Broadwind Energy, Inc. (BWEN)

FORM 8-K | Current report
May. 2, 2017 7:00 AM
|
About: Broadwind Energy, Inc. (BWEN)View as PDF
BROADWIND ENERGY, INC. (Form: 8-K, Received: 05/02/2017 07:01:49)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): May 2, 2017

 

BROADWIND ENERGY, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware 001-34278 88-0409160
(State or Other Jurisdiction of (Commission File Number) (IRS Employer Identification No.)
Incorporation)    
     

 

3240 South Central Avenue, Cicero, Illinois 60804

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (708) 780-4800

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

Item 2.02.  Results of Operations and Financial Condition.

 

On May 2, 2017, Broadwind Energy, Inc. (the “Company”) issued a press release announcing its financial results as of and for the quarter ended March 31, 2017.  The press release is incorporated herein by reference and is attached hereto as Exhibit 99.1.

 

The information contained in, or incorporated into, this Item 2.02 of this Current Report on Form 8-K (this “Report”), including Exhibit 99.1, is furnished under Item 2.02 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act regardless of any general incorporation language in such filings.

 

Item 7.01. Regulation FD Disclosure.

 

An Investor Presentation dated May 2, 2017 is incorporated herein by reference and attached hereto as Exhibit 99.2.

 

The information contained in, or incorporated into, this Item 7.01 of this Report, including Exhibit 99.2 attached hereto, is furnished under Item 7.01 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act or the Exchange Act regardless of any general incorporation language in such filings.

 

This Report shall not be deemed an admission as to the materiality of any information in this Report that is being disclosed pursuant to Regulation FD.

 

Please refer to Exhibit 99.2 for a discussion of certain forward-looking statements included therein and the risks and uncertainties related thereto.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)   Exhibits
     

EXHIBIT

NUMBER

  DESCRIPTION
99.1   Press Release dated May 2, 2017
99.2   Investor Presentation dated May 2, 2017

 

 

2
 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

  BROADWIND ENERGY, INC.
   
May 2, 2017 By:  /s/ Stephanie K. Kushner
    Stephanie K. Kushner
    Chief Executive Officer and Chief Financial Officer
    (Principal Executive Officer and Principal Financial Officer)

 

 

 

 

 

3
 

EXHIBIT INDEX

 

EXHIBIT

NUMBER

  DESCRIPTION
     
99.1   Press Release dated May 2, 2017
99.2   Investor Presentation dated May 2, 2017

 

 

 

 

 

 

4

 

 

EXHIBIT 99.1

Broadwind Energy Announces Q1 2017 Results

Highlights:

  • Closed Red Wolf acquisition during Q1 2017
  • Q1 2017 orders total $40 million, up 3% from Q1 2016
  • Revenue of $56 million for Q1 2017, up 20% from Q1 2016 as expected – 16% increase in tower revenue and addition of Red Wolf
  • Gross profit margin rises 290 basis points to 11.4% in Q1 2017, compared to 8.5% in Q1 2016
  • Income from continuing operations of $6.5 million ($.43 per share) for Q1 2017, compared to loss from continuing operations of $.4 million ($.02 per share) for Q1 2016; includes one-time $.34 per share income tax benefit related to Red Wolf
  • Cash and cash assets drop to $.3 million as expected following $16.5 million cash payment for Red Wolf acquisition - $6.5 million drawn against expanded $25 million credit line

CICERO, Ill., May 02, 2017 (GLOBE NEWSWIRE) -- Broadwind Energy, Inc. (NASDAQ:BWEN) reported sales of $56.1 million in Q1 2017, up 20% compared to $46.8 million in Q1 2016. The increase was primarily due to a 16% increase in Towers and Weldments segment revenue due to high shipments in advance of the 100% safe harbor Production Tax Credit deadline, and significantly improved production flow in the Abilene tower plant. Additionally, the current quarter included $3.3 million of sales from the newly formed Process Systems segment, which includes the Abilene compressed natural gas (CNG) and fabrication business and Red Wolf Company, LLC (Red Wolf) as of the February 1, 2017 acquisition date. These increases were partially offset by lower Gearing segment revenue resulting from broadly lower second half 2016 order intake.

The Company reported net income from continuing operations of $6.5 million, or $.43 per share, in Q1 2017, compared to a net loss from continuing operations of $.4 million, or $.02 per share, in Q1 2016. The current quarter includes a $5.1 million, or $.34 per share income tax benefit due primarily to the partial release of a tax valuation allowance related to the Red Wolf acquisition. The remaining $.11 per share improvement was due mainly to the improved production flow in the Towers and Weldments segment.

