Broadwind (Nasdaq: BWEN, or the “Company”), a diversified precision manufacturer of specialized components and solutions serving global markets, today announced results for the second quarter 2024.

SECOND QUARTER 2024 RESULTS

  • Total revenue of $36.5 million
  • Net income of $0.5 million, or $0.02 per diluted share
  • Total non-GAAP adjusted EBITDA of $3.6 million, or 10.0% of total revenue
  • Ratio of net debt to trailing twelve-month non-GAAP adjusted EBITDA of 1.1x as of June 30, 2024

Broadwind reported second quarter net income of $0.5 million, or $0.02 per diluted share, versus $1.4 million, or $0.07 per diluted share, in the prior year period. The Company reported adjusted EBITDA, a non-GAAP measure, of $3.6 million in the second quarter compared to $5.4 million in the prior-year period. For a reconciliation of GAAP to non-GAAP metrics, please see the appendix of this release.

Second quarter results benefited from a higher value sales mix, strong operational execution, and improved manufacturing efficiency, offset by broad softness in onshore wind, oil & gas and industrial demand. While revenue declined by more than 28% on a year-over-year basis in the second quarter, the Company effectively managed its operating leverage, resulting in a modest decline in non-GAAP adjusted EBITDA margin, compared to the prior year period.

Second quarter orders declined compared to the prior year period due to a pause in demand across most of our verticals. Total backlog was $139.1 million as of June 30, 2024, while the book-to-bill ratio was 0.5x for the second quarter of 2024.

As of June 30, 2024, Broadwind had total cash on hand and availability under the Company’s credit facility of $18.4 million, versus $22.4 million at the end of the first quarter of 2024.

MANAGEMENT COMMENTARY

“We continued to successfully navigate the ongoing transitional period for onshore wind demand by investing in technology, expanding within high-growth energy transition market adjacencies and driving improved productivity across our manufacturing footprint, resulting in continued operating leverage improvements during the quarter,” stated Eric Blashford, President and CEO of Broadwind.   “While our second quarter wind and oil & gas revenues were pressured, wind OEM customer outlooks are improving and order indication activity is accelerating in our non-wind markets, pointing toward improved order activity going into 2025.”

“Based on customer feedback, we believe that the trough in onshore wind demand is largely behind us, reinforcing our continued expectations for a meaningful improvement in demand through 2025 and 2026,” continued Blashford. “Our current focus on operational efficiency and expansion into higher growth energy transition market adjacencies, better positions us to benefit from attractive multi-year secular demand trends within energy transition and deliver above market-growth through the cycle.”

“While new order activity softened across our three segments, new order demand within mining and industrial markets accelerated this quarter,” continued Blashford. “We have been focused on improving our relationships with new and existing customers, which resulted in targeted new customer project wins during the quarter. Going forward, we will continue to build on our customer relationships within existing verticals and position for opportunistic expansion into new markets, such as aerospace and defense” stated Blashford.

“Our focus on operational efficiency and fixed cost management allowed us to deliver non-GAAP adjusted EBITDA margin of 10%, despite lower revenues,” stated Blashford. “In combination, these actions have contributed more than $4 million in annualized cost savings beginning in the first quarter 2024.   At the end of the second quarter, we had $18.4 million of available cash and liquidity to support our operations and continue to prioritize balance sheet discipline ahead of an acceleration in wind demand. As of June 30, 2024, our net leverage was 1.1x, well within our target range of at or below 2.0x.”

“Today, we introduced financial guidance for the third quarter 2024,” concluded Blashford.  “While wind tower demand is expected to remain muted over the near-term, we remain pleased with the pace of new order activity and performance within our other, non-wind markets, a dynamic we expect to continue as we move through the balance of 2024.”

SEGMENT RESULTS

Heavy Fabrications Segment Broadwind provides large, complex and precision fabrications, and proprietary industrial processing equipment, to customers in a broad range of industrial markets. Key products include wind towers, industrial fabrications, including mining and material handling components and other frames/structures, and compressed natural gas pressure reducing systems.  

Heavy Fabrications segment sales declined by 42.2% to $19.6 million in the second quarter 2024, as compared to the prior-year period, primarily driven by a 58.0% decline in towers sections sold. The segment reported operating income of $1.6 million in the second quarter, as compared to operating income of $3.9 million in the prior year period. The segment non-GAAP adjusted EBITDA was $2.8 million in the second quarter, as compared to $5.0 million in the prior-year period.

Gearing SegmentBroadwind provides custom gearboxes, loose gearing, precision machining and heat treat services to a broad set of customers in diverse markets, including oil & gas production, surface and underground mining, wind energy, steel, material handling and other infrastructure markets.

