What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-02-04 · 101 added, 137 removed, 124 unchanged (66% of the section changed)

8 unchanged sentences

These important factors include, but are not limited to:

We have not been historically profitable, which may recur in the future.

Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter;

While we generated positive operating cash flow in fiscal 2024 and the prior year, we have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us;

Our technology and products could infringe intellectual property rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages and disrupt our business;

Changes in exchange rates could adversely affect our results of operations;

If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data;

We may be required to issue performance bonds, which restricts our ability to access any cash used as collateral for the bonds;

We may not realize all of the sales expected from our backlog of orders and contracts;

If we fail to implement our business strategy successfully, our financial performance could be harmed;

We may not realize all of the sales expected from our backlog of orders and contracts;

We rely upon third-party suppliers for the components and subassemblies of many of our Grid and Wind products, making us vulnerable to supply shortages and price fluctuations, which could harm our business;

We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits;

Our business and operations may be materially adversely impacted in the event of a failure or security breach of our or any critical third parties'

IT Systems or Confidential Information;

Our contracts with the U.S.

3 unchanged sentences

government defense spending could negatively impact our financial position, results of operations, liquidity and overall business;

Our business and operations may be materially adversely impacted in the event of a failure or security breach of our or any critical third parties' IT Systems or Confidential Information;

Failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results;

Our performance on contracts with the U.S.

Department of Defense may result in restrictions to our ability to repurchase our common stock or U.S.

government denial of Foreign Military Sales or ceasing of assistance for international Direct Commercial Sales;

Failure to comply with evolving data privacy and data protection laws, regulations, and other obligations, or to otherwise protect personal data, may adversely impact our business and financial results;

Our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects;

We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits;

A significant portion of our Wind segment revenues are derived from a single customer.

If this customer’s business is negatively affected, it could adversely impact our business;

If this customer'

s business is negatively affected, it could adversely impact our business;

Our success in addressing the wind energy market is dependent on the manufacturers that license our designs;

Many of our revenue opportunities are dependent upon subcontractors and other business collaborators;

Problems with product quality or product performance may cause us to incur warranty expenses and may damage our market reputation and prevent us from achieving increased sales and market share;

Problems with product quality or product performance may cause us to incur warranty expenses or product liability charges and may damage our market reputation and prevent us from achieving increased sales and market share;

Many of our customers outside of the United States may be either directly or indirectly related to governmental entities, and we could be adversely affected by violations of the United States Foreign Corrupt Practices Act and similar worldwide anti-bribery laws outside the United States;

We have had limited success marketing and selling our superconductor products and system-level solutions, and our failure to more broadly market and sell our products and solutions could lower our revenue and cash flow;

We have had limited success marketing and selling our superconductor products and system-level solutions, including our REG system, and our failure to more broadly market and sell our products and solutions could lower our revenue and cash flow;

We or third parties on whom we depend may be adversely affected by natural disasters, including events resulting from climate change, and our business continuity and disaster recovery plans may not adequately protect us or our value chain from such events;

1 unchanged sentence

Pandemics, epidemics, or other public health crises may adversely impact our business, financial condition and results of operations;

Changes in valuation allowance of deferred tax assets may affect our future operating results;

If we fail to maintain proper and effective internal control over financial reporting on business acquisitions, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data;

We have not been historically profitable, and there can be no assurance that we will sustain our recent profitability;

we have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us;

Changes in exchange rates could adversely affect our results of operations;

We may be required to issue performance bonds, which restricts our ability to access any cash used as collateral for the bonds;

Adverse changes in domestic and global economic conditions could adversely affect our operating results;

The ongoing conflicts between the United States, Israel, and Iran has disrupted global energy markets and supply chains and could adversely affect our business, financial condition, and results of operations;

Our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results;

Our products face competition, which could limit our ability to acquire or retain customers;

We have operations in, and depend on sales in, emerging markets, including India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these markets.

Changes in India’s political, social, regulatory and economic environment may affect our financial performance;

We have operations in, and depend on sales in, emerging markets, including Latin America and India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these markets.

