Broadwind, Inc.

Greetings and welcome to the Broadwind first quarter 2022 results conference call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone wants to require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Tom Taccone, Vice President and Principal Accounting Officer of Broadwind, Thank you. You may begin.

Good morning, and welcome to the Broadwind First Quarter 2022 Results Conference Call. Leading the call today is our CEO, Eric Blashford, and I'm Tom Ciccone, the company's Vice President and Principal Accounting Officer. We issued a press release before the market opened today detailing our first quarter results. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements which, by their nature, are uncertain and out 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 a discussion of some of the 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 the historical non-GAAP financial measures discussed during our call and 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.

Thank you, Tom, and welcome to those joining us today. As discussed in previous quarters, our wind business is experiencing a temporary pause in order activity due to a number of headwinds, such as the delay in the federal production tax credit or the PTC, and the high cost of steel. We believe the wind market will recover beginning in 2023 and that we could see some potential switching from solar investments to wind investments given the recent Department of Commerce case in the solar industry. Our non-wind end markets remain strong. Labor remains a challenge, but we've enacted a number of programs to recruit, train, and retain the talent we need to meet our customers' demand. We remain focused on quoting contracts competitively, but with the recognition of rising costs. We are effectively managing our cash and expect to have liquidity at current levels by year-end 2022. During the first quarter, we delivered $42 million of revenue, 28% increase year-over-year, led by the heavy fabrication and gearing segments, which posted gains of 20% and 98%, respectively. And excluding the ERC impact in first quarter 2021, adjusted EBITDA increased by more than $2 million year over year. We are working with multiple turbine OEMs who have placed orders to secure about 50% of our optimal 2022 tower capacity so far. And we're in discussions for further orders. Tower quoting activity increased during the first quarter of 2022. as customers reserve tower production capacity for the second half of 2022 and began discussions regarding 2023 capacity. Cost inflation on key materials remains a headwind for our wind turbine customers and one that has dampened near-term capital investment in wind. The cost of plate steel, a significant material in the construction of a wind tower, remains elevated after the significant increases seen over the last year. While Broadwind absorbs only minimal direct commodity price risk, we believe some customers are waiting for raw material costs to normalize before placing orders. This, when balanced against wind developers' efforts to align projects with a potential PTC extension, has pushed tower orders out several quarters. Our Q1 orders were $53 million, a 54% increase year-over-year, led by strength in our heavy fabrication and gearing segments. Our heavy fabrication segment saw orders of $34 million, a 64% increase over Q1 2021, while our gearing segment booked $14 million of orders, a 42% increase year-over-year, following a record Q4 2021, due to continued strength in our energy and mining markets. Our backlog increased to $117 million, a 24% gain year-over-year, with all segments reporting a book-to-bill ratio above 1. Quoting activity in our non-wind markets remains robust, and we expect the good order flow to continue through 2022, especially from gearing and industrial fabrication customers. And we are seeing the ability to pass on inflationary cost increases in our new quoting activity. Within our heavy fabrication segment, revenue increased 20% driven by strong repowering industrial fabrication shipments. We continue to quote and produce from multiple wind turbine OEMs and our customer diversification in wind energy segment will serve us well as the wind market recovers. Within gearing, revenue doubled to approximately $11 million as the anticipated improvement in customer activity continues. Revenue for our industrial solution segment dropped by half a million dollars, or 12%, as several shipments were delayed into Q2 due to incoming supply chain constraints. Orders for this segment were up 30% year-over-year as we are seeing our gas turbine aftermarket strengthen, and we continue to expand the business globally. In summary, I'm pleased that our diversification strategy continues to provide revenue opportunities as we work through the temporary pause in wind tower demand until the headwinds of commodity pricing and policy uncertainty resolve. Our team has responded quickly to the well-documented global supply chain challenges as we continue to meet our customers' needs and keep our people safe. We expect wind development activity to ramp up gradually over the medium term, particularly if we see a substantial extension of the PTC and increased interconnection activity. With that, I'll turn the call back over to Tom for a discussion of our first quarter financial performance.