Broadwind, Inc.

Greetings. Welcome to Broadwind's second quarter 2022 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 will now turn the conference over to Chief Accounting Officer. Thank you. You may begin.

Good morning and welcome to the Broadwin second 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 second 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 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 factors that could cause actual results to differ, please refer to the risk factor 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.

Thanks, Tom, and welcome to those joining us today. During the second quarter, we generated strong year-over-year revenue growth within our gearing and industrial solution segments. while non-wind orders increased more than 60% in the second quarter when compared to the year-ago period. Once again, our non-wind business proved to be an important offset to a continued pause in wind tower demand as the market attempts to manage true policy uncertainty, such as that around the proposed extension to the Federal Production Tax Credit, or PTC, together with the still elevated raw material costs, such as steel plate. At this time, we believe the wind market will begin to recover in 2023 and are encouraged by the recent congressional efforts to pass the proposed Inflation Reduction Act, or IRA, that includes several major renewable energy provisions, most notably an extension of the PTC on projects beginning construction before January 1st, 2025. Operationally, labor remains a challenge, but we're seeing improved recruitment levels in several of our markets. We continue to closely manage the impacts of cost inflation and have adjusted our quoting models to reflect rising costs. We're effectively managing our cash and expect to have liquidity remain at current levels by year end calendar 2022. During the second quarter, we delivered $50 million of revenue, an 8% increase year over year led by growth in our gearing and industrial solution segments, which posted gains of 37% and 43% respectively. And excluding the PPP loan forgiveness and ERC impact in Q2 2021, adjusted EBITDA increased $300,000 year over year. We continue to work with our turbine OEM customers who have placed orders to secure about 50% of our optimal 2022 tower capacity and are now reserving capacity into 2023. Tower quoting activity is increasing as our OEM customers work to secure tower production capacity for the first half of 2023, as is typical for this time of the year. The recent news regarding the climate-related aspects of the IRA have accelerated interest in available capacity. On a consolidated basis, our Q2 orders were $26 million a 1% decrease year over year, reflecting a softness in tower demand partially offset by stronger orders within the gearing and industrial solution segments, as well as for the industrial fabrication product line within heavy fabrications. Our heavy fabrication segment saw orders of $13 million, a 12% decrease year over year, with stronger industrial fabrications orders offsetting the timing of tower orders. However, in early July, we received nearly $8 million in new tower orders, an encouraging data point that supports our view for an improved wind outlook into next year. Our gearing segment booked $9 million of orders, a 14% increase year over year, as we continue to see strength in our energy and industrial markets. Our total backlog at the end of Q2 was $93 million, a 25% gain versus the prior year period. Quoting activity in our non-win markets remains strong, and we expect the good order flow to continue through 2022, most notably from the gearing in industrial fabrication products. We are seeing the ability to pass on inflationary cost increases in our new quoting activity, and in certain cases, through temporary surcharges. Within our heavy fabrication segment, revenue declined 1% year-over-year due to a pause in tower demand. We're allocating spare tower section capacity toward other projects in energy, commercial, and other industrial markets. We continue to quote for multiple wind turbine OEMs as our customer diversification in the wind energy segment will serve as well as the wind market recovers in conjunction with federal policy clarity. Within gearing, revenue is $10 million. a 37% increase year-over-year as customer activity continues to accelerate within the energy sector given elevated commodity pricing. Revenue for our industrial solutions segment increased 43% to $5 million, driven by increased demand for natural gas turbine content, including stronger demand for components used in the aftermarket maintenance and upgrading of these units. In summary, I'm pleased that our diversification strategy continues to provide new opportunities, particularly 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 while continuing to optimize both our assets and human capital during a transitional period. activity to ramp up gradually over the medium term, particularly if we see a substantial extension of the PTC as reflected in the most recent version of the IRA. With that, I'll turn the call back over to Tom for a discussion of our second quarter financial performance.