Broadwind Energy Q4 2024 Earnings Report

Broadwind Energy EPS Results

• Actual EPS: -$0.04
• Consensus EPS: -$0.08
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: N/A

Broadwind Energy Revenue Results

• Actual Revenue: $33.57 million
• Expected Revenue: $31.54 million
• Beat/Miss: Beat by +$2.03 million
• YoY Revenue Growth: N/A

Broadwind Energy Announcement Details

• Quarter: Q4 2024
• Date: 3/5/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, March 5, 2025
• Conference Call Time: 11:00AM ET

Broadwind Energy (NASDAQ:BWEN) is an industrial manufacturing company that provides precision-engineered products and services for the clean energy, industrial, and infrastructure markets. The company’s capabilities include heavy fabrication, precision machining, welding, assembly, and gearing.

Broadwind has historically been known as a manufacturer of wind turbine towers and related components. It also produces large welded structures, fabricated equipment, and precision-machined parts for customers in sectors such as power generation, energy infrastructure, mining, and other industrial applications.

The company operates manufacturing facilities in the United States and serves original equipment manufacturers and other industrial customers through its specialized production businesses. Broadwind’s operations have included tower manufacturing, industrial fabrication, and gear and gearbox solutions, allowing it to support customers from engineering and manufacturing through final assembly.

Broadwind Energy Q4 2024 Earnings Call Transcript

Key Takeaways

• Q4 orders jumped 85% year-over-year to $37M, with broad-based growth across Heavy Fabrication, Gearing and Industrial Solutions.
• Broadwind realized about $4M in annualized cost savings from restructuring actions, positioning the company for improved operating leverage in 2025.
• Industrial Solutions posted record bookings of $8M in Q4 and $27M for full-year, driven by strong demand for natural gas and aero-derivative turbine components.
• Fourth-quarter revenue fell 28% to $33.6M and Q4 adjusted EBITDA dropped to 6.4% margin due to ongoing onshore wind and oil & gas market softness.
• For 2025, Broadwind guided to $140M–$160M in revenue and $13M–$15M in adjusted EBITDA, implying mid-single-digit growth and steady margins.

Presentation

[Operator]

Greetings and welcome to Broadwind's Q4 and full year 2024 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Tom Ciccone. Thank you. You may begin.

[Tom Ciccone, VP and CFO at Broadwind]

Good morning and welcome to the Broadwind Q4 and full year 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 Q4 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.

[Tom Ciccone, VP and CFO at Broadwind]

For a discussion of some of the factors that could cause our 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.

[Eric Blashford, President and CEO at Broadwind]

Thanks, Tom, and welcome to those joining us today. In a transitional demand environment, Broadwind delivered strong commercial and operational execution during 2024, culminating in full year revenue and adjusted EBITDA of $143 million and $13.3 million, respectively. While we continue to experience a near-term pause in demand for new wind towers and oil and gas gearing during the Q4, recent cost actions, together with stable demand and improved order activity across many of our diverse markets, resulted in a strong Q4 performance which included revenue and adjusted EBITDA of $34 million and $2.1 million, respectively. Importantly, while Q4 demand conditions were mixed, our order rates increased materially during the period, with orders increasing 85% from the Q4 of 2023 to $37 million. Order growth was broad-based, moving higher across nearly all of our end markets.

[Eric Blashford, President and CEO at Broadwind]

Orders within our Heavy Fabrications business saw continued strong demand for the adapters used to repower wind turbines, increased demand for our natural gas pressure reduction systems, and from our industrial sector, which includes our first sizable order in the hydroelectric market. Gearing orders nearly doubled year-over-year, led by increasing demand from the industrial and steel markets. Orders from our Industrial Solutions segment increased 21% year-over-year due to continued strength in the global gas turbine market. At a commercial level, we continue to expand our product mix within higher margin adjacent markets. Quoting activity remains elevated in all segments, but most notably in our Heavy Fabrications and Industrial Solutions businesses, where we're seeing strong interest from the power generation markets. Interestingly, we're also beginning to see some meaningful activity from the oil and gas gearing market for the first time in nearly two years.

