THIRD QUARTER 2020 RESULTS
(As compared to the third quarter 2019)
- Total revenue of
$54.6 million , +18% y/y - Total gross profit of
$3.7 million , (6%) y/y - Total net loss of
($1.0) million , or ($0.06 ) per basic share - Total non-GAAP adjusted EBITDA of
$1.3 million (30%) y/y - Total cash and excess availability of
$21.8 million , +13% y/y
For the three months ended
Year-over-year revenue growth in the Heavy Fabrications segment more than offset a decline in Gearing and Industrial Solutions segment revenues during the third quarter 2020. Heavy Fabrications segment revenue increased by more than 28% on a year-over-year basis in the third quarter, supported by a combination of strong demand for wind towers, together with higher selling prices, the combination of which contributed to a favorable sales mix. Gearing segment revenue declined by 11% driven primarily by lower order intake in recent quarters, primarily in oil/gas and mining end markets, partially offset by increased demand in other industrial markets. Industrial Solutions segment revenue declined 5%, due to supply chain constraints and customer project delays.
STRATEGY UPDATE
During the third quarter,
- Diverse market focus. Revenue from non-wind markets, including the industrial, mining and natural gas turbine markets, continue to be a strategic focus for the Company, contributing 29% of total revenue for the nine months ended 2020. The Company’s trailing twelve months revenue from non-wind markets is
$63 million , a reflection of the Company’s progress against executing its multi-year strategy to diversify its customers and end market exposure beyond its legacy wind business. The Company continues to evaluate new, offshore wind customer opportunities that leverage its existing expertise. - Increased operating efficiency. The Company sold 312 wind tower sections in the third quarter 2020, versus 243 sections in the prior-year period. Plant utilization has increased year over year, due in part to increases in expected wind tower installations in the current year and expansion of its customer base.
Broadwind produced towers for three of the four top global wind turbine manufacturers in Q3. During the current year quarter, supply chain and staffing constraints caused by the COVID-19 pandemic resulted in increased manufacturing inefficiencies. - Disciplined capital management. During the third quarter, the Company reduced total outstanding indebtedness under its line of credit by
$4.5 million . Total cash and availability under outstanding credit facilities was flat sequentially and increased$2.5 million when compared to the prior year third quarter. As ofSeptember 30, 2020 , the ratio of net debt to trailing twelve-month adjusted EBITDA was .9x, after excluding the$9.2 million in loans received under the Paycheck Protection Program.
MANAGEMENT COMMENTARY
“During a period of pandemic-related market disruption, we have continued to advance our long-term strategy through targeted end-market diversification, operational execution, cost discipline and the pursuit of new organic growth opportunities that leverage our precision manufacturing expertise,” stated
“Total revenue increased more than 18% on a year-over-year basis in the third quarter, driven by sustained demand for new wind tower installations in the US,” continued Blashford. “Despite the negative impacts caused by the pandemic, we sold a total of 312 wind tower sections during the third quarter, an increase of nearly 30% when compared to the year-ago period, supported by a safe-harbor extension of the Production Tax Credit announced earlier this year.”
“By 2025, we expect annual North American offshore wind capacity additions to exceed onshore additions, representing a significant new opportunity for Broadwind,” stated Blashford. “We are continuing to evaluate the economics of the offshore tower market and our strategy to serve this market. We believe the transition to offshore represents a natural progression for our business, should we choose to move forward with the initiative.”
