Broadwind Energy, Inc. Announces Third Quarter 2012 Results Strategic Diversification Benefits Financial Results Business Wire NAPERVILLE, Ill. -- November 07, 2012 Broadwind Energy, Inc. (NASDAQ: BWEN): Highlights: *Q3 sales of $55.0 million, up 15% from prior-year quarter *Adjusted EBITDA increased to $2.4 million from prior-year loss of $1.5 million, driven by gross margin expansion and operating expense reduction. Net loss narrows to $3.9 million *All operating segments generated positive adjusted EBITDA in Q3 *Operating expenses declined to $6.2 million, or 11% of revenue, from $7.0 million, or 15% of revenue in the prior-year period *Order intake of $26 million comparable to prior-year quarter. $8 million steel content adjustment to backlog reduces reported “net” orders to $17.7 million *$20 million asset-based credit facility closed during Q3, strengthens financial flexibility to support cyclical working capital needs Broadwind Energy, Inc. (NASDAQ: BWEN) reported sales of $55.0 million for the third quarter of 2012, a 15% increase compared to $47.9 million in the third quarter of 2011. The Company reported a net loss from continuing operations of $3.9 million or $.28 per share in the third quarter of 2012, compared to a loss of $6.6 million or $.60 per share during the third quarter of 2011. Per share amounts reflect the 1-for-10 reverse stock split that Broadwind effected on August 22, 2012, resulting in a reduction in shares outstanding to 14.1 million. The improvement in net loss was primarily due to stronger operating results from all three segments. The Company reported non-GAAP adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, share-based payments and restructuring) of $2.4 million during the third quarter of 2012, compared to an adjusted EBITDA loss of $1.5 million during the third quarter of 2011. Peter C. Duprey, president and chief executive officer, stated, “Third quarter financial results improved significantly, with revenue growth of 15% and EBITDA increasing substantially both from last year’s loss and sequentially from last quarter’s positive level. Importantly, all segments achieved positive EBITDA as execution improved across the board. While certain Gearing end-markets are showing some weakening, we are seeing the ongoing benefits of our diversification, expense management and square-foot reduction initiatives. Our Tower business is seeing good order activity, and our 2013 outlook for Towers is more positive. Our Services segment is expanding nicely, with order flow resilient overall and profitability moving in the right direction. Finally, during the quarter, we closed a $20 million working capital facility to fund our growth.” Mr. Duprey concluded, “Broadwind Energy’s actions to diversify our customer and revenue bases, reduce our cost base through consolidation and restructuring, and increase our financial flexibility are transforming our business model, which is clearly improving our financial results. The tower orders we recently announced have reduced much of the downside in the business for 2013, and demonstrate our success at winning repeat business with new customers added in 2011. We consider winning these orders a tremendous accomplishment given the political and regulatory uncertainty in the wind market. We remain focused for the remainder of this year on executing customer projects, continuing our consolidation efforts and cost improvements, and progressing toward sustained profitability.” Orders and Backlog The Company booked $17.7 million in net new orders during the third quarter, a decrease of 33% from the prior year quarter. Towers and Weldments orders, which vary considerably from quarter-to-quarter, totaled $3.1 million, net of an $8.0 million adjustment to remove materials from one tower order previously reported in backlog, for which it was subsequently agreed that the customer would supply the materials. Excluding the steel adjustment, order intake totaled $25.7 million. Third quarter Gearing orders totaled $8.7 million, a 28% decrease from the prior year third quarter, as weaker orders from natural gas fracking and mining equipment customers were partly offset by solid order intake from other industrial customers. Services orders in the third quarter totaled $5.9 million, a 20% decrease from the prior year third quarter, which included a large blade retrofit project. At September 30, 2012, backlog totaled $100 million, down from $137 million at June 30, 2012. Backlog is expected to increase during the fourth quarter due to the recent tower order bookings. Segment Results Towers and Weldments Broadwind Energy fabricates specialty weldments for wind, oil and gas, mining and other industrial applications, specializing in the production of wind turbine towers. Towers and Weldments segment sales totaled $37.4 million in the third quarter of 2012, compared to $29.7 million in the third quarter of 2011. Revenue increased 26% from the prior year quarter because current year production was comprised of larger, higher value towers, and tower section production volume rose 7%. Consistent with the company’s