[Eric Blashford, President and CEO at Broadwind]

We're pleased to see that the investments made in the quality certifications over the last year are generating new quote opportunities in bookings in the aeroderivative turbine and aerospace verticals. Operationally, we continue to prudently invest in equipment technology to improve our process capabilities, reduce costs, and improve our profitability. We've upgraded key fabrication equipment in our manufacturing facilities as we seek to capitalize on demand growth, which includes recent orders for larger scale towers ordered by our customers for 2025 production runs. Gearing continues to invest in quality and security certifications such as the AS9100 and ITAR registrations earned in 2024, followed by the CMMC 2.0, a cybersecurity requirement for the defense industry, which we will achieve in 2025. Beginning in the Q1 of 2024, we undertook significant cost actions to align our structure with the current demand environment.

[Eric Blashford, President and CEO at Broadwind]

These actions equated to about $4 million in annualized cost savings, which is evident in our 2024 results and will continue into 2025. As demand conditions begin to improve, we believe these actions position Broadwind to realize improved operating leverage in 2025. Q4 revenue was behind the prior year quarter, primarily due to reduced activity within our wind and oil and gas markets. Our non-wind activity levels remain relatively stable as we see demand for our precision manufacturing capabilities across multiple markets, most notably in power generation and industrials. Within our Heavy Fabrication segment, Q4 revenue was $20 million, down 31% from a year ago, mostly due to the decline in tower production and natural gas pressure-reducing systems, or PRS, shipments, partially offset by increased sales of mining equipment.

[Eric Blashford, President and CEO at Broadwind]

Gearing revenue was $7.6 million, a 31% reduction year-over-year due to broad-based softness in the oil and gas and steel markets, partially offset by strength in mining and aftermarket wind. Industrial Solutions revenue was $5.9 million, down slightly year-over-year, primarily due to the timing of certain aftermarket shipments into the natural gas turbine market. In summary, the operating performance of all divisions continues to be strong as we quickly respond to demand fluctuations in business while maintaining profitability. With that, I'll turn the call over to Tom for a discussion of our Q4 financial performance.

[Tom Ciccone, VP and CFO at Broadwind]

Thank you, Eric. Turning to slide five for an overview of our Q4 performance. Q4 consolidated revenues were $33.6 million compared to $46.6 million in the prior year quarter. This represents a 28% decrease versus the prior year quarter as our production levels continue to be impacted by the ongoing pause within the onshore wind industry, as well as the extended slowdown within the oil and gas sector. Adjusted EBITDA margin fell to 6.4% due primarily to lower capacity utilization, partially offset by the targeted cost reductions we took earlier this year. From an order perspective, we experienced a rebound in activity during the quarter with consolidated orders of almost $38 million, representing our highest intake level in nearly two years. It should be noted that within all three segments, orders increased sequentially quarter over quarter and on a year-over-year basis.

[Tom Ciccone, VP and CFO at Broadwind]

Turning to slide six for a discussion of our Heavy Fabrication segment. Q4 orders of $22.4 million are up both sequentially and versus the prior year period as we continue to recognize orders related to wind repowering projects and strength within our industrial market. Q4 revenues were $20.4 million, down almost $9 million versus the prior year quarter, reflective of lower tower volumes as well as lower PRS shipments. During the Q4, we recognized adjusted EBITDA of $2.6 million, a decrease of $1.1 million versus the prior year period. Despite the decreased revenue levels, we were able to maintain our adjusted EBITDA margin as our drop in capacity utilization was partially offset by targeted cost actions taken towards the end of 2023 into 2024.

[Tom Ciccone, VP and CFO at Broadwind]

Turning to slide seven, Gearing orders of $7 million are up sequentially and versus the prior year. Although we continue to experience softness in oil and gas demand, we've made investments in machine technology which are capable of finishing products to tolerances within a millionth of an inch. This level of precision is needed to serve the aerospace and aeroderivative markets. This technology, along with our expanded commercial team and new quality certifications, is bearing fruit as we win orders in these strategic markets, in addition to growth from legacy markets. Segment revenue was $7.6 million, down $3.4 million versus the prior year quarter. Q4 segment adjusted EBITDA was $0.1 million, a decrease of $1.2 million versus the prior year quarter. These decreases are reflective of the lower order intake levels we've experienced in recent quarters.

