BWEN - Earnings call 3 2023

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Operator

Greetings, and welcome to Broadwind's Third Quarter 2023 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Tom Ciccone. Thank you.

begin. may You

Thomas Ciccone

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

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

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

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

Eric Blashford

gas growth EBITDA. a generated welcome income, Thanks, delivered today. margin Heavy reduction We in revenue, tower improved natural revenue yielding third demand our systems, all and sections, increases of Fabrications for or quarter joining performance, realization adjusted augmented us and to significant largest segments, revenue net those double-digit year-over-year Tom, year-over-year pressure strong in with We growth our high-flow segment, new wind XX% PRSs. realizing due to by shipments

XXXX. than manufacturing in of in IRA's provided adjusted from by of improved investments coatings efficiencies, These QX a value and higher a of recent basis technology. process and Our the more actions, discipline, well improvement results credit, benefits resulted prep sales early an XXX benefited improved versus operating advanced over automation tax combination points price leverage, EBITDA the from including mix plus our XX%, benefit

million look a as full for across major in of to to improved order to our tower booked third Continued operate we to decline on development our for fourth demand We're content. mix our the from adjacent mining a due within down orders orders to guidance longer-term our We markets has had Solutions demand was primarily to leading XXXX. for the primarily contributed industrial and orders on of us business low-flow Entering gas industrial due XXXX were non-wind quarter, prior in of including placed what Partially across due a million our the the this stability continue declined expanding customer year, series unit, year diverse orders turbine orders. pulled we segment sector. Gearing Industrial visibility late our plan. $XX the year in XXXX. this reaffirm approximately the and track RNG been both orders, EBITDA XX% orders from $XX prior release from tower from version XX% while fabrication the large product the in offsetting wind as of the the of an and adjusted historically smaller on forward customers, of reduced down PRS higher-margin quarter, year focused increase in oil gas a in timing ratable timing within new XX% markets, that remainder to

results locations are new and showing Gearing both at and service orders asset on-site which to the help existing process We implemented projects diagnostic, provide the we sessions utilization equipment. reliability we've gearing to and operating led replacement and have our lean their of optimize in technical maintenance customers. Operationally, sessions are continuing and with training during productivity. These and continuous also performance, increased principles, good controls from advisory service repair improvement new all longevity our with customers

to us quality third quarter increases safety, member has the of valued million allowed continuing seen quality and in meet versus strong by generated million continually increase our team on far. prior focus of revenue We generated an experienced performance relentless this $XX customers. We and training total the year all the the Our much delivery systems $X.X as we've we the $X.X in divisions. year performance million adjusted period, approximately in so of EBITDA quarter, skills

$X operating continue third backlog quarter Tom led third customer of and continues through consolidated tower markets. in softness the oil content we prior year-over-year industrial in remain $XX and this Gearing million, Solutions pressure-reducing a continue as new year-over-year, QX million, the balance reductions good was of as to year, we strategy. gas of both and performance to turn that, segment, at year and I'll Our execute performance. Quoting With be to from and in notwithstanding both million, the forward the a offset call through markets million, summary, construction over expect end and financial revenue wind of for activity remainder activity through increases by $XXX the was by of quarter flow systems, look year-over-year, stable, the non-wind our divisions the all a XX% market. Within proprietary gear pleased period. the order million our our XX% our gas to up approximately international to XX% the in up the momentum Industrial mining, industrial $XX I'm continuing gas $XX by our was increase in led Heavy sales discussion revenue QX strong increase domestic steel sectors. and turbine was this with to increases within our revenue Fabrications the customers. In year natural

Thomas Ciccone

you, Thank Eric.

per had for the strong The margin $X.X X experienced gross in we overview sequential a year advanced year we third quarter. manufacturing tax increase or production associated with In solid an or our diluted We to $X.X generated EBITDA. both of together compared improved revenue, and $X.XX attributable third million overall We to operational of with million $X.X QX, income production year-over-year million the net credits AMP and share wind the EBITDA our tower growth this margin performance. is quarter. in quarter third been prior in third and primarily of due quarter. benefits $X.X execution. Slide We earning to to EBITDA recognized realization Turning credits the million have

