Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to Broadwind's Second 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.

I would now like to turn the conference over to your host, Tom Ciccone. you. Thank

begin. may You

Tom Ciccone

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

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

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

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

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

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

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

Eric Blashford

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

we strong strength the end across continue demand During markets. to our balanced our quarter, execution strategic while on demonstrate second diverse capitalizing plan on

per maintenance system. of the planned on facility are impact earnings share retooling we million The in sustained benefits, same year-over-year Abilene expansion process Abilene discipline, with This and an where period. by the and benefits together of was or profitability enhancements, delivered IRA-related offset and second manufacturing and price freight significant we time, at portions our procurement, maintenance basis. which, $X.XX $X.X drove efficient introduced the of in partially the coding our planned the resulted an approximately translated automating quarter reduced EBITDA our to At tax materials expense improved at in margin strong performance

with optimism OEM our diverse business. Indications customers, across and contributed have continued interest our of across to improved stability our stability from markets non-wind together

our to we guidance leading the adjusted year XXXX. of to increase second the full As us look the EBITDA half year, for

new, a progress higher-margin growth broader traction clean adjacent wind property that legacy here meaningful profitable the one unique spectrum together plan, intellectual developing markets within momentum we're energy on positive leverage strategic business, opportunities. a of tech reflect The transition and that within across with emphasizes our Broadwind at

further we focus to improved we realization driving and through improved unit drive with utilization asset service and consistent expect product capabilities, economics expand on the As our our margin cycle.

orders proprietary the were We industrial as for market prior from million aftermarket. softness systems, booked fabrications natural the down Gearing from orders $XX the gas X% and in segment, increases by producing orders second the offset natural year gas PRS systems, the in turbine our Mining in quarter orders for about and in pressure-reducing oil quarter gas orders mostly for or

adjacent operate third operational the continue and flow expansion as our higher-margin both our plan latest We're product Entering markets expanding mix commercial quarter, within unit. on at line, by level. reflected the of focused high PRS on HXXX we to a the

We've value our technical increase new our our introduced provided gearbox customers. for to service to customers. PRS maintenance customers Both the designed new advisory preventative for programs overall offerings sessions and

improvement projects continuous all emphasis Operationally, utilization. improved we've on across asset including across the with principles deployed divisions operating organization, lean an

focus and on our quality consistent delivery strict requirements has vital Our meet continually and workforce the quality to allowed us safety, customers. training to team so member systems

million reaping optimization. and both labor and of this retool and quarter, system coding later looking $X.X in wrap we're The of QX investment this the automation up terms benefits in launched Abilene to in project will forward throughput

working in of of from improved tower capital generated almost $XX $X.X improving efficiency, a revenue QX. with maintenance continued upon in period, the versus strong strong resulting the in in The We product second year generation, an period. performance the slight $X was generated increases in to by million cash quarter, the We contributed all a total EBITDA prior year-over-year reduction adjusted revenue other of offset in in Abilene, million combination growth million planned of in quarter, together increase flow the EBITDA lines.

Our X% as our to strength with pleased year-over-year, $XX industrial We're down in fabrications product year-over-year segment of see led PRS increasing Heavy sales. QX, expected. up orders booked Fabrication line by orders XX% in million

Gearing from XX% orders partially were down steel of incoming softening the driven $X in increases gas million, by and sector. offset year-over-year, orders, a oil by processing orders

by for orders gas $X aftermarket repowering to be projects. the a natural year-over-year increase strong, million of continue Solutions turbine for and Orders Industrial wind posting XX% both led

$XXX year, consolidated expect period. notwithstanding strong, backlog good and market. balance total the our gearing year flow the the the million for continue in of end non-wind activity Our the prior at markets in to was oil softness order gas the up Quoting orders versus million, remain we $XXX QX of through and

maintenance Fabrication activity X% partially Within revenue in plant. the Fabrications year-over-year QX Texas our revenue Heavy segment, mentioned offsetting previously $XX our million, the in was Industrial a with towers revenue from decrease resulting reduction

respectively. X% revenue increase as activity Solutions to gas turbine new lines. both XX% be and in million, the by up within XXX% up increases $XX a XX% led was year-over-year was and product revenue Gearing year-over-year, Industrial strong, sectors, customer industrial both continues and steel aftermarket year-over-year

building first our to look am the to as back the the all summary, pleased this half operating continue In forward year in of growth execute I performance and divisions with diversification the on the we of momentum of half and through year, strategy.