Changes in Brazil'

s political, social, regulatory and economic environment may affect our financial performance;

Industry consolidation could result in more powerful competitors and fewer customers;

Our success could depend upon the commercial adoption of the REG system, which is currently limited, and a widespread commercial market for our REG products may not develop;

Increasing focus and scrutiny on environmental sustainability and social initiatives could adversely impact our business and financial results;

Evolving and varied expectations on environmental sustainability and social initiatives could adversely impact our business and financial results;

Growth of the wind energy market depends largely on the availability and size of government subsidies, economic incentives and legislative programs designed to support the growth of wind energy;

Lower prices for other energy sources may reduce the demand for wind energy development, which could have a material adverse effect on our ability to grow our Wind business;

We may be unable to adequately prevent disclosure of trade secrets and other proprietary information;

2 unchanged sentences

There are a number of technological challenges that must be successfully addressed before our superconductor products can gain widespread commercial acceptance, and our inability to address such technological challenges could adversely affect our ability to acquire customers for our products;

Our common stock has experienced, and may continue to experience, market price and volume fluctuations, which may prevent our stockholders from selling our common stock at a profit and could lead to costly litigation against us that could divert our management’s attention;

Unfavorable results of legal proceedings could have a material adverse effect on our business, operating results and financial condition;

5 unchanged sentences

These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

American Superconductor®, Amperium®, AMSC®, D-VAR®, PowerModule™, D-VAR VVO ®, PQ-IVR®, SeaTitan®, Gridtec™ Solutions, Windtec™ Solutions, Smarter, Cleaner...Better Energy™, orchestrate the rhythm and harmony of power on the grid™, actiVAR®, armorVAR™, NEPSI™ and Neeltran™, NWL™ and SafetyLOCK™ are trademarks or registered trademarks of American Superconductor Corporation or our subsidiaries.

American Superconductor®, AMSC®, Comtrafo™, Neeltran®, NEPSI™, NWL®, to the next power™, think inside the box™, Smarter, Cleaner...Better Energy™, orchestrate the rhythm and harmony of power on the grid™, Amperium®, D-VAR®, PowerModule™, D-VAR VVO®, PQ-IVR®, SeaTitan®, Gridtec™, Mairnetec™, Windtec™, actiVAR®, armorVAR™, SafetyLOCK™ are trademarks or registered trademarks of American Superconductor Corporation or our subsidiaries.

We reserve all of our rights with respect to our trademarks or registered trademarks regardless of whether they are so designated in this Quarterly Report on Form 10-Q by an ® or ™ symbol.

1 unchanged sentence

Executive Overview

We are 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 our Navy's fleet.

Our solutions enhance the performance of the power grid, protect our Navy’s fleet, and lower the cost of wind power.

In the power grid market, we enable electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute smarter, cleaner and better power through our transmission planning services and power electronics and superconductor-based systems.

In the wind power market, we enable manufacturers to field highly competitive wind turbines through our advanced power electronics and control system products, engineering, and support services.

Our power grid and wind products and services provide exceptional reliability, security, efficiency and affordability to our customers.

Our power system solutions help to improve energy efficiency, alleviate power grid capacity constraints, improve system resiliency, and increase the adoption of renewable energy generation.

Demand for our solutions is driven by the growing needs for modernized smart grids that improve power reliability, security and quality, the U.S.

Navy's effort to upgrade onboard power systems to support fleet electrification, and the needs for increased renewable sources of electricity, such as wind and solar energy.

Concerns about these factors have led to increased spending by corporations and the military, as well as supportive government regulations and initiatives on local, state, and national levels, including renewable portfolio standards, tax incentives and international treaties.

We manufacture products using two proprietary core technologies:

PowerModule™ programmable power electronic converters and our Amperium® high temperature superconductor ("HTS") wires.

These technologies and our system-level solutions are protected by a robust intellectual property portfolio consisting of patents and patent applications worldwide and rights through exclusive and non-exclusive licenses.

Guided by a belief in the power of next, we are a leading provider of power control solutions that apply innovation and creativity to address today’s challenges and enable a more resilient and sustainable energy future.

Driven by our purpose “to power progress,” we integrate future-facing technologies to balance the growing global demand for power with the need for reliable, and efficient power delivery.

Our advanced grid systems, engineering services, power electronics, software controls, and superconductor-based solutions help the traditional and renewable energy sectors, electric utilities, the materials and mining sector, industrial facilities, and other critical infrastructure operators optimize network reliability, improve power quality, alleviate grid constraints, and scale operations without added complexity or size.

We also deliver ship protection and power management solutions that enhance fleet efficiency, survivability, and operational readiness for the U.S.

