8-K
BROADWIND, INC. (BWEN)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________
Form 8-K _____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): August 3, 2021
BROADWIND, INC. (Exact Name of Registrant as Specified in Charter)
| Delaware | 001-34278 | 88-0409160 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 3240 South Central Avenue, Cicero, Illinois 60804 | ||
| --- | ||
| (Address of Principal Executive Offices) (Zip Code) |
(708) 780-4800 (Registrant's telephone number, including area code)
Not Applicable (Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
|---|---|---|
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, $0.001 par value | BWEN | The NASDAQ Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
On August 6, 2021, Broadwind, Inc. (the “Company”) issued a press release announcing its financial results as of and for the quarter ended June 30, 2021. The press release is incorporated herein by reference and is attached hereto as Exhibit 99.1.
The information contained in, or incorporated into, this Item 2.02 of this Current Report on Form 8-K (this “Report”), including Exhibit 99.1, is furnished under Item 2.02 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act regardless of any general incorporation language in such filings.
Please refer to Exhibit 99.1 for a discussion of certain forward-looking statements included therein and the risks and uncertainties related thereto.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 3, 2021, Terence P. Fox delivered notice of his resignation from the Board of Directors (the “Board”) of the Company, effective immediately. Mr. Fox’s resignation from the Board did not involve any disagreement on any matter relating to the Company’s operations, policies or practices.
Mr. Fox was the chairman of the Board’s Governance/Nominating Committee and also served on the Board’s Compensation Committee. Upon the effective date of Mr. Fox’s resignation, Philip J. Christman replaced Mr. Fox as the chairman of the Governance/Nominating Committee.
Item 7.01. Regulation FD Disclosure.
An Investor Presentation dated August 6, 2021 is incorporated herein by reference and attached hereto as Exhibit 99.2.
The information contained in, or incorporated into, this Item 7.01 of this Report, including Exhibit 99.2 attached hereto, is furnished under Item 7.01 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act or the Exchange Act regardless of any general incorporation language in such filings.
This Report shall not be deemed an admission as to the materiality of any information in this Report that is being disclosed pursuant to Regulation FD.
Please refer to Exhibit 99.2 for a discussion of certain forward-looking statements included therein and the risks and uncertainties related thereto.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibit
| EXHIBIT NUMBER | DESCRIPTION |
|---|---|
| 99.1 | Press Release dated August 6, 2021 |
| 99.2 | Investor Presentation dated August 6, 2021 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BROADWIND, INC. | ||
|---|---|---|
| Date: August 6, 2021 | By: | /s/ Eric B. Blashford |
| Eric B. Blashford | ||
| President, Chief Executive Officer<br>(Principal Executive Officer) |
EdgarFiling
EXHIBIT 99.1
Broadwind Announces Second Quarter 2021 Results
CICERO, Ill., Aug. 06, 2021 (GLOBE NEWSWIRE) -- Broadwind (NASDAQ: BWEN), a diversified precision manufacturer of specialized components and solutions serving global markets, today announced results for the second quarter 2021.
SECOND QUARTER 2021 RESULTS (As compared to the second quarter 2020)
- Total revenue of $46.5 million, down 15% year-over-year
- Total net income of $10.3 million, or $0.53 per diluted share, including $12.7 million of CARES Act benefits
- Total non-GAAP adjusted EBITDA of $12.8 million
- Total cash and excess availability of $23.7 million, up 8% year-over-year
- Net debt leverage at 0.4x TTM non-GAAP adjusted EBITDA, following forgiveness of $9.2 million in PPP loans
For the three months ended June 30, 2021, Broadwind reported total revenue of $46.5 million, a decline of 15% when compared to the prior-year period. The Company reported net income of $10.3 million, or $0.53 per diluted share in the second quarter, compared to net income of $0.5 million, or $0.03 per diluted share, in the prior-year period. The Company reported adjusted EBITDA, a non-GAAP measure, of $12.8 million in the second quarter 2021, compared to $2.9 million in the prior-year period.
Second quarter results included a $9.2 million benefit related to loan forgiveness under the Paycheck Protection Program (PPP), together with a $3.6 million benefit related to the Employee Retention Tax Credit (ERC), as outlined under the provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and further modified under the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021.
Second quarter results were primarily impacted by a year-over-year decline in wind tower sections sold, partially driven by the delay of several projects into the second half of 2021. To date, the Company has booked approximately 50% of its second half 2021 optimal wind tower capacity and has received orders for approximately 15% of 2022 production.
STRATEGY UPDATE
During the second quarter, the Company continued to advance a multi-year strategy to capitalize on favorable policy trends within the domestic wind energy market; further diversify consolidated revenues into complementary end-markets through both organic and inorganic investments; and maintain a disciplined capital structure positioned to support long-term growth.
Capitalize on favorable policy environment. In June 2021, the U.S. Treasury Department published the Biden Administration’s tax proposals for the fiscal year 2022. These proposals include a provision for an extension of the Production Tax Credit (PTC) for qualified facilities, including onshore and offshore wind assets, commencing construction after December 31, 2021 and before January 1, 2027. If passed into law, the Company expects the Administration’s planned, multi-year extension of the PTC would provide a significant catalyst for tower demand. As a result of this favorable policy backdrop and continued decline in the levelized cost of wind energy, the Company anticipates ~100 GW of new onshore wind capacity will be installed during the next decade.
Pursue inorganic expansion within adjacent, complementary clean tech end markets. Broadwind continues to actively evaluate bolt-on acquisitions that seek to leverage the Company’s existing manufacturing expertise and exposure to clean tech markets. The Company will continue to consider opportunities for accretive acquisitions of assets or businesses with high revenue and/or cost synergies, complementary product lines and a well-established, diverse customer base that further supports Broadwind’s long-term revenue diversification strategy.
Achieve scale through efficiency. The Company remains focused on operating its production facilities at or near capacity, while reducing costs through improvement initiatives. In addition to securing new tower orders from multiple turbine manufacturers in the second quarter of 2021, new order demand from gearing and industrial fabrication customers increased sequentially, reflecting an ongoing recovery in cyclical end markets.
