Broadwind Energy, Inc. Aktie

Greetings, and welcome to Broadwind's First Quarter 2026 Results Conference Call.

[Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Tom Ciccone. Thank you. You may begin.

Good morning, and welcome to the Broadwind First Quarter 2026 Results Conference Call. Leading the call today is our CEO, Eric Blashford. And I'm Tom Ciccone, the company's Vice President and Chief Financial Officer. We issued a press release before the market opened today, detailing our first 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.

Thank you, Tom, and welcome to our call today. During the first quarter, we advanced our business transformation strategy while delivering strong revenue growth, margin realization and order momentum in our core Gearing and Industrial Solutions segments. Higher demand in the power generation and critical infrastructure end markets drove revenue growth of more than 40% in Gearing and more than 60% in Industrial Solutions year-over-year.

We anticipate our strategic exit from wind tower production will be complete in the third quarter of 2026. So Gearing and Industrial Solutions will represent our core businesses moving forward. Excluding the divested product lines within the Heavy Fabrications segment, Broadwind generated approximately $64 million of revenue on a trailing 12-month basis through the end of the first quarter. Our remaining businesses are higher growth, more predictable, more profitable and not policy dependent, with meaningfully improved earnings quality. Over time, we will use our core Gearing and Industrial Solutions segments as a platform to grow a business of increasing scale and profitability.

Within the Gearing segment, Q1 orders increased more than 65% to $13.2 million, supporting a backlog of $30.5 million. Demand growth within the Gearing segment has been largely driven by strong customer activity in power generation driven by the AI data center boom as well as industrial and mining markets. Quoting activity remains robust, with green shoots now forming in defense.

Our Industrial Solutions segment had yet another strong quarter as orders increased 44% year-over-year to $14.6 million, driving backlog to a record $43.3 million. Natural gas turbine demand remains very strong, also driven by the AI data center boom as well as global electrification, representing key growth drivers for this segment, and we are happy to meet that demand.

Operationally, we continue to invest in equipment and technology to increase our process capabilities, reduce costs and improve our profitability. In Gearing, this quarter, we commissioned new very high-precision grinding and mechanical balancing equipment to improve quality and reduce lead times in the production of high-speed reduction gearing such as the gearing used on natural gas turbines. These technology improvements make us one of the most vertically integrated manufacturers of these types of critical components in the U.S.

In the Industrial Solutions segment, we continue to make investments to improve our capacity and capabilities in order to meet the strong customer demand that we're experiencing from our key gas turbine equipment customers. We are on track to expand our local footprint in our North Carolina facility in Q2. This expansion will increase production space in North Carolina by 30%, which is necessary to service our strong backlog that position us to handle the future growth projected in this market.

Within our Heavy Fabrications segment, Q1 revenue decreased by 35%, reflecting the sale of the Manitowoc industrial fabrications business last year, lower PRS demand and the residual impact of the OEM directed-buy material supply issue we experienced late last year.

Revenue on our Gearing segment increased 42% year-over-year, to $8.5 million, given the steady ramp-up in power generation related demand. Within Industrial Solutions, revenue grew 64% year-over-year to $9.2 million, primarily due to stronger shipments of natural gas turbine components.

In summary, the team and business continued to perform well as we sharpen our focus within adjacent higher-margin precision manufacturing verticals. Our progress on industry-specific certifications, such as AS9100 for aerospace and defense and the Cybersecurity Maturity Model Certification or CMMC 2.0 for the defense market and others, combined with targeted investments in capacity and capability, is yielding the results we expected and more.

Our decision to strategically pivot from the unpredictable, uncertain and policy-dependent wind tower business and repurpose that capital toward higher-growth, more predictable, more profitable markets positions us well for the future.

With that, I'll turn the call over to Tom for a discussion of our first quarter financial performance.

Thank you, Eric. Turning to Slide 5 for an overview of our first quarter performance.

First quarter consolidated revenues were $34.1 million, representing an 8% decrease versus the prior-year period. As expected, we experienced a decrease in our Heavy Fabrications segment. However, outside of the Heavy Fabrications segment, first quarter revenues within our Gearing and Industrial Solutions segment increased more than 40% and 60%, respectively, reflective of the strong order activity levels we've been recognizing.

Adjusted EBITDA declined slightly to $2.2 million versus the prior year of $2.4 million. However, adjusted EBITDA increased approximately 16% sequentially, driven by improved capacity utilization and a more profitable mix.

First quarter orders remained strong at over $37 million. Orders increased within our Gearing and Industrial Solutions segment, driven by strength in the power generation and natural gas turbine verticals, while orders decreased within our Heavy Fabrications segment reflective of our exit of the Manitowoc facility late in 2025.

Turning to Slide 6 for a discussion of our Heavy Fabrications segment. As expected with the wind-down of the Manitowoc operation, we continue to see decreases in revenue, orders and backlog. We anticipate this to continue going forward, especially in light of our recently announced sale of our Abilene facility, pursuant to which we strategically exited the wind market.

First quarter orders of $9.7 million primarily consists of wind tower production that will continue through Q3 of 2026 out of the Abilene facility, as well as some baseline PRS activity. As a reminder, we will retain the PRS business, and we are evaluating segment reporting following the divestiture. We'll provide additional detail as the process is finalized.

First quarter revenues of $16.4 million and adjusted EBITDA of $1.7 million are both down versus the comparative prior-year period due to the wind-down of our Manitowoc operations, the resolved raw material supply issue and lower PRS demand.

Turning to Slide 7. Q1 Gearing orders remained strong at $13.2 million, an increase of 66% versus the prior year and 36% sequentially. We ended Q1 with over $30 million in backlog, a level we have not reached since 2023. As we noted in prior quarters, we continue to see strong orders from power generation and oil and gas customers, and that momentum continued into Q2 as we booked more than $6 million in orders in April alone.

Segment revenue was $8.5 million, an increase both sequentially and versus the prior year, reflective of the stronger recent order intake level. We recognized adjusted EBITDA of $0.6 million, compared to an adjusted EBITDA loss of $0.2 million in the prior-year period. As our volumes continue to recover, we are improving our capacity utilization, driving improved operating leverage.

Turning to Slide 8. Industrial Solutions booked almost $15 million of new orders during the first quarter, a 44% increase over the prior year. During the first quarter, the segment set a new record for both orders and backlog, and is on track to do so again in Q2 as it has already recorded over $10 million in orders during April alone. The $43 million backlog total is more than $5 million above the previous high watermark set in Q4. Q1 represents the sixth straight quarter setting a record backlog level.

Q1 segment revenue was $9.2 million, up over 60% versus the prior year, reflective of the elevated order levels received recently. As we noted last quarter, we expect this business will operate at these elevated revenue levels over the medium term. First quarter adjusted EBITDA was $1.8 million or 19% of revenue. This represents a significant increase over the $0.5 million in adjusted EBITDA and 8.7% EBITDA margin in the prior year, as the segment benefited from improved capacity utilization and a more favorable mix of products sold.

Turning to Slide 9. We ended the first quarter with total cash and availability on our credit facility of more than $25 million or $16.4 million after adjusting for the minimum excess availability requirement in place effective Q1. Pro forma for the sale of the Abilene facility, our liquidity improves approximately $10 million, reflective of credit availability adjustments and required debt payments.

During Q1, operating working capital increased slightly as a decrease within our Heavy Fabrications segment was more than offset by increases within our Gearing and Industrial Solutions segments, in line with our increasing activity levels.

Finally, with respect to our financial guidance, as noted last week, with the sale of the Abilene facility, we have elected to withdraw our full year 2026 financial guidance.

That concludes my remarks. I will turn the call back over to Eric to continue our discussion.

Thanks, Tom. Now allow me to provide some thoughts as we move into Q2 and beyond.

We continue to make a decisive shift toward increasingly stable, growing power generation and critical infrastructure markets. The strategic moves we've made with our tower facilities position us to focus on higher-growth and higher-margin opportunities that leverage our precision manufacturing expertise, and to do so with a strengthened balance sheet. We will complete our remaining wind tower orders through Q3 and then direct our full attention to our growth strategy.

