AMERICAN SUPERCONDUCTOR CORP /DE/ 10-Q

ITEM 1. FINANCIAL STATEMENTS UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December 31, 2025 March 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 141,072 $ 79,494 Accounts receivable, net 62,581 46,186 Inventory, net 105,408 71,169 Prepaid expenses and other current assets 13,181 8,055 Restricted cash 2,751 1,613 Total current assets 324,993 206,517 Property, plant and equipment, net 87,451 38,572 Intangibles, net 13,852 5,916 Right-of-use assets 3,655 3,829 Goodwill 166,373 48,164 Restricted cash 3,288 4,274 Deferred tax assets, long-term portion 117,342 1,178 Equity-method investments 1,561 1,113 Other assets 1,019 958 Total assets $ 719,534 $ 310,521 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 46,602 $ 32,282 Lease liability, current portion 1,078 685 Debt, current portion 1,621 — Deferred revenue, current portion 72,659 66,797 Total current liabilities 121,960 99,764 Deferred revenue, long-term portion 16,704 9,336 Lease liability, long-term portion 2,560 2,684 Deferred tax liabilities, long-term portion — 1,595 Debt, long-term portion 6,124 — Contingent consideration 34,737 — Other liabilities 613 28 Total liabilities 182,698 113,407 Commitments and Contingencies (Note 17) Stockholders' equity: Common stock, $ 0.01 par value, 75,000,000 shares authorized; 48,015,636 and 39,887,536 shares issued and 47,612,285 and 39,484,185 shares outstanding at December 31, 2025 and March 31, 2025, respectively 480 399 Additional paid-in capital 1,475,792 1,259,540 Treasury stock, at cost, 403,351 at December 31, 2025 and March 31, 2025 ( 3,765 ) ( 3,765 ) Accumulated other comprehensive income (loss) ( 4,326 ) 1,565 Accumulated deficit ( 931,345 ) ( 1,060,625 ) Total stockholders' equity 536,836 197,114 Total liabilities and stockholders' equity $ 719,534 $ 310,521 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements 3 AMERICAN SUPERCONDUCTOR CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended Nine Months Ended December 31, December 31, 2025 2024 2025 2024 Revenues $ 74,529 $ 61,403 $ 212,749 $ 156,163 Cost of revenues 51,677 45,077 144,970 112,000 Gross margin 22,852 16,326 67,779 44,163 Operating expenses: Research and development 3,543 3,000 11,577 7,932 Selling, general and administrative 15,440 11,567 43,051 30,990 Amortization of acquisition-related intangibles 510 444 1,184 1,289 Change in fair value of contingent consideration — — — 6,682 Total operating expenses 19,493 15,011 55,812 46,893 Operating income (loss) 3,359 1,315 11,967 ( 2,730 ) Interest income, net 1,997 802 5,198 2,901 Other (expense)/income, net 77 272 57 ( 214 ) Income (loss) before income tax benefit 5,433 2,389 17,222 ( 43 ) Income tax benefit ( 112,373 ) ( 76 ) ( 112,058 ) ( 4,871 ) Net income $ 117,806 $ 2,465 $ 129,280 $ 4,828 Net income per share of common stock Basic $ 2.68 $ 0.07 $ 3.08 $ 0.13 Diluted $ 2.62 $ 0.06 $ 3.01 $ 0.13 Weighted average number of shares of common stock outstanding Basic 43,957 37,661 42,036 36,766 Diluted 44,939 38,463 42,975 37,457 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 4 AMERICAN SUPERCONDUCTOR CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Three Months Ended Nine Months Ended December 31, December 31, 2025 2024 2025 2024 Net income $ 117,806 $ 2,465 $ 129,280 $ 4,828 Other comprehensive income, net of tax: Foreign currency translation gain 5,702 153 5,891 80 Total other comprehensive gain, net of tax 5,702 153 5,891 80 Comprehensive income $ 123,508 $ 2,618 $ 135,171 $ 4,908 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 5 AMERICAN SUPERCONDUCTOR CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE Three and Nine Months Ended December 31, 2025 AND 2024 (In thousands) Common Stock Additional Accumulated Other Total Number of Shares Par Value Paid-in Capital Treasury Stock Comprehensive Income (Loss) Accumulated Deficit Stockholders' Equity Balance at March 31, 2025 39,888 $ 399 $ 1,259,540 $ ( 3,765 ) $ 1,565 $ ( 1,060,625 ) $ 197,114 Issuance of common stock – restricted shares, net of forfeited shares 918 9 ( 9 ) — — — — Stock-based compensation expense — — 4,526 — — — 4,526 Issuance of common stock for 401(k) match 14 1 361 — — — 362 Issuance of common stock - equity offering, net of offering expenses 4,744 47 124,530 — — — 124,577 Cumulative translation adjustment — — — — ( 187 ) — ( 187 ) Net income — — — — — 6,724 6,724 Balance at June 30, 2025 45,564 $ 456 $ 1,388,948 $ ( 3,765 ) $ 1,378 $ ( 1,053,901 ) $ 333,116 Exercise of stock options 10 — 66 — — — 66 Issuance of common stock – restricted shares, net of forfeited shares 7 — — — — — — Issuance of common stock – ESPP 3 — 176 — — — 176 Stock-based compensation expense — — 3,766 — — — 3,766 Issuance of common stock for 401(k) match 6 — 310 — — — 310 Cumulative translation adjustment — — — — ( 2 ) — ( 2 ) Net income — — — — — 4,750 4,750 Balance at September 30, 2025 45,590 $ 456 $ 1,393,266 $ ( 3,765 ) $ 1,376 $ ( 1,049,151 ) $ 342,182 Stock-based compensation expense — — 3,822 — — — 3,822 Issuance of common stock for 401(k) match 8 — 321 — — — 321 Issuance of common stock - Comtrafo acquisition, net of offering expenses 2,417 24 78,383 — — — 78,407 Cumulative translation adjustment — — — — ( 5,702 ) — ( 5,702 ) Net income — — — — — 117,806 117,806 Balance at December 31, 2025 48,015 480 $ 1,475,792 $ ( 3,765 ) $ ( 4,326 ) $ ( 931,345 ) $ 536,836 6 Common Stock Additional Accumulated Other Total Number of Shares Par Value Paid-in Capital Treasury Stock Comprehensive Income (Loss) Accumulated Deficit Stockholders' Equity Balance at March 31, 2024 37,343 $ 373 $ 1,212,913 $ ( 3,639 ) $ 1,582 $ ( 1,066,658 ) $ 144,571 Issuance of common stock – restricted shares, net of forfeited shares 44 1 ( 1 ) — — — — Stock-based compensation expense — — 1,229 — — — 1,229 Issuance of common stock for 401(k) match 12 — 179 — — — 179 Repurchase of treasury stock — — — ( 126 ) — — ( 126 ) Cumulative translation adjustment — — — — 15 — 15 Net loss — — — — — ( 2,524 ) ( 2,524 ) Balance at June 30, 2024 37,399 $ 374 $ 1,214,320 $ ( 3,765 ) $ 1,597 $ ( 1,069,182 ) $ 143,344 Issuance of common stock – ESPP 8 — 157 — — — 157 Issuance of common stock – restricted shares, net of forfeited shares 815 8 ( 8 ) — — — — Stock-based compensation expense — — 843 — — — 843 Issuance of common stock for 401(k) match 7 — 166 — — — 166 Issuance of common stock - Megatran acquisition, net of offering expenses 1,298 13 31,189 — — — 31,202 Issuance of common stock to settle contingent consideration 300 3 6,501 — — — 6,504 Cumulative translation adjustment — — — — ( 88 ) — ( 88 ) Net income — — — — — 4,887 4,887 Balance at September 30, 2024 39,827 $ 398 $ 1,253,168 $ ( 3,765 ) $ 1,509 $ ( 1,064,295 ) $ 187,015 Issuance of common stock – restricted shares 30 1 — — — — 1 Stock-based compensation expense — — 2,861 — — — 2,861 Issuance of common stock for 401(k) match 7 — 181 — — — 181 Cumulative translation adjustment — — — — 153 — 153 Net income — — — — — 2,465 2,465 Balance at December 31, 2024 39,864 $ 399 $ 1,256,210 $ ( 3,765 ) $ 1,662 $ ( 1,061,830 ) $ 192,676 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 7 AMERICAN SUPERCONDUCTOR CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Nine Months Ended December 31, 2025 2024 Cash flows from operating activities: Net income $ 129,280 $ 4,828 Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 4,184 3,984 Stock-based compensation expense 12,114 4,933 Provision for excess and obsolete inventory 2,162 1,186 Amortization of operating lease right-of-use assets 825 753 Deferred income taxes ( 113,769 ) ( 5,171 ) Earnings from equity method investments ( 449 ) ( 152 ) Change in fair value of contingent consideration — 6,682 Other non-cash items 97 ( 177 ) Changes in operating asset and liability accounts: Accounts receivable ( 12,462 ) ( 1,650 ) Inventory ( 8,824 ) ( 10,836 ) Prepaid expenses and other assets 1,581 ( 1,658 ) Operating leases ( 381 ) ( 1,531 ) Accounts payable and accrued expenses 5,972 118 Deferred revenue ( 6,469 ) 20,686 Net cash provided by operating activities 13,861 21,995 Cash flows from investing activities: Purchases of property, plant and equipment ( 3,099 ) ( 1,376 ) Cash paid for acquisition, net of cash acquired ( 72,096 ) ( 29,577 ) Change in other assets ( 75 ) 167 Cash paid to settle Megatran contingent consideration liability — ( 3,278 ) Net cash used in investing activities ( 75,270 ) ( 34,064 ) Cash flows from financing activities: Repurchase of treasury stock — ( 126 ) Repayment of debt ( 883 ) ( 25 ) Employee taxes paid related to net settlement of equity awards — ( 148 ) Proceeds from exercise of employee stock options and ESPP 242 157 Proceeds from public equity offering, net of offering expenses 124,501 — Net cash provided by (used in) financing activities 123,859 ( 142 ) Effect of exchange rate changes on cash ( 720 ) ( 29 ) Net increase (decrease) in cash, cash equivalents and restricted cash 61,730 ( 12,240 ) Cash, cash equivalents and restricted cash at beginning of period 85,381 92,280 Cash, cash equivalents and restricted cash at end of period $ 147,111 $ 80,040 Supplemental schedule of cash flow information: Cash paid for income taxes, net of refunds $ 407 $ 263 Non-cash investing and financing activities Issuance of common stock in connection with the purchase of Megatran $ — $ 31,350 Issuance of common stock in connection with the purchase of Comtrafo $ 78,407 $ — Issuance of common stock to settle contingent consideration $ — $ 6,504 Right-of-use assets obtained in exchange for new lease obligations $ 647 $ 2,247 Issuance of common stock to settle 401k match liabilities $ 993 $ 526 The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. 