providing efficient and reliable short power to naval vessels.
We reached nearly $20 million of military revenue, which includes both ship protection and new energy power systems revenue.
We successfully delivered and tested the first ship protection system.
The system is now operating on the ship.
We delivered our second ship protection system and we're currently delivering in the third.
And our wind business, we more than doubled our year over year growth as <unk> business prospects demonstrate improvement at our three megawatt ECS demonstrate its capabilities now.
Now I will turn the call over to John <unk> to review, our financial results for the fourth quarter.
Full fiscal year 2023, and.
And provide guidance for the first quarter of fiscal 2024, which will end June 32024, John Thanks.
Thanks, Daniel and good morning, everyone.
Total revenues for the fourth quarter of fiscal 2023 were $42 million. This is an increase of 32% compared to the year ago quarter of $31 7 million.
Great business revenue was up $34 2 million increased by 21% versus a year ago quarter, while our wind business revenues of $7 8 million more than doubled versus the year ago quarter.
Moving on to the full fiscal year total revenues were $145 6 million.
Our grid business represented 84% for fiscal 2023 revenues.
Speaker Change: This included year over year over year growth within our new energy power systems, and our ship protection systems product lines.
Our wind business represented 16% of fiscal 2023 revenues composed of increased ECS shipments to IMAX or both their two megawatt, but more recently three megawatt class turbines.
Gross.
For the fourth quarter of fiscal 2023 was 25% compared to the year ago quarter at 12%.
And for the full fiscal year MSC generated gross margins of 24%. This was up from 8% in fiscal 2022.
Speaker Change: Our focus on gross margin expansion has been effective with both our grid and win win segments experiencing significant gross margin improvements throughout fiscal 2023.
In fact, our consolidated gross margins expanded by over 1600 basis points in fiscal 2023.
Now moving on to operating expenses research and development and SG&A expenses totaled $10 3 million for the fourth quarter of fiscal 2023. This is up from $8 5 billion in the year ago quarter.
Speaker Change: 10% of R&D and SG&A expenses in the fourth quarter were noncash.
For the full fiscal year research and development and SG&A expenses totaled $39 6 million compared with $37 7 million in fiscal 2022.
Speaker Change: Approximately 11% of R&D and SG&A expenses in fiscal 2023 were noncash.
Our net loss in the fourth quarter of fiscal 2023 was $1 6 million or five cents per share compared to $6 9 million or 25 cents per share in the year ago quarter.
Our non-GAAP net income for the fourth quarter of fiscal 2023 was one 9 million or six cents per share.
Speaker Change: Compared with a non-GAAP net loss of $7 8 million or 28 cents per share in the year ago quarter.
For the full fiscal year, our net loss was $11 1 million or <unk> 37 cents per share. This compares to a net loss of 35 billion or $1.26 a share in fiscal 2022.
Our non-GAAP net income for fiscal 2023 was 600000 or two cents per share. This compares to a non-GAAP net loss of $28 8 million or $1 <unk> per share for fiscal 2022.
Speaker Change: We ended fiscal 'twenty to 'twenty, three with $92 3 million in cash cash equivalents and restricted cash. This compares with $25 7 million at March 31, 2023.
In the fourth quarter of fiscal 2023, we generated $2 2 million in operating cash flow and for the full fiscal year, our operating operating cash generation was $2 1 million.
Speaker Change: Yeah.
Now turning to our financial guidance for the first quarter of fiscal 2024, we expect that our revenues will be in the range of 38 to 42 million of net loss on that revenue is expected to be no more than $2 2 million or five cents per share.
Speaker Change: And our non-GAAP net loss is expected to be no more than 500001 cents per share.
We anticipate operating cash flow to be in the range of breakeven to positive $2 million.
With that now I'll turn the call back over to Daniel Thanks, John.
<unk> delivered a terrific year of operational performance and success the culmination of our efforts to build a more diversified and financially stronger company.
We have developed growing customer relationships across successive projects of increasing size content and complexity.