Navy and allied fleets.

In the wind power market, we provide advanced electrical control systems, engineering, and support services that help manufacturers lower the cost of wind energy and improve turbine performance.

Beyond these markets, we provide industrial process, environmental and emission control capabilities that support operational efficiency across the broader energy infrastructure.

Across our businesses, our solutions are helping optimize power networks, strengthen naval capabilities, and support gigawatts of renewable energy generation worldwide as governments and industries continue investing in more resilient, secure, and sustainable power systems.

We operate our business under two market-facing business segments:

Grid and Wind.

We believe this market-centric structure enables us to more effectively anticipate and meet the needs of power generation project developers, the Navy's ship protection systems, electric utilities and wind turbine manufacturers.

Through our Gridtec™ Solutions, our Grid business segment enables electric utilities, industrial facilities, and renewable energy project developers to connect, transmit and distribute power with exceptional efficiency, reliability, security and affordability.

We believe this market centric structure enables us to more effectively anticipate and meet the needs of power generators, power utilities, industrial manufacturers, the military and renewable energy companies.

Our Grid business segment enables electric utilities, industrial facilities, and traditional and renewable energy project developers to connect, transmit, transform and distribute power with exceptional efficiency, reliability, security and affordability.

We provide transmission planning services that allow us to identify power grid congestion, poor power quality, and other risks, which help us determine how our solutions can improve network performance.

These services often lead to sales of our grid interconnection solutions for wind farms and solar power plants, power quality systems and transmission and distribution cable systems.

We also sell ship protection products to the U.S.

Navy through our Grid business segment.

Through our Windtec™ Solutions, our Wind business segment enables manufacturers to field wind turbines with exceptional power output, reliability and affordability.

We also sell critical shipyard infrastructure power solutions, ship power supplies and ship protection products to U.S.

and allied Navies through our Grid business segment.

Our Wind business segment enables manufacturers to field wind turbines with exceptional power output, reliability and affordability.

We supply advanced power electronics and control systems, license our highly engineered wind turbine designs, and provide extensive customer support services to wind turbine manufacturers.

5 unchanged sentences

Other fiscal years follow similarly.

Changes in macroeconomic conditions arising from various reasons, such as the ongoing war between Russia and Ukraine, tariffs, trade restrictions and resulting trade conflicts, labor force availability, sourcing, material delays and global supply chain disruptions, could have a material adverse effect on our business, financial condition and results of operations.

Changes in macroeconomic conditions arising from various reasons, such as the ongoing wars between Russia and Ukraine, and in the Middle East, tariffs, trade restrictions and resulting trade conflicts, labor force availability, sourcing, material delays and global supply chain disruptions, could have a material adverse effect on our business, financial condition and results of operations.

On December 5, 2025 (the "Comtrafo Acquisition Date"), we entered into a Stock Exchange Agreement (the "Stock Exchange Agreement") with the selling stockholders named therein (the "Stockholders").

Pursuant to the terms of the Stock Exchange Agreement, Mardin Participações Ltda., an entity incorporated in Brazil (“AMSC Brazil”) and our wholly-owned subsidiary, directly or indirectly, purchased all of the issued and outstanding shares of Comtrafo Indústria de Transformadores Elétricos S.A.

("Comtrafo") (collectively, the "Comtrafo Acquisition") for (a) (i) 300,000,000 Brazilian Real in cash;

("Comtrafo") (collectively, the "Comtrafo Acquisition") for (a) (i) 300 million Brazilian Real in cash;

and (b) 2,417,142 restricted shares of our common stock, $0.01 par value per share (the "AMSC Shares") that were paid and issued, respectively, at closing.

In addition, pursuant to certain additional real property agreements, AMSC Brazil through Comtrafo purchased certain real estate assets and transportation assets of Comtrafo for 155,564,538 Brazilian Real and 13,376,676 Brazilian Real, respectively, in cash.

Additionally, AMSC Brazil has agreed to pay the Stockholders up to an additional 382,500,000 Brazilian Real in cash (the "Earnout") upon the achievement of specified earnings before interest, taxes, depreciation, and amortization ("EBITDA") objectives during the three years following the closing.

In addition, pursuant to certain additional real property agreements, AMSC Brazil through Comtrafo purchased certain real estate assets and transportation assets of Comtrafo for 155.6 million Brazilian Real and 13.4 million Brazilian Real, respectively, in cash.

