This Annual Report on Form 10-K (“Annual Report”) contains “forward looking statements”— that is, statements related to future, not past, events—as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements. Forward looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the ~~following~~, ~~many of which are, and will be, amplified by the COVID-19 pandemic:~~ following:(i) the impact of global health concerns ~~including the impact of the current COVID-19 pandemic~~ on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants, including the advanced manufacturing tax credits (which remain subject to further technical guidance and regulations), and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (v) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as ~~necessary, in light of the COVID-19 pandemic; (v)~~necessary; (vi) our ability to continue to grow our business organically and through ~~acquisitions, and the impairment thereto by the impact of the COVID-19 pandemic; (vi)~~acquisitions; (vii) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; ~~(vii)~~(viii) information technology failures, network disruptions, cybersecurity attacks or breaches in data ~~security, including with respect to any remote work arrangements implemented in response to the COVID-19 pandemic; (viii)~~security; (ix) the sufficiency of our liquidity and alternate sources of funding, if necessary; ~~(ix)~~(x) our ability to realize revenue from customer orders and ~~backlog; (x)~~backlog (including our ability to ~~operate our business efficiently, comply~~finalize the terms of the remaining obligations under a supply agreement with ~~our debt obligations, manage capital expenditures and costs effectively, and generate cash flow;~~a leading global wind turbine manufacturer); (xi) the economy ~~including its stability in light of the COVID-19 pandemic,~~ and the potential impact it may have on our business, including our customers; (xii) the state of the wind energy market and other energy and industrial markets generally, including the availability of tax credits, and the impact of competition and economic volatility in those markets; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xv) the effects of the change of administrations in the U.S. federal government; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xviii) ~~our ability to utilize various relief options enabled by the CARES Act; (xix)~~ the limited trading market for our securities and the volatility of market price for our securities; (xix) our outstanding indebtedness and its impact on our business activities (including our ability to incur additional debt in the future); and (xx) the impact of future sales of our common stock or securities convertible into our common stock on our stock price.These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements. We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.

(Dollar amounts are presented in thousands, except per share data and unless otherwise stated)

As used in this Annual Report, the terms “we,” “us,” “our,” “Broadwind” and the “Company” refer to Broadwind, Inc., a Delaware corporation headquartered in Cicero, Illinois, and its wholly-owned subsidiaries (the “Subsidiaries”). Dollars are presented in thousands unless otherwise stated.

Broadwind is a precision manufacturer of structures, equipment and components for clean technology and other specialized applications. We provide technologically advanced high value products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure sectors, primarily in the United States of America (the “U.S.”). Our capabilities include but are not limited to the following: heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, gearbox manufacturing and repair, heat treat, assembly, engineering and packaging solutions.

We were incorporated in 1996 in Nevada as Blackfoot Enterprises, Inc., and through a series of subsequent transactions, became Broadwind Energy, Inc., a Delaware corporation, in 2008. Through acquisitions in 2007 and 2008, we focused on expanding upon our core platform as a wind tower manufacturer, established our Gearing segment, and developed and broadened our industrial fabrications capabilities. In early 2017, we acquired Red Wolf Company, LLC, a kitter and assembler of industrial components primarily supporting the global gas turbine market. In 2020, we rebranded to Broadwind, Inc., a reflection of our diversification progress to date and our continued strategy to expand our product and customer diversification outside of wind energy. Effective with our 2020 rebranding, we renamed certain segments. Our Towers and Heavy Fabrications segment was renamed to Heavy Fabrications and our Process Systems segment was renamed to Industrial Solutions. Our Gearing segment name remained the same.

We provide large, complex and precision fabrications to customers in a broad range of industrial markets. Our most significant presence is within the U.S. wind energy industry, although we have diversified into other industrial markets in order to improve our capacity utilization, reduce our customer concentration, and reduce our exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, we provide steel towers and repowering adapters primarily to wind turbine manufacturers. Our production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers (1650 tower sections), sufficient to support turbines generating more than 1,100 MW of power. We have expanded our production capabilities and leveraged our manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and original equipment manufacturer (“OEM”) components utilized in surface and underground mining, construction, material handling, oil and gas (“O&G”) and other infrastructure markets. We have designed and manufacture a mobile, modular pressure reducing system for the compressed natural gas virtual pipeline market. We manufacture components for buckets, shovels, car bodies, drill masts and other products that support mining and construction markets. In other industrial markets, we provide crane components, pressure vessels, frames and other structures.

We provide gearing, gearboxes and ~~gearboxes~~precision machined components to a broad set of customers in diverse markets including; ~~onshore and offshore O&G fracking and drilling,~~ surface and underground mining, wind energy, steel, material handling, infrastructure, onshore and offshore O&G fracking and drilling, marine and other industrial markets. We provide gearbox repair services and have manufactured loose gearing, gearboxes and systems and provided heat treat services for aftermarket and OEM applications for ~~nearly~~ a century. While a significant portion of our business is manufactured to our customer’s specifications, we employ design and metallurgical engineers to meet our customer’s stringent quality requirements, to improve product performance and reliability and to develop custom products that are integrated into our customer’s product offerings.

We provide supply chain solutions, light fabrication, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market. We have recently expanded ~~our market reach~~ into the ~~solar~~U.S. wind power generation market, by ~~leveraging our existing core competencies.~~providing tower internals kitting solutions for on-site installations, as OEMs domesticate their supply chain due to lead time and reliability issues. We leverage a global supply chain to provide instrumentation & controls, valve assemblies, sensor devices, fuel system components, electrical junction boxes & wiring, energy storage services and electromechanical devices. We also provide packaging solutions and fabricate panels and sub-assemblies to reduce our customers’ costs, improve manufacturing velocity and reliability.

The following table summarizes the key markets served and product offering of our three segments:

We intend to capitalize on the markets for wind energy, gas turbines, O&G, mining, and other industrial verticals in North America by leveraging our core competencies in welding, manufacturing, assembling and kitting. Our strategic objectives include the following, many of which are subject to risks and uncertainties that are, and have been, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result:following:

We market our heavy fabrications, gearing, and industrial solutions through a direct sales force, supplemented with independent sales agents in certain markets. Our sales and marketing strategy is to develop and maintain long-term relationships with our existing customers, and seek opportunities to expand these relationships across our business units. Our business development team uses market data, including marketing databases, information gathered at industry and trade shows, internet research and website marketing to identify and target new customers.

We manufacture products for a variety of customers in the wind energy, O&G, gas turbine, mining, and other industrial markets. Within the wind energy industry, our customer base consists primarily of wind turbine manufacturers who supply end users and wind farm operators with wind turbines, and wind gearbox re-manufacturers who use our replacement gears in their replacement gearboxes. The wind turbine market is very concentrated. According to Wood Mackenzie Power & Renewables ~~2022~~2023 industry data, the top four wind turbine manufacturers comprised approximately ~~90%~~88% of the U.S. market. As a result, although we have historically produced towers for a broad range of wind turbine manufacturers, in any given year a limited number of customers have accounted for the majority of our revenues. Within the O&G and mining industries, our customer base consists of manufacturers of hydraulic fracturing and mud pumps, drilling and production equipment, mining equipment, and off highway vehicles. Within the gas turbine industry, our customers supply end-users with natural gas turbines and after-market replacement and efficiency upgrade packages. Within our other industrial markets served, our customer base includes steel producers, ship builders, and manufacturers of material handling, pulp and paper and other power generation equipment. Sales to GE Renewable Energy representedgreater than 10% of our consolidated revenues for the year ended December 31, 2023. Sales to Siemens Gamesa Renewable Energy (“SGRE”) and GE Renewable Energy each represented greater than 10% of our consolidated revenues for the ~~years~~year ended December 31, ~~2022 and 2021.~~2022. The loss of one of these customers could have a material adverse effect on our business, results of operation or financial condition. As a result, we have an ongoing initiative to diversify our customer base.

Each of our businesses faces competition from both domestic and international companies. In recent years, the industrial gearing industry has experienced consolidation of producers and acquisitions by strategic buyers in response to strong international competition, although recent tariff and supply chain uncertainties have caused buyers to shift more of their purchases to domestic gear manufacturers.

Within the wind tower product line of our Heavy Fabrications segment, the largest North American based competitor is Arcosa Inc., which was formerly a Trinity Industries company. Other competitors include C.S. Wind, a South Korean Company, Marmen Industries, a Canadian company, and GRI Renewable Industries, a Spanish company, each of which have production facilities in the U.S. We also face competition from imported towers, although in recent years a number of trade cases have periodically significantly reduced competition from imports.

Imports from China and Vietnam have declined following a determination by the U.S. International Trade Commission (“USITC”) in 2013 that wind towers from those countries were being sold in the U.S. at less than fair value. As a result of the determination, the U.S. Department of Commerce (“USDOC”) issued antidumping and countervailing duty orders on imports of wind towers from China and an antidumping duty order on imports of towers from Vietnam. In May 2018, the U.S. Court of Appeals affirmed the decision from the U.S. Court of International Trade and at the same time excluded CS Wind Vietnam from the antidumping order. In April 2019, the USDOC extended the term of these duties for an additional five-year period. Following a renewed surge of tower imports from countries not impacted by existing tariffs, in July 2020, the USDOC issued antidumping and countervailing duty orders on imports of wind towers from Canada, Indonesia, and Vietnam and an antidumping order on imports of towers from Korea. The Indonesia countervailing duty order was later revoked after an appeal to the U.S. Court of International Trade (“CIT”). Then in September 2020, a new trade case was brought before the USDOC and USITC, to assess whether wind towers imported from India, Malaysia, and Spain were being sold in the U.S. at less than fair value. The USDOC and USITC issued affirmative final determinations in all three antidumping (India, Malaysia, and Spain) and two countervailing duty cases (India and Malaysia). The USDOC imposed orders for two cases in August 2021 and the remainder in December 2021.Appeals of several of the USDOC determinations are currently pending at the CIT and the CAFC.

Within our industrial fabrications product line of our Heavy Fabrications segment, our competitors in a fragmented market include Weldall Manufacturing and AT&F Advanced Metals, along with a large number of other regional competitors. The primary differentiator among fabricators is the range of manufacturing and machining capabilities, including lifting capacity, precision machining, heat treatment capacity and the sophistication of quality systems.

In our Gearing segment, which is focused on O&G, wind energy, mining and steel markets, we compete with domestic and international manufacturers who produce gears greater than one meter in diameter. Our key competitors include Overton Chicago Gear, Cincinnati Gearing Systems, Milwaukee Gear and Horsburgh & Scott. In addition, we compete with the internal gear manufacturing capacity of relevant equipment manufacturers and face competition from foreign competitors.

In our Industrial Solutions segment, which is primarily focused on the gas turbine market, we compete with electrical supply distributors. Our key competitors include Gexpro and other small independent companies.

The most impactful development incentive for our products has been the production tax credit (“PTC”) for new wind energy projects, which provides federal income tax credits based on electricity produced from qualifying wind turbines. Legislative support for the PTC has been intermittent since its introduction in 1992, which has caused volatility in the demand for new wind energy projects.

In December 2020, the Consolidated Appropriations Act of 2021 (“COVID IV”), a $2.3 trillion spending bill that combines a $1.4 trillion omnibus spending bill for federal fiscal year 2021 with $900 billion in stimulus relief for the COVID-19 pandemic was signed into law. As part of COVID IV, the PTC was extended for an additional year, allowing for a 60% credit for projects that start construction by the end of 2021. In order to benefit from the PTC, qualifying projects must either be completed within four years from their start of construction, or the developer must demonstrate that its projects are in continuous construction between start of construction and completion. As a result of COVID IV, the PTC will subsidize wind projects commenced as late as 2021 and completed by 2025, or later if continuous construction can be demonstrated. Included in COVID IV is the addition of a new 30% investment tax credit (“ITC”) created for offshore wind projects that start construction by the end of 2025. The provision will retroactively apply to projects that started production in 2016.

On August 16, 2022, the Inflation Reduction Act (“IRA”) was enacted to reduce inflation and promote clean energy in the United States. The IRA modifies and extends the PTC until the later of 2032 or when greenhouse gas emissions have been reduced by 75% compared to 2022. It provides for tax credits up to a maximum of 30%, adjusted for inflation annually, for electricity generated from qualified renewable energy sources where taxpayers meet prevailing wage standards and employ a sufficient proportion of qualified apprentices from registered apprenticeship programs. It also provides a bonus credit for qualifying clean energy production in energy communities.

The IRA also includes ~~advanced manufacturing~~Advanced Manufacturing Production tax credits (“AMP credits”) for manufacturers of eligible components, including wind and solar ~~components (“45X credits”).~~components. Manufacturers qualify for the ~~45X~~AMP credits based on the electricity output for each component produced and sold in the US starting in 2023 through 2032. The credit amount varies based on the eligible component, which includes solar components, wind energy components, inverters, qualifying battery components, and critical minerals. Tower manufacturers are eligible for credits of $0.03 per watt for applicable components produced. Manufacturers can ~~apply~~elect a direct pay option where they can receive a payment equal to the full value of the tax credits from the Internal Revenue Service ~~for cash refunds of~~anytime during the ~~45X credits~~ten-year period. That election lasts for ~~up to five years. After the first~~ five years, after which the ~~45X~~AMP credits ~~are transferable and~~ can be ~~sold~~used against tax obligations or transferred to third parties in exchange for cash. ~~We are waiting for the Internal Revenue Service and the U.S. Treasury Department to provide implementation guidance for the legislation.~~

In November 2021, the federal Infrastructure Investment and Jobs Act (“IIJA”) was signed into law. The IIJA provides for $548 billion in new infrastructure spending over the next five years and $650 billion in previously allocated funds. The IIJA allocated $62 billion to the Department of Energy for various projects focused on clean energy resources and expanding renewable energy. However the timing of the award of projects funded by the IIJA is uncertain thus the impact on our business is uncertain.

Our operations are subject to regulation of health and safety matters by the U.S. Occupational Safety and Health Administration. We believe that we take appropriate precautions to protect our employees and third parties from workplace injuries and harmful exposure to materials handled and managed at our facilities. However, claims asserted in the future against the Company for work-related injury or illnesses could increase our costs.

Our operations are subject to numerous federal, state and local environmental laws and regulations. Although it is our objective to maintain compliance with these laws and regulations, it may not be possible to quantify with certainty the potential impact of actions involving environmental matters, particularly remediation and other compliance efforts that we may undertake in the future.

We sell our towers under either supply agreements or individual purchase orders (“POs”), depending on the size and duration of the purchase commitment. Under the supply agreements, we typically receive a purchase commitment for towers to be delivered in future fiscal quarters, then receive POs on a periodic basis depending upon the customer’s forecast of production volume requirements within the contract terms. For our Gearing and Industrial Solutions segments, sales are generally based on individual POs. As of December 31, ~~2022,~~2023, the dollar amount of our backlog ~~believed to be firm~~based on unfulfilled POs and supply agreements was approximately ~~$297~~$183 million. This represents a ~~179% increase~~38% decrease from the backlog at December 31, ~~2021.~~2022. Backlog as of December 31, ~~2022~~2023 and ~~2021~~2022 is net of revenue recognized over time as described in Note 2, “Revenues” of our consolidated financial statements.

We had ~~499~~444 U.S.-based employees at December 31, ~~2022,~~2023, of which ~~451~~398 were in manufacturing related functions and 4846 were in administrative functions. As of December 31, ~~2022,~~2023, approximately ~~19%~~18% of our employees were covered by collective bargaining agreements with local unions in our Cicero, Illinois and Neville Island, Pennsylvania locations. We anticipate that the collective bargaining agreements with our union members will be renewed through contract renegotiation near the contract expiration dates, although there can be no assurance that any such agreements will be concluded. The collective bargaining agreement with the Neville Island union was renegotiated in November 2022 and is expected to remain in effect through October 2026. A four-year collective bargaining agreement in regards to the Cicero, Illinois facility was negotiated in February 2022 and is expected to remain in effect through February 2026. We believe that our relationship with our employees is generally positive. The table below summarizes our employees as of December 31, ~~2022:~~2023:

The primary raw material used in the construction of heavy fabrication and gearing products is steel in the form of plate, bar stock, forgings and castings. The market for tower steel and internal packages has become increasingly globalized. Although we are generally responsible for procurement of the raw materials, our global tower customers often negotiate the prices and terms for purchases, and, through a “directed buy”, we purchase under these agreements. We ~~then~~have legal title to the raw materials and pass the raw material cost through to our end customer plus a conversion margin.

Outside of these directed buys, we operate a multiple supplier sourcing strategy and source our raw materials through various suppliers located throughout the U.S. and abroad. We do not have long term supply agreements with our raw material suppliers, and closely match terms with those of our customers to limit our exposure to commodity price fluctuations. We have made modifications to our supply chain management practices to deal more effectively with potential disruptions arising from these purchasing practices.

Although we have been affected by global supply chain issues that are at least partially a result of the COVID-19 pandemic, we believe that we will be able to obtain an adequate supply of steel and other raw materials in 2023 to meet our manufacturing requirements. From time to time we have faced shortages of specific grades of steel, internal packages and delays associated with other materials from foreign sources including shortages and delays resulting from the impact of the COVID-19 pandemic.

We have a long-standing focus on processes for ensuring the manufacture of high-quality products. To achieve high standards of production and operational quality, we implement strict and extensive quality control and inspections throughout our production processes. We maintain internal quality controls over all core manufacturing processes and carry out quality assurance inspections at the completion of each major manufacturing step to ensure the quality of our products. The manufacturing process at our Gearing segment, for example, involves transforming forged steel into precision gears through cutting, heat treating, testing and finishing. We inspect and test raw materials before they enter the assembly process, retest the raw materials after rough machining, test the functioning of gear teeth and cores after thermal treatment and accuracy test final outputs for compliance with product specifications. We believe our investment in industry leading heat treatment, high precision machining, specialized grinding technologies and cutting-edge welding has contributed to our high product reliability and the consistent performance of our products under varying operating conditions. All of our core operating facilities are ISO 9001:2015 certified. We will continue our efforts to achieve the highest quality standards.

We utilize standardized information technology systems across all areas of quoting and estimating, enterprise resource planning, materials resource planning, capacity planning and accounting, project execution and financial controls. We provide information technology oversight and support from our corporate headquarters in Cicero, IL. The operational information systems we employ throughout the Company are industry-specific applications that in some cases have been internally developed or modified by the vendor and improved to fit our operations. Our enterprise resource planning software is integrated with our operational information systems wherever possible to deliver relevant and real-time operational data. We believe our information systems provide our people with the tools to execute their individual job function and achieve our strategic initiatives.

We sell to a broad range of industrial customers. In general, we produce to order rather than to stock. For wind towers, our largest product line, the industry has historically used customized contracts with varying terms and conditions between suppliers and customers, depending on the specific objectives of each party. Our practices mirror this historical industry practice of negotiating agreements on a case- by-case basis. As a result, working capital needs, including levels of accounts receivable (“A/R”), accounts payable (“A/P”), and inventory, can vary significantly from quarter to quarter based on the contractual terms associated with each quarter’s sales, such as whether and when we are required to purchase and supply steel to meet our contractual obligations. Customer deposits can vary significantly from quarter to quarter based on customer mix, contractual terms associated with each quarter’s sales and the timing impacts associated with customers placing orders for future production. In recent years, our larger customers have increasingly used supplier financing programs, whereby a third-party lender advances customer payments to us net of an interest charge. The combination of customer deposits and supplier financing programs arrangements may significantly reduce our working capital requirements.

In analyzing our liquidity, an important short-term metric is our use of operating working capital (“OWC”) in relation to revenue. OWC is comprised of A/R and inventories, net of A/P and customer deposits. Our OWC at December 31, ~~2022~~2023 was ~~$475,~~$19,408, or ~~0.3%~~10% of trailing three months of sales annualized, compared to December 31, ~~2021,~~2022, when OWC was ~~$18,635,~~$475, or ~~18%~~0.3% of trailing three months of sales annualized. The ~~decrease~~increase in OWC was driven primarily by ~~the timing and level of customer deposits received for future scheduled production.~~higher accounts receivable balances.

Our principal executive office is located at 3240 South Central Avenue, Cicero, IL 60804. Our phone number is (708) 780-4800 and our website address is www.bwen.com.

On our website at www.bwen.com, we make available under the “Investors” menu selection, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8 K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such reports or amendments are electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”). Also, the SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information that we file electronically with the SEC.

From time to time, we also provide additional information about the Company and its activities on the “Investors” section of our website, which we encourage investors to review. The information contained or incorporated on our website is not a part of this document.

We may be unable to keep pace with rapidly changing technology in wind turbine and other industrial component manufacturing.

The global markets for wind turbines and our other manufactured industrial components are rapidly evolving technologically. Our component manufacturing equipment and technology may not be suited for future generations of products being developed by wind turbine companies. As turbines grow in size, particularly to support the development of offshore windfarms, tower manufacturing becomes more complicated and may require investments in new manufacturing equipment. For example, some wind turbine manufacturers are using wind turbine towers made partially or wholly from concrete instead of steel. Additionally, if we implement emerging technologies such as artificial intelligence and machine learning into our products and services, we may not be able to anticipate vulnerabilities, flaws or security threats resulting from the use of such technology and develop adequate protection measures. To maintain a successful business in our field, we must keep pace with technological developments and the changing standards of our customers and potential customers and meet their constantly evolving demands. If we fail to adequately respond to the technological changes in our industry, make the necessary capital investments or are not suited to provide components for new types of wind turbines, our business, financial condition and operating results may be adversely affected.

We are substantially dependent on a few significant customers and the ordering levels for our products may vary based on customer needs. Further, we face significant risks associated with changes in our relationship with these significant customers.

Historically, the majority of our revenues are highly concentrated with a limited number of customers. Some of the markets we serve have a limited number of customers. In 2023, one customer, GE Renewable Energy, accounted for more than 10% of our consolidated revenues, and our five largest customers accounted for 65% of our consolidated revenues. Certain of our customers have periodically expressed their intent to scale back, delay or restructure existing customer agreements, which has led to reduced revenues from these customers and periodic deviations in expected ordering levels. It is possible that this may occur again in the future. Additionally, not all of our customers make purchases every year. As a result, our operating profits and gross margins have historically been negatively affected by significant variability in production levels, which has created production volume inefficiencies in our operations and cost structures. Because of this variability, we believe that comparisons of our operating results in any particular quarterly period may not be a reliable indicator of future performance.

Additionally, if our relationships with our significant customers should change materially, it could be difficult for us to immediately and profitably replace lost sales in a market with such concentration, which could have a material adverse effect on our operating and financial results. We could be adversely impacted by decreased customer demand for our products due to (i) the impact of current or future economic conditions on our customers, (ii) our customers’ loss of market share to their competitors that do not use our products, and (iii) our loss of market share with our customers. We could lose market share with our customers to our competitors or to our customers themselves, should they decide to become more vertically integrated and produce the products that we currently provide.

In addition, even if our customers continue to do business with us, we could be adversely affected by a number of other potential developments with our customers. For example:

Because our industry is capital intensive and we have significant fixed and semi-fixed costs, our profitability is sensitive to changes in volume.

The property, plants and equipment needed to manufacture products for our customers and provide our processes and solutions can be very expensive. We must spend a substantial amount of capital to purchase and maintain such property, plant and equipment. Although we believe our current cash balance, along with our projected internal cash flows and available financing sources, will provide sufficient cash to support our currently anticipated operating and capital needs, if we are unable to generate sufficient cash to purchase and maintain the property, plant and equipment necessary to operate our business, we may be required to reduce or delay planned capital expenditures or to incur additional indebtedness.

