[t]BWEN[/t]'s 10-K for the fiscal year ending December 31, 2008:
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Broadwind Energy Reports Fourth Quarter and Fiscal Year 2008 Results
Tuesday March 17, 3:35 pm ET
NAPERVILLE, Ill., March 17 /PRNewswire-FirstCall/ -- Broadwind Energy, Inc. (OTC Bulletin Board: BWEN - News), a leading provider of components, logistics and services to the wind power and broader energy markets, today announced results for its fourth quarter and fiscal year ended December 31, 2008. The Company announced full-year revenues of $217.3 million, up from revenues of $29.8 million in 2007. For the 2008 fourth quarter, revenues grew to $77.6 million, compared to $21.8 million in revenues for the same period in 2007.
Broadwind said the increased revenues resulted from a combination of acquisitions and strong organic growth at its Tower Tech Systems, Inc. wind tower manufacturing business and the Brad Foote Gear Works, Inc. wind gear production facilities. With respect to acquisitions, the Company benefited in 2008 from a full year of revenues at its Brad Foote Gear Works subsidiary, the January 2008 acquisition of Energy Maintenance Service, LLC (EMS), its wind energy operations, maintenance, and services unit, and the June 2008 acquisition of Badger Transport, Inc., a leading provider of logistics and transportation to the wind energy industry.
On a pro-forma basis (assuming the acquisitions of Brad Foote Gear Works, EMS and Badger Transport had occurred as of January 1, 2007), Broadwind's revenues grew $98 million in 2008 versus the prior-year period, driven primarily by higher production volumes of wind towers, as well as higher gear production volumes. Revenues on a pro forma basis were $223 million in 2008, up from $125 million in 2007.
"In 2008, we executed on our goal of becoming the most diverse component and service supplier to the wind industry through strategic acquisitions and investments in facilities and equipment," said Broadwind CEO J. Cameron Drecoll. "We have a broad portfolio of operations, technology and talent that required significant investment and integration costs during the year, but which also positions us as a long-term leader in the dynamic wind energy sector."
Broadwind reported a net loss of $25.3 million, or $0.28 per share, in 2008, compared with a net loss of $3.4 million, or $0.07 per share, in 2007. For the fourth quarter of 2008 the Company reported a net loss of $12.4 million, or $0.14 per share, compared to a net loss of $4.7 million or $0.07 per share in the fourth quarter of 2007. The 2008 net loss includes $11.2 million in non-cash amortization expense associated with the acquisitions made over the past two fiscal years, as well as a $2.4 million one-time non-cash charge for impairment of goodwill at the Company's R.B.A., Inc. business unit. High costs related to the integration of acquisitions, increased expenses due to the ramp up of new production and facilities, and the addition of key management depth and added personnel throughout the subsidiaries contributed to the loss in the fourth quarter and full year.
Fiscal year results were also impacted by $84 million in capital expenditures reflecting the commitment of significant resources to Broadwind's existing and newly acquired facilities and subsidiaries. These expenditures consisted of construction of Tower Tech's new facility in Abilene, Texas, the ongoing construction of its tower manufacturing facility in Brandon, South Dakota, as well as the build-out of additional facility capacity and gearing equipment at Brad Foote. Further expenditures included new transportation equipment purchases at Badger Transport, increasing heavy haul capacity by more than 30%.
"While the investments made throughout the course of the year impact our financial results in the short term, they were necessary to put us in a position to capitalize on forecasted growth in the North American wind energy sector," said Drecoll. "At the same time, we are not immune to the challenges of this unprecedented global economic slowdown, which has led us to optimize our workforce and facility utilization to reduce operating costs over the near term."
The Company generated Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-Based Compensation (EBITDAS) of $4.3 million in 2008, versus EBITDAS of $103,000 in 2007. For a summary of financial results and an explanation and reconciliation of EBITDAS to net income, please see the table below.
Segment Results
Products
Broadwind's Products segment includes the Company's Tower Tech Systems, Brad Foote Gear Works, and R.B.A. subsidiaries. Tower Tech is a leading wind tower manufacturer. Brad Foote manufactures precision gearing systems for various markets, including wind turbines, mining, and oil and gas exploration. R.B.A. provides subcontract machining and fabrication for several industries, including components for cranes used in wind facility construction.
