Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to Broadwind's First Quarter 2023 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. to conference like host, to now Mr. would turn over the your I Ciccone. Tom

You may begin.

Thomas Ciccone

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

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

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

its therewith, the directors the in connection in in meeting. and Meeting and reconciliations in proxy annual in you Additionally, release inform related non-GAAP call connection our like solicitation are definitive officers Broadwind with of from SEC would find certain please Stockholders Annual XXXX our stockholders participants you with materials proxy connection financial and of that during to the that of filed executive note the today. the I its discussed proxies historical statement can issued its press of with measures such

the direct they the the are important of materials in address when and about solicitation Broadwind entirety will strongly read security in proxy holdings indirect related carefully as by Meeting, participants and XXXX filed otherwise. become Annual information of Stockholders SEC or other to contain available their including the they and the or identity such statement encouraged with all their

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

open the that, line call remarks, Eric. we turn conclusion the to our of will over I'll With for the At prepared questions.

Eric Blashford

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

a across improved start contributed the last continued consistent The quarter. demonstrate Our growth demand operational first into to evidenced end we as markets, results first year-over-year significant exited shoots as sustained profitability. year year quarter in to strong green margin the realization execution first and diverse

of a announced million visibility $X diverse, including new, accessories together OEM and or indications markets, As are interest business customers, the into continued business with orders and several we orders in across our Pressure from mobile momentum tower at positive business our significant higher-margin new that with in for across property to significant contributed by winds, new These We've the stability markets our $XXX followed XXXX adjacent traction unique recently improved optimism Systems, within XXXX. our proprietary have together non-wind intellectual leverage record wind here order Broadwind. Reducing PRSs, in legacy related within business, developing reflect and million April.

Importantly, and broader this strategic profitable opportunities. energy on plan, transition a emphasizes progress growth across tech our reflects spectrum which clean performance meaningful of

proprietary of tower by offset expect to we booked improved December large in orders expected, million focus quarter, forward XX% which down unit improved $XX consistent our first these through we multi-year orders as expand prior partially As economics the drive about realization with capabilities, We we was our include in a line. driving in cycle. tower utilization increase product the our of product margin further the orders, in asset the our of XXXX. The industrial service pull fabrications than the XXX% more and timing PRS and quarter year from on order given received

cost increases price operate quarter, we on are as an and along customers. commercial our level. operational both on second plan staying to continue inflationary the a disciplined Entering we Commercially, to we at pass

We are by to our on our we prudently product improved reflected We're launches. working recent adequate availability PRS contract product adjacent as expanding markets cash also liquidity also grow. and managing our or ensure negotiating capital focusing mix and terms as higher-margin profitable within

continue operational reporting of May end increase first the at the We improved of posting organization, plant, divisions across automation, resulting which emphasis major us fully We've lean across quarter, of quarter, retooling including utilization. increase of million is deploy with and led an coatings million $XX improved This plant gains. continued focus all automation operating efficiencies. year, to prior we to the continuous generated in of Operationally, principles the and our $X.X more a a at return projects the double-digit versus expected to period. adjusted than the on be period, million each to a increasingly in year segment XX%, of year-over-year EBITDA Abilene asset in on an $X XXXX. improvement we've process positioning the to with capture generated process manufacturing We revenue profitability in

Our $XX that Industrial Heavy Fabrications million, strength given year. million tower in line, than product Fabrications late XX% with received $XXX year-over-year order expected, year-over-year. QX as We're segment of down multi-year last to pleased our booked orders the increasing orders more doubling we see

increases by of by for oil sectors. partially as and led industrial Our orders, turbine well were orders for million, gearing $X year-over-year, year-over-year offset the gas to Orders strong, as XX% million new the $XX orders softening of both gas and led down builds aftermarket. XX% Solutions orders in increase posting a from continued processing be incoming Industrial turbine steel by gas

good the markets was XXX% wind prior Within industrial strong, Our $XX this XX% Heavy to Quoting of period. Fabrication segment, and of XX% year-over-year, total the million, remain other revenue we $XXX continue gains in respectively. order end activity increase non-wind year. QX through million, our expect posting of fabrications flow our the backlog at and year a and QX balance versus with XX%, a increase towers was

clean pipeline of or a which expand System well, system with North fuels. part perform as our Pressure the in revenues up in execute Broadwind we to Reducing America, is continues virtual new proprietary PRS, vital our XX% strategy year-over-year Importantly, gas natural product line, to the

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

We are of Industrial our positive given In year-over-year our this in as the execute commercial strategy. operating the I'm we quarter. XXX% impact our with of pleased diversification divisions summary, seeing segment year continue strategy growth to entering the growth and performance all

