Broadwind Energy Announces Q1 2014 Results

Broadwind Energy Announces Q1 2014 Results

Q1 Highlights:

  *Sales of $58.8 million, up 29% from Q1 2013
  *Gross profit margin (ex. restructuring) of 9.1%, up 330 bp from Q1 2013
  *Adjusted EBITDA of $2.8 million, more than double Q1 2013
  *EPS loss of $.07, significantly ahead of Q1 2013 and Q1 2014 guidance
  *Cash assets declined as expected, to $11.5 million; operating line of
    credit undrawn; debt and capital lease balance dropped below $5 million

CICERO, Ill., April 30, 2014 (GLOBE NEWSWIRE) -- Broadwind Energy, Inc.
(Nasdaq:BWEN) reported sales of $58.8 million for the first quarter of 2014, a
29% increase compared to $45.5 million in the first quarter of 2013. The
increase reflects the continued strength in the Company's 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 $1.0 million or
$.07 per share in the first quarter of 2014, compared to a loss of $4.5
million or $.32 per share in the first quarter of 2013. The $.25 per share
improvement was due to stronger results in the Towers and Weldments segment
and lower corporate expenses, partly offset by weaker results in the Services
segment. The Company reported non-GAAP adjusted EBITDA (earnings before
interest, taxes, depreciation, amortization, share-based payments and
restructuring costs) of $2.8 million in the first quarter of 2014, compared to
$1.3 million in the first quarter of 2013. The progress reflects the 50%
increase in tower volume in the current-year first quarter, partly offset by
weaker results in the other business segments.

Peter C. Duprey, president and chief executive officer, stated, "We are off to
a solid start in 2014. Our first-quarter results reflect substantial
improvement over the prior year, with revenue up a significant 29%, gross
margin up 330 basis points, and an EPS improvement of $.25 over last year's
first quarter. Our Towers and Weldments segment recorded another solid
quarter, improving tremendously as we produce efficiently against the past two
quarters' strong order flow. Gearing and Services faced some challenges during
the quarter with low volumes and production inefficiencies as well as some
unforeseen weather-related expenses, although Gearing orders did show a 61%
improvement sequentially. Our Continuous Improvement projects are proceeding
as planned, and we are seeing progress from those initiatives."

Mr. Duprey concluded, "Overall, I am pleased with our first-quarter results,
which were better than our guidance and set us up nicely to achieve our
financial objectives for 2014. Our restructuring plan is paying off in
increased operating leverage, and we are working hard to continue this
progress by making the Gearing business competitive and profitable for the
long-term. In Services, our new general manager is in place and we are focused
on leveraging our robust in-field service capabilities in wind and beyond. In
all, we remain on track to achieve profitability in 2014."

Orders and Backlog

The Company booked $15.8 million in net new orders in the first quarter of
2014, down from $91.9 million in the prior-year first quarter when orders
surged following the renewal of the federal Production Tax Credit. Towers and
Weldments orders, which vary considerably from quarter to quarter, totaled
$3.9 million and consisted of industrial weldment orders primarily for one
large customer. This order pattern was expected, following the massive order
inflow experienced in the second half of 2013. First quarter Gearing orders
totaled $8.3 million, down 29% from the prior-year first quarter and up 61%
sequentially. Services orders totaled $3.6 million, up sharply from the
prior-year first quarter which included the cancellation of a large drivetrain
assembly project with an industrial customer.

At March 31, 2014, total backlog was $267.5 million, up 58% from the
prior-year first quarter.

Segment Results

Towers and Weldments

Broadwind Energy produces fabrications for wind, oil and gas, mining and other
industrial applications, specializing in the production of wind turbine
towers.

