Broadwind targets net leverage of 2.0x by end-2028 after MCM acquisition
Key Facts
Broadwind plans to reduce net leverage to 2.0x or less by the end of 2028, the company said on November 2 when it announced its acquisition of MCM. It said the reduction would come from a combination of earnings growth and debt repayment. The company estimated combined-business net debt to adjusted EBITDA at about 3.7x, on a pro forma basis using results for the twelve months ended June 30, 2026. That puts estimated post-deal leverage above the stated target, with a deadline of the end of 2028. Broadwind shares closed at $2.98 in the November 11 session, within a daily range of $2.900 to $3.110.
Broadwind paid about $21.5 million in cash at the October 30 closing, of which $3.5 million was deposited in escrow accounts. The company said in its filing that it funded the acquisition with available cash and draws on its credit facility. MCM generated about $16.5 million in revenue during the twelve months ended June 30, 2026, and recorded adjusted EBITDA of about $3.7 million. That equates to a margin of about 23% of revenue, according to Broadwind's figures. MCM's contribution forms part of the combined business base on which the company based its pro forma leverage estimate after the deal.
The acquisition gives Broadwind entry into manufacturing power transmission and distribution components, a sector that the company said accounted for about 95% of MCM's revenue in the twelve months through June 30, 2026. The deal added a 37,000-square-foot design, engineering and manufacturing facility in Northport, Alabama. About 50 skilled employees also joined the company, according to Broadwind's announcement. MCM Chief Executive Wes Jones said joining Broadwind would give customers greater scale and broader capabilities while preserving the value MCM had built over three decades. The addition expands Broadwind's reach in electrical infrastructure, while its stated debt-reduction plan depends on earnings growth and repayment of obligations.
Before announcing the acquisition, Broadwind reported second-quarter 2026 revenue of $24.3 million, up 67% year over year, and orders of $35.2 million, up 68%. The company said organic orders in its industrial solutions segment rose 24% and in its gearing segment increased 138% from the same period a year earlier. The combined backlog for the two segments also rose 93% year over year through June 30, and the book-to-bill ratio was 1.5x at quarter-end. Chief Executive Eric Blashford linked the strategic shift to a focus on precision manufacturing for power generation and critical infrastructure markets in the United States. These indicators provide context for the business growth the company is counting on in its financial plan, but they relate to the second quarter of 2026.
Broadwind had set November 12 as the date for releasing third-quarter results before the market opened, with a review call scheduled for the same day at 11 a.m. Eastern time. According to Investing.com, the stock fell 14.93% to $2.535 in premarket trading on November 12, compared with the previous session's close of $2.98. The move came after the results announcement, according to the same source. The company is scheduled to make a replay of the call available through November 19. The stated leverage target remains set for the end of 2028, with Broadwind's stated path relying on earnings growth and debt repayment.