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Broadwind Announces Fourth Quarter and Full-Year 2021 Results

·19 min read
Broadwind, Inc.
Broadwind, Inc.

CICERO, Ill., March 02, 2022 (GLOBE NEWSWIRE) -- Broadwind (NASDAQ: BWEN, or the “Company”), a diversified precision manufacturer of specialized components and solutions serving global markets, today announced results for the fourth quarter and full-year 2021.

FULL-YEAR 2021 RESULTS
(As compared to the full-year 2020)

  • Total revenue of $145.6 million, (27%) y/y

  • Total gross profit of $5.5 million, (69%) y/y

  • Total non-GAAP adjusted EBITDA of $13.2 million, +65% y/y

FOURTH QUARTER 2021 RESULTS
(As compared to the fourth quarter 2020)

  • Total revenue of $26.0 million, (35%) y/y

  • Total gross profit of $1.0 million, (64%) y/y

  • Total net loss of ($4.1) million, or ($0.21) per basic share

  • Total non-GAAP adjusted EBITDA of ($1.2) million

  • Total cash and excess availability of $14.9 million

For the three months ended December 31, 2021, the Company reported total sales of $26.0 million, a decline of 35% when compared to the prior year period. The Company reported a net loss of ($4.1) million, or ($0.21) per basic share in the fourth quarter 2021, compared to a net loss of ($2.0) million, or ($0.12) per basic share, in the fourth quarter 2020. The Company reported adjusted EBITDA, a non-GAAP measure, of ($1.2) million in the fourth quarter 2021, compared to $0.2 million in the prior year period.

Fourth quarter results within the Heavy Fabrications segment were impacted by a near-term pause in wind tower orders, as higher commodity steel costs, supply chain challenges and uncertainty related to renewable energy production tax credits delayed near-term order activity. A year-over-year decline in Heavy Fabrications segment adjusted EBITDA more than offset a continued recovery within the Gearing segment, driven by a sustained recovery in both energy and mining customer demand.

Tower quoting activity increased during the first quarter 2022, as customers began to reserve tower production capacity for the second half of 2022 and into 2023. To date, the Company has nearly 50% of optimal tower production capacity booked for the full-year 2022.

ORDERS AND BACKLOG

Total orders increased 55% year-over-year to $55.8 million in the fourth quarter 2021, with significant year-over-year order growth across all reporting segments. During the fourth quarter 2021, Heavy Fabrication segment orders increased by $3.6 million on a year-over-year basis to $31.1 million; Gearing segment orders increased $11.0 million to $16.8 million; and Industrial Solutions segment orders increased $5.2 million to $7.9 million.

Total backlog increased 15% year-over-year to $106.4 million in the fourth quarter of 2021. As of December 31, 2021, Heavy Fabrication segment orders represented approximately 60% of the Company’s total backlog.

MANAGEMENT COMMENTARY

“We continued to leverage our precision manufacturing expertise across a diverse portfolio of end-markets during the fourth quarter, an approach that served to mitigate a transitory pause in wind tower demand,” stated Eric Blashford, President and CEO of Broadwind. “Total customer orders increased by more than 55% in the fourth quarter to the highest level in nearly three years. Total backlog at year-end was approximately 40% higher than at the end of the third quarter 2021, given accelerating activity levels within both energy and industrial markets.”

“Near-term wind tower demand remains impacted by a combination of legislative delays around a proposed Production Tax Credit extension, elevated raw materials costs and pronounced supply chain disruptions,” continued Blashford. “Despite these challenges, our core investment thesis remains intact, with more than 100 gigawatts of new onshore wind capacity forecasted to come online in the United States by 2030, as demand for cost-competitive renewable energy rises across commercial, industrial and utility markets. We remain well-positioned to capitalize on the current energy transition, one that seeks to replace aging, carbon-centric power generators with long-lived, sustainable development projects.”

“During 2021, we introduced a series of strategic initiatives within our Gearing segment designed to expand our available markets, lessen customer lead-times, reduce fixed overhead costs and streamline critical business processes,” continued Blashford. “During the fourth quarter, Gearing segment revenue increased by 70% on a year-over-year basis to $8.3 million, a performance made possible by the targeted strategic actions taken last year. Gearing segment orders increased by nearly 200% at quarter-end, while backlog increased by more than 120% to $32 million, as demand within key energy markets continues to increase. We are encouraged by the positive inflection within our Gearing segment and look forward to further advancing this business.”

“Looking ahead, we anticipate continued strength within our non-wind end-markets, as reflected by current order rates and backlog levels,” continued Blashford. “Although our core wind markets are expected to be soft during the first half of 2022, we remain in the early phase of a broader recovery in onshore wind tower demand. Accordingly, we anticipate increasing customer interest in securing tower production capacity as commodity prices normalize and policy uncertainty becomes clearer.”