We face significant risks associated with uncertainties resulting from changes to policies and laws with the periodic changes in the U.S. administration.

Changes of administration in the U.S. federal government may affect our business in a manner that currently cannot be reliably predicted, especially given the potentially significant changes to various laws and regulations that affect us. These uncertainties may include changes in laws and policies in areas such as corporate taxation, taxation on imports of internationally sourced products, international trade including trade treaties such as the United States-Mexico-Canada Agreement, environmental protection and workplace safety laws, labor and employment law, immigration and health care, which individually or in the aggregate could materially and adversely affect our business, results of operations or financial condition.

Disruptions in the supply of parts and raw materials, or changes in supplier relations, may negatively impact our operating results.

We are dependent upon the supply of certain raw materials used in our production process, and these raw materials are exposed to price fluctuations on the open market. Raw material costs for materials such as steel, our primary raw material, have fluctuated significantly and may continue to fluctuate. To reduce price risk caused by market fluctuations, we have generally tried to match raw material purchases to our sales contracts or incorporated price adjustment clauses in our contracts. However, limitations on availability of raw materials or increases in the cost of raw materials (including steel), energy, transportation and other necessary services may impact our operating results if our manufacturing businesses are not able to fully pass on the costs associated with such increases to their respective customers. Alternatively, we will not realize material improvements from any decline in steel prices as the terms of our contracts generally require that we pass these cost savings through to our customers. In addition, we may encounter supplier constraints, be unable to maintain favorable supplier arrangements and relations or be affected by disruptions in the supply chain caused by events such as natural disasters, pandemics, shipping delays, power outages and labor strikes. Additionally, our supply chain has become more global in nature and, thus, more complex from a shipping and logistics perspective. In the event of limitations on availability of raw materials or significant changes in the cost of raw materials, particularly steel, our margins and profitability could be negatively impacted.

We rely on unionized labor, the loss of which could adversely affect our future success.

We depend on the services of unionized labor and have collective bargaining agreements with certain of our operations workforce at our Cicero, Illinois and Neville Island, Pennsylvania Gearing facilities. The loss of the services of these and other personnel, whether through terminations, attrition, labor strike or otherwise, or a material change in our collective bargaining agreements, including a significant increase in labor costs, could have a material adverse impact on us and our future profitability. In November 2022, a four-year collective bargaining agreement was ratified by the collective bargaining union in our Neville Island facility and will remain in effect through October 2026. A four-year collective bargaining agreement in regard to the Cicero, Illinois facility was negotiated in February 2022, and is expected to remain in effect through February 2026. Any failure to negotiate and conclude a new collective bargaining agreement with a union when the applicable agreement expires could result in strikes, boycotts, or other labor disruptions. As of December 31, 2023, these collective bargaining units represented approximately 18% of our workforce.

Our ability to hire and retain qualified personnel at competitive cost could adversely affect our business.

Many of the products we sell, and related services that we provide require that we have skilled labor in our manufacturing facilities. The availability of labor in the markets in which we operate has declined in recent years and competition for such labor has increased, especially under the economic crises experienced throughout and following the COVID-19 pandemic and current inflationary pressures. A significant increase in wages paid by competitors, both within and outside the energy industry, for such work force could result in insufficient availability of workers or increase our labor costs, or both. In the event prevailing wage rates continue to increase in the markets in which we operate, we may be required to concurrently increase the wages paid to our employees to maintain the quality of our workforce and customer service. If the supply of skilled labor is constrained or our costs of attracting and maintaining a workforce increase, our profit margins could decrease, and our growth potential and brand image could be impaired.

If our estimates for warranty expenses differ materially from actual claims made, or if we are unable to reasonably estimate future warranty expense for our products, our business and financial results could be adversely affected.

We provide warranty terms generally ranging between one and five years to our customers depending upon the specific product and terms of the customer agreement. We reserve for warranty claims based on prior experience and estimates made by management based upon a percentage of our sales revenues related to such products. From time to time, customers have submitted warranty claims to us. However, we have a limited history on which to base our warranty estimates for certain of our manufactured products. Our assumptions could materially differ from the actual performance of our products in the future and could exceed the levels against which we have reserved. In some instances, our customers have interpreted the scope and coverage of certain of our warranty provisions differently from our interpretation of such provisions. The expenses associated with remediation activities in the wind energy industry can be substantial, and if we are required to pay such costs in connection with a customer’s warranty claim, we could be subject to additional unplanned cash expenditures. If our estimates prove materially incorrect, or if we are required to cover remediation expenses in addition to our regular warranty coverage, we could be required to incur additional expenses and could face a material unplanned cash expenditure, which could adversely affect our business, financial condition and results of operations. Market disruptions and volatility may result in an increased likelihood of our customers asserting warranty or remediation claims in connection with our products that they would not ordinarily assert in a more stable economic environment. In the event of such a claim, we may incur costs if we decide to compensate the affected customer or to engage in litigation with the affected customer regarding the claim. We maintain product liability insurance, but there can be no guarantee that such insurance will be available or adequate to protect against such claims. A successful claim against us could have a material adverse effect on our business.

Cybersecurity incidents could disrupt our business and result in the compromise of confidential information.

Our business is at risk from and may be impacted by information security incidents, including attempts to gain unauthorized access to our confidential data and data systems, ransomware, malware, business email compromise, phishing attacks, and other electronic security events. Such incidents can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. They can also result from internal compromises, such as human error, or malicious acts. While we seek to employ measures to prevent, detect, and mitigate these threats, there is no guarantee such efforts will be successful in preventing a cyber event. Cybersecurity incidents could disrupt our business and compromise confidential information belonging to us and third parties.

Recent increases in inflation and interest rates in the United States and elsewhere could adversely affect our business.

We are exposed to fluctuations in inflation and interest rates, which could negatively affect our business, financial condition and results of operations. The United States and other jurisdictions have recently experienced high levels of inflation. If the inflation rate continues to increase, it will likely affect our expenses, including, but not limited to, employee compensation and labor expenses and increased costs for supplies, and we may not be successful in offsetting such cost increases. In addition, historically we have carried a significant amount of variable rate debt which is subject to fluctuations in interest rates. Certain government agencies, including the U.S. Treasury, have previously implemented and may implement policies that have resulted and may continue to result in significantly increased interest rates and borrowing costs. Recent increases in interest rates will result in increased interest expense to the extent we cannot limit our debt balances.

Our financial and operating performance is subject to certain factors out of our control, including the state of the wind energy market in North America.

Our results of operations (like those of our customers) are subject to general economic conditions, and specifically to the state of the wind energy market. In addition to the state and federal government policies supporting renewable energy described below, the growth and development of the larger wind energy market in North America is subject to a number of factors, including, among other things:

Consolidation among wind turbine manufacturers could increase our customer concentration and/or disrupt our supply chain relationships.

Wind turbine manufacturers are among our primary customers. There has been consolidation among these manufacturers, and more consolidation may occur in the future. For example, both Siemens Energy, Inc. and Gamesa Wind US, LLC, were customers for our tower business until early 2017, at which time they merged into SGRE. Customer consolidation may result in pricing pressures, leading to downward pressure on our margins and profits, and may also disrupt our supply chain relationships.

We face competition from industry participants who may have greater resources than we do.

Our businesses are subject to risks associated with competition from new or existing industry participants who may have more resources and better access to capital. Certain of our competitors and potential competitors may have substantially greater financial resources, customer support, technical and marketing resources, larger customer bases, longer operating histories, greater name recognition and more established relationships in the industry than we do. Among other things, these industry participants compete with us based upon price, quality, location and available capacity. We cannot be sure that we will have the resources or expertise to compete successfully in the future. We also cannot be sure that we will be able to match cost reductions by our competitors or that we will be able to succeed in the face of current or future competition.

~~We are substantially dependent on a few significant customers and the ordering levels for our products may vary based on customer needs.~~

Historically, the majority of our revenues are highly concentrated with a limited number of customers. Some of the markets we serve have a limited number of customers. In 2022, two customers, SGRE and GE Renewable Energy, each accounted for more than 10% of our consolidated revenues, and our five largest customers accounted for69% of our consolidated revenues. Certain of our customers have periodically expressed their intent to scale back, delay or restructure existing customer agreements, which has led to reduced revenues from these customers and periodic deviations in expected ordering levels. It is possible that this may occur again in the future. Additionally, not all of our customers make purchases every year. As a result, our operating profits and gross margins have historically been negatively affected by significant variability in production levels, which has created production volume inefficiencies in our operations and cost structures. Because of this variability, we believe that comparisons of our operating results in any particular quarterly period may not be a reliable indicator of future performance.

We face significant risks associated with uncertainties resulting from changes to policies and laws with the periodic changes in the U.S. administration as well as risks associated with changes in our relationship with our significant customers.

Additionally, if our relationships with significant customers should change materially, it could be difficult for us to immediately and profitably replace lost sales in a market with such concentration, which could have a material adverse effect on our operating and financial results. We could be adversely impacted by decreased customer demand for our products due to (i) the impact of current or future economic conditions on our customers, (ii) our customers’ loss of market share to their competitors that do not use our products, and (iii) our loss of market share with our customers. We could lose market share with our customers to our competitors or to our customers themselves, should they decide to become more vertically integrated and produce the products that we currently provide.

~~In addition, even if our customers continue to do business with us, we could be adversely affected by a number of other potential developments with our customers. For example:~~

~~Disruptions in the supply of parts and raw materials, or changes in supplier relations, may negatively impact our operating results.~~

~~We rely on unionized labor, the loss of which could adversely affect our future success.~~

We depend on the services of unionized labor and have collective bargaining agreements with certain of our operations workforce at our Cicero, Illinois and Neville Island, Pennsylvania Gearing facilities. The loss of the services of these and other personnel, whether through terminations, attrition, labor strike or otherwise, or a material change in our collective bargaining agreements, including a significant increase in labor costs, could have a material adverse impact on us and our future profitability. In November 2022, a four-year collective bargaining agreement was ratified by the collective bargaining union in our Neville Island facility and will remain in effect through October 2026. A four-year collective bargaining agreement in regard to the Cicero, Illinois facility was negotiated in February 2022, and is expected to remain in effect through February 2026. Any failure to negotiate and conclude a new collective bargaining agreement with a union when the applicable agreement expires could result in strikes, boycotts, or other labor disruptions. As of December 31, 2022, these collective bargaining units represented approximately 19% of our workforce.

~~Our ability to hire and retain qualified personnel at competitive cost could adversely affect our business.~~

Many of the products we sell, and related services that we provide require that we have skilled labor in our manufacturing facilities. The availability of labor in the markets in which we operate has declined in recent years and competition for such labor has increased, especially under the economic crises experienced throughout and following the COVID-19 pandemic. A significant increase in wages paid by competitors, both within and outside the energy industry, for such work force could result in insufficient availability of workers or increase our labor costs, or both. In the event prevailing wage rates continue to increase in the markets in which we operate, we may be required to concurrently increase the wages paid to our employees to maintain the quality of our workforce and customer service. If the supply of skilled labor is constrained or our costs of attracting and maintaining a workforce increase, our profit margins could decrease, and our growth potential and brand image could be impaired.

~~We may be unable to keep pace with rapidly changing technology in wind turbine and other industrial component manufacturing.~~

The global markets for wind turbines and our other manufactured industrial components are rapidly evolving technologically. Our component manufacturing equipment and technology may not be suited for future generations of products being developed by wind turbine companies. As turbines grow in size, particularly to support the development of offshore windfarms, tower manufacturing becomes more complicated and may require investments in new manufacturing equipment. For example, some wind turbine manufacturers are using wind turbine towers made partially or wholly from concrete instead of steel. To maintain a successful business in our field, we must keep pace with technological developments and the changing standards of our customers and potential customers and meet their constantly evolving demands. If we fail to adequately respond to the technological changes in our industry, make the necessary capital investments or are not suited to provide components for new types of wind turbines, our business, financial condition and operating results may be adversely affected.

~~Because our industry is capital intensive and we have significant fixed and semi-fixed costs, our profitability is sensitive to changes in volume.~~

~~The COVID-19 pandemic has had, and may continue to have, adverse effects on our operations.~~

In prior periods, we experienced adverse impacts from the COVID-19 pandemic including a decline in order activity levels within the Gearing and Heavy Fabrications segments and customers’ postponement of scheduled purchases and project timing partially offset by the continued operation of our facilities as essential businesses in light of the customers and markets served. We continue to incur manufacturing inefficiencies associated with severe supply chain disruptions and realized employee staffing constraints due to the continued spread of the COVID-19 pandemic.

Although availability of vaccines and reopening of state and local economies have improved the outlook for recovery from the impact of the COVID-19 pandemic, due to the ongoing global pandemic, including emerging variants, we may again experience weaker customer demand, requests for extended payment terms, customer bankruptcies, additional supply chain disruption, more employee staffing constraints and difficulties, government restrictions or other factors that could negatively impact us and our business, operations and financial results. In addition, a possible recession or market correction resulting from the spread of COVID-19 or otherwise could materially affect our business and the value of our stock.

The impacts and potential impacts of COVID-19 that could directly or indirectly materially affect our business also include, but are not limited to, effectiveness of the vaccines against the evolving variants, additional widespread resurgences in COVID-19 infections, and evolving safety protocols such as requirements for proof of vaccination or regular testing in certain of our markets. As we cannot predict the duration or scope of the pandemic or its impact on economic and financial markets, any negative impact to our results cannot be reasonably estimated, but it could be material.

~~Cybersecurity incidents could disrupt our business and result in the compromise of confidential information.~~

Our business is at risk from and may be impacted by information security incidents, including attempts to gain unauthorized access to our confidential data, ransomware, malware, phishing emails, and other electronic security events. Such incidents can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. They can also result from internal compromises, such as human error, or malicious acts. While we seek to employ measures to prevent, detect, and mitigate these threats, there is no guarantee such efforts will be successful in preventing a cyber event. Cybersecurity incidents could disrupt our business and compromise confidential information belonging to us and third parties.

~~Recent increases in inflation and interest rates in the United States and elsewhere could adversely affect our business.~~

We are exposed to fluctuations in inflation and interest rates, which could negatively affect our business, financial condition and results of operations. The United States and other jurisdictions have recently experienced high levels of inflation. If the inflation rate continues to increase, it will likely affect our expenses, including, but not limited to, employee compensation and labor expenses and increased costs for supplies, and we may not be successful in offsetting such cost increases. In addition, historically we have carried a significant amount of variable rate debt which is subject to fluctuations in interest rates. Recent increases in interest rates will result in increased interest expense to the extent we cannot limit our debt balances.

Our plans for growth and diversification may not be successful, and could result in poor financial performance.

We continue to seek to strategically diversify and grow the business to improve operational efficiency and meet customer demand. Our diversification efforts into the natural gas turbine power generation, O&G, mining and other industries may require additional investments in personnel, equipment and operational infrastructure. Moreover, although we have historically participated in most of these lines of business, there is no assurance that we will be able to grow our presence in these markets at a rate sufficient to compensate for a potentially weaker wind energy market. If we are unable to further penetrate these markets, our plans to diversify our operations may not be successful and our anticipated future growth may be adversely affected.

Our growth efforts through increased production levels at existing facilities, acquisitions and continuous improvement activities such as the proper coordination and integration of the supply chain, the consistent use of systems with respect to production activities, the Advanced Product Quality Processes (APQP) to support the introduction of new products, and the hiring of continuous improvement experts to optimize our production processes, will require coordinated efforts across the Company and continued enhancements to our current operating infrastructure. If the cost of making these changes increases or if our efforts are unsuccessful, the Company may not realize anticipated benefits and our future earnings may be adversely affected.

Our diversification outside of the wind energy market exposes us to business risks associated with the gas turbine, O&G, and mining industries, among others, which may slow our growth or penetration in these markets.

Although we have experience in the gas turbine, O&G and mining industry markets, these markets have not historically been our primary focus. In further diversifying our business to serve these markets, we face competitors who may have more resources, longer operating histories and more well-established relationships than we do, and we may not be able to successfully or profitably generate additional business opportunities in these industries. Moreover, if we are able to successfully diversify into these markets, our businesses may be exposed to risks associated with these industries, which could adversely affect our future earnings and growth. These risks include, among other things:

If our projections regarding the future market demand for our products are inaccurate, our operating results and our overall business may be adversely affected.

We have previously made significant capital investments in anticipation of rapid growth in the U.S. wind energy market. However, the growth in the U.S. wind energy market has not kept pace with our expectations when some of these capital investments were made, and there can be no assurance that the U.S. wind energy market will grow and develop in a manner consistent with our expectations, or that we will be able to fill our capacity through the further diversification of our operations. Our internal manufacturing capabilities have required significant upfront capital costs. If market demand for our products does not increase at the pace we have anticipated and align with our manufacturing capacity, we may be unable to offset these costs and achieve economies of scale, and our operating results may continue to be adversely affected by high fixed costs, reduced margins and underutilization of capacity which may prevent us from achieving or maintaining profitability. In light of these considerations, we may be forced to reduce our labor force and production to minimum levels, as was done at certain operating locations in the past, temporarily idle existing capacity or sell to third parties manufacturing capacity that we cannot utilize in the near term, in addition to the steps that we have already taken to adjust our capacity more closely to demand. Alternatively, if we experience rapid increased demand for our products in excess of our estimates, or we reduce our manufacturing capacity, our installed capital equipment and existing workforce may be insufficient to support higher production volumes, which could adversely affect our customer relationships and overall reputation. In addition, we may not be able to expand our workforce and operations in a timely manner, procure adequate resources or locate suitable third-party suppliers to respond effectively to changes in demand for our existing products or to the demand for new products requested by our customers, and our business could be adversely affected. Our ability to meet such excess customer demand could also depend on our ability to raise additional capital and effectively scale our manufacturing operations.

Additionally, most of our customers do not commit to long-term contracts or firm production schedules, and accordingly, we frequently experience volatile lead-times in customer orders. Additionally, customers may change production quantities or delay production with little advance notice. Therefore, we rely on and plan our production and inventory levels based on our customers’ advance orders, commitments and/or forecasts, as well as our internal assessments and forecasts of customer demand. The variations in volume and timing of sales make it difficult to schedule production and optimize utilization of manufacturing capacity. This uncertainty may require us to increase staffing and incur other expenses in order to meet an unexpected increase in customer demand, potentially placing a significant burden on our resources. An inability to respond to such changes in a timely manner may also cause customer dissatisfaction, which may negatively affect our customer relationships.

Our growth strategies could be ineffective due to the risks of acquisitions and risks relating to integration.

Our growth strategy includes acquiring complementary businesses. In regards to any other future acquisitions, we could fail to identify, finance or complete suitable acquisitions on acceptable terms and ~~prices.~~prices, particularly with interest rates at comparatively high levels. Acquisitions and the related integration processes could increase a number of risks, including diversion of operations personnel, financial personnel and management’s attention, difficulties in integrating systems and operations, potential loss of key employees and customers of the acquired companies and exposure to unanticipated liabilities. The price we pay for a business may exceed the value realized and we cannot provide any assurance that we will realize the expected synergies and benefits of any acquisitions. Our discovery of, or failure to discover, material issues during due diligence investigations of acquisition targets, either before closing with regard to potential risks of the acquired operations, or after closing with regard to the timely discovery of breaches of representations or warranties, could materially harm our business. Our failure to meet the challenges involved in integrating a new business to realize the anticipated benefits of an acquisition could cause an interruption or loss of momentum in our existing activities and could adversely affect our profitability. Acquisitions also may result in the recording of goodwill and other intangible assets which are subject to potential impairments in the future that could diminish our reported earnings and operating results.

We are subject to risks associated with proxy contests and other actions of activist stockholders.

Publicly traded companies have increasingly become subject to campaigns by activist investors advocating corporate actions such as governance changes, financial restructurings, increased borrowings, special dividends, stock repurchases or even sales of assets or entire companies to third parties or the activists themselves. We ~~have~~ received a notice dated January 18, 2023 from WM Argyle Fund, LLC (“WM Argyle”), which allegedly owned approximately 1.0% of the Company’s outstanding shares at the time of submission, purporting to nominate a slate of six candidates for election as directors at our 2023 Annual Meeting of Stockholders. ~~The Company values input from all stockholders, including WM Argyle, and remains open to ongoing engagement with WM Argyle. However, if the Company and WM Argyle cannot~~We did not reach an agreement with WM Argyle in connection with its nomination, and there ~~will be~~was a contested election at the Company’s 2023 Annual Meeting of ~~Stockholders.~~ Stockholders, in which none of WM Argyle’s candidates were elected as directors. The cumulative cost to the Company of responding to the proxy contest was approximately $1.8 million. We value input from all stockholders and remain open to ongoing engagement with our stockholders.

A proxy contest or related activities on the part of activist stockholders ~~including, among others, WM Argyle,~~ could adversely affect our business for a number of reasons, including, without limitation, the following:

We have experienced operating losses since inception, except that we were profitable in 2016, 2021, and ~~2021.~~2023. We have incurred significant costs in connection with the development of our businesses, and because we have operated at low-capacity utilization in certain facilities, there is no assurance that we will generate sufficient revenues to offset anticipated operating costs. Although we anticipate deriving revenues from the sale of our products, no assurance can be given that these products can be sold on a profitable basis. We cannot give any assurance that we will be able to sustain or increase profitability on a quarterly or annual basis in the future.

We may continue to incur significant losses in the future for a number of reasons, including other risks described in this Annual Report on Form 10-K, and we may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors.

We have significant indebtedness and we may incur additional debt in the future. Servicing our indebtedness requires a significant amount of cash, and the terms of our current indebtedness, and the terms of any future indebtedness, may restrict the activities of the Company.

We have significant indebtedness, including the indebtedness under the 2022 Credit Facility (as defined and further discussed in Note 10 “Debt and Credit Agreements” of our consolidated financial statements). Our debt obligations could potentially have important consequences to us and our investors, including: (1) requiring a substantial portion of our cash flows from operations to make debt service payments or to refinance our indebtedness as it becomes due, making it more difficult for us to satisfy our other priorities and obligations; (2) resulting in higher interest expenses, (3) increasing our vulnerability to general adverse economic and industry conditions; (4) reducing the cash flows available to fund capital expenditures and other corporate purposes and to grow our business; (5) limiting our flexibility in pursuing strategic opportunities or planning for, or reacting to, changes in our business and the industry; (6) placing us at a competitive disadvantage relative to our competitors that may not be as highly leveraged; and (7) limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase shares.

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive, regulatory factors, and factors beyond our control. Our cash flow from operations in the future may be insufficient to service our indebtedness, including if our actual cash requirements in the future are greater than expected. If we are unable to generate the necessary cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, incurring new debt or issuing additional equity on terms that may be unfavorable, onerous or highly dilutive. Our ability to refinance our indebtedness or incur new debt will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

As described in Note 10 “Debt and Credit Agreements” of our consolidated financial statements, the agreements governing our indebtedness contain covenants restricting our operations and limiting our financial flexibility. In addition, some of the agreements governing our indebtedness require that we maintain minimum EBITDA requirements, not exceed a maximum fixed charge coverage ratio and contain certain customary events of default. Our ability to comply with such restrictions and covenants may be affected by various factors, some of which factors may be beyond our control. If we breach any of these restrictions or covenants and do not obtain a waiver from the lenders or holders, as applicable, then, subject to the applicable cure periods and conditions, any outstanding indebtedness could be declared immediately due and payable.

Our PPP Loans were forgiven, but we may still be subject to audit and any resulting adverse audit financings of non-compliance could result in the repayment of a portion or all of the PPP Loans and may restrict our flexibility in operating our business or otherwise adversely affect our results of operations.

