Broadwind Announces First Quarter 2024 Results
Broadwind (Nasdaq: BWEN) reported its Q1 2024 results, highlighting a total revenue of $37.6 million and a net income of $1.5 million, or $0.07 per diluted share. The non-GAAP adjusted EBITDA was $4.2 million, representing 11.1% of total revenue. Despite a 23% year-over-year revenue decline, profitability improved due to a higher value sales mix and cost reductions. Orders grew 43.5% sequentially but declined compared to the prior year. The backlog stood at $159.9 million with a book-to-bill ratio of 0.8x. The company had $22.4 million in cash and available credit. CEO Eric Blashford emphasized the company's shift towards non-wind energy markets and anticipated growth in domestic onshore wind activity by 2025-2026.
- Net income increased to $1.5 million compared to $0.8 million in Q1 2023.
- Non-GAAP adjusted EBITDA improved to $4.2 million from $4.1 million in the prior year.
- Gross margin and non-GAAP adjusted EBITDA margin increased by over 330 and 270 basis points respectively.
- Orders increased by 43.5% sequentially compared to Q4 2023.
- Industrial Solutions segment revenue rose by 47.4% to $8.0 million.
- Operating income for Industrial Solutions grew to $1.8 million from $0.6 million in Q1 2023.
- Annualized cost savings of over $4 million starting Q1 2024.
- Total revenue declined by more than 23% year-over-year.
- Heavy Fabrications segment sales dropped by 30.3%, driven by a 44.3% decline in wind tower sections sold.
- Gearing segment sales fell by 30.3% due to broad-based softness across major end markets.
- Operating income for the Gearing segment was only $0.03 million compared to $0.6 million in the prior year.
- Total backlog decreased with a book-to-bill ratio of 0.8x.
- Cash and available credit slightly decreased to $22.4 million from $22.8 million at the end of Q4 2023.
Insights
Broadwind's first quarter 2024 results exhibit both strengths and cautionary signals. The total revenue of
The company's adjusted EBITDA margin of 11.1% demonstrates operational efficiency with an increase of
Order activity surged sequentially by
It is important to consider the shift in demand from wind-related revenue to other sectors, suggesting a strategic diversification which might mitigate some market-specific risks. Yet, the decline in segments like Heavy Fabrications and Gearing signals potential headwinds in these areas. Investors should closely monitor how Broadwind navigates the transitional period in the wind market and its continued efforts in cost optimization.
Broadwind's performance signals intriguing market dynamics. The shift away from wind tower revenue, which fell notably by
Growth in the Industrial Solutions segment, with sales increasing by
Despite the softness in the Gearing segment, the diversified customer base across oil & gas, mining and infrastructure markets could offer resilience against market fluctuations. The Heavy Fabrications segment faces challenges, but the company’s targeted cost reductions and operational improvements may enhance future profitability. Investors should consider the strategic shifts and market diversification efforts as a means to stabilize and potentially grow revenue streams.
From an operational perspective, Broadwind's results reflect a disciplined approach to efficiency and cost management. The adjusted EBITDA margin improvement of
The sequential rise in order activity across all segments, despite year-over-year declines, suggests that the company's focus on operational excellence is beginning to pay off. The introduction of $4 million in annualized cost savings from recent actions will likely contribute further to maintaining profitability and operational resilience in the coming quarters.
Strategic optimization of facilities and workforce aimed at higher-growth markets, along with a focus on multi-year trends like domestic onshoring, points to a forward-thinking approach. These efforts could help sustain growth and profitability in the long run, even as the company navigates the current transitional period in the wind market.
CICERO, Ill., May 14, 2024 (GLOBE NEWSWIRE) -- Broadwind (Nasdaq: BWEN, or the “Company”), a diversified precision manufacturer of specialized components and solutions serving global markets, today announced results for the first quarter 2024.
