Earnings call transcript Q4 2022

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Operator

Greetings, and welcome to Broadwind's Fourth Quarter and Full Year 2022 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Tom Ciccone, Chief Financial Officer. sir. you, Thank

begin. You may

Tom Ciccone

Vice and results welcome our fourth morning, the the Eric Financial to call. Leading XXXX company's Ciccone, conference Tom is and quarter and the Chief Blashford, Officer. Good I'm, Broadwind President call CEO, today

a the market press fourth detailing opened before results. release issued today our We quarter

company's on by like may the include call to management's their I outside conference are control. you would and commentary and statements, which, today's that remind responses nature, uncertain to questions forward-looking of

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

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

non-GAAP press during call Additionally, please note issued that release you can measures historical in our financial the find the today. reconciliations discussed of

to the I and are their the SEC you XXXX its to therewith, such Broadwind or the XXXX are a contain from all in otherwise. in in about security information indirect holdings become Meeting, solicitation will Stockholders, intends proxy materials with to participants such important interest when read participants executive the direct of or available, filed Annual in other and and the Stockholders Broadwind our they Annual connection proxies carefully file proxy encouraged materials entirety statement related solicitation that and with certain in annual related the of identity by strongly the and connection of their with as including they directors the with and in proxy of meeting. SEC would statement stockholders of officers like Meeting its inform connection

WM by or further we nominations Argyle will Fund the purported Argyle its the discussions make any Fund this WM on nominations. related reported comment to or time, or At no recent matters made

the will questions. of the we conclusion remarks, prepared line At open for our

With Eric. to that, I'll turn the call over

Eric Blashford

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

hiatus, customers, from we have diverse green optimism have XXXX. domestic after business stability market. interest our a continued within contributed pleased with the wind report to two-year onshore improved OEM shoots see together our in begun markets, to across of visibility and am I that non-wind across to indications Recent

practice have we guidance, year we will reintroduced touch shortly. backdrop, full our past this of on providing Given which

in fourth Reduction we the prices of business. PTC coming XXXX, new much from of are an prior-year provision, passage million material with recent XXX% In of for Act, the orders, from a quarter includes nearly from $XXX raw booked which tailwinds XX-year recent decline the together select wind. period, Inflation elevated improvement levels, of this The increase our the with significant

point efforts, the Operationally, the first-time curve progress quality, with cost deploying use learning made to improvement continuous instructions to rollouts. new QR good product product and has vital reduced asset work plant video we and on code including directly and floor. This process innovative our technology including information, the have our on improved provide of utilization,

profitability fixed and new industry-leading in footprint per and in Gearing improve reduce lead automation facility our reduce to capabilities the maintain costs, and head. optimized movement material We added times, to Wisconsin our revenue

Solutions to accounts. existing new markets share capabilities business wallet Industrial on expand added also We and our to of open

upswing able talent develop the support markets. and that to required across to been pleased are retain the our We we've key demand in

capture taking priced backlog. We in our cost wind ensure as competitively strategic work builds actions inflation and tower are managing some impacts the margin through to we of stable near-term

products. margins customers with cost working are our our and proprietary our on We increases share inflationary to expanding

contract terms managing We our grow. negotiating ensure to liquidity cash improved availability and as we prudently and adequate capital are working

million XXXX. the with each first during posting or million generated expect includes that year-over-year quarter of quarter, of in more. XX%, the fourth finish order the EBITDA lower-margin gains of tower of $X.X we a the increase in of a We to million We generated impact which revenue of segment year-over-year, $X.X an XX% Broadwind increase $XX quarter,

QX Our received booked of million, last Heavy year-over-year, including Fabrication $XXX late the segment $XXX year. XXX% orders up million order nearly

and million order respectively, million, $XX and Industrial $X overall from robust a quarter Solutions orders standpoint. Gearing Our were an yielding

Our of good was of expect and of this the backlog markets flow consolidated the balance increase continue in order period. XXX% million, $XXX total an at versus remain end strong, the prior-year non-wind activity Quoting through to we QX year. our the

with million, a XX% Heavy of our towers posting revenue QX industrial segment, XX%, Within year-over-year wind other and XX% Fabrication $XX gains and was increase fabrications respectively.

is North our America, pipeline volume which a Pressure or XX% Reducing comprised vital clean in new line, the Systems, fuels. proprietary our Broadwind gas strategy as of of execute to roughly we a part PRS, natural virtual expand Importantly, product in system this

revenue was continues million, as industrial year-over-year, $XX a energy be increase within Gearing customer XX% strong activity sectors. to and the

our our oil We growth products. outpace and strategy gas steel of industrial, are seeing and commercial as impact the lines product positive in mining in growth our

in all the in head increase we activity pleased order production I'm divisions. we with across summary, substantial experienced visibility XXXX backlog as better In with much QX into and

turn back to quarter Tom a over for I'll performance. discussion the that, financial With fourth call of our