On April 15, 2020, we received funds under notes and related documents (“PPP Loans”) with CIBC Bank, USA under the Paycheck Protection Program (the “PPP”), which was established under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), as amended by the Paycheck Protection Program Flexibility Act of 2020 in response to the COVID-19 pandemic and is administered by the U.S. Small Business Administration (the “SBA”). We received total proceeds of $9,530 from the PPP Loans and made repayments of $379 on May 13, 2020. We used at least 60% of our PPP Loan proceeds to pay for payroll costs and the balance on other eligible qualifying expenses that we believe to be consistent with the PPP.

~~We submitted our forgiveness applications to CIBC Bank, USA in the first quarter of 2021, and during~~During the second quarter of 2021, all of our PPP Loans were forgiven by the SBA. ~~The~~However, the U.S. Department of the Treasury has announced that it will conduct audits for PPP Loans that exceed $2,000 for a period of six years after forgiveness. Should we be audited or reviewed by the U.S. Department of the Treasury or the SBA, such audit or review could result in the diversion of management’s time and attention and cause us to incur significant costs. If we were to be audited and receive an adverse outcome in such an audit, we could be required to return the full amount of the PPP Loans and may potentially be subject to civil and criminal fines and penalties. If it is subsequently determined that the PPP Loans must be repaid, we may be required to use a substantial portion of our available cash and/or cash flows from operations to pay interest and principal on the PPP Loans, and any future repayment of such loans, would adversely impact our operations and financial results.

There is a limited trading market for our securities and the market price of our securities is subject to volatility.

Our common stock trades on the Nasdaq Capital Market. Historically, we have not had an active trading market for our common stock. The absence of an active trading market increases price volatility and reduces the liquidity of our common stock. The market price and level of trading of our common stock could be subject to wide fluctuations in response to numerous factors, many of which are beyond our control. These factors include, among other things, our limited trading volume, actual or anticipated variations in our operating results and cash flow, the nature and content of our earnings releases, announcements or events that impact our business and the general state of the securities market, as well as general economic, political and market conditions and other factors that may affect our future results. In ~~2022,~~2023, the closing price of our common stock varied from a high of ~~$3.59~~$5.92 per share to a low of ~~$1.47~~ $1.77per share. Stockholders may have incurred substantial losses with regard to any investment in our common stock adversely affecting stockholder confidence.

Limitations on our ability to utilize our NOLs may negatively affect our financial results.

We may not be able to utilize all of our NOLs. For financial statement presentation, all benefits associated with the NOL carryforwards have been reserved; therefore, this potential asset is not reflected on our balance sheet. To the extent available, we will use any NOL carryforwards to reduce the U.S. corporate income tax liability associated with our operations. However, if we do not achieve sufficient profitability prior to their expiration, we will not be able to fully utilize our NOLs to offset income. Section 382 of the IRC (“Section 382”) generally imposes an annual limitation on the amount of NOL carryforwards that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. Our ability to utilize NOL carryforwards and built-in losses may be limited, under Section 382 or otherwise, by our issuance of common stock or by other changes in ownership of our stock. After analyzing Section 382 in 2010, we determined that aggregate changes in our stock ownership had triggered an annual limitation of NOL carryforwards and built-in losses available for utilization to $14,284 per annum. Although this event limited the amount of pre ownership change date NOLs and built- in losses we can utilize annually, it does not preclude us from fully utilizing our current NOL carryforwards prior to their expiration. However, subsequent changes in our stock ownership could further limit our ability to use our NOL carryforwards and our income could be subject to taxation earlier than it would if we were able to use NOL carryforwards and built-in losses without an annual limitation, which could result in lower profits. To address these concerns, in February 2013 we adopted a Section 382 Stockholder Rights Plan, which was subsequently approved by our stockholders and extended in 2016, 2019, and ~~2019~~2022 for additional three-year periods (as amended, the “Rights Plan”), designed to preserve our substantial tax assets associated with NOL carryforwards under Section 382. The Rights Plan is intended to deter any person or group from being or becoming the beneficial owner of 4.9% or more of our common stock and thereby triggering a further limitation of our available NOL carryforwards. On February 3, 2022, the Board of Directors (the “Board”) approved an amendment which included an extension of the Rights Plan for an additional three years, which was subsequently approved by our stockholders at our 2022 Annual Meeting of Stockholders. See Note ~~13,~~14, “Income Taxes” of our consolidated financial statements for further discussion of our Rights Plan. There can be no assurance that the Rights Plan will be effective in protecting our NOL carryforwards. Additionally, because the Rights Plan subjects any person that acquires 4.9% of our common stock without the Board’s permission to significant dilution, it could make it harder for a third party to acquire us without the consent of the Board. In particular, the Rights Plan may deter a third party from completing or even initiating an acquisition of the Company, which may prevent stockholders from realizing a control premium from a potential acquirer, or from otherwise maximizing stockholder value.

Any failure to protect our customers’ intellectual property that we use in the products we manufacture for them could harm our customer relationships and subject us to liability.

The products we manufacture for our customers often contain our customers’ intellectual property, including copyrights, patents, trade secrets and know-how. Our success depends, in part, on our ability to protect our customers’ intellectual property. The steps we take to protect our customers’ intellectual property may not adequately prevent its disclosure or misappropriation. If we fail to protect our customers’ intellectual property, our customer relationships could be harmed and we may experience difficulty in establishing new customer relationships. Additionally, our customers might pursue legal claims against us for any failure to protect their intellectual property, possibly resulting in harm to our reputation and our business, financial condition and operating results.

We may not be able to protect important intellectual property and we could incur substantial costs defending against claims that our products infringe on the proprietary rights of others.

Our ability to compete effectively will depend, in part, on our ability to protect our proprietary system level technologies, systems designs and manufacturing processes. While we have attempted to safeguard and maintain our proprietary rights, we do not know whether we have been or will be successful in doing so.

Further, our competitors may independently develop or patent technologies or processes that are substantially equivalent or superior to ours. If we are found to be infringing third-party patents, we could be required to pay substantial royalties and/or damages, and we do not know whether we will be able to obtain licenses to use such patents on acceptable terms, if at all. Failure to obtain needed licenses could delay or prevent the development, manufacture or sale of our products, and could necessitate the expenditure of significant resources to develop or acquire non infringing intellectual property.

We may need to pursue lawsuits or legal action in the future to enforce our intellectual property rights and to determine the validity and scope of the proprietary rights of others. Litigation and other proceedings, even if they are successful, are expensive to pursue and time consuming, and we could use a substantial amount of our management and financial resources in either case.

Confidentiality agreements to which we are party may be breached, and we may not have adequate remedies for any breach. Our trade secrets may also be known without breach of such agreements or may be independently developed by competitors. Our inability to maintain the proprietary nature of our technology and processes could allow our competitors to limit or eliminate any competitive advantages we may have.

The U.S. wind energy industry is significantly impacted by tax and other economic incentives. A significant change in these incentives could significantly impact our results of operations and growth.

We sell towers to wind turbine manufacturers who supply wind energy generation facilities. The U.S. wind energy industry is significantly impacted by federal tax incentives and state Renewable Portfolio Standards (“RPSs”). Despite recent reductions in the cost of wind energy, due to variability in wind quality and consistency, and other regional differences, wind energy may not be economically viable in certain parts of the country absent such incentives. These programs have provided material incentives to develop wind energy generation facilities and thereby impact the demand for our products. The increased demand for our products that generally results from the credits and incentives could be impacted by the expiration or curtailment of these programs.

One such federal government program, the PTC, provides a supplemental payment based on electricity produced from each qualifying wind turbine. Legislative support for the PTC has been intermittent since its introduction in 1992, which has caused volatility in the demand for new wind energy projects. In 2015, the PTC was extended for a five-year period, with a time-based phase-out depending on the year the wind project is commenced. The phase-out schedule legislated in 2015 provided for: 100% extension of the credit for projects commenced before the end of 2016, 80% extension of the credit for projects commenced in 2017, 60% extension of the credit for projects commenced in 2018 and 40% extension of the credit for projects commenced in 2019. As part of a year-end tax extenders bill in 2019, the PTC was extended for an additional year, allowing for a 60% extension of the credit for projects commenced before the end of 2020.

On December 27, 2020, COVID IV was signed into law. As part of COVID IV, the PTC was extended for an additional year, allowing for a 60% credit for projects that start construction by the end of 2021. In order to benefit from the PTC, qualifying projects must either be completed within four years from their start of construction, or the developer must demonstrate that its projects are in continuous construction between start of construction and completion. As a result of COVID IV, the PTC will subsidize wind projects commenced as late as 2021 and completed by 2025, or later if continuous construction can be demonstrated. The PTC tax benefits are available for the first ten years of operation of a wind energy facility, and also applies to significant redevelopment of existing wind energy facilities. Included in COVID IV is the addition of a new 30% ITC created for offshore wind projects that start construction by the end of 2025. The provision will be retroactively applied to projects that started production in 2016.

On August 16, 2022, the IRA was enacted to reduce inflation and promote clean energy in the United States. The IRA modifies and extends the PTC until the later of 2032 or when greenhouse gas emissions have been reduced by 75% compared to 2022. It provides for tax credits up to a maximum of 30%, adjusted for inflation annually, for electricity generated from qualified renewable energy sources where taxpayers meet prevailing wage standards and employ a sufficient proportion of qualified apprentices from registered apprenticeship programs. It also provides a bonus credit for qualifying clean energy production in energy communities.

The IRA also includes ~~advanced manufacturing tax~~AMP credits for manufacturers of eligible components, including wind and solar ~~components (“45X credits”).~~components. Manufacturers qualify for the ~~45X~~AMP credits based on the electricity output for each component produced and sold in the US starting in 2023 through 2032. The credit amount varies based on the eligible component, which includes solar components, wind energy components, inverters, qualifying battery components, and critical minerals. Tower manufacturers are eligible for credits of $0.03 per watt for applicable components produced. Manufacturers can ~~apply~~elect a direct pay option where they can receive a payment equal to the full value of the tax credits from the Internal Revenue Service ~~for cash refunds of~~anytime during the ~~45X credits~~ten-year period. That election lasts for ~~up to five years. After the first~~ five years, after which the ~~45X~~AMP credits ~~are transferable and~~ can be ~~sold~~used against tax obligations or transferred to third parties in exchange for cash. We ~~are waiting~~expect certain financial benefits as a result of tax incentives provided by the IRA. If these expected financial benefits vary significantly from our assumptions, our business, financial condition, and results of operations could be adversely affected. Any modifications to the law or its effects arising, for example, through (i) technical guidance and regulations from the ~~Internal Revenue Service~~IRS and ~~the~~ U.S. Treasury Department, (ii) subsequent amendments to ~~provide implementation guidance for~~or interpretations of the ~~legislation.~~law, and/or iii) future laws or regulations rendering certain provisions of the IRA less effective or ineffective, in whole or in part, could result in material adverse changes to the benefits we have recognized and expect to recognize.

RPSs generally require or encourage state regulated electric utilities to supply a certain proportion of electricity from renewable energy sources or to devote a certain portion of their plant capacity to renewable energy generation. Typically, utilities comply with such standards by qualifying for renewable energy credits evidencing the share of electricity that was produced from renewable sources. Under many state standards, these renewable energy credits can be unbundled from their associated energy and traded in a market system, allowing generators with insufficient credits to meet their applicable state mandate. These standards have spurred significant growth in the wind energy industry and a corresponding increase in the demand for our products. Currently, the majority of states have RPSs in place and certain states have voluntary utility commitments to supply a specific percentage of their electricity from renewable sources. The enactment of RPSs in additional states or any changes to existing RPSs (including changes due to the failure to extend or renew the federal incentives described above), or the enactment of a federal RPS or imposition of other greenhouse gas regulations, may impact the demand for our products. We cannot assure that government support for renewable energy will continue including any assurance regarding the adoption of any of the clean energy provisions of ~~the~~President Biden’s Build Back Better agenda. The elimination of, or reduction in, state or federal government policies that support renewable energy could have a material adverse impact on our business, results of operations, financial performance and future development efforts.

Changes to trade regulation, quotas, duties or tariffs, and sanctions caused by changing U.S. and geopolitical policies, may impact our competitive position or adversely impact our margins.

Tariffs have resulted in increased prices, including with respect to certain steel products, and could adversely affect our consolidated results of operations, financial position and cash flows. These tariffs, along with any additional tariffs or trade restrictions that may be implemented by the U.S. or other countries, could result in further increased prices and a decreased available supply of steel and other imported components and inputs. We may not be able to pass price increases on to our customers and may not be able to secure adequate alternative sources of steel on a timely basis.

The existence of government subsidies available to our competitors in certain countries may affect our ability to compete on a price basis. ~~In 2013, the USITC determined that wind towers from China and Vietnam were being sold in the U.S. at less than fair value.~~ Imports from China and Vietnam have declined following a determination by the ~~USITC~~U.S. International Trade Commission (“USITC”) in 2013 that wind towers from those countries were being sold in the U.S. at less than fair value. As a result of the determination, the ~~USDOC~~U.S. Department of Commerce (“USDOC”) issued antidumping and countervailing duty orders on imports of wind towers from China and an antidumping duty order on imports of towers from Vietnam. In May 2018, the U.S. Court of Appeals affirmed the decision from the U.S. Court of International Trade and at the same time excluded CS Wind Vietnam from the antidumping order. In April 2019, the USDOC extended the term of these duties for an additional five-year period. Following a renewed surge of tower imports from countries not impacted by existing tariffs, in July 2020, the USDOC issued antidumping and countervailing duty orders on imports of wind towers from Canada, Indonesia, and Vietnam and an antidumping order on imports of towers from Korea. The Indonesia countervailing duty order was later revoked after an appeal to the U.S. Court of International Trade (“CIT”). Then in September 2020, a new trade case was brought before the USDOC and USITC, to assess whether wind towers imported from India, Malaysia, and Spain were being sold in the U.S. at less than fair value. The USDOC and USITC issued affirmative final determinations in all three antidumping (India, Malaysia, and Spain) and two countervailing duty cases (India and Malaysia). The USDOC imposed orders for two cases in August 2021 and the remainder in December 2021. Appeals of several of the USDOC determinations are currently pending at the CIT and the CAFC.

Additionally, the war in Ukraine has led to economic sanctions imposed against Russia by the U.S. and certain European nations, including a prohibition on doing business with certain Russian companies. Such sanctions may impact companies in many sectors and could lead to volatility of prices in the global energy industry. The extent and duration of the war and extent and strength of the sanctions are still developing, and the corresponding effect on the Company remains uncertain. Certain other geopolitical conflicts, including the war between Israel and Hamas may also lead to material disruptions to certain supply chains and volatility in prices.

We could incur substantial costs to comply with environmental, health and safety (“EHS”) laws and regulations and to address violations of or liabilities under these requirements.

Our operations are subject to a variety of EHS laws and regulations in the jurisdictions in which we operate and sell products governing, among other things, health, safety, pollution and protection of the environment and natural resources, including the use, handling, transportation and disposal of non-hazardous and hazardous materials and wastes, as well as emissions and discharges into the environment, including discharges to air, surface water, groundwater and soil, product content, performance and packaging. We cannot guarantee that we have been, or will at all times be in compliance with such laws and regulations. Changes in existing EHS laws and regulations, or their application, could cause us to incur additional or unexpected costs to achieve or maintain compliance. Failure to comply with these laws and regulations, obtain the necessary permits to operate our business, or comply with the terms and conditions of such permits may subject us to a variety of administrative, civil and criminal enforcement measures, including the imposition of civil and criminal sanctions, monetary fines and penalties, remedial obligations, and the issuance of compliance requirements limiting or preventing some or all of our operations. The assertion of claims relating to regulatory compliance, on or off-site contamination, natural resource damage, the discovery of previously unknown environmental liabilities, the imposition of criminal or civil fines or penalties and/or other sanctions, or the obligation to undertake investigation, remediation or monitoring activities could result in potentially significant costs and expenditures to address contamination or resolve claims or liabilities. Such costs and expenditures could have a material adverse effect on our business, financial condition or results of operations. Under certain circumstances, violation of such EHS laws and regulations could result in us being disqualified from eligibility to receive federal government contracts or subcontracts under the federal government’s debarment and suspension system.

We also are subject to laws and regulations that impose liability and cleanup responsibility for releases of hazardous substances into the environment. Under certain of these laws and regulations, such liabilities can be imposed for cleanup of currently and formerly owned, leased or operated properties, or properties to which hazardous substances or wastes were sent by current or former operators at our current or former facilities, regardless of whether we directly caused the contamination or violated any law at the time of discharge or disposal. Several of our facilities have a history of industrial operations, and contaminants have been detected at some of our facilities. The presence of contamination from hazardous substances or wastes could interfere with ongoing operations or adversely affect our ability to sell, lease or use our properties as collateral for financing. We also could be held liable under third-party claims for property damage, natural resource damage or personal injury and for penalties and other damages under such environmental laws and regulations, which could have a material adverse effect on our business, financial condition and results of operations. During ~~2022,~~2023, we did not incur significant remediation costs or penalties related to environmental matters.

Our ability to comply with regulatory requirements and potential environmental, social and governance (“ESG”) regulations and trends is critical to our future success, and there can be no guarantee that our businesses are in full compliance with all such requirements.

As a manufacturer and distributor of wind and other energy industry products we are subject to the requirements of federal, state, local and foreign regulatory authorities. In addition, we are subject to a number of authorities setting industry standards, such as the American Gear Manufacturers Association and the American Welding Society. Changes in the standards and requirements imposed by such authorities could have a material adverse effect on us. In the event we are unable to meet any such standards when adopted, our businesses could be adversely affected. We may not be able to obtain all regulatory approvals, licenses and permits that may be required in the future, or any necessary modifications to existing regulatory approvals, licenses and permits, or maintain all required regulatory approvals, licenses and permits. There can be no guarantee that our businesses are fully compliant with such standards and requirements.

Additionally, other ESG-related laws, regulations, treaties, and similar initiatives and programs are being proposed, adopted and implemented throughout the world. If we were to violate or become liable under environmental or certain ESG-related laws or if our products become non-compliant with such laws or market access requirements, our customers may refuse to purchase our products, and we could incur costs or face other sanctions, such as restrictions on our products entering certain jurisdictions, fines, and/or civil or criminal sanctions. In addition to potential implementation of ESG laws, investor advocacy groups, certain institutional investors, investment funds, other market participants, political figures, stockholders, and customers have focused increasingly on the ESG practices of companies, including those associated with climate change. If our ESG practices do not meet investor or other industry stakeholder expectations and standards, which continue to evolve, our brand, reputation and employee retention may be negatively impacted based on an assessment of our ESG practices.

We rely on information systems to obtain, rapidly process, analyze, and manage data in order to effectively operate our business. We are committed to protecting our business information, intellectual property, customer, supplier and employee data and information systems from cybersecurity risks and maintain an active cybersecurity risk management program.

We maintain enterprise-wide information security policies, processes and standards that set the requirements around acceptable use of information systems and data, risk assessment and management, identity and access management, data security, security operations, security incident response and threat and vulnerability management. We work to align to the National Institute of Standards and Technology (NIST) 800-171 Cybersecurity Framework, as its program controls are designed to protect and maintain confidentiality, integrity, and continued availability of our data and information systems. Our team of information system professionals and third-party providers monitors our information systems for cybersecurity threats, breaches, intrusions and other weaknesses, responds to cybersecurity incidents, develops and implements plans to mitigate cybersecurity threats and facilitates training for our employees.

We also engage consultants and other third-party advisors to conduct independent assessments of our cybersecurity readiness and control effectiveness. In collaboration with our third-party providers, we seek to gain insights into emerging threats and vulnerabilities, industry trends, and leading practices to inform our cybersecurity response.

Management plays a critical role in assessing and managing material risks from cybersecurity threats. Our Director of Information Technology leads an internal team and works directly with our third-party information security professionals to manage our cybersecurity risk management program and activities. This includes monitoring our information systems for cybersecurity threats, reviewing cybersecurity incidents, analyzing emerging threats, and the development and implementation of risk mitigation strategies.

Our Director of Information Technology reports directly to our executive leadership team on cybersecurity matters, providing the leadership team with updates on enterprise risks, cybersecurity incidents, the status of ongoing initiatives, key metrics, and additional cybersecurity topics. Our information technology team, led by the Director of Information Technology, meets regularly to discuss the progress of ongoing program initiatives, cybersecurity priorities, identified risks and metrics.

The Board of Directors exercises direct oversight of strategic risks to the Company. The Board has delegated the responsibility for cybersecurity oversight to the Audit Committee. The Audit Committee’s responsibilities include reviewing and discussing with management the strategies, process and controls pertaining to the management of information technology operations, including cybersecurity risks and information security. The Director of Information Technology reports to the Audit Committee annually and more frequently, as needed, on cybersecurity matters, including the cybersecurity threat landscape, key metrics demonstrating the overall management of our cybersecurity risk and risk management program, related key initiatives, enterprise program framework alignment, annual risk mitigation strategy, and review of cybersecurity incidents. Our Board is committed to maintaining a well-informed and cybersecurity-aware posture, regularly engaging through regular and requested updates on our strategy and evolving threat landscape.

Our corporate headquarters is located in Cicero, Illinois, a suburb located west of Chicago, Illinois. In addition, the Subsidiaries own or lease operating facilities, which are presented by operating segment as follows (information below is as of December 31, ~~2022)~~2023).

We consider our active facilities to be in good condition and adequate for our present and future needs.

We are party to a variety of legal proceedings that arise in the ordinary course of our business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect, individually or in the aggregate, on our results of operations, financial condition or cash flows. Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on our results of operations, financial condition or cash flows. It is possible that if one or more of such matters were decided against us, the effects could be material to our results of operations in the period in which we would be required to record or adjust the related liability and could also be material to our financial condition and cash flows in the period in which we would be required to pay such liability.

We received a notice dated January 18, 2023 from WM Argyle Fund, LLC, which allegedly owned approximately 1.0% of our outstanding shares at the time of submission, purporting to nominate a slate of six candidates for election as directors at our 2023 Annual Meeting of Stockholders. We remain open to ongoing engagement with WM Argyle. However, if the Company and WM Argyle cannot reach an agreement in connection with its nomination, there will be a contested election at the Company’s 2023 Annual Meeting of Stockholders.

(Dollar amounts are presented in thousands, except per share data and unless otherwise stated)

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the NASDAQ Capital Market (“NASDAQ”) under the symbol “BWEN.” The following table sets forth the high and low bid prices of our common stock traded on the NASDAQ.

The closing price for our common stock as of ~~March 6, 2023~~February 29, 2024 was ~~$4.65.~~$2.48. As of ~~March 6, 2023,~~February 29, 2024, there were 4950 holders of record of our common stock.

We have never paid cash dividends on our common stock and have no current plan to do so in the foreseeable future. The declaration and payment of dividends on our common stock are subject to the discretion of our Board and are further limited by our credit agreement and other contractual agreements we may have in place from time to time. The decision of our Board to pay future dividends will depend on general business conditions, the effect of a dividend payment on our financial condition, and other factors our Board may consider relevant. The current policy of our Board is to reinvest cash generated in our operations to promote future growth and to fund potential investments.

There were no repurchases of our equity securities made during the years ended December 31, ~~2022~~2023 and ~~2021.~~2022.

There were no unregistered sales of equity securities for the years ended December 31, ~~2022~~2023 or ~~2021.~~2022.

See Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Annual Report on Form 10-K for information as of December 31, ~~2022~~2023 with respect to shares of our common stock that may be issued under our existing share-based compensation plans.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As used in this Annual Report, the terms “we,” “us,” “our,” “Broadwind,” and the “Company” refer to Broadwind, Inc., a Delaware corporation headquartered in Cicero, Illinois, and its Subsidiaries.

