Broadwind, Inc. · NASDAQ:BWEN
Broadwind — Roth Industrials and Clean Tech Conference 2017
24 slides from Broadwind's conference presentation, Dec 12, 2017
Slide 1: Investor Presentation
Investor Presentation December 2017
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
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
Slide 4: 3 Year Strategy: Double Revenue and EBITDA Margins
3 Year Strategy: Double Revenue and EBITDA Margins SALES BY SEGMENT (%) 2015 2016 9 mos 11% 12% 2017 18% Revenue $M 199.2 180.8 129.0 89% 70% EBITDA $M (0.4) 9.6 6.7 2016 2017E EBITDA % Neg 5.3 5.2 Towers Gears Process Systems EPS (.83) .09 .25 Organic growth of existing and acquired businesses
Slide 5: Orders and Backlog
Orders and Backlog Orders – $M Backlog – $M FY 2016 9 mos 9 mos 2016 B2B 2017 2017 B2B 350 Towers & 260.8 1.64 32.3 .33 300 Weldments 250 Millions Gearing 14.2 .69 29.5 1.69 200 150 Process n/a n/a 13.4 1.09 100 Systems 50 Total 275.0 1.53 72.3 .58 - Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 12 12 13 13 1
Slide 6: >90% of BWEN 2016 Revenue From Wind Energy
>90% of BWEN 2016 Revenue From Wind Energy Cumulative Installations – US Wind Power Capacity (GW) Under Construction/Advanced Development 100 35 85 GW 80 30 25 60 20 GW 40 15 10 20 5 0 0 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Under construction at QE Adv. Development Source: AWEA Q3 17 Market Rep
Slide 7: As Costs Decline, Wind Energy is Becoming More Competitive with Conventional Power Generation
As Costs Decline, Wind Energy is Becoming More Competitive with Conventional Power Generation Global Onshore Wind Levelized Cost of UNSUBSIDIZED Levelized Cost of Power Energy Over Time ($/MWh) Generation Ranges by Technology - ($/MWh) $250 $200 $150 $100 $50 $- 2009 2010 2011 2012 2013 2014 2015 20
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
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
Slide 10: 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
Slide 11: Gear Market Update – 2016 Inflection Point
Gear Market Update – 2016 Inflection Point Source: IHS Markit August 2017 Source: IHS Markit August 2017 BWEN YTD 2017 orders up over 2.5x vs YTD 2016 December 2017 11
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 >$50M annu
Slide 13: Global Gas Turbine Market
Global Gas Turbine Market Global Gas Turbine Orders (Utility and IPP segment) 500 80 450 70 400 60 350 Capacity (GW) 300 50 # of Units 250 40 200 30 150 20 100 50 10 0 0 2012 2013 2014 2015 2016 # of Units GW Sources: McCoy Power Reports Red Wolf sales concentrated in gas turbine market – new unit
Slide 14: Process Systems
Process Systems Q3 Q3 9 mos 9 mos Red Wolf acquisition 2016 2017 2016 2017 Contract manufacturer specialized in kitting, light fabrication, packaging/assembly and Orders ($M) n/a 5.3 n/a 13.4 testing Diversifies BWEN into gas turbine install and Revenue ($M) n/a 6.1 n/a 12.3 upgrade market Opera
Slide 15: Consolidated Financial Results
Consolidated Financial Results 9 months $M except EPS 2015 2016 2016 2017 Revenue 199.2 180.8 132.7 129.0 Gross Profit 7.9 18.1 13.4 11.3 -% (ex. Restructuring) 4.0% 10.0% 10.1% 8.7% Operating Expense-$M 19.8 16.2 12.1 12.0 -% (ex. Restructuring) 9.4% 9.0% 9.1% 9.3% Operating Income/(Loss) (11.9) 1.
Slide 16: Operating Working Capital (OWC)
Operating Working Capital (OWC) OWC* Management OWC* Historical Trend – cents/$ sales $0.20 $0.15 $0.10 $0.05 $- *Operating Working Capital = Trade A/R + Inventories – Trade Payables – Customer Deposits Q3 OWC cents/$ sales flat compared to Q2 17 OWC dollars decreased as expected, due to lower s
Slide 17: Balance Sheet and Capital Expenditures
Balance Sheet and Capital Expenditures Capital Expenditures (In Millions) 12/31/2016 6/30/2017 9/30/2017 % of sales 0.8% 3.4% 4.6% Cash Assets $ 21.9 $ 0.2 $ 0.0 $6.2 $6.0 Accounts Receivable 11.9 21.5 9.3 Inventory 21.2 21.3 15.4 PPE 54.6 57.4 56.5 Other 8.1 24.6 24.1 Total Assets 117.7 125.0 105.3
Slide 18: Near Term Priorities
Near Term 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 profit
Slide 19: Investment Thesis
Investment Thesis Medium term US Wind markets fundamentally strong, short term weakness driving share price below tangible book value Broadwind gearing gaining share in strong oil & gas market Strong balance sheet –good working capital management Conservative capital structure supports opera
Slide 20: Appendix
Appendix Consolidated Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net Income/(Loss) from continuing operations……………………………. $ (2,049) $ 1,245 $ 3,745 $ 929 Interest Expense…………………………………. 228 125 584 431 Income Tax Provision/(Benefit)……………………………… (22) 0 (5,056)
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
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
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
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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