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Broadwind Energy Announces Second-Quarter 2013 Results

Broadwind Energy Announces Second-Quarter 2013 Results

Highlights:

  *New tower orders surged to $52 million; Backlog of $143 million up 4% from
    prior- year second quarter; $70 million tower order received in July

  *Gross profit margin (ex. restructuring) rose to 7.4%, double prior-year
    second quarter

  *Adjusted EBITDA of $2.7 million up significantly from $1.1 million in 2012
    due to strong Towers and Weldments segment results

  *Sale of idle tower facility for $12 million closed on April 22, 2013

  *Strengthened balance sheet as of June 30: Cash and equivalents totaled
    $17.6 million, operating line of credit undrawn; Debt balance of $3.1
    million outstanding

CICERO, Ill., Aug. 1, 2013 (GLOBE NEWSWIRE) -- Broadwind Energy, Inc.
(Nasdaq:BWEN) today reported sales of $51.4 million for the second quarter of
2013, a 9% decrease compared to $56.3 million in the second quarter of 2012.
The decline reflected weaker activity in the Gearing and Services segments,
partly offset by stronger revenue in the Towers and Weldments segment due in
part to a 42% increase in industrial weldments revenue compared to the
prior-year second quarter.

The Company reported a net loss from continuing operations of $.2 million or
$.01 per share in the second quarter of 2013, compared to a loss of $4.2
million or $.30 per share during the second quarter of 2012. The improvement
was due to stronger operating results in the Towers and Weldments segment as
well as the gain on the sale of the Company's idle tower facility during the
current-year quarter. The Company reported non-GAAP adjusted EBITDA (earnings
before interest, taxes, depreciation, amortization, share-based payments and
restructuring costs) of $2.7 million during the second quarter of 2013,
compared to $1.1 million during the second quarter of 2012.

Peter C. Duprey, president and chief executive officer, stated, "Our
second-quarter results showed the strength of our Towers and Weldments segment
in which we booked $52 million of new orders during the period, and announced
another $70 million after quarter-end. We have sold out our 2013 capacity, and
are now booking orders well into 2014. We expect 2014 production to reach or
exceed our design capacity of 500 towers. During the second quarter, we
demonstrated a dramatic improvement in productivity and tower through-put
compared with last year when we were experiencing production issues associated
with manufacturing multiple tower types at the same time. Process improvements
that we initiated in 2012 and a generally better mix of towers resulted in
strong EBITDA in the quarter.

"Gearing had a challenging quarter and continues to be impacted by weak demand
from customers in the mining and natural gas sectors. In addition, Gearing
revenues were affected by production issues relating to a greater number of
gearboxes versus loose gearing in the mix and delays associated with the first
article qualification process for a new customer. These production issues have
caused us to review our front-end processes as part of our continuous
improvement efforts. We believe we are getting to the root cause of these
manufacturing issues and feel confident that the turnaround in Gearing will be
significantly underway by the end of the year.

"The Services segment also had a difficult quarter. New turbine installations
were at an all-time industry low and wind-farm operators have redeployed staff
that ordinarily would be supporting new installations to perform non-routine
maintenance activities. As a result of the lower order rate, we have adjusted
this segment's expense structure to be more in line with its current revenue
outlook. We believe this situation will improve as we approach the end of the
year and construction efforts accelerate.

"Finally we have strengthened our balance sheet by achieving some major
milestones, including selling our idle Brandon, South Dakota tower facility
for $12 million, paying down additional debt of $6 million and ending the
quarter with $18 million of cash."

