Slide 1: Investor Teleconference Q2 2013 Results
August 1, 2013 Investor Teleconference Q2 2013 Results © 2013 Broadwind Energy, Inc. All Rights Reserved.
Slide 2: Industry Data Disclaimer and Forward-Looking Statements
Industry Data Disclaimer and Forward-Looking Statements 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 avail
Slide 3: Q2 2013 Overview
Q2 2013 Overview 3 Business Highlights New orders of $59 million; cancelled $35 million order from 2010 Gross profit margin (ex. restructuring) doubled to 7.4% Adj. EBITDA more than double Q2 2012 Operating working capital dropped to 5% of sales due to receipt of customer deposits to secure 2013/201
Slide 4: Orders and Backlog
Orders and Backlog Q2 Orders ($ in millions) Order Backlog New tower orders of $52 million, reduced by $35 million in cancelled orders originally placed in 2010 $70 million in tower orders received after 6/30/13 – 2013 capacity full, filling up 2014 Gearing and Services order activity low Q2 2013 en
Slide 5: Continued Transformation Progress
Continued Transformation Progress Broadwind ENERGY Rationalization Thousands Sq. Ft. Reduction toward goal Expense Management SGA as % of Revenue Revenue Growth and Diversification Estimate New Wind Installed Base Industrial and Other 2013 Broadwind Energy, Inc. All Rights Reserved.
Slide 6: Gearing Revenue Transformation
Gearing Revenue Transformation 6 History Shifted from industrial to wind, back to industrial over 10-year period 2008-2010: Lost our market focus and most of sales force As wind declined in 2010, began rebuilding relationships with customers in natural gas and mining In 2011 mining and natural gas c
Slide 7: Continuous Improvement
Continuous Improvement 7 Streamlining Processes Gearing order to shop floor release – recurring products Shop Order Completion – Duration (Days) Low High Current 35 77 Future 1 16 Number of Steps Current 102 Future 32 Number of Handoffs Current 43 Future 10 Comments Questioning every step in process
Slide 8: Consolidated Financial Results
Consolidated Financial Results 8 Q2 2013 Comments Sales down 9% from Q2 2012 – weak activity in Gearing and Services segments, partly offset by Towers and Weldments revenue – slippage of $4 million into Q3 Gross margin double Q2 2012 – improved Towers throughput and mix Operating expense increased s
Slide 9: Profitability Progress
Profitability Progress 9 Continued progress on pathway to profitability Gross Margin Improvements Less variable mix and production enhancements – Towers Square footage reduction (restructuring) Challenges Rising share of gearboxes – Gearing Soft end markets for Gearing – mining, natural gas Low poin
Slide 10: Towers and Weldments Second Quarter 2013
Towers and Weldments Second Quarter 2013 10 Strategic Focus Tower section volume decreased 12% compared to Q2 2012 Industrial Weldments revenue increased 42% compared to Q2 2012 Q2 2013 productivity increase from process improvements and more uniform tower types Adj. EBITDA margin improved dramatica
Slide 11: Gearing Second Quarter 2013
Gearing Second Quarter 2013 Revenue affected by production delays related to product mix and by industrial end market softness Adj. EBITDA declined due to lower volumes and margins, partly offset by other spending reductions Plant consolidation spending ~ 56% complete — large machine moves continuin
Slide 12: Services Second Quarter 2013
Services Revenue down 29% from Q2 2012; new wind installations at all-time industry low, depressing field service activity Aligned cost structure with revenue outlook 12 Diversify revenue base, particularly with industrial customers Further develop proprietary product offerings Launched DriveMAX and
Slide 13: Operating Working Capital
Operating Working Capital 13 6/30/13 operating working capital decreased $14 million from 3/31/13 to $9.5 million or 5% of revenue, related to receipt of customer deposits from recent tower orders Inventories up sharply (+$7 million vs. 3/31) to support higher tower build and due to delayed customer
Slide 14: Debt and Liquidity
Debt and Liquidity 14 Net debt negative – cash increased from customer deposits and sale of Brandon facility Eliminated Brandon mortgage liability with proceeds of sale Debt balance includes $3 million which is either forgivable economic development grants or New Markets Tax Credit financing Line of
Slide 15: 2013 Financial Outlook
2013 Financial Outlook 15 Towers: Greater revenue visibility given improved supply/demand balance Level-loading, fewer tower types increasing throughput, efficiencies and margins Gearing: Revenue and end-market demand down ~ 5% from 2012, with some uncertainty in natural gas Margin stable – restruct
Slide 16: Restructuring and Other Updates
Restructuring and Other Updates 16 Inception to date Est. Total % Capital Spend $4,054 $5,347 76% Expense $3,829 $5,602 68% Subtotal: Cash Outlay $7,883 $10,949 72% Asset sale gain ($3,586) ($3,586) Non-cash $2,525 $5,373 Grand Total $6,822 $12,736 54% Settlement of shareholder class action litigati
Slide 17: Broadwind Energy is committed to helping customers maximize performance of their energy and infrastructure
17 Broadwind Energy is committed to helping customers maximize performance of their energy and infrastructure investments — quicker, easier and smarter. © 2013 Broadwind Energy, Inc. All Rights Reserved.