Q3 2025 Earnings Call: Contradictions Emerge on Gearing Demand, Capacity Expansion, and Wind Segment Outlook

Date of Call: November 13, 2025

Financials Results

• Revenue: $44.2M in Q3, up 25% YOY and up ~13% sequentially

Guidance:

• Full-year 2025 revenue raised to $155M–$160M (from $145M–$155M)
• Adjusted EBITDA maintained at $9M–$10M (excludes $8.2M gain on Manitowoc sale)
• CapEx expected ~2%–3% of revenue; not expected to exceed that in 2026
• Industrial Solutions to expand floor space ~35% in 2H 2026 to serve backlog
• Expect working capital to decline in Q4; more detail on full-year 2026 outlook on Q4 call

Business Commentary:

* Order Growth and Strategic Shifts: - Broadwind reported orders of nearly $44 million in Q3 2025, representing a 90% increase year-over-year and 108% sequentially. - This growth was driven by strong demand across power generation and renewables markets, strategic actions to consolidate its manufacturing footprint, and the sale of its industrial fabrication operations in Wisconsin.

• Power Generation and Renewables Market Performance:
• Orders from power generation customers more than doubled, now representing nearly 20% of revenue.

• The increase is primarily attributed to strong demand for natural gas turbine product offerings, supporting Broadwind's strategic focus on high-value end markets.

• Gearing Segment Recovery:

• Q3 gearing orders increased by $11.5 million year-over-year to $16 million, nearly 3x the average quarterly total over the past 2 years.

• This rebound is due to increased strength in power generation and some resurgence in the wind and oil and gas aftermarket.

• Capacity Utilization and Strategic Investments:

• Broadwind aims to improve capacity utilization by consolidating its Abilene facility and expanding resources to meet growing demand.
• Strategic investments in robotics, coatings, and machining are aimed at enhancing capabilities and better serving customers in high-growth markets.
  
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted 90% YoY order growth and highest quarterly orders since 2022, an $8.2M net gain from the Manitowoc sale, a $3M share repurchase program, and raised 2025 revenue guidance to $155M–$160M while maintaining adjusted EBITDA guidance.

  Market Analysis:

  Outlook: Optimistic

  • Broadwind is capitalizing on high-margin power generation and renewables markets, with a strong backlog supporting future revenue growth.
  • With strategic manufacturing consolidation and increased capacity utilization, the company is positioned to meet demand in its core markets and scale profitably.

Q&A:

• Question from Amit Dayal (H.C. Wainwright & Co, LLC, Research Division): Looking into 2026 a little bit, it looks like you're having pretty good traction on the Industrial Solutions side with the power infrastructure ramp that is underway. Is that going to be the key driver for you guys next year in terms of growth?
  Response: Yes — power generation and critical infrastructure will be the primary growth drivers lifting Industrial Solutions and Gearing in 2026.

• Question from Amit Dayal (H.C. Wainwright & Co, LLC, Research Division): Okay. So that's why I was wondering why Gearing was soft. I know you indicated some sort of organic near-term issues. But is the general business environment for the Gearing segment positive, I guess, given some of the headlines we're seeing about maybe an economic slowdown, et cetera?
  Response: Softness in current revenue reflects order timing and lead times; recent order inflows will be delivered in 2026, and end markets like distributed power and infrastructure are showing strength.

• Question from Amit Dayal (H.C. Wainwright & Co, LLC, Research Division): Are you seeing any sort of cost increases? Are you fairly confident about sort of the margin profile for 2026 with the level of visibility you have right now?
  Response: Margins are expected to be roughly flat in 2026; tariffs have increased some costs but are largely pass-through and improved capacity utilization should help margins.

• Question from Sameer Joshi (H.C. Wainwright & Co, LLC, Research Division): Now that the Manitowoc overhead is out of the way, do you expect to have higher gross margins going forward?
  Response: Yes — removing Manitowoc overhead, operating more from the owned Abilene facility and higher capacity utilization should support improved margins.

