Broadwind (BWEN) 13 Nov 242024 Q3 Earnings call transcript

Greetings, and welcome to Broadwind's Third Quarter 2024 Conference -- 2024 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, Tom Ciccone. Thank you.

You may begin.

to Third welcome Conference XXXX and Call. morning, the Quarter Broadwind Results Good

today Eric Financial our Tom the third the is Leading call detailing today CEO, a release company's our President market opened issued results. Ciccone, Vice Blashford; and We Chief Officer. quarter press before the I'm and

of conference you nature, forward-looking include statements by their to I commentary responses may would remind like control. to call and uncertain the and outside are management's that questions company's on today's which,

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

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

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

turn I'll that, the to Eric. With over call

us Tom, today. Thanks, those and welcome to joining

wind mining saw third demand the industrial in QX, actions. double-digit orders new Fabrication wind Broadwind despite results all a used and million targeted mix, in pause a the for orders improved offset sectors. consecutive in ago value EBITDA transitional higher reduced demand, by $XX our the segments. reduction the by for revenue. systems, year execution reporting by third quarter a seventh our solid partially period, cost benefited tower quarter repower profitable delivered increased increase driven to We sales and booked Offsetting margin highlighted from in Heavy from and near turbines quarter, and pressure a decreased XX% across increased reduction adapters demand

due the and year-over-year strength from increased to market. demand markets. power year-over-year in segment Solutions orders increased Orders due increased global the turbine to XX% Gearing gas generation XX% our Industrial infrastructure from

triple in our at to our of level, segments, but commercial a continue is notably elevated power and higher-margin most handling, quoting we across demand and the businesses, is reflecting material Industrial all efforts Quoting such non-wind Solutions as markets. within and more activity generation. improved product where our impact expand year-over-year, markets, Heavy mining than commercial mix Fabrications At adjacent our up

to and invest capabilities, our improve profitability. Operationally, to our we process innovative reduce in technology improve continue costs

time Our the to flanges. The new tower machine installed new facility in a a time holds milling to improves the speed portable of mill cell to setup of to new Abilene wind total a improved between supports and that process. a key market. top the surface tolerances, is of mill turbine. technology and system flange in approximately reduction tighter XX% invest used and reduce the for tower for efficiency machine continues flange surface This finish that in Gearing

combination, year, and the to cost the organization gearbox savings, these turnaround annualized with million demand or in evident actions undertook designs, structure current product scanning actions quote in of days. from portable the In our contribute models results. by to align quarter team by our $X the XX%, recently, commercial our this environment. is first Beginning in than laser XD retrofits, equipment time repairs, literally our weeks deployed develop to has used Most measurement to quote reducing will more we which significant cost

revenue conditions lower due improved declined realize believe demand. demand primarily leverage to year Broadwind we operating As to to levels, begin position actions tower ago these improve, versus XXXX. QX entering

$X.X PRS XX% segment, EBITDA $XX in QX, QX as and due we year our see decline down generated mining revenue the multiple was year, million, offset relatively non-wind Heavy activity revenue industrial into absence project Gearing softness of markets. from In partially the equipment. year-over-year mining primarily manufacturing and for an due to sales tower Our categories. precision million, gas in Within by ago, by offset and XX.X% which shipped million, repeat. market, levels in net to was international of income a reduction the capabilities and was our $X.X of to the uptick did million $X.X remained across large a XX.X% year-over-year sales of broad-based Industrial production we oil a due primarily increased million. stable revenue not down demand $X.X Solutions Fabrications last shipments,

business. as operating the be divisions quickly strong fluctuations of in summary, In to we to all the continues demand respond performance

With quarter to performance. that, discussion for a Tom I'll call financial of our over turn third the

Eric. Thank you,

seventh QX, Turning to quarter In Slide X delivered of third our consecutive performance. quarter we an for profitability. our overview of

onshore prior to gas the ongoing within and of sector, solid an by be consistent revenue late as to we QX, due maintain well as level continues to prior previous commentary adversely wind the in tower mix, to $X.X $X.X an sales XXXX. execution impacted a mainly Abilene able and EBITDA sold, our still the margin were our to the of decline compared the with testament XX%, oil year-over-year XX% power year we sections the this While industry slowdown pause cost in generated higher reduced regarding million is approaching a within reductions. In adjusted year of million wind value versus period, production in sales extended EBITDA slowdown targeted