(Dollar amounts are presented in thousands, except per share data and unless otherwise stated)

We booked ~~$368,027~~$101,060 in net new orders in ~~2022, up~~2023, down from ~~$159,025~~$368,027 in ~~2021.~~2022. Heavy Fabrications orders ~~increased~~decreased by 215% from the prior year as demand increased for our capacity as tower customers secured production capacity through 2024 for ongoing wind turbine tower installation projects. Gearing segment orders increased 16%83% from the prior year primarily due to ~~increased~~the timing of tower orders as a major wind tower customer secured relatively longer-term capacity during the fourth quarter of 2022 instead of ordering in more regular intervals consistent with how orders are typically placed. Partially offsetting this decrease in wind tower orders was a 14% increase in industrial fabrication product line orders primarily due to improved demand ~~in all end markets led by industrial~~for our Pressure Reducing Systems (“PRS”) units. Gearing segment orders decreased 54% from the prior year primarily due to reduced demand from O&G and mining customers. Industrial Solutions segment orders increased by 3%26% in ~~2022~~2023 from the prior year primarily due to an increase in orders associated with new gas turbine and aftermarket projects. ~~At December 31, 2022, total backlog was $297,200, up 179% from $106,383 at December 31, 2021 primarily due to the aforementioned increase in Heavy Fabrication segment orders.~~

We recognized revenue of ~~$176,759~~$203,477 in ~~2022,~~2023, up~~21%~~ 15% from revenue of ~~$145,619~~$176,759 in ~~2021.~~2022. Heavy Fabrications segment revenues increased by ~~15% during 2022~~14% primarily due to a ~~92%~~18% increase in ~~industrial fabrication~~wind tower revenue as a resultof a 30 section increase in tower sections sold,less customer supplied materials in the current year and increased steel content, which is generally a pass-through to customers. Additionally, industrial fabrication product line revenues increased primarily due to higher ~~recent order intake from industrial customers and revenue recognized from~~shipments of our PRS units in the current year. Gearing segment ~~revenues~~revenue increased ~~49% during~~7% relative to 2022 primarily due to higher shipments for industrial and steel customers, partially offset by a decrease in revenue from mining and O&G customers. Industrial Solutions segment revenue increased 41% from the prior year primarily due to ~~recent higher order intake levels~~increased demand for new and aftermarket gas turbine content, and increased revenue from ~~customers in most end markets, particularly O&G, partially offset by a decrease in aftermarket wind revenue. Industrial Solutions segment revenue increased 16% from the prior year primarily due tothe timing of aftermarket installations.~~ international customers.

We reported net income of $7,649, or $0.36 per share in 2023, compared to a net loss of $9,730 or $0.48 per share in 2022 ~~compared to a net income of $2,847 or $0.15 per share in 2021. The decrease in earnings was~~ primarily due to higher sales and $14,493 of gross AMP credits (discussed below) recognized in the ~~absence~~current year.

In January 2023, we announced that we had entered into a supply agreement for wind tower purchases valued at approximately $175 million with a leading global wind turbine manufacturer. Under the terms of the ~~$9,151 benefit~~supply agreement, order fulfillment is to occur beginning in 2023 through year-end 2024. In early November 2023, the parties discussed their joint intent to shift approximately half of the contracted tower section orders initially planned for 2024 into 2025, while maintaining the total number of tower sections stipulated under the supply agreement.

During 2023, we recognized ~~from~~gross AMP credits totaling $14,493, within the ~~PPP loan forgiveness~~Heavy Fabrications segment. These AMP credits were introduced as part of the IRA, which was enacted on August 16, 2022. The IRA includes advanced manufacturing tax credits for manufacturers of eligible components, including wind and solar components. Manufacturers of wind components qualify for the ~~$6,965 ERC benefit (described below), both~~AMP credits based on the total rated capacity, expressed on a per watt basis, of the completed wind turbine for which ~~were~~such component is designed. The credit applies to each component produced and sold in the U.S. beginning in 2023 through 2032. Wind towers within the Company’s Heavy Fabrications segment are eligible for credits of $0.03 per watt for each wind tower produced. In calculating the eligible credit, we relied on the megawatt rating provided by the customer. Manufacturers who qualify for the AMP credits can apply to the Internal Revenue Service for cash refunds of the AMP credits or sell the AMP credits to third parties for cash, or apply the AMP credits against taxable income. We recognized ~~in “Other Income (expense), net”~~the AMP credits as a reduction to cost of sales in our consolidated ~~statement~~statements of operations for the year ended December 31, ~~2021. This decrease was partially offset by~~2023. The assets related to the ~~volume related increases discussed above.~~

On March 27, 2020, the CARES Act was signed into law providing numerous tax provisions and other stimulus measures, including the Employee Retention Credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. As amended, the ERC was available for wages paid through September 30, 2021 and was equal to 70% of qualified wages (which included employer qualified health plan expenses) paid to employees. During each quarter of 2021, a maximum of $10,000 in qualified wages for each employee was eligible for the ERC. Therefore, the maximum tax credit that could be claimed by an eligible employer in 2021 was $7,000 per employee per calendar quarter. We qualified for the ERCAMP credits are recognized as current assets in the first quarter of the year because we experienced a reduction in gross receipts of more than 20% for the first quarter of 2021 compared to the first quarter of 2019, the relevant criteria for the ERC. Since we qualified for the ERC in the first quarter of 2021, we automatically qualified for the ERC in the second quarter of 2021. In the first and second quarters of 2021, we received ERC benefits of $3,372 and $3,593, respectively, and under analogy to IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance” were recorded in “Other income (expense), net” in our consolidated statement of operations. During the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of 2019, we did not qualify for the ERC benefit. The receivable for the remaining uncollected ERC benefit was $497 as of December 31, 2021 and was included in the “Employee retention“AMP credit receivable” line item in our consolidated balance sheet as of December 31, 2023.

On December 21, 2023, we entered into an agreement to sell 2023 and 2024 AMP credits to a third party. At that time, we sold a portion of the gross 2023 credits in the amount of $6,952 and recognized a 6.5% discount on the sale in the amount of $452 which was recognized in cost of sales. In addition, we wrote down the remaining receivable of $7,541 to net realizable value and recorded the expected loss on sale of $490 in cost of sales. The remaining 2023 AMP credit receivable was collected during the first quarter of 2024. We also incurred other miscellaneous administrative costs related to selling the credits in the amount of $254, $197 of which has been recorded as cost of sales, with the remaining capitalized and included in the “Prepaid expenses and other current assets” line item of our consolidated financial statements at December 31, ~~2021. The $497 receivable balance was collected during January 2022.~~

We use our credit facility to fund working capital requirements and believe that our credit facility, together with the operating cash generated by our businesses, and any potential proceeds from access to the public or private debt or equity markets, are sufficient to meet all cash obligations over the next twelve months. On December 31, ~~2022,~~2023, we had $0$4,657 outstanding under our senior secured revolving credit facility, ~~$7,217~~$6,135 outstanding under our senior secured term loan, ~~$12,732~~$1,099 of cash on hand, with the ability to borrow an additional ~~$27,351.~~$21,714. For a further discussion of our capital resources and liquidity, including a description of recent amendments and waivers under our credit facility, please see the discussion under “Liquidity, Financial Position and Capital Resources” in this Annual Report on Form 10-K.

Our facilities continued to operate as essential businesses in light of the customers and markets served. However, through December 31, 2022, we have experienced an adverse impact to our business, operations and financial results as a result of this pandemic due in part to manufacturing inefficiencies associated with supply chain disruptions and employee staffing constraints due to the spread of the COVID-19 pandemic. In response to the pandemic, we continue to right-size our workforce and delay certain capital expenditures. In future periods, we may experience weaker customer demand, requests for extended payment terms, customer bankruptcies, additional supply chain disruption, employee staffing constraints and difficulties, government restrictions or other factors that could negatively impact the Company and its business, operations and financial results. As we cannot predict the duration or scope of the pandemic, including in light of the emerging variants, or its impact on economic and financial markets, any negative impact to our results cannot be reasonably estimated, but it could be material.

Although the long-term effects of COVID-19 remain unknown, the availability of vaccines and reopening of state and local economies have improved the outlook for recovery from COVID-19 impacts. However, we continue to monitor closely the Company’s financial health and liquidity and the impact of the pandemic on the Company, including emerging variants. We have been able to serve the needs of our customers while taking steps to protect the health and safety of our employees, customers, partners, and communities. Among these steps, we follow the guidance provided by the U.S. Centers for Disease Control and Prevention.

In addition to measures of financial performance presented in our consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”), we use certain other financial measures to analyze our performance. These non-GAAP financial measures primarily consist of adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share-based compensation, and other stock payments, restructuring costs, impairment charges, proxy contest-related expenses, and other non-cash gains and losses) and free cash flow which help us evaluate growth trends, establish budgets, assess operational efficiencies, oversee our overall liquidity, and evaluate our overall financial performance.

The following table reconciles our non-GAAP key financial measures to the most directly comparable GAAP measure:

Year Ended December 31, ~~2022~~2023 Compared to Year Ended December 31, ~~2021~~2022

The summary of selected financial data table below should be referenced in connection with a review of the following discussion of our results of operations for the year ended December 31, ~~2022~~2023 compared to the year ended December 31, ~~2021.~~2022.

Revenues increasedby ~~$31,140~~$26,718 during the year ended December 31, ~~2022~~2023 primarily due to a ~~92%~~14% increase in ~~industrial fabrications product line revenue within the~~ Heavy Fabrications segment ~~compared to~~revenues. Wind tower revenue increased 18% from the prior ~~year. This was~~year primarily as a resultof a 30 section increase in tower sections sold, less customer supplied materials in the current year and increased steel content, which is generally a pass-through to customers. Additionally, industrial fabrication product line revenues increased primarily due to higher ~~recent order intake from industrial customers and revenue recognized from~~shipments of our PRS units in the current year. Gearing segment revenue increased 7% relative to 2022 primarily due to higher shipments for industrial and steel customers, partially offset by ~~49% compared to~~a decrease in revenue from mining and O&G customers. Industrial Solutions segment revenue increased 41% from the prior year primarily due to ~~higher order intake~~increased demand for new and aftermarket gas turbine content, in ~~recent quarters~~addition to increased revenue recognized from customers in most end markets, particularly O&G, partially offset by a decrease in aftermarket wind revenue. Industrial Solutions segment revenue increased 16% primarily due to the timing of aftermarket installations.international customers.

Gross profit improved by ~~$5,199~~$21,798 during the year ended December 31, ~~2022~~2023 primarily due to the higher sales volumes inwithin all segments and $14,493 recognized from the ~~Gearing and the Heavy Fabrications segments, partially offset by higher material costs and ramp-up costs~~.AMP credits. As a result, our gross margin increased from ~~3.8% for the year ended December 31, 2021, to~~6.1% for the year ended December 31, ~~2022.~~2022, to 16.0% for the year ended December 31, 2023.

Operating expenses as a percentage of sales ~~decreased~~increased to 10.5% in 2023 from 9.8% in 2022 ~~from 12.4% in 2021~~ primarily due to proxy-contest related expenses, higher ~~revenue levels, reduced salaries~~medical costs, and ~~benefits and reduced legal fees.~~increased incentive compensation.

Net income ~~decreased~~increased from ~~$2,847 for the year ended December 31, 2021 to~~ a net loss of $9,730 for the year ended December 31, ~~2022.The decrease~~2022 to net income of $7,649 for the year ended December 31, 2023.The increase in net income was primarily due to the absence of the $9,151 benefit recognized from the PPP loan forgiveness and the $6,965 ERC benefit, both of which were recognized in “Other Income (expense), net” in our consolidated statement of operations for the year ended December 31, 2021. This decrease was partially offset by the volume related increases discussedfactors described above.

The following table summarizes the Heavy Fabrications segment operating results for the twelve months ended December 31, ~~2022~~2023 and ~~2021:~~2022:

Heavy Fabrications orders ~~increased~~decreased by ~~215%~~83% versus the prior year primarily due to the timing of tower orders as a ~~result~~major wind tower customer secured relatively longer-term capacity during the fourth quarter of ~~increased~~2022 instead of ordering in more regular intervals consistent with how orders are typically placed. Partially offsetting this decrease in wind tower orders was a 14% increase in industrial fabrication product line orders primarily due to improved demand for our ~~capacity as tower customers secured production capacity through 2024 for ongoing wind turbine tower installation projects.~~PRS units. Segment revenues increased by ~~15% during the year ended December 31, 2022~~14% primarily due to a ~~92%~~18% increase in wind tower revenue primarily as a resultof a 30 section increase in tower sections sold, less customer supplied materials in the current year and increased steel content, which is generally a pass-through to customers. Additionally, industrial fabrication ~~revenue~~product line revenues increased primarily due to higher ~~recent order intake from industrial customers and revenue recognized from~~shipments of our PRS units in the current year.

Heavy Fabrications segment operating results improved by ~~$2,170~~$16,050 as compared to the prior year. The improvement in operating performance was primarily a result of ~~higher sales~~reduced wind tower costs as a result of the AMP credits recognized of $14,493 in the current year and the absence of one-time events that occurred during the prior year period including a weather-related event and a customer driven project delay, partially offset by costs associated with transitioning a portion of the workforce to support growth in the industrial fabrications product line and inefficiencies associated with a change to a new tower design in the fourth quarter.year. Operating profit margin was 11.3% during the year ended December 31, 2023 compared to (0.9%) during the year ended December 31, ~~2022 compared to (3.2%) during the year ended December 31, 2021.~~2022.

The following table summarizes the Gearing segment operating results for the twelve months ended December 31, ~~2022~~2023 and ~~2021:~~2022:

Gearing segment orders for the year ended December 31, ~~2022 increased 16%~~2023 decreased 54% compared to ~~the year ended December 31, 2021 primarily due to increased demand from customers in all end markets. Revenues increased 49% during~~ the year ended December 31, 2022 primarily due to reduced demand from O&G and mining customers. Revenues increased 7% during the year ended December 31, 2023 from the prior year primarily due to higher ~~order intake in recent quarters from~~shipments of industrial and steel customers, ~~in most end markets, particularly O&G,~~ partially offset by a decrease in ~~aftermarket wind revenue.~~revenue from mining and O&G customers.

The Gearing segment's operating income improved by ~~$2,636~~$1,803 during the year ended December 31, ~~2022~~2023 from the year ended December 31, ~~2021~~2022 primarily due to higher sales, improved operational efficiencies, ~~partially offset by higher material costs,~~a more profitable product mix sold, and the absence of ramp-up costs ~~and increased fixed costs to support higher volumes.~~incurred in the prior year. Operating margin was ~~0.1%~~4.1% for the year ended December 31, ~~2022~~2023 compared to ~~(9.1)%~~0.1% during the year ended December 31, ~~2021.~~2022.

The following table summarizes the Industrial Solutions segment operating results for the twelve months ended December 31, ~~2022~~2023 and ~~2021.~~2022.

Industrial Solutions segment orders increased by 3%26% for the year ended December 31, ~~2022~~2023 primarily due to an increase in orders associated with new gas turbine ~~orders.~~and aftermarket projects. Segment revenue increased ~~16%~~41% from the prior year primarily due to~~the timing of~~ increased demand for new and aftermarket ~~installations.~~gas turbine content, in addition to revenue recognized from international customers. The improvement in operating income during the year ended December 31, 2023 was a result of higher sales and a more profitable mix of product sold. The operating margin improved from 0.7% during the year ended December 31, 2022, ~~was a result of the revenue increase, partially offset by increased labor and freight costs. The operating margin improved from (2.5)%~~to 12.6% during the year ended December 31, ~~2021, to 0.7% during the year ended December 31, 2022.~~2023.

Corporate and Other expenses~~decreased~~ increased by ~~$679~~$3,162 during the year ended December 31, ~~2022. The decrease was~~2023 primarily ~~attributable~~due to ~~lower salaries~~higher medical costs, increased incentive compensation, and ~~benefits.~~increased professional fees associated with the contested proxy election.

The methods, estimates and judgments that we use in applying our critical accounting policies have a significant impact on the results that we report in our financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain.

We have identified the accounting policies listed below to be critical to obtain an understanding of our consolidated financial statements. This section should also be read in conjunction with Note 1, “Description of Business and Summary of Significant Accounting Policies” in the notes to our consolidated financial statements for further discussion of these and other significant accounting policies.

We recognize revenue when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Customer deposits and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers, like those made for liquidated damages, are presumed to be classified as reductions of revenue in our statement of operations.

In many instances within our Heavy Fabrications segment, wind towers as well as certain 2023 sales within our Gearing segment, are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition versus shipment, due to our customers’ preference to ship products in batches to support efficient construction of wind farms. We recognize revenue under these arrangements when there is a substantive reason for the arrangement (i.e., the buyer requests the arrangement), the ordered goods are segregated from inventory and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and we do not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.

During ~~2022~~2023 and ~~2021,~~2022, we also recognized revenue over time, versus point in time, when products in the ~~Gearing and~~ Heavy Fabrications segments had no alternative use to us and we had an enforceable right to payment, including profit, upon termination of the contract by the customer. Since the projects are labor intensive, we use labor hours as the input measure of progress for the contract. Contract assets are recorded when performance obligations are satisfied but we are not yet entitled to payment. We recognize contract assets associated with this revenue which represents our rights to consideration for work completed but not billed at the end of the period.

We provide warranty terms that generally range from one to five years for various products relating to workmanship and materials supplied by us. In certain contracts, we have recourse provisions for items that would enable us to seek recovery from third parties for amounts paid to customers under warranty provisions. We estimate the warranty accrual based on various factors, including historical warranty costs, current trends, product mix and sales.

Inventories consist of raw materials, work-in-process and finished goods. Raw materials consist of components and parts for general production use. Work-in-process consists of labor and overhead, processing costs, purchased subcomponents, and materials purchased for specific customer orders. Finished goods consist of components purchased from third parties as well as components manufactured by us.

Inventories are stated at the lower of cost or net realizable value. Where necessary, we have recorded a reserve for the excess of cost over net realizable value in our inventory allowance. Net realizable value of inventory, and management’s judgment concerning the need for reserves, encompasses consideration of many business factors including physical condition, inventory holding period, contract terms and usefulness. Inventories are valued based either on actual cost or using a first-in, first out method.

We review property and equipment and other long-lived assets (“long-lived assets”) for impairment whenever events or circumstances indicate that their carrying amounts may not be recoverable. Due to triggering events identified within our segments at various times in the past, we continue to evaluate the recoverability of certain of the long-lived assets. During ~~November 2022,~~the year ended December 31, 2023, we ~~identified a~~did not identify any triggering event associated with the Heavy Fabrications segment. In accordance with GAAP, we compared the carrying value of the segment asset group to the forecast undiscounted cash flows associated with the asset group. Based on the analysis performed, the forecast undiscounted cash flows exceeded the carrying value resulting inevents within our segments and no ~~recorded~~ impairment ~~of this group.~~expense was recorded.

We account for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted.

In connection with the preparation of our consolidated financial statements, we are required to estimate our income tax liability for each of the tax jurisdictions in which we operate. This process involves estimating our actual current income tax expense and assessing temporary differences resulting from differing treatment of certain income or expense items for income tax reporting and financial reporting purposes. We also recognize the expected future income tax benefits of NOL carryforwards as deferred income tax assets. In evaluating the realizability of deferred income tax assets associated with NOL carryforwards, we consider, among other things, expected future taxable income, the expected timing of the reversals of existing temporary reporting differences, and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits. Changes in, among other things, income tax legislation, statutory income tax rates or future taxable income levels could materially impact our valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting periods.

We also account for the uncertainty in income taxes related to the recognition and measurement of a tax position taken or expected to be taken in an income tax return. We follow the applicable pronouncement guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition related to the uncertainty in these income tax positions.

On August 4, 2022, we entered into a credit agreement ~~(the~~(as amended, the “2022 Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), providing the Company and its subsidiaries with a $35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon the request of the Company and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, as amended, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. As of December 31, ~~2022,~~2023, cash totaled ~~$12,732, an increase~~$1,099, a decrease of ~~$11,880~~$11,633 from December 31, ~~2021.~~2022. Debt and finance lease obligations at December 31, ~~2022~~2023 totaled ~~$14,545,~~$17,678, and we had the ability to borrow up to ~~$27,351~~$21,714 under the 2022 Credit Facility.

In addition to the 2022 Credit Facility, we also utilize supply chain financing arrangements as a component of our funding for working capital, which accelerates receivable collections and helps to better manage cash flow. Under these agreements, we have agreed to sell certain of our accounts receivable balances to banking institutions who have agreed to advance amounts equal to the net accounts receivable balances due, less a discount as set forth in the respective agreements. The balances under these agreements are accounted for as sales of accounts receivable, as they are sold without recourse. Cash proceeds from these agreements are reflected as operating activities included in the change in accounts receivable in the consolidated statements of cash flows. Fees incurred in connection with the agreements are recorded as interest expense.

On ~~August 18, 2020,~~September 22, 2023, we filed a ~~“shelf”~~shelf registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (the “SEC”) on October ~~13, 2020~~12, 2023 (the “Form S-3”) and ~~expires~~which will expire on October 12, 2026, replacing a prior shelf registration statement which expired on October 12, 2023. This shelf registration statement, which includes a base prospectus, allows us ~~at any time~~ to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, we would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes.

On March 9, 2021, we entered into a $10,000 Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC. Pursuant to the terms of the Equity Distribution Agreement, we issued 1,897,697 shares of the Company's common stock thereunder during the first two quarters of 2021. The net proceeds (before upfront costs) to the Company from the sales of such shares were approximately $9,725 after deducting commissions paid of approximately $275 and before deducting other expense of $411.

On September 12, 2022, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC and HC Wainwright & Co., LLC (collectively, the “Agents”). Pursuant to the terms of the Sales Agreement, we may sell from time to time through the Agents shares of ~~the Company’s~~our common stock, par value $0.001 per share with an aggregate sales price of up to $12,000. ~~The Company~~We will pay a commission to the Agents of 2.75% of the gross proceeds of the sale of the shares sold under the Sales Agreement and reimburse the Agents for the expenses incident to the performance of their obligations under the Sales Agreement. During the year ended December 31, 2022, we issued 100,379 shares of ~~the Company’s~~our common stock under the Sales Agreement and the net proceeds (before upfront costs) to us from the sale of ~~the Company’s~~our common stock were approximately $323 after deducting commissions paid of approximately $9 and before deducting other expenses of $93. No shares of our common stock were issued under the Sales Agreement during the year ended December 31, 2023. As of December 31, ~~2022,~~2023, shares of ~~the Company’s~~our common stock having a value of approximately $11,667 remained available for issuance under the Sales Agreement.

~~On March 27, 2020,~~ Any additional shares offered and sold under the CARES Act was signed into law providing numerous tax provisions and other stimulus measures, including the Employee Retention Credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. As amended, the ERC was available for wages paid through September 30, 2021 and was equalSales Agreement are to 70% of qualified wages (which included employer qualified health plan expenses) paid to employees. During each quarter of 2021, a maximum of $10,000 in qualified wages for each employee was eligible for the ERC. Therefore, the maximum tax credit that could be claimed by an eligible employer in 2021 was $7,000 per employee per calendar quarter. We qualified for the ERC in the first quarter of the year because we experienced a reduction in gross receipts of more than 20% for the first quarter of 2021 comparedissued pursuant to the first quarter of 2019, the relevant criteria for the ERC. Since we qualified for the ERC in the first quarter of 2021, we automatically qualified for the ERC in the second quarter of 2021. In the firstForm S-3 and second quarters of 2021, we received ERC benefits of $3,372 and $3,593, respectively, and under analogy to IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance” were recorded in “Other income (expense), net” in our consolidated statement of operations. During the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of 2019, we did not qualify for the ERC benefit. The receivable for the remaining uncollected ERC benefit was $497 as of December 31, 2021 and was included in the “Employee retention credit receivable” line item in our consolidated balance sheet at December 31, 2021. The $497 receivable balance was collected during January 2022. a 424(b) prospectus supplement.