The Company reported a net loss from discontinued operations of $.2 million, or $.01 per share, in Q1 2017, compared to near break-even in Q1 2016. The Company reported non-GAAP adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, share-based payments and restructuring costs) of $3.9 million in Q1 2017, compared to $1.7 million in Q1 2016 (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release). The $2.2 million improvement was mainly attributable to the increased volume and productivity in the Towers and Weldments segment as well as a $.4 million reduction in Corporate expenses.

Broadwind CEO Stephanie Kushner stated, “Broadwind started the year strong. Revenue was up 20% and we doubled our EBITDA margin to 7% from last year. Our team members’ focus on continuous operational improvement and stringent cost reduction is reflected in our financial performance. Towers results exceeded our plan, as we operated at full capacity to meet aggressive customer delivery schedules, while successfully converting to a new tower model in the Abilene plant.

“Gearing revenue was soft due to weak order intake late last year, but orders have risen sharply since the beginning of 2017 due to recovering oil and gas markets and the expansion of our sales organization. The work we did in 2016 to improve delivery times, raise productivity and reduce costs will translate into significant financial improvements as the year progresses.

Ms. Kushner continued, “Our tower order intake was weak in the first quarter and the near-term demand outlook for our Manitowoc plant is down significantly, as the impact of our customers pre-ordering components in advance of the safe harbor Production Tax Credit deadline was greater than we anticipated. While the medium-term outlook for our tower business remains strong, we have taken immediate action to reduce headcount and lower our tower production rate through at least the next two quarters. Despite the addition of Red Wolf and the recovery of Gearing volumes, we have revised down our full-year outlook to reflect flat year-over-year revenue with EBITDA growth exceeding 15 percent. We believe this tower weakness is short-term and reflects the structure of the PTC qualification rules. This does not alter our strategic objective of doubling revenue and EBITDA margins over the next three years.”

Orders and Backlog

The Company booked $40.0 million of net new orders in Q1 2017, compared to $39.0 million of net new orders booked in Q1 2016. Towers and Weldments orders, which vary considerably from quarter to quarter, totaled $29.1 million in Q1 2017, down from $35.4 million in Q1 2016, reflecting weaker demand for towers in the upper Midwest, due to pre-buys of equipment by turbine manufacturers and the locational mix of windfarms under construction. Gearing orders totaled $7.3 million in Q1 2017, more than double Q1 2016 orders of $3.5 million, due to increased orders from oil & gas and industrial customers. Process Systems orders totaled $3.6 million in Q1 2017.

At March 31, 2017, total backlog was $181.7 million, more than double the backlog of $86.0 million at March 31, 2016.

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 $48.9 million in Q1 2017, compared to $42.0 million in Q1 2016. Tower sales increased 16% compared to Q1 2016 due to improved production flow at the Abilene plant and higher material costs, which are generally passed through to the customer. Operating income totaled $5.8 million in Q1 2017, compared to $3.2 million in Q1 2016, due to the improved throughput at the Abilene plant, and better overhead absorption at both tower plants. Net income for the segment totaled $4.0 million in Q1 2017, compared to $2.1 million in Q1 2016. Non-GAAP adjusted EBITDA totaled $7.0 million in Q1 2017, compared to $4.3 million in Q1 2016, due mainly to the factors described above. (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release)

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

Gearing segment sales totaled $3.9 million in Q1 2017, compared to $4.8 million in Q1 2016. The $.9 million decrease was due to reduced sales to oil & gas and mining industry customers related to the weak order intake in the second half of 2016. Operating loss was $1.5 million in Q1 2017, compared to $1.2 million in Q1 2016. The $.3 million increase was due to lower sales, the absence of a $.1 gain from an asset sale recorded in Q1 2016 and higher compensation expense. Net loss for the Gearing segment totaled $1.5 million in Q1 2017, compared to a net loss of $1.2 million in Q1 2016. The Non-GAAP adjusted EBITDA loss for Q1 2017 totaled $.9 million, compared to $.5 million in Q1 2016, due to the factors described above. (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release)

Process Systems
Broadwind Energy designs and manufactures custom, modular systems for compression, filtration and other specialized process applications for the global market.