Disciplined capital management. The Company believes it has sufficient liquidity to support ongoing operations, together with potential growth investments. Total cash and availability under its credit facility was $23.7 million as of June 30, 2021, compared to $21.9 million as of June 30, 2020. As of June 30, 2021, the ratio of net debt to trailing twelve-month non-GAAP adjusted EBITDA was 0.4x.
MANAGEMENT COMMENTARY
“Although our second quarter results were adversely impacted by temporary project delays in the current year, we believe both onshore new build and repowering projects should benefit significantly from the Biden Administration’s proposed PTC extension, supporting our expectations for sustained growth in domestic wind capacity during the next decade,” stated Eric Blashford, President and CEO of Broadwind.”
“While pandemic-related supply chain constraints were less acute during the second quarter, cost inflation on key raw materials remains a headwind for our customers, one that has dampened near-term capital investment,” stated Blashford. “This is particularly relevant with respect to the cost of steel, which has risen significantly during the past year. While Broadwind absorbs minimal direct commodity price risk, we believe some customers are waiting for raw materials costs to normalize which, when balanced against wind developers’ efforts to begin construction following a potential PTC extension, has served to push tower orders into next year. Given this pause in wind energy projects, we expect our second half tower production to be approximately 50% of optimal capacity, resulting in an approximate 25% decline in second half 2021 consolidated sales when compared to the second half of 2020.”
“Our diverse end-market strategy performed as intended during the second quarter, as growth in non-wind markets helped to offset softness in tower orders,” continued Blashford. “Our Gearing segment generated significant year-over-year growth in both revenue, orders and backlog, supported by increased demand from energy customers. We believe our non-wind end-markets are recovering, as evidenced by our industrial and energy customers placing orders to restock inventories in support of new capital projects.”
“We remain focused on pursuing immediately accretive, complementary acquisitions in adjacent markets,” continued Blashford. “While our precision manufacturing and heavy fabrications expertise has application across multiple end-markets, we remain particularly focused on building our presence within both the renewables and clean energy transition verticals. At the end of the second quarter, we had nearly $24 million in total cash and availability under our line of credit to support operations and growth opportunities.”
“We expect third quarter 2021 revenue to be in a range of $38.0 to $42.0 million and adjusted EBITDA to be in a range of $0.5 to $1.0 million,” concluded Blashford.
ORDERS AND BACKLOG
Total orders declined 33% year-over-year to $26.4 million in the second quarter 2021, as Gearing segment order growth was more than offset by a year-over-year decline in Heavy Fabrications and Industrial Solutions orders. Gearing orders increased by 111% on a year-over-year basis given increased demand from energy and mining customers, while Heavy Fabrications and Industrial Solutions orders declined by 53% and 14%, respectively, versus the prior-year period.
Total backlog declined 34% year-over-year to $74.3 million in the second quarter. As of June 30, 2021, Heavy Fabrications’ orders represented approximately 65% of the Company’s total backlog.
SEGMENT RESULTS
Heavy Fabrications Segment Broadwind provides large, complex and precision fabrications to customers in a broad range of industrial markets. Key products include wind towers and industrial fabrications, including mining and material handling components and other frames/structures.
Heavy Fabrications segment sales declined by $7.8 million to $35.8 million in the second quarter 2021, when compared to the prior year period. This decrease is primarily due to a 6% decline in tower sections sold, a lower average selling price due to the mix of towers produced and decreased industrial fabrication sales. The decline in tower section sales was attributable to lower demand, primarily a result of a shift in the timing of customer projects. Total operating income declined $2.9 million to $0.3 million, when compared to the second quarter of 2020. Segment non-GAAP adjusted EBITDA of $10.0 million, includes a benefit of $5.8 million related to the PPP loan forgiveness. EBITDA excluding PPP loan forgiveness, remained flat at $4.2 million, when compared to the prior-year period.
Gearing Segment Broadwind provides custom gearboxes, loose gearing and heat treat services to a broad set of customers in diverse markets, including oil & gas production, surface and underground mining, wind energy, steel, material handling and other infrastructure markets.
Gearing segment sales increased by $0.5 million to $7.4 million in the second quarter 2021, when compared to the year-ago period, primarily due to increased demand from energy customers. The Gearing segment reported an operating loss of ($0.9) million in the second quarter 2021, compared to an operating loss of ($0.7) million in the prior-year period. Segment non-GAAP adjusted EBITDA of $2.9 million, includes a benefit of $2.5 million related to the PPP loan forgiveness. EBITDA excluding the PPP loan forgiveness benefit was $0.4 million, versus ($0.1) million in the prior-year period.
Industrial Solutions Segment Broadwind provides supply chain solutions, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market as well as other clean technology markets.
Industrial Solutions segment sales declined by $0.9 million to $3.5 million in the second quarter 2021, when compared to the year-ago period, primarily driven by global logistics delays. Total operating income declined ($0.3) million to breakeven in the second quarter 2021, when compared to the prior-year period. Segment non-GAAP adjusted EBITDA of $0.7 million, includes a benefit of $0.5 million related to the PPP loan forgiveness. EBITDA excluding the PPP loan forgiveness, was $0.2 million, compared to $0.4 million in the comparable prior year period.
SECOND QUARTER 2021 CONFERENCE CALL
Broadwind will issue second quarter 2021 results before the market opens on August 6, 2021. A conference call will be held that same day at 11:00 A.M. ET to review the Company’s financial results, discuss recent events and conduct a question-and-answer session. A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of Broadwind’s website at www.BWEN.com/Investors. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.
| To participate in the live teleconference: | |
|---|---|
| Domestic Live: | 1-877-407-9716 |
| International Live: | 1-201-493-6779 |
| To listen to a replay of the teleconference, which will be available through August 13, 2021: | |
| Domestic Replay: | 1-844-512-2921 |
| International Replay: | 1-412-317-6671 |
| Conference ID: | 13721138 |
ABOUT BROADWIND
Broadwind (NASDAQ: BWEN) is a precision manufacturer of structures, equipment and components for clean tech and other specialized applications. With facilities throughout the U.S., our talented team is committed to helping customers maximize performance of their investments—quicker, easier and smarter. Find out more at www.bwen.com
NON-GAAP FINANCIAL MEASURES
The Company provides non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share-based compensation and other stock payments, restructuring costs, impairment charges and other non-cash gains and losses) as supplemental information regarding the Company’s business performance. The Company’s management uses this supplemental information when it internally evaluates its performance, reviews financial trends and makes operating and strategic decisions. The Company believes that this non-GAAP financial measure is useful to investors because it provides investors with a better understanding of the Company’s past financial performance and future results, which allows investors to evaluate the Company’s performance using the same methodology and information as used by the Company’s management. The Company's definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.
