Q4 2024 American Superconductor Corp Earnings Call

Operator: Good morning, and welcome to the AMSC fourth quarter fiscal 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Good morning, and welcome to the a M. S C fourth quarter fiscal 2020 for financial results Conference call all participants will be in listen only mode.

Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one. Please note, this event is being recorded.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one please.

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Nicol Golez: I would now like to turn the conference over to Nicol Golez, AMFC's Director of Communications. Please go ahead. Thank you, MJ.

Nicole Gala: I would now like to turn the conference over to Nicole Gala is a M. S D. As director of Communications. Please go ahead.

Nicole Gala: Thank you Jay Good morning, everyone and welcome to American Superconductor corporations fourth quarter and full fiscal year 2024 conference call I am the Congolese M. A c's director of communication joining me today are Daniel Mccann, Chairman President and Chief.

Nicol Golez: Good morning, everyone, and welcome to American Superconductor Corporation's fourth quarter and full fiscal year 2024 conference call. I am Nicol Golez, AMSE's Director of Communications.

Nicol Golez: Joining me today are Daniel McGahn, Chairman, President, and Chief Executive Officer, and John Kosiba, Senior Vice President, Chief Financial Officer, and Treasurer.

Nicole Gala: Executive Officer, and John Kosiba, Senior Vice President Chief Financial Officer, and Treasurer yesterday after market closed American Superconductor issued its earnings release for the fourth quarter and full fiscal year 2024, a copy is available on the <unk>.

Nicol Golez: Yesterday, after market closed, American Superconductor issued its earnings release for the fourth quarter and full fiscal year 2020. A copy is available on the investors page of the company's website at www.amsc.com.

Nicole Gala: Investors page of the company's website at Www Dot MSC dotcom remarks that management may make during today's call about future expectations, including expectations regarding the company's financial results plans and prospects cost.

Nicol Golez: Remarks that management may make during today's call about future expectations, including expectations regarding the company's financial results, plans, and prospects constitute forward 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 our annual report on risk. where the year ended March 31, 2012. which the company filed with the Securities and Exchange Commission on May 21st. and the company's other reports filed with the SEC, which are also available on our website.

Nicole Gala: Such forward looking statements.

Nicole Gala: 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 our annual report on Form 10-K for the year ended March 31 2000.

Nicole Gala: 25, which the company filed with the Securities and Exchange Commission on May 21st 2025, and the company's other reports filed with the SEC, which are also available on our website. The company disclaims any obligation to update these forward looking statements also.

Nicol Golez: The company disclaims any obligation to update these forward-looking Also, on today's call, management will refer to non-GAAP net on non-GAAP finance. tables of reconciliation of GAAP to adjusted financial measures can be found in the company's earnings report.

Speaker Change: On today's call management will refer to non-GAAP net income are non-GAAP financial measure tables are frequently Asian of GAAP to adjusted financial measures can be found in the company's earnings release with that I will now turn the call over to chairman.

Daniel McGahn: With that, I will now turn the call over to Chairman, President, and Chief Executive Officer, Daniel McGahn. Thanks, Nicol. Good morning, everyone, and thank you for joining us. We're really excited to share some great news about the company and not only where we are, but where we're headed. I'll begin today by providing an update and sharing a few remarks on our business.

Daniel Mccann: President and Chief Executive Officer, Daniel Mccann, Daniel Thanks, Nicole.

Daniel Mccann: Morning, everyone and thank you for joining us we're really excited to share some great news about the company and not only where we are but where we're headed I'll begin today by providing an update and sharing a few remarks on our business.

Daniel McGahn: John Kosiba will then provide a detailed review of our financial results for the fourth quarter and full fiscal year 2024. He will also provide guidance for the first quarter of fiscal 2025, which will end June 30, 2025. And following our remarks, we'll open up the line to questions from our analysts.

Nicole Gala: John Kosiba will then provide a detailed review of our financial results for the fourth quarter and full fiscal year 2024.

Nicole Gala: He will also provide guidance for the first quarter of fiscal 2025, which will end June 32025, and following our remarks, we'll open up the line to questions from our analysts.

Daniel McGahn: AMSC delivered its strongest reported performance in years for both the quarter and for the fiscal year. During our fourth quarter, we outperformed expectations across nearly every key metric. We saw revenue grow sequentially, quarter over quarter, and by nearly 60% against the year-ago period, as we reached a recent record level of revenue surpassing the $65 million mark. Our grid business revenue grew substantially by more than 60% over the year-ago quarter. while our wind business revenue increased significantly by more than 40% for the same period. We achieved our third consecutive quarter of GAAP profitability, our seventh consecutive quarter of non-GAAP profitability, as well as our seventh consecutive quarter of generating operating cash flow.

Nicole Gala: M. A C delivered its strongest reported performance in years for both the quarter and for the fiscal year.

Nicole Gala: During our fourth quarter, we outperformed expectations across nearly every key metric, we saw revenue grow sequentially quarter over quarter and by nearly 60% against the year ago period as he reached a recent record level of revenue surpassing.

Nicole Gala: The 65 million dollar Mark.

Nicole Gala: Our grid business revenue grew substantially by more than 60% over the year again I'll go quarter.

Nicole Gala: Our wind business revenue increased significantly by more than 40% for the same period.

Nicole Gala: We achieved our third consecutive quarter of GAAP profitability, our seventh consecutive quarter of non-GAAP profitability as well as our seventh consecutive quarter of generating operating cash flow. We believe this record quarterly revenue and continued profitability reflect the strong momentum we built and the disc.

Daniel McGahn: We believe this record quarterly revenue and continued profitability reflect the strong momentum we've built and the discipline behind our success.

Nicole Gala: The plan behind our success.

Daniel McGahn: For the full fiscal year, I'm proud to say that it was a year of exceptional execution and strong growth across our business. We saw total revenue grow over 50% to $250 million. $222 million. We saw revenue diversity across renewables, industrials, military, utility, and the semiconductor sector. Over a third of our sales were for renewable projects, manufacturing and traditional energy projects represented also nearly a third. Military was about 15% and utility came in just over 10%. A significant part of our strong performance was driven by our core business, where we achieved nearly 20% organic growth for the fiscal year.

Nicole Gala: For the full fiscal year I'm proud to say that it was a year of exceptional execution and strong growth across our business.

Nicole Gala: We saw total revenue grow over 50% to 200.

Nicole Gala: $222 million.

Nicole Gala: We saw revenue diversity across renewables industrials military utility and the semiconductor sector.

Nicole Gala: Over a third of our sales were for renewable projects manufacturing and traditional energy projects represented also nearly a third military was about 15% and utility came in just over 10%.

Nicole Gala: A significant part of our strong performance was driven by our core business, where we achieved nearly 20% organic growth for the fiscal year.

Daniel McGahn: Nearly 70% of our revenue came from the United States market. We see this as a very important hedge against the changing American trade policy and tariff landscape. We ended the year with over $85 million in cash.

Nicole Gala: Nearly 70% of our revenue came from the United States market.

Nicole Gala: We see this as a very important hedge against the changing American trade policy and tariff landscape.

Nicole Gala: We ended the year with over $85 million in cash.

Daniel McGahn: Let's now take a look at our order bookings for the quarter, which were extremely strong. Fourth quarter orders grew to $75 million. We are seeing a significant acceleration in our business driven by semiconductors as well as traditional energy projects.

Nicole Gala: Let's now take a look at our order bookings for the quarter, which were extremely strong fourth quarter orders grew to $75 million.

Nicole Gala: We are seeing a significant acceleration in our business driven by semiconductors as well as traditional energy projects.

Daniel McGahn: We booked nearly $320 million of new orders for fiscal 2024. We close the year with a robust 12-month backlog of over $200 million. This was $140 million a year ago. The business has expanded, and orders appear to be accelerating, albeit we are now booking some products for delivery already in fiscal 2026.

Nicole Gala: We booked nearly $320 million of new orders for fiscal 2024.

Nicole Gala: We closed the year with a robust 12 month backlog of over $200 million.

Nicole Gala: This was a $140 million a year ago. The business has expanded and orders appear to be accelerating, albeit we are now booking some products for delivery already in fiscal 'twenty 'twenty six.

Daniel McGahn: We successfully expanded into Allied navies for the first time with an order from the Royal Canadian Navy, marking a key milestone in our global defense business strategy. Additionally, we successfully delivered three ship protection systems for the U.S. Navy. These accomplishments highlight the growing demand for our solutions, as well as our position as a trusted partner domestically and abroad.

