OTC Listings Review of Broadwind Energy, Inc. BWEN
For those of you that follow our twitter account www.twitter.com/otclistings you may have caught our early morning discussion prior to market open supporting the vision of the WIND ENERGY market, and trying to perform like BWEN, Broadwind Energy, Inc. I believe a good company to watch will be the Naperville, Illinois-based Broadwind Energy, Inc. (Nasdaq: BWEN), although much of the profit taking has been done by their initial capital firms, the company appears to continue to grow despite the economy, and the market has held strong regardless of market pressure. I have been watching the various private placements, sale of shares, hiring of investment and venture capital firms in this stock which was under performing the last few months and appears to have bounced back.
As a NASDAQ company, and a wind energy company, the North American market would recognize this company as a Barack Stock, or one that the new administration would benefit. However, outside of the positive roll of the new administration in Government, strategic positioning of a new President, Lars Moller, for Technology and International, the company is set to expand on his more than 20 years of experience in the wind energy industry. Moller currently serves on the board of directors of both the American Wind Energy Association (AWEA) and the Canadian Wind Energy Association (CanWEA). The reality is that the ability to sit on Association Boards gives great exposure of which Broadwind will be able to capitalize on both locally and abroad. The company is in a league of its own with the group of professionals they have added to their board and the existing team. (http://broadwindenergy.com/press/leadership_strucuture_june_23_09.pdf)
Bullet points to consider:
– They added a Director of the Canadian and American Wind Association and they are going to be networking and gearing up for the Trade Shows CanWEA 2009: 25th Annual Conference & Exhibition on September 20 – 23, 2009 in Metro Toronto Convention Centre Canada and the Windpower 2010 Conference & Exhibition May 23 – 26, 2010 In Dallas Texas USA. Of which they will likely be an Allstar service provider based on their track record thus far. – First Quarter 2009 is highlighted with a 51% revenue growth
– The company is listed now on the NASDAQ
– Broadwind employs more than 1,000 employees and has over 1 million square feet of production and service center capacity nationwide. – The positioning of their products in the industry is clearly in a high need market of wind tower and precision gear manufacturing; heavy steel fabrication; wind facility construction support; wind turbine installation and maintenance; and wind turbine transportation services.
– Broadwind’s customers include many of the leading wind turbine manufacturers and wind farm owners in North America and are expanding the market internationally where growth is speculatively larger than their current market. Despite the significant growth of wind energy capacity in the United States, wind energy comprised only 0.8% of total United States electricity production in 2007. This represents a small portion compared to the current percentage of electricity produced by wind energy in Denmark, Spain and Germany, of approximately 21%, 11% and 7.5%, respectively. International acceptance is a good indication of where the management focus will continue to grow past their current positioning in the North American market where they are set to capitalize on market maturity.
The 5 segements of their market is broken into 2 categories of Products and Services, as of the S-1 filed on May 27th 2009 the following are key things to consider:
The Products Segment has undergone a significant expansion in the last two years and reflects the operations of Brad Foote Gear Works, Inc. (“Brad Foote”), Tower Tech Systems Inc. (“Tower Tech”), and R.B.A., Inc. (“RBA”). As of March 31, 2009, the segment had approximately 725 employees, and operated in Wisconsin, Texas, Illinois, and Pennsylvania. Taking into account the acquisition of RBA on October 1, 2007 and Brad Foote on October 19, 2007, the Products segment had revenues of $29,804,000 and $177,114,000, in 2007 and 2008, respectively.
The Services Segment was established upon acquisition of Energy Maintenance Service, LLC (“EMS”) in January 2008 and expanded with the acquisition of Badger Transport, Inc. (“Badger”) in June 2008. This segment specializes in construction, operations and maintenance and component repair services for the wind industry as well as specialized heavy haul trucking services to installation sites. Services provided include construction and technical support in the erection of wind turbine generators, scheduled and un-scheduled maintenance, fiberglass blade repair, retrofit solutions, technical training, and the transportation of oversize/overweight equipment and machinery. As of March 31, 2009, the segment had approximately 290 employees. Currently, the Services segment has service hub locations in South Dakota, Texas and Wisconsin and satellite field service centers in California, Colorado, Pennsylvania and Illinois. Taking into account the acquisition of EMS on January 16, 2008 and Badger on June 4, 2008, the Services segment had revenues of $41,502,000 in fiscal year 2008. The Backlog numbers are interesting for the cashflow of this annum as well, and the strength and ability of the company to perform regardless of the credit crisis. It could be a strength, and a weakness depending on the strength of their clients to perform, but the contracts in backlog are as follows: “Many of our products are sold under long-term supply agreements. These long-term agreements have various terms, but generally range from several months to three years with some contracts carrying automatic renewal provisions. As of April 30, 2009, the dollar amount of our backlog believed to be firm was approximately $264.7 million, of which $148.3 million is expected to be shipped during the remainder of 2009.”
With over 1,000 employees, roughly only 30% are covered by two collective bargaining agreements with Unions, which means under half of their workforce is non-union. This is hopefully a viable relationship to continue, the numbers seem to be economical in the state of the company, but at the same time, the strength of the Union does effect the company more like a utility business, whereby, the company appears to be predominantly a service business. Since the revenues do not appear to come as residual high yield electricity projects but rather products and services, the Unionization of the company could add to overhead and profit margin over the long-haul. Unlike the car industry, everyone doesn’t have a wind turbine in their driveway. I believe however, the positive would be the continued growth in international markets and development of manufacturing and installation with offshore employees as they grow this could also benefit their local market by importing the contract to contract cheaper labor. However, for the time being, a company like this is exactly what American’s need for job creation. I am just peeping around the corner a few years with my discussion of outsourcing growth globally.
All in all, as I peep around the corner at affiliate selling of shares, new investor relations firms, issuances to Directors and Employees, the structure has been set to monetize the efforts of the current team and therefore, although some profit taking has been clear in the last few months, the stability and growth in the First Quarter brings me to believe the company is set for further acquisitions, further growth, and further financing with a hard working executive team that intends on globally becoming a preferred source for their services and products. Read the S-1 and subsequent filings related to the issuance of shares, and get a good feeling for this companies potential. I believe the management is motivated, and this is a good sign, especially when the company is on the NASDAQ.