Broadwind Energy Announces Third-Quarter 2013 Results

Broadwind Energy Announces Third-Quarter 2013 Results

Highlights:

  oQ3 orders up sharply to $87 million; Excludes $106 million tower order
    received after quarter-end
  oSeptember 30 backlog of $167 million, up 17% sequentially
  oRevenue of $62.4 million beat outlook due to record tower sales
  oGross profit margin (ex. restructuring) rose to 9.1%, up 370 bp from Q3
    2012
  oEPS loss of $.18 and Adjusted EBITDA of $2.6 million
  oBalance sheet continues to strengthen: Cash assets totaled $24 million,
    operating line of credit undrawn; Debt balance of $3.1 million outstanding

CICERO, Ill., Oct. 31, 2013 (GLOBE NEWSWIRE) -- Broadwind Energy, Inc.
(Nasdaq:BWEN) today reported sales of $62.4 million for the third quarter of
2013, a 13% increase compared to $55.0 million in the third quarter of 2012.
The increase reflected the continued strength in the Towers and Weldments
segment, partly offset by weaker results in the Gearing and Services segments.

The Company reported a net loss from continuing operations of $2.6 million or
$.18 per share in the third quarter of 2013, compared to a loss of $3.9
million or $.28 per share in the third quarter of 2012. The improvement was
due to stronger operating results in the Towers and Weldments segment, which
offset the impact of a $1.5 million fine incurred by the Gearing segment to
settle a long-standing environmental investigation. The Company reported
non-GAAP adjusted EBITDA (earnings before interest, taxes, depreciation,
amortization, share-based payments and restructuring costs) of $2.6 million
during the third quarter of 2013, compared to $2.4 million during the third
quarter of 2012, up modestly despite the inclusion of the regulatory
settlement charge.

Peter C. Duprey, president and chief executive officer, stated, "Our
third-quarter results continue to highlight the strength in our Towers and
Weldments segment which had its highest quarter on record. We booked $70
million in new tower orders during the quarter and announced another $106
million in tower orders after quarter-end. Our tower production capacity is
substantially sold out for 2014 and we are booking orders for 2015.

"Our Gearing segment continues to work through challenges, both internally and
externally. Internally, we are working to minimize the operational impact of
the plant consolidation, which is on track. Gearing results were below
expectations as we continue to grapple with productivity issues stemming from
a mix of more complicated gearboxes versus loose gearing. Externally, Gearing
revenues continue to be impacted by weak demand from customers in the mining
sector. In response to these challenges, we have made a number of process and
management changes in this segment, from which we are already starting to see
positive results. Gearing orders more than doubled during the third quarter
compared to last quarter, and we continue to focus on Kaizen events to
identify process improvements that will get this business back on track. We
believe we will see improvement in the fourth quarter.

"Gearing also incurred a $1.5 million regulatory settlement charge associated
with an environmental investigation that has been underway for some time.
While the fine was higher than we anticipated and remains subject to final
court approval, we are happy to have this distraction behind us. Sound
environmental management is one of our key operating principles. We have made
a careful evaluation of environmental practices at our other acquired
businesses and believe there are no other potential problems.

"In our Services segment, we saw some recovery from a weak first half.
However, sales and earnings continue to lag behind the prior year due mainly
to low turbine construction activity and lower gearbox repair activity. We are
focused on better leveraging our precision gearing expertise and service
experience to meet emerging customer preference for uptower gearbox repair
services. We believe we will see positive results from this effort in 2014."

Mr. Duprey concluded, "Despite the challenges in the Gearing and Services
businesses, we reached some key milestones during the quarter. Gross margin
expanded by 390 basis points, we added $6.0 million of cash and generated $4.1
million of EBITDA before the regulatory settlement, which represented a $1.7
million improvement over 2012. This performance shows the financial potential
of the business ahead. We are focused on achieving a similar turnaround in
Gearing and Services going forward as we have achieved in our Towers
business."

Revenue for the nine months ending September 30, 2013 was $159.5 million, down
4% from $165.8 million for the same period last year. Gearing revenue declined
due to weaker demand from mining and oil and natural gas customers as well as
difficulties related to the production of more complex gearboxes. This was
partly offset by an 18% increase in completed towers compared to the prior
year. Non-GAAP adjusted EBITDA for the nine months ending September 30, 2013
was $6.6 million, up 37% from $4.9 million in the same period in 2012. The
sharp increase was due to higher volumes and a less variable mix of towers in
the current year, partly offset by lower volumes and margins in the Gearing
segment as well as the regulatory settlement in the current year period.
Operating loss for the nine months ending September 30, 2013 was $10.2
million, an improvement of 12% over the same period in 2012 due in part to $.6
million lower restructuring expense in the current year and the factors
described above.

