Broadwind, Inc. · NASDAQ:BWEN

Broadwind — Broadwind Energy — Liolios Group 6th Annual Gateway Investor Conference (September 2017)

24 slides from Broadwind's conference presentation, Sep 6, 2017

  1. Slide 1: Investor Presentation

    Investor Presentation September 2017

  2. 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

  3. Slide 3: Introduction to Broadwind Energy

    Introduction to Broadwind Energy Towers and Weldments  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  Leveraging welding competencies in broader markets Gea

  4. Slide 4: 3 Year Strategy: Double 2016 Revenue and EBITDA Margins

    3 Year Strategy: Double 2016 Revenue and EBITDA Margins SALES BY SEGMENT (%) 2015 2016 1H 2017 11% 12% 18% Revenue $M 199.2 180.8 99.4 89% EBITDA $M (0.4) 9.6 5.9 70% EBITDA % Neg 5.3 6.0 2016 2017E Towers Gears Process Systems EPS (.83) .09 .39  Organic growth of existing and acquired businesses 

  5. Slide 5: Orders and Backlog

    Orders and Backlog Orders – $M Backlog – $M FY 2016 YTD YTD 2016 B2B 2017 2017 B2B 350 300 Towers & 260.8 1.64 30.6 .37 Weldments 250 Millions Gearing 14.2 .69 19.0 1.91 200 150 Process n/a n/a 8.1 1.29 100 Systems 50 Total 275.0 1.53 57.6 .58 - Q1 12 Q4 12 Q3 13 Q2 14 Q1 15 Q4 15 Q3 16 Q2 17  Brea

  6. Slide 6: >90% of BWEN 2016 Revenue From Wind Energy

    >90% of BWEN 2016 Revenue From Wind Energy Cumulative Installations – US Wind Power Capacity (GW) Under Construction/Advanced Development 100 84 GW 20 80 16 12 GW 60 GW 8 40 4 20 0 0 Under Construction Advanced Development Combined Total Source: AWEA Q2 17 Market Report  Over 84 GW currently instal

  7. Slide 7: As Costs Decline, Wind Energy is Becoming More Competitive with Conventional Power Generation

    As Costs Decline, Wind Energy is Becoming More Competitive with Conventional Power Generation Global Onshore Wind Levelized Cost of UNSUBSIDIZED Levelized Cost of Power Energy Over Time ($/MWh) Generation Ranges by Technology - ($/MWh) $250 $200 $150 $100 $50 $- 2009 2010 2011 2012 2013 2014 2015 20

  8. Slide 8: US Wind Tower Supply/Demand Dynamics

    US Wind Tower Supply/Demand Dynamics Demand (MAKE) Demand (BNEF) Domestic Supply (MAKE) 12.3 10.9 10 10.2 9.4 8.6 8.9 8.5 7.3 8.4 8.4 7.5 4.8 2014A 2105A 2016A 2017E 2018E 2019E 2020E Source: MAKE Consulting Q2 2017 Global Wind Power Market Outlook Update dated 6/7/17, Bloomberg New Energy Finance 1

  9. Slide 9: Towers and Weldments

    Towers and Weldments  Leading US wind tower manufacturer  Have produced >3000 multi-mw towers for all major OEM’s in US: Vestas, GE, Siemens/Gamesa, Nordex, Goldwind  Recent $7M investment improves flow and expands capacity to 550 towers – Manitowoc, WI 350 and Abilene, TX 200  Continuous improv

  10. Slide 10: Gear Market Update – 2016 Inflection Point

    Gear Market Update – 2016 Inflection Point US Gear Demand Forecast US Gear 2014- 2017- 5500 Demand by 2016 2019 5000 Market CAGR CAGR US Consumption 4500 Turbines/Power -11.5% 9.5% $ MILLION 4000 3500 Oil & Gas -24.7% 17.4% US Manufactured 3000 Mining -19.8% 7.8% 2500 2000 Other Industrial -7.5% 5.3

  11. Slide 11: Broadwind: Geared For Industry

    Broadwind: Geared For Industry Sales By Industry 2014-2016 General  Replacement gears and gear Industrial  Replacement Gearing - Wind Wind  Gearbox repair - Wind boxes in steel processing plants  Waste Processing  Paper Industry Mining O&G  Underground and surface mining  On and offshore dril

