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American Superconductor Corporation (AMSC) reported adjusted earnings per share of 12 cents for the first-quarter 2010. The results surpassed the Zacks Consensus of 10 cents.

We have considered the impact of employee stock-based compensation in the adjusted quarterly results; excluding the said effect, the fourth-quarter 2009 earnings would have been 18 cents per share.

American Superconductor’s (GAAP) net income in the reported quarter was $4.9 million (11 cents per share) and non-GAAP net income was $8.3 million (18 cents per share). The results differed due to the impact of an amortization of acquisition-related intangibles of $0.5 million, stock-based compensation of $3.0 million, and a non-GAAP loss of $0.1 million.

Fourth-Quarter Highlights

American Superconductor reported total revenue of $87.6 million in the fourth-quarter 2009, up 74% over the prior-year period, reflecting strong results from Power Systems. The lower results from Semiconductor dragged down the revenue marginally.

Selling, general & administrative (SG&A) expenses increased 34% and research & development (R&D) expenses increased 51.6% from the year-ago period.

Fiscal-Year Highlights

American Superconductor reported total revenue of $316 million in the fiscal 2009, generating a revenue growth of 73% year over year. The year-over-year increase was driven by higher contribution from Power Systems, which improved 81% on a year-over-year basis. The other segment, Superconductors, however posted a year-over-year decline of 20.8%.

SG&A expenses increased 34.4% and R&D expenses increased 19.9% on a year-over-year basis in the reported quarter. During the third quarter earnings call the company had disclosed its plan to increase SG&A and R&D expenses in absolute terms but expected them to decline for the full fiscal year, as a percentage of revenue, from year-ago levels.

Expenses incurred in the year were in line with the company’s plan, with both SG&A and R&D expenses, as a percentage of revenue, coming in a net 4.5% and 1% lower, respectively, from fiscal 2008 levels.

In the fiscal-year 2009, American Superconductor’s GAAP net income was $16.2 million and non-GAAP net income was $31.7 million. The difference between GAAP and non-GAAP results was due to the impact of an amortization of acquisition-related intangibles of $1.8 million, stock-based compensation of $13.5 million, restructuring and impairments of $0.5 million and a non-GAAP loss of $0.3 million.

Backlog reported by American Superconductor for the fiscal year ended March 31, 2010, was $588 million, up from $546 million reported as of December 31, 2009. Of the total backlog, American Superconductor expects to recognize around $380 million as revenue in 2010.

Cash and cash equivalents and marketable securities at the end of March 31, 2010 were $142.06 million, compared with $109.92 million at the end of March 31, 2009.

American Superconductor generated a gross margin of 36.4% in fiscal 2009 versus 28.4% in fiscal 2008. In view of the competitive landscape, gross margin of the company was better than its peers, ABB Ltd. (ABB) and Satcon Technology Corporation (SATC), with their respective gross margins of 30.4% and 7.7%.

Guidance

American Superconductor expects total revenue for fiscal 2010 to increase over 30% year over year to a range of $415 to $425 million.

The company expects a whopping 100% increase in the GAAP net income for fiscal 2010 to a range of $37.5 to $40.0 million, or 80 to 85 cents per share. The company expects the non-GAAP net income for fiscal 2010 to increase over 70% from year-ago levels to a range of $54.0 to $56.5 million, or $1.15 to $1.20 per share. The company expects to achieve the desired level of net income through its incremental revenue and productivity gains.

Our View

We like the overall performance of American Superconductor in fiscal 2009. American Superconductor intends to increase expenses in the coming quarters to create a platform for growth in the subsequent years. We presently maintain a neutral outlook on the stock and see whether the company can maintain its growth trajectory in the coming years.

Devens, Massachusetts-based American Superconductor provides megawatt-scale wind turbine designs and electrical control systems. It operates through two segments, AMSC Power Systems and AMSC Superconductors. The company also has a strategic alliance with LS Cable Ltd. to advance commercial sales of superconductor cables.

Source: American Superconductor Reports Beat Q1