Nicole Gala: We successfully expanded into allied navies for the first time with an order from the Royal Canadian Navy, marking a key milestone in our global defense business strategy. Additionally, we successfully delivered three ship protection systems for the U S Navy.

Nicole Gala: These accomplishments highlight the growing demand for our solutions as well as our position as a trusted partner domestically and abroad.

Daniel McGahn: we expanded our product portfolio through an acquisition, positioning us to capitalize on opportunities in both the military and industrial sector.

Nicole Gala: We expanded our product portfolio through an acquisition positioning us to capitalize on opportunities in both the military and industrial sectors.

Daniel McGahn: In our wind business, we showed year-over-year growth as INOX's business prospects strengthened and our three-megawatt ECS demonstrated its capability. We believe all parts of the business are now aligned and poised to deliver improvement.

Nicole Gala: In our wind business, we showed year over year growth and <unk> business prospects strengthened.

Nicole Gala: And our three megawatt ECS demonstrated its capabilities.

Nicole Gala: We believe all parts of the business are now aligned and poised to deliver improvement now I will turn the call over to John <unk> to review, our financial results for the fourth quarter and full fiscal year 2024, and provide guidance for the first quarter of fiscal 2025.

John Kosiba: Now I'll turn the call over to John Kosiba to review our financial results for the fourth quarter and full fiscal year 2024 and provide guidance for the first quarter of fiscal 2025, which will end June 30, 2025. Thank you, John. Thanks, Daniel. And good morning, everyone. Total revenues for the fourth quarter of fiscal 2024 were $66.7 million. This is an increase of 59% compared to the year-ago quarter of $42 million. Grid business revenues of $55.6 million increased by 62% versus the year-ago quarter, while our wind business revenues of $11.1 million increased by 42% versus the year-ago quarter.

Nicole Gala: Which will end June 32025, John.

John Kosiba: Daniel and good morning, everyone.

Nicole Gala: Total revenues for the fourth quarter of fiscal 2024 were $66 7 million.

Nicole Gala: This is an increase of 59% compared to the year ago quarter of 42 million.

Nicole Gala: Grid business revenues of $55 6 million increased by 62% versus the year ago quarter, while our wind business revenues of $11 1 million increased by 42% versus the year ago quarter.

John Kosiba: Moving on to the full fiscal year, our total revenue in fiscal 2024 were $222.8 million. This is an increase of 53 percent compared to fiscal year 2023 revenues of $145.6 million. Grid business revenues of $187.2 million increased 53% in fiscal 2024 and represented 84% of total revenue. The year-over-year increase is a result of organic growth within our new energy product lines, accompanied by the addition of NWL. win business revenues of $35.6 million, increased 51% in fiscal 2024, and represented 16% of total revenue. The year-over-year increase is a result of increased ECS shipments to INOX for our 2-megawatt and 3-megawatt class ECS systems. Gross margin for the fourth quarter of fiscal 2024 was 27%, compared to 25% in the a year ago quarter.

Nicole Gala: Moving on to the full fiscal year.

Nicole Gala: Total revenue in fiscal 2024, or $222 8 million. This is an increase of 53% compared to fiscal year 2023 revenues of $145 6 million.

Nicole Gala: Grid business revenues of $187 2 million increased 53% in fiscal 2024 and represented 84% of total revenue.

Nicole Gala: The year over year increase as a result of organic growth within our new energy product lines accompanied by the addition of <unk>.

Nicole Gala: Wind business revenues of $35 6 million increased 51% in fiscal 2024 and represented 16% of total revenue.

Nicole Gala: The year over year increase as a result of increased ECS shipments to IMAX for a two megawatt and three megawatt class ECS systems.

Nicole Gala: Gross margin for the fourth quarter of fiscal 2024 was 27% compared to 25% in the year ago quarter.

John Kosiba: For the full fiscal year 2024, AMC generated gross margins of 28%. This was up from 24% in fiscal 2023. we saw a full year gross margin expansion of 353 basis points over the prior year.

Nicole Gala: For the full fiscal year 2020 for AMC generated gross margins of 28%.

Nicole Gala: This was up from 24% in fiscal 2023.

Nicole Gala: We saw full year gross margin expansion of 353 basis points over the prior year.

John Kosiba: Now moving on to operating expenses, research and development, and SG&A expenses for the fourth quarter of fiscal 2024 totals $15.6 million. This was up from $10.3 million in the year-ago quarter. Approximately 17% of R&D and SG&A expenses in the fourth quarter were non-cash.

Nicole Gala: Yeah.

Nicole Gala: Now moving on to operating expenses research and development and SG&A expenses for the fourth quarter of fiscal 2024 totaled $15 6 million.

Nicole Gala: This was up from $10 3 million in the year ago quarter.

Nicole Gala: Approximately 17% of R&D and SG&A expenses in the fourth quarter were noncash.

John Kosiba: For the full fiscal year, research and development and SG&A expenses totaled $54.5 million in fiscal 2024, compared with $39.6 million in fiscal 2023. Approximately 14% of R&D and SG&A expenses in fiscal 2024 were non-cash.

Nicole Gala: For the full fiscal year research and development and SG&A expenses totaled $54 5 million in fiscal 2020 ball compared with $39 6 million in fiscal 2023.

Nicole Gala: Approximately 14% of R&D and SG&A expenses in fiscal 2024 were noncash.

John Kosiba: Our net income in the fourth quarter of fiscal 2024 was $1.2 million, or $0.03 per share, compared to a $1.6 million loss, or $0.05 per share, in the year-ago quarter. Our non-GAAP net income for the fourth quarter of fiscal 2024 was $4.8 million, or $0.13 per share, compared with non-GAAP net income of $1.9 million, or $0.06 per share, in the year-ago quarter. For the full fiscal year 2024, our net income was $6 million or $0.16 per share. this compared to a net loss of $11.1 million or $0.37 per share in fiscal 2023. For the full fiscal year 2024, our non-GAAP net income was $24 million, or $0.65 per share.

Nicole Gala: Our net income in the fourth quarter of fiscal 2024 was $1 2 million or <unk> <unk> per share compared to one compared to a $1 6 million dollar loss or five cents per share and a year ago quarter.

Nicole Gala: Our non-GAAP net income for the fourth quarter of fiscal 2024 was $4 8 million or 13 cents per share.

Nicole Gala: Compared with non-GAAP net income of $1 9 million or six cents per share and a year ago quarter.

Nicole Gala: Yeah.

Nicole Gala: For the full fiscal year 2024, our net income was $6 million or 16 cents per share.

Nicole Gala: This compares to a net loss of $11 1 million or <unk> 37 cents per share in fiscal 2023.

Nicole Gala: Although for the full fiscal year 2024, non-GAAP net income was $24 million or 65 cents per share.

John Kosiba: This compares to non-gap net income of $600,000 or $0.02 per share in fiscal 2023.

Nicole Gala: This compares to non-GAAP net income of 600000 or <unk> <unk> per share in fiscal 'twenty to 'twenty three.

John Kosiba: We ended fiscal year 2024 with $85.4 million in cash, cash equivalents, and restricted cash. In the fourth quarter of fiscal 2024, we generated $6.3 million in operating cash flow. For the full fiscal year, we generated operating cash flow of $28.3 million.

Nicole Gala: We ended fiscal year 2024, with $85 4 million in cash cash equivalents and restricted cash.

Nicole Gala: In the fourth quarter of fiscal 'twenty 'twenty, four we generated $6 3 million in operating cash flow.

Nicole Gala: For the full fiscal year, we generated operating cash flow of $28 3 million.

John Kosiba: Now, turning to our financial guidance for the first quarter of fiscal 2025, we expect that our revenues will be in the range of $64 to $68 million. Our net income on that revenue is expected to exceed $1,000,000 or $0.03 per share, and our non-GAAP net income is expected to exceed $4,000,000 or $0.10 per share.

Nicole Gala: Now turning to our financial guidance for the first quarter of fiscal 2025, we expect that our revenues will be in the range of $64 million to $68 million.

Nicole Gala: Our net income on that revenue is expected to exceed 1 million or <unk> <unk> per share.

Nicole Gala: On a non-GAAP net income is expected to exceed 4 million or 10 cents per share.

Daniel McGahn: With that, I'll turn the call back over to Daniel. Thanks, John. It really is a different business now. AMSE delivered a terrific year of operational performance, an outcome that reflects our efforts to build a more resilient company.

Daniel Mccann: With that I'll turn the call back over to Daniel.

Daniel Mccann: Thanks, John It really is a different business now.

Speaker Change: M. A C delivered a terrific year of operational performance.