We now deliver higher quantities to repeat customers and markets.
We believe our company's diverse bookings.
<unk> balance sheet and operational success in fiscal 2023.
Laid the groundwork for M. A c's long term growth trajectory.
Over the past two years, we have managed well through a sharp increase in revenue.
If we look back to fiscal year 2017, our annual revenue was under $50 million fast forward four years to fiscal year 2021 and you will see that we doubled revenue.
So over $100 million.
If we look at our revenue for fiscal 2020 three.
We can see that we're nearly halfway to doubling revenue again, we believe we can double revenue from today's annual rate with our current manufacturing capabilities, we are driving operating leverage and cash flow on our improved business model without significant capex investment.
The business isn't the best position its been.
And over a decade.
Speaker Change: And continues to improve.
We are guiding to another quarter of high revenue levels for our first quarter of fiscal 2024 again seeing the 40 million dollar level as possible.
The guidance range always depends on the customer timing of milestones on many of our projects, but it's nice to be talking about $40 million. When we were talking about $30 million per quarter, only a year ago.
We just mentioned the possibility of doubling revenue to double revenue from our fiscal 2021 levels and let me remind you those levels were in the $100 million a year range, we would need to get to $50 million a quarter.
We believe this is certainly conceivable.
At this $50 million quarterly level, we have the potential to generate net income.
With today's product lineup.
We see strong indicators in our end markets.
We expect that our new energy power system products should provide a strong base of grid revenue in fiscal 2024.
And we expect that any additional orders from IMAX and the Navy.
To have meaningful impact on our business with that I'll move on to what we're focused on in fiscal 2024, let's start with the Navy and ship protection systems or Sps.
Our systems help move U S Navy ships into the future.
By installing protection systems that help them stay hidden from our enemy threats.
Today, we have a total of five S. P. S contracts for the San Antonio Class L. P. D. The U S. S. Fort Lauderdale, the U S. S. Harrisburg U S S Richard but cool the U S S Pittsburgh and the U S S. Philadelphia, which offers improved pricing on the SBS system, we have been talking about more ship cause.
Coming.
Speaker Change: And I emphasize this today.
Is it could dramatically impact the business as the cash generation capabilities, we are making tremendous headway with engineering work to specify a potential solution.
Speaker Change: If we look back a year ago, we announced our proprietary high temperature superconductor mine countermeasure or M. C. M system to be designed bill integrated and deployed on the U S. Navy's mine countermeasure unmanned surface vehicle.
Our proprietary MCM system is a capability that is incorporated into an unmanned surface vehicle and launched during mine countermeasure operations that control for and neutralize mines. We believe that this program is positioned to grow Navy related revenue in the near future to be clear.
We hope to be serving multiple ship platforms for the U S. Navy with the addition of the M. C M product when it goes into production. We are very focused on expanding to other U S ship platforms as well as allied navies.
Speaker Change: Clearly.
There are more ships on the horizon I'm looking forward to talking about the things our team has been focused on hopefully in the relatively near future.
Another near term opportunity is wind.
We design wind turbines and provide electrical control systems or ECS to make the turbine more competitive and profitable.
In fiscal 'twenty twenty-three, we secured nearly $15 million a two megawatt wind turbine ECS demand from IMAX and India.
We also announced an initial three megawatt class wind turbine ECS order of $5 million, followed by an additional $8 million order.
We shipped most of the order two megawatt and three megawatt ECS systems against those orders during fiscal year 2023.
Additionally, we completed type certification for the three megawatt class wind turbine.
Yeah.
Speaker Change: The three megawatt class wind turbine is now operating in the field and is expected to drive additional customer demand.
We are supporting imax's growth through our proprietary technology that can enable our partner to deliver superior products to the marketplace.
IMAX is reporting their highest backlog.
Memory with nearly 2.7 Gigawatts of orders. This is why we have been talking about more ships on the horizon and more wind at our back we should start to see the impact of these two themes relatively soon.
Let's discuss our expanding opportunities in our grid business really focusing on our new energy product.