“We generated positive cash flow during the third quarter, positioning us to reduce outstanding borrowings under our line of credit by
“Despite the effects of COVID-19 on our business and the general economy in 2020, assuming there are no new material disturbances caused by the COVID-19 pandemic, we expect year over year growth in Revenue and adjusted EBITDA for the full year 2020. For Q4 2020, we expect revenue to be approximately
ORDERS AND BACKLOG
Total orders declined 48% on a year-over-year basis to
Total backlog declined 12% sequentially in the third quarter to
SEGMENT RESULTS
Heavy Fabrications Segment
Heavy Fabrications segment sales increased by
Gearing Segment
Gearing segment sales declined by
Industrial Solutions Segment
Industrial Solutions segment sales declined by
THIRD QUARTER 2020 CONFERENCE CALL
To participate in the live teleconference:
Domestic Live: | 877-407-9716 |
International Live: | 201-493-6779 |
To listen to a replay of the teleconference, which will be available through | |
Domestic Replay: | 844-512-2921 |
International Replay: | 412-317-6671 |
Conference ID: | 13711760 |
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 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, many of which are, and will be, amplified by the COVID-19 pandemic: (i) the impact of global health concerns, including the impact of the current COVID-19 pandemic 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 and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
2020 | 2019 | ||||||||
ASSETS | |||||||||
CURRENT ASSETS: | |||||||||
Cash | $ | 2,541 | $ | 2,416 | |||||
Accounts receivable, net | 24,161 | 18,310 | |||||||
Contract assets | 1,475 | - | |||||||
Inventories, net | 25,480 | 31,863 | |||||||
Prepaid expenses and other current assets | 2,463 | 2,124 | |||||||
Total current assets | 56,120 | 54,713 | |||||||
LONG-TERM ASSETS: | |||||||||
Property and equipment, net | 46,101 | 46,940 | |||||||
Operating lease right-of-use assets | 19,067 | 15,980 | |||||||
Intangible assets, net | 4,369 | 4,919 | |||||||
Other assets | 399 | 314 | |||||||
TOTAL ASSETS | $ | 126,056 | $ | 122,866 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
CURRENT LIABILITIES: | |||||||||
Line of credit and other notes payable | $ | 8,176 | $ | 12,917 | |||||
Current portion of finance lease obligations | 1,174 | 546 | |||||||
Current portion of operating lease obligations | 1,588 | 1,326 | |||||||
Accounts payable | 17,631 | 21,876 | |||||||
Accrued liabilities | 5,750 | 4,911 | |||||||
Customer deposits | 18,524 | 22,717 | |||||||
Total current liabilities | 52,843 | 64,293 | |||||||
LONG-TERM LIABILITIES: | |||||||||
Long-term debt, net of current maturities | 9,497 | 505 | |||||||
Long-term finance lease obligations, net of current portion | 1,856 | 673 | |||||||
Long-term operating lease obligations, net of current portion | 19,529 | 16,591 | |||||||
Other | 96 | 44 | |||||||
Total long-term liabilities | 30,978 | 17,813 | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||||
STOCKHOLDERS' EQUITY: | |||||||||
Preferred stock, | |||||||||
or outstanding | - | - | |||||||
Common stock, | |||||||||
and 16,830,930 shares issued as of | |||||||||
17 | 17 | ||||||||
respectively | (1,842 | ) | (1,842 | ) | |||||
Additional paid-in capital | 384,356 | 383,361 | |||||||
Accumulated deficit. | (340,296 | ) | (340,776 | ) | |||||
Total stockholders' equity | 42,235 | 40,760 | |||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 126,056 | $ | 122,866 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues | $ | 54,614 | $ | 46,138 | $ | 158,174 | $ | 128,967 | ||||||||
Cost of sales | 50,876 | 42,144 | 142,847 | 117,532 | ||||||||||||
Restructuring | - | - | - | 12 | ||||||||||||
Gross profit | 3,738 | 3,994 | 15,327 | 11,423 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Selling, general and administrative | 4,030 | 4,049 | 12,537 | 11,772 | ||||||||||||