Towers and Weldments segment sales totaled $48.3 million in the first quarter
of 2014, compared to $29.9 million in the first quarter of 2013. The
significant increase was due to a 50% increase in tower volume compared to the
prior-year first quarter, reflecting the near curtailment of production due to
the lapse of the federal Production Tax Credit at the end of 2012 and
subsequent renewal in early 2013. Towers and Weldments operating income for
the first quarter of 2014 was $5.6 million (12% of sales), up $3.5 million
from the first quarter of 2013. The significant improvement was the result of
higher volumes, material sourcing improvements, and a higher margin mix of
towers compared to the first quarter of 2013. Partly offsetting this was an
increase in manufacturing overhead due, in part, to ramping up the production
infrastructure in industrial weldments to support the growth of this product
line, and higher professional fees linked to the 2013 year-end accounting
investigation. Non-GAAP adjusted EBITDA for the segment totaled $6.7 million
in the current-year period, up sharply from $3.5 million in the same period
last year due to the factors described above and lower non-cash charges in the
current-year period.

Gearing

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

Gearing sales totaled $8.8 million in the first quarter of 2014, compared to
$10.7 million in the first quarter of 2013. The decrease was due primarily to
lower shipments to steel and other industrial customers caused primarily by
manufacturing inefficiencies. Despite the 18% decrease in revenue, Gearing
segment operating loss for the first quarter of 2014 was $3.0 million, a
slight improvement compared to the first quarter of 2013. The small
improvement was due primarily to lower depreciation and amortization expense
and lower restructuring charges, nearly offset by less favorable production
mix as well as $0.2 million of weather-related utility costs in Q1 2014.
Non-GAAP adjusted EBITDA for the first quarter of 2014 was a loss of $.8
million, compared to a slightly positive non-GAAP adjusted EBITDA in the
prior-year first quarter, due to the factors described above.

Services

Broadwind Energy specializes in non-routine drivetrain and blade maintenance
services and offers comprehensive field services to the wind industry.

Revenue from the Services segment was $2.4 million in the first quarter of
2014, compared to $7.5 million in the first quarter of 2013. The decrease was
related to the completion of a large drivetrain assembly project in the
prior-year first quarter, partly offset by higher demand for blade repair work
in the current-year first quarter. Services operating loss for the first
quarter of 2014 was $1.3 million, compared to $.7 million in the prior-year
first quarter, due primarily to lower volume, partly offset by cost savings
resulting from a reduction in manufacturing space and other cost management
efforts. Non-GAAP adjusted EBITDA loss totaled $0.9 million in the first
quarter of 2014, compared to near break-even in the first quarter of 2013, due
to the factors described above and lower non-cash charges, primarily
restructuring, in the current-year period.

Corporate and Other

Corporate and other expenses totaled $2.3 million in the first quarter of
2014, compared to $3.0 million in the first quarter of 2013. The decrease was
due primarily to lower restructuring and insurance expense in the current-year
first quarter.

Future income tax benefits associated with the 2013 loss were offset by an
increase in the valuation allowance; therefore, the effective federal tax rate
is zero. As of December 31, 2013, cumulative federal net operating loss
carry-forwards totaled $167 million.

Cash and Liquidity

During the quarter, operating working capital (accounts receivable and
inventory, net of accounts payable and customer deposits) increased $14.3
million to $19.6 million or 8% of annualized first-quarter 2014 sales due to
the ramp up in production for 2014.

Cash assets declined to $11.5 million at March 31, 2014, a decrease of $14.3
million from December 31, 2013. At March 31, 2014, the Company's $20 million
line of credit was undrawn.

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, steel, 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, including those contained in Part I, Item 1A "Risk
Factors" of our Annual Reports on Form 10-K.



BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
                                                               
                                                    March 31,  December 31,
                                                    2014        2013
                                                    (Unaudited) 
ASSETS                                                          
CURRENT ASSETS:                                                 
Cash and cash equivalents                            $9,601    $24,936
Short-term investments                               1,795      1,143
Restricted cash                                      83         83
Accounts receivable, net of allowance for doubtful
accounts of $59 and $17 as of March 31, 2014 and     23,640     18,735
December 31, 2013, respectively
Inventories, net                                     39,123     37,143
Prepaid expenses and other current assets            1,925      2,325
Assets held for sale                                 1,582      1,970
Total current assets                                 77,749     86,335
Property and equipment, net                          67,797     69,077
Intangible assets, net                               5,792      5,903
Other assets                                         2,278      2,379
TOTAL ASSETS                                         $153,616  $163,694
                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY                            
CURRENT LIABILITIES:                                            
Lines of credit and notes payable                    $--      $--
Current maturities of long-term debt                 179        201
Current portions of capital lease obligations        946        933
Accounts payable                                     24,424     27,537
Accrued liabilities                                 7,327      8,115
Customer deposits                                    18,727     22,993
Liabilities held for sale                            361        749
Total current liabilities                            51,964     60,528
                                                               
LONG-TERM LIABILITIES:                                          
Long-term debt, net of current maturities            2,612      2,755
Long-term capital lease obligations, net of current  952        1,193
portions
Other                                                3,415      3,888
Total long-term liabilities                          6,979      7,836
                                                               
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; 14,696,157 and 14,627,990 shares issued  15         15
and outstanding as of March 31, 2014 andDecember
31, 2013, respectively
Additional paid-in capital                           376,511    376,125
Accumulated deficit                                  (281,853)  (280,810)
Total stockholders' equity                           94,673     95,330
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $153,616  $163,694




BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
                                                               
                                                 Three Months Ended March 31,
                                                 2014           2013
Revenues                                          $58,800      $45,506
Cost of sales                                     53,438        42,881
Restructuring                                     269           455
Gross profit                                      5,093         2,170
                                                               
OPERATING EXPENSES:                                             
Selling, general and administrative               5,917         5,388
Intangible amortization                           111           665
Restructuring                                     60            601
Total operating expenses                          6,088         6,654
Operating loss                                    (995)         (4,484)
                                                               
OTHER (EXPENSE) INCOME, net:                                    
Interest expense, net                             (160)         (391)
Other, net                                        136           335
Gain on sale of assets and restructuring          --           13
Total other (expense) income, net                 (24)          (43)
                                                               
Net loss from continuing operations before        (1,019)       (4,527)
provision for income taxes
Provision for income taxes                        24            22
LOSS FROM CONTINUING OPERATIONS                   (1,043)       (4,549)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX     --           (210)
NET LOSS                                          $(1,043)     $(4,759)
                                                               
                                                               
NET LOSS PER COMMON SHARE - BASIC AND DILUTED:                   
Loss from continuing operations                   $(0.07)      $(0.32)
Loss from discontinued operations                 --           (0.01)
Net loss                                          $(0.07)      $(0.33)
                                                               
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -      14,659        14,267
Basic and diluted



BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
                                                               
                                                 Three Months Ended March 31,
                                                 2014           2013
CASH FLOWS FROM OPERATING ACTIVITIES:                           
Net loss                                          $(1,043)     $(4,759)
                                                               
Adjustments to reconcile net cash used in                       
operating activities:
Depreciation and amortization expense             3,114         3,986
Impairment charges                                --           --
Change in fair value of interest rate swap        --           --
agreements
Deferred income taxes                             --           --
Stock-based compensation                          223           427
Allowance for doubtful accounts                   42            (154)
Common stock issued under defined contribution    163           138
401(k) plan
Loss on disposal of assets                        5             15
Changes in operating assets and liabilities:                    
Accounts receivable                               (4,947)       (6,156)
Inventories                                      (1,980)       (8,058)
Prepaid expenses and other current assets         457           (503)
Accounts payable                                 (2,672)       7,852
Accrued liabilities                               (788)         (69)
Customer deposits                                 (4,266)       4,149
Other non-current assets and liabilities          (425)         82
Net cash used in operating activities             (12,117)      (2,840)
                                                               
CASH FLOWS FROM INVESTING ACTIVITIES:                           
Proceeds from sale of logistics business and      --           --
related note receivable
Purchases of available for sale securities        (2,543)       --
Sales and maturities of available for sale        1,890         
securities
Purchases of property and equipment               (2,200)       (1,375)
Proceeds from disposals of property and equipment 45            4
(Increase) decrease in restricted cash            --           --
Net cash used in investing activities             (2,808)       (1,371)
                                                               