Our remaining facilities in Chicago, Pittsburgh and Sanford, North Carolina, near Raleigh, have more than 450,000 square feet of manufacturing space ready to serve our customers. Quarter upon quarter of strong order growth within the Gearing and Industrial Solutions segments from power generation, specifically within distributed power, as well as growing opportunities in both small-frame and utility-scale natural gas turbines support our strategy to expand in this market. Quote activity continues to increase in both Gearing and Industrial Solutions, generated by our ability to solve complex precision manufacturing and sourcing challenges faced by our customers in this growing market. So we have prudently added resources to meet this demand in both divisions.

In our Gearing segment, we continue to execute our strategy to move beyond traditional gearing toward new opportunities in other precision machine products for power generation, aerospace and defense. We see the continuing strength in incoming orders from the power generation sector as the beginning of a super cycle for which we are prepared. The expansion of our very high-precision and vertically integrated capabilities to serve the high-speed gear segment I mentioned earlier increases our value-add to key customers.

We're pleased with the increasing level of customer activity we're seeing in various new infrastructure-related opportunities such as material processing and defense. We expect further inroads in defense as we complete our CMMC 2.0 certification later this year, which is a requirement when producing certain defense-related products. Lastly, there is also improving order activity in traditional gearing markets supporting oil and gas, specifically the fracking aftermarket, as certain customers begin putting older rigs back in service.

In Industrial Solutions, our commercial performance continues to set new records in both orders and backlog. The strong demand that we began experiencing in 2025 continues to accelerate in 2026. As the global demand for natural gas power generation equipment grows and as our customers bring additional production capacity online, we believe this is an extended period of growth. Some of our key customers have sold out their production capacity for the remainder of the decade, which gives us confidence that this period of strong demand is still in its early stages.

In summary, I am pleased with the order growth and the strategic actions we've taken over the last year, and I'm excited to execute our plan. Our divisions are well positioned to support the nation's growing need for power generation and infrastructure improvement, which we see as long-term opportunities for us. Our quality, quick response and ability to solve complex manufacturing challenges for our customers continue to help us win new opportunities.

We've refocused our business, are investing wisely and are taking decisive strategic actions towards higher-value, growing end markets. We're encouraged that our order intake continues to grow, positioning us for improved utilization of our reduced manufacturing footprint in 2026, as we strengthen our foundation for steady, profitable growth, serving the power generation, critical infrastructure and other key markets with high-quality precision components and proprietary products to capitalize on improved demand in the years ahead.

With that said, I'll turn the call over to the moderator for the Q&A session.

[Operator Instructions] Our first question comes from Justin Clare with ROTH Capital Partners.

I wanted to start out with Heavy Fab, and just wanted to see how you'd frame the conversion of the remaining backlog for Heavy Fab, the $25 million, how do you expect that to convert between Q2 and Q3? And then just wanted to see how you're thinking about the inventory levels for the overall business as you convert the remaining orders for Heavy Fab here, and then what the effect could be on your overall liquidity? Because I'm imagining you may have a lower inventory level as you convert the remaining orders here.

Yes. Justin, so of the $25 million of backlog, the overwhelming majority of that is tower related that we'll be completing out of the Abilene facility here. And that should be very, very ratable over the next 2 quarters. So it's probably 5 months, think of it 1/5, over the next 5 months, if you will. So I think you can call that fairly ratable post-close 3 -- I mean, post Q1 here.

The other thing I would mention is, overall, when we're looking at, not just inventory balances, but our operating working capital, we have maybe about $10 million of operating working capital associated with our wind business at the end of the quarter. So we expect that that will obviously decrease, but we are expecting that to be partially offset by increases within our Gearing and our BIS segment as those businesses continue to ramp up here over the balance of the year. So there may be some benefit, but I think it will be muted. Yes.

Got it. Okay. And then with the sale of Abilene, just wondering how we should think about the overall operating expenses for the business here and how you anticipate that changing as you exit that wind tower business? And then any other actions we should be looking for in terms of things that you may be looking to do to optimize the business as you shift to a focus on power generation and critical infrastructure?

Well, yes, we do have -- obviously, the operating expenses associated with that facility will go away as we exit the facility. I don't think that their cost structure is significantly different than what we have within the other business units. So we shouldn't see any consolidated impact there.

In terms of other costs that we're looking at, we're looking at all of our costs and trying to optimize that in light of this transaction going forward.

Got it. Okay. And then maybe just one more. You had indicated natural gas content drove order growth for Industrial Solutions and Gearing. Wondering if you could talk about the opportunity for Broadwind to expand content per turbine or wallet share within the nat gas end market. And then also, I guess, what you're seeing in terms of order size or project scope and how that's trending?

Yes. Justin, this is Eric. Well, I will tell you that we are engaged with a couple different producers of gas turbines, primarily the ones that are in the utility scale. We're engaged right now with 4 of the top 10 right now. Of course, we do have some concentration on a couple of those.

As far as content, the content for Industrial Solutions is broad. As we discussed before, we tend to support those installations on what's called not hot gas path, but surrounding the hot gas path. So we continue to invest in capabilities to grow share within that product set. So I think we are growing within our primary customer and another 3 on top of that. We're also growing content from Industrial Solutions kind of beyond what we traditionally do by taking more manufacturing on ourselves.

With regard to Gearing, we do reduction gearing, and we're looking at some other components within the natural gas turbine, but it will be limited primarily to that reduction gearing that we discussed before because that's primarily what these turbines need from us as far as precision machine gearing.

Our next question comes from Eric Stine with Craig-Hallum.

So obviously, you're focusing here, you've been investing in Gearing and Industrial Solutions for some time. Curious, could you update us on, you've got really strong backlog in both segments, update us on how you would expect that backlog to flow in both businesses, whether that has changed or improved your ability to execute on that, and then just what that implies over the next, say, 12 to 18 months?

Sure. Sure, Eric. I think what we're seeing is we think that Q1 is probably the low watermark for our revenues for both of those segments. We do expect these revenues to ramp up. I don't think we can take our order run rate and extrapolate that to mean what we're going to book in terms of revenue, because we are probably booking further into the future than we have in the past. But I think just suffice to say, I think we can expect a steady ratable growth for the balance of this year.

And we are -- I should add that we are booking into '27 and actually a little bit into '28 now. That's depending on when the customers want the product, not depending on our capability to deliver. It's when the customers want it. They are looking further out.

A couple of our customers are booked literally to the end of the decade. And so we have some advanced notice of some of their products. They want to secure capacity now instead of waiting.

So I don't want to put words in your mouth, but you could -- it sounds like you could execute on this backlog in both segments perhaps over the next 12 or so months. But in some cases, as you said, it has to do when the customers want that production, and that that would potentially be the limiting factor.

Correct. Which also means there's more capacity we have to fill in the interim.

Yes. Okay. Got it. I mean, is it something where you're able to disclose kind of what your -- the percentage? And it sounds like it would be more skewed to Industrial Solutions when you're talking about booking further out. But are you able to kind of give a high-level view of, say, what, in that backlog, what is kind of earmarked for '26 versus '27 and '28?

We could probably provide that on the next call, we can provide some color there. At this point, I would say it's primarily '27. Anything that's not in this year would be '27. I think we're just starting to touch 2028. But we can add some color to that maybe on the next call, for sure.

And you're correct, the -- you are correct. The customer that is pushing some or requesting some 2028 due dates -- delivery dates, would be out of the Industrial Solutions segment, not so much out of Gearing.

Yes. Okay. Got it. And then could you just talk a little bit about Gearing, you mentioned some positive trends in oil and gas. And certainly, you are hearing just -- I mean it's a distant memory, but early in the year, gas prices -- or I'm sorry, oil prices, pretty depressed. And you're hearing people start to talk about that that's really weighed on their oil and gas business and that it really has not picked up even with oil price appreciation given geopolitical factors. So maybe talk about that. I mean, is that something that you're kind of concerned about or on the lookout for? Or is there a reason that Gearing would be a little bit insulated from what some others are seeing?

Well, Gearing has been -- or oil and gas gearing, as you know, has been at a low for, shoot, 6 or 7 quarters now. And it's because of a couple of things. One is the customers are being more frugal with their capital. Their rigs are a lot more productive, so you don't need to add rigs to add output. However, what's going on now is we have customers that are putting some of their old rigs back to work and replacing some components within their existing rigs. So what we're seeing is what I would call quick-turn domestic supply for our customers as they put some of their old equipment back to work.

Got it. So I mean maybe, is this a possibility that that actually -- I mean, you are seeing some improvement there, as you said, low levels, but you're seeing some improvement there because customers are in fact a little bit cautious, but they're trying to get more out of their existing equipment rather than new capital?