Lineup that we have.
We have orders and backlog generated from demand associated with the electrification of transportation, where we expect to deliver multiple units of the same design. This is something we've been working on.
We are seeing demand for identical solutions for repeat customers our future facing technologies.
Help harmonize the world's desire for de Carbonization, and clean energy with the need for more reliable effective and efficient power delivery.
That's why we believe to be well positioned for long term growth. The world is quickly moving towards de carbonization.
No doubt and climate change and create a path for a more sustainable world.
Transitioning to a low carbon economy potentially increases demand for our new energy power systems through two main avenues renewables and key materials for the new energy economy.
In 2023 renewable solved nearly 1.8 trillion dollars of global investment and the low carbon energy transition. This.
This global surge of 17% is a new record level of annual investment and demonstrates the resilience of the clean energy transition and a year of geopolitical turbulence high interest rates and cost inflation.
In the U S. We see positive effects coming from the inflation reduction Act and chips Act, which were enacted in part to address the challenges of climate change with the goal of reducing emissions by 40% and 23.
India, the world's fastest growing electricity market is forecasting wind power demand to double to 140 Gigawatts by 2030.
India's government added 2.8, Gigawatts of wind energy in 2023, representing an increase of over 50% when compared to calendar year 2022.
[noise] key materials for the new energy economy are mainly driven by the electrification of transportation. These key materials include metals and mining as well as semiconductors.
For calendar year 2020 for the global semiconductor market is expected to grow by nearly 17% while the global mining market is expected to grow by nearly 7%.
The materials industry is being driven by the electrification of transportation the need to prioritize energy security and the need to bolster domestic supply chains.
This exciting energy future depends on computer chips batteries and fuel cells that are built from silicon lithium and carpet all of these building blocks must be mined and processed and assembled into components and final products industrial manufacturers of these essential materials must be able to power their factories and ways that scale.
Phil without adding complexity or size right now we're powering the evolution of our grid.
That's fit for the future a more reliable and resilient grid that can incorporate renewable energy sources, and our pioneering product software and control solutions.
In summary, MSC delivered an outstanding year of improved operational performance.
We've become a more diversified and financially stronger company.
Through diligent execution of our strategy. During 2023, we expanded gross margins dramatically versus a year ago, we delivered three consecutive quarters of non-GAAP net income and operating cash flow.
We ended fiscal 2023 with over $90 million in cash.
This cash balance is critical in order to support larger orders. It also presents us with opportunities.
For further future business growth.
And we feel multiple tailwind coming from our Navy and wind business. The team is receiving kudos for many customers. We're optimistic our business may benefit from the investments in our key road markets renewables mining and metals semiconductors and military.
We're off to a very good start for fiscal 'twenty 'twenty four with tremendous opportunities ahead of us.
We believe we have a conceivable pathway to get to $50 million, a quarter and potentially generate net income.
20 years ago, our annual revenue was under our $50 million for the entire ear.
We are confident of our near and long term prospects I am very proud of our team and what they've been able to accomplish already our transformer to power solutions are moving the world forward.
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 de carbonization and clean energy 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 harmonized and increasingly complex energy system.
I look forward to reporting to you again following the completion of our first quarter of fiscal 2020 for Gary We can now open the line to any questions from our analysts.
We will now begin the question and answer session too.
To ask a question you May press Star then one on your telephone keypad. If you were using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Okay.
Speaker Change: [noise].
The first question is from Eric Stine with Craig Hallum. Please go ahead.
Speaker Change: Hi, Daniel Hi, John.
Baird.
Hey, good morning, So maybe just starting with grid and I'm, particularly interested in the semi conductor focused part of that business.
I'm wondering.
Speaker Change: When you look at that growth I mean is is that broad based is it with you now.
One or two customers and maybe just some details on why you win because clearly that is a component of the grid shrinks.
Yeah, I think when we looked at our future. It's it's more with more ships and more chips I think that the chip part of the equation here is positioned to really boom.