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

Third which lower These year sold quarter and driven the up third in sections were in $XX.X in revenues million, tower by both QX quarter. versus versus and the year the were sold in XXX sequentially current XX-tower recognized XXX year had from Manitowoc facility periods. largely XXX We prior quarter. increases comparable our prior the section the sections quarter

segment the of prior an million, $X.X of driven tower EBITDA $X.X period, AMP by primarily and third period. increased million the improvement sold year versus credits the recognized sections current in During we recognized the year quarter, the

decrease X. The prior reduction slowed Segment sold Turning prior the in when million revenue to but year $X.X compared been the majority $X third of QX demand year quarter. totaling XX% in million, attributable products and to Gearing we've $XX.X less overhead to with Slide compared to versus mix higher quarter, year prior EBITDA significantly of the million million to costs a the quarter. profitable and $X.X the up million, oil was due experiencing. decreased a orders $XX.X decrease was or that gas $XXX,XXX

a for since early Red highest Solutions Broadwind's revenue third strong Turning to in with our Industrial XXXX. Wolf total X Slide quarter of Solutions of acquisition discussion a the segment. had Industrial

While acquisition. both versus quarterly year of highest orders million our of an level prior third still the are third the $X.X million backlog since total at down and represents elevated $XX.X quarter, remains sequentially and

our for demand strong see turbine core to continue offerings. We natural gas

to quarter. year prior entered period, quarter breakeven to prior in with Third revenues sold record consistent as reflective the year segment the backlog when as the with. increased $X.X million to increased revenue the the high period, quarter EBITDA $X increased in year products prior of from well profitable a of mix third more million from the million $X we compared

Turning to X. Slide

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

During largest increase collection major see changed $X our primarily a sales operating terms did of and over significant an just month the in year-to-date. AR working and increase capital billing the due in customer significant of net we with million, to September, QX, as because we in a

as balances will and operating debt. be carrying lower quarter, capital result, During decrease, working the we we fourth expect to a

balance be working capital earned under operating continue million, a As in of expect than this past quarters, should end we the it At traditional AMP few and third receivable credit out to $XX the that credits more credits our receivable I noted to until pointed IRA. AMP as the calculation, increase reminder, monetized. representing the our of quarter, totaled part the do not are

monetization evaluating credits institutional if are of credits which during third We an approach parties, pursued the unaffiliated currently earned XXXX. accelerate these of these to would sale

finish for turn call my full year our time, as we That EBITDA the to Eric at concludes continue year. us the over and mentioned, reaffirming to strong this will I positioning guidance are Eric our Finally, discussion. revenue to adjusted a back remarks.

Eric Blashford

Tom. Thanks,

Now total section our allow thoughts XXXX to manufacturer. that at agreement, the XXXX, into tower tower wind of of number occur you'll orders wind while the half of global announced fulfillment we sections we'd a shift under XXXX. In discussed entering intent maintaining supply In XXXX, Fabrications agreement first order supply planned XXXX provide the through into their with purchases approximately the Under beginning year-end me tower in supply entered recall the Heavy beginning approximately for joint leading contracted is XXXX terms turbine to November some to parties early initially stipulated for agreement. January with XXXX, segment. valued $XXX a million the

base stream markets Importantly, our remain this average into we've Gearing our this less revenue reorganized commercial ratable production mix shift achieve team for going accelerate more a to to level to into transition. will support tower still our cyclical to forward a balanced sales important of us allow XXXX. In and broaden us, segment,

to more and other process repowering this the while in that plan we the to we investments from than booked division. In with latter our grow to demand with in-house oil through business costs several the in summary, QX. and pleased to pleased our yield for share of while Solutions, will of wind upgraded market machining automation several years. In this including in actions leveraging our and continue QX from growth additional far anticipate the performance and team year, in next continued result operational in $X over of power and good in have we I'm so we achieved solar the further million strong reduce we months add plasma wallet Additionally, from this cutting orders wind which adding took ones. in reduction interest new overhead accounts market, Industrial our add I'm capabilities generation, CNC last orders renewables equip gas markets. capabilities the our over us the We've to to the part and to engineering made continue existing QX, response

demand to to and for focus on solid transition energy to key and serving look the ahead. the a growth, efforts capitalizing continue improved forward market We in build foundation steady, markets profitable years other

generation We leverage business as the our costs call for over to talent renewables, footholds will prudently that and energy other and new while With fuels control facilities, such overhead maintain our presence session. needed will vital while within said, we the core markets invest grow moderator in as to Q&A clean transition. the power equipment we I the establishing our complementary in turn