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

both up as prior orders period are versus orders year recognized million wind quarter we of sequentially the during projects repowering $XX.X related QX. and Third to

Manitowoc, facility, for building OEMs at Wisconsin, different are We XXXX. into continue adapters repowering that wind X will work currently our

were almost $XX revenues million, down quarter $XX.X the quarter. year versus million prior Third

of driven $X.X the into XXXX. offset by the levels, million, revenue partially During end the the XXXX versus of decreased by period, targeted taken third towards quarter, cost actions EBITDA $X.X primarily we recognized million year prior decrease segment of a

are Turning to Gearing Slide X. versus $X.X the million million of orders up prior year. $X.X

scale increase prior gas continued this primarily desired the below and Although versus we to orders year, an levels, in due experienced of oil softness activity. are

million, was significant decrease to a we are increase X corresponding million a have year As been investment in orders made was $X.X term. in of in levels the revenue Segment in technology commercial quarter. down the $X.X and our mentioned X to intake recently expanded million machine we see we've past expect in have segment quarters. million, experiencing near and $X.X we efforts, versus reflective decreases $X.X the order prior a prior These the over the the quarter. lower year EBITDA from QX recognized past,

gas the prior year year orders interest strong increase to year. due record and Turning gas Slide The recorded revenue $X.X a reflective year segment an Industrial new in segment. to booking and period. to versus a QX EBITDA prior for million, Solutions This segment near level the natural content, of strength year demand included revenue. decrease a specifically $X.X most the the repeat strength $X.X X. The period, was QX prior represents for the million continue order turbines, total decrease revenue in into third sequentially a in commercial versus been $X.X the not international $X.X of quarter. current totaling expect the recorded experiencing was both and million, the has in segment shipment, segment large did million turbine QX. prior we which million decrease versus for

with total a $XX Slide to third of cash improvement and million, our the sequential the credit ended versus quarter. Turning facility X. quarter availability on second We

last our level operating half, a QX. to discussed deposit more at balance during typical end returned after As quarter, first of a the decrease the significant

in moderate a and experienced our flow the we we million. $X.X QX, capital working time had first cash During operating this for decrease balance positive year, of

amount as larger expect of finished During to accordance levels to be in quarter, we holding customers' increase fourth the we are with our anticipating needs. inventory goods shipping

QX increase meaningful borrowings. a operating we temporary As in capital and a such, increase anticipate in working

Finally, quarter XXXX. are financial guidance with financial today, guidance, respect introducing our to the for fourth of we

million expectations the revenue in to beliefs, $XX of to to quarter fourth we be Given EBITDA anticipate of be million the range $XX to $X.X in and our range million. and adjusted million $X current

remarks. the Eric I back call continue turn That concludes my over our will discussion. to to

Thanks, Tom.

given me of allow is our enter customers. we indications to Fabrications some as believe from provide XXXX domestic time frame, segment. Heavy the We current Now wind to in onshore beginning interest QX, accelerate activity XXXX, poised thoughts with

We are useful interest generating the capacity environment, as legacy delay lives their project or the increase rate for they their to and impacted investments. market momentum multiple turbines customers defer wind we as timing higher in has encouraged while some them developers, their extending repowering economics power support by to sustained the of update as repower leading

wind in benefit recent However, prices reductions time. interest rates declining project economics and steel will over

segment, now systems cyclical interest revenue continue, for applications broaden our and this Gearing in We wind by of Fuels XX-year backup family power in stable this family. excited on third the our PRSs. its into pipeline profile. efforts price more improving about of factors given with newest ideal PRS realize The it unit the competitive we're model, the such performance markets power, We're remain integrity turbines, specifications, solution model is to visibility launch field making gas in mix model attractive of natural a or testing, afforded to It's compact primary economics projects. In us systems, cost pressure-reducing footprint less of in of a as point, and industrial Clean credit the the customer the low-flow strong the supply sales and and or tax confident positioning L-XX, seeing Broadwind given our IRA. capacity a wind, particularly long-term product balanced,

to gearing increasing precision We investments as strategy products. result our qualifications. the other our at of of We're move process traditional a machine activity capabilities beyond and level continue to customer pleased we're seeing execute to in

allow to As strategy market well begin Furthermore, competitive customers direct advance completed to gearing, their diversification high-quality growth ASXXXX qualifications continue customer are positioned we will we certification, and them a reshore, the quality to currently our to having aerospace recently which our with to continue provide and with serving legacy underway. alternative in quick, us suppliers.