Gearing segment sales declined by 4.8% to $10.5 million in the second quarter 2024, as compared to the prior year period, as growth in wind revenues was more than offset by softness across other markets served. The segment reported operating income of $0.5 million in the second quarter, compared to operating income of $0.3 million in the prior year period. The segment reported non-GAAP adjusted EBITDA of $1.2 million in the second quarter, versus $1.0 million in the prior-year period.

Industrial Solutions Segment Broadwind provides supply chain solutions, light fabrication, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market as well as other clean technology markets.  

Industrial Solutions segment sales increased 3.1% to $6.5 million in the second quarter 2024, as compared to the prior year period, primarily driven by increased demand for aftermarket gas turbine content. The segment reported operating income of $0.6 million in the second quarter compared to operating income of $0.8 million in the prior year period. The segment reported non-GAAP adjusted EBITDA of $0.8 million in the second quarter, versus $1.0 million in the prior year period.

FINANCIAL GUIDANCE

Today, Broadwind introduced financial guidance for the third quarter 2024. The following financial guidance reflects the Company’s current expectations and beliefs. All guidance is current as of the time provided and is subject to change.

  Third Quarter 2024
$ in Millions Low Mid High
       
Total Revenue $36 $37 $38
Adjusted EBITDA $1.7 $2.1 $2.5
       

SECOND QUARTER 2024 RESULTS CONFERENCE CALL

Broadwind will host a conference call today, August 13, 2024, at 11:00 a.m. ET to review the Company’s financial results, discuss recent events and conduct a question-and-answer session.

A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of the Company’s corporate website at https://investors.bwen.com/investors. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.

To participate in the live teleconference:
     
Live Teleconference:   877-407-9716
     
To listen to a replay of the teleconference, which will be available through Tuesday, August 20, 2024:
     
Teleconference Replay:   844-512-2921
Conference ID:   13747800
     

ABOUT BROADWIND

Broadwind (Nasdaq: BWEN) is a precision manufacturer of structures, equipment and components for clean tech and other specialized applications. With facilities throughout the U.S., our talented team is committed to helping customers maximize performance of their investments—quicker, easier and smarter. Find out more at www.bwen.com

NON-GAAP FINANCIAL MEASURES

The Company provides non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share-based compensation and other stock payments, restructuring costs, impairment charges, proxy contest-related expenses and other non-cash gains and losses) as supplemental information regarding the Company’s business performance. The Company’s management uses this supplemental information when it internally evaluates its performance, reviews financial trends and makes operating and strategic decisions. The Company believes that this non-GAAP financial measure is useful to investors because it provides investors with a better understanding of the Company’s past financial performance and future results, which allows investors to evaluate the Company’s performance using the same methodology and information as used by the Company’s management. The Company's definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.

FORWARD-LOOKING STATEMENTS

This release contains “forward-looking statements”—that is, statements related to future, not past, events— as defined in Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. 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. Forward-looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following: (i) our expectations and beliefs with respect to our financial guidance as set forth in this release; (ii) the impact of global health concerns on the economies and financial markets and the demand for our products; (iii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants, including the advanced manufacturing tax credits, and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iv) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (v) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (vi) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary; (vii) our ability to continue to grow our business organically and through acquisitions; (viii) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (ix) information technology failures, network disruptions, cybersecurity attacks or breaches in data security; (x) the sufficiency of our liquidity and alternate sources of funding, if necessary; (xi) our ability to realize revenue from customer orders and backlog (including our ability to finalize the terms of the remaining obligations under a supply agreement with a leading global wind turbine manufacturer); (xii) the economy and the potential impact it may have on our business, including our customers; (xiii) the state of the wind energy market and other energy and industrial markets generally, including the availability of tax credits, and the impact of competition and economic volatility in those markets; (xiv) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xvi) the effects of the change of administrations in the U.S. federal government; (xvii) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xviii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xix) the limited trading market for our securities and the volatility of market price for our securities; (xx) our outstanding indebtedness and its impact on our business activities (including our ability to incur additional debt in the future); and (xxi) the impact of future sales of our common stock or securities convertible into our common stock on our stock price. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements including, but not limited to, those set forth under the caption “Risk Factors” in Part I, Item 1A of our most recently filed Form 10-K. We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.

 
BROADWIND, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(IN THOUSANDS)(UNAUDITED)
 
          June 30,   December 31,
            2024       2023  
ASSETS        
CURRENT ASSETS:        
  Cash   $ 938     $ 1,099  
  Accounts receivable, net     14,172       19,231  
  AMP credit receivable     1,691       7,051  
  Contract assets     1,157       1,460  
  Inventories     38,802       37,405  
  Prepaid expenses and other current assets     2,390       3,500  
    Total current assets     59,150       69,746  
LONG-TERM ASSETS:        
  Property and equipment, net     46,266       47,123  
  Operating lease right-of-use assets, net     14,748       15,593  
  Intangible assets, net     1,733       2,064  
  Other assets     636       630  
TOTAL ASSETS   $ 122,533     $ 135,156  
               
