{"id":751267,"date":"2023-04-26T07:14:31","date_gmt":"2023-04-26T11:14:31","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/broadwind-sends-letter-to-shareholders\/"},"modified":"2023-04-26T07:14:31","modified_gmt":"2023-04-26T11:14:31","slug":"broadwind-sends-letter-to-shareholders","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/broadwind-sends-letter-to-shareholders\/","title":{"rendered":"Broadwind Sends Letter to Shareholders"},"content":{"rendered":"
\n

CICERO, Ill., April 26, 2023 (GLOBE NEWSWIRE) — Broadwind, Inc. (Nasdaq: BWEN) (the \u201cCompany\u201d), a diversified precision manufacturer of specialized components and solutions serving global markets, has sent a letter to shareholders in connection with its 2023 annual meeting of stockholders (the \u201c2023 Annual Meeting\u201d), which is scheduled to be held on May 23, 2023. The full text of the letter follows.<\/p>\n

April 26, 2023<\/p>\n

Dear Fellow Shareholder,<\/p>\n

As the 2023 Annual Meeting of Stockholders approaches on May 23, 2023 (the \u201c2023 Annual Meeting\u201d), we urge you to vote to support Broadwind, Inc.\u2019s (\u201cBroadwind\u201d or the \u201cCompany\u201d) directors on the WHITE <\/strong>proxy card.<\/p>\n

Your vote will be especially important this year. An activist hedge fund, WM Argyle Fund, LLC (\u201cWM Argyle\u201d), has notified the Company that it intends to propose three nominees to the Company\u2019s Board of Directors (the \u201cBoard\u201d). WM Argyle, which claims to be \u201cone of Broadwind’s largest shareholders\u201d while only owning approximately 1% of Broadwind\u2019s outstanding common stock, appears to have been formed specifically to disrupt Broadwind.<\/p>\n

WM Argyle has made what we believe to be distorted, misleading and fundamentally false claims with respect to the Board and management team in a thinly veiled attempt to take control of Broadwind. WM Argyle is seeking to replace half of your independent Board, including the Chairman, the Chairman of the Audit Committee, and one of our most experienced technical and engineering experts. In stark contrast, WM Argyle\u2019s candidates are each worryingly unqualified. We believe their lack of senior-level experience and wholly inadequate knowledge of our markets leave them incapable of effectively representing all shareholder interests.<\/p>\n

Over the past several years, Broadwind has taken decisive steps to drive long-term value creation for shareholders. We have positioned the business to achieve margin expansion, strengthened the balance sheet and retained significant manufacturing capabilities to support customers as market conditions in the US domestic wind industry begin to improve. This strategy has already achieved results, as seen by the transformational $175 million wind tower order with a major wind turbine Original Equipment Manufacturer (\u201cOEM\u201d) in January 2023. This order more than doubled our backlog and secured at least 50% of our tower production capacity for 2023 and 2024 with an attractive margin profile, particularly given the benefit of the IRA-related tax credit. Last week Broadwind increased its full year financial outlook for 2023, which has been bolstered by demand strength across our diverse endmarkets, pricing discipline and a more favorable sales mix towards higher margin products.<\/p>\n

We believe investors have recognized our success, together with the significant opportunities that lay ahead. Broadwind\u2019s stock responded strongly to the tower order announcement, contributing to its outperformance versus the WilderHill Clean Energy Index by more than 230% in the three-year period immediately prior to WM Argyle\u2019s public activist campaign announcement on January 18, 2023 and by over 170% year-to-date 2023. WM Argyle\u2019s campaign for Board control threatens the Board\u2019s ability to oversee the successful execution of its strategy during this critical period.<\/p>\n

\n
\n WM Argyle\u2019s Short-sighted, Opportunistic Demands Show a Fundamental Lack of Understanding of the Company and Clean Tech Industry<\/em>
\n <\/strong>\n <\/p>\n

Since it first approached Broadwind last year, WM Argyle has proposed a set of shifting demands that put their inexperience on full display. Ironically, some of their demands include initiatives that we already have underway, which they have repackaged as their \u201cnew\u201d ideas for the business, while offering vague platitudes around cost management, available liquidity and customer acquisition that demonstrate a lack of commercial sophistication and operational expertise.<\/p>\n

For example, WM Argyle recently criticized our customer concentration and reliance on large customer relationships. This is a fundamental misunderstanding of the US domestic wind energy market, where four OEMs were responsible for nearly all new onshore wind projects in 2022. Broadwind has strong, trusted relationships with three of these OEMs and is in active discussions with the fourth. Further, over the past six years, our diversification efforts have reduced the percentage of sales derived from our top five customers from 91% to 69% and reduced the precentage of wind-related revenue from 92% to 48%.<\/p>\n

WM Argyle also either misunderstands or misrepresents our capital allocation strategy and cash burn rate. Broadwind has more than enough liquidity to meet the continued growth of the business. Our use of a revolving line of credit is part of a deliberate strategy to manage cash prudently, and is a standard practice in our industry. While lower wind activity during the pandemic contributed to lower free cash generation over the past three years, this dynamic has begun to shift as the industry moves toward cyclical recovery. To that end, Broadwind had a near record level in cash and liquidity as of December 31, 2022.<\/p>\n

WM Argyle claims Broadwind must invest in the creation of intellectual property, an initiative that Broadwind has been undertaking for several years and is already showing results. We developed and launched a new proprietary, copyright-protected line of natural gas Mobile Pressure Reducing Systems (PRS). The product launched successfully, recovering its costs in less than three years. Earlier this month, we announced a new $8 million order for the PRS system and its accessories, further validating the strength of our technology and long-term strategy within clean fuels. The PRS product is enabling Broadwind to enter the hydrogen fuel market, which is forecast to grow rapidly in the coming years.<\/p>\n

Perhaps most importantly, WM Argyle has criticized our operating performance and profitability, urging reductions in expenses and a dilution of strategic focus. We have taken substantial actions to reduce non-essential fixed overhead costs, including headcount reductions, and increased revenue per employee from $295,000 to $354,000 since 2018. At the same time, we intentionally retained the majority of our skilled workforce during the recent downturn to preserve capacity that could have been otherwise eliminated, so that we would be among the first to benefit from a rebound in demand entering a cyclical recovery. The transformational $175 million tower order announced in January 2023 is a direct result of this strategy, and a validation of our OEM-centric approach.<\/p>\n

Simply put, we have taken a long-term value approach that sits in direct contrast to WM Argyle, whose short-sighted, ill-conceived demands would have led to a failure to capitalize on the current demand recovery evidenced across our diverse end-markets.<\/p>\n

\n
\n WM Argyle\u2019s Nominees Are Unqualified and Unsuitable for Broadwind<\/em>
\n <\/strong>\n <\/p>\n

None of WM Argyle\u2019s candidates have ever served in a fidicuary role as a board member, ever. None of WM Argyle\u2019s nominees have backgrounds in clean technologies or energy transition manufacturing; none have senior executive or board experience; and none have senior-level financial expertise, or any such background required to be an effective director at Broadwind:<\/p>\n