On February 1, 2017 the Company acquired Red Wolf which has been combined with the Abilene CNG and fabrication business, previously reported as a part of Towers and Weldments, to form the Process Systems segment. The Process Systems segment results include a partial period of Red Wolf results as of the acquisition date. Process Systems sales for Q1 2017 totaled $3.3 million. For Q1 2017, Process Systems operating loss totaled $.8 million and net loss for the Process Systems segment totaled $.7 million. The first quarter loss reflects the absence of any CNG unit shipments and included a $.2 million adverse impact of inventory revaluation associated with purchase accounting and $.2 million of intangible amortization associated with the Red Wolf transaction. Non-GAAP adjusted EBITDA loss totaled $.5 million in Q1 2017. (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release)

Corporate

Corporate and other expenses totaled $1.9 million in Q1 2017, compared to $2.3 million in Q1 2016. The decrease was due mainly to lower health care costs in Q1 2017.

Cash and Liquidity

During Q1 2017, operating working capital (accounts receivable and inventory, net of accounts payable and customer deposits) increased to $16.4 million due to the addition of Red Wolf and higher accounts receivable.

Capital expenditures, net of disposals, in Q1 2017 totaled $3.3 million. Expenditures included investments to upgrade the coatings systems in the tower plants, and outlays associated with the expansion of the Abilene tower plant which will be operational in mid-2017.

Cash assets (cash and short-term investments) dropped as expected to $.2 million at March 31, 2017, compared to $21.9 million at December 31, 2016, following the acquisition of Red Wolf on February 1, 2017 for a closing cash payment of $16.5 million, subject to adjustment and additional earn-out payments.

Debt and capital leases totaled $10.5 million at March 31, 2017, including the $2.6 million New Markets Tax Credit loan, which is expected to be substantially forgiven when it matures in 2018. The Company’s credit line with The Private Bank and Trust Company had a balance of $6.5 million at March 31, 2017. Late in the quarter, the credit line was increased to $25 million to accommodate the additional working capital associated with Red Wolf.

About Broadwind Energy, Inc.
Broadwind Energy (NASDAQ:BWEN) is a precision manufacturer of structures, equipment and components for clean tech and other specialized applications. From gears and gearing systems for wind, oil and gas and mining applications, to wind towers and industrial weldments, we have solutions for the clean tech, energy and infrastructure needs of the future. With facilities throughout the U.S., Broadwind Energy's talented team 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 contains “forward looking statements”—that is, statements related to future, not past, events—as defined in Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. Forward looking statements include any statement that does not directly relate to a current or historical fact. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements. Forward looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following: (i) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards; (ii) our customer relationships and efforts to diversify our customer base and sector focus and leverage customer relationships across business units; (iii) our ability to continue to grow our business organically and through acquisitions; (iv) the sufficiency of our liquidity and alternate sources of funding, if necessary; (v) our ability to realize revenue from customer orders and backlog; (vi) our ability to operate our business efficiently, manage capital expenditures and costs effectively, and generate cash flow; (vii) the economy and the potential impact it may have on our business, including our customers; (viii) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets; (ix) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (x) the effects of the recent change of administrations in the U.S. federal government; (xi) our ability to successfully integrate and operate the business of Red Wolf Company, LLC and to identify, negotiate and execute future acquisitions; and (xii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change.

    BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
     
            March 31,   December 31,
              2017       2016  
  ASSETS   (Unaudited)    
  CURRENT ASSETS:        
    Cash and cash equivalents   $   216     $   18,699  
    Short-term investments        -          3,171  
    Restricted cash        39         39  
    Accounts receivable, net of allowance for doubtful accounts of $153        
     and $145 as of March 31, 2017 and December 31, 2016, respectively        23,690         11,865  
    Inventories, net        25,775         21,159  
    Prepaid expenses and other current assets       2,027         2,449  
    Current assets held for sale        626         808  
      Total current assets        52,373         58,190  
  LONG-TERM ASSETS:        
    Property and equipment, net        55,982         54,606  
    Goodwill       5,568         -   
    Other intangible assets, net       17,491         4,572  
    Other assets        274         294  
  TOTAL ASSETS     $   131,688     $   117,662  
                 
