Greetings, and welcome to Broadwind, Inc.'s Third Quarter 2025 Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, as a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Thomas A. Ciccone. Thank you. You may begin.

Good morning. And welcome to the Broadwind, Inc. Third Quarter 2025 Results Conference Call. Leading the call today is our CEO, Eric B. Blashford, and I am Thomas A. Ciccone, the company's Vice President and Chief Financial Officer. We issued a press release before the market opened today detailing our third 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 a discussion of some of the factors that could cause actual results to differ, please refer to the risk factors 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 our call. This quarter, we continued to transform Broadwind, Inc. into a leading precision manufacturing partner of choice for global OEMs. As we advance our priorities to focus on high-value end markets while becoming a leaner, more diversified business, equipped to deliver profitable growth through the cycle. Recent actions to consolidate our manufacturing footprint, reduce fixed overhead, and strengthen the balance sheet have created a strong foundation, one that positions us well entering 2026. This quarter, our performance was driven by strong demand across our power generation and renewables markets, with third quarter orders increasing 90% year over year, supported by broad-based growth across all of our reporting segments. Importantly, orders from our power generation customers more than doubled versus last year and now represent nearly 20% of revenue driven by strong demand for our natural gas turbine product offerings. In early September, we completed the sale of our industrial fabrication operations in Wisconsin, resulting in a net gain of $8.2 million. By consolidating our heavy fabrications operations into our Abilene, Texas facility, we continue to enhance asset utilization and position Broadwind, Inc. to capitalize on opportunities with higher value, growing end markets, where our technical expertise and 100% domestic manufacturing footprint are in high demand. Along with closing the sale in Manitowoc, we announced a $3 million share repurchase program underscoring our continued confidence in our long-term value creation potential. Customer activity remains robust, with incoming orders rising to $44 million, up 90% year over year and doubling sequentially. Led by strong demand from power generation, increasing demand from oil and gas and industrial customers, combined with strong wind orders. These market dynamics reinforce the importance of our diverse customer base and our strategy to pursue the capabilities and quality certifications required to expand…

Thank you, Eric. Turning to Slide five for an overview of our third quarter performance. Third quarter consolidated revenues were $44.2 million, representing a 25% increase versus the prior year period. Third quarter benefited from restarting Manitowoc Tower production, as well as increased repowering revenue in both our Manitowoc and Abilene facilities. Outside of our heavy fabrication segment, lower gearing deliveries were more than offset by increased revenue within our Industrial Solutions segment, reflective of the strong order levels we've experienced recently. Sequentially, revenue increased nearly 13% due primarily to the increase in heavy fabrication shipments. Adjusted EBITDA declined $2.4 million versus the prior year of $3.4 million. This decrease was primarily due to lower capacity utilization within our Gearing segment, costs associated with unplanned machine downtime, and manufacturing inefficiencies related to the production of unique low volume power builds within our heavy fabrication segment. Third quarter orders were strong at nearly $44 million. This represents an increase of 90% versus the prior year quarter and 108% sequentially. Orders increased across all of our segments versus the prior year and were up or flat across all segments sequentially. This represents the highest quarterly order level since 2022. Turning to Slide six for a discussion of our heavy fabrication. Third quarter orders were nearly $14 million, a 25% increase versus the prior year quarter. Just a reminder, during the second quarter, we received purchase order releases satisfying the volume associated with the long-term customer supply agreement that we announced in January 2023. As such, the growth in Q3 was primarily attributable to resuming the recognition of new power orders with this customer, partially offset by the decrease attributable to winding down the industrial fabrication operation at our Manitowoc facility. Third quarter revenues of $29.4 million are up 43% versus the prior…

