Good day, everyone, and welcome to the AMSC Conference Call. This call is being recorded. [Operator Instructions] With us on the call this morning are AMSC President and CEO, Daniel McGahn; Senior Vice President and CFO, David Henry; Senior Manager of Corporate Communications, Kerry Farrell. For opening remarks, I would like to turn the call over to Kerry Farrell. Please go ahead.

Thank you, Tasha, and welcome to our call to discuss our first quarter fiscal 2013 results. Before we begin, I'd like to note that various remarks management may make on this conference call about AMSC's future expectations, plans and prospects constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including those discussed in the Risks section of our annual report on Form 10-K for the year ended March 31, 2013, which was filed with the SEC on June 14 and subsequent reports that we have filed with the SEC. These forward-looking statements represent our expectations only as of today and should not be relied upon as representing our views as of any date subsequent to today. While AMSC anticipates that subsequent events and developments may cause the company's views to change, we specifically disclaim any obligation to update these forward-looking statements. I also would like to note that we will be referring on today's call to non-GAAP net loss or net loss before adverse purchase commitments, recoveries, losses, net stock-based compensation, amortization of acquisition-related intangibles, restructuring and impairment charges, Sinovel litigation costs, consumption on zero cost-basis inventory, noncash interest expense, change in fair value of derivatives and warrants and other unusual charges, net of any tax effects related to these items. Non-GAAP net loss is a non-GAAP financial metric. A reconciliation of our non-GAAP to GAAP net loss 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 www.amsc.com. And now, I will turn the call over to CEO, Dan McGahn. Dan?

Thanks, Kerry. I'll begin today by providing an overview of our financial results for the first quarter of fiscal 2013. Dave will then review our financial results in detail and provide guidance for our second fiscal quarter. Since we had an extensive call in June, during which we told you about the milestones that we need to reach to get to cash flow breakeven, after Dave's comments, I'll focus on how we expect to reach our objective of 25% annual revenue growth this year in year 2013. After that, we'll open up the line to your questions. We grew revenues by 13% sequentially in the first quarter of fiscal 2013, driven by higher revenue in our Wind segment, going from $8.9 million to $14.7 million. This came on the heels of 35% growth in our Grid segment during fiscal 2012. We reduced our non-GAAP net loss by 31% from the fourth quarter of 2012 and nearly doubled our gross margin quarter-over-quarter. In July, we undertook additional cost-cutting measures, including a workforce reduction that we expect will further reduce our annualized operating expenses by approximately $3 million. Dave will give you details on that later. Let me update you on our ongoing litigation with Sinovel. In June, Sinovel, 2 of its employees and a former AMSC employee were indicted by the Department of Justice in the United States for stealing AMSC's trade secrets. Following an investigation, the FBI discovered the unauthorized use of our intellectual property in Sinovel wind turbines that have been installed in Massachusetts. The Department of Justice believes that the damages to AMSC are more than $800 million. This is, we believe, in addition to the $1.2 billion that AMSC is seeking in the Chinese court system. If convicted of the trade secret charges in the United States…

Thanks, Dan, and good morning, everyone. AMSC generated $23.1 million in revenues for the first quarter of fiscal 2013. While this is down from $28.7 million in the year ago quarter, it is up from $20.4 million in the fourth quarter of fiscal 2012. The quarter-over-quarter growth was driven primarily by strength in our Wind business. Wind revenue of $14.7 million in the first quarter increased by $5.8 million sequentially, due primarily to resumed volume shipments to JCNE. Our growth was offset by our Grid business; our revenues of $8.4 million in the first quarter declined by $3.1 million sequentially, due primarily to lower D-VAR revenue from the U.K. 12-month backlog as of June 30, 2013, was $75.4 million compared to $84.7 million as of March 31, 2013. Gross margin in the first quarter was 22.1% compared with 11.4% in the prior quarter. Gross margin in the first quarter of fiscal 2012 was 41.1%. However, in that quarter, gross margin was positively impacted by adverse purchase commitment recoveries. Normalized gross margin for the year ago quarter was 15.6%. In both fiscal years, first quarter gross margin was positively impacted by approximately $3 million in revenue at 100% margin, due in part to collections on past due receivables from certain customers in China. Revenue is recognized from those customers upon cash collection. Additionally, in the first quarter of fiscal 2013, previously deferred revenue was recognized from the completion of the ACCIONA project. R&D and SG&A expenses for the first quarter were $13.9 million. This is down from $17.7 million in the year ago quarter. The decrease in the first quarter compared to the year ago quarter was due primarily to effective cost controls and the benefit of the restructuring actions taken in the third quarter of fiscal 2012. A few weeks…