Operator

from Eric Stine first with Our Instructions] question comes Craig-Hallum. [Operator

Eric Stine

the start guidance. if just could we with Maybe

pretty also or wide you So would fourth implied given is -- just have whole out wind the trying or about quarter. a in to activity, EBITDA imply number of from what that don't implied. a the lot to mean, I the range. seem It talk it's that's figure

you to maybe, and you Could be range. as consider things I it about a talk or is would end to the just wide what we the that mean, QX? range factors high think get the low about of end some So

Eric Blashford

we conservative we pushouts, those be most and the with to can. all, customers market There's and that Yes. be XXXX we'll always oil in management include negotiating requesting and some as I as of first trepidation as for we're with gas conservative of as Well, think management. tend customers have to we

a guidance primary caution reason XXXX. for So reason for that's for the our and reaffirming -- our

Eric Stine

correct is have implying and though, get level I say lower think it activity that about QX. say Is that then $X I to the that the And lower guess, fair of I positive mean, seem million, tower to about to you being in I to given conservative, it? a or activity, breakeven EBITDA, given would wind much mean, that but way

Eric Blashford

minimis. than be lower in lower There but than de QX orders multiple Well, QX -- that we QX not we because it'd finished we in tower finished in would activity had be QX.

as that take a please conservative estimate. So

Eric Stine

Okay. recognized customer be simple and No. then taking quarter adjust I was -- I order. tower I good is just what Abilene, given as possibility Maybe would that? kind the to to throughout it guess would the large also, fill the to able timing now capacity be open I and to quarter, Curious, okay. that mean, are you third location, a the Yes, And with to ratably that just then number a of of that's some of mean, cutting you turning very as that run decision in rate that 'XX. half? makes that, in is seem there sense. going and know it quarterly some have fourth your

Eric Blashford

we of as you're lease is talked divided Sure. before, preferred XXXX us I to year X XX% and Eric, as ratable XX% the an across years, about that well. capacity mean, for XX% correct. while volume as And operator, gives whole by we -- utilization while

we or the and that in get same there X that capacity from open other we'll viable X have OEMs. the still of it open orders capacity are OEMs. are X other that market for period. more time certainly Remember, Now the X to This plant, was to

always our it capacity. been, mission fill that yes, as has to is, So

Eric Stine

And it. Got last thing.

directionally, the would guess, be Industrial I down today commentary, the Industrial of cost a Solutions asking 'XX I for I taken and in you've up? in number, is Gearing. Just mean, as cuts I kind and than potentially Gearing, mean, mean, more to Solutions potentially flat of a year some here sit that that you positive without

Eric Blashford

those Gearing rise and Fed an full continues would I to but control does say I is it's a markets. have try the And business inflation, most as can that's markets. to good on our Yes. frankly, as mean, industrial diverse it rates estimate. to impact of the continue industrial interest

an domestically Solutions, international hand, ship other We you the company. Industrial is if internationally. On remember, and both

some inflation, necessarily don't rates, the So as international. of interest domestic drivers impact such

say a estimate, would good I So that Eric. would be

Operator

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

Amit Dayal

us Eric, different give with pipeline what now? the in some the respect with sense you working are of to could right segments, you

Eric Blashford

Solutions, If talking Industrial Pipeline. with pipeline I potential of about you're start orders?