8 AMERICAN SUPERCONDUCTOR CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of the Business and Operations Nature of the Business and Operations American Superconductor Corporation (together with its subsidiaries, “AMSC®” or the “Company”) was founded on April 9, 1987. The Company is a leading system provider of megawatt-scale power resiliency solutions that orchestrate the rhythm and harmony of power on the grid™ and protect and expand the capability of the Navy’s fleet. The Company’s system level products leverage its proprietary “smart materials” and “smart software and controls” to provide enhanced resiliency and improved performance of megawatt-scale power flow. These unaudited condensed consolidated financial statements of the Company have been prepared on a going concern basis in accordance with United States generally accepted accounting principles (“GAAP”) and the Securities and Exchange Commission’s (“SEC”) instructions to Form 10 -Q. All significant intercompany accounts and transactions are eliminated in consolidation. Investments in entities in which we do not have a controlling interest are accounted for under the equity method of accounting. The going concern basis of presentation assumes that the Company will continue operations and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to those instructions. The year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The unaudited condensed consolidated financial statements, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim periods ended December 31, 2025 and 2024 , and the financial position at December 31, 2025 ; however, these results are not necessarily indicative of results which may be expected for the full year. The interim condensed consolidated financial statements, and notes thereto, should be read in conjunction with the audited condensed consolidated financial statements for the year ended March 31, 2025 , and notes thereto, included in the Company’s Annual Report on Form 10 -K for the year ended March 31, 2025 filed with the SEC on May 21, 2025 . 9 2. Acquisition Acquisition of Comtrafo On December 5, 2025 ( the "Comtrafo Acquisition Date"), the Company entered into a Stock Exchange Agreement (the “Stock Exchange Agreement”) with the selling stockholders named therein. Pursuant to the terms of the Stock Exchange Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding shares of capital stock of Comtrafo Indústria de Transformadores Elétricos S.A. ("Comtrafo") (the "Comtrafo Acquisition"). Comtrafo is a Brazil-based manufacturer of large power and distribution transformers primarily for utility customers and also for industrial customers. The Comtrafo Acquisition has been accounted for under the purchase method of accounting in accordance with ASC 805, Business Combinations . The Company allocated the purchase price on a preliminary basis using the information available as of December 31, 2025 to the assets acquired and liabilities assumed at their estimated fair values as of the date of acquisition. Due to the timing of the completion of the acquisition, the purchase price and related allocation are preliminary and could be revised as a result of adjustments made to the purchase price, and additional information obtained regarding assets acquired and liabilities assumed and revisions of provisional estimates of fair values, including, but not limited to the completion of independent appraisals of inventory, customer relationships, backlog, deferred taxes, tangible assets and intangible assets. Changes to the purchase price allocation could be significant. The purchase price allocation will be finalized within the measurement period of up to one year from the acquisition. The excess of the purchase price paid by the Company over the estimated fair value of net assets acquired has been recorded as goodwill. The total purchase price of approximately $ 202.7 million includes the fair value of the Company's common stock issued at closing, contingent consideration and cash paid, as follows (in millions): Cash payments $ 88.3 Issuance of 2,417,142 shares of Company’s common stock 78.5 Contingent consideration 35.9 Total consideration $ 202.7 At the Comtrafo Acquisition Date, in addition to the $ 88.3 million cash, the Company valued the Company's common stock at $ 32.47 per share, which was the closing price on that date. Comtrafo Acquisition costs of $ 1.2 million were included in SG&A and $ 0.1 million were included in cost of revenues for the three and nine months ended December 31, 2025. The following table summarizes the allocation of the purchase price based on the estimated fair values of the assets acquired and liabilities assumed and related deferred income taxes in connection with the Comtrafo Acquisition as of the Comtrafo Acquisition Date (in millions): Cash and cash equivalents $ 16.2 Prepaid expenses and other current assets 6.7 Accounts receivable 4.1 Inventory 28.4 Property, plant and equipment 50.3 Deferred tax asset 4.1 Accounts payable and accrued expenses ( 10.2 ) Debt, current and long-term ( 8.8 ) Deferred revenue ( 19.8 ) Net tangible assets/(liabilities) 71.0 Backlog 1.8 Customer relationships 7.7 Net identifiable intangible assets/(liabilities) 9.5 Goodwill 122.2 Total purchase consideration $ 202.7 The fair value of the financial assets acquired includes receivables with a fair value of $ 4.1 million. The gross amount due is $ 8.5 million, of which $ 4.4 million is expected to be uncollectible in order to align with existing AMSC reserve policy. Inventory includes a $ 1.5 million adjustment to step-up the inventory balance to fair value consistent with the purchase price allocation. The fair value was determined based on the estimated selling price of the inventory, less the remaining manufacturing and selling cost and a normal profit margin on those manufacturing and selling efforts. The inventory step-up adjustment increased cost of revenue $ 0.4 million in the three and nine months ended December 31, 2025, as the inventory was sold. Backlog of $ 1.8 million was evaluated using the multi period excess earnings method under the income approach. The contracts do not provide for any guarantees to source all future requirements from the Company. The amortization method being utilized is economic consumption estimated over a sixteen -month period with the expense being allocated to cost of revenues. Customer relationships of $ 7.7 million relate to customers currently under contract and was based on a multi period excess earnings method under the income approach. The method of amortization being utilized is the economic consumption over 5 years with the expense being allocated to SG&A. Goodwill represents the value associated with the acquired workforce and expected synergies related to the business combination of the two companies. Goodwill resulting from the Comtrafo Acquisition was assigned to the Company's Grid segment. Goodwill recognized in the Comtrafo Acquisition is not deductible for tax purposes. The $ 4.1 million of deferred tax asset is primarily related to basis difference of intangibles, inventory and property, plant, and equipment. Acquisition of NWL On August 1, 2024 (the "NWL Acquisition Date"), the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding shares of capital stock of Megatran Industries, Inc. ("Megatran") (the "NWL Acquisition"). Megatran's wholly-owned subsidiary, NWL, Inc. (together with Megatran, "NWL"), is a U.S.-based global provider of engineered power conversion solutions for demanding industrial and military applications. The NWL Acquisition has been accounted for under the purchase method of accounting in accordance with ASC 805, Business Combinations . The Company allocated the purchase price to the assets acquired and liabilities assumed at their estimated fair values as of the Acquisition Date. The excess of the purchase price paid by the Company over the estimated fair value of net assets acquired has been recorded as goodwill. The total purchase price of approximately $ 61.4 million includes the fair value of shares of the Company’s common stock issued at closing, and cash paid, as follows (in millions): Cash payments $ 30.0 Issuance of 1,297,600 shares of Company’s common stock 31.4 Total consideration $ 61.4 At the NWL Acquisition Date, in addition to the $ 30.0 million cash, the Company valued the Company’s common stock, at $ 24.16 per share, which was the closing price on the day prior to the day that the Company completed the NWL Acquisition. NWL Acquisition costs of $ 1.1 million were included in selling, general and administrative ("SG&A") for the fiscal year ended March 31, 2025. The following table summarizes the allocation of the purchase price based on the estimated fair values of the assets acquired and liabilities assumed and related deferred income taxes in connection with the NWL Acquisition as of the NWL Acquisition Date and reflective of measurement period adjustments (in