Orders and Backlog

The Company booked net orders of $87 million during the third quarter of 2013,
more than four times the level booked during the third quarter of 2012. Towers
and Weldments orders, which vary considerably from quarter-to-quarter, totaled
$70 million. Third quarter net Gearing orders totaled $13 million, a 47%
increase from the prior-year third quarter due mainly to a large order for
replacement wind gearing. Net orders for Services totaled $4 million and were
up from the first half run-rate but down $2 million compared to the prior-year
third quarter, due mainly to weaker demand for in-field services compared to
the prior year.

At September 30, 2013, backlog totaled $167 million, up from $100 million at
September 30, 2012. Subsequent to quarter-end, the Company announced new tower
orders of $106 million.

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 $48.7 million in the third quarter
of 2013, compared to $37.4 million in the third quarter of 2012. The 30%
increase reflects strong demand from the Company's expanded customer base and
$4.4 million of sales of a new tower design produced during the second quarter
of 2013 but not inspected and accepted by the customer until the third
quarter. Partly offsetting this strength was a $.9 million reduction in
industrial weldment sales to a mining equipment customer that is trimming
production in view of a weaker mining sector outlook. Non-GAAP adjusted EBITDA
for the third quarter was $7.8 million, more than double the prior-year third
quarter adjusted EBITDA of $3.1 million. The significant improvement was the
result of higher volumes, improved operating efficiencies and a less variable
and more profitable mix of towers compared to the third quarter of 2012,
during which productivity suffered due to the production of multiple tower
types. Towers and Weldments segment operating income for the third quarter of
2013 was $6.7 million (14% of sales), up $5.0 million from the third 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 third quarter of 2013,
compared to $11.3 million in the third quarter of 2012. The 8% decrease was
caused by lower sales to a mining customer due to weak demand in this industry
as well as lower shipments to an oil industry customer due in part to
manufacturing delays with a new line of gearboxes. Gearing segment non-GAAP
adjusted EBITDA for the third quarter of 2013 was a loss of $2.6 million,
declining from $.9 million in the prior-year third quarter due in part to
lower volumes and margins. The loss also included a $1.5 million regulatory
settlement associated with resolution of a long-standing environmental
investigation as discussed above. These factors were partly offset by
reductions in fixed costs and lower compensation, bad debt and other
professional expenses. Gearing segment operating loss for the third quarter of
2013 increased to $5.7 million, from a loss of $2.6 million in the prior-year
third quarter. The increased operating loss was partly attributable to $.6
million of higher restructuring charges as well as the factors described
above. The restructuring and consolidation project remains on track and on
budget.

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 $3.7 million in the third quarter of
2013, compared with $6.9 million in the third quarter of 2012. The 46%
decrease was due primarily to lower gearbox sales and depressed in-field
service activity as a result of very low wind turbine installations across the
United States, resulting in wind farm operators continuing to insource
non-routine maintenance projects. Non-GAAP adjusted EBITDA loss for the third
quarter of 2013 was $.6 million, compared with non-GAAP adjusted EBITDA of $.1
million in the prior-year third quarter. The decrease was due mainly to lower
volumes and increased inventory reserves, partly offset by lower salary
expenses and the absence of a one-time legal charge in the prior-year third
quarter. Services segment operating loss of $1.3 million in the third quarter
of 2013 increased $.7 million from a loss of $.6 million in the third quarter
of 2012, due to the factors described above.

Corporate and Other

Corporate and other expenses totaled $2.2 million in the third quarter of
2013, compared with $2.1 million in the third quarter of 2012. The increase in
expense was primarily attributable to increased legal expense.

Cash and Liquidity

During the quarter, operating working capital decreased $5.5 million to $4.0
million or 2% of annualized third-quarter 2013 sales. The decrease from June
30, 2013 was due primarily to a decrease in inventory related to the completed
tower sections that were manufactured and placed into inventory during the
prior quarter.

Cash and equivalents rose to $24.0 million at September 30, 2013, an increase
of $6.0 million from June 30, 2013, due to operational cash flow and the
reduction in working capital noted above. At September 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 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)
                                                               
