Broadwind (BWEN) Q4 2024 Earnings Call March 05, 2025 06:47 PM ET Company Participants Thomas Ciccone - VP & CFOEric Blashford - CEO, President & Director Conference Call Participants Eric Stine - Senior Research AnalystAmit Dayal - Managing Director & Senior Technology AnalystJustin Clare - MD & Research Analyst Operator Greetings and welcome to Broadwind's Fourth Quarter and Full Year twenty twenty four Results Conference Call. At this time, all participants are in a listen only mode. A question and answe ...

Financial Data and Key Metrics Changes - For the full year 2024, the company reported revenue of $143 million and adjusted EBITDA of $13.3 million, with fourth quarter revenue of $34 million and adjusted EBITDA of $2.1 million [6][15] - Fourth quarter consolidated revenues decreased by 28% compared to the prior year quarter, primarily due to reduced activity in the wind and oil and gas markets [15][16] - Adjusted EBITDA margin fell to 6.4% due to lower capacity utilization, partially offset by targeted cost reductions [16] Business Line Data and Key Metrics Changes - Heavy Fabrication segment reported fourth quarter orders of $22.4 million, with revenues of $20.4 million, down 31% year-over-year [17][13] - Gearing segment orders increased, with revenue of $7.6 million, a 31% reduction year-over-year, reflecting softness in oil and gas and steel markets [19][13] - Industrial Solutions segment recorded orders of $8 million in the fourth quarter, with full year orders totaling $27 million, both representing record levels for the segment [20][21] Market Data and Key Metrics Changes - Order rates increased by 85% from the fourth quarter of 2023 to $37 million, with broad-based growth across nearly all end markets [7] - Gearing orders nearly doubled year-over-year, driven by demand from industrial and steel markets [8] - Quoting activity remains elevated across all segments, particularly in heavy fabrications and industrial solutions [10] Company Strategy and Development Direction - The company is reallocating production capacity towards stable, recurring project revenue streams across diverse end markets, with notable growth in mining and hydroelectric sectors [26] - Investments in quality certifications and equipment technology are aimed at improving process capabilities and profitability [11][12] - The company is focused on expanding its product mix into higher-margin adjacent markets [9] Management's Comments on Operating Environment and Future Outlook - Management expects wind tower activity to remain muted through 2026, with potential improvement in 2027 [25][41] - The company is optimistic about order growth in non-wind markets, positioning itself for improved manufacturing optimization [35] - Management highlighted a 55% reduction in recordable incident rates, emphasizing a commitment to safety and productivity [34] Other Important Information - The company ended the fourth quarter with approximately $33 million in total cash and availability on its credit facility, reflecting a significant improvement due to reduced operating working capital [22] - Financial guidance for 2025 anticipates revenue in the range of $140 million to $160 million and adjusted EBITDA between $13 million and $15 million [24] Q&A Session Summary Question: Confirmation on wind market expectations - Management confirmed expectations of muted demand in the wind sector through 2026, with some improvement anticipated in 2027 [41][43] Question: Visibility on GE contract work - Management indicated firm visibility on tower production through 2025, with clear indications on orders [43] Question: Order activity and guidance for 2025 - Management noted that Q1 2025 is expected to be softer due to pull-ins from Q4 2024, with a ratable increase throughout the year [46][47] Question: Impact of tariffs on order activity - Management stated that order activity has not been significantly disrupted by tariff-related news, with increased inquiries for onshoring [70][72] Question: Hydro project offerings - Management explained that hydroelectric offerings are expected to provide a repeating revenue stream as infrastructure upgrades occur [78]