Thanks, Dave. To achieve our objective of growing revenues by 25% in fiscal 2013, we will need strong contributions from both our Wind and Grid businesses. Let me focus first on how we believe we will reach that objective in our Wind business. For those new to AMSC, we provide a unique set of solutions for wind turbine manufacturers, including both products and services. The products are a set of power electronics and controls called electrical control systems, or ECS, that work cohesively and serve as the brain of the wind turbine. Our services include proprietary wind turbine designs and various offerings aimed at enabling wind turbine manufacturers to quickly increase their production and market share, while driving down the cost of wind energy. It is primarily through the sales of the electrical control systems to our partners in India and China that will enable us to reach our 25% annual revenue growth objective. Let's start with India. The country's Wind business is expected to continue to grow steadily. The Government of India has set a target of producing an additional 15 gigawatts of wind energy between 2012 and 2017. To put this into perspective, the country's cumulative installed base at the end of 2011 was 16 gigawatts, so this target will nearly double India's installed base. Similar to the Indian wind market, our partner, Inox Wind, is on an upward trajectory. Inox experienced a five-fold increase by installing over 250 megawatts in 2012, up from over 50 megawatts in 2011. As a result, Inox is ranked among the top 5 in installations in India. In July, Inox Wind announced that they will pursue an initial public offering. It expects to raise over $100 million. Inox plans to use the capital to expand and upgrade its operations to help meet…

[Operator Instructions] We'll take our first question from Carter Driscoll with Ascendiant Capital.

First question, just a couple of comments, Dan, if I may, about talking about -- relative to your fiscal '13 revenue guidance, talk about both the semiconductor contracts that you have in hand, and the revenues you said that you have fully booked in Europe. Could you elaborate a little bit? I mean, obviously, you have a target in mind and when you say it's fully booked, can you elaborate? I mean, is that relative to where you expected it was at the beginning of the fiscal year? Has that shifted at all geographically by country-by-country? Obviously, it sounds like D-VAR was a little bit down in the U.K., so maybe we could box Europe separately from the comments you made about the superconductor side. And then I have a couple of follow-ups, if I may.

Okay. Let me try to expand on that a little bit. So we are where we thought we'd be in Europe. I think that the message today from a risk standpoint, we feel comfortable about the revenues in Europe to help us get to the 25% stated objective for revenue growth for the year. I think what's emerged are a series of additional opportunities in Europe. We mentioned in the Republic of Ireland, we mentioned in Spain, talked a little bit about Romania, that there are other markets that we believe are opening up in the near term for the D-VAR product. And our team is focused very much on working with developers, governments, utilities in these different countries to ensure that not only do we get next orders, but that we're able to open up, on a longer-term basis, a bigger market for D-VAR. So I think if you look at Europe, we're comfortable. We talked about the U.K. specifically, that larger projects are emerging, particularly for offshore. But onshore projects remain opportunities for us. So we have to continue to do the things that we've been successful in our past, specifically in the United Kingdom. So I think that gets at your questions around the D-VAR.

Right. So that was specifically for D-VAR, not so much for wind. But it was for D-VAR for onshore and offshore. Correct?

If you think about wind, I mean, our play really is -- as we went through, it's really India, China and Korea. And in the case of all those partners, in the near term, we only expect them to stay in their home market. We don't look for, we don't plan, we don't forecast for export of products out of India and China and Korea here in 2013. So they're not part of the arithmetic that we're trying to get to the stated objective of the 25% growth year-to-year. If we were to see penetration in Europe on the wind side through those partners, we believe it would be upside to our current plans.

Got it, got it. That's helpful. And then on the superconductors side, it's the same type of comment then, it's your -- it's a contribution to that 25% growth that you have?