  LIABILITIES AND STOCKHOLDERS' EQUITY        
  CURRENT LIABILITIES:        
    Line of credit and notes payable    $   6,494     $   -   
    Current portions of capital lease obligations        470         465  
    Accounts payable        19,495         15,852  
    Accrued liabilities        8,536         8,430  
    Customer deposits        13,574         18,011  
    Current liabilities held for sale       371         493  
      Total current liabilities        48,940         43,251  
  LONG-TERM LIABILITIES:        
    Long-term debt, net of current maturities        2,600         2,600  
    Long-term capital lease obligations, net of current portions        918         1,038  
    Other       4,098         2,190  
      Total long-term liabilities        7,616         5,828  
  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; 15,255,688        
    and 15,175,767 shares issued as of March 31, 2017 and        
    December 31, 2016, respectively       15         15  
    Treasury stock, at cost, 273,937 shares as of March 31, 2017 and December 31, 2016       (1,842 )       (1,842 )
    Additional paid-in capital        379,098         378,876  
    Accumulated deficit        (302,139 )       (308,466 )
      Total stockholders' equity       75,132         68,583  
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $   131,688     $   117,662  


  BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
           
          Three Months Ended March 31,
            2017       2016  
               
               
  Revenues    $   56,060     $   46,757  
  Cost of sales        49,686         42,795  
  Gross profit        6,374         3,962  
               
  OPERATING EXPENSES:        
  Selling, general and administrative        4,420         4,075  
  Intangible amortization        351         111  
    Total operating expenses        4,771         4,186  
  Operating income (loss)       1,603         (224 )
               
  OTHER (EXPENSE) INCOME, net:        
  Interest expense, net        (139 )       (154 )
  Other, net       -          12  
    Total other expense, net        (139 )       (142 )
               
  Net income (loss) before benefit for income taxes        1,464         (366 )
  Benefit for income taxes        (5,018 )       (8 )
  INCOME (LOSS) FROM CONTINUING OPERATIONS        6,482         (358 )
  LOSS FROM DISCONTINUED OPERATIONS        (155 )       (19 )
  NET INCOME (LOSS)   $   6,327     $   (377 )
               
               
  NET INCOME (LOSS) PER COMMON SHARE - BASIC:        
  Income (loss) from continuing operations    $   0.43     $   (0.02 )
  Loss from discontinued operations    $   (0.01 )       (0.00 )
  Net income (loss)   $   0.42     $   (0.03 )
               
  WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC       14,929         14,758  
               
  NET INCOME (LOSS) PER COMMON SHARE - DILUTED:        
  Income (loss) from continuing operations    $   0.43     $   (0.02 )
  Loss from discontinued operations        (0.01 )       (0.00 )
  Net income (loss)   $   0.42     $   (0.03 )
               
  WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED       15,195         14,758  


BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
 
           
          Three Months Ended March 31,
            2017     2016  
CASH FLOWS FROM OPERATING ACTIVITIES:      
  Net income (loss)    $   6,327   $   (377 )
  Loss from discontinued operations        (155 )     (19 )
  Income (loss) from continuing operations       6,482       (358 )
             
Adjustments to reconcile net cash used in operating activities:    
  Depreciation and amortization expense        2,101       1,657  
  Deferred income taxes        (5,050 )     -   
  Stock-based compensation        222       259  
  Allowance for doubtful accounts        8       80  
  Gain on disposal of assets        (2 )     (138 )
  Changes in operating assets and liabilities:      
    Accounts receivable        (9,037 )     (2,753 )
    Inventories        382       5,348  
    Prepaid expenses and other current assets        423       (55 )
    Accounts payable        2,883       1,848  
    Accrued liabilities       (2,356 )     (129 )
    Customer deposits        (4,440 )     (2,163 )
    Other non-current assets and liabilities        239       (535 )
Net cash (used in) provided by operating activities of continuing operations       (8,145 )     3,061  
             
CASH FLOWS FROM INVESTING ACTIVITIES:      
  Cash paid in acquisition        (16,659 )     -   
  Purchases of available for sale securities        -        (1,978 )
  Sales of available for sale securities        2,221       36  
  Maturities of available for sale securities        950       2,425  
  Purchases of property and equipment        (3,261 )     (950 )
  Proceeds from disposals of property and equipment       2       -   
Net cash  (used in) provided by investing activities of continuing operations       (16,747 )      (467 )
             
CASH FLOWS FROM FINANCING ACTIVITIES:      
  Net proceeds from lines of credit and notes payable        6,494       -   
  Payments on long-term debt       -        (179 )
  Principal payments on capital leases        (114 )     (147 )
Net cash provided by (used in) financing activities of continuing operations       6,380       (326 )
             
             
DISCONTINUED OPERATIONS:      
  Operating cash flows        74       826  
  Investing cash flows        -        151  
  Financing cash flows        (109 )     (12 )
Net cash provided by (used in) discontinued operations       (35 )     965  
             