FORWARD-LOOKING STATEMENTS
This release contains “forward looking statements”—that is, statements related to future, not past, events—as defined in Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. Forward looking statements include any statement that does not directly relate to a current or historical fact. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements.
Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following, many of which are, and will be, amplified by the COVID-19 pandemic, including as a result of emerging variants: (i) the impact of global health concerns, including the impact of the current COVID-19 pandemic on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary, in light of the COVID-19 pandemic; (v) our ability to continue to grow our business organically and through acquisitions, and the impairment thereto by the impact of the COVID-19 pandemic; (vi) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (vii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security, including with respect to any remote work arrangements implemented in response to the COVID-19 pandemic; (viii) the sufficiency of our liquidity and alternate sources of funding, if necessary; (ix) our ability to realize revenue from customer orders and backlog; (x) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (xi) the economy, including its stability in light of the COVID-19 pandemic, and the potential impact it may have on our business, including our customers; (xii) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xv) the effects of the change of administrations in the U.S. federal government; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xviii) our ability to utilize various relief options enabled by the CARES Act; (xix) the limited trading market for our securities and the volatility of market price for our securities; and (xx) the impact of future sales of our common stock or securities convertible into our common stock on our stock price. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements including, but not limited to, those set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020. We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.
BROADWIND, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
| December 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| ASSETS | ||||||
| CURRENT ASSETS: | ||||||
| Cash | 4,757 | $ | 3,372 | |||
| Accounts receivable, net | 17,614 | 15,337 | ||||
| Employee retention credit receivable | 1,714 | - | ||||
| Contract assets | 2,665 | 2,253 | ||||
| Inventories, net | 31,951 | 26,724 | ||||
| Prepaid expenses and other current assets | 1,885 | 2,909 | ||||
| Total current assets | 60,586 | 50,595 | ||||
| LONG-TERM ASSETS: | ||||||
| Property and equipment, net | 45,186 | 45,195 | ||||
| Operating lease right-of-use assets | 18,926 | 19,321 | ||||
| Intangible assets, net | 3,819 | 4,186 | ||||
| Other assets | 502 | 385 | ||||
| TOTAL ASSETS | 129,019 | $ | 119,682 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| CURRENT LIABILITIES: | ||||||
| Line of credit and other notes payable | 6,392 | $ | 1,406 | |||
| Current portion of finance lease obligations | 1,801 | 1,427 | ||||
| Current portion of operating lease obligations | 1,729 | 1,832 | ||||
| Accounts payable | 17,096 | 18,180 | ||||
| Accrued liabilities | 4,612 | 6,307 | ||||
| Customer deposits | 15,470 | 18,819 | ||||
| Total current liabilities | 47,100 | 47,971 | ||||
| LONG-TERM LIABILITIES: | ||||||
| Long-term debt, net of current maturities | 228 | 9,381 | ||||
| Long-term finance lease obligations, net of current portion | 2,658 | 1,996 | ||||
| Long-term operating lease obligations, net of current portion | 19,310 | 19,569 | ||||
| Other | 927 | 104 | ||||
| Total long-term liabilities | 23,123 | 31,050 | ||||
| COMMITMENTS AND CONTINGENCIES | ||||||
| STOCKHOLDERS' EQUITY: | ||||||
| Preferred stock, 0.001 par value; 10,000,000 shares authorized; no shares issued | ||||||
| or outstanding | - | - | ||||
| Common stock, 0.001 par value; 30,000,000 shares authorized; 19,658,998 | ||||||
| and 17,211,498 shares issued as of June 30, 2021 and | ||||||
| December 31, 2020, respectively | 20 | 17 | ||||
| Treasury stock, at cost, 273,937 shares as of June 30, 2021 and December 31, 2020, | ||||||
| respectively | (1,842 | ) | (1,842 | ) | ||
| Additional paid-in capital | 393,839 | 384,749 | ||||
| Accumulated deficit | (333,221 | ) | (342,263 | ) | ||
| Total stockholders' equity | 58,796 | 40,661 | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 129,019 | $ | 119,682 |
All values are in US Dollars.