Speaker Change: An outcome that reflects our efforts to build a more resilient company I think this is the first time, we are guiding to net income.

Daniel McGahn: I think this is the first time we're guiding to net income. and we're talking about strong revenue and non-GAF net income as well. We've cultivated growing relationships with our customers across multiple projects that have increased in size, scope, and technical complexity. Today, we're delivering greater volumes to repeat customers. We believe our diverse bookings, strong balance sheet, and operational success in fiscal 2024 have set the stage for long-term improvement in the business. Over the past three years, we've managed well through a sharp increase in revenue. Back in fiscal 2017, our annual revenue was under $50 million.

Speaker Change: And we're talking about strong revenue and non-GAAP net income as well.

Speaker Change: We've cultivated growing relationships with our customers across multiple projects that have increased in size scope and technical complexity.

Speaker Change: Today, we're delivering greater volumes to repeat customers.

Speaker Change: We believe our diverse bookings strong balance sheet and operational success in fiscal 2024 has set the stage for long term improvement into the business over the past three years, we've managed well through a sharp increase in revenue.

Speaker Change: Back in fiscal 2017, our annual revenue was under $50 million.

Daniel McGahn: That was annually, not quarterly. By 2021, we had doubled that, and then by 2024, we doubled it again. or quarterly revenues now exceed that annual level from fiscal year 2017. We delivered operating leverage without requiring major capital investment. The business really is in the strongest position in over a decade, and we believe it's still getting better. We enter fiscal 2025 confident in our ability to continue building a more resilient and profitable company. We are guiding to another quarter of expected high revenue levels for our first quarter of fiscal 2025. Again, seeing this $65 million revenue level as possible, The guidance range always depends on customer timing of milestones on many of our projects.

Speaker Change: That was annually not quarterly.

Speaker Change: By 2021 we had doubled that.

Speaker Change: And then by 'twenty 'twenty four we doubled it again.

Speaker Change: Our quarterly revenues now exceed that annual level from fiscal year 2017.

Speaker Change: We delivered operating leverage without requiring major capital investment.

Speaker Change: The business really is in the strongest position in over a decade, and we believe it's still getting better.

Speaker Change: We enter fiscal 'twenty twenty-five confident in our ability to continue building a more resilient and profitable company we.

Speaker Change: We are guiding to another quarter of expected high revenue levels for our first quarter of fiscal 2025 again seeing this $65 million revenue level as possible.

Speaker Change: The guidance range always depends on customer timing of milestones on many of our projects. It's certainly nice to be talking about $65 million. When we were talking about $30 million per quarter only two years ago.

Daniel McGahn: It's certainly nice to be talking about $65 million when we were talking about $30 million per quarter only two years ago.

Speaker Change: Yeah.

Daniel McGahn: With that, let's turn our focus to fiscal 2025, starting with the growing opportunities in our power Demand for reliable power is rising. defense priorities dictate a stronger Navy. We see demand for our power quality products across the evolving energy landscape where reliability and performance become more critical than ever. The grid is under pressure. Distributed energy and two-way power flows are adding complexity. the need for smarter, more resilient and dynamic systems is only increasing. data centers alone could double global power demand by as early as 2026. Semiconductor fabs in the United States are projected to more than triple by 2032.

Speaker Change: With that let's turn our focus to fiscal 2025, starting with the growing opportunities in our power solutions.

Speaker Change: Demand for reliable power is rising.

Speaker Change: Defense priorities dictate a stronger Navy.

Speaker Change: We see demand for our power quality products across the evolving energy landscape, where reliability and performance become more critical than ever the.

Speaker Change: The grid is under pressure.

Speaker Change: Distributed energy and two way power flows are adding complexity.

Speaker Change: The need for smarter more resilient and dynamic system is only increasing.

Speaker Change: Data centers alone could double global power demand by as early as 2026.

Speaker Change: Semiconductor fabs in the United States are projected.

Speaker Change: To more than triple by 2032.

Daniel McGahn: We've seen a ramp up in our orders pipeline this quarter, securing multiple orders driven by semiconductor fabs under construction. These orders, as well as orders from traditional power customers, are the main reason that we see such a dramatic increase in our order intake rate. Traditional power production is also making a resurgence, driving industrial growth and grid strain. The U.S. is reshoring advanced manufacturing in many factories where resilient power supply is critical. Our aging infrastructure just can't keep up.

Speaker Change: We've seen a ramp up in our orders pipeline this quarter, securing multiple orders driven by semiconductor fabs under construction. These orders as well as orders from traditional power customers are the main reason that we see such a dramatic increase in our order intake rate.

Speaker Change: Traditional power production is also making a resurgence driving industrial growth in grid strain.

Speaker Change: The U S is reassuring advanced manufacturing and many factories were resilient power supply is critical our aging infrastructure just can't keep up.

Daniel McGahn: Last month, the administration issued an executive order to strengthen grid reliability and security. The Department of Energy is now authorized to use all available power resources to ensure reliable electricity delivery. That's where we come in. Our power solutions, capacitor banks, harmonic filters, and static synchronous compensators are built for energy-intensive industries like artificial intelligence, data centers, steel, and a variety of metals, automotive, chemicals, and semis. Our products are designed to maintain reliability, maximize output, and enhance power quality in distribution networks impacted by industrial loads. We are uniquely positioned to enable industrials to power facilities in ways that scale without adding complexity or size.

Speaker Change: Last month, the administration issued an executive order to strengthen grid reliability and security and the.

Speaker Change: The Department of Energy has now authorized to use all available power resources to ensure reliable electricity delivery, that's where we come in our power solutions capacitor banks harmonic filters and static synchronous compensator or bill for energy intensive industries like artificial intelligence data.

Speaker Change: Centers steel in a variety of metals automotive chemicals and semiconductors.

Speaker Change: Our products are designed to maintain reliability maximize output and enhanced power quality and distribution networks impacted by industrial loads.

Speaker Change: We are uniquely positioned to enable industrials to power facilities in ways that scale without adding complexity or size.

Daniel McGahn: In fiscal 2024, we expanded our offerings with power supplies and military-grade solutions that strengthen our overall product portfolio. These solutions help industries cut emissions, power critical systems, and boost the performance of their plant, as well as powering critical military systems. In each case, these are critical power solutions that need to operate in harsh environments. We have orders and backlog generated from the demand across industrial, utility, and military sectors, where these products are making a significant impact. We're not just responding to grid changes, we're enabling them. were focused on capturing the many opportunities ahead in both power and defense.

Speaker Change: In fiscal 'twenty 'twenty, four we expanded our offerings with power supplies ability military grade solutions that strengthen our overall product portfolio.

Speaker Change: These solutions help industries cut emissions power critical systems and boost the performance of their plant as well as powering critical military systems in each case. These are critical power solutions they need to operate in harsh environments, we have orders and backlog generated from that.

Speaker Change: Demand across industrial utility and military sectors, where these products are making a significant impact.

Speaker Change: We're not just responding to grid changes, we're enabling them.

Speaker Change: We're focused on capturing the many opportunities ahead in both power and defense.

Daniel McGahn: We see growth from wind in India. We design and supply electrical control systems, or ECS. They make wind turbines more competitive and efficient.

Speaker Change: We see growth from wind in India.

Speaker Change: We design design and supply electrical control systems or ECS, they make wind turbines more competitive and efficient.

Daniel McGahn: In fiscal 2024, we secured nearly $35 million in orders for our 2-megawatt and 3-megawatt ECS from Inox as they ramp up to service their growing demand. About half of these shipments were occurred during the year. Our proprietary technology is helping INUC scale, supporting what they've called their strongest backlog in recent memory with over 3 gigawatts of order.

Speaker Change: In fiscal 'twenty 'twenty, four we secured nearly $35 million in orders for our two megawatt and three megawatt ECS for my docs as they ramp up to service their growing demand about half of these shipments.

Speaker Change: Sure.

Speaker Change: Occurred during the year.

Speaker Change: Our proprietary technology is helping <unk> scale supporting what they've called their strongest backlog in recent memory with over three gigawatts of orders.

Daniel McGahn: Let's now turn to our growing presence in the Navy sector. Our Ship Protection Systems, or SPS, help naval vessels by reducing their visibility to enemy threat.

Speaker Change: Let's now turn to our growing presence in the Navy sector, our ship protection systems, or Sps help naval vessels by reducing their visibility to enemy threats.