Orders and Backlog

The Company booked $59 million in new orders during the second quarter of
2013. Additionally, a $35 million tower order from 2010 was removed from
backlog due to a change in the customer's U.S. wind requirements. As a result,
net orders for the second quarter of 2013 were $25 million, a 17% decrease
compared to the prior-year second quarter. Towers and Weldments orders, which
vary considerably from quarter-to-quarter, totaled $18 million, net of the $35
million cancellation noted above. Second-quarter net Gearing orders totaled $5
million, a 70% decrease from the prior-year second quarter, reflecting
continued weakness in orders from natural gas and other industrial customers
as well as less demand for wind replacement gearing. Net orders for Services
totaled $3 million compared to $5 million in the prior-year quarter, due to
weaker demand for field services, as a number of customers have insourced work
during a period of low turbine construction activity.

At June 30, 2013, backlog totaled $143 million, up from $137 million at June
30, 2012. Subsequent to quarter-end, the Company announced new tower orders of
$87 million, $17 million of which were included in backlog as of June 30,
2013.

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 $37.5 million in the second quarter
of 2013, compared to $37.0 million in the second quarter of 2012. Tower
section volume in the second quarter of 2013 was down 12% compared to the
prior year. The prior-year production consisted of a greater number of
lighter, lower-value sections as compared to the current-year second quarter.
Additionally, $4.4 million of completed tower sections remained in inventory
at quarter-end because a customer first article qualification process was not
completed as planned. Revenue for these sections will be included in the
third-quarter results. Consistent with the Company's strategic focus on
diversifying end markets, industrial weldments sales of $3.2 million increased
42% compared to the prior-year period, more than offsetting the tower
shortfall noted above. Non-GAAP adjusted EBITDA for the second quarter was
$5.3 million; nearly triple the prior-year second quarter adjusted EBITDA of
$1.8 million. The dramatic improvement was the result of improved operating
efficiencies and a less variable and more profitable mix of towers. During the
second quarter of 2012, productivity suffered due to the production of
multiple tower types in that quarter. Towers and Weldments segment operating
income for the second quarter of 2013 was $4.1 million, up $3.5 million from
the second quarter of 2012 due to the factors described above.

Gearing

Broadwind Energy engineers, builds and remanufactures precision gears and
gearboxes for oil and gas, mining, steel and wind applications.

Gearing segment sales totaled $10.4 million in the second quarter of 2013,
compared to $14.1 million in the second quarter of 2012. The 26% decrease was
due primarily to lower demand from mining and natural gas customers as well as
protracted manufacturing issues with a new line of gearboxes for an industrial
customer. Gearing segment non-GAAP adjusted EBITDA for the second quarter of
2013 was a loss of $.1 million, decreasing from $1.3 million in the prior-year
second quarter due in part to lower volumes and lower margins, partly offset
by reductions in fixed costs and lower compensation, bad debt and other
professional expenses. Gearing segment operating loss for the second quarter
of 2013 increased to $3.9 million, from $1.6 million in the prior-year second
quarter. The increased operating loss was partly attributable to $.7 million
of higher restructuring charges and $.5 million of accelerated amortization as
well as the factors described above.

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 $4.1 million in the second quarter of
2013, compared with $5.7 million in the second quarter of 2012. The 29%
decrease was due in large part to depressed field service activity as a result
of very low wind turbine installations across the United States, reflecting
the curtailment of development work in late 2012 in response to the
uncertainty regarding the production tax credit as mentioned above. This has
resulted in wind farm operators insourcing non-routine maintenance projects
during this same period. Non-GAAP adjusted EBITDA loss for the second quarter
of 2013 was $.6 million, compared with $.5 million in the prior-year second
quarter. As a result of the 29% drop in sales, the Company reduced headcount
during the quarter and reduced SGA costs compared to the prior-year second
quarter. Services segment operating loss of $1.3 million in the second quarter
of 2013, increased $.2 million, from a loss of $1.1 million in the second
quarter of 2012, reflecting $.1 million of additional restructuring charges in
the current-year second quarter as well as the factors described above.

Corporate and Other

Corporate and other expenses totaled $2.3 million in the second quarter of
2013, compared with $1.9 million in the second quarter of 2012. The increase
in expense was primarily attributable to increased employee compensation
partly offset by lower legal expense.