“For the first quarter of 2022, we currently anticipate non-GAAP adjusted EBITDA loss of $0.5 million, subject to market conditions,” concluded Blashford.

SEGMENT RESULTS

Heavy Fabrications Segment
Broadwind provides large, complex and precision fabrications to customers in a broad range of industrial markets. Key products include wind towers and industrial fabrications, including mining and material handling components and other frames/structures.

Heavy Fabrications segment sales declined by $15.1 million to $14.7 million in the fourth quarter 2021, as compared to the prior year period. This decrease is primarily due to a 62% decline in tower sections sold. The decline in tower section sales was primarily attributable to a near-term pause in customer demand. The segment reported an operating loss of ($1.3) million, versus operating income of $1.6 million in the prior year period. Segment non-GAAP adjusted EBITDA was break-even in the fourth quarter 2021, a decline of $2.8 million versus the fourth quarter 2020.

Gearing Segment
Broadwind provides custom gearboxes, loose gearing and heat treat services to a broad set of customers in diverse markets, including oil & gas production, surface and underground mining, wind energy, steel, material handling and other infrastructure markets.

Gearing segment sales increased by $3.4 million to $8.3 million in the fourth quarter 2021, as compared to the prior year period, primarily due to increased demand within the energy and mining markets. The segment reported an operating loss of ($0.5) million in the fourth quarter 2021, compared to an operating loss of ($1.9) million in the prior year period. The segment reported non-GAAP adjusted EBITDA of $0.1 million in the fourth quarter 2021, an increase of $1.6 million versus the fourth quarter 2020.

Industrial Solutions Segment
Broadwind provides supply chain solutions, light fabrication, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market as well as other clean technology markets.

Industrial Solutions segment sales declined $2.7 million to $3.0 million in the fourth quarter 2021 as compared to the prior year period, primarily driven by lower order intake during the first part of 2021, as well as supply chain issues experienced during the fourth quarter of 2021. The segment reported an operating loss of ($0.2) million in the fourth quarter 2021, a decrease of $0.6 compared to the prior year period. The segment reported break-even non-GAAP adjusted EBITDA in the fourth quarter 2021, a decline of $0.6 million versus the prior year period.

FOURTH QUARTER AND FULL-YEAR 2021 CONFERENCE CALL

Broadwind will host a conference call today, March 2, 2022 at 11:00 A.M. ET to review the Company’s financial results, discuss recent events and conduct a question-and-answer session.

A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of the Company’s corporate website at https://investors.bwen.com/investors. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.

To participate in the live teleconference:

Domestic Live:
International Live:

877-407-9716
201-493-6779

To listen to a replay of the teleconference, which will be available through March 9, 2022:

Domestic Replay:
International Replay:
Conference ID:

844-512-2921
412-317-6671
13726270

ABOUT BROADWIND

Broadwind (NASDAQ: BWEN) is a precision manufacturer of structures, equipment and components for clean tech and other specialized applications. With facilities throughout the U.S., our talented team is committed to helping customers maximize performance of their investments—quicker, easier and smarter. Find out more at www.bwen.com

NON-GAAP FINANCIAL MEASURES

The Company provides non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share-based compensation and other stock payments, restructuring costs, impairment charges and other non-cash gains and losses) as supplemental information regarding the Company’s business performance. The Company’s management uses this supplemental information when it internally evaluates its performance, reviews financial trends and makes operating and strategic decisions. The Company believes that this non-GAAP financial measure is useful to investors because it provides investors with a better understanding of the Company’s past financial performance and future results, which allows investors to evaluate the Company’s performance using the same methodology and information as used by the Company’s management. The Company's definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.

FORWARD-LOOKING STATEMENTS

This release contains “forward looking statements”—that is, statements related to future, not past, events—as defined in Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. Forward looking statements include any statement that does not directly relate to a current or historical fact. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements.

Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following, many of which are, and will be, amplified by the COVID-19 pandemic, including as a result of emerging variants: (i) the impact of global health concerns, including the impact of the current COVID-19 pandemic on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary, in light of the COVID-19 pandemic; (v) our ability to continue to grow our business organically and through acquisitions, and the impairment thereto by the impact of the COVID-19 pandemic; (vi) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (vii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security, including with respect to any remote work arrangements implemented in response to the COVID-19 pandemic; (viii) the sufficiency of our liquidity and alternate sources of funding, if necessary; (ix) our ability to realize revenue from customer orders and backlog; (x) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (xi) the economy, including its stability in light of the COVID-19 pandemic, and the potential impact it may have on our business, including our customers; (xii) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xv) the effects of the change of administrations in the U.S. federal government; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xviii) our ability to utilize various relief options enabled by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act); (xix) the limited trading market for our securities and the volatility of market price for our securities; and (xx) the impact of future sales of our common stock or securities convertible into our common stock on our stock price. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements including, but not limited to, those set forth under the caption “Risk Factors” in Part I, Item 1A of our most recently filed Form 10-K and our other filings with the Securities and Exchange Commission. We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.