Right. That's correct. So the rig count in the U.S. remains down. The customers aren't really putting new rigs back to work. There's been a couple over the last couple of weeks that have been redeployed. But where we are seeing the demand is what I would call aftermarket, meaning the customers that have rigs working, need to keep those rigs functioning and they're replacing some of their wear -- their gearing wear parts with the new components. Not new rigs; upgrading existing rigs.

Okay. All right. That's helpful. Last one for me. Just I mean, pretty clear signaling that you aim to use a stronger balance sheet to add to your business. So I'm curious, maybe it's too early or maybe you just can't talk about some specific thoughts, but just curious, when you look at your platform order, what are some areas where you potentially could fill in?

Well, of course, we have been pretty open about wanting to grow inorganically. We're going to use those 2, both of those platforms, Gearing and Industrial Solutions, as platforms to grow. We like precision machining with exposure to defense and aerospace. We already have some exposure to power generation. If we can find something in power generation that would make sense, we'd certainly like to bolt that on.

We also like grid hardening. Think in terms of transmission distribution. A lot of the grid in the U.S. is quite old and in need of upgrade. And we think there is position for us to take to support that upgrade.

Our next question comes from Amit Dayal with H.C. Wainwright.

So it looks like you have a pretty clear strategy in front of you with the new segments you're focused on. In that context, what should we expect EBITDA margins to sort of come through maybe over the next 12 to 18 months as you sort of clean up the businesses you're exiting and focus on these new segments?

Sure. Yes, I'll take that one, Amit. So I would say within our Gearing segment, we should expect margins to continue to improve. For them, it's really about volume and operating leverage. They have a big fixed cost structure, and the more revenue that we can produce out of that plant, the more profitable the overall plant is. So we should see that continue to improve ratably.

In terms of our BIS, we should see our mix normalize. The last 2 quarters, I think we've got a very strong mix of products sold. And we expect that to increase -- we expect that to normalize, I should say, over the balance of the year. Although revenue going up, but in terms of margins, I think you'll see that normalize a little bit over the balance of the year.

Understood. And then we've spoken about this, guys, one-on-one in prior calls, but with the Heavy Fabrication now sort of out of the way, is there a potential rebranding coming for the company overall?

Yes. The question, really is we don't know yet. There is certain of our divisions are already operating with different names, Brad Foote Gear, which we would not rebrand. But the overall company, we're thinking about it. I would stay tuned on that. The word Broadwind has wind in it, but there's a lot more that Broadwind means to many people than just a wind company.

So stay tuned. We've thought about it. We're considering it. But no decision at this point.

Understood. And then just last one, on the defense side, who are the customers on the defense side, Eric?

Some of them, well, there's...

Or what kind of customers? Just to get a sense of...

Yes. What I would say is some of them don't want us to disclose their name. But let's say there are parts for weapon systems, there's parts for the naval systems and there's parts for helicopters.

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

Yes. Thanks, everyone, for listening today. We're on the move. We're excited to execute our strategy. So stay tuned on that. We look forward to speaking with you again after Q2 to discuss our results. Have a great day, everyone.

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

Greetings, and welcome to Broadwind's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Tom Ciccone. Thank you. You may begin.

Good morning, and welcome to the Broadwind fourth quarter and full year 2025 results conference call. Leading the call today is our CEO, Eric Blashford; and I'm Tom Ciccone, the company's Vice President and Chief Financial Officer. We issued a press release before the market opened today detailing our fourth 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'll open the line for questions. With that, I'll turn the call over to Eric.

Thanks, Tom, and welcome to our call. 2025 was a pivotal year in our evolution. As a leading manufacturing partner of choice for global OEMs in power generation and critical infrastructure, while becoming a leaner, more diversified business equipped to deliver profitable growth through the cycle.

The divestiture of our Industrial Fabrication operations in Wisconsin in the third quarter represented an important step in optimizing our asset base and increasing our balance sheet optionality, which positions us to redeploy capital toward higher-value opportunities. Our fourth quarter performance was in line with the preliminary results we issued in early February 2026. Fourth quarter results were impacted by a raw material supply disruption in our Heavy Fabrications business associated with an OEM customer's directed-buy program, which reduced manufacturing throughput and operating efficiency during the period. The company has implemented corrective actions to address the issue and expects operations to normalize during the first quarter of 2026.

Demand conditions and customer activity were strong during the fourth quarter, supported by robust project activity across our Gearing and Industrial Solutions segments. Orders were led by 38% year-over-year growth in the Gearing and Industrial Solutions segments, partially offset by a 20% year-over-year decline in the Heavy Fabrications segment, reflecting the divestiture of the Wisconsin operation. Gearing orders increased to nearly $9.7 million as we saw strength in power generation, along with some resurgence in oil and gas and the wind aftermarket. In March 2026, we received a $6 million follow-on order for precision machine gearing components used in midsized natural gas turbines, which power data centers and other applications. This order represents the second half of the significant order we received in July of last year.

Within the Industrial Solutions business, we received orders of $11.1 million, reflecting increased demand across all segments served, including natural gas turbine components for new and aftermarket applications, wind repowering and solar. The backlog for this business reached $38.1 million in the fourth quarter, yet another record. Operationally, we continue to invest in equipment technology to improve our process capabilities, reduce costs and improve our profitability.

In Gearing, we successfully completed three complex PPAPs or Production Part Approval Processes, specific to the large orders for the power generation market and installed and qualified the critical equipment used to ensure precise balancing of high-speed gear components using what's called electromechanical runout or EMRO technology.

In the Industrial Solutions segment, we made prudent investments in equipment and staffing to double our capacity across all production processes, including machining, welding, assembly and kitting, to address our growing backlog and to meet future customer demand in the gas power generation equipment market. Additionally, in Q2 of this year, we are expanding our local footprint in North Carolina by about 30% to accommodate future growth.

Within our Heavy Fabrications segment, Q4 revenue grew by 6% to $21.6 million year-over-year, primarily due to an increase in wind towers and repowering adapters sold. Revenue in our Gearing segment fell 8% year-over-year to $7 million due to lower demand from the wind aftermarket and mining sectors, partially offset by power generation and oil and gas. Within Industrial Solutions, revenue grew 60% year-over-year due to stronger shipments into the natural gas turbine equipment market, both new and aftermarket and increased solar shipments, partially offset by a reduction of wind repowering shipments.

In summary, the team and business continued to perform well as we sharpen our focus within adjacent higher-margin precision manufacturing verticals. This past quarter, we quickly identified and addressed the supply disruption by working with our customer, to bring on an alternative supplier, minimizing the overall impact to our business. Furthermore, recent strategic actions to divest our Wisconsin facility positions us for increased balance sheet strength and flexibility while improving capacity utilization at our Abilene facility and reducing overhead costs. Despite the volatile trade policy environment, our 100% domestic manufacturing base remains a key competitive advantage as we partner with Tier 1 OEMs who value our deep technical expertise, commitment to quality and on-time service.

With that, I'll turn the call over to Tom for a discussion of our fourth quarter financial performance.

Thank you, Eric. Turning to Slide 5 for an overview of our fourth quarter performance. Fourth quarter consolidated revenues were $37.7 million, representing a 12% increase versus the prior year period. Fourth quarter increase was driven primarily by strength within the Industrial Solutions segment in which revenue was up 60% year-over-year. Furthermore, the fourth quarter revenue level within the Industrial Solutions segment represents a 40% increase versus the average over the past 4 quarters, and we believe that this volume level will continue, based on current customer indications.

Outside of our Industrial Solutions segment, lower Gearing deliveries were more than offset by increased revenue within the Heavy Fabrications segment, which benefited from increased wind revenue versus the prior year quarter. Adjusted EBITDA declined to $1.9 million versus the prior year of $2.1 million. Despite higher volume, adjusted EBITDA decreased due primarily to lower capacity utilization within our Gearing segment and operating inefficiencies associated with the directed-buy raw material supplier issue, we referenced in our February 5 press release.

Fourth quarter orders were strong at nearly $39 million. Orders increased within our Gearing and Industrial Solutions segments, driven by strength in the power generation, oil and gas and natural gas turbine verticals, while orders decreased within our Heavy Fabrications segment, reflective of our exit of the Manitowoc facility late in 2025.