FIRST QUARTER 2024 RESULTS
- Total revenue of
$37.6 million - Net income of
$1.5 million , or$0.07 per diluted share - Total non-GAAP adjusted EBITDA of
$4.2 million , or11.1% of total revenue - Ratio of net debt to trailing twelve-month non-GAAP adjusted EBITDA of 0.6x as of March 31, 2024
Broadwind reported first quarter net income of
First quarter results benefited from a higher value sales mix, sustained price discipline, and targeted cost reduction actions, offset by a pause in new wind tower demand. While revenue declined by more than
First quarter orders increased
As of March 31, 2024, Broadwind had total cash on hand and availability under the Company’s credit facility of
MANAGEMENT COMMENTARY
“During a transitional period for the domestic onshore wind market, we’ve prioritized expansion within emerging growth, non-wind energy-transition verticals, and continued to drive improved operational efficiency across the organization, culminating in continued profitable growth,” stated Eric Blashford, President and CEO of Broadwind. “While our first quarter wind-related revenue was down versus the prior year, non-wind activity levels are more stable, given strong demand for our precision manufacturing expertise across a diverse base of high-performance OEM customer brands.”
“We believe domestic onshore wind activity is poised to accelerate meaningfully in the 2025-2026 timeframe, given current indications of interest from customers,” continued Blashford. “In the interim, we’re taking action to further optimize our facilities and skilled labor force within other, higher growth energy-transition markets, while capitalizing on multi-year mega trends, including domestic onshoring and reshoring.”
“New order activity accelerated on a sequential basis across each of our reporting segments during the first quarter, with first quarter orders increasing nearly
“In recent quarters, we’ve taken significant actions to further align our cost structure with the current demand environment,” stated Blashford. “In combination, these actions will contribute more than
“Today, we introduced financial guidance for the second 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 intake 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, compressed natural gas pressure reducing systems and industrial fabrications, including mining and material handling components and other frames/structures.
Heavy Fabrications segment sales declined by
Gearing Segment
Broadwind provides custom gearboxes, loose gearing 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
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
FINANCIAL GUIDANCE
Today, Broadwind introduced financial guidance for the second 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.
| Second Quarter 2024 | ||||||
| $ in Millions | Low | Mid | High | |||
| Total Revenue | ||||||
| Adjusted EBITDA | ||||||
FIRST QUARTER 2024 RESULTS CONFERENCE CALL
Broadwind will host a conference call today, May 14, 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, May 21, 2024:
| Teleconference Replay: | 844-512-2921 |
| Conference ID: | 13745804 |
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 (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 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 SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED) | ||||||||||
| March 31, | December 31, | |||||||||
| 2024 | 2023 | |||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS: | ||||||||||
| Cash | $ | 1,073 | $ | 1,099 | ||||||
| Accounts receivable, net | 14,601 | 19,231 | ||||||||
| AMP credit receivable | 1,732 | 7,051 | ||||||||
| Contract assets | 660 | 1,460 | ||||||||
| Inventories | 37,386 | 37,405 | ||||||||
| Prepaid expenses and other current assets | 2,829 | 3,500 | ||||||||
| Total current assets | 58,281 | 69,746 | ||||||||
| LONG-TERM ASSETS: | ||||||||||
| Property and equipment, net | 47,137 | 47,123 | ||||||||
| Operating lease right-of-use assets, net | 15,159 | 15,593 | ||||||||