[Tom Ciccone, VP and CFO at Broadwind]

Turning to slide eight, Industrial Solutions recorded orders totaling $8 million in the Q4. The $8 million of Q4 orders, as well as the $27 million of full year orders, both represent record booking levels for the segment. The segment continues to experience strong commercial interest for natural gas turbine content, most notably for new gas turbines, and we've seen order strength continue into 2025. Q4 segment revenue was $5.9 million, and Q4 segment adjusted EBITDA was $0.6 million, both small decreases versus the prior year period. It should be noted that in addition to the aforementioned order activity, full year 2024 revenue and adjusted EBITDA totals are both record levels for the segment.

[Tom Ciccone, VP and CFO at Broadwind]

Turning to slide nine, we ended the Q4 with total cash and availability on our credit facility of approximately $33 million. This is a significant sequential improvement resulting from a $13 million reduction in our operating working capital as we experience an increased level of advanced payments from a major customer. The decrease in operating working capital drove strong free cash flow generation in Q4. Moving forward into 2025, we expect deposit balances to return to more typical operating levels. Finally, with respect to our financial guidance, today we are introducing financial guidance for the full year 2025. Given our current expectations and beliefs, we anticipate full year revenue to be in the range of $140 million to 160 million and adjusted EBITDA to be in the range of $13 million to 15 million. That concludes my remarks. I will turn the call back over to Eric to continue our discussion.

[Eric Blashford, President and CEO at Broadwind]

Thanks, Tom. Now allow me to provide some thoughts as we enter 2025, beginning with our Heavy Fabrication segment. We believe that the domestic onshore wind tower activity will likely continue at its present rate through 2026. We're encouraged by the continued momentum in the wind repowering market as we're seeing sustained demand from our OEM customers for the adapters we manufacture, which are required to upgrade most legacy turbines. We believe that the new tariffs announced recently, combined with the existing anti-dumping measures in place, will continue to benefit the domestic wind tower manufacturers. We continue to reallocate production capacity towards stable recurring project revenue streams across diverse end markets, with recent notable wins occurring in the mining and hydroelectric verticals. We're seeing increasing quote activity from the power generation space, especially for products supporting the nation's electrical infrastructure, such as the large transformers required to support the grid.

[Eric Blashford, President and CEO at Broadwind]

We're excited about the launch of our newest model in the family of PRSs, the Broadwind Clean Fuels L70 Low Flow PRS unit. This is the third model in this product family and is now in customer field trials with favorable results so far. We're seeing strong customer interest in this model and are increasing our production plan to meet the anticipated demand. Customers appreciate the unit's performance specifications, compact footprint, simplicity of operation, remote monitoring capability, and attractive price point, making it the ideal solution for industrial applications such as primary or backup power supply systems and/or pipeline integrity projects. In our Gearing segment, we continue to execute our strategy to move beyond traditional gearing toward other precision machine products.

[Eric Blashford, President and CEO at Broadwind]

We're pleased at the increasing level of customer activity we're seeing in various new markets, such as aeroderivative gas turbines used in data center primary or backup power, aggregate material processing, and large high-speed compressors, to name a few. Our content for these markets includes products such as airfoils, fan blades, and impellers, in addition to our more traditional gearing and shaft products. We expect that the customer onshoring efforts we've seen in 2024 will accelerate with the recently announced tariffs and are well-positioned to provide customers a quick, high-quality, and competitive domestic alternative to their legacy suppliers. Additionally, the organization upgraded and brought online two additional heat treat furnaces at our Pittsburgh location to address increasing demand and provide additional scheduling flexibility for our external heat treat customers.

