Good day, everyone and welcome to AMSC's Q2 FY '15 Investor Conference Call. This call is being recorded. [Operator Instructions] With us on the call this morning are AMSC's President and CEO, Daniel McGahn; Executive Vice President and CFO, David Henry; and Manager of AMSC's Investor Relations, Brion Tanous. For opening remarks, I would like to turn the call over to Mr. Brion Tanous. Please go ahead, sir.

Thank you, Tanisha, and welcome to our call to discuss our second quarter of fiscal 2015 results. Before we begin, I would 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 Risk Factors section of our Annual Report on Form 10-K for the year ended March 31, 2015, which we filed with the SEC on May 28, 2015, 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 would also like to note that we will be referring on today's call to non-GAAP net loss, or net loss before stock-based compensation, amortization of acquisition-related intangibles, restructuring and impairment charges, consumption of 0-cost-basis inventory, change in fair value of derivatives and warrants, noncash interest expense 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 would like to turn the call over to CEO, Dan McGahn. Dan?

Thanks, Brion, and good morning, everyone. I will begin today by providing an overview of our accomplishments and financial results for the second quarter of fiscal 2015, which ended September 30, 2015. Dave will then provide a detailed review of our financial results and guidance for our third fiscal quarter, which will end December 31, 2015. Following Dave's comments, I will provide an overview of our activities and future expectations. And after that, we'll open up the line to your questions. In the second quarter of fiscal 2015, we increased revenue by more than 50% year-over-year as a result of strength in our Wind business. We also delivered significantly improved gross margin as compared to the same quarter a year ago. At the beginning of the fiscal year, we outlined several near-term business objectives we expected to achieve in the first half of fiscal 2015. Those included identifying an additional U.S. utility to perform a deployment study of our REG system, announcing a large wind order and announcing new D-VAR orders. I'm pleased to announce we have achieved all of these objectives. During the second quarter, Pepco in Washington, D.C., joined Boston's Eversource as an additional U.S. utility, performing a deployment study of our REG system. We also began shipping to Inox under the new $40 million order we received from them during the second fiscal quarter. Inox is growing its market share and its order book, and we believe that we are well positioned to support their growth plans this fiscal year and beyond. Within our Gridtec business unit, we've announced multiple D-VAR orders so far this year. We are encouraged by the activity we've seen for our D-VAR product for both renewable energy as well as industrial applications. We see the need for power quality and reliability increasing among utilities and commercial customers alike. In addition to achieving these near-term objectives, we made progress on our Resilient Electric Grid, or REG, solution for the electric utility market, and our Ship Protection Systems, or SPS, product line for the U.S. Navy. We are now tracking activity for our REG product at about a dozen U.S. utilities, and we're working to increase the opportunity pipeline for our Gridtec products through our new and growing network and sales channel. During the quarter, we received a $3.7 million contract modification from the U.S. Department of Homeland Security to fund the purchase of certain long lead-time components for the REG system as well as further engineering activities. I will talk more about the contract modification, our road map and our business development activities with utilities and the U.S. Navy later in the call. Now I'll turn the call over to Dave Henry to discuss our financial results for the second quarter of fiscal 2015. Dave?

Thanks, Dan, and good morning, everyone. AMSC increased its revenues 53% to $19 million for the second fiscal quarter compared to $12.5 million in the year-ago quarter. Wind revenue increased 82% year-over-year driven by higher ECS shipments to Inox, while Grid revenue grew 9% year-over-year due to increased D-VAR revenues. 12-month backlog as of September 30, 2015 was approximately $62 million compared with $39 million as of June 30, 2015. The increase was primarily the result of a large follow-on order from Inox Wind we received and began shipping under in the second fiscal quarter. Shipments under the new order from Inox are expected to be completed early in the first quarter of fiscal 2016. This expected shipment schedule represents an accelerated pace of deliveries compared to the prior quarters, which were completed over roughly -- over the -- compared to the prior orders, I should say, which were completed over roughly 4 to 5 quarters. Looking at the P&L in more detail. Gross margin for the second fiscal quarter was 15.8%, which compares with negative 11% in the prior-year quarter. The year-over-year increase in gross margin resulted from higher revenues; improved mix, primarily in our D-VAR product line; and improved factory utilization. R&D and SG&A expenses for the second fiscal quarter were $9.8 million as compared with $11.1 million for the same period a year ago. The decrease was primarily due to lower stock compensation and lower legal expenses. Approximately 13% of this R&D and SG&A spending in the second fiscal quarter was noncash. Other expense was $400,000 in the second fiscal quarter compared to other income of $700,000 in the year-ago quarter. The increase in other expense is primarily driven by foreign currency losses, particularly the weaker euro, compared to the prior-year period. We incurred approximately $900,000 in…

