Highlights:
- Booked $23 million in new orders during Q1; ending
backlog totaled $174 million
- Revenue of $51.1 million, down 13% from Q1 2014 due to
residual production issues in Abilene tower facility and deferral
of revenue associated with West Coast port delays
- Gearing operating loss of $1.2 million reduced by
nearly 60% compared to Q1 2014
- Adjusting operations in response to weak oil and gas
and mining markets; overhead costs reduced $.6 million per
quarter
Broadwind Energy, Inc. (Nasdaq:BWEN) reported sales of $51.1
million for the first quarter of 2015, down 13% compared to $58.8
million in the first quarter of 2014 due mainly to lower tower
sales reflecting the residual effects of production issues in the
Company's Abilene tower plant and production re-sequencing
necessitated by supply shortages caused by labor slowdowns at West
Coast ports.
The Company reported a net loss of $5.0 million or $.34 per
share in the first quarter of 2015, compared to a net loss of $1.0
million or $.07 per share in the first quarter of 2014. The $.27
per share reduction was due to weaker Towers and Weldments segment
results, partially offset by improvements in the Gearing segment.
Towers and Weldments segment operating income was down $4.5 million
from the prior-year period due to lower sales and increased costs
associated with residual production issues in the Abilene tower
plant, as well as increased logistics costs and delayed revenues
attributable to supply shortages due to a port strike on the West
Coast of the United States. Both issues have been substantially
resolved. The Company reported a non-GAAP adjusted EBITDA (earnings
before interest, taxes, depreciation, amortization, share-based
payments and restructuring costs) loss of $1.9 million in the first
quarter of 2015, compared to non-GAAP adjusted EBITDA of $2.8
million in the first quarter of 2014. The $4.7 million decrease was
due mainly to the weakness in Towers and Weldments segment
performance.
Peter Duprey, President and Chief Executive Officer, stated,
"During the quarter, we faced three main challenges that
contributed to our weak performance: restoring our Abilene tower
plant to full capacity, navigating the West Coast port slowdown,
and responding to weaker oil and gas and mining end markets. In the
Abilene tower facility, we produced 18 fewer towers than in the
prior year period, mainly in January and February, but by March the
facility was performing near its targeted production rate,
signaling that we are back on track in this facility. The West
Coast port slowdown required us to produce towers ahead of schedule
for which we had materials on hand. We navigated well through this
challenge and were able to avoid losing production slots. However,
we incurred higher logistics costs and ended the quarter holding
more steel than is typical for our Abilene facility and $5 million
of towers that will not be invoiced until Q2-Q3. Finally, we are
dealing with weak oil and gas and mining demand for gears and
weldments, and have reduced headcount and will idle two satellite
production facilities to reduce overhead expense by approximately
$600,000 per quarter."
Mr. Duprey concluded, "The tower market outlook remains strong
for 2016 and we are firming up our order book this quarter. With
the operational improvements and cost reductions in place, we
expect to have a profitable second quarter on par with Q2
2014."
Orders and Backlog
The Company booked $23.3 million in net new orders in Q1 2015,
up from $15.8 million in Q1 2014. Towers and Weldments orders,
which vary considerably from quarter to quarter, totaled $11.8
million, up from $3.9 million in Q1 2014. Gearing orders totaled
$9.7 million, up 17% from Q1 2014 due in part to a large wind
replacement gearing order during Q1 2015. Services orders totaled
$1.9 million, down from $3.6 million in Q1 2014.
At March 31, 2015, total backlog was $174 million, down 35% from
the backlog at March 31, 2014.
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 $41.0 million for Q1
2015, down 15% from $48.3 million in Q1 2014 due to a delay in
recognizing revenue on $5 million of towers in inventory at
quarter-end which will be recognized in Q2-Q3, and due to lower
production at the Abilene tower plant early in the year. The
inventoried towers are for a customer order that will be invoiced
in Q2 and Q3. Towers and Weldments operating income for Q1 2015
totaled $1.1 million, or 3% of sales, down sharply from $5.6
million, or 12% of sales, in Q1 2014. The significant reduction was
due to lower revenues, a lower value production mix, and higher
material and fixed overhead costs to resolve the production issues
in Abilene and to expedite freight and re-sequence production as a
result of the supply disruption triggered by the labor slowdowns at
the ports. These factors were partially offset by the absence of
higher professional fees in Q1 2014.
Non-GAAP adjusted EBITDA in Q1 2015 was $2.1 million, compared
to $6.7 million in Q1 2014, due to the factors described above.
Gearing
Broadwind Energy engineers, builds and remanufactures precision
gears and gearboxes for oil and gas, mining, steel and wind
applications.