                                                 September 30, December 31,
                                                 2013           2012
                                                 (Unaudited)    
ASSETS                                                          
CURRENT ASSETS:                                                 
Cash and cash equivalents                         $22,826      $516
Short-term investments                            867           --
Restricted cash                                   331           330
Accounts receivable, net of allowance for
doubtful accounts of $279 and $179 as of          21,927        20,039
September 30, 2013 and December 31, 2012,
respectively
Inventories, net                                  32,625        21,988
Prepaid expenses and other current assets         2,532         3,836
Assets held for sale                              2,152         8,042
Total current assets                              83,260        54,751
Property and equipment, net                       72,761        79,889
Intangible assets, net                            6,014         7,454
Other assets                                      2,194         816
TOTAL ASSETS                                      $164,229     $142,910
                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY                            
CURRENT LIABILITIES:                                            
Lines of credit and notes payable                 $--         $955
Current maturities of long-term debt              342           352
Current portions of capital lease obligations     1,308         2,217
Accounts payable                                  29,063        16,377
Accrued liabilities                               6,961         6,012
Customer deposits                                 21,482        4,063
Liabilities held for sale                         --           3,860
Total current liabilities                         59,156        33,836
                                                               
LONG-TERM LIABILITIES:                                          
Long-term debt, net of current maturities         2,757         2,956
Long-term capital lease obligations, net of       1,431         641
current portions
Other                                             3,342         2,169
Total long-term liabilities                       7,530         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; 14,563,228 and 14,197,792 shares      15            14
issued and outstanding as of September 30, 2013
and December 31, 2012, respectively
Additional paid-in capital                        375,542       373,605
Accumulated deficit                               (278,014)     (270,311)
Total stockholders' equity                        97,543        103,308
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $164,229     $142,910


BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                             
                            Three Months Ended    Nine Months Ended September
                             September 30,         30,
                            2013       2012       2013          2012
                                                             
                                                             
Revenues                     $62,436  $55,045  $159,463    $165,799
Cost of sales                56,783    52,097    147,399      158,155
Restructuring                1,097     233       2,758        1,038
Gross profit                 4,556     2,715     9,306        6,606
                                                             
OPERATING EXPENSES:                                           
Selling, general and         5,247     5,197     15,788       16,658
administrative
Intangible amortization      111       664       1,441        1,094
Regulatory settlement        1,500               1,500        
Restructuring                79        381       787          481
Total operating expenses     6,937     6,242     19,516       18,233
Operating loss               (2,381)   (3,527)   (10,210)     (11,627)
                                                             
OTHER INCOME (EXPENSE) ,                                      
net:
Interest expense, net        (177)     (553)     (795)        (1,053)
Other, net                   (4)       148       511          758
Restructuring                (1)       (15)      2,965        (86)
Total other income           (182)     (420)     2,681        (381)
(expense), net
                                                             
Net loss from continuing
operations before provision  (2,563)   (3,947)   (7,529)      (12,008)
for income taxes
Provision for income taxes   28        (9)       64           21
LOSS FROM CONTINUING         (2,591)   (3,938)   (7,593)      (12,029)
OPERATIONS
LOSS FROM DISCONTINUED       100       --       (110)        --
OPERATIONS, NET OF TAX
NET LOSS                     $(2,491) $(3,938) $(7,703)    $(12,029)
                                                             
                                                             
NET LOSS PER COMMON SHARE -                                   
BASIC AND DILUTED:
Loss from continuing         $(0.18)  $(0.28)  $(0.53)     $(0.86)
operations
Loss from discontinued       0.01      --       (0.01)       --
operations
Net loss                     $(0.17)  $(0.28)  $(0.53)     $(0.86)
                                                             
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING - Basic   14,525    14,093    14,405       14,022
and diluted


BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
                                                             
                                                             
                                              Nine Months Ended September 30,
                                              2013            2012
CASH FLOWS FROM OPERATING ACTIVITIES:                         
Net loss                                       $(7,703)      $(12,029)
                                                             
Adjustments to reconcile net cash used in                     
operating activities:
Depreciation and amortization expense          11,412         12,227
Impairment charges                             288            --
Stock-based compensation                       1,438          2,079
Allowance for doubtful accounts                (274)          158
Common stock issued under defined contribution 499            345
401(k) plan
(Gain) loss on disposal of assets              (3,576)        220
Changes in operating assets and liabilities:                  
Accounts receivable                            (1,613)        (3,318)
Inventories                                   (10,637)       (5,672)
Prepaid expenses and other current assets      1,228          1,078
Accounts payable                               12,337         (3,175)
Accrued liabilities                            1,054          (110)
Customer deposits                              17,419         (13,411)
Other non-current assets and liabilities       (365)          1,319
Net cash provided by (used in) operating       21,507         (20,289)
activities
                                                             
CASH FLOWS FROM INVESTING ACTIVITIES:                         
Proceeds from sale of logistics business and   250            375
related note receivable
Purchases of available for sale securities     (867)          --
Purchases of property and equipment            (5,967)        (3,300)
Proceeds from disposals of property and        12,533         106
equipment
(Increase) decrease in restricted cash         (1)            546
Net cash provided by (used in) investing       5,948          (2,273)
activities
                                                             