Obviously, not next quarter, but in the coming quarters, we have a very dramatic pipeline of potential projects for our solution and that's from multiple chip fab bakers not just the one that people know about because they've been a significant customer for a number of years.
But there's a huge investment moving in the U S. It's only just begun we're kind of at the tip of the iceberg, we think with semiconductor it's probably a run over the next maybe three years could be more longer and we're very well positioned and the reason is why we went as we were able to provide a complete solution without changing complexity or size.
So we can fit our equipment easily into small substations as they expand existing fabs or build new ones. We have a very economical solution that we can deliver very quickly to our customers. It's all built in a factory fully test ready to plug into the grid and it's become for some chip makers the standard on how they built fast. So we think we're in a <unk>.
<unk> position, Eric for the semiconductor market and really we see the future very bright there.
Got it and is that I mean, do you envision going forward I believe with your primary or with one of the main customers you may be specced in I mean is that your expectation that you would.
You know as you said become the preferred solution in that every build out that happens. It would most likely include a M. S C.
Yeah, we've identified literally hundreds of millions of dollars of potential business from multiple chip fabs that we are working on competing in and as you know from prior conversations and calls we have been affected by some and we hope to be able to expand that and we think it's a tremendous opportunity for our business, it's probably an opportunity that most investors.
<unk> don't fully appreciate where we are and where we're going to go I think you know pretty rapidly over the coming years.
Got it Okay. That's helpful and maybe then just turning to win so obviously a great.
Agree wind corridor here.
But should we take from your comments that maybe the first half.
The fiscal year might be soft simply because although you're in a good position to get more follow on orders from IMAX you've to work you've worked through most of the orders that you currently have in hand.
Yeah other than the word soft I think I think it's relatively strong to where we've been in the past years, but I think it's probably going to continue to get better and probably the earliest as you're indicating and for us to confirm is that they're really sure gonna see further improvement would be later this fiscal year or lead time to our customer.
There's about six months.
And obviously the last time that we announced an order was back in January.
If you look at their demand, particularly our key customer that we love in India.
Their demand is only going up and we believe that there's more of orders on the horizon are they're coming and we want to make sure. We're in good position to be able to deliver them timely.
Because their business really if you listen to them. It's just it seems to be strengthening quarter on quarter.
Alright.
Okay. So just to confirm I, maybe I misunderstood, but in your prepared remarks talking about that you shipped.
The majority of the three megawatts, we shouldn't read into that that there's necessarily a much of a sequential difference it's more about don't expect a step.
Step up until you get further orders, which obviously, you're well positioned to get.
Yeah, I think that that gets right at it okay.
Okay. Thank you very much.
Thanks, Eric.
The next question is from Colin Rusch with Oppenheimer. Please go ahead.
Thanks, so much guys.
I just wanted two questions on the demand side and the sales cycle can you talk a little bit about what you're seeing is book and ship business either within the quarter within you know a nine to 12 month period, and then also if you're starting to see any sort of interest from data centers given the substation solution that you talked about it seems like as.
<unk> increased our.
Data centers.
You know given that you.
Increased in compute power on the new servers that solution could make a lot of sense let.
Let me take the second one first and then I'll ask you with the first one I wasn't getting call it.
Data centers are certainly on our radar, we see a large propensity of projects in our pipeline.
I think we're trying to figure out how we fit how he can win how we can continue to differentiate I think the combined offering that we have now between what we do in power electronics and superconductors, probably could have a relevant fit in data centers.
But kind of like you know we did when we launched the V. B O product kind of like when we started talking about resiliency for the military using the new energy power solutions I'd like to give you a proof point or two to point to and hopefully you know in the coming quarters or year or so we can deliver on that and then we can say with more strength.
Speaker Change: That we think Datacenters is I'm, just gonna be a future important part of our business today, how we're gonna benefit is really through more chips and more demand on the grid requires more of our equipment, but there may be eventually a more direct play for us in data centers.
Yeah.