Turning to Slide 6 for a discussion of our Heavy Fabrication segment. Fourth quarter orders were nearly $18 million, a 20% decrease versus the prior year quarter. However, after backing out the $6.3 million in Industrial Fabrication product line orders received for the Manitowoc facility in the prior year, orders increased more than 10% on an adjusted basis due to meaningful tower orders being recognized in the current year quarter. Fourth quarter revenues of $21.6 million are up 6% versus the prior year quarter. Despite delays associated with the raw material supply issue we experienced, we were still able to recognize increased wind tower and repowering revenue in the fourth quarter. However, adjusted EBITDA was down versus the prior year due to manufacturing inefficiencies associated with the aforementioned raw material supply issue.

Turning to Slide 7. Q4 Gearing orders remained strong at $9.7 million, an increase of 38% versus the prior year fourth quarter. We ended 2025 with approximately $26 million in backlog, a level we have not reached since 2023. As we noted in the prior quarter, we continue to see strength in the power generation and oil and gas verticals, and that momentum continued into Q4. Additionally, as we announced via this morning's earnings release, we recently received just over $6 million in follow-on orders from a leading OEM in the natural gas turbine segment of the power generation end market. Including this order, we have already booked almost $11 million in Q1 orders.

Segment revenue was $7 million, down almost 8% versus the prior year quarter. We recognized an adjusted EBITDA loss of $0.3 million compared to $0.1 million of adjusted EBITDA in the prior year period. Due to the lower revenue levels, earnings were adversely impacted by reduced capacity utilization. As volumes recover, we expect operating leverage to improve in 2026.

Turning to Slide 8. Industrial Solutions booked over $11 million of orders during the fourth quarter, a 38% increase over the prior year quarter. Orders remained at an elevated level, the resulting backlog again hit a new record level of over $38 million at the end of the fourth quarter, eclipsing the previous record of $36 million set at the end of Q3. This quarter represents the fifth straight quarter setting a record backlog level. Q4 segment revenue was $9.4 million, up both sequentially and versus the prior year quarter, reflective of the elevated order levels received recently. Fourth quarter revenues represent a 60% increase over the prior year quarter and is the highest revenue level ever recorded within the segment. We believe this business will operate at these elevated revenue levels throughout 2026. Adjusted EBITDA of $1.5 million or almost 16% segment EBITDA margin increased significantly over the $0.6 million or 10% segment EBITDA margin recorded in the prior year quarter, reflective of the increased revenue levels.

Turning to Slide 9. We ended the fourth quarter with total cash and availability on our credit facility of nearly $25 million. This is down from the prior year, and we were carrying significantly lower working capital levels as we had received advanced payments from a major customer late in 2024. Working capital levels were flat during the quarter, and we expect them to remain relatively consistent moving forward. Finally, with respect to our financial guidance, today, we are reaffirming our full year 2026 guidance. We expect full year 2026 revenue to be in the range of $140 million to $150 million and the adjusted EBITDA to be in the range of $8 million to $10 million. That concludes my remarks.

I'll turn the call back over to Eric to continue our discussion.

Thanks, Tom. Now allow me to provide some thoughts as we move into 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 on pursuing the highest growth and the highest margin opportunities that leverage our precision manufacturing expertise.

Our facilities in Abilene, Texas, Chicago, Pittsburgh and Sanford, North Carolina near Raleigh have more than 600,000 square feet of manufacturing space ready to serve our customers. Quarter upon quarter of repeat wins within the Gearing and Industrial Solutions segments from power generation, specifically within distributed power as well as growing opportunities in both small frame and utility-scale natural gas turbines support our strategy to expand in this market. Quote activity continues to increase 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. So we are expanding resources to meet this demand in both divisions.

In our Gearing segment, we continue to execute our strategy to move beyond traditional gearing markets for opportunities in other precision machine products. 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, along with some early green shoots in defense. Recent sizable orders we received from the power generation sector are the beginning of a multiyear cycle for which we are prepared. The expansion of our capabilities to serve the high-speed gear segment, such as the dynamic balancing capabilities I mentioned earlier, allow us to bring more processes in-house, decreasing lead times while improving quality and profitability.

In Industrial Solutions, continued growth in the natural gas turbine industry, driven by the global demand for power is having a positive commercial impact on our business. New data center installations are driving increased demand for distributed power solutions, including those that provide redundancy, and many of our key customers are adding significant production capacity in order to meet both the current and foreseeable future demand from power generation. We are proud to have recently received the 2025 Supplier Quality and Delivery Award, from our largest customer in recognition of our quick response to their significant growth and demand, all while meeting their strict quality and delivery requirements.

In our Heavy Fabrication segment, we believe that domestic onshore wind tower activity will continue at its present rate through 2026 and into 2027. We have good visibility for tower production into Q3 of 2026 and good customer indications beyond that. We are seeing increased quoting activity for our PRS line of natural gas pressure reduction units and expect sales to increase proportionately.

In summary, I'm pleased with the order growth and strategic actions we've taken this year as we continue to demonstrate our strong execution of our strategic priorities. Our divisions are well positioned to support the nation's growing need for power generation and infrastructure improvement, which we see as long-term opportunities for us. Our quality, quick response and ability to solve complex manufacturing challenges for our customers continue to help us win new opportunities. We've reduced our cost structure, are investing wisely and are taking strategic actions to refocus our resources toward higher value and growing end markets. We value our people and are committed to keeping them safe, fulfilled and productive.

This year, we will be implementing an ISO 45001 Occupational Health and Safety Readiness Program with plans to add that certification to our existing ISO 9001 and AS9100 certifications. Our 100% U.S.-based plants are expanding capabilities to take advantage of opportunities afforded by the pro-domestic manufacturing policy backdrop afforded by the current Administration. We're encouraged that our order intake continues to grow, positioning us for improved utilization of our manufacturing footprint in 2026 as we strengthen our foundation for steady, profitable growth, serving the power generation, critical infrastructure and other key markets with high-quality precision components and proprietary products to capitalize on improved demand in the years ahead.

With that said, I'll turn the call back over to the moderator for the Q&A session.

[Operator Instructions] Our first question comes from Eric Stine with Craig-Hallum.

So I know Gearing and Industrial Solutions backlog up 2x or more year-over-year. You did mention your expectations for revenue for Industrial Solutions in 2026. I'm curious if you could just talk about Gearing a little bit. I know that -- I mean, obviously, the demand is there, but the quarter was limited by utilization. So just curious, I mean, maybe thoughts on that, steps you need to do to get through that and what 2026 growth might look like in Gearing throughout the year?

Sure, Eric. Yes. So as you mentioned, our backlog is about double where we -- from where we entered 2025 with. So we are expecting significant growth within that segment in terms of revenue for sure. Double-digit growth can be relied on there. We're entering with a much stronger backlog. So it's about execution versus commercial success this year.

I mean on execution, can you talk about that a little bit? I mean -- so this is not limited by timing of when customers want these components. It's more about you driving higher throughput? Or just any details about kind of how the year ended and why 2026 may be different or may be limited at the start or anything along those lines?

Well, I can add a little bit. We've got a lot more visibility. This is Eric, with the backlog that we have. We are working towards the customers requested dates, which are spread out throughout the year. So I'd say there's a ramp-up going to happen in Q1 with steady revenue in 2, 3 and 4. Again, much visibility for the full year. Some of our backlog is into 2027, but most of it is 2026, if that helps you.

Yes. No, that is helpful. Okay. Maybe -- I mean, after selling Manitowoc, balance sheet is in solid shape. You talked about redeploying it to different areas that includes bolt-ons and some new capabilities. I mean what -- maybe it's hard to share, but if there's anything you can share about areas that you think need added to whether organic or inorganic?

Well, we're definitely focused on power generation and critical infrastructure in all of our divisions. And our M&A search is in those areas, especially with grid or power generation. I think we're entering a super cycle for power generation and grid both, that's going to last at least 10 years, and that's where my focus is, my targets are in M&A. also for organic growth, both in BIS, which is obviously power generation and in -- BIS is Industrial Solutions and in Gearing with power generation in these turbines that are, I would call midrange, which are 100-megawatts and less.

Got it. And maybe I mean so we -- but these are not -- I mean, I guess, bolt-on certainly implies that these are not necessarily significant acquisitions, but more about adding capabilities, whether it's a new product line, new manufacturing footprint, that sort of thing?

Yes. So to that extent, they would be bolt-on acquisitions to our existing platforms, yes.

Our next question comes from Justin Clare with ROTH Capital Partners.