BROADWIND, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Revenues | $ | 46,491 | $ | 54,926 | $ | 79,219 | $ | 103,560 | ||||
| Cost of sales | 44,293 | 49,509 | 76,739 | 91,971 | ||||||||
| Gross profit | 2,198 | 5,417 | 2,480 | 11,589 | ||||||||
| OPERATING EXPENSES: | ||||||||||||
| Selling, general and administrative | 4,325 | 4,198 | 8,735 | 8,507 | ||||||||
| Intangible amortization | 184 | 184 | 367 | 367 | ||||||||
| Total operating expenses | 4,509 | 4,382 | 9,102 | 8,874 | ||||||||
| Operating (loss) income | (2,311 | ) | 1,035 | (6,622 | ) | 2,715 | ||||||
| OTHER INCOME (EXPENSE), net: | ||||||||||||
| Paycheck Protection Program loan forgiveness | 9,151 | - | 9,151 | - | ||||||||
| Interest expense, net | (318 | ) | (474 | ) | (547 | ) | (1,147 | ) | ||||
| Other, net | 3,775 | (1 | ) | 7,137 | (3 | ) | ||||||
| Total other income (expense), net | 12,608 | (475 | ) | 15,741 | (1,150 | ) | ||||||
| Net income before provision for income taxes | 10,297 | 560 | 9,119 | 1,565 | ||||||||
| Provision for income taxes | 45 | 31 | 77 | 83 | ||||||||
| NET INCOME | $ | 10,252 | $ | 529 | $ | 9,042 | $ | 1,482 | ||||
| NET INCOME PER COMMON SHARE - BASIC: | ||||||||||||
| Net income | $ | 0.55 | $ | 0.03 | $ | 0.50 | $ | 0.09 | ||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 18,761 | 16,761 | 17,974 | 16,678 | ||||||||
| NET INCOME PER COMMON SHARE - DILUTED: | ||||||||||||
| Net income | $ | 0.53 | $ | 0.03 | $ | 0.48 | $ | 0.09 | ||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 19,400 | 17,125 | 18,864 | 16,934 |
BROADWIND, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
| Six Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net income | $ | 9,042 | $ | 1,482 | ||
| Adjustments to reconcile net cash used in operating activities: | ||||||
| Depreciation and amortization expense | 3,164 | 3,194 | ||||
| Paycheck Protection Program loan forgiveness | (9,151 | ) | - | |||
| Deferred income taxes | 21 | 21 | ||||
| Change in fair value of interest rate swap agreements | 12 | 157 | ||||
| Stock-based compensation | 664 | 556 | ||||
| Allowance for doubtful accounts | (421 | ) | 34 | |||
| Common stock issued under defined contribution 401(k) plan | 570 | - | ||||
| Gain on disposal of assets | (23 | ) | - | |||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | (1,856 | ) | (7,843 | ) | ||
| Employee retention credit receivable | (1,714 | ) | - | |||
| Contract assets | (412 | ) | - | |||
| Inventories | (5,227 | ) | (5,748 | ) | ||
| Prepaid expenses and other current assets | 1,024 | 385 | ||||
| Accounts payable | (1,342 | ) | 520 | |||
| Accrued liabilities | (953 | ) | 28 | |||
| Customer deposits | (3,349 | ) | (1,001 | ) | ||
| Other non-current assets and liabilities | (36 | ) | (23 | ) | ||
| Net cash used in operating activities | (9,987 | ) | (8,238 | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchases of property and equipment | (765 | ) | (929 | ) | ||
| Proceeds from disposals of property and equipment | 23 | - | ||||
| Net cash used in investing activities | (742 | ) | (929 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Proceeds from line of credit | 82,862 | 93,358 | ||||
| Payments on line of credit | (78,108 | ) | (92,768 | ) | ||
| Proceeds from long-term debt | 387 | 9,530 | ||||
| Payments on long-term debt | (157 | ) | (822 | ) | ||
| Principal payments on finance leases | (728 | ) | (428 | ) | ||
| Shares withheld for taxes in connection with issuance of restricted stock | (1,491 | ) | - | |||
| Proceeds from sale of common stock, net | 9,349 | - | ||||
| Net cash provided by financing activities | 12,114 | 8,870 | ||||
| - | ||||||
| NET INCREASE (DECREASE) IN CASH | 1,385 | (297 | ) | |||
| CASH beginning of the period | 3,372 | 2,416 | ||||
| CASH end of the period | $ | 4,757 | $ | 2,119 |
BROADWIND, INC. AND SUBSIDIARIES SELECTED SEGMENT FINANCIAL INFORMATION (IN THOUSANDS) (UNAUDITED)
| Three Months Ended | Six Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||
| ORDERS: | |||||||||||||
| Heavy Fabrications | $ | 14,760 | $ | 31,401 | $ | 35,557 | $ | 46,916 | |||||
| Gearing | 7,858 | 3,731 | 17,778 | 16,151 | |||||||||
| Industrial Solutions | 3,823 | 4,426 | 7,320 | 10,300 | |||||||||
| Total orders | $ | 26,441 | $ | 39,558 | $ | 60,655 | $ | 73,367 | |||||
| REVENUES: | |||||||||||||
| Heavy Fabrications | $ | 35,830 | $ | 43,614 | $ | 58,607 | $ | 81,983 | |||||
| Gearing | 7,404 | 6,922 | 12,753 | 13,149 | |||||||||
| Industrial Solutions | 3,541 | 4,397 | 8,145 | 8,435 | |||||||||
| Corporate and Other | (284 | ) | (7 | ) | (286 | ) | (7 | ) | |||||
| Total revenues | $ | 46,491 | $ | 54,926 | $ | 79,219 | $ | 103,560 | |||||
| OPERATING (LOSS)/PROFIT: | |||||||||||||
| Heavy Fabrications | $ | 271 | $ | 3,199 | $ | (1,429 | ) | $ | 6,740 | ||||
| Gearing | (882 | ) | (651 | ) | (1,871 | ) | (912 | ) | |||||
| Industrial Solutions | (47 | ) | 217 | (61 | ) | 410 | |||||||
| Corporate and Other | (1,653 | ) | (1,730 | ) | (3,261 | ) | (3,523 | ) | |||||
| Total operating profit/(loss) | $ | (2,311 | ) | $ | 1,035 | $ | (6,622 | ) | $ | 2,715 |
BROADWIND, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (IN THOUSANDS) (UNAUDITED)
| Consolidated | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net Income | $ | 10,252 | $ | 529 | $ | 9,042 | $ | 1,482 | ||||
| Interest Expense | 318 | 474 | 547 | 1,147 | ||||||||
| Income Tax Provision | 45 | 31 | 77 | 83 | ||||||||
| Depreciation and Amortization | 1,612 | 1,582 | 3,164 | 3,194 | ||||||||
| Share-based Compensation and Other Stock Payments | 573 | 247 | 1,187 | 562 | ||||||||
| Adjusted EBITDA (Non-GAAP) | 12,800 | 2,863 | 14,017 | 6,468 | ||||||||
| Heavy Fabrications Segment | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net Income. | $ | 6,020 | $ | 2,467 | $ | 6,942 | $ | 5,165 | ||||
| Interest Expense | 158 | 89 | 257 | 194 | ||||||||
| Income Tax Provision | 2,594 | 643 | 2,191 | 1,381 | ||||||||
| Depreciation | 992 | 939 | 1,937 | 1,903 | ||||||||
| Share-based Compensation and Other Stock Payments | 261 | 60 | 483 | 102 | ||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 10,025 | $ | 4,198 | $ | 11,810 | $ | 8,745 | ||||
| Gearing Segment | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net Income (Loss) | $ | 2,354 | $ | (674 | ) | $ | 2,071 | $ | (988 | ) | ||
| Interest Expense | 7 | 20 | 19 | 70 | ||||||||
| Income Tax Provision | 3 | 2 | 7 | 6 | ||||||||
| Depreciation and Amortization | 462 | 503 | 920 | 1,015 | ||||||||
| Share-based Compensation and Other Stock Payments | 63 | 25 | 143 | 40 | ||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 2,889 | $ | (124 | ) | $ | 3,160 | $ | 143 | |||
| Industrial Solutions Segment | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net Income | $ | 636 | $ | 197 | $ | 814 | $ | 356 | ||||
| Interest Expense | 18 | 10 | 32 | 10 | ||||||||
| Income Tax Provision | 29 | 9 | 47 | 40 | ||||||||
| Depreciation and Amortization | 104 | 106 | 211 | 210 | ||||||||
| Share-based Compensation and Other Stock Payments | (43 | ) | 31 | 103 | 50 | |||||||
| Adjusted EBITDA (Non-GAAP) | $ | 744 | $ | 353 | $ | 1,207 | $ | 666 | ||||
| Corporate and Other | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net Income (Loss) | $ | 1,242 | $ | (1,461 | ) | $ | (785 | ) | $ | (3,051 | ) | |