Cash and Liquidity

During the quarter, operating working capital decreased $14.0 million to $9.5
million or 5% of annualized second-quarter 2013 sales. The decrease from March
31, 2013 was due primarily to an increase in customer deposits of $13.4
million at June 30, 2013 related to the significant tower orders announced
during the quarter.

Cash and equivalents surged to $17.6 million at June 30, 2013, an increase of
$16.7 million from March 31, 2013 due primarily to the reduction in working
capital noted above. Additionally, as previously announced, the Company
completed the sale of its idle Brandon, South Dakota tower facility during the
second quarter of 2013, realizing net proceeds of $11.8 million, of which $3.5
million was used to repay the underlying mortgage debt. At June 30, 2013, the
Company's $20 million line of credit was not drawn.

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 release includes various forward-looking statements related to future,
not past, events. Statements in this release that are not historical are
forward-looking statements. These statements are based on current expectations
and we undertake no obligation to update these statements to reflect events or
circumstances occurring after this release. Such statements are subject to
various risks and uncertainties that could cause actual results to vary
materially from those stated. Such risks and uncertainties include, but are
not limited to: expectations regarding our business, end-markets,
relationships with customers and our ability to diversify our customer base;
the impact of competition and economic volatility on many of the industries in
which we compete; our ability to realize revenue from customer orders and
backlog; the impact of regulation on our end-markets, including the wind
energy industry in particular; the sufficiency of our liquidity and
working-capital; our restructuring plans and the associated cost-savings; our
ability to preserve and utilize our tax net operating loss carry-forwards; and
other risks and uncertainties described in our filings with the Securities and
Exchange Commission.



BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
                                                               
                                                    June 30,   December 31,
                                                    2013        2012
                                                    (Unaudited) 
ASSETS                                                          
CURRENT ASSETS:                                                 
Cash and cash equivalents                            $17,261   $516
Short-term investments                               606        --
Restricted cash                                      331        330
Accounts receivable, net of allowance for doubtful
accounts of $279 and $453 as of June 30, 2013 and    22,877     20,039
December 31, 2012, respectively
Inventories, net                                     36,810     21,988
Prepaid expenses and other current assets            3,202      3,836
Assets held for sale                                 2,190      8,042
Total current assets                                 83,277     54,751
Property and equipment, net                          72,972     79,889
Intangible assets, net                               6,125      7,454
Other assets                                         686        816
TOTAL ASSETS                                         $163,060  $142,910
                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY                            
CURRENT LIABILITIES:                                            
Lines of credit and notes payable                    $--      $955
Current maturities of long-term debt                 356        352
Current portions of capital lease obligations        1,274      2,217
Accounts payable                                     28,644     16,377
Accrued liabilities                                  6,293      6,012
Customer deposits                                    21,586     4,063
Liabilities held for sale                            --        3,860
Total current liabilities                            58,153     33,836
                                                               
LONG-TERM LIABILITIES:                                          
Long-term debt, net of current maturities            2,767      2,956
Long-term capital lease obligations, net of current  436        641
portions
Other                                                2,299      2,169
Total long-term liabilities                          5,502      5,766
                                                               
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; 14,476,727 and 14,197,792 shares issued  14         14
and outstanding as of June 30, 2013 and December 31,
2012, respectively
Additional paid-in capital                           374,914    373,605
Accumulated deficit                                  (275,523)  (270,311)
Total stockholders' equity                           99,405     103,308
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $163,060  $142,910




BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                              
                        Three Months Ended June 30, Six Months Ended June 30,
                        2013          2012          2013         2012
                                                              
                                                              
Revenues                 $51,363     $56,311     $97,027    $110,754
Cost of sales            47,573       54,236       90,616      106,058
Restructuring            1,206        416          1,661       805
Gross profit             2,584        1,659        4,750       3,891
                                                              
