EXHIBIT 99.2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
`
Date of report (Date of earliest event reported): February 27, 2018
BROADWIND ENERGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 001-34278 | 88-0409160 | ||
| (State or Other Jurisdiction of | (Commission File Number) | (IRS Employer Identification No.) | ||
| Incorporation) |
3240 South Central Avenue, Cicero, Illinois 60804
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (708) 780-4800
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On February 27, 2017, Broadwind Energy, Inc. (the “Company”) issued a press release announcing its financial results as of and for the quarter ended December 31, 2017. The press release is incorporated herein by reference and is attached hereto as Exhibit 99.1.
The information contained in, or incorporated into, this Item 2.02 of this Current Report on Form 8-K (this “Report”), including Exhibit 99.1, is furnished under Item 2.02 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act regardless of any general incorporation language in such filings.
Item 7.01. Regulation FD Disclosure.
An Investor Presentation dated February 27, 2018 is incorporated herein by reference and attached hereto as Exhibit 99.2.
The information contained in, or incorporated into, this Item 7.01 of this Report, including Exhibit 99.2 attached hereto, is furnished under Item 7.01 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act or the Exchange Act regardless of any general incorporation language in such filings.
This Report shall not be deemed an admission as to the materiality of any information in this Report that is being disclosed pursuant to Regulation FD.
Please refer to Exhibit 99.2 for a discussion of certain forward-looking statements included therein and the risks and uncertainties related thereto.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits | |
|
EXHIBIT NUMBER |
DESCRIPTION | |
| 99.1 | Press Release dated February 27, 2018 | |
| 99.2 | Investor Presentation dated February 27, 2018 |
| 2 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BROADWIND ENERGY, INC. | ||
| February 27, 2018 | By: | /s/ Stephanie K. Kushner |
| Stephanie K. Kushner | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| 3 |
EXHIBIT INDEX
|
EXHIBIT NUMBER |
DESCRIPTION | |
| 99.1 | Press Release dated February 27, 2018 | |
| 99.2 | Investor Presentation dated February 27, 2018 |
4
EXHIBIT 99.1
Broadwind Energy Announces Q4 and Full Year 2017 Results
Highlights:
CICERO, Ill., Feb. 27, 2018 (GLOBE NEWSWIRE) -- Broadwind Energy, Inc. (NASDAQ:BWEN) reported sales of $17.8 million in Q4 2017, compared to $48.2 million in Q4 2016. The significant decrease was due primarily to weak Towers and Heavy Fabrications segment revenue, down $38.1 million compared to Q4 2016, as tower customers curtailed purchases beginning in the third quarter in order to draw down component inventories. The very low tower revenue was partially offset by $5.1 million of sales from the Process Systems segment due primarily to the acquisition of Red Wolf Company, LLC earlier this year, and $2.6 million increased sales from the Gearing segment due to the strong order intake from oil and gas customers which began early in 2017.
The Company reported a net loss from continuing operations of $6.9 million, or $.45 per share, in Q4 2017, compared to a net income from continuing operations of $.4 million, or $.03 per share, in Q4 2016. The earnings reversal was largely due to the significantly weaker results from the Towers and Heavy Fabrications segment, where tower build was very high in Q4 2016 to meet the terms of the Production Tax Credit qualification, but was curtailed in Q4 2017.
The Company reported a non-GAAP adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, share-based payments and restructuring costs) loss of $4.0 million in Q4 2017, compared to EBITDA of $2.5 million in Q4 2016 (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release). The decrease was due primarily to the weaker results from the Towers and Heavy Fabrications segment as noted above.
Broadwind CEO Stephanie Kushner stated, “Despite growth in both the Gearing and Process Systems segments, 2017 was a challenging year due to weak second half tower production, while our major customer rightsized their inventory. In response, we took swift action to reduce the workforce accordingly, and to reduce factory overhead and operating expenses. At the same time, we have also made capital investments to add capabilities in our Manitowoc, Wisconsin plant to support an expansion and diversification of our other heavy fabrications business, in alignment with strengthening mining and infrastructure markets. We are committed to diversifying our customer base to reduce the volatility in our order and production pattern.