I wanted to just start out on the capacity outlook for Industrial Solutions. So you mentioned that you're expanding the capacity there, I think, by 30% to accommodate future growth. So just wondering with that added capacity, how much potential revenue might be supported for the Industrial Solutions segment when it's fully utilized? And then if you could speak to how you anticipate utilization increasing over time here?

Sure. Just for clarification, our footprint is increasing 30%. But our capacity, we've already doubled it through staffing and equipment. So that floor space is just over and above that. So I think we can easily double our revenue if not, maybe 2.2x more than 2025 revenue in our existing facility before we end up having capacity constraints. We're right now only operating at one shift, so we can add another shift, if necessary. So I think we could certainly get into the $70 million range revenue within our existing facility.

Okay. And any sense for the timing in which you might be able to achieve that level of revenue given the visibility you have into demand and the discussions that you're having with your customers?

Well, the growth in the combined cycle natural gas, utility-scale natural gas turbines, which we serve in that market is really, really strong. Primary customer, one of our primary customers, so our primary customer, GE says their orders increased 77% in 2025 alone. So I expect that the demand will be there from our primary customer and others all the way through 2030. So with customer indications, I think we've got a real strong chance of hitting that revenue number over the next several years.

Got it. Okay. That's helpful. And then maybe shifting over to the Heavy Fab business here. So the backlog was down in Q4, but that partly reflects the Manitowoc divestiture. Just wondering if you could speak to the underlying demand trends that you're seeing, the visibility you have and maybe the timing for backlog conversion and what you're expecting in terms of the cadence in orders in terms of the timing of bookings relative to when revenue would be recognized?

Sure. As has been the practice in the market for some time now, we tend to get -- our customers tend to release orders about 6 months or so in advance of their production needs. We've got good visibility for towers and adapters into Q3 2026 and customers have indicated that, that level of volume should continue through the remainder of 2026 and into 2027.

Yes. Just to add to that, Justin, you asked about converting backlog. We see this as a ratable conversion consistent through 2026. So we're not seeing any really spikiness in terms of revenue. It should be pretty ratable over the 4 quarters of '26.

Our next question comes from Amit Dayal with H.C. Wainwright.

Eric, with respect to sort of the 20% roughly level of organic year-over-year revenue growth you are guiding for, with the kind of visibility you have right now and sort of the macro conditions, I mean, they look favorable. Do you think this is a level of growth you can maintain for the next few years at a minimum?

Well, the markets that we're growing into have CAGRs of about 6-plus percent year-over-year, but they're in great demand cycles that we're in, on the products that we're in, such as natural gas turbines in medium and high capacity, the growth is beyond that CAGR that I mentioned to you. So I think we can. Those 2 divisions achieve that kind of growth rate going forward over the next several years, really through 2030, which is as far as we can see out now.

Okay. Understood. And then the $6 million follow-on order, is this with just one customer? And then adjacent to that, are there other opportunities similar to this that you may be pursuing that are in the pipeline, but not in the backlog?

Sure. Again, this is the power generation market, which we're really excited about. That's the market that we're attacking because we have the capital, equipment in place. We've got the certifications in place. We've got the customer relationships in place now. That is one customer that we're talking to with regard to that particular order, but we're talking to several others in that space.

Okay. And just given sort of the recent volatility around events taking place in the Middle East and your exposure to the oil and gas space, are you seeing a little bit more inquiries, et cetera, or activity from that segment right now?

We are. Several of our customers, the orders aren't huge like they were several years ago, but they're -- I would call them substantive and it's multiple customers. So I think what they're doing is hedging their bet, if you will, that, A, there could be a disruption in their supply, which sometimes come from overseas, but there's demand because the price of oil is an indicator of demand in the U.S. and our customers are in the fracking and drilling U.S.-based space.

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

Yes. Thanks, everyone, for being on the call today and your interest in our company. We look forward to coming to you again at the end of Q1 to talk about our results. Thank you.

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

Greetings, and welcome to Broadwind's Third Quarter 2025 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Tom Ciccone. Thank you. You may begin.

Good morning, and welcome to the Broadwind Third Quarter 2025 Results Conference Call. Leading the call today is our CEO, Eric Blashford; and I'm Tom 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. After 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 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, reduced fixed overhead and strengthened 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 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 in growing markets, specifically power generation.

Orders within our Heavy Fabrications business reflect an increase in orders for our wind products, offset by softness in our natural gas pressure-reducing systems, or PRS. Gearing orders continued to rebound nicely, increasing 250% to $16 million as we continue to see strength in power generation and some resurgence in the wind and oil and gas aftermarket.

In Q3 2025, orders within our Industrial Solutions business continued to be strong, increasing 86% to nearly $14 million, driven by strong demand for both new gas turbine installations and aftermarket upgrades and services. We are pleased to have set yet another record for backlog in this segment. Operationally, we continue to invest in equipment technology to improve our process capabilities, reduce costs and improve our profitability.

In the third quarter of 2025, margins were temporarily impacted by production process inefficiencies relating to a unique low-volume tower build at our Manitowoc and Abilene facilities as well as lower capacity utilization levels within our Gearing segment. As production normalizes, we anticipate improved operating leverage through the duration of the year and into 2026.

In the Industrial Solutions segment, we are investing in additional manufacturing capacity to address our growing backlog and meet future customer demand and the gas power generation equipment market. Within our Heavy Fabrication segment, Q3 revenue grew by 43% year-over-year, primarily due to an increase in wind towers and repowering adapters sold, offset by lower demand for our proprietary PRSs.

Revenue in our Gearing segment fell 23% year-over-year due to lower demand from the mining and industrial sectors, partially offset by power generation and steel. Within Industrial Solutions, revenue grew 37% year-over-year, primarily due to stronger shipments into the new gas turbine equipment market, both domestically and internationally.

In summary, the team and business continued to perform well as we sharpen our focus within adjacent higher-margin precision manufacturing verticals. Recent strategic actions to divest our Manitowoc facility, position us for increased balance sheet strength and optionality while improving capacity utilization at our Abilene facility and reducing overhead costs.

Despite the volatile trade policy environment, our 100% domestic manufacturing base remains a key competitive advantage, positioning us to partner with Tier 1 OEMs who value our deep technical expertise, commitment to quality and on-time service.

With that, I'll turn the call over to Tom for a discussion of our third quarter financial performance.

Thank you, Eric. Turning to Slide 5 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. The 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 tower build 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. The $44 million of orders represents the highest quarterly order level since 2022.

Turning to Slide 6 for a discussion of our Heavy Fabrications segment. 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 of 2023. As such, the growth in Q3 was primarily attributable to resuming the recognition of new tower orders with this customer, partially offset by the decrease attributable to winding down the industrial fabrication operations at our Manitowoc facility.

Third quarter revenues of $29.4 million are up 43% versus the prior year quarter, driven by an increase in wind tower [indiscernible] sold as we restarted Manitowoc tower production in the previous quarter, a limited run, which was completed during the third quarter and increased repowering revenue. This was partially offset by a decrease in the industrial fabrication shipments as we wound down the Manitowoc operations, had fewer shipments of our PRS units.

Despite the increase in revenue, third quarter segment adjusted EBITDA was down versus the prior year due to the manufacturing headwinds and unplanned machine downtime previously mentioned.

Turning to Slide 7. Q3 gearing orders increased $11.5 million year-over-year to $16 million, a level almost 3x the average quarterly total over the past 2 years. Most notably, Q3 included a $6 million follow-on order from a leading OEM in the natural gas turbine segment of the power generation end market, which we announced in July. This order represents the year 1 volume of a multiyear supply agreement for Gearing products.

In addition, during the quarter, oil and gas orders remain elevated relative to prior year levels as we are benefiting from reshoring in reaction to recent U.S. trade policies. Segment revenue was $7.1 million, down over $2 million versus the prior year quarter. We recognized adjusted EBITDA of $0.1 million, down $0.5 million versus the prior year period, driven by lower revenue and reduced capacity utilization.

Turning to Slide 8. Industrial Solutions booked nearly $14 million of orders during the third quarter, maintaining the strong demand seen this year. The segment participates in the natural gas power equipment industry, which is experiencing significant resurgence driven by the increasing demand for reliable and flexible power supply. Segment backlog hit a new record of almost $36 million at the end of the third quarter, eclipsing the previous record of $30 million set in Q2. This quarter represents the fourth straight quarter setting a record backlog level.