| Interest Expense | 135 | 355 | 239 | 873 | ||||||||
| Income Tax (Benefit)/Provision | (2,581 | ) | (623 | ) | (2,168 | ) | (1,344 | ) | ||||
| Depreciation and Amortization | 54 | 34 | 96 | 66 | ||||||||
| Share-based Compensation and Other Stock Payments | 292 | 131 | 458 | 370 | ||||||||
| Adjusted EBITDA (Non-GAAP) | $ | (858 | ) | $ | (1,564 | ) | $ | (2,160 | ) | $ | (3,086 | ) |
CORPORATE CONTACT
Jason Bonfigt Investor@BWEN.com
EdgarFiling
Exhibit 99.2
Second Quarter 2021 Results Conference Call Investor Presentation
SAFE - HARBOR STATEMENT 2 | Investor Presentation This release contains “forward looking statements” — that is, statements related to future, not past, events — as defined in Section 21 E of the Securities Exchange Act of 1934 , as amended, that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management . Forward looking statements include any statement that does not directly relate to a current or historical fact . We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements . Our forward - looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following, many of which are, and will be, amplified by the COVID - 19 pandemic, including as a result of emerging variants : ( i ) the impact of global health concerns, including the impact of the current COVID - 19 pandemic on the economies and financial markets and the demand for our products ; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States ; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units ; (iv) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary, in light of the COVID - 19 pandemic ; (v) our ability to continue to grow our business organically and through acquisitions, and the impairment thereto by the impact of the COVID - 19 pandemic ; (vi) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows ; (vii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security, including with respect to any remote work arrangements implemented in response to the COVID - 19 pandemic ; (viii) the sufficiency of our liquidity and alternate sources of funding, if necessary ; (ix) our ability to realize revenue from customer orders and backlog ; (x) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow ; (xi) the economy, including its stability in light of the COVID - 19 pandemic, and the potential impact it may have on our business, including our customers ; (xii) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets ; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities ; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers ; (xv) the effects of the change of administrations in the U . S . federal government ; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions ; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986 , as amended ; (xviii) our ability to utilize various relief options enabled by the CARES Act ; (xix) the limited trading market for our securities and the volatility of market price for our securities ; and (xx) the impact of future sales of our common stock or securities convertible into our common stock on our stock price . These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements including, but not limited to, those set forth under the caption “Risk Factors” in Part I, Item 1 A of our Annual Report on Form 10 - K for the year ended December 31 , 2020 . We are under no duty to update any of these statements . You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change . Accordingly, forward - looking statements should not be relied upon as a predictor of actual results .
PERFORMANCE OVERVIEW
4 | Investor Presentation EXECUTIVE SUMMARY Market update, recent results and outlook Market Update As of August 2021 2Q21 Results Performance Overview Management Outlook As of August 2021 Upgraded U.S. offshore wind forecast 32 GW of new capacity expected by 2030, with more than 14 GW of projects already approved; supported by increased subsidies, accelerated permitting and C&I demand Raw materials price inflation a headwind Commodity price inflation for raw materials used in wind turbine construction, including steel, have led some developers to postpone current - year projects Upgraded U.S. onshore wind outlook Anticipated extension of the Production Tax Credit (PTC) in the US strengthens near - term expectations for 27 GW of incremental onshore installations between 2022 and 2030 2Q21 challenged by tower project delays 2Q21 results were mainly impacted by a year - over - year decline in wind tower sections sold, as raw materials cost inflation led some OEM customers to postpone orders initially planned for the current calendar year Heavy Fabrications segment update Total wind towers sections sold declined by 6% on a y/y basis due to above - referenced issues Gearing segment update Generated significant year - over - year growth in both revenue, orders and backlog, supported by increased demand from energy customers Industrial Solutions segment update Revenue impacted by near - term order cadence within natural gas turbines (1) U.S. Department of the Treasury – General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals - https:/ /home.treasury.gov/system/files/131/General - Explanations - FY2022.pdf Plant utilization outlook The Company has booked approximately 50% of its 2H 2021 optimal wind tower capacity and, as of July 2021, has received orders for approximately 15% of 2022 production 3Q21 financial guidance Anticipate 3Q21 revenue to be in a range of $38 to $42 million and adjusted EBITDA to be in a range of $0.5 to $1.0 million Renewable energy t ax c redi ts in focus Biden Administration is proposing a multi - year PTC for wind and certain other qualified facilities that begin construction after 2021 (1) Capital deployment focus Continue to actively evaluate bolt - on acquisitions and joint venture partnerships that seek to leverage the Company’s existing manufacturing expertise and exposure to clean tech markets. Significant PPP and ERC benefit 2Q21 results included a $9.2 million benefit related to loan forgiveness under the Paycheck Protection Program (PPP), together with a $3.6 million benefit related to the Employee Retention Tax Credit (ERC)
CONSOLIDATED FINANCIAL DATA Revenue declined 15% y/y, as wind tower projects were delayed to 2H21 5 | Investor Presentation Total Revenue (1) ($MM) Gross Profit (1) ($MM) Adjusted EBITDA (1) ($MM) Earnings (Loss) Per Diluted Share (1) ($) • Total revenue declined 15% y/y to $46.5 million, primarily within Heavy Fabrication segment • PPP and ERC provided $9.2 million and $3.6 million Adjusted EBITDA benefit, respectively, to 2Q21 results • PPP provided a $ 0.47 per diluted share benefit to 2Q21 results $54.9 $46.5 $198.9 $174.2 2Q20 2Q21 TTM 2Q20 TTM 2Q21 $5.4 $2.2 $19.6 $8.9 2Q20 2Q21 TTM 2Q20 TTM 2Q21 $2.9 $12.8 $10.1 $15.5 2Q20 2Q21 TTM 2Q20 TTM 2Q21 $0.03 $0.53 ($0.06) $0.28 2Q20 2Q21 TTM 2Q20 TTM 2Q21 (1) For 2Q21, results include $9.2 million benefit related to loan forgiveness under the Paycheck Protection Program (PPP), toget he r with a $3.6 million related to the Employee Retention Tax Credit (ERC), as outlined under the provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and further modified under the Taxpayer Cert ain ty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021.