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

Tom Ciccone

Eric. you, Thank

In in quarter X recognized to the to second quarter of margin tower overall adjusted margin EBITDA second for The one prior attributable significant due of in to QX, credits $X.X We quarter had overview quarter. the million advanced this Slide production with to second earned million we A&P with associated benefits our realization operational tax Turning together execution. we primarily $X is in year $X.X and compared wind improved production highlighted by increase strong our the solid a million credits, manufacturing or EBITDA. an performance. expansion growth

diluted net per $X.X million share net quarter, or generated $X.XX $X After adjusting income We share. $X.X the quarter. second diluted second over of or in incurred costs proxy for $X.XX million contest-related income in of of we per million the generated

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

Second million million, from quarter period. decrease year $X.X $XX.X prior the orders were of a

I include PRS multiyear line. $X included the be PRS more QX was compared when As in orders introduced tower order timing last a both newly mobile related regular of XXXX, the limited to model. to proprietary our product The our quarter, did These intervals. large high-flow prior over flow for late units, record that when that and medium orders expect million orders periods stated orders based in received were placed on we tower to

due the increase revenues but prior tower sales Industrial X.X% planned tower in Fabrication sequentially sections in quarter up was our current $XX.X facility. demand revenue, higher Partially reflective quarter, versus to less We of were manufacturing million, recognized Second product for year the our of the down year primarily Abilene maintenance offsetting an quarter. the lower in impact offerings. PRS

we the year recognized million, well quarter, $X.X period, second of period prior of Fabrication EBITDA improvement million the year recognized the revenue. the the as an as $X product increased line primarily in Industrial current versus segment A&P by During credits driven

prior prior million, a versus Turning of decrease orders majority X. with the attributable revenue the compared to year we the Segment and $XX slowdown year. second to totaling $X.X million in quarter. $X.X QX, entered backlog million, strong Gearing Slide year million XX% was was or up The in the reflective oil orders. to $X.X quarter, of the slowed decrease which the gas

sold quarter, of year million a result in prior We an additional QX, versus the the and the ramp-up million of the prior of more of increase $X products generated costs $X.X year. segment revenue, lack a EBITDA mix in of incurred profitable

continues X early robust demand of million operate in Industrial level Broadwind's of environment. of discussion a QX, intake orders second Industrial Turning to Solutions highest We recorded Slide a Red since in Wolf segment. acquisition new for XXXX. in our quarterly the to Solutions $X.X

turbine represented see $X.X as million or XX% million backlog gas natural second offerings. record $X.X high increase the our ended to The $XX period. versus continue in prior we core the year for with demand a strong We quarter million

to increased revenues the $X.X prior to an as when products period, improved levels well $X segment of quarter. from revenues mix intake year increased $X.X with in consistent million million, quarter million primarily due $X sold by strong increased order as prior million we've EBITDA Second experiencing. to the compared year the the been to

X. Slide to Turning

liquidity sequential working $X since end million decreased adequate increased expected operating of facility availability approximately remains with improvement. After deposit cash $X.X has quarter capital under working credit by Our large to increase, our balance. capital million, an due million a and QX the $XX.X

during increase reminder, expect year. but I should are As last working traditional this noted operating not be part our calculation of it the credits do quarter, we that balance as receivable out to capital a A&P pointed the

and For working of our the lower debt. to year, the intend balance balance produce operating do we capital

as Finally, are full increasing our mentioned, we Eric EBITDA year guidance.