Yes, I mean, the focus of the call, we spent a lot of time last call really talking in great detail about how we turn the company from where we've been to cash flow positive on a quarterly basis by the end of 2014. What we wanted to do today is to shed more detailed color on the year that will be 2013. How do we get to this midpoint objective of growing the top line by 25% year-to-year? And you hit on the other part of when we think about risk is that on the superconductor product side, we have in hand already the contracts for utility projects and for Navy projects. I don't want to say, we have 100% of what we planned. But incrementally, I'll say, it's not material to the overall number. If we were to bring in an order on the superconductor side in 2013, and it was able to generate revenue in 2013, we would consider that as well as upside.

So to boil it down, I think what you need to get to the 25%, when you -- again, thinking about risk, is China and India wind and then D-VAR revenues from primarily existing markets such as Australia, North America, U.K., things like that.

And we talked about the risks, in Australia, it's about our customers getting financing on time and at the appropriate levels they need to go forward with those projects. Those are always challenges that are dealt with, but we see a big pipeline in Australia. And then in North America, we talked a little bit about Canada for there are some larger projects emerging there, but focus principally on the U.S., and it's about the PTC. So what we think the PTC is going to do in the U.S. market for renewables, is back-end installations. And if that happens, I think we're in a good position to convert what we see in pipeline actually into backlog and orders.

So let me just follow up on the PTC a little bit. Obviously, it was reinstated early in the year, but that caused a disruption, temporary disruption. You're seeing that flow through initially in the first half of your fiscal year, but you hope that picks up. Can you see that type of disruption if we go on this ongoing 1-year renewal basis? Or how do you see the grid market playing? I mean, does it still continue to be really lumpy and as you said, tied to the PTC? Can you see that being the main driver, again, next fiscal year if we go through the same type of renewal process?

Yes. I think if we focus specifically on the United States market, we do have applicability for the D-VAR product for utilities, and we've done installations there. We've demonstrated applicability for industrial consumers of electricity that it provides power protection and grid stability for there. But really, the main application that drives us in the United States is grid interconnection of renewable power generation.

When we look specifically at the PTC, we think it affects, at least it's written, 2013 and potentially 2014 as well. So there's some rules about the end of the year on how far projects need to be matured in order to continue to qualify for the PTC in 2014. It's a fundamental challenge to the Wind business in America, is that the policy that the government has put in place is not a long-term policy. We benefit from the PTC in that it gives clarity on what the market is going to look like. If there's a market without the PTC, it doesn't mean that our solution is no longer applicable, it still will be. The question will be, when you finance a project, what's the return and what's the likelihood that certain projects go forward, and at the end of the day, how big the market could be? What you see is the beginning of the realization of our diversification strategy. We're talking about progress being made in Africa. We're talking about progress that has been made in prior quarters in Eastern Europe. We're looking to open up additional markets for D-VAR to allow for a different risk profile for the business, and ultimately, we hope and we believe a larger total available market. So that's why we're out pushing the product, the technology, the grid codes that have been adopted in some of these other geographies we do well in, we're out promoting them in some of these emerging markets for renewable energy because we believe that our solution can fit and help solve problems in those markets.

Two more questions, if I may, before I get back in the queue. It sounds like there's a bit of a shift more geographically driven right now that you're moving back to more core component sales from ECS. Can you talk about how that plays out? What's this blanketed around India versus China right now? And how do you see them evolve in, potentially, India into ECS, over what period of time? And then as you said, the shift in China, more from the severe price competition we've seen over the last couple of years to a focus on quality and how that plays into your strategy for developing and selling ECS?