Financial Performance - Broadwind Energy, Inc. reported a quarterly loss of $0.04 per share, better than the Zacks Consensus Estimate of a loss of $0.08, and compared to earnings of $0.05 per share a year ago, indicating an earnings surprise of 50% [1] - The company posted revenues of $33.57 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.41%, but down from year-ago revenues of $46.6 million [2] - Over the last four quarters, Broadwind Energy has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance and Outlook - Broadwind Energy shares have declined approximately 20.2% since the beginning of the year, while the S&P 500 has only declined by 1.8% [3] - The current consensus EPS estimate for the coming quarter is -$0.01 on revenues of $37.5 million, and for the current fiscal year, it is $0.33 on revenues of $192.43 million [7] Industry Context - The Manufacturing - General Industrial industry, to which Broadwind Energy belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, which may impact stock performance [8]

Financial Performance - Broadwind reported a net loss of $0.9 million, or $0.04 per share, in Q4 2024, compared to a net income of $1.1 million, or $0.05 per share, in Q4 2023[2]. - Total revenues for the three months ended December 31, 2024, decreased to $33,565 thousand from $46,598 thousand in the same period of 2023, representing a decline of approximately 28%[26]. - The company recorded a net loss of $(914) thousand for the three months ended December 31, 2024, compared to a net income of $1,071 thousand in the same period of 2023[26]. - The total net income for the company for the twelve months ended December 31, 2024, was $6,755 million, compared to $13,862 million for the same period in 2023, a decrease of 51.3%[33]. Revenue and Orders - Total revenue for Q4 2024 was $33.6 million, with adjusted EBITDA of $2.1 million, representing 6.4% of total revenue[7]. - Total orders increased by 85% in Q4 2024 compared to the prior year, with a book-to-bill ratio of 1.1x[4][6]. - Total orders for the three months ended December 31, 2024, increased to $37,470 thousand from $20,207 thousand in the same period of 2023, marking an increase of approximately 85%[30]. Segment Performance - Heavy Fabrications segment sales declined by 30.8% to $20.4 million in Q4 2024, primarily due to a 27% decline in wind-related revenue[10]. - Gearing segment sales decreased by 31.0% to $7.6 million in Q4 2024, driven by softness in demand from oil & gas markets[12]. - Industrial Solutions segment sales fell by 2.8% to $5.9 million in Q4 2024, primarily due to lower demand for aftermarket units[13]. - The Heavy Fabrications segment reported revenues of $20,429 thousand for the three months ended December 31, 2024, down from $29,503 thousand in 2023, a decrease of about 31%[30]. Cash and Debt Management - As of December 31, 2024, Broadwind had total cash and availability of $33 million, with a net debt to trailing twelve-month adjusted EBITDA ratio of 0.6x[5][8]. - The company’s cash balance at the end of the period was $7,721 thousand, a significant increase from $1,099 thousand at the end of 2023[28]. - Total current liabilities decreased to $43,557 thousand as of December 31, 2024, compared to $53,612 thousand in 2023, reflecting a reduction of approximately 19%[24]. Guidance and Future Outlook - For full-year 2025, Broadwind provided revenue guidance of $140 million to $160 million and adjusted EBITDA guidance of $13 million to $15 million[16]. - The company anticipates improvements in order activity across diverse end-markets as it moves through 2025, despite expected softness in oil/gas markets[6]. - Broadwind's strategic focus includes expanding commercial efforts in high-value markets and improving operational efficiency while selectively investing in high-return capabilities[8]. Profitability and Expenses - Gross profit for the twelve months ended December 31, 2024, was $21,189 thousand, down from $32,508 thousand in 2023, indicating a decrease of about 35%[26]. - Adjusted EBITDA for the twelve months ended December 31, 2024, was $13,325 thousand, down from $21,474 thousand in 2023, indicating a decrease of about 38%[32]. - Adjusted EBITDA for the Gearing Segment was $93 million in Q4 2024, significantly lower than $1,315 million in Q4 2023, indicating a decline of 92.9%[33]. - The company incurred proxy contest-related expenses of $1 million in Q4 2024, compared to $1,780 million in the previous year, indicating a significant reduction[33].

Core Insights - Broadwind reported a net loss of $0.9 million, or $0.04 per share, in Q4 2024, a decline from a net income of $1.1 million, or $0.05 per share, in Q4 2023 [2][7] - Total revenue for Q4 2024 was $33.6 million, down from $46.6 million in Q4 2023, while full-year revenue for 2024 was $143.1 million compared to $203.5 million in 2023 [7][27] - The company experienced a significant increase in total orders, which rose by 85% in Q4 2024 compared to the prior year, driven by demand across various segments [4][6] Financial Performance - Adjusted EBITDA for Q4 2024 was $2.1 million, representing 6.4% of total revenue, down from $4.4 million in Q4 2023 [2][7] - For the full year 2024, adjusted EBITDA was $13.3 million, or 9.3% of total revenue, compared to $21.5 million in 2023 [7][27] - The ratio of net debt to trailing twelve-month non-GAAP adjusted EBITDA was 0.6x as of December 31, 2024, indicating a stable financial position [5][7] Segment Performance - Heavy Fabrications segment sales declined by 30.8% to $20.4 million in Q4 2024, primarily due to a 27% decrease in wind-related revenue [10] - Gearing segment sales fell by 31.0% to $7.6 million in Q4 2024, largely driven by reduced demand in the oil and gas markets [12] - Industrial Solutions segment sales decreased by 2.8% to $5.9 million in Q4 2024, attributed to lower demand for aftermarket units [14] Orders and Backlog - Total orders for Q4 2024 reached $37.5 million, up from $20.2 million in the same period last year, with record levels in the Industrial Solutions segment [4][32] - Consolidated backlog increased to $125.5 million as of December 31, 2024, reflecting strong order intake [4][6] Management Outlook - The company anticipates improved operating leverage in 2025 due to increased order intake and cost-saving measures [6][8] - Financial guidance for 2025 projects total revenue between $140 million and $160 million, with adjusted EBITDA expected to range from $13 million to $15 million [16][17]

Company Performance - Broadwind Energy, Inc. (BWEN) closed at $1.60, reflecting a -1.23% change from the previous day, underperforming compared to the S&P 500's daily loss of 0.43% [1] - Over the last month, the company's shares decreased by 9.5%, contrasting with the Industrial Products sector's loss of 1.98% and the S&P 500's gain of 2.6% [1] Upcoming Earnings - The company's earnings report is scheduled for March 5, 2025, with an expected EPS of -$0.08, representing a 260% decline from the prior-year quarter [2] - Revenue is anticipated to be $31.54 million, indicating a 32.31% drop compared to the same quarter last year [2] Analyst Estimates - Recent modifications to analyst estimates for Broadwind Energy reflect changing short-term business dynamics, with upward revisions indicating analysts' optimism about the company's operations and profit generation [3] Valuation Metrics - Broadwind Energy is currently trading at a Forward P/E ratio of 4.91, significantly lower than the industry average Forward P/E of 23.83, suggesting it is undervalued compared to its peers [6] - The Manufacturing - General Industrial industry, which includes Broadwind Energy, holds a Zacks Industry Rank of 151, placing it in the bottom 40% of over 250 industries [6] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has a proven track record of outperforming, with stocks rated 1 yielding an average annual return of +25% since 1988 [5] - Broadwind Energy currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook [5]

Core Viewpoint - Broadwind is set to announce its fourth quarter and full-year 2024 financial results on March 5, 2025, before market opening, indicating a focus on transparency and investor engagement [1]. Company Information - Broadwind (NASDAQ:BWEN) is a diversified precision manufacturer specializing in components and solutions for clean tech and other specialized applications, with facilities across the U.S. [3]. - The company aims to help customers maximize the performance of their investments in a quicker, easier, and smarter manner [3]. Conference Call Details - A conference call will take place on March 5, 2025, at 11:00 a.m. ET to review financial results and discuss recent events [1]. - Investors can access a live webcast of the conference call and related materials on the company's Investor Relations website [2]. - For participation, a live teleconference number is provided, along with details for accessing a replay of the call available until March 12, 2025 [2].

Company Performance - Broadwind Energy, Inc. closed at $1.73, reflecting a -0.57% change from the previous day, underperforming the S&P 500 which had a loss of 0.01% [1] - The stock has decreased by 8.9% over the past month, contrasting with the Industrial Products sector's gain of 1.3% and the S&P 500's gain of 4.88% [1] Upcoming Earnings Report - The upcoming EPS for Broadwind Energy is projected at -$0.08, indicating a 260% decline compared to the same quarter last year [2] - Revenue is estimated to be $31.54 million, down 32.31% from the prior-year quarter [2] Analyst Estimates and Valuation - Recent changes to analyst estimates for Broadwind Energy indicate a dynamic business trend, with positive revisions suggesting analyst optimism about the company's profitability [3] - The Zacks Rank system, which includes estimate changes, currently ranks Broadwind Energy at 2 (Buy) [5] - Broadwind Energy has a Forward P/E ratio of 5.27, significantly lower than the industry's average Forward P/E of 22.84 [6] Industry Context - The Manufacturing - General Industrial industry, to which Broadwind Energy belongs, has a Zacks Industry Rank of 175, placing it in the bottom 31% of over 250 industries [6] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Viewpoint - Wall Street analysts' recommendations, particularly for Broadwind Energy, are heavily relied upon by investors, but their effectiveness in guiding investment decisions is questionable [1][4]. Group 1: Brokerage Recommendations - Broadwind Energy has an average brokerage recommendation (ABR) of 1.00, indicating a Strong Buy, based on four recommendations from brokerage firms, all of which are Strong Buy [2]. - The ABR is calculated solely from brokerage recommendations, which may not accurately reflect the stock's potential for price appreciation due to analysts' inherent biases [4][5]. Group 2: Zacks Rank vs. ABR - The Zacks Rank, which is based on earnings estimate revisions, is a more reliable indicator of a stock's near-term price performance compared to the ABR [7][10]. - Unlike the ABR, which may not be up-to-date, the Zacks Rank reflects timely changes in earnings estimates, providing a more accurate prediction of future stock prices [11]. Group 3: Current Earnings Estimates - The Zacks Consensus Estimate for Broadwind Energy remains unchanged at $0.02 for the current year, suggesting stable analyst views on the company's earnings prospects [12]. - Due to the unchanged consensus estimate and other factors, Broadwind Energy holds a Zacks Rank of 3 (Hold), indicating a cautious approach despite the Buy-equivalent ABR [13].

Group 1 - Broadwind Energy, Inc. (BWEN) closed at $1.81, showing no change from the previous trading day, while the S&P 500 experienced a 1.46% loss [1] - The stock has decreased by 5.73% over the past month, underperforming the Industrial Products sector's gain of 5.12% and the S&P 500's gain of 1.08% [1] - The upcoming earnings report is projected to show earnings of -$0.08 per share, a year-over-year decline of 260%, with anticipated revenue of $31.54 million, reflecting a 32.31% decrease from the same quarter last year [2] Group 2 - Recent adjustments to analyst estimates for Broadwind Energy, Inc. are important as they indicate changing business trends, with positive revisions suggesting analyst optimism [3] - The Zacks Rank system, which assesses estimate changes, currently ranks Broadwind Energy, Inc. at 2 (Buy), with the consensus EPS estimate remaining unchanged over the past month [5] - Broadwind Energy, Inc. has a Forward P/E ratio of 5.48, significantly lower than the industry average of 24.26, indicating it is trading at a discount [6] Group 3 - The Manufacturing - General Industrial industry, part of the Industrial Products sector, has a Zacks Industry Rank of 168, placing it in the bottom 34% of over 250 industries [6] - The Zacks Industry Rank evaluates the strength of industry groups based on the average Zacks Rank of individual stocks, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [7]