| Intangible assets, net | 1,899 | 2,064 | ||||||||
| Other assets | 595 | 630 | ||||||||
| TOTAL ASSETS | $ | 123,071 | $ | 135,156 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Line of credit and current maturities of long-term debt\ | $ | 1,428 | $ | 5,903 | ||||||
| Current portion of finance lease obligations | 2,205 | 2,153 | ||||||||
| Current portion of operating lease obligations | 1,914 | 1,851 | ||||||||
| Accounts payable | 16,298 | 20,728 | ||||||||
| Accrued liabilities | 6,406 | 6,477 | ||||||||
| Customer deposits | 11,403 | 16,500 | ||||||||
| Total current liabilities | 39,654 | 53,612 | ||||||||
| LONG-TERM LIABILITIES: | ||||||||||
| Long-term debt, net of current maturities | 6,262 | 6,250 | ||||||||
| Long-term finance lease obligations, net of current portion | 3,733 | 3,372 | ||||||||
| Long-term operating lease obligations, net of current portion | 15,374 | 15,888 | ||||||||
| Other | 7 | 15 | ||||||||
| Total long-term liabilities | 25,376 | 25,525 | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||
| STOCKHOLDERS' EQUITY: | ||||||||||
| Preferred stock, | - | - | ||||||||
| Common stock, | ||||||||||
| and 21,840,301 shares issued as of March 31, 2024 and | ||||||||||
| December 31, 2023, respectively | 22 | 22 | ||||||||
| Treasury stock, at cost, 273,937 shares as of March 31, 2024 and December 31, 2023, | ||||||||||
| respectively | (1,842 | ) | (1,842 | ) | ||||||
| Additional paid-in capital | 399,848 | 399,336 | ||||||||
| Accumulated deficit | (339,987 | ) | (341,497 | ) | ||||||
| Total stockholders' equity | 58,041 | 56,019 | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 123,071 | $ | 135,156 | ||||||
| BROADWIND, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) | ||||||||||
| Three Months Ended March 31, | ||||||||||
| 2024 | 2023 | |||||||||
| Revenues | $ | 37,616 | $ | 48,873 | ||||||
| Cost of sales | 30,979 | 41,897 | ||||||||
| Gross profit | 6,637 | 6,976 | ||||||||
| OPERATING EXPENSES: | ||||||||||
| Selling, general and administrative | 4,394 | 5,526 | ||||||||
| Intangible amortization | 165 | 168 | ||||||||
| Total operating expenses | 4,559 | 5,694 | ||||||||
| Operating income | 2,078 | 1,282 | ||||||||
| OTHER EXPENSE, net: | ||||||||||
| Interest expense, net | (532 | ) | (488 | ) | ||||||
| Other, net | 3 | (2 | ) | |||||||
| Total other expense, net | (529 | ) | (490 | ) | ||||||
| Net income before provision for income taxes | 1,549 | 792 | ||||||||
| Provision for income taxes | 39 | 23 | ||||||||
| NET INCOME | $ | 1,510 | $ | 769 | ||||||
| NET INCOME PER COMMON SHARE - BASIC: | ||||||||||
| Net income | $ | 0.07 | $ | 0.04 | ||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 21,595 | 20,869 | ||||||||
| NET INCOME PER COMMON SHARE - DILUTED: | ||||||||||
| Net income | $ | 0.07 | $ | 0.04 | ||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 21,807 | 21,387 | ||||||||
| BROADWIND, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income | $ | 1,510 | $ | 769 | |||||||
| Adjustments to reconcile net cash provided by (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization expense | 1,596 | 1,605 | |||||||||
| Deferred income taxes | (8 | ) | (5 | ) | |||||||
| Stock-based compensation | 225 | 178 | |||||||||
| Allowance for doubtful accounts | (2 | ) | 14 | ||||||||
| Common stock issued under defined contribution 401(k) plan | 287 | 302 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | 4,632 | (8,841 | ) | ||||||||
| AMP credit receivable | 5,319 | (3,162 | ) | ||||||||
| Contract assets | 800 | 46 | |||||||||
| Inventories | 19 | (4,281 | ) | ||||||||
| Prepaid expenses and other current assets | 635 | 130 | |||||||||
| Accounts payable | (4,005 | ) | (784 | ) | |||||||
| Accrued liabilities | (71 | ) | 847 | ||||||||
| Customer deposits | (5,097 | ) | (12,799 | ) | |||||||
| Other non-current assets and liabilities | 17 | (3 | ) | ||||||||
| Net cash provided by (used in) operating activities | 5,857 | (25,984 | ) | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchases of property and equipment | (1,744 | ) | (1,065 | ) | |||||||
