Q3 2024 Broadwind Inc Earnings Call
Presentation.
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Speaker Change: I'd now like to turn the conference over to your host Tom Giacomini. Thank you you may begin.
Tom Giacomini: Good morning, and welcome to the broad one third quarter 2024 results conference call.
Leading the call today is our CEO, Eric Flashboard and I'm, Tom Kony, the company's Vice President and Chief Financial Officer.
Tom Giacomini: We issued a press release before the market opened today detailing our third quarter results.
Tom Giacomini: 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.
Tom Giacomini: 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.
Tom Giacomini: Please refer to the risk factors section of our latest annual and quarterly filings with the SEC.
Tom Giacomini: 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.
Speaker Change: 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: Thanks, Tom and welcome to those joining us today.
Eric: Robin delivered a solid Q3.
Eric: Highlighted by near double digit EBITDA margin.
Eric: Our seventh consecutive profitable quarter, despite reduced revenue.
Eric: Offsetting a transitional pause in new wind tower demand third quarter results benefited from a higher value sales mix improved execution in targeted cost reduction actions.
Eric: We booked $23 million in orders in the third quarter, a 45% increase from the year ago period.
Eric: By increased demand across all reporting segments.
Eric: Heavy fabrications saw increased demand for the adapters used to Repower wind turbines.
Eric: And for our pressure reduction systems, partially offset by decreased orders in the industrial and mining sectors.
Eric: Gearing orders increased 46% year over year due to increased demand from the power generation and infrastructure markets.
Eric: Orders from our industrial solutions segment increased 52% year over year due to strength in the global gas turbine market.
Eric: At a commercial level, we continue to expand our product mix within higher margin adjacent markets.
Eric: Quoting activity is elevated at all segments, but most notably in our heavy fabrications and industrial solutions businesses. We're quoting is up more than triple year over year.
Eric: Reflecting improved demand.
And the impact of our commercial efforts across our non wind markets, such as material handling mining and power generation.
Eric: Operationally, we continued to invest in innovative technology to improve our process capabilities reduce costs and improve our profitability.
Our tower facility in Abilene and sold a new portable milling system to machine flanges. This new flange mill is used to machine the surface between the top <unk> of a tower and the sale of a wind turbine.
Eric: The new mill holds tighter tolerances improved surface finish and reduced the setup time for a total reduction time.
Eric: Of approximately 25%.
Eric: With that key process.
Gearing continues to invest in technology that supports improved efficiency and speed to market.
Eric: Most recently the organization has deployed portable laser scanning in product measurement equipment to develop a three D models used by our commercial team.
Eric: <unk> gearbox designs retrofits.
Eric: Retrofits.
While repairs, reducing our quote turnaround time by 75%.
Literally from weeks to days.
Eric: Beginning in the first quarter of this year, we undertook significant actions to align our cost structure with the current demand environment.
Eric: In combination these actions will contribute more than $4 million.
Eric: An annualized cost savings, which is evident in our results.
Eric: As demand conditions begin to improve we believe these actions position broadband to realize improved operating leverage entering 2025.
Eric: Q3 revenue declined versus year ago levels, primarily due to lower tower demand.
Eric: Our non wind activity levels remained relatively stable as we see demand for our precision manufacturing.
Eric: <unk> capabilities across multiple markets.
Eric: In Q3, we generated EBITDA of $3 $4 million and net income.
Some of <unk> $1 million.
Eric: Within our heavy fabrication segment Q3 revenue was $21 million down 46% from a year ago, primarily due to the decline in tower production in Prs shipments, partially offset by increased sales of mining equipment.
Gearing revenue was $9 2 million or $19 six reduction year over year due to broad based softness in the oil and gas market offset by an uptick in sales into the mining and industrial categories.
Eric: Industrial solutions revenue was 5 million $5 $7 million.
Eric: Down 22, 8% year over year, primarily due to the absence of a large international project shipped last year, which did not repeat.
Eric: In summary.
The operating performance of all divisions continues to be strong as we quickly respond to demand fluctuations in the business.
Tom Giacomini: With that I'll turn the call over to Tom for a discussion of our third quarter financial performance.
Thank you Eric.
Tom Giacomini: Turning to slide five for an overview of our third quarter performance.
Tom Giacomini: In Q3, we delivered our seventh consecutive quarter of profitability.
Tom Giacomini: While revenue continues to be adversely impacted by the ongoing pause within the onshore wind industry.
As well as an extended slowdown within the oil and gas sector, we were still able to maintain an adjusted EBITDA margin approaching 10%.
Tom Giacomini: Testament to our higher value sales mix solid execution and targeted cost reductions.
Tom Giacomini: In Q3, we generated $3 4 million of EBITDA compared to $7 6 million in the prior year period, due mainly to a 54% year over year decline in wind tower sections sold.