Gearing segment sales totaled $8.6 million in Q1 2015, down
slightly from $8.8 million in Q1 2014. Sales to oil and gas
customers were down due to weak demand, but shipments benefited
from a reduction in past due shipments and stronger industrial
sales. The Gearing segment operating loss narrowed to $1.2 million
in Q1 2015 compared to $3.0 million in Q1 2014 due to improved
operating efficiencies, the absence of restructuring expense due to
the completion of the plant consolidation and lower depreciation
expense due to the maturing capital base. Gearing non-GAAP adjusted
EBITDA was $.1 million in Q1 2015, an improvement of $.9 million
compared to Q1 2014, due to the improved operating
efficiencies.
Services
Broadwind Energy specializes in non-routine drivetrain and blade
maintenance services and offers comprehensive field services to the
wind industry.
Services segment revenue was $1.9 million in Q1 2015, compared
to $2.4 million in Q1 2014, due to weak demand for turbine blade
repairs and other field service work. Services' operating loss for
Q1 2015 totaled $2.6 million, compared to $1.3 million in Q1 2014,
due to the low volume and a $.7 million inventory charge associated
with cost reduction actions taken to consolidate our gearbox repair
shops and exit the shrinking kilowatt turbine repair business.
Services' non-GAAP adjusted EBITDA loss for Q1 2015 totaled $2.2
million, compared to a non-GAAP adjusted EBITDA loss of $.9 million
in Q1 2014, due to the factors described above.
Corporate and Other
Corporate and other expenses totaled $2.3 million in Q1 2015,
essentially flat compared to Q1 2014. Lower incentive compensation
was offset by higher professional services expense and the timing
of health insurance costs.
Cash and Liquidity
During the quarter, operating working capital (accounts
receivable and inventory, net of accounts payable and customer
deposits) increased as expected to $29.6 million or 15% of
annualized Q1 2015 sales, due mainly to high steel inventory at the
Abilene facility, delayed invoicing of towers produced during the
quarter and draw-down of customer advances.
Cash assets (cash and short-term investments) totaled $.2
million at March 31, 2015, a decrease of $20 million from December
31, 2014, due to the increase in working capital noted above. Under
the terms of the Company's $20 million credit agreement,
availability varies depending on the balance of qualified
receivables and inventories. At March 31, 2015, the total
availability was $16 million and the Company had drawn $1.2 million
and had letters of credit outstanding of $2.5 million. The Company
expects the record high inventory level during Q1 to normalize and
replenish more than $10 million of cash before year end.
During the quarter, the Company did not repurchase any shares of
its stock.
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 over 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 contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 that involve risks,
uncertainties and assumptions, such as statements regarding our
future financial condition or results of operations, cash flows,
performance, business prospects, and opportunities, as well as
assumptions made by, and information currently available to, our
management, and our prospects and strategies for future growth,
including with respect to estimated 2015 guidance. Forward-looking
statements include any statement that does not directly relate to a
current or historical fact. We have tried to identify
forward-looking statements by using words such as "anticipate,"
"believe," "expect," "intend," "will," "should," "may," "plan" and
similar expressions, but these words are not the exclusive means of
identifying 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 and our plans to
evaluate alternative sources of funding if necessary; our
restructuring plans and the associated cost savings; our ability to
preserve and utilize our tax net operating loss carry-forwards; our
plans to continue to grow our business through organic growth; our
plans with respect to the use of proceeds from financing activities
and our ability to operate our business efficiently, manage capital
expenditures and costs effectively, and generate cash flow; 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 Report on Form 10-K
for the year ended December 31, 2014.