The medium-term outlook for wind energy remains strong. As announced previously, 2018 tower production volume is recovering and we expect a significant improvement in capacity utilization in our plants as we progress through this year. In response to the ramp up in production, we have called back or hired a significant number of employees to support our production needs in 2018.”
Kushner continued, “In our Gearing segment, we booked $37 million in new orders in 2017, a 150% increase from 2016, due to the rebound in the oil and gas industry and successful penetration of a number of new accounts. Our current backlog and order intake support production at a quarterly run rate of $9-10 million in 2018. As previously announced, our fourth quarter revenue fell short of guidance due mainly to supply chain constraints in the Gearing segment as the industry rebounds at a very high rate. We are seeing supply pressures normalize as businesses adjust to the higher demand levels.”
Our Process Systems segment contributed $17 million in revenue, due principally to the acquisition of Red Wolf on February 1, 2017. Although we remain excited about this business, we have experienced headwinds in the gas turbine manufacturing and service business, where Red Wolf’s legacy business was concentrated. We continue to work on penetrating new markets and adding diverse customers.”
Kushner concluded, “Following a disappointing 2017, 2018 is off to a brighter start. As our tower order book firms and our gearing and heavy fabrications business accelerates, we expect consolidated Q1 2018 revenue of $28-30 million, with an EBITDA loss of about $1 million. Our backlog supports a further rise in revenue in Q2 2018 to approximately $40 million and a return to positive EBITDA generation. We expect to see additional growth in the back half of the year.”
For FY 2017, revenue totaled $146.8 million, compared to $180.8 million for FY 2016. The 19% decrease was due primarily to a $56.8 million decrease in Tower and Heavy Fabrication segment revenue partially offset by $17.4 million of sales from the Process Systems segment primarily due to the acquisition of Red Wolf earlier this year and $5.4 million of higher sales in the Gearing segment.
The net loss from continuing operations for FY 2017 totaled $3.2 million, or $.21 per share, compared to net income from continuing operations of $1.3 million, or $.09 per share, for FY 2016. The decrease was due primarily to a $7.6 million reduction in net income from the Towers and Heavy Fabrications segment, somewhat offset by a $5.1 million, or $.34 per share, income tax benefit due to the partial release of a tax valuation allowance related to the Red Wolf acquisition earlier in 2017.
The net loss from discontinued operations for FY 2017 totaled $.5 million, or $.03 per share, compared to a net loss from discontinued operations for FY 2016 of $1.0 million, or $.07 per share, as activities in the discontinued Services segment have substantially wound down.
The Company reported non-GAAP adjusted EBITDA of $2.8 million for FY 2017, compared to non-GAAP adjusted EBITDA of $9.6 million for FY 2016. The significant decrease was primarily due to the weaker results in the Towers and Heavy Fabrications segment. The decrease in non-GAAP adjusted EBITDA was partly offset by a $.6 million improvement in Gearing segment EBITDA and a $2.5 million reduction in corporate, which reflected lower expenses, and included the $1.4 million benefit triggered by a partial reversal of a reserve for the payment of a contingent consideration associated with the Red Wolf acquisition (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release).
Orders and Backlog
The Company booked $12.3 million of net new orders in Q4 2017, down from $32.3 million booked in Q4 2016. Orders in the Towers and Heavy Fabrication segment totaled $2.5 million in Q4 2017, reflecting the weaker demand from our tower customers who were drawing down component inventories. Gearing segment orders totaled $7.4 million in Q4 2017, up substantially from Q4 2016 orders of $2.9 million, due to recovery in the oil and gas industry, and an expansion of the customer base. Process Systems segment orders totaled $2.4 million in Q4 2017 due to weak demand from gas turbine OEM’s.
FY 2017 orders totaled $87.6 million, compared to $275.0 million in FY 2016, which included a $137 million multi-year tower order that supports deliveries through 2019.
