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Broadwind Energy Cuts Q3 Outlook on Production Failure

Broadwind Energy, Inc. BWEN recently provided preliminary results for third-quarter 2015. Reduced top- and bottom-line outlooks for the quarter primarily triggered a decline of roughly 12% in the company’s share price on Sep 18.

As disclosed, Broadwind Energy’s production of towers at the Manitowoc, WI-based facility has been disrupted due to difficulties encountered in paint production as well as steel quality issues with the company’s regular supplier. This led the company to revise down its revenue and earnings guidance for the quarter ending Sep 2015.

For the third quarter, Broadwind Energy anticipates revenues approximately within $52−$53 million, down from the previous estimate of $63−$65 million. Operating loss for the quarter will be roughly $3−$4 million as against profit of $1−$2 million expected earlier. Consolidated net loss is predicted to be 20−27 cents per share, down from the previous projection of 7−12 cents per share of earnings.

We believe such production failures, if continued in the quarters ahead, will severely impact Broadwind Energy’s tower business and hence, its profitability. Last quarter, the company derived roughly 84% of its revenues from the Tower and Weldments segment. Towers sold in the quarter increased 19% year over year. For 2015, the company aims to produce 500 towers.

Broadwind Energy presently has a market capitalization of $42 million. The company encounters competition from Graco Inc. GGG and Luxfer Holdings PLC LXFR, each holding a Zacks Rank #2 (Buy). Another machinery stock that is currently performing well and has gained high investment value on the back of a Zacks Rank #1 (Strong Buy) is AO Smith Corp. AOS.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SMITH (AO) CORP (AOS): Free Stock Analysis Report
 
GRACO INC (GGG): Free Stock Analysis Report
 
LUXFER HOLDINGS (LXFR): Free Stock Analysis Report
 
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