Add: Cash balance of discontinued operations, beginning of period       2       -   
Less: Cash balance of discontinued operations, end of period       -        2  
             
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH       (18,545 )     3,231  
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH beginning of the period        18,800       6,519  
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH end of the period    $   255   $   9,750  
             
Supplemental cash flow information:      
  Interest paid    $   77   $   143  
  Income taxes paid    $   3   $   12  
  Contingent consideration related to business acquisition $   2,944   $   -   
Non-cash investing and financing activities:      
  Issuance of restricted stock grants    $   222   $   259  
Red Wolf acquisition:    
Assets acquired    $   27,157   $   -   
Liabilities assumed    $   7,554   $   -   


  BROADWIND ENERGY, INC. AND SUBSIDIARIES
SELECTED SEGMENT FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
   
        Three Months Ended
        March 31,
          2017       2016  
ORDERS:      
  Towers and Weldments $   29,088     $   35,436  
  Gearing     7,319         3,540  
  Process Systems     3,615         -   
    Total orders $   40,022     $   38,976  
             
REVENUES:      
  Towers and Weldments     $   48,895     $   42,015  
  Gearing         3,871     $   4,760  
  Process Systems     3,294         -   
  Corporate and Other         -          (18 )
    Total revenues     $   56,060     $   46,757  
             
OPERATING PROFIT/(LOSS):      
  Towers and Weldments     $   5,849         3,241  
  Gearing         (1,531 )       (1,202 )
  Process Systems     (822 )       -   
  Corporate and Other         (1,893 )       (2,263 )
    Total operating profit/(loss)     $   1,603     $   (224 )

Non-GAAP Financial Measure
The Company provides non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, and stock compensation) as supplemental information regarding the Company’s business performance. The Company’s management uses adjusted EBITDA when it internally evaluates the performance of the Company’s business, reviews financial trends and makes operating and strategic decisions. The Company believes that this non-GAAP financial measure is useful to investors because it provides investors with a better understanding of the Company’s past financial performance and future results allows investors to evaluate the Company’s performance using the same methodology and information as used by the Company’s management. The Company's definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.

  BROADWIND ENERGY, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
(UNAUDITED)
   
  Consolidated   Three Months Ended March 31,
          2017       2016  
  Net Income/(Loss) from continuing operations    $   6,482     $   (358 )
  Interest Expense        139         154  
  Income Tax Provision/(Benefit)       (5,018 )       (8 )
  Depreciation and Amortization     2,101         1,657  
  Share-based Compensation and Other Stock Payments     222         259  
  Restructuring Expense      -          -   
      Adjusted EBITDA (Non-GAAP)   $   3,926     $   1,704  


Towers and Weldments Segment Three Months Ended March 31,
    2017     2016
Net Income  $   4,003   $   2,140
Interest Expense/(Benefit)      15       10
Income Tax Provision/(Benefit)     1,831       1,103
Depreciation and Amortization     1,092       966
Share-based Compensation and Other Stock Payments     58       38
  Adjusted EBITDA (Non-GAAP)  $   6,999   $   4,257


Gearing Segment   Three Months Ended March 31,  
      2017       2016    
Net Loss    $   (1,537 )   $   (1,208 )  
Interest Expense        4         5    
Income Tax Provision/(Benefit)       2         1    
Depreciation and Amortization       625         639    
Share-based Compensation and Other Stock Payments       19         48    
  Adjusted EBITDA (Non-GAAP)    $   (887 )   $   (515 )  
           


Process Systems Three Months Ended March 31,
    2017       2016
Net Income/(Loss)  $   (699 )   $   - 
Interest Expense      1         - 
Income Tax Provision/(Benefit)     (125 )       - 
Depreciation and Amortization     334         - 
Share-based Compensation and Other Stock Payments     6         - 
  Adjusted EBITDA (Non-GAAP)  $   (483 )   $   - 


Corporate and Other Three Months Ended March 31,
    2017       2016  
Net Income/(Loss)  $   4,715     $   (1,290 )
Interest Expense      119         140  
Income Tax Provision/(Benefit)     (6,726 )       (1,113 )
Depreciation and Amortization     51         52  
Share-based Compensation and Other Stock Payments     139         173  
  Adjusted EBITDA (Non-GAAP)  $   (1,703 )   $   (2,038 )
               

 

BWEN INVESTOR CONTACT:
Joni Konstantelos, 708.780.4819
joni.konstantelos@bwen.com

EXHIBIT 99.2

 

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Q1 2017 Earnings Call May 2, 2017

 