Daniel McGahn: This year marked a major milestone as we expanded our ship protection systems internationally with a breakthrough contract from the Royal Canadian Navy, our first Allied Navy customer. We secured a multi-year, multi-unit contract worth about $75 million with Irving Shipbuilding, the leading builder of Canada's naval fleet. We believe this order represents a strong signal of global demand for our defense system.

Speaker Change: This year marked a major milestone as we expanded our ship protection systems internationally with a breakthrough contract from the Royal Canadian Navy, our first Allied Navy customer.

Speaker Change: We secured a multi year multi unit contract worth about $75 million with Irving shipbuilding the leading builder.

Speaker Change: Candidates Naval fleet.

Speaker Change: We believe this order represents a strong signal of global demand for our defense systems.

Daniel McGahn: We're now preparing to deliver our proprietary solutions to support the U.S. Navy and the Royal Canadian Navy. To date, we've secured five SPS contracts from the U.S. Navy. for the San Antonio class ship. We've delivered on three out of the five systems to the following vessels, the USS Fort Lauderdale, the USS Harrisburg, and the USS Pittsburgh. We anticipate delivering our fourth system soon.

Speaker Change: We're now preparing to deliver our proprietary solutions to support the U S Navy and the Royal Canadian Navy to date, we have secured five S. P S contracts.

Speaker Change: From the U S Navy.

Speaker Change: For the San Antonio Class ship.

Speaker Change: We've delivered on three out of the five systems to the following vessels U S. S. Fort Lauderdale U S. S. Harrisburg in the U S. S. Pittsburgh, we anticipate delivering our fourth system soon.

Daniel McGahn: We're also actively pursuing opportunities beyond the U.S. platforms, including other allied navies.

Speaker Change: We're also actively pursuing opportunities beyond the U S platforms, including other allied navies in summary, our progress reflects a company that is delivering strong consistent results.

Daniel McGahn: In summary, our progress reflects a company that is delivering strong, consistent results. As we look ahead, we believe AMSC is in a better position than it's ever been. We've delivered consistent profitability, higher revenue, and increased cash generation.

Speaker Change: As we look ahead.

Speaker Change: We believe MSC is in a better position than its ever been we've.

Speaker Change: We've delivered consistent profitability higher revenue and increased cash generation.

Daniel McGahn: We closed fiscal 2024 with a 12-month backlog of over $200 million and over $85 million in cash, which is critical for supporting larger orders and future growth opportunities. We grew our product portfolio and extended the key solution to an international defense. We significantly expanded gross margins year over year.

Speaker Change: We closed fiscal 'twenty 'twenty four with the 12 month backlog of over $200 million and over $85 million in cash, which is critical for supporting larger orders and future growth opportunities.

Speaker Change: We grew our product portfolio and extended a key solution to an international defense customer.

Speaker Change: We significantly expanded gross margins year over year.

Daniel McGahn: None of these accomplishments would be possible without the incredible dedication of our team. I want to thank each and every one of our team members for truly delivering an outstanding We are focused, well-capitalized, and committed to creating long-term value for our customers, our partners, as well as our shareholders.

Speaker Change: None of these accomplishments would be possible without the incredible dedication of our team I want to thank each and every one of our team members for truly delivering an outstanding year.

Speaker Change: We are focused well capitalized and committed to creating long term value for our customers our partners as well as our shareholders.

Daniel McGahn: We closed a fantastic 2024 and are off to a very good start for fiscal 2025 with tremendous opportunities ahead of us. We are at the center of some of the most important transformations of our time, from defense to industrial growth, from renewable integration to grid modernization. Our solutions are helping power the evolution of a grid that is fit for the future, a more reliable and resilient grid built to support and incorporate a broad mix of energy. we believe specifically are American-made products. supported largely by a domestic supply chain. and supplied to U.S. customers, which account for 70 to 75 percent of our total revenue, and our expanded exposure to recession-resilient industries positions us strongly against tariff risks and global economic volatility.

Speaker Change: We closed a fantastic 2024 and are off to a very good start for fiscal 2025 with tremendous opportunities ahead of us.

Speaker Change: We are at the center of some of the most important transformations of our time from defense to industrial growth from renewable integration to grid modernization. Our solutions are helping power the evolution of a grid that is fit for the future a more reliable and resilient grid.

Speaker Change: The support and incorporate a broad mix of energy sources.

Speaker Change: We believe specifically are American made products.

Speaker Change: Supported largely by a domestic supply chain.

Daniel McGahn: We are executing on our vision and believe that our creativity can meet today's challenges and help us progress to a better future. This means using future-facing technologies to harmonize the world's desire for decarbonization 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 harmonize an increasingly complex.

Speaker Change: This means using future facing technologies to harmonize the world's desire for de carbonization in 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 harmony.

Speaker Change: <unk> and increasingly complex energy system.

Daniel McGahn: Thank you for your continued trust and support. We look forward to sharing our progress with you in the months ahead.

Speaker Change: Thank you for your continued trust and support.

Speaker Change: We look forward to sharing our progress with you in the months ahead M.

Operator: M.J., can we now open up the lines for any questions from our audience? Certainly. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, you may press star, then two.

Speaker Change: M. J can we now open up the line for any questions from our analysts.

Speaker Change: Certainly if you ask a question you May press Star then one on your telephone keypad, if you're using a speaker phone. Please pick up your handset before pressing the keys.

Speaker Change: A J. Your question you May Press Star then two.

Eric Stine: Today's first question comes from Eric Stine with Craig Hallam. Please go ahead. Hi Daniel, hi John. Good morning. Hey Eric, good to hear your voice. Hey, you too.

Speaker Change: Today's first question comes from Eric Stine with Craig Hallum. Please go ahead.

Eric Stine: Hi, Daniel Hi, John Good morning, Hey, Eric Good to hear your voice.

Eric Stine: So I do appreciate the commentary on semiconductors, but I'm wondering you know.

Daniel McGahn: So I do appreciate the commentary on semiconductors, but I'm wondering, you know, for orders, if you could do, I think you've done this in the past, but just an order breakdown, high level for the grid segment in the fourth quarter, and then what is your expectation? Again, high level for how that plays out in fiscal 25.

Eric Stine: For orders if you could do I think you've done this in the past, but just an order breakdown high level for the grid segment in the fourth quarter and then what is your expectation again high level for how that plays out in fiscal 'twenty five.

Daniel McGahn: Yeah, so if I look longer term, I'll start there and then I can think about what the breakout of the order So if you think about the business really kind of as four or five parts. I think where we're headed in the business we're building, it's going to be about 25% materials, including semiconductor, so all of kind of the industrial chemicals and material processing that we've talked about in the past. I think that what we're seeing is in traditional power generation, we have a unique product offering that we're just learning more and more about. where that might be applicable.

Eric Stine: Yeah, So if I look longer term.

Eric Stine: I'll start there and then I could think about what the breakout of the orders are.

Eric Stine: Yeah.

Eric Stine: So if you think about the business really kind of as four or five parks.

Eric Stine: I think where we're headed in the business. We're building, it's going to be about 25% materials, including semiconductor. So all of kind of the industrial chemicals and material processing that we've talked about in the past.

Eric Stine: I think that what we're seeing is in traditional power generation, we have a unique product offering that we're just learning more and more about.

Eric Stine: Where that might be applicable and if we look at where spending is headed that potentially could drive to as much as 25% of the business as well I think renewables will continue to be strong for us, particularly in India and in Europe, which is really where we're focused.

Daniel McGahn: And if we look at where spending is headed, that potentially could drive to as much as 25% of the business as well. I think renewables will continue to be strong for us, particularly in India and in Europe, which is really where we're focused. I think that'll be about 25%. And then the remaining quarter is probably, you know, on the order of say 15% military, maybe 10% utility. We're seeing some uptick in utility that could even be stronger. So I think we have a very diverse business. In the past quarter, it was led, driven by renewables.

Eric Stine: I think that'll be about 25% and then the remaining quarter is probably.

Eric Stine:

Eric Stine: On the order of say, 15% military maybe 10% utility we're seeing some uptick in utility that could even be stronger. So I think we have a very diverse business.

Eric Stine: In the past quarter. It was led driven by renewables, we have a number of projects not only in India, but in Europe.

Daniel McGahn: We have a number of projects, not only in India, but in Europe where we see demand as well. Industrials was a big part of that as well. Utilities participated. But I think the main accelerating factor, Eric, really was. The demand change or inflection in semiconductor that we've been talking to for the past couple of quarters is now really beginning. So a big uptick in the orders going from about a $60 million run rate to now delivering 75 of new orders really was a large part delivered by semiconductor. We see that continuing. We see that with the potential for future growth.

Eric Stine: Where we see demand as well.