At December 31, 2017, total backlog was $138.2 million, compared to a backlog of $188.7 million at December 31, 2016.
Segment Results
Towers and Heavy Fabrications (formerly known as Towers and Weldments)
Broadwind Energy produces fabrications for wind, oil and gas, mining and other industrial applications, specializing in the production of wind turbine towers.
Towers and Heavy Fabrications segment sales totaled $4.2 million in Q4 2017, down 90% from $42.3 million in Q4 2016, due to a significant reduction in tower volume as a result of a major customer working down its inventory.
Towers and Heavy Fabrications operating loss in Q4 2017 totaled $4.5 million compared to operating income of $2.8 million in Q4 2016 due to the lower volume of towers sold in Q4 2017. Towers and Heavy Fabrications segment net loss in Q4 2017 totaled $4.2 million compared to net income of $1.8 million in Q4 2016. Non-GAAP adjusted EBITDA loss totaled $3.0 million in Q4 2017, compared to Non-GAAP adjusted EBITDA of $3.9 million in Q4 2016 due mainly to the factors described above (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release).
Towers and Heavy Fabrications segment sales for FY 2017 totaled $103.4 million, compared to $160.2 million for FY 2016 due to a 41% decrease in towers sold beginning mid-year 2017, partially offset by higher average prices due to a more complex tower design, and higher material costs which are generally passed through to the customer.
FY 2017 Towers and Heavy Fabrications segment operating income totaled $2.7 million, compared to $12.8 million for FY 2016. The significant decrease in operating income was due to the lower production volume and corresponding underutilization of plant capacity, offset by significant cost reduction actions including a $1.5 million decrease in incentive compensation and staffing reductions. The Towers and Heavy Fabrications segment net income for FY 2017 totaled $.9 million compared to FY 2016 net income of $8.5 million due to the factors described above.
Gearing
Broadwind Energy engineers, builds and remanufactures precision gears and gearboxes for oil and gas, mining, steel and wind applications.
Gearing segment sales totaled $8.5 million in Q4 2017, compared to $5.9 million in Q4 2016 due primarily to stronger demand from oil and gas customers.
Gearing segment operating loss totaled $.1 million in Q4 2017, compared to an operating loss of $.2 million in Q4 2016. The slight improvement was due to the impact of the increase in volume and a $.7 million reduction in the environmental reserve due to completion of a remediation project. Partly offsetting were the impact of supply chain disruptions which led to plant underutilization and production inefficiencies. Net loss for the Gearing segment narrowed to $.1 million compared to $.2 million in Q4 2016. Non-GAAP adjusted EBITDA for Q4 2017 totaled $.6 million, compared to $.5 million for Q4 2016, due to the factors described above (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release).
For FY 2017, Gearing segment sales totaled $26.0 million compared to $20.6 million in FY 2016. The improvement was primarily due to the strong order intake during FY 2017 related to the recovering oil and gas market.
FY 2017 Gearing segment operating loss narrowed to $2.6 million compared to FY 2016 operating loss of $3.2 million. The improvement was due primarily to the $1.9 million impact of increased sales volume, and a $.7 million reduction in the environmental reserve due to the completion of a remediation project. Partly offsetting were higher maintenance and tooling expenses associated with supporting the volume increases and higher commission expense. Gearing segment net loss for FY 2017 totaled $2.6 million compared to FY 2016 operating loss of $3.2 million. The Gearing segment reported break-even results for FY 2017 non-GAAP adjusted EBITDA, compared to non-GAAP adjusted EBITDA loss of $.6 million in FY 2016 due to the factors described above (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release).
Process Systems
Broadwind Energy designs and manufactures custom, modular systems for compression, filtration and other specialized process applications for the global market. On February 1, 2017, the Company acquired Red Wolf which has been combined with the Abilene-based compressed natural gas (“CNG”) and fabrication business, previously reported as a part of Towers and Heavy Fabrications, to form the Process Systems segment.
