Broadwind, Inc. Showcases Strong Q1 2023 Performance, Exceeding Expectations and Making Strides Towards Future Growth

May 11, 2023 [crocon media – msch] – Broadwind, Inc. (Nasdaq: BWEN), a diversified precision manufacturer of specialized components and solutions for global markets, has released its financial results for Q1 2023, revealing substantial improvements over the same period last year.

In terms of positive aspects, Broadwind’s total revenue rose by 17% year-over-year (y/y) to $48.9 million, while its total gross profit reached $7.0 million, marking a significant increase of $5.0 million y/y. Broadwind’s GAAP net income stood at $0.8 million, up $3.2 million y/y, and the company’s non-GAAP adjusted EBITDA was $4.1 million, a notable increase of $4.1 million y/y. The company’s total backlog also rose dramatically by $170.7 million y/y to a robust $287.8 million, indicating a healthy pipeline of future business.

Furthermore, Broadwind provided updated full-year 2023 financial guidance, projecting total revenue between $205 million to $220 million, positive GAAP net income, and total non-GAAP adjusted EBITDA between $16 million to $18 million. This suggests a strong outlook for the rest of the year.

However, there are aspects of the report that are just okay. While Broadwind reported strong revenue and profit growth, the company’s total cash on hand and availability under its credit facility was $12.3 million, down from $40.1 million at the end of Q4 2022. This decrease was due to heavy investments in working capital to support incremental wind tower demand, resulting in a sequential decline in total liquidity, although this was expected.

Broadwind has also pursued aggressive strategies to increase its share of wallet with existing customers and expand into complementary adjacent markets. For instance, the company recently announced an $8 million order for its proprietary Mobile Pressure Reducing Systems (PRS) and related accessories, which are critical components in “virtual pipelines” supplying compressed natural gas to regions without established pipeline infrastructure.

The company’s robust growth strategy, focused on organic growth, revenue mix diversification, improved asset optimization, and disciplined capital management, positions it for continued success in the coming years. However, the company will need to carefully manage its liquidity and continue its strong operational performance to maintain its current momentum.

In summary, Broadwind’s Q1 2023 financial results reflect a company that is executing well on its growth strategies, improving its financial performance, and showing promise for the remainder of the year.

Read the original press release for more details : https://www.globenewswire.com/news-release/2023/05/11/2666528/13041/en/Broadwind-Announces-First-Quarter-2023-Results.html

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Disclaimer
All transactions are carried out by The SiLLC Assembly, a private portfolio management assembly. This document is not an offer of securities for sale or investment advisory services. This document contains general information only and is not intended to provide general or specific investment advice. Past performance is not a reliable indicator of future results and targets are not guaranteed. Certain statements and forecasted data are based on current expectations, current market and economic conditions, estimates, projections, opinions, and beliefs of SiLLC and/or its members. Due to various risks and uncertainties, actual results may differ materially from those reflected or contemplated in such forward-looking statements or in any of the case studies or forecasts. All references to SiLLC’s advisory activities relate to The SiLLC Assembly International.

Broadwind Files Definitive Proxy Statement and Sends Letter to Shareholders

CICERO, Ill., April 10, 2023 — Broadwind, Inc. (Nasdaq: BWEN, or the “Company”), a diversified precision manufacturer of specialized components and solutions serving global markets, filed its definitive proxy statement with the U.S. Securities and Exchange Commission (the “SEC”) in connection with its 2023 annual meeting of stockholders (the “2023 Annual Meeting”), which is scheduled to be held on May 23, 2023 (the “2023 Annual Meeting”). The Company has also sent a letter to shareholders. The full text of the letter follows.

April 10, 2023

Dear Fellow Shareholder,

Thank you for your investment in Broadwind, Inc. (“Broadwind”). Over the past year, Broadwind took decisive steps to drive value creation for our shareholders. We strengthened our relationships with core wind turbine manufacturing customers and continued to expand into adjacent, high-margin non-wind industries where our innovative manufacturing and engineering capabilities, domestic production facilities, and customer-centric approach remain key areas of competitive differentiation.

As an experienced publicly-traded wind tower manufacturer in the United States, Broadwind is uniquely positioned to benefit from an ongoing, multi-year investment cycle in new onshore wind capacity. We are pleased to report that after a two-year hiatus, activity within the domestic onshore wind market is accelerating entering 2023, as reflected by increased order activity from our wind customers.