Speaker Change: <unk> was a big part of that as well utilities participated but I think the main accelerating factor Eric really was the.

Speaker Change: The the demand change or inflection in semiconductor that we've been talking to for the past couple of quarters is now really beginning some a big uptick in the orders going from about a $60 million run rate to now deliver in 75 of new orders really wasn't a large part D.

Speaker Change: <unk> Bye bye semiconductor, we see that continuing we see that with the potential for future growth. Those projects are under construction. So these are projects that are real that are funded that are happening they've been on on the plans of our partners for a number of years.

Daniel McGahn: Those projects are under construction. So these are projects that are real, that are funded, that are happening. They've been on the plans of our partners for a number of years. And they've been funded and are going to happen. So they get our equipment kind of late in the cycle. So I'm really excited at the diversity that we have. I'm excited that we're now talking not only about renewable power but more traditional power. We're discovering that we have a very unique offering that can help the grid fix a lot of different problems for a lot of different industries.

Speaker Change: And they've been there been funded and are going to happen. So they get our equipment kind of late in the cycle. So I'm really excited at the diversity that we have I'm excited that we're now talking not only about renewable power, but more traditional power. We were discovering that we have a very unique offerings that can help the grid.

Speaker Change: Fix a lot of different problems for a lot of different industries.

Eric Stine: That is great. I appreciate that color.

Speaker Change:

Speaker Change: That is great I appreciate that color and then you did mention wind and I believe this was your strongest quarter since I think fiscal 16, maybe in wind and I know your orders have been quite good or were in fiscal 'twenty four.

Daniel McGahn: And then you did mention wind and You know, I believe this was your strongest quarter since I think fiscal 16 maybe in wind and I know your orders have been quite good or were in fiscal 24. I Don't know if you did I might have missed it. But Did you break out wind? I mean just a percentage Of what those were in q4 and then based on that and based on the backlog of wind that you have Kind of what are your high-level thoughts for fiscal 25?

Speaker Change: I don't know if you did I might have missed it but did you breakout wind or I mean, just a percentage.

Speaker Change: Of what those were in Q4, and then based on that and based on the backlog of win that you have kind of what are your high level thoughts for fiscal 'twenty five.

Daniel McGahn: Yeah, I think there's a couple pieces in there to get at. So the first thing is, you know, what is it? So we've grown from about eight at the beginning of the year. I think we were six the prior year, and now we're above 10, 11. So the business with INOX is driving that ramp. It's really the three megawatts. that we see demand that's greater than what we're delivering today. I think the news I'm trying to make sure that people understand, Eric, is that the demand for what we have is not singularly gonna be driven by wind.

Speaker Change: Yeah, I think Theres a couple of pieces in there to get at.

Speaker Change: So the first thing is you know what is it so we've grown from about eight at the beginning of the year I think we're six the prior year and now are above 10 11.

Speaker Change: So the business with IMAX is driving that ramp it's really the three megawatt.

Speaker Change: That we see demand that's greater than what we're delivering today.

Speaker Change: I think the news I'm trying to make sure that people understand Eric is that the demand for what we have is not singularly going to be driven by when it's going to be driven by semiconductors can be driven by traditional power.

Daniel McGahn: It's gonna be driven by, semiconductors can be driven by traditional power. Longer term, we'll see military. Near term, we'll see some things with utilities as well.

Speaker Change: Longer term, we'll see military near term, we'll see some swings things with utilities as well, but I think this is the probably the first call I'm really saying that we have.

Daniel McGahn: But I think this is probably the first call. I'm really saying that we have. not the potential of a number of tailwinds. We're feeling those tailwinds now. The order book is driving it. The revenue is converting over a variety of these areas. So I think as we look forward with INOX, the one thing to have you understand and have the audience understand They're a critical partner to us and a great customer. We love working with them. We love the relationship. We've tried to do the best we can to support them. They're about to go through what we think is gonna be another historic ramp up for their company.

Speaker Change: Not the potential of a number of tailwind we're feeling those tailwind now the order book is driving the revenue is converting.

Speaker Change: Over a variety of these areas.

Speaker Change: So I think as we look forward with <unk>. The one thing to have you understand and have the audience understand us.

Speaker Change: Is there a critical partner to us and a great customer we love working with them. We love the relationship we've tried to do the best we can to support them. They are about to go through what we think is going to be another historic ramp up for their company and we're really proud of what they've done we're proud of how they've taken what was basically technology would really turned it.

Daniel McGahn: And we're really proud of what they've done. We're proud of how they've taken what was basically technology and really turned it into profit in the business. They've really done a fantastic job. We have changed the way and the pacing of that part of the business. When it was a larger fraction of our business, we wanted to have stability. So we worked very closely with INOX to have long-term contracts. Today, we're more working on the short-term, because as we see their ramp, we want to be responsive.

Speaker Change: The profit in that business, they've really done a fantastic job.

Speaker Change: We have changed the way in the pacing of that part of the business though.

Speaker Change: When it was a larger fraction of our business we wanted to have stability.

Speaker Change: So we work very closely with IMAX to have long term contracts.

Speaker Change: Today, we're more working on the short term because as we see their ramp we want to be responsive. So the thing that's different about particularly the backlog is theres not a lot of wind backlog in the 12 month number and that's because we're converting it pretty fast in the revenue and then we're trying to get the next order in the next order for.

Daniel McGahn: So the thing that's different about particularly the backlog is there's not a lot of win backlog in the 12-month number. And that's because we're converting it pretty fast in the revenue, and then we're trying to get the next order and the next order for six months out, nine months out, and continue to do that. So that's something that's different in the business in 2025 than it certainly has been in the past, right? We'd like to have stability in that business. Today we see it as a stable business. We're trying to be a good partner and being able to provide product as fast as we can.

Speaker Change: Six months out nine months out and continue to do that so that's something that's different in the business in 2025 than it certainly has been in the past right. We like to have stability in that business today, we see it as a stable business, we're trying to be a good partner and being able to provide product as fast as we can so that's why when you look at the back.

Daniel McGahn: So that's why when you look at the backlog, there's not a significant amount of backlog. I said that, you know, the orders in 24 we delivered were about $35 million. We said about half of those were already delivered, right? So that's a very light backlog relative to what the demand could be from INOX. And that's because we want to be rapidly responsive to them. They are going to go through a ramp, and we want to support them.

Speaker Change: Backlog, there's not a significant amount of backlog I said that the orders that <unk> and 'twenty four we deliver about $35 million. We said about half of those were already delivered right. So that's a very light backlog relative to what the demand could be from iron ox and that's because we want to be rapidly responsive to them that they are going to go through a ramp and we want it.

Speaker Change: We want to support that.

Daniel McGahn: Did that help with the color on the lead top? new setup that you're, because it is more kind of order to order and potentially orders in, I don't want to say small orders, but just smaller orders that add up to a bigger number, those are things that you will not announce. You know, I think the key is really is the pacing and the talk about that, and we'll try to highlight that in the call. I think when you look at the financials getting to the $65 million in revenue, and WIND is representing, you know, $11 million of that, I guess we're just north of $66.

Speaker Change: Did that help with the color on <unk> no.

Speaker Change: No absolutely helps and you know and I guess, just it's a new new set up that you are because it is more kind of order to order in and potentially.

Speaker Change: Orders in and I don't want to say smaller orders, but just a smaller orders that add up to a bigger number those are things that you will not announce.

Speaker Change: I think the key is really is the pacing and to talk about that and we'll try to highlight that in the call I think when you look at the financials getting to the 65 million in revenue and windows, representing $11 million of that.

Speaker Change: I guess, we're just north of 66 I try to look at it as a threshold we broke through a certain threshold.

Daniel McGahn: I try to look at it as a threshold. We broke through a certain threshold. They're a great customer, you know, but I don't think it's... I think it doesn't behoove us to overemphasize that, because the rest of the business, the growth through grid has happened, the diversification is happening, and all those pieces are put in place. And that's something that INOX really encourages us to do. We are a much better supplier today, I feel, because of the financial performance of the business, that we can react in ways but differently than maybe we could have even a few years Right, and absolutely.

Speaker Change: They're a great customer, but I don't think it's it's it's.

Speaker Change: I think it doesn't behoove us to overemphasize that because the rest of the business the growth through grid has happened the diversification that's happening and all of those pieces are put in place and that's something that IMAX really encourage us to do we.

Speaker Change: We are a much better supplier today I feel because of the financial performance of the business.

Speaker Change: That we can react in waves, but differently than maybe we could have even a few years ago.