Process Systems segment sales in Q4 2017 totaled $5.1 million. Q4 2017 net loss totaled $.4 million. A $.4 million of reserve was taken as a result of the decision to exit the CNG unit fabrication business. The Process Systems segment reported breakeven results for Non-GAAP adjusted EBITDA in Q4 2017 (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release).
FY 2017 sales for the Process Systems segment totaled $17.4 million and FY 2017 net loss totaled $2.2 million. The Process Systems segment reported a Non-GAAP adjusted EBITDA loss of $.5 million for FY 2017, due principally to losses in the legacy CNG business (please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release).
Corporate
Corporate and other expenses totaled $1.6 million in Q4 2017, compared to $2.0 million in Q4 2016, mainly due to lower incentive compensation expense.
FY 2017 Corporate and other expenses totaled $5.2 million compared to $7.6 million in FY 2016. The $2.4 million reduction included a $1.4 million gain resulting from the expectation that the contingent consideration payment associated with the Red Wolf acquisition will not be paid for the first year of ownership, and reflected a $.9 million reduction in incentive compensation expense.
Cash and Liquidity
During Q4 2017, operating working capital (accounts receivable and inventory, net of accounts payable and customer deposits) decreased to $11.4 million due to the timing of customer receipts.
Capital expenditures, net of disposals, in Q4 2017 totaled $.7 million. FY 2017 capital investments totaled $6.7 million, primarily for upgrades to tower manufacturing capabilities and to expand the Abilene tower facility.
Debt and capital leases totaled $16.8 million at December 31, 2017, including the $2.6 million New Markets Tax Credit loan, which is expected to be substantially forgiven when it matures in 2018. The Company’s $25 million line of credit with Canadian Imperial Bank of Commerce had a balance of $11.5 million at December 31, 2017 and $11.8 million of availability.
The Company was not in compliance with the fixed charge coverage ratio covenant of its credit facility as of December 31, 2017. On January 29, 2018, the Company and Canadian Imperial Bank of Commerce executed the third amendment to the loan agreement waiving compliance with this covenant and amending it going forward. The third amendment included a minimum EBITDA covenant and a capital expenditure covenant through June 30, 2018.
Cash assets (cash and short-term investments) remained near zero as expected because the Company’s cash and receipts are automatically applied to the outstanding credit line balance consistent with the loan documents.
About Broadwind Energy, Inc.
Broadwind Energy, Inc. (NASDAQ:BWEN) is a precision manufacturer of structures, equipment and components for clean tech and other specialized applications. From gears and gearing systems for wind, oil and gas and mining applications, to wind towers and industrial heavy fabrications, we have solutions for the clean tech, energy and infrastructure needs of the future. With facilities throughout the U.S., Broadwind Energy's talented team is committed to helping customers maximize performance of their investments—quicker, easier and smarter. Find out more at www.bwen.com
Forward-Looking Statements
This release contains “forward looking statements”—that is, statements related to future, not past, events—as defined in Section 21E of the Securities Exchange Act of 1934, as amended, that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. Forward looking statements include any statement that does not directly relate to a current or historical fact. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements.
Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following: (i) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards; (ii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iii) our ability to continue to grow our business organically and through acquisitions; (iv) the sufficiency of our liquidity and alternate sources of funding, if necessary; (v) our ability to realize revenue from customer orders and backlog; (vi) our ability to operate our business efficiently, manage capital expenditures and costs effectively, and generate cash flow; (vii) the economy and the potential impact it may have on our business, including our customers; (viii) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets; (ix) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (x) the effects of the recent change of administrations in the U.S. federal government; (xi) our ability to successfully integrate and operate the business of Red Wolf Company, LLC and to identify, negotiate and execute future acquisitions; (xii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; and (xiii) the impact of future sales of our common stock or securities convertible into our common stock on our stock price. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change.
