Broadwind, Inc. · NASDAQ:BWEN
Broadwind — Oppenheimer 3rd Annual Emerging Growth Conference 2018
23 slides from Broadwind's conference presentation, May 15, 2018
Slide 1: Oppenheimer 3rd Annual Emerging Growth Conference
Oppenheimer 3rd Annual Emerging Growth Conference May 15, 2018
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 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 ▪ Leveraging welding competencies in broader ma
Slide 4: Q1 2018 Highlights
Q1 2018 Highlights ▪ Order intake recovering ▪ Successful ramp up of tower facilities following near shut down in Q4 17 ▪ Q1 18 revenue of $30 million up 69% sequentially as tower production recovers ▪ Customer diversification efforts on track ▪ Initiated restructuring plan following exit of CNG bus
Slide 5: BWEN order trend in $Millions
BWEN order trend in $Millions Recovery 80 and diversification 70 Towers 60 Gears 50 Other 40 30 20 10 0 2016 Avg Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 ▪ 3-yr tower framework agreement signed in Q3 16 for $137M ~ $45M annual baseload with option to double ▪ After Q1, 2017 tower orders fell off due to custome
Slide 6: As Costs Decline, Wind Energy is Becoming More Competitive with Conventional Power Generation
As Costs Decline, Wind Energy is Becoming More Competitive with Conventional Power Generation Global Onshore Wind Levelized Cost of Current influences- US Market Energy Over Time ($/MWh) ▪ Incentives narrowing (eg. PTC step-down in US) ▪ Capital costs increasing – interest costs and tax incentives d
Slide 7: US Wind Market Update
US Wind Market Update Development Pipeline - GW Forecast – GW Installations 40 14 35 13.0 13 30 12 25 11.0 11 GW 20 GW 10 15 9 8.2 8.4 8.0 10 8 5 7 6.4 0 6 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 2015a 2016a 2017a 2018e 2019e 2020e Under construction at QE Adv. Development Source: AWEA
Slide 8: US Wind Tower Supply/Demand Dynamics
US Wind Tower Supply/Demand Dynamics Supply/Demand Balance 14 13.0 12 11.0 10 8.6 8.9 8.4 8 7.0 8.4 8.4 6 4.8 4 2 0 2014 2015 2016 2017 2018E 2019E 2020E Demand (MAKE) Domestic Supply (MAKE) Source: MAKE Consulting United States Wind Energy Market Outlook May 8, 2018 ▪ Following weaker 2017, domesti
Slide 9: Tariff and Trade Uncertainties
Tariff and Trade Uncertainties Wind Turbine Materials Cost Breakdown Relative Steel Price $/ST * 1000 900 US 800 700 600 500 China 400 300 200 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 May-18 Source: Platts ▪ Steel accounts for nearly half of material content of a wind turbine ▪ Fluctuating US vs Chinese steel
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: 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 12: Demand for U.S. gearing remains healthy
Demand for U.S. gearing remains healthy US Gear Production % 2014- 2017- 4,000 9.0% CAGR market 2017 2019 3,500 CAGR CAGR 3,000 Turbines & Power 10% -6% +5% 2,500 Oil & Gas 6% -13% +22% $M 2,000 1,500 Mining & Const. 7% -6% +7% 1,000 500 Other Industrial 38% +1.5% +1% 0 2015a 2016a 2017a 2018e 2019e
Slide 13: Cost Management and Continuous Improvement Culture Leading to Operational Turnaround in Gearing
Cost Management and Continuous Improvement Culture Leading to Operational Turnaround in Gearing ▪ Custom precision gear manufacturing with state of the art machinery ▪ Operational turnaround evident – focus on cost management and continuous improvement, plant lay out reconfigured to boost productivi
Slide 14: Global Gas Turbine Market
Global Gas Turbine Market Global Gas Turbine Sales (Utility and IPP Class > 10MW) 400 70 350 60 300 # of Units > 10MW 50 Capacity (GW) 250 40 200 30 150 20 100 50 10 0 0 2014 2015 2016 2017 # of Units > 10MW GW Source: McCoy Power Reports ▪ Low power pricing environment has strained both new unit an
Slide 15: Process Systems
Process Systems FY Q1 2017 2018 Q1 Results ▪ Process Systems includes Abilene-based CNG and Orders ($M) $15.8 $4.9 fabrications, and Red Wolf as of Feb 1, 2017 Revenue ($M) 17.4 4.4 ▪ Operating loss worse due to low productivity ▪ Initiated restructuring plan for Abilene fabrications Operating (2.3)
Slide 16: BWEN Consolidated Financial Results
BWEN Consolidated Financial Results FY 16 FY 17 Q1 17 Q4 17 Q1 18 Total Sales $180.8 $146.8 $56.1 $17.8 $30.0 Gross Profit 18.1 8.2 6.4 (3.1) (.1) Gross Profit % 10.0% 5.6% 11.4% (17.5%) (.4%) Operating Expense 16.2 15.6 4.8 3.6 4.4 Operating Income/(Loss) 1.9 (7.4) 1.6 (6.7) (4.5) % of sales 1.1% (
Slide 17: Operating Working Capital (OWC)
Operating Working Capital (OWC) OWC* Management OWC* Historical Trend – cents/$ sales 12/31/17 3/31/18 $0.20 DSO 70 48 $0.15 Inv. Turns 5.0 5.4 DPO 44 42 $0.10 Cash Conv. 48 44 $0.05 (days) OWC $M 11.4 14.3 $- $(0.05) *Operating Working Capital = Trade A/R + Inventories – Trade Payables – Customer D
Slide 18: Balance Sheet and Capital Expenditures
Balance Sheet and Capital Expenditures (In Millions) Capital Expenditures (net) 3/31/2017 12/31/2017 3/31/2018 Cash Assets $ 0.3 $ 0.1 $ - 4.5% % of sales 3.4% Accounts Receivable 23.7 13.6 15.9 $6.6 $6.2 Inventory 25.8 19.3 22.3 PPE 56.0 55.7 53.7 Other 25.9 23.7 23.3 1.5-2.5% Total Assets 131.7 11
Slide 19: 2018 Priorities
2018 Priorities ▪ Customer diversification ▪ Manufacturing footprint reduction ▪ Restructure systems to support changing sales mix ▪ CI to offset margin compression ▪ Manage through steel escalation risk May 2018
Slide 20: Investment Thesis
Investment Thesis ▪ Medium term US Wind markets fundamentally strong ▪ Tower market rebounding in 2018 – ramping up production to meet demand, expect growth in 2H 18 ▪ Broadwind gearing gaining share in strong oil & gas market ▪ Capital availability will support tower business recovery ▪ >$200M NOL
Slide 21: Appendix
Appendix Consolidated Three Months Ended March 31, 2018 2017 Net (Loss)/Income from continuing operations……………………………. $ (4,811) $ 6,482 Interest Expense………………………………………………. 298 139 Income Tax Provision/(Benefit)……………………………… (27) (5,018) Depreciation and Amortization……………………………………………………………… 2,357 2,10
Slide 22: Appendix
Appendix Process Systems Three Months Ended March 31, 2018 2017 Net Income/(Loss)……………………………………….. $ (644) $ (699) Interest Expense………………………………………….. 1 1 Income Tax Provision/(Benefit)…………………………. (253) (125) Depreciation and Amortization…………………………… 451 334 Share-based Compensation and Other Stock Pa
Slide 23: 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 2018
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