BROADWIND, INC. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 Performance: Full-year revenue $143 million, adjusted EBITDA $13.3 million. Q4 revenue $34 million, adjusted EBITDA $2.1 million. Order rates increased materially, with orders up 85% from Q4 2023 to $37 million.
• Market Activity: Order growth broad-based across end markets, including strong demand for wind repowering adapters, natural gas systems, hydroelectric orders, and gearing. Quoting activity elevated in heavy fabrications and industrial solutions.
• Operational Investments: Upgraded fabrication equipment, invested in quality certifications, and undertook cost actions equating to $4 million annualized savings, positioning for improved leverage in 2025.

Segment Performance

• Heavy Fabrication: Q4 revenue was $20 million, down 31% from a year ago, mostly due to decline in tower production and natural gas PRS shipments; orders increased 85% from Q4 2023 to $37 million, with strong demand for wind turbine adapters, natural gas pressure reduction systems, and hydroelectric orders.
• Gearing: Q4 revenue $7.6 million, a 31% reduction year-over-year due to softness in oil and gas and steel markets; orders nearly doubled year-over-year, led by industrial and steel markets.
• Industrial Solutions: Q4 revenue $5.9 million, down slightly year-over-year; orders $8 million, a record level, with strong interest in the global gas turbine market.

Guidance

• Full-year 2025 revenue expected in range of $140 million to $160 million, adjusted EBITDA $13 million to $15 million.
• Wind activity muted through 2025, but repowering market strong; PRS model launch with increased production.
• Gearing moving to precision products, new markets, upgraded heat-treat furnaces.
• Industrial solutions continuing strong quoting and order activity.

Risks

• Uncertainty in wind and oil and gas markets impacting demand.
• Potential permitting slowdowns affecting wind project timelines.
• Tariff and policy changes affecting costs and margins.

Q: Hi, Eric. Hi, Tom. So, first of all, just on wind, just to confirm, so I know in your release you were talking about expecting wind softness through ’25. But I believe, just to confirm, you said you kind of expect this to be the situation through ‘26, and I guess meaning some improvement in 2027. So, that would be first. And then second, can you just remind me of the visibility you've got for the GE work you're doing under the contract that you received a number of quarters ago?

A: Sure. Yeah, I see the demand as muted. Certainly, we can be optimistic beyond ‘25, but I'd expect ‘26 to be about the same as ‘25, just based on indications we're getting from customers and some conversations I've had with industry peers and whatnot. Regarding the visibility we have through 2025, we have, I would say, firm visibility through, really through the whole year 2025. We know exactly the towers we're going to build through September and have indications beyond that, Eric.

Q: Good morning, guys. Eric, just trying to understand from your previous release, you're saying project activity is low, but order activity has improved. Can you help us understand, what that means in terms of the setup you have right now?

A: Well, if we're talking about project activity in terms of wind, wind is muted right now. We have a strong backlog. We've got good customer communications and visibility. But for new orders for wind, it would be somewhat muted. Is that the question you're asking? I want to make sure I'm answering the correct question.

Q: Hi. Good morning. Thanks, guys. So I wanted to just touch on the 2025 guidance. It implies mid single-digit revenue growth for 2025. And then just wondering if you could speak to the growth that you are anticipating for the segments. Which segments might grow faster than the corporate average, what might be a little bit slower? It sounds like gearing might be a little on the slower side, but if you could just give us a little bit more granularity, that would be helpful.

A: I would say as far as industrial solutions, I would say the pace of growth that we've seen over the last couple of years shows no sign of slowing down. And just a reminder, that's based on natural gas turbines and aeroderivative turbines, which is really the same thing, different size, across the world. And so as electricity demand increases, the demand for those products increases, and the demand for our products increases. So I'd say pace of growth would continue there, I'd suspect, through 2025. Gearing, starting from a bit of a slower start because of the orders that we had, or the lack of orders we had in Q2 and Q3, primarily driven by oil and gas, I do expect that to grow prospectively going forward, kind of ratably, but reasonably. Towers is going to be flat, as we indicated. So the growth that you are seeing, that we're guiding to, is really going to come from those other divisions.