| BROADWIND ENERGY, INC. AND SUBSIDIARIES | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
| (IN THOUSANDS) | |||||||||
| As of December 31, | |||||||||
| 2017 | 2016 | ||||||||
| ASSETS | |||||||||
| CURRENT ASSETS: | |||||||||
| Cash and cash equivalents | $ | 78 | $ | 18,699 | |||||
| Short-term investments | - | 3,171 | |||||||
| Restricted cash | - | 39 | |||||||
| Accounts receivable, net | 13,644 | 11,865 | |||||||
| Inventories, net | 19,279 | 21,159 | |||||||
| Prepaid expenses and other current assets | 1,798 | 2,449 | |||||||
| Current assets held for sale | 580 | 808 | |||||||
| Total current assets | 35,379 | 58,190 | |||||||
| LONG-TERM ASSETS: | |||||||||
| Property and equipment, net | 55,693 | 54,606 | |||||||
| Goodwill | 4,993 | - | |||||||
| Other intangible assets, net | 16,078 | 4,572 | |||||||
| Other assets | 207 | 294 | |||||||
| TOTAL ASSETS | $ | 112,350 | $ | 117,662 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| CURRENT LIABILITIES: | |||||||||
| Line of credit, NMTC and other notes payable | $ | 14,138 | $ | - | |||||
| Current maturities of long-term debt | 114 | - | |||||||
| Current portions of capital lease obligations | 762 | 465 | |||||||
| Accounts payable | 11,756 | 15,852 | |||||||
| Accrued liabilities | 4,393 | 8,430 | |||||||
| Customer deposits | 9,791 | 18,011 | |||||||
| Current liabilities held for sale | 30 | 493 | |||||||
| Total current liabilities | 40,984 | 43,251 | |||||||
| LONG-TERM LIABILITIES: | |||||||||
| Long-term debt, net of current maturities | 797 | 2,600 | |||||||
| Long-term capital lease obligations, net of current portions | 941 | 1,038 | |||||||
| Other | 3,557 | 2,190 | |||||||
| Total long-term liabilities | 5,295 | 5,828 | |||||||
| COMMITMENTS AND CONTINGENCIES | |||||||||
| STOCKHOLDERS' EQUITY: | |||||||||
| Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding | - | - | |||||||
| Common stock, $0.001 par value; 30,000,000 shares authorized; 15,480,299 and 15,175,767 shares issued as of December 31, 2017 and 2016, respectively | 15 | 15 | |||||||
| Treasury stock, at cost, 273,937 shares at December 31, 2017 and 2016 | (1,842 | ) | (1,842 | ) | |||||
| Additional paid-in capital | 380,005 | 378,876 | |||||||
| Accumulated deficit | (312,107 | ) | (308,466 | ) | |||||
| Total stockholders' equity | 66,071 | 68,583 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 112,350 | $ | 117,662 | |||||
| BROADWIND ENERGY, INC. AND SUBSIDIARIES | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (IN THOUSANDS, EXCEPT PER SHARE DATA) | |||||||||||||||||
| (UNAUDITED) | |||||||||||||||||
| Three Months Ended December 31, | For the Year Ended December 31, | ||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Revenues | $ | 17,768 | $ | 48,151 | $ | 146,785 | $ | 180,840 | |||||||||
| Cost of sales | 20,869 | 43,447 | 138,626 | 162,701 | |||||||||||||
| Gross (loss)profit | (3,101 | ) | 4,704 | 8,159 | 18,139 | ||||||||||||
| OPERATING EXPENSES: | |||||||||||||||||
| Selling, general and administrative | 3,117 | 4,001 | 13,828 | 15,786 | |||||||||||||
| Intangible amortization | 471 | 111 | 1,764 | 444 | |||||||||||||
| Total operating expenses | 3,588 | 4,112 | 15,592 | 16,230 | |||||||||||||
| Operating (loss) income | (6,689 | ) | 592 | (7,433 | ) | 1,909 | |||||||||||
| OTHER (EXPENSE) INCOME, net: | |||||||||||||||||
| Interest expense, net | (214 | ) | (194 | ) | (798 | ) | (625 | ) | |||||||||
| Other, net | (14 | ) | 22 | 3 | 49 | ||||||||||||
| Total other expense, net | (228 | ) | (172 | ) | (795 | ) | (576 | ) | |||||||||