Amit Dayal

and I'm sense, something any just this forward? going pipeline this a Is potential. there. to Sales see what yes. pipeline last there Is had like there large trying big you you in year. Yes, order get that

Eric Blashford

Okay.

wasn't I wind... you're in you talking If if of -- wind, so about sure terms

Amit Dayal

industrial. or wind Yes, Any color [indiscernible]

Eric Blashford

Okay.

orders, wind. -- with type and PO I've with Let continue. to before, we our me as general which received, those start large had and competition their received mentioned of ratable Wind, continue orders notwithstanding the it's and had PO bids other OEMs

So normal. slowness I'd say, the general, market. would be There say I'd a the is pipeline in

of Wood said XXXX would As some be beyond year indicate be stronger would much expected, and Mac transition we -- and and XXXX 'XX a so the that that our that. exhibits and

the long-term still So anticipated. that is to generate as the wind market We expected. IRA as going exuberance believe is the in

your answer for market, So wind market. for your there's that

natural I the Natural are is across since sales turbine we think the the year, gas turbine second looks world, which did bullish. gas actually highest Solutions, this Industrial acquisition. For the market, that

expect of flow from interest I we year sorry, to a and such material demand. so next I'm do have quote steel, in handling. marine, as win. XX mentioned, Gearing, our order input I do input strong -- months. And Gearing through Those to business we most we But diverse going to, dampening think, They subject is think good some within markets our oil as So gas, business. rates are that we're before, yet, quote order service industrial as mentioned markets I the

down but I'd certainly materially point. not than this year XXXX XXXX a at softer So expect in

Amit Dayal

material what that increases raw terms potential right. perspective, cost in on and all those from you seeing of And are going any of Okay, forward? margins from on front impact types increases then a of

Eric Blashford

But a bit remember, which XX% multiyear wind of but X% at of plate Well, in between still bit steel, and high. softening, a there's it's still, it, a softening. we're call used especially starting see turbine to is for steel, tower, a is softening in

turbines So wind forward. that structure and of and going wind turbine think the possibly towers profitability we could help cost

-- inflation, seeing as that's far think as stable pricing. overall I we're

a so primary a As input It also, our would wind as our input market, are our wind regard with it margins. goes costs, we pass-through from talked in up wouldn't margins gross really we've impact the to if reminder impact costs before, Amit. steel

Thomas Ciccone

to the And Amit, we've I'll the X/X a price plate you was where been of maybe of go today. thing only X/X add in that steel to XXXX, -- where is years it is if back couple of

So some still of we levels steel for are elevated just it's at these pricing. perspective,

Eric Blashford

a was to X this, affecting are of purchase turbines temporary ago inflation, or to utilities power price interest it inputs, definitely headwinds the causing move causing several to to seek rates steel, regard calling cost projects. years right the is purchase and the wind PPAs, and their enable EPCs think financials I definitely what the projects I'm Xx So that are some like be able said, from are to with developers Tom agreements, price the agreements or for higher

So all right the dynamic things short-term facing I the which in that is a a to that we're is move to think bit. market, causing

Amit Dayal

to I monetizing potentially but credits? will on And something Okay, play about last come you in maybe multiple manufacturing or these into monetizing one, party? to I this Or is know talking you customer that understood. the these come credits. mean, one guess, said through is I it just are with going XXXX, parties

Thomas Ciccone

and this, been Yes. There's buyers. to talking next potential year. Thanks depends talking changes all potential X you're for and Yes, to for on year about them for a purchase buyer to. we've for parties multiple who question. multiple structure the this of There's the

looking possible, soon towards out possibly depends just of can. we there. But on the We're monetize we XXXX, these that. kind just deal as to if as are that's it So working

Operator

Our question from with Martin comes Rice. Johnson next Malloy

Martin Malloy

First question.

talk You for the low and scope mentioned industry. a about product that offering, there? RNG you maybe product pressure new Could

Eric Blashford

We've market. proprietary that calls, from developed And it products that previous Yes. pipeline. replaces natural -- services market virtual pipeline service gas you maybe the remember hard

to natural at it, it normal it takes so different of the can line a it be takes at frac gas, decompresses compresses stranded hospital natural So and maintained, a a it it to needs site it gas if or the a point whether site use, used pressure. be be

that. do developed we technology to So

medium a A year, lower we So the decompressing. And the flow, demand. trailers X is released we low flow, maybe developed time we flow, need, at this least call lower high which earlier at time. expensive. lower call first X what a it, handle, which to flow, also up which can this which It's obviously a is trailers

So a looking some think our we that of point price it for. fit can customers are

the is it this volume. in we and those gas, we can with of completes product well products which So renewable delineations. Also suite for smaller market the tends be to that X family, RNG, natural very think serve

you don't pressure you of unit. the higher That's the in or part unit. so a flow our why natural And flow the need low high version is medium gas management flow renewable would as

