Broadwind, Inc. · NASDAQ:BWEN
Broadwind — Roth Capital Partners Industrial Conference 2018
22 slides from Broadwind's conference presentation, Dec 11, 2018
Slide 1: Investor Presentation
Investor Presentation December 2018
Slide 2: Industry Data and Forward-Looking Statements
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 studies conducted by third parties, independent industry associations or general publications and other publicly ava
Slide 3: Introduction to Broadwind Energy
Introduction to Broadwind Energy Towers and Heavy Fabrications ▪ Leading US wind tower manufacturer with plants strategically located in Texas and Wisconsin ▪ Current capacity – 550 towers per year ▪ Have produced towers for every major OEM in industry ▪ Heavy Fabrications product line leverages cor
Slide 4: Investment Thesis
Investment Thesis ▪ Medium term US Wind markets fundamentally strong ▪ Tower and Heavy Fabrications segment recovering in 2018 due to improved tower demand and successful customer/product diversification ▪ Broadwind gearing gaining share in strong oil & gas and mining/construction markets—delivering
Slide 5: 2018 Focus
2018 Focus ▪ Order intake recovering following 2017 inventory correction by primary tower customer ▪ Successful ramp up of tower facilities following near shut down in Q4 17 ▪ Customer diversification plans on track ▪ Multi-year 50% operating footprint consolidation nearing completion ▪ Manufacturin
Slide 6: Successful Diversification of BWEN Customer Base
Successful Diversification of BWEN Customer Base $40M target Mining Mining YTD Orders Oth. Industrial OG ▪ Diversification of customer base on track to meet $40M target for 2018 ▪ Oil and gas, mining and other industrial has grown to >$60M annual intake for BWEN December 2018 6
Slide 7: Successful Diversification of BWEN Customer Base
Successful Diversification of BWEN Customer Base Non- SGRE Non- SGRE SGRE SGRE *SGRE Orders based on PO’s received during the period ▪ 3-yr tower framework agreement with SGRE signed in Q3 16 for $137M ~ $45M annual baseload with option to double ▪ Acquisition of Red Wolf in 2017 provides entry into
Slide 8: Wind Energy is Becoming More Competitive with Conventional Power Generation
Wind Energy is Becoming More Competitive with Conventional Power Generation Global Onshore Wind Levelized Cost of Forecast – GW Installations Energy Over Time ($/MWh) 12 10 8 6 4 2 0 2015 2016 2017 2018e 2019e 2020e 2021e Source: Lazard Levelized Cost of Energy Analysis (version 11) Source: MAKE Glo
Slide 9: Tariff and Trade Uncertainties
Tariff and Trade Uncertainties Domestic Supply/Demand Balance Relative Steel Price $/ST (GW) 1100 14 1000 US 900 12 800 10 8.4 8.4 8.4 8.4 700 8 600 6 500 China 4 400 2 300 0 200 2015 2016 2017 2018e 2019e 2020e 2021e Demand (MAKE) Domestic Supply (MAKE) Source: Platts ▪ Following weaker 2017, domes
Slide 10: Towers and Heavy Fabrications
Towers and Heavy Fabrications ▪ Have produced >3000 multi-mw towers for all major OEM’s in US: GE, Goldwind, Nordex, Siemens/Gamesa, Vestas ▪ Recent $7M investment improves flow and expands capacity to 550 towers ▪ Engineering experts partner with our customers to improve efficiencies and reduce cos
Slide 11: Towers and Heavy Fabrications
Towers Heavy and Heavy Fabrications Fabrications Overview ▪ Leverage existing footprint and labor at our Tower manufacturing facilities in TX and WI ▪ Strategic investments made in flexible manufacturing cells and a large horizontal milling machine ▪ Strong welding capabilities developed in Tower bu
Slide 12: Broadwind: Geared For Industry
