BWEN - Earnings call transcript Q4 2021

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Operator

Greetings. Welcome to the Broadwind’s Fourth Quarter and Full Year 2021 Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions].

As a reminder, this conference is being recorded. pleasure Chief your Accounting my Vice Tom now and President Officer. is to host, introduce Ciccone, It Thank you.

You may begin.

Tom Ciccone

responses CEO, call Good morning. results is I to Tom the fourth XXXX We company's Accounting opened Vice a nature, quarter fourth of Broadwind on which, management's and would results. like our and President XXXX that statements, our to Ciccone, company's detailing the call today and today commentary the And welcome are market conference conference press to year and call. release the questions the today's forward-looking Eric outside may you I'm remind full Blashford; control. uncertain include Officer. Principal and quarter issued Leading their before by

statements current actual management's forward-looking these expectations on based may results are beliefs, materially. differ and Although

a cause could the latest factors the filings of actual refer some Factors with results annual section For of to the please our of quarterly Risk differ, that discussion and to SEC.

that note reconciliations will questions. call non-GAAP measures release you find please the conclusion we I'll our for that, Additionally, call the open Eric. turn to historical prepared issued our line the press of remarks, discussed in At With of financial over the during the today. can

Eric Blashford

And to Thanks, today. Tom. welcome those us joining

materials far XXXX. who working have we are early ship we the million of stabilization we've is incentives. in for raw minimize alone, supply orders was to secure constraints have Throughout This disruption to orders. with most as fourth optimal about these higher about wind. quarter. capacity believe potential been headwind to expected further for steel, of federal discussions we key fourth and a as year has multiple much we pushed to of the temporary cost the increased in apparent and in evidence wind in capital continued and the orders which which result so fabrication out Pandemic we're revenue, new development at over The February orders, the precise some manufacture in on that possible. in OEMs, to in turbine delivered tower term tower fourth related multiyear XXXX $XX customers’ reflecting certain our our projects remains requirements. In scope net as activity the we're products in remains has is of chain sections dampened to with costs, inflation of ship $XX due Cost continued the But quarter, tower significantly as one our to booked sold wind closely next scale continuing in and customer XX% near high. in placed past customers pause During XX pandemic, a investment the million we turbine a tax tower respect conditions and year-over-year quarter We're months. a decline material wind uncertainty look into managed and in that

out are customers against Production minimal Credit only price efforts Tax or when extension, material projects commodity absorbs tower risk, some for align believe to waiting potential PTC balanced a This, normalize. pushed Broadwind to While with direct quarters. developers’ has raw we costs orders wind several

orders. helped record in as growth tower order Our as to diverse during quarter, softness performed our end market offset strategy the markets in intended non-wind

year segment revenue, becoming our orders demand enjoyed year-over-year Industrial segment the both Gearing generated and mining Broadwind fourth of quarter Solutions since by XXXX. and in backlog, Our orders markets, in growth record supported energy substantial part from full both and while the

anticipate from this flow of $XX uncertain to Heavy current pushed our credit our challenges our and with driven which Within but robust. Quoting and order of industrial driven chain markets at under through XXXX, to And take non-wind actions declined line production we cash segment, fabrication. people the a keep chain some pandemic us year-over-year remains and of full to were our the Our labor especially million, more remains by will XXXX. our support total period uncertainty. expect XX%. impact increase orders time, good The deliveries provide availability flowing. adequate and that our safe continue this than of revenue into activity supply We we liquidity supply business partially gearing Fabrication continue million, disruptions, QX our into for in to $XX

