Broadwind, Inc. Q2 FY2026 earnings call

Strategic Pivot and Market Positioning

• Completed a strategic pivot away from wind tower manufacturing to become a pure-play precision manufacturing business focused on domestic power generation and critical infrastructure markets, creating increased financial flexibility and strategic focus.
• Expects a sustained multiyear investment cycle in U.S. electricity generation, transmission, and distribution driven by AI data center load growth, domestic manufacturing expansion, electrification trends, and the need to replace and modernize the aging grid.
• The company's 100% domestic manufacturing footprint, technical expertise, and long-standing customer relationships position it to serve customers with complex, large-scale manufacturing challenges.

Demand and Backlog Momentum

• Combined backlog for the two continuing segments increased 93% YoY as of June 30, 2026, with an overall consolidated book-to-bill ratio of 1.5x.
• Gearing segment demand growth is driven by strong activity in power generation (including data center-related power requirements) and improving upstream oil and gas activity, with robust quoting activity.
• Industrial Solutions segment demand is supported by strong natural gas turbine demand tied to data center power needs and broader global electrification trends, with six consecutive quarters of robust growth.

Operational Improvements

• In the Gearing segment, management is executing a floor space optimization initiative, reconfiguring machining centers into cellular manufacturing layouts to improve material flow, reduce waste, increase productivity, and raise throughput to meet strong demand.
• The 30% warehouse expansion at the Industrial Solutions North Carolina facility was completed in Q2, enabling more efficient handling of higher sales volume, opening additional processing and packaging space, and supporting expected future growth.
• Additional engineering and manufacturing resources have been added across both segments to meet growing customer demand.

Capital Allocation Strategy

• Capital allocation priorities are focused on long-term shareholder value via sustained organic growth and opportunistic bolt-on acquisitions of complementary precision manufacturing assets in targeted markets that meet strict criteria for sector focus, profitability, business model durability, and valuation.
• The company ended Q2 with a strong liquidity position and reduced debt levels, providing substantial financial flexibility to pursue organic and acquisition growth.

The Heavy Fabrication segment (excluding Pressure Reducing Systems, PRS) is classified as discontinued operations following the sale of the Avail Infrastructure Solutions facility, so performance below reflects only continuing operations. Total consolidated revenue from continuing operations in Q2 2026 was $24.3 million, a 67% increase year-over-year (YoY). 1. Gearing Segment: Revenue increased 24% YoY to $9 million, accounting for 37% of total consolidated continuing operations revenue. Q2 new orders rose 138% YoY to $15.2 million, ending the quarter with $37.6 million in backlog (fourth consecutive quarter of backlog growth). Adjusted EBITDA was $0.4 million, improving from a $0.1 million adjusted EBITDA loss in the prior year period. 2. Industrial Solutions Segment: Revenue rose 79% YoY to $13.2 million, a new quarterly record, accounting for 54% of total consolidated continuing operations revenue. Q2 new orders increased 24% YoY to a record $17.2 million, driving backlog to a new record of $47.4 million (eighth consecutive quarter of backlog growth). Adjusted EBITDA was $2.5 million, up from $0.7 million in the prior year period, with an EBITDA margin of nearly 19%. PRS activity does not meet reportable segment criteria and is included only in consolidated results.

• Management has not reinstated formal full-year guidance as of Q2 2026. Guidance will only be reinstated after the scheduled completion of the wind-down of remaining Abilene wind tower manufacturing operations in Q3 2026, which management views as a required prerequisite to restoring guidance confidence.
• Management expects revenue to remain above recent historical levels for the second half of 2026, though Industrial Solutions EBITDA margins are expected to moderate to more typical levels from the strong Q2 2026 result, varying with customer schedules, product mix, and market conditions.
• Management expects the Gearing segment will see improving operating leverage and higher margins as sales volumes continue to recover from prior year levels.

No new material risks were explicitly discussed in the prepared remarks. Management noted in the opening disclaimer that forward-looking statements are inherently uncertain, and actual results may differ materially from expectations due to factors outlined in the company's historical SEC filings. No specific operational failures were discussed during the call.

Q: Why has Broadwind not reinstated full-year 2026 guidance yet, and what needs to happen to reinstate it? / A: Management will not reinstate guidance until the scheduled wind-down of remaining Abilene wind tower manufacturing operations is complete in Q3 2026. The wind-down process creates ongoing uncertainty that makes it imprudent to issue formal guidance at this time.

Q: What is driving the 138% YoY order growth in the Gearing segment, and does this strong growth indicate continued future demand? / A: The growth is broad-based across the segment's core end markets: upstream oil and gas is seeing increased demand as customers return idled older rigs to service amid stronger commodity prices, and power generation demand continues to accelerate. Management states the strong order growth is a good indicator of sustained future demand for the segment.

Q: What types of acquisition targets is Broadwind evaluating for its bolt-on acquisition strategy? / A: The company is focused on complementary targets that expand its existing precision manufacturing capabilities in core high-growth end markets: power generation, critical infrastructure, grid hardening, and potentially aerospace and defense. Targets are expected to add complementary customers, capabilities, or capacity that align with and expand the core Gearing and Industrial Solutions businesses, rather than entering entirely new markets. Management views power generation and critical infrastructure as a long 10-15 year demand cycle, making acquisitions in these areas attractive.

Q: What is the current revenue exposure to data center-driven power generation demand, and are regional data center bans impacting the company's pipeline? / A: Management does not track an explicit breakdown of revenue from data center-specific demand, but estimates that 30-40% of Gearing segment revenue and a larger share of Industrial Solutions segment revenue comes from power generation, and the company's top power generation customers cite AI data center growth as a primary demand driver. No slowdown in demand from data center-related power projects has been seen to date.

Q: What is the typical conversion timeline from backlog to recognized revenue for the two core segments? / A: The typical conversion cycle for Gearing segment orders is 6 months, though strong current power generation demand has led some customers to schedule production out beyond 2026, extending the cycle for some orders. For Industrial Solutions, aftermarket orders convert in under 3 months, while new build orders can take up to 18 months, with a general benchmark of 6-12 months for average conversion. The company already holds significant backlog scheduled for revenue recognition as far out as 2028, providing strong long-term visibility.