Slide 1: Q3 2018 Earnings Call
Q3 2018 Earnings Call October 30, 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: Highlights – Q3
Highlights – Q3 § Orders up 12% - customer diversification efforts on track § $31.4M revenue and $.2M EBITDA - in line with guidance § Tariffs and tight steel market remain a headwind for towers in Q4 § Gearing segment reaches profitability milestone § Order book building for strong 2019 October 30,
Slide 4: Orders and Backlog ($ Millions)
Orders and Backlog ($ Millions) Orders Backlog $107M Q3 17 Q3 18 YTD YTD YTD 2018 350 9/30/17 9/30/18 Book:Bill 300 Towers & $1.8 $3.8 $32.3 $21.1 .36 250 Heavy 200 Fabrications 150 Gearing 10.6 11.5 29.5 33.0 1.21 100 50 Process 5.3 4.4 13.4 12.4 .98 - Systems Q2 12 Q3 13 Q4 14 Q1 16 Q2 17 Q3 18 To
Slide 5: Successful Diversification of BWEN Customer Base
Successful Diversification of BWEN Customer Base Orders from Diverse Customers Non-Wind Order Trend (T12M) 70,000 40,000 $40M target 35,000 60,000 Mining 30,000 50,000 YTD Orders 25,000 Oth. Industrial 40,000 20,000 30,000 15,000 20,000 10,000 Oil & Gas 5,000 10,000 - - 18 M 8 18 17 18 8 18 18 8 8 1
Slide 6: Market Outlook – US Wind (GW)
Market Outlook – US Wind (GW) Development Pipeline - GW 14 Forecast – GW Installations 40 35 12 30 10 25 8 GW 20 6 15 4 10 2 5 0 0 Q1 16 Q3 16 Q1 17 Q3 17 Q1 18 Q3 18 2015 2016 2017 2018e 2019e 2020e 2021e Under construction at QE Adv. Development Source: MAKE Global Wind Market Outlook Update – Q3
Slide 7: Market Outlook - U.S. Gearing Production ($ millions)
Market Outlook - U.S. Gearing Production ($ millions) 5000 4500 GR 4000 +7% CA 3500 3000 2500 2000 1500 1000 500 0 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E 2021E *Excluding automotive Sources: AGMA & IHS § Demand for gearing produced in US is expected to rise ~ 7% p.a. through 2019 then flatt
Slide 8: 2018 Priorities
2018 Priorities § Continue focus on customer diversification § Complete manufacturing footprint reduction § Restructure systems to support changing sales mix § Continuous improvement to offset margin compression § Manage through raw materials escalation risk § Ensure steel supply to support strong 2
Slide 9: Towers and Heavy Fabrications
Towers and Heavy Fabrications Q3 Q3 YTD YTD Q3 Results 2017 2018 2017 2018 § Segment orders up from PY - increased Orders ($M) $1.8 $3.8 $32.3 $21.1 mining and industrial demand Sections Sold (#) 126 132 790 476 § Q3 18 tower sections sold up slightly but Revenue ($M) 16.0 17.3 99.2 58.1 down YTD Op
Slide 10: Gearing
Gearing Q3 2017 Q3 2018 YTD 2017 YTD 2018 Q3 Results § Orders up due primarily to timing of Orders ($M) $10.6 $11.5 $29.5 $33.0 demand from wind customers Revenue ($M) 7.6 10.1 17.5 27.5 § Revenue up 33% compared to Q3 17 Operating (Loss)/ (0.4) 0.3 (2.6) (0.9) § EBITDA $1M – increased plant utiliza
Slide 11: Process Systems
Process Systems Q3 Q3 YTD YTD 2017 2018 2017 2018 Q3 Results § Process Systems includes Abilene-based CNG Orders ($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 12: BWEN Consolidated Financial Results
BWEN Consolidated Financial Results Q3 17 Q3 18 YTD 17 YTD 18 Total Sales $29.6 $31.4 $129.0 $98.2 Gross Profit 1.0 1.5 11.3 3.6 Gross Profit % 3.4% 4.7% 8.7% 3.6% Recurring Operating Expense 4.2 4.1 13.4 12.6 Red Wolf earn-out and goodwill (1.4) - (1.4) 3.9 one-time items Total Operating Expenses 2
Slide 13: Operating Working Capital (OWC)
Operating Working Capital (OWC) OWC* Management OWC* Historical Trend – cents/$ 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 $- 4 5 5 6 6 7 7 8 8 201 201 201 201 201 201 201 201 201 Q3 Q1 Q3 Q
Slide 14: Balance Sheet and Capital Expenditures
Balance Sheet and Capital Expenditures (In Millions) Capital Expenditures (net) 12/31/2017 6/30/2018 9/30/2018 % of sales Cash Assets $ 0.1 $ 0.1 $ 0.1 4.5% 3.4% $6.6 Accounts Receivable 13.6 17.9 16.7 $6.2 Inventory 19.3 20.7 23.5 PPE 55.7 52.3 50.7 Other 23.7 17.7 17.0 Total Assets 112.4 108.7 108
Slide 15: 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 October 30, 2018 15
Slide 16: 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 17: 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 18: Broadwind Energy is a precision manufacturer for clean tech
Broadwind Energy is a precision manufacturer of structures, equipment & components for clean tech and other specialized applications. www.BWEN.com October 30, 2018 18