| Net (loss) income before benefit for income taxes | (6,917 | ) | 420 | (8,228 | ) | 1,333 | |||||||||||
| Benefit for income taxes | 11 | 14 | (5,045 | ) | (2 | ) | |||||||||||
| (LOSS) INCOME FROM CONTINUING OPERATIONS | (6,928 | ) | 406 | (3,183 | ) | 1,335 | |||||||||||
| LOSS FROM DISCONTINUED OPERATIONS | (53 | ) | (108 | ) | (458 | ) | (1,016 | ) | |||||||||
| NET (LOSS) INCOME | $ | (6,981 | ) | $ | 298 | $ | (3,641 | ) | $ | 319 | |||||||
| NET (LOSS) INCOME PER COMMON SHARE - BASIC: | |||||||||||||||||
| (Loss) income from continuing operations | $ | (0.45 | ) | $ | 0.03 | $ | (0.21 | ) | $ | 0.09 | |||||||
| Loss from discontinued operations | (0.01 | ) | (0.01 | ) | (0.03 | ) | (0.07 | ) | |||||||||
| Net (loss) income | $ | (0.46 | ) | $ | 0.02 | $ | (0.24 | ) | $ | 0.02 | |||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC | 15,171 | 14,876 | 15,053 | 14,843 | |||||||||||||
| NET (LOSS) INCOME PER COMMON SHARE - DILUTED: | |||||||||||||||||
| (Loss) income from continuing operations | $ | (0.45 | ) | $ | 0.03 | $ | (0.21 | ) | $ | 0.09 | |||||||
| Loss from discontinued operations | (0.01 | ) | (0.01 | ) | (0.03 | ) | (0.07 | ) | |||||||||
| Net (loss) income | $ | (0.46 | ) | $ | 0.02 | $ | (0.24 | ) | $ | 0.02 | |||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED | 15,171 | 15,096 | 15,053 | 15,081 | |||||||||||||
| BROADWIND ENERGY, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (IN THOUSANDS) | ||||||||
| (UNAUDITED) | ||||||||
| Twelve Months Ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net (loss) income | $ | (3,641 | ) | $ | 319 | |||
| Loss from discontinued operations | (458 | ) | (1,016 | ) | ||||
| (Loss) income from continuing operations | (3,183 | ) | 1,335 | |||||
| Adjustments to reconcile net cash used in operating activities: | ||||||||
| Depreciation and amortization expense | 8,999 | 6,914 | ||||||
| Impairment charges | 80 | - | ||||||
| Deferred income taxes | (5,045 | ) | - | |||||
| Remeasurement of contingent consideration | (1,394 | ) | - | |||||
| Stock-based compensation | 813 | 753 | ||||||
| Allowance for doubtful accounts | 37 | 61 | ||||||
| Common stock issued under defined contribution 401(k) plan | 316 | - | ||||||
| Gain on disposal of assets | (12 | ) | (217 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 884 | (2,141 | ) | |||||
| Inventories | 7,057 | 3,060 | ||||||
| Prepaid expenses and other current assets | 651 | (933 | ) | |||||
| Accounts payable | (5,287 | ) | 989 | |||||
| Accrued liabilities | (4,921 | ) | 297 | |||||
| Customer deposits | (8,219 | ) | 8,057 | |||||
| Other non-current assets and liabilities | (126 | ) | (875 | ) | ||||
| Net cash (used in) provided by operating activities of continued operations | (9,350 | ) | 17,300 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash paid in acquisition | (16,449 | ) | - | |||||
| Purchases of available for sale securities | - | (19,223 | ) | |||||
| Sales of available for sale securities | 2,221 | 13,061 | ||||||
| Maturities of available for sale securities | 950 | 9,170 | ||||||
| Purchases of property and equipment | (6,688 | ) | (6,624 | ) | ||||
| Proceeds from disposals of property and equipment | 72 | 452 | ||||||
| Net cash used in investing activities of continued operations | (19,894 | ) | (3,164 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Net proceeds from issuance of stock | - | 19 | ||||||
| Proceeds from line of credit | 158,856 | - | ||||||
| Payments on line of credit | (148,009 | ) | - | |||||
| Net proceeds on long-term debt | 457 | (2,799 | ) | |||||