 

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Industry Data and Forward - Looking Statements Disclaimer ▪ Broadwind obtained the industry and market data used throughout this presentation from our own research, internal surveys and st udies conducted by third parties, independent industry associations or general publications and other publicly available informatio n. Independent industry publications and surveys generally state that they have obtained information from sources believed to be reliable, but do not gu arantee the accuracy or completeness of such information. Forecasts are particularly likely to be inaccurate, especially over long periods of time. W e a re not aware of any misstatements in the industry data we have presented herein, but estimates involve risks and uncertainties and a re subject to change based on various factors beyond our control. ▪ This presentation contains “forward - looking statements ”, as defined in Section 21E of the Securities Exchange Act of 1934, as amended. Forward - looking statements include any statement that does not directly relate to a current or historical fact. Our forward - look ing statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following: (i ) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, conti nua tion or renewal of federal tax incentives and grants and state renewable portfolio standards; (ii) our customer relationships and efforts to div ers ify our customer base and sector focus and leverage customer relationships across business units; (iii) our ability to continue to grow our busines s o rganically and through acquisitions; (iv) the sufficiency of our liquidity and alternate sources of funding, if necessary; (v) our ability t o r ealize revenue from customer orders and backlog; (vi) our ability to operate our business efficiently, manage capital expenditures and costs effe cti vely, and generate cash flow; (vii) the economy and the potential impact it may have on our business, including our customers; (viii) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those marke ts; (ix) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (x) the effects of the recent change of administrations in the U.S. federal government; (xi) our ability to successfully integrate and operate the business of Red Wolf Company, LLC and to identify, negotiate and execute future acquisitions; and (xii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors. We are under no duty to update any of these statements. You sh oul d not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our c urr ent beliefs, expectations, plans and/or assumptions to change. ▪ This presentation contains non - GAAP financial information. We believe 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. We believe tha t these non - GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a c omp arison of historical information that excludes certain infrequently occurring or non - operational items that impact the overall comparabili ty. Non - GAAP financial measures should be viewed in addition to, and not as an alternative to, our reported results prepared in accordance wi th GAAP. Please see our earnings release dated May 2, 2017 for a reconciliation of certain non - GAAP measures presented in this presentation. May 2, 2017

 

 

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Q1 2017 Highlights May 2, 2017 • Completed Red Wolf acquisition — provides new growth platform and exposure to gas - fired utility scale turbine market • Q1 revenue up 20%; strong results from Towers — volume, productivity and overhead absorption all favorable • Gross Profit rose ~300 basis points to 11.4% • $.43 EPS – incl. one - time $.34 income tax benefit • EBITDA of $3.9M, 7% of sales • Initial evidence of recovery in Gearing markets

 

 

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Orders and Backlog Orders – $M ▪ $29M of new Towers & Weldments orders in Q1 ▪ Q1 17 Gearing orders up vs. PY – orders from oil & gas and industrial customers ▪ Process Systems includes Red Wolf and CNG Backlog – $M ▪ 3/31 backlog $182M ▪ Pause in tower order activity following PTC qualification deadline Q1 2016 Q1 2017 Book : Bill Ratio FY 2016 Towers & Weldments 35.4 29.1 0.6 260.8 Gearing 3.5 7.3 1.9 14.2 Process Systems n/a 3.6 1.1 n/a Total 39.0 40.0 .71 275.0 May 2, 2017 - 50 100 150 200 250 300 350 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 Q1 17 Millions

 

 

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Wind Market Update May 2, 2017 Texas/Plai ns 43% Midwest 37% CO/NM 12% Others 8% ▪ ~21 GW under construction or in advanced development at end of Q1 17 ▪ 4.5 GW in new construction announcements in Q1 17 ▪ Majority of new construction/adv. development located in Texas (~9GW) and the Midwest (~8GW) Wind Power Capacity Under Construction/Advanced Development Geographic Breakdown of Wind Power Under Construction/in Advanced Development S ource: AWEA Q1 17 Market Report S ource: AWEA Q1 17 Market Report

 

 

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Gear Market Update May 2, 2017 Source: IHS US Gear Demand by Market 2016 % Chg. 2017 % Chg. Turbines/Power - 24.9 +11.0 Oil & Gas - 37.8 +17.7 Mining - 17.1 +11.5 Other Industrial - 3.2 +11.4 US Total - 16.6 +6.4 Source: IHS Third upward revision of US gear demand forecast within last 8 months

 

 