[Eric Blashford, President and CEO at Broadwind]

In Industrial Solutions, the momentum that we've experienced in the gas turbine industry this year continued through the Q4 and remained strong as we enter 2025. Our key customers, which are seeing strong demand for gas turbine equipment and services, are reporting strong backlogs and are increasing their production capacity in response. Accordingly, quoting activity remains high, and we're adding resources in quality, procurement, and project management to respond to customer demand. As a reminder, our Industrial Solutions business provides supply chain solutions, custom fabrications, and control panel manufacturing for the growing combined cycle natural gas turbine market worldwide, which is driven by demand growth attributable at least in part to data centers and other sources of increased electrical load. As a result, we achieved record orders again this year, surpassing the previous record set last year in 2023.

[Eric Blashford, President and CEO at Broadwind]

In summary, I'm pleased with the strong operational performance from our team this quarter as we continue to demonstrate strong execution on our strategic priorities. Our quality, quick response, and reliable deliveries continue to win new customers for us, particularly in the Gearing and Heavy Fabrications businesses. We've reduced our cost structure during a transitional period for domestic onshore wind and oil and gas gearing demand while retaining our key talent and continuing to work on vital activities like process improvement and product expansion. We're committed to keeping our people safe and productive. Our focus on team member safety has yielded a 55% reduction in our recordable incident rate in 2024, well below the industry average, and we had zero lost-time incidents.

[Eric Blashford, President and CEO at Broadwind]

We have five plants, 100% U.S.-based, so we're prepared to capitalize on any opportunities afforded by the pro-domestic manufacturing policy backdrop afforded by the current administration. While potential impacts of both tariffs and renewable energy policy changes are unknown, we're optimistic that the new policies will support the necessary rebuilding of the country's infrastructure. We're encouraged by the pace of order growth within our core non-wind markets, which positions us for improved optimization of our manufacturing base over the coming year as we build a firm foundation for steady, profitable growth, serving the power generation, infrastructure, and other key markets with high-quality precision components and proprietary products to capitalize on improved demand in the years ahead. With that, I'll turn the call back over to the moderator for the Q&A session.

[Operator]

Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. In confirmation, a tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. One moment, please, while we poll for questions. Our first question comes from Eric Stine with Craig-Hallum. Please proceed with your question.

[Eric Stine, Senior Research Analyst at Craig-Hallum]

Hi, Eric. Hi, Tom.

[Eric Blashford, President and CEO at Broadwind]

Hi, Eric.

[Tom Ciccone, VP and CFO at Broadwind]

Good morning, Eric.

[Eric Stine, Senior Research Analyst at Craig-Hallum]

Good morning. First of all, just on wind, just to confirm, I know in your release you were talking about expecting wind softness through 2025, but I believe just to confirm, you said you kind of expect this to be the situation through 2026, and I guess meaning some improvement in 2027. That would be first. Second, can you just remind me of the visibility you've got for the GE work you're doing under the contract that you received a number of quarters ago?

[Eric Blashford, President and CEO at Broadwind]

Sure. Yeah, I see the demand as muted. Certainly, we can be optimistic beyond 2025, but I'd expect 2026 to be about the same as 2025, just based on indications we're getting from customers and some conversations I've had with industry peers and whatnot. Regarding the visibility we have through 2025, we have, I would say, firm visibility really through the whole year of 2025. We know exactly the towers we're going to build through September and have indications beyond that, Eric.

[Eric Stine, Senior Research Analyst at Craig-Hallum]

Got it. Okay. Maybe sticking with that, when you think about 2025, and I know you gave the guidance range, how should we think about the linearity of that? Maybe helpful just something on Q1 and then just the remainder of the year given some visibility from wind, but also, I would think, some visibility in your backlog across the rest of the business.

[Eric Blashford, President and CEO at Broadwind]

Sure. I think wind is going to be relatively stable through the full year, except we did have some pull-in at the end of 2024 that we thought we were going to be able to recognize revenue in Q1 2025. That benefited Q4 2024 to the somewhat detriment of Q1 2025. Not really hurting the year, but it actually moved some things around. I would say, regarding the pace of the year, it's radically increasing through the year. Q1 is going to be probably the lowest quarter because of the pull-ins. We had pull-ins, by the way, Eric, not only in towers but also in Gearing and in Industrial Solutions. It made for a strong Q4, but a little bit of a softer Q1 based on the backlog we have. I would say, like I said, radical through the year increases.