Eric Stine: I mean, grid is the biggest part of the business by far, but this is the first time in a long, long time that I've heard you say that, you know, the confidence very high that both businesses are working, have tailwinds, etc. So, okay. The whole turn on the quarter thing, I think we've turned it and we're not going to look back.

Speaker Change: Right and absolutely I mean grid is the the biggest part of the business by far but this is the first time in a long long time that I've heard you say that you know you eat the confidence very high that both businesses are are working have tailwind et cetera. So okay. Thank you for the quarter thing I think we've turned it in and we're not going to look back.

Operator: Okay, thanks a lot. Thank you.

Speaker Change: Okay. Thanks, a lot.

Speaker Change: Yeah.

Speaker Change: Thank you. The next question comes from Colin Rusch with Oppenheimer. Please go ahead.

Colin Rusch: The next question comes from Colin Rusch with Oppenheimer. Please go ahead. Thanks so much, guys. You know, Dan, can you talk a little bit about the effectiveness of the cross selling efforts that you've got now that you've got a couple of platforms integrated? I know you ask this repeatedly, but just want to get a sense of, you know, how that's impacting your win rate, order size, and, you know, the contribution to the overall bookings at the $75 million.

Colin Rusch: Thanks, So much guys you know Dan could you talk a little bit about the effectiveness of the cross selling your efforts that you've got now that you've got a couple of platforms integrated I know you've asked us repeatedly but just want to get a sense of how that's impacting your win rate order size.

Colin Rusch: And you know the contribution to the overall bookings at this $75 million level.

Daniel McGahn: Yeah, we're not cross-selling anymore. We're just selling. We're selling the whole portfolio to everybody. We're trying to look at it and what do we have that meets the customer's demands and how do we present that as a full series of features that can be designed as their project. So, that's something that the team has really worked on over the past, you know, 18 months or so to get us to the point where we're not thinking, we're not positioning, we're not promoting it as a disparate group of energy control systems. It's one system for a semiconductor fab.

Colin Rusch: Yeah, we're not cross selling anymore. We're just sell them, we're selling the whole portfolio to everybody. We're trying to look at it and what do we have that meets the customers' demands and how do we present that as a full series of features that can be designed to their project. So that's something that the team has really worked on over the past.

Colin Rusch: 18 months or so to get us to the point, where we're not thinking we're not positioning we're not promoting it as a disparate group of energy control systems. It's one system for a semiconductor fab. So we don't really talk to the customer about hey, well. This is a D. Var. This comes from.

Daniel McGahn: So, we don't really talk to the customer about, hey, well, this is a DVAR, this comes from NEPC, or this is how it all works. It's, here's how we mitigate sag, right? Here's how we get the fab to have more uptime. And we have more dynamic and we have more static and persistent capability than we had before we made an improvement. So, in each of these industries, that's what we're talking more and more about. So, you know, I don't even really see the business really as wind and grid so much anymore. It's a series of control solutions that we try to provide to a certain set of customers.

Colin Rusch: From Nazi or this is how it all works, it's here's how we mitigate sag here's how we get the fab to have more uptime and we have more dynamic and we have more static and persistent capability than we had before we'd made a new needs.

Colin Rusch: Each of these industries, that's what we're talking more and more about.

Colin Rusch: So with.

Speaker Change: Yeah, I don't even really see the business really is wind and grid. So much anymore. It's a series of control solutions that we tried to provide a certain set of customers and theres a bunch of great industries that are going to drive the growth not just one it's manny.

Daniel McGahn: And there's a bunch of great industries that are going to drive the growth, not just one, it's many. So, it's hard for me to delineate, hey, well, we got a win and we got extra because we have this offering. Because now, I mean, we're five years into this transformation in the business, and now we're really seeing the financial performance as a result of that.

Colin Rusch: So it's hard for me to delineate Hey, well, we got to win and we got extra.

Speaker Change: Because we have this offering because now we're five years into this transformation in the business and now we're really seeing the financial performance.

Speaker Change: As a result of that.

Colin Rusch: Okay, that's that's actually super helpful.

Speaker Change: Okay. That's that's actually Super helpful. And then from a margin perspective, you know as you get a little bit more scale and you've got this common platform that you're selling across multiple applications can you talk a little bit about opportunities for driving cost reduction on the manufacturing side and our supply chain just either through incremental design adjustments or from just leveraged.

Daniel McGahn: And then from a marketing perspective, you know, as you get a little bit more scale, and you've got, you know, this common platform that you're selling across multiple applications, can you talk a little bit about opportunities for driving cost reduction on the manufacturing side, you know, supply chain, just either through incremental design adjustments, or from just leveraging some of the scale purchase. Yeah, I think all those are available to us. It's something that we're working across the company. You know, a lot of the ways the systems are built are very similar, so we're trying to look at learning and efficiency in how we produce, but also how we source.

Speaker Change: Some of the scale purchasing.

Speaker Change: Yeah, I think all of those are available to us it's something that we're working across the company.

Speaker Change:

Speaker Change: You know a lot of the waves of systems are built are very similar so we're trying to look at learning and efficiency and how we produce but also how we source.

Daniel McGahn: The team really learned a lot that is paying off today with supply chain to be very flexible. and to be very dynamic with how do we deal with if supply gets constrained or costs change. So we're trying to do the best we can in managing those costs. And to date, we really haven't seen much that impacts the business. That isn't to say that we won't, that isn't to say that we'll talk to customers about how the world's going to change. I think we've done a very good job of being patient with our costs and passing pricing changes on to customers when it made sense, when the customer could accept it, all those things.

Speaker Change: The team really learned a lot.

Speaker Change: That is paying off today with supply chain to be very flexible.

Speaker Change: And to be very dynamic with how do we deal with if thing if supply gets constrained or cross changed. So we're trying to do the best we can in managing those costs and to date, we really haven't seen much that impacts the business that isn't to say that we won't that isn't to say that we will talk to <unk>.

Speaker Change: Customers about how the world is going to change I think we've done a very good job of being patient with our cost and passing pricing changes onto customers.

Speaker Change: When it made sense when the customer could accepted all of those things and I think that again, we're gonna had another through another period of that where there's a chance to reestablish the value with the customer.

Daniel McGahn: And I think that, again, we're going to head through another period of that where there's a chance to reestablish the value with the customer and make sure that we're getting the appropriate value out of it. But we do work on supply chain all the time. I don't have today for you kind of goals or objectives, hey, we're going to take this cost out of that cost out on the product. We really are just trying to drive more through the factory, get efficiencies in buying and bundling, purchasing as we can, and continue to move the needle with gross margin.

Speaker Change: And make sure that we're getting the appropriate value out of it but we do work on supply chain. All the time I don't have today for your kind of goals or objectives, Hey, we're going to take this cost out of that cost out on the product. We really are just trying to drive.

Speaker Change: More through the factory get efficiencies and buying in bundling purchasing as we can and you know it continues to move the needle with gross margin gross margin change year to year, it's pretty dramatic right. So now we're trying to incrementally improve as the business grows and.

Daniel McGahn: Gross margin change year to year is pretty dramatic, right? So now we're trying to incrementally improve as the business grows. And if we can do that, I think that would be quite valuable.

Speaker Change: And if I think if we can do that I think that would be quite valuable.

Colin Rusch: Thanks so much, guys. Thank you.

Speaker Change: Thanks, so much guys.

Speaker Change: Thank you. The next question comes from Justin Clare with Roth Capital Partners. Please go ahead.

Justin Clare: The next question comes from Justin Clare with Ross Capital Partners. Please go ahead. Hey, good morning. Thanks, guys. So I wanted to follow up on the semiconductor opportunity here and just wanted to see if you could share a little bit more about the visibility you have into the pipeline of opportunities in semiconductor. And then if you could speak to are you primarily seeing the growth being driven by the U.S. market or are you also seeing healthy international growth? And then lastly, maybe if you could just speak to order sizes within semiconductors and how they might be trending.

Justin Clare: Hey, good morning, Thanks, guys.

Justin Clare: Wanted to follow up on the the semiconductor opportunity here and just wanted to see if you could share a little bit more about the visibility you have into the pipeline of opportunities and in semiconductor and then if you could speak to or are you primarily seeing the growth being driven by the U S market or are you also seeing.

Speaker Change: Healthy International growth and then lastly, maybe if you could just speak to order sizes within semiconductors, and how how they might be trending.