These dynamics, coupled with continued stability in our adjacent non-wind markets, put us on pace to achieve near record full-year revenue in 2023. We enter the year with a strong balance sheet, an expanded product line, the highest order and backlog levels in a decade, and historic policy support for wind energy that we are well positioned to leverage.

The 2023 Annual Meeting of Stockholders on May 23, 2023 will be an important one. An activist hedge fund, WM Argyle Fund, LLC (“WM Argyle”), which owns 1.0% of Broadwind’s outstanding common stock valued at approximately $700,000, is seeking to replace three of our directors –half of our independent board, including our Chairman – with a director slate of its own, effectively taking control of your company.

During the past year, WM Argyle has demanded Broadwind undertake a series of high-risk, short-sighted initiatives that exhibit both a lack of commercial sophistication and a fundamentally flawed understanding of the energy transition industry. It has also proposed candidates to the board that we believe are deeply unqualified.

As you cast your vote at the annual meeting this year, we ask you consider the following:

1) Broadwind has successfully navigated through a significant trough in the domestic onshore wind market, positioning the Company for long-term value creation

Wind energy producers have faced a challenging economic environment over the past two years, as pandemic-related supply chain disruptions, raw material price inflation, labor constraints, and softening demand for new renewable energy projects impacted profit margins. The expiration of a US wind energy tax credit in 2020 created further uncertainty, contributing to a decline in new domestic wind turbine installations.

As a trusted partner and supplier to wind turbine original equipment manufacturers (“OEMs”), we supported our customers continuously during a challenging period for the industry. At the same time, we took action to further diversify our revenue mix toward alternative, complementary end markets beyond wind energy such as power generation, oil & gas and infrastructure. In fact, over the last five years, Broadwind grew its annual non-wind revenue by 45% to $90 million through expanded relationships with new and existing partners.

Our strategic focus on revenue diversification has built Broadwind into a more resilient, durable business. We have positioned the business to achieve margin expansion, strengthened our balance sheet, and retained significant manufacturing capacity to support our customers. Our decision to preserve and invest in our manufacturing capabilities has positioned us to respond quickly as market conditions begin to improve across the domestic wind market.

2) Broadwind is a key beneficiary of the Inflation Reduction Act (“IRA”) of 2022, which positions us to deliver significant margin expansion and improved profitability

The IRA of 2022 provides transformative, long-term funding to the domestic wind industry through extended domestic tax credits and transmission infrastructure investments. Importantly, it also offers manufacturers greater visibility into future tax and pricing benefits, facilitating long-term planning and encouraging production of new domestic installations. Following a two-year decline in the pace of wind investment, domestic onshore wind tower installation activity began to accelerate in early 2023. Broadwind is a key beneficiary of this improved market outlook.

To be very clear, this opportunity is not hypothetical. In January 2023, Broadwind announced a transformative $175 million tower order with a major wind turbine OEM. This order more than doubled our backlog and secures at least 50% of our tower production capacity for 2023 and 2024. This order has an attractive margin profile, particularly given the benefit of the IRA-related tax credit.

This transformational order is a validation of our OEM-centric approach, one that led us to preserve capacity that could have been otherwise eliminated and retain skilled labor during the downturn so that we would be among the first to benefit from a rebound in demand entering a cyclical recovery.

We believe investors have recognized our success, together with the significant opportunities that lay ahead for Broadwind. In 2022, Broadwind outperformed the WilderHill Clean Energy Index by 41%. Broadwind’s stock also responded strongly to the recent tower order announcement, contributing to its outperformance versus the WilderHill Clean Energy Index by more than 230% in the three-year period immediately prior to the public activist campaign announcement by WM Argyle on January 18, 2023 and by 90% year-to-date 2023.

3) Broadwind is deploying capital effectively, laying a strong foundation for long-term value creation

Broadwind remains focused on a disciplined capital allocation strategy that supports profitable commercial growth within both existing and adjacent markets, with an emphasis on clean tech and energy transition opportunities.

Looking ahead, we intend to prioritize revenue growth within higher-margin, more profitable areas, while optimizing the economic benefits afforded by the IRA of 2022. Leveraging our high-performance team, we will further enhance the efficiency of our operations, while continuing to invest in people, systems and assets that position us to win in the markets we serve. We will also expand our product lines, creating intellectual property value in clean tech and other specialized markets organically and through accretive, bolt-on acquisitions.