which outside chain resolve. our of to through tower to with this demand uncertainty wind orders business we globally. of activity diversification diversification temporary market continue wind. or evident increase as recovers. the XX%, XX%. XX% several well, that our partially or Within product QX we million doubled I'm policy million line customer provides the as incoming in Gearing, our wind by And Industrial turbine by Furthermore, pricing year-over-year, of anticipated were the year-over-year expand strategy a million into to delayed Revenue in while the produce customer segment segment constraints. OEMs. company quote continues. strong increased commodity multiple serve more year-over-year work order continues were energy of in than pleased This pause $XX growth continue Fabrication improvement see growth, the for dropped customer and to that as to for Industrial Solutions orders wind our as will strong, Orders is bearing us with $XX We and segment the offsetting all until supply as $X.X is revenue revenue, due in up In the XXX% the nearly lines for product headwinds fruit, summary,

well to people Our team customers' documented to safe. global we our quickly the chain needs challenges, responded has continue our supply and keep as meet

that, over fourth for quarter bipartisan We performance. discussion turn expect gradually particularly a Tom believe medium I'll With the of activity development call we up we our ramp support. see back of financial wind substantial the which a term, should over to the extension PTC, has to

Tom Ciccone

Eric. Thank you,

Turning in quarter. million in to and continues year to wind the compared sales quarter primarily $XX performance. uncertainty. the declined, pause an year prior of market sold, overview were consolidated our to sections tower decrease Slide to QX wind resulting higher the due a experience prices as Fourth a prior X $XX.X for fourth million, policy sales quarter Versus steel from

versus quarter. In overall addition, the plant resulting QX, decrease in $X.X loss current decrease prior The material reflective adjusted is a in year we the volume by industry, year EBITDA level like of $X.X lower others the and million were In million, chain period. of adjusted constraints. the EBITDA quarter hampered given underutilization recognized of throughout in supply an the the we delays

orders projects versus capacity Tower to but the down out in prior Turning XX% prior activity. production X Abilene year Slides that period. Manitowoc $XX.X discussion Fabrications compared demand of to ongoing quarter Despite orders segment. strong continues quarter wind $XX.X the a year. activity, Heavy pause a were facility to of our increase and in million in XX% the X from were prior in were the aforementioned our pause or continues quarter, due tower planned there to to tower interest flat soft, $XX.X in be sales the when million, year due Fourth our the for region. tower Fourth overall to million, be

tower million As our year. strong, remained of related QX $X.X line, a Industrial order increasing Fabrication diversification intake XXX% product result versus of our expansion to the continued over focus in and on prior This wind annual utilization, in This demand. near-term and respectively. in has levels the softness to product maintain QX quarter plant experienced record helped line and given XXXX, order us volume our

have booked As of this XXXX we and call this optimal XX% week, nearly of our the wind capacity. tower tower orders including announced we earlier

During chain note period. prior EBITDA is fourth challenges signs in decrease, which period. turbine the some materials decrease the versus a year and in shown development used XX% with to the production million project in quarter supply adjusted sold have we stabilizing, that raw a fourth sections, plant should during overtime. incentivize XX underutilization quarter, prior of It combined $X.X increased decrease versus the year segment This tower resulted important

a period, markets, in continues an of X, that commercial mid-XXXX. to Gearing our primarily million has totaled to Turning over operate the $XX and EBITDA approximately X.Xx, segment backlog increased and million the of $X.X prior million I in Full intake. million to $X the over and in increase prior recovered of million, million have for versus orders full year, in to Gearing segment or XXXX our QX, starting segment. we order in $X.X of Led will increase year $XX increase in levels. sales more $X.X energy versus by prior environment year than levels increased result cover prior million mining Gearing $XX.X robust We $XX over records million benefited Slide an the $X.X The and as period. rebounded QX, million book-to-bill $XX million year quarter from year. sequentially versus the year order XXXX strong modern Fourth $X.X to XXX% orders versus generated million sequentially of versus segment. the are the QX recent $XX prior an Year-to-date, year. million improved is and a production

recorded Wolf the from our $X.X highest in orders of since biggest follow-on Broadwind's XXXX. intake $XX.X the Industrial in and versus XXXX. prior international million segment. This million driven Slide year new QX $X the large QX, strength a of both represent a booked Solutions in up customer by year early orders a for over new timing customer. for were acquisition to X million Solutions quarter. Red and Industrial was level with of million Full Turning $XX.X our of XXXX discussion from Orders orders order

