Broadwind Energy, Inc. (NASDAQ: BWEN) stated sales of $41.7M in Q-1 2K19, up 39 percent difference to $30.0M in Q-1 2K18. The sharp raise was due mainly to a $10.1M raise in Towers and Heavy Fabrications segment sales as a result of a 31 percent raise in tower sections sold, in support of a strengthening Tower market and a higher average sales price driven by raises in steel prices. In Addition To, Gearing segment sales were up $1.2M, or 14 percent difference to Q-1 2K18, due mainly to strong demand from mining, wind, and other industrial customers.
The Company stated a net loss of $1.0M, or $.07 per share, in Q-1 2K19, difference to a net loss of $4.8M, or $.32 per share, in Q-1 2K18. The current year loss narrowed as a result of the raised in sales and improved operating performance.
Broadwind C-E-O Stephanie Kushner stated, “Gearing continues to carry strong operating results, reflecting development in the customer base, even operations, and good cost administration. The changes in the organizational structure and investments in process changes have dramatically enhanced the performance of this business for the long term.”
Kushner continued, “Capacity utilization at our tower plants is rising, and we be expecting it to remain strong for the medium term. Margins have been prejudiced by higher steel prices, but the team continues to bring operational improvements to assist offset this pressure. Our development into other heavy fabrications remains paramount, and order activity continues to be strong.”
Kushner concluded, “In the 2ND QUARTER, we expect revenue to exceed $40M with about $1.3 -$1.8M of EBITDA. Our full year outlook on the business is unchanged. We continue to expect quarterly revenues to exceed $40M and EBITDA generation of about $8M for the year.”
Orders and Backlog
The Company booked $24.0M of net new orders in Q-1 2K19, difference to $28.1M in Q-1 2K18. Towers and Heavy Fabrications orders rose to $12.5M in Q-1 2K19, up from $9.8M in Q-1 2K18. Gearing orders totaled $7.1M in Q-1 2K19, down from $15.4M Q-1 2K18, following a surge in oil and gas orders to secure production slots in the previous year and reflecting declined near-term demand for frack gears linked to a pause in development activity in the Permian Basin. Process Systems orders totaled $4.4M in Q-1 2K19 difference to $3.0M in Q-1 2K18 as a result of higher new gas turbine content demand from an international customer.
At March 31, 2K19, total backlog was $81.1M, difference to $96.5M at December 31, 2K18, a reduction that reflects the final year of a 3-year tower supply agreement. Future orders are expected to be on a spot basis, reflecting a shift in procurement practices in the industry.
Towers and Heavy Fabrications
Towers and Heavy Fabrications segment sales totaled $28.3M in Q-1 2K19, difference to $18.2M in Q-1 2K18. The remarkable improvement was due mainly to a 31 percent raise in tower sections sold and a higher average sales price on the product mix sold due mainly to the rise in steel prices.
The Towers and Heavy Fabrications segment operating loss totaled $.2M in Q-1 2K19 difference to an operating loss of $2.1M in Q-1 2K18. The remarable improvement was due mainly to higher plant utilization and improved plant efficiencies counting the absence of remarable start-up costs related to the quick production ramp up from near shutdown levels in the previous year.
The net loss narrowed for the Towers and Heavy Fabrications segment to $.2M in Q-1 2K19, from a net loss of $1.7M in Q-1 2K18. Non-GAAP Adjusted EBITDA in Q-1 2K19 was $1.1M difference to an EBITDA loss of $.5M in Q-1 2K18 (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release). The raise was due mainly to the factors described above.
Gearing segment sales totaled $10.0M in Q-1 2K19, difference to $8.8M in Q-1 2K18. The $1.2M raise was due mainly to higher mining, wind and other industrial shipments, partially offset by lower demand from oil and gas customers, which is expected to continue in the near-term. The operating profit raised to $1.4M in Q-1 2K19, difference to a $.6M loss in Q-1 2K18.
The remarkable improvement was due mainly to the raise in revenue noted above, continued improvements in operating efficiencies and the absence of residual impact of supply chain delays and higher manufacturing variances in the previous year. The net income for the Gearing segment totaled $1.3M in Q-1 2K19, difference to a net loss of $.6M in Q-1 2K18.
The Gearing segment stated $2.0M of Non-GAAP adjusted EBITDA for Q-1 2K19 difference to a near breakeven Non-GAAP adjusted EBITDA in Q-1 2K18 (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release). The $2.0M improvement was due mainly to the factors described above.
Process Systems revenue totaled $3.3M in Q-1 2K19 difference to $3.0M in Q-1 2K18, due mainly to higher sales for aftermarket natural gas turbine content. The operating loss was $.3M in both periods, as the favorable impact of lower amortization expense was offset by a lower margin revenue mix.
The net loss for the Process Systems segment was $.3M in Q-1 2K19, difference to a net loss of $.1M in Q-1 2K18. The Process Systems segment stated $.2M of Non-GAAP adjusted EBITDA loss for Q-1 2K19 difference to Non-GAAP adjusted EBITDA of $.1M in Q-1 2K18 (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release).
Corporate and other expenses totaled $1.4M in Q-1 2K19, down from $1.5M in Q-1 2K18. The decrease was due mainly to lower insurance expense, partly offset by raised incentive compensation expense.
Cash and Liquidity
During Q-1 2K19, operating working capital (accounts receivable and inventory, net of accounts payable and customer deposits) raised to $17.6M from $5.0M at year-end 2K18, as production levels raised to support higher planned tower deliveries. The cash conversion ratio raised sequentially, from 16 days at year-end 2K18 to 41 days, predominantly driven by the raise in operating working capital.
Capital expenditures, net of disposals, in Q-1 2K19 totaled $.6M.
Debt and capital leases totaled $25.7M at March 31, 2K19. The Company’s $35M line of credit with CIBC had a balance of $22.2M at March 31, 2K19 and $7.5M of availability.
The Company adopted Accounting Standards Codification 842, related to new lease accounting standards, on January 1, 2K19, recognizing operating lease liabilities totaling $19.1M and a corresponding right of use asset of $17.2M.