Broadwind, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Strategic Shift: Continued shift toward power generation markets (oil & gas, renewables, nuclear) leveraging precision manufacturing expertise.
• Facilities: Manufacturing spaces in Texas, Illinois, Pennsylvania, North Carolina with over 600,000 sq. ft. Anticipate improved capacity utilization.
• Orders and Backlog: Strong Q3 orders (90% y/y increase), with power generation driving growth. Industrial Solutions backlog at record high.
• Divestment and Repurchase: Completed sale of Manitowoc industrial fabrication, net gain $8.2 million; announced $3 million share repurchase.

Segment Performance

• Heavy Fabrication: Third quarter orders were nearly $14 million, a 25% increase vs prior year quarter. Revenue was $29.4 million, up 43% y/y, driven by wind towers and repowering, offset by softness in natural gas pressure reducing systems (PRS). Segment adjusted EBITDA down due to manufacturing inefficiencies.
• Gearing: Q3 orders increased 260% to nearly $16 million. Revenue was $7.1 million, down over $2 million y/y due to lower capacity utilization.
• Industrial Solutions: Q3 orders were nearly $14 million, up 86% y/y. Revenue grew 37% y/y to $7.9 million, driven by stronger shipments into new gas turbine markets. Segment backlog hit a record $36 million.

Guidance

• Full Year 2025: Increased revenue guidance to $155-$160 million (up from $145-$155 million). Adjusted EBITDA range maintained at $9-$10 million, excluding the $8.2 million gain from the Manitowoc sale.
• 2026 Outlook: More detail to be provided in Q4 call.

Risks

• Volatile Trade Policy: Impact on business, though domestic manufacturing remains a competitive advantage.
• Operational Inefficiencies: Previously affected margins, though expected to improve with normalized production.
• Market Demand Fluctuations: E.g., softness in PRS due to oil price impact on customer capital.

Question and Answer

Q: Looking into 2026, is industrial solution the key driver?

A: Power generation and critical infrastructure will lift both Industrial Solutions and Gearing in 2026.

Q: Gearing segment softness despite positive environment?

A: Softness due to lead time; current orders will be delivered in 2026.

Q: Margin profile for 2026?

A: Stable, with potential marginal improvement due to reduced operational headwinds.

Q: Higher gross margins post-Manitowoc divestment?

A: Yes, due to owned Abilene facility and higher capacity utilization.

Q: PRS weakness timing or demand?

A: Timing; resurgence expected when oil prices allow customer capital.

Q: CapEx for Industrial Solutions and capacity expansion?

A: Modest CapEx, expanding plant space and staffing to meet demand.

Q: Heavy fab wind orders and backlog?

A: Good visibility through 2026, but exact timing dependent on customer turbine sales.