Q1 Highlights:
- Sales of $58.8 million, up 29% from Q1
2013
- Gross profit margin (ex. restructuring) of 9.1%, up 330
bp from Q1 2013
- Adjusted EBITDA of $2.8 million, more than double Q1
2013
- EPS loss of $.07, significantly ahead of Q1 2013 and Q1
2014 guidance
- Cash assets declined as expected, to $11.5 million;
operating line of credit undrawn; debt and capital lease balance
dropped below $5 million
Broadwind Energy, Inc. (Nasdaq:BWEN) reported sales of $58.8
million for the first quarter of 2014, a 29% increase compared to
$45.5 million in the first quarter of 2013. The increase reflects
the continued strength in the Company's Towers and Weldments
segment, partly offset by weaker results in the Gearing and
Services segments.
The Company reported a net loss from continuing operations of
$1.0 million or $.07 per share in the first quarter of 2014,
compared to a loss of $4.5 million or $.32 per share in the first
quarter of 2013. The $.25 per share improvement was due to stronger
results in the Towers and Weldments segment and lower corporate
expenses, partly offset by weaker results in the Services segment.
The Company reported non-GAAP adjusted EBITDA (earnings before
interest, taxes, depreciation, amortization, share-based payments
and restructuring costs) of $2.8 million in the first quarter of
2014, compared to $1.3 million in the first quarter of 2013. The
progress reflects the 50% increase in tower volume in the
current-year first quarter, partly offset by weaker results in the
other business segments.
Peter C. Duprey, president and chief executive officer, stated,
"We are off to a solid start in 2014. Our first-quarter results
reflect substantial improvement over the prior year, with revenue
up a significant 29%, gross margin up 330 basis points, and an EPS
improvement of $.25 over last year's first quarter. Our Towers and
Weldments segment recorded another solid quarter, improving
tremendously as we produce efficiently against the past two
quarters' strong order flow. Gearing and Services faced some
challenges during the quarter with low volumes and production
inefficiencies as well as some unforeseen weather-related expenses,
although Gearing orders did show a 61% improvement sequentially.
Our Continuous Improvement projects are proceeding as planned, and
we are seeing progress from those initiatives."
Mr. Duprey concluded, "Overall, I am pleased with our
first-quarter results, which were better than our guidance and set
us up nicely to achieve our financial objectives for 2014. Our
restructuring plan is paying off in increased operating leverage,
and we are working hard to continue this progress by making the
Gearing business competitive and profitable for the long-term. In
Services, our new general manager is in place and we are focused on
leveraging our robust in-field service capabilities in wind and
beyond. In all, we remain on track to achieve profitability in
2014."
Orders and Backlog
The Company booked $15.8 million in net new orders in the first
quarter of 2014, down from $91.9 million in the prior-year first
quarter when orders surged following the renewal of the federal
Production Tax Credit. Towers and Weldments orders, which vary
considerably from quarter to quarter, totaled $3.9 million and
consisted of industrial weldment orders primarily for one large
customer. This order pattern was expected, following the massive
order inflow experienced in the second half of 2013. First quarter
Gearing orders totaled $8.3 million, down 29% from the prior-year
first quarter and up 61% sequentially. Services orders totaled $3.6
million, up sharply from the prior-year first quarter which
included the cancellation of a large drivetrain assembly project
with an industrial customer.
At March 31, 2014, total backlog was $267.5 million, up 58% from
the prior-year first quarter.
Segment Results
Towers and Weldments
Broadwind Energy produces fabrications for wind, oil and gas,
mining and other industrial applications, specializing in the
production of wind turbine towers.
Towers and Weldments segment sales totaled $48.3 million in the
first quarter of 2014, compared to $29.9 million in the first
quarter of 2013. The significant increase was due to a 50% increase
in tower volume compared to the prior-year first quarter,
reflecting the near curtailment of production due to the lapse of
the federal Production Tax Credit at the end of 2012 and subsequent
renewal in early 2013. Towers and Weldments operating income for
the first quarter of 2014 was $5.6 million (12% of sales), up $3.5
million from the first quarter of 2013. The significant improvement
was the result of higher volumes, material sourcing improvements,
and a higher margin mix of towers compared to the first quarter of
2013. Partly offsetting this was an increase in manufacturing
overhead due, in part, to ramping up the production infrastructure
in industrial weldments to support the growth of this product line,
and higher professional fees linked to the 2013 year-end accounting
investigation. Non-GAAP adjusted EBITDA for the segment totaled
$6.7 million in the current-year period, up sharply from $3.5
million in the same period last year due to the factors described
above and lower non-cash charges in the current-year period.