Tom Ciccone

Eric. you, Thank

the recent Slide overview of consolidated increase our was and $XX.X prior-year sales quarter. primarily levels the improved Turning intake an fourth were supply order an sales for of quarter compared strong $XX million environment, quarter to chain. consolidated X in improving The demand million performance. to Fourth reflective in XX%

utilization, of the and is period. in cost In a prior-year loss compared absorption The to higher the QX, operating to corresponding overall quarter. to $X.X which volume transition EBITDA attributable in leverage to quarter and we contributed in fixed recognized fourth fourth $X.X the million level profitable primarily increase improved a EBITDA plant million the

our million the $XXX tailwinds as well increase passage Slide orders segment. IRA appears recent has begun improving million, discussion improvement. near the Abilene Fourth for nearly are a in recent to in from out XXX% normalize project ended The our Turning $XXX of we've that which Heavy months, to to facility. We X nearly economics. generated reflective a due steel increase the from I segment is quarter projects that pricing like demand also million planned period. were backlog, experienced $XXX sequential Fabrication or ongoing conditions the of should a help QX of plate as would the to the prior-year it with point

fabrication which well from deliveries million, $XX.X were supply revenue. sales of customers the benefited both in the experienced million fabrication as prior-year quarter. PRS quarter. sales absence improved issues, fourth demand from $XX.X year, units. the increases quarter up Industrial prior-year and benefited from the in as industrial the from industrial hampered Fourth to Compared we our prior chain Tower for in sales tower

EBITDA year prior an improvement versus breakeven. million, we the were quarter, fourth recognized of we the $X.X where During

the versus current we prior model Although quarter. produced impact rates changes customer more the tower production tower year year, volume did in

Turning continued be in to to $XX.X orders Gearing Slide totaling million. strong QX, X.

with $XX exceeded segment recent year segment. levels XXXX backlog; prior-year than versus Although by QX record to prior-year in volumes. versus year impacted quarter, experiencing history. QX Gearing this $XX most the $X.X orders and of represents a for million, were prior have we prior-year the in period million a the generated the of ended million of was million growth increase in quarter represent of both We in more sales increased end decrease modern we versus XX% increased period, XX% reflective over QX, favorably segment the of been the Fourth versus the quarter. $X.X million Full Results EBITDA $XX.X an markets. highest

than Industrial to million record orders a Full result by customer, volume period, Turning gas globally. turbine we year an for sales for with compared sales aftermarket XXXX segment X to to $X.X to segment. new increased in natural we've increased year prior-year of in indication the orders biggest driven million was the $XX been intake EBITDA with discussion rebound Industrial $XX of as QX. our greater upgrades million were million This Slide a Solutions first Solutions of levels Fourth $X.X and the primarily $X.X quarter. strong million backlog. of million, time, the prior-year increase our order high recorded a primarily with the in when in ended experiencing. quarter strong consistent the increased from $X.X increased a orders

availability than quarter the in significantly orders to Broadwind liquidity improved under a testament with of represents is a the deposits customer highest respect the X. strength The the OEM our to terms during at cash nearly credit more This decade. fourth Total Turning our million. liquidity and and result Slide relationships. and improved to $XX facility increased of to

raw $XX in as As $X.X in in deposit of of well the some operating capital deposits, offsetting in million. progress shipments. a nearly as an million increase increase QX to XXXX decreased goods the and finished advance of deliveries large was work net impact result timing in material working customer inventory the Partially significant

it significant increase, to capital will working operating as XXXX. ended our AR more in expect we where balance become our forward, Looking primarily QX, versus

guidance. as Finally, are financial historical reintroducing our indicated, year we Eric full of practice providing

full anticipate For currently year million. the $XX $XXX $XXX XXXX, adjusted be be to range EBITDA to and within a total to million million, million $XX of and we approximately revenue

will some overview addition remarks. my to markets, concludes Eric turn back call of I end the That to an over for concluding in remarks.

