FIRST QUARTER 2023 RESULTS
(As compared to the first quarter 2022)
- Total revenue of
$48.9 million , +17% y/y - Total gross profit of
$7.0 million ,+$5.0 million y/y - Total GAAP Net Income of
$0.8 million ,+$3 .2 million y/y - Total Non-GAAP Adjusted EBITDA of
$4.1 million ,+$4.1 million y/y - Total backlog of
$287.8 million ,+$170.7 million y/y
FULL-YEAR 2023 FINANCIAL GUIDANCE
Broadwind provided updated full-year 2023 financial guidance onApril 20, 2023 - Total revenue of between
$205 million to$220 million - Anticipate positive GAAP net income for the full-year 2023
- Total non-GAAP adjusted EBITDA of between
$16 million to$18 million
For the three months ended
First quarter results benefited from a combination of sustained demand strength and strong operational execution across the Company’s diverse end-markets, with each reporting segment generating year-over-year growth in both revenue and operating income. Total gross margin increased 950 basis points on a year-over-year basis to a record 14.3%, primarily driven by improved sales mix, continued price discipline, benefits derived from advanced manufacturing credits associated with the Inflation Reduction Act (the “IRA”), and consistent asset optimization. Total backlog increased by
As of
BUSINESS UPDATE
- New business development. During the last three years,
Broadwind has pursued an aggressive strategy designed to both increase its share-of-wallet with existing customers, while expanding into complementary adjacent markets – and new customer relationships. InApril 2023 , the Company announced an$8 million order for its proprietary Mobile Pressure Reducing Systems (“PRS”) and related accessories, including both its legacy medium flow and newly introduced high flow PRS model. First launched in 2021, Broadwind’s mobile natural gas decompression systems are a key component utilized in “virtual pipelines”, an alternative method for supplying compressed natural gas to regions without established pipeline infrastructure. The Company anticipates that its clean fuels product offering, which carries a higher margin profile than its legacy fabrication services, has the potential to be 10% of total revenue by 2025.
- 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. During the first quarter 2023, total non-wind revenue increased 23% on a year-over-year basis to$24.3 million , driven primarily by commercial growth across existing end-markets, together with organic, greenfield expansion in PRS sales.
- Drive asset optimization. As of
March 31, 2023 ,Broadwind has secured over 50% of its optimal tower production capacity across its facilities for the full-year 2023. 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 resources invested.
- Capitalize on IRA tailwinds. The 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 production tax credit (”AMP credit”) for which all new tower orders will qualify.
MANAGEMENT COMMENTARY
“Our first quarter results demonstrate a strong start to the year, as sustained demand across our diverse end-markets, improved margin realization, and consistent operational execution contributed to significant year-over-year growth in volume and profitability,” stated
“Early into 2023, we’ve announced several significant new business wins, including
“Our backlog remains near a record-high entering the second quarter 2023,” continued Blashford. “As before, assuming full utilization of our wind tower manufacturing facilities, we believe the IRA could provide up to an estimated
“As of
“Entering the second quarter, we remain on-pace to achieve our full-year 2023 guidance,” stated Blashford. “At a strategic level, we remain focused on organic commercial growth, improved asset optimization, margin expansion and sustained profitability. Our first quarter results demonstrate focused execution on these priorities, while creating a strong foundation for long-term value creation.”
SEGMENT RESULTS
Heavy Fabrications Segment
Heavy Fabrications segment sales increased 16% to
Gearing Segment
Gearing segment sales increased by 13% to
Industrial Solutions Segment
Industrial Solutions segment sales increased 33% to
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.
$ in Millions | Previous Full-Year 2023 Guidance | New Full-Year 2023 Guidance | ||||||||
Low | High | Low | High | |||||||
Revenue | ||||||||||
Non-GAAP Adjusted EBITDA | ||||||||||
FIRST QUARTER 2023 CONFERENCE CALL
A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of the Company’s corporate website at https://investors.bwen.com/investors. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.