millions): Cash and cash equivalents $ 0.4 Equity-method investments 1.2 Prepaid expenses and other current assets 1.7 Accounts receivable 16.1 Inventory 23.1 Property, plant, and equipment 28.4 Accounts payable and accrued expenses ( 5.6 ) Deferred revenue ( 5.0 ) Deferred tax liability ( 5.6 ) Net tangible assets/(liabilities) 54.7 Backlog 0.7 Customer relationships 1.3 Net identifiable intangible assets 2.0 Goodwill 4.7 Total purchase consideration $ 61.4 The fair value of the financial assets acquired includes receivables with a fair value of $ 16.1 million. The gross amount due is $ 16.9 million, of which $ 0.8 million is expected to be uncollectible. Inventory includes a $ 0.7 million adjustment to step-up the inventory balance to fair value consistent with the purchase price allocation. The fair value was determined based on the estimated selling price of the inventory, less the remaining manufacturing and selling cost and a normal profit margin on those manufacturing and selling efforts. The inventory step-up adjustment increased cost of revenue $ 0.7 million for the fiscal year ended March 31, 2025 as the inventory was sold. Backlog of $ 0.7 million was evaluated using the multi period excess earnings method under the income approach. The contracts with customers do not provide for any guarantees to source all future requirements from the Company. The amortization method being utilized is economic consumption estimated over an eight -month period with the expense being allocated to cost of revenues. Customer relationships of $ 1.3 million relates to customers currently under contract and was determined based on a multi period excess earnings method under the income approach. The method of amortization being utilized is straight line over 10 years, as the results were not materially different from the economic consumption method, with the expense being allocated to SG&A. Goodwill represents the value associated with the acquired workforce and expected synergies related to the business combination of the two companies. Goodwill resulting from the NWL Acquisition was assigned to the Company’s Grid business segment. Goodwill recognized in the NWL Acquisition is not deductible for tax purposes. 10 Unaudited Pro Forma Operating Results The unaudited pro forma condensed consolidated statement of operations for the three and nine months ended December 31, 2025 and 2024 presented as if the NWL and Comtrafo Acquisitions had occurred on April 1, 2024, is as follows: Three Months Ended December 31, 2025 Nine Months Ended December 31, 2025 Three Months Ended December 31, 2024 Nine Months Ended December 31, 2024 Net Revenue $ 85,882 $ 248,163 $ 70,190 $ 222,273 Operating income 4,986 19,565 454 4,543 Net income $ 119,381 $ 134,171 $ 4,776 $ 12,956 Net income per common share Basic $ 2.61 $ 3.03 $ 0.12 $ 0.33 Diluted $ 2.56 $ 2.97 $ 0.11 $ 0.32 Shares - basic 45,692 44,225 41,376 39,764 Shares - diluted 46,673 45,163 42,178 40,454 The pro forma amounts include the historical operating results of the Company, NWL, and Comtrafo with appropriate adjustments that give effect to acquisition related costs, income taxes, intangible amortization resulting from the NWL and Comtrafo Acquisitions and certain conforming accounting policies of the Company. The pro forma amounts are not necessarily indicative of the operating results that would have occurred if the NWL and Comtrafo Acquisitions and related transactions had been completed at the beginning of the applicable periods presented. In addition, the pro forma amounts are not necessarily indicative of operating results in future periods. NWL contrib uted $ 14.1 million of revenue and $ 0.6 million of net loss for the Company for the three months ended December 31, 2025 . NWL contributed $ 48.3 million of revenue and $ 3.9 million in n et income for the Company for the nine months ended December 31, 2025 . Amortization expense of less than $ 0.1 million and $ 0.1 million is included in the three and nine months ended December 31, 2025 , respectively, as a result of the acquired intangible assets from the NWL Acquisition. Comtrafo contributed $ 4.6 million of revenue and $ 0.9 million in net income for the Company for the three and nine months ended December 31, 2025 . Amortization expense of $ 0.2 million is included in the three and nine months ended December 31, 2025 , as a result of the acquired intangible assets from the Comtrafo Acquisition. In addition, $ 0.4 million for the step-up basis assigned to acquired inventory was charged to cost of revenues in the three and nine months ended December 31, 2025 . 3. Revenue Recognition The Company’s revenues in its Grid segment are derived primarily through enabling the transmission and distribution of power, providing planning services that allow it to identify power grid needs and risks, and developing ship protection systems for the U.S. Navy. The Company’s revenues in its Wind segment are derived primarily through supplying advanced power electronics and control systems, licensing its highly engineered wind turbine designs, and providing extensive customer support services to wind turbine manufacturers. The Company records revenue based on a five -step model in accordance with Accounting Standards Codification ("ASC") 606. For its customer contracts, the Company identifies the performance obligations, determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when (or as) control of goods or services is transferred to the customer. For the three and nine months ended December 31, 2025 , 86 % and 89 %, respectively, of revenue was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time. For the three and nine months ended December 31, 2024 , 87 % and 88 %, respectively, of revenue was recognized at the point in time when control transferred to the customer, with the remainder being recognized over time. In the Company's equipment and system product line, each contract with a customer summarizes each product sold to a customer, which typically represents distinct performance obligations. A contract's transaction price is allocated to each distinct performance obligation using the respective standalone selling price which is determined primarily using the cost-plus expected margin approach and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company’s product sales transfer control to the customer in line with the contracted delivery terms and revenue is recorded at the point in time when title and risk transfer to the customer, which is primarily upon delivery, as the Company has determined that this is the point in time that control transfers to the customer. In the Company's service and technology development product line, there are several different types of transactions and each begins with a contract with a customer that summarizes each product sold to a customer, which typically represents distinct performance obligations. The technology development transactions are primarily for activities that have no alternative use and for which a profit can be expected throughout the life of the contract. In these cases, the revenue is recognized over time, but in the instances where the profit cannot be assured throughout the entire contract then the revenue is recognized at a point in time. Each contract's transaction price is allocated to each distinct performance obligation using the respective standalone selling price which is determined primarily using the cost-plus expected margin approach. The ongoing service transactions are for service contracts that provide benefit to the customer simultaneously as the Company performs its obligations, and therefore this revenue is recognized ratably over time throughout the effective period of these contracts. The transaction prices on these contracts are allocated based on an adjusted market approach which is re-assessed annually for reasonableness. The field service transactions include contracts for delivery of goods and completion of services made at the customer's requests, which are not deemed satisfied until the work has been completed and/or the requested goods have been delivered, so all of this revenue is recognized at the point in time when the control changes, and at allocated prices based on the adjusted market approach driven by standard price lists. The royalty transactions are related to certain contract terms on transactions in the Company's equipment and systems product line based on activity as specified in the contracts. The transaction prices of these agreements are calculated based on an adjusted market approach as specified in the contract. The Company reports royalty revenue for usage-based royalties when the sales have occurred. In circumstances when collectability is not assured and a contract does not exist under ASC 606, revenue is deferred until a non-refundable payment has been received for substantially all the amount that is due and there are no further remaining performance obligations. 