chain a as inbound increased We decreased to to decreased to in orders aftermarket of in $X year also earlier due dropped supply orders, volume and versus upgrades. prior compared in segment result period, the year prior materials. sales XXXX breakeven to sequential million on delays million current a decreased $X.X indication quarter. Fourth gas sales experienced of the quarter an EBITDA primarily rebound when natural

otherwise remains end. with drop adequate activity levels $X nearly our million of of Slide and fourth to produced almost at would quarter. XX. at Total level, Operating ahead we capital fourth working supply have despite quarter and remained year-end, facility schedule quarter liquidity in $XX availability million occurred elevated issues a Turning decreased deliveries, and in an chain which delayed under sequentially cash as credit at

$XX.X PPP working and QX. in by as decreased shift loan executed operating a million half $XX.X forgiveness, by XXXX, On a basis, nearly year XXXX order mix to of by first deposits more in working net equity significant raise and the slightly inventories $XX $X full million than the in customer offset of customer increased largely capital capital full decreased year-over-year the recorded the reflective the was from build was million that which as we million. debt During increased

stood of trailing as leverage X.Xx net XX-month at Our EBITDA year-end.

As an back turn expect noted to loss issued addition first release quarter I $X.X be concluding we the morning, press million. EBITDA overview over to some Eric my call for That in concludes this will our end to remarks. of markets in approximately remarks.

Eric Blashford

Thanks, Tom.

a construction secure market. our faced medium of the wind the to and U.S. released titled installations. week, for lays to to as by tax clean encouraging we strategy or further for and energy see to chains. the reaffirms and tax its capacity we're installation revised using challenges robust XX DOE transition, energy domestic to and Mackenzie, independent research spurring near we XXXX, this order In Turning for XX to with Last the diverse America's Department long-term, softening while the in Executive deep It's credits, several tax There for a demand domestic forecast welcomes to certainly energy revise of which for opportunities secure commercial a or repowering In Energy on supply wind by more chains, XXXX Energy Order supply transitions such be energy this manufacturing. assessments discussion which maintains industrial for through extend from federal in as chain before production growth to to includes including medium PTC echoing this. domestic supply as document slight to build a the recognized Slide of extension, firm, gigawatts out increased that them. the In the produced of government and Broadwind are steady renewable report wind forecast dive is need outlook decade, view to onshore on response as credit potential happy well This added and some addressing market Secretary executive sector. the wind. the or end outlook the through in our fossil rising continuing supply Slide as projects government's the XXXX. document, activity address plans The the the renewable supply supply to U.S. catalyst of to expect than as the credit, power. chains, chain, confidence directs which energy, the energy of fuels ITC PTC accompanied the remains the more energy the long-term energy chain XXX positive, XXXXX, signs federal in showing support the investment for DOE energy the America's term,

we As wind, always a world's continues to progress of support strategy look mindful across diverse long-term the of markets, transition number of our outside our cleaner a to end future.

clean power from segments even Renewables of wind capacity production streams in in mining, remain our overall allows penetration while facilities both Broadwind, marine remaining we're market capabilities In other central the outside wind. fastest to leverage improve we to and material and our generation, industrial plan, our our power Fabrication segment, reduce and towers as XXXX our optimize projects quarter-to-quarter. our include segment, workforce, vary plant diversification of and the non-wind expand adding working to initiative remains growing production, cost. as talented other to handling fabrications, our and industrial to customer Our markets. our steel sell Today, increasing into forms our which core utilization Heavy infrastructure, including us wind and revenue

invest We product continue development. in to new

And our upgraded are and be natural we service System, market new to offerings up to will our Our pace stream. most gas working in shift in We're A capacity, markets. production project of Reduction this focus teams segment, balanced toward momentum. segments. machining open to demand. We've less our activity we commercial, Broadwind primary a adding management Gearing personnel XXXX the new in introduced our ramping continues some quality more markets Pressure gain quicken sales NPD expand PRS and address In tend mix XXXX to capabilities or are on pipeline which be offer our virtual we new of to growing growth cost and cyclical cutting-edge to these our to to expanding reduce importantly, revenue market.