BROADWIND, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

December 31,

December 31,

2021

2020

ASSETS

CURRENT ASSETS:

Cash

$

852

$

3,372

Accounts receivable, net

13,802

15,337

Employee retention credit receivable

497

-

Contract assets

1,136

2,253

Inventories, net

33,377

26,724

Prepaid expenses and other current assets

2,661

2,909

Total current assets

52,325

50,595

LONG-TERM ASSETS:

Property and equipment, net

43,655

45,195

Operating lease right-of-use assets

18,029

19,321

Intangible assets, net

3,453

4,186

Other assets

585

385

TOTAL ASSETS

$

118,047

$

119,682

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Line of credit and other notes payable

$

6,650

$

1,406

Current portion of finance lease obligations

2,060

1,427

Current portion of operating lease obligations

1,775

1,832

Accounts payable

16,462

18,180

Accrued liabilities

3,654

6,307

Customer deposits

12,082

18,819

Total current liabilities

42,683

47,971

LONG-TERM LIABILITIES:

Long-term debt, net of current maturities

177

9,381

Long-term finance lease obligations, net of current portion

2,481

1,996

Long-term operating lease obligations, net of current portion

18,405

19,569

Other

167

104

Total long-term liabilities

21,230

31,050

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding

-

-

Common stock, $0.001 par value; 30,000,000 shares authorized; 19,859,650 and 17,211,498 shares issued as of December 31, 2021 and December 31, 2020, respectively

20

17

Treasury stock, at cost, 273,937 shares as of December 31, 2021 and December 31, 2020, respectively

(1,842

)

(1,842

)

Additional paid-in capital

395,372

384,749

Accumulated deficit

(339,416

)

(342,263

)

Total stockholders' equity

54,134

40,661

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

118,047

$

119,682


BROADWIND, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2021

2020

2021

2020

Revenues

$

26,011

$

40,322

$

145,619

$

198,496

Cost of sales

25,054

37,648

140,108

180,495

Gross profit

957

2,674

5,511

18,001

OPERATING EXPENSES:

Selling, general and administrative

4,749

4,309

17,372

16,846

Intangible amortization

183

183

733

733

Total operating expenses

4,932

4,492

18,105

17,579

Operating (loss) income

(3,975

)

(1,818

)

(12,594

)

422

OTHER INCOME (EXPENSE), net:

Paycheck Protection Program loan forgiveness

-

-

9,151

-

Interest expense, net

(313

)

(330

)

(1,129

)

(1,984

)

Other, net

122

126

7,444

123

Total other (expense) income, net

(191

)

(204

)

15,466

(1,861

)

Net (loss) income before (benefit) provision for income taxes

(4,166

)

(2,022

)

2,872

(1,439

)

(Benefit) provision for income taxes

(76

)

(55

)

25

48

NET (LOSS) INCOME

$

(4,090

)

$

(1,967

)

$

2,847

$

(1,487

)

NET (LOSS) INCOME PER COMMON SHARE - BASIC:

Net (loss) income

$

(0.21

)

$

(0.12

)

$

0.15

$

(0.09

)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC

19,516

16,938

18,726

16,746

NET (LOSS) INCOME PER COMMON SHARE - DILUTED:

Net (loss) income

$

(0.21

)

$

(0.12

)

$

0.15

$

(0.09

)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED

19,516

16,938

19,388

16,746


BROADWIND, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

Twelve Months Ended December 31,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

2,847

$

(1,487

)

Adjustments to reconcile net cash (used in) provided by operating activities:

Depreciation and amortization expense

6,336

6,279

Paycheck Protection Program loan forgiveness

(9,151

)

-

Deferred income taxes

(2

)

(4

)

Change in fair value of interest rate swap agreements

23

167

Stock-based compensation

1,541

1,295

Allowance for doubtful accounts

(426

)

346

Common stock issued under defined contribution 401(k) plan

1,193

-

Gain on disposal of assets

(33

)

-

Changes in operating assets and liabilities:

Accounts receivable

1,961

2,627

Employee retention credit receivable

(497

)

-

Contract assets

1,117

(2,253

)

Inventories

(6,653

)

5,139

Prepaid expenses and other current assets

133

(865

)

Accounts payable

(1,736

)

(3,320

)

Accrued liabilities

(2,676

)

1,229

Customer deposits

(6,737

)

(3,898

)

Other non-current assets and liabilities

(66

)

75

Net cash (used in) provided by operating activities

(12,826

)

5,330

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(1,707

)

(1,547

)

Proceeds from disposals of property and equipment

33

-

Net cash used in investing activities

(1,674

)