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

Thomas Ciccone

Eric. you, Thank

reflective an quarter. $XX.X revenues prior million first a had to results. strong to compared operating demand of our and markets. strength execution performance operating operational sustained quarter across was in X increase Turning year-over-year our Slide diverse primarily for consolidated of of $XX.X generated strong both quarter overview XX% end the and year our income. with segments in the growth revenues We The Each first million of

prior breakeven In compared in quarter. QX, we the of year recognized first to EBITDA EBITDA $X.X million

and credits to performance volume primarily the Our attributable production AMP or realization advanced higher the manufacturing strong EBIT margin overall the benefits tax to improved is credits. attributable level and

qualify with which of in as this per credits quarter, associated point based eligible starting XXXX. these $X.XX into output with wind part for $XXX,XXX Act, Manufacturers manufacturing net that $X.X on credits After solar of out costs, per or diluted or income associated the the the income XXXX. the for are, law were in U.S. tax AMP It first in quarter. we provides Inflation for We our component electricity Reduction to The for wind and produced diluted also IRA GAAP components. important introduced the The each and adjusting enacted proxy tower of million was production. in contest-related is net we generated $X.XX $XXX,XXX share in of generated share. sold credits

Turning for to a of segment. discussion Slide Heavy X Fabrications our

received the order year is the at by timing period since the intake attributable periods order more of were limited and to decrease compared near-record to a $XXX project the expect levels in year-end, Based late that we reflected resulting prior million consistent XXXX. from this when the where tower project orders large $XX.X orders backlog timing. prior to decrease sequentially. First we've be million, that quarter carried order multiyear on timing comparatively limited This was a the and of

year million, $XX.X the quarter up revenues prior were $XX.X First from quarter. in million

sold increase customers. we had in costs, customer prior and as tower supply increased less pass-through material the sections Although revenue versus less steel realized to wind we a an we year period, which generally tower is

XX% a recognized as well year we product current line to increased PRS in quarter. addition, industrial the due revenue mining for increase our units in In fabrication as customers demand for

$X.X revenue. of million, well period AMP $X.X the first improvement period, of as fabrication versus year line quarter, an by product the recognized primarily the the as industrial current year driven in credits prior million recognized increased EBITDA the we During

$X.X in year XX% million revenue, This we Backlog generated million. again continue million in Turning prior history. year to first of mix reflective with quarterly and year. of to remains a level the $X.X in quarter, incurred with. stronger $XX versus to QX, $XX increased entered quarter first quarter, additional the ramp-up strong represents revenues products prior profitable decrease of lack versus increase XXXX balance prior recent the Compared million, pace highest comparatively to segment QX, increased sold the QX $XX.X orders year the resulting Gearing but experienced averaged result costs be that the a of of prior an a backlog Slide the of in represents during We EBITDA more the reported segment XXXX. and on million totaling in X. the

X segment. or of backlog year our quarter million natural we record $X QX. see We new ended first a Slide to turbine the million quarter. recorded with Solutions in to $XX increase demand for our versus in continue discussion strong a gas core Industrial million high a offerings. Turning the orders Solutions prior represents for $X.X as This first XX% Industrial of

period to prior customer. a First quarter. year of quarter we've as improved primarily mix prior increased levels year increased million been and as consistent in revenue the to experiencing $X.X shipment to an products for strong EBITDA segment million, international intake increased well an compared with when revenues due order the large $X.X million $X.X sold from to the the

Turning to Slide X.

end cash and remains liquidity $XX.X our million. of quarter availability credit with under adequate, Our facility

conference balances during well production our higher the results normalized QX AR deposit inventory call, as decreasing consistent in a levels. the with noted to result of new our QX As as increased increase expect that working as levels to operating operating we balances and capital

of We increased As such, increases balance in of don't funded further we our which capital the for any working was significant capital operating anticipate working by year. operating sequentially, saw line credit. the

should credits traditional of during noted operating but do that working our the to be expect balance are this part capital we not increase receivable calculation, the It AMP year.

affirming April Finally, full financial are we year as our we on XX, announced guidance.