CASH FLOWS FROM FINANCING ACTIVITIES:                         
Payments on lines of credit and notes payable  (80,233)       (24,190)
Proceeds from lines of credit and notes        75,208         36,908
payable
Proceeds from sale-leaseback transactions      --            1,000
Payments for debt issuance costs               --            (630)
Principal payments on capital leases           (120)          (1,145)
Net cash (used in) provided by financing       (5,145)        11,943
activities
                                                             
                                                             
NET INCREASE (DECREASE) IN CASH AND CASH       22,310         (10,619)
EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of the    516            13,340
period
CASH AND CASH EQUIVALENTS, end of the period   $22,826       $2,721


BROADWIND ENERGY, INC. AND SUBSIDIARIES
SELECTED SEGMENT FINANCIAL INFORMATION
(IN THOUSANDS)
                                                           
                 Three Months Ended September Nine Months Ended September 30,
                  30
                 2013           2012          2013            2012
REVENUES:         (unaudited)                  (unaudited)
Towers and        $48,658      $37,423     $116,194      $109,587
Weldments
Gearing           10,389        11,256       31,554         41,352
Services          3,704         6,899        15,253         16,037
Corporate and     (315)         (533)        (3,538)        (1,177)
Other
Total revenues   $62,436      $55,045     $159,463      $165,799
                                                           
OPERATING (LOSS)                                            
PROFIT:
Towers and        $6,723       $1,740      $12,828       $3,306
Weldments
Gearing           (5,653)       (2,637)      (12,394)       (5,390)
Services          (1,276)       (570)        (3,239)        (3,331)
Corporate and     (2,175)       (2,060)      (7,405)        (6,212)
Other
Total operating  $(2,381)     $(3,527)    $(10,210)     $(11,627)
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 nine months ended September 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   Nine Months Ended
                                September 30,         September 30,
                                2013       2012       2013        2012
                                (unaudited)           (unaudited)
Operating loss                   $(2,381) $(3,527) $(10,210) $(11,627)
Depreciation and amortization    3,178     4,195     10,826     11,590
Restructuring                    1,176     614       3,545      1,519
Other income                     (4)       148       511        758
Share-based compensation and     645       982       1,970      2,619
other stock payments
Adjusted EBITDA                  $2,614   $2,412   $6,642    $4,859

                                                 
Towers and Weldments  Three Months Ended September Nine Months Ended September
Segment               30,                          30,
                     2013           2012          2013          2012
                     (unaudited)                  (unaudited)
                                                             
Operating Profit      $6,723       $1,740      $12,828     $3,306
Depreciation          941           942          2,841        2,722
Share-based
compensation and      108           210          353          575
other stock payments
Other Income          (9)           171          265          529
Restructuring Expense 50            --          165          --
Total Adjusted       $7,813       $3,063      $16,452     $7,132
EBITDA (Non-GAAP)
                                                             
Gearing Segment       Three Months Ended September Nine Months Ended September
                      30,                          30,
                     2013           2012          2013          2012
                     (unaudited)                  (unaudited)
Operating Loss        $ (5,653)      $ (2,637)     $ (12,394)    $ (5,390)
Depreciation          1,702         2,157        5,442        6,485
Amortization          111           665          1,441        1,094
Share-based
compensation and      121           157          334          455
other stock payments
Other Income          10            4            (5)          17
(Expense)
Restructuring Expense 1,125         514          2,684        1,362
Total Adjusted       $(2,584)     $860        $(2,498)    $4,023
EBITDA (Non-GAAP)
                                                             
Services Segment      Three Months Ended September Nine Months Ended September
                      30,                          30,
                     2013           2012          2013          2012
                     (unaudited)                  (unaudited)
Operating Loss        $(1,276)     $(570)      $(3,239)    $(3,331)
Depreciation          409           414          1,064        1,237
Share-based
compensation and      59            153          227          340
other stock payments
Other Income          (5)           (29)         251          209
(Expense)
Restructuring Expense --           100          234          146
Total Adjusted       $(813)       $68         $(1,463)    $(1,399)
EBITDA (Non-GAAP)
                                                             
Corporate and Other   Three Months Ended September Nine Months Ended September
                      30,                          30,
                     2013           2012          2013          2012
                     (unaudited)                  (unaudited)
Operating Loss        $(2,175)     $(2,060)    $(7,405)    $(6,212)
Depreciation          15            17           38           51
Share-based
compensation and      357           462          1,056        1,249
other stock payments
Other Income          --           2            --          4
(Expense)
Restructuring Expense 1             --          462          11
Total Adjusted       $(1,802)     $(1,579)    $(5,849)    $(4,897)
EBITDA (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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