Our new product initiatives have begun to yield positive results. In 2019, we began development of a proprietary technology aligned with our clean tech strategy, which led to the launch of our Medium Flow Pressure Reducing System (PRS) model in 2022, a copyright-protected mobile natural gas decanting system serving the virtual pipeline market in North America. This equipment will allow entry into the hydrogen fuel sector which is currently seeing enormous growth and investment. Our clean fuels product offerings have the potential to be 10% of revenue by 2025.

In 2023, our primary capital allocation priorities include debt reduction; organic investments in new intellectual property; opportunistic return of capital initiatives; and inorganic growth.

Our balance sheet is strong, with a near record level of cash and liquidity as of December 31, 2022 and a prudent net leverage ratio of 0.7x, well within our targeted range of at or below 2.0x. This positions us well to invest in projects that will build long-term value for shareholders.

4) Broadwind’s Board of Directors has the experience and independence required to represent shareholders

Broadwind has a diverse, experienced Board that values best-in-class corporate governance. As a Board, we adopted governance structures such as majority voting and annual elections to increase accountability and transparency to shareholders; an independent Chairman and highly independent Board to enhance oversight of management; and prudent executive compensation programs to align management incentives with the sustainable creation of long-term shareholder value.

Each of our directors has the skills and varied perspectives required to effectively oversee the company’s strategy and risk management. Our candidates offer extensive experience as senior operating and financial executives and public company directors, deep industry expertise in clean technologies and energy transition manufacturing, and broad backgrounds in sales and marketing, accounting, finance, M&A, new product development and risk management.

We are also committed to bringing new perspectives into the boardroom as our business needs evolve. Since the 2022 annual meeting, we have added two extremely talented, qualified directors, each of whom was chosen following a rigorous selection process: Sachin Shivaram, Chief Executive Officer of Wisconsin Aluminum Foundry, and Jeanette Press, who served as the Chief Financial Officer and Principal Accounting Officer for CMC Materials, Inc. (Nasdaq: CCMP).

5) WM Argyle’s activist campaign for Board control is highly disruptive and a serious risk to long-term shareholder value

The contrast between WM Argyle’s candidates and our directors could not be more evident. None of WM Argyle’s nominees have backgrounds in clean technologies or energy transition manufacturing; none have senior executive or public board experience; and none have senior-level financial expertise, or any such background required to be an effective director at Broadwind. Replacing any of our directors with members of WM Argyle’s proposed director slate would result in a significant loss of institutional knowledge and senior-level expertise, jeopardizing the Board’s ability to oversee the successful execution of our strategy.

This inexperience is further evident in the short-sighted, opportunistic proposals put forth by WM Argyle. Despite our significant concerns, over the past year, we have tried in earnest to achieve a viable, constructive resolution with WM Argyle and, in so doing, avoid a costly and distracting proxy contest. The Board thoroughly considered its proposals and candidates. At every point, WM Argyle insisted that the Board relinquish control of Broadwind without a shareholder vote. While the Board has and will always remain open to constructive discussions with Broadwind’s shareholders, it will never abdicate its responsibility to properly represent the interests of all shareholders.

In summary, the election of WM Argyle’s proposed slate would be highly detrimental to your best interests as a shareholder of Broadwind. The Board’s long-term strategic approach clearly positions Broadwind for success, and yielding to WM Argyle’s demands would derail Broadwind’s progress. We look forward to further presenting the facts around WM Argyle’s self-serving campaign over the coming weeks.

We are grateful for the trust you have placed with us as stewards of shareholder capital over the years and ask for your continued support at this annual meeting.

Sincerely,

The Broadwind Board of Directors

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

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 the Company’s current expectations regarding its 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, its management. Forward looking statements include any statement that does not directly relate to a current or historical fact. The Company has 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.

The Company’s forward-looking statements may include or relate to the Company’s beliefs, expectations, plans and/or assumptions with respect to the future of the Company’s operations and its ability to continue to execute on its strategies and grow its business organically. These statements are based on information currently available to the Company and are subject to various risks, uncertainties and other factors that could cause the Company’s 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 the Company’s most recently filed Form 10-K and the Company’s other filings with the SEC. The Company is 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 the Company’s current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.

Important Additional Information

The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from the Company’s stockholders in connection with its upcoming 2023 Annual Meeting. The Company filed its definitive proxy statement and a WHITE proxy card with the SEC on April 7, 2023 in connection with any such solicitation of proxies from the Company’s stockholders. STOCKHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TO READ SUCH PROXY STATEMENT, ACCOMPANYING WHITE PROXY CARD AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. The Company’s definitive proxy statement for the 2023 Annual Meeting contains information regarding the direct and indirect interests, by security holdings or otherwise, of the Company’s directors and executive officers in the Company’s securities. Information regarding subsequent changes to their holdings of the Company’s securities can be found in the SEC filings on Forms 3, 4 and 5, which are available on the Company’s website at http://investors.bwen.com or through the SEC’s website at www.sec.gov. Information can also be found in the Company’s other SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 9, 2023. Stockholders will be able to obtain the definitive proxy statement, any amendments or supplements to the proxy statement and other documents filed by the Company with the SEC at no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge on the Company’s website at http://investors.bwen.com.

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Disclaimer
All transactions are carried out by The SiLLC Assembly, a private portfolio management assembly. This document is not an offer of securities for sale or investment advisory services. This document contains general information only and is not intended to provide general or specific investment advice. Past performance is not a reliable indicator of future results and targets are not guaranteed. Certain statements and forecasted data are based on current expectations, current market and economic conditions, estimates, projections, opinions, and beliefs of SiLLC and/or its members. Due to various risks and uncertainties, actual results may differ materially from those reflected or contemplated in such forward-looking statements or in any of the case studies or forecasts. All references to SiLLC’s advisory activities relate to The SiLLC Assembly International.

Broadwind Announces Fourth Quarter and Full-Year 2022 Results, Introduces 2023 Financial Outlook

CICERO, Ill., March 09, 2023 — Broadwind, Inc. (Nasdaq: BWEN, “Broadwind” or the “Company”), a diversified precision manufacturer of specialized components and solutions serving global markets, today announced results for the fourth quarter and full-year 2022.

FOURTH QUARTER 2022 RESULTS
(As compared to the fourth quarter 2021)

  • Total revenue of $40.1 million, +54.0% y/y
  • Total gross profit of $2.6 million, +$1.6 million y/y
  • Total non-GAAP adjusted EBITDA of $0.2 million, +$1.4 million y/y
  • Total orders of $204.8 million, +$149.1 million y/y
  • Total backlog of $297.2 million, +$190.8 million y/y
  • Total cash and excess availability of $40.1 million, +$25.2 million y/y

FULL-YEAR 2022 RESULTS
(As compared to the full-year 2021)

  • Total revenue of $176.8 million, +21.4% y/y
  • Total gross profit of $10.7 million, +94.3% y/y
  • Total non-GAAP adjusted EBITDA of $2.4 million, +$5.3 million y/y excluding the 2021 benefit of the Paycheck Protection Program (PPP) and the Employee Retention Credit (ERC)

FULL-YEAR 2023 FINANCIAL GUIDANCE

  • Total revenue of between $200 million to $220 million
  • Total non-GAAP adjusted EBITDA of between $14 million to $16 million

For the three months ended December 31, 2022, Broadwind reported total revenue of $40.1 million, an increase of 54.0% when compared to the prior year period. The Company reported a net loss of ($2.9) million, or ($0.14) per basic share in the fourth quarter 2022, compared to a net loss ($4.1) million, or ($0.21) per basic share, in the fourth quarter 2021. The Company reported adjusted EBITDA, a non-GAAP measure, of $0.2 million in the fourth quarter 2022, compared to ($1.2) million in the prior-year period.

Fourth quarter results benefited from a combination of broad-based demand growth and improved operating leverage, partially offset by lower-margin project activity that commenced during the fourth quarter 2022. Each of the Company’s reporting segments reported positive year-over-year growth in both revenue and non-GAAP adjusted EBITDA during the fourth quarter 2022. Total gross margin increased 270 basis points on a year-over-year basis to 6.4%, primarily driven by improved price discipline and improved sales mix. Total operating cash flow increased by $28.9 million versus the prior-year period to $26.9 million, due to significant deposits received from a major customer.

Fourth quarter orders increased nearly 270% versus the prior-year period, while total backlog at year-end 2022 reached a near-record $297.2 million, supported by improved demand conditions across the Company’s diverse end-markets.

As of December 31, 2022, Broadwind had total cash on hand and availability under the Company’s credit facility of $40.1 million, up from $14.8 million at the end of the third quarter 2022. The significant, sequential increase in available liquidity was the result of more favorable terms on customer orders with respect to deposits, which will better optimize the Company’s working capital management moving forward.

BUSINESS UPDATE

Broadwind has continued to demonstrate strong operational excellence and commercial execution, consistent with a multi-year focus on building a market-leading precision manufacturing platform. Broadwind remains focused on organic growth within existing and adjacent markets; further revenue mix diversification beyond its core wind business; improved asset optimization; ratable growth in orders and backlog; and disciplined capital management to support the requirements of the business.

  • New business development. During the last three years, Broadwind has pursued an aggressive development strategy designed to both increase its share-of-wallet with its existing customers, while expanding into complementary adjacent markets – and new customer relationships. In January 2023, the Company announced the receipt of approximately $175 million in new tower orders from a leading global wind turbine manufacturer. The transformational, two-year order, which was the primary driver of the sequential improvement in our year-end backlog, secures significant tower production capacity across Broadwind’s facilities in both 2023 and 2024.
  • Revenue mix diversification. Since 2018, Broadwind has grown its non-wind precision manufacturing revenue by nearly 45% and expanded relationships with both new and existing customers. In the full year 2022, non-wind revenue increased by nearly 60% on a year-over-year basis to a record $91.6 million, supported by broad-based share gains across most end-markets. Included in non-wind revenue is $7 million generated from sales of Broadwind’s new line of proprietary pressure reducing systems (“PRS”).
  • Drive asset optimization. As of December 31, 2022, Broadwind has secured approximately 50% of its optimal tower production capacity across its facilities in both 2023 and 2024. During 2023, the Company expects to further optimize 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 improve throughput and asset optimization. The base load of orders in backlog allows the Company to focus these efforts on specific manufacturing processes offering the highest return on the resources invested.
  • Consistent growth in order and backlog. Total orders increased by more than 130%, or $209 million, in the full year 2022 compared to 2021, supported by broad-based demand growth across new and existing customer accounts. Fourth quarter 2022 orders increased to $205 million, supported by strong order activity from within wind, mining, steel and other markets. Total backlog increased to $297 million at year-end 2022, versus $106 million at year-end 2021, representing the highest total year-end backlog since 2013. 
  • Capitalize on IRA tailwinds. The Inflation Reduction Act (“IRA”) passed into law in 2022 provides critical industries, including those supporting the energy transition, with tax credits designed to accelerate a generational shift in the energy production mix from fossil fuels toward renewable energy, including wind. Included within section 45x of the IRA is a provision for a new advanced manufacturing tax credit for which the recently announced $175 million tower order qualifies.
  • Disciplined capital allocation. At year-end 2022, total cash and liquidity increased materially on both a sequential and year-over-year basis to $40.1 million, supported by growth in deposits on new customer orders. The Company’s ratio of net debt to trailing twelve-month non-GAAP adjusted EBITDA was 0.7x as of December 31, 2022. Broadwind remains well-capitalized to support the ongoing growth of its business.

MANAGEMENT COMMENTARY

“We continued to advance our commercial strategy during the fourth quarter and full-year 2022, resulting in strong, year-over-year revenue growth across our diverse end-markets,” stated Eric Blashford, President and CEO of Broadwind. “For most of last year, persistent supply chain disruptions and elevated raw materials costs impacted customer activity levels, particularly within the domestic, onshore wind market. Beginning in the fourth quarter 2022, freight activity began to normalize, raw materials prices showed signs of returning toward historical levels and customer demand across both wind and non-wind markets began to increase. Recent actions we’ve taken to improve asset optimization and reduce fixed overhead have taken hold, positioning us to drive profitable, above-market growth into a recovery.”

“In January 2023, we announced $175 million in new tower orders from a leading global wind turbine manufacturer,” continued Blashford. “On a standalone basis, this transformational two-year order secures approximately 50% of our optimal tower production capacity across Broadwind’s manufacturing facilities during the full-year 2023 and 2024. In addition to providing significant order book visibility over the next two years, we expect this order will provide significant economies of scale across our organization. Ordered tower sections will be produced at both our Abilene and Manitowoc facilities.”

“Our backlog sits at a near-record high entering the first quarter 2023,” continued Blashford. “While the fourth quarter 2022 included some lower-margin, legacy project work, margin capture on our current-year backlog will benefit from IRA-related tax credits. Assuming full utilization of our wind tower manufacturing facilities, we believe the IRA could provide up to ~$30 million in incremental annual gross profit in future years.”

“At year-end 2022, we had $40.1 million of available cash and liquidity, given recent actions taken to further optimize our working capital management,” continued Blashford. “In 2023, our capital allocation priorities will include further debt reduction; organic investment in new intellectual property; and opportunistic investments in complementary, immediately-accretive bolt-on acquisitions that expand our capabilities within energy transition markets. As of December 31, 2022, our net leverage was 0.7x, well within our target range of at or below 2.0x.”

“Today, we introduced financial guidance for the full-year 2023,” concluded Blashford. “Our risk-adjusted guidance reflects expectations for a gradual recovery in customer demand this year, improved efficiencies resulting from economies of scale, together with improved margin realization resulting from the IRA’s 45x tax credit, pending final guidance from the Internal Revenue Service.”

SEGMENT RESULTS

Heavy Fabrications Segment
Broadwind provides large, complex and precision fabrications to customers in a broad range of industrial markets. Key products include wind towers and industrial fabrications, including mining and material handling components and other frames/structures. 

Heavy Fabrications segment sales increased by 61.2% to $23.7 million in the fourth quarter 2022, as compared to the prior-year period, primarily driven by a 22% increase in towers sections sold and a 73% increase in industrial fabrication product line revenue as a result of higher recent order intake from industrial customers and additional revenue recognized from our PRS units. The segment reported an operating loss of ($1.0) million in the fourth quarter of 2022, as compared to an operating loss of ($1.3) million in the prior year period.  Segment non-GAAP adjusted EBITDA was $0.3 million in the fourth quarter 2022, as compared to ($0.04) million in the prior-year period.

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 increased by 41.5% to $11.7 million in the fourth quarter 2022, as compared to the prior year period, primarily driven by increased demand across the energy, industrial and steel end-markets. The segment reported operating income of $0.1 million in the fourth quarter 2022, compared to an operating loss of ($0.5) million in the prior year period. The segment reported non-GAAP adjusted EBITDA of $0.8 million in the fourth quarter 2022, versus $0.1 million in the fourth quarter 2021.

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 53.2% to $4.7 million in the fourth quarter 2022, as compared to the prior year period, primarily driven by increased demand for natural gas turbine content. The segment reported operating income of $0.5 million in the fourth quarter 2022, compared to an operating loss of ($0.2) million in the prior year period. The segment reported non-GAAP adjusted EBITDA of $0.7 million in the fourth quarter 2022, versus ($0.04) million in the prior year period.

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 Guidance
$ in millions 2022 Actual 2023 Low 2023 High
Revenue       $         176.8       $         200.0  $         220.0
Non-GAAP Adjusted EBITDA $             2.4  $           14.0  $           16.0

FOURTH QUARTER 2022 CONFERENCE CALL

Broadwind will host a conference call today, March 9, 2023 at 11:00 A.M. ET to review its 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 the 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 March 16, 2023:

Teleconference Replay:1-844-512-2921
Conference ID:13735951

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 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.

The Company’s 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 the United States; (iii) 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; (iv) 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, in light of the COVID-19 pandemic; (v) our ability to continue to grow our business organically and through acquisitions, and the impairment thereto by the impact of the COVID-19 pandemic; (vi) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (vii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security, including with respect to any remote work arrangements implemented in response to the COVID-19 pandemic; (viii) the sufficiency of our liquidity and alternate sources of funding, if necessary; (ix) our ability to realize revenue from customer orders and backlog; (x) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (xi) the economy, including its stability in light of the COVID-19 pandemic, and the potential impact it may have on our business, including our customers; (xii) 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; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xv) the effects of the change of administrations in the U.S. federal government; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xviii) our ability to utilize various relief options enabled by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act); (xix) the limited trading market for our securities and the volatility of market price for our securities; and (xx) 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 and our other filings with the Securities and Exchange Commission (the “SEC”). 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
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