Thanks, Tom. Now allow me to provide some thoughts as we move into Q4 and 2026. We continue to make a decisive shift toward increasingly stable, growing power generation markets with an emphasis on oil and gas, renewables, and potentially nuclear. Our strategic emphasis is on pursuing the highest growth and the highest margin opportunities that leverage our precision manufacturing expertise. Our facilities in Abilene, Texas, Cicero, Illinois near Chicago, Pittsburgh, Pennsylvania, and Sanford, North Carolina near Raleigh have more than 600,000 square feet of manufacturing space ready to serve our customers. Given the consolidation of our manufacturing base, we anticipate Broadwind, Inc. should be on pace to materially improve capacity utilization going forward. Recent wins within the Gearing and Industrial Solutions segments from power generation, specifically within distributed power, as well as growing opportunities in utility scale natural gas turbines, support our strategy to expand in this market. We continue to see robust quote activity in both gearing and industrial solutions, generated by our ability to solve the complex precision manufacturing and sourcing challenges faced by customers in this growing market. Accordingly, we are expanding resources to meet this demand. In our Gearing segment, we continue to pursue our strategy to move beyond traditional gearing markets for new opportunities and other precision machine products. The recent sizable orders we received from the power generation sector are exciting, with more expected to come next year. We're pleased with the increasing level of customer activity we're seeing in various new infrastructure-related markets, such as road maintenance, cement plants, and aggregate material processing among others. Additionally, we're seeing an increase in orders from our traditional oil and gas customers, partially due to reshoring efforts. Accordingly, we continue to expand our capabilities to serve the high-speed geared segment with additions to our dynamic…

Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. One moment, while we poll for questions. Our first question comes from Amit Dayal with H.C. Wainwright. Please proceed with your question.

Thank you. Good morning, everyone. So Eric, good morning, Amit. Good morning, Amit. Looking into 2026 a little bit, you know, is it looks like, you know, you're having good traction on the industrial solution side with, you know, the power infrastructure ramp that is underway. Is that going to be the key driver for you guys next year in terms of growth?

I think power, well, in terms of division, yes. But I think in terms of market, power generation and critical infrastructure are going to lift both industrial solutions and gearing in 2026.

Okay. So and that's why I was wondering why gearing was soft. You know, I know you indicated some sort of organic near-term issues, but is the general business environment for the gearing segment positive, I guess, you know, given some of the headlines we are seeing about maybe some economic slowdown, etcetera?

Well, again, with certain markets, we are seeing a lift. We're seeing power generation, with distributed power, primarily with reciprocal turbines, below maybe 50 megawatts. So that's strength for us. We're also seeing some strength in aggregates. And even road maintenance of all things. So we're seeing some general infrastructure lift as well as power generation in gearing. Now gearing reminder, does have a bit of a lead time. So what we're seeing in softness in revenue is because of the lack of orders we had a couple, three quarters ago. These orders that we're receiving now, we will be delivering in 2026.

Okay. Understood. And then just last one for me. You know, are you seeing learn about the margin profile for 2026 with the level of visibility you have right now.

It's pretty stable. We are having some increases because of tariffs. We're able to pass those on. Some of our sourcing has to come from those countries that do primarily for industrial solutions. That are subject to tariffs, but we are able to pass those on with a timing difference to our customers. So I'd expect the margin profile to be about the same in '26 as it is in '25. However, the increase in capacity utilization does help us. Yeah. I think the only thing I'd add there, Amit, is that we did some operational headwinds in '25 here. And I think maybe all else being equal, we could expect a marginal improvement just due to the absence of those headwinds.

Understood. Okay, guys. That's all I have. Thank you so much.

Thank you.

Our next question comes from Sameer Joshi with H.C. Wainwright.

Hey. Hey, Tom. Just following up with some more questions on the costs front. Now that the Manitowoc overhead is out of the way, do you expect to have higher gross margins going forward?

Yeah. I would say it's probably more to do yeah. The answer is yes. And I think it probably has more to do with the, again, with the lack of operational headwinds that we had. The Abilene facility is an owned facility versus Manitowoc being a rented facility. So we do see slightly higher margins out of that facility. And I think capacity utilization is a big factor here. The more we can run across that plant, we should see some good returns on that.

Understood. And then, the PRS, sort of it's showing some weakness, at least in this quarter. Is that because of just timing, or is there a general lack of demand for that?