Thanks, Dave. I'll start today with our Windtec business unit. Through our Windtec Solutions, we provide our wind turbine licensees with fully integrated Electrical Control Systems, or ECS. The ECS consists of the electric pit [ph] system, converter system, power distribution cabinets and various turbine control cabinets, as well as our SCADA solution and software. By using our integrated Electrical Control Systems, we believe our customer's wind turbines provide higher availability, reliability and optimize energy output. We have been exploring new wind turbine licensing opportunities with a number of potential partners in Eastern Europe, Russia and Brazil. If we identify the right opportunity with the right partner, we certainly will see if we can expand into these other emerging wind markets. Focusing specifically on India, the wind market in India looks bright for Inox. According to the Global Wind Energy Council, the Indian wind energy sector has a total installed power capacity of 23.5 gigawatts as of March 31, 2015. In terms of wind power installed, India is a major player in the global wind energy market, and ranks fifth in the world in cumulative installations according to industry analysts. Policies such as accelerated depreciation benefit and generation-based incentives seem to be having a positive effect on the Indian wind market. Additionally, multiple states in India now have multiyear tariff policies. Stakeholders are bullish about the future of the Indian wind energy sector. The government has announced an impressive target of having 60 gigawatts of wind energy capacity installed by 2022, which is more than double the existing installed capacity. Inox has benefited from supportive government policies as well as a strong business model, and during its recent quarterly earnings call in October, announced that it had an order book of about 1,200 megawatts as of the end of September.…

[Operator Instructions] And we'll go ahead and take our first question from Jeff Osborne with Cowen & Company.

I just had one clarification and 2 questions. On the clarification, I missed in the 10-Q what the R&D expense was in cost of revenue. I was wondering if you could provide that number. And then the 2 questions I had was just, can you talk about the 3Q strength in D-VAR, and then what visibility you have into that? Is there any visibility for the fourth quarter? Or just as we look out to the fourth fiscal quarter, should we think about the Grid revenue trailing down? And then I had a question also on Inox. It sounds like things are accelerating there. Can you just talk about your working relationship with them, and what type of visibility they're providing? It seems like the past couple of quarters have been pretty lumpy with -- on the revenue line, but you seem pretty confident with the commentary you provided on the call. So I'm just trying to get a sense of what's changed there.

Jeff, it's Dave Henry. I'll take the first one on the revenue. We actually -- for the longest time, we made that -- we did that disclosure, sort of that non-GAAP measure in R&D in our MD&A, to talk about the fact that when we were doing so much government program work and such, that sometimes you could have all of the company's R&D expense up in COGS and -- because that's all -- that's the only place where revenues were coming from. And as we've matured and such, we felt that, that disclosure really -- it wasn't really needed anymore so we -- effective with this quarter, we stopped the -- we stopped providing that calculation that shows what R&D would have been as if there were nothing in COGS. So we just compared in our MD&A GAAP R&D to GAAP R&D year-over-year. That's what we'll continue to do going forward.

On the third quarter in D-VAR, we expect to generate our highest revenues for D-VAR in nearly 3 years, and these are due to expected shipments to customers in Asia and Africa. I think also you're seeing, at the end of the calendar year, perhaps customers getting work done in calendar 2015 in preparation for milestones that they need to achieve by going into 2016. We're not providing any additional color in the future, Jeff, for Q4. I think what -- we will get at that as we get into the next call and the call after that.