in industry the Accordingly, seeing In XXXX the turbine in turbine strong third from are segment, our as demand and of we've customers services, backlogs. tripling are continued key the year. our the prior Industrial activity experienced quoting half gas reporting equipment quarter strong the first gas into that remains Solutions volume for and momentum in high,

at for As business sources data natural solutions, chain Industrial Solutions centers and growing growth and to load combined-cycle a part, gas other attributable, custom control worldwide. market, supply fabrications for in least provides increasing manufacturing the reminder, by electricity of driven panel demand turbine our

on the another surpassing pace we're result, record for business, a record in previous year. year order set this last As

I vital work onshore pleased as activities summary, product this on our execution key like expansion. cost performance demonstrate demand operational wind while transitional our for strong priorities. period reduced We've to strategic we domestic to continuing strong our and a with continue on am improvement our and from talent team retaining quarter during process In the structure

the below industry yielded on incident And incidents had recordable safety Our time a rate member safe We're we our keeping focus have so average. in lost year. well people productive. team this reduction committed in and far X to has our XX% XXXX,

the steady We continue to on ahead. serving and firm with markets build components and the for key profitable a capitalize proprietary infrastructure in other to power generation, high-quality products demand foundation years precision improved growth,

that to over for said, back the session. turn the Q&A call moderator With I'll the

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

starting also maybe I can So some optimism. there, some appreciate but uncertainty with cautious wind,

today of it's the Just it for bit of say, what your it's or business factor into -- when that have election if does if a and how tempered you XXXX improved, beyond? couple or quarter ago, does think a months view ago about outcome your curious view a and versus,

bit a in Well, opinion terms of I'd say little optimism. my improved has

there's time to uncertainty, an any think people I election pause. tend

little the in of any way. I will election complete, that election don't impact wind the be a or think bit I Now there Broadwind might think release. is really impact

of of aisle. in Just our the sides producing a wind and bunch keep manufacturer things. a turbine wind benefits mind, We're towers both business other

the So election certainly the I term. near in an don't on have or impact really think not medium Broadwind will

curious for up 'XX then through and you're you're you this look moving you And trends Or whether seeing 'XX, then bodes about you your however all year-over-year something where in mean, recovery do now you the well the and it. for order now as year is Got it sets that's very to potentially order what or it. think describe seeing see the early kind parts of see across you that mean, I Just thinking 'XX? business, really 'XX? and the want follow maybe in at I would 'XX what you look throughout just where year

that, wind talking some as Thanks, volumes. of turbine really Yes. through We've like in demand things got our then Eric. quarters the into X of terms really and visibility about I and RFQs and good some customer XXXX. that think XXXX in production we've late tower activity accelerating is first got 'XX

uptick. terms start little be do expect That's that similar up to do adapters industry. of a bit in So volume I activity a time QX, I that continue to wind mentioned be of order to strong us. frame the preparation for tends And an QX the in think XXXX volume. I with to going believe is XXXX for XXXX towards in seeing we it should bit. to ramp XXXX We some

Okay.

so So the just mean commentary. when of business. thinking wind the that's Is I -- it... about rest

such Yes, the Sure. we That's PRS standpoint, the that's well, Solutions. gearing -- businesses standpoint, the in standpoint. we service first seeing really a And from from just that order strong industrial all, we're power have other generation from of activity Industrial solutions reminder why the strong.

