SECOND QUARTER 2023 RESULTS
(As compared to the second quarter 2022)
- Revenue of
$50.8 million , +0.8 million y/y - Gross Profit of
$8.3 million ,+$5.9 million y/y - GAAP Net Income of
$1.4 million , +4.1 million y/y - Non-GAAP Adjusted EBITDA of
$5.4 million ,+$5.0 million y/y - Ratio of net debt to trailing twelve-month Non-GAAP Adjusted EBITDA of 2.0x as of
June 30, 2023 - Total backlog of
$262.2 million ,+$169.0 million y/y, as ofJune 30, 2023
FULL-YEAR 2023 FINANCIAL GUIDANCE
- Maintaining total revenue guidance in a range of between
$205 million and$220 million - Increasing Adjusted EBITDA guidance to a range of between
$17 million and$19 million
For the three months ended
During the second quarter,
Total backlog increased by
As of
BUSINESS UPDATE
- Capitalize on favorable demand. For the three months ended
June 30, 2023 , revenue growth within the Company’s industrial and energy markets was partially offset by decreased activity in the mining and construction markets. Wind-related revenue declined modestly in the second quarter 2023, versus the prior year period, primarily due to planned maintenance at theAbilene facility. Non-GAAP adjusted EBITDA increased meaningfully on a year-over-year basis across each reporting segment during the second quarter of 2023. - Drive revenue mix diversification. On a trailing twelve-month basis through the end of the second quarter 2023, non-wind revenue increased by nearly 32% on a year-over-year basis to
$98.9 million , supported by broad-based share gains across most end-markets. During the second quarter 2023, total non-wind revenue increased 12% on a year-over-year basis to$25.9 million , driven primarily by commercial growth across existing end-markets, together with organic, greenfield expansion in PRS sales. - Deliver sustained margin expansion. In the second quarter 2023, total gross margin rate increased 11.6 percentage points year-over-year to 16.4%, while non-GAAP adjusted EBITDA margin increased 9.8 percentage points to 10.5% in the same period. IRA-related tax credits, improved labor efficiencies and effective cost-management contributed to the year-over-year improvement, partially offset by planned facility maintenance.
- Drive asset optimization. As of
June 30, 2023 ,Broadwind had secured more than 50% of its optimal tower production capacity across its facilities for the full-years 2023 and 2024. During 2023, the Company expects to further optimize its plant utilization, resulting in improved economies of scale.Broadwind has deployed a lean operating approach across all divisions which includes continuous improvement efforts designed to drive throughput growth and asset optimization. The base load of orders in backlog is expected to allow the Company to focus these efforts on specific manufacturing processes offering the highest return on resources invested.
MANAGEMENT COMMENTARY
“Our balanced value creation strategy continues to prioritize targeted commercial expansion within growing energy transition markets, focused operational excellence and disciplined capital management, consistent with our commitment to driving superior total returns for our shareholders, over the long-term,” stated
“This year, we’ve introduced a series of performance improvement actions designed to drive greater process efficiency, reduce fixed overhead and further optimize our manufacturing base,” continued Blashford. “These actions, together with economic benefit afforded by the IRA’s advanced manufacturing tax credit, have propelled our margins and profitability toward historic highs. Given current activity levels, we anticipate a further acceleration in customer demand across our commercial and industrial markets into the second half of 2023, with expectations for improved wind tower demand during 2024.”
“Disciplined balance sheet management remains a key strategic priority for us,” continued Blashford. “Our net leverage profile improved meaningfully over the last year, with our ratio of net debt to trailing twelve-month non-GAAP adjusted EBITDA declining to 2.0x as of
“Today, we raised our full year 2023 Adjusted EBITDA guidance, with backlog still at near-record levels entering the third quarter,” concluded Blashford. “The overall demand outlook remains stable, while our operations excellence initiatives continue to drive improved cost efficiencies across the organization. As our business becomes increasingly cash generative, we expect to have improved balance sheet optionality with which to pursue investments that enhance our capabilities within complementary, high-value precision manufacturing markets.”
SEGMENT RESULTS
Heavy Fabrications Segment
Heavy Fabrications segment sales declined 5% to
Gearing Segment
Gearing segment sales increased by 9% to
Industrial Solutions Segment
Industrial Solutions segment sales increased 24% to
FINANCIAL GUIDANCE
The following financial guidance for the full year 2023 reflects the Company’s current expectations and beliefs. All guidance is current as of the time provided and is subject to change.