(1,547

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from line of credit

156,004

153,891

Payments on line of credit

(150,899

)

(164,163

)

Proceeds from long-term debt

817

9,530

Payments on long-term debt

(161

)

(1,186

)

Principal payments on finance leases

(1,672

)

(992

)

Shares withheld for taxes in connection with issuance of restricted stock

(1,423

)

(139

)

Proceeds from sale of common stock, net

9,314

232

Net cash provided by (used in) financing activities

11,980

(2,827

)

-

NET (DECREASE) INCREASE IN CASH

(2,520

)

956

CASH beginning of the period

3,372

2,416

CASH end of the period

$

852

$

3,372

Supplemental cash flow information:

Interest paid

$

741

$

1,449

Income taxes paid

$

102

$

81

Non-cash investing and financing activities:

Equipment additions via finance lease

$

2,757

$

3,196

Non-cash purchases of property and equipment

$

18

$

376


BROADWIND, INC. AND SUBSIDIARIES
SELECTED SEGMENT FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2021

2020

2021

2020

ORDERS:

Heavy Fabrications

$

31,150

$

27,536

$

93,246

$

105,843

Gearing

16,757

5,741

46,081

25,117

Industrial Solutions

7,866

2,682

19,698

17,922

Total orders

$

55,773

$

35,959

$

159,025

$

148,882

REVENUES:

Heavy Fabrications

$

14,713

$

29,776

$

101,994

$

155,198

Gearing

8,268

4,863

28,583

25,136

Industrial Solutions

3,044

5,783

15,402

18,299

Corporate and Other

(14

)

(100

)

(360

)

(137

)

Total revenues

$

26,011

$

40,322

$

145,619

$

198,496

OPERATING (LOSS)/PROFIT:

Heavy Fabrications

$

(1,341

)

$

1,624

$

(3,214

)

$

10,385

Gearing

(504

)

(1,948

)

(2,593

)

(3,883

)

Industrial Solutions

(217

)

385

(386

)

881

Corporate and Other

(1,913

)

(1,879

)

(6,401

)

(6,961

)

Total operating profit/(loss

$

(3,975

)

$

(1,818

)

$

(12,594

)

$

422


BROADWIND, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)

Consolidated

Three Months Ended
December 31,

Twelve Months
Ended December 31,

2021

2020

2021

2020

Net (Loss) Income

$

(4,090

)

$

(1,967

)

$

2,847

$

(1,487

)

Interest Expense

313

330

1,129

1,984

Income Tax (Benefit) Provision

(76

)

(55

)

25

48

Depreciation and Amortization

1,577

1,518

6,336

6,279

Share-based Compensation and Other Stock Payments

1,067

395

2,872

1,161

Adjusted EBITDA (Non-GAAP)

(1,209

)

221

13,209

7,985


Heavy Fabrications Segment

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2021

2020

2021

2020

Net Income

$

367

$

1,270

$

6,996

$

7,949

Interest Expense

149

79

530

356

Income Tax (Benefit) Provision

(1,742

)

389

382

2,193

Depreciation

941

905

3,844

3,737

Share-based Compensation and Other Stock Payments

244

66

975

205

Adjusted EBITDA (Non-GAAP)

$

(41

)

$

2,709

$

12,727

$

14,440


Gearing Segment

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2021

2020

2021

2020

Net (Loss) Income

$

(554

)

$

(1,924

)

$

1,280

$

(3,957

)

Interest Expense

30

11

62

100

Income Tax Provision (Benefit)

20

(35

)

30

(26

)

Depreciation and Amortization

472

459

1,855

1,961

Share-based Compensation and Other Stock Payments

173

30

531

86

Adjusted EBITDA (Non-GAAP)

$

141

$

(1,459

)

$

3,758

$

(1,836

)


Industrial Solutions Segment

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2021

2020

2021

2020

Net (Loss) Income

$

(196

)

$

391

$

488

$

824

Interest Expense

13

21

56

39

Income Tax (Benefit) Provision

(34

)

(38

)

21

3

Depreciation and Amortization

110

111

425

430

Share-based Compensation and Other Stock Payments

64

39

211

103

Adjusted EBITDA (Non-GAAP)

$

(43

)

$

524

$

1,201

$

1,399


Corporate and Other

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2021

2020

2021

2020

Net Loss

$

(3,707

)

$

(1,704

)

$

(5,917

)

$

(6,303

)

Interest Expense

121

219

481

1,489

Income Tax Provision (Benefit)

1,680

(371

)

(408

)

(2,122

)

Depreciation and Amortization

54

43

212

151

Share-based Compensation and Other Stock Payments

586

260

1,155

767

Adjusted EBITDA (Non-GAAP)

$

(1,266

)

$

(1,553

)

$

(4,477

)

$

(6,018

)

CONTACT: CORPORATE CONTACT Noel Ryan, IRC investor@bwen.com