Daniel McGahn: Yeah, make sure I hit all those points because I think it's tremendous to get people to understand what we're saying. I mean, the pipeline is huge. It's triple digit potential for us. And again, if we grow the business It could be a triple digit part of the business, if it's really gets to the point where materials and driven by semiconductor, not semiconductor alone, probably could get to that level. And that's based upon projects that we know that are low risk, that we feel that are either about to be constructed or in construction. It's global, so it's not just the U.S.

Speaker Change: Make sure I hit all those points because I think it's a tremendous to get people understand what we're seeing I mean, the pipeline is huge it's triple digit.

Speaker Change: Potential for us.

Speaker Change: And again, if we grow the business.

Speaker Change: It could be a triple digit part of the business. If it's really gets to the point where if.

Speaker Change: Materials, and driven by semiconductor and semiconductor alone probably could get to that level.

Speaker Change: And that's based upon projects that we know of.

Speaker Change: That are low risk that we feel that are either about to be constructed or in construction.

Speaker Change: It's global so it's not just the U S. There's definitely a drive in the U S to reach or to bring that capacity and capability here, but there's a broader issue, which is theres a need for more computational power, particularly small device computational power in a variety of applications.

Daniel McGahn: There's definitely a drive in the U.S. to reshore, to bring that capacity and capability here. But there's the broader issue, which is there's a need for more computational power, particularly small device computational power, in a variety of applications that really fit into the fabs that we deliver our solution to. You know, today a fab order could be as small as 2 million. One time we were trying to get it up to a million, but today I think they're almost all over 2 million. And the larger ones can approach 8 to 10 million. I think we see things on the horizon where a single fab could be 10 to 15 million in a few years, given where we're headed, where the size of fabs are going to grow, and the level of static and dynamic capability that we provide to that business.

Speaker Change: Really fit into the Fabs that we deliver our solution to.

Speaker Change: Today, a fab order can be as.

Speaker Change: Small is 2 million one time, we were trying to get it up to a million, but today I think they're almost all over $2 million.

Speaker Change: And the larger ones in there.

Speaker Change: $8 million to $10 million I think we see things on the horizon, where single fab could be $10 million to $15 million in a few years, given where we're headed where the size of fabs are going to grow.

Speaker Change: And the level of static.

Speaker Change: Static and dynamic capability that we provide to the to that business. So we're really pleased and it's not just with one maker at several makers were trying to get further and deeper and what our capability is for them. So they can understand the value that they get from our offering.

Daniel McGahn: So we're really pleased. And it's not just with one maker. It's several makers. We're trying to get further and deeper in what our capability is for them, so they can understand the value that they get from our offering. And again, as I kind of said a little bit earlier, we're just selling it as an AMSC solution. And the teams are working as one, not necessarily separately on these key accounts, specifically like semiconductors is a great example.

Speaker Change: And again as I kind of said a little bit earlier, we're just selling it as an MSC solution.

Speaker Change: And the teams are working as one not necessarily separate separately on these these key accounts specifically like semiconductor is a great example of that.

Daniel McGahn: Okay, that's, that's really helpful. And then I just guess this more broadly on demand and the orders that you're seeing, you know, fiscal Q4 was strong. Wondering if the implementation of the tariffs and then the pause, has that had any notable effect on the cadence of orders that you've seen from your customers? Wondering if you could just speak to how things have kind of evolved into your fiscal Q1? Yeah, I think in the short term, I can say, if anything, it's helped. I think in the future, if anything, it's going to continue to help the level of reassuring that we're seeing and the level of investment that's being considered.

Speaker Change: Okay. That's really helpful. And then I guess, just more broadly on demand and the orders that you're seeing you know fiscal Q4 was strong.

Speaker Change: Wondering if the implementation of the tariffs and then the pause has that had any notable effect on the cadence of orders that you've seen from your customers I'm wondering if you could just speak to how things have kind of evolved into your fiscal Q1 here.

Speaker Change: Yes, I think in the short term I can say if anything it has helped us I think in the future if anything it's going to continue to help the level of reassuring that we're seeing in the level of investment that's being considered.

Daniel McGahn: It's extraordinary. And I think we really sit at the center where there's a power quality problem or a power control problem. We have some unique offerings. And in some cases, we're the only American provider to be able to provide. So I kind of saw this as the rhetoric was changing after the election, that this could present itself as an opportunity for the company. I see that today. And I hope to see that going forward as well. Yeah, okay.

Speaker Change: It's extraordinary and I think we really sit at the center, where there's a there's a power quality problem or a power control problem, we have some unique offerings.

Speaker Change: And in some cases, where the only American provider to be able to provide so I kind of saw this as the rhetoric with changing after the election that this could present itself as an opportunity for the company I see that today and I hope to see that going forward as well.

Speaker Change: Got it Okay, and then maybe just shifting over to the Navy here. So you have delivered the three systems to the U S. Navy now and wondering if you have any details on how those systems are performing have they been in the field and do you have kind of.

Daniel McGahn: And then maybe just shifting over to the Navy here. So you have delivered the three systems to the US Navy now, and wondering if you have any details on how those systems are performing? Have they been in the field? And do you have kind of, you know, demonstrated performance that has advantages over legacy solutions that could help you to, you know, sell more of those systems? I know this information is fairly sensitive, given that it's with the military, but to the extent that you have any detail there. Yeah, all I can really say is yes to everything that you said.

Speaker Change: <unk> demonstrated performance that has advantages over the legacy solutions that could help you to sell.

Speaker Change: So more of those systems I know this information is fairly sensitive given that just with the military but to the extent that you have any detail there.

Speaker Change: Yeah, all I can really say is yes to everything that you said.

Daniel McGahn: It is a differentiated solution. It works. It works as well or better than advertised. The US Navy is excited about what we're doing, not just there, but in other parts. We've talked about the power continuum for them. I think getting the Canadian Navy then reaffirms the whole technology, again, that this is really valuable and viable. So I know, you know, somebody told me the other day that they, like, did superconductors ever get commercialized? And I'm like, yeah, that happened years ago. This is real. It's effective. It works. They're happy.

Speaker Change: It is a differentiated solution that works.

Speaker Change: It works as well or better than advertised.

Speaker Change: The U S. Navy so excited about what we're doing not just there but another parts we've talked about in patent power continuum for them I think get into Canadian Navy then reaffirms the whole technology again that this is really valuable and viable.

Speaker Change: So I know somebody tell me the other day that they like it.

Speaker Change: <unk> ever get commercialized.

Speaker Change: Happened years ago. This is real it's effective it works, they're happy I don't want to get into the Differentiators because that gets into some classified and stuff but.

Operator: I don't want to get into the, you know, the differentiators, because that gets into some classified stuff. But we're really happy. It's a pleasure working with the Canadian Navy so far. It's been a very proud moment for us as a company to be able to provide real world systems for the US Navy. The hope is we can go scale that and be able to bring that to other allies. It's a great offering that we have, and it's real. Okay, sounds good. All right, thank you. Thank you. At this time, there are no further questions in the queue.

Speaker Change: We're really happy.

Speaker Change: Yeah.

Speaker Change: It's a pleasure working with the Canadian Navy so far it's been.

Speaker Change: A very proud moment for us as a company to be able to provide real world systems for the U S. Navy. So.

Speaker Change: The hope is we can go scale out and be able to bring that to other allies.

Speaker Change: It's a great offering that we have and it's real.

Speaker Change: Okay sounds good thank you.

Speaker Change: Thank you.

Speaker Change: At this time there are no further questions in the queue. This concludes our question and answer session and I would now like to turn the call back over to Mr. Gardner for closing remarks.

Daniel McGahn: This concludes our question and answer session, and I would now like to turn the call back over to Mr. Gahn for closing remarks. Great. That was a wonderful articulation of my name.

Gardner: Great that was a wonderful articulation of my name.

Daniel McGahn: I just want to close up on growth, because I think that the main question is we come out of a great year in position to continue to get better and better. I think the question on your mind might be, and I know that's what we're trying to drive the team, is what's really going to drive our growth in the near term? I think it's semiconductors right here, right now. I think it'll be followed up pretty quickly with traditional energy. I think we have a unique offering there. We're learning about it. We're working with partners to better understand that.

Gardner: I just wanted to close up on growth because I think that's the main question as we come out of a great year and positioned to continue to get better and better.

Gardner: I think the question on your mind might be and I know, that's what we're trying to drive the team is what's really going to drive our growth in the near term I think its semiconductors right here right now I think that'll be followed up pretty quickly with traditional energy I think we have a unique offering there we're learning about it we're working with partners to better understand that and utilities a lot of the kind of <unk>.

