BWEN — Q2 2026 Financial Report Analysis

Overview

Broadwind's second quarter of 2026 is the first one reported after it sold its Abilene, Texas wind-tower plant on April 30 and left the wind fabrication business. Because of that sale, the tower business is now shown separately as a "discontinued operation", and every figure below covers only what Broadwind is keeping: precision gearing, gas-turbine components (the Industrial Solutions segment) and a small pressure-reducing-systems line. On that basis, revenue rose 67% to $24.3 million and the loss from continuing operations shrank to $0.7 million from $3.0 million. Almost all of the improvement came from natural gas turbine demand. Industrial Solutions sales rose 79% "primarily due to increased shipments to new and aftermarket gas turbine customers", and Gearing grew 24% on shipments to power generation customers.

At a glance

• $24.3 million revenue, up 67%: the business Broadwind is keeping is growing quickly, but it is small. The company said these lines made roughly $64 million over the twelve months to March, against the $140–150 million it had guided to for 2026 when the wind business was still included.
• 15.6% gross margin, up from 6.9%: gross margin is the share of sales left after the direct cost of making the product. More volume through the same plants, plus what the company calls "a more profitable mix" in Industrial Solutions, more than doubled it.
• $85.1 million backlog, up 93%: backlog is signed orders not yet shipped. For the continuing businesses it was $85.1 million at June 30, against $44.2 million a year earlier. That is about 3.5 quarters of revenue at the Q2 run rate.

Key figures (continuing operations)

The company derives continuing-operations backlog from total backlog of $89.3M and $95.3M, minus $4.2M and $51.1M that belongs to the exited wind business. Percentage changes on losses are marked n/m (not meaningful).

Where the growth came from

Industrial Solutions is now the profit engine. It sells components for combined-cycle natural gas turbines, both for new turbines and for replacement parts on existing ones. The 10-Q credits its jump in operating income to "higher sales and a more profitable mix of product sold". Its segment adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $2.5 million, or nearly 19% of sales. Orders were a record $17.2 million, up 24%, and segment backlog was a record $47.4 million, up 59%.

Gearing is still slightly loss-making, but orders rose 138% to $16.2 million. The 10-Q cites "significant orders from a leading Original Equipment Manufacturer (OEM) of natural gas turbines", plus oil and gas demand. Segment backlog rose 164% to $37.6 million. That includes a $6 million follow-on gas-turbine gearing order announced in March, which management said would ship in Q4 2026 and into 2027. The order surge has not reached revenue yet: Gearing sales grew 24% while orders grew 138%. The second half is when that gap should start to close.

On a sequential basis, continuing revenue rose from $17.9 million in Q1 to $24.3 million in Q2. Adjusted EBITDA went from almost zero (about $0.04 million) to $1.55 million. These Q1 figures are derived from the six-month totals minus Q2.

The exit from wind

The Abilene plant went to a subsidiary of IES Holdings for up to $19.5 million. Broadwind received $17.2 million in net cash and booked a $0.2 million loss on the sale. Broadwind leases the plant back at a nominal rent until about September 5, 2026, only to finish the tower contracts already in hand. Only $4.2 million of wind backlog was left at June 30. The discontinued business still produced $18.5 million of revenue in Q2 but only $45,000 of after-tax income, down from $2.0 million a year earlier. Management links the wind exit to the One Big Beautiful Bill Act of July 2025, which "accelerated the phase-out of certain clean energy tax credits" for wind projects. It says it does not expect that law to materially affect the continuing businesses.

The sale changed the balance sheet. Cash rose to $17.0 million from $0.5 million at December 31. Debt and finance leases fell to $6.3 million, down from $29.0 million a year earlier, so Broadwind now holds about $10.7 million more cash than debt. Liquidity, meaning cash plus undrawn credit line, was $40.1 million, or $31.3 million after the lender's minimum-availability requirement.

What the headline numbers hide

• Corporate overhead still absorbs all segment profit. The two operating segments together earned $2.1 million of operating income in Q2. Corporate and Other lost $2.4 million, which left a consolidated operating loss of $0.2 million. At its current size the company is roughly break-even, and growth has to keep outrunning a fixed corporate cost base of about $2.4 million a quarter.
• Transaction costs are the gap between GAAP and adjusted results. Adjusted EBITDA of $1.55 million adds back $0.62 million of "transaction costs", which the company describes as legal and professional fees for "completed or contemplated transactions". It also adds back $0.40 million of share-based pay and the usual interest, tax and depreciation. Without the transaction costs, the operating result would have been about $0.4 million of profit instead of a $0.25 million loss. These costs may recur, because management says it is "actively evaluating" acquisitions.
• Receivables are growing faster than sales and are using up cash. Accounts receivable (money customers owe) rose 52% in six months, from $11.2 million to $17.0 million, a $5.8 million cash outflow. That is why continuing operations still used $0.9 million of operating cash in the first half, despite positive adjusted EBITDA. Inventory was flat at $28.2 million. The company also sells some receivables to banks under supply-chain financing programs, which pulls cash in sooner, so reported operating cash flow already benefits from that.
• Capital spending picked up. First-half capex was $3.2 million, against $0.4 million a year earlier, and most of it came in Q1. By the company's own free cash flow measure, the continuing business generated $0.3 million in Q2 but burned $4.0 million over the half.
• The lower loss per share is entirely operational. Weighted shares rose 3.2% to 23.5 million, reflecting stock issued to the 401(k) plan and employee awards, and there were no buybacks. The tax charge was negligible: the company cites nearly $300 million of net operating loss carryforwards, which are past losses that can offset future taxable profit. Interest expense fell by only $0.2 million. The improvement in loss per share came from the operating line.
• The old full-year guidance no longer fits the company. In March, Broadwind reaffirmed full-year 2026 guidance of $140–150 million revenue and $8–10 million adjusted EBITDA. Those figures included the wind business it has since sold. Neither the May nor the August results release restates guidance for the smaller company, so there is no current target to measure against.

Takeaway: The business Broadwind kept is growing, and its main segment is now profitable: Industrial Solutions made a 17.8% operating margin on gas-turbine demand. But at roughly $24 million of quarterly revenue, the segments' profit is only just enough to cover about $2.4 million a quarter of corporate cost. The near-doubled backlog, especially Gearing's 164% jump, is the evidence that revenue can grow past that fixed cost. Whether Gearing turns those orders into shipments in the second half matters more than anything in this quarter's P&L.

Outlook

Management did not give updated numerical guidance. It points to a book-to-bill of 1.5x (orders received divided by revenue shipped, so above 1 means the order book is growing) and "improved visibility into the remainder of 2026". Its stated capital priorities are bolt-on acquisitions in power generation and infrastructure, organic investment, debt reduction and "opportunistic share repurchases".

Our read: the order book supports continued year-over-year revenue growth in Q3 and Q4. The risk is concentration. Both segments' growth is tied to natural gas turbine OEMs, so the company has largely swapped dependence on wind tax credits for dependence on the gas-turbine build cycle. Watch three things in the Q3 report: whether Gearing revenue starts catching up with its orders, whether receivables stop outgrowing sales, and whether transaction costs turn into an actual acquisition. The wind lease ends in early September, so Q3 should be the last quarter with meaningful discontinued-operations activity.