Broadwind, Inc.

Greetings and welcome to Broadwind's second quarter 2024 results conference call. At this time, all participants are in listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Mr. Tom Ciccone. Thank you. You may begin.

Good morning and welcome to the Broadwind second quarter 2024 results conference call. Leading the call today is our CEO, Eric Blashford, and I'm Tom Ciccone, the company's vice president and chief financial 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 expectation 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 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 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, Tom, and welcome to those joining us today. Browen delivered a solid Q2, highlighted by double-digit EBITDA margin, consistent with prior year results, despite reduced revenue. Offsetting a transitional pause in new wind tower demand, second quarter results benefited from a higher value sales mix, improved execution, and targeted cost reduction actions. We booked $18 million of orders in the second quarter, a year-over-year decline, as we saw reduced demand across all segments. Heavy fabrication saw reduced demand for our pressure reduction systems, partially offset by increased orders from the wind repowering market. Gearing orders were reduced year over year, largely due to decreased demand from the industrial and steel sectors, while orders from our industrial solutions segment softened compared to the unusually strong aftermarket orders seen last year. At a commercial level, we continue to expand our product mix within higher margin adjacent markets. The Broadwind Clean Fuels L70 low flow PRS unit, the third model in this product family, will be released in Q3 as planned with customer interest expected to be high for this new model. Quoting activity is elevated at all segments and in nearly all markets served, including some green shoots in oil and gas, which has been soft in recent quarters. Furthermore, the gearing division has completed all requirements for the AS9100 quality certification, for which we expect to receive final approval later this quarter. Operationally, We continue to invest in cutting-edge technology to improve our process capabilities, reduce costs, and improve our profitability. Bradfoot Gearing has recently installed an industry-leading Teokoki grinding center. This new equipment replaces several older machines and includes real-time onboard quality inspection, ensuring that the finished product precisely matches the blueprint specifications before the part leaves the machine. We now have the people, qualifications, and technology to penetrate the aerospace and defense markets we target. Our focus on team member safety has yielded a 56 percent reduction in our recordable incident rate so far in 2024, well below the industry average. And we have had zero lost time incidents this year. Most importantly, we are keeping our people safe. But secondarily, we are seeing the financial benefit in reduced costs. Our quality systems, standard work deployment, and flexible skills training have allowed us to improve our response time and increase the profitability of the first article and smaller runs often associated with our new customers. Beginning in the first quarter, we undertook significant actions to align our cost structure with the current demand environment. In combination, these actions will contribute more than $4 million in annualized cost savings, which is evident in our results. While total revenue declined versus year-ago levels given lower tower demand, our non-wind activity levels remain relatively stable as we see demand for our precision manufacturing capabilities across multiple markets. In Q2, we generated EBITDA of $3.6 million and net income of half a million dollars. This marks our sixth consecutive quarter of profitability despite lingering wind-related demand headwinds. Quoting activity in our non-wind markets has been robust so far in 2024, and we expect consistent order flow through the remainder of this year, despite the continuing softness in the oil and gas gear market. Within our heavy fabrication segment, Q2 revenue was $20 million, down 42% from a year ago, primarily due to the decline in tower production and PRS shipments partially offset by increased sales of mining equipment Gearing revenue was $10.5 million, a 5% reduction year over year due to broad-based softness across major markets, offset by an uptick in wind gearing sales. Industrial solutions revenue was $6.5 million, up 3% year over year, led by an increase in aftermarket gas turbine content, continuing the positive trend for this business, which began in 2022. In summary, I'm pleased with the operating performance of all divisions through the second quarter, reflecting solid execution and the quick and substantial cost actions we took this year in response to demand fluctuations in both our heavy fabrications and gearing businesses. With that, I'll turn the call back over to Tom for a discussion of our second quarter financial performance.