Broadwind Energy, Inc. BWEN reported weaker-than-expected results for the first quarter of 2018. It delivered negative earnings surprise of 60%.
The machinery company recorded net loss from continuing operations of 32 cents per share in the reported quarter, wider than the Zacks Consensus Estimate of 20 cents loss per share. The bottom line compared unfavorably with earnings of 43 cents per share reported in the year-ago quarter. The weakness stemmed from the lower production of towers in the quarter. Lower Tower Production Hurts Net Sales
In the quarter under review, Broadwind Energy's net sales were approximately $30 million, reflecting decline of 46.5% from the year-ago quarter. However, the top line came in line with the Zacks Consensus Estimate.
Orders in the reported quarter totaled $28.1 million, down 29.7% from $40 million in the year-ago quarter. Backlog was $136.3 million versus $138.2 million at the end of the year-ago quarter.
The company reports its net sales in three segments - Towers and Heavy Fabrications, Gearing and Process Systems. The segmental information is briefly discussed below:
Revenues from the Towers and Heavy Fabrications segment were $16.8 million, less than the half of $48.9 million generated in the year-ago quarter. Results were adversely impacted by lower tower production and fall in average selling price. Tower sections sold in the reported quarter plummeted 64%.
The segment's orders were worth $7.8 million in the reported quarter, reflecting the decline of 73% from the year-ago quarter.
Revenues from the Gearing segment totaled $8.8 million, more than double of $3.9 million generated in the year-ago quarter. The improvement came on the back of healthy product demand from the oil and gas market.
Orders in the reported quarter totaled $15.4 million, reflecting growth of 110% from the year-ago quarter.
Revenues from Process Systems segment were $4.4 million, increasing 32.9% year over year. The improvement was driven by recovery witnessed in industrial and mining markets.
Orders in the quarter under review totaled $4.9 million, reflecting growth of 36.5% from the year-ago quarter. Lower Sales Results in Gross & Operating Loss
In the quarter under review, Broadwind Energy's cost of sales decreased 40% year over year to roughly $30 million. It was slightly above the quarter's net sales, recording gross loss of roughly $17,000. Selling, general and administrative expenses decreased 11.8% year over year to $3.9 million, which represented 13% of net sales.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were ($1.6) million in the quarter under review versus $3.9 million in the year-ago quarter. Operating loss was $4.5 million versus operating income of $1.6 million recorded in the year-ago quarter. Balance Sheet and Cash Flow
Exiting the first quarter, Broadwind Energy's cash and cash equivalents were $26,000, way below $78,000 recorded at the end of the previous quarter. Long-term debt balance (net of current portion) increased 91.1% sequentially to approximately $1.5 million.
In the reported quarter, the company used net cash of $3.3 million for operating activities versus $8.1 million used in the year-ago quarter. Capital invested, used for purchasing property and equipment, totaled $229,000, way below $3.3 million used in the year-ago quarter. Outlook
Broadwind Energy anticipates gaining from the restart of tower production at two of its facilities, and healthy demand from oil and gas customers. Also, annual savings of $600,000 in manufacturing overhead due to the consolidation of production facilities as a result of plans to exit CNG business will be advantageous. Orders are predicted to recover throughout 2018.
For the second quarter of 2018, the company anticipates generating revenues of $36-$38 million and positive EBITDA. Broadwind Energy, Inc. Price, Consensus and EPS Surprise
Broadwind Energy, Inc. Price, Consensus and EPS Surprise | Broadwind Energy, Inc. Quote
Zacks Rank & Stocks to Consider
Broadwind Energy currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the industry are DXP Enterprises, Inc. DXPE , Tennant Company TNC and IDEX Corporation IEX . While both DXP Enterprises and Tennant sport a Zacks Rank #1 (Strong Buy), IDEX Corporation carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
In the last 60 days, earnings estimates for each of these stocks improved for the current year. Also, average positive earnings surprise for the last four quarters was 189.56% for DXP Enterprises, 1.39% for Tennant and 3.12% for IDEX Corporation.
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