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

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

Eric Blashford

In Tom. growth awaited positive believe to in to it developers. term, XXXX long-term we the continue provides industrial view rising catalyst demand, that sector, new near long policy Inflation certainty installations the the significant IRA, Reduction wind for and commercial the in the a medium supported Act will as as ratable beginning Thanks, We XXXX. wind of by by support

of at to decade. as manufacturers final given create in included production including the are seeing confidence our a stable next new guidance, credit over wind credits energy, expectations we industry tower our relating IRA more growth AMP for the Even a we wind await the clean customers products. for IRS domestic components The renewed

look of to our of XXXX power solar on our such operating increased legacy strengthened balance and and forward clean into a the as we to fuels, segments wind clean tech have expand and in backlog year, next as build the infrastructure. and into adjacent new we each in we As visibility markets

earlier, improve industrial beyond. adding these favorable proprietary our work and and line for we're mentioned the towers is to Pressure flow introduced we've as fabrications and year. Heavy with year response also our customer plant labor received model per new a units with of optimize rental XXXX the last strategy, and market to we we for our pleased are throughput, Fabrication introduced As We've book continue to for activity in other response Reducing demand. to as high and released order customers in reduce this automation costs segment, option The progressing our for coatings capacity Systems

from revenue Given by we approximately capacity, current expect this incremental million margins. generate attractive to $XX our annual XXXX line product in at

industrial stream and our a going on and In our to Order from into forward. our increased cyclical to been focus are repair gearbox seeing revenue segment, strong, with seeing our growth steel response refurbishment Gearing services. we success efforts markets sales and broaden balanced mix has more to processing less achieve segments good we're

to expand while strategy yielding finally, ones within to improve wallet existing our Industrial And is share capabilities accounts profiles to our business of add our Solutions margin desired new results. process and penetrating

a summary, and pleased the progress ahead. I'm build our improved for capitalizing look forward the in durable with to growth to demand foundation In is steady making profitable years on team market

investment to facilities, our several recovery equipment strategy an activity renewables the well maintain positions us next years, and wind support As core our increases gradually and activity. ongoing prudently vital talent to in order over

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

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

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

Operator

Instructions]. [Operator

comes with Our first from Eric Craig-Hallum. question Stine

Eric Stine

Eric and Tom.

a about is potentially QX large that what, bit presumably really business the secured did little wind if the in you could in curious or 'XX. business So contracts, mid-'XX early in you talk

end just ratable also when as more the any start is then it that XXXX? when contract the to I it just through And it about view want that, up? would be does, think of clarity year but on you the large progresses that still expect to So confirm

Eric Blashford

orders On all yes. end particular your producing XXXX. larger last and that order be will they'll the of to way in in through against Yes. the QX Ratably, point,

Eric Stine

the the ever than visibility, forward then about past, better that And in it. guided I Got you've you had. And into know you've better -- quarter. guess talked having I talked you've

since then can any that dictate obviously credit recognize you maybe you color in QX chance would you linearity also, talk mix winds, versus that's any just And about going curious, the to on can Just and provide QX? of quarter? the the

Eric Blashford

QX, mix, towers the think I This coatings QX consistent this also QX, to robot, putting to I the year, with we in to pull going of with QX. that were bit little automation we're a so But orders we QX. consistent in to it QX We of consistent. into this mixture for able QX. elected do are put some be that pulled into see instead it expect be

Eric Stine

Okay. wind, just little clear. With to less a be

Eric Blashford

yes. wind, less Little

Eric Stine

right. your with an All that in you're fair. it so that there. I still No, that. appreciate Okay. the mean, that's Manitowoc kind some would maybe of orders terms And uptick in frame when then that's about That commentary, up just wind wind, for imply fill sticking orders sounds that that that facility of time early in in maybe might recovery? 'XX like I you the does the facility? it's kind expect of talking

Eric Blashford

Yes, I we're innings. early it call I say would would the --

has take south And time. north harder heat to some the up, will previous starting is but in the than As before calls, it I been north. mentioned the

In So overall 'XX, orders I installation consistent growth the some start wind correct. think seeing of we'll expectations you're market. in the with

Eric Stine

Great guess. understood. Maybe just one No, I last for Yes. me. color,

Tom, Just capital. working for on

actually the kind start talking million CapEx about a terms or to it year that stay benefit does the flattish Given free going and that working you're of of cash only what year capital not in you for to $X implies flow get as of progresses.

might any year? throughout you in provide of I the color how So mean, terms can that hit

Thomas Ciccone

the the There projected quarters, now flows QX, and the No, lot pretty I of expect capital I throughout we've year. the in stable balance some be the at kind it of think significant a that I but working plateau ebb don't may the movement so within increase of will for the of of think seen we Yes. significant end be year. balance

think free I will earnings. our balance cash from of our the come flow

we'll the generate. there small So capital, cash working some might that be mostly I on it's think to benefit but

Operator

with Our next ROTH question Justin is from Clare MKM.

Justin Clare

at on waiting just still how those credits? if more that you guidance you we're over would million then it might likely you to QX. maybe manufacturing broadly monetize was the credits? near is clarity So XXXX? if manufacturing those cash the the might looking it term? talk just Are you talk treasury you more in in credits know on the could manufacturing on transferring you credits looks off but like I Or And just the could where credits, in there, here secured wondering receive I about start need advanced more just treasury about from $X you

Thomas Ciccone

Justin. Thanks, Yes.