Okay. So let me clarify. So from everything we talked about in India is ECS, not core components. The content is larger than it had been traditionally. It means that we're providing, we think, better value for the customer. In the case of Inox, they're positioned and talking about great growth here over the next 2 to 3 years. They're looking to more than double what they've delivered. They've delivered a factor of 5 growth. And this has really been the -- when we thought about the business model, that is our Windtec Solutions brand, it's getting these exponential growth of new entrants or new products being entered into the market by existing players that allow for our company to be able to grow. We're seeing that right now in India. What we're attempting to indicate on the call is that the conditions in India for wind will remain quite good for the next 4 or 5 years. The government is firmly behind wind. It's a necessary component for their own diversification strategy for how they're going to produce power. And we believe that Inox, if they do well in the market, we're going to do well as well on our Wind business. We are making a distinction when we talk about Inox and our Chinese customer, JCNE, because their business models are a little bit different than a number of our other licensees. They each have a business that makes wind turbines that runs alongside a business that develops power plant projects. So at the end of the day, what they're focused on, really, is performance and cost of electricity. And this is where our technology fits very nicely in their strategy, because it enables them to differentiate in a way that gives a reliable source of power at lower cost in the market. It's very different than, say, the model was even 3 or 4 years ago. We're focused on advanced technology to lower the cost of electricity. And again, for JCNE, the product that we're selling them is ECS. So the content, again, is higher, and in the case of JCNE, they're doing a full conversion drivetrain, which also has a multiple occasion [ph] factor on the level of content that we're providing and the value to the customer. I think the good news, as we go through the remarks today, we see revenue in this quarter coming from JCNE. It's a good level of revenue. And as long as our customers in wind, and we're focusing on this call talking in detail about Inox and JCNE, if these guys are able to move forward with their plans, we're going to get to our 25% growth target, at least the contribution from the Wind business, as well as get to our stated objective for cash flow breakeven by the end of 2014 on a quarterly basis. I hope that clarifies it.

That's very helpful. That definitely helps to clarify. The last question is just -- and I realize this is a bit of a speculative opinion. But what do you think the practical effects of the DOJ case against Sinovel are in terms of maybe forcing or accelerating the timeline of your current litigation going on in China, if at all, have an impact?

Well, I think the impact that can be felt on that is now it's definitely a government-to-government discussion, having a criminal indictment, having a clear-cut equation for damages and also substantial fines. The order of magnitude of the amount of money that the U.S. government is now seeking on our behalf, it's staggering. It has to be taken seriously by the Chinese government when they look at this as an issue. There's a lot of issues between the countries, and I don't know want to say this is the only issue, by any means. But it's an important issue. It's an issue that's been brought up by this administration. It is solely now being discussed by this Congress, and the Congress is discussing what other consequences could be contemplated for China. So the criminal indictment kind of ups the ante, if you want to think of it that way, not only monetarily, but also when we think about the stakes that are to be had here, are no longer just about American Superconductor. It's really about how American companies go forward in China, how will intellectual property be protected, and if there are problems, how will they be compensated for. At the end of the day, we want to measure success for this case in compensation, but we believe that this is going to pave a way for a more robust dialogue between America, China and Europe on intellectual property issues. And we've already seen that happen since the announcement of the indictment at the end of June.

[Operator Instructions] And now we'll move to our next question from JinMing Liu with Ardour Capital.

Just a follow-up on the last question. What is the chance for you to recover some money from Sinovel, if any, given Sinovel's current -- it's own financial situation and the fact they are closing, I believe, 8 -- their overseas subsidiaries?

Yes, I think the way to think about the strategy on this, JinMing, is that we've upped this ante between the nation states. And it really comes down to the government-to-government discussions. And if and when a decision is made that this needs to be resolved, that the order of magnitude of the damages in the litigation are so significant, the evidence is so overwhelming, that we believe it's in China's best interest as a nation to make this problem go away in as positive a way that China can deal with. So I don't look at the fact that the numbers get bigger, that somehow looking at a computation of Sinovel's capability to pay or be able to have the financial resources to do it. It really comes down to a decision between America, China and also Europe to resolve this issue, because it creates what we think will be the beginning of, we'll say, additional constraints on trade between the 3 different regions. It's no longer just about Sinovel. It really now is a question for China, and they have an opportunity, we believe, to make a very positive statement to the West on the value of intellectual property. And that, if it's a positive statement, should help facilitate additional investment in China, should help facilitate additional technology transfer to China. But if intellectual property is not protected, I think it changes the landscape greatly between how American companies, European companies look at, respect and want to participate in the Chinese market. So it's a much -- it's now, at this point, a much bigger issue than just AMSC.

Okay. Speak to your other emerging markets, could you disclose the names of new licensees in those emerging markets, or you are still working on that?

