THIRD QUARTER 2023 RESULTS
(As compared to the third quarter 2022)
- Revenue of
$57.2 million ,+$12.3 million y/y - GAAP Net Income of
$4.4 million , or$0.20 per diluted share,+$6.2 million y/y - Non-GAAP Adjusted EBITDA of
$7.6 million ,+$5.7 million y/y - Ratio of net debt to trailing twelve-month Non-GAAP Adjusted EBITDA of 1.7x as of
September 30, 2023 - Total backlog of
$220.8 million ,+$88.6 million y/y, as ofSeptember 30, 2023 - Reiterating full-year 2023 revenue and Adjusted EBITDA guidance
For the three months ended
During the third quarter,
Total backlog increased by
BUSINESS UPDATE
- Drive revenue mix diversification. On a trailing twelve-month basis through the end of the third quarter 2023, non-wind revenue increased by nearly 25% on a year-over-year basis to
$103 million . During the third quarter 2023, total non-wind revenue increased 16% on a year-over-year basis to$27 million . These increases were primarily supported by broad-based share gains across industrial and power generation end-markets. - Deliver sustained margin expansion. In the third quarter 2023, total gross margin rate increased more than 940 basis points year-over-year from 8.4% to 17.8%, while non-GAAP adjusted EBITDA margin increased more than 900 basis points from 4.2% to 13.3% in the same period. IRA-related tax credits and effective cost-management contributed to the year-over-year improvement.
- Drive asset optimization.
Broadwind has deployed a lean operating approach across all divisions which includes continuous improvement efforts designed to drive throughput growth and asset optimization. The base load of orders in backlog is expected to allow the Company to focus these efforts on specific manufacturing processes offering the highest return on resources invested.
MANAGEMENT COMMENTARY
“We delivered a strong third quarter performance, one highlighted by significant year-over-year increases in revenue, net income, margin realization and non-GAAP adjusted EBITDA,” stated
“Our third quarter results benefited from a combination of improved operating leverage, continued price discipline, a higher value sales mix and improved process efficiencies, including early benefits from our recent investments in coatings automation and weld-prep technology,” continued Blashford. “These actions, together with the benefit provided by the IRA’s advanced manufacturing tax credit, resulted in third quarter non-GAAP adjusted EBITDA margin of more than 13%, an increase of more than 900 basis points as compared to the prior year period.”
“We remain highly focused on balance sheet optimization as we seek to build liquidity, further reduce net leverage and improve working capital efficiency,” continued Blashford. “Our net leverage profile improved meaningfully over the last year, with our ratio of net debt to trailing twelve-month non-GAAP adjusted EBITDA declining to 1.7x as of
“Looking ahead, we remain well-positioned to capitalize on a pending recovery in onshore wind investment, while leveraging our precision manufacturing expertise across new energy transition verticals, including renewable fuels and power generation,” concluded Blashford. “While we see early signs of a recovery within our onshore wind markets, 2024 is expected to be a transitional year for the industry. As before, we remain focused on delivering profitable growth through organic share gains and product innovation, consistent with our focus on long-term value creation.”
SEGMENT RESULTS
Heavy Fabrications Segment
Heavy Fabrications segment sales increased 25% to
In
Gearing Segment
Gearing segment sales increased by 12% to
Industrial Solutions Segment
Industrial Solutions segment sales increased 85% to
FINANCIAL GUIDANCE
The following financial guidance for the full year 2023 reflects the Company’s current expectations and beliefs. All guidance is current as of the time provided and is subject to change.
Full Year 2023 | ||||
$ in Millions | Financial Guidance | |||
Low | High | |||
Revenue | ||||
Non-GAAP Adjusted EBITDA |
THIRD QUARTER 2023 CONFERENCE CALL
A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of the Company’s corporate website at https://investors.bwen.com/investors. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.