Tom Giacomini: This reduced level of tower sales versus the prior year is consistent with our previous commentary regarding the slowdown of Abilene production late in 2023.
Tom Giacomini: Turning to slide six for a discussion of our heavy fabrication segment.
Tom Giacomini: Third quarter orders of $11 1 million are up both sequentially and versus the prior year period, as we recognize orders related to wind repowering projects during Q3.
We are currently building Repowering adapters for two different wind Oems at our Manitowoc, Wisconsin facility work that will continue into 2025.
Tom Giacomini: Third quarter revenues were $20 6 million down almost $18 million versus the prior year quarter.
Tom Giacomini: During the third quarter, we recognized segment EBITDA of $3 4 million a decrease of $3 5 million versus the prior year period, primarily driven by the decreased revenue levels, partially offset by targeted cost actions taken towards the end of 2023 into 2024.
In Q3, we generated EBITDA of $3 $4 million and net income of <unk> $1 million.
Within our heavy fabrications segment Q3 revenue was $21 million down 46% from a year ago, primarily due to the decline in tower production in Prs shipments, partially offset by increased sales of mining equipment.
Tom Giacomini: Turning to slide seven gearing orders of $4 $4 million are up $1 4 million versus the prior year.
Speaker Change: Gearing revenue was $9 $2 million of $19 six reduction year over year due to broad based softness in the oil and gas market offset by an uptick in sales into the mining and industrial categories.
Tom Giacomini: Although we experienced an increase versus the prior year orders of this scale are below desired levels, primarily due to continued softness in oil and gas activity.
Speaker Change: Industrial solutions revenue was five point million $5 $7 million.
Tom Giacomini: As we have mentioned in the past we have recently made a significant investment in machine technology and expanded our commercial efforts and we expect to see a corresponding increase in orders in the near term.
Speaker Change: 22, 8% year over year, primarily due to the absence of a large international project shipped last year, which did not repeat.
Tom Giacomini: Segment revenue was $9 2 million down $2 $2 million versus the prior year quarter.
In summary.
Speaker Change: The operating performance of all divisions continues to be strong as we quickly respond to demand fluctuations in the business.
Tom Giacomini: Q3 segment EBITDA was <unk> 6 million a decrease from <unk> 9 million recognized in the prior year quarter.
Tom: With that I'll turn the call over to Tom for a discussion of our third quarter financial performance.
Tom Giacomini: These decreases are reflective of the lower order intake levels, we've been experiencing over the past four to five quarters.
Tom: Thank you Eric.
Tom: Turning to slide five for an overview of our third quarter performance.
Tom Giacomini: Turning to slide eight industrial solutions recorded orders totaling $7 4 million in the third quarter.
Tom: In Q3, we delivered our seventh consecutive quarter of profitability.
Tom Giacomini: This represents an increase both sequentially and versus the prior year and a near record booking level for this segment.
Tom: While revenue continues to be adversely impacted by the ongoing pause within the onshore wind industry as well as an extended slowdown within the oil and gas sector. We were still able to maintain an adjusted EBITDA margin approaching 10%.
Tom Giacomini: This segment has been experiencing strong commercial interests due to demand strength for natural gas turbine content, most specifically for new gas turbines and we expect order strength to continue into Q4.
Tom: Testament to our higher value sales mix solid execution and targeted cost reductions.
Q3 segment revenue was $5 7 million a decrease versus the $7 4 million recorded in the prior year period the.
Tom: In Q3, we generated $3 4 million of EBITDA compared to $7 6 million in the prior year period.
Tom Giacomini: Prior year revenue total included a large international shipment, which did not repeat in the current year.
Tom: Due mainly to a 54% year over year decline in wind tower sections sold.
Tom Giacomini: Q3 segment EBITDA was <unk> 6 million a decrease of <unk> three versus the prior year period reflective of the decrease in segment revenue.
Tom: This reduced level of tower sales versus the prior year is consistent with our previous commentary regarding the slowdown of Abilene production late in 2023.
Tom Giacomini: Turning to slide nine.
Tom: Turning to slide six for a discussion of our heavy fabrication segment.
We ended the third quarter with total cash and availability on our credit facility of $19 million, a sequential improvement versus the second quarter.
Tom: Third quarter orders of $11 1 million are up both sequentially and versus the prior year period, as we recognize orders related to wind repowering projects during Q3.
Tom Giacomini: As discussed last quarter after a significant decrease during the first half.
Tom: We are currently building Repowering adapters for two different wind Oems at our Manitowoc, Wisconsin facility work that will continue into 2025.
Tom Giacomini: Our deposit balance returned to a more typical operating level at the end of Q2.
During Q3, we experienced a moderate decrease in our operating working capital balance for the first time this year and we had positive cash flow of $4 8 million.
