Latest news with #Broadwind
Business Upturn
2 days ago
- Business
- Business Upturn
Broadwind Announces Sale of Industrial Fabrication Operations in Manitowoc, Wisconsin
By GlobeNewswire Published on June 5, 2025, 04:00 IST Divestiture of the Manitowoc, WI facility optimizes asset base and improves operating leverage Further diversifies BWEN's business toward higher-margin precision manufacturing segments Significantly enhances liquidity, while reducing net leverage and supporting capital deployment priorities CICERO, Ill., June 04, 2025 (GLOBE NEWSWIRE) — Broadwind (Nasdaq: BWEN, or the 'Company'), a diversified precision manufacturer of specialized components and equipment serving global markets, today announced that it has entered into a definitive agreement to sell its industrial fabrication operations in Manitowoc, WI for total consideration of not less than $13 million. This transaction is expected to close during the third quarter 2025, subject to the satisfaction of customary closing conditions. 'This transaction represents a meaningful step forward in optimizing our footprint, enhancing balance sheet optionality, and sharpening our strategic focus within stable, higher-margin precision manufacturing verticals,' stated Eric Blashford, President and CEO of Broadwind. 'By consolidating our operations, we expect to materially improve our overall utilization across our remaining operations, while reducing annualized operating costs by approximately $8 million upon closing of the transaction.' 'This transaction supports our continued strategic diversification in precision manufacturing toward other key power generation and infrastructure markets,' said Blashford. 'At the same time, we remain committed to serving our key wind customers while consolidating production into our most competitive facility.' 'At the close of this transaction, our capital allocation strategy will prioritize debt repayment and complementary acquisitions providing diversification into high-value, high growth adjacencies, together with other value-enhancing actions,' stated Blashford. 'We look forward to ensuring a seamless transition of the facility and operations in Manitowoc.' STRATEGIC RATIONALE Optimizes asset base. In 2024, the Manitowoc facility generated approximately $25 million in revenue. The Company expects to transition roughly $8 million of wind-related revenue to its Abilene, TX facility. By moving the remaining wind repowering and pressure reducing systems (PRS) volume from Manitowoc, where margins were approximately 8-9%, the Company anticipates it will materially improve utilization rates and enhance operating leverage. Diversifies toward precision manufacturing in other key power generation and infrastructure end-markets. The Company continues to reduce its exposure to wind by redeploying underutilized assets into non-wind precision manufacturing. Investments in advanced machinery, and quality certifications have positioned Broadwind to support higher volumes in the Gearing and Industrial Solutions segments. On a proforma 2024 basis, revenue would have been approximately $125 million, with 52% from Heavy Fabrications, 28% from Gearing, and 20% from Industrial Solutions. Enhances balance sheet flexibility. As of March 31, 2025, Broadwind had total cash and net debt outstanding of $1.2 million and $16.7 million, respectively. Pro-forma for the closing of the transaction, total cash would have increased to $9.4 million with net debt of $3.7 million. 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 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; (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 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 effects of proxy contests and actions of activist stockholders; (xx) the limited trading market for our securities and the volatility of market price for our securities; (xxi) our outstanding indebtedness and its impact on our business activities (including our ability to incur additional debt in the future); and (xxii) 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. Disclaimer: The above press release comes to you under an arrangement with GlobeNewswire. Business Upturn takes no editorial responsibility for the same. GlobeNewswire provides press release distribution services globally, with substantial operations in North America and Europe.