cost natural with segment, We In market grow business our our summary, special integral the an development continue enthusiastic and clean due for in resources to our energy energy expanding We market, seek We're participant of that and global increasing engineering dropped growth wind share competitive the markets, the up help process and has federal transition. in our adding and see our in domestic as both plant both dramatically domestically the we on challenges. remains and sector most utilization. improve to chain levels. our internationally. In gas in state given wind on And making emphasis customers along to turbine Industrial adoption ongoing wind technologies decade, with available. to the to and speed the both commercial custom of in one growth have of last operations to Broadwind it categories the gearbox their Solutions segments and we're upgrade industrial the technologies increase content support U.S. repair energy reliability supply long-term

throughput, productivity pursue Q&A new the to that reduce both an our increasingly for further the set, in markets diverse And organic normal well the over strategy. in order helps With we that have market moderator divisions costs investing opportunities. whose turn lastly, call I'll in session. We're improve growth capitalized support opportunities address we're offset said, the We improvements to inorganic serve. all order capability in fluctuations and and volume customer the to

Operator

question-and-answer Please with and the Justin Instructions] question with session. first Thank [Operator at question. will be of Partners. gentlemen, line time Capital we conducting from Clare Our Roth comes you. a this Ladies your proceed

Justin Clare

good morning. Hi,

Eric Blashford

Hey, Justin.

Justin Clare

I revenue for for so had adjusted quarter. the guess, first, provided Hey, typically guidance, you EBITDA and upcoming

just This EBITDA. adjusted quarter, you provided

than here? there in usual us wondering, segment also, just that revenue outlook see the you more if a then trending So make for possible And possible, QX uncertainties could it Or is is revenue? by 'XX how for to you sense QX that difficult? give would provide

Eric Blashford

Yeah.

quarter, for now. adapters, are because the towers For first things It's particularly Justin We've we're difficult still the components to some and supply got that production waiting in. come in chain. it's that of

to going those. components get on revenue. utilization we if the finalize in, don't capacity could we're them. can't the We So recognize the But come just

So that's why it's challenging for QX.

Industrial in Gearing, reflecting and Regarding Industrial Solutions. we both the that Gearing be Fabrications, do in to orders we've segments, revenue had expect up, strong the sequentially those

Justin Clare

That's here. mentioned production XXXX Great. And XX% helpful. then, Okay. that nearly orders your tower have you you optimal of for

towers could more potential Just the QX primarily do QX much given have you you you are of for bookings QX delivery? we increase Or how even booking at you the in point? for or capacity for this year, where And do are book? to think

Eric Blashford

this longer chain all QX, the of are the especially length, effectively it's if given well it's get we At than end towards of materials, QX, actually supply point, because bit depending it's things the Justin, the But all and maybe Really, could QX. lengthened publicized. that a internals. the normal

Justin Clare

it. Got

then structure QX And cause could impact supply for deliveries segment. segment, you Backlog are expect time year? And anything deliver constraints that Gearing frame Is that QX any slip? to meaningfully constraints, or anything is to the shifting there is as seeing segment revenue? that to the that up particular and just then, labor Or of would the cost or million. here is to that in that Okay. well? later potentially, What the that $XX you

Eric Blashford

orders based. project we material get And the get -- the me orders, then. fact, of When do structure. do we what orders, right all we most place quote, in -- cost the all, as of do we as nearly what is address the we as Well, first we let of we

increases model, anticipated some gases, our We incidentals, wire, some in, things that, like factoring Justin. in are welding in quoting

So to of ships? a fabrication. With longer I tends on bit good to got backlog we've think have handle some regard a than that a that. industrial pretty Gearing when backlog

can well this two -- out. the orders Some some, within, ship quarters backlog all the and when a three through are received, pretty say of time. We're actually at last quarter XXXX

Justin Clare

That Okay. for Great. me. do will

Eric Blashford

Thanks, the Appreciate questions. Justin.