Intangible amortization | 183 | 203 | 550 | 609 | ||||||||||||
Total operating expenses | 4,213 | 4,252 | 13,087 | 12,381 | ||||||||||||
Operating (loss) income | (475 | ) | (258 | ) | 2,240 | (958 | ) | |||||||||
OTHER EXPENSE, net: | ||||||||||||||||
Interest expense, net | (507 | ) | (610 | ) | (1,654 | ) | (1,919 | ) | ||||||||
Other, net | (1 | ) | (2 | ) | (3 | ) | (19 | ) | ||||||||
Total other expense, net | (508 | ) | (612 | ) | (1,657 | ) | (1,938 | ) | ||||||||
Net (loss) income before provision for income taxes | (983 | ) | (870 | ) | 583 | (2,896 | ) | |||||||||
Provision for income taxes | 20 | 28 | 103 | 62 | ||||||||||||
NET (LOSS) INCOME | $ | (1,003 | ) | $ | (898 | ) | $ | 480 | $ | (2,958 | ) | |||||
NET (LOSS) INCOME PER COMMON SHARE - BASIC: | ||||||||||||||||
Net (loss) income | $ | (0.06 | ) | $ | (0.06 | ) | $ | 0.03 | $ | (0.18 | ) | |||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 16,866 | 16,236 | 16,741 | 16,024 | ||||||||||||
NET (LOSS) INCOME PER COMMON SHARE - DILUTED: | ||||||||||||||||
Net (loss) income | $ | (0.06 | ) | $ | (0.06 | ) | $ | 0.03 | $ | (0.18 | ) | |||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 16,866 | 16,236 | 17,278 | 16,024 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Nine Months Ended | |||||||||
2020 | 2019 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
Net income (loss) | $ | 480 | $ | (2,958 | ) | ||||
Adjustments to reconcile net cash (used in) provided by operating activities: | |||||||||
Depreciation and amortization expense | 4,761 | 5,006 | |||||||
Deferred income taxes | 12 | (11 | ) | ||||||
Change in fair value of interest rate swap agreements | 161 | 50 | |||||||
Stock-based compensation | 763 | 765 | |||||||
Allowance for doubtful accounts | 47 | (30 | ) | ||||||
Common stock issued under defined contribution 401(k) plan | - | 669 | |||||||
Gain on disposal of assets | - | (1 | ) | ||||||
Changes in operating assets and liabilities, net of acquisition: | |||||||||
Accounts receivable | (5,898 | ) | (5,377 | ) | |||||
Contract assets | (1,475 | ) | - | ||||||
Inventories | 6,383 | (8,580 | ) | ||||||
Prepaid expenses and other current assets | (303 | ) | (737 | ) | |||||
Accounts payable | (3,900 | ) | 6,046 | ||||||
Accrued liabilities | 678 | 1,632 | |||||||
Customer deposits | (4,193 | ) | 7,557 | ||||||
Other non-current assets and liabilities | 9 | 303 | |||||||
Net cash (used in) provided by operating activities | (2,475 | ) | 4,334 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
Purchases of property and equipment. | (1,597 | ) | (1,776 | ) | |||||
Proceeds from disposals of property and equipment | - | 1 | |||||||
Net cash used in investing activities | (1,597 | ) | (1,775 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
Proceeds from line of credit | 142,348 | 131,865 | |||||||
Payments on line of credit | (146,216 | ) | (134,136 | ) | |||||
Proceeds from long-term debt | 9,530 | - | |||||||
Payments on long-term debt | (1,003 | ) | (698 | ) | |||||
Principal payments on finance leases | (694 | ) | (752 | ) | |||||
Proceeds from sale of common stock, net | 232 | - | |||||||
Net cash provided by (used in) financing activities | 4,197 | (3,721 | ) | ||||||
NET INCREASE (DECREASE) IN CASH | 125 | (1,162 | ) | ||||||
CASH beginning of the period | 2,416 | 1,177 | |||||||
CASH end of the period | $ | 2,541 | $ | 15 |
SELECTED SEGMENT FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended | Nine Months Ended | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
ORDERS: | |||||||||||||||||
Heavy Fabrications | $ | 31,391 | $ | 65,559 | $ | 78,306 | $ | 174,398 | |||||||||
Gearing | 3,225 | 5,877 | 19,376 | 18,584 | |||||||||||||
Industrial Solutions | 4,939 | 5,081 | 15,240 | 12,153 | |||||||||||||