We anticipate that we will be able to satisfy the cash requirements associated with, among other things, working capital needs, capital expenditures and lease commitments through at least the next twelve months primarily through cash generated from operations, available cash balances, our Credit Facility, sales of shares under the Sales Agreement, additional equipment financing, and access to the public or private debt and/or equity markets, including the option to raise additional capital from the sale of our securities under ~~a “shelf” registration statement on~~the Form ~~S-3.~~S-3, and proceeds from sales of AMP credits.

In 2016, we entered into a $570 unsecured loan agreement with the Development Corporation of Abilene which is included in long-term debt, less current maturities. The loan is forgivable upon us meeting and maintaining specific employment thresholds. During each of the years ended December 31, 2022 and 2021, $114 of the loan was forgiven. As of December 31, 2022, the loan balance was $0. In addition, weWe have outstanding notes payable for capital expenditures in the amount of ~~$1,094~~$1,361 and ~~$363~~$1,094 as of December 31, ~~2022~~2023 and ~~2021,~~2022, respectively, with ~~$88~~$163 and ~~$186~~$88 included in the “Line of credit and current ~~portion~~maturities of long-term debt” line item of our consolidated financial statements as of December 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The notes payable have monthly payments that range from $3 to ~~$16~~$15 and an interest rate of 4%6%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates ~~that range from July2023~~toin September 2028.

The following table summarizes our cash flows from operating, investing, and financing activities for the years ended December 31, ~~2022~~2023 and ~~2021:~~2022:

During the year ended December 31, ~~2022, net cash provided by operations was $16,643 compared to~~2023, net cash used in operating activities was $6,946 compared to net cash provided by operating activities of ~~$12,826~~$16,643 for the year ended December 31, ~~2021.~~2022. The ~~increase~~decrease in net cash provided by operating activities was primarily ~~due~~attributable to the new AMP credit receivable and a decrease in customer deposits in 2023, versus an increase in the prior year. Partially offsetting this was a decrease in inventory during 2023 as compared to an increase in ~~customer deposits for future scheduled production during the current year period and an increase in accounts payable as compared to~~ the prior year.

During the year ended December 31, ~~2022,~~2023, net cash used in investing activities was ~~$3,098~~$6,384 compared to net cash used in investing activities of ~~$1,674~~$3,098 for the year ended December 31, ~~2021.~~2022. The increase was primarily due to an increase in net purchases of property and equipment.

During the year ended December 31, ~~2022,~~2023, net cash provided by financing activities totaled $1,697 compared to net cash used in financing activities ~~totaled~~of $1,665 ~~compared to net cash provided by financing activities of $11,980~~ for the year ended December 31, ~~2021.~~2022. The ~~decrease~~increase was primarily due to ~~greater proceeds from the sale of securities~~increased net borrowings under the ~~Equity Distribution Agreement received in the prior year and increased net repayments under our~~ 2022 Credit Facility ~~during~~in the current ~~year. This was partially offset by an increase in proceeds from long term debt primarily related to the senior secured term loan under our 2022 Credit Facility.~~year period.

We enter into a variety of contractual obligations as part of our normal operations in addition to capital expenditures. As of December 31, ~~2022,~~2023, we have (i) debt obligations related to our Credit Facility and other notes payable as described in Note 9,10, “Debt and Credit Agreements” of our consolidated financial statements (ii) cash payments for operating and finance lease obligations that are described in Note ~~10,~~11, “Leases” of our consolidated financial statements and (iii) purchase obligations made in the normal course of business. We expect to fund these cash requirements primarily through cash generated from operations, available cash balances, our 2022 Credit Facility, sales of shares under the Sales Agreement, additional equipment financing, proceeds from sales of AMP credits, and access to the public or private debt and/or equity markets, including the option to raise additional capital from the sale of our securities under a “shelf” registration statement on Form S-3.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and as such are not required to provide information under this item.

The financial information required by Item 8 is contained in Part IV, Item 15 “EXHIBITS AND FINANCIAL STATEMENT SCHEDULES” of this Annual Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

We seek to maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. This information is also accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. Our management, under the supervision and with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the most recent fiscal year reported on herein. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures ~~are~~were effective as of December 31, ~~2022.~~2023.

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

Our management, including our CEO and CFO, assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2022.~~2023. Management based this assessment on criteria for effective internal control over financial reporting described in “Internal Control—Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management determined that our internal control over financial reporting was effective as of December 31, ~~2022.~~2023.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.

None of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the fourth quarter of 2023.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

With the exception of the description of our Code of Ethics and Business Conduct below, the information required by this item is incorporated herein by reference from the discussion under the headings “Directors and Director Compensation,” “Corporate Governance,” and “Executive Officers” in our definitive Proxy Statement to be filed in connection with our ~~2023~~2024 Annual Meeting of Stockholders (the ~~“2023~~“2024 Proxy Statement”).

We have adopted a Code of Ethics and Business Conduct (the “Code”) that applies to all of our directors, executive officers and senior financial officers (including our principal executive officer, principal financial officer, principal accounting officer, controller, and any person performing similar functions). The Code is available on our website at www.bwen.com under the caption “Investors” and is available in print, free of charge, to any stockholder who sends a request for a paper copy to Broadwind, Inc., Attn: Investor Relations, 3240 South Central Avenue, Cicero, IL 60804. We intend to include on our website any amendment to, or waiver from, a provision of the Code that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K.

Information regarding director and executive compensation is incorporated by reference from the discussion under the headings “Directors and Director Compensation,” “Executive Officers” and “Compensation Discussion and Analysis” in the ~~2023~~2024 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Certain of the information required by this item is incorporated herein by reference from the discussion under the heading “Security Ownership of Certain Beneficial Holders and Management” in the ~~2023~~2024 Proxy Statement.

The following table provides information as of December 31, ~~2022,~~2023, with respect to shares of our common stock that may be issued under our existing equity compensation plans:

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated herein by reference from the discussion under the headings “Certain Transactions and Business Relationships” and “Corporate Governance” in the ~~2023~~2024 Proxy Statement.

The information required by this item is incorporated herein by reference from the discussion under the heading “Ratification of Appointment of Independent Registered Public Accounting Firm” in the ~~2023~~2024 Proxy Statement.

The financial statements listed on the Index to Financial Statements (page 34) are filed as part of this Annual Report.

These schedules have been omitted because the required information is included in the consolidated financial statements or notes thereto or because they are not applicable or not required.

The exhibits listed on the Index to Exhibits are filed as part of this Annual Report.

The accompanying notes are an integral part of these consolidated financial statements.

Broadwind, Inc. (the “Company”) is a precision manufacturer of structures, equipment and components for clean tech and other specialized applications. The Company provides technologically advanced high value products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure sectors, primarily in the United States of America (the “U.S.”). The Company’s most significant presence is within the U.S. wind energy industry, although the Company has increasingly diversified into other industrial markets. Within the U.S. wind energy industry, the Company provides products primarily to turbine manufacturers. The Company also provides precision gearing and heavy fabrications to a broad range of industrial customers for oil and gas (“O&G”), mining, steel and other industrial applications, in addition to supplying components for natural gas turbines. The Company has three reportable operating segments: Heavy Fabrications, Gearing, and Industrial Solutions.

The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets. The Company’s most significant presence is within the U.S. wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentrations, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, the Company provides steel towers and adapters primarily to wind turbine manufacturers. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers (1650 tower sections), sufficient to support turbines generating more than 1,100 MW of power. The Company has expanded its production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and ~~OEM~~original equipment manufacturer (“OEM”) components utilized in surface and underground mining, construction, material handling, O&G and other infrastructure markets.

The Company has designed and manufactures a mobile, modular pressure reducing system for the compressed natural gas virtual pipeline market. The Company manufactures components for buckets, shovels, car bodies, drill masts and other products that support mining and construction markets. In other industrial markets, the Company provides crane components, pressure vessels, frames and other structures.

The Company provides gearing, gearboxes and ~~gearboxes~~precision machined components to a broad set of customers in diverse markets including; ~~onshore and offshore O&G fracking and drilling,~~ surface and underground mining, wind energy, steel, material handling, infrastructure, onshore and offshore O&G fracking and drilling, marine, and other ~~infrastructure~~industrial markets. The Company has manufactured loose gearing, gearboxes and systems, and provided heat treat services for aftermarket and OEM applications for ~~nearly~~ a century. The Company uses an integrated manufacturing process, which includes machining and finishing processes in addition to gearbox repair in Cicero, Illinois, and heat treatment and gearbox repair in Neville Island, Pennsylvania.

The Company provides supply chain solutions, light fabrication, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market. The Company has recently expanded into the U.S. wind power generation market, by providing tower internals kitting solutions for on-site installations, as OEMs domesticate their supply chain due to lead time and reliability issues. The Company leverages a global supply chain to provide instrumentation & controls, valve assemblies, sensor devices, fuel system components, electrical junction boxes & wiring, energy storage services and electromechanical devices. The Company also provides packaging solutions and fabricates panels and sub-assemblies to reduce customers’ costs, improve manufacturing velocity and reliability.

The Company meets its short term liquidity needs through cash generated from operations, its available cash balances, through its 2022 Credit Facility (as defined and further discussed in Note 910 “Debt and Credit Agreements” of these consolidated financial statements), equipment financing, access to the public and private debt and/or equity markets, and has the option to raise capital under the Company’s registration statement on Form S-3 (as discussed below), and proceeds from sales of Advanced Manufacturing Production tax credits (“AMP credits”) (discussed in Note 7 “AMP Credits” of these consolidated financial statements). The Company uses the 2022 Credit Facility to fund working capital requirements. Under the 2022 Credit Facility, borrowings are continuous and all cash receipts are usually applied to the outstanding borrowed balance. As of December 31, ~~2022~~2023, cash totaled ~~$12,732, an increase~~$1,099, a decrease of ~~$11,880~~$11,633 from December 31, ~~2021~~2022. The Company had the ability to borrow up to ~~$27,351~~$21,714 under the 2022 Credit Facility as of December 31, ~~2022~~2023.

The Company also utilizes supply chain financing arrangements as a component of its funding for working capital, which accelerates receivable collections and helps to better manage cash flow. Under these agreements, the Company has agreed to sell certain of its accounts receivable balances to banking institutions who have agreed to advance amounts equal to the net accounts receivable balances due, less a discount as set forth in the respective agreements. The balances under these agreements are accounted for as sales of accounts receivable, as they are sold without recourse. Cash proceeds from these agreements are reflected as operating activities included in the change in accounts receivable in the Company's consolidated statements of cash flows. Fees incurred in connection with the agreements are recorded as interest expense by the Company.

During the years ended December 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company sold account receivables totaling ~~$93,245~~ $40,343and ~~$99,130,~~$93,245, respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling ~~$1,431~~$858 and ~~$251,~~$1,431, respectively.

Debt and finance lease obligations at December 31, ~~2022~~2023 totaled ~~$14,545,~~$17,678, which includes current outstanding debt and finance lease obligations totaling ~~$3,178, due over the next~~ ~~twelve~~ ~~months.~~$8,056. The Company's outstanding debt includes ~~$7,217~~$6,135 outstanding from the senior secured term loan under the 2022 Credit Facility. The Company had $0$4,657 drawn on the senior secured revolving credit facility as of December 31, ~~2022.~~2023.

On ~~August 18, 2020,~~September 22, 2023, the Company filed a ~~“shelf”~~shelf registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (the “SEC”) on October ~~13, 2020~~12, 2023 (the “Form S-3”) ~~and expires~~, replacing a prior shelf registration statement which expired on October 12, 2023. This shelf registration statement, which includes a base prospectus, allows the Company ~~at any time~~ to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes.

On ~~March 9, 2021,~~ the Company entered into a $10,000 Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC. Pursuant to the terms of the Equity Distribution Agreement, the Company issued 1,897,697 shares of the Company’s common stock thereunder during the ~~first~~~~two~~ ~~quarters of~~ ~~2021.~~ The net proceeds (before upfront costs) to the Company from the sale of such shares were approximately $9,725 after deducting commissions paid of approximately $275 and before deducting other expenses of $411.

On September 12, 2022, the Company entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC and HC Wainwright & Co., LLC (collectively, the “Agents”). Pursuant to the terms of the Sales Agreement, the Company may sell from time to time through the Agents shares of the Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $12,000. ~~Any shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S-~~3 ~~and the~~ ~~424~~~~(b) prospectus supplement relating to the offering dated~~ ~~September 12, 2022.~~ The Company will pay a commission to the Agents of 2.75% of the gross proceeds of the sale of the shares sold under the Sales Agreement and reimburse the Agents for the expenses incident to the performance of their obligations under the Sales Agreement. During the year ended December 31, 2022, the Company issued 100,379 shares of the Company’s common stock under the Sales Agreement and the net proceeds (before upfront costs) to the Company from the sale of the Company’s common stock were approximately $323 after deducting commissions paid of approximately $9 and before deducting other expenses of $93. No shares of the Company’s common stock were issued under the Sales Agreement during the year ended December 31,2023.As of December 31, ~~2022,~~ 2023,shares of the Company’s common stock having a value of approximately $11,667 remained available for issuance under the Sales Agreement. Any additional shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S-3 and a 424(b) prospectus supplement.

OnIn ~~March 27, 2020,~~January 2023, the ~~Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed~~Company announced that it had entered into ~~law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is~~ a ~~refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of~~ ~~2020~~ ~~and~~supply agreement for wind tower purchases valued at approximately $175 million with a leading global wind turbine manufacturer. Under the ~~American Rescue Plan Act of~~ ~~2021~~ ~~extended and expanded the availability~~terms of the ~~ERC. As amended, the ERC~~supply agreement, order fulfillment is ~~available for wages paid through~~ ~~September~~ ~~30,~~~~2021~~ ~~and is equal~~ to ~~70%~~ ~~of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter of~~ ~~2021,~~ ~~a maximum of~~ ~~$10,000~~ ~~in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer~~occur beginning in ~~2021~~2023 isthrough year-end ~~$7,000~~2024. ~~per employee per calendar quarter.~~ In early November 2023, the ~~first~~ ~~and~~ ~~second~~ ~~quarters of~~ ~~2021,~~ ~~the Company received ERC benefits of $3,372 and $3,593, respectively, and under analogy~~parties discussed their joint intent to ~~IAS~~ 20 “Accounting for Government Grants and Disclosure of Government Assistance” were recorded in “Other income (expense), net” in our consolidated statement of operations. The Company qualified for the ERC in the ~~first~~ ~~quarter of~~ ~~2021~~ ~~because it experienced a reduction in gross receipts of more than~~ ~~20%~~ ~~for the~~ ~~first~~ ~~quarter of~~ ~~2021~~ ~~compared to the~~ ~~first~~ ~~quarter of~~ ~~2019,~~ ~~the relevant criteria for the ERC. Since the Company qualified for the ERC in the~~ ~~first~~ ~~quarter of~~ ~~2021,~~ ~~it automatically qualified for the ERC in the~~ ~~second~~ ~~quarter of~~ ~~2021.~~ ~~As a result~~shift approximately half of the ~~Company averaging~~contracted tower section orders initially planned for ~~500~~2024 ~~or fewer full-time employees in~~into ~~2019,~~2025, ~~all wages paid to employees were eligible for~~while maintaining the ~~ERC (rather than only wages paid to employees~~ ~~not~~ ~~providing services). During~~total number of tower sections stipulated under the ~~third~~ ~~quarter of~~ ~~2021~~ ~~due to relatively higher revenues in~~ ~~2021~~ ~~as compared to the~~ ~~third~~ ~~quarter of~~ ~~2019,~~ ~~the Company did~~ ~~not~~ ~~qualify for the ERC benefit. The receivable for the remaining uncollected ERC benefit is $497 as of~~ ~~December~~ ~~31,~~~~2021~~ ~~and is included in the “Employee retention credit receivable” line item in the Company’s consolidated balance sheet at~~ ~~December~~ ~~31,~~~~2021.~~ ~~The $497 receivable balance was collected during~~ ~~January 2022.~~ supply agreement.

The Company anticipates that current cash resources, amounts available under the 2022 Credit Facility, sales of shares under the Sales Agreement, cash to be generated from operations and equipment financing, ~~and~~ any potential proceeds from the sale of further Company securities under the Form S-3, and proceeds from sales of AMP credits will be adequate to meet the Company’s liquidity needs for at least the next twelve months.

Certain prior year amounts, which are not material, have been reclassified to conform to current year presentation in the consolidated financial statements and the notes to the consolidated financial statements.

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, and valuation allowances on deferred taxes. Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates.

As of December 31, ~~2022~~2023 and December 31, ~~2021~~2022, cash totaled ~~$12,732~~$1,099 and ~~$852,~~$12,732, respectively. For the years ended December 31, ~~2022~~2023 and ~~2021~~2022, interest income was $0$8 and ~~$1,~~$0, respectively.

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are presumed to be classified as reductions of revenue in the Company’s statement of operations.

For ~~many~~substantially all tower sales within the Company’s Heavy Fabrications segment, as well as certain 2023 sales within our Gearing segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition versus shipment. The Company recognizes revenue under these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.

During ~~2022~~2023 and ~~2021,~~2022, the Company also recognized revenue over time, versus point in time, when products in the ~~Gearing and~~ Heavy Fabrications segments had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contract by the customer. Since the projects are labor intensive, the Company uses labor hours as the input measure of progress for the contract. Contract assets are recorded when performance obligations are satisfied but the Company is not yet entitled to payment. The Company recognizes contract assets associated with this revenue which represents its rights to consideration for work completed but not billed at the end of the period.

Cost of sales represents all direct and indirect costs associated with the production of products for sale to customers. These costs include operation, repair and maintenance of equipment, materials, direct and indirect labor and benefit costs, rent and utilities, maintenance, insurance, equipment rentals, freight, and depreciation. AMP credits and related discounts and administrative fees are also recognized in cost of sales. See “AMP Credits” discussion below in this “Summary of Significant Accounting Policies” for further details.

Selling, general and administrative (“SG&A”) expenses include all corporate and administrative functions such as sales and marketing, legal, human resource management, finance, investor and public relations, information technology and senior management. These functions serve to support the Company’s current and future operations and provide an infrastructure to support future growth. Major expense items in this category include management and staff wages and benefits, share-based compensation and professional services.

The Company generally grants uncollateralized credit to customers on an individual basis based upon the customer’s financial condition and credit history. Credit is typically on net 30 day terms and customer deposits are frequently required at various stages of the production process to finance customized products and minimize credit risk.

Historically, the Company’s A/R is highly concentrated with a select number of customers. During the year ended December 31, ~~2022~~2023, the Company’s five largest customers accounted for~~69%~~ 65% of its consolidated revenues and ~~43%~~27% of outstanding A/R balances, compared to the year ended December 31, ~~2021~~2022 when the Company’s five largest customers accounted for ~~71%~~69% of its consolidated revenues and ~~25%~~43% of its outstanding A/R balances.

 Beginning January 1, 2023, the Company assessed and recorded an allowance for credit losses using the current expected credit loss (“CECL”) model. The adjustment for credit losses to management’s current estimate is recorded in net income as credit loss expense. All credit losses were on trade receivables and/or contract assets arising from the Company’s contracts with customers. 

The Company selected a loss-rate method for the CECL model based on the relationship between historical write-offs of receivables and the underlying sales by major customers. Utilizing this model, a historical loss-rate is applied against the amortized cost of applicable assets, at the time the asset is established. The loss rate reflects the Company’s current estimate of the risk of loss (even when that risk is remote) over the expected remaining contractual life of the assets. The Company’s policy is to deduct write-offs from the allowance for credit losses account in the period in which the financial assets are deemed uncollectible. The adjustment for credit losses using this CECL model on accounts receivable and contract assets during the year ended December 31,2023 was not material. 

The allowance for credit losses for prior periods was prepared in accordance with legacy GAAP. Based upon past experience and judgment, the Company ~~establishes~~established an allowance for doubtful accounts with respect to ~~A/R.~~accounts receivable. The Company’s standard allowance estimation methodology ~~considers~~considered a number of factors that, based on its collections experience, the Company ~~believes will~~believed would have an impact on its credit risk and the ~~realizability~~collectability of its ~~A/R.~~accounts receivable. These factors ~~include~~included individual customer circumstances, history with the Company, the length of the time period during which the account receivable had been past due and other relevant criteria.  ~~A/R balances that remain outstanding after the Company has exhausted reasonable collection efforts are written off through a charge to the valuation allowance and a credit to A/R.~~

The Company monitors its collections and write-off experience to assess whether or not adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes may impact the ~~realizability~~collectability of its ~~A/R,~~accounts receivable, as noted above, or modifications to ~~the Company’s~~its credit standards, collection practices and other related policies may impact ~~its~~the Company’s allowance for doubtful accounts and its financial results.

The Company accounts for government assistance that is not subject to the scope of ASC 740 using a grant accounting model, by analogy to International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance, and recognizes such grants when it has reasonable assurance that it will comply with the grant’s conditions and that the grant will be received. Income-based grants are initially recognized as “AMP credit receivable” and as a reduction to cost of sales. The Company recognizes grants expected to be received directly from a government entity at their stated value. When the Company expects to transfer grants to a third party, it recognizes the grants at, or adjusts their carrying value to, the amount expected to be received from the transaction. Proceeds received from income-based grants are presented as cash inflows from operating activities.

Inventories are stated at the lower of cost or net realizable value. Net realizable value is the value that can be realized upon the sale of the inventory less a reasonable estimate of selling costs. Cost is determined either based on the first-in, first-out (“FIFO”) method, or on a standard cost basis that approximates the FIFO method. Any excess of cost over net realizable value is included in the Company’s inventory allowance. Net realizable value of inventory, and management’s judgment of the need for reserves, encompasses consideration of other business factors including physical condition, inventory holding period, contract terms and usefulness.

Inventories consist of raw materials, work-in-process and finished goods. Raw materials consist of components and parts for general production use. Work-in-process consists of labor and overhead, processing costs, purchased subcomponents and materials purchased for specific customer orders. Finished goods consist of components purchased from third parties as well as components manufactured by the Company that will be used to produce final customer products.

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is recognized using the straight-line method over the estimated useful lives of the related assets for financial reporting purposes, and generally using an accelerated method for income tax reporting purposes. Depreciation expense related to property and equipment for the years ended December 31, ~~2022~~2023 and ~~2021~~2022 was ~~$5,335~~$5,719 and ~~$5,603,~~$5,335, respectively. Expenditures for additions and improvements are capitalized, while replacements, maintenance and repairs that do not improve or extend the useful lives of the respective assets are expensed as incurred. Property or equipment sold or disposed of is removed from the respective property accounts, with any corresponding gains and losses recorded within the operating results of the Company’s consolidated statement of operations.

The Company reviews property and equipment and other long-lived assets (“long-lived assets”) for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Asset recoverability is first measured by comparing the assets’ carrying amounts to their expected future undiscounted net cash flows to determine if the assets are impaired.