Daniel McGahn: And utilities, a lot of the kind of problems that we see are becoming more commonplace. across different utilities. We've really seen the beginning of an acceleration in these parts of our business. So semiconductors are expected to be a key driver for orders, and we're already seeing that impact with the acceleration to the 75 million orders this quarter. This momentum position is really the benefit from the continued expansion that's coming in the sector. As I commented in the questions, it's global, it's not just domestic, but there is a strong driver domestically for sure. We're now really involved in seeing orders come from traditional energy.

Gardner: With that we see are becoming more commonplace.

Gardner: Across different utilities, we really seen the beginning of an acceleration in these parts of our business. So semiconductors are expected to be a key driver for orders and we're already seeing that impact.

Gardner: With the acceleration to the $75 million in orders this quarter. This momentum positions related benefit from the continued expansion that's coming in the sector as I commented in the questions. Its global its not just domestic but there is a strong driver domestically for sure.

Gardner: We're now really involved in seeing orders coming from traditional energy I've talked a little bit about it briefly but I haven't really gotten into it.

Daniel McGahn: I've talked a little bit about it briefly, but I haven't really gotten into it. What we've learned is the combined offering of the different pieces that we've put together may be very uniquely positioned for traditional energy. And if you think about that market, it's really divided into kind of three main stages, upstream, midstream and downstream. So upstream involves drilling and extraction. Midstream refers to storage and transportation via pipelines. They're supported by compressors and pump stations. They all need critical power to ensure flow. So think about what we're doing is just like we would do with a semiconductor fab, just like we would do with a chemical plant, you're trying to power a pipeline.

Gardner: What we've learned is the combined offering of the different pieces that we've put together, maybe very uniquely positioned for traditional energy and if you think about that market. It's really divided into kind of three main stages upstream midstream and downstream. So upstream involves drilling and extraction midstream refers to storage.

Gardner: In transportation pipelines, they're supported by compressors and pump stations. They all need critical power to ensure flow. So think about what we're doing is just like we would do with a semiconductor fab just like we would do with a chemical plant.

Gardner: Trying to power a pipeline how do you view that in a resilient way or how do you do that at an effective way.

Daniel McGahn: How do you do that in a resilient way? How do you do that in an effective way? How do you drive all that equipment? It has to be in harsh and hardened environments. The other market we've seen some recent wins in is downstream, which handles the refining and distribution to users of the energy product.

Gardner: How do you drive all that equipment that has to be in harsh and hardened environments.

Gardner: The other market, we've seen some recent wins and is downstream, which handles the refining and distribution to users.

Gardner: Of the energy products. So we're really not just about renewables, we've diversified now to energy in a broader sense.

Daniel McGahn: So we're really not just about renewables. We've diversified now to energy in a broader scale. We're now involved in all three phases, upstream, midstream, and downstream. And our solutions mitigate power impacts from the equipment or processes at each stage. And we try to boost productivity and efficiency in each of these traditional energy operations.

Gardner: We're now involved in all three phases upstream midstream and downstream and our solution mitigate power impacts from the equipment our processes each stage and we try to boost productivity and efficiency in each of these traditional energy operations.

Daniel McGahn: I think the third area I'd talk about is we're really involved in a variety of different utility projects that enhance grid resilience and support the energy transition. And now what we're seeing is a utility may do one of these. And now multiple utilities are doing many of these, right? And again, these are projects that take a little bit longer to be able to deliver. The scope might be a bit higher as well.

Gardner: The third area I'd talk about is we're really involved in a variety of different utility projects that enhanced grid resilience and support.

Gardner: Energy transition and now what we're seeing is a utility may do one of these and now multiple utilities are doing many of these right and again these are projects take a little bit longer to be able to deliver the scope might be a bit higher as well.

Daniel McGahn: But we see, and I think this is a key one to highlight as we kind of close out the call, and this is new news for us. We're strengthening substation power quality to support the demand from data centers. We are seeing direct demand now. I talked before, we didn't have a direct solution. We're seeing the solution as we have now, that we can directly add that into capital projects for data centers to support this rapid build out. It's new, we're excited. It's a big part of our future pipeline. It's a whole kind of pivot where we're going.

Gardner: But we see and I think this is a key one to highlight as we kind of close out the call and this is new news for US, we're strengthening substation power quality to support the demand from data centers.

Gardner: We are seeing direct demand now I talked before we didn't have a direct solution. We're seeing this solution as we have now that we can directly add that into capital projects for data centers to support this rapid build out its new.

Gardner: We're excited.

Gardner: A big part of our future pipeline, it's a whole kind of pivot where we're going I had some hope in late led some kind of indications that maybe when we get in that direction. I think now we're starting to see it we have the proof that we've delivered and we have the proof that we've been able to secure additional orders in that area.

Daniel McGahn: I had some hope and led some kind of indications that maybe we would get in that direction. I think now we're starting to see it. We have the proof that we've delivered and we have the proof that we've been able to secure additional orders in that area. We're implementing reactive power systems for voltage stability. You guys know about that. We've talked about that for years. But kind of one of the new applications is for the retirement of thermal plants. And we're seeing more and more of these plants where older plants are going to be taken offline.

Gardner: We're implementing reactive power systems for both the stability you guys know about that we've talked about that for years, but kind of one of the new applications for the retirement of formal plans and we're seeing more and more of these plant where older plants are going to be taken offline that provides disturbances on the grid that we can uniquely be able to mitigate.

Daniel McGahn: That provides disturbances on the grid that we can uniquely be able to mitigate. We talk a lot historically, but to remind you about reinforcing transmission infrastructure to support industrial load growth, a good example is large mining operations on vulnerable lines. We're seeing that globally as there's a drive to be able to process and refine materials. And semiconductors is a highly refined, highly processed material that's really key here in the short term as well.

Gardner: Data advantage.

Gardner: We talk a lot historically, but to remind you about reinforcing transmission infrastructure to support and that lost your load growth. Good example is large mining operations on vulnerable lines, we're seeing that globally as theres, a drive to to be able to process and refine.

Gardner: Materials.

Gardner: In semiconductors is a highly refined highly processed material.

Gardner: The really key here in the short term as well so we're really trying to build a diverse business driven by materials like semiconductors power and energy both from traditional and renewable sources. So each of those three pieces really could represent about a quarter of our future business.

Daniel McGahn: So we're really trying to build a diverse business driven by materials like semiconductors, power and energy both from traditional and renewable sources. So each of those three pieces really could represent about a quarter of our future business. The remaining quarter is probably going to come from military and utilities combined. Military might be a bit bigger. We'll see where utilities and data centers, where that goes, maybe that becomes a bigger part of it. But I think the business is clearly aligned for not only the energy transition, but also to support the reshoring of domestic manufacturing in America.

Gardner: The remaining quarters, probably going to come from military and utilities combined.

Gardner: Military might be a bit bigger, we'll see where utilities and data centers, where that goes maybe that becomes a bigger part of it but I think the business is clearly aligned for not only the energy transition, but also to support the re shoring of domestic manufacturing in America and I think that's different it's a different business I talked to you today about.

Daniel McGahn: And I think that's different.

Daniel McGahn: It's a different business I talked to you today about than we did in 2017 or 2020, or even 2022. We're evolving, we're growing, we're trying to meet customer demands. We're trying to extend our product portfolio where we're capable. I'm really happy with what the team did. I think just to recap, big orders over the year that we had diversified, more navies involved. I think a big part of it... is really a testament to the overall team trying to drive this change in the company. And we're starting to see the manifestation of that now. So again, all these calls, everybody says, oh, you sound really excited.

Gardner: Then we did in 2017 or 2020.

Gardner: Or even 2022, we're evolving we're growing we're trying to meet customer demands, we're trying to extend our product portfolio, where we're capable of.

Gardner: I'm really happy with what the team did I think if you just to recap big orders over the year that we had diversified.

Gardner: More navies involved I think a big part of it.

Gardner: <unk> is really a testament to the overall team trying to drive this change and the company and we're starting to see that.

Gardner: The manifestation of that now so.

Gardner: Again, all these calls everybody says Oh, you sound really excited if I can't say it enough I'm really excited not only about what we just did but what we're going to go do so thank you everybody for your trust your patience with me.

Daniel McGahn: If I can't say it enough, I'm really excited, not only about what we just did, but what we're going to go do. So thank you, everybody, for your trust, your patience with me. We are really in a great position. And thanks for the time.

Gardner: We are really in a great position and thanks for the time.

Operator: The conference is now concluded. Thank you for attending today's presentation.

Gardner: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

Operator: You may now disconnect your line.

Gardner: Yeah.

Gardner: [music].