Additionally, AMSC Brazil has agreed to pay the Stockholders up to an additional 382.5 million Brazilian Real in cash (the "Earnout") upon the achievement of specified earnings before interest, taxes, depreciation, and amortization ("EBITDA") objectives during the three years following the closing.

Comtrafo is a Brazil-based manufacturer of large power and distribution transformers primarily for utility customers and also for industrial customers.

On August 1, 2024, we 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, we acquired all of the issued and outstanding shares of Megatran, Industries, Inc.

("Megatran"), for aggregate consideration in an amount equal to $61.4 million, as may be adjusted pursuant to the Stock Purchase Agreement (the “Purchase Price”), including a cash payment after closing of $5.0 million, as adjusted pursuant to Sections 5.6(c), (d), and (f) of the Stock Purchase Agreement (the “Additional Cash Purchase Price”).

At closing, we paid to Megatran's selling stockholders $25.0 million in cash on hand, and 1,297,600 restricted shares of our common stock.

On September 23, 2024, we paid the Additional Cash Purchase Price to the selling stockholders, which was calculated based on the agreed upon formula set forth in the Stock Purchase Agreement, in the amount of $8.3 million which includes the Additional Cash Purchase Price and the make whole payment.

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.

As a result of this transaction, Megatran became a wholly-owned subsidiary and is operated by our Grid business segment.

We refer to this transaction as the "acquisition of NWL".

In June 2025, we completed an offering of 4,743,750 shares of our common stock at a public offering price of $28.00 per share under our Registration Statement on Form S-3.

5 unchanged sentences

Results of Operations

Three and nine months ended December 31, 2025 , compared to the three and nine months ended December 31, 2024

Total revenues increased 21% to $74.5 million for the three months ended December 31, 2025 and total revenues increased 36% to $212.7 million for the nine months ended December 31, 2025 compared to $61.4 million and $156.2 for the three and nine months ended December 31, 2024, respectively.

Three months ended June 30, 2026 , compared to the three months ended June 30, 2025

Total revenues increased 30% to $94.1 million for the three months ended June 30, 2026 compared to $72.4 million for the three months ended June 30, 2025.

Our revenues are summarized as follows (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

Our Grid business segment accounted for 85% and 83% of total revenues for both the three and nine months ended December 31, 2025, respectively, compared to 85% and 84% for the three and nine months ended December 31, 2024, respectively.

Our Grid business segment revenues increased 21% to $63.2 million in the three months ended December 31, 2025, from $52.3 million in the three months ended December 31, 2024.

Our Grid business segment revenues increased 35% to $177.6 million in the nine months ended December 31, 2025, from $131.6 million in the nine months ended December 31, 2024.

The increase in the Grid business segment revenues in the three months ended December 31, 2025, compared to the three months ended December 31, 2024, was driven by increased shipments of new energy power systems and additional ship protection systems revenues than in the prior year period along with the addition of Comtrafo revenues.

The increase in the Grid business segment revenues in the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024, was driven by the acquisitions of NWL and Comtrafo, increased shipments of new energy power systems, and additional ship protection systems revenues compared to the prior year periods.

Our Wind business segment accounted for 15% and 17% of total revenues for the three and nine months ended December 31, 2025, respectively, compared to 15% and 16% for the three and nine months ended December 31, 2024, respectively.

Revenues in the Wind business segment increased 25% to $11.3 million in the three months ended December 31, 2025, from $9.1 million in the three months ended December 31, 2024.

Revenues in the Wind business segment increased 43% to $35.1 million in the nine months ended December 31, 2025, from $24.6 million in the nine months ended December 31, 2024.

The increase during the three and nine months ended December 31, 2025, compared to the three and nine months ended December 31, 2024, was driven by additional shipments of electrical control systems ("ECS").

Three Months Ended June 30,

Our Grid business segment accounted for 81% of total revenues for the three months ended June 30, 2026 compared to 83% for the three months ended June 30, 2025.

Our Grid business segment revenues increased 27% to $76.3 million in the three months ended June 30, 2026, from $60.1 million in the three months ended June 30, 2025.

The increase in the Grid business segment revenues in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, was driven by the addition of Comtrafo revenues.

Our Wind business segment accounted for 19% of total revenues for the three months ended June 30, 2026, compared to 17% for the three months ended June 30, 2025.