  12. Slide 12: 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 capacity in place to support >$50M annu

  13. Slide 13: Process Systems

    Process Systems US Capacity Additions  Red Wolf acquisition 14 12 Natural Gas Wind  Contract manufacturer specialized in kitting, light 10 fabrication, packaging/assembly and testing 8  Diversifies BWEN into gas turbine install and GW 6 4 upgrade market 2 0  Adds new southeast regional geographi

  14. Slide 14: Process Systems

    Process Systems $M Q2 Q2 YTD YTD Q2 Results 2016 2017 2016 2017  Process Systems includes Abilene-based CNG, Orders n/a 4.4 n/a 8.1 and Red Wolf as of Feb 1, 2017 Revenue n/a 3.0 n/a 6.3  Q2 Orders predominantly Red Wolf $4.1M  Revenue reflects $1M customer imposed Operating Loss n/a (1.1) n/a (1

  15. Slide 15: Consolidated Financial Results

    Consolidated Financial Results 6 months $M except EPS 2015 2016 2016 2017 Revenue 199.2 180.8 90.1 99.4 Gross Profit 7.9 18.1 8.1 10.2 -% (ex. Restructuring) 4.0% 10.0% 9.0% 10.3% Operating Expense-$M 19.8 16.2 8.1 9.2 -% (ex. Restructuring) 9.4% 9.0% 9.0% 9.2% Operating Income/(Loss) (11.9) 1.9 (0.

  16. Slide 16: Operating Working Capital (OWC)

    Operating Working Capital (OWC) OWC* Historical Trend – cents/$ sales $0.20 $0.18 $0.16 $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $- *OWC: Trade A/R + Inventories – Trade Payables – Customer Deposits  Q2 OWC back in “normal” range -- $.13/ dollar sales  OWC increase driven by roll-off of customer

  17. Slide 17: Balance Sheet and Capital Expenditures

    Balance Sheet and Capital Expenditures (In Millions) Cap Ex- % of Revenue 12/31/2016 6/30/2017 5.0% Cash Assets $ 21.9 $ 0.2 Abilene Expansion and Coatings Improvements Accounts Receivable 11.9 21.5 4.0% Inventory 21.2 21.3 PPE 54.6 57.4 Other 8.1 24.6 3.0% Total Assets 117.7 125.0 Typically ~ 2% of

  18. Slide 18: 2017 Priorities

    2017 Priorities  Navigate through the impact of 2H tower inventory correction  Progress growth/diversification strategy  Commission Abilene plant expansion  Add machining capabilities for weldments  Red Wolf market expansion initiatives  Controlled Gearing revenue growth to achieve profitabili

  19. Slide 19: Investment Thesis

    Investment Thesis  US Wind markets fundamentally strong  Broadwind gearing gaining share in strong oil & gas market  Strong balance sheet –good working capital management  Surplus cash redeployed to diversify into gas turbine supply chain with Red Wolf acquisition  Conservative capital structur

  20. Slide 20: Appendix

    Appendix Consolidated Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Net Income/(Loss) from continuing operations……………………………. $ (688) $ 42 $ 5,794 $ (316) Interest Expense…………………………………. 217 152 356 306 Income Tax Provision/(Benefit)……………………………… (16) (8) (5,034) (16) Deprec

  21. Slide 21: Broadwind Energy is a precision manufacturer of structures, equipment & components for clean tech

    Broadwind Energy is a precision manufacturer of structures, equipment & components for clean tech and other specialized applications. www.BWEN.com September 2017 21

  22. Slide 22: Corporate and Other Buyers are Becoming a Significant Demand Driver for US Wind

    Corporate and Other Buyers are Becoming a Significant Demand Driver for US Wind Google Energy Microsoft Facebook Amazon IKEA Owens Corning Source: AWEA Annual Market Report 2016  39% of MW contracted in 2016 through PPA’s were signed by Fortune 500 companies, universities and government agencies 

  23. Slide 23: Making a Wind Tower – More than Metal Bending

    Making a Wind Tower – More than Metal Bending Steel Plate Prepped Bevel Roll Long Seam Flange Fit Up Circ Weld Clip and Clean Blast and Paint Assembly September 2017 23

  24. Slide 24: M&A Overview & Selection Criteria

    M&A Overview & Selection Criteria Key Objectives:  Add scale Structure Integration  Diversify industry and customer mix Financial Profile: complexity  Consistency  Unlock value of NOL’s  Profitability  Growth Rate Gating Factors:  Controls  >75% of income generated in US Attractiveness:  E

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