11 The Company's service contracts can include a purchase order from a customer for specific goods in which each item is a distinct performance obligation satisfied at a point in time at which control of the goods is transferred to the customer. This transfer occurs based on the contracted delivery terms or when the requested service work has been completed. The transaction price for these goods is allocated based on the adjusted market approach considering similar transactions under similar circumstances. Service contracts are also derived from ongoing maintenance contracts and extended service-type warranty contracts. In these transactions, the Company is contracted to provide an ongoing service over a specified period of time. As the customer is consuming the benefits as the service is being provided, the revenue is recognized over time ratably. The Company’s policy is not to accept volume discounts, product returns, or rebates and allowances within its contracts. In the event a contract was approved with any of these terms, it would be evaluated for variable consideration, estimated and recorded as a reduction of revenue in the same period the related product revenue was recorded. The Company provides assurance-type warranties on all product sales for a term of typically one to three years, and extended service-type warranties are available for purchase at the customer's option for an additional term ranging up to four additional years. The Company accrues for the estimated warranty costs for assurance warranties at the time of sale based on historical warranty experience plus any known or expected changes in warranty exposure. For all extended service-type warranties, the Company recognizes the revenue ratably over time during the effective period of the services. Infrequently, the Company receives requests from customers to hold product being purchased from us for a valid business purpose. The Company recognizes revenues for such arrangements provided the transaction meets, at a minimum, the following criteria: the reason for the bill-and-hold arrangement must be substantive; the product must be identified separately as belonging to the customer; the product currently must be ready for physical transfer to the customer; the entity cannot have the ability to use the product or to direct it to another customer. Revenue for the nine months ended December 31, 2025 included $ 7.9 million from such held transactions. There were no such transactions for the three months ended December 31, 2025 and the three and nine months ended December 31, 2024 . The Company records revenue net of sales tax, value added tax, excise tax and other taxes collected concurrent with revenue-producing activities. The Company has elected to recognize the cost for freight and shipping when control over the products sold passes to customers and revenue is recognized. The Company has elected to recognize incremental costs of obtaining a contract as expense when incurred except in contracts where the amortization period would exceed twelve months. As of December 31, 2025 and March 31, 2025 , the Company's capitalized incremental contract costs were not material. The Company has elected not to adjust the promised amount of consideration for the effects of a significant financing component if the period of financing is twelve months or less. The Company has elected to recognize revenue based on the as invoiced practical expedient if there is a right to consideration from a customer in an amount that corresponds directly with the value of the Company's performance. The Company’s contracts with customers do not typically include extended payment terms and may include milestone billing over the life of the contract. Payment terms vary by contract type and type of customer and generally range from 30 to 60 days from delivery. 12 The following tables disaggregate the Company’s revenue by product line and by shipment destination (in thousands): Three Months Ended December 31, 2025 Nine Months Ended December 31, 2025 Product Line: Grid Wind Grid Wind Equipment and systems $ 56,004 $ 143 $ 156,300 $ 445 Services and technology development 7,183 11,199 21,316 34,688 Total $ 63,187 $ 11,342 $ 177,616 $ 35,133 Region: Americas $ 51,974 $ — $ 137,394 $ 16 Asia Pacific 7,253 11,326 29,583 35,022 EMEA 3,960 16 10,639 95 Total $ 63,187 $ 11,342 $ 177,616 $ 35,133 Three Months Ended December 31, 2024 Nine Months Ended December 31, 2024 Product Line: Grid Wind Grid Wind Equipment and systems $ 48,979 $ 8,768 $ 123,431 $ 23,357 Services and technology development 3,327 329 8,147 1,228 Total $ 52,306 $ 9,097 $ 131,578 $ 24,585 Region: Americas $ 47,737 $ - $ 121,696 $ 1 Asia Pacific 2,293 9,080 4,280 24,562 EMEA 2,276 17 5,602 22 Total $ 52,306 $ 9,097 $ 131,578 $ 24,585 As of December 31, 2025 and 2024 , the Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company's accounts receivable balance is made up entirely of customer contract related balances. Changes in the Company’s contract assets, which are included in “Unbilled accounts receivable” and “Deferred program costs” (see Note 8, “Accounts Receivable” and Note 9, “Inventory” for a reconciliation to the condensed consolidated balance sheets) and "Contract liabilities", which are included in the current portion and long-term portion of "Deferred revenue" in the Company’s condensed consolidated balance sheets, are as follows (in thousands): Unbilled Accounts Receivable Deferred Program Costs Contract Liabilities Beginning balance as of March 31, 2025 $ 6,376 $ 5,757 $ 76,133 Increase for balance acquired — — 19,783 Increases for costs incurred to fulfill performance obligations — 23,174 — Increase (decrease) due to customer billings ( 15,991 ) — 81,667 Decrease due to cost recognition on completed performance obligations — ( 21,767 ) — Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations 22,399 — ( 88,591 ) Other changes and FX impact 12 ( 1 ) 371 Ending balance as of December 31, 2025 $ 12,796 $ 7,163 $ 89,363 Unbilled Accounts Receivable Deferred Program Costs Contract Liabilities Beginning balance as of March 31, 2024 $ 6,150 $ 2,523 $ 57,829 Increase for balances acquired — — 5,049 Increases for costs incurred to fulfill performance obligations — 10,876 — Increase (decrease) due to customer billings ( 7,139 ) — 96,400 Decrease due to cost recognition on completed performance obligations — ( 6,133 ) — Increase (decrease) due to recognition of revenue based on transfer of control of performance obligations 6,120 — ( 75,410 ) Other changes and FX impact ( 18 ) ( 11 ) ( 540 ) Ending balance as of December 31, 2024 $ 5,113 $ 7,255 $ 83,328 13 The Company’s remaining performance obligations represent the unrecognized revenue value of the Company’s contractual commitments. The Company’s performance obligations may vary significantly each reporting period based on the timing of major new contractual commitments. As of December 31, 2025 , the Company had outstanding performance obligations on existing contracts under ASC 606 to be recognized in the next twelve months of approximately $ 253.5 million . There are also approximately $ 99.7 m illion o f outstanding performance obligations to be recognized over a period of thirteen to sixty months. The remaining performance obligations are subject to customer actions and therefore the timing of revenue recognition cannot be reasonably estimated. The following table sets forth customers who represented 10% or more of the Company’s total revenues for the three and nine months ended December 31, 2025 , and 2024: Three Months Ended Nine Months Ended Reportable December 31, December 31, Segment 2025 2024 2025 2024 Inox Wind Limited Wind 14 % 10 % 15 % 13 % Innomotics LLC Grid <10% 14 % <10% <10% Fuji Bridex Pte Ltd Grid <10% <10% 11 % <10% 4. Stock-Based Compensation The Company accounts for its stock-based compensation at fair value. The following table summarizes stock-based compensation expense by financial statement line item for the three and nine months ended December 31, 2025 , and 2024 (in thousands): Three Months Ended December 31, Nine Months Ended December 31, 2025 2024 2025 2024 Cost of revenues $ 269 $ 211 $ 875 $ 309 Research and development 504 442 1,703 697 Selling, general and administrative 3,049 2,208 9,536 3,927 Total $ 3,822 $ 2,861 $ 12,114 $ 4,933 The Company issued no shares and 887,000 shares of restricted stock during the three and nine months ended December 31, 2025 , respectively. The Company issued no shares and 39,445 shares of immediately vested common stock during the three and nine months ended December 31, 2025 , respectively. The Company issued 30,000 shares and 872,500 shares of restricted stock during the three and nine months ended December 31, 2024 , respectively. The Company issued no shares and 19,200 shares of immediately vested common stock during the three and nine months ended December 31, 2024 , respectively. These restricted stock awards generally vest over 2 - 3 years. Awards for restricted stock include both time-based and performance-based awards. For options and restricted stock awards that vest upon the passage of time, expense is being recorded over the vesting period. Performance-based awards are expensed over the requisite service period based on probability of achievement. The Company granted no stock options and 2,112 stock options during the three and nine months ended December 31, 2025 , respectively. The Company granted no stock options during the three and nine months ended December 31, 2024 . The stock options granted during the nine months ended December 31, 2025 will vest over 2 years. The estimated fair value of the Company’s stock-based awards, less expected annual forfeitures, is amortized over the awards’ service period. There were less than $ 0.1 million of unrecognized compensation costs for unvested stock options as of December 31, 2025 . This expense will be recognized over a weighted average period of approximately 1.4 years. The total unrecognized compensation cost for unvested outstanding restricted stock was $ 24.9 mi llion as of December 31, 2025 . This expense will be recognized over a weighted-average expense period of approximately 1.7 years. 