Yahoo
2 days ago
- Business
- Yahoo
Broadwind Announces Sale of Industrial Fabrication Operations in Manitowoc, Wisconsin
Divestiture of the Manitowoc, WI facility optimizes asset base and improves operating leverage Further diversifies BWEN's business toward higher-margin precision manufacturing segments Significantly enhances liquidity, while reducing net leverage and supporting capital deployment priorities CICERO, Ill., June 04, 2025 (GLOBE NEWSWIRE) -- Broadwind (Nasdaq: BWEN, or the 'Company'), a diversified precision manufacturer of specialized components and equipment serving global markets, today announced that it has entered into a definitive agreement to sell its industrial fabrication operations in Manitowoc, WI for total consideration of not less than $13 million. This transaction is expected to close during the third quarter 2025, subject to the satisfaction of customary closing conditions. 'This transaction represents a meaningful step forward in optimizing our footprint, enhancing balance sheet optionality, and sharpening our strategic focus within stable, higher-margin precision manufacturing verticals,' stated Eric Blashford, President and CEO of Broadwind. 'By consolidating our operations, we expect to materially improve our overall utilization across our remaining operations, while reducing annualized operating costs by approximately $8 million upon closing of the transaction.' 'This transaction supports our continued strategic diversification in precision manufacturing toward other key power generation and infrastructure markets,' said Blashford. 'At the same time, we remain committed to serving our key wind customers while consolidating production into our most competitive facility.' 'At the close of this transaction, our capital allocation strategy will prioritize debt repayment and complementary acquisitions providing diversification into high-value, high growth adjacencies, together with other value-enhancing actions,' stated Blashford. 'We look forward to ensuring a seamless transition of the facility and operations in Manitowoc.' STRATEGIC RATIONALE Optimizes asset base. In 2024, the Manitowoc facility generated approximately $25 million in revenue. The Company expects to transition roughly $8 million of wind-related revenue to its Abilene, TX facility. By moving the remaining wind repowering and pressure reducing systems (PRS) volume from Manitowoc, where margins were approximately 8-9%, the Company anticipates it will materially improve utilization rates and enhance operating leverage. Diversifies toward precision manufacturing in other key power generation and infrastructure end-markets. The Company continues to reduce its exposure to wind by redeploying underutilized assets into non-wind precision manufacturing. Investments in advanced machinery, and quality certifications have positioned Broadwind to support higher volumes in the Gearing and Industrial Solutions segments. On a proforma 2024 basis, revenue would have been approximately $125 million, with 52% from Heavy Fabrications, 28% from Gearing, and 20% from Industrial Solutions. Enhances balance sheet flexibility. As of March 31, 2025, Broadwind had total cash and net debt outstanding of $1.2 million and $16.7 million, respectively. Pro-forma for the closing of the transaction, total cash would have increased to $9.4 million with net debt of $3.7 million. 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 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; (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 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 effects of proxy contests and actions of activist stockholders; (xx) the limited trading market for our securities and the volatility of market price for our securities; (xxi) our outstanding indebtedness and its impact on our business activities (including our ability to incur additional debt in the future); and (xxii) 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. CONTACT: IR CONTACT Stefan Neely or Noel Ryan BWEN@
Yahoo
14-05-2025
- Business
- Yahoo
Q1 2025 Broadwind Inc Earnings Call
Thomas Ciccone; Chief Financial Officer, Vice President; Broadwind Inc Eric Blashford; President, Chief Executive Officer, Director; Broadwind Inc Justin Clare; Analyst; ROTH Capital Partners Sameer Joshi; Analyst; H.C. Wainwright & Co Eric Stine; Analyst; Craig-Hallum Capital Group Operator Greetings, and welcome to Broadwind's first quarter and full year 2025 results conference call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Tom Ciccone. Thank you. You may begin. Thomas Ciccone Good morning, and welcome to the Broadwind first quarter 2025 results conference call. Leading the call today is our CEO, Eric Blashford; and I'm Tom Ciccone, the company's Vice President and Chief Financial Officer. We issued a press release before the market opened today, detailing our first quarter results. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the factors that could cause actual results to differ please refer to the Risk Factors section of our latest annual and quarterly filings with the SEC. Additionally, please note that you can find reconciliations of the historical non-GAAP financial measures discussed during our call in the press release issued today. At the conclusion of our prepared remarks, we will open the line for questions. With that, I'll turn the call over to Eric. Eric Blashford Thanks, Tom. And welcome to those joining us today. Broadwind delivered solid commercial and operational execution during the quarter, with revenue and adjusted EBITDA of $37 million and $2.4 million, respectively, with increasing momentum reflected in sequential growth in both revenue and gross margin. Stronger demand for wind repowering adapters supported our revenue this quarter, while our disciplined operations produced a positive EBITDA margin despite a lower margin product mix, and supply chain delays. Customer activity continues to accelerate with order rates increasing 5% year over year to $30 million. Stronger demand for wind repowering adapters and natural gas turbine content more than offset lower demand in mining and natural gas pressure-reducing systems, or PRSs. These market dynamics highlight the importance of our diverse customer base especially during times of US trade policy uncertainty. Orders within our Heavy Fabrication business increased 10% year over year due to continued strong demand for the adapters used to repower wind. Orders for our Gearing business continued their upward sequential trajectory, increasing 13% versus Q4 2024 as we have begun to realize sizable wins in the strategic power generation market as well as a lift in oil and gas gearing, which we believe is partially due to tariff-related onshoring. Orders from our Industrial Solutions segment increased 38% year over year due to continued strength in the global gas turbine market setting another record for orders and backlog in this segment. At a commercial level, we continue to expand our product mix within higher-margin adjacent markets. Quoting activity remains elevated in all segments, but most notably in our Heavy Fabrications and Industrial Solutions businesses, where we're seeing strong interest from the power generation market. We are prudently adding resources to meet this increasing demand. In the gearing market, we're pleased to see that the investments made in equipment and quality certifications over the last year are returning dividends in the form of new orders from new customers in power generation and defense. Operationally, we continue to invest in equipment technology to improve our process capabilities, reduce costs and improve our profitability. In the Industrial Solutions segment, we're investing in advanced testing equipment to expand our transmitter panel offering and are moving forward with a UL certification for electrical panels to further expand our offering. In heavy fabrications, we've invested in new milling and beveling equipment to improve throughput and precision in our wind tower and repowering adapter manufacturing processes while reducing costs. Looking at sales in the first quarter, revenue was slightly below the prior year quarter due to the absence of a large natural gas turbine aftermarket shipment in the prior year and softness in the oil and gas gearing market, offset by stronger shipments into the wind market. Within our Heavy Fabrication segment, Q1 revenue was $25 million, up 15% from a year ago mostly due to the aforementioned increase in demand for wind tower adapters, partially offset by slower sales of our PRS units. Gearing revenue was $6 million in Q1, down 28% year over year due to broad-based softness in the oil and gas gearing market, partially offset by strength in wind and the industrial sector. We've taken further cost actions to align production capacity with the present demand levels while maintaining key manufacturing and engineering talent required to accommodate the anticipated increase in orders later this year. Industrial Solutions revenue was $5.6 million, down 29% year over year, primarily due to the timing of certain aftermarket shipments into the natural gas turbine market. In summary, the team and business continues to perform well. As we navigate demand fluctuations and policy uncertainty, while we maintain our key operating talent and execute our diversification strategy. With that, I'll turn the call over to Tom for a discussion of our first quarter financial performance. Thomas Ciccone Thank you, Eric. Turning to slide 5 for an overview of our first quarter performance. First quarter consolidated revenues were $36.8 million a 2% decrease as our production levels continue to be impacted by the extended slowdown within the oil and gas sector. Sequentially, revenue was up almost 10%, as we have experienced stronger demand for wind repowering. Adjusted EBITDA margin was 6.4%, due primarily to low capacity utilization, particularly within our Gearing segment and a lower margin mix of products sold across all three operating segments. Q1 orders totaled $30.5 million, an increase of 5% versus the prior year first quarter. Orders in Heavy Fabrications and Industrial Solutions increased due to strong demand from the wind repowering and power generation markets, while orders and gearing remain muted. Turning to slide 6 for a discussion of our Heavy Fabrication segment. First quarter orders of $12.4 million are up versus the $11.2 million booked in the prior year period as we continue to realize improved demand for wind repowering projects. This is partially offset by a decrease in orders for our PRS units. First quarter revenues of $25.2 million are up both sequentially and versus the prior year quarter, driven by an increase in wind tower sections sold and increased revenue related to repowering adapters. During the first quarter, we recognized segment adjusted EBITDA of $3.4 million an increase sequentially and versus the prior year first quarter, driven by increased revenue and overall production levels as we ramp up for increased shipments expected in the second quarter. Turning to slide 7. Gearing orders of $8 million are down