Full Year 2023 | |||||||||
$ in Millions | Prior Guidance | New Guidance | |||||||
Low | High | Low | High | ||||||
Revenue | $ | 205 | $ | 220 | $ | 205 | $ | 220 | |
Non-GAAP Adjusted EBITDA | $ | 16 | $ | 18 | $ | 17 | $ | 19 | |
SECOND QUARTER 2023 CONFERENCE CALL
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: | 1-877-407-9716 |
To listen to a replay of the teleconference, which will be available through
Teleconference Replay: | 1-844-512-2921 |
Conference ID: | 13740063 |
ABOUT
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, 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. 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. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following: (i) the impact of global health concerns on the economies and financial markets and the demand for our products; (ii) 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 (which remain subject to further technical guidance and regulations), and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
2023 | 2022 | |||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash | $ | 2,095 | $ | 12,732 | ||||||||
Accounts receivable, net | 28,796 | 17,018 | ||||||||||
AMP credit receivable | 6,729 | - | ||||||||||
Contract assets | 2,228 | 1,955 | ||||||||||
Inventories, net | 48,555 | 44,262 | ||||||||||
Prepaid expenses and other current assets | 3,143 | 3,291 | ||||||||||
Total current assets | 91,546 | 79,258 | ||||||||||
LONG-TERM ASSETS: | ||||||||||||
Property and equipment, net | 46,787 | 45,319 | ||||||||||
Operating lease right-of-use assets, net | 15,488 | 16,396 | ||||||||||
Intangible assets, net | 2,395 | 2,728 | ||||||||||
Other assets | 749 | 839 | ||||||||||
TOTAL ASSETS | $ | 156,965 | $ | 144,540 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Line of credit and current portion of long-term debt | $ | 13,110 | $ | 1,170 | ||||||||
Current portion of finance lease obligations | 1,590 | 2,008 | ||||||||||
Current portion of operating lease obligations | 1,737 | 1,882 | ||||||||||
Accounts payable | 28,419 | 26,255 | ||||||||||
Accrued liabilities | 5,680 | 4,313 | ||||||||||
Customer deposits | 30,360 | 34,550 | ||||||||||
Total current liabilities | 80,896 | 70,178 | ||||||||||
LONG-TERM LIABILITIES: | ||||||||||||
Long-term debt, net of current maturities | 7,203 | 7,141 | ||||||||||
Long-term finance lease obligations, net of current portion | 3,531 | 4,226 | ||||||||||
Long-term operating lease obligations, net of current portion | 15,917 | 16,696 | ||||||||||
Other | 20 | 26 | ||||||||||
Total long-term liabilities | 26,671 | 28,089 | ||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||
STOCKHOLDERS' EQUITY: | ||||||||||||
Preferred stock, | - | - | ||||||||||
Common stock, | 22 | 21 | ||||||||||
(1,842 | ) | (1,842 | ) | |||||||||
Additional paid-in capital | 398,180 | 397,240 | ||||||||||
Accumulated deficit | (346,962 | ) | (349,146 | ) | ||||||||
Total stockholders' equity | 49,398 | 46,273 | ||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 156,965 | $ | 144,540 | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended | Six Months Ended | |||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Revenues | $ | 50,843 | $ | 50,012 | $ | 99,716 | $ | 91,856 | ||||||||||||||
Cost of sales | 42,510 | 47,618 | 84,407 | 87,450 | ||||||||||||||||||
Gross profit | 8,333 | 2,394 | 15,309 | 4,406 | ||||||||||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||||
Selling, general and administrative | 5,952 | 4,122 | 11,478 | 8,024 | ||||||||||||||||||
Intangible amortization | 165 | 184 | 333 | 367 | ||||||||||||||||||
Total operating expenses | 6,117 | 4,306 | 11,811 | 8,391 | ||||||||||||||||||
Operating income (loss) | 2,216 | (1,912 | ) | 3,498 | (3,985 | ) | ||||||||||||||||
OTHER EXPENSE, net: | ||||||||||||||||||||||