To participate in the live teleconference:
Domestic Live Call: | 1-877-407-9716 |
International Live Call: | 1-201-493-6779 |
To listen to a replay of the teleconference, which will be available through
Domestic Call Replay: | 1-844-512-2921 |
International Call Replay: | 1-412-317-6671 |
Access Code: | 13737950 |
ABOUT
NON-GAAP FINANCIAL MEASURES
The Company provides non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share-based compensation and other stock payments, restructuring costs, impairment charges, 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, that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. Forward-looking statements include any statement that does not directly relate to a current or historical fact. We have tried to identify forward-looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following: (i) the impact of global health concerns 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, including the advanced manufacturing tax credits (which remain subject to further technical guidance and regulations), and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into
IR CONTACT
BWEN@val-adv.com
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
2023 | 2022 | |||||||||
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash | $ | 1,729 | $ | 12,732 | ||||||
Accounts receivable, net | 25,845 | 17,018 | ||||||||
Contract assets | 1,909 | 1,955 | ||||||||
Inventories, net | 48,543 | 44,262 | ||||||||
Prepaid expenses and other current assets | 3,160 | 3,291 | ||||||||
Total current assets | 81,186 | 79,258 | ||||||||
LONG-TERM ASSETS: | ||||||||||
Property and equipment, net | 45,270 | 45,319 | ||||||||
Operating lease right-of-use assets, net | 15,946 | 16,396 | ||||||||
AMP credit receivable | 3,162 | - | ||||||||
Intangible assets, net | 2,560 | 2,728 | ||||||||
Other assets | 834 | 839 | ||||||||
TOTAL ASSETS | $ | 148,958 | $ | 144,540 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Line of credit and current portion of long-term debt | $ | 18,089 | $ | 1,170 | ||||||
Current portion of finance lease obligations | 1,663 | 2,008 | ||||||||
Current portion of operating lease obligations | 1,824 | 1,882 | ||||||||
Accounts payable | 25,794 | 26,255 | ||||||||
Accrued liabilities | 5,160 | 4,313 | ||||||||
Customer deposits | 21,751 | 34,550 | ||||||||
Total current liabilities | 74,281 | 70,178 | ||||||||
LONG-TERM LIABILITIES: | ||||||||||
Long-term debt, net of current maturities | 6,863 | 7,141 | ||||||||
Long-term finance lease obligations, net of current portion | 3,976 | 4,226 | ||||||||
Long-term operating lease obligations, net of current portion | 16,296 | 16,696 | ||||||||
Other | 20 | 26 | ||||||||
Total long-term liabilities | 27,155 | 28,089 | ||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||
STOCKHOLDERS' EQUITY: | ||||||||||
Preferred stock, | ||||||||||
or outstanding | - | - | ||||||||
Common stock, | ||||||||||
and 21,127,130 shares issued as of | ||||||||||
21 | 21 | |||||||||
respectively | (1,842 | ) | (1,842 | ) | ||||||
Additional paid-in capital | 397,720 | 397,240 | ||||||||
Accumulated deficit | (348,377 | ) | (349,146 | ) | ||||||
Total stockholders' equity | 47,522 | 46,273 | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 148,958 | $ | 144,540 | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended | |||||||||
2023 | 2022 | ||||||||
Revenues | $ | 48,873 | $ | 41,844 | |||||
Cost of sales | 41,897 | 39,832 | |||||||
Gross profit | 6,976 | 2,012 | |||||||
OPERATING EXPENSES: | |||||||||
Selling, general and administrative | 5,526 | 3,902 | |||||||
Intangible amortization | 168 | 183 | |||||||
Total operating expenses | 5,694 | 4,085 | |||||||
Operating income (loss) | 1,282 | (2,073 | ) | ||||||
OTHER (EXPENSE) INCOME, net: | |||||||||
Interest expense, net | (488 | ) | (345 | ) | |||||
Other, net | (2 | ) | 21 | ||||||
Total other (expense) income, net | (490 | ) | (324 | ) | |||||
Net income (loss) before provision for income taxes | 792 | (2,397 | ) | ||||||
Provision for income taxes | 23 | 7 | |||||||
NET INCOME (LOSS) | $ | 769 | $ | (2,404 | ) | ||||
NET INCOME (LOSS) PER COMMON SHARE - BASIC: | |||||||||
Net income (loss) | $ | 0.04 | $ | (0.12 | ) | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 20,869 | 19,708 | |||||||
NET INCOME (LOSS) PER COMMON SHARE - DILUTED: | |||||||||
Net income (loss) | $ | 0.04 | $ | (0.12 | ) | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 21,387 | 19,708 | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended | ||||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ | 769 | $ | (2,404 | ) | |||
Adjustments to reconcile net cash used in operating activities: | ||||||||