Q3 segment revenue was $7.9 million, up both sequentially and versus the prior year quarter, reflective of the strong commercial environment. Revenue was up 37% versus the prior year quarter, but adjusted EBITDA of $0.6 million was flat versus the prior year due to a lower margin mix of products sold as well as additional overhead to support increased production volume.

Turning to Slide 9. We ended the third quarter with total cash and availability on our credit facility of nearly $27 million. Liquidity was boosted in the quarter by the September closing of the sale of our Manitowoc industrial fabrication operations which resulted in over $13 million in cash. We used that cash to pay off a portion of our term loan with the balance applied to our line of credit, which decreased from $17.6 million, down to $3.8 million during Q3. Also boosting liquidity was a decrease in our operating working capital of almost $5 million, primarily driven by reduced inventory levels. We anticipate that working capital levels will decrease again during the fourth quarter.

Finally, with respect to our financial guidance. Today, we are updating our full year 2025 guidance. We're increasing our full year 2025 revenue expectations to be in the range of $155 million to $160 million, up from $145 million to $155 million. And the adjusted EBITDA range is maintained at $910 million, which excludes the $8.2 million gain on the sale of our Manitowoc industrial fabrication operations.

As a reminder, in 2024, Manitowoc facility generated over $25 million of revenue with an adjusted EBITDA margin rate of approximately 8% to 9%. The majority of that 2024 revenue was industrial fabrication work that we do not anticipate replacing organically in 2026. We expect to provide more detail around the full year 2026 outlook on our fourth quarter conference call.

That concludes my remarks. I will turn the call back over to Eric to continue our discussion.

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 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 a complex precision manufacturing and sourcing challenges faced by customers in this growing market. Accordingly, we're expanding resources to meet this demand.

In our Gearing segment, we continue to execute 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 balancing capabilities as we bring more key processes in-house. In Industrial Solutions, continued growth in the natural gas turbine industry driven by the global demand for power is having a positive commercial impact on our business.

In Q3, we had near record bookings, which led to a new record quarterly backlog. New data center installations are driving increased demand for distributed power solutions, including those that provide redundancy and many of our key customers are adding significant production capacity in order to meet both the current and foreseeable future demand. Accordingly, we are expanding our internal capabilities in production, fulfillment and the customer response team to address this growing opportunity and better serve our customers. Expanding on the investments made in robotics, coatings and machining made earlier this year, we added another vertical machining center in Q3 to expand our fabrication capability.

In our Heavy Fabrication segment, we believe that domestic onshore wind tower activity will continue at its present pace through 2026. We are encouraged by the continued momentum in the wind repowering market as we are seeing sustained demand from our OEM customers for the adapters we manufacture, which are required to upgrade most legacy turbines. We have good visibility for tower production through the first half of 2026 and good customer indications beyond that.

In summary, I'm pleased with the order growth and strategic actions we've taken this year as we continue to demonstrate strong execution of our strategic priorities. Our divisions are well positioned to support the nation's growing need for power generation and infrastructure improvement which we see as long-term opportunities for us. Our quality, quick response and ability to solve complex manufacturing challenges for our customers, continue to help us win new opportunities.

We're reducing our cost structure, investing wisely and taking strategic actions to refocus our resources toward higher value and growing end markets. We value our people and are committed to keeping them safe, fulfilled and productive. Our 100% U.S.-based plants are expanding capabilities to take advantage of opportunities afforded by the pro domestic manufacturing policy backdrop afforded by the current administration.

We're encouraged that our order intake continues to grow, positioning us for improved utilization of our manufacturing footprint for the rest of the year and into 2026. As we strengthen our foundation for steady profitable growth, serving the power generation, critical infrastructure and other key markets with high-quality precision components and proprietary products to capitalize on improved demand in the years ahead.

With that, I'll turn the call over to the moderator for the Q&A session.

[Operator Instructions] Our first question comes from Amit Dayal with H.C. Wainwright.

Looking into 2026 a little bit, it looks like you 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?

Yes, I think we -- I think -- well, in terms of the vision, yes. But I think in terms of market, power gen and critical infrastructure are going to lift both Industrial Solutions and Gearing in 2026.

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?

Well, again, with certain markets, we are seeing a -- 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.

Gearing, reminder, does have a bit of a lead time. So what we're seeing is softness in revenue is because of the lack of orders we had a couple -- 3 quarters ago. These orders that we're receiving now, we will be delivering in 2026.

Okay. Understood. And then just last one for me. 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?

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 do -- we are able to pass those on with the 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.

Yes. I think the only thing I'd add there, Amit, is that we did have 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.

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

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

Yes. I would say it's probably more to do -- yes, 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 is the more we can run across that plant we should see some good returns on that.

Understood. And then the BRS 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?

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.

Our next question comes from Eric Stine with Craig-Hallum Capital Group.

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 that you could have a pretty meaningful step-up in revenues once those investments kind of come to bear?

Yes. 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 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. But the demand is there. And it is coming. It is there and it is continuing. So we definitely need to make these investments to keep up with it.

Right. And okay, so second half it should be more of the expectation potentially for a step up there. I mean, maybe a good segue just on -- I mean, obviously, it's no secret what's going on in energy markets, demand need for resiliency, et cetera. But I mean, I would think that this is a tailwind for your business for multiple years. And so 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 4Q 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 center is projected to go from 22 gigawatts up to 35 gigawatts 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 2 or 3 years which is as far as we can see out right now. Gas turbines sold are about 30% up year-over-year, '25 versus 2024 and '24 was a strong year. So the basics are there for the growth.

Regarding the capacity, we're really only still about 45-ish percent full in our 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 have over quality, over timing and over price. So those are -- where you're going to see our investments made going forward.

Yes. Okay. That is helpful. And then just on Heavy Fab and specifically wind. 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 get a large order, it's probably going to mean that you're at elevated levels for the next few quarters and -- but no one should expect necessarily that Heavy Fab backlog is meaningfully higher until wind really picks up. I mean, is that a [indiscernible]?

Yes, you're 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 the first half of '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, you should expect to see going forward.

We have reached the end of the question-and-answer session. I'd now like to turn the call back over to Eric 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.

Greetings, and welcome to Broadwind Second Quarter 2025 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Tom Ciccone. Thank you. You may begin.

Good morning, and welcome to the Broadwind Second Quarter 2025 Results Conference Call. Leading the call today is our CEO, Eric Blashford; and I'm Tom Ciccone, the company's Vice President and Chief Financial Officer. We issued a press release before the market opened today detailing our second 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 those joining us today. We continue to advance our strategic priorities during the second quarter, prioritizing our focus on high-value precision manufacturing end markets, while moving toward a leaner, more diversified business capable of delivering profitable growth through the cycle. Second quarter revenue increased on both a sequential and year-over-year basis, driven by increased demand from the wind and industrial verticals. In June, we announced the pending sale of our industrial fabrication operations in Manitowoc, Wisconsin. This represents a meaningful step toward further optimizing our asset footprint, improving our balance sheet flexibility and sharpening our focus within stable, higher-margin precision manufacturing verticals. We are on pace to complete this transaction in the third quarter and expect it will add approximately $13 million of cash to our balance sheet while reducing costs by $8 million annually.

Customer activity continues to accelerate with order rates rising 14% year-over-year to $21 million. Robust demand from power generation and increasing demand from oil and gas customers offset softness in wind, industrials and mining. These market dynamics reinforce the importance of our diverse customer base, especially during sustained periods of U.S. trade policy uncertainty. Orders within our Heavy Fabrications business were adjusted to reflect the estimated backlog that will be transferring with the sale of the Manitowoc operation.

In the second quarter, we also received the final purchase order release against the long-term customer agreement we entered into in early 2023. So new tower orders for that customer will add to backlog. Gearing orders continue to rebound, increasing 45% as we continue to see strength in power generation and some resurgence in the oil and gas aftermarket. In July, this momentum continued as we received a follow-on order for $6 million of Gearing products for the power generation market. This acceleration in order activity is a direct result of the investments we made in capabilities and quality certifications in this business.

In Q2 2025, orders within our Industrial Solutions business remained very strong, more than tripling year-over-year driven by strong demand for new gas turbine units as well as upgrades and services. We're pleased to have set another record for both orders and backlog in this segment. Operationally, we continue to invest in equipment technology to improve our process capabilities, reduce costs and improve our profitability. In the second quarter of 2025, margins were temporarily impacted by early production process inefficiencies at our Manitowoc and Abilene facilities and lower capacity utilization levels within our Gearing segment.