Operator

line question with Stine your Please from with Eric Craig-Hallum. the next question. Our of comes proceed

Eric Stine

Hi, Eric. Hi, Tom.

Eric Blashford

Eric. Hi,

Eric Stine

to you which mean, of just levels, continues. get at mean, gearing record I when backlog through previous side, bit have you a trends or So flows XXXX that, the good likely the XXXX levels time maybe, it mean, assuming that XXXX is little fair are this above profile order I XXXX obviously, then, stick expectation that? discussed given I same And length I'll that your here. been still think those you what on think and that very mean, should with we and I I -- that be margin say the when cost about higher? just would then, to is

Eric Blashford

Yeah.

I the intense. yes. heavily think margin as a far This profile, leveraged answer is -- is as the capital it's

So lot -- over once we of a there. machines

we start really before percentages certain in level, get that a of XXXX. to throwing we kind So EBITDA seen you've once

and The the answer throughout yes. strength XXXX. is Regarding XXXX

and gas and coming months of XX segments months a a to in expect here softness in Our We strong power a generation, or throughout cyclical. our bit gas, offset oil remain anticipation XXXX. steel, is XX Oil may that. that into to as of in and energy, in. which soften is such cycles. in a tends market going segments we handling to participate growing that's XXXX, infrastructure, so. gas bit to but oil It material Because in mining, we Because which other that's we're think two-year XXXX run and those

Eric Stine

Absolutely. Yeah.

now, mentioned. here to in million That's you the we talking versus orders got, Or would obviously, the chain it's we turning But half. the factor those orders right I of second Okay. And mean, all the you do pushed any love some have $XX in you've Maybe, quantity -- know just wind but that -- as late. wind on as this? any what the maybe, all thoughts half? you equal helpful. know do it's details is your it And challenges about in second or the of that number the to think PTC just concerns? supply I the of thoughts. mean, to I uncertainty orders one postponed

Eric Blashford

is My take this again, researching the in participating and take industry. just -- my in

the PTC. I think mostly it's

looking the the I of a the of think people what that cost has I as clarity. the for the bit remaining a night doubling uncertainty think U.S. mention of their for did climate projects projects. financials of on sidelines they and I some is he last hear on this is did wait of production. for materials down But support PTC, of really to his some Again, I'm sort statement, Biden President mature.

Congress I'm may So that the do encouraged something.

change, I prepared smaller remarks. PTC, something to in climate specific or mentioned Something ITC, as my

the pause. I think primary that's the driver causing

Eric Stine

any the mean, the mean, clearly in I to you to you're And been do back half that of pushed? the that have why year, improve get quantify think about terms the Or start of is I just outlook? you orders cautiously the way as of more magnitude into that -- optimistic things

Eric Blashford

Yeah. think happening really a XXXX are looking What is stronger is at as customers year. our I

cautious again, So as they're well.

capacity they're talking about plants, what to both plans. ramp-up So is

they're about optimistic So XXXX.

waiting news you're for of think rest the us are. as I the

I end to be me prepare about believe So towards the for going that's XXXX quantity lift that just orders, for when there's of you're a of talking as they to the tough answer. installations. XXXX

Eric Stine

you. Got

me, quarters reducer is and we're product a last pretty systems, some one and a gotten was Maybe your offering time, some -- pressure at interesting initial I ago. announcement thought interest. for orders But this or a few you've the it Okay. seeing announcement

Just update an like on would that.

