Broadwind(US:BWEN)2020-02-27 22:24Financial Data and Key Metrics Changes - Fourth quarter revenue was $49 million, up 81% from the prior year, marking the strongest annual performance since 2016 [6][8] - Total adjusted EBITDA for Q4 was $1.8 million, significantly above a weak 2018 [12] - Full year sales increased to $178.2 million, a 42% year-over-year change [21] - Full year gross margin improved to 8.6% from 2.4% in the prior year [23] - Net loss per share in Q4 was $0.09 compared to a loss of $0.79 in the prior year [25] Business Line Data and Key Metrics Changes - Heavy Fabrication segment revenue was up 76% year-on-year for the full year, with fourth quarter revenue at $37.6 million compared to $12.1 million in the prior year [9][29] - Gearing revenue in Q4 was down 30% due to reduced demand in fracking, but the segment posted record total operating income for 2019 of $3.2 million [10][34] - Industrial Solutions segment achieved an 18% year-over-year increase in revenue, totaling $14.7 million for the year [40] Market Data and Key Metrics Changes - Total wind energy installations increased by approximately 9% in 2019, with projections to grow to 15 gigawatts in 2020 [17] - The company finished the year with a backlog of $142 million, up 80% year-over-year [7] - Orders for heavy fabrication reached a multi-year high in 2019, totaling $222 million, up more than $138 million year-over-year [16] Company Strategy and Development Direction - The company aims to diversify its product markets and customers as part of its long-term strategic plan [56][67] - Focus on expanding manufacturing capabilities and optimizing throughput to improve operational leverage [59][72] - Development of an offshore tower market strategy to address growing demand [61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position for multi-year revenue and earnings growth, supported by a strong manufacturing workforce and branding change [90] - The extension of the production tax credit is expected to boost onshore wind projects and help bridge to the offshore wind industry [13] - Management anticipates EBITDA to be between $12 million to $14 million in 2020, with a focus on profitability [54] Other Important Information - The company has implemented cash conversion initiatives that have improved working capital management, with DSO declining to 34 days from 59 days in the prior year [45] - A favorable preliminary ruling on trade litigation is expected to discourage imports and support U.S. tower manufacturers [14] Q&A Session Summary Question: Orders for heavy fabrication seem to slow in Q4 relative to strong order flow in Q2 and Q3. What is the expectation for this slowdown? - Management indicated that discussions with customers are ongoing to secure the rest of the 2020 production, expecting resolution in the next two to three months [79] Question: What utilization level is assumed for 2020 guidance? - Management noted that the focus is on the material handling OEM sector, which is expected to shrink slightly in 2020, but there is ample room for growth with existing and new customers [80] Question: Can you quantify the margin headwind related to tower internals? - Management mentioned that the impact is likely in the hundreds of thousands of dollars, but production levels are currently smoother [86]