American Superconductor (AMSC) Q2 2011 Earnings Call November 09, 2011 10:00 am ET Executives David A. Henry - Chief Financial Officer, Principal Accounting Officer, Senior Vice President, Secretary and Treasurer Daniel Patrick McGahn - Chief Executive Officer, President and Director Jason Fredette - Managing Director of Corporate Communications Analysts Timothy M. Arcuri - Citigroup Inc, Research Division Benjamin Schuman - Pacific Crest Securities, Inc., Research Division Benjamin J. Kallo - Robert W. Baird & Co. Incorporated, Research Division Paul Clegg - Mizuho Securities USA Inc., Research Division JinMing Liu - Ardour Capital Investments, LLC, Research Division Colin W. Rusch - ThinkEquity LLC, Research Division Jeremy Hellman - Divine Capital Markets LLC, Research Division James Ricchiuti - Needham & Company, LLC, Research Division Elaine Kwei - Jefferies & Company, Inc., Research Division Presentation Operator
These forward-looking statements represent the company’s expectations only as of today and should not be relied upon as representing the company’s views as of any subsequent date. While AMSC anticipates that subsequent events and developments may cause the company's views to change, the company specifically disclaims any obligation to update these forward-looking statements.I also would like to note that we'll be referring on today's call to non-GAAP net income or net income before amortization of acquisition-related intangibles, restructuring and impairments, stock-based compensation, other unusual charges and any tax effects related to those items. Non-GAAP net income is a non-GAAP financial metric, a reconciliation of non-GAAP to GAAP net income can be found in the press release we issued and filed with the SEC this morning on Form 8-K. All of our press releases and SEC filings can be accessed from the Investors Page of our website at amsc.com. And finally, I'd like to note that we'll be participating in the Baird 2011 Clean Technology Conference on November 30. Our presentation from this conference will be webcast. More details on this will follow. Now, CEO Dan McGahn will begin our quarterly review. Dan? Daniel Patrick McGahn Thank you, Jason, and good morning, everyone. When we last spoke to you in September, we described the actions we were taking to return AMSC to growth and create a sustainably profitable company. We described how we were aligning the business more strongly with our core wind and grid markets and how we are highlighting the value proposition for our Windtec and Gridtec Solutions. We detailed how we are prioritizing our strategic investments and business development efforts. We talked about the cost reduction efforts we have underway and the new policies and financial controls we have put in place. We discussed how we are flattening the organization to establish better collaboration and clarity of responsibilities. We provided a sense of direction on where we're headed financially. And we discussed the actions we have begun to take with respect to our former customer, Sinovel. Today, we'll update you on these areas, but let me give you a quick summary before turning the call over to Dave to discuss the financials.
We made good progress with our wind turbine manufacturing customers and they in turn helped us diversify our business in the second quarter. On the grid side, we grew our D-VAR system revenues quarter-over-quarter. And along with our partners, we have achieved important power cable milestones. From a financial standpoint, we executed on our plan in the second fiscal quarter and exceeded our financial forecast. This forecast did not contemplate the termination of our acquisition agreement with The Switch. And finally, on the legal front, we made all of our legal filings in China against our former customer, and all of the civil single filings have now been accepted by arbitrators and the courts.Finally, before beginning our financial discussions, let me bring you up the speed on our litigation activity which is progressing on plan. As a reminder, our issues with Sinovel began in late March when this former customer refused to accept contracted shipments and refused to pay us for past shipments. Over the summer, we discovered evidence that Sinovel had gained access to stolen intellectual property. That of course changed everything. After conducting an investigation with European authorities, one of our former employees was arrested and he is now in jail following his conviction on charges of economic espionage and fraudulent misuse of data. In the second quarter, we prepared and filed multiple lawsuits in various jurisdictions in China. In total, we are seeking to recover more than $1.2 billion for contracted shipments and damages. Read the rest of this transcript for free on seekingalpha.com