Broadwind: Geared For Industry Sales By Industry 2014-2017 General ▪ Replacement gears and gear Industrial ▪ Replacement Gearing - Wind Wind boxes in steel processing ▪ Gearbox repair - Wind plants ▪ Waste Processing ▪ Paper Industry Mining O&G ▪ Underground and surface mining ▪ On and offshore dril
Slide 13: Cost Management and Continuous Improvement Culture Leading to Operational Turnaround in Gearing
Cost Management and Continuous Improvement Culture Leading to Operational Turnaround in Gearing ▪ Custom precision gear manufacturing with state of the art machinery ▪ Operational turnaround evident – focus on cost management and continuous improvement, plant lay out reconfigured to boost productivi
Slide 14: Process Systems
Process Systems Q3 Q3 YTD YTD 2017 2018 2017 2018 Q3 Results ▪ Process Systems includes Abilene-based CNG Orders ($M) $5.3 $4.4 $13.4 $12.4 and fabrications, and Red Wolf as of Feb 1, Revenue ($M) 2017 6.1 4.2 12.3 12.7 ▪ Operating loss $.9M – lower sales volume Operating 0.1 (0.9) (1.8) (7.6) parti
Slide 15: BWEN Consolidated Financial Results
BWEN Consolidated Financial Results Q3 17 Q3 18 YTD 17 YTD 18 Total Sales $29.6 $31.4 $129.0 $98.2 Gross Profit 1.0 1.5 11.3 3.6 Gross Profit % 3.4% 4.7% 8.7% 3.6% Recurring Operating Expense 4.2 4.1 13.4 12.6 Red Wolf earn-out and goodwill (1.4) - (1.4) 3.9 one-time items Total Operating Expenses 2
Slide 16: Operating Working Capital (OWC)
Operating Working Capital (OWC) OWC* Management OWC* Historical Trend – cents/$ sales 12/31/17 6/30/18 9/30/18 $0.20 DSO 70 44 49 $0.15 Inv. Turns 5.0 6.7 5.1 DPO 44 41 44 $0.10 Cash Conv. 48 36 54 (days) $0.05 OWC $M 11.4 14.3 18.2 $- *Operating Working Capital = Trade A/R + $(0.05) Inventories – T
Slide 17: Balance Sheet and Capital Expenditures
Balance Sheet and Capital Expenditures Capital Expenditures (net) % of sales 4.5% 3.4% $6.6 $6.2 <1% 2016 2017 2018e 2016 2017 2018e ▪ Cash receipts applied to reduce balance on credit line – minimize interest expense ▪ $25M credit line had $6M of additional availability at quarter-end ▪ Capital exp
Slide 18: Q3 Summary and Guidance
Q3 Summary and Guidance ▪ Q3: As guided – Gearing progress offset by rescheduled tower production ▪ Q4: Tower production low point; $25-26M revenue, EBITDA ($1-2M) ▪ 2019: Average quarterly revenue >$40M, consistent positive EBITDA December 2018 18
Slide 19: Investment Thesis
Investment Thesis ▪ Medium term US Wind markets fundamentally strong ▪ Tower and Heavy Fabrications segment recovering in 2018 due to improved tower demand and successful customer/product diversification ▪ Broadwind gearing gaining share in strong oil & gas and mining/construction markets—delivering
Slide 20: Appendix
Appendix Consolidated Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Net (Loss)/Income from continuing operations……………………………. $ (750) $ (2,049) $ (11,644) $ 3,745 Interest Expense………………………………………………. 372 228 1,022 584 Income Tax Provision/(Benefit)……………………………… 13
Slide 21: Appendix
Appendix Process Systems Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Net Income/(Loss)………………………………………………… $ (2,471) $ 4,321 $ (7,092) $ (1,449) Interest Expense……………………………………………………. 1 1 2 4 Income Tax Provision/(Benefit)…………………………………… 1,552 (4,219) (498) (378
Slide 22: Broadwind Energy is a precision manufacturer of structures, equipment & components
Broadwind Energy is a precision manufacturer of structures, equipment & components for clean tech and other specialized applications. www.BWEN.com December 2018 22
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