| |
|
|
| BROADWIND ENERGY, INC. AND
SUBSIDIARIES |
| CONSOLIDATED BALANCE
SHEETS |
| (IN THOUSANDS) |
| (UNAUDITED) |
| |
|
|
| |
March 31, |
December 31, |
| |
2015 |
2014 |
| |
(Unaudited) |
|
| ASSETS |
|
|
| CURRENT ASSETS: |
|
|
| Cash and cash equivalents |
$ 150 |
$ 12,149 |
| Short-term investments |
-- |
8,024 |
| Restricted cash |
83 |
83 |
| Accounts receivable, net of allowance for
doubtful accounts of $83 and $82 as of March 31, 2015 and December
31, 2014, respectively |
21,841 |
20,012 |
| Inventories, net |
45,855 |
34,921 |
| Prepaid expenses and other current
assets |
1,614 |
1,815 |
| Assets held for sale |
700 |
738 |
| Total current assets |
70,243 |
77,742 |
| Property and equipment, net |
61,400 |
62,952 |
| Intangible assets, net |
5,348 |
5,459 |
| Other assets |
436 |
464 |
| TOTAL ASSETS |
$ 137,427 |
$ 146,617 |
| |
|
|
| LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
| CURRENT LIABILITIES: |
|
|
| Line of credit and notes payable |
$ 1,238 |
$ -- |
| Current maturities of long-term debt |
64 |
268 |
| Current portions of capital lease
obligations |
667 |
766 |
| Accounts payable |
22,182 |
18,461 |
| Accrued liabilities |
7,875 |
9,553 |
| Customer deposits |
15,894 |
22,619 |
| Total current
liabilities |
47,920 |
51,667 |
| |
|
|
| LONG-TERM LIABILITIES: |
|
|
| Long-term debt, net of current
maturities |
2,612 |
2,650 |
| Long-term capital lease obligations, net
of current portions |
285 |
427 |
| Other |
2,990 |
3,493 |
| Total long-term
liabilities |
5,887 |
6,570 |
| |
|
|
| 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; 14,907,552 and 14,844,307 shares
issued and outstanding as of March 31, 2015 and December 31,
2014, respectively |
15 |
15 |
| Treasury stock, at cost, 273,937 shares
at March 31, 2015 and December 31, 2014, respectively |
(1,842) |
(1,842) |
| Additional paid-in capital |
377,440 |
377,185 |
| Accumulated deficit |
(291,993) |
(286,978) |
| Total stockholders'
equity |
83,620 |
88,380 |
| TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY |
$ 137,427 |
$ 146,617 |
| |
|
|
| |
|
|
| BROADWIND ENERGY, INC. AND
SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF
OPERATIONS |
| (IN THOUSANDS, EXCEPT PER SHARE
DATA) |
| (UNAUDITED) |
| |
|
|
| |
Three Months
Ended March 31, |
| |
2015 |
2014 |
| |
|
|
| Revenues |
$ 51,051 |
$ 58,800 |
| Cost of sales |
50,312 |
53,438 |
| Restructuring |
-- |
269 |
| Gross profit |
739 |
5,093 |
| |
|
|
| OPERATING EXPENSES: |
|
|
| Selling, general and administrative |
5,606 |
5,917 |
| Intangible amortization |
111 |
111 |
| Restructuring |
-- |
60 |
| Total operating expenses |
5,717 |
6,088 |
| Operating loss |
(4,978) |
(995) |
| |
|
|
| OTHER (EXPENSE) INCOME,
net: |
|
|
| Interest expense, net |
(172) |
(160) |
| Other, net |
212 |
136 |
| Total other (expense) income, net |
40 |
(24) |
| |
|
|
| Net loss from continuing operations before
provision for income taxes |
(4,938) |
(1,019) |
| Provision for income taxes |
77 |
24 |
| NET LOSS |
$ (5,015) |
$ (1,043) |
| |
|
|
| NET LOSS PER COMMON SHARE - BASIC AND
DILUTED: |
|
|
| Net loss |
$ (0.34) |
$ (0.07) |
| |
|
|
| WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - Basic and diluted |
14,597 |
14,659 |
| |
|
|
| |
|
|
| BROADWIND ENERGY, INC. AND
SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH
FLOWS |
| (IN THOUSANDS) |
| (UNAUDITED) |
| |
|
|
| |
Three Months
Ended March 31, |
| |
2015 |
2014 |
| CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
| Net loss |
$ (5,015) |
$ (1,043) |
| |
|
|
| Adjustments to reconcile
net cash used in operating activities: |
|
| Depreciation and
amortization expense |
2,578 |
3,114 |
| Impairment charges |
38 |
-- |
| Stock-based
compensation |
255 |
223 |
| Allowance for doubtful
accounts |
-- |
42 |
| Common stock issued under
defined contribution 401(k) plan |
-- |
163 |
| Loss on disposal of
assets |
-- |
5 |
| Changes in operating assets
and liabilities: |
|
|
| Accounts
receivable |
(1,829) |
(4,947) |
|
Inventories |
(10,934) |
(1,980) |
| Prepaid
expenses and other current assets |
102 |
457 |
| Accounts
payable |
3,644 |
(2,672) |
| Accrued
liabilities |
(1,678) |
(788) |
| Customer
deposits |
(6,727) |
(4,266) |
| Other
non-current assets and liabilities |
(472) |
(425) |