Eric Blashford

Thanks, Tom.

of provides the catalyst developers. to a Inflation as Reduction significant for term, by XXXX it In the long the as long-term certainty medium wind we positive Act view the near sector, awaited policy

wind in law, will that we XXXX. by beginning this, IRA rising supported and demand, believe industrial is Now that the increased commercial drive installations

Credit for new extension final to provision and IRA to relating of Act, for such In as ITC the incentives wind Advanced await Energy credit we This energy, the including production power Section guidance in for positive creates the of additional XXX. our or domestic the manufacturers the PTC components IRS clean of the wind a products. solar, on Production precise treatment addition developments

of expand clean As tech solar strengthened in infrastructure. on wind markets, as such new our we increased fuels, visibility and segments into power our backlog XXXX, as legacy operating in and and to we've each build we adjacent into look clean

to Fabrication to plant coatings costs, reduce work Heavy our with for and our towers improve we segment, and other capacity throughput, to customers adding labor as continue The we automation our of optimize are book product strategy, high introduced year. offering introduce and is for this to both and we XXXX fabrications beyond. year to industrial and pressure-reducing our systems line RNG flow proprietary progressing plan versions last In

generate annual incremental revenue from current the have million to in $XX product ability this our Given approximately we line. capacity,

as challenge specific facilities. as bottleneck less balanced Gearing processing cyclical sales a significantly industrial, segment, our to to into to the demand, production projects our efforts improvement gas force markets increasing a mining per that place plan. address but stream. achieve in from our we continuous of order and remains is our more growth customers Skilled from active, our we oil in we In broaden our The have expand meet and revenue labor mix our areas seeing outpacing pace for with success to steel us are

am has the in team I growth last ahead. year strong market forward a to with summary, progress for pleased over In build on year look to our capitalizing foundation demand the profitable made and the improved

the renewables support year, wind gradually and As we'll coming investment ongoing activity. and maintain increases to our order recovery in talent activity facilities, core over equipment

fuels business. footholds support clean capacity we utilization, a growth market time, while will as within We seek sheet wind, have will expansion margin the the continued balance such At and within leverage and ensuring leverage, power optionality adjacencies we reduce drive same generation, complementary the to established our other establishing of solar. long-term net present to

long-term with successful significant execution several NOLs to both more we EBITDA an years creation. generate as emphasis revenue we in expect and leverage next over the fully the on this our With strategy, value of growth

With call I the session. the the turn that Q&A said, for over to moderator will

Operator

Thank you.

a now Stine with question Please our first question. be will with Craig-Hallum. question-and-answer We session. Our proceed Instructions] Eric [Operator conducting from comes

Eric Stine

Hi, Hi, Eric. Tom.

Eric Blashford

Eric. Hi,

Tom Ciccone

Good morning, Eric.

Eric Stine

good Hey morning.

obviously, early start, pick said, you but as So, maybe to in just still things up to me days, starting for wind.

up the Just that type like the see still do filling might now frame conversations conversations available you've which that's of having kind start you is curious in a to Abilene. What well? you're as capacity have filled big to to order, are of got getting the Wisconsin? time effectively And what you related when

Eric Blashford

Yes. the Thanks Eric. question, for

for fill it time is project back and as the north, that. it's but we're on to filling up calls, previous again the So, pipeline going some up, I excited in about mentioned to take

would announcement. 'XX. we 'XX And say and We starting that to see tower to that. But orders for look would I production I in Manitowoc say 'XX innings, into are as orders early have some we start production and that produce and subsequent in per that in should some we after to -- for as 'XX

I think an 'XX. increasing head 'XX we're as on we and into slope

Eric Stine

guidance awaiting, same everyone it. the even from though else (ph) Got you're sticking with IRA, as it's And [law] maybe the awaiting obviously, in treasury. then, the boat

So, no about presentation, to I that your you're just want to awaiting changes guidance. assuming be talked guidance. In clear, you're you

guide assuming in it's mean, come your say that I fair So, you XXX. EBITDA would some out to the of are

Eric Blashford

Correct.

Eric Stine

Okay.

Eric Blashford

yes. correct, That's

Eric Stine

the is number, But Okay. mean, not it's a I of that at I factor, would majority think least. but it

Eric Blashford

correct. is That

we're we We conservative, understand law, statute. following the are but the and

And are so, of that including in some accordance in that, projections, we yes. with our

Eric Stine

just blades and seal, keep mean, of that, maybe credits all are given then, kind credit is you areas? that. credit, is about I having this there's And sticking the to than these and in something Understood. are got other rather share that potentially thought to that you When also full towers basically. that the then for rate for because everyone credits still think that there you've it able in with

Eric Blashford

years, us purpose for, competitive, out it's customers certainly more intended able business. I it. think that. a retain if the may in think to gets early project-specific is that We in we'll some We and But I in years, early which intend the share think that or than something to negotiation, certainly be maybe for more there's consider that way. are We'd our out keep of our improve site or the the the ask to some leaning we Eric, it years, use in years to

Eric Stine

it. Got Yes.