14 The weighted average assumptions used in the Black Scholes valuation model for stock options granted during the nine months ended December 31, 2025 are as follows: Nine Months Ended December 31, 2025 Expected volatility 74.01 % Risk-free interest rate 4.19 % Expected life (years) 6.31 Dividend yield None 5. Computation of Net Income per Share of Common Stock Basic net income per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Where applicable, diluted EPS is computed by dividing the net income by the weighted-average number of common shares and dilutive common equivalent shares outstanding during the period, calculated using the treasury stock method. Common equivalent shares include the effect of restricted stock, exercise of stock options and warrants and contingently issuable shares. Stock options and warrants that are out-of-the-money with exercise prices greater than the average market price of the underlying common shares and shares of performance-based restricted stock where the contingency was not met are excluded from the computation of diluted EPS as the effect of their inclusion would be anti-dilutive. For the three months ended December 31, 2025 , 496,105 shares were not included in the calculation of diluted EPS. Of these, 495,834 were shares of performance-based restricted stock where the contingency was not met and 271 shares relate to outstanding stock options that were considered anti-dilutive. For the nine months ended December 31, 2025 , 508,391 shares were not included in the calculation of diluted EPS. Of these, 507,895 were shares of performance-based restricted stock where the contingency was not met and 496 shares relate to outstanding stock options that were considered anti-dilutive. For the three months ended December 31, 2024 , 475,971 shares were not included in the calculation of diluted EPS. Of these, 475,971 were shares of performance-based restricted stock where the contingency was not met. For the nine months ended December 31, 2024 , 471,985 shares were not included in the calculation of diluted EPS. Of these, 471,768 were shares of performance-based restricted stock where the contingency was not met. Of the remaining shares, 217 shares relate to outstanding stock awards that were considered anti-dilutive. The following table reconciles the numerators and denominators of the earnings per share calculation for the three and nine months ended December 31, 2025 , and 2024 (in thousands, except per share data): Three Months Ended December 31, Nine Months Ended December 31, 2025 2024 2025 2024 Numerator: Net income $ 117,806 $ 2,465 $ 129,280 $ 4,828 Denominator: Weighted-average shares of common stock outstanding 45,872 39,450 43,980 38,127 Weighted-average shares subject to repurchase ( 1,915 ) ( 1,789 ) ( 1,943 ) ( 1,361 ) Shares used in per-share calculation ― basic 43,957 37,661 42,036 36,766 Shares used in per-share calculation ― diluted 44,939 38,463 42,975 37,457 Net income per share ― basic $ 2.68 $ 0.07 $ 3.08 $ 0.13 Net income per share ― diluted $ 2.62 $ 0.06 $ 3.01 $ 0.13 6. Goodwill and Other Intangibles Goodwill Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets when accounted for using the purchase method of accounting. Goodwill is not amortized but reviewed for impairment. The Company's goodwill balance relates to the Comtrafo Acquisition in fiscal 2025, the NWL Acquisition in fiscal 2024, the acquisition of Neeltran, Inc. in fiscal 2021 , the Northeast Power Systems, Inc. ("NEPSI") acquisition in fiscal 2020 , and the acquisition of Infinia Technology Corporation in fiscal 2017 and is reported in the Grid business segment. Goodwill is reviewed annually on February 28th and whenever events or changes in circumstances indicate that the carrying value of the goodwill might not be recoverable. Goodwill increased by $ 122.2 million during the three and nine months ended December 31, 2025 , related to the Comtrafo Acquisition. Changes in the Company’s goodwill are as follows (in thousands): Goodwill March 31, 2025 $ 48,164 Balance acquired - Comtrafo 122,175 Currency translation adjustment ( 3,967 ) December 31, 2025 $ 166,373 15 The Company did not identify any triggers to assess impairment in the three and nine months ended December 31, 2025 or 2024. Other Intangibles Intangible assets at December 31, 2025 and March 31, 2025 consisted of the following (in thousands): December 31, 2025 March 31, 2025 Gross Amount Accumulated Amortization Net Book Value Gross Amount Accumulated Amortization Net Book Value Estimated Useful Life Backlog 3,095 ( 1,488 ) 1,607 1,381 ( 1,381 ) — 2 Trade name and trademarks 1,800 1,800 1,800 — 1,800 Indefinite Customer relationships 18,392 ( 8,720 ) 9,671 10,880 ( 7,901 ) 2,980 7 - 10 Core technology and know-how 5,970 ( 5,197 ) 773 5,970 ( 4,834 ) 1,136 5 - 10 Intangible assets $ 29,257 $ ( 15,405 ) $ 13,852 $ 20,031 $ ( 14,116 ) $ 5,916 The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $ 0.5 million and $ 1.2 million in the three and nine months ended December 31, 2025 , respectively. The Company recorded intangible amortization expense related to customer relationship and core technology and know-how of $ 0.4 million and $ 1.3 million in the three and nine months ended December 31, 2024 . The Company recorded intangible amortization expense related to backlog of $ 0.1 million in the three and nine months ended December 31, 2025 . The Company recorded intangible amortization expense related to backlog of $ 0.3 million and 0.4 million in the three and nine months ended December 31, 2024 , respectively. Expected future amortization expense related to intangible assets is as follows (in thousands): Years ending March 31, Total 2026 (remaining) 1,175 2027 2,735 2028 3,217 2029 2,255 2030 1,372 Thereafter 1,298 Total $ 12,052 The Company's intangible assets relate entirely to the Grid business segment operations in the United States and Brazil. The following tables summarizes the Company’s intangibles by geography (in thousands): December 31, 2025 March 31, 2025 U.S. $ 4,904 $ 5,916 Brazil 8,947 — Total $ 13,852 $ 5,916 16 7. Fair Value Measurements A valuation hierarchy for disclosure of the inputs to valuation used to measure fair value has been established. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 - Unobservable inputs that reflect the Company’s assumptions that market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available, including its own data. The Company provides a gross presentation of activity within Level 3 measurement roll-forward and details of transfers in and out of Level 1 and 2 measurements. A change in the hierarchy of an investment from its current level is reflected in the period during which the pricing methodology of such investment changes. Disclosure of the transfer of securities from Level 1 to Level 2 or Level 3 is made in the event that the related security is significant to total cash and investments. The Company did not have any transfers of assets and liabilities from Level 1, Level 2 or Level 3 of the fair value measurement hierarchy during the three or nine months ended December 31, 2025 . A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Valuation Techniques Cash Equivalents Cash equivalents consist of highly liquid instruments with maturities of three months or less that are regarded as high quality, low risk investments and are measured using such inputs as quoted prices, and are classified within Level 1 of the valuation hierarchy. Cash equivalents consist principally of money market accounts. Short-term Cash Instruments Short-term cash instruments consist of highly liquid instruments with maturities of three months or less that are regarded as high quality, low risk investments and are measured using such inputs as quoted prices in markets that are not active, and are classified within Level 2 of the valuation hierarchy. Short-term cash instruments consist principally of certificates of deposits. Contingent Consideration Contingent consideration relates to the earnout payment set forth in the Stock Exchange Agreement governing the acquisition of Comtrafo that provides the selling stockholders may receive an additional sum of cash upon the achievement of certain specified earnings before interest, taxes, depreciation, and amortization ("EBITDA") objectives during the three years following the Comtrafo Acquisition Date. See Note 14, "Contingent Consideration" for further discussion. The Company relied on a Monte Carlo method to determine the fair value of the contingent consideration on the closing of the acquisition of Comtrafo and continues to revalue the fair value of the contingent consideration using the same method at each subsequent balance sheet date until the contingencies are resolved and the cash to be paid is determined, with the change in fair value recorded in the current period operating loss. For the period ended December 31, 2025 , the change in fair value from December 5, 2025 was not considered material and as such no adjustment was recorded. 