approximately $2.5 million. Although down versus the prior year, Q1 gearing orders are up sequentially and are well above the quarterly average for the past two years within the segment. We have booked some meaningful oil and gas volume for the first time in over a year as we may be benefiting from the possible onshoring in reaction to recent US trade policies. Segment revenue was $6 million, down $2.4 million versus the prior year quarter. We experienced an adjusted EBITDA loss of $0.2 million driven by lower revenue resulting from softer order intake levels in recent quarters in addition to operational inefficiencies experienced in Q1. Turning to slide 8. Industrial Solutions recorded more than $10 million of orders in the first quarter, surpassing the previous $8 million record achieved last quarter. The segment continues to operate in a robust demand environment and there continues to be strong commercial interest for its natural gas turbine content. Segment backlog also hit a new record high of nearly $23 million at the end of the first quarter, eclipsing the previous record of $18.5 million set in Q4 of 2024. Q1 segment revenue was $5.6 million, and Q1 segment adjusted EBITDA was $0.5 million, both down versus the prior year period as we experienced supply chain headwinds, which impacted shipments during the quarter. We believe these issues to be temporary and expect revenue totals to improve over the balance of 2025. Turning to slide 9. We ended the first quarter with cash and availability on our credit facility of approximately $23 million, reflective of our deposit balance returning to a more normal operating level. In addition, we experienced a significant inventory build in Q1 as we began a tower run in Manitowoc early in Q2 and transitioned to a new tower design with increased material content in Abilene. Finally, with respect to our financial guidance. Today, we are reiterating our full year 2025 revenue and adjusted EBITDA guidance. We anticipate full year revenue to be in the range of $140 million to $160 million and adjusted EBITDA to be in the range of $13 million to $15 million. That concludes my remarks. I will turn the call back over to Eric to continue our discussion. Eric Blashford Thanks, Tom. Now allow me to provide some thoughts as we move into Q2. Beginning with our Heavy Fabrications segment. We believe that domestic onshore wind tower activity will continue at its present rate through 2026. We are encouraged by the continued momentum in the wind repowering market. As we are seeing sustained demand from our OEM customers for the adapters we manufacture, which are used to upgrade most legacy turbines. We believe that the tariffs announced earlier this year, combined with the existing antidumping measures in place will continue to benefit domestic wind tower manufacturers. We have good visibility for tower production through the balance of 2025 and are in active discussions with several OEM customers for 2026 volume. We continue to reallocate production capacity towards stable recurring project revenue streams across diverse end markets with recent gearing wins in the power generation market and expanded opportunities in large utility scale natural gas turbines. We continue to see quote activity from the power generation and grid hardening space, especially for products supporting the nation's electrical infrastructure, such as the large transformers required to support the grid. We are expanding our service and commercial teams for our clean fuels PRS line to better serve customers outside the Permian and Eagle Ford regions into the DJ and Bakken regions. The newest model in our line, the L-70 low flow unit continues to perform well in field trials and will be ready for full release this summer. Customers appreciate the unit's performance specifications, compact footprint simplicity of operation, remote monitoring capability and attractive price point, making it the ideal solution for industrial applications, such as primary or backup power supply systems and pipeline integrity projects. Furthermore, we're evaluating certain export opportunities, which we will address through key distribution partners who provide local service and support after the sale. In our Gearing segment, we continue to execute our strategy to move beyond traditional gearing toward other precision machine products. We're pleased with the increasing level of customer activity we're seeing in various new markets such as air derivative gas turbines, aggregate material processing and large high-speed compressors to name a few. The recent sizable orders we received from the power generation sector are evidence that our strategy is working. In Industrial Solutions, the momentum that we've experienced in the gas turbine industry last year continues this year as we set another quarterly record for bookings in Q1. Our key customers, which see strong demand for gas turbine equipment and services are reporting strong backlogs and are increasing their production capacity in response. The strength in the natural gas turbine market is attributable, at least in part to data centers and other sources of increasing electrical load and is expected to continue for years. So we are taking the necessary steps to increase capacity, add capabilities such as electrical panel manufacturing and improve processes so that we can take full advantage of this significant growth opportunity. As a reminder, our Industrial Solutions business provides supply chain solutions, custom fabrications, and control panel manufacturing for the growing