Broadwind Energy, Inc. Announces Third Quarter 2012 Results

  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
john.segvich@bwen.com
or
LHA
Jody Burfening/Carolyn Capaccio, 212.838.3777
ccapaccio@lhai.com