Gearing
Broadwind Energy engineers, builds and remanufactures precision
gears and gearboxes for oil and gas, mining, steel and wind
applications.
Gearing sales totaled $8.8 million in the first quarter of 2014,
compared to $10.7 million in the first quarter of 2013. The
decrease was due primarily to lower shipments to steel and other
industrial customers caused primarily by manufacturing
inefficiencies. Despite the 18% decrease in revenue, Gearing
segment operating loss for the first quarter of 2014 was $3.0
million, a slight improvement compared to the first quarter of
2013. The small improvement was due primarily to lower depreciation
and amortization expense and lower restructuring charges, nearly
offset by less favorable production mix as well as $0.2 million of
weather-related utility costs in Q1 2014. Non-GAAP adjusted EBITDA
for the first quarter of 2014 was a loss of $.8 million, compared
to a slightly positive non-GAAP adjusted EBITDA in the prior-year
first quarter, due to the factors described above.
Services
Broadwind Energy specializes in non-routine drivetrain and blade
maintenance services and offers comprehensive field services to the
wind industry.
Revenue from the Services segment was $2.4 million in the first
quarter of 2014, compared to $7.5 million in the first quarter of
2013. The decrease was related to the completion of a large
drivetrain assembly project in the prior-year first quarter, partly
offset by higher demand for blade repair work in the current-year
first quarter. Services operating loss for the first quarter of
2014 was $1.3 million, compared to $.7 million in the prior-year
first quarter, due primarily to lower volume, partly offset by cost
savings resulting from a reduction in manufacturing space and other
cost management efforts. Non-GAAP adjusted EBITDA loss totaled $0.9
million in the first quarter of 2014, compared to near break-even
in the first quarter of 2013, due to the factors described above
and lower non-cash charges, primarily restructuring, in the
current-year period.
Corporate and Other
Corporate and other expenses totaled $2.3 million in the first
quarter of 2014, compared to $3.0 million in the first quarter of
2013. The decrease was due primarily to lower restructuring and
insurance expense in the current-year first quarter.
Future income tax benefits associated with the 2013 loss were
offset by an increase in the valuation allowance; therefore, the
effective federal tax rate is zero. As of December 31, 2013,
cumulative federal net operating loss carry-forwards totaled $167
million.
Cash and Liquidity
During the quarter, operating working capital (accounts
receivable and inventory, net of accounts payable and customer
deposits) increased $14.3 million to $19.6 million or 8% of
annualized first-quarter 2014 sales due to the ramp up in
production for 2014.
Cash assets declined to $11.5 million at March 31, 2014, a
decrease of $14.3 million from December 31, 2013. At March 31,
2014, the Company's $20 million line of credit was undrawn.
About Broadwind Energy, Inc.
Broadwind Energy (Nasdaq:BWEN) applies decades of deep
industrial expertise to innovate integrated solutions for customers
in the energy and infrastructure markets. From gears and gearing
systems for wind, steel, oil and gas and mining applications, to
wind towers, to comprehensive remanufacturing of gearboxes and
blades, to operations and maintenance services and industrial
weldments, we have solutions for the energy needs of the future.
With facilities throughout the U.S., Broadwind Energy's talented
team of 800 employees is committed to helping customers maximize
performance of their investments – quicker, easier and smarter.
Find out more at www.bwen.com.