17 The following table provides the assets and liabilities carried at fair value on a recurring basis, measured as of December 31, 2025 and March 31, 2025 (in thousands): Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2025: Assets: Cash equivalents $ 98,468 $ 98,468 $ — $ — Short-term cash instruments $ 1,335 $ — $ 1,335 $ — Liabilities: Contingent consideration $ 34,737 $ — $ — $ 34,737 Total Carrying Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2025 Assets: Cash equivalents $ 51,230 $ 51,230 $ — $ — Short-term cash instruments $ 1,404 $ — $ 1,404 $ — The table below reflects the activity for the Company's contingent consideration derivative liability measured at fair value on a recurring basis (in thousands): Comtrafo Acquisition Contingent Consideration Balance at March 31, 2025 $ — Issuance of contingent consideration 35,902 Change in fair value — FX Impact ( 1,165 ) Balance at December 31, 2025 $ 34,737 8. Accounts Receivable Accounts receivable at December 31, 2025 and March 31, 2025 consisted of the following (in thousands): December 31, 2025 March 31, 2025 Accounts receivable (billed) $ 49,785 $ 39,810 Accounts receivable (unbilled) 12,796 6,376 Accounts receivable $ 62,581 $ 46,186 18 9. Inventory Inventory, net of reserves, at December 31, 2025 and March 31, 2025 consisted of the following (in thousands): December 31, 2025 March 31, 2025 Raw materials $ 53,480 $ 35,892 Work-in-process 32,108 19,633 Finished goods 12,657 9,888 Deferred program costs 7,163 5,756 Net inventory $ 105,408 $ 71,169 The Company recorded inventory write-downs of $ 0.4 million f or the three months ended December 31, 2025 and 2024 . The Company recorded inventory write-downs of $ 2.2 million and $ 1.2 million f or the nine months ended December 31, 2025 and 2024 , respectively. These write-downs were based on the Company's evaluation of its inventory on hand for excess quantities and obsolescence. Deferred program costs as of December 31, 2025 and March 31, 2025 primarily represent costs incurred on programs where the Company needs to complete performance obligations before the related revenue and costs will be recognized. 19 10. Property, Plant and Equipment The cost and accumulated depreciation of property, plant and equipment at December 31, 2025 and March 31, 2025 are as follows (in thousands): December 31, 2025 March 31, 2025 Land $ 37,059 $ 22,650 Construction in progress – equipment 938 1,371 Buildings 29,854 7,528 Equipment and software 59,443 47,774 Furniture and fixtures 1,866 1,672 Leasehold improvements 8,334 7,969 Property, plant and equipment, gross 137,494 88,964 Less accumulated depreciation ( 50,043 ) ( 50,392 ) Property, plant and equipment, net $ 87,451 $ 38,572 Depreciation expense was $ 1.0 million and $ 0.9 million for the three months ended December 31, 2025 and 2024 , respectively. Depreciation expense was $ 2.9 million and $ 2.3 million for the nine months ended December 31, 2025 and 2024 , respectively. The increase in land, building, and equipment and software relates to the property added as part of the Comtrafo Acquisition. 11. Equity-Method Investments Investment in NWL Pacific Inc. Co., LTD The Company has a 50 % ownership in NWL Pacific Inc. Co., LTD ("NWL Pacific"). The investment represents the Company's interest in NWL Pacific. The investment is a joint venture in South Korea established on May 12, 1998. The Company treats the equity investment in the condensed consolidated financial statements under the equity method. Equity method investments are equity securities in entities the Company does not control but over which it has the ability to exercise significant influence. These investments are accounted for under the equity method of accounting in accordance with ASC 323, Investments — Equity Method and Joint Ventures . Equity method investments are measured at cost minus impairment, if any, plus or minus the Company’s share of an investee’s income or loss, less distributions received. As of December 31, 2025 the Compa ny did not have material accounts receivable nor accounts payable balances wi th NWL Pacific. The Company's investment in NWL Pacific was $ 1.6 million and $ 1.1 million as of December 31, 2025 and March 31, 2025, respectively. The table below presents the summarized financial information for periods presented post-acquisition, as provided to the Company by the investee, for the unconsolidated company (in thousands): Three Months Ended December 31, Nine Months Ended December 31, 2025 2025 Net revenue $ 2,317 $ 6,003 Gross profit 854 2,508 Income from operation 334 1,089 Net income $ 354 $ 1,221 12. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses at December 31, 2025 and March 31, 2025 consisted of the following (in thousands): December 31, 2025 March 31, 2025 Accounts payable $ 16,186 $ 6,733 Accrued inventories in-transit 1,855 2,111 Accrued other miscellaneous expenses 5,903 3,600 Accrued contract loss - 97 Advanced deposits 1,630 1,267 Accrued compensation 12,768 13,418 Income taxes payable 1,895 305 Accrued product warranty 4,066 3,033 Accrued commissions 2,299 1,718 Total $ 46,602 $ 32,282 The Company generally provides a one to three year warranty on its products, commencing upon delivery or installation where applicable. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. 20 Product warranty activity was as follows (in thousands): Three Months Ended December 31, Nine Months Ended December 31, 2025 2024 2025 2024 Balance at beginning of period $ 3,333 $ 3,110 $ 3,033 $ 2,363 Acquired warranty obligations 450 — 450 637 Provisions for warranties during the period 551 348 1,619 1,122 Settlements during the period ( 268 ) ( 415 ) ( 1,036 ) ( 1,079 ) Balance at end of period $ 4,066 $ 3,043 $ 4,066 $ 3,043 13. Income Taxes The Company recorded income tax benefits of $ 112.4 million and $ 112.1 million for the three and nine months ended December 31, 2025 , respectively, and income tax benefit of $ 0.1 million and $ 4.9 million for the three and nine months ended December 31, 2024 , respectively. On a quarterly basis, the Company reassesses the valuation allowance on deferred income tax assets, weighing positive and negative evidence to assess the recoverability of the deferred tax assets. As of December 31, 2025 , the Company recorded a $ 113.1 million non-cash income tax benefit related to the release of a substantial portion of its valuation allowance against deferred tax assets. This was based on the Company's evaluation of the positive evidence, including cumulative income position over the three -year period December 31, 2025 , revenue growth, current profitability, expectations regarding future forecasted income, and negative evidence, including uncertainty in economic and political environments from industry competition and dependence on government contracts. This release of the valuation allowance resulted in the recognition of a deferred tax asset and a corresponding increase to income tax benefit in the current period, the effect of which is an increase in reported net income. On July 4, 2025, the reconciliation bill, commonly referred to as the One Big Beautiful Bill ("OBBB") was signed into law, which includes a broad range of tax reform provisions that may affect the company's financial results. The OBBB allows an elective deduction for domestic Research and Development (R&D), a reinstatement of elective 100% first -year bonus depreciation, and a more favorable tax rate on Foreign-derived Deduction Eligible Income and income from non-U.S. subsidiaries (Net CFC Tested Income), among other provisions. The Company has performed an initial evaluation of the impact of the OBBB on the Company's effective tax rate and deferred tax assets in 2025 and future periods. Based on this initial evaluation, the Company believes the tax reform provisions will not have a material impact on the Company’s consolidated financial statements and related disclosures. We will continue to assess the implications of the OBBB, and our tax provision may be further impacted as additional guidance from the U.S. Department of the Treasury is released. Accounting for income taxes requires a two -step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if, based on the technical merits, it is more likely than not the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company re-evaluates these uncertain tax positions on a quarterly basis. The evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision. The Company did not identify any uncertain tax positions in the nine months ended December 31, 2025 and did not have any gross unrecognized tax benefits as of December 31, 2025 . 14. Contingent Consideration NEPSI Contingent Consideration On October 1, 2020 ( the "NEPSI Acquisition Date"), the Company entered into a Stock Purchase Agreement (the "NEPSI Stock Purchase Agreement") with the selling stockholders named therein. Pursuant to the terms of the NEPSI Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding (i) shares of capital stock of NEPSI, and (ii) membership interests of Northeast Power Realty, LLC, a New York limited liability company, which holds the real property that serves as NEPSI's headquarters (the "NEPSI Acquisition"). NEPSI is a U.S.