Well, we like to think it's timing. Talk with our customers about it when we're on roadshows. And demos, and they really like the specifications of that. But what they say is at least right now, the price of oil is restricting their ability to increase capital. Once that turns a bit for them with new budget season, we should expect a resurgence in volume from that product line.

Great. Thanks. Thanks for that color.

Thank you. Our next question comes from Eric Stine with Craig Hallum Capital Group. Please proceed with your question.

Hi, Eric. Hi, Tom. Good morning.

Morning, Eric.

Morning.

So maybe it sounds like, I mean, you're clearly making investments for growth across the business. I just want to specifically look at Industrial Solutions given where the backlog is? I guess, first, could you just talk about you've done it sounds like, quite a few. You've got more upgrades planned, what that might mean from a CapEx perspective, but also how quickly can that come on because your backlog would imply, you know, that you could have a pretty meaningful step up in revenues. Once those investments kind of come to bear.

Yeah. I think to answer your question about CapEx, we've made some investment this year. They've been relatively modest. We don't expect anything that would move the needle from a consolidated perspective. As we look forward, historically, we've been about 2% to 3% of revenue as CapEx. We don't anticipate exceeding that in '26 or Q4 or '26. But what I will tell you is we do intend to expand that plant into another portion of a larger building which we can get into. Increases our floor space by about 35%. Going into 2026. So that, along with the increase we're making in staffing and equipment, we should be able to respond to this demand. But the demand is there and is coming, it is there and is continuing. So we definitely need to make these investments to keep up with it.

Right. And, okay. So second half is should it should be more of the expectation potentially for a step up there. Sure. I mean, maybe a good segue just on you know? I mean, obviously, it's no secret what's going on in energy markets, demand, need for resiliency, etcetera. But, I mean, I would think that this is a tailwind for your business for multiple years. And, so, you know, curious if you agree with that first. But then secondly, I mean, do you have you mentioned what you're doing in Industrial Solutions. But even in gearing, I mean, do you have kind of additional ways to expand capacity as you think about that, not just for 2026, but as you look at '27, '28, and beyond given these trends.

Sure. Well, first of all, the demand for electricity is going to keep on going up, and we all know that. The demand for data centers is projected to go from 22 GW up to 35 GW through 2030 just for data centers alone. So we know that's a demand driver for us. Regarding capacity, I'm sorry. The visibility that we have for the gas turbine market goes beyond 26 into 27 and even into 28. So we do expect that tailwind to be behind us for the next certainly two or three years which is as far as we can see out right now. Gas turbines sold are about 30% up year over year, 2025 versus 2024. And '24 was a strong year. So you know, the basics are there for the growth. Regarding the capacity, we're really only still about 45% full in gearing facility. So we have plenty of capacity to fill there as this business grows. But what we're doing is specifically adding technology to bring more in-house. That was the balancing equipment I mentioned. Because the more we can bring in-house, the more control we hope we have of quality, over timing, and over price. So those are where are to see our investments made going forward.

Yep. Okay. That is helpful. And then just on heavy fab and specifically wind, you know, I would assume we should expect this to be the new norm now that you have satisfied that long-term contract. I mean, not that you would turn down an order of that magnitude should it happen. I mean, this is going to be a maybe not quarter to quarter, but this is going to be a you know, you get a large order. It's probably gonna mean that you're at elevated levels for you know, the next few quarters. And you know? But no one should expect necessarily that heavy fab backlog, you know, is meaningfully higher. Until wind really picks up. I mean, is that a fair or correct answer?

Correct. Our customers like to issue us ratable POs because it also helps them because they don't necessarily know the turbine they're going to sell. That far out. They know that we know they want our capacity. We've got good visibility through '26 and really good customer indications beyond that. But when it comes to which turbine they sell and which tower goes under it, they really can't look out that far. So yes. What we saw this quarter, should expect to see going forward.

Okay. Thank you. Thanks, Eric.

Very good. Thank you.

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

Yes. Thanks, everyone, for listening. We look forward to coming back to you again early next year to talk about our full year 2025 and how 2026 looks.

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