Forward-Looking Statements
This release includes various forward-looking statements related
to future, not past, events. Statements in this release that are
not historical are forward-looking statements. These statements are
based on current expectations, and we undertake no obligation to
update these statements to reflect events or circumstances
occurring after this release. Such statements are subject to
various risks and uncertainties that could cause actual results to
vary materially from those stated. Such risks and uncertainties
include, but are not limited to: expectations regarding our
business, end-markets, relationships with customers and our ability
to diversify our customer base; the impact of competition and
economic volatility on the industries in which we compete; our
ability to realize revenue from customer orders and backlog; the
impact of regulation on our end-markets, including the wind energy
industry in particular; the sufficiency of our liquidity and
working capital; our restructuring plans and the associated cost
savings; our ability to preserve and utilize our tax net operating
loss carry-forwards; and other risks and uncertainties described in
our filings with the Securities and Exchange Commission, including
those contained in Part I, Item 1A "Risk Factors" of our Annual
Reports on Form 10-K.
| |
| |
| BROADWIND ENERGY, INC. AND
SUBSIDIARIES |
| CONSOLIDATED BALANCE
SHEETS |
| (IN THOUSANDS) |
| |
|
|
| |
March 31, |
December 31, |
| |
2014 |
2013 |
| |
(Unaudited) |
|
| ASSETS |
|
|
| CURRENT ASSETS: |
|
|
| Cash and cash equivalents |
$ 9,601 |
$ 24,936 |
| Short-term investments |
1,795 |
1,143 |
| Restricted cash |
83 |
83 |
| Accounts receivable, net of
allowance for doubtful accounts of $59 and $17 as of March 31, 2014
and December 31, 2013, respectively |
23,640 |
18,735 |
| Inventories, net |
39,123 |
37,143 |
| Prepaid expenses and other
current assets |
1,925 |
2,325 |
| Assets held for sale |
1,582 |
1,970 |
| Total current assets |
77,749 |
86,335 |
| Property and equipment,
net |
67,797 |
69,077 |
| Intangible assets, net |
5,792 |
5,903 |
| Other assets |
2,278 |
2,379 |
| TOTAL ASSETS |
$ 153,616 |
$ 163,694 |
| |
|
|
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
| CURRENT LIABILITIES: |
|
|
| Lines of credit and notes
payable |
$ -- |
$ -- |
| Current maturities of long-term
debt |
179 |
201 |
| Current portions of capital
lease obligations |
946 |
933 |
| Accounts payable |
24,424 |
27,537 |
| Accrued liabilities |
7,327 |
8,115 |
| Customer deposits |
18,727 |
22,993 |
| Liabilities held for sale |
361 |
749 |
| Total current liabilities |
51,964 |
60,528 |
| |
|
|
| LONG-TERM LIABILITIES: |
|
|
| Long-term debt, net of current
maturities |
2,612 |
2,755 |
| Long-term capital lease
obligations, net of current portions |
952 |
1,193 |
| Other |
3,415 |
3,888 |
| Total long-term
liabilities |
6,979 |
7,836 |
| |
|
|
| COMMITMENTS AND
CONTINGENCIES |
|
|
| |
|
|
| STOCKHOLDERS' EQUITY: |
|
|
| Preferred stock, $0.001 par
value; 10,000,000 shares authorized; no shares issued or
outstanding |
-- |
-- |
| Common stock, $0.001 par value;
30,000,000 shares authorized; 14,696,157 and 14,627,990 shares
issued and outstanding as of March 31, 2014 and December 31,
2013, respectively |
15 |
15 |
| Additional paid-in capital |
376,511 |
376,125 |
| Accumulated deficit |
(281,853) |
(280,810) |
| Total stockholders' equity |
94,673 |
95,330 |
| TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY |
$ 153,616 |
$ 163,694 |
| |
| |
| |
| BROADWIND ENERGY, INC. AND
SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF
OPERATIONS |
| (IN THOUSANDS, EXCEPT PER SHARE
DATA) |
| (UNAUDITED) |
| |
|
|
| |
Three Months
Ended March 31, |
| |
2014 |
2013 |
| Revenues |
$ 58,800 |
$ 45,506 |