We expect profitability to improve as production normalizes throughout the duration of the year. In the Industrial Solutions segment, we are investing in additional manufacturing capacity in order to service our current backlog and meet future customer demand in the rapidly growing gas power generation equipment market. Within our Heavy Fabrication segment, Q2 revenue grew year-over-year, primarily due to an increase in wind towers, and repowering adapters sold, offset by lower demand from the mining market. Revenue in our Gearing segment fell year-over-year due to lower demand from the oil and gas gearing market, partially offset by strength in the mining and industrial sectors. We've taken further cost actions to align production capacity with the present demand levels while maintaining the key manufacturing and engineering talent required to accommodate the increasing order intake we're experiencing this year. Within Industrial Solutions, we saw growth year-over-year primarily due to stronger shipments into the new gas turbine equipment market.

In summary, the team and business continued to perform well as we sharpen our focus within adjacent higher-margin precision manufacturing verticals. Recent strategic actions to divest our Manitowoc facility will position us for increased balance sheet strength and optionality while reducing overhead costs materially. While the trade policy environment remains volatile, our 100% domestic manufacturing base remains a key competitive advantage, positioning us to partner with Tier 1 OEMs who value our commitment to quality, on-time service and deep technical expertise.

With that, I'll turn the call over to Tom for a discussion of our second quarter financial performance.

Thank you, Eric. Turning to Slide 5 for an overview of our second quarter performance. Second quarter consolidated revenues were $39.2 million, an 8% increase versus the prior year period. During the second quarter, we restarted the Manitowoc tower production for a limited customer run ahead of the planned asset sale and recognized increased repowering revenue in both our Manitowoc and Abilene facilities. Sequentially, revenue was up nearly 7% due to stronger deliveries within our Industrial Solutions segment as we resolved some of the temporary supply chain headwinds that impacted the first quarter. Despite an increase in revenue, second quarter adjusted EBITDA declined to $2.1 million versus the prior year at $3.6 million.

Adjusted EBITDA margin dropped to 5.3% due primarily to lower capacity utilization within our Gearing segment, manufacturing inefficiencies associated with the production of a new larger wind tower design in both the Manitowoc and Abilene facilities and additional labor to support increased volumes within the wind and power generation verticals. Q2 orders totaled $21 million, an increase of 14% versus the prior year second quarter, driven primarily by stronger demand for natural gas turbine content, serving power generation markets in our Industrial Solutions segment.

Turning to Slide 6 for a discussion of our Heavy Fabrications segment. Second quarter orders of $0.2 million were muted given the timing of wind-related orders and the fact that we're winding down operations within our Manitowoc facility. It should be noted that 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 of 2023. Going forward, purchase orders received from that customer will again be recognized as orders and incremental backlog. Second quarter revenues of $25 million are up 27% versus the prior year quarter, driven by an increase in wind tower sections sold, as we restarted Manitowoc tower production on a limited run and increased revenue related to repowering adapters, offset by lower demand for mining customers. Despite an increase in revenue, second quarter segment adjusted EBITDA was flat versus the prior year at $2.8 million due to the manufacturing headwinds previously mentioned.

Turning to Slide 7. Gearing orders of $6.8 million were up over $2 million versus the prior year period. Of note, we received follow-on orders from a significant customer serving the power generation market, with whom in July, we subsequently announced a multiyear supply agreement for Gearing products to be used in natural gas turbines. In addition, oil and gas order growth accelerated for the second quarter in a row as we may be benefiting from onshoring in reaction to recent U.S. trade policies. Segment revenue was $7.3 million, up sequentially but down over $3 million versus the prior year quarter, recognized an adjusted EBITDA loss of $0.1 million, driven by lower revenue and reduced capacity utilization.

Turning to Slide 8. Industrial Solutions recorded nearly $14 million of orders during the second quarter, surpassing the previous $10 million record achieved last quarter. Segment participates in the natural gas power equipment industry, which is experiencing a significant resurgence driven by the increasing demand for reliable and flexible power supply. Segment backlog also hit a new record high of nearly $30 million at the end of the second quarter, eclipsing the previous record of $23 million set in Q1. This quarter represents the third straight quarter with record order and backlog levels. Q2 segment revenue was $7.4 million, up 30% sequentially as much of the supply chain headwinds impacting shipments in the first quarter were resolved during Q2. Revenue was up 14% versus the prior year second quarter, but adjusted EBITDA of $0.7 million was down slightly from the prior year due to a lower margin mix of products sold as well as additional overhead to support increased production volume.

Turning to Slide 9. We ended the second quarter with total cash and availability on our credit facility of approximately $15 million. Line of credit borrowings increased during Q2 to support a nearly $14 million increase and operating working capital. This working capital increase was driven most notably by our deposit balance returning to more normal operating levels, while our inventory levels increased in response to higher wind-related production levels. We expect that inventory levels will decrease in the third quarter.

Finally, with respect to our financial guidance in connection with the pending asset sale of Manitowoc and related operations, we are suspending our previously issued financial guidance for the full year 2025. We intend to reinstate new financial guidance, excluding contributions from Manitowoc upon closing of the transaction, which is expected during the third quarter of 2025, consistent with prior expectations. That concludes my remarks.

I will turn the call back over to Eric to continue our discussion.

Thanks, Tom. Now allow me to provide some thoughts as we move into Q3. We continue to refocus production capacity towards stable recurring revenue streams across diverse end markets. With recent gearing wins in the power generation markets, and growing opportunities in a large utility scale natural gas turbines. We continue to see robust quote activity in both gearing and the Industrial Solutions segment. In our Gearing segment, we continue to execute our strategy to move beyond traditional gearing toward other precision machine products. The recent sizable orders we received from the power generation sector are evidence that our strategy is working. We're pleased at the increasing level of customer activity we're seeing in various new markets, including infrastructure support, such as cement plants, and aggregate material processing, among others.

In Industrial Solutions, significant growth in the natural gas turbine industry is having a positive commercial impact on our business. In Q2, we eclipsed the quarterly bookings record that was previously set in Q1 2025 by over $3.5 million and established a new record quarterly backlog. Due to strong demand for power worldwide, our key customers are adding significant production capacity in order to meet both the current and foreseeable future demand. In order to take full advantage of the significant growth opportunity within our industry, we're investing in the necessary personnel and equipment such as adding robotic welding, expanding painting and machining capacity and upgrading testing equipment to meet this higher demand level and to maximize our growth opportunities within this dynamic market.

We believe that our current actions will position us to capitalize on the opportunities to grow and expand within this high-growth market. In our Heavy Fabrication segment, we've expanded our service and commercial teams for our Clean Fuels PRS line to better serve the DJ Basin and Bakken regions. This includes adding a cold weather performance package for the climate in these regions. Our L-70 low flow unit has performed well in field trials and is now available to purchase, lease and rent. The addition of this product complements our current product offerings, which are the medium and high flow units to meet the various gas delivery requirements of our customers.

We have just completed our first field start-up on a medium flow M125 export unit through a key distribution partner, and we're excited about the opportunities that this could bring over time. We believe the domestic onshore wind tower activity will continue at its present rate through 2026. We are encouraged by the continued momentum in the wind repowering market as we are seeing sustained demand from our OEM customers for the adapters we manufacture, which are required to upgrade most legacy turbines. In our view, the recent policy announcements from Washington provide clarity for our customers, which they need to confidently move forward with projects. We have good visibility for tower production through the balance of 2025 and into 2026.

In summary, I'm pleased with the order growth and strategic actions we've taken this year as we continue to demonstrate strong execution of our strategic priorities. Our divisions are well positioned to support the nation's growing need for power generation and infrastructure improvement, which we see as long-term opportunities for us. Our quality, quick response and ability to solve complex manufacturing challenges for our customers, continue to help us win new opportunities notably within the Gearing and Industrial Solutions businesses. We're reducing our cost structure, investing wisely and taking strategic actions to refocus our resources toward higher value and growing end markets. We value our people and are committed to keeping them safe, fulfilled and productive. All of our plants are U.S.-based. So we're prepared to capitalize on any opportunities afforded by the pro domestic manufacturing policy backdrop afforded by the current administration.

We're encouraged that our order intake continues to grow, positioning us for improved utilization of our manufacturing footprint for the rest of the year and into 2026 as we strengthen our 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.