[Tom Ciccone, VP and CFO at Broadwind]

Yeah. Eric, the only thing I would add to that is, in addition to kind of a ramping up throughout the year, I think Q1 will be adversely impacted by some lower production levels within our Gearing segment, just as we start the year, as we had some lower order intake quarters earlier in the year.

[Eric Stine, Senior Research Analyst at Craig-Hallum]

Okay. That is very helpful. Then maybe lastly, just sticking on the order front, it sounds like, I mean, certainly you had, I think you cited very strong quoting activity on your Q3 call, and obviously, that played out with order strength in Q4. Sounds like you continue to see that quoting activity and maybe thoughts on what you see in terms of book-to-bill throughout 2025.

[Eric Blashford, President and CEO at Broadwind]

Yeah, it's exciting. Frankly, it's nice to see what we've done in our non-wind markets. I know I've said on previous calls, we first set forth the process capability, so we built that up in multiple divisions. Then we had the quality certifications that we've won, the ITAR, the CMMC, the AS9100, the ASME Division 2. We have those all in place now, which customers want. We have improved our sales force so we can reach these customers. It's nice to see that that really manifests itself in some strong quoting activity in three and four, and now the order activity is following that. We don't win them all, but we're excited about what we are winning, especially in the strategic markets like power gen, aeroderivatives, a little bit of aerospace. That takes a little bit longer. Even medical.

[Tom Ciccone, VP and CFO at Broadwind]

Yeah. In terms of book-to-bill, Eric, I think within our Gearing segment, we can expect a book-to-bill greater than one. Within Industrial Solutions, with a strong backlog, closer to one. In Heavy Fab, because we're working off the LTA and we're not announcing new orders, as you know, until we start announcing new orders or counting orders, we probably won't be greater than one in terms of book-to-bill.

[Eric Stine, Senior Research Analyst at Craig-Hallum]

Okay. Thank you.

[Eric Blashford, President and CEO at Broadwind]

Thanks, Eric. Appreciate it.

[Operator]

Our next question comes from Amit Dayal with H.C. Wainwright. Please proceed with your question.

[Amit Dayal, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Thank you. Good morning, guys. Eric.

[Eric Blashford, President and CEO at Broadwind]

Morning, Amit.

[Amit Dayal, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Just trying to understand from your press release, you're saying project activity is low, but order activity has improved. Can you help us understand what that means in terms of the setup you have right now?

[Eric Blashford, President and CEO at Broadwind]

If we're talking about project activity in terms of wind, wind is muted right now. We have a strong backlog. We've got good customer communications and visibility. For new orders for wind, it would be somewhat muted. Is that the question you're asking? I want to make sure I'm answering the correct question.

[Amit Dayal, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Yeah. I'm just trying to reconcile those two things. The project activity that you are talking about is more on the customer side, and the order activity is more on what you are from a backlog perspective, I guess, right? Just trying to see how these two are sort of balancing each other out or how they're impacting the guidance you've provided, basically.

[Eric Blashford, President and CEO at Broadwind]

Sure. When we talk about project, we're talking about active orders that we have, and then we're talking about prospective orders and booking, which would be future orders that we expect. That's the whole positive book-to-bill that we're talking about. I think that's the answer to your question. Again, we've got good visibility on our wind backlog, wind production through most of 2025. Not only just towers, but we also have a nice backlog on the adapters that I mentioned in the press release, which are used to upgrade legacy turbines. We're doing both. Those run down the same line. That's good capacity utilization for wind.

[Eric Blashford, President and CEO at Broadwind]

The rest of it, we are entering with a pretty strong backlog in industrial fab outside of wind, quite a strong backlog, Industrial Solutions that we mentioned before. I would say a growing backlog in Broadwind and Gearing because we did have soft orders in Q2 and Q3, and those are the orders we're actually building now in Q1 2025.

[Amit Dayal, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Understood. No, that's helpful. Thank you. You talked a little bit about tariffs—

[Eric Blashford, President and CEO at Broadwind]

Sure.