-- file able point, monetize XXXX. if we into for until this tax at we to do return we nothing, XXXX be won't year-end those when our So

that's we've to certificate So guidance to what long-term in this anything that potential so -- to There's we'll everyone with people comes of IRS unwillingness is kind to this. to the the We credit, But when talked just some what comes their issued, going the regarding this a see don't going monetization we about an will a so patient out the know market transferring credits. like, several out. there's waiting transfer, is until these game is be do it's of and look think over develop market time. be

Eric Blashford

is much expect from The is a causing think IRS on. as there And question domestic the clarity I some about contributions we of that's change bit labor far developers. a specific overall Yes, think what impact this I -- to don't is content, Add from that Justin, But Eric. manufacturers. could that As pause. expect the in guidance, the component this what's I

Justin Clare

it. Yes. Got Okay.

maybe to little that speak can a you more. So bit

in Is there until a maybe customers from and pause are terms credits content meaningful impact of on And treasury. waiting seeing on projects clarity? and developers? having a is are your put more manufacturing we developers that the the on We domestic guidance

Eric Blashford

Yes.

hesitancy if I activity a a that there's you answer will, of some us by There projects think we as kind I others. both. and little and guidance final are await bit increased others. the believe the just might the than guidance, of be bubble, announced may orders is Justin. little as seeing evidenced more mean still on the justify of this by is the help do some by I market But

waiting. be -- So there both. the bit the is it's definitely We're pause, some I some a some seeing could exuberance market, of think in little but answer

Justin Clare

Got you.

XXXX? Okay. And a is But of capital in flow to you amount a build year move kind anticipation in right XXXX the see about through we part working Or then early do ramp and here. the What more of I wanted of likely inventory cash this it XXXX? know your increasing you've have that we into the you into year in potentially is XXXX? here of need as the early pickup visibility later a end spoken in utilization just now and that in good to greater year potential there ask, may through

Thomas Ciccone

think I latter. the

think and going be it's year not may a flow, of capital working will we our factor factor of end this least. the ebb That XXXX, I towards flow. a balance of will ebb think. think don't to significant I again, would and be But we're just at inventory -- the for more

Operator

is Wainwright. with question Amit next Our from H.C. Dayal

Amit Dayal

the rate at you the on the the you execution the in a remainder to right? first accumulate Good just saw year? expecting quarter these credits credits So that run to topic, [indiscernible] see similar of on Are for

Eric Blashford

that but be yes, ratable. a building They -- say, for, reminder, they're on range we're a the factor I based we're capacity they're turbines to as we calculated building going the is think do there within. of would

yes. think, I So

the Given of year. for that rest ratable range, the it should be

Thomas Ciccone

the right to we're thing that producing, only that that won't is about add the some designs of away. Amit, know I tower we would

the X designing So subject of megawatt we're towers. rating they or the well X-section they're to as as tower are that whether

So there some uncertainty is going those. regarding about forward --

Amit Dayal

you Or for our the fair. in product year? just margin little is this margins stronger given level probably front That's will Understood. the room be mix? the Understood. at which guys on gross on further I'm you relative gross expectations. came there wondering rest for to And the new bit the if a is upside of the then

Eric Blashford

for Well, the a rest I would a into pull through gross margin think in we the enhanced to year. I orders think bit execution. capacity production saw be because the of of -- standpoint, good little from it in, able the to But relatively utilization we're quarter stable

Amit Dayal

then on what cater And order, just for PRS me $X bit with opportunity Okay. one the And offering? you a looks this could little million type you? what for you like about customers the last talk of to

Eric Blashford

-- is of taking it units process natural call gas, origin the support pipeline, of decompressing taking the from where point go to it the and the what on we would subject decompression compressing for Yes. virtual it equipment pressure into -- And end. point a it's then the fuel other of which service, end. we to where the reduction and that's not the be pipeline then gas, at or Those source, and its use

sell these be at selling point gas. of -- are gas working users our gas the to do tend to we They equipment they use, of and they the the So use things that. of purveyors natural to to

Operator

like of management We now back closing the over comments. to have the I'd session. reached to turn the question-and-answer call for end

Eric Blashford

for way, forward we look QX. the appreciate you Yes. in started, We're to excited your after Broadwind. to and Thank you're interest you. We back coming

Thanks, So a give then. everyone. report

Operator

conference. today's This concludes

at You may disconnect participation. we thank your for and this you your time, lines

Broadwind (BWEN) 11 May 232023 Q1 Earnings call transcript