| Principal payments on capital leases | (644 | ) | (539 | ) | ||||
| Net cash provided by (used in) financing activities of continued operations | 10,660 | (3,319 | ) | |||||
| DISCONTINUED OPERATIONS: | ||||||||
| Operating cash flows | (78 | ) | 731 | |||||
| Investing cash flows | - | 615 | ||||||
| Financing cash flows | - | 58 | ||||||
| Net cash (used in) provided by discontinued operations (1) | (78 | ) | 1,404 | |||||
| Add: Cash balance of discontinued operations, beginning of period | 2 | - | ||||||
| Less: Cash balance of discontinued operations, end of period | - | 2 | ||||||
| NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | (18,660 | ) | 12,219 | |||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH beginning of the period | 18,738 | 6,519 | ||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH end of the period | $ | 78 | $ | 18,738 | ||||
| Supplemental cash flow information: | ||||||||
| Interest paid | $ | 585 | $ | 494 | ||||
| Income taxes paid | $ | 44 | $ | 23 | ||||
| Non-cash activities: | ||||||||
| Issuance of restricted stock grants | $ | 813 | $ | 753 | ||||
| Equipment additions via capital lease | $ | 844 | $ | 1,616 | ||||
| Contingent consideration related to business acquisition | $ | 2,534 | $ | - | ||||
| Red Wolf acquisition: | ||||||||
| Assets acquired | $ | 26,602 | ||||||
| Liabilities assumed | $ | 7,619 | ||||||
| BROADWIND ENERGY, INC. AND SUBSIDIARIES | |||||||||||||||||
| SELECTED SEGMENT FINANCIAL INFORMATION | |||||||||||||||||
| (IN THOUSANDS) | |||||||||||||||||
| (UNAUDITED) | |||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| ORDERS: | |||||||||||||||||
| Towers and Heavy Fabrications | $ | 2,543 | $ | 29,389 | $ | 34,873 | $ | 260,790 | |||||||||
| Gearing | 7,398 | 2,913 | 36,928 | 14,220 | |||||||||||||
| Process Systems | 2,358 | - | 15,761 | - | |||||||||||||
| Total orders | $ | 12,299 | $ | 32,302 | $ | 87,562 | $ | 275,010 | |||||||||
| REVENUES: | |||||||||||||||||
| Towers and Heavy Fabrications | $ | 4,195 | $ | 42,262 | $ | 103,389 | $ | 160,210 | |||||||||
| Gearing | 8,495 | 5,889 | 26,006 | 20,648 | |||||||||||||
| Process Systems | 5,078 | - | 17,390 | - | |||||||||||||
| Corporate and Other | - | - | - | (18 | ) | ||||||||||||
| Total revenues | $ | 17,768 | $ | 48,151 | $ | 146,785 | $ | 180,840 | |||||||||
| OPERATING PROFIT/(LOSS): | |||||||||||||||||
| Towers and Heavy Fabrications | $ | (4,510 | ) | $ | 2,772 | $ | 2,667 | $ | 12,788 | ||||||||
| Gearing | (70 | ) | (162 | ) | (2,632 | ) | (3,244 | ) | |||||||||
| Process Systems | (464 | ) | - | (2,269 | ) | - | |||||||||||
| Corporate and Other | (1,645 | ) | (2,018 | ) | (5,200 | ) | (7,635 | ) | |||||||||
| Total operating (loss)/profit | $ | (6,689 | ) | $ | 592 | $ | (7,434 | ) | $ | 1,909 | |||||||
Non-GAAP Financial Measure
The Company provides non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share based compensation, and other stock payments) as supplemental information regarding the Company’s business performance. The Company’s management uses adjusted EBITDA when it internally evaluates the performance of the Company’s business, reviews financial trends and makes operating and strategic decisions. The Company believes that this non-GAAP financial measure is useful to investors because it provides investors with a better understanding of the Company’s past financial performance and future results, and it allows investors to evaluate the Company’s performance using the same methodology and information as used by the Company’s management. The Company's definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.