-based global provider of medium-voltage metal-enclosed power capacitor banks and harmonic filter banks for use on electric power systems. NEPSI is a wholly-owned subsidiary of the Company and is operated by its Grid business segment. The purchase price was $ 26.0 million in cash and 873,657 restricted shares of common stock of the Company. As part of the transaction, the selling stockholders were entitled to receive up to an additional 1,000,000 shares of common stock of the Company upon the achievement of certain specified revenue objectives during varying periods of up to four years following closing of the NEPSI Acquisition. During the year ended March 31, 2024, the Company issued 399,999 shares of common stock and cash in lieu of a fractional share of common stock, related to the achievement of specified revenue objectives in connection with the NEPSI Acquisition. One specified revenue objective, which would have earned the selling stockholders 300,000 shares of Company common stock, was not achieved. NEPSI recognized revenues in excess of $ 120.0 million during the four years after the NEPSI Acquisition Date. As a result, during the quarter ended September 30, 2024, the Company issued 300,000 shares of common stock of the Company to the selling stockholders, following certification of the achievement of the specified earnout revenue objective. As of September 30, 2024, the Company had settled all outstanding contingent consideration under the NEPSI Stock Purchase Agreement. The Company evaluated the NEPSI Acquisition earnout payment set forth in the NEPSI Stock Purchase Agreement, which was expected to require settlement in the Company's common stock, and determined the contingent consideration qualified for liability classification and derivative treatment under ASC 815, Derivatives and Hedging . As a result, for the periods in which the Company had outstanding contingent consideration, the fair value of the contingent consideration was remeasured and the resulting gain or loss was recognized in operating expenses until the share amount was fixed. Following is a summary of the key assumptions used in a Monte Carlo simulation to calculate the fair value of contingent consideration related to the NEPSI Acquisition: June 30, March 31, Fiscal Year 2024 2024 2024 Revenue risk premium 5.50 % 5.50 % Revenue volatility 27.5 % 24.8 % Stock Price $ 23.39 $ 13.51 Payment delay (days) 80 80 Fair value (millions) $ 7.0 $ 3.1 NWL Contingent Consideration On August 1, 2024 , the Company entered into the Stock Purchase Agreement with the selling stockholders named therein. Pursuant to the terms of the Stock Purchase Agreement and concurrently with entering into such agreement, the Company acquired all of the issued and outstanding shares of Megatran for aggregate consideration in an amount equal to $ 61.4 million which consideration amount was subject to various adjustments set forth in the Stock Purchase Agreement. The value of the contingent consideration to make the sellers whole was determined to be de minimis at the time of the NWL Acquisition. On September 23, 2024, the Company paid $ 3.3 million to the selling stockholders, which was calculated based on the agreed upon formula set forth in the Stock Purchase Agreement. As of September 30, 2024, there were no remaining obligations to the selling stockholders of Megatran. 21 Comtrafo Contingent Consideration On December 5, 2025, the Company entered into the Stock Exchange Agreement with the selling stockholders named therein. Pursuant to the terms of the Stock Exchange Agreement, the Company has agreed to pay the selling stockholders of the Comtrafo Acquisition an additional amount in cash upon the achievement of specified EBITDA objectives during the three years following the Comtrafo Acquisition Date. The Company evaluated the Comtrafo Acquisition earnout payment set forth in the Comtrafo Stock Exchange Agreement (See Note 2, "Acquisitions" for further details), which will require settlement in cash, and determined the contingent consideration qualified for liability classification. As a result, for each period, the fair value of the contingent consideration will be remeasured, and the resulting gain or loss will be recognized until the cash amount is fixed. Following is a summary of the key assumptions used in a Monte Carlo simulation to calculate the fair value of contingent consideration related to the Comtrafo Acquisition: December 05, Fiscal Year 2025 2025 EBITDA Risk Premium (continuous) 2.10 % EBITDA Volatility 25.0 % Credit Spread (semiannual) 1.9 % Payment delay (days) 89 Fair value (millions) $ 35.9 The Company performed an analysis on the change in fair value through December 31, 2025 and concluded the impact was immaterial to the financial statements. The Company recorded no gains or losses from the changes in fair value of the contingent consideration in the three and nine months ended December 31, 2025 . The Company recorded a loss of $ 6.7 million resulting from the increases in the fair value of the NEPSI and NWL contingent consideration in the nine months ended December 31, 2024 . 15. Debt As part of the Comtrafo Acquisition, the Company identified three debt agreements that Comtrafo had entered into prior to the Comtrafo Acquisition Date. Based on the current maturity schedules of the respective agreements, the Company recorded current and long-term debt of $ 1.6 million and $ 6.1 million, respectively during the three months ended December 31, 2025 . 16. Leases Operating Leases All significant lease arrangements are recognized at lease commencement. Operating lease right–of-use assets and lease liabilities are recognized at commencement. The operating lease right-of-use asset includes any lease payments related to initial direct cost and prepayments and excludes any lease incentives. Lease expense is recognized on a straight-line basis over the lease term. The Company enters into a variety of operating lease agreements through the normal course of its business, but primarily real estate leases to support its operations. The real estate lease agreements generally provide for fixed minimum rental payments and the payment of real estate taxes and insurance. Many of these real estate leases have one or more renewal options that allow the Company, at its discretion, to renew the lease for varying periods up to five years or to terminate the lease. Only renewal options or termination rights that the Company believed were likely to be exercised were included in the lease calculations. The Company also enters into leases for vehicles, IT equipment and service agreements, and other leases related to its manufacturing operations that are also included in the right-of-use assets and lease liability accounts if they are for a term of longer than twelve months. However, many of these leases are either short-term in nature or immaterial. The Company has made the policy election to exclude short-term leases from the condensed consolidated balance sheets. 22 Supplemental balance sheet information related to leases at December 31, 2025 , and March 31, 2025 are as follows (in thousands): December 31, 2025 March 31, 2025 Leases: Right-of-use assets – Operating $ 3,655 $ 3,829 Total right-of-use assets 3,655 3,829 Lease liabilities – ST Operating $ 1,078 $ 685 Lease liabilities – LT Operating 2,560 2,684 Total lease liabilities $ 3,638 $ 3,369 Weighted-average remaining lease term 4.46 4.94 Weighted-average discount rate 15.51 % 14.94 % The costs related to the Company's operating leases for the three and nine months ended December 31, 2025 and 2024 , are as follows (in thousands): Three Months Ended Nine Months Ended December 31, 2025 December 31, 2025 Operating Leases: Operating lease costs – fixed $ 425 $ 1,259 Operating lease costs – variable 45 136 Short-term lease costs 42 125 Total lease costs $ 512 $ 1,520 Three Months Ended Nine Months Ended December 31, 2024 December 31, 2024 Operating Leases: Operating lease costs – fixed $ 407 $ 1,052 Operating lease costs – variable 21 110 Short-term lease costs 38 116 Total lease costs $ 466 $ 1,278 23 The Company’s estimated minimum future lease obligations under the Company's leases are as follows (in thousands): Leases Year ending March 31, 2026 (remaining) $ 305 2027 1,583 2028 1,026 2029 420 2030 350 Thereafter 1,242 Total minimum lease payments 4,926 Less: interest ( 1,288 ) Present value of lease liabilities $ 3,638 17. Commitments and Contingencies Legal Contingencies From time to time, the Company is involved in legal and administrative proceedings and claims of various types. The Company records a liability in its condensed consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary to make the condensed consolidated financial statements not misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in its condensed consolidated financial statements. Other The Company enters into long-term construction contracts with customers that require the Company to obtain performance bonds. The Company is required to deposit an amount equivalent to some or all the face amount of the performance bonds into an escrow account until the termination of the bond. When the performance conditions are met, amounts deposited as collateral for the performance bonds are returned to the Company. In addition, the Company has various contractual arrangements in which minimum quantities of goods or services have been committed to be purchased on an annual basis. AMSC Brazil, through Comtrafo, entered into an agreement to purchase additional real estate within the twelve months following the Comtrafo Acquisition Date for 37,246,459 Brazilian Real upon successful re-zoning classification of such real estate. As of December 31, 2025 , the Company had $ 3.3 million of restricted cash included in long-term assets and $ 2.8 million of restricted cash included in current assets. As of March 31, 2025 , the Company had $ 4.3 million of restricted cash included in long-term assets and $ 1.6 million of restricted cash included in current assets. These amounts included in restricted cash primarily represent deposits to secure letters of credit for various supply contracts and long-term projects or collateral deposits. These deposits are held in interest bearing accounts. 