Interest expense, net | (751 | ) | (776 | ) | (1,239 | ) | (1,121 | ) | ||||||||||||||
Other, net | (22 | ) | - | (24 | ) | 21 | ||||||||||||||||
Total other expense, net | (773 | ) | (776 | ) | (1,263 | ) | (1,100 | ) | ||||||||||||||
Net income (loss) before provision for income taxes | 1,443 | (2,688 | ) | 2,235 | (5,085 | ) | ||||||||||||||||
Provision for income taxes | 28 | 15 | 51 | 22 | ||||||||||||||||||
NET INCOME (LOSS) | $ | 1,415 | $ | (2,703 | ) | $ | 2,184 | $ | (5,107 | ) | ||||||||||||
NET INCOME (LOSS) PER COMMON SHARE - BASIC: | ||||||||||||||||||||||
Net income (loss) | $ | 0.07 | $ | (0.13 | ) | $ | 0.10 | $ | (0.26 | ) | ||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 21,091 | 20,244 | 20,981 | 19,977 | ||||||||||||||||||
NET INCOME (LOSS) PER COMMON SHARE - DILUTED: | ||||||||||||||||||||||
Net income (loss) | $ | 0.07 | $ | (0.13 | ) | $ | 0.10 | $ | (0.26 | ) | ||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 21,409 | 20,244 | 21,390 | 19,977 | ||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Six Months Ended | |||||||||||
2023 | 2022 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income (loss) | $ | 2,184 | $ | (5,107 | ) | ||||||
Adjustments to reconcile net cash used in operating activities: | |||||||||||
Depreciation and amortization expense | 3,167 | 3,095 | |||||||||
Deferred income taxes | (5 | ) | (9 | ) | |||||||
Change in fair value of interest rate swap agreements | - | 2 | |||||||||
Share-based compensation | 409 | 580 | |||||||||
Allowance for doubtful accounts | 16 | 30 | |||||||||
Common stock issued under defined contribution 401(k) plan | 648 | 613 | |||||||||
Loss on disposal of assets | 48 | 3 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (11,794 | ) | (7,389 | ) | |||||||
AMP credit receivable | (6,729 | ) | - | ||||||||
Employee retention credit receivable | - | 497 | |||||||||
Contract assets | (273 | ) | (2,194 | ) | |||||||
Inventories | (4,293 | ) | (1,552 | ) | |||||||
Prepaid expenses and other current assets | 147 | 596 | |||||||||
Accounts payable | 1,776 | 9,698 | |||||||||
Accrued liabilities | 1,367 | 656 | |||||||||
Customer deposits | (4,190 | ) | (7,789 | ) | |||||||
Other non-current assets and liabilities | 75 | 6 | |||||||||
Net cash used in operating activities | (17,447 | ) | (8,264 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Purchases of property and equipment | (3,977 | ) | (1,697 | ) | |||||||
Proceeds from disposals of property and equipment | 15 | - | |||||||||
Net cash used in investing activities | (3,962 | ) | (1,697 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Proceeds from line of credit, net | 11,991 | 10,687 | |||||||||
Proceeds from long-term debt | 618 | 125 | |||||||||
Payments on long-term debt | (607 | ) | (107 | ) | |||||||
Principal payments on finance leases | (1,113 | ) | (1,003 | ) | |||||||
Shares withheld for taxes in connection with issuance of restricted stock | (117 | ) | (544 | ) | |||||||
Net cash provided by financing activities | 10,772 | 9,158 | |||||||||
- | |||||||||||
(10,637 | ) | (803 | ) | ||||||||
CASH beginning of the period | 12,732 | 852 | |||||||||
CASH end of the period | $ | 2,095 | $ | 49 | |||||||
SELECTED SEGMENT FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended | Six Months Ended | ||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||
ORDERS: | |||||||||||||||||||
Heavy Fabrications | $ | 12,363 | $ | 12,989 | $ | 32,599 | $ | 47,149 | |||||||||||
Gearing | 5,813 | 8,941 | 18,206 | 23,003 | |||||||||||||||
Industrial Solutions | 7,185 | 4,116 | 14,158 | 8,587 | |||||||||||||||
Total orders | $ | 25,361 | $ | 26,046 | $ | 64,963 | $ | 78,739 | |||||||||||
REVENUES: | |||||||||||||||||||
Heavy Fabrications | $ | 33,944 | $ | 35,575 | $ | 65,537 | $ | 62,847 | |||||||||||