I'll take offline. rest Thanks. Okay, the

Eric Blashford

Thank you.

Tom Ciccone

Eric. Thanks,

Operator

Justin your question Clare with Please proceed comes with next from question. ROTH. Our

Justin Clare

Yes. here. Hey, taking guys. Thanks our questions for

Eric Blashford

Justin. Hi,

Justin Clare

I guess for first Fabrication ask I XXXX. in segment the to -- Heavy hi. utilization about wanted

expect the current Or even be that slower based some be in So the as are Manitowoc? to just -- additional think early with about is QX we that going you're part bookings, And above based orders year? to in, pretty there of on that? the we for throughout you up utilization a XX% be XX% up on now, at maybe pick then, going it potential start looking to little QX do year? your bit utilization say, the production let's should see at what's what you How the or

Eric Blashford

specific. we're since Well, let Yes. me talking utilization plant, plant about the in about talk

our both Abilene indicated plant, this but in order majority produced produced I be be plants. So, there, will it of as will before, the in

[Eric] our plant, (ph). So, sell we've to capacity in got Northern

about industrial towers. So, quite addition plant, across I But our think the is work XX% in Wisconsin also in keep did think a businesses. good bit Northern we our that mind our to of fabrication in let's to plant,

be utilization the think I So, would XX%. of that plant above

Justin Clare

is there it. Okay. if in change should will guidance? then And of then, that? in between you about XXXX EBITDA could QX we full that negative impact you mention projects be some let's And from QX impact your that Got did potential and relative What say, lower-margin the profitability Wondering startup the how think versus costs. quantify your QX? to,

Eric Blashford

our each really order. took low-margin say we make year. quarter This plants QX. we'll in would maintain is that took, take to had retrospect, sure it over We of and us ratably one going I that adequate it's we I'm into in for finish workforce. force That in order increasing we order our took our to in the QX, that and labor capacity glad plant Abilene

looking say to if So, I project and and two, project, I four. in how would through you're modest EBITDA QX would three growing at

Justin Clare

Got it.

gross do what profit. I'm then, it? that to $XX then, flow way you And adjusted will to ask I credit into And assuming And we you're I the utilization, just EBITDA. that's cash Is manufacturing will into should be a point it the just million And when about other and the you how see to see not do have is and to the Okay. gross on that how your about it it's right visibility in credits? expect your then, credits. expectations finally, At like if through to could expecting to seems benefit that? Like financials? the think one impact your impact but revenue, XX% wanted year. for profit for receive roughly wanted you baking much

Eric Blashford

first of Tom we waiting couple for a over second I'll the Yes, A, to and guidance. the that of portion. there's things portion, for realization turn then to it IRS consider. the With need I'll to we're credits, take regards the

out haven't or IRS I two, We Justin. expect come to but that by found timeframe, do that in it requires to a specific any next the quarter statute the

was But, mathematically So, end if is of I we're being year the part your at to correct it conservative. math exactly yes, the from sound. first the of year the XX%, think

sure because just that it. guidance including not are not We our we're much in about

Tom Ciccone

And I'll address geography Justin, the question.

So, in we're a of guidance, through sales. going of be it's towards contra given lack discussions auditors, now, terms with we're our to our right the of leading P&L, cost --

So, you'll P&L. sales up area show the cost of on in it see our

will as best going practices firms. And from and GM CM, analysis, so EBITDA to comes well out of if percentage. impact whatever before guidance all that we're as margin us, accounting again, follow But our there's the

of any statute In that. of the full transferability terms Absence until we're these does action, for monetization, we credits. looking call won't credits But monetize XXXX. these of at

So, we various to are can very -- who take them a want deal for taxpayer institutions preliminary, albeit having a discussions discussions might away. transferring these with advantage having credits right with that broker we're of to

Eric Blashford

year, to that, more latter would what certain. Justin, the put backloaded So, be we're these towards guidance, we think more add forecast a it to credits as little and in we part to going more of the be the

we mindful need other of be of that The are megawatt. they is couple to things per

of this be that of the tower, exactly the the of not towards to rating we're magnitude end certain the the So, capacity year. producing the we're towers, going

example. an That's So, than for tower the X.X A a reason has X.X reason conservatism. megawatt X.X, that's moderation. for as a another credit greater

Justin Clare

Right.

pass I'll on. helpful. Very great. it Okay,

Eric Blashford

Thanks.