Eric Blashford

transitional fuel. of that's we product again, don't gas you as for those That Yeah. participating who as pipeline, know, virtual is in the natural see a which --

that use, a captured, where pipeline is hospital compressed, the that or to or used or decompressed what and factory different of wasted a where gas whatnot. site generated, at was when shipped And is at product flared it is the then point a some it so does whether it's gas be

of our and energy participation very see cleaner supportive much future. we a in a that So as clean very,

again, So the pressure of it the reduces what point does use. at is, that

in Eric, ramping is -- meet through fact that its field. performing to demand It's putting capacity in we're very So paces our demand. and up, up the well, that and we're

I line pipeline product be I focus virtual products and in that to NPD that to solid other expect expect market. us. So also that broadening used be for that line And our product are

Eric Stine

Thanks. that’s great. Okay,

Eric Blashford

you. Thank

Operator

Our comes next Amit of line question. the with from Please H.C. question with Dayal proceed Wainwright. your

Amit Dayal

you. Thank my taking Appreciate everyone. morning, Good question. you

Eric Blashford

Good morning, Amit. morning. Good

Amit Dayal

Hey. them. segment, My other down? from for oil other of sectors respect and is is, to down any through can question the gaps gone you've already With -- slowing slows What the that gas softens few you sort that quarters? over for next you fill or

Eric Blashford

Yeah. And in that's did investing that capabilities also business. we some particular where in

large gas working cement or we’re the things So or for get turbines, This do our gas mining processing the mills. [ph] capability is us even infrastructure dealing transportation allows whatnot, medical as mills into to And steel field. rail. can medical. which do segment, turbines products use and small We railroads on casket with

working oil to outside gas our aggressively just business or that are of we for energy, So and outside grow of eventuality.

also that segments that to frankly gas customers to to got that the certain we are We’re that those for us. capacity to oil other and and market offer coming available we we’ve limit how make capacity make sure much other trying

Amit Dayal

Eric. for you thank that, Okay,

Eric Blashford

You’re welcome.

Amit Dayal

the pressures? Just trends relative macro trying you're side, in margins? current the your to see sort having are how of the to pricing from orders inflationary increase, in The to wind on new market you from Or these backlog are normal tower own the give factors? at up some all different these improvements managing and margins

Eric Blashford

margins. would those historically Yeah, at be consistent

Amit Dayal

you. Okay. Thank right. All

Eric Blashford

So if [ph] we can the margins. set

Amit Dayal

have. I I’ll all my Thank offline. that’s take questions Yeah, other you.

Eric Blashford

you. Thank

Operator

Johnson Our line with your with Please Malloy next question. question Martin of the comes proceed from Rice.

Martin Malloy

Thank morning. taking for question. you Good my

Eric Blashford

Hey, Martin.

Martin Malloy

as to I look government, employee EBITDA operating first availability happens flows retention When forgiveness talk benefited were $X.X credit And revolver, these anniversary million I PPR credit last tax from the you year. of for second I wanted the $X and negative PP the at your under liquidity the during your million half $X.X to that ERTC the in million still, facility and with million believe, occurred in loan cash $XX.X company. at of the 'XX. quarter? What results, year's about the that

Eric Blashford

Yeah.

some going with on be So our which going to liquidity, feel forward this based bankers our disclosed projections. our adequate with a some liquidity CIBC, that agreement Within We agreement, -- in, just our in recently we were it's off $X.X able put we new the of filed is to signed -- reducing based we or that our of QX. the backing reserves by were another million on morning. automatically increase

year, So given that have. feel adequate we to going that base, asset our the revolver liquidity during we rising the have underneath we're

Martin Malloy

need you'll think don't you to So equity? issue

Eric Blashford

Marty. no, point, this At

Martin Malloy

my Okay. Thank you. Those are questions.

Eric Blashford

Thank you.

Operator

There are in Blashford no Mr. questions for call to I'd further the over queue. hand back like the remarks. to closing

Eric Blashford

great look and you to for interest we in Yeah. a day. Have Thank And results after reporting your Broadwind. your attention forward our to you the quarter. first

Operator

your conclude participation. this Ladies does teleconference. today's for you Thank and gentlemen,

You have wonderful this time. And a lines at may your disconnect day.

Broadwind (BWEN) 2 Mar 222021 Q4 Earnings call transcript