HEAVY FABRICATIONS SEGMENT Higher raw materials costs and PTC extension uncertainty have pushed some projects out of 2021 6 | Investor Presentation Segment Revenue ($MM) Segment Adjusted EBITDA ($MM) Segment Orders ($MM) Quarter - End Segment Backlog ($MM) • Revenue declined $7.8 million y/y to $35.8 million due to a decline in wind tower sections sold, lower ASP’s and a drop in industrial fabrication revenue • Segment orders declined 53% y/y in 2Q21 to $14.8 million; backlog down 43% y/y to $48.2 million • Higher raw materials costs, including escalation in the cost of steel, together with PTC extension uncertainty, have led some developers to postpone projects • Segment non - GAAP adjusted EBITDA, less the PPP loan forgiveness benefit, remained flat at $4.2 million, when compared to the prior - year period. $43.6 $35.8 $153.4 $131.8 2Q20 2Q21 TTM 2Q20 TTM 2Q21 $4.2 $10.0 $12.9 $17.5 2Q20 2Q21 TTM 2Q20 TTM 2Q21 $31.4 $14.8 $117.7 $94.5 2Q20 2Q21 TTM 2Q20 TTM 2Q21 $85.2 $69.3 $48.2 2Q20 1Q21 2Q21
HEAVY FABRICATIONS SEGMENT Tower plant utilization expected to be ~50% in 2H 2021 7 | Investor Presentation Total Wind Tower Sections Sold (Number of Sections) (1) Escalation in Raw Materials Costs (Indexed Price of Steel Per Ton) (2) • Expect tower facilities to be at approximately 50% utilization in the second half 2021, given current bookings • 2Q21 results impacted by lower tower sales volumes, a less favorable mix of tower sales and a decline in industrial fabrication sales • Lower tower sales was a result of a shift in the timing of customer projects • Steel costs have increased materially in the last 12 months; we have no direct commodity price risk (pass through to the customer) (1) Our production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated near the primary U.S. domestic wi nd energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers (1650 tower sections), sufficient to support turbines generating more than 1,100 M W o f power. (2) Source: Factset. US MW Dom HRC Steel Near Term Price Per Ton (NYMEX) 0% 10% 20% 30% 40% 50% 60% 70% 80% - 200 400 600 800 1,000 1,200 1,400 2017 2018 2019 2020 TTM 2Q21 Wind Tower Sections Sold Tower Plant Capacity Utilization 0 50 100 150 200 250 300 350 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21
GEARING SEGMENT Y/Y growth in revenue, orders and backlog supported by recovery in energy sector demand 8 | Investor Presentation Segment Revenue ($MM) Segment Adjusted EBITDA ($MM) Segment Orders ($MM) Quarter - End Segment Backlog ($MM) • Revenue increased 7% y/y in 2Q21; customer activity is accelerating, particularly within energy sector • Orders increased by 110% y/y to $7.9 million, as economic recovery accelerates • Backlog improved 12% y/y • Segment non - GAAP adjusted EBITDA, excluding the PPP loan forgiveness benefit, was $0.4 million, versus ($0.1) million in the prior - year period. $6.9 $7.4 $28.7 $24.7 2Q20 2Q21 TTM 2Q20 TTM 2Q21 ($0.1) $2.9 $2.3 $1.1 2Q20 2Q21 TTM 2Q20 TTM 2Q21 $3.7 $7.9 $28.9 $26.7 2Q20 2Q21 TTM 2Q20 TTM 2Q21 $17.4 $19.1 $19.6 2Q20 1Q21 2Q21
INDUSTRIAL SOLUTIONS SEGMENT Revenue impacted by timing of natural gas turbine customer orders 9 | Investor Presentation Segment Revenue ($MM) Segment Adjusted EBITDA ($MM) Segment Orders ($MM) Quarter - End Segment Backlog ($MM) • Revenue declined 19% y/y driven by lower demand for gas turbine components • Orders declined y/y due to a change in the timing of customer order buying patterns • Segment non - GAAP adjusted EBITDA, excluding the PPP loan forgiveness benefit, declined $0.1 million to $0.2 million, when compared to the prior - year period. $4.4 $3.5 $16.8 $18.0 2Q20 2Q21 TTM 2Q20 TTM 2Q21 $0.4 $0.7 $1.1 $1.9 2Q20 2Q21 TTM 2Q20 TTM 2Q21 $4.4 $3.8 $19.7 $14.9 2Q20 2Q21 TTM 2Q20 TTM 2Q21 $9.5 $6.0 $6.6 2Q20 1Q21 2Q21
BALANCE SHEET UPDATE Nearly $24 million of cash and availability to support growth as of 6/30/21 10 | Investor Presentation Quarter - End Total Cash and Availability on Credit Facility ($MM) Quarter - End Operating Working Capital as a % of Sales (1) (1) Operating working capital divided by T3M annualized sales $8.1 $19.2 $19.0 $19.0 $21.9 $21.8 $24.1 $21.6 $23.7 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 13% 3% 3% 5% 9% 6% 3% 9% 9% 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21
U.S. WIND POWER INSTALLATION FORECAST Biden Administration considering multi - year extension of the Production Tax Credit 11 | Investor Presentation (1) Source: Wood MacKenzie June 2021 Wind Sector Outlook; wind values include new build and repowering U.S. Onshore Wind Capacity Installations (Annual On - Shore GW Installed) (1) • Anticipation of an extension to the Production Tax Credit (PTC) supports significant upgrade to prior onshore wind forecast, with nearly 108 GW of new onshore wind capacity over the next decade • Both onshore new build and repowering expected to benefit from PTC extension • Domestic offshore wind installations expected to exceed 32 GW between 2023 and 2030 • 14 GW of offshore projects are already contracted or expected to be approved, up from 9 GW in 2020; most states on track to reach mandates • Biden Administration taking steps to accelerate permitting of offshore wind developments U.S. Offshore Wind Capacity Installations (Annual Off - Shore GW Installed) (1) 0.4 2.9 4.3 5.6 4.8 4.6 4.7 4.8 0.7 2.6 4.3 4.4 6.0 4.6 4.7 4.8 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 1Q21 Forecast 2Q21 Forecast 15.3 11.6 7.6 7.6 8.1 5.2 5.8 6.8 6.8 6.9 14.6 11.7 8.5 8.7 9.2 9.3 11.2 11.9 11.7 11.4 2021 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 1Q21 Forecast 2Q21 Forecast