Tom Ciccone

Justin. Thanks,

Operator

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

Amit Dayal

everyone. Thank you. morning, Good

Eric Blashford

Good morning, Amit.

Amit Dayal

way out now? costs, you start-up tower With respect the to new of the for these are model

Eric Blashford

Yes.

Amit Dayal

Okay.

from going is pressure quarters? margin show any now in the up next few that So, to not

Eric Blashford

margin Correct. again, before. because mentioned costs those. But were We start-up cost, was still deal, a as margin the it incurred moderately large QX. past I -- We're have start-up in a normal the

Amit Dayal

to flow upfront begin collected this Okay. these from of place? Thank you $XXX then, you take working mostly cash respect your of with Or deliveries work? are as order, sort And any capital and payments sort you. once million do get

Tom Ciccone

can sheet, amount as and from deposits, balance order. relates see a our of significant year-end this So, we've that primarily you to collected

are it become, collecting to XXXX where not have at It's capital, part do collected deposits So, to anomaly. operating was compare an least we expect significant balance. and deposit continue again, a going once you We forward. can to of we be have we year-end But balance our see we nonetheless, that were in balance -- XXXX. at them expect we that level. you -- The when at will upfront, significant do they extremely an high working

Amit Dayal

Understood.

Eric Blashford

would And so, we remainder produce collect balance if of balances, all, you're projecting cash as against course, balance. this we AR order, the of the and

Amit Dayal

sort respect going then, your XX at your be XX% And the given where to months. Yes. obviously, situation, should next Understood. the IRA And now, that with to capacity backlog stands with increase, order. expectation is the cetera, roughly this of right to new over you're XX et

are in to options is point terms to continuing get steps or completely this during capture you period, so what spoken a for capacity the you If that of opportunity? front in of your next where

Eric Blashford

XX% now, That on our increase out in is in Southern there. great to executing we're somewhat is times because plant by are Lead XX%. Yes, it right that's I equipment against We're you limited tell there. available equipment planning. equipment out capacity question. active to will by a our

answer for sell. one we volume we of to Manitowoc, beyond strength, If got plenty that. go we've continue can see you. In the to So, there's left

needed. We sections we week XX, also one facility, XX out plant. was that were of point, There expand can a if that doing

we've think expanding more at plenty take we also that room Manitowoc. got I But orders to is option. So, before of look even an

peninsula there We as necessary. on have that space expand to

Operator

you’re Martin your comes Please Johnson question next question. with Our from Rice. proceed Malloy

Martin Malloy

Good morning.

Eric Blashford

Martin. Hey,

Martin Malloy

shuttered also you Hi. maybe moment sorry, -- in export import if out of seen I'm a just about the into couple picture -- downturn capacity North for any for landscape looks the last the could to sections talk maybe years during take tower what towers the the you've in competitive I about wind like ask there. wanted and to you And the the U.S.? America,

Eric Blashford

cases. a cases, as of United three just first, win reminder, Coalition trade the States did three Tower Wind we Well, Turbine won trade

the still active, we are are in those So, But there's will there towers to be are might and that we and coming going in that new market because be back believe the demand those. supply. defending X,XXX-or-so online, still maybe think up facilities coming pop there's in the idled with even is IRA demand U.S. because potentially the than still that more of do now Act. We of there entrants

tower -- looks bodes participants several that market U.S. the that well the to in for the for So the in years come.

Martin Malloy

wanted ask I front? to with you the question, benefit in tax second all seeing the And on IRA, my And repowering the are credits, could about respect Great. repowering you projects? what to that wind

Eric Blashford

a I question. that's participate Yes, to that's good answer way, Marty, it repowering. a but -- We in this hate do

be our fact, -- a set Northern going what on found would that in adapter. repowering language a language repowering we to activities from repowering, for thankful for. we're benefit we tower we allow the haven't it's how would In of a or And the portion specific -- us support is we because tower. which full have plant, yet do an

that. certainly apply, So, that Marty. of but I them ways looking that, find mindful We're could haven't found yet, we're to

Martin Malloy

I'll it Thank turn back. you.

Operator

back further Eric are floor with like over There now comments. turn I questions to no to at closing the this time. Blashford would

Eric Blashford

you. interest. I thank Well, appreciate your

a to XXXX to in excited Have are about very then. Thank results back everyone. day, to We you. our you how talk QX after come great encouraged looks. We're

Operator

teleconference. This concludes today's

participation. at may for Thank You your disconnect time. you lines this your

Broadwind (BWEN) 9 Mar 232022 Q4 Earnings call transcript