Revenues in the Wind business segment increased 45% to $17.8 million in the three months ended June 30, 2026, from $12.3 million in the three months ended June 30, 2025.

The increase during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, was driven by additional shipments of electrical control systems ("ECS").

Cost of Revenues and Gross Margin

Cost of revenues increased by 15% to $51.7 millio n for the three months ended December 31, 2025 , compared to $45.1 million for the three months ended December 31, 2024.

Cost of revenues increased by 29% to $145.0 millio n for the nine months ended December 31, 2025 , compared to $112.0 million for the nine months ended December 31, 2024.

Gross margin was 31% and 32% for the three and nine months ended December 31, 2025, respectively, compared to 27% and 28% for the three and nine months ended December 31, 2024, respectively.

Cost of revenues includes total amortization expense of $0.1 million in the three and nine months ended December 31, 2025 as a result of Comtrafo acquired backlog intangible assets.

In addition, a charge of $0.4 million related to a fair value adjustment for the step-up basis assigned to acquired inventory to properly reflect the fair value in purchase accounting was charged to cost of revenues in the three and nine months ended December 31, 2025, when the inventory was sold.

The increase in gross margin in the three and nine months ended December 31, 2025 was due to higher revenues, a favorable product mix and favorable impacts across the business due to pricing increases across product lines.

Cost of revenues increased by 45% to $69.3 millio n for the three months ended June 30, 2026 , compared to $47.9 million for the three months ended June 30, 2025.

Gross margin was 26% for the three months ended June 30, 2026, compared to 34% for the three months ended June 30, 2025.

Cost of revenues includes total amortization expense of $0.5 million in the three months ended June 30, 2026 as a result of Comtrafo acquired backlog intangible assets.

In addition, $0.7 million related to a fair value adjustment for the step-up basis assigned to acquired inventory to properly reflect the fair value in purchase accounting was charged to cost of revenues in the three months ended June 30, 2026.

The decrease in gross margin in the three months ended June 30, 2026 was due to a less favorable product mix and the impact of Comtrafo purchase accounting items.

Operating Expenses

Research and development

Research and development ("R&D") expenses increased 18% in the three months ended December 31, 2025 , to $3.5 million from $3.0 million in the three months ended December 31, 2024.

R&D expenses increased 46% in the nine months ended December 31, 2025 , to $11.6 million from $7.9 million in the nine months ended December 31, 2024.

The increase in the three and nine months ended December 31, 2025 was driven primarily by higher overall compensation expense and additional stock-based compensation expense.

Research and development ("R&D") expenses decreased 9% in the three months ended June 30, 2026 , to $3.9 million from $4.3 million in the three months ended June 30, 2025.

The decrease in the three months ended June 30, 2026 was driven primarily by lower stock-based compensation expense and lower outside services expense.

Selling, general, and administrative

Selling, general and administrative ("SG&A") expenses increased 33% in the three months ended December 31, 2025, to $ 15.4 million from $11.6 million in the three ended December 31, 2024.

SG&A expenses increased 39% in the nine months ended December 31, 2025, to $43.1 million from $31.0 million in the nine months ended December 31, 2024.

The increase in SG&A expense in the three and nine months ended December 31, 2025 was driven primarily by higher overall compensation expense, additional stock-based compensation expense, and acquisition costs related to the acquisition of Comtrafo.

Selling, general and administrative ("SG&A") expenses increased 31% in the three months ended June 30, 2026, to $ 18.6 million from $14.2 million in the three months ended June 30, 2025.

The increase in SG&A expense in the three months ended June 30, 2026 was driven primarily by the addition of Comtrafo expenses, higher overall compensation expense, and additional stock-based compensation expense.

Amortization of acquisition-related intangibles

We recorded amortization expense related to our core technology and know-how and customer relationships of $ 0.5 million in the three months ended December 31, 2025, and $0.4 million in the three months ended December 31, 2024.

We recorded amortization expense related to our core technology and know-how and customer relationships of $1.2 million in the nine months ended December 31, 2025, and $1.3 million in the nine months ended December 31, 2024.

The increase in amortization expense in the three months ended December 31, 2025, was a result of additional amortization related to the Comtrafo acquisition, as well as ongoing activity from NEPSI and Neeltran which are using the economic consumption method as the basis to amortize the acquired customer relationships intangible assets.

The decrease in amortization expense in the nine months ended December 31, 2025, was a result of additional amortization expense related to the Comtrafo acquisition using the economic consumption method as the basis to amortize the acquired customer relationships intangible assets offset by similar ongoing activity from NEPSI and Neeltran, Inc.

We recorded amortization expense related to our core technology and know-how and customer relationships of $ 0.5 million in the three months ended June 30, 2026, and $0.3 million in the three months ended June 30, 2025.

The increase in amortization expense in the three months ended June 30, 2026, was a result of additional amortization related to the Comtrafo acquisition, as well as ongoing activity from NEPSI and Neeltran which are using the economic consumption method as the basis to amortize the acquired customer relationships intangible assets.

Change in fair value of contingent consideration

The change in fair value of our contingent consideration for the earnout payment on the acquisition of NEPSI resulted in a loss of $3.4 million resulting from an increase in fair value in the nine months ended December 31, 2024.

During the three and nine months ended December 31, 2024, we issued 300,000 shares of common stock of the Company to the selling stockholders following certification of the achievement of specified earnout revenue objectives.

There was no activity in the three and nine months ended December 31, 2025 as the contingent consideration for NEPSI and NWL was settled during the prior fiscal year.

The change in fair value of the Comtrafo contingent consideration was deemed immaterial to the financial statements from the Comtrafo Acquisition Date.

The change in fair value of our contingent consideration for the earnout payment on the acquisition of Comtrafo resulted in a gain of $8.1 million from a decrease in fair value of the contingent consideration driven by changes in the forecast in the three months ended June 30, 2026.

There was no activity in the three months ended June 30, 2025 related to the change in fair value of contingent consideration.

Operating income (loss)

Our operating income (loss) is summarized as follows (in thousands):

Three Months Ended December 31,

Nine Months Ended December 31,

Operating income (loss):

Three Months Ended June 30,

Operating income:

Unallocated corporate expenses

Ou r Grid business segment generated operating income of $ 2.0 million and $7.5 million in the three and nine months ended December 31, 2025 , respectively, compared to an operating income of $0.2 million and $1.6 million in the three and nine months ended December 31, 2024 , respectively.

The increase in the Grid business segment operating income in the three and nine months ended December 31, 2025 was due to higher revenues and gross margins.

Our Wind business segment generated operating income of $ 1.3 million and $4.5 million in the three and nine months ended December 31, 2025 , respectively, compared to operating income of $1.1 million and $2.4 million in the three and nine months ended December 31, 2024 , respectively.

The increase in the Wind business segment operating income in the three and nine months ended December 31, 2025 was due to higher revenues and gross margins from increased sales of ECS units.

Unallocated corporate expenses included a net loss on contingent consideration of $6.7 million in the nine months ended December 31, 2024.

Ou r Grid business segment generated operating loss of $ 2.2 million in the three months ended June 30, 2026 , compared to an operating income of $4.2 million in the three months ended June 30, 2025 .

The decrease in the Grid business segment operating income in the three months ended June 30, 2026 was due to lower gross margins and Comtrafo purchase accounting expense.

Our Wind business segment generated operating income of $ 3.9 million in the three months ended June 30, 2026 , compared to operating income of $1.5 million in the three months ended June 30, 2025 .

The increase in the Wind business segment operating income in the three months ended June 30, 2026 was due to higher revenues and gross margins from increased sales of ECS units.

Interest income, net

Interest income, net, was $2.0 million and $5.2 million in the three and nine months ended December 31, 2025, respectively, compared to $0.8 million and $2.9 million in the three and nine months ended December 31, 2024, respectively.

The increase in interest income, net, in the three and nine months ended December 31, 2025 was due to higher cash balances primarily generated from the public offering completed in June 2025 .

Interest income, net, was $1.5 million in the three months ended June 30, 2026, compared to $0.9 million in the three months ended June 30, 2025.

The increase in interest income, net, in the three months ended June 30, 2026 was due to higher cash balances in the current year .

Other income (expense), net

Other expense, net, was $0.1 million and both in the three and nine months ended December 31, 2025 , compared to other income, net of $0.3 million and other expense, net of $0.2 million in the three and nine months ended December 31, 2024 , respectively.

The increase in other expense, net, during the three months ended December 31, 2025 , compared to the three months ended December 31, 2024 was driven by unfavorable fluctuations in foreign currencies.

The decrease in other expense, net, during the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024 was driven by favorable fluctuations in foreign currencies.

Income tax benefit was $112.3 million and $112.1 million in the three and nine months ended December 31, 2025, respectively, compared to income tax benefit of $0.1 million and $4.9 million in the three and nine months ended December 31, 2024 , respectively.

The increase in our income tax benefit was primarily due to a $113.1 million non-cash tax benefit from the release of the majority of our valuation allowance against deferred tax assets.

Net income was $ 117.8 million and $129.3 million in the three and nine months ended December 31, 2025, respectively, compared to $2.5 million and $4.8 million in the three and nine months ended December 31, 2024, respectively.

The increase in net income for the three and nine months ended December 31, 2025 was driven primarily by the release of the valuation allowance and increased revenues and gross margins.

Other expense, net, was $0.6 million in the three months ended June 30, 2026 , compared to other income, net of $0.3 million in the three months ended June 30, 2025 .

The decrease in other income, net, during the three months ended June 30, 2026 , was driven by unfavorable fluctuations in foreign currencies.

Income tax expense was $1.3 million in the three months ended June 30, 2026, compared to income tax expense of $0.2 million in the three months ended June 30, 2025 .

The increase in our income tax expense was primarily due to taxes in foreign jurisdictions.

Net income was $ 9.5 million in the three months ended June 30, 2026, compared to $6.7 million in the three months ended June 30, 2025.

The increase in net income for the three months ended June 30, 2026 was driven primarily by the change in fair value of contingent consideration.

Non-GAAP Financial Measure - Non-GAAP Net Income

1 unchanged sentence

The non-GAAP measures included in this Quarterly Report on Form 10-Q, however, should be considered in addition to, and not as a substitute for or superior to the comparable measures prepared in accordance with GAAP.

We define non-GAAP net income as net income before stock-based compensation, acquisition costs, amortization of acquisition-related intangibles, change in fair value of contingent consideration, and other non-cash or unusual charges.

We define non-GAAP net income as net income before stock-based compensation, amortization of acquisition-related intangibles, change in fair value of contingent consideration, and other non-cash or unusual charges.

We believe non-GAAP net income assists management and investors in comparing our performance across reporting periods on a consistent basis by excluding these non-cash charges and other items that we do not believe are indicative of our core operating performance.

1 unchanged sentence

A reconciliation of GAAP to non-GAAP net income is set forth in the table below (in thousands, except per share data):

Three Months Ended December 31,

Nine Months Ended December 31,

Three Months Ended June 30,

Stock-based compensation

Acquisition costs

Amortization of acquisition-related intangibles

5 unchanged sentences

Weighted average shares outstanding - diluted

We generated non-GAAP net income of $123.5 million and $144.0 million, or $ 2.81 and $3.42 per share, for the three and nine months ended December 31, 2025 , respectively, compared to a non-GAAP net income of $6.0 million and $19.3 million, or $0.16 and $0.52 per share, for the three and nine months ended December 31, 2024 , respectively.

For the three and nine months ended December 31, 2025, the increase in non-GAAP net income was a result of the release of the valuation allowance and higher revenues and gross margins.

We generated non-GAAP net income of $7.6 million, or $ 0.17 per share, for the three months ended June 30, 2026 , compared to a non-GAAP net income of $11.6 million, or $0.30 per share, for the three months ended June 30, 2025 .

For the three months ended June 30, 2026, the decrease in non-GAAP net income was a result of lower gross margins.

Liquidity and Capital Resources

1 unchanged sentence

We believe that these sources of liquidity are sufficient to meet both our short-term and reasonably foreseeable long-term requirements and obligations.

As of December 31, 2025, we had cash and cash equivalents of $141.1 million.

Our cash requirements depend on numerous factors, including the successful completion of our product development activities, our ability to commercialize our Resilient Electric Grid and ship protection system solutions, the rate of customer and market adoption of our products, collecting receivables according to established terms, the continued availability of U.S.

government funding during the product development phase of our superconductor-based products and whether Inox is successful in executing on Solar Energy Corporation of India Limited orders or in obtaining additional orders under the new central and state auction regime.

We continue to closely monitor our expenses and, if required, may reduce our operating and capital spending to enhance liquidity.

On June 10, 2025, we completed an offering of 4,125,000 shares of our common stock at a public offering price of $28.00 per share under our Registration Statement on Form S-3.

We received net proceeds of approximately $108.2 million after deducting underwriting discounts and commissions and offering expenses.

The offering included an option to purchase an additional 618,750 shares over the initial offering of 4,125,000 shares at the public offering price, less underwriting discounts and commission.

This option was fully exercised on June 16, 2025 resulting in an additional $16.3 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses payable by the Company, for total net proceeds of approximately $124.6 million.

The offering closed on June 16, 2025.

As of December 31, 2025, we had cash, cash equivalents and restricted cash of $147.1 million, compared to $85.4 million as of March 31, 2025, an increase of $61.7 million.

As of December 31, 2025, we had $22.8 million in cash, cash equivalents, and restricted cash in foreign bank accounts.

As of June 30, 2026, we had cash, cash equivalents and restricted cash of $153.1 million, compared to $147.6 million as of March 31, 2026, an increase of $5.5 million.

As of June 30, 2026, we had $22.8 million in cash, cash equivalents, and restricted cash in foreign bank accounts.

Our cash, cash equivalents, and restricted cash are summarized as follows (in thousands):

December 31, 2025

June 30, 2026

March 31, 2026

2 unchanged sentences

Total cash, cash equivalents, and restricted cash

For the nine months ended December 31, 2025, net cash provided by operating activities was $13.9 million, compared to $22.0 million for the nine months ended December 31, 2024.

The decrease in cash flows provided by operating activities in the nine months ended December 31, 2025 was due primarily to changes in deferred revenue, offset by change in accounts payable and accrued expenses, accounts receivable, deferred income taxes, and stock-based compensation expense.

For the nine months ended December 31, 2025, net cash used in investing activities was $75.3 million, compared to $34.1 million for the nine months ended December 31, 2024.

The increase in net cash used in investing activities was primarily due to cash paid for the Comtrafo acquisition in the current year.

For the nine months ended December 31, 2025, net cash provided by financing activities was $123.9 million compared to cash used in financing activities of $0.1 million for the nine months ended December 31, 2024.

The increase in net cash provided by financing activities was due primarily to the equity raise in June 2025.

As of December 31, 2025, we had $3.3 million of restricted cash included in long-term assets and $2.8 million of restricted cash included in current assets.

For the three months ended June 30, 2026, net cash provided by operating activities was $16.0 million, compared to $4.1 million for the three months ended June 30, 2025.

The increase in cash flows provided by operating activities in the three months ended June 30, 2026 was due primarily to changes in deferred revenue, inventory, prepaid expenses and other current assets, and changes in fair value consideration.

For the three months ended June 30, 2026, net cash used in investing activities was $10.5 million, compared to $0.7 million for the three months ended June 30, 2025.

The increase in net cash used in investing activities was primarily due to cash paid for the purchase of property, plant and equipment in the current year.

For the three months ended June 30, 2026, there was no cash provided by or used in financing activities.

For the three months ended June 30, 2025, net cash provided by financing activities was $124.6 million.

The decrease in net cash provided by financing activities was due primarily to the equity raise in June 2025.

As of June 30, 2026, we had $5.6 million of restricted cash included in long-term assets and $3.8 million of restricted cash included in current assets.

At March 31, 2026, we had $3.3 million of restricted cash included in long-term assets and $3.5 million of restricted cash in current assets.

3 unchanged sentences

These obligations impact our short-term and long-term liquidity and capital resource needs.

Certain contractual obligations are reflected on the condensed consolidated balance sheet as of December 31, 2025, while others are considered future commitments.

Certain contractual obligations are reflected on the condensed consolidated balance sheet as of June 30, 2026, while others are considered future commitments.

We have various contractual arrangements, under which we have committed to purchase certain minimum quantities of goods or services on an annual basis.

13 unchanged sentences

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.

December 31, 2025 , we are evaluating the impact on our 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 , we are evaluating the impact on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures .

1 unchanged sentence

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 , we are evaluating the impact on our consolidated financial statements.

We are evaluating the impact on our consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software .

The amendments in ASU 2025-06 remove all references to software development project stages and requires entities to start capitalizing software costs when both of the following occur:

(i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended.

Following the release of ASU 2024-05 in September 2025, the effective date will be annual reporting periods beginning after December 15, 2027.

We are evaluating the impact on our consolidated financial statements.

We do not believe that, outside of those disclosed here, there are any other recently issued accounting pronouncements that will have a material impact on our condensed consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis