Broadwind(US:BWEN)2022-11-08 21:49Financial Data and Key Metrics Changes - The company reported consolidated sales of $44.8 million in Q3 2022, an increase of 11% compared to $40.4 million in the prior year quarter [15] - EBITDA for Q3 was $1.9 million, up from $0.4 million in the prior year, reflecting improved operating leverage due to higher volume levels [16][22] - Total backlog at the end of Q3 was $132 million, a 73% increase year-over-year [10] Business Line Data and Key Metrics Changes - Heavy Fabrication segment orders were $62.9 million, a 137% increase year-over-year, driven by a $40 million increase in tower orders [17] - Gearing segment orders totaled $15.5 million, up 34% year-over-year, with sales increasing to $10.2 million from $7.6 million [19] - Industrial Solutions sales decreased marginally, contributing to an overall decline in that segment [15] Market Data and Key Metrics Changes - The company booked $85 million in new orders in Q3, more than double the prior year period, with significant increases across all segments [7] - Wind orders more than doubled from last year, attributed to the Inflation Reduction Act and a decline in select raw material prices [7] - Quoting activity in non-wind markets remains strong, indicating continued demand [10] Company Strategy and Development Direction - The company aims to expand into adjacent clean tech markets, including solar, clean fuels, and power infrastructure, while maintaining its legacy in wind [26][30] - Plans to enhance automation in the Heavy Fabrication segment to improve throughput and reduce costs [27] - The company is focused on building a precision manufacturing operation to support the transition to cleaner energy [30][31] Management's Comments on Operating Environment and Future Outlook - Management views the Inflation Reduction Act as a significant positive catalyst for the wind sector, expecting increased installations starting in 2023 [24] - The company anticipates a gradual ramp-up in wind development activity due to the extension of the Production Tax Credit [12][24] - Labor challenges persist, but the company is taking steps to improve recruitment and retention [8][29] Other Important Information - The company expects Q4 EBITDA to be approximately $0.2 million to $0.5 million, reflecting competitive pricing pressures [22] - Net debt increased by $4.6 million due to working capital build and capital expenditures [22] Q&A Session Summary Question: Are you comfortable with your balance sheet outlook to meet higher order activity? - Management expressed comfort with the current liquidity situation, noting approximately $15 million in cash and availability [34] Question: How should we think about costs through 2023 and 2024? - Management indicated costs are increasing due to inflation but are able to achieve price realization to offset these increases [36] Question: What are you doing with respect to solar? - The company is involved in manufacturing replacement inverter skids for solar projects through its Industrial Solutions segment [40] Question: What is the outlook for the Manitowoc facility regarding wind tower demand? - Management expects a ramp-up in demand for the Manitowoc facility in the latter half of 2023 into 2024 [42] Question: How much of your capacity is booked for 2023 and 2024? - No wind orders have been booked for 2024 yet, but discussions are ongoing [54] Question: What is the expected value of the manufacturing tax credit per tower? - The expected credit is $0.03 per watt, potentially amounting to about $90,000 for a 3-megawatt turbine tower [56] Question: How will the tax credit flow through your financials? - The company will be able to monetize the credits through direct payments, with guidance expected from the IRS [58]