LIABILITIES AND STOCKHOLDERS' EQUITY        
CURRENT LIABILITIES:        
  Line of credit and current maturities of long-term debt   $ 12,012     $ 5,903  
  Current portion of finance lease obligations     2,098       2,153  
  Current portion of operating lease obligations     1,987       1,851  
  Accounts payable     15,950       20,728  
  Accrued liabilities     4,347       6,477  
  Customer deposits     2,772       16,500  
    Total current liabilities     39,166       53,612  
LONG-TERM LIABILITIES:        
  Long-term debt, net of current maturities     5,945       6,250  
  Long-term finance lease obligations, net of current portion     3,481       3,372  
  Long-term operating lease obligations, net of current portion     14,872       15,888  
  Other     17       15  
    Total long-term liabilities     24,315       25,525  
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; 45,000,000 shares authorized; 22,259,496 and 21,840,301 shares issued as of June 30, 2024 and December 31, 2023, respectively     22       22  
  Treasury stock, at cost, 273,937 shares as of June 30, 2024 and December 31, 2023, respectively     (1,842 )     (1,842 )
  Additional paid-in capital.     400,377       399,336  
  Accumulated deficit     (339,505 )     (341,497 )
    Total stockholders' equity     59,052       56,019  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 122,533     $ 135,156  
               
 
BROADWIND, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
 
        Three Months Ended June 30,   Six Months Ended June 30,
          2024       2023       2024       2023  
                     
                     
Revenues     $ 36,452     $ 50,843     $ 74,068     $ 99,716  
Cost of sales       30,886       42,510       61,865       84,407  
Gross profit       5,566       8,333       12,203       15,309  
                     
OPERATING EXPENSES:                
Selling, general and administrative     4,143       5,952       8,537       11,478  
Intangible amortization     166       165       331       333  
  Total operating expenses     4,309       6,117       8,868       11,811  
Operating income     1,257       2,216       3,335       3,498  
                     
OTHER EXPENSE, net:                
Interest expense, net     (726 )     (751 )     (1,258 )     (1,239 )
Other, net       4       (22 )     7       (24 )
  Total other expense, net     (722 )     (773 )     (1,251 )     (1,263 )
Net income before provision for income taxes     535       1,443       2,084       2,235  
Provision for income taxes     53       28       92       51  
NET INCOME   $ 482     $ 1,415     $ 1,992     $ 2,184  
                   
NET INCOME PER COMMON SHARE - BASIC:              
Net income     $ 0.02     $ 0.07     $ 0.09     $ 0.10  
                   
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC     21,783       21,091       21,689       20,981  
                     
NET INCOME PER COMMON SHARE - DILUTED:              
Net income     $ 0.02     $ 0.07     $ 0.09     $ 0.10  
                   
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED       22,003       21,409       21,904       21,390  
                     
       
BROADWIND, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(IN THOUSANDS)(UNAUDITED)
       
          Six Months Ended June 30,
            2024     2023  
CASH FLOWS FROM OPERATING ACTIVITIES:      
  Net income   $ 1,992   $ 2,184  
Adjustments to reconcile net cash used in operating activities:      
    Depreciation and amortization expense     3,314     3,167  
    Deferred income taxes     2     (5 )
    Share-based compensation     576     409  
    Allowance for credit losses     (2 )   16  
    Common stock issued under defined contribution 401(k) plan     595     648  
    (Gain) loss on disposal of assets.     (114 )   48  
    Changes in operating assets and liabilities:      
      Accounts receivable     5,061     (11,794 )
      AMP credit receivable     5,360     (6,729 )
      Contract assets     302     (273 )
      Inventories     (1,397 )   (4,293 )
      Prepaid expenses and other current assets     1,111     147  
      Accounts payable     (4,328 )   1,776  
      Accrued liabilities     (2,130 )   1,367  
      Customer deposits.     (13,728 )   (4,190 )
      Other non-current assets and liabilities     (41 )   75  
Net cash used in operating activities     (3,427 )   (17,447 )
             
CASH FLOWS FROM INVESTING ACTIVITIES:      
  Purchases of property and equipment     (2,534 )   (3,977 )
  Proceeds from disposals of property and equipment     159     15  
Net cash used in investing activities     (2,375 )   (3,962 )
             
CASH FLOWS FROM FINANCING ACTIVITIES:      
  Proceeds from line of credit, net     5,914     11,991  
  Proceeds from long-term debt     1,421     618  
  Payments on long-term debt     (681 )   (607 )
  Payments on finance leases     (883 )   (1,113 )
  Shares withheld for taxes in connection with issuance of restricted stock     (130 )   (117 )
Net cash provided by financing activities     5,641     10,772  
             