cycle, machinery, power generation material super if in XXXX. XXXX U.S. industrial to either the our market, those are et we're at at into or XXXX. particular mining, looking and And as for trend a but trends beginning all electricity. a demand generation, positive or But other negative handling, think slightly of is so think cetera, we exit to of neutral With low regard be in markets, you the about I that

is As material that We of market to upswing, to steeper we Eric, that power also an our our the -- an Industrial those I Material expected is a have Mining into for of the produce. bit than not XXXX. through actually material expected that also trend that for all X cranes big trend upward handling positive example, also handling. is I strong. turbine, a mentioned as machinery handling mentioned. as an have way particular but steep that's Engine, is sell transmission, other very trend

positioned. -- in an in, we're of are well it's we're markets beginning upward the as we're those So think, trend is that, what but going I I be, to markets. going think mentioned Wind be other I all at to

the and And arguably, improve would thought given oil and oil general be that change? the to guess, set administration gas, I gas

you're didn't wanting I But things the that but place were soft. Yes. right, orders continues mention pumps fracking that like our for one and them about customers that's to to be talking -- either the and of way. out, that. way the election for certainly, they've frankly, been They bodes outcome for turned gas. oil the But I waiting, election well are think, the

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

you sense -- give offering? outside can offering you're what of products of you and With power respect Eric, to generation, wind, services maybe us some products the are

Yes. Keep mind -- you. in thank yes,

combined So the turbines the and one manufacturing, that deliveries panel upgrades natural all strong. is light market chain We And segment have, manufacturing Industrial we supply of very, solutions, the world. Solutions we world. the output around majority very around and vast that out natural that gas of gas services for installations turbine Carolina, the their new cycle provide North

In fact, we service multiple customers.

trend. our of following years that that next out one public are their gone capacity. said X So And customers the for and and has looking they're increase to are we sold

-- that is for and and natural wind power big also generation generation. we gas that's power so supports us, the well doing there. we're is PRSs Obviously, So power have generation

mean a be I administration. under this gas Okay. natural beneficiary could new

looks the you it have put place like efforts in all should... So diversification

globally. to before Right. electric before just going data But you're think AI, be right, mention it the This vehicles, mentioned if not and will trend for increase, the load you And States I started to the only it's centers United that, strengthen. and election. fantastic

participate And in so we markets. those most of

that's No, Understood. know. to good

revenue of But is taken are for You've from growth are other for... allow the of you're you create other today here. maybe more or may that to It strategies of now. segment what obviously, to be Just But like not looking there sales implement? may for Is you a stronger from cut costs products, to trying wind, steps separate team? a it be segments, just what of room that perspective, leverage of to now revenue outside costs. that already sort you. understand lot a what looks doing a you and some growth Probably branding cut much building thinking sort you can doing to

working something tiers. And And at question. have is to diversification look great a it as in it That's addition strategy. we Yes. X I the been on

take First, as we to new new in to with we've products. allow we have us we've done Solutions, to the markets equipment access I improve have mentioned, our Gearing, in. on X those that. Industrial capabilities And process done and on calls previous those all invested

you So process first, markets. to you address the capabilities have to available to have those

We've divisions certifications. to of improving aerospace ITAR, have defense. is which you quality in other CMMC, but our the the quality have terms and in Gearing, the certifications, also in Then been ASXXXX, primarily

now we have those So place. qualifications in

the process to cuts customers our And team. the which cost have qualifications, are done, course, overhead of added looking have spite added you -- really that We've added outreach. you commercial we team. In improved the top-graded and And have we've So of to commercial the and commercial have then, our commercially. have then we've capabilities, for. we've you fixed SG&A

doing those and to is -- understand markets. what we're adding staffs people we're that So our new

So capabilities Gearing. get in have and markets. mentioned Heavy RFQs in Industrial That's why certifications our doubled they Fabrications, Solutions but the on process can call, nearly both we've earlier and that and in the quality tripled had the leverage those I

become QX 'XX. efforts. early starting bookings we of the commercial through those to as that are we're fruits and confident And QX see those go So we will into

to really business non-gearing, to and machining that, our Yes, Amit. manufacturing, think Gearing what just the we're precision market on And within just focus segment, to really specifically trying trying we're add capabilities. I to those focus precision the

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

want of strong. that had QX because that the question Yes. question so we some a about into is part which our XXXX, customers pull our audience why regarding is I've to was guidance. remind a just QX volume our -- QX I had XXXX of

what is thought So combine we QX were going it to really with actually analysts when you aligned the and QX, be.

on a a to We're we're results the and talking of So up to you delivered it QX. your half doing our to add the have for you. this in coming strong what add And such Thank year. look again, you to at to it, excited QX here will about QX year. when attention early forward and second pleased strong thank we're for call. you . And Broadwind

conference. concludes This today's

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