But generically speaking, the visibility in D-VAR is less than 3 to 4 months out? Is that fair? Or are people placing orders multiple quarters in advance, and you have that kind of line of sight?

Kind of, d, all of the above. The line of sight for D-VAR can be between 3 and 9 months, typically. In many cases, it could be 6 months. We could get calls this month that would require delivery within the fiscal year. But in general, as we look at the health of the pipeline, we kind of track looking out 3, 6, 9 months at a time. We're seeing that overall pipeline as being quite healthy. We're seeing a diversity in that pipeline among many of the markets we participate in, not only from a user base, be it industrial, utility or renewable customer, but also the countries that we see future order flow coming from. So we think that D-VAR, right now, is looking quite strong in the near term. We've been able to successfully transition manufacturing of that product from Wisconsin to Massachusetts. And we've talked a little bit on the call about we have an effort within the company to expand our sales channel and our channels to market. So we're looking squarely to position Gridtec for growth, and we hope to be able to report on that in future calls.

So on the D-VAR, I can give you a little bit more color. I mentioned 12-month backlog, $62 million. Obviously, there is D-VAR in that backlog. But most of that 12-month backlog for D-VAR is really shippable in fiscal 2015. So there's not a lot yet that's booked into the first 6 months of fiscal 2016, but we wouldn't really expect it to, at this point in time. I think starting now and in the coming months, we'll we be looking to build backlog for fiscal 2016 in D-VAR.

On Inox accelerating, I think you're right. You do see some lumpy revenue, and it really gets down to their timing and their management of their inventory and their cash. We mentioned coming out of the March quarter that we were basically at a run rate that is equivalent to their current capacity. We are watching as well as you're probably watching their public announcements about their progress with their capacity expansion. They're looking to go from 800 megawatts, which should translate into about 100 sets [ph] a quarter for us, to something that's double that. Their visibility that they are showing to us and they're showing publicly, is they have an order book for about 1,200 megawatts, and that their manufacturing time is pretty much 100% occupied for about the next 12 months. So they're trying to be able to manage their business well and also expand their capacity in parallel. And our hope, as we look to support them, is as the market helps move them along and as we're able to continue to support them, that should mean in the near term for us, continued revenue with Inox. From a growth standpoint, I think it's challenging to make that call because of the lumpy nature that we see sometimes quarter-to-quarter with Inox.

[Operator Instructions]

I think for those of you on the call, one of the challenges that we're going through as a company is I think our analyst community is going through some change, so we're appreciative, Jeff, of your attention, and the others that are on the call. I think we'll move now to close down the call. I want to go and I want to re-highlight again the accomplishments so far in the first half of the year. So we said we would do 3 things, and we did them. Well, we received an order for $40 million from Inox, and we've began shipping under that order. We delivered our $9 million in new D-VAR system orders that we've announced. We were able to enter into a contract vehicle with the U.S. Navy for ship protection equipment to the tune of $8.5 million. We've been able to sign up Eversource in Boston, and Pepco in the nation's capital, to conduct deployment studies. We've been able to double revenue year-to-year, and we are showing you today sequential quarter-to-quarter growth from our Q2 ending in September to our Q3 ending in December. D-VAR backlog growth shows what we believe will be a record quarter, at least in the near term, for D-VAR. In the longer term, we continue to work with the U.S. Navy on supporting their needs and also developing these different product offerings for the Navy. And we're looking forward to be able to demonstrate and report on continued progress with the project in Chicago. I think we're very happy with the progress we've already been able to make to date with Washington, D.C. The company is in a very good position. We're focused on the near term here to be able to deliver growth quarter-to-quarter, but we have in our basket a bundle of products that we believe have extraordinarily large opportunities for our company to take advantage of. And with that, I look forward to reporting our results again in 3 months' time, and thank you for your attention, and specifically, Jeff, for the questions. Thank you.

And that does conclude today's program. We'd like to thank you for your participation. Have a wonderful day. And you may disconnect at any time.