August 2, 2019 - 7:00 AM EDT
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Broadwind Energy Announces Q2 2019 Results

Highlights:

  • Q2 orders total $105M -- customers securing towers to support strong 2020 turbine installations

  • Backlog rises to $145 million at June 30

  • Q2 2019 revenue of $41.2 million up 12% from 2018, all segments higher

  • Continued strong Gearing performance -- $9 million revenue and 10% operating margin

  • EPS loss narrows to $.06

CICERO, Ill., Aug. 02, 2019 (GLOBE NEWSWIRE) -- Broadwind Energy, Inc. (NASDAQ: BWEN) reported sales of $41.2 million in Q2 2019, up 12% compared to $36.8 million in Q2 2018 due primarily to higher steel prices and a more complex tower product mix.

The Company reported a net loss of $1.0 million, or $.06 per share, in Q2 2019, compared to a net loss of $6.1 million, or $.40 per share, in Q2 2018.  The prior year quarter loss included an adverse $.25 per share impact related to a $5.0 million goodwill impairment charge, net of the $1.1 million reversal of an earn-out reserve.

The Company reported non-GAAP adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, share-based payments and restructuring costs) of $1.9 million in Q2 2019, compared to non-GAAP adjusted EBITDA of $2.1 million in Q2 2018.  The prior year quarter benefited from the reversal of an earn-out reserve of $1.1 million. 

Broadwind CEO Stephanie Kushner stated, “We delivered a second consecutive quarter of revenue greater than $40M and healthier EBITDA generation, in line with our guidance.  Gearing continues to deliver strong operating results, demonstrating management’s significant strides in improving operational performance and customer diversification.”

Kushner continued, “We are pleased to see the order recovery in Towers, which is beginning to provide good visibility into 2020 production. We continue to prioritize diversification of our customer base, and booked a sizeable tower order from a new wind turbine OEM during the quarter.  We are growing our fabrication product line at a healthy rate, which offers additional diversification to our product and customer mix.”

Kushner concluded, “In Q3, we expect revenue to exceed $45 million with approximately $1.4-1.8 million of EBITDA.  Our full year EBITDA target remains at $8 million, which assumes the supply chain executes in a tightening environment.”

Orders and Backlog

The Company booked $104.6 million of net new orders in Q2 2019, compared to $18.6 million in Q2 2018. Towers and Heavy Fabrications orders rose nearly ten-fold to $96.3 million in Q2 2019, up from $9.9 million in Q2 2018, when a large portion of the Company’s capacity was committed under a multi-year framework agreement for which minimum volumes had been booked into backlog in 2016.  The 3-year framework agreement has been fulfilled, and orders are now recorded on a project-by-project basis.

Strong Q2 2019 bookings reflected the addition of a major new turbine OEM and increased demand to support growing turbine installations in 2020. Gearing orders totaled $5.6 million in Q2 2019, down from $6.1 million Q2 2018, due to timing of purchases from mining customers. Process Systems orders were essentially flat at $2.7 million, with higher demand for new gas turbine content mostly offset by weaker demand for aftermarket content.

At June 30, 2019, total backlog was $144.7 million, compared to $81.1 million at March 31, 2019, driven by the surge of Tower orders recorded during the quarter.

Segment Results

Towers and Heavy Fabrications
Broadwind Energy produces fabrications for wind, oil and gas, mining and other industrial applications, specializing in the production of wind turbine towers.  In Q1 2019, the Company revised and retroactively adjusted the financial statements of its segment reporting by moving the Abilene CNG and Fabrication business to the Towers and Heavy Fabrications segment from the Process Systems segment. 

Towers and Heavy Fabrications segment sales totaled $29.0 million in Q2 2019, compared to $25.6 million in Q2 2018. The increased revenue was attributable to a rise in steel prices and a more complex mix of towers produced.  Unit production volumes were flat versus the comparison period. 

Segment operating profit totaled $.3 million in Q2 2019 compared to an operating profit of $.5 million in Q2 2018. Improved gross profit from the Heavy Fabrication product line and lower depreciation were more than offset by the adverse impact on towers of lower pricing resulting from rising competition from tower imports. Net income declined comparatively for the Towers and Heavy Fabrications segment to $.2 million in Q2 2019, from net income of $.4 million in Q2 2018. Non-GAAP adjusted EBITDA in Q2 2019 was $1.5 million compared to Non-GAAP adjusted EBITDA of $2.2 million in Q2 2018, due to the cash factors described above. 

Gearing
Broadwind Energy engineers, builds and remanufactures precision gears and gearboxes for oil and gas, mining, steel, wind and other specialized applications.

Gearing segment sales totaled $9.3 million in Q2 2019, compared to $8.6 million in Q2 2018. The $.7 million increase was due primarily to higher shipments to mining, wind and other industrial customers, partially offset by lower purchases by oil and gas customers, as the significant expansion of fracking capacity experienced in 2018 has subsided. Operating profit increased to $.9 million in Q2 2019, compared to a $.7 million loss in Q2 2018, reflecting the impact of higher revenues and the significant operational improvements achieved in recent quarters. Compared to the prior year, these operational improvements included better production efficiencies, the absence of prior year supply chain disruptions and improved manufacturing variances.  The net income for the Gearing segment rose comparably to $.8 million in Q2 2019, compared to a net loss of $.7 million in Q2 2018. The Gearing segment reported $1.5 million of Non-GAAP adjusted EBITDA in Q2 2019 compared to a near break-even Non-GAAP adjusted EBITDA in Q2 2018.

Process Systems
Broadwind Energy provides contract manufacturing services that include build-to-print, kitting, and inventory management for customers, primarily supporting the natural gas electrical generation market.

Process Systems revenue totaled $2.9 million in Q2 2019 compared to $2.6 million in Q2 2018, due primarily to higher sales for new natural gas turbine content.  The segment operated at break-even in Q2 2019 compared to a $5.6 million operating loss in Q2 2018, primarily due to a $5 million goodwill impairment in the prior year quarter. Also contributing to the improvement was an improved product mix.  Net income for the Process Systems segment was break-even in Q2 2019, compared to an after tax loss of $3.8 million in Q2 2018. The Process Systems segment reported $.2 million of Non-GAAP adjusted EBITDA for Q2 2019 compared to Non-GAAP adjusted EBITDA loss of $.2 million in Q2 2018.

Corporate
Corporate and other expenses increased by $1.4 million in Q2 2019. The rise in net expenses was due primarily to the absence of a $1.1 million gain associated with the release of the earn-out reserve in the prior year quarter, combined with increased incentive compensation and professional fee expenses.

Cash and Liquidity

During Q2 2019, operating working capital (accounts receivable and inventory, net of accounts payable and customer deposits) increased to $22.0 million from $17.6M at March 31, 2019, in support of higher scheduled tower deliveries. The cash conversion ratio increased sequentially, from 41 days at March 31, 2019 to 53 days, predominantly driven by the increase in operating working capital.

Capital expenditures, net of disposals, in Q2 2019 totaled $.9 million.

Debt and finance leases totaled $29.9 million at June 30, 2019.  The Company’s $35 million line of credit with CIBC had a balance of $26.6 million at June 30, 2019.  Availability under the credit line improved to $8.0 million from $7.5 million at March 31, 2019.

Cash assets (cash and short-term investments) remained near zero as expected because the Company’s cash and receipts are automatically applied to the outstanding credit line balance consistent with the terms of the line.

Conference Call

Broadwind Energy will conduct a teleconference and live webcast, with a slide presentation, beginning at 10 a.m. Central Time on Friday, August 2nd, 2019, to discuss its 2019 second-quarter financial results. This webcast will be available in listen-only mode and can be accessed, for up to ninety days following the call, through the investors section on the Broadwind Energy website at http://www.bwen.com/investors/events-and-presentations.

About Broadwind Energy, Inc.
Broadwind Energy (NASDAQ: BWEN) is a precision manufacturer of structures, equipment and components for clean tech and other specialized applications. From gears and gearing systems for wind, oil and gas and mining applications, to wind towers and industrial weldments, we have solutions for the clean tech, energy and infrastructure needs of the future. With facilities throughout the U.S., Broadwind Energy's 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 Measure
The Company provides non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, and stock compensation) as supplemental information regarding the Company’s business performance. The Company’s management uses adjusted EBITDA when it internally evaluates the performance of the Company’s business, 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 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) 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; (ii) 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; (iii) our ability to continue to grow our business organically and through acquisitions; (iv) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (v) the sufficiency of our liquidity and alternate sources of funding, if necessary; (vi) our ability to realize revenue from customer orders and backlog; (vii) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (viii) the economy and the potential impact it may have on our business, including our customers; (ix) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets; (x) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xi) the effects of the change of administrations in the U.S. federal government; (xii) our ability to successfully integrate and operate companies and to identify, negotiate and execute future acquisitions; (xiii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xiv) the limited trading market for our securities and the volatility of market price for our securities; and (xv) 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. 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.


BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)

    June 30,  December 31, 
     2019   2018 
 ASSETS   
 CURRENT ASSETS:   
  Cash and cash equivalents$74  $1,177 
  Accounts receivable, net 20,273   17,455 
  Inventories, net 35,758   22,670 
  Prepaid expenses and other current assets 1,760   1,776 
   Total current assets 57,865   43,078 
 LONG-TERM ASSETS:   
  Property and equipment, net 48,197   49,087 
  Operating lease right-of-use assets 16,651   - 
  Other intangible assets, net 6,196   6,602 
  Other assets 349   398 
 TOTAL ASSETS$129,258  $99,165 
       
 LIABILITIES AND STOCKHOLDERS' EQUITY   
 CURRENT LIABILITIES:   
  Line of credit and other notes payable$27,555  $11,930 
  Current portion of finance lease obligations 825   967 
  Current portion of operating lease obligations 1,591   - 
  Accounts payable 15,484   11,618 
  Accrued liabilities 4,372   3,806 
  Customer deposits 18,561   23,507 
  Current liabilities held for sale 26   27 
   Total current liabilities 68,414   51,855 
 LONG-TERM LIABILITIES:   
  Long-term debt, net of current maturities 998   1,408 
  Long-term finance lease obligations, net of current portion 553   571 
  Long-term operating lease obligations, net of current portion 17,020   - 
  Other 69   1,969 
   Total long-term liabilities 18,640   3,948 
 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; 16,437,109   
  and 15,982,622 shares issued as of June 30, 2019 and   
  December 31, 2018, respectively 16   16 
  Treasury stock, at cost, 273,937 shares as of June 30, 2019 and December 31, 2018,   
  respectively (1,842)  (1,842)
  Additional paid-in capital 382,343   381,441 
  Accumulated deficit (338,313)  (336,253)
   Total stockholders' equity 42,204   43,362 
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$129,258  $99,165 



BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

    Three Months Ended June 30, Six Months Ended June 30,
     2019   2018   2019   2018 
           
           
 Revenues $41,169  $36,781  $82,829  $66,748 
 Cost of sales  37,277   34,442   75,388   64,426 
 Restructuring  -   116   12   231 
 Gross profit  3,892   2,223   7,429   2,091 
           
 OPERATING EXPENSES:        
 Selling, general and administrative  3,895   2,495   7,723   6,393 
 Impairment charges -   4,993   -   4,993 
 Intangible amortization  203   471   406   942 
 Restructuring  -   -   -   36 
  Total operating expenses  4,098   7,959   8,129   12,364 
 Operating loss  (206)  (5,736)  (700)  (10,273)
           
 OTHER EXPENSE, net:        
 Interest expense, net  (773)  (352)  (1,309)  (650)
 Other, net  (16)  (1)  (18)  (4)
  Total other expense, net  (789)  (353)  (1,327)  (654)
           
 Net loss before provision (benefit) for income taxes  (995)  (6,089)  (2,027)  (10,927)
 Provision (benefit) for income taxes  23   (6)  34   (33)
 LOSS FROM CONTINUING OPERATIONS  (1,018)  (6,083)  (2,061)  (10,894)
 INCOME (LOSS) FROM DISCONTINUED OPERATIONS  -   (33)  1   (60)
 NET LOSS $(1,018) $(6,116) $(2,060) $(10,954)
           
           
 NET LOSS PER COMMON SHARE - BASIC:        
 Loss from continuing operations $(0.06) $(0.40) $(0.13) $(0.71)
 Income (loss) from discontinued operations  0.00   0.00   0.00   0.00 
 Net loss $(0.06) $(0.40) $(0.13) $(0.71)
           
 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC  16,046   15,421   15,917   15,339 
           
 NET LOSS PER COMMON SHARE - DILUTED:        
 Loss from continuing operations $(0.06) $(0.40) $(0.13) $(0.71)
 Income (loss) from discontinued operations  0.00   0.00   0.00   0.00 
 Net loss $(0.06) $(0.40) $(0.13) $(0.71)
           
 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED  16,046   15,421   15,917   15,339 

 

BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

     Six Months Ended June 30,
      2019  2018 
CASH FLOWS FROM OPERATING ACTIVITIES:   
 Net loss $(2,060)$(10,954)
 Income (loss) from discontinued operations  1  (60)
 Loss from continuing operations  (2,061) (10,894)
       
Adjustments to reconcile net cash used in operating activities:  
  Depreciation and amortization expense  3,390  4,706 
  Deferred income taxes  (5) (42)
  Impairment charges  -  4,993 
  Change in fair value of interest rate swap agreements  26  - 
  Stock-based compensation  510  489 
  Allowance for doubtful accounts  (12) (25)
  Common stock issued under defined contribution 401(k) plan  392  338 
  Gain on disposal of assets  (1) - 
  Changes in operating assets and liabilities, net of acquisition:   
   Accounts receivable  (2,806) (4,232)
   Inventories  (13,088) (1,003)
   Prepaid expenses and other current assets  16  49 
   Accounts payable  3,306  4,823 
   Accrued liabilities  540  325 
   Customer deposits.  (4,946) (1,141)
   Other non-current assets and liabilities  127  (1,179)
Net cash used in operating activities of continued operations  (14,612) (2,793)
       
CASH FLOWS FROM INVESTING ACTIVITIES:   
 Purchases of property and equipment  (1,183) (1,676)
 Proceeds from disposals of property and equipment  1  - 
Net cash used in investing activities of continued operations  (1,182) (1,676)
       
CASH FLOWS FROM FINANCING ACTIVITIES:   
 Proceeds from line of credit  91,007  66,985 
 Payments on line of credit (75,370) (63,200)
 Proceeds from long-term debt -  1,410 
 Payments on long-term debt  (462) (313)
 Principal payments on finance leases  (485) (377)
Net cash provided by financing activities of continued operations  14,690  4,505 
       - 
DISCONTINUED OPERATIONS:   
 Operating cash flows  1  (38)
Net cash provided by (used in) discontinued operations  1  (38)
       
NET DECREASE IN CASH AND CASH EQUIVALENTS  (1,103) (2)
CASH AND CASH EQUIVALENTS beginning of the period  1,177  78 
CASH AND CASH EQUIVALENTS end of the period $74 $76 
       
Supplemental cash flow information:   
 Interest paid $825 $537 
 Income taxes paid $49 $84 
       
Non-cash activities:   
 Issuance of restricted stock grants $510 $489 
 Non-cash purchases of property and equipment$325 $- 



BROADWIND ENERGY, INC. AND SUBSIDIARIES
SELECTED SEGMENT FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)

   Three Months Ended Six Months Ended
   June 30, June 30,
    2019   2018   2019   2018 
ORDERS:      
 Towers and Heavy Fabrications $96,328  $9,870  $108,839  $19,674 
 Gearing  5,572   6,148   12,707   21,514 
 Process Systems  2,712   2,584   7,072   5,555 
 Total orders $104,612  $18,602  $128,618  $46,743 
          
REVENUES:      
 Towers and Heavy Fabrications $28,970  $25,552  $57,264  $43,747 
 Gearing  9,266   8,632   19,293   17,438 
 Process Systems  2,933   2,620   6,272   5,586 
 Corporate and Other  -   (23)  -   (23)
 Total revenues $41,169  $36,781  $82,829  $66,748 
          
OPERATING (LOSS)/PROFIT:      
 Towers and Heavy Fabrications $318  $541  $96  $(1,554)
 Gearing  913   (662)  2,300   (1,288)
 Process Systems  28   (5,589)  (256)  (5,890)
 Corporate and Other  (1,465)  (26)  (2,840)  (1,541)
 Total operating (loss)/profit $(206) $(5,736) $(700) $(10,273)



BROADWIND ENERGY, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)

 Consolidated Three Months Ended June 30, Six Months Ended June 30,
     2019   2018   2019   2018 
 Loss from Continuing Operations $(1,019) $(6,083) $(2,061) $(10,894)
 Interest Expense  774   352   1,309   650 
 Income Tax Provision/(Benefit)  22   (6)  34   (33)
 Depreciation and Amortization  1,628   2,349   3,390   4,706 
 Share-based Compensation and Other Stock Payments  494   418   930   846 
 Restructuring Costs  -   116   12   267 
 Impairment Charges  -   4,993   -   4,993 
  Adjusted EBITDA (Non-GAAP) $1,899  $2,139  $3,614  $535 

 

 Towers and Heavy Fabrications Segment Three Months Ended June 30, Six Months Ended June 30,
    2019  2018  2019   2018 
 Net Income/(Loss) $186 $446 $(49) $(1,263)
 Interest Expense  63  50  129   82 
 Income Tax Provision/(Benefit)  54  46  1   (373)
 Depreciation and Amortization  978  1,317  2,073   2,636 
 Share-based Compensation and Other Stock Payments  214  181  379   334 
 Restructuring Expense  -  116  12   267 
 Adjusted EBITDA (Non-GAAP) $1,495 $2,156 $2,545  $1,683 

 

 Gearing Segment Three Months Ended June 30, Six Months Ended June 30,
    2019  2018   2019  2018 
 Net Income/(Loss) $796 $(662) $2,096 $(1,293)
 Interest Expense  113  2   195  5 
 Income Tax Provision/(Benefit)  4  (3)  9  - 
 Depreciation and Amortization  483  586   965  1,176 
 Share-based Compensation and Other Stock Payments  102  77   194  143 
 Adjusted EBITDA (Non-GAAP) $1,498 $-  $3,459 $31 

 

 Process Systems Three Months Ended June 30, Six Months Ended June 30,
    2019  2018   2019   2018 
 Net Income/(Loss) $4 $(3,794) $(274) $(3,844)
 Interest Expense  -  -   1   - 
 Income Tax Provision/(Benefit)  23  (1,797)  14   (2,050)
 Depreciation and Amortization  122  386   244   773 
 Share-based Compensation and Other Stock Payments  13  12   26   30 
 Impairment Expense  -  4,993   -   4,993 
 Adjusted EBITDA (Non-GAAP) $162 $(200) $11  $(98)

 

 Corporate and Other Three Months Ended June 30, Six Months Ended June 30,
    2019   2018   2019   2018 
 Loss from continuing operations $(2,005) $(2,073) $(3,834) $(4,494)
 Interest Expense  598   300   984   563 
 Income Tax Provision/(Benefit)  (59)  1,748   10   2,390 
 Depreciation and Amortization  45   60   108   121 
 Share-based Compensation and Other Stock Payments  165   148   331   339 
 Adjusted EBITDA (Non-GAAP) $(1,256) $183  $(2,401) $(1,081)

 

BWEN INVESTOR CONTACT: Jason Bonfigt, 708.780.4821 [email protected]

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Source: GlobeNewswire (August 2, 2019 - 7:00 AM EDT)

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