I don't even mind going back and restating. The first the first part of the question Yeah. Yeah. I'm. Just curious about you know how much of yourself is book and ship within the quarter or within a nine to 12 month period.
I think two things are happening, we're seeing some book and ship in the quarter are there are product lines that work that way.
Most of them were looking at nine months plus but we are taking orders you don't still for later this calendar year. Later this fiscal year. What we're seeing is our supply chain has been able to respond our manufacturing capabilities set up we can deliver in one of the things that our customers are giving us kudos for as we are.
Short lead times so.
That certainly helps us to look at potential further acceleration in the business.
But we have to be able to add more order book I think to give everybody comfort and color that.
The asbestos is going to continue to accelerate the higher levels. You can see just what we have in backlog we can be at about the current revenue levels for the coming quarters, and then as I mentioned to Eric.
You know theres the potential maybe later in the year, we could see further acceleration, but today I don't know if the order book fully justifies that but I'm certainly leaning forward that there's a lot more orders coming and I think the business is going to improve over the coming months and coming quarters.
That's super helpful. And then I just have a quick.
And around some of the value based pricing initiatives that you've had and if theres more to do there you know obviously you you push through some price increases.
And there is there an incremental opportunity there and in your mind or you know a place where you're just driving volume at this point because youre at compelling price points.
I'd say in the general sense, we're just driving volume, but I think there are in certain projects, where there's combined offering from our different manufacturing locations that there. We may have some ability to command more price that's something we're working on to try to figure out. So there may be a piece of that but I think you know.
The main driver will be more volume and kind of a secondary order there might be some improved pricing for some of the larger orders where were providing more content.
Great. Thanks, so much guys.
Thanks Carl.
The next question is from Justin Clare with Roth Capital Partners. Please go ahead.
Yeah, Good morning, guys.
Hey, Justin Good morning morning, Hey, I just wanted to start out you talked about the possibility of reaching $50 million in quarterly revenue and the potential to generate a positive net income was wondering you know.
Do you think that $50 million is potentially achievable in fiscal 'twenty, four or potentially fiscal 'twenty five based on the demand you're seeing and then as we think about you know higher levels of revenue how should we think about your operating leverage you know should.
We anticipate growth in Opex opex that needed to get to that 50 level $50 million level.
Yeah, I think the hard part and I think you're asking the right question is the timing of when that could happen I think certainly given where the backlog is today I don't see 50 million per quarter, you know happened in the next four quarters.
We want to focus on being able to deliver.
Timely to our customers on the order book that we have I think as we see if we do see an acceleration in orders and you can start to think about higher revenue levels. In the 40 40 ish that we did last quarter and that.
We got it with 38 to 42 for this quarter. So some similar kind of number. So we're really excited that we were talking a year ago about 30 now we're at 40 and I felt compelled we should talk about 50, because I don't want people to realize we don't have to invest.
I want people to be able to realize that we don't have to invest a lot of capex to continue growing this business and Doug to your question about operating leverage we don't have to scale Opex I'm certainly not not at the same rate relative to revenue right. So we think we have a very capital light manufacturing capability. We think we have an opex that's highly <unk>.
Capable of today, and we think we have the demand to potentially scale of the business I think the hard part to answer. Your question. Just really is the when is the timing I know that's what everybody wants I think all we can do is demonstrate we were just talking about more orders coming we see wind at our back we see more ships on the horizon, we see a plethora of new chip on.
Pertuit east for Us that can help continue to drive some growth for new energy. So we think everything is very well aligned but you don't mean long enough just that I'm I'm I, usually talk about how it very rarely talk about wind.
We're going to see how it all all figures out as we generate more significant orders in the future, but we're very happy with where the business is today, where we've grown to do and I really want people to realize that yeah. There is a lot more upside than what we can do and that's why I talked a lot about doubling because that's what we want to be in a position that we think the markets are driving theres a lot of.
A lot of tailwind that are hitting our entire complete business and we want to be in position to take advantage of those as they come.
Okay got it I appreciate that.