Depreciation and amortization expense | 1,605 | 1,519 | ||||||
Deferred income taxes | (5 | ) | (7 | ) | ||||
Change in fair value of interest rate swap agreements | - | 2 | ||||||
Share-based compensation | 178 | 192 | ||||||
Allowance for doubtful accounts | 14 | (23 | ) | |||||
Common stock issued under defined contribution 401(k) plan | 302 | 282 | ||||||
Loss (gain) on disposal of assets | - | 3 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (8,841 | ) | (5,073 | ) | ||||
AMP credit receivable | (3,162 | ) | - | |||||
Employee retention credit receivable | - | 497 | ||||||
Contract assets | 46 | (2,038 | ) | |||||
Inventories | (4,281 | ) | (5,690 | ) | ||||
Prepaid expenses and other current assets | 130 | 179 | ||||||
Accounts payable | (784 | ) | 10,538 | |||||
Accrued liabilities | 847 | (254 | ) | |||||
Customer deposits | (12,799 | ) | (3,683 | ) | ||||
Other non-current assets and liabilities | (3 | ) | (45 | ) | ||||
Net cash used in operating activities | (25,984 | ) | (6,005 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (1,065 | ) | (492 | ) | ||||
Net cash used in investing activities | (1,065 | ) | (492 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from line of credit, net | 16,945 | 7,207 | ||||||
Proceeds from long-term debt | - | 125 | ||||||
Payments on long-term debt | (634 | ) | (8 | ) | ||||
Principal payments on finance leases | (265 | ) | (495 | ) | ||||
Shares withheld for taxes in connection with issuance of restricted stock | - | (411 | ) | |||||
Net cash provided by financing activities | 16,046 | 6,418 | ||||||
(11,003 | ) | (79 | ) | |||||
CASH beginning of the period | 12,732 | 852 | ||||||
CASH end of the period | $ | 1,729 | $ | 773 | ||||
SELECTED SEGMENT FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended | ||||||||||
2023 | 2022 | |||||||||
ORDERS: | ||||||||||
Heavy Fabrications | $ | 20,236 | $ | 34,161 | ||||||
Gearing | 12,393 | 14,061 | ||||||||
Industrial Solutions | 6,973 | 4,471 | ||||||||
Total orders | $ | 39,602 | $ | 52,693 | ||||||
REVENUES: | ||||||||||
Heavy Fabrications | $ | 31,593 | $ | 27,272 | ||||||
Gearing | 11,965 | 10,584 | ||||||||
Industrial Solutions | 5,423 | 4,073 | ||||||||
Corporate and Other | (108 | ) | (85 | ) | ||||||
Total revenues | $ | 48,873 | $ | 41,844 | ||||||
OPERATING PROFIT/(LOSS): | ||||||||||
Heavy Fabrications | $ | 2,790 | $ | (461 | ) | |||||
Gearing | 581 | (112 | ) | |||||||
Industrial Solutions | 622 | (209 | ) | |||||||
Corporate and Other | (2,711 | ) | (1,291 | ) | ||||||
Total operating profit (loss) | $ | 1,282 | $ | (2,073 | ) | |||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)
Consolidated | Three Months Ended | ||||||||
2023 | 2022 | ||||||||
Net Income (Loss) | $ | 769 | $ | (2,404 | ) | ||||
Interest Expense | 488 | 345 | |||||||
Income Tax Provision | 23 | 7 | |||||||
Depreciation and Amortization | 1,605 | 1,519 | |||||||
Share-based Compensation and Other Stock Payments | 493 | 525 | |||||||
Proxy Contest-Related Expenses | 720 | - | |||||||
Adjusted EBITDA (Non-GAAP) | $ | 4,098 | $ | (8 | ) | ||||
Heavy Fabrications Segment | Three Months Ended | |||||||
2023 | 2022 | |||||||
Net Income (Loss) | $ | 2,590 | $ | (476 | ) | |||
Interest Expense | 140 | 140 | ||||||
Income Tax (Benefit) Provision | 60 | (126 | ) | |||||
Depreciation | 858 | 879 | ||||||
Share-based Compensation and Other Stock Payments | 210 | 215 | ||||||
Adjusted EBITDA (Non-GAAP) | $ | 3,858 | $ | 632 | ||||
Gearing Segment | Three Months Ended | |||||||
2023 | 2022 | |||||||
Net Income (Loss) | $ | 501 | $ | (136 | ) | |||
Interest Expense | 73 | 47 | ||||||
Income Tax Provision | 8 | - | ||||||
Depreciation and Amortization | 595 | 476 | ||||||
Share-based Compensation and Other Stock Payments | 117 | 118 | ||||||
Adjusted EBITDA (Non-GAAP) | $ | 1,294 | $ | 505 | ||||
Industrial Solutions Segment | Three Months Ended | |||||||
2023 | 2022 | |||||||
Net Income (Loss) | $ | 529 | $ | (225 | ) | |||
Interest Expense | 83 | 14 | ||||||
Income Tax Provision | 8 | 2 | ||||||
Depreciation and Amortization | 94 | 103 | ||||||
Share-based Compensation and Other Stock Payments | 43 | 60 | ||||||
Adjusted EBITDA (Non-GAAP) | $ | 757 | $ | (46 | ) | |||
Corporate and Other | Three Months Ended | ||||||||
2023 | 2022 | ||||||||
Net Loss | $ | (2,851 | ) | $ | (1,567 | ) | |||
Interest Expense | 192 | 144 | |||||||
Income Tax (Benefit) Provision | (53 | ) | 131 | ||||||
Depreciation and Amortization | 58 | 61 | |||||||
Share-based Compensation and Other Stock Payments | 123 | 132 | |||||||
Proxy Contest-Related Expenses | 720 | - | |||||||
Adjusted EBITDA (Non-GAAP) | $ | (1,811 | ) | $ | (1,099 | ) | |||
Source:
2023 GlobeNewswire, Inc., source