combined-cycle natural gas turbine market worldwide. In summary, I am pleased with our start this year. as we continue to demonstrate strong execution of our strategic priorities. Each of our divisions is well positioned to support the nation's growing need for power generation and infrastructure improvement which we see as long-term opportunities for us. Our quality, quick response and reliable deliveries continue to win new customers for us, particularly within the gearing business. We've reduced our cost structure during a transitional period for domestic onshore wind and oil and gas gearing demand while retaining our key talent and continuing to work on vital activities like process improvement, prudent capabilities investment and product expansion. We value our people and are committed to keeping them safe, fulfilled and productive. We have 5 plants, all US-based so we're prepared to capitalize on any opportunities afforded by the pro domestic manufacturing policy backdrop afforded by the current administration. While the potential impacts of both tariffs and renewable energy policy changes are unknown, we are confident that we can support the necessary rebuilding of the country's infrastructure. We're encouraged that our order intake continues to grow, positioning us for improved utilization of our manufacturing base over the coming year as we build a firm foundation for steady, profitable growth serving the power generation, infrastructure and other key markets with high-quality precision components and proprietary products to capitalize on improved demand in the years ahead. With that said, I'll turn the call back over to the moderator for the Q&A session. Operator (Operator Instructions) Justin Clare, ROTH Capital Partners. Justin Clare So I just wanted to start off on the Heavy Fabrications segment. Q1 revenue was the strongest we've seen in, I think, over a year for that segment. And so I was just wondering if you could talk a little bit more about the repowering opportunity that you're seeing? And then maybe how revenue might trend for heavy fabrications through the remainder of 2025? And then if you could speak to 2026 a little bit, it sounds like you are anticipating kind of flat demand year over year, but do you see any mix shift between Abilene or Manitowoc or between the repowering opportunity or tower segments? Thomas Ciccone Yes. Thanks, Justin. I think some of the strength that we've seen in Q1 really had to do with strong demand for our repowering adapters that we produce for our customers. So that seems to be a very strong market right now, and we're billing for several OEMs in both of our plants right now. So that's been a real good tailwind for us. As it relates to the rest of 2025, we are expecting to see some increase in our overall revenue in that segment, particularly in Manitowoc as we are starting -- we did start a tower run in Q2. I mean, we expect to start reaping some of the revenue -- recording some of that revenue in Q2 and Q3. Eric Blashford Yes. And Justin, this is Eric. Just to add on to that. Regarding '26, we expect '26 to be about the same from a new wind tower perspective and repowering adapters to be at the same level, if not a hair higher. We are actually producing for -- we're actually producing for multiple OEMs and another one is actually interested in our capacity to in repowering. Justin Clare Got it. Okay. That's good to hear. Maybe just shifting over to tariffs. I know all your manufacturing is in the US, but wondering if tariffs are having any effect on your cost structure, any materials that you might source from overseas? And then just wondering on the competitive environment, are the tariffs changing anything in terms of your relative cost structure to others you may compete against really across any of your segments? Eric Blashford Well, if we start with wind. Wind, as you know, has some components that are sourced from overseas. Our OEM partners saw this coming and they've shifted some of their -- some of the internals which typically come from China out to other countries that are less suspect or less impacted by tariffs. So I think it could have a minor impact, but that would be a pass-through for us. So we don't see a lot of impact because of the kind of advanced change that we did within our supply chain. With regard to the other locations, the other divisions that we have, we're seeing a little bit of lift in terms of the consumables such as welding wire and whatnot that we're able to pass through to our customers because, as you know, we quote virtually every job independently. On the flip side, we're starting to see some potential onshoring activities. Even with oil and gas gearing that we haven't seen before, we're seeing a lift and we suspect that it could have something to do with our customers' concerns with regard to tariffs out of especially the Far East and so looking to reshore or onshore more gearing and gearing components to the US. Justin Clare Okay. Got it. And then, I guess, just following up on gearing. We have seen oil prices drop this year, and they're still at a relatively low level. I guess what's your visibility into the demand outlook for gearing and how might the outlook for oil and gas be affecting that? Eric Blashford As far as oil and gas gearing, as we reported before, that's on a certainly 18 months to two-year lull because fracking -- new frac rigs and whatnot are not being brought online. We are seeing some upgrades, updates to existing fleets, and we're selling into the aftermarket there. So I would say that would be soft to