BROADWIND, INC. (BWEN)·Q2 2025 Earnings Summary

Executive Summary

• Revenue of $39.2M, up 7.6% year-over-year; adjusted EBITDA of $2.1M (5.3% margin) as margin pressure from inefficiencies and lower gearing utilization offset volume gains. Revenue beat consensus, while EPS and EBITDA missed.
• Diluted EPS of ($0.04) vs. $0.02 a year ago; adjusted EBITDA down year-over-year on manufacturing ramp inefficiencies for larger wind towers and lower capacity utilization in Gearing.
• Orders rose 14% year-over-year to $21.0M; Industrial Solutions set record orders and backlog for a third consecutive quarter, reflecting robust natural gas turbine demand.
• Guidance suspended following definitive agreement to divest Manitowoc industrial fabrication operations; transaction expected to add ~$13M cash and reduce annual costs by ~$8M, with updated guidance to be provided post-close.
• July follow-on ~$6M gearing order under a two-year agreement in power generation underscores strategic pivot toward higher-value precision manufacturing end markets.

What Went Well and What Went Wrong

What Went Well

• Heavy Fabrications revenue rose 27.4% to $25.0M on increased wind tower sections and repowering adapters; segment operating income improved to $1.7M.
• Industrial Solutions: third straight quarter of record orders and backlog; Q2 orders ~$13.9M and backlog ~$30M, driven by natural gas turbine demand. “Segment backlog also hit a new record high of nearly $30,000,000…”
• Strategic progress and end-market diversification: “Our second quarter results reflect clear progress in our strategy to diversify into higher value precision manufacturing end markets…” (CEO).
• Commercial momentum in power generation: July follow-on ~$6M gearing order; production starts Q4 2025, fulfillment in 2026–2027.

What Went Wrong

• Gearing segment revenue fell 30.3% to $7.3M; segment swung to operating loss of ($0.8)M and adjusted EBITDA of ($0.1)M on lower oil & gas demand and utilization.
• Margins compressed: adjusted EBITDA fell to $2.1M from $3.6M; profitability impacted by early production inefficiencies (Manitowoc and Abilene), added overhead for ramp, and low gearing utilization.
• Backlog declined 31.5% year-over-year to $95.3M; net leverage rose to 3.0x TTM adjusted EBITDA, reflecting working capital build for wind volume.

Financial Results

Estimates vs. Actuals (Q2 2025)

Values with asterisk (*) retrieved from S&P Global.

Segment Performance (Q2 2025 vs. Q2 2024)

KPIs and Balance Sheet

Q4 2024 Trend Anchors

Guidance Changes

Additional items affecting outlook:

• Manitowoc divestiture expected to add ≥$13M cash and reduce annual costs by ~$8M upon closing; redeployment and consolidation intended to improve utilization and operating leverage.

Earnings Call Themes & Trends

Management Commentary

• “Our second quarter results reflect clear progress in our strategy to diversify into higher value precision manufacturing end markets, while also benefiting from increased demand for wind related content.” (Eric Blashford, CEO)
• “This transaction [Manitowoc sale]…is expected to add approximately $13 million of cash…while reducing costs by an estimated $8 million annually.” (CEO)
• “Adjusted EBITDA margin dropped 5.3% due primarily to lower capacity utilization within our gearing segment, manufacturing inefficiencies associated with the production of a new larger wind tower design… and additional labor to support increased volume.” (CFO)
• “Segment backlog also hit a new record high of nearly $30,000,000… This quarter represents the third straight quarter with record order and backlog levels.” (CFO, Industrial Solutions)

Q&A Highlights

• Guidance suspension driven chiefly by closing timing and transitional costs tied to Manitowoc sale; management intends to reinstate guidance post-close.
• Industrial Solutions visibility improving with customers adding capacity; Broadwind expanding capacity (robotic welding, paint, machining, testing) to meet demand; typical 12–18 month lag from market orders to BWEN orders.
• Margin trajectory: Management sees potential expansion via fixed-cost coverage and improved utilization; near-term mix and ramp inefficiencies weigh on margins.
• Wind outlook: Completed LTA releases; strong visibility through 2026 for towers/adapters across multiple OEMs; Abilene utilization targeted at 60–80% in 2026.
• Cost savings split: ~$8M Manitowoc-related savings largely in cost of goods sold (fixed costs).

Estimates Context

• Q2 2025 performance versus S&P Global consensus: Revenue beat ($39.235M actual vs. $37.648M*), EPS missed (($0.04) vs. $0.01*), adjusted EBITDA missed ($2.085M actual vs. $3.320M*).
• Implications: Consensus likely to trim EPS/EBITDA near term on observed margin pressure and guidance suspension; revenue trajectories in Industrial Solutions may support modest revenue upward revisions as capacity ramps.
  Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

• Revenue resiliency with continued order strength, but execution-dependent margin recovery as new wind tower designs and gearing utilization normalize; monitor H2 margin trajectory.
• Structural shift toward higher-value precision manufacturing reinforced by Manitowoc divestiture (cash infusion and cost reductions) and power gen gearing wins.
• Industrial Solutions remains a growth engine (record orders/backlog, sequential revenue acceleration); capacity investments should underpin sustained growth.
• Wind repowering demand and Abilene utilization outlook provide baseline activity through 2026 despite broader wind project permitting/tariff uncertainties.
• Balance sheet tightness in Q2 driven by working capital for wind ramp; net leverage increased to 3.0x—watch inventory unwind and liquidity post-divestiture.
• Guidance reset post-transaction is a key catalyst; updated ranges excluding Manitowoc will clarify 2025 earnings power and margin profile.
• Near-term trading: mixed setup as revenue beat collides with EPS/EBITDA miss and guide withdrawal; medium-term thesis improves on portfolio reshaping, capacity adds, and power generation tailwinds.