Total orders | $ | 39,555 | $ | 76,517 | $ | 112,922 | $ | 205,135 | |||||||||
REVENUES: | |||||||||||||||||
Heavy Fabrications | $ | 43,440 | $ | 33,834 | $ | 125,424 | $ | 91,098 | |||||||||
Gearing | 7,125 | 7,989 | 20,273 | 27,282 | |||||||||||||
Industrial Solutions | 4,081 | 4,317 | 12,516 | 10,589 | |||||||||||||
Corporate and Other | (32 | ) | (2 | ) | (39 | ) | (2 | ) | |||||||||
Total revenues | $ | 54,614 | $ | 46,138 | $ | 158,174 | $ | 128,967 | |||||||||
OPERATING PROFIT/(LOSS): | |||||||||||||||||
Heavy Fabrications | $ | 2,020 | $ | 693 | $ | 8,760 | $ | 789 | |||||||||
Gearing | (1,023 | ) | 496 | (1,935 | ) | 2,797 | |||||||||||
Industrial Solutions | 87 | 141 | 496 | (116 | ) | ||||||||||||
Corporate and Other | (1,559 | ) | (1,588 | ) | (5,081 | ) | (4,428 | ) | |||||||||
Total operating profit/(loss) | $ | (475 | ) | $ | (258 | ) | $ | 2,240 | $ | (958 | ) |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)
Consolidated | Three Months Ended | Nine Months Ended | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net (Loss)/Income | $ | (1,003 | ) | $ | (898 | ) | $ | 480 | $ | (2,958 | ) | |||||
Interest Expense | 507 | 609 | 1,654 | 1,919 | ||||||||||||
Income Tax Provision | 20 | 28 | 103 | 62 | ||||||||||||
Depreciation and Amortization | 1,567 | 1,616 | 4,761 | 5,006 | ||||||||||||
Share-based Compensation and Other Stock Payments | 206 | 496 | 768 | 1,424 | ||||||||||||
Restructuring Costs | - | - | - | 12 | ||||||||||||
Adjusted EBITDA (Non-GAAP) | 1,297 | 1,851 | 7,766 | 5,465 |
Heavy Fabrications Segment | Three Months Ended | Nine Months Ended | |||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
Net Income | $ | 1,515 | $ | 476 | $ | 6,679 | $ | 427 | |||
Interest Expense | 83 | 61 | 277 | 190 | |||||||
Income Tax Provision | 422 | 156 | 1,804 | 157 | |||||||
Depreciation | 929 | 951 | 2,831 | 3,024 | |||||||
Share-based Compensation and Other Stock Payments | 36 | 187 | 140 | 566 | |||||||
Restructuring Expense | - | - | - | 12 | |||||||
Adjusted EBITDA (Non-GAAP) | $ | 2,985 | $ | 1,831 | $ | 11,731 | $ | 4,376 |
Gearing Segment | Three Months Ended | Nine Months Ended | |||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||
Net (Loss)/Income | $ | (1,045 | ) | $ | 435 | $ | (2,033 | ) | $ | 2,531 | |||
Interest Expense | 19 | 61 | 89 | 256 | |||||||||
Income Tax Provision | 2 | 1 | 8 | 10 | |||||||||
Depreciation and Amortization | 488 | 507 | 1,503 | 1,472 | |||||||||
Share-based Compensation and Other Stock Payments | 16 | 110 | 56 | 304 | |||||||||
Adjusted EBITDA (Non-GAAP) | $ | (520 | ) | $ | 1,114 | $ | (377 | ) | $ | 4,573 |
Industrial Solutions Segment | Three Months Ended | Nine Months Ended | ||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
Net Income/(Loss) | $ | 77 | $ | 134 | $ | 433 | $ | (140 | ) | |||
Interest Expense | 8 | 1 | 18 | 2 | ||||||||
Income Tax Provision | 2 | 3 | 42 | 17 | ||||||||
Depreciation and Amortization | 108 | 123 | 318 | 367 | ||||||||
Share-based Compensation and Other Stock Payments | 14 | 15 | 65 | 41 | ||||||||
Adjusted EBITDA (Non-GAAP) | $ | 209 | $ | 276 | $ | 876 | $ | 287 |
Corporate and Other | Three Months Ended | Nine Months Ended | |||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net Loss | $ | (1,550 | ) | $ | (1,943 | ) | $ | (4,599 | ) | $ | (5,776 | ) | |||
Interest Expense | 397 | 486 | 1,270 | 1,471 | |||||||||||
Income Tax (Benefit)/Provision | (406 | ) | (132 | ) | (1,751 | ) | (122 | ) | |||||||
Depreciation and Amortization | 42 | 35 | 109 | 143 | |||||||||||
Share-based Compensation and Other Stock Payments | 140 | 184 | 507 | 513 | |||||||||||
Adjusted EBITDA (Non-GAAP) | $ | (1,377 | ) | $ | (1,370 | ) | $ | (4,464 | ) | $ | (3,771 | ) |
CORPORATE CONTACTJason Bonfigt Investor@BWEN.com
Source:
2020 GlobeNewswire, Inc., source