• Question from Sameer Joshi (H.C. Wainwright & Co, LLC, Research Division): The PRS sort of -- it's showing some weakness, at least in this quarter, is that because of this timing? Or is there a general lack of demand for that?
  Response: Management views PRS weakness as timing-related and constrained by low oil prices limiting customer capex; volumes should rebound when customer budgets recover.

• Question from Eric Stine (Craig-Hallum Capital Group LLC, Research Division): Could you just talk about CapEx for Industrial Solutions and how quickly that can come on because your backlog would imply a meaningful step-up in revenues once those investments come to bear?
  Response: CapEx has been modest historically (~2%–3% of revenue) and is not expected to exceed that in 2026; the company will expand plant space (≈35% more floor area) and add staffing/equipment to raise output in H2 2026.

• Question from Eric Stine (Craig-Hallum Capital Group LLC, Research Division): Do you see the demand tailwind lasting multiple years and do you have ways to expand capacity in Gearing for 2027/2028?
  Response: Yes — management expects a multi-year tailwind (2–3+ years) from gas turbines and data centers; Gearing is ~45% utilized with ample capacity and targeted investments (e.g., balancing equipment) to bring more processes in-house.

• Question from Eric Stine (Craig-Hallum Capital Group LLC, Research Division): On Heavy Fabrication and wind, should we expect current activity to be the new norm now that you satisfied the long-term contract?
  Response: Yes — customers tend to issue ratable POs; the company has good visibility through H1 2026 and expects similar steady tower and repowering activity going forward.

Contradiction Point 1

Gearing Segment Demand and Growth

It highlights differing perspectives on the demand and growth outlook for the Gearing segment, which could impact investor expectations and strategic planning.

Is the Gearing segment's business environment positive amid economic slowdown headlines? - Amit Dayal(H.C. Wainwright & Co, LLC)

2025Q3: We're seeing power generation with distributed power, primarily with reciprocal turbines below maybe 50 megawatts. So that's a 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. - Eric Blashford(CEO)

What is your visibility into demand for gearing with the recent oil price drop? - Justin Clare(ROTH Capital Partners)

2025Q1: Oil and gas gearing demand is soft but there's some lift, particularly in the power generation sector. - Eric Blashford(CEO)

Contradiction Point 2

Capacity and Expansion Plans

It involves differing statements about the company's capacity and expansion plans, which are critical for production and revenue growth.

Are there additional ways to expand capacity considering energy market trends? - Eric Stine(Craig-Hallum Capital Group)

2025Q3: We do intend to expand that plant into another portion of the larger building, which we can get into. It increases our floor space by about 35% going into the second half of 2026. So that, along with the increases we're making in staffing and equipment, we should be able to respond to this demand. - Eric Blashford(CEO)

Has your visibility on demand trends improved, particularly regarding order timing and delivery timelines? And can you discuss your current capacity to meet demand and whether expansion is needed? - Justin Lars Clare(ROTH Capital Partners, LLC, Research Division)

2025Q2: We have good visibility for the next 18 months with our largest customer, GE, who has visibility through 2028. We have capacity to fulfill increased demand. This includes options for expansion into an adjacent facility and enhancing capabilities through robotic welding, paint capacity, and testing equipment. We have room in our current facility to receive increased volume. - Eric Blashford(CEO)

Contradiction Point 3

Wind Segment Demand and Order Activity

It involves differing statements on the demand and order activity within the wind segment, which could impact investor expectations and business strategy.

Is the PRS weakness due to timing or a general lack of demand? - Sameer Joshi(H.C. Wainwright & Co, LLC)

2025Q3: Well, we like to think it's timing. We talk with our customers about it when we're on road shows 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. - Eric Blashford(CEO)

Can you confirm continued wind demand weakness through 2025 and provide visibility on GE contract work progress? - Eric Stine(Craig-Hallum)

2024Q4: Regarding wind, we expect demand to be muted, with 2026 remaining similar to 2025... regarding orders, we believe they will be ratable throughout the year. - Eric Blashford(CEO)