[Amit Dayal, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Is that already reflected as much as you can, I guess, in the guidance you provided? I mean, there could be some other developments that could impact this, but what would be some sort of the positives and the negatives that we should sort of keep an eye on as the year plays out from a tariff perspective?

[Eric Blashford, President and CEO at Broadwind]

We are very transparent with our customers and our suppliers, and we have all kind of been through this before. We understand how to deal with it. We quote, as you may remember, a lot of, first of all, some of our products are pass-through. Wind, as an example, is pass-through. Any increases we would get would be automatically passed through for the most part with heavy steel, heavy steel plate and whatnot. But outside of that, we quote to order. We need to be very prudent in how we quote, make sure that the lead times and the quotes that we are getting from our suppliers are current.

[Eric Blashford, President and CEO at Broadwind]

We are actually limiting the quote life of the quotes we are providing to our customers to make sure that we have time to react to any possible inflationary increases we get from suppliers. Again, we are transparent. We're going to pass them forward so we can maintain our margins.

[Amit Dayal, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Okay. So at least so far, the order activity, you haven't seen too much of a disruption in that process from this tariff-related news flow?

[Eric Blashford, President and CEO at Broadwind]

No. We really haven't seen anything other than customers are, let's say, the inquiries for onshoring. We used to get this from an offshore supplier, and we know that the onshore prices might be a little bit higher than an offshore foreign supplier, but we want to come back and make sure that we've got a refreshed quote from industrial fab or from Gearing. That kind of activity, our customers are looking out. I'd say our order activity is increasing as a result. Our booking, our queue activity is increasing as a result.

[Amit Dayal, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Thank you. Thank you. That's helpful. This last one for me, you mentioned this hydroelectric offering—

[Eric Blashford, President and CEO at Broadwind]

Sure.

[Amit Dayal, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Is this sort of a new product, and could this become a steady stream of revenues, or is it a little bit like one-time type of order?

[Eric Blashford, President and CEO at Broadwind]

Yeah, what this is, is actually as hydroelectric dams are being refurbished, there's a lot of heavy fabrication that are inside these dams that need to be replaced, refurbished, repaired. And we're capable, because we have this capability, as you know, to build large cylindrical type of things that are very precise and very robust. Our customers are coming to us for this. I think it is repeating. These are for dams that are existing. As the infrastructure in the country needs to be upgraded, and frankly, it all does, we do see this to be a repeating revenue stream. Not nearly as significant like would be towers or whatnot, but repeating. Seven digits.

[Amit Dayal, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Yeah. Understood. I mean, it helps with the capacity utilization aspect of the story.

[Eric Blashford, President and CEO at Broadwind]

It definitely helps because it's essentially run down the same lines as the towers do because big cylindrical things.

[Amit Dayal, Managing Director and Senior Technology Analyst at H.C. Wainwright]

Yeah. That's all I have, guys, for now. I will take my other questions offline. Thank you.

[Eric Blashford, President and CEO at Broadwind]

Thank you.

[Tom Ciccone, VP and CFO at Broadwind]

Thanks, Amit.

[Operator]

Our next question comes from Justin Clare with Roth MKM. Please proceed with your question.

[Justin Clare, Managing Director and Research Analyst at Roth MKM]

Hi. Good morning. Thanks, guys.

[Eric Blashford, President and CEO at Broadwind]

Morning, Justin.

[Tom Ciccone, VP and CFO at Broadwind]

Good morning.

[Justin Clare, Managing Director and Research Analyst at Roth MKM]

Morning. I wanted to just touch on the 2025 guidance. It implies mid-single-digit revenue growth for 2025. I am just wondering if you could speak to the growth that you're anticipating for the segments, which segments might grow faster than the corporate average, what might be a little bit slower. It sounds like Gearing might be a little on the slower side, but if you could just give us a little bit more granularity, that'd be helpful.

[Eric Blashford, President and CEO at Broadwind]

I would say, as far as Industrial Solutions, I would say the pace of growth that we've seen over the last couple of years shows no sign of slowing down. Just a reminder, that's based on natural gas turbine and aeroderivative turbines, which is really the same thing, different size, across the world. As electricity demand increases, the demand for those products increases, and the demand for our products increases. I'd say pace of growth would continue there, I'd expect, through 2025.