And then I guess just recently it does seem like there's a lot more optimism around the potential for a recovery in wind project deployments in the U S.
We recently got a guidance on domestic content, which could be beneficial for you know accelerating some wind projects, but wondering if you're seeing signs of an acceleration or deployments in the U S and a potential for maybe an uptick in order flow for for your business.
Yeah, we see more potential coming from wind and solar if you go back to the prepared remarks, I think John said.
The wind business, which is inside the wind turbines about 16% I talked about that renewables, which is wind and solar combined it's more than a third of the business right. So there's a there's a good a fraction of the grid business and new energy, that's supporting both wind and solar so we see that tremendous investment.
Today that investments growing all over the world, including in the U S and where we're trying to be in position to take advantage of that the best we can and we haven't been approved lineup. We don't just use a D. Var. We also use Nebraska for banks of empty. It's it's a more broader effort and offering that we have from renewables today than we did.
A few years ago.
Okay. Okay got it and then one more for me was wondering if you could just speak a little bit more to what's driving the larger order sizes is this coming from an increase in the content per order that youre supplying or are you seeing the size of projects that you're delivering to R. R.
Those project sizes, increasing.
And then wondering how youre thinking about this you know into the future here or is there further opportunity to increase content per order or are you seeing opportunities for larger projects.
Yeah, I think if I go back to the first part the answer to both is yes. So we're seeing larger projects on the customer that they're building.
And we're able to offer more content into those projects. So it helps to drive larger project size. If I look at the future a lot of our pipeline has very large projects in it.
So when we look at our future order size do you think the potential is there to continue to increase it and for the same two factors that you outlined that's increased pass revenue, which is larger projects at more content per project part of why we want to be in position with the balance sheet that we are today is to support those larger orders are having that large.
Your balance sheet gives our customers more comfort, but it also potentially allows us to invest in more content.
That on our own organically or be that inorganically eventually through additional acquisitions, we've been very successful with the entities that we've acquired the whole business across the board is operating very nicely and.
And we you know we.
You know we want to make the effort to make sure that that continues.
Continues to happen. So I think that you know today. The message is a lot of doubling in a lot of more and more and more which is really what we see on the horizon. I think the question for everybody is how quickly can we go after that and address that and I think you know time time will tell that but we're in a wonderful position. This is the healthiest position we've ever been.
And really as a company are all the way back to the founding.
Okay I appreciate it thanks guys.
Thanks Joseph.
This concludes our question and answer session I would like to turn the conference back over to Mr. Mcgill for any closing remarks.
I'm trying to curtail by kind of a strong excitement that I have here on where we sit yeah. This is a point, we've really worked hard to get to and we're here you know the numbers are delivering.
The things that we want you all to believe that we could do are now happening you know the business generated cash for the full fiscal year.
That's huge right and that's not something we said was going to happen. We've tried to manage the business and the growth to get to that point and you know John and I as management team. We don't go out and say, we're going to do all of these glorious things that didn't come back and only do a fraction of them, we we like to.
Under promise and over deliver and we feel the business is doing that because our customers are driving us to do that and that's really given us strong performance.
Actually the last several quarters.
We see a strong first quarter, continuing that trend, possibly given the numbers that we've set and I think Justin got at it call. It hinted at it Eric hinted at it.
We got large orders on the horizon common folks.
Think a lot of my excitement is not just today and how the financial results are but what we see the future possibilities for this company. We've put together a great company run by our are our employees that are able to deliver and step up to the place they've been able to do it at every turn.
And we're counting on that to happen we have great customers, we're getting a lot of great feedback from customers, where they want to make bigger orders they want to make multiple unit orders and things that are parts of our business weren't able to do a few years ago. We can do now and that's really a testament to everybody's support. So I think there's a lot of belief that I get feedback from investors and.
Where we're going you know come with us for the ride here and I think it's gonna be a bright and shiny future for us. So thanks, everybody for your time and attention and look forward to talking to you again.
In a couple of months.
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