| Cost of sales |
53,438 |
42,881 |
| Restructuring |
269 |
455 |
| Gross profit |
5,093 |
2,170 |
| |
|
|
| OPERATING EXPENSES: |
|
|
| Selling, general and administrative |
5,917 |
5,388 |
| Intangible amortization |
111 |
665 |
| Restructuring |
60 |
601 |
| Total operating expenses |
6,088 |
6,654 |
| Operating loss |
(995) |
(4,484) |
| |
|
|
| OTHER (EXPENSE) INCOME,
net: |
|
|
| Interest expense, net |
(160) |
(391) |
| Other, net |
136 |
335 |
| Gain on sale of assets and restructuring |
-- |
13 |
| Total other (expense) income,
net |
(24) |
(43) |
| |
|
|
| Net loss from continuing operations before
provision for income taxes |
(1,019) |
(4,527) |
| Provision for income taxes |
24 |
22 |
| LOSS FROM CONTINUING
OPERATIONS |
(1,043) |
(4,549) |
| LOSS FROM DISCONTINUED OPERATIONS,
NET OF TAX |
-- |
(210) |
| NET LOSS |
$ (1,043) |
$ (4,759) |
| |
|
|
| |
|
|
| NET LOSS PER COMMON SHARE
- BASIC AND DILUTED: |
|
| Loss from continuing operations |
$ (0.07) |
$ (0.32) |
| Loss from discontinued operations |
-- |
(0.01) |
| Net loss |
$ (0.07) |
$ (0.33) |
| |
|
|
| WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - Basic and diluted |
14,659 |
14,267 |
| |
| |
| BROADWIND ENERGY, INC. AND
SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH
FLOWS |
| (IN THOUSANDS) |
| (UNAUDITED) |
| |
|
|
| |
Three Months
Ended March 31, |
| |
2014 |
2013 |
| CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
| Net loss |
$ (1,043) |
$ (4,759) |
| |
|
|
| Adjustments to reconcile net cash
used in operating activities: |
|
|
| Depreciation and amortization
expense |
3,114 |
3,986 |
| Impairment charges |
-- |
-- |
| Change in fair value of
interest rate swap agreements |
-- |
-- |
| Deferred income taxes |
-- |
-- |
| Stock-based compensation |
223 |
427 |
| Allowance for doubtful
accounts |
42 |
(154) |
| Common stock issued under
defined contribution 401(k) plan |
163 |
138 |
| Loss on disposal of assets |
5 |
15 |
| Changes in operating assets and
liabilities: |
|
|
| Accounts receivable |
(4,947) |
(6,156) |
| Inventories |
(1,980) |
(8,058) |
| Prepaid expenses and other
current assets |
457 |
(503) |
| Accounts payable |
(2,672) |
7,852 |
| Accrued liabilities |
(788) |
(69) |
| Customer deposits |
(4,266) |
4,149 |
| Other non-current assets and
liabilities |
(425) |
82 |
| Net cash used in operating activities |
(12,117) |
(2,840) |
| |
|
|
| CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
| Proceeds from sale of logistics
business and related note receivable |
-- |
-- |
| Purchases of available for sale
securities |
(2,543) |
-- |
| Sales and maturities of
available for sale securities |
1,890 |
|
| Purchases of property and
equipment |
(2,200) |
(1,375) |
| Proceeds from disposals of
property and equipment |
45 |
4 |
| (Increase) decrease in
restricted cash |
-- |
-- |
| Net cash used in investing activities |
(2,808) |
(1,371) |
| |
|
|
| CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
| Net proceeds from issuance of
stock |
-- |
-- |
| Payments on lines of credit and
notes payable |
(164) |
(44,606) |
| Proceeds from lines of credit
and notes payable |
-- |
49,408 |
| Proceeds from sale-leaseback
transactions |
-- |
-- |
| Payments for debt issuance
costs |
-- |
-- |
| Principal payments on capital
leases |
(246) |
(570) |
| Net cash (used in) provided by financing
activities |
(410) |
4,232 |
| |
|
|
| |
|
|
| NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS |
(15,335) |
21 |
| CASH AND CASH EQUIVALENTS, beginning
of the period |
24,936 |
516 |
| CASH AND CASH EQUIVALENTS, end of the
period |
$ 9,601 |
$ 537 |
| |
|
|
| Supplemental cash flow
information: |
|
|
| Interest paid |
$ 143 |
$ 334 |
| Income taxes paid |
$ 2 |
$ 13 |
| Non-cash investing and financing
activities: |