| Net cash used in investing activities | (1,744 | ) | (1,065 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| (Payments on) proceeds from line of credit, net | (4,657 | ) | 16,945 | ||||||||
| Proceeds from long-term debt | 1,244 | - | |||||||||
| Payments on long-term debt | (325 | ) | (634 | ) | |||||||
| Principal payments on finance leases | (401 | ) | (265 | ) | |||||||
| Net cash (used in) provided by financing activities | (4,139 | ) | 16,046 | ||||||||
| NET DECREASE IN CASH | (26 | ) | (11,003 | ) | |||||||
| CASH beginning of the period | 1,099 | 12,732 | |||||||||
| CASH end of the period | $ | 1,073 | $ | 1,729 | |||||||
| BROADWIND, INC. AND SUBSIDIARIES SELECTED SEGMENT FINANCIAL INFORMATION (IN THOUSANDS) (UNAUDITED) | |||||||||
| Three Months Ended | |||||||||
| March 31, | |||||||||
| 2024 | 2023 | ||||||||
| ORDERS: | |||||||||
| Heavy Fabrications | $ | 11,221 | $ | 20,236 | |||||
| Gearing | 10,446 | 12,393 | |||||||
| Industrial Solutions | 7,329 | 6,973 | |||||||
| Total orders | $ | 28,996 | $ | 39,602 | |||||
| REVENUES: | |||||||||
| Heavy Fabrications | $ | 22,016 | $ | 31,593 | |||||
| Gearing | 8,337 | 11,965 | |||||||
| Industrial Solutions | 7,994 | 5,423 | |||||||
| Corporate and Other | (731 | ) | (108 | ) | |||||
| Total revenues | $ | 37,616 | $ | 48,873 | |||||
| OPERATING PROFIT/(LOSS): | |||||||||
| Heavy Fabrications | $ | 2,046 | $ | 2,790 | |||||
| Gearing | 25 | 581 | |||||||
| Industrial Solutions | 1,767 | 622 | |||||||
| Corporate and Other | (1,760 | ) | (2,711 | ) | |||||
| Total operating profit (loss) | $ | 2,078 | $ | 1,282 | |||||
| BROADWIND, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (IN THOUSANDS) (UNAUDITED) | ||||||||||
| Consolidated | Three Months Ended March 31, | |||||||||
| 2024 | 2023 | |||||||||
| Net Income | $ | 1,510 | $ | 769 | ||||||
| Interest Expense | 532 | 488 | ||||||||
| Income Tax Provision | 39 | 23 | ||||||||
| Depreciation and Amortization | 1,596 | 1,605 | ||||||||
| Share-based Compensation and Other Stock Payments | 503 | 493 | ||||||||
| Proxy Contest-Related Expenses | (10 | ) | 720 | |||||||
| Adjusted EBITDA (Non-GAAP) | $ | 4,170 | $ | 4,098 | ||||||
| Heavy Fabrications Segment | Three Months Ended March 31, | |||||||
| 2024 | 2023 | |||||||
| Net Income | $ | 2,587 | $ | 2,590 | ||||
| Interest Expense | 89 | 140 | ||||||
| Income Tax (Benefit) Provision | (630 | ) | 60 | |||||
| Depreciation | 911 | 858 | ||||||
| Share-based Compensation and Other Stock Payments | 178 | 210 | ||||||
| Adjusted EBITDA (Non-GAAP) | $ | 3,135 | $ | 3,858 | ||||
| Gearing Segment | Three Months Ended March 31, | |||||||
| 2024 | 2023 | |||||||
| Net (Loss) Income | $ | (35 | ) | $ | 501 | |||
| Interest Expense | 54 | 73 | ||||||
| Income Tax Provision | 7 | 8 | ||||||
| Depreciation and Amortization | 540 | 595 | ||||||
| Share-based Compensation and Other Stock Payments | 102 | 117 | ||||||
| Adjusted EBITDA (Non-GAAP) | $ | 668 | $ | 1,294 | ||||
| Industrial Solutions Segment | Three Months Ended March 31, | |||||||
| 2024 | 2023 | |||||||
| Net Income | $ | 1,584 | $ | 529 | ||||
| Interest Expense | 163 | 83 | ||||||
| Income Tax Provision | 23 | 8 | ||||||
| Depreciation and Amortization | 100 | 94 | ||||||
| Share-based Compensation and Other Stock Payments | 50 | 43 | ||||||
| Adjusted EBITDA (Non-GAAP) | $ | 1,920 | $ | 757 | ||||
| Corporate and Other | Three Months Ended March 31, | |||||||
| 2024 | 2023 | |||||||
| Net Loss | $ | (2,626 | ) | $ | (2,851 | ) | ||
| Interest Expense | 226 | 192 | ||||||
| Income Tax Provision (Benefit) | 639 | (53 | ) | |||||
| Depreciation and Amortization | 45 | 58 | ||||||
| Share-based Compensation and Other Stock Payments | 173 | 123 | ||||||
| Proxy Contest-Related Expenses | (10 | ) | 720 | |||||
| Adjusted EBITDA (Non-GAAP) | $ | (1,553 | ) | $ | (1,811 | ) | ||
FAQ
What were Broadwind's Q1 2024 revenues?
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