CUSTOMER DIVERSIFICATION INITIATIVE Balanced revenue mix supports long - term growth and profitability 12 | Investor Presentation Wind vs. Non - Wind Revenue Concentration (% of Total Revenue) (1) (1) Wind energy figures shown above exclude repair/replacement demand • Wind and renewables remain our core industry focus • Revenue diversification positions us to better optimize our production capabilities during periods of lower wind tower demand • Since 2016, we have increased non - wind revenue by nearly 300% to approximately $60 million annually Fastest Growing Non - Wind Sectors Since 2016 (Absolute Growth in Revenue) Industrial Mining Power Generation 92% 72% 50% 66% 69% 67% 67% 8% 28% 50% 34% 31% 33% 33% 2016 2017 2018 2019 2020 TTM 1Q21 TTM 2Q21 Wind Revenue Non-Wind Revenue
APPENDIX
EXHIBIT A Revenues and Operating Income (Loss) Consolidated and by Segment 14 | Investor Presentation Three Months Ended Six Months Ended 2021 2020 2021 2020 ORDERS: Heavy Fabrications………………………………………………………………14,760$ 31,401$ 35,557$ 46,916$ Gearing………………………………………………………………7,858 3,731 17,778 16,151 Industrial Solutions………………………………………………………………3,823 4,426 7,320 10,300 Total orders………………………………...………………26,441$ 39,558$ 60,655$ 73,367$ REVENUES: Heavy Fabrications………………………………………………………………35,830$ 43,614$ 58,607$ 81,983$ Gearing………………………………………………………………7,404 6,922 12,753 13,149 Industrial Solutions………………………………………………………………3,541 4,397 8,145 8,435 Corporate and Other……………………………………………………………(284) (7) (286) (7) Total revenues…………………………………..……………………46,491$ 54,926$ 79,219$ 103,560$ OPERATING (LOSS)/PROFIT: Heavy Fabrications………………………………………………………………271$ 3,199$ (1,429)$ 6,740$ Gearing………………………………………………………………(882) (651) (1,871) (912) Industrial Solutions………………………………………………………………(47) 217 (61) 410 Corporate and Other……………………………………………………………(1,653) (1,730) (3,261) (3,523) Total operating profit/(loss)……………………………………(2,311)$ 1,035$ (6,622)$ 2,715$ June 30, June 30,
EXHIBIT B GAAP to Non - GAAP Consolidated Adjusted EBITDA Reconciliation 15 | Investor Presentation 15 | Investor Presentation Consolidated 2021 2020 2021 2020 Net Income……………..…………...………………………………………10,252$ 529$ 9,042$ 1,482$ Interest Expense…………………….……………………………………. 318 474 547 1,147 Income Tax Provision…………………………….....…………………… 45 31 77 83 Depreciation and Amortization………………..……………………………………………………1,612 1,582 3,164 3,194 Share-based Compensation and Other Stock Payments………………………………………………………………573 247 1,187 562 Adjusted EBITDA (Non-GAAP)…………………………. 12,800 2,863 14,017 6,468 Three Months Ended June 30, Six Months Ended June 30, Heavy Fabrications Segment 2021 2020 2021 2020 Net Income……………………...…………………………….……. 6,020$ 2,467$ 6,942$ 5,165$ Interest Expense……………………………..……………………. 158 89 257 194 Income Tax Provision……..…………………...…………………… 2,594 643 2,191 1,381 Depreciation……………………………………………………………… 992 939 1,937 1,903 Share-based Compensation and Other Stock Payments………………………………………………………………261 60 483 102 Adjusted EBITDA (Non-GAAP)…………………………….. 10,025$ 4,198$ 11,810$ 8,745$ Three Months Ended June 30, Six Months Ended June 30, Gearing Segment 2021 2020 2021 2020 Net Income (Loss)……………………...……………………...……………. 2,354$ (674)$ 2,071$ (988)$ Interest Expense………………………...……………………………… 7 20 19 70 Income Tax Provision…………………...…………………… 3 2 7 6 Depreciation and Amortization………………………………………………………………462 503 920 1,015 Share-based Compensation and Other Stock Payments………………………………………………………………63 25 143 40 Adjusted EBITDA (Non-GAAP)……………………….. 2,889$ (124)$ 3,160$ 143$ Three Months Ended June 30, Six Months Ended June 30, Industrial Solutions Segment 2021 2020 2021 2020 Net Income……………………...……...……………………………. 636$ 197$ 814$ 356$ Interest Expense……………………………………………………. 18 10 32 10 Income Tax Provision…………………...…………………… 29 9 47 40 Depreciation and Amortization……………………………………. 104 106 211 210 Share-based Compensation and Other Stock Payments………… (43) 31 103 50 Adjusted EBITDA (Non-GAAP)……………………………… 744$ 353$ 1,207$ 666$ Three Months Ended June 30, Six Months Ended June 30, Corporate and Other 2021 2020 2021 2020 Net Income (Loss)………………………..……...……………………………. 1,242$ (1,461)$ (785)$ (3,051)$ Interest Expense……………….…………………………………… 135 355 239 873 Income Tax (Benefit)/Provision…………………..…………… (2,581) (623) (2,168) (1,344) Depreciation and Amortization………………………………………………………………54 34 96 66 Share-based Compensation and Other Stock Payments………………………………………………………………292 131 458 370 Adjusted EBITDA (Non-GAAP)……………………..……………. (858)$ (1,564)$ (2,160)$ (3,086)$ Three Months Ended June 30, Six Months Ended June 30,