The Products segment posted significant growth in fiscal 2008, fueled by increased production and sales of wind towers and gearing systems. Revenues in 2008 for the Products segment grew to $177.1 million, compared with $29.8 million in revenues in 2007, reflecting the broader product mix and increased market and customer penetration. The Company experienced significant integration and production ramp-up costs associated with its acquisitions, as well as expansion costs related to the tower and gear manufacturing plant expansions. As of December 31, 2008, the segment employed approximately 800 associates across facilities in Wisconsin, Texas, Illinois and Pennsylvania.
Service
Broadwind's Service segment was created as a result of the Company's January 2008 acquisition of Energy Maintenance Service (EMS), one of the nation's leading service and maintenance providers to the wind energy market. The Service segment also includes Badger Transport, acquired in June 2008, a heavy hauler specializing in transporting oversized and overweight components and equipment for the wind energy industry. For 2008, revenues for the Service segment were $41.5 million. As of December 31, 2008 the segment had approximately 250 employees in locations in South Dakota, Texas and Wisconsin and satellite field offices in California and Illinois.
"As a leader in wind energy infrastructure, we firmly believe in the future of wind energy as a strong, sustainable resource that will continue to become a larger part of the overall energy mix," added Drecoll. "Despite the challenging market conditions, our investments in people and enhanced infrastructure have positioned us to benefit from continued demand for our services. Looking ahead, we remain focused on disciplined cost containment and improving operational efficiencies throughout our subsidiaries."
Reconciliation of GAAP Net Income to Adjusted EBITDAS (Unaudited)
The Company has provided the following table, which reconciles net income, as reported, to EBITDAS (Earnings Before Interest, Taxes, Depreciation, Amortization and Stock-Based Compensation). The Company utilizes EBITDAS as a key financial metric and believes it represents the Company's cash generation, which it can use to make acquisitions, invest in operations and facilities, and for other uses. EBITDAS, which is a non-GAAP financial measure, should not be considered an alternative to, or more meaningful than, net income prepared on a GAAP basis. Additionally, EBITDAS as computed by the Company may not be comparable to similar metrics used by others in the industry.
(In thousands) Twelve months ended December 31,
2008 2007 2006
Net (loss) income ($25,285) ($3,362) ($2,735)
Add: interest expense
(net), income taxes,
depreciation and
amortization, goodwill
impairment charges 27,613 3,323 739
EBITDA 2,328 (39) (1,996)
Add: stock based compensation 1,999 142 353
EBITDAS $4,327 $103 ($1,643)
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BROADWIND ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AUDITED)
(in thousands, except per share data)
Three months ended Year ended
December 31, December 31,
2008 2007 2008 2007
Net sales $77,639 $21,819 $217,321 $29,804
Cost of Sales 71,352 20,977 183,951 25,865
Gross profit 6,287 842 33,370 3,939
Operating costs and expenses:
Selling, general and
administrative expenses 13,080 3,818 41,545 5,724
Goodwill impairment 2,409 - 2,409 -
Amortization of intangible assets 2,900 1,750 11,159 1,750
Total operating costs and expenses 18,389 5,568 55,113 7,474
Operating (loss) income (12,102) (4,726) (21,743) (3,535)
Other income (expense):
Interest income (expense), net (355) (992) (2,276) (839)
Other, net (261) (26) (204) (27)
Total other income (expense), net (616) (1,018) (2,480) (866)
Income (loss) before provision for
income taxes (12,718) (5,744) (24,223) (4,401)
Income tax (benefit) provision (348) (1,039) 1,062 (1,039)
Net (loss) income $(12,370) $(4,705) $(25,285) $(3,362)
Net (loss) income per common share
- basic and diluted $(0.13) $(0.07) $(0.28) $(0.07)
Weight average common share
outstanding - basic and diluted 96,470 70,368 89,899 51,535
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Source: Broadwind Energy, Inc.
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