To participate in the live teleconference: | |
Live Teleconference: | 877-407-9716 |
To Listen to a replay of the teleconference, which will be available through | |
Teleconference Replay: | 844-512-2921 |
Conference ID: | 13741903 |
ABOUT
NON-GAAP FINANCIAL MEASURES
The Company provides non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share-based compensation and other stock payments, restructuring costs, impairment charges, proxy contest-related expenses and other non-cash gains and losses) as supplemental information regarding the Company’s business performance. The Company’s management uses this supplemental information when it internally evaluates its performance, reviews financial trends and makes operating and strategic decisions. The Company believes that this non-GAAP financial measure is useful to investors because it provides investors with a better understanding of the Company’s past financial performance and future results, which allows investors to evaluate the Company’s performance using the same methodology and information as used by the Company’s management. The Company's definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.
FORWARD-LOOKING STATEMENTS
This release contains “forward-looking statements”—that is, statements related to future, not past, events— as defined in Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements. Forward-looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following: (i) the impact of global health concerns on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants, including the advanced manufacturing tax credits (which remain subject to further technical guidance and regulations), and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
2023 | 2022 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | 1,740 | $ | 12,732 | ||||
Accounts receivable, net | 41,253 | 17,018 | ||||||
AMP credit receivable | 11,217 | - | ||||||
Contract assets | 2,176 | 1,955 | ||||||
Inventories, net | 39,906 | 44,262 | ||||||
Prepaid expenses and other current assets | 3,454 | 3,291 | ||||||
Total current assets | 99,746 | 79,258 | ||||||
LONG-TERM ASSETS: | ||||||||
Property and equipment, net | 46,889 | 45,319 | ||||||
Operating lease right-of-use assets, net | 15,086 | 16,396 | ||||||
Intangible assets, net | 2,229 | 2,728 | ||||||
Other assets | 649 | 839 | ||||||
TOTAL ASSETS | $ | 164,599 | $ | 144,540 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Line of credit and current portion of long-term debt | $ | 19,762 | $ | 1,170 | ||||
Current portion of finance lease obligations | 1,612 | 2,008 | ||||||
Current portion of operating lease obligations | 1,660 | 1,882 | ||||||
Accounts payable | 25,269 | 26,255 | ||||||
Accrued liabilities | 6,238 | 4,313 | ||||||
Customer deposits | 29,904 | 34,550 | ||||||
Total current liabilities | 84,445 | 70,178 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Long-term debt, net of current maturities | 6,562 | 7,141 | ||||||
Long-term finance lease obligations, net of current portion | 3,628 | 4,226 | ||||||
Long-term operating lease obligations, net of current portion | 15,583 | 16,696 | ||||||
Other | 19 | 26 | ||||||
Total long-term liabilities | 25,792 | 28,089 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDERS' EQUITY: | ||||||||
Preferred stock, | - | - | ||||||
Common stock, | 22 | 21 | ||||||
(1,842 | ) | (1,842 | ) | |||||
Additional paid-in capital | 398,750 | 397,240 | ||||||
Accumulated deficit | (342,568 | ) | (349,146 | ) | ||||
Total stockholders' equity | 54,362 | 46,273 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 164,599 | $ | 144,540 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenues | $ | 57,163 | $ | 44,843 | $ | 156,879 | $ | 136,699 | ||||||||
Cost of sales | 46,996 | 41,095 | 131,403 | 128,545 | ||||||||||||
