Broadwind secures tax credit deal with MarketAxess

Broadwind, Inc. (NASDAQ:BWEN), a nonferrous foundry with a market capitalization of $36.27 million, has entered into a significant tax credit transfer agreement with MarketAxess Holdings Inc., as per an 8-K filing with the SEC. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 1.5x, indicating solid short-term financial stability. The deal, effective January 28, 2025, allows Broadwind’s subsidiary, Broadwind Heavy Fabrications, Inc. (BHF), to sell Advanced Manufacturing Production Credits to MarketAxess.

These tax credits, generated by BHF’s production of eligible components for wind turbine equipment, are sold under the Internal Revenue Code Section 45X. For the years 2025 and 2026, the agreement stipulates the sale of up to $15 million and $20 million in tax credits, respectively.

MarketAxess will purchase the credits quarterly at $0.935 per dollar of tax credit value. Broadwind will incur a broker’s fee of 0.75% on the gross amounts received, along with other transaction-related expenses, including legal fees for both BHF and MarketAxess. Additionally, Broadwind Inc. has provided a parent guaranty supporting BHF’s obligations under the agreement.

This strategic move by Broadwind reflects the company’s ongoing efforts to capitalize on its manufacturing capabilities and the incentives available for domestic production in the renewable energy sector. The transaction is backed by the full texts of the agreements, which are attached to the SEC filing as exhibits. InvestingPro analysis indicates the company has been profitable over the last twelve months, with a positive earnings yield of 9% and a favorable EV/EBITDA ratio of 5.55x.

Investors and stakeholders in the renewable energy manufacturing space may view this agreement as a positive development for Broadwind, signaling the company’s proactive approach to leveraging financial mechanisms to support its operations. Based on InvestingPro data, analysts maintain coverage of the stock with price targets ranging from $2.50 to $8.00, suggesting potential upside from current levels. The company’s next earnings report is scheduled for February 26, 2025, which could provide further clarity on the impact of this strategic initiative. This information is based on a press release statement and InvestingPro research.

In other recent news, Broadwind has been making strategic moves to bolster its financial standing and operational performance. The manufacturer recently amended its credit agreement with Wells Fargo (NYSE:WFC) Bank, increasing the principal amount of its term loan to $7.578 million and adjusting its fixed charge coverage ratio. The move is expected to enhance Broadwind’s financial flexibility and liquidity for its operations.

Simultaneously, the company reported its third-quarter earnings for 2024, marking its seventh consecutive profitable quarter. Despite a decrease in revenue, Broadwind recorded $23 million in orders, a 45% increase from the previous year, and a net income of $0.1 million. The company projects revenues between $31 million and $33 million for the fourth quarter, with an adjusted EBITDA anticipated to be between $1 million and $1.5 million.

Broadwind’s stock price target was recently reduced to $2.50 from $4.00 by analysts, despite maintaining a Buy rating. This adjustment followed the company’s mixed third-quarter performance, which saw revenues fall short of guidance and market expectations, although EBITDA and net income were favorable. The company’s CEO, Eric Blashford, attributes the company’s performance to operational improvements and strategic investments. These are the recent developments at Broadwind.

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