NET DECREASE IN CASH     (161 )   (10,637 )
CASH beginning of the period     1,099     12,732  
CASH end of the period   $ 938   $ 2,095  
             
 
BROADWIND, INC. AND SUBSIDIARIESSELECTED SEGMENT FINANCIAL INFORMATION(IN THOUSANDS)(UNAUDITED)
 
      Three Months Ended   Six Months Ended
      June 30,   June 30,
        2024       2023       2024       2023  
ORDERS:            
  Heavy Fabrications   $ 9,138     $ 12,363     $ 20,359     $ 32,599  
  Gearing     4,704       5,813       15,150       18,206  
  Industrial Solutions     4,530       7,185       11,859       14,158  
  Total orders   $ 18,372     $ 25,361     $ 47,368     $ 64,963  
                   
REVENUES:            
  Heavy Fabrications   $ 19,611     $ 33,944     $ 41,628     $ 65,537  
  Gearing     10,454       10,977       18,791       22,943  
  Industrial Solutions     6,463       6,270       14,456       11,692  
  Corporate and Other     (76 )     (348 )     (807 )     (456 )
  Total revenues   $ 36,452     $ 50,843     $ 74,068     $ 99,716  
                   
OPERATING INCOME/(LOSS):            
  Heavy Fabrications   $ 1,557     $ 3,867     $ 3,601     $ 6,657  
  Gearing     482       348       508       929  
  Industrial Solutions     623       843       2,390       1,465  
  Corporate and Other     (1,405 )     (2,842 )     (3,164 )     (5,553 )
  Total operating profit (loss)   $ 1,257     $ 2,216     $ 3,335     $ 3,498  
                   
 
BROADWIND, INC. AND SUBSIDIARIESRECONCILIATION OF NON-GAAP FINANCIAL MEASURES(IN THOUSANDS)(UNAUDITED)
             
Consolidated   Three Months Ended June 30,   Six Months Ended June 30,
      2024       2023       2024       2023  
Net Income   $ 482     $ 1,415     $ 1,992     $ 2,184  
Interest Expense     726       751       1,258       1,239  
Income Tax Provision     53       28       92       51  
Depreciation and Amortization     1,718       1,562       3,314       3,167  
Share-based Compensation and Other Stock Payments     663       567       1,165       1,060  
Proxy Contest-Related Expenses     -       1,036       (10 )     1,755  
Adjusted EBITDA (Non-GAAP).   $ 3,642     $ 5,359     $ 7,811     $ 9,456  
Heavy Fabrications Segment   Three Months Ended June 30,   Six Months Ended June 30,
      2024       2023       2024       2023  
Net Income   $ 1,699     $ 3,736     $ 4,287     $ 6,326  
Interest Expense     264       137       354       277  
Income Tax (Benefit) Provision     (408 )     (5 )     (1,038 )     54  
Depreciation     1,022       856       1,933       1,714  
Share-based Compensation and Other Stock Payments     222       241       400       452  
Adjusted EBITDA (Non-GAAP)   $ 2,799     $ 4,965     $ 5,936     $ 8,823  
Gearing Segment   Three Months Ended June 30,   Six Months Ended June 30,
      2024       2023       2024       2023  
Net Income   $ 422     $ 273     $ 387     $ 774  
Interest Expense     53       67       106       140  
Income Tax Provision     7       8       14       15  
Depreciation and Amortization     553       556       1,093       1,152  
Share-based Compensation and Other Stock Payments     128       117       230       233  
Adjusted EBITDA (Non-GAAP)   $ 1,163     $ 1,021     $ 1,830     $ 2,314  
Industrial Solutions Segment   Three Months Ended June 30,   Six Months Ended June 30,
      2024       2023       2024       2023  
Net Income   $ 471     $ 681     $ 2,055     $ 1,210  
Interest Expense.     115       128       278       211  
Income Tax Provision     35       13       58       21  
Depreciation and Amortization.     106       92       205       186  
Share-based Compensation and Other Stock Payments     76       57       126       101  
Adjusted EBITDA (Non-GAAP)   $ 803     $ 971     $ 2,722     $ 1,729  
Corporate and Other   Three Months Ended June 30,   Six Months Ended June 30,
      2024       2023       2024       2023  
Net Loss   $ (2,110 )   $ (3,275 )   $ (4,737 )   $ (6,126 )
Interest Expense.     294       419       520       611  
Income Tax Provision (Benefit)     419       12       1,058       (39 )
Depreciation and Amortization     37       58       83       115  
Share-based Compensation and Other Stock Payments     237       152       409       274  
Proxy Contest-Related Expenses     -       1,036       (10 )     1,755  
Adjusted EBITDA (Non-GAAP)   $ (1,123 )   $ (1,598 )   $ (2,677 )   $ (3,410 )
IR CONTACT

Noel Ryan, IRC
BWEN@val-adv.com
Broadwind (NASDAQ:BWEN)
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