Martin Malloy

a of And just calls. a in follow-up on us for about the seeing could look wanted acquisition you're at? and talked ask acquisition you great. that give about pipeline Okay, potential And sense right question. of just maybe to and now kind you've the to opportunities I opportunities past

Eric Blashford

clean the to adjacent But the transition. space, certainly looking acquisition. and right right want are that for energy are that as Well, looking acquisition, can composites, the precision additional sure the We such companies size we We're we're serve manufacturing materials I'm in either as I want specific make steel. or do we're cautious. aluminum. at is make can service don't right we about energy to transition, carbon right such more into sure ones get But metals, that that materials metals. any or talk now Everything prepared do now. have we lighter the basically We to

Operator

next question Justin Clare is Our ROTH from with MKM.

Justin Clare

the Abilene wanted to to capacity here, that's agreements. the the available one, long-term at first I change given So ask about facility the

is have your like looks capacity QX you part for open least it XXXX. of QX that's So capacity at and of

the at capacity be QX booking a to it that the sense wanted Just that to you're point? to still that that for just facility. And region maybe to QX demand it fairly strong what and get on it's because have trying time at Or you going you in into? could could fill be recently. seems utilization this is like been comment see, do then if really So

maybe just to seeing. can So you're what you speak

Eric Blashford

you're would out think, working utilization think if capacity we to this model. the model. specifics I good And take Yes, still I ratably that with We're would and over XX% would but that customer, spread our be year, good, some right. that be to

far how we could As weeks in quickly weeks replace term think before, I times. far XX short, XX that we as long as the maybe the as capacity, lead in talked as

of the way EPCs for had higher quite XXXX, they Texas, purchase wind, which more and announcements notwithstanding we are But QX, delays of, from post interconnection that market XXXX some to production into future. think and market, the the be I certain still we X a them I chain financial market, some for the inflation squeezed hot now lot long-term public. a ask that right, of So that higher right frankly I Oklahoma because of these southern booking especially of part delays remain that from earlier, that is felt what in market, aspects agreements see. were in mentioned. I from latter and because see will going are strong their thought interest reminder I a interconnection projects X. But it's and inflationary much rates seen to and IRA than have, still we're some literally There's of we said also being kind many that's think to be and supply utilities higher for and We we'd that to part some costs causing delays, and latter a but interest it the we've now seen power going developers impact haven't the a do demand that in going of certain are that been it's believe of market that standpoint. We've towards just remains what you're seen think return recently and And 'XX.

Justin Clare

it, Got meaningful customers to looking even the shift demand And seen That's just really if in you XXXX? comment into then you've Manitowoc at are [indiscernible] facility. facility, How helpful. on Can okay. any shifting that

Eric Blashford

I've Yes. as thought south mentioned, the depending going seems from tend What I typical. seen, There's renewables north that pendulum to to go I or to were That a for north. to south supporting the tends swing to be move things to on states' appetite whatnot.

starting I move think north. it is to

We of I for several, call, I at meaningful capacity, fourth northern northern 'XX. that late quarter what capacity have third, call Justin, seen the the would plant, inquiries would for,

interest So time. coming activity, quoting this don't orders have certainly I increasing, to activity, report it's back, any is but at

Justin Clare

X maybe here. And okay. it, then more just Got

You might should QX? here -- the of in some remarks, what customer. there on talk generated the particular the was mentioned anticipating up QX been It prepared terms you ticked in that as sounds the about then QX. lower a what you in like collect And moving we change had AR receivables have Can a in with be in there? change AR

Thomas Ciccone

Yes.

As operating working capital the QX remarks, think that have we I expectation in decrease. in an I said our will prepared

just I -- it leave think could we that's that. that at

else there. think think there's that's meaningful I we don't anything --

Operator

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

Eric Blashford

Have appreciate results. coming We great about interest QX to a to and joining. day, for talk QX everyone. back after look our your to you thanks, forward Well, everyone,

Operator

This conference. concludes today's

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

Broadwind (BWEN) 13 Nov 232023 Q3 Earnings call transcript