With that said, I'll turn the call over to the moderator for the Q&A session.

[Operator Instructions] Our first question comes from Justin Clare with ROTH Capital Partners.

So first, I just wanted to start on the guidance. I wanted to see if you could just expand a little bit on the uncertainty that may be created by the Manitowoc sale, whether it's timing related or whether your revenue or margins could be affected by the sale. And then just beyond that, are there any other uncertainties within the business that is making it more challenging to provide guidance for the remainder of the year here.

Yes. Thanks for your question, Justin. I think it's mostly related to timing. There's some uncertainty in terms of when we will close. There's not any uncertainty about closing, but the timing is a little up for grabs. So that will impact the amount of industrial fab revenue that we're ultimately able to recognize and realize. So yes, it's mostly timing. There are also some transitional costs that we'll be incurring as a result of winding down the operations in Manitowoc. So we'll be shipping some materials down to Abilene when we're incurring some legal costs.

So we're vetting all that out, and we just want to be prudent and accurate with our guidance. In terms of other phenomenon that you're talking about, I don't think there's anything -- any other reason why in any other business units that we pulled the guidance.

Got it. Okay. I appreciate that added detail there. And then just on Industrial Solutions, I think record orders, your backlog is up I think, more than 100% here. So just wondering if you could speak to the visibility you have into additional demand. Is your visibility improving in terms of when you see orders and the time frame expected for the delivery of those orders? And then maybe you just speak to the capacity you have to fulfill the demand and whether there's anything that you need to do in order to expand.

Yes. Thanks, Justin. This is Eric. I'll take that call. So Industrial Solutions, primarily services the large gas turbine markets, and those are over 100 megawatts. So far this year through Q2, the market sold 93 units versus 21 units last year at the same time. So that's 4x up. Our customers vary, but our largest customer is GE Vernova in that, and they are dominant in the field. We do see visibility with that customer, again, based on their reporting for several years out, we do follow that. We do talk to that customer frequently. They're saying that they've got visibility up through '28 and beyond that, and they're increasing their own capability to produce these turbines and so that would drive demand for us.

When we see orders taken in the market, it's about a 12- to 18-month lag time before we see orders because it just takes some time for these things to get set up. As far as available capacity, we do have the capacity. We've got room in that facility in Sanford, North Carolina. We also have the ability to expand into an adjacent facility and really, it just becomes continuing to increase our capabilities. That's where we talked about robotic welding, our paint capacity, some machining capacity, some testing capacity and then it's all about a material movement. So we do believe we can receive this increased volume quite handily.

Got it. Okay. And then just as you expand the business here, wondering if you could speak to the margin profile and whether as a result of operating leverage you may have you could see an expansion in margins over time here?

Yes, I think that's reasonable to assume. I mean, we have a fairly large fixed cost structure and the more fixed cost coverage that we get from increase in revenue, a tick up in revenue, definitely helps us. So for us, a big factor in our profitability is capacity utilization.

Our next question comes from Amit Dayal with H.C. Wainwright.

Congrats on sort of continuing to put together good quarters despite some headwinds you guys are facing. In that context, what else is being done to maybe capitalize on the growing demand for the power generation side of things? Like are you adding more folks on the sales side? Just wanted to see how that pipeline is being built up or what you are thinking strategically you could take advantage of to participate maybe in a bigger way in that opportunity?

Well, thank you. Thank you, Amit, for that question. We have, within our Gearing segment, really expanded our independent sales rep organizations across the country. We now have pretty good representation west of the Rockies, which we hadn't had before. We brought in some new reps that are actually on our payroll that have specificity in markets like cement and aggregates and to a lesser extent, power generation. But with regard to taking advantage of that, I think it's capacity increases that we've done in Industrial Solutions and in the Gearing market. Also, the PRS, which is this our proprietary product within Compressed Natural Gas, we released that product. The L-70, which is the lowest volume -- our lowest power unit, and that's really ideal for backup power supply support. So I think the more that, that product is accepted in the marketplace and proven I think that will help us expand opportunities within power generation.

Understood. You mentioned there's a new tower order that -- I'm not sure if that is showing in the backlog you highlighted in the earnings release. How big is this new tower order?

Well, we were talking about the manufacturing challenges that we had with a tower order -- small tower order that we were building in Manitowoc. That order was received late last year and we're producing it this year. That's the one that -- it's a very large tower with a very fixed steel. It's actually twice as thick as the normal steel we produce. So it's presented some challenges for our engineers to make sure that, that -- those cans that are made by that out of that fixed deal can be moved appropriately to construct the wind tower. That's what we're referring to in our prepared remarks.

Sorry. So it's already part of the Broadwind. Yes. Understood. Okay.

Right. But one of the things we did say is that at the end of the quarter 2, we have completed the long-term agreement we had with one of our key OEM partners. And that had always been in backlog for the last 2 years. And so as we were receiving PO releases against that order, they weren't counting as new orders because the order was already in backlog. Since we've now completed that, new orders, in fact, orders that we've received in July and beyond will count as new orders and new backlog. That was also referenced in my prepared remarks.

Okay. Understood. It looks like the sentiment around wind, at least from a news headline perspective, still is a little sort of depressed. But from the commentary, it looks like things are picking up for you. Like how should folks sort of think about the opportunity ahead for you with respect to the wind-related business?

Sure. Well, the big beautiful Build Act did have some challenges in it for renewables as our investors are aware of. But one of the things that it did have is the 45x credit that we take advantage of as do others component manufacturers in our market are still in place, but they end in 2028 as opposed to a couple of years later. So I think we could see actually pulling in of some orders in '26 and '27 ahead of that. There's also provision that projects have to start construction by July 4, 2026, to avoid a deadline placed in service deadline which impacts the PTC, the production tax credit, which benefits developers. So again, I think certainly in '26 and likely '27, there would be a pull-in of orders as developers take advantage of the changes in the tax law.

Our last question comes from Eric Stine with Craig Hallum Capital Group.

So maybe just getting back to wind. So you mentioned that you've satisfied the original order with GE, and I believe that was for -- or is for the SunZia project. Just curious, as you think about that going forward and now you will be recognizing those orders, what type of demand do you see? Is that part of the visibility you mentioned that you have through 2026 on the tower side out of Abilene. Just maybe any thoughts on that would be great.

Sure. Yes. Just remember, we're one of only several out of U.S. that are qualified to produce for as many OEMs as we are. And that one particular OEM, we had the long-term agreement with is still an important customer of ours. I think, in fact, the relationship is every bit as strong as it ever was. So when I mentioned that we've got good visibility certainly through '25 into '26 for orders, we literally have those booked through January 2026. And let's just say, very strong customer indications that we will have a good flow throughout the whole year of 2026 of towers and adapters in Abilene.

And you're seeing from that customer and others? Or are you more focused on that customer?

Well, from that customer and others. From that customer and others. And I would say, directionally, if we were operating, call it, 50%, 60% capacity utilization rate, in that plant in 2025, we would comfortably be more like 60% to 80% capacity utilization in that plant through 2026, including towers and adapters from multiple OEMs.

That's great. Then maybe just heavy fab as a whole. I know that the order level, you mentioned some of it's timing and maybe you did mention this and I missed it, but I mean, I would think there was some impact related to just some of the variability or uncertainty related to selling Manitowoc. So maybe do you sense that there are heavy fab orders that are kind of pent up and that you would see upon closing? Or how do you view that as we think about 3Q and the remainder of the year into '26?

When I would say regarding the orders that we have for Abilene, I think the customers received the news quite well. We did have a customer cancel a fall adapter order and that customer intends to give -- to redo that adapter order in Abilene for 2026 production. But as far as industrial fabrication, orders, those orders -- we're still taking those orders, but those orders will be -- will transfer over to the new operator of that facility. So we delineate between industrial fab. Those are the crane orders, Eric, and the construction orders we produce in Manitoba. As far as Abilene, those orders would not impact this particular sale. PRS orders and tower and adapter orders seem to be flowing as usual.

Okay. And then maybe last one for me. Just you mentioned $8 million in cost savings related to the planned divestiture. Can you just remind me the split between cost of goods and OpEx?

I think I would say that's it's all -- that would be all in cost of goods sold. It's mostly fixed overhead.

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

Yes. Well, thank you, everyone, for your interest, and we look forward to getting back with you after our third quarter results to discuss them with you. Have a great day.

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