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BWEN Consolidated Financial Results May 2, 2017 ▪ Sales up 20%; Towers and Weldments + 16%, Gearing – 19%, Process Systems added 7% ▪ Gross Margin, profit and EBITDA increases all due to improved tower production flow in Abilene and better overhead absorption in both tower plants ▪ EPS of $.43 includes one - time $5.1M ($.34 per share) income tax benefit related to Red Wolf 2016 2017 Total Sales 46.8$ 56.1$ Gross Profit 4.0 6.4 Gross Profit % 8.5% 11.4% Total Operating Expense 4.2 4.8 Income from Operations -0.2 1.6 % of Sales -0.5% 2.0% Adj. EBITDA 1.7 3.9 % of Sales 3.6% 7.0% EPS, Continuing -0.02 0.43 Memo: Net I/(L) incl. Disc. Ops. -0.03 0.42 $M except as noted otherwise Q1

 

 

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Towers and Weldments Q1 2016 Q1 2017 FY 2016 Orders ($M) 35.4 29.1 260.8 Towers Sold (#) 119 133 458 Revenue ($M) 42.0 48.9 160.2 Operating Income ($M) 3.2 5.8 12.8 - % of Sales 7.7% 11.9% 8.0% EBITDA* ($M) 4.3 7.0 17.2 - % of Sales 10.1% 14.3% 10.7 Q1 Results ▪ Towers sold +12% vs. Q1 16 – improved throughput in Abilene; strong demand for 100% PTC qualification ▪ Operating income up 81% vs. Q1 16 – high labor efficiency, better overhead absorption in both plants ▪ EBITDA margin 14.3% 2017 Objectives ▪ Sell remaining 2017 - 18 tower capacity; build and diversify Weldments backlog ▪ Complete capital investments to provide better production flexibility ▪ Reduce tower production cost through improved welding and paint productivity May 2, 2017 0 100 200 300 400 500 2012 2013 2014 2015 2016 2017E # of Towers Annual Tower Sales * Reconciliation to non - GAAP measure included in Appendix

 

 

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Gearing Q1 2016 Q1 2017 FY 2016 Orders ($M) 3.5 7.3 14.2 Revenue ($M) 4.8 3.9 20.6 Operating Loss ($M) - 1.2 - 1.5 - 3.2 EBITDA* ($M) - 0.5 - 0.9 - 0.6 Q1 Results ▪ Orders up significantly – oil & gas and industrial ▪ Revenue down due to low order intake in 2H 16 ▪ Operating loss slightly worse – lower sales, absence of gain on asset sale in Q1 16 and higher compensation expense May 2, 2017 2017 Objectives ▪ Leverage expanded sales resources to improve capacity utilization – target $7.5M/quarter shipments ▪ Continue cross - training to improve labor productivity ▪ Continue aggressive cost management ▪ Positive EBITDA for 2017 — trending to positive Operating Income * Reconciliation to non - GAAP measure included in Appendix 8.5 18.5 9.1 6.9 9.9 3.9 9.0 2.1 3.7 5.6 2.2 2.9 7.3 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Gears Order History

 

 

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May 2, 2017 Process Systems Q1 2016 Q1 2017 Orders ($M) n/a 3.6 Revenue ($M) n/a 3.3 Operating Loss ($M) n/a - 0.8 EBITDA* ($M) n/a - 0.5 * Reconciliation to non - GAAP measure included in Appendix Q1 Results ▪ Process Systems includes Abilene - based CNG, and Red Wolf as of Feb 1 ▪ Q1 Orders include Red Wolf $2.3M and CNG $1.2M ▪ No CNG units shipped in Q1 ▪ Results include $0.5M of inventory revaluation and purchase accounting from acquisition 2017 Objectives ▪ Seamless integration of Red Wolf into BWEN ▪ Build momentum on CNG business ▪ Grow Red Wolf business by expanding customer base and entering new markets

 

 

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Operating Working Capital (OWC) May 2, 2017 ▪ Q1 OWC back in “normal” range -- $.07/ dollar sales ▪ OWC increase driven by addition of Red Wolf and higher A/R — surge of March shipments ▪ 2017 OWC expected to rise with expansion of Gears and addition of Red Wolf * Operating Working Capital = Trade A/R + Inventories – Trade Payables – Customer Deposits 12/31/16 3/31/17 DSO 22 39 Inv. Turns 8.2 7.7 DPO 33 36 Cash Conv. (days) 0 28 $- $0.02 $0.04 $0.06 $0.08 $0.10 $0.12 $0.14 $0.16 $0.18 $0.20 OWC* Historical Trend – cents/$ sales OWC* Management

