Broadwind M&A announcement

Good morning, and thank you for joining today's call. After the market closed yesterday, we issued a press release announcing Broadwind's acquisition of MCM. In addition to this release, a presentation related to the transaction is currently available in the investor relations section of our corporate website. 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 factor section of our latest annual and quarterly filings with the SEC.

Additionally, please note that you can find reconciliations of historical non-GAAP financial measures discussed during our call in the press release issued yesterday. With that, I'll turn the call over to Broadwind's President and CEO, Eric Blashford.

Thanks, Tom, and welcome to all of you joining today's presentation. After the market closed yesterday, we issued a press release announcing our acquisition of privately held MCM for a purchase price of $18 million plus an earnout, subject to meeting certain financial performance milestones within 14 months of the transaction close. MCM is an Alabama-based precision manufacturer with a 30-year track record of designing, engineering, and fabricating metal components, the electric utility, and critical infrastructure markets. From its 37,000 sq ft facility in Northport, near Tuscaloosa, MCM supplies mission-critical hardware to some of the nation's leading utilities and their suppliers, with products engineered to meet stringent standards for corrosion resistance, conductivity, and performance under extreme weather conditions in high-power transmission line applications.

Through a vertically integrated offering that includes machining, fabrication, assembly, kitting, and delivery, MCM has established itself as a leading component provider to the domestic electrical transmission and distribution, or T&D sector. MCM is 100% U.S.-based and sources all raw materials through an established domestic supplier network, creating a responsive and reliable supply of products for their customers on demand. MCM's management and its approximately 50 employees all joined Broadwind upon the closing of the acquisition. The acquisition of MCM marks a defining milestone in Broadwind's transformation into a more focused, higher value solutions provider serving the power generation and critical infrastructure markets. Over the past several years, we have sold non-core assets, exited underperforming product lines, and strengthened our balance sheet. We remain focused on building more stable, higher value revenue streams supported by distinct capabilities, lasting competitive advantages, and strong long-term growth opportunities.

Beginning in 2018, we launched a strategic campaign to diversify away from the wind market, which had represented a significant portion of Broadwind's revenue. As recently as 2023, lower margin and often uneven wind-related revenue represented as much as 50% of our total revenue and depended heavily on tax credit support to achieve acceptable profitability. Over the last two years, we left the wind tower market entirely. Today, with the acquisition of MCM, we are taking the next important step in our evolution toward becoming a leading supplier of critical components for the power generation and grid infrastructure markets. Following the wind-down of our legacy wind business, MCM gives Broadwind an attractive platform to rebuild its skilled workforce and rescale domestic manufacturing capability. It also serves the electrical T&D market, which is seeing record investment in grid modernization, expansion, hardening, and resilience.

With approximately 95% of its trailing 12-month revenue generated from T&D component manufacturing, MCM gives Broadwind an immediate and strategic entry point into this attractive growing market. MCM's experienced manufacturing team, technical expertise, longstanding customer relationships, and track record of profitable growth make the business a strong strategic fit for Broadwind and a compelling foundation for the next phase of our growth. Next, allow me to provide a bit more detail on our investment case and why we're excited about the value creation potential of MCM under the Broadwind umbrella. First, MCM gives Broadwind a strategic entry point into fast-growing power generation and critical infrastructure markets. It positions us to benefit from a multi-year wave of investment to upgrade, expand, and strengthen the nation's power grid as rising electricity demand calls for a more reliable and efficient transmission network.

The U.S. transmission network spans more than 600,000 miles, and it needs significant investment to meet growing demand and stay reliable and resilient. Second, MCM adds a higher value revenue stream in our target markets. MCM grew revenue at a compounded annual rate of 25% over the four years ending 2025. For the 12 months ending June 30th, 2026, its adjusted EBITDA margin was approximately 23%, well above Broadwind's. With most of its revenue over that period coming from the domestic T&D market, which shifts our revenue mix toward power and critical infrastructure and directly advances our strategic priorities. Third, the acquisition expands our domestic manufacturing footprint and skilled workforce. MCM adds about 50 skilled non-union employees and a 37,000 sq ft engineering and manufacturing facility in Northport, Alabama. With MCM, our total employee base grows by more than 20%.

MCM brings longstanding customer relationships backed by sole source and preferred supplier positions. Its customer base is entirely complementary to ours, which broadens and diversifies our commercial relationships. MCM stands out for short lead times, day-to-day delivery, and consistently meeting demanding utility-grade specifications. As a result, its top customers have been with MCM for more than 20 years on average. With that, I will turn the call back over to Tom for additional details around the transaction.

Thank you, Eric. On October 30th, Broadwind completed the acquisition of privately held MCM for $18 million in cash at closing. The transaction also includes up to $7 million of additional performance-based consideration tied to the achievement of defined financial milestones over the next 14 months. Beginning in the fourth quarter of 2026, it is anticipated that MCM's results will be reported within a new Grid Infrastructure Solutions segment. The trailing 12 months ended June 30th, 2026, MCM generated approximately $16.5 million of revenue and $3.7 million of adjusted EBITDA, representing an adjusted EBITDA margin of approximately 23%. Over the past five years, MCM has invested in new capacity additions in support of backlog growth, including an expansion of the Northport facility in 2023.

Moving forward into 2027, we expect near-term capital expenditures to be largely related to maintenance-type spend, and we expect that these expenditures will not exceed 5% of revenue. On a pro forma combined basis, for the trailing 12 months ended June 30th, 2026, Broadwind and MCM generated approximately $90 million of revenue and $3.6 million of adjusted EBITDA, representing a blended margin of 4%. After giving effect to the transaction, pro forma net debt to trailing 12-month adjusted EBITDA was approximately 3.7x. Based on MCM's trailing 12-month adjusted EBITDA as of June 30th, 2026, the upfront purchase price represents a multiple of approximately 4.8x. This valuation excludes any performance-based consideration that may become payable upon the achievement of the specified milestones. We expect the transaction to be accretive to Broadwind's adjusted EBITDA margin and earnings per share beginning in the fourth quarter of 2026.

With that overview of the transaction economics and pro forma financial profile, I will turn the call back to Eric for his concluding remarks.

Thanks, Tom. In conclusion, the acquisition of MCM represents an important milestone in Broadwind's strategic transformation. It advances our shift toward higher value, more durable revenue streams, and strengthens our position as a leading domestic supplier to the power generation and critical infrastructure markets. The transaction, we expect to be accretive to both adjusted EBITDA margin and earnings per share, provides a compelling entry point into component manufacturing for the domestic T&D market, while positioning us to rescale our manufacturing capacity and skilled labor force at an attractive valuation multiple. We believe this acquisition provides a strong template for how we intend to approach strategic acquisitions going forward as we pursue high-quality, low-risk bolt-on assets that expand our domestic manufacturing base in a disciplined, ratable fashion, while adding experienced management teams and capabilities to support Broadwind's next phase of growth.

On behalf of the entire Broadwind team, we're excited to welcome the people of MCM to our company. Our shared commitment to product quality, operational excellence, and deep long-term customer relationships gives us confidence that MCM will be a solid long-term strategic fit and a meaningful contributor to shareholder value over time. With that, I'll turn the call back over to the operator to begin our Q&A session.