EXHIBIT C Consolidated Statement of Cash Flows 16 | Investor Presentation 2021 2020 Net income…...……………………………………………………………………………………………9,042$ 1,482$ Adjustments to reconcile net cash used in operating activities: Depreciation and amortization expense…………………………………………………………………….3,164 3,194 PPP loan forgiveness…………………………………………………………………….(9,151) - Deferred income taxes………………………………………………………………………………………….21 21 Change in fair value of interest rate swap agreements………………………………………………………………….12 157 Stock-based compensation……………………………………………………………………………………..664 556 Allowance for doubtful accounts……………………………………………………………………………….(421) 34 Common stock issued under defined contribution 401(k) plan…………………………………….570 - Gain on disposal of assets……………………………………………………………………………………….(23) - Changes in operating assets and liabilities: Accounts receivable………………………………………………………………………………………………..(1,856) (7,843) Employee retention credit receivable………………………………………………………………………………………………..(1,714) - Contract assets………………………………………………………………………………………………..(412) - Inventories ……………………………………………………………………………………………………………(5,227) (5,748) Prepaid expenses and other current assets……………………………………………………………..1,024 385 Accounts payable ……………………………………………………………………………………………….(1,342) 520 Accrued liabilities………………………………………………………………………………………………(953) 28 Customer deposits…………………………………………………………………………………………….(3,349) (1,001) Other non-current assets and liabilities…………………………………………………………………………………………….(36) (23) Net cash used in operating activities………………………………………………………………………………………………(9,987) (8,238) Purchases of property and equipment……………………………………………………………………………...…….(765) (929) Proceeds from disposals of property and equipment……………………………………………………………………23 - (742) (929) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from line of credit………………………………………………………………………..82,862 93,358 Payments on line of credit………………………………………………………………………..(78,108) (92,768) Proceeds from long-term debt…………………………………………………………………………387 9,530 Payments on long-term debt…………………………………………………………………………(157) (822) Principal payments on finance leases………………………………………………………………………………..(728) (428) Shares withheld for taxes in connection with issuance of restricted stock………………………………………………………………………………..(1,491) - Proceeds from sale of common stock, net………………………………………………………………………………..9,349 - 12,114 8,870 - NET INCREASE (DECREASE) IN CASH……………………………………….…………………….1,385 (297) CASH beginning of the period……………………………………………………. 3,372 2,416 CASH end of the period………………………………………………………………………..4,757$ 2,119$ Six Months Ended June 30, CASH FLOWS FROM OPERATING ACTIVITIES: CASH FLOWS FROM INVESTING ACTIVITIES: Net cash used in investing activities……………………………………………………………………………………………… Net cash provided by financing activities………………………………………………………………………………………………………………………………
EXHIBIT D Consolidated Balance Sheet 17 | Investor Presentation June 30, December 31, 2021 2020 CURRENT ASSETS: Cash………………………………………………………………………………………………………………………4,757$ 3,372$ Accounts receivable, net………………………………………………………………………………………………………………………17,614 15,337 Employee retention credit receivable………………………………………………………………………………………………………………………1,714 - Contract assets………………………………………………………………………………………………………………………2,665 2,253 Inventories, net………………………………………………………………………………………………………..31,951 26,724 Prepaid expenses and other current assets……………………………………………………………………………1,885 2,909 Total current assets…………………………………………………………………………………………………….60,586 50,595 LONG-TERM ASSETS: Property and equipment, net………………………………………………………………………………….. 45,186 45,195 Operating lease right-of-use assets…………………………………………………………………………………………………………………..18,926 19,321 Intangible assets, net…………………………………………………………………………………………… 3,819 4,186 Other assets………………………………………………………………………………………………………. 502 385 TOTAL ASSETS……………………………………………………………………………………………………….. 129,019$ 119,682$ CURRENT LIABILITIES: Line of credit and other notes payable…………………………………………………………………………………………..6,392$ 1,406$ Current portion of finance lease obligations………………………………………………………………………..1,801 1,427 Current portion of operating lease obligations………………………………………………………………………..1,729 1,832 Accounts payable………………………………………………………………………………………………………….17,096 18,180 Accrued liabilities ………………………………………………………………………………………………………..4,612 6,307 Customer deposits………………………………………………………………………………………………….15,470 18,819 Total current liabilities………………………………………………………………………………………………..47,100 47,971 LONG-TERM LIABILITIES: Long-term debt, net of current maturities……………………………………………………………………………….228 9,381 Long-term finance lease obligations, net of current portion…………………………………………………. 2,658 1,996 Long-term operating lease obligations, net of current portion………………………………………………….19,310 19,569 Other…………………………………………………………………………………………………………………………927 104 Total long-term liabilities………………………………………………………………………………………….23,123 31,050 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding…………………………………………………………………………………………………………………….- - Common stock, $0.001 par value; 30,000,000 shares authorized; 19,658,998 and 17,211,498 shares issued as of June 30, 2021 and December 31, 2020, respectively………………………………………………………………………………………………………20 17 Treasury stock, at cost, 273,937 shares as of June 30, 2021 and December 31, 2020, respectively……………………………………………………………………………………………………… (1,842) (1,842) Additional paid-in capital………………………………………………………………………………………………….393,839 384,749 Accumulated deficit……………………………………………………………………………………………………………….(333,221) (342,263) Total stockholders' equity………………………………………………………………………………………58,796 40,661 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY………………………………………………………….. 129,019$ 119,682$ ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY
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