| Net cash used in operating activities |
(20,038) |
(12,117) |
| |
|
|
| CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
| Purchases of available for sale
securities |
(1,884) |
(2,543) |
| Sales of available for sale
securities |
5,083 |
1,890 |
| Maturities of available for sale
securities |
4,825 |
-- |
| Purchases of property and equipment |
(840) |
(2,200) |
| Proceeds from disposals of property and
equipment |
-- |
45 |
| Net cash provided by (used in) investing
activities |
7,184 |
(2,808) |
| |
|
|
| CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
| Payments on lines of credit and notes
payable |
(17,304) |
(164) |
| Proceeds from lines of credit and notes
payable |
18,400 |
-- |
| Principal payments on capital leases |
(241) |
(246) |
| Net cash provided by (used in) financing
activities |
855 |
(410) |
| |
|
|
| NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS |
(11,999) |
(15,335) |
| CASH AND CASH EQUIVALENTS, beginning
of the period |
12,149 |
24,936 |
| CASH AND CASH EQUIVALENTS, end of the
period |
$ 150 |
$ 9,601 |
| |
|
|
| Supplemental cash flow
information: |
|
|
| Interest paid |
$ 102 |
$ 143 |
| Income taxes paid |
$ 1 |
$ 2 |
| Non-cash investing and
financing activities: |
|
| Issuance of restricted stock grants |
$ 225 |
$ 138 |
| |
|
|
| |
|
|
| BROADWIND ENERGY, INC. AND
SUBSIDIARIES |
| SELECTED SEGMENT FINANCIAL
INFORMATION |
| (IN THOUSANDS) |
| |
|
|
| |
Three Months
Ended |
| |
March
31, |
| |
2015 |
2014 |
| ORDERS: |
(unaudited) |
| Towers and Weldments |
$ 11,770 |
$ 3,928 |
| Gearing |
9,654 |
8,277 |
| Services |
1,891 |
3,595 |
| Total revenues |
$ 23,315 |
$ 15,800 |
| |
|
|
| REVENUES: |
(unaudited) |
| Towers and Weldments |
$ 41,028 |
$ 48,294 |
| Gearing |
8,608 |
8,774 |
| Services |
1,938 |
2,438 |
| Corporate and Other |
(523) |
(706) |
| Total revenues |
$ 51,051 |
$ 58,800 |
| |
|
|
| OPERATING (LOSS)
PROFIT: |
(unaudited) |
| Towers and Weldments |
$ 1,135 |
$ 5,612 |
| Gearing |
(1,211) |
(2,966) |
| Services |
(2,624) |
(1,339) |
| Corporate and Other |
(2,278) |
(2,302) |
| Total operating loss |
$ (4,978) |
$ (995) |
| |
|
|
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, 2015 and 2014. 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.
| |
|
|
| BROADWIND ENERGY, INC. AND
SUBSIDIARIES |
| RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES |
| (IN THOUSANDS) |
| |
|
|
| Consolidated |
Three Months
Ended March 31, |
| |
2015 |
2014 |
| |
(unaudited) |
| Operating loss |
$ (4,978) |
$ (995) |
| Depreciation and amortization |
2,578 |
3,114 |
| Restructuring |
-- |
329 |
| Other income |
212 |
136 |
| Share-based compensation and other stock
payments |
255 |
223 |
| Total Adjusted EBITDA
(Non-GAAP) |
$ (1,933) |
$ 2,807 |
| |
|
|
| |
|
|
| Towers and Weldments
Segment |
Three Months
Ended March 31, |
| |
2015 |
2014 |
| |
(unaudited) |
| Operating Profit |
$ 1,135 |
$ 5,612 |
| Depreciation |
914 |
985 |
| Share-based compensation and other stock
payments |
15 |
43 |
| Other Income |
72 |
2 |
| Restructuring Expense |
-- |
18 |
| Total Adjusted EBITDA (Non-GAAP) |
$ 2,136 |
$ 6,660 |
| |
|
|
| |
Three Months
Ended March 31, |
| Gearing Segment |
2015 |
2014 |
| |
(unaudited) |
| Operating Loss |
$ (1,211) |
$ (2,966) |
| Depreciation |
1,185 |
1,690 |
| Amortization |
111 |
111 |
| Share-based compensation and other stock
payments |
62 |
59 |
| Other Income (Expense) |
-- |
2 |
| Restructuring Expense |
-- |
311 |
| Total Adjusted EBITDA (Non-GAAP) |
$ 147 |
$ (793) |
| |
|
|
| |
|
|
| Services Segment |
Three Months
Ended March 31, |
| |
2015 |
2014 |
| |
(unaudited) |
| Operating Loss |
$ (2,624) |
$ (1,339) |
| Depreciation |
322 |
313 |
| Share-based compensation and other stock
payments |
10 |
15 |
| Other Income (Expense) |
140 |
133 |
| Total Adjusted EBITDA (Non-GAAP) |
$ (2,152) |
$ (878) |
| |
|
|
| |
|
|
| Corporate and Other |
Three Months
Ended March 31, |
| |
2015 |
2014 |
| |
(unaudited) |
| Operating Loss |
$ (2,278) |
$ (2,302) |
| Depreciation |
46 |
15 |
| Share-based compensation and other stock
payments |
168 |
105 |
| Total Adjusted EBITDA (Non-GAAP) |
$ (2,064) |
$ (2,182) |
CONTACT: BWEN INVESTOR CONTACT:
Joni Konstantelos
708.780.4819
joni.konstantelos@bwen.com
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