Gearing | 10,977 | 10,115 | 22,943 | 20,700 | |||||||||||||||
Industrial Solutions | 6,270 | 5,049 | 11,692 | 9,121 | |||||||||||||||
Corporate and Other | (348 | ) | (727 | ) | (456 | ) | (812 | ) | |||||||||||
Total revenues | $ | 50,843 | $ | 50,012 | $ | 99,716 | $ | 91,856 | |||||||||||
OPERATING PROFIT/(LOSS): | |||||||||||||||||||
Heavy Fabrications | $ | 3,867 | $ | 78 | $ | 6,657 | $ | (383 | ) | ||||||||||
Gearing | 348 | (585 | ) | 929 | (697 | ) | |||||||||||||
Industrial Solutions | 843 | 32 | 1,465 | (177 | ) | ||||||||||||||
Corporate and Other | (2,842 | ) | (1,437 | ) | (5,553 | ) | (2,728 | ) | |||||||||||
Total operating profit (loss) | $ | 2,216 | $ | (1,912 | ) | $ | 3,498 | $ | (3,985 | ) | |||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)
Consolidated | Three Months Ended | Six Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||
Net Income (Loss) | $ | 1,415 | $ | (2,703 | ) | $ | 2,184 | $ | (5,107 | ) | |||||||
Interest Expense | 751 | 776 | 1,239 | 1,121 | |||||||||||||
Income Tax Provision | 28 | 15 | 51 | 22 | |||||||||||||
Depreciation and Amortization | 1,562 | 1,576 | 3,167 | 3,095 | |||||||||||||
Share-based Compensation and Other Stock Payments | 567 | 708 | 1,060 | 1,232 | |||||||||||||
Proxy Contest-Related Expenses | 1,036 | - | 1,755 | - | |||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 5,359 | $ | 372 | $ | 9,456 | $ | 363 | |||||||||
Heavy Fabrications Segment | Three Months Ended | Six Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net Income (Loss) | $ | 3,736 | $ | (302 | ) | $ | 6,326 | $ | (778 | ) | ||||||
Interest Expense | 137 | 455 | 277 | 595 | ||||||||||||
Income Tax (Benefit) Provision | (5 | ) | (74 | ) | 54 | (201 | ) | |||||||||
Depreciation | 856 | 862 | 1,714 | 1,741 | ||||||||||||
Share-based Compensation and Other Stock Payments | 241 | 256 | 452 | 472 | ||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 4,965 | $ | 1,197 | $ | 8,823 | $ | 1,829 |
Gearing Segment | Three Months Ended | Six Ended | |||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Net Income (Loss) | $ | 273 | $ | (630 | ) | $ | 774 | $ | (766 | ) | |||||
Interest Expense | 67 | 43 | 140 | 90 | |||||||||||
Income Tax Provision | 8 | 2 | 15 | 2 | |||||||||||
Depreciation and Amortization | 556 | 554 | 1,152 | 1,030 | |||||||||||
Share-based Compensation and Other Stock Payments | 117 | 160 | 233 | 278 | |||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 1,021 | $ | 129 | $ | 2,314 | $ | 634 | |||||||
Industrial Solutions Segment | Three Months Ended | Six Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net Income (Loss) | $ | 681 | $ | (32 | ) | $ | 1,210 | $ | (257 | ) | ||||||
Interest Expense | 128 | 52 | 211 | 66 | ||||||||||||
Income Tax Provision | 13 | 9 | 21 | 11 | ||||||||||||
Depreciation and Amortization | 92 | 98 | 186 | 201 | ||||||||||||
Share-based Compensation and Other Stock Payments | 57 | 73 | 101 | 134 | ||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 971 | $ | 200 | $ | 1,729 | $ | 155 | ||||||||
Corporate and Other | Three Months Ended | Six Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||
Net Loss | $ | (3,275 | ) | $ | (1,739 | ) | $ | (6,126 | ) | $ | (5,917 | ) | |||||
Interest Expense | 419 | 226 | 611 | 481 | |||||||||||||
Income Tax Provision (Benefit) | 12 | 78 | (39 | ) | (408 | ) | |||||||||||
Depreciation and Amortization | 58 | 62 | 115 | 212 | |||||||||||||
Share-based Compensation and Other Stock Payments | 152 | 219 | 274 | 1,155 | |||||||||||||
Proxy Contest-Related Expenses | 1,036 | - | 1,755 | - | |||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | (1,598 | ) | $ | (1,154 | ) | $ | (3,410 | ) | $ | (4,477 | ) | |||||
IR CONTACTNoel Ryan , IRC BWEN@val-adv.com
Source:
2023 GlobeNewswire, Inc., source