 

 

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Balance Sheet and Capital Expenditures May 2, 2017 1% 1% 2% 1% 2.0% 2.3% 4.8% 5.4% 5.8% Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Cap Ex - % of Revenue Typically ~ 2% of revenue Abilene Expansion and Coatings Improvements ▪ Cash Assets dropped as expected - Red Wolf acquisition $16.5M + rebound in working capital ▪ PrivateBank line of credit increased to $ 25M to include Red Wolf -- $6.5M drawn at quarter - end ▪ Capex remains elevated for Abilene expansion and other tower plant improvements – FY capex estimate $8M 12/31/2016 3/31/2017 Cash Assets 21.9$ 0.3$ Accounts Receivable 11.9 23.7 Inventory 21.2 25.8 PPE 54.6 56.0 Other 8.1 25.9 Total Assets 117.7 131.7 Accounts Payable 15.9 19.5 Customer Deposits 18.0 13.6 Debt + Cap. Leases 4.1 10.5 Other 11.1 13.0 Total Liabilities 49.1 56.6 Equity 68.6 75.1 (In Millions)

 

 

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2017 Guidance and Priorities Q2 2016 Q2 2017 FY 2016 FY 2017 Revenue ($M) $46.8 $43 - 45 $180.8 $180 - 185 EBITDA* ($M) $1.7 $1.5 - 2 $9.6 > $11 EPS ($.02) ($.05) $.09 $.44 - .46** May 2, 2017 ▪ Sell remaining 2017 - 2018 tower capacity ▪ Complete T ower capital investments ▪ Complete integration of Red Wolf — launch market expansion initiatives ▪ Controlled execution of Gearing revenue growth to achieve segment profitability ▪ Evaluate additional acquisition opportunities to support growth strategy *Reconciliation to non - GAAP measure included in Appendix ** Includes one - time tax benefit of $.34/share

 

 

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Appendix May 2, 2017 Consolidated 2017 2016 Net Income/(Loss) from continuing operations…………………………….6,482$ (358)$ Interest Expense…………………………………. 139 154 Income Tax Provision/(Benefit)……………………………… (5,018) (8) Depreciation and Amortization………………………………………………………………2,101 1,657 Share-based Compensation and Other Stock Payments………………………………………………………………222 259 Restructuring Expense…………………………………………………... - - Adjusted EBITDA (Non-GAAP)………………… 3,926$ 1,704$ Three Months Ended March 31, Towers and Weldments Segment 2017 2016 Net Income…...……………………………. 4,003$ 2,140$ Interest Expense/(Benefit)…………………………………. 15 10 Income Tax Provision/(Benefit)……………………………… 1,831 1,103 Depreciation and Amortization………………………………………………………………1,092 966 Share-based Compensation and Other Stock Payments………………………………………………………………58 38 Adjusted EBITDA (Non-GAAP)…………………. 6,999$ 4,257$ Three Months Ended March 31, Gearing Segment 2017 2016 Net Loss……………………………. (1,537)$ (1,208)$ Interest Expense…………………………………. 4 5 Income Tax Provision/(Benefit)……………………………… 2 1 Depreciation and Amortization………………………………………………………………625 639 Share-based Compensation and Other Stock Payments………………………………………………………………19 48 Adjusted EBITDA (Non-GAAP)…………………. (887)$ (515)$ Three Months Ended March 31, Process Systems 2017 2016 Net Income/(Loss)……………………………. (699)$ -$ Interest Expense…………………………………. 1 - Income Tax Provision/(Benefit)……………………………… (125) - Depreciation and Amortization………………………………………………………………334 - Share-based Compensation and Other Stock Payments………………………………………………………………6 - Adjusted EBITDA (Non-GAAP)…………………. (483)$ -$ Three Months Ended March 31, Corporate and Other 2017 2016 Net Income/(Loss)……………………………. 4,715$ (1,290)$ Interest Expense…………………………………. 119 140 Income Tax Provision/(Benefit)……………………………… (6,726) (1,113) Depreciation and Amortization………………………………………………………………51 52 Share-based Compensation and Other Stock Payments………………………………………………………………139 173 Adjusted EBITDA (Non-GAAP)…………………. (1,703)$ (2,038)$ Three Months Ended March 31,

 

 

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Broadwind Energy is a precision manufacturer of structures, equipment

 

& components for clean tech and other specialized applications . www.BWEN.com May 2, 2017