Broadwind, Inc. · NASDAQ:BWEN
Broadwind — Broadwind Energy — Investor Presentation (May 2017)
24 slides from Broadwind's investor presentation, May 31, 2017
Slide 1: Investor Presentation May 2017
Investor Presentation May 2017
Slide 2: Industry Data and Forward-Looking Statements Disclaimer
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
Slide 3: Broadwind Energy
Broadwind Energy May 2017 Towers 89% Gearing 11% 2016 Revenue $181M Towers and Weldments ▪ Leading wind tower manufacturer ▪ Capacity 500 towers, expanding to 550 ▪ Have produced towers for every major OEM in industry ▪ Leveraging welding competencies in broader energy markets Towers Gearing Process
Slide 4: 2016 Full-Year Highlights
2016 Full - Year Highlights May 2017 ▪ 2016 was 1 st profitable year in Company history ▪ Orders of $275M nearly triple 2015 orders of $94M ▪ More than d oubled gross profit margin ▪ Cost reductions of $9M exceeded plan by $1M ▪ Strong cash balance of $22M at year end 4
Slide 5: >90% of BWEN 2016 Revenue From Wind Energy
>90% of BWEN 2016 Revenue F rom W ind Energy May 2017 0 20 40 60 80 100 GW Cumulative Installations – US Source: AWEA Q1 17 Market Report 84 GW Wind Power Capacity Under Construction/Advanced Development ▪ Over 84 GW currently installed in the US ▪ 8.2 GW added in 2016 – wind now provides 5.5% of el
Slide 6: Strategically Located to Serve the Wind Belt
Strategically Located to Serve the Wind Belt May 2017 6 Wind Belt Gearing Broadwind Towers
Slide 7: Non-Utility Wind Energy Direct Buys
Non - Utility Wind Energy Direct Buys May 2017 7 ▪ 39% of MW contracted in 2016 through PPA’s were signed by Fortune 500 companies, universities and government agencies ▪ Emergent and sustained demand market for wind industry Google Energy Microsoft Facebook Amazon IKEA Owens Corning Source: AWEA An
Slide 8: US Wind Tower Supply/Demand Dynamics
US Wind Tower Supply/Demand Dynamics May 2017 ▪ US supply is 8.4 GW or ~3800 towers (includes 2017 capacity additions) ▪ Imports provide additional supply ▪ MAKE demand est. 40 GW, Bloomberg demand est. 36 GW (2017 - 2020) Source: MAKE Consulting Q1 2017 North American Wind Power Outlook plus adjust
Slide 9: Broadwind Orders and Backlog
Broadwind Orders and Backlog Orders – $M ▪ $29M of new Towers & Weldments orders in Q117 ▪ Q1 17 Gearing orders up vs. PY – orders from oil & gas and industrial customers ▪ Process Systems includes Red Wolf and CNG Backlog – $M ▪ 3/31/17 backlog $182M ▪ Pause in tower order activity following PTC qu
Slide 10: Towers and Weldments
Towers and Weldments ▪ Leading wind tower manufacturer in US ▪ Have produced ~3000 >1MW towers for all major OEM’s in US ▪ Manitowoc, WI plant capacity ~350 towers ▪ Abilene, TX plant capacity ~150 towers, expanding to 200 towers ▪ $7M investment underway to improve flow and increase capacity ▪ Stro
Slide 11: Geared For Industry
Geared F or Industry May 2017 11 Wind O&G Mining General Industrial Sales By Industry 2014 - 2016 • Underground and surface mining • Masts, Framing , Gear Casings • Replacement gears and gear boxes in s teel p rocessing plants • Waste Processing • Paper Industry • On and off shore drilling • Frack a
Slide 12: Gear Market Update
Third upward revision of US gear demand forecast within last 8 months Gear Market Update May 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 12
Slide 13: Gearing
Gearing May 2017 ▪ 90+ year history ▪ Competencies in wind gearing, oil & gas, mining, steel and other industrial applications ▪ Completed 3 - year restructuring in 2014: well positioned for rebound in oil & gas and mining ▪ 2017 focus: Expand sales efforts, continue aggressive cost management, cont
Slide 14: Process Systems
May 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, 2017 ▪ Q1 Orders inc
Slide 15: Consolidated Financial Results
Consolidated Financial Results May 2017 ▪ 2015 results impacted from production issues associated with a challenging contract ▪ 2016 improvement vs. 2015 – production issues resolved, eliminated $9M of manufacturing overhead and operating expense, 1 st profitable year ▪ Strong Q1 17; FY 2017 estimat
Slide 16: Operating Working Capital (OWC)
Operating Working Capital (OWC) May 2017 ▪ 3/31/17 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
Slide 17: Balance Sheet and Capital Expenditures
Balance Sheet and Capital Expenditures May 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 + reb
Slide 18: Strategy
VISION: Over the next three years we will double our sales by growing our existing businesses and expanding our presence in clean tech. We will build lasting customer relationships and increase our profitability through improved commercial and operational execution. Strategy May 2017 FY16 Sales $180
Slide 19: M&A Overview & Selection Criteria
M&A Overview & Selection Criteria Half of plan period revenue growth from inorganic transactions Key Objectives: ▪ Add scale ▪ Diversify industry and customer mix ▪ Unlock value of NOL’s 19 Financial Profile: ▪ Consistency ▪ Profitability ▪ Growth Rate ▪ Controls Attractiveness: ▪ Clean Tech or expa
Slide 20: Red Wolf, A Broadwind Energy Company
Red Wolf, A Broadwind Energy Company ▪ ~$30M c ontract manufacturer specialized in kitting, light fabrication, packaging/assembly and testing ▪ Diversifies BWEN into gas turbine install and upgrade market ▪ Adds new southeast regional geographic manufacturing presence in close proximity to leading P
Slide 21: 2017 Priorities
2017 Priorities May 2017 ▪ Sell remaining 2017 tower capacity ▪ Reduce tower production costs through improved paint and welding ▪ Complete tower plant expansion project ▪ Seamless integration of Red Wolf ▪ Expand commercial relationships in Gearing 21
Slide 22: Investment Thesis
Investment Thesis ▪ US Wind markets fundamentally strong…oil and gas and mining recovering ▪ Strong balance sheet – good working capital management ▪ Surplus cash redeployed to diversify into gas turbine supply chain with Red Wolf acquisition ▪ Conservative capital structure supports growth objectiv
Slide 23: Appendix
Appendix May 2017 Consolidated 2017 2016 Net Income/(Loss) from continuing operations…………………………….6,482$ (358)$ Interest Expense…………………………………. 139 154 Income Tax Provision/(Benefit)……………………………… (5,018) (8) Depreciation and Amortization………………………………………………………………2,101 1,657 Share-based Compensation and O
Slide 24: 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 May 2017 24