American Superconductor Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Eric Stine - Craig-Hallum Holdings LLC - Analyst : Hi, Daniel. Hi, John. Good morning.

Question: Eric Stine - Craig-Hallum Holdings LLC - Analyst : Hey. Happy Thursday. So maybe just to start on the gross margin number. I mean, I believe that's your all-time high number. But I mean, it sure seems like from your commentary that while, I think you said nearly perfect, there were no onetime items in there that skewed that. So I guess, first, I'd like to confirm that. But then second, kind of your confidence level that this can be, given the momentum in the business, a 30%-plus gross margin business going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 2:00PM, AMSC.OQ - Q1 2025 American Superconductor Corp Earnings Call

Question: Eric Stine - Craig-Hallum Holdings LLC - Analyst : Yes. No, that's great. Thanks for that. Maybe turning to Wind then. I think last quarter, Daniel, I believe the direct quote was that Inox was on the cusp of a historic volume ramp. Curious, I mean, another step-up in Wind? I mean, does this kind of give you the confidence that, that historic volume ramp is underway? Or maybe the trends you see there, I guess, both on the order front and -- but also throughout the remainder of fiscal '25?

Question: Eric Stine - Craig-Hallum Holdings LLC - Analyst : Right. And your -- and just to confirm, when you talk about a potential ramp early next year, are you talking calendar year or fiscal year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 2:00PM, AMSC.OQ - Q1 2025 American Superconductor Corp Earnings Call

Question: Eric Stine - Craig-Hallum Holdings LLC - Analyst : Okay, thank you.

Question: Colin Rusch - Oppenheimer & Co Inc - Analyst : Thank you so much, guys. As you look at the growth in the business and the fact that you had high utilization rates here this quarter, can you talk a little bit about how you're thinking about capacity expansion? And the capabilities that you might want to weave into that incremental capacity either from a design or manufacturing flexibility perspective as you look at taking another step function with the business over the next three to five?

Question: Colin Rusch - Oppenheimer & Co Inc - Analyst : Excellent. And then as you look at ways to drive revenue growth, could you talk a little bit about the potential for geographic expansion, if that's a consideration or the potential for increased pricing monetization of the value creation that you guys are providing? Because it looks to me like particularly in some of the higher tech areas, you guys are providing power quality solution that saves not only CapEx but also reduce the risk on operations for facilities.

Question: Colin Rusch - Oppenheimer & Co Inc - Analyst : Excellent. Thanks so much, guys.

Question: Justin Clare - Roth Capital Partners - Analyst : Yes. Good morning, guys. Thanks for the questions here. So I wanted to just follow up on the gross margin. I wanted to see if you could share maybe a little bit more detail on potentially what end markets or particular product lines might have driven the higher gross margins in the quarter? For example, does the semi business tend to have higher margins than the corporate average? And then just as we think through, as you scale revenues here, if you are delivering revenues, let's say, at $70 million or above, would you anticipate gross margins at 30%-plus? Is that kind of a fair assumption here? [Technical Difficulty] I might have lost you guys.

Question: Justin Clare - Roth Capital Partners - Analyst : Yes, I got you. Did you hear my question?

Question: Justin Clare - Roth Capital Partners - Analyst : Yes, certainly. And yes, it's definitely good to see. I guess then maybe just shifting over, you had talked about inroads into data center infrastructure projects. Just wondering if you could give us an update on how you're pursuing that market? Are you in conversations with data center developers or is it primarily with utilities or EPCs? And then just trying to think through, would your products be more likely to be suited at the substation or do you think there are opportunities within the data center infrastructure within the building that are areas that you could pursue?

Question: Justin Clare - Roth Capital Partners - Analyst : Got it. Okay. And then just one more. I wanted to just check in. What do you see as the key factors that are enabling your success in the semiconductor market? Is this proprietary technology? Is it the breadth of the portfolio that you have? Are you able to put together a solution that is unique here given the wider portfolio that you have? Maybe you -- could you just speak to what's enabling you to win there?

Question: Justin Clare - Roth Capital Partners - Analyst : Okay. Well, it's good to see. Thanks, guys.

Question: Tim Moore - Clear Street - Analyst : Thanks. Impressive execution on your strategy and the profit margin expansion. Part of our investment thesis when we launched coverage recently was really your operating leverage step-up of absorbing the fixed costs and adding acquisitions helps to really drive higher incremental margin as seen in the June quarter you just reported. So one question I actually have is, if I back out our rough estimate of possible sales contribution from acquisitions, I mean, organic growth just seems phenomenally strong, maybe 35% in the quarter -- the June quarter. What do you think is -- looking at your backlog and the lead times you mentioned and conversion and where they stand, what do you think might be a realistic organic sales growth pace for this year? Is 20% possible on the organic growth side as you (inaudible) the acquisitions?

Question: Tim Moore - Clear Street - Analyst : That was actually very helpful. I appreciate the color. Another question that we have is, obviously, the strengthening of the US electrical grid has been a theme in the last couple of years. But from what we're seeing in some of our coverage, it's really accelerating more since the April executive order, maybe by the administration. Have you seen kind of any more incoming calls or inquiries just for better awareness of your brand and your solutions out there for grid reliability and efficiency? Have you kind of seen an uptick on that in the last couple of months?

Question: Tim Moore - Clear Street - Analyst : Great. That's really helpful. Thanks for sharing that color and that's it for my questions.