Tom: Third quarter revenues were $20 6 million down almost $18 million versus the prior year quarter.
Tom Giacomini: During the fourth quarter, we are anticipating inventory levels to increase as we expect to be holding larger amount of finished goods in accordance with our customers' shipping needs.
Tom: During the third quarter, we recognized segment EBITDA of $3 4 million a decrease of $3 5 million versus the prior year period, primarily driven by the decreased revenue levels, partially offset by targeted cost actions taken towards the end of 2023 into 2024.
Tom Giacomini: As such we anticipate a meaningful Q4 increase in operating working capital and a temporary increase in borrowings.
Tom Giacomini: Finally, with respect to our financial guidance today, we are introducing financial guidance for the fourth quarter of 2024.
Tom: Turning to slide seven gearing orders of $4 4 million or up $1 4 million versus the prior year.
Tom Giacomini: Given our current expectations and beliefs, we anticipate fourth quarter revenue to be in the range of 31% to $33 million and adjusted EBITDA to be in the range of one to $1 5 million.
Tom: Although we experienced an increase versus the prior year orders of this scale are below desired levels, primarily due to continued softness in oil and gas activity.
Tom Giacomini: That concludes my remarks, I will turn the call back over to Eric to continue our discussion.
Tom: As we have mentioned in the past we have recently made a significant investment in machine technology and expanded our commercial efforts and we expect to see a corresponding increase in orders in the near term.
Eric: Thanks, Tom.
Eric: Now allow me to provide some thoughts as we enter Q4.
Eric: Beginning with our heavy fabrication segment.
Tom: Segment revenue was $9 2 million down $2 $2 million versus the prior year quarter.
Eric: We believe domestic onshore wind activity is poised to accelerate in the 2025 2026 timeframe.
Tom: Q3 segment EBITDA was <unk> 6 million a decrease from <unk> 9 million recognized in the prior year quarter.
Eric: Given current indications of interest from customers.
Eric: We are encouraged by the momentum in the wind Repowering market as we support multiple customers as they update and Repower legacy turbines.
Tom: These decreases are reflective of the lower order intake levels, we've been experiencing over the past four to five quarters.
Eric: To increase their power generating capacity, while extending their useful lives.
Tom: Turning to slide eight industrial solutions recorded orders totaling $7 4 million in the third quarter.
Eric: At a sustained higher interest rate environment.
Eric: Has impacted project economics for some developers leading them to take a.
Tom: This represents an increase both sequentially and versus the prior year and a near record booking level for the segment.
Eric: Hey, or defer the timing of their investments.
Eric: However, recent reductions in interest rates and declining steel prices will benefit wind project economics over time.
Tom: The segment has been experiencing strong commercial interests due to demand strength for natural gas turbine content, most specifically for new gas turbines and we expect order strength to continue into Q4.
Eric: We remain confident on the long term economics of wind.
Eric: Given the improving capacity factors of turbines.
Tom: Q3 segment revenue was $5 7 million a decrease versus the $7 4 million recorded in the prior year period the.
Eric: And a competitive cost of wind power, particularly with a 10 year tax credit visibility afforded by the IRS.
Tom: The prior year revenue total included a large international shipment, which did not repeat in the current year.
We're excited about the launch of our newest model and the family of natural gas pressure reducing systems or.
Tom: Q3 segment EBITDA was <unk> 6 million a decrease of <unk> three versus the prior year period reflective of the decrease in segment revenue.
Eric: <unk>.
Eric: The broadband clean fuels El 70, low flow Prs unit is the third model and this product family.
Tom: Turning to slide nine.
Eric: It's now in field testing and we're seeing strong customer interest in this model given its performance specifications compact footprint and attractive price point, making.
Tom: We ended the third quarter with total cash and availability on our credit facility of $19 million, a sequential improvement versus the second quarter.
Eric: Making it the ideal solution for industrial applications.
Tom: As discussed last quarter after a significant decrease during the first half.
Eric: Such as primary or backup power supply systems and pipeline integrity projects.
Tom: Our deposit balance returned to a more typical operating level at the end of Q2.
Eric: Our gearing segment efforts to broaden our sales mix into less cyclical markets continue.
Tom: During Q3, we experienced a moderate decrease in our operating working capital balance for the first time this year and we had positive cash flow of $4 $8 million.
Eric: Positioning us to realize a more balanced stable revenue profile.
Eric: We continue to execute our strategy to move beyond traditional gearing to other precision machine products.
Tom: During the fourth quarter, we are anticipating inventory levels to increase as we expect to be holding larger amount of finished goods in accordance with our customers' shipping needs.
Eric: We're pleased at the increasing level of customer activity, we are seeing as a result of our investments and process capabilities and qualifications.
As such we anticipate a meaningful Q4 increase in operating working capital and a temporary increase in borrowings.