24 18. Business Segments The Company reports its financial results in two reportable business segments: Grid and Wind. In accordance with ASC 280 , Segment Reporting , the Company has identified two operating segments. The Company's operating segments reflect the way in which internally-reported financial information is used to make decisions and allocate resources. Through the Company’s power grid offerings, the Grid business segment enables electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute smarter, cleaner and better power through its transmission planning services, power electronics, and superconductor-based systems. The sales process is enabled by transmission planning services that allow it to identify power grid congestion, poor power quality and other risks, which helps the Company determine how its solutions can improve network performance. These services often lead to sales of grid interconnection solutions for wind farms and solar power plants, power quality systems, and transmission and distribution cable systems. The Company also sells ship protection products to the U.S. Navy through its Grid business segment. Through the Company’s wind power offerings, the Wind business segment enables manufacturers to field highly competitive wind turbines through its advanced power electronics and control system products, engineered designs, and support services. The Company supplies advanced power electronics and control systems, licenses its highly engineered wind turbine designs, and provides extensive customer support services to wind turbine manufacturers. The Company’s design portfolio includes a broad range of drive trains and power ratings of 2 megawatts ("MWs") and higher. The Company provides a broad range of power electronics and software-based control systems that are highly integrated and designed for optimized performance, efficiency, and grid compatibility. AMSC’s Chief Executive Officer Daniel McGahn is the chief operating decision maker. The chief operating decision maker uses segment operating income (loss) to allocate resources (including employees, property, and financial or capital resources) for each segment predominantly in the annual budget and forecasting process. The chief operating decision maker considers budget-to-actual variances on a monthly basis for segment operating income (loss) when making decisions about allocating capital and personnel to the segments. The chief operating decision maker also uses segment operating income or loss to assess the performance for each segment by comparing the results and return on assets of each segment with one another and in the compensation of certain employees. 25 The following tables (i) summarize total sales by segment and (ii) reconcile each segment's sales to their respective segment operating income, including segment operating expenses, for each of the three and nine months ended December 31, 2025 and 2024 (in thousands): Three Months Ended December 31, 2025 Nine Months Ended December 31, 2025 Grid Wind Unallocated Total Grid Wind Unallocated Total Segment operating income: Revenues $ 63,187 $ 11,342 $ - $ 74,529 $ 177,616 $ 35,133 $ - $ 212,749 Less (a) Segment other operating expenses (b) 61,156 10,014 - 71,170 170,152 30,630 - 200,782 Segment operating income $ 2,031 $ 1,328 $ - $ 3,359 $ 7,464 $ 4,503 $ - $ 11,967 (a) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. (b) Segment other operating expense includes cost of sales, research and development expense, selling general, and administrative expense, and amortization of acquisition related intangibles. Three Months Ended December 31, 2024 Nine Months Ended December 31, 2024 Grid Wind Unallocated Total Grid Wind Unallocated Total Segment operating income: Revenues $ 52,306 $ 9,097 $ - $ 61,403 $ 131,578 $ 24,585 $ - $ 156,163 Less (a) Segment other operating expenses (b) 52,072 8,016 - 60,088 130,006 22,198 6,689 158,893 Segment operating income (loss) $ 234 $ 1,081 $ - $ 1,315 $ 1,572 $ 2,387 $ ( 6,689 ) $ ( 2,730 ) (a) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. (b) Segment other operating expense includes cost of sales, research and development expense, selling general, and administrative expense, amortization of acquisition related intangibles, and gain/loss on contingent consideration. Unallocated corporate expenses consisted of net losses resulting from activity relating to both the NEPSI earnout and the Megatran make whole payment which resulted in $ 6.7 million in increases in the fair value of contingent consideration in the nine months ended December 31, 2024 . The reconciliation of segment operating income (loss) to consolidated income (loss) before income taxes for the three and nine months ended December 31, 2025 and 2024 is as follows (in thousands): Three Months Ended December 31, Nine Months Ended December 31, 2025 2025 2024 2025 2024 Operating income (loss): $ 3,359 $ 1,315 $ 11,967 $ ( 2,730 ) Interest income, net 1,997 802 5,198 $ 2,901 Other (expense)/income, net 77 272 57 ( 214 ) Income (loss) before income tax benefit $ 5,433 $ 2,389 $ 17,222 $ ( 43 ) Depreciation and amortization expense by segment for the three and nine months ended December 31, 2025 and 2024 is as follows (in thousands): Three Months Ended December 31, Nine Months Ended December 31, 2025 2025 2024 2025 2024 Grid $ 1,726 $ 1,567 $ 4,089 $ 3,920 Wind 63 22 95 $ 64 Total $ 1,789 $ 1,589 $ 4,184 $ 3,984 The accounting policies of the business segments are the same as those for the consolidated Company. The Company’s business segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities. The Company evaluates performance based upon several factors, of which the primary financial measures are segment revenues and segment operating income (loss). The disaggregated financial results of the segments reflect allocation of certain functional expense categories consistent with the basis and manner in which Company management internally disaggregates financial information for the purpose of assisting in making internal operating decisions. In addition, certain corporate expenses which the Company does not believe are specifically attributable or allocable to either of the two business segments have been excluded from the segment operating income (loss). Total assets for the two business segments as of December 31, 2025 and March 31, 2025 , are as follows (in thousands): December 31, 2025 March 31, 2025 Grid $ 558,431 $ 211,520 Wind 13,969 13,697 Corporate assets 147,134 85,304 Total $ 719,534 $ 310,521 26 19. Recent Accounting Pronouncements In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures . The amendments in ASU 2023 - 09 address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. Following the release of ASU 2023 - 09 in December 2023, the effective date was annual reporting periods beginning after December 15, 2024. As of December 31, 2025 , the Company is evaluating the impact on its consolidated financial statements. In March 2024, the FASB issued ASU 2024 - 02, Codification Improvements — Amendments to Remove References to the Concepts Statements . The amendments in ASU 2024 - 02 contain amendments to the Codification that remove references to various FASB Concepts Statements. Following the release of ASU 2024 - 02 in March 2024, the effective date was annual reporting periods beginning after December 15, 2024. As of December 31, 2025 , the Company is evaluating the impact on its consolidated financial statements. In November 2024, the FASB issued ASU 2024 - 03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures . The amendments in ASU 2024 - 03 address investor requests for more disclosure of disaggregated financial reporting information about expenses presented in the income statement. Following the release of ASU 2024 - 03 in November 2024, the effective date will be annual reporting periods beginning after December 15, 2026. As of December 31, 2025 , the Company is evaluating the impact on its consolidated financial statements. 20. Subsequent Events The Company has performed an evaluation of subsequent events through the time of filing this Quarterly Report on Form 10 -Q with the SEC and has determined that there are no such events to report. 27 AMERICAN SUPERCONDUCTOR CORPORATION MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS