Note 17 - Business Segments

3 Months Ended

Jun. 30, 2024

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

17. 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 aggregates four operating segments into one reporting segment for financial reporting purposes due to their similar operating and financial characteristics. 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.

The operating results for the two business segments are as follows (in thousands):

	Three Months Ended June 30,
	2024		2023
Revenues:
Grid	$	32,336	$	25,737
Wind		7,954		4,517
Total	$	40,290	$	30,254

	Three Months Ended June 30,
	2024			2023
Operating income (loss):
Grid	$	859		$	(1,971	)
Wind		999			(649	)
Unallocated corporate expenses		(5,149	)		(2,713	)
Total	$	(3,291	)	$	(5,333	)

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 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 loss.

Unallocated corporate expenses consisted of net losses of $3.9 million and $1.3 million resulting from the increases in the fair value of contingent consideration in the three months ended  June 30, 2024 and 2023, respectively. There are 300,000 shares remaining for potential issuance upon the achievement of the last specified revenue objective under the NEPSI Stock Purchase Agreement by September 30, 2024. Additionally, unallocated corporate expenses consisted of stock-based compensation expense of $1.2 million and $1.4 million in the three months ended  June 30, 2024 and 2023, respectively.

Total assets for the two business segments as of  June 30, 2024 and  March 31, 2024, are as follows (in thousands):

	June 30, 2024		March 31, 2024
Grid	$	128,296	$	125,878
Wind		16,355		14,733
Corporate assets		95,492		92,160
Total	$	240,143	$	232,771