December 31, December 31,
20222021
ASSETS
CURRENT ASSETS:
Cash$12,732$852
Accounts receivable, net17,01813,802
Employee retention credit receivable497
Contract assets1,9551,136
Inventories, net44,26233,377
Prepaid expenses and other current assets3,2912,661
Total current assets79,25852,325
LONG-TERM ASSETS:
Property and equipment, net45,31943,655
Operating lease right-of-use assets16,39618,029
Intangible assets, net2,7283,453
Other assets839585
TOTAL ASSETS$144,540$118,047
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Line of credit and current portion of long-term debt$1,170$6,650
Current portion of finance lease obligations2,0082,060
Current portion of operating lease obligations1,8821,775
Accounts payable26,25516,462
Accrued liabilities4,3133,654
Customer deposits34,55012,082
Total current liabilities70,17842,683
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities7,141177
Long-term finance lease obligations, net of current portion4,2262,481
Long-term operating lease obligations, net of current portion16,69618,405
Other26167
Total long-term liabilities28,08921,230
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; 21,127,130 and 19,859,650 shares issued as of December 31, 2022 and December 31, 2021, respectively2120
Treasury stock, at cost, 273,937 shares as of December 31, 2022 and December 31, 2021, respectively(1,842)(1,842)
Additional paid-in capital397,240395,372
Accumulated deficit(349,146)(339,416)
Total stockholders’ equity46,27354,134
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$144,540$118,047

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

Three Months Ended December 31,Twelve Months Ended December 31,
2022202120222021
Revenues$40,060$26,011$176,759$145,619
Cost of sales37,50425,054166,049140,108
Gross profit2,55695710,7105,511
OPERATING EXPENSES:
Selling, general and administrative4,4834,74916,59217,372
Intangible amortization175183725733
Total operating expenses4,6584,93217,31718,105
Operating loss(2,102)(3,975)(6,607)(12,594)
OTHER (EXPENSE) INCOME, net:
Paycheck Protection Program loan forgiveness9,151
Interest expense, net(863)(313)(3,218)(1,129)
Other, net1131221307,444
Total other (expense) income, net(750)(191)(3,088)15,466
Net (loss) income before provision for income taxes(2,852)(4,166)(9,695)2,872
(Benefit) provision for income taxes(1)(76)3525
NET (LOSS) INCOME$(2,851)$(4,090)$(9,730)$2,847
NET (LOSS) INCOME PER COMMON SHARE – BASIC:
Net (loss) income$(0.14)$(0.21)$(0.48)$0.15
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC20,72319,51620,29918,726
NET (LOSS) INCOME PER COMMON SHARE – DILUTED:
Net (loss) income$(0.14)$(0.21)$(0.48)$0.15
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – DILUTED20,72319,51620,29919,388

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

Twelve Months Ended December 31,
20222021
CASH FLOWS FROM OPERATING ACTIVITIES: 
Net (loss) income$(9,730)$2,847
Adjustments to reconcile net cash provided by (used in) operating activities:
Depreciation and amortization expense6,0606,336
Paycheck Protection Program loan forgiveness(9,151)
Deferred income taxes(13)(2)
Change in fair value of interest rate swap agreements(27)23
Stock-based compensation9441,541
Allowance for doubtful accounts(30)(426)
Common stock issued under defined contribution 401(k) plan1,2441,193
Loss (gain) on disposal of assets3(33)
Changes in operating assets and liabilities:
Accounts receivable(3,186)1,961
Employee retention credit receivable497(497)
Contract assets(820)1,117
Inventories(10,885)(6,653)
Prepaid expenses and other current assets(629)133
Accounts payable9,926(1,736)
Accrued liabilities686(2,676)
Customer deposits22,468(6,737)
Other non-current assets and liabilities135(66)
Net cash provided by (used in) operating activities16,643(12,826)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment(3,098)(1,707)
Proceeds from disposals of property and equipment33
Net cash used in investing activities(3,098)(1,674)
CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments on) proceeds from line of credit, net(6,350)5,105
Payments for deferred financing costs(470)
Proceeds from long-term debt8,113817
Payments on long-term debt(863)(161)
Principal payments on finance leases(1,776)(1,672)
Shares withheld for taxes in connection with issuance of restricted stock(549)(1,423)
Proceeds from sale of common stock, net2309,314
Net cash (used in) provided by financing activities(1,665)11,980
NET INCREASE (DECREASE) IN CASH11,880(2,520)
CASH beginning of the period8523,372
CASH end of the period$12,732$852
Supplemental cash flow information:
Interest paid$1,638$741
Income taxes paid$23$102
Non-cash investing and financing activities:
Equipment additions via finance lease$3,882$2,757
Non-cash purchases of property and equipment$134$18

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

Three Months EndedTwelve Months Ended
December 31,December 31,
2022202120222021
ORDERS:                                                      
Heavy Fabrications$184,075$31,150$294,097$93,246
Gearing15,07116,75753,59746,081
Industrial Solutions5,6857,86620,33319,698
Total orders$204,831$55,773$368,027$159,025
REVENUES:
Heavy Fabrications$23,720$14,713$117,206$101,994
Gearing11,6978,26842,58828,583
Industrial Solutions4,6633,04417,80415,402
Corporate and Other(20)(14)(839)(360)
Total revenues$40,060$26,011$176,759$145,619
OPERATING PROFIT/(LOSS):
Heavy Fabrications$(1,032)$(1,341)$(1,044)$(3,214)
Gearing116(504)43(2,593)
Industrial Solutions487(217)120(386)
Corporate and Other(1,673)(1,913)(5,726)(6,401)
Total operating loss$(2,102)$(3,975)$(6,607)$(12,594)

 

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

ConsolidatedThree Months Ended December 31,Twelve Months Ended December 31,
2022202120222021
Net (Loss) Income$(2,851)$(4,090)$(9,730)$2,847
Interest Expense8633133,2181,129
Income Tax Provision(1)(76)3525
Depreciation and Amortization1,4781,5776,0606,336
Share-based Compensation and Other Stock Payments6951,0672,8612,872
Adjusted EBITDA (Non-GAAP)$184$(1,209)$2,444$13,209
Heavy Fabrications SegmentThree Months Ended December 31,Twelve Months Ended December 31,
2022202120222021
Net (Loss) Income$(926)$367$(1,935)$6,996
Interest Expense3381491,585530
Income Tax (Benefit) Provision(330)(1,742)(579)382
Depreciation8529413,4463,844
Share-based Compensation and Other Stock Payments3312441,028975
Adjusted EBITDA (Non-GAAP)$265$(41)$3,545$12,727
Gearing SegmentThree Months Ended December 31,Twelve Months Ended December 31,
2022202120222021
Net Income (Loss)$(5)$(554)$(190)$1,280
Interest Expense1173024962
Income Tax Provision420730
Depreciation and Amortization4714721,9781,855
Share-based Compensation and Other Stock Payments192173589531
Adjusted EBITDA (Non-GAAP)$779$141$2,633$3,758
Industrial Solutions SegmentThree Months Ended December 31,Twelve Months Ended December 31,
2022202120222021
Net (Loss) Income$410$(196)$(130)$488
Interest Expense741322156
Income Tax Provision1(34)2221
Depreciation and Amortization98110397425
Share-based Compensation and Other Stock Payments11264295211
Adjusted EBITDA (Non-GAAP)$695$(43)$805$1,201
Corporate and OtherThree Months Ended December 31,Twelve Months Ended December 31,
2022202120222021
Net Loss$(2,330)$(3,707)$(7,475)$(5,917)
Interest Expense3341211,163481
Income Tax Provision (Benefit)3241,680585(408)
Depreciation and Amortization5754239212
Share-based Compensation and Other Stock Payments605869491,155
Adjusted EBITDA (Non-GAAP)$(1,555)$(1,266)$(4,539)$(4,477)

Contact Data

IR CONTACT
Noel Ryan, IRC

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Disclaimer
All transaction are carrying out by SiLLC, a private portfolio management assembly. This document is not an offer of securities for sale or investment advisory services. This document contains general information only and is not intended to represent general or specific investment advice. Past performance is not a reliable indicator of future results and targets are not guaranteed. Certain statements and forecasted data are based on current expectations, current market and economic conditions, estimates, projections, opinions and beliefs of SiLLC and/or its members. Due to various risks and uncertainties, actual results may differ materially from those reflected or contemplated in such forward-looking statements or in any of the case studies or forecasts. All references to SiLLC’s advisory activities relates to SiLLC Assembly International.


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