Those are in development, and we're only going to site new licensees if we think it's really advantageous to the company when we think about the sale of the products. It's nice to have the licensees. It's nice to develop the designs, but we don't really make money until we start to sell the components. We're focused on a series of markets that we went through in the call that all have -- revolve around local content requirements. Local content enables our partners to be successful in those markets because we can help bring a vast majority of the supply chain to be produced in-nation for these local markets. We've not announced, and we're not announcing today, any additional partners in some of these markets, but we're trying to also indicate not just our 25% year-to-year revenue growth. But when we think about the longer-term value of the company and potential for growth, we think that these opportunities are on the table, and our team is focused on turning those opportunities into realities.

Okay. Regarding your 25% revenue growth this year, once you solve the puzzle is the PTC in the U.S -- I remember the language of PTC for this year changed, basically as far as the wind project is in some state of construction instead of fully connected to power grid, that project will be eligible for the PTC. Will that push some of the D-VAR sales in the U.S. into 2014, instead of back-end loaded in 2013?

I think the way to think about it is, one, when we look at the first quarter installations, we're basically 0 in the U.S. That was due to not having the PTC, but really, if you want to think about it specifically, it's about not having a policy. If I'm going to go finance a project, if I don't know what the rules are, it's very hard to move forward with it. So you see a pause in the U.S. market for the first quarter. We talked about for the second quarter, that there's nearly 1 gigawatt that's planned to be constructed, so we see the U.S. market kind of bouncing back a bit. The way that we look at the year isn't things being pushed from '13 to '14. There are requirements when you think about the financing for return, and we always see good business in the December quarter. We see good business, usually, in our second quarter as well, because so much of wind in the U.S. is in the second half of the year. The pipeline that we see in the U.S. is very healthy. But again, what we're trying to say explicitly to get to the 25% goal, we have to convert that pipeline into orders and into backlog. So I would say, think about this as the PTC allows for '13 to get to where we want to be. It opens up the door for the continuation of the market in America for '14. But it also means that there has to be a policy decision here, probably in '13, what is going to be the fate of wind in America. The amount of jobs that are tied to wind, the reason why the PTC was extended, those reasons continue to persist. So we'll look to Washington to see what decision gets made. If it doesn't get renewed or there's instability in the policy, again, you'll see a pause in the American market. And what we're trying to do is to diversify the revenues on the grid side to many of these other emerging markets that are going to not only require the technology we hope, but requirement for -- require it for a long period of time.

Okay. Lastly, is there any update on the orders from the Navy and the potential divestiture of the 2 subsidiaries?

For the Navy orders, there's no update there. We talked about, basically, on the superconductors side having those orders in hand to get through 2013. If we get an order for a full system deployment for the future, obviously, that's something that we would look forward to be able to announce. And I'll turn it over to Dave, so he can talk a bit here about the noncore assets.

Yes, I mean, we've -- JinMing, we have hired an advisor to assist us in the process. Work is underway on that. I think, though, we're going to be respecting the process. We're not going to give a play-by-play each quarter on how we're doing. But suffice to say, we will -- we are continuing to work on it, and it's a key part of our strategy to enhance our liquidity. And so it's our first priority to enhance liquidity here in the near term as opposed to doing anything else from a straight financing standpoint.

And now I'd like to turn the call back over to management for closing remarks.

Great. Thanks, Tasha. We really do appreciate it, and to Carter and JinMing, for the questions that they provide. The focus of the call today is really about growing revenues in fiscal 2013 by 25%. Achieving this target really comes down to 3 things: the first one is supporting our partner in India to reach their growth objectives and then looking to augment sales in India with the demand from our licensees in China, and we talked a lot today about JCNE. Any revenue beyond India and China, we would consider upside for the Wind business. So that's the first thing. The second thing is we want to grow our D-VAR sales in the existing markets, which we define as North America, United Kingdom and Australia. We're also further penetrating into emerging markets, again, furthering our diversification strategy and making sure that not only we can deliver a good revenue growth, but sustainable revenue growth as well. So that's the second one. And then the third one, to get through 2013 and deliver on the growth that we anticipate, is really to make sure that we deliver on our superconductor contracts that are already in place. It's not going to be simple and I'm not trying to trivialize it, but it comes down to our ability to continue to generate orders, particularly on the D-VAR side, and the execution in our business on the wind side and on the superconductor side as well. Thank you for joining, and we look forward to speaking with you again following our second quarter. Thank you, everyone.

This concludes today's conference. You may now disconnect your lines, and have a wonderful day.