| BROADWIND ENERGY, INC. AND SUBSIDIARIES | ||||||||||||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
| (IN THOUSANDS) | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| Consolidated | Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net Income/(Loss) from continuing operations | $ | (6,928 | ) | $ | 406 | $ | (3,183 | ) | $ | 1,335 | ||||||
| Interest Expense | 214 | 194 | 798 | 625 | ||||||||||||
| Income Tax Provision/(Benefit) | 11 | 14 | (5,045 | ) | (2 | ) | ||||||||||
| Depreciation and Amortization | 2,428 | 1,776 | 8,999 | 6,914 | ||||||||||||
| Share-based Compensation and Other Stock Payments | 323 | 125 | 1,223 | 753 | ||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | (3,952 | ) | $ | 2,514 | $ | 2,792 | $ | 9,625 | |||||||
| Towers and Heavy Fabrications Segment | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||
| Net (Loss)/Income | $ | (4,207 | ) | $ | 1,772 | $ | 919 | $ | 8,510 | ||||
| Interest Expense/(Benefit) | 26 | 5 | 89 | 26 | |||||||||
| Income Tax (Benefit)/Provision | (337 | ) | 1,001 | 1,666 | 4,286 | ||||||||
| Depreciation and Amortization | 1,355 | 1,100 | 4,638 | 4,166 | |||||||||
| Share-based Compensation and Other Stock Payments | 128 | 11 | 440 | 165 | |||||||||
| Adjusted EBITDA (Non-GAAP) | $ | (3,035 | ) | $ | 3,889 | $ | 7,752 | $ | 17,153 | ||||
| Gearing Segment | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Net Income/(Loss) | $ | (70 | ) | $ | (159 | ) | $ | (2,638 | ) | $ | (3,258 | ) | |||||
| Interest Expense | 3 | - | 12 | 9 | |||||||||||||
| Income Tax Provision/(Benefit) | (4 | ) | (3 | ) | (6 | ) | 4 | ||||||||||
| Depreciation and Amortization | 583 | 627 | 2,430 | 2,546 | |||||||||||||
| Share-based Compensation and Other Stock Payments | 64 | 17 | 178 | 106 | |||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 576 | $ | 482 | $ | (24 | ) | $ | (593 | ) | |||||||
| Process Systems | Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||
| Net Income/(Loss) | $ | (390 | ) | $ | - | $ | (2,207 | ) | $ | - | ||||
| Interest Expense | 1 | - | 5 | - | ||||||||||
| Income Tax Provision/(Benefit) | (78 | ) | - | (88 | ) | - | ||||||||
| Depreciation and Amortization | 428 | - | 1,706 | - | ||||||||||
| Share-based Compensation and Other Stock Payments | 20 | - | 53 | - | ||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | (19 | ) | $ | - | $ | (531 | ) | $ | - | ||||
| Corporate and Other | Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net Income/(Loss) | $ | (2,651 | ) | $ | (1,208 | ) | $ | 743 | $ | (3,917 | ) | |||||
| Interest Expense | 184 | 189 | 692 | 590 | ||||||||||||
| Income Tax Provision/(Benefit) | 430 | (984 | ) | (6,617 | ) | (4,292 | ) | |||||||||
| Depreciation and Amortization | 62 | 49 | 225 | 202 | ||||||||||||
| Share-based Compensation and Other Stock Payments | 111 | 97 | 552 | 482 | ||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | (1,864 | ) | $ | (1,857 | ) | $ | (4,405 | ) | $ | (6,935 | ) | ||||
BWEN INVESTOR CONTACT: Joni Konstantelos, 708.780.4819 joni.konstantelos@bwen.com
EXHIBIT 99.2