a little bit of a lift. We had some stronger orders and revenue in gearing that we have seen in several years, which is interesting. And certainly, attractive to us, but the power gen sector which is obviously not drilling. It's using natural gas and oil. We're seeing a lift in. And that's -- those were strategic target markets we went after specifically with gearing with this AS9100 Certification, that's air derivatives and whatnot, we're starting to see some green shoots in that. So notwithstanding the price of oil and gas being down, we're seeing some real opportunities in power generation from that sector. Operator Sameer Joshi, H.C. Wainwright. Sameer Joshi I will focus on the Industrial Solutions segment. It seems -- and correct me if I'm wrong, but the drop in revenue could be attributed to supply chain and delays. And also, it looks like the outlook and the backlog seems to be quite strong here. Is the assessment that the Q1 performance only attributable to supply chain or delivery pushouts the correct assumption? Thomas Ciccone Yes. Sameer, that's a correct assumption. We're attributing the drop in revenues. It's simply a temporary delay as a result of supply chain issues that we've been experiencing in Q1. I think we've largely made up for that already in the beginning of Q2. Eric Blashford Yes. So with regard to the Industrial Solutions, if you remember, we're providing some pretty complex and large packages for utility-scale installations and upgrades of turbines and with several hundred pieces and components in each package, if one is delayed, we have to delay the whole package. But within our supply chain and our OEM support with their supply chain specifications, we are qualifying new suppliers and actually US and international suppliers. So we've resolved that supply chain, I would say, constraint. But it's largely because of the growth in the industry, the overall growth in the industry as being absorbed by Broadwind, our customers and the supply chain. Sameer Joshi Understood. And maybe I'm reading too much into the inventory going up almost $10 million this quarter. Was it because of these sort of delayed shipments or any work in progress inventory that increased from -- particularly from the industrial solutions? Thomas Ciccone Sameer, I'm sorry, can you repeat that? Were you were asking about inventory? Sameer Joshi Yes. So the inventory income increased by around $9.5 million to $10 million -- and I was wondering if it is mainly attributable to Industrial Solutions? Thomas Ciccone Well, I would say only partially. The real driver there is we're beginning tower production, again, in Manitowoc and it's a rather large tower design. So we've been increasing our inventory during Q1 to accommodate that we're going to begin shipments in Q2 related to that tower builds. So we have a -- the lion's share of that increase is related to Manitowoc. I'd also say that we're seeing a slight increase in Abilene as well because we're moving to a bigger tower design with a higher material content. So that's really driving up some of the inventory that you're seeing. But this is also a contributing factor as well Industrial Solutions, that is, yes. Sameer Joshi Got it. Understood. And then one last one on the PRS, I mean you talked about the demand in clean fields and also the L-70 low flow, which is performing well. Do you have sort of an aspirational goal revenues for 2026 from this particular product line or industry? Eric Blashford Certainly. We have said before, we see that to be about 10% of our revenue. So I would say between $15 million and $20 million should be a comfortable assumption for that product line. We're starting to see some more interest in two things in international, in South America for that product line, which we believe we've got certainly an innovative solution for that geography, but also some increased demand for rentals. So if a customer takes on a new job and it's a short-term job and they're not comfortable with investing in capital, they will often take advantage of one of our rental units or units processes. And eventually, that can turn into a buy. So with all that, we think -- I feel comfortable with about 10% of our revenue being out of the PRS line. Sameer Joshi And do you expect the gross margins to be similar, higher for this going forward? Eric Blashford Yes, we do. Yes, the L-70 has an attractive pricing point, but that doesn't mean that we're sacrificing gross margin for that. And obviously, with the rental and service, that comes naturally with higher margins. There's a capital outlay on Broadwind's part, but the return is quite a bit higher. Operator Eric Stine, Craig-Hallum Capital Partners. Eric Stine So can we just dig into wind a little bit more? So interesting starting tower production for a new opportunity in Manitowoc and do you -- do you see that as kind of indicative of something changing in the market or more of a one-off? And then also just want to think about kind of your longer-term view in '26, you talked about seeing elevated quoting activity. When you're talking about that being flat year over year, are you anticipating that, that quoting activity turns to orders? Do you need that for it to be flat year over year? Or is it kind of flat year over year based on what's in hand today? Eric Blashford Well, I'll take the second part of your question. Well, the first part of your question has to do with Manitowoc. As you know, wind is basically project-based whether the North -- whether it be in the North or the South, that's where we have the two plants