OPERATING EXPENSES:                                            
Selling, general and     5,145        5,578        10,541      11,461
administrative
Intangible amortization  665          215          1,330       430
Restructuring            107          25           708         100
Total operating expenses 5,917        5,818        12,579      11,991
Operating loss           (3,333)      (4,159)      (7,829)     (8,100)
                                                              
OTHER (EXPENSE) INCOME,                                        
net:
Interest expense, net    (227)        (238)        (618)       (500)
Other, net               180          247          515         610
Restructuring            3,241        (71)         2,966       (71)
Total other (expense)    3,194        (62)         2,863       39
income, net
                                                              
Net loss from continuing
operations before        (139)        (4,221)      (4,966)     (8,061)
provision for income
taxes
(Benefit) provision for  14           10           36          30
income taxes
LOSS FROM CONTINUING     (153)        (4,231)      (5,002)     (8,091)
OPERATIONS
LOSS FROM DISCONTINUED   --          --          (210)       --
OPERATIONS, NET OF TAX
NET LOSS                 $(153)      $(4,231)    $(5,212)   $(8,091)
                                                              
                                                              
NET LOSS PER COMMON
SHARE - BASIC AND                                              
DILUTED:
Loss from continuing     $(0.01)     $(0.30)     $(0.35)    $(0.58)
operations
Loss from discontinued   --          --          (0.01)      --
operations
Net loss                 $(0.01)     $(0.30)     $(0.36)    $(0.58)
                                                              
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING -     14,422       13,991       14,345      13,985
Basic and diluted




BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
                                                    
                                                    Six Months Ended June 30,
                                                    2013         2012
CASH FLOWS FROM OPERATING ACTIVITIES:                            
Net loss                                             $(5,212)   $(8,091)
Loss from discontinued operations                    210         --
Loss from continuing operations                      (5,002)     (8,091)
                                                                
Adjustments to reconcile net cash used in operating              
activities:
Depreciation and amortization expense                8,033       7,860
Impairment charges                                   288         --
Stock-based compensation                             972         1,289
Allowance for doubtful accounts                      (174)       254
Common stock issued under defined contribution       337         --
401(k) plan
(Gain) loss on disposal of assets                    (3,657)     92
Changes in operating assets and liabilities:                     
Accounts receivable                                  (2,664)     1,246
Inventories                                         (14,822)    (15,362)
Prepaid expenses and other current assets            535         1,526
Accounts payable                                     11,869      16,817
Accrued liabilities                                  385         (222)
Customer deposits                                    17,523      (8,607)
Other non-current assets and liabilities             153         832
Net cash provided by (used in) operating activities  13,776      (2,366)
of continuing operations
                                                                
CASH FLOWS FROM INVESTING ACTIVITIES:                            
Proceeds from sale of logistics business and related --         175
note receivable
Purchases of available for sale securities           (606)       --
Purchases of property and equipment                  (2,729)     (2,165)
Proceeds from disposals of property and equipment    12,453      87
Decrease in restricted cash                          --         646
Net cash provided by (used in) investing activities  9,118       (1,257)
of continuing operations
                                                                
CASH FLOWS FROM FINANCING ACTIVITIES:                            
Payments on lines of credit and notes payable        (80,209)    (1,954)
Proceeds from lines of credit and notes payable      75,208      --
Proceeds from sale-leaseback transactions            --         1,000
Principal payments on capital leases                 (1,148)     (627)
Net cash used in financing activities of continuing  (6,149)     (1,581)
operations
                                                                
                                                                
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 16,745      (5,204)
CASH AND CASH EQUIVALENTS, beginning of the period   516         13,340
CASH AND CASH EQUIVALENTS, end of the period         $17,261    $8,136




BROADWIND ENERGY, INC. AND SUBSIDIARIES
SELECTED SEGMENT FINANCIAL INFORMATION
(IN THOUSANDS)
                                                               