Gross profit | 10,167 | 3,748 | 25,476 | 8,154 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||
Selling, general and administrative | 4,635 | 4,085 | 16,113 | 12,109 | ||||||||||||
Intangible amortization | 165 | 183 | 498 | 550 | ||||||||||||
Total operating expenses | 4,800 | 4,268 | 16,611 | 12,659 | ||||||||||||
Operating income (loss) | 5,367 | (520 | ) | 8,865 | (4,505 | ) | ||||||||||
OTHER EXPENSE, net: | ||||||||||||||||
Interest expense, net | (932 | ) | (1,234 | ) | (2,171 | ) | (2,355 | ) | ||||||||
Other, net | (13 | ) | (4 | ) | (37 | ) | 17 | |||||||||
Total other expense, net | (945 | ) | (1,238 | ) | (2,208 | ) | (2,338 | ) | ||||||||
Net income (loss) before provision for income taxes | 4,422 | (1,758 | ) | 6,657 | (6,843 | ) | ||||||||||
Provision for income taxes | 28 | 14 | 79 | 36 | ||||||||||||
NET INCOME (LOSS) | $ | 4,394 | $ | (1,772 | ) | $ | 6,578 | $ | (6,879 | ) | ||||||
NET INCOME (LOSS) PER COMMON SHARE - BASIC: | ||||||||||||||||
Net income (loss) | $ | 0.21 | $ | (0.09 | ) | $ | 0.31 | $ | (0.34 | ) | ||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 21,337 | 20,506 | 21,101 | 20,156 | ||||||||||||
NET INCOME (LOSS) PER COMMON SHARE - DILUTED: | ||||||||||||||||
Net income (loss) | $ | 0.20 | $ | (0.09 | ) | $ | 0.31 | $ | (0.34 | ) | ||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 21,574 | 20,506 | 21,451 | 20,156 | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Nine Months Ended | ||||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ | 6,578 | $ | (6,879 | ) | |||
Adjustments to reconcile net cash used in operating activities: | ||||||||
Depreciation and amortization expense | 4,772 | 4,581 | ||||||
Deferred income taxes | (7 | ) | (13 | ) | ||||
Change in fair value of interest rate swap agreements | - | (27 | ) | |||||
Share-based compensation | 649 | 760 | ||||||
Allowance for doubtful accounts | 16 | (18 | ) | |||||
Common stock issued under defined contribution 401(k) plan | 978 | 915 | ||||||
Loss on disposal of assets | 48 | 3 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (24,251 | ) | (3,096 | ) | ||||
AMP credit receivable | (11,217 | ) | - | |||||
Employee retention credit receivable | - | 497 | ||||||
Contract assets | (221 | ) | (2,353 | ) | ||||
Inventories | 4,356 | (525 | ) | |||||
Prepaid expenses and other current assets | (162 | ) | (1,200 | ) | ||||
Accounts payable | (1,577 | ) | 4,968 | |||||
Accrued liabilities | 1,925 | 1,271 | ||||||
Customer deposits | (4,646 | ) | (9,006 | ) | ||||
Other non-current assets and liabilities | 166 | (149 | ) | |||||
Net cash used in operating activities | (22,593 | ) | (10,271 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (5,315 | ) | (2,757 | ) | ||||
Proceeds from disposals of property and equipment | 15 | - | ||||||
Net cash used in investing activities | (5,300 | ) | (2,757 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from line of credit, net | 18,518 | 7,966 | ||||||
Payments for deferred financing costs | - | (470 | ) | |||||
Proceeds from long-term debt | 387 | 8,113 | ||||||
Payments on long-term debt | (893 | ) | (261 | ) | ||||
Principal payments on finance leases | (994 | ) | (1,347 | ) | ||||
Shares withheld for taxes in connection with issuance of restricted stock | (117 | ) | (546 | ) | ||||
Proceeds from sale of common stock, net | - | 230 | ||||||
Net cash provided by financing activities | 16,901 | 13,685 | ||||||
- | ||||||||
NET (DECREASE) INCREASE IN CASH | (10,992 | ) | 657 | |||||
CASH beginning of the period | 12,732 | 852 | ||||||
CASH end of the period | $ | 1,740 | $ | 1,509 | ||||
SELECTED SEGMENT FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
ORDERS: | ||||||||||||||||
Heavy Fabrications | $ | 8,009 | $ | 62,873 | $ | 40,608 | $ | 110,022 | ||||||||
Gearing | 3,005 | 15,523 | 21,211 | 38,526 | ||||||||||||
Industrial Solutions | 4,876 | 6,061 | 19,034 | 14,648 | ||||||||||||