[Eric Blashford, President and CEO at Broadwind]

Gearing, starting from a bit of a slower start because of the orders that we had or the lack of orders we had in Q2 and 3, primarily driven by oil and gas, I do expect that to grow prospectively going forward, kind of radically but reasonably. Towers is going to be flat, as we indicated. The growth that you're seeing that we're guiding to is really going to come from those other divisions.

[Justin Clare, Managing Director and Research Analyst at Roth MKM]

Okay. Got it. When I look at the adjusted EBITDA margin that's implied for 2025, 9.3% at the midpoint, it's similar to what you guys experienced in 2024. Just wondering, it sounds like you're anticipating improvement in utilization. Is there potential to lift that margin above that 9.3% in 2025? Maybe just speak to the opportunity there.

[Tom Ciccone, VP and CFO at Broadwind]

Sure. That's correct. At our midpoint, it's pretty close to where we ended 2024. I think if we end up at the higher end of our guided range, there's definitely an opportunity there as we better utilize our capacity, our plant capacity. I would definitely say that that's an opportunity.

[Eric Blashford, President and CEO at Broadwind]

To add some color to that, Justin, the capacity utilization will benefit it. As we pursue new markets, they tend to start a little bit slower with PPAPs. There are a lot of quality requirements that are required for some of these new customers and markets. They tend to come with lower initial margins, especially with the smaller quantities. Once you get your PPAP passed or your first run passed, the customers tend to give us larger quantities so we can use our machines on longer runs, less setups. That would improve the margins. That is part of the reason we have that built in, the expectation that it is going to come with increased PPAPs, which are shorter runs, a little bit more margin pressure on those.

[Justin Clare, Managing Director and Research Analyst at Roth MKM]

Got it. Got it. Okay. Understood. Just thinking through the executive order on wind permitting that was put in place by the new administration here, wondering if that's had any effect on order activity that you're seeing. I'm guessing maybe not at this point, but I'm wondering if there could be an impact as we get into toward the end of 2025, end of 2026. In discussions with your customers, are customers potentially pausing projects? Are you seeing any delays? Maybe just speak to potential impact there.

[Eric Blashford, President and CEO at Broadwind]

Yeah. I'd say, Justin, that's really the root of the comments and the beliefs that we have that 2026 might be about the same as 2025. Just as a reminder, about 4% of wind projects are on federal lands, federal lands. Those are kind of blocked off right now, which leaves 96% on state or private land. Most of the wind activity, onshore wind activity, is on state or private lands. They still require FAA permits and, to a certain extent, EPA permits for environmental protection, for wildlife and whatnot. To the extent that that could be slowed down by a permitting slowdown for the federal government, that has the potential to slow projects, which is why we're thinking 2026 might be muted, meaning the same as 2025.

[Justin Clare, Managing Director and Research Analyst at Roth MKM]

Got it. Okay. That makes sense. All right. Go ahead.

[Eric Blashford, President and CEO at Broadwind]

Yeah. Customers, as developers, if there's uncertainty, it could cause them to pause. Customers are saying they really hadn't seen that yet, Justin, but there's always that backdrop that it could happen.

[Justin Clare, Managing Director and Research Analyst at Roth MKM]

Got it. Okay. Thank you.

[Eric Blashford, President and CEO at Broadwind]

Thanks, Justin.

[Operator]

We have reached the end of the question-and-answer session. I'd now like to turn the call back over to Eric Blashford for closing comments.

[Eric Blashford, President and CEO at Broadwind]

Yeah. Thanks, everyone. I really appreciate your attention. We're excited about what's happening at Broadwind, and we look forward to coming to you at the end of Q1 to report our earnings then. Thank you.

[Operator]

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Participants

Analysts

• Justin Clare, Managing Director and Research Analyst at Roth MKM
• Tom Ciccone, VP and CFO at Broadwind
• Eric Stine, Senior Research Analyst at Craig-Hallum
• Amit Dayal, Managing Director and Senior Technology Analyst at H.C. Wainwright
• Eric Blashford, President and CEO at Broadwind