In evaluating the recoverability of long-lived assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of such assets. If the Company’s fair value estimates or related assumptions change in the future, the Company may be required to record impairment charges related to property and equipment and other long-lived assets. If such assets are considered to be impaired, the impairment recognized is measured based on the amount by which the carrying amount of the assets exceeds the fair value. See Note 7,8, “Long-Lived Assets” of these consolidated financial statements for further discussion of long-lived assets.

The Company leases various property and equipment under operating lease arrangements. On ~~January 1, 2019,~~ ~~the~~The Company ~~adopted Accounting Standards Update (“ASU”)~~ ~~2016~~-~~02,~~ ~~Leases (“Topic~~ ~~842”~~~~) and ASU~~ ~~2018~~-11 ~~using the cumulative effect method. Adopting the standard resulted in the Company recognizing~~recognizes operating lease assets and liabilities on the balance sheet. Rent expense for these types of leases is recognized on a straight-line basis over the lease term. In addition, the Company has entered into finance lease arrangements to finance property and equipment and assumed finance lease obligations in connection with certain acquisitions. The cost basis and accumulated amortization of assets recorded under finance leases are included in property and equipment, while the liabilities are included in finance lease obligations.

The Company provides warranty terms that generally range from one to five years for various products and services relating to workmanship and materials supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable the Company to pursue recovery from third parties for amounts paid to customers under warranty provisions. Warranty liability is recorded in accrued liabilities within the consolidated balance sheet. The Company estimates the warranty accrual based on various factors, including historical warranty costs, current trends, product mix and sales. The changes in the carrying amount of the Company’s total product warranty liability for the years ended December 31, ~~2022~~2023 and ~~2021~~2022 were as follows:

The Company accounts for income taxes based upon an asset and liability approach. Deferred tax assets and liabilities represent the future tax consequences of the differences between the financial statement carrying amounts of assets and liabilities versus the tax basis of assets and liabilities. Under this method, deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards. Deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The impact of tax rate changes on deferred tax assets and liabilities is recognized in the year that the change is enacted.

In connection with the preparation of its consolidated financial statements, the Company is required to estimate its income tax liability for each of the tax jurisdictions in which the Company operates. This process involves estimating the Company’s actual current income tax expense and assessing temporary differences resulting from differing treatment of certain income or expense items for income tax reporting and financial reporting purposes. The Company also recognizes as deferred income tax assets the expected future income tax benefits of net operating loss (“NOL”) carryforwards. In evaluating the realizability of deferred income tax assets associated with NOL carryforwards, the Company considers, among other things, expected future taxable income, the expected timing of the reversals of existing temporary reporting differences and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits. Changes in, among other things, income tax legislation, statutory income tax rates or future taxable income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause its income tax provision to vary significantly among financial reporting periods.

The Company also accounts for the uncertainty in income taxes related to the recognition and measurement of a tax position taken or expected to be taken in an income tax return. The Company follows the applicable pronouncement guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition related to the uncertainty in these income tax positions.

The Company grants incentive stock options, restricted stock units (“RSUs”) and/or performance awards (“PSUs”) to certain officers, directors, and employees. The Company accounts for share-based compensation related to these awards based on the estimated fair value of the equity award and recognizes expense ratably over the required vesting term of the award. The expense associated with PSUs is also based on the probability of achieving embedded targets. Awards that are based on a fixed number of shares are treated as equity while awards that are based on a fixed amount of dollars are treated as liabilities. See Note 1415 “Share-Based Compensation” of these consolidated financial statements for further discussion of the Company’s share-based compensation plans, the nature of share-based awards issued and the Company’s accounting for share-based compensation.

The Company presents both basic and diluted net income (loss) per share. Basic net income (loss) per share is based solely upon the weighted average number of common shares outstanding and excludes any dilutive effects of restricted stock, options, warrants and convertible securities. Diluted net income (loss) per share is based upon the weighted average number of common shares and common-share equivalents outstanding during the year excluding those common-share equivalents where the impact to basic net income (loss) per share would be anti-dilutive.

The following table presents the Company’s revenues disaggregated by revenue source for the years ended December 31, ~~2022~~2023 and ~~2021~~2022:

The Company’s revenue is generally recognized at a point in time, typically when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The Company measures revenue based on the consideration specified in the purchase order and revenue is recognized when the performance obligations are satisfied. If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation.

For ~~many~~substantially all tower sales within the Company’s Heavy Fabrications segment as well as certain 2023 sales within our Gearing segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition versus shipment. The Company recognizes revenue under these arrangements only when there is a substantive reason for the arrangement, the ordered goods are identified separately as belonging to the customer and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance. During the year ended December 31,2023, the Company recognized $5,370 of revenue within the Gearing segment under terms included in bill and hold sales arrangements.

During the years ended December 31, ~~2022~~2023 and ~~2021,~~2022, the Company recognized a portion of revenue within the ~~Gearing and~~ Heavy Fabrications segments over time, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts. Since the projects are labor intensive, the Company uses labor hours as the input measure of progress for the applicable contracts. Within the Heavy Fabrications segment, the Company recognized revenue for contracts that meet over time criteria of ~~$14,298~~$11,033 and ~~$5,665~~$15,117 for the years ended December ~~30,~~31,2023 and 2022, ~~and~~ ~~2021,~~respectively. ~~Within the Gearing segment, the Company recognized revenue over time of $2,444 for the year ended~~ ~~December~~ ~~31,~~~~2021.~~ ~~During the~~ ~~fourth~~ ~~quarter of~~ ~~2021,~~ ~~the Company ceased recording revenue over time within the Gearing segment due to a change in contract terms with a customer.~~ Contract assets are recorded when performance obligations are satisfied but the Company is not yet entitled to payment. Contract assets represent the Company’s rights to consideration for work completed but not billed at the end of the period.

The Company generally expenses sales commissions when incurred. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in the Company’s statement of operations.

The Company does not disclose the value of the unsatisfied performance obligations for contracts with an original expected length of one year or less.

The following table presents a reconciliation of basic and diluted earnings per share for the years ended December 31, ~~2022~~2023 and ~~2021~~2022 as follows:

(1) Restricted stock units granted and outstanding of 822,737 are excluded from the computation of diluted earnings for the year ended December 31, 2022 due to the anti-dilutive effect as a result of the Company’s net loss for that period.

The Company reviews new accounting standards as issued. Although some of the accounting standards issued or effective in the current fiscal year may be applicable to it, the Company believes that none of the new standards have a significant impact on its consolidated financial statements.

In June 2016, the ~~FASB~~Financial Accounting Standards Board issued ~~ASU~~Accounting Standards Update No. 2016-13, “Financial Instruments-Credit Losses (Topic 326),” which replaces the current incurred loss impairment methodology for most financial assets with the ~~current expected credit loss, or~~ CECL methodology. The series of new guidance amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables and contract assets. The guidance should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. The guidance is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company ~~is currently evaluating~~implemented CECL during the year ended December 31,2023. The impact ~~that~~on the ~~new~~Company's financial statements was not material. See Note 1, “Description of Business and Summary of Significant Accounting Policies,” of these consolidated financial statements for a further discussion of CECL.

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update No.2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires additional disclosure of significant segment expenses on an annual and interim basis. This guidance will be applied retrospectively and will be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update No.2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. The Company does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements.

The activity in the accounts receivable allowance from operations for the years ended December 31, ~~2022~~2023 and ~~2021~~2022 consists of the following:

The components of inventories as of December 31, ~~2022~~2023 and ~~2021~~2022 are summarized as follows:

During 2023, the Company recognized gross AMP credits totaling $14,493, within the Heavy Fabrications segment. These AMP credits were introduced as part of the IRA, which was enacted on August 16, 2022. The IRA includes advanced manufacturing tax credits for manufacturers of eligible components, including wind and solar components. Manufacturers of wind components qualify for the AMP credits based on the total rated capacity, expressed on a per watt basis, of the completed wind turbine for which such component is designed. The credit applies to each component produced and sold in the U.S. beginning in 2023 through 2032. Wind towers within the Company’s Heavy Fabrications segment are eligible for credits of $0.03 per watt for each wind tower produced. In calculating the eligible credit, the Company relied on the megawatt rating provided by the customer. Manufacturers who qualify for the AMP credits can apply to the Internal Revenue Service for cash refunds of the AMP credits or sell the AMP credits to third parties for cash, or apply the AMP credits against taxable income. The Company recognized the AMP credits as a reduction to cost of sales in the Company’s consolidated statements of operations for the year ended December 31,2023. The assets related to the AMP credits are recognized as current assets in the “AMP credit receivable” line item in the Company's consolidated balance sheet as of December 31,2023.

On December 21, 2023, the Company entered into an agreement to sell 2023 and 2024 AMP credits to a third party. At that time, the Company sold a portion of the gross 2023 credits in the amount of $6,952 and recognized a 6.5% discount on the sale in the amount of $452 which was recognized in cost of sales. In addition, the Company wrote down the remaining receivable of $7,541 to net realizable value and recorded the expected loss on sale of $490 in cost of sales. The remaining 2023 AMP credit receivable was collected during the first quarter of 2024. The Company also incurred other miscellaneous administrative costs related to selling the credits in the amount of $254, $197 of which has been recorded as cost of sales, with the remaining capitalized and included in the “Prepaid expenses and other current assets” line item of the Company's consolidated financial statements at December 31,2023.

The cost basis and estimated lives of property and equipment ~~from continuing operations~~ as of December 31, ~~2022~~2023 and ~~2021~~2022 are as follows:

As of December 31, ~~2022~~2023, the Company had commitments of ~~$1,942~~$1,523 related to the completion of projects within construction in progress.

~~Intangible assets represent~~During the ~~fair value assigned to definite-lived assets such as trade names and customer relationships. Intangible assets are amortized on~~year ended December 31, 2023, the Company did not identify any impairment triggering events within its segments. As a ~~straight-line basis over their estimated useful lives, with a remaining life range from~~ 1 to 5 ~~years.~~result, no impairment charges were recorded for the year ended December 31, 2023.

During November 2022, the Company identified a triggering event associated withan expected operating loss within the Heavy Fabrications segment during the year ended December 31, 2022. Accordingly, the Company performed an undiscounted cash flow analysis as of November 30, 2022 and determined that the undiscounted future cash flows exceeded the asset group's carrying value. Additionally, there were no changes in facts or circumstances following the November 30, 2022 assessment through December 31, 2022, which would alter the asset group’s initial undiscounted future cash flows or carrying value estimates. As a result, no impairment charge was recorded for the Heavy Fabrications asset group for the year ended December 31, 2022.

~~During~~ ~~November 2021,~~ the Company identified triggering events associated with operating losses within the Gearing segment and a decline in revenue and operating margin within the Heavy Fabrications segment during the year ended ~~December 31, 2021.~~ ~~Accordingly, the Company performed undiscounted cash flow analyses as of~~ ~~November 30, 2021~~ ~~and determined that the undiscounted future cash flows exceeded the asset groups' carrying values. Additionally, there were~~ no ~~changes in facts or circumstances following the~~ ~~November 30, 2021~~ ~~assessments through~~ ~~December 31, 2021,~~ ~~which would alter the asset groups initial undiscounted future cash flows or carrying value estimates. As a result,~~ no ~~impairment charges were recorded for the Heavy Fabrications and Gearing asset groups for the year ended~~ ~~December 31, 2021.~~

As of December 31, ~~2022~~2023 and ~~2021~~2022, the cost basis, accumulated amortization and net book value of intangible assets were as follows:

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships. Estimated useful lives for intangibles assets range from6 to 20 years. Intangible assets are amortized on a straight-line basis over their estimated useful lives, ~~which~~with a remaining life range from 62 to 204 years. Amortization expense was $664 and $725 for the years ended December 31, ~~2022~~2023 and ~~2021~~2022., respectively. As of December 31, ~~2022~~2023, estimated future amortization expense is as follows:

Accrued liabilities as of December 31, ~~2022~~2023 and ~~2021~~2022 consisted of the following:

The Company’s outstanding debt balances as of December 31, ~~2022~~2023 and ~~2021~~2022 consisted of the following:

As of December 31, ~~2022~~2023, future annual principal payments on the Company’s outstanding debt obligations were as follows:

On ~~October 26, 2016,~~ ~~the Company established a~~ ~~three-year secured revolving line of credit with CIBC Bank USA (“CIBC”). This line of credit has been amended from time to time. On~~ ~~February 25, 2019,~~ ~~the line of credit was expanded and extended for~~ ~~three~~ ~~years when the Company and its subsidiaries entered into an Amended and Restated Loan and Security Agreement (the~~ ~~“2016~~ Amended and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the other financial institutions party thereto (the “Lenders”), providing the Company and its subsidiaries with a $35,000 secured credit facility (as amended to date, the ~~“2016~~ ~~Credit Facility”). The obligations under the~~ ~~2016~~ ~~Credit Facility were secured by, subject to certain exclusions, (i) a~~ ~~first~~ priority security interest in all accounts receivable, inventory, equipment, cash and investment property, and (ii) a mortgage on the Abilene, Texas tower and Pittsburgh, Pennsylvania gearing facilities.

On ~~October~~ ~~29,~~~~2020,~~ ~~the Company executed the First Amendment to the~~ ~~2016~~ ~~Amended and Restated Loan Agreement (the “First Amendment”), implementing a payoff of a syndicated lender and a pricing grid based on the Company's trailing~~ ~~twelve~~ ~~month EBITDA under which applicable margins range from 2.25% to 2.75% for LIBOR rate loans and 0.00% and 0.75% for base rate loans, and extending the term of the~~ ~~2016~~ ~~Credit Facility to~~ ~~July~~ ~~31,~~~~2023.~~

On ~~February 23, 2021,~~ ~~the Company executed the Second Amendment to the Amended and Restated Loan Agreement, which waived testing of the fixed charge coverage covenant for the quarters ended~~ ~~March 31, 2021~~ ~~and~~ ~~June 20, 2021,~~ ~~added a new liquidity covenant applicable to the quarter ended~~ ~~March 31, 2021~~ ~~and new minimum EBITDA covenants applicable to the quarters ended~~ ~~March 31, 2021~~ ~~and~~ ~~June 30, 2021.~~ ~~As of~~ ~~September 30, 2021,~~ ~~the Company transitioned back to a fixed charge coverage covenant.~~

On ~~November 8, 2021,~~ ~~the Company executed the Third Amendment to the Amended and Restated Loan Agreement (the “Third Amendment”) which waived the fixed charge coverage ratio default for the quarter ended~~ ~~September 30, 2021,~~ ~~suspended testing of the fixed charge coverage ratio covenant through~~ ~~September 30, 2022,~~ ~~added a minimum EBITDA covenant applicable to the~~ ~~three~~~~-month period ending~~ ~~December 31, 2021,~~ ~~the~~ ~~six~~~~-month period ending~~ ~~March 31, 2022,~~ ~~the~~ ~~nine~~~~-month period ending~~ ~~June 30, 2022~~ ~~and the~~ ~~twelve~~~~-month period ending~~ ~~September 30, 2022~~ ~~and added a reserve of $5,000 to the Revolving Loan Availability through~~ ~~December 31, 2022.~~

On ~~February 28, 2022,~~ the Company executed the Fourth Amendment to the Amended and Restated Loan Agreement (the “Fourth Amendment”) which reduced the line of credit from $35,000 to $30,000, extended the maturity date until ~~January 31, 2024,~~ ~~waived the minimum EBITDA covenant for the~~ ~~three~~~~-month period ended~~ ~~December 31, 2021,~~ ~~revised the fixed charge coverage ratio covenant as of~~ ~~December 31, 2022~~ ~~for the trailing~~ ~~nine~~~~-month period after~~ ~~March 31, 2022,~~ ~~revised the minimum EBITDA covenant applicable to the~~ ~~three~~~~-month period ending~~ ~~March 31, 2022,~~ ~~the~~ ~~six~~~~-month period ending~~ ~~June 30, 2022~~ ~~and the~~ ~~nine~~~~-month period ending~~ ~~September 30, 2022,~~ revised the liquidity reserve and amended certain other provisions in connection with the discontinuation of LIBOR and replacement with the forward-looking term Secured Overnight Financing Rate (Term SOFR) administered by CME Group, Inc.

~~In conjunction with the~~ ~~2016~~ ~~Amended and Restated Loan Agreement, during~~ ~~June 2019,~~ the Company entered into a floating to fixed interest rate swap with CIBC. The swap agreement has a notional amount of $6,000 and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire term of the ~~2016~~ Credit Facility at 2.13%, before considering the Company’s risk premium. The interest rate swap is accounted for using mark-to-market accounting. Accordingly, changes in the fair value of the swap each reporting period are adjusted through earnings, which ~~may~~ subject the Company’s results of operations to non-cash volatility. The interest rate swap liability is included in the “Accrued liabilities” line item of the Company’s consolidated financial statements as of ~~December 31, 2021.~~ ~~The interest rate swap expired in~~ ~~February 2022.~~

~~All obligations outstanding under the~~ ~~2016~~ ~~Credit Facility were refinanced by the~~ ~~2022~~ ~~Credit Facility on~~ ~~August 5, 2022.~~ On August 4, 2022, the Company entered into a credit agreement ~~(the~~(as amended, the “2022 Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), ~~providing~~which replaced its prior credit facility and provided the Company and its subsidiaries with a $35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon the request of the Company and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, as amended, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. ~~The~~ ~~2022~~ ~~Credit Facility replaced the~~ ~~2016~~ ~~Credit Facility. In connection with~~Deferred financing costs related to the 2022 Credit Facility ~~the Company incurred deferred financing costs in the amount of $470~~were $359 primarily related to the revolving credit ~~loan.~~ loan, which is net of accumulated amortization of $141, at December 31, 2023. Deferred financing costs related to the 2022 Credit Facility were $414 which is net of accumulated amortization of $38, at December 31, 2022. These costs are included in the “Other assets” line item of the Company's consolidated financial statements ~~as of~~at December 31,2023 and December 31, 2022.

~~2022~~ Credit Facility, as amended, contains customary covenants limiting the Company’s and its subsidiaries’ ability to, among other things, incur liens, make investments, incur indebtedness, merge or consolidate with others or dispose of assets, change the nature of its business, and enter into transactions with affiliates. In addition, the ~~2022~~ ~~Credit Facility contains financial covenants requiring the Company to have a Fixed Charge Coverage Ratio (i) as of the~~ ~~twelve~~~~-month period ending~~ ~~January 31, 2024~~ ~~through and including~~ ~~June 30, 2024~~ ~~of 1.0 to~~ ~~1.0,~~ ~~and (ii) as of each~~ ~~twelve~~~~-month period thereafter to be greater than 1.1 to~~ ~~1.0~~ ~~and minimum EBITDA (as defined in the~~ ~~2022~~ ~~Credit Facility) on a month-end basis of $1,921,000 for the~~ ~~twelve~~~~-month period ending~~ ~~March~~December 31, 2023 ~~$3,661,000 for the~~and ~~twelve~~2022~~-month period ending~~ ~~June 30, 2023,~~ ~~$5,876,000 for the~~ ~~twelve~~~~-month period ending~~ ~~September 30, 2023,~~ ~~and $9,929,000 for the~~ ~~twelve~~~~-month period ending~~ ~~December 31, 2023.~~ ~~The initial term of the revolving credit facility matures~~ ~~August 4, 2027.~~ ~~The term loan also matures on~~ ~~August 4, 2027,~~ ~~with monthly payments based on an 84-month amortization.~~

On February 8, 2023, the Company executed Amendment No. 1 to Credit Agreement and Limited Waiver ~~(the “First Amendment to~~ ~~2022~~ ~~Credit Agreement”),~~which waived the ~~Company's~~Company’s fourth quarter minimum EBITDA (as defined in the 2022 Credit ~~Facility)~~Agreement) requirement for the period ended December 31, 2022, amended the Fixed Charge Coverage Ratio (as defined in the 2022 Credit ~~Facility)~~Agreement) requirements for the twelve-month period ending January 31, 2024 through and including June 30, 2024 and each twelve-month period thereafter, and amended the minimum EBITDA requirements applicable to the twelve-month periods ending March 31, 2023, June 30, 2023, September 30, 2023, and December 31, 2023.

The 2022 Credit Agreement contains customary covenants limiting the Company’s and its subsidiaries’ ability to, among other things, incur liens, make investments, incur indebtedness, merge or consolidate with others or dispose of assets, change the nature of its business, and enter into transactions with affiliates. The initial term of the revolving credit facility matures August 4, 2027. The term loan also matures on August 4, 2027, with monthly payments based on an 84-month amortization.

As of December 31, ~~2022~~2023, ~~only $7,217~~there was $10,792 ~~from~~of outstanding indebtedness under the 2022 Credit Facility, with the ability to borrow an additional $21,714. As of December 31,2023, the Company was in compliance with all financial covenants under the 2022 Credit Facility. As of December 31, 2023, the effective interest rate of the senior secured revolving credit facility was 7.64% and the effective rate of the senior secured term loan was ~~outstanding under the~~ ~~2022~~ ~~Credit Facility. The Company had $0 drawn on the senior secured revolving credit facility and had the ability to borrow up to $27,351 under the~~ ~~2022~~ ~~Credit Facility as of~~ ~~December 31, 2022~~7.89%. As of December 31, 2022, the effective interest rate of the senior secured revolving credit facility was 6.55% and the effective rate of the senior secured term loan was 6.80%. ~~As of~~ ~~December 31, 2021,~~ ~~the effective interest rate of the~~ ~~2016~~ ~~Credit Facility was4.0%.~~

In ~~2016,~~ ~~the Company entered into a $570 unsecured loan agreement with the Development Corporation of Abilene which is included in long-term debt, less current maturities.~~ The ~~loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years ended~~ ~~December 31, 2022~~ ~~and~~ ~~2021~~, ~~$114~~ ~~of the loan was forgiven. As of~~ ~~December 31, 2022~~ ~~and~~ ~~December 31, 2021,~~ ~~the loan balance was $0and~~ ~~$114,~~ ~~respectively. In addition, the~~ Company has outstanding notes payable for capital expenditures in the amount of ~~$1,094~~$1,361 and ~~$363~~$1,094 as of December 31, ~~2022~~2023 and ~~2021~~2022, respectively, with ~~$88~~$163 and ~~$186~~$88 included in the “Line of credit and current ~~portion~~maturities of long-term debt” line item of the Company’s consolidated financial statements as of December 31, ~~2022~~2023 and ~~2021~~2022, respectively. The notes payable have monthly payments that range from $3to ~~$16~~$15 and an interest rate of 4%6%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates ~~that range from~~ ~~July~~~~2023~~ toin September 2028.