diversification strategy, industrial weldment sales rose $2.0 million from the prior-year quarter, to $2.9 million. Non-GAAP adjusted EBITDA for the third quarter was $3.1 million in 2012, compared to $1.1 million in 2011, up significantly due to the growth in revenue and the increased complexity, and therefore higher margin, of the sales mix. Towers and Weldments segment operating profit for the third quarter of 2012 was $1.7 million, compared to breakeven in 2011. Gearing Broadwind Energy engineers, builds and remanufactures precision gears and gearing systems for wind, oil and gas and mining applications. Gearing segment sales totaled $11.3 million in the third quarter of 2012, compared to $12.6 million in the third quarter of 2011. The 11% decrease was due primarily to a delay in the scheduled completion of a large, complex gearbox and lower sales to wind turbine customers, which were only partly offset by higher sales to industrial customers. Non-GAAP adjusted EBITDA for the third quarter of 2012 was $.9 million, compared to a loss of $.7 million in the prior year third quarter, with the increase resulting from growth in higher-margin industrial sales volumes, improved productivity and lower operating expenses. Gearing segment operating loss for the third quarter of 2012 improved similarly to $2.6 million, versus a loss of $3.3 million in 2011, and included $.2 million of additional expense associated with the plant consolidation project underway. Services Broadwind Energy specializes in non-routine drivetrain and blade maintenance services. The Company also offers comprehensive installation support and field services to the wind industry. Revenue from the Services segment was $6.9 million in the third quarter of 2012, compared with $6.6 million in the third quarter of 2011. This 4% increase in revenue was primarily the result of higher field activity in the southwest region and growth of sales for drivetrain services. Non-GAAP adjusted EBITDA for the third quarter improved to $.1 million, compared to a loss of $.1 million in the prior year third quarter, as a result of higher volumes and lower fixed overhead, reflecting the reduction in leased space negotiated in the second quarter. Services segment operating loss in the third quarter 2012 was $.6 million, compared to a loss of $.4 million in the third quarter of 2011. Corporate and Other Corporate and other expenses totaled $2.0 million in the third quarter of 2012, compared with $2.5 million in the third quarter of 2011. The modest improvement was primarily attributable to lower employee costs due to reduced headcount, and other general cost containment efforts. On a consolidated basis, total operating expenses declined to $6.2 million, or 11% of revenue, from $7.0 million, or 15% of revenue in the prior year period. The future income tax benefits associated with the current period loss were offset by an increase in the valuation allowance; therefore the effective federal tax rate is zero. As of the prior year-end, cumulative federal net operating loss carry-forwards totaled $136 million. Cash and Liquidity At September 30, 2012, cash, marketable securities and short-term investments on hand totaled $3.1 million and $2.4 million of the Company’s $20 million credit line was available. During the quarter, operating working capital increased sharply to $39.3 million, or 18% of annualized third quarter 2012 sales. The $19.6 million increase from June 30, 2012 was due primarily to reductions in trade payables associated with steel deliveries received earlier in the year. The Company expects working capital to decrease significantly during the fourth quarter as it receives payments for towers shipped during the third quarter, and expects borrowings under its line of credit to fall below $10 million by year-end. At quarter-end, debt and capitalized lease obligations totaled $28.2 million, and the company was in compliance with all covenants. About Broadwind Energy, Inc. Broadwind Energy (NASDAQ: BWEN) applies decades of deep industrial expertise to innovate integrated solutions for customers in the energy and infrastructure markets. From gears and gearing systems for wind, oil and gas and mining applications to wind towers, to comprehensive remanufacturing of gearboxes and blades, to operations and maintenance services, and industrial weldments, we have solutions for the energy needs of the future. With facilities throughout the U.S., Broadwind Energy's talented team of 800 employees is committed to helping customers maximize performance of their investments—quicker, easier and smarter. Find out more at www.bwen.com. Forward-Looking Statements This news release includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995—that is, statements related to future, not past, events. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "anticipate," "believe," "intend," "expect," "plan," "will" or other similar words. These forward-looking statements involve certain risks and uncertainties that ultimately may not prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. The Company's forward looking statements may include or relate to the Company's plans to grow its business and its expectations regarding its operations, revenue growth, profitability and the business of its customers; the Company’s expectations regarding its plan to restructure its operations by consolidating its operations; the Company’s tower order intake, backlog, and tower production execution and the effect of such production on the Company’s inventory, working capital and debt levels as well as the aggregate sufficiency of the Company's working capital; the Company's expectations regarding the state of the wind energy market, and the regulatory frameworks affecting the wind energy industry, as well as the Company's expectations relating to the economic downturn and the potential impact on its business and the business of its customers. For further discussion of risks and uncertainties, individuals should refer to the Company's SEC filings. The Company undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this news release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this news release. All forward-looking statements are qualified in their entirety by this cautionary statement. BROADWIND ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) September 30, December 31, 2012 2011 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,721 $ 13,340 Restricted cash 330 876 Accounts receivable, net of allowance for doubtful accounts of $515 and $438 as of September 30, 2012 and 28,471 25,311 December 31, 2011, respectively Inventories, net 29,027 23,355 Prepaid expenses and other current assets 3,219 4,033 Assets held for sale 8,044 8,052 Total current assets 71,812 74,967 Property and equipment, net 81,299 87,766 Intangible assets, net 8,119 9,214 Other assets 654 944 TOTAL ASSETS $ 161,884 $ 172,891 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Lines of credit and notes payable $ 17,585 $ 1,566 Current maturities of long-term debt 349 636 Current portions of capital lease 2,242 965 obligations Accounts payable 14,338 17,358 Accrued liabilities 5,627 5,749 Customer deposits 3,908 17,328 Liabilities held for sale 4,083 4,833 Total current liabilities 48,132 48,435 LONG-TERM LIABILITIES: Long-term debt, net of current maturities 2,781 4,797 Long-term capital lease obligations, net of 1,116 975 current portions Other 1,601 825 Total long-term liabilities 5,498 6,597 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; 14,110,127 and 13,977,920 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively 14 140 Additional paid-in capital 372,673 370,123 Accumulated deficit (264,433 ) (252,404 ) Total stockholders' equity 108,254 117,859 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 161,884 $ 172,891 BROADWIND ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) Three Months Ended September Nine Months Ended 30, September 30, 2012 2011 2012 2011 Revenues $ 55,045 $ 47,899 $ 165,799 $ 130,761 Cost of sales 52,097 47,098 158,155 124,449 Restructuring 233 89 1,038 89 Gross profit 2,715 712 6,606 6,223 OPERATING EXPENSES: Selling, general and 5,197 6,442 16,658 19,807 administrative Intangible 664 214 1,094 644 amortization Restructuring 381 300 481 300 Total operating 6,242 6,956 18,233 20,751 expenses Operating loss (3,527 ) (6,244 ) (11,627 ) (14,528 ) OTHER (EXPENSE) INCOME, net: Interest (553 ) (276 ) (1,053 ) (845 ) expense, net Other, net 148 127 758 559 Restructuring (15 ) (202 ) (86 ) (202 ) Total other (expense) (420 ) (351 ) (381 ) (488 ) income, net Net loss from continuing operations (3,947 ) (6,595 ) (12,008 ) (15,016 ) before provision for income taxes (Benefit) provision for (9 ) (9 ) 21 24 income taxes LOSS FROM CONTINUING (3,938 ) (6,586 ) (12,029 ) (15,040 ) OPERATIONS LOSS FROM DISCONTINUED - - - (1,184 ) OPERATIONS, NET OF TAX NET LOSS $ (3,938 ) $ (6,586 ) $ (12,029 ) $ (16,224 ) NET LOSS PER COMMON SHARE - BASIC AND DILUTED: Loss from continuing $ (0.28 ) $ (0.60 ) $ (0.86 ) $ (1.39 ) operations Loss from discontinued - - - (0.11 ) operations Net loss $ (0.28 ) $ (0.60 ) $ (0.86 ) $ (1.50 ) WEIGHTED AVERAGE COMMON SHARES 14,093 11,037 14,022 10,822 OUTSTANDING - Basic and diluted BROADWIND ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) Nine Months Ended September 30, 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (12,029 ) $ (16,224 ) Loss from discontinued operations - 1,184 Loss from continuing operations (12,029 ) (15,040 ) Adjustments to reconcile net cash used in operating activities: Depreciation and amortization expense 12,227 10,910 Stock-based compensation 2,079 1,395 Allowance for doubtful accounts 158 542 Common stock issued under defined 345 150 contribution 401(k) plan Loss on disposal of assets 220 390 Changes in operating assets and liabilities: Accounts receivable (3,318 ) (2,586 ) Inventories (5,672 ) (13,544 ) Prepaid expenses and other current assets 1,078 (411 ) Accounts payable (3,175 ) 806 Accrued liabilities (110 ) (1,112 ) Customer deposits (13,411 ) 6,822 Other non-current assets and liabilities 1,319 186 Net cash used in operating activities of (20,289 ) (11,492 ) continuing operations CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of logistics business 375 761 Purchases of property and equipment (3,300 ) (4,134 ) Proceeds from disposals of property and 106 1,850 equipment Decrease in restricted cash 546 (1,276 ) Net cash used in investing activities of (2,273 ) (2,799 ) continuing operations CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of stock - 11,739 Payments on lines of credit and notes (24,190 ) (1,055 ) payable Proceeds from lines of credit and notes 36,908 2,307 payable Proceeds from sale-leaseback transactions 1,000 - Payments for debt issuance costs (630 ) - Principal payments on capital leases (1,145 ) (674 ) Net cash provided by financing activities of 11,943 12,317 continuing operations DISCONTINUED OPERATIONS: Operating cash flows - (829 ) Financing cash flows - (83 ) Net cash used in discontinued operations - (912 ) Add: Cash balance of discontinued - 530 operations, beginning of period NET DECREASE IN CASH AND CASH EQUIVALENTS (10,619 ) (2,356 ) CASH AND CASH EQUIVALENTS, beginning of the 13,340 15,331 period CASH AND CASH EQUIVALENTS, end of the period $ 2,721 $ 12,975 Supplemental cash flow information: Interest paid, net of capitalized interest $ 854 $ 757 Income taxes paid $ 25 $ 34 Non-cash investing and financing activities: Issuance of restricted stock grants $ 1,307 $ 633 Common stock issued under defined $ 345 $ 150 contribution 401(k) plan BROADWIND ENERGY, INC. AND SUBSIDIARIES SELECTED SEGMENT FINANCIAL INFORMATION (IN THOUSANDS) Three Months Ended September Nine Months Ended September 30, 30, 2012 2011 2012 2011 REVENUES: (unaudited) (unaudited) Towers and $ 37,423 $ 29,684 $ 109,587 $ 82,350 Weldments Gearing 11,256 12,634 41,352 38,696 Services 6,899 6,615 16,037 10,810 Corporate (533 ) (1,034 ) (1,177 ) (1,095 ) and Other Total $ 55,045 $ 47,899 $ 165,799 $ 130,761 revenues OPERATING (LOSS) PROFIT: Towers and $ 1,740 $ (35 ) $ 3,306 $ 5,159 Weldments Gearing (2,637 ) (3,281 ) (5,390 ) (8,523 ) Services (570 ) (413 ) (3,331 ) (3,862 ) Corporate (2,060 ) (2,515 ) (6,212 ) (7,302 ) and Other Total operating $ (3,527 ) $ (6,244 ) $ (11,627 ) $ (14,528 ) loss The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, the Company’s management believes that certain non-GAAP financial measures may provide users of this financial information with meaningful comparisons between current results and results in prior operating periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain infrequently occurring or non-operational items that impact the overall comparability. See the table below for supplemental financial data and corresponding reconciliations to GAAP financial measures for the three and six months ended September 30, 2012 and 2011. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. Consolidated Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 (unaudited) (unaudited) Operating Loss $ (3,527 ) $ (6,244 ) $ (11,627 ) $ (14,528 ) Depreciation 3,530 3,432 10,495 10,266 Amortization 665 215 1,094 644 Share-based compensation 982 565 2,619 1,512 and other stock payments Other Income 148 (75 ) 759 358 Restructuring Expense 614 591 1,519 591 Adjusted EBITDA $ 2,412 $ (1,516 ) $ 4,859 $ (1,157 ) Towers and Weldments Three Months Ended September Nine Months Ended Segment 30, September 30, 2012 2011 2012 2011 (unaudited) (unaudited) Operating Profit $ 1,740 $ (35 ) $ 3,306 $ 5,159 Depreciation 942 872 2,722 2,638 Share-based compensation and 210 131 575 370 other stock payments Other Income 171 181 529 666 Total Adjusted $ 3,063 $ 1,149 $ 7,132 $ 8,833 EBITDA (Non-GAAP) Three Months Ended September Nine Months Ended 30, September 30, Gearing 2012 2011 2012 2011 Segment (unaudited) (unaudited) Operating Loss $ (2,637 ) $ (3,281 ) $ (5,390 ) $ (8,523 ) Depreciation 2,157 2,254 6,485 6,853 Amortization 665 215 1,094 644 Share-based compensation 157 98 455 277 and other stock payments Other Income 4 (252 ) 17 (443 ) (Expense) Restructuring 514 291 1,362 291 Expense Total Adjusted EBITDA 860 (675 ) 4,023 (901 ) (Non-GAAP) Services Three Months Ended Nine Months Ended September Segment September 30, 30, 2012 2011 2012 2011 (unaudited) (unaudited) Operating Loss $ (570 ) $ (413 ) $ (3,331 ) $ (3,862 ) Depreciation 414 263 1,237 645 Share-based compensation 153 44 340 110 and other stock payments Other Income (29 ) (2 ) 209 139 (Expense) Restructuring 100 - 146 - Expense Total Adjusted EBITDA $ 68 $ (108 ) $ (1,399 ) $ (2,968 ) (Non-GAAP) Corporate and Three Months Ended September Nine Months Ended Other 30, September 30, 2012 2011 2012 2011 (unaudited) (unaudited) Operating Loss $ (2,060 ) $ (2,515 ) $ (6,212 ) $ (7,302 ) Depreciation 17 43 51 130 Share-based compensation 462 292 1,249 755 and other stock payments Other Income 2 (2 ) 4 (4 ) (Expense) Restructuring - 300 11 300 Expense Total Adjusted EBITDA $ (1,580 ) $ (1,882 ) $ (4,897 ) $ (6,121 ) (Non-GAAP) Contact: Broadwind John Segvich, 630.995.7137 email@example.com or LHA Jody Burfening/Carolyn Capaccio, 212.838.3777 firstname.lastname@example.org
Broadwind Energy, Inc. Announces Third Quarter 2012 Results
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