Eric: As customers continue to re sure.
Eric: We are well positioned to provide them with a quick high quality and competitive alternative to their legacy suppliers.
Finally, with respect to our financial guidance today, we are introducing financial guidance for the fourth quarter of 2024.
Furthermore, we continue to advance our growth and diversification strategy in gearing, having recently completed our 9100 quality certification.
Tom: Given our current expectations and beliefs, we anticipate fourth quarter revenue to be in the range of $31 million to $33 million and adjusted EBITDA to be in the range of one to $1 5 million.
Eric: Which will allow us to begin serving the aerospace market with direct customer qualifications currently underway.
Tom: That concludes my remarks, I will turn the call back over to Eric to continue our discussion.
Eric: In our industrial solutions segment.
Eric: Thanks, Tom.
Eric: The momentum that we've experienced in the gas turbine industry in the first half of 2024 continued into the third quarter.
Eric: Now allow me to provide some thoughts as we enter Q4.
Eric: Beginning with our heavy fabrication segment.
Eric: We believe domestic onshore wind activity is poised to accelerate in the 2025 2026 timeframe.
Eric: As our key customers are seeing strong demand for gas turbine equipment and services.
Eric: And our reporting strong backlogs.
Eric: Given current indications of interest from customers.
Eric: Accordingly, quoting activity remains high tripling in volume from the prior year.
Eric: We are encouraged by the momentum in the wind Repowering market as we support multiple customers as they update and Repower legacy turbines.
Speaker Change: As a reminder.
Speaker Change: Our industrial solutions business provide supply chain solutions custom fabrications and control panel manufacturing.
Eric: To increase their power generating capacity, while extending their useful lives.
Eric: As sustained higher interest rate environment.
Speaker Change: For the growing combined cycle natural gas turbine market.
Eric: Has impacted project economics for some developers leading them to take or.
Speaker Change: Driven by demand growth attributable at least in part to data centers and other sources of increasing load for electricity worldwide.
Eric: Hey, or defer the timing of their investments.
Eric: However, recent reductions in interest rates and declining steel prices will benefit wind project economics over time.
Speaker Change: As a result in this business we're on pace for another record order year.
Surpassing the previous record set last year.
Eric: We remain confident on the long term economics of wind.
Speaker Change: In summary, I am pleased with the strong operational performance from our team this quarter.
Given the improving capacity factors of turbines.
Speaker Change: As we continue to demonstrate strong execution on our strategic priorities.
Eric: And a competitive cost of wind power, particularly with a 10 year tax credit visibility afforded by the IRS.
Speaker Change: We've reduced our cost structure during a transitional period for domestic onshore wind demand.
Eric: We're excited about the launch of our newest model and the family of natural gas pressure reducing systems.
Speaker Change: Retaining our key talent and continuing to work on vital activities like process improvement and product expansion.
Eric: Our prs.
The <unk> clean fuels L 70, low flow Prs unit is the third model and this product family.
Speaker Change: Our focus on team member safety has yielded a 51% reduction in our recordable incident rates, so far in 2024, well below the industry average.
Eric: It's now in field testing and we're seeing strong customer interest in this model given its performance specifications compact footprint and attractive price point, making.
Speaker Change: And we have had zero lost time incidents this year.
We're committed to keeping our people safe and productive.
Eric: Making it the ideal solution for industrial applications.
Speaker Change: We continue to build a firm foundation for steady profitable growth.
Eric: Such as primary or backup power supply systems and pipeline integrity projects.
Speaker Change: 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.
Eric: Our gearing segment efforts to broaden our sales mix into less cyclical markets continue.
Eric: Positioning us to realize a more balanced stable revenue profile.
Speaker Change: With that said I'll.
I'll turn the call back over to the moderator for the Q&A session.
We continue to execute our strategy to move beyond traditional gearing to other precision machine products.
Speaker Change: 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.
Eric: We're pleased at the increasing level of customer activity were seeing as a result of our investments and process capabilities and qualifications.
Speaker Change: A confirmation 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.
Eric: As customers continue to re sure.
Eric: We are well positioned to provide them with a quick high quality and competitive alternative to their legacy suppliers.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Furthermore, we continue to advance our growth and diversification strategy in gearing, having recently completed our <unk> 9100 quality certification.
Speaker Change: Our first question comes from Eric Stine with Craig Hallum. Please proceed with your question.
Eric: Which will allow us to begin serving the aerospace market with direct customer qualifications currently underway.
Speaker Change: Hi, Eric Hi, Tom.
Speaker Change: Hi, Eric Good morning, Hey, good morning.
Eric: In our industrial solutions segment.
Speaker Change: So maybe starting with wind I can appreciate.
Yeah.
Eric: The momentum that we've experienced in the gas turbine industry in the first half of 2024 continued into the third quarter.
Speaker Change: Some uncertainty there, but also some cautious optimism just.
Speaker Change: When you think about your view of that business today versus say a quarter ago or a couple of months ago curious if it's.
Eric: As our key customers are seeing strong demand for gas turbine equipment and services.
In our reporting strong backlogs.
Speaker Change: If it's improved if it's tempered a bit and.
Eric: Accordingly, quoting activity remains high tripling in volume from the prior year as.
Speaker Change: What does the election outcome have or how does it factor into your view for 2025 and beyond.
Eric: As a reminder.
Eric: Our industrial solutions business provide supply chain solutions custom fabrications and control panel manufacturing.
Speaker Change: So I would say my my opinion has has.
Eric: For the growing combined cycle natural gas turbine market.
Speaker Change: Improved a little bit in terms of optimism I think anytime there's an election uncertainty people tend to pause now that the election is complete I think there might be a little bit of.
Eric: Driven by demand growth attributable at least in part to data centers and other sources of increasing load for electricity worldwide.
Speaker Change: Release.
Speaker Change: Thank the election will impact.
Eric: As a result in this business we are on pace for another record order year.
Speaker Change: Impact wind or impact broad one really in any way just keep in mind, our wind business.
Eric: Surpassing the previous record set last year.
Speaker Change: Benefits, both sides of the aisle, where a manufacturer producing wind turbine towers and a bunch of other things. So I really don't think the election will have an impact on <unk> certainly not in the near or medium term.
Eric: In summary, I am pleased with our strong operational performance from our team this quarter.
Eric: As we continued to demonstrate strong execution on our strategic priorities.
Eric: We've reduced our cost structure during a transitional period for domestic onshore wind demand.
Speaker Change: Got it and then maybe just thinking about 25 and in all of the moving parts across your business I.
Eric: While retaining our key talent and continuing to work on vital activities like process improvement and product expansion.
Speaker Change: I mean do you look at 'twenty as kind of that's the year.
Eric: Our focus on team member safety.
Speaker Change: Where do you see follow through in the in the order trends Youre seeing now.
Eric: Has yielded a 51% reduction in our recordable incident rates, so far in 2024, well below the industry average.
Order recovery throughout the year and then it really sets you up for 'twenty six or I mean is this is this something where you think that that what you're seeing now and what you would see early in 'twenty five potentially.
And we have had zero lost time incidents this year.
We're committed to keeping our people safe and productive.
Eric: We continue to 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.
Speaker Change: Potentially bodes very well for 25, just curious whether that when we've got year over year look or however, you want to describe it.
Speaker Change: Yeah. Thanks, Eric we've got really good visibility of our of our wind turbine tower production really through the first three quarters and then some into 2025, we've got some customer activity that I think is accelerating in terms of demand as <unk> and things like that talking about late 'twenty five and into 2020.
Speaker Change: With that said I'll turn the call back over to the moderator for the Q&A session.
Speaker Change: 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.
Speaker Change: A confirmation 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 Q.
Speaker Change: Mix volume. So I continue to believe that 2025 is going to be similar to 2024 in terms of volume with a little bit of uptick.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Speaker Change: We mentioned adapters that tends to be strong for us that's the wind industry and I do think we should start seeing some order activity towards the Q3 Q4 timeframe in 2020.
Speaker Change: Our first question comes from Eric Stine with Craig Hallum. Please proceed with your question.
Speaker Change: 2025 in preparation for 2026 volume I do expect it to ramp up a bit.
Speaker Change: Hi, Eric Hi, Tom.
Speaker Change: Hi, Eric Good morning, Hi, good morning.
Okay. So wind so that's wind commentary I mean, just thinking about the rest of the business is there.
Speaker Change: So maybe starting with wind I can appreciate.
Speaker Change: Sure Yes.
Some uncertainty there, but also some cautious optimism just.
Speaker Change: The other businesses that we have well first of all just a reminder, that we service.
Speaker Change: When you think about your view of that business today versus say a quarter ago or a couple of months ago curious if it's.
Speaker Change: We serve as power generation from from the gearing standpoint from the industrial solutions standpoint from the Prs standpoint, and that's really that's really strong that's why we're seeing such strong order activity in industrial solutions.
Speaker Change: If it's improved if it's tempered a bit and.
Speaker Change: What does the election outcome have or how does it factor into your view for 2025 and beyond.
Speaker Change: And so I think that particular market power generation is at the beginning of.
Speaker Change: Super cycle, if you think about.
Speaker Change: Well I would say my my opinion has has.
Speaker Change: Low generation or lower demand in the U S for electricity with regard to our other markets.
Speaker Change: Improved a little bit in terms of optimism I think anytime there's an election uncertainty people tend to pause now that the election is complete I think there might be a little bit of.
Speaker Change: Material handling industrial machinery mining et cetera, but we were either at a neutral or slightly negative trend in in 2024, but all of those trends are looking to be positive.
Speaker Change: Relief.
Speaker Change: Thank the election will impact.
Speaker Change: Impact wind or impact broadband really in any way just keep in mind, our wind business.
Speaker Change: As we exit 2024 and into 2025 as an example, our material.
Speaker Change: Benefits, both sides of the aisle, where a manufacturer producing wind turbine towers and a bunch of other things. So I really don't think the election will have an impact on Bravo and certainly not in the near or medium term.
Speaker Change: Material handling is expected to have an upward trend all the way through 2027, we sell into that for material handling.
Or a big cranes that we produce industrial machinery is also that the trend of that particular market is actually a steeper positive trend in material handling engine turbine power transmission I mentioned, that's also very strong.
Speaker Change: Got it and then maybe just thinking about 25, and <unk> and all the moving parts across your business.
Speaker Change: I mean do you look at 'twenty as kind of that's the year.
Speaker Change: Mining is also expected to have a bit of an upswing, Eric but not as steep as those other three that I mentioned, so I think we're well positioned.
Speaker Change: Where do you see follow through in the in the order trends Youre seeing now.
Order recovery throughout the year and then it really sets you up for 'twenty six or I mean is this is this something where you think that that what you're seeing now and what you would see early in 'twenty five potentially.
Speaker Change: Wind is going to be what it's going to be as I mentioned that but the other markets were in I think our we're debating beginning of an upward trend in all of those markets.
Speaker Change: And arguably oil and gas I.
Speaker Change: I guess, the general thought it would be the oil and gas set to improve given the administration change.
Speaker Change: Potentially bodes very well for 25, just curious whether that when we've got year over year look or however, you want to describe it.
Speaker Change: Yes, I didn't I didn't mention that but that's the one that continues to be soft, but youre right. Our customers who are talking about them wanting to place orders for four of fracking fracking pumps and things like that they are they've been waiting frankly for them for the outcome of the election, either way, but certainly the way the election turned out I think bodes well for oil and gas.
Speaker Change: Yes, Thanks, Eric we've got really good visibility of our of our wind turbine tower production really through the first three quarters and then some into 2025, we've got some customer activity that I think is accelerating in terms of demand is our accused and things like that talking about late 'twenty five and into 2020.
Speaker Change: Yes.
Speaker Change: Okay. Thanks.
Speaker Change: Mix volume. So I continue to believe that 2025 is going to be similar to 2024 in terms of volume with a little bit of uptick.
Speaker Change: Thanks, Eric.
Speaker Change: Our next question comes from Amit Dayal with H C. Wainwright. Please proceed with your question.
Speaker Change: We mentioned adapters that tends to be strong for us that's the wind industry and I do think we should start seeing some order activity towards the Q3 Q4 timeframe in 2020.
Amit Dayal: Thank you good morning, everyone.
Speaker Change: With respect to power generation, Eric you know outside of wind can you maybe give us some sense of what the products you are offering products and services to do an offering.
Speaker Change: 2025 in preparation for 2026 volume I do expect it to ramp up a bit.
Speaker Change: Yes keep in mind, yes.
Eric Stine: Yes. Thank you so the industrial solutions segment that we that we that we have the one out of North Carolina.
Speaker Change: Okay. So wind so that's wind commentary I mean, just thinking about the rest of the business is there that sure yes.
The vast majority of their output services combined cycle natural natural gas turbines around the world and we provide supply chain solutions light manufacturing panel manufacturing.
Speaker Change: The other businesses, we have well first of all just a reminder, that we service.
We service power generation from from the gearing standpoint from the industrial solutions standpoint from the Prs standpoint, and that's really that's really strong and that's why we're seeing such strong order activity in industrial solutions.
Eric Stine: For natural gas turbine.
Eric Stine: <unk>.
Eric Stine: Deliveries and upgrades and new installations, all around the world and that market is very very strong.
Speaker Change: And so I think that particular market power generation is at the beginning of <unk>.
Eric Stine: In fact, we service multiple customers. So one of our customers has gone public and said that they are sold out for the next five years and are looking to increase their capacity and we are following that trend. So that's so natural gas power generation is big for us and we're doing we're doing while they're obviously wind is power generation.
Speaker Change: Super cycle, if you think about.
Speaker Change: Low generation of lower demand in the U S for electricity with regard to our other markets are material.
Speaker Change: Material handling industrial machinery mining et cetera, but we were either at a neutral or slightly negative.
Eric Stine: And the Prs is that we have also supports power generation.
Speaker Change: <unk> in in 2024, but all of those trends are looking to be positive.
Speaker Change: Thank you for that.
Speaker Change: Yeah natural gas could be a beneficiary under this new administration, so it looks like.
As we exit 2024 and into 2025 as an example material.
Speaker Change: The all the diversification efforts you have put in place.
Speaker Change: Material handling is expected to have an upward trend all the way through 2027, we sell into that for material handling.
Speaker Change: Should.
Speaker Change: This trend started this trend started before that before the election, but youre right I think I think it will only strengthen if you mentioned data centers and AI. The load increase not to mentioned electric vehicles is just it's just going to be fantastic for the United States.
Speaker Change: Big cranes that we produce industrial machinery is also that the trend of that particular market is actually a steeper positive trend in material handling engine turbine power transmission I mentioned, that's also very strong.
Speaker Change: Mining is also expected to have a bit of an upswing, Eric but not as steep as those other three that I mentioned, so I think we're well positioned.
Speaker Change: And globally and so.
We participate in most of those markets.
Speaker Change: Understood that's good to know.
Speaker Change: Wind is going to be what it's going to be as I mentioned that but the other markets were in I think our we're debating beginning of an upward trend in all of those markets.
You've taken a lot of steps to cut costs. It looks like you have there now.
Speaker Change: And arguably oil and gas.
Speaker Change: Probably not much more room to cut.
Speaker Change: Cut costs from here.
Speaker Change: I guess, the general thought would be the oil and gas set to improve given the administration change.
Our revenue growth perspective, you know outside of wind, obviously that is a separate segment for you but for.
Speaker Change: Yes, I didn't I didn't mention that but that's the one that continues to be soft, but youre right. Our customers who are talking about them wanting to place orders for for fracking fracking pumps and things like that they are they've been waiting frankly for the for the outcome of the election, either way, but certainly the way the election turned out I think bodes well for foil.
Speaker Change: Other.
Speaker Change: Segments other products.
Speaker Change: One of the.
Speaker Change: Revenue growth strategy that you may be looking to implement is it just maybe branding or <unk>.
Speaker Change: Building a stronger sales team.
Trying to understand.
Speaker Change: Right, what you're already doing today, and what you may be thinking of doing that can sort of now allow you to create some leverage.
<unk> gas.
Speaker Change: Okay. Thanks.
Speaker Change: Thanks, Eric.
Speaker Change: Our next question comes from Amit Dayal with H C. Wainwright. Please proceed with your question.
Speaker Change: Yes, that's a great that's.
Speaker Change: Yes, that's a great question and it is something we've been we have been working on in addition to the diversification strategy and I look at is three tiers.
Amit Dayal: Thank you good morning, everyone.
Speaker Change: With respect to power generation Eric.
Speaker Change: First we have to improve our process capabilities to allow us to take on those those new markets new products and we haven't done that industrial solutions. We've done it in gearing as I mentioned on previous calls with all but five access equipment. We've invested in so first you have to have the process capabilities available to you to address those markets than you.
Speaker Change: Sorry to wind can you maybe give us some sense of what the products you are offering products and services you are offering yes, well keep in mind.
Speaker Change: Yes. Thank you so the industrial solutions segment that we that we that we have the one out of North Carolina. The vast majority of their output services combined cycle natural gas turbines around the world.
Speaker Change: To have the quality certifications, we've been improving our quality certifications primarily in.
Speaker Change: And we provide supply chain solutions light manufacturing panel manufacturing.
Speaker Change: And gearing, but also in the other divisions in terms of.
Speaker Change: Our CMC the S 9100, which is aerospace and defense. So we now have those qualifications in place. So you have the process capabilities. Then you have the qualifications, which customers are looking for and then of course you have to have the commercial outreach and we've been really improved.
Speaker Change: For natural gas turbine.
Speaker Change: <unk>.
Speaker Change: Deliveries and upgrades and new installations, all around the world and that market is very very strong in fact, we service multiple customers. So one of our customers has gone public and said that they are sold out for the next five years and are looking to increase their capacity and we are following that trend. So that's so natural gas power generation is big for us.
Speaker Change: We've added to it.
Speaker Change: To our commercial team in spite of the fixed overhead and SG&A cost cuts that we've done we've added commercially we've added in top graded our commercial team so and.
And we're doing we're doing while they're obviously wind is power generation.
Speaker Change: And the Prs is that we have also supports power generation.
Speaker Change: And what we're doing is we're adding people to our staff that understand those new markets. So they can they can leverage the process capabilities and the quality certifications.
Speaker Change: Thank you for that.
Speaker Change: Oh, yes, natural gas could be a beneficiary under this new administration, so it looks like.
Speaker Change: And get those markets that's why.
Speaker Change: The all the diversification efforts you have put in place you know I'm.
Speaker Change: Earlier on the call I mentioned that we've had our RF CUSIP tripled.
Speaker Change: Should this.
In both industrial solutions and in and heavy fabrications, but nearly doubled and gearing. So we're starting to see the early fruits of those commercial efforts.
Speaker Change: This trend started this trend started before that before the election, but youre right I think I think it will only strengthen if you mentioned data centers and AI. The load increase not to mentioned electric vehicles is just it's just going to be fantastic for the United States.
Speaker Change: We are confident that those will become bookings as we as we go through Q4 and into Q1 'twenty five.
Speaker Change: And globally and so.
Speaker Change: Yes, and just to add to that I think really what we're trying to focus specifically within our gearing segment, we're really trying to focus on the non gearing to precision manufacturing precision machining business.
Speaker Change: We participate in most of those markets.
Speaker Change: Understood that's good to know.
Speaker Change: You've taken a lot of steps to cut costs. It looks like you up there now.
Speaker Change: This market those capabilities.
Speaker Change: Probably not much more room to go.
Speaker Change: Understood.
Speaker Change: Cut costs from here.
Speaker Change: And Thats a lot of things I would take my questions offline. Thank you.
Speaker Change: From a revenue growth perspective, you know outside of wind obviously that is a separate segment for you.
Speaker Change: Thank you.
Speaker Change: We have reached the end of the question and answer session I'd now like to turn the call back over to Eric Blatchford for closing comments.
Speaker Change: But.
Speaker Change: Other.
Speaker Change: Segments other products.
Speaker Change: One of the.
Speaker Change: Yes, I had a question about the.
Speaker Change: Revenue growth strategy that you may be looking to implement is it just maybe branding or bill.
Speaker Change: A question regarding our Q Q4 guidance I, just want to remind remind the audience that part of that is because we had some of our customers pull volume into 'twenty to Q3, 2024, which is why our Q3 2024 was so strong so when you combined.
Speaker Change: Building a stronger sales team.
Speaker Change: Trying to understand.
Speaker Change: Right, what you're already doing today, and what you may be thinking of doing that can sort of now allow you to create some leverage.
Speaker Change: Q3, and Q4, it actually is really aligned with what the analysts thought we were going to be so we're pleased to have delivered such a strong Q3 and when you add in Q4, two it will it'll add up to a strong second half of the year.
Speaker Change: Yes, that's a great.
Speaker Change: Yes, that's a great question and it is something we've been we have been working on in addition to the diversification strategy and I look at is three tiers.
First we have to improve our process capabilities to allow us to take on those those new markets and there is a new product and we haven't done that industrial solutions. We've done it in gearing as I mentioned on previous calls with all the five access equipment. We've invested in so first you have to have the process capabilities available to you to address those markets than you.
Speaker Change: And again, thank you for your attention on this call. We're excited for what we're doing here at <unk> and look forward to coming to you and talking about our Q4 results early in the year.
Speaker Change: Thank you.
Speaker Change: This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.
To have the quality certifications, we've been improving our quality certifications primarily in.
Speaker Change: And gearing, but also in the other divisions in terms of <unk>.
Speaker Change: Our CMC the S 9100, which is aerospace and defense. So we now have those qualifications in place. So you have the process capabilities. Then you have the qualifications, which customers are looking for and then of course you have to have the commercial outreach and we've been really improved.
We've added to it.
Speaker Change: To our commercial team in spite of the fixed overhead and SG&A cost cuts that we've done we've added commercially we've added in top graded our commercial team so and.
Speaker Change: And what we're doing is we're adding people to our staff that understand those new markets. So they can they can leverage the process capabilities and the quality certifications in and get those markets. That's why.
Earlier on the call I mentioned that we've had our RF CUSIP tripled.
Speaker Change: In both industrial solutions, and and and and heavy fabrications, but nearly doubled and gearing. So we're starting to see the early fruits of those commercial efforts.
Speaker Change: We are confident that those will become bookings as we as we go through Q4 and into Q1 'twenty five.
Speaker Change: Yes, and just to add to that I think really what we're trying to focus specifically within our gearing segment, we're really trying to focus on the non gearing to precision manufacturing precision machining business.
Speaker Change: As market those capabilities.
Understood.
Speaker Change: And Thats a lot of things I would take my questions offline. Thank you.
Speaker Change: 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 Blatchford for closing comments.
Speaker Change: Yes, I've had a question about the question regarding our Q Q4 guidance I just want to remind remind the audience that part of that is because we had some of our customers pull volume into 'twenty to Q3, 2024, which is why our Q3 2024 was so strong so when you combined.
Speaker Change: Q3, and Q4, it actually is really aligned with what the analysts thought we were going to be so we're pleased to have delivered such a such a strong Q3 and when you add in Q4, two it will it'll add up to a strong second half of the year.
And again, thank you for your attention on this call. We're excited for what we're doing here at <unk> and look forward to coming to you and talking about our Q4 results early in the year.
Speaker Change: Thank you.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.