XXXX, total million $XX anticipate For adjusted the we approximately to is the million currently $XX year EBITDA million. million previously $XX from range $XX to to up This announced. full be

at changing million to remains We are that range. existing the revenue million $XXX guidance not $XXX our

remarks. I the turn call That to over Eric to will concludes my continue discussion. back our

Eric Blashford

Tom. Thanks,

XX new the the in IRA-related catalyst significant coming ahead, tax remain over months. Looking a investment for benefits

remains is of Our sustained win our passage. backlog remains positioned since has strong a active, substantially the for and expansion. Customer interest wind view grown its that market reinforcing period

improved next backlog year, XXXX we the each in of to segments. forward our look an have and increased we As of and second operating visibility into half

markets clean on As clean into tech, fuels, our we solar, legacy and in power to expand new in build infrastructure. wind adjacent generation

of our that continue high-value evaluate complementary number We these into a accelerate could inorganic other and opportunities markets. to growth entrance

long the our Heavy added demand. prepare labor our work natural leverage plant improve have of and in segment, earlier, pressure-reducing years introduced for automation our systems last mentioned proprietary our line in to gas we expected with customers year As progressing per throughput as strategy. to Fabrication is The we as increase coatings

that we're that our activity the HXXX second pleased order model unit, We've with released we high-flow model for the far. and product received in so family,

in We customer and have product response options maintenance demand. also this preventative for to line programs rental introduced

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

expanded In to time. to mix balanced sales segment, improve efforts a And team our more achieve going sales response cyclical we've our stream markets revenue into technical less our remain our broaden for Gearing forward, us. important to

interest and segments in we're gearbox quick increased Order And growth services. our turn from has repair strong. processing refurbishment industrial seeing the been steel and

process renewables presence And margins, this markets. business new to yielding is in solar improve finally, our as to orders we ones our and that million this business pleased I'm we booked results. accounts increase our than wind while existing $X in add desired position winning Solutions of Industrial year capabilities that strategy within more

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

a in and equipment. investment vital wind facilities, an over years, recovery activity increases need maintain And we ongoing support we As activity. renewables the several core in invest to talent our will gradually prudently order our next the

generation other support complementary growth will within drive fuels margin We presence establishing markets, wind, we utilization, ensuring transition. our serving leverage balance clean footholds reduced to Concurrently, capacity leverage, and while will our net optionality of expansion the business. in energy long-term new and continued power sheet the

in our we this income creation. on emphasis fully to generate growth years leverage we more an over successfully as both value several we with the As next expect revenue execute long-term and strategy, NOLs significant

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

Operator

question-and-answer At question. comes proceed this Stein you. [Operator question Craig-Hallum. Please time, your with Instructions] conducting with a Thank Eric be Our we'll from session. first

Eric Stine

Eric Tom. Hey, and

Eric Blashford

Hey, morning. Eric. Good

Eric Stine

industry Or just to industry-wide it talk Midwest just gain timing. point. for extent, be a are might that like I plants, filled you think up should I'm large I sense curious, mean, at filled wind how you mean, Good closer? the Abilene confidence given mean makes picking location. do you on what will Is up Wisconsin be fill start a to in feel in that? the other to obviously, the locations? obviously, see I waiting side. Maybe starting little in about bit morning. to need could tower advantageous about its plant. we it Is activity some more that and in the that markets to

Eric Blashford

Yeah.

about kind the the of it do see megawatts XX,XXX we kind gigawatts XX region, demand in there. We northern certainly, or in west of the and region. think or megawatts of northern of Dakotas see I central XX

Again, to some eastern need there's in demand So we would that see part materialize. region. to demand there of of that happen. do We of expect plenty the that

delayed terms is of demand, already This What's projects. me is even include encouraging a what's under XX this is announced in development, to lot construction. some that advanced really does gigawatts of and not

would some region, west. demand Iowa, right, need of the -- further demand to would in Wyoming, eastern seeing and materialize Montana most versus not we Dakotas northern So that meaning and the But the start part Minnesota, that we you're there. of is the

Eric Stine

Got it. of And that it activity terms just industry-wide really other is just up starting so in closer I filled -- is in rather then mean, to in Manitowoc other more being locations? plants capacity other just than

Eric Blashford

we of Eric. I eastern on side are the mean Correct. that,

that So we've got are some West. competitors more

And so you're their as and would we fill western, they up goes correct, demand up. fill then

Eric Stine

it. Got

Okay.

