Broadwind Energy expects lower 4Q revenues
CICERO - Broadwind Energy announced its revenue and loss per share for the quarter and year ending Dec. 31, 2015 are expected to be below the company's previous estimates due to substantial production issues and one-time costs associated with an unprofitable contract in the Company's Abilene tower facility.
Based on preliminary financial results, the company now expects consolidated fourth-quarter revenue to be approximately $38 million and the consolidated fourth-quarter operating loss to be approximately $11 million, versus guidance of a $4-5 million operating loss. The company said the new estimates are primarily due to a $5 million loss in the Towers and Heavy Weldments segment mainly due to low production in the company's Abilene tower facility, where labor overruns, inventory charges and other manufacturing inefficiencies were incurred, associated with a challenging order taken in 2014.
"We can see with hindsight that this contract was a poor fit for the site layout and organizational maturity of our Abilene plant. As a result, our fourth-quarter production rate was just one-quarter of our design capacity," said Broadwind interim CEO Stephanie Kushner. "This drove significant labor inefficiencies and very low overhead absorption. In early January, we made the decision to curtail this production run in Abilene and produce the remaining towers from this order in our Manitowoc facility.
"We have analyzed past performance in the Abilene plant, implemented upgraded methods and have now begun a new production run for a known product line with a long-term customer. Today the plant is again producing at or near the plant design rate," Kushner added.
Kushner said that despite the challenges, the company ended 2015 with a cash balance that exceeded $12 million as expected, paid down a portion of our long-term debt, and our credit line remains undrawn.
"We remain focused on delivering improved performance, reducing costs, expanding throughput and enhancing efficiency," she said.