On ~~April 15, 2020,~~ ~~the Company received funds under notes and related documents (“PPP Loans”) with CIBC, under the Paycheck Protection Program (the “PPP”) which was established under the CARES Act enacted on~~ ~~March 27, 2020~~ ~~in response to the COVID-~~19 ~~pandemic and is administered by the U.S. Small Business Administration (“SBA”). The Company received total proceeds of $9,530 from the PPP Loans and made repayments of $379 on~~ ~~May 13, 2020.~~ ~~Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of~~ ~~2020~~ ~~enacted on~~ ~~June 5, 2020,~~ ~~the PPP Loans, and accrued interest and fees are eligible to be forgiven following a period of~~ ~~twenty-four~~ weeks after PPP Loan proceeds are received (the “covered period”) if they are used for qualifying expenses as described in the CARES Act including payroll costs and certain employee benefits (which must equal or exceed ~~60%~~ ~~of the amount requested to be forgiven), rent, mortgage interest, and utilities.The amount of loan forgiveness is reduced if the borrower terminates employees or significantly reduces salaries during such period, subject to certain exceptions. The Company used at least~~ ~~60%~~ of the amount of the PPP Loans proceeds to pay for payroll costs and the balance on other eligible qualifying expenses consistent with the terms of the PPP and submitted its forgiveness applications to CIBC during the ~~first~~ ~~quarter of~~ ~~2021.~~ ~~During the quarter ended~~ ~~June~~ ~~30,~~~~2021,~~ ~~all loans were forgiven by the SBA and a gain of $9,151 was recorded in “Other income (expense), net” in the Company's condensed consolidated statements of operations.~~

The Company leases various property and equipment under operating lease arrangements. On ~~January 1, 2019,~~ ~~the~~The Company ~~adopted Topic~~ ~~842~~ ~~and ASU~~ ~~2018~~-11 ~~using the cumulative effect method and has elected to apply each available practical expedient. The standard requires companies to recognize~~recognizes operating lease assets and liabilities on the balance sheet and ~~to disclose~~discloses key information regarding leasing arrangements. The Company has elected to apply the short-term lease exception to all leases of one year or less.

As of December 31, ~~2022~~2023, the right-of-use (“ROU”) asset had a balance of ~~$16,396~~$15,593 which is included in the “Operating lease right-of-use assets” line item of these consolidated financial statements and current and non-current lease liabilities relating to the ROU asset of ~~$1,882~~$1,851 and ~~$16,696,~~$15,888, respectively, and are included in the “Current portion of operating lease obligations” and “Long-term operating lease obligations, net of current portion” line items of these consolidated financial statements. As of December 31, ~~2021,~~2022, the ROU asset had a balance of ~~$18,029~~$16,396 and current and non-current lease liabilities relating to the ROU asset of ~~$1,775~~$1,882 and ~~$18,405,~~$16,696, respectively. The discount rates used for leases accounted for under Topic 842 are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio.

Lease terms generally range from 3 to 15 years with renewal options for extended terms. Some of the Company’s facility leases include options to renew. The exercise of the renewal options is at the Company’s discretion. Therefore, the majority of renewals to extend the lease terms are not included in ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them. Certain leases contain rent escalation clauses that require additional rental payments in the later years of the term. Rent expense for these types of leases is recognized on a straight-line basis over the lease term. Operating rental expense for the years ended December 31, ~~2022~~2023 and ~~2021~~2022 was ~~$4,253~~ $4,201and ~~$4,302,~~$4,253, respectively.

In addition, the Company has entered into finance lease arrangements to finance property and equipment and assumed finance lease obligations in connection with certain acquisitions. Finance rental expense for the years ended December 31, ~~2022~~2023 and ~~2021~~2022 was ~~$1,639~~ $1,790and ~~$1,379,~~$1,639, respectively.

Amortization expense recorded in connection with assets recorded under finance leases was ~~$1,172~~$1,263 and ~~$984~~$1,172 for the years ended December 31, ~~2022~~2023 and ~~2021~~2022, respectively.

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share ~~data~~

)

data)

Quantitative information regarding the Company’s leases is as follows:

	*Year Ended December 31,*						*Year Ended December 31,*
	*2022*			*2021*			*2023*			*2022*
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$	1,172		$	984		$	1,263		$	1,172
Interest on finance lease liabilities		467			395			527			467
Total finance lease costs		1,639			1,379			1,790			1,639
Operating lease cost components:
Operating lease cost		2,839			2,965			2,792			2,839
Short-term lease cost		707			654			361			707
Variable lease cost (1)		898			870			1,260			898
Sublease income		(191	)		(187	)		(212	)		(191	)
Total operating lease costs		4,253			4,302			4,201			4,253

Total lease cost	$	5,892		$	5,681		$	5,991		$	5,892

Supplemental cash flow information related to our operating leases is as follows for the twelve months ended December 31, 2022 and 2021:
Supplemental cash flow information related to our operating leases is as follows for the twelve months ended December 31, 2023 and 2022:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	3,496		$	3,581		$	3,460		$	3,496
Right-of-use assets obtained in exchange for new
operating lease liabilities	$	187		$	907		$	983		$	187

Weighted-average remaining lease term-finance leases at end of period (in years)		3.3			1.9			3.2			3.3
Weighted-average remaining lease term-operating leases at end of period (in years)		8.1			8.9			7.1			8.1
Weighted-average discount rate-finance leases at end of period		6.0	%		6.3	%		6.1	%		6.0	%
Weighted-average discount rate-operating leases at end of period		8.7	%		8.6	%		8.5	%		8.7	%

(1)	Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment.

Amortization associated with new right-of-use assets obtained in exchange for new operating lease liabilities is ~~$20~~$5 and ~~$270~~$20 for the years ended December 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

As of December 31, ~~2022~~2023, future minimum lease payments under finance leases and operating leases were as follows:

	*Finance*			*Operating*						*Finance*			*Operating*
	*Leases*			*Leases*			*Total*			*Leases*			*Leases*			*Total*
2023	$	2,372		$	3,453		$	5,825
2024		1,392			2,998			4,390		$	2,416		$	3,351		$	5,767
2025		986			3,064			4,050			1,193			3,447			4,640
2026		774			3,059			3,833			937			3,442			4,379
2027		671			3,098			3,769			671			3,144			3,815
2028 and thereafter		1,015			10,948			11,963
2028											671			3,153			3,824
2029 and thereafter											344			7,803			8,147
Total lease payments		7,210			26,620			33,830			6,232			24,340			30,572
Less—portion representing interest		(976	)		(8,042	)		(9,018	)		(707	)		(6,601	)		(7,308	)
Present value of lease obligations		6,234			18,578			24,812			5,525			17,739			23,264
Less—current portion of lease obligations		(2,008	)		(1,882	)		(3,890	)		(2,153	)		(1,851	)		(4,004	)
Long-term portion of lease obligations	$	4,226		$	16,696		$	20,922		$	3,372		$	15,888		$	19,260

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

~~11.~~12. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

~~From time to time, the~~The Company is ~~subject~~party to a variety of legal proceedings or claims that arise in the ordinary course of its business. The Company accrues for costs related to loss contingencies when such costs are probable and reasonably estimable. As of December 31, ~~2022~~2023, the Company is not aware of any material pending legal proceedings or threatened litigation that would have a material adverse effect individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows, although no assurance can be given with respect to the ultimate outcome of pending actions. ~~Refer~~Due to ~~Note~~the inherent uncertainty of litigation, there can be ~~18,~~no ~~“Legal Proceedings”~~assurance that the resolution of ~~these consolidated~~any particular claim or proceeding would not have a material adverse effect on the Company’s results of operations, financial ~~statements for further discussion~~condition or cash flows. It is possible that if one or more litigation matters were decided against the Company, the effects could be material to the Company’s results of ~~legal proceedings.~~operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company’s financial condition and cash flows in the periods the Company would be required to pay such liability.

Environmental Compliance and Remediation Liabilities

The Company’s operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content, performance and packaging. Also, certain environmental laws can impose the entire cost or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous owners or operators of the site. These environmental laws also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners or operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites.

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

Collateral

In select instances, the Company has pledged specific inventory and machinery and equipment assets to serve as collateral on related payable or financing obligations.

Warranty Liability

Liquidated Damages

In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question and dependent on actual losses sustained by the customer. When the damages are determined to be probable and estimable, the damages are recorded as a reduction to revenue. During ~~2022~~2023 and ~~2021~~2022, the Company incurrednoliquidated damages of $84 and $0, respectively, and there was noa reserve for liquidated damages of $84 and $0 as of December 31, ~~2022~~2023 orand December 31, ~~2021.~~2022, respectively.

Workers’ Compensation Reserves

~~As of~~ ~~December 31, 2022~~ ~~and~~ ~~2021~~~~, the Company had $30and $166, respectively, accrued for self-insured workers’ compensation liabilities. At the beginning of the~~ ~~third~~ ~~quarter of~~ ~~2013,~~ ~~the Company began to self-insure for its workers’ compensation liabilities, including reserves for self-retained losses.~~ The Company entered into a guaranteed workers’ compensation cost program at the beginning of the third quarter of 2016. The reserve prior to 2016 ~~but still maintains a liability for the trailing claims for the self-insured policy periods.~~is immaterial. Although the ultimate outcome of these matters may exceed the amounts recorded and additional losses may be incurred, the Company does not believe that any additional potential exposure for such liabilities will have a material adverse effect on the Company’s consolidated financial position or results of operations.

Health Insurance Reserves

As of December 31, ~~2022~~2023 and ~~2021~~2022, the Company had ~~$360~~$742 and ~~$416,~~$360, respectively, accrued for health insurance liabilities. The Company self-insures for its health insurance liabilities, including establishing reserves for self-retained losses. Historical loss experience combined with actuarial evaluation methods and the application of risk transfer programs are used to determine required health insurance reserves. The Company takes into account claims incurred but not reported when determining its health insurance reserves. Health insurance reserves are included in accrued liabilities. While the Company’s management believes that it has adequately reserved for these claims, the ultimate outcome of these matters may exceed the amounts recorded and additional losses may be incurred.

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

Other

As of December 31, ~~2022~~2023, approximately ~~19%~~18% of the Company’s employees were covered by two collective bargaining agreements with local unions at the Company’s Cicero, Illinois and Neville Island, Pennsylvania locations. During November 2022, the Company negotiated a four-year collective bargaining agreement with the Neville Island union and it is expected to remain in effect through October 2026. A four-year collective bargaining agreement in regards to the Cicero, Illinois facility was negotiated in February 2022 and is expected to remain in effect through February 2026.

1213. FAIR VALUE MEASUREMENTS

The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:

Level 1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly. For the Company’s corporate and municipal bonds, although quoted prices are available and used to value said assets, they are traded less frequently.

Level 3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

Fair value of financial instruments

The carrying amounts of the Company’s financial instruments, which include cash, A/R, accounts payable and customer deposits, approximate their respective fair values due to the relatively short-term nature of these instruments. Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company’s long-term debt is approximately equal to its fair value.

~~BROADWIND, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~December 31, 2022~~ ~~and~~ ~~2021~~

~~(in thousands, except share and per share data)~~

The Company entered into an interest rate swap in June 2019 to mitigate the exposure to the variability of LIBOR for its floating rate debt described in Note 9,10, “Debt and Credit Agreements,” of these consolidated financial statements. The fair value of the interest rate swap is reported in “Accrued liabilities” and the change in fair value is reported in “Interest expense, net” of these consolidated financial statements. The fair value of the interest rate swap is estimated as the net present value of projected cash flows based on forward interest rates at the balance sheet date. The interest rate swap expired in February 2022.

~~The following table represents the fair value of the Company’s financial assets measured as of~~

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022:

December 31, 2021

Level 1

Level 2

Level 3

Total

Liabilities measured on a recurring basis:

Interest rate swap
$ — $ 27 $ — $ 27
Total liabilities at fair value
$ — $ 27 $ — $ 27

(in thousands, except share and per share data)

~~13.~~14. INCOME TAXES

The provision for income taxes for the years ended December 31, ~~2022~~2023 and ~~2021~~2022 consists of the following:

	*For the Years Ended Year Ended December 31,*						*For the Years Ended Year Ended December 31,*
	*2022*			*2021*			*2023*			*2022*
Current provision
Federal	$	—		$	—		$	—		$	—
State		48			21			251			48
Total current provision		48			21			251			48
Deferred provision
Federal		(2,102	)		(1,636	)		(1,758	)		(2,102	)
State		(460	)		(304	)		(209	)		(460	)
Total deferred provision		(2,562	)		(1,940	)		(1,967	)		(2,562	)
Increase in deferred tax valuation allowance		2,549			1,944			1,957			2,549
Total provision for income taxes	$	35		$	25		$	241		$	35

During the year ended December 31, ~~2022~~2023, the Company recorded an expense for income taxes of ~~$35,~~$241, compared to an expense for income taxes of ~~$25~~$35 during the year ended December 31, ~~2021~~2022. On August 16, 2022, Congress enacted the Inflation Reduction Act which includes ~~advanced manufacturing tax~~AMP credits for manufacturers of eligible components, including wind and solar components produced and sold in the US from 2023 through 2032. These credits will have Nono ~~rulings have been made~~impact on ~~the taxability of these credits.~~income tax expense.

The total change in the deferred tax valuation allowance was ~~$2,549~~$1,957 and ~~$1,944~~$2,549 for the years ended December 31, ~~2022~~2023 and ~~2021~~2022, respectively. The changes in the deferred tax valuation allowance in ~~2022~~2023 and ~~2021~~2022 were primarily the result of increases to the deferred tax assets pertaining to federal and state NOLs. Management believes that significant uncertainty exists surrounding the recoverability of deferred tax assets. As a result, the Company recorded a valuation allowance against the remaining deferred tax assets.

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

The tax effects of the temporary differences and NOLs that give rise to significant portions of deferred tax assets and liabilities are as follows:

	*As of Year Ended December 31,*						*As of Year Ended December 31,*
	*2022*			*2021*			*2023*			*2022*
Noncurrent deferred income tax assets:
Net operating loss carryforwards	$	74,807		$	71,967		$	75,235		$	74,807
Intangible assets		—			453
Accrual and reserves		3,531			2,946			4,637			3,531
Leases		3,834			4,428			3,532			3,834
Other		4			8			4			4
Total noncurrent deferred tax assets		82,176			79,802			83,408			82,176
Valuation allowance		(74,559	)		(72,010	)		(76,516	)		(74,559	)
Noncurrent deferred tax assets, net of valuation allowance		7,617			7,792			6,892			7,617
Noncurrent deferred income tax liabilities:
Fixed assets		2,584			2,834			2,364			2,584
Intangible assets		674			—			487			674
Leases		4,344			4,956			4,016			4,344
Total noncurrent deferred tax liabilities		7,602			7,790			6,867			7,602
Net deferred income tax asset	$	15		$	2		$	25		$	15

~~Certain prior year amounts have been reclassified to conform to current year presentation.~~ Valuation allowances of ~~$74,559~~$76,516 and ~~$72,010~~$74,559 have been provided for deferred income tax assets for which realization is uncertain as of December 31, ~~2022~~2023 and ~~2021~~2022, respectively. A reconciliation of the beginning and ending amounts of the valuation is as follows:

Valuation allowance as of December 31, 2021
$ (72,010 )
Gross increase for current year activity
(2,549 )
Valuation allowance as of Balance at December 31, 2022
$ (74,559 )

Valuation allowance as of December 31, 2022	$	(74,559	)
Gross increase for current year activity		(1,957	)
Valuation allowance as of Balance at December 31, 2023	$	(76,516	)

As of December 31, ~~2022~~2023, the Company had federal and unapportioned state NOL carryforwards of approximately ~~$288,462~~$290,233 of which $227,781will begin to expire in 2026. The majority of the NOL carryforwards will expire in various years from2028 through 2037. NOLs generated after January 1, 2018 will not expire.

The reconciliation between the statutory U.S. federal income tax rate and the Company’s effective income tax rate is as follows:

	*For the Year Ended*						*For the Year Ended*
	*December 31,*						*December 31,*
	*2022*			*2021*			*2023*			*2022*
Statutory U.S. federal income tax rate		21.0	%		21.0	%		21.0	%		21.0	%
State and local income taxes, net of federal income tax benefit		3.3			(6.6	)		0.6			3.3
Permanent differences		(0.6	)		1.9
Other permanent differences								0.4			(0.6	)
Change in valuation allowance		(26.3	)		29.2			22.8			(26.3	)
Equity compensation		0.0			14.5
162(m)								0.5			0.0
Other		(2.1	)		0.2			0.2			(2.1	)
State NOL deferred adjustment		4.3			-
PPP loan forgiveness		0.0			(59.6	)
Other deferred adjustment								(7.5	)		4.3
AMP credits								(35.2	)		0.0
Effective income tax rate		(0.4	)%		0.6	%		2.8	%		(0.4	)%

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

The Company accounts for the uncertainty in income taxes by prescribing a minimum recognition threshold for a tax position taken, or expected to be taken, in a tax return that is required to be met before being recognized in the financial statements. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. As of December 31, ~~2022~~2023, the Company had no unrecognized tax benefits that could impact the income tax expense.

The Company files income tax returns in the U.S. federal and state jurisdictions. As of December 31, ~~2022~~2023, with few exceptions, the Company is no longer subject to federal or state income tax examinations by taxing authorities for years before December 31, ~~2018;~~2019; however, taxing authorities have the ability to adjust NOL carryforwards in open tax years that may have been carried forward from closed years. The Company’s 2008 and 2009 federal tax returns were examined in 2011 and no material adjustments were identified related to any of the Company’s tax positions. Although these periods have been audited, they continue to remain open until all NOLs generated in those tax years have either been utilized or expire.

Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize NOL carryforwards and built-in losses may be limited, under this section or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of IRC Section 382, the Company has determined that aggregate changes in stock ownership have resulted in an annual limitation of $14,284 on NOLs and built-in losses available for utilization based on the triggering event in 2010. To the extent the Company’s use of NOL carryforwards and associated built-in losses is significantly limited in the future due to additional changes in stock ownership, the Company’s income could be subject to U.S. corporate income tax earlier than it would if the Company were able to use NOL carryforwards and built-in losses without such annual limitation, which could result in lower profits and the loss of the majority of the benefits from these attributes.

In February 2013, the Company adopted a Stockholder Rights Plan, which was amended in February 2016 and approved by our stockholders (as amended, the “Rights Plan”), designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under Section 382 of the IRC. On February 7, 2019, the Board of Directors (the “Board”) approved an amendment extending the Rights Plan for an additional three years, which was subsequently approved by the Company’s stockholders at the 2019 Annual Meeting of Stockholders held on April 23, 2019 (the “2019 Annual Meeting of Stockholders”). On February 3, 2022, the Board approved an amendment which included an extension of the Rights Plan for an additional three years, which was subsequently approved by the Company's stockholders at the 2022 Annual Meeting of Stockholders.

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, being or becoming the beneficial owner of 4.9% or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board declared a non-taxable dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on February 22, 2013. Since the record date, the Company has issued one Right with each newly issued share of its common stock. Until the distribution date (unless earlier redeemed or exchanged or upon expiration of the Rights, as applicable), the Rights will be evidenced by certificates of the Company's common stock and will be transferred only with such certificates. Each Right entitles its holder to purchase from the Company one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $7.26 per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9% or more of the outstanding shares of the Company’s common stock as of February 12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares after that date.

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

~~14.~~15. SHARE-BASED COMPENSATION

Overview of Share-Based Compensation Plan

The Company has granted incentive stock options and other equity awards pursuant to previously Board approved equity incentive plans. Most recently, the Company has granted equity awards pursuant to the Broadwind Energy, Inc. 2015 Equity Incentive Plan, which was approved by the Board in February 2015 and by the Company’s stockholders in April 2015. On February 19, 2019, the Board approved an Amended and Restated 2015 Equity Incentive Plan (as amended, the “2015 EIP,”), which, among other things, increased the number of shares of our common stock authorized for issuance under the 2015 EIP from 1,100,000 to 2,200,000. The amendment and restatement of the 2015 EIP was approved by the Company’s stockholders at the 2019 Annual Meeting of Stockholders. On February 7, 2021, the Board approved the Second Amendment to the Amended and Restated 2015 Equity Incentive Plan which, among other things, increased the number of shares of our common stock authorized for issuance under the 2015 EIP from 2,200,000 to 3,200,000. The Second Amendment to the amendment and restatement of the 2015 EIP was approved by the Company’s stockholders at the 2021 Annual Meeting of Stockholders. On March 2,2023, the Board approved the Third Amendment to the Amended and Restated 2015 Equity Incentive Plan which, among other things, increased the number of shares of our common stock authorized for issuance under the 2015 EIP from 3,200,000 to 4,700,000. The Third Amendment to the amendment and restatement of the 2015 EIP was approved by the Company’s stockholders at the 2023 Annual Meeting of Stockholders.

The purposes of the Company’s equity incentive plans are (a) to align the interests of the Company’s stockholders and recipients of awards by increasing the proprietary interest of such recipients in the Company’s growth and success; (b) to advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors and independent contractors; and (c) to motivate such persons to act in the long-term best interests of the Company and its stockholders. Under the 2015 EIP, the Company may grant (i) non-qualified stock options; (ii) “incentive stock options” (within the meaning of Section 422 of the IRC); (iii) stock appreciation rights; (iv) restricted stock and restrictive stock units; and (v) performance awards.

Stock Options. The exercise price of stock options granted under the 2015 EIP is equal to the closing price of the Company’s common stock on the date of grant. Stock options generally become exercisable on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant. Additionally, stock options expire ten years after the date of grant. The fair value of stock options granted is expensed ratably over their vesting term.

Restricted Stock Units (RSUs). The granting of RSUs is provided for under the 2015 EIP. RSUs generally contain a vesting period of one to five years from the date of grant. The fair value of each RSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the vesting term of the RSU award.

Performance Awards (PSUs). The granting of PSUs is provided for under the 2015 EIP. Vesting of PSUs is conditioned upon the Company meeting applicable performance measures over the performance period. The fair value of each PSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the term of the PSU award plan.

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

The 2015 EIP reserves ~~3,200,000~~4,700,000 shares of the Company’s common stock. As of December 31, ~~2022,~~2023, ~~1,854,919~~2,187,843 shares of common stock reserved for issuance pursuant to stock options and RSU awards granted under the 2015 EIP had been issued in the form of common stock and ~~822,737~~687,206 shares of common stock are issued and unvested.

There was no stock option activity during the years ended December 31, ~~2022~~2023 and ~~2021~~2022 and no stock options were outstanding as of December 31, ~~2022~~2023 and ~~2021.~~2022. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are ~~not~~ ~~limited to, the Company’s expected stock price volatility over the expected life of the awards and actual and projected stock option exercise behavior.~~

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

The following table summarizes information with respect to outstanding RSUs and PSUs accounted for as equity awards as of December 31, ~~2022~~2023 and ~~2021~~2022:

				*Weighted Average*					*Weighted Average*
				*Grant-Date Fair Value*					*Grant-Date Fair Value*
	*Number of Shares*			*Per Share*		*Number of Shares*			*Per Share*
Unvested as of December 31, 2021		918,448		$	2.73
Unvested as of December 31, 2022							822,737		$	2.37
Granted		748,694		$	1.75		492,665		$	4.10
Vested		(818,956	)	$	2.23		(493,327	)	$	2.73
Forfeited		(25,449	)	$	2.60		(134,869	)	$	3.98
Unvested as of December 31, 2022		822,737		$	2.37
Unvested as of December 31, 2023							687,206		$	3.03

RSUs and PSUs are generally subject to ratable vesting over a three-year period. Compensation expense related to these service and performance based awards is generally recognized on a straight-line basis over the vesting period. During the years ended December 31, ~~2022~~2023 and ~~2021~~2022, the Company utilized a forfeiture rate of 25%, based on historical activity, for estimating the forfeitures of stock compensation granted.

During the year ended December 31, 2022, the Company recorded share-based compensation expense in the amount of $619 for PSUs treated as liability awards that ~~will be~~were settled in shares of the Company’s stock in 2023. The liability is recognized in the “Accrued liabilities” line item of the Company’s condensed consolidated balance sheet and has a balance of $619 as of December 31, 2022. The following table summarizes share-based compensation expense, net of taxes withheld, included in the Company’s consolidated statements of operations for the years ended December 31, ~~2022~~2023 and ~~2021~~2022 as follows:

	*For the Years Ended*				*For the Years Ended*
	*December 31,*				*December 31,*
	*2022*		*2021*		*2023*		*2022*
Share-based compensation expense:
Cost of sales	$	129	$	130	$	118	$	129
Selling, general and administrative		1,434		1,411		759		1,434
Net effect of share-based compensation expense on net income	$	1,563	$	1,541	$	877	$	1,563
Reduction in earnings per share:
Basic earnings per share	$	0.08	$	0.08	$	0.04	$	0.08
Diluted earnings per share	$	0.08	$	0.08	$	0.04	$	0.08

(1)

Income tax benefit is not illustrated because the Company is currently in a full tax valuation allowance position and an actual income tax benefit was not realized for the years ended December 31, ~~2022~~2023 and ~~2021~~2022. The result of the income (loss) situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance.