Eric Blashford

in plants other Iowa, Again, Minnesota et cetera. and

Eric Stine

limited potentially down the but helpful. going of for given And for just Abilene, be does that if A&P. I know heavier back maybe the and then turning on the it obviously Thanks be QX, is EBITDA to up the to there, guide would And XXXX setting just That you on that. down right. All I'm get side, just more it half to make and trying EBITDA. or sequentially into sense work QX? you're the wind imply of guide from that the you're that

or back half? business, thoughts parts whether that it's mix EBITDA Just the of Are that. may something there limit on in else other the

Tom Ciccone

Yeah, for question. the Eric, thanks

I the had very think we do of well QX QX. it -- with lot and a that very, has to executed fact in a we

the in QX, mix year. of latter QX, mentioned, turn you very As will of favorable and half that was in the some the around

Eric Stine

it. Got

strengthen. business? in parts Okay. mean, But It's wind, mix obviously, that the I of simply will other

Eric Blashford

Correct.

Eric Stine

timing. me, at point, -- it of they are about kind should thinking for looking just the other? we is Or than about mean, order similar quarters? see these? X you quarter maybe on And Okay. envision the as and higher XQ-XQ, last I the one do book this do I think then mean, you you how

Eric Blashford

really as would know, year. order I the have book, consistent Eric, on you traditionally we this out. nice order year orders, spiky, late the and last it's been From from say Tower won

So we I order so. other the or a in to months over very, don't do businesses, to I Industrial and, Industrial continue. expect Gearing of the Fabrications, number a for lesser order of six flow strong year. ones see very large activity the see Solutions, extent, next the But do rest

Eric Stine

then I for quarters? mean, they to at revenue And the pretty now, Okay. mean, is from revenue just least it at fair looks back might guess the revenue similar that linearity one Or of say point, a like year, this the I I like right of is it half higher? look be

Eric Blashford

say tower of the northern would projects I the in ship we've it plant, in of plants, got both QX. of lot ship most -- one will our will some a Yeah, in that

year QX. the So QX than stronger than quarter the be will a But balanced be will half of that. latter other

Eric Stine

much. Okay. Thank very you

Eric Blashford

Eric. Thanks,

Operator

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

Amit Dayal

Thank you, good morning, guys.

Eric Blashford

Amit. Hey,

Amit Dayal

that. on answer up Just to question following answered Eric's question and you last

terms In backlog, last the win this of had year. late you big

up that that are size for year. may I may like materialize that deals there's or similar year, size bigger even significant be utilization So of be into sort the there pipeline this going smaller, But and that ramp coming you next guess, could help better? of that looks maybe it or nothing of

Eric Blashford

'XX, for ones potentially 'XX. Sure. always couple maybe quarters materialize I that deals There into next over larger late of to and are into are deals deals larger perhaps some tower do percolating. smaller 'XX expect smaller the

Amit Dayal

right for of will how end be we And will levels? Okay. the that? And visibility capacity full have say, do potentially that by now, with growth you 'XX, you of ahead the at plan -- that then

Eric Blashford

plant data the of in about coming with XX of online. timing wind part the has has online, the This southern coming that The tower slower capacity, coming these do turbine demand to timing of the belt. it especially to is gigawatts in than demand northern is is full Eric's question, of the

So the I increasing. of see over that say, next we should would quarters, demand couple

until look perhaps As would capacity to far not that in capability as the northern I plant, into XXXX. full