Total orders | $ | 15,890 | $ | 84,457 | $ | 80,853 | $ | 163,196 | ||||||||
REVENUES: | ||||||||||||||||
Heavy Fabrications | $ | 38,326 | $ | 30,640 | $ | 103,864 | $ | 93,486 | ||||||||
Gearing | 11,404 | 10,190 | 34,347 | 30,890 | ||||||||||||
Industrial Solutions | 7,434 | 4,020 | 19,125 | 13,142 | ||||||||||||
Corporate and Other | (1 | ) | (7 | ) | (457 | ) | (819 | ) | ||||||||
Total revenues | $ | 57,163 | $ | 44,843 | $ | 156,879 | $ | 136,699 | ||||||||
OPERATING PROFIT/(LOSS): | ||||||||||||||||
Heavy Fabrications | $ | 5,791 | $ | 372 | $ | 12,448 | $ | (11 | ) | |||||||
Gearing | 265 | 624 | 1,194 | (73 | ) | |||||||||||
Industrial Solutions | 846 | (191 | ) | 2,311 | (368 | ) | ||||||||||
Corporate and Other | (1,535 | ) | (1,325 | ) | (7,088 | ) | (4,053 | ) | ||||||||
Total operating profit (loss) | $ | 5,367 | $ | (520 | ) | $ | 8,865 | $ | (4,505 | ) | ||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)
Consolidated | Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net Income (Loss) | $ | 4,394 | $ | (1,772 | ) | $ | 6,578 | $ | (6,879 | ) | ||||||
Interest Expense | 932 | 1,234 | 2,171 | 2,355 | ||||||||||||
Income Tax Provision | 28 | 14 | 79 | 36 | ||||||||||||
Depreciation and Amortization | 1,605 | 1,486 | 4,772 | 4,581 | ||||||||||||
Share-based Compensation and Other Stock Payments | 603 | 935 | 1,660 | 2,166 | ||||||||||||
Proxy Contest-Related Expenses | 23 | - | 1,779 | - | ||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 7,585 | $ | 1,897 | $ | 17,039 | $ | 2,259 | ||||||||
Heavy Fabrications Segment | Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net Income (Loss) | $ | 5,839 | $ | (231 | ) | $ | 12,166 | $ | (1,009 | ) | ||||||
Interest Expense | 223 | 651 | 500 | 1,246 | ||||||||||||
Income Tax Benefit | (272 | ) | (48 | ) | (218 | ) | (249 | ) | ||||||||
Depreciation | 896 | 852 | 2,610 | 2,594 | ||||||||||||
Share-based Compensation and Other Stock Payments | 261 | 226 | 712 | 697 | ||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 6,947 | $ | 1,450 | $ | 15,770 | $ | 3,279 | ||||||||
Gearing Segment | Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net Income (Loss) | $ | 194 | $ | 581 | $ | 968 | $ | (185 | ) | |||||||
Interest Expense | 63 | 41 | 203 | 131 | ||||||||||||
Income Tax Provision | 8 | 1 | 23 | 4 | ||||||||||||
Depreciation and Amortization | 563 | 477 | 1,715 | 1,507 | ||||||||||||
Share-based Compensation and Other Stock Payments | 113 | 119 | 346 | 397 | ||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 941 | $ | 1,219 | $ | 3,255 | $ | 1,854 | ||||||||
Industrial Solutions Segment | Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net Income (Loss) | $ | 669 | $ | (283 | ) | $ | 1,879 | $ | (540 | ) | ||||||
Interest Expense | 151 | 81 | 362 | 147 | ||||||||||||
Income Tax Provision | 12 | 9 | 34 | 20 | ||||||||||||
Depreciation and Amortization | 94 | 97 | 280 | 299 | ||||||||||||
Share-based Compensation and Other Stock Payments | 47 | 48 | 147 | 182 | ||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 973 | $ | (48 | ) | $ | 2,702 | $ | 108 | |||||||
Corporate and Other | Three Months Ended | Nine Months Ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net Loss | $ | (2,308 | ) | $ | (1,839 | ) | $ | (8,435 | ) | $ | (5,145 | ) | ||||
Interest Expense | 495 | 461 | 1,106 | 831 | ||||||||||||
Income Tax Provision | 280 | 52 | 240 | 261 | ||||||||||||
Depreciation and Amortization | 52 | 60 | 167 | 181 | ||||||||||||
Share-based Compensation and Other Stock Payments | 182 | 542 | 455 | 890 | ||||||||||||
Proxy Contest-Related Expenses | 23 | - | 1,779 | - | ||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | (1,276 | ) | $ | (724 | ) | $ | (4,688 | ) | $ | (2,982 | ) |
IR CONTACT 720.778.2415 BWEN@val-adv.com
Source:
2023 GlobeNewswire, Inc., source