|
|
| Issuance of restricted stock
grants |
$ 138 |
$ 317 |
| |
| |
| BROADWIND ENERGY, INC. AND
SUBSIDIARIES |
| SELECTED SEGMENT FINANCIAL
INFORMATION |
| (IN THOUSANDS) |
| |
|
| |
Three Months
Ended March 31, |
| |
2014 |
2013 |
| REVENUES: |
(unaudited) |
| Towers and Weldments |
$ 48,294 |
$ 29,871 |
| Gearing |
8,774 |
10,720 |
| Services |
2,438 |
7,484 |
| Corporate and Other |
(706) |
(2,569) |
| Total revenues |
$ 58,800 |
$ 45,506 |
| |
|
|
| OPERATING (LOSS)
PROFIT: |
|
| Towers and Weldments |
$ 5,612 |
$ 2,154 |
| Gearing |
(2,966) |
(2,977) |
| Services |
(1,339) |
(702) |
| Corporate and Other |
(2,302) |
(2,959) |
| Total operating loss |
$ (995) |
$ (4,484) |
BROADWIND ENERGY, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (IN THOUSANDS)
The Company reports its financial results in accordance with
U.S. generally accepted accounting principles (GAAP). However, the
Company's management believes that certain non-GAAP financial
measures may provide users of this financial information with
meaningful comparisons between current results and results in prior
operating periods. Management believes that these non-GAAP
financial measures can provide additional meaningful reflection of
underlying trends of the business because they provide a comparison
of historical information that excludes certain infrequently
occurring or non-operational items that impact the overall
comparability. See the table below for supplemental financial data
and corresponding reconciliations to GAAP financial measures for
the three months ended March 31, 2014 and 2013. Non-GAAP financial
measures should be viewed in addition to, and not as an alternative
for, the Company's reported results prepared in accordance with
GAAP.
| Consolidated |
Three Months
Ended |
| |
March
31, |
| |
2014 |
2013 |
| |
(unaudited) |
| Operating loss |
$ (995) |
$ (4,484) |
| Depreciation and amortization |
3,114 |
3,806 |
| Share-based compensation and other stock
payments |
223 |
624 |
| Other income |
136 |
335 |
| Restructuring |
329 |
1,056 |
| Total Adjusted EBITDA
(Non-GAAP) |
$ 2,807 |
$ 1,337 |
| |
|
| Towers and Weldments
Segment |
Three Months
Ended March 31, |
| |
2014 |
2013 |
| |
(unaudited) |
| |
|
| Operating Profit |
$ 5,612 |
$ 2,154 |
| Depreciation |
985 |
951 |
| Share-based compensation and other stock
payments |
43 |
129 |
| Other Income |
2 |
159 |
| Restructuring Expense |
18 |
78 |
| Total Adjusted EBITDA
(Non-GAAP) |
$ 6,660 |
$ 3,471 |
| |
|
| |
Three Months
Ended March 31, |
| Gearing Segment |
2014 |
2013 |
| |
(unaudited) |
| Operating Loss |
$ (2,966) |
$ (2,977) |
| Depreciation |
1,690 |
1,866 |
| Amortization |
111 |
665 |
| Share-based compensation and other stock
payments |
59 |
80 |
| Other Income (Expense) |
2 |
(15) |
| Restructuring Expense |
311 |
401 |
| Total Adjusted EBITDA
(Non-GAAP) |
$ (793) |
$ 20 |
| |
|
| |
|
| Services Segment |
Three Months
Ended March 31, |
| |
2014 |
2013 |
| |
(unaudited) |
| Operating Loss |
$ (1,339) |
$ (702) |
| Depreciation |
313 |
313 |
| Share-based compensation and other stock
payments |
15 |
40 |
| Other Income (Expense) |
133 |
191 |
| Restructuring Expense |
-- |
119 |
| Total Adjusted EBITDA
(Non-GAAP) |
$ (878) |
$ (39) |
| |
|
| Corporate and Other |
Three Months
Ended March 31, |
| |
2014 |
2013 |
| |
(unaudited) |
| Operating Loss |
$ (2,302) |
$ (2,959) |
| Depreciation |
15 |
11 |
| Share-based compensation and other stock
payments |
105 |
375 |
| Restructuring Expense |
-- |
458 |
| Total Adjusted EBITDA
(Non-GAAP) |
$ (2,182) |
$ (2,115) |
CONTACT: BWEN INVESTOR CONTACT:
Joni Konstantelos, 708.780.4819
joni.konstantelos@bwen.com
LHA CONTACT:
Jody Burfening/Carolyn Capaccio, 212.838.3777
ccapaccio@lhai.com
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