to address it. What's happening in the North are a couple of sizable projects that our customers are taking advantage of our capacity there in the North. And that's one of the reasons why we're building repowering adapters in both plants to keep that -- those capabilities in the workforce ready for a tower build. So I would say that would be project based. Again, I think demand is still stronger in the South in general than it is in the North. But regarding 2026, I do believe that to be -- the volume to be consistent in '26 versus '25. The backlog that we have now that is partially because of the long-term agreement we signed a couple of years ago, takes us through the end of 2025. So into 2026, those would be new orders with consistent customer base. Eric Stine Got it. Okay. And then did you -- and I can't remember if you do this on the call or if it's in the queue, but did you call out the 45x tax credit that you recognized in Q1? Thomas Ciccone We did not, but it's about $2.5 million for Q1 is what we've recorded. Eric Stine Okay. No, that's helpful. Yes. And then maybe last thing for me, just I want to make sure I understand it. So I know that you had identified $4 million in cost reductions for 2025. And I guess my understanding was that most of that had been put in place or achieved. But in your commentary, it seemed as if you may be considering targeted cost reductions in other areas, am I hearing that right? And if so, could you just provide a little bit more... Eric Blashford Sure. Yes, sure. What we did last year was general cost actions. And really, that was a result of the overall reduction in wind output from '23 into '24. Those cost reductions are -- they're being maintained. They're in place and they remain in place. What I mentioned in the prepared remarks is with gearing capacity utilization and gearing, we've taken some cost actions in gearing to balance our output capability with demand. And I expect that to kind of return back as we expect orders to increase throughout this year through these target markets I mentioned earlier, such as power generation and infrastructure and whatnot, defense and even aerospace out of that division. But that's what I'm referring to in the remarks is we took further actions in gearing to balance our capacity with demand. Operator We have reached the end of the question-and-answer session. I'd now like to turn the call back over to Eric Blashford for closing comments. Eric Blashford Yes. Thanks, everyone. I appreciate your interest and look forward to executing our strategy in Q2 and coming back before you at the end of Q2 to talk about our results. Thank you. Operator This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation. 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19-02-2025
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- Yahoo
An Intrinsic Calculation For Broadwind, Inc. (NASDAQ:BWEN) Suggests It's 38% Undervalued
Broadwind's estimated fair value is US$2.71 based on 2 Stage Free Cash Flow to Equity Current share price of US$1.68 suggests Broadwind is potentially 38% undervalued The US$4.58 analyst price target for BWEN is 69% more than our estimate of fair value Today we will run through one way of estimating the intrinsic value of Broadwind, Inc. (NASDAQ:BWEN) by taking the expected future cash flows and discounting them to today's value. Our analysis will employ the Discounted Cash Flow (DCF) model. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow. We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. See our latest analysis for Broadwind We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$6.60m US$7.00m US$6.03m US$5.49m US$5.19m US$5.04m US$4.97m US$4.97m US$5.01m US$5.08m Growth Rate Estimate Source Analyst x2 Analyst x1 Est @ -13.93% Est @ -8.92% Est @ -5.42% Est @ -2.97% Est @ -1.25% Est @ -0.05% Est @ 0.79% Est @ 1.38% Present Value ($, Millions) Discounted @ 10% US$6.0 US$5.7 US$4.5 US$3.7 US$3.2 US$2.8 US$2.5 US$2.3 US$2.1 US$1.9 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$35m After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.8%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 10%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$5.1m× (1 + 2.8%) ÷ (10%– 2.8%) = US$68m Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$68m÷ ( 1 + 10%)10= US$25m The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$60m. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of US$1.7, the company appears quite undervalued at a 38% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Broadwind as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 10%, which is based on a levered beta of 1.762. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. Strength Debt is well covered by cash flow. Weakness Earnings declined over the past year. Interest payments on debt are not well covered. Opportunity Annual earnings are forecast to grow faster than the American market. Good value based on P/E ratio and estimated fair value. Threat Revenue is forecast to grow slower than 20% per year. Although the valuation of a company is important, it shouldn't be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Can we work out why the company is trading at a discount to intrinsic value? For Broadwind, we've compiled three additional items you should explore: Risks: As an example, we've found 1 warning sign for Broadwind that you need to consider before investing here. Future Earnings: How does BWEN's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NASDAQCM every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
