BWEN.NASDAQBroadwind, INC
10-K: Broadwind, Inc. Reports Net Income for 2024, Revenue Declines Due to Order Shift
Sentiment:
Annual Results
Broadwind, Inc. announces net income for 2024, but revenue decreases due to a shift in wind tower orders and reduced demand in certain segments.
Delay expectedA global wind turbine manufacturer shifted approximately half of its contracted tower section orders initially planned for 2024 into 2025.
Capital raiseThe company has a shelf registration statement on Form S-3 allowing it to offer securities.The company has a Sales Agreement with Roth Capital Partners, LLC and HC Wainwright & Co., LLC to sell shares of common stock.
Worse than expectedNet income and revenue were significantly lower in 2024 compared to 2023 due to a shift in wind tower orders and reduced demand in certain segments.
Summary
- Broadwind, Inc. reported net income of $1,152 in 2024, or $0.05 per share, compared to $7,649, or $0.36 per share in 2023.
- Revenue decreased by 30% to $143,136 in 2024 from $203,477 in 2023.
- The Heavy Fabrications segment saw a 38% revenue decrease, primarily due to a shift in wind tower orders to 2025 and reduced demand for PRS units.
- Gearing segment revenue decreased by 22% due to lower shipments to O&G and steel customers.
- Industrial Solutions segment revenue increased by 4% due to increased shipments to gas turbine customers.
- New orders increased to $107,813 in 2024 from $101,060 in 2023.
- Backlog decreased by 31% to $125 million as of December 31, 2024.
- The company recognized $9,588 in gross AMP credits in 2024, down from $14,493 in 2023.
- The company sold 2023 AMP credits to a third party, recognizing a discount and a write-down.
- As of December 31, 2024, the company had $7,721 in cash and the ability to borrow an additional $24,901 under its credit facility.
Sentiment
Score: 4
Explanation: The document presents mixed results, with increased orders but decreased revenue and net income. The shift in wind tower orders and reliance on a few customers create uncertainty. The sentiment is cautiously negative.
Positives
- New orders increased to $107,813 in 2024 from $101,060 in 2023.
- Industrial Solutions segment revenue increased by 4% due to increased shipments to gas turbine customers.
- The company has $7,721 in cash and $24,901 available under its credit facility.
- Heavy Fabrications segment orders increased 7% over the prior year reflecting an increase in orders associated with wind repowering projects.
- Gearing segment orders increased 7% from the prior year primarily due to improved demand from industrial and aftermarket wind customers.
Negatives
- Net income decreased significantly from $7,649 in 2023 to $1,152 in 2024.
- Revenue declined by 30% to $143,136.
- The Heavy Fabrications segment experienced a 38% revenue decrease.
- Gearing segment revenue decreased by 22%.
- Backlog decreased by 31% to $125 million.
- The company recognized $9,588 in gross AMP credits in 2024, a decrease from $14,493 in 2023.
Risks
- The shift in wind tower orders to 2025 could impact future revenue recognition.
- Reduced demand for PRS units and in the O&G and steel markets poses a risk to revenue growth.
- Reliance on a few significant customers could lead to volatility in revenue and profitability.
- Fluctuations in raw material costs, particularly steel, could impact margins.
- The company's ability to utilize its NOLs is subject to limitations under Section 382 of the IRC.
- The company is subject to risks associated with proxy contests and other actions of activist stockholders.
- The company is subject to risks associated with cybersecurity incidents.
Future Outlook
The company expects to shift approximately half of the contracted tower section orders initially planned for 2024 into 2025, while maintaining the total number of tower sections stipulated under the supply agreement.
Industry Context
The wind turbine market is very concentrated, with the top two manufacturers comprising approximately 91% of the U.S. market, according to Wood Mackenzie Power & Renewables 2024 industry data.
Comparison to Industry Standards
- The document does not provide enough information to make a detailed comparison to industry standards.
- Comparable companies mentioned include Arcosa Inc., C.S. Wind, Marmen Industries, and GRI Renewable Industries in the wind tower product line.
- Key competitors in the gearing segment include Overton Chicago Gear, Cincinnati Gearing Systems, Milwaukee Gear and Horsburgh & Scott.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Rights Plan | The Board approved an amendment which included an extension of the Rights Plan for an additional three years, subject to approval by our stockholders at our 2025 Annual Meeting of Stockholders. | February 3, 2025 | The Rights Plan is intended to deter any person or group from being or becoming the beneficial owner of 4.9% or more of our common stock and thereby triggering a further limitation of our available NOL carryforwards. |
Stakeholder Impact
- Shareholders may be concerned about the decrease in net income and revenue.
- Employees may be affected by potential adjustments to production levels.
- Customers may experience changes in delivery schedules due to the shift in wind tower orders.
- Suppliers may be impacted by changes in demand for raw materials.
Next Steps
- The company expects to fulfill the shifted wind tower orders in 2025.
- The company will continue to focus on diversifying its customer base and product lines.
- The company will seek stockholder approval for the amendment to the Rights Plan at the 2025 Annual Meeting of Stockholders.
Key Dates
| Date | Description |
|---|---|
| 2010 | Aggregate changes in stock ownership triggered an annual limitation of NOL carryforwards and built-in losses available for utilization to $14,284 per annum. |
| February 12, 2013 | Company adopted a Stockholder Rights Plan to preserve tax assets associated with NOL carryforwards. |
| April 2015 | Stockholders approved the Broadwind Energy, Inc. 2015 Equity Incentive Plan. |
| February 2016 | Stockholder Rights Plan was amended. |
| February 7, 2019 | Board approved an amendment extending the Rights Plan for an additional three years. |
| April 23, 2019 | Stockholders approved the amendment to the Rights Plan at the 2019 Annual Meeting of Stockholders. |
| December 27, 2020 | COVID IV was signed into law, extending the PTC for an additional year. |
| February 3, 2022 | Board approved an amendment which included an extension of the Rights Plan for an additional three years. |
| August 4, 2022 | Company entered into a credit agreement with Wells Fargo Bank, National Association. |
| August 16, 2022 | The Inflation Reduction Act (IRA) was enacted. |
| September 12, 2022 | Company entered into a Sales Agreement with Roth Capital Partners, LLC and HC Wainwright & Co., LLC. |
| February 8, 2023 | Company executed Amendment No. 1 to Credit Agreement and Limited Waiver. |
| March 2, 2023 | Board approved the Third Amendment to the Amended and Restated 2015 Equity Incentive Plan. |
| October 12, 2023 | Shelf registration statement on Form S-3 was declared effective by the SEC. |
| December 19, 2024 | Company executed Amendment No. 2 to Credit Agreement. |
| February 3, 2025 | Board approved an amendment which included an extension of the Rights Plan for an additional three years, subject to stockholder approval. |
| January 28, 2025 | Broadwind Heavy Fabrications, Inc. entered into a Tax Credit Transfer Agreement with MarketAxess Holdings Inc. |
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