CASH FLOWS FROM FINANCING ACTIVITIES:                           
Net proceeds from issuance of stock               --           --
Payments on lines of credit and notes payable     (164)         (44,606)
Proceeds from lines of credit and notes payable   --           49,408
Proceeds from sale-leaseback transactions         --           --
Payments for debt issuance costs                  --           --
Principal payments on capital leases              (246)         (570)
Net cash (used in) provided by financing          (410)         4,232
activities
                                                               
                                                               
NET INCREASE (DECREASE) IN CASH AND CASH          (15,335)      21
EQUIVALENTS
CASH AND CASH EQUIVALENTS, beginning of the       24,936        516
period
CASH AND CASH EQUIVALENTS, end of the period      $9,601       $537
                                                               
Supplemental cash flow information:                             
Interest paid                                     $143         $334
Income taxes paid                                 $2           $13
Non-cash investing and financing activities:                    
Issuance of restricted stock grants               $138         $317



BROADWIND ENERGY, INC. AND SUBSIDIARIES
SELECTED SEGMENT FINANCIAL INFORMATION
(IN THOUSANDS)
                     
                     Three Months Ended March 31,
                     2014          2013
REVENUES:             (unaudited)
Towers and Weldments  $48,294     $29,871
Gearing               8,774        10,720
Services              2,438        7,484
Corporate and Other   (706)        (2,569)
Total revenues       $58,800     $45,506
                                  
OPERATING (LOSS) PROFIT:            
Towers and Weldments  $5,612      $2,154
Gearing               (2,966)      (2,977)
Services              (1,339)      (702)
Corporate and Other   (2,302)      (2,959)
Total operating loss $(995)      $(4,484)

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

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 months ended March 31, 2014 and 2013.
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
                                                 March 31,
                                                 2014     2013
                                                 (unaudited)
Operating loss                                    $(995) $(4,484)
Depreciation and amortization                     3,114   3,806
Share-based compensation and other stock payments 223     624
Other income                                      136     335
Restructuring                                    329     1,056
Total Adjusted EBITDA (Non-GAAP)                  $2,807 $1,337

                                                 
Towers and Weldments Segment                      Three Months Ended March 31,
                                                 2014           2013
                                                 (unaudited)
                                                 
Operating Profit                                  $5,612       $2,154
Depreciation                                      985           951
Share-based compensation and other stock payments 43            129
Other Income                                      2             159
Restructuring Expense                             18            78
Total Adjusted EBITDA (Non-GAAP)                  $6,660       $3,471

                                                 
                                                 Three Months Ended March 31,
Gearing Segment                                   2014           2013
                                                 (unaudited)
Operating Loss                                    $(2,966)     $(2,977)
Depreciation                                      1,690         1,866
Amortization                                      111           665
Share-based compensation and other stock payments 59            80
Other Income (Expense)                            2             (15)
Restructuring Expense                             311           401
Total Adjusted EBITDA (Non-GAAP)                  $(793)       $20

                                                 
                                                 
Services Segment                                  Three Months Ended March 31,
                                                 2014            2013
                                                 (unaudited)
Operating Loss                                    $(1,339)      $(702)
Depreciation                                      313            313
Share-based compensation and other stock payments 15             40
Other Income (Expense)                            133            191
Restructuring Expense                             --             119
Total Adjusted EBITDA (Non-GAAP)                  $(878)        $(39)

                                                 
Corporate and Other                               Three Months Ended March 31,
                                                 2014           2013
                                                 (unaudited)
Operating Loss                                    $(2,302)     $(2,959)
Depreciation                                      15            11
Share-based compensation and other stock payments 105           375
Restructuring Expense                             --            458
Total Adjusted EBITDA (Non-GAAP)                  $(2,182)     $(2,115)

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

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