Broadwind, Inc.

Greetings and welcome to Broadwind's second quarter 2020 results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I would now like to turn the conference over to your host, Jason Boffitt, Broadwind's Chief Financial Officer. Thank you. You may begin.

Good morning, and welcome to the Broadwind second quarter 2020 results conference call. Leading the call today is our CEO, Eric Blashford, and I'm Jason Bonfit, the company's CFO. We issued a press release before the market opened today to detailing our second quarter results. I would like to remind you that management's commentary and response to questions on today's conference call may include forward-looking statements, which by their nature are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For discussion of some of the risk factors that could cause actual results to differ, please refer to the risk factors section of our latest annual and quarterly filings with the SEC. Additionally, please note that you can find reconciliations of historical non-GAAP financial measures discussed during our call in the press release issued today. At the conclusion of our prepared remarks, we will open the line for questions. With that, I'll turn the call over to Eric.

Thanks, Jason, and welcome to those joining us today. Despite continued macro uncertainty related to the COVID-19 pandemic, our business performed well during the second quarter, guided by our long-term focus on end-market diversification, lean manufacturing processes, and disciplined capital management. This strong performance was supported by broad-based revenue growth across our core wind, industrials, steel, and natural gas turbine markets during the period. Let's begin on slides four and five. We generated net income of half a million dollars, or three cents a share, representing a year-over-year increase of $1.5 million, and our second consecutive quarter of profitability. Revenue increased 33% year-over-year to $54.9 million, driven by demand from our wind customers together with customers in multiple non-wind markets. Wind industry sales increased by more than $11 million versus the second quarter of 2019, with power section volumes up approximately 60% year-over-year to the highest levels we've seen since early 2017. Improved plant utilization and operating efficiency supported year-over-year improvements in both gross margin and operating margin of 40% and 240% basis points respectively. Our second quarter EBITDA was $2.9 million, an increase of $1 million over the prior year period. Our total backlog decreased 12% sequentially to $112 million due to the timing of customer orders which were delayed by COVID-19. Our oil and gas customers have delayed scheduled deliveries into the second half, and we expect this market will remain challenged in the near to medium term. I was encouraged by the team's ability to work through the COVID-19-related restrictions and supply chain challenges evident throughout the quarter, positioning us to produce several new wind tower models for both new and existing customers. Orders in the second quarter were $40 million, an increase of 17% sequentially, a strength in the heavy fabrications orders offset softness in gearing segment orders. Heavy fabrication orders were $31 million, doubling sequentially. Looking forward to the full year 2020, we now have about 90% of our 2020 tower production capacity in backlog. Gearing orders were $3.7 million, down 33% versus the prior year, reflecting the COVID-19 impacted softness in the diverse markets we serve. Orders in our industrial solutions segment, which primarily serves the natural gas turbine market, continued the positive trend we saw last quarter. posting orders of $4.4 million, an increase over Q2 2019 of 63%. Turning to a discussion of our segment-level performance, heavy fabrications revenue was $43.6 million, an increase of 50% year-over-year, supported by an acceleration in wind power demand and increased diversification. We had $6 million of revenue from our industrial fabrications product line as we execute against our long-term diversification strategy. Gearing revenue fell by 25% year-over-year due to a general pause in new customer orders and weakness in oil and gas markets. COVID-19 impacted our customers' project timing and their capital investments. We are currently taking actions to align our gearing segment cost structure with the current demand environment, including workforce reductions and a hold on CapEx. Industrial solutions revenue was up 50% in the second quarter when compared to the prior year period. supported by increased penetration of both new and existing customer accounts consistent with our ongoing diversification strategy. Most of the year-over-year growth in revenue within this segment continues to be driven by strong demand in the natural gas-turbine market. We had total cash of $2 million and availability of nearly $20 million under our credit line as of June 30th. We are continuing to manage cash prudently with tight controls over discretionary spend and capital investments. Given current market uncertainty, we remain focused on preserving liquidity to maintain continued balance sheet optionality. As I indicated at the outset of the call, the full implications of the COVID-19 pandemic on our customer supply chain and operations are not yet known. To that end, we have chosen not to reinstate our full-year financial guidance at this time. We continue to monitor the situation and work closely with our customers and suppliers to promptly respond to business opportunities as they arise. With that, I'll hand the call over to Jason for a financial overview of our second quarter results.