                        Three Months Ended June 30, Six Months Ended June 30,
                        2013          2012          2013         2012
REVENUES:                (unaudited)                 (unaudited)
Towers and Weldments     $37,507     $36,995     $67,536    $72,164
Gearing                  10,445       14,063       21,164      30,096
Services                 4,065        5,695        11,549      9,137
Corporate and Other      (654)        (422)        (3,222)     (643)
Total revenues           $51,363     $56,331     $97,027    $110,754
                                                              
OPERATING (LOSS) PROFIT:                                       
Towers and Weldments     $4,103      $561        $6,105     $1,566
Gearing                  (3,882)      (1,632)      (6,743)     (2,753)
Services                 (1,260)      (1,139)      (1,962)     (2,763)
Corporate and Other      (2,293)      (1,948)      (5,229)     (4,150)
Total operating loss     $(3,332)    $(4,158)    $(7,829)   $(8,100)

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 June 30, 2013 and 2012.
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 June 30, Six Months Ended June 30,
                      2013           2012          2013          2012
                      (unaudited)                  (unaudited)
Operating loss         $(3,333)     $(4,159)    $(7,829)    $(8,100)
Depreciation and       3,842         3,739        7,648        7,395
amortization
Restructuring          1,313         441          2,369        905
Other income           180           247          515          610
Share-based
compensation and other 702           788          1,325        1,638
stock payments
Adjusted EBITDA        $2,704       $1,056      $4,028      $2,448

                                                   
                                                   
                                                   
Towers and Weldments     Three Months Ended June 30, Six Months Ended June 30,
Segment
                        2013          2012          2013         2012
                        (unaudited)                 (unaudited)
                                                   
Operating Profit         $4,103      $561        $6,105     $1,566
Depreciation             949          904          1,901       1,780
Share-based compensation 116          167          245         365
and other stock payments
Other Income             115          171          273         358
Restructuring Expense    37           --          115         --
Total Adjusted EBITDA    $5,320      $1,803      $8,639     $4,069
(Non-GAAP)

                                                   
                                                   
                                                   
                        Three Months Ended June 30, Six Months Ended June 30,
Gearing Segment          2013          2012          2013         2012
                        (unaudited)                 (unaudited)
Operating Loss           $(3,882)    $(1,632)    $(6,742)   $(2,753)
Depreciation             1,874        2,165        3,740       4,327
Amortization             665          215          1,330       430
Share-based compensation 131          141          211         298
and other stock payments
Other Income (Expense)   --          --          (15)        13
Restructuring Expense    1,158        441          1,559       848
Total Adjusted EBITDA    $ (54)       $ 1,330      $ 83        $ 3,163
(Non-GAAP)

                                                   
                                                   
                                                   
Services Segment         Three Months Ended June 30, Six Months Ended June 30,
                        2013          2012          2013         2012
                        (unaudited)                 (unaudited)
Operating Loss           $(1,260)    $(1,139)    $(1,962)   $(2,763)
Depreciation             342          439          655         824
Share-based compensation 128          95           168         187
and other stock payments
Other Income (Expense)   65           75           256         238
Restructuring Expense    114          --          233         47
Total Adjusted EBITDA    $(611)      $(530)      $(650)     $(1,467)
(Non-GAAP)

                                                   
                                                   
                                                   
Corporate and Other      Three Months Ended June 30, Six Months Ended June 30,
                        2013          2012          2013         2012
                        (unaudited)                 (unaudited)
Operating Loss           $(2,293)    $(1,948)    $(5,229)   $(4,150)
Depreciation             12           16           23          34
Share-based compensation 326          385          701         788
and other stock payments
Other Income (Expense)   --          --          --         --
Restructuring Expense    4            --          460         11
Total Adjusted EBITDA    $(1,951)    $(1,547)    $(4,045)   $(3,317)
(Non-GAAP)

CONTACT: BWEN INVESTOR CONTACT:
         Joni Konstantelos
         708.780.4819
         joni.konstantelos@bwen.com
        
         LHA
         Jody Burfening/Carolyn Capaccio
         212.838.3777
         ccapaccio@lhai.com

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