Amit Dayal

environment? for you that. of Maybe this better guys. there being marketing strength is anything me, the in Or doing perform and in sales The perspective non-wind driven is Thank is that stronger one segments? sort last by as market company you've Okay. for from you these a a helping a business, like just been just

Eric Blashford

a I've Yeah. years a for of strategy We've about times. a number now. had that couple diversification spoken of

We our to have some force industries. sales in experts hired after go specific

the As an material example, from help in us gas. oil mining industry handling Gearing and in Gearing and to diversify

that had go after our leveraging material in handling, has plant capacity Industrial right capabilities far there. the or year, not we to as proprietary As now available great are products excess or northern we've and success came out. year growing let's construction, out mining, tower markets of the have out there our They And over to as capacity Fabrications, that the next such success marine. it because continue softness will we so. forget are come and coming Plus, last

Furthermore, Industrial that the global gas dependent Solutions scale, the demand demand increasing. that's for turbine natural gas and utility natural is global world, business, around turbine on

point the that's its fact, In been since in XXXX. at highest acquisition

Amit Dayal

Understood.

Okay. guys. offline. questions other That’s Thank have, I you. I'll my take all

Eric Blashford

you. Thank

Operator

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

Justin Clare

Yeah. morning. Good

wanted I facility. to Abilene about ask first the So

in If could expansion? And Just frame? you be how if Are about much visibility terms have you're cost the And requirement? of bookings so, at the you given that facility, capacity the us also you how address what add? on thinking the be could capacity what into demand, then CapEx you time that would the that might for update you the could thinking about plant?

Eric Blashford

opportunities continuing We've we're in to and to plant, interest expand grow. got that to continues study customer plant. that Well, it

of on investment, an And evaluating from in that XX $XX of or to studies it million and finalize to upwards investment terms expand XX%. be high could on say, would to that be I We anywhere the that. would side. have maybe it could We're conducted $XX million what and time plant continue take

Justin Clare

Got it.

remarks indicate balance to your your look $X like monetize did expected credit the here. cash on the you then plans on prepared It I there. the -- be that was early? A&P talk the the us likely year that strategy Could payment XXs so. update credit is wondering through could if the to And for increase others on Okay. of you to could just if we to, the wondering credit. But balance you that Or talked in low to from sheet for get pricing you could kind the return you through your tax sounds there? in or wait are $X.XX the just monetizing

Tom Ciccone

Thanks, Justin. Yeah.

We perspective. have our to slow interested been parties. out at looking has at monetizing We're The reach develop, them. market trying to from least been to

We have several conversations.

There's an possible. kind out, if inclined would more to the transfer came which that guidance to of aspect make us

So point. so. in -- interested we have were nothing But at this definitely imminent is we point, doing anything at this don't

Justin Clare

Got it.

then on just And one content. Okay. more domestic

have domestic towers U.S. for received We be on the manufactured in adder. to And have content domestic going treasury guidance the the it some really to looks requirements. qualify from content the the are like to

mean having changed demand you you're that's being customers by discussions really at if of just what out wondering the that might maybe with met So the you vast And that seeing U.S. sources? to and all? speak supply demand you're the Are can dynamic that there? domestic for anticipating majority

Eric Blashford

interest that by here in it's demand as domestic. customers the see by We finding And the towers with developers' that the our U.S., Yeah. believe of We we helps do company. appreciative yes, are for certainly in U.S. increasing U.S. our -- a that certainly best do and

we industry good be with have can our announced between capacity a there and balance think that forward demand going will brought curves the the I have and some plus available online. others that supply in expansions be

will nice support U.S. So I there industry the a and balance pricing. think be maintain adequate to

Justin Clare

Appreciate great. you. the Okay, Thank time.

Eric Blashford

Thanks, Justin.

Operator

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

Eric Blashford

who to results. Have to forward the we today QXX day. the Thank today. call Yes. with And Thanks, our look you. in a listen everyone, call coming and you to great participate

Operator

This concludes today's conference.

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

Broadwind (BWEN) 14 Aug 232023 Q2 Earnings call transcript