As of December 31, ~~2022~~2023, the Company estimates that pre-tax compensation expense for all unvested share-based RSUs and PSUs in the amount of approximately ~~$1,162~~$1,467 will be recognized through the year ~~2024.~~2025. The Company expects to satisfy the future distribution of shares of restricted stock by issuing new shares of common stock.

~~15.~~16. SEGMENT REPORTING

The Company is organized into reporting segments based on the nature of the products offered and business activities from which it earns revenues and incurs expenses for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision maker.

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

The Company’s segments and their product offerings are summarized below:

Heavy Fabrications

The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets. The Company’s most significant presence is within the U.S. wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentrations, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, the Company provides steel towers and adapters primarily to wind turbine manufacturers. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers (1650 tower sections), sufficient to support turbines generating more than 1,100 MW of power. The Company has expanded its production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and OEM components utilized in surface and underground mining, construction, material handling, O&G and other infrastructure markets. The Company has designed and manufactures a mobile, modular pressure reducing system for the compressed natural gas virtual pipeline market. The Company manufactures components for buckets, shovels, car bodies, drill masts and other products that support mining and construction markets. In other industrial markets, the Company provides crane components, pressure vessels, frames and other structures.

Gearing

The Company provides gearing, gearboxes and ~~gearboxes~~precision machined components to a broad set of customers in diverse markets including; ~~onshore and offshore O&G fracking and drilling,~~ surface and underground mining, wind energy, steel, material handling, infrastructure, onshore and offshore oil and gas fracking and drilling, marine, and other ~~infrastructure~~industrial markets. The Company has manufactured loose gearing, gearboxes and systems, and provided heat treat services for aftermarket and OEM applications for ~~nearly~~ a century. The Company uses an integrated manufacturing process, which includes machining and finishing processes in addition to gearbox repair in Cicero, Illinois, and heat treatment and gearbox repair in Neville Island, Pennsylvania.

Industrial Solutions

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

Corporate and Other

“Corporate” includes the assets and SG&A expenses of the Company’s corporate office. “Eliminations” comprises adjustments to reconcile segment results to consolidated results.

The accounting policies of the reportable segments are the same as those referenced in Note 1, “Description of Business and Summary of Significant Accounting Policies” of these consolidated financial statements. Summary financial information by reportable segment is as follows:

	*Heavy Fabrications*			*Gearing*		*Industrial Solutions*		*Corporate*			*Eliminations*			*Consolidated*			*Heavy Fabrications*		*Gearing*		*Industrial Solutions*		*Corporate*			*Eliminations*			*Consolidated*
For the Year Ended December 31, 2022
For the Year Ended December 31, 2023
Revenues from external customers	$	117,194			42,572		16,993		—			—		$	176,759		$	133,368		45,408		24,701		—			—		$	203,477
Intersegment revenues		12			16		811		—			(839	)		—			—		—		458		—			(458	)		—
Net revenues		117,206			42,588		17,804		—			(839	)		176,759			133,368		45,408		25,159		—			(458	)		203,477
Operating (loss) income		(1,044	)		43		120		(5,722	)		(4	)		(6,607	)
Operating income (loss)																		15,006		1,846		3,160		(8,884	)		11			11,139
Depreciation and amortization		3,446			1,978		397		239			—			6,060			3,517		2,270		380		216			—			6,383
Capital expenditures		2,601			446		48		3			—			3,098			4,739		1,398		214		54			—			6,405
Total assets		45,475			51,944		12,775		224,856			(190,510	)		144,540			46,931		48,599		16,295		58,487			(35,156	)		135,156

	*Heavy Fabrications*			*Gearing*			*Industrial Solutions*			*Corporate*			*Eliminations*			*Consolidated*			*Heavy Fabrications*			*Gearing*		*Industrial Solutions*		*Corporate*			*Eliminations*			*Consolidated*
For the Year Ended December 31, 2021
For the Year Ended December 31, 2022
Revenues from external customers	$	101,989			28,583			15,047			—			—		$	145,619		$	117,194			42,572		16,993		—			—		$	176,759
Intersegment revenues		5			—			355			—			(360	)		—			12			16		811		—			(839	)		—
Net revenues		101,994			28,583			15,402			—			(360	)		145,619			117,206			42,588		17,804		—			(839	)		176,759
Operating loss		(3,214	)		(2,593	)		(386	)		(6,401	)		—			(12,594	)
Operating (loss) income																				(1,044	)		43		120		(5,722	)		(4	)		(6,607	)
Depreciation and amortization		3,844			1,855			425			212			—			6,336			3,446			1,978		397		239			—			6,060
Capital expenditures		1,038			328			261			80			—			1,707			2,601			446		48		3			—			3,098
Total assets		37,131			46,219			10,825			228,219			(204,347	)		118,047			45,475			51,944		12,775		224,856			(190,510	)		144,540

The Company generates revenues entirely from transactions completed in the U.S. and its long-lived assets are all located in the U.S. All intercompany revenue is eliminated in consolidation. During ~~2022~~2023, ~~twocustomers~~one customer accounted for more than 10% of total net revenues. The ~~customers,~~customer, reported within the Heavy Fabrications segment, accounted for revenues of ~~$64,625 and $20,336, respectively.~~$88,144. During ~~2021~~2022, two customers accounted for more than 10% of total net revenues. The customers, reported within the Heavy Fabrications segment, accounted for revenues of ~~$59,278~~$64,625 and ~~$25,946~~$20,336, respectively. During the years ended December 31, ~~2022~~2023 and ~~2021~~2022, five customers accounted for ~~69%~~65% and ~~71%~~69%, respectively, of total net revenues.

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

~~16.~~17. EMPLOYEE BENEFIT PLANS

Retirement Savings and Profit Sharing Plans

Retirement Savings and Profit Sharing Plans

The Company offers a 401(k) retirement savings plan to all eligible employees who may elect to contribute a portion of their salary on a pre-tax basis, subject to applicable statutory limitations. As of December 31, ~~2022~~2023, all employees were eligible to receive safe harbor matching contributions equal to 100% of the first 3% of the participant’s elective deferral contributions and 50% of the next 2% of the participant’s elective deferral contributions. The Company has the discretion, subject to applicable statutory requirements, to fund any matching contribution with a contribution to the plan of the Company’s common stock. The Company periodically evaluates whether to fund the matching contribution in cash or in the Company’s common stock. Under the plan, elective deferrals and basic Company matching is 100% vested at all times.

For the years ended December 31, ~~2022~~2023 and ~~2021~~2022, the Company recorded expense under these plans of approximately ~~$1,247~~$1,394 and ~~$1,195,~~$1,247, respectively.

Deferred Compensation Plan

The Company maintains a deferred compensation plan for certain key employees and nonemployee directors, whereby certain wages earned, compensation for services rendered, and discretionary company-matching contributions may be deferred and deemed to be invested in the Company’s common stock. Changes in the fair value of the plan liability are recorded as charges or credits to compensation expense. Compensation income (expense) associated with the deferred compensation plan recorded during the years ended December 31, ~~2022~~2023 and ~~2021~~2022 was ~~$(1)~~$8 and ~~$(55)~~$(1). The fair value of the plan liability to the Company is included in accrued liabilities in the Company’s consolidated balance sheets. As of December 31, ~~2022~~2023 and ~~2021~~2022, the fair value of plan liability to the Company was ~~$15~~ $23and ~~$16,~~$15, respectively.

In addition to the employee benefit plans described above, the Company participates in certain customary employee benefits plans, including those which provide health and life insurance benefits to employees.

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, ~~2022~~2023 and ~~2021~~2022

(in thousands, except share and per share data)

~~17.~~18. QUARTERLY FINANCIAL SUMMARY (UNAUDITED)

The following table provides a summary of selected financial results of operations by quarter for the years ended December 31, ~~2022~~2023 and ~~2021~~2022 as follows:

2022	*First*			*Second*			*Third*			*Fourth*
2023													*First*		*Second*		*Third*		*Fourth*
Revenues	$	41,844		$	50,012		$	44,843		$	40,060		$	48,873	$	50,843	$	57,163	$	46,598
Gross profit		2,012			2,394			3,748			2,556			6,976		8,333		10,167		7,032
Operating loss		(2,073	)		(1,912	)		(520	)		(2,102	)
Net loss		(2,404	)		(2,703	)		(1,772	)		(2,851	)
Net loss per share:
Operating income														1,282		2,216		5,367		2,274
Net income														769		1,415		4,394		1,071
Net income per share:
Basic	$	(0.12	)	$	(0.13	)	$	(0.09	)	$	(0.14	)	$	0.04	$	0.07	$	0.21	$	0.05
Diluted	$	(0.12	)	$	(0.13	)	$	(0.09	)	$	(0.14	)	$	0.04	$	0.07	$	0.20	$	0.05

2021	*First*			*Second*			*Third*			*Fourth*
2022													*First*			*Second*			*Third*			*Fourth*
Revenues	$	32,728		$	46,491		$	40,389		$	26,011		$	41,844		$	50,012		$	44,843		$	40,060
Gross profit		282			2,198			2,074			957			2,012			2,394			3,748			2,556
Operating loss		(4,311	)		(2,311	)		(1,997	)		(3,975	)		(2,073	)		(1,912	)		(520	)		(2,102	)
Net (loss) income		(1,210	)		10,252			(2,105	)		(4,090	)
Net (loss) income per share:
Net loss														(2,404	)		(2,703	)		(1,772	)		(2,851	)
Net loss per share:
Basic	$	(0.07	)	$	0.55		$	(0.11	)	$	(0.21	)	$	(0.12	)	$	(0.13	)	$	(0.09	)	$	(0.14	)
Diluted	$	(0.07	)	$	0.53		$	(0.11	)	$	(0.21	)	$	(0.12	)	$	(0.13	)	$	(0.09	)	$	(0.14	)

~~BROADWIND, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~December 31, 2022~~ ~~and~~ ~~2021~~

~~(in thousands, except share and per share data)~~

~~18.~~ ~~LEGAL PROCEEDINGS~~

The Company is party to a variety of legal proceedings that arise in the normal course of its business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will ~~not~~ have a material adverse effect, individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows. Due to the inherent uncertainty of litigation, there can be no ~~assurance that the resolution of any particular claim or proceeding would~~ ~~not~~ ~~have a material adverse effect on the Company’s results of operations, financial condition or cash flows. It is possible that if~~ ~~one~~ or more litigation matters were decided against the Company, the effects could be material to the Company’s results of operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company’s financial condition and cash flows in the periods the Company would be required to pay such liability.

~~The Company received a notice dated~~ ~~January 18, 2023~~ ~~from WM Argyle Fund, LLC, which allegedly owned approximately~~ ~~1.0%~~ ~~of the Company’s outstanding shares at the time of submission, purporting to nominate a slate of~~ ~~six~~ ~~candidates for election as directors at the Company's~~ ~~2023~~ Annual Meeting of Stockholders. The Company remains open to ongoing engagement with WM Argyle. However, if the Company and WM Argyle cannot reach an agreement in connection with its nomination, there will be a contested election at the Company’s ~~2023~~ ~~Annual Meeting of Stockholders.~~

INDEX TO EXHIBITS

Exhibit Number		Description
3.1		Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008)
3.2		Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed August 23, 2012)
3.3		Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed May 6, 2020)
3.4		~~Third~~Fourth Amended and Restated Bylaws of the Company, adopted as of ~~May 4, 2020~~June 26, 2023 (incorporated by reference to Exhibit ~~3.2~~3.1 to the ~~Company's~~Company’s Current Report on Form 8-K filed ~~May 6, 2020)~~June 28, 2023)
4.1		Section 382 Rights Agreement dated as of February 12, 2013 between the Company and Equiniti Trust Company, as rights agent, which includes the Form of Rights Certificate as Exhibit B thereto (incorporated by reference to Exhibit 1 to the Company’s Registration Statement on Form 8-A filed February 13, 2013)
4.2		Certificate of Designation of Series A Junior Participating Preferred Stock of the Company (incorporated by reference to Exhibit 2 to the Company’s Registration Statement on Form 8-A filed February 13, 2013)
4.3		First Amendment to Section 382 Rights Agreement dated as of February 2, 2016 between the Company and Equiniti Trust Company, as rights agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed February 8, 2016)
4.4		Second Amendment to Section 382 Rights Agreement dated as of February 7, 2019 between the Company and Equiniti Trust Company, as rights agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed February 12, 2019)
4.5		Third Amendment to Section 382 Rights Agreement dated as of February 3, 2022 between the Company and Equiniti Trust Company, as rights agent (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed February 3, 2022
4.6		Description of Securities (incorporated by reference to Exhibit 4.5 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019)
10.1		Lease Agreement dated December 26, 2007 between Tower Tech Systems Inc. and City Centre, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007)
10.2		Amended and Restated Lease for Industrial/Manufacturing Space dated as of May 1, 2010 between Tower Tech Systems Inc. and City Centre, LLC (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010)
10.3†		Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010)
10.4†		Broadwind Energy, Inc. 2015 Equity Incentive Plan (incorporated by reference to Exhibit A to the Company’s Schedule 14A filed on March 12, 2015)
10.5†		Form of Executive Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010)
10.6†		Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012)
10.7†		Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012)
10.8†		Form of Stock Option Agreement (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012)
10.9†		Form of Restricted Stock Unit Award Agreement (Non-Employee Directors) (incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015)
10.10†		Form of Restricted Stock Unit Award Agreement (Extended Executive Team) (incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015)
10.11†		Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015)
10.12†		Broadwind Energy, Inc. 2015 Equity Incentive Plan Restricted Stock Unit Award Notice (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018)
~~10.13~~		Amended and Restated Loan and Security Agreement, dated February 25, 2019, among the Company, Brad Foote Gearworks, Inc., Broadwind Services, LLC, Broadwind Towers, Inc., Red Wolf Company, LLC, the other Loan Parties and Lenders party thereto, and CIBC Bank USA, as Administrative Agent and Sole Lead Arranger (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018)
~~10.14†~~10.13†		Severance and Non-Competition Agreement, dated as of May 4, 2018, between the Company and Eric Blashford (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 3, 2018)
~~10.15†~~10.14†		Form of Performance Award Agreement (Broadwind Energy, Inc. 2015 Equity Incentive Plan) (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019)
~~10.16†~~10.15†		Form of Performance Award Agreement (Amended and Restated Broadwind Energy, Inc. 2015 Equity Incentive Plan) (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019)
~~10.17†~~		Form of Performance Award Agreement dated April 23, 2019 between the Company and Stephanie K. Kushner (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019)
~~10.18†~~		Restricted Stock Award Agreement dated April 23, 2019 between the Company and Stephanie K. Kushner (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019)
~~10.19†~~10.16†		Amended and Restated Broadwind Energy, Inc. 2015 Equity Incentive Plan (incorporated by reference to Exhibit D to the Company’s Schedule 14A filed on March 11, 2019)
~~10.20~~		Note dated April 5, 2020 by and between Brad Foote Gear Works, Inc. and CIBC Bank USA (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020)
~~10.21~~		Note dated April 5, 2020 by and between Broadwind Heavy Fabricators, Inc. and CIBC Bank USA (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020)
~~10.22~~		Note dated April 5, 2020 by and between Broadwind Industrial Solutions, Inc. and CIBC Bank USA (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020)
~~10.23~~		Note dated April 8, 2020 by and between Broadwind Energy, Inc. n/k/a Broadwind, Inc. and CIBC Bank USA (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020)
~~10.24†~~10.17†		Form of Performance Award Agreement (Amended and Restated Broadwind, Inc. 2015 Equity Incentive Plan) (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020)
~~10.25†~~10.18†		First Amendment to Amended and Restated Broadwind Energy, Inc. 2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020)
~~10.26~~		First Amendment to the Amended and Restated Loan and Security Agreement and Other Loan Documents, dated October 29, 2020, among the Company, Brad Foote Gearworks, Inc, Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC, CIBC Bank USA, as Administrative Agent for itself and all Lenders and Siena Lending Group (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020)
~~10.27~~		Second Amendment to the Amended and Restated Loan and Security Agreement, dated February 23, 2021, among the Company, Brad Foote Gearworks, Inc, Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC, and CIBC Bank USA, as Administrative Agent for itself and all Lenders (incorporated by reference to Exhibit 10.33 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020)
~~10.28~~10.19		Second Amendment to Amended and Restated Broadwind, Inc. 2015 Equity Incentive Plan (incorporated by reference to Appendix B to Amendment No. 1 to the Company's Schedule 14A filed April 5, 2021)
~~10.29~~10.20		Third Amendment to Amended and Restated ~~Loan and Security Agreement, dated November 8, 2021, among the Company, Brad Foote Gearworks,~~Broadwind, Inc.~~, Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC and CIBC Bank USA, as Administrative Agent for itself and all Lenders~~ 2015 Equity Incentive Plan (incorporated by reference to ~~Exhibit 10.1~~Appendix B to the ~~Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021)~~ Company’s Schedule 14A filed April 7, 2023)
~~10.30~~		Equity Distribution Agreement, dated March 9, 2021, by and between the Company and Craig-Hallum Capital Group LLC (incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K filed March 9, 2021)
~~10.31~~		Fourth Amendment to Amended and Restated Loan and Security Agreement, dated February 28, 2022, among the Company, Brad Foote Gearworks, Inc., Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC and CIBC Bank USA, as Administrative Agent for itself and all Lenders (incorporated by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021)
~~10.32~~10.21		Credit Agreement, dated as of August 4, 2022, by and among Broadwind, Inc., Brad Foote Gear Works, Inc., Broadwind Industrial Solutions, LLC, Broadwind Heavy Fabrications, Inc., 5100 Neville Road, LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed August 8, 2022)
~~10.33~~10.22		Guaranty, dated as of August 4, 2022, by Broadwind, Inc., Brad Foote Gear Works, Inc., Broadwind Industrial Solutions, LLC, Broadwind Heavy Fabrications, Inc. and 5100 Neville Road, LLC in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed August 8, 2022)
~~10.34~~10.23		Severance and Non-Competition Agreement dated as of August 10, 2022, between Broadwind, Inc. and Thomas A. Ciccone (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed August 12, 2022)
~~10.35~~10.24		Sales Agreement, dated September 12, 2022, by and among Broadwind, Inc., Roth Capital Partners, LLC and H.C. Wainwright & Co. (incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K filed September 12, 2022)
~~10.36~~10.25		Amendment No. 1 to Credit Agreement and Limited Waiver, dated as of February 8, 2023, by and among Broadwind Inc., Brad Foote Gear Works, Inc., Broadwind Industrial Solutions, LLC, Broadwind Heavy Fabrications, Inc., 5100 Neville Island, LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed February 14, 2023)
10.26		Tax Credit Transfer Agreement, dated as of December 21, 2023, by and between Broadwind Heavy Fabrications Inc. and MarketAxess Holding Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 27, 2023)
10.27		Guaranty, dated as of December 21, 2023, by and between Broadwind, Inc. and MarketAxess Holdings Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed December 27, 2023)
21		Subsidiaries of the Registrant (filed herewith)
23		Consent of RSM LLP (filed herewith)
31.1		Rule 13a-14(a) Certification of Chief Executive Officer (filed herewith)
31.2		Rule 13a-14(a) Certification of Chief Financial Officer (filed herewith)
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
97		Broadwind, Inc. Policy on Recoupment of Incentive-Based Compensation (filed herewith)
101		The following financial information from this Form 10-K of Broadwind, Inc. for the year ended December 31, ~~2022,~~2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, ~~2022~~2023 and ~~2021,~~2022, (ii) Consolidated Statements of Operations for the years ended December 31, ~~2022~~2023 and ~~2021,~~2022, (iii) Consolidated Statements of Stockholders’ Equity for the years ended December 31, ~~2022~~2023 and ~~2021,~~2022, (iv) Consolidated Statements of Cash Flows for the years ended December 31, ~~2022~~2023 and ~~2021,~~2022, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.
104		Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

†	Indicates management contract or compensation plan or arrangement.

7170

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the ~~ninth~~fifth day of March, ~~2023~~2024 .

	BROADWIND, INC.

	By:	/s/ Eric B. Blashford
		Eric B. Blashford President and Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons (including a majority of the board of directors) on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE	TITLE	DATE

/s/ Eric B. Blashford	President, Chief Executive Officer, and Director (Principal Executive Officer)	March ~~9, 2023~~5, 2024
Eric B. Blashford

/s/ Thomas A. Ciccone	Vice President and Chief Financial Officer (Principal Financial Officer)	March ~~9, 2023~~5, 2024
Thomas A. Ciccone

/s/ David P. Reiland	Director	March ~~9, 2023~~5 2024
David P. Reiland

/s/ Philip J. Christman	Director	March ~~9, 2023~~5, 2024
Philip J. Christman

/s/ Thomas A. Wagner	Director	March ~~9, 2023~~5, 2024
Thomas A. Wagner

/s/ Cary B. Wood	Director	March ~~9, 2023~~5, 2024
Cary B. Wood

/s/ Sachin M. Shivaram	Director	March ~~9, 2023~~5, 2024
Sachin M. Shivaram

/s/ Jeanette A. Press	Director	March 5, 2024
Jeanette A. Press

7271

(Mark One)
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, ~~2022~~2023
Or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-34278

Delaware (State of or other jurisdiction of incorporation or organization)		88-0409160 (I.R.S. Employer Identification No.)
3240 S. Central Avenue Cicero, Illinois (Address of principal executive offices)		60804 (Zip code)
Securities registered pursuant to Section 12 (b) of the Exchange Act:		Registrant’s telephone number, including area code: (708) 780-4800

Title of Class	Trading Symbol	Name of Exchange on which Registered
Common Stock, $0.001 par value	BWEN	The Nasdaq Capital Market

Segment	Heavy Fabrications	Gearing	Industrial Solutions

Key Markets Served	-Wind Power Generation	-Onshore & Offshore	-Combined Cycle Natural
	-Surface and Underground Mining	Oil and Gas Fracking/Drilling	Gas Power Generation
	-Material Handling	-Surface and Underground Mining	-Solar Power Generation
	-Oil and Gas	-Steel Production	-Wind Power Generation
	-Construction	-Infrastructure
	-Infrastructure	-Wind Power Generation
		-Pulp and Paper
		-Material Handling
		-Marine
		-Waste Processing


Products	-Wind ~~Towers~~Towers/Adaptors	-Loose Gearing	-Supply Chain Solutions
	-Industrial Fabrications:	-Custom Gearboxes	-Inventory Management
	Mining Components	-Gearbox Repair	-Kitting and Assembly
	Crane Components	-Heat Treat Services	-Solar Inverter Racks
	Pressure Reducing Systems		-Solar Powered Shelters/Charging Stations
	Other Frames/Structures
	Pressure Vessels

	●	A material change in payment terms with a significant customer could have a material adverse effect on our short-term cash flows.
	●	The concentration of our customer base may enable our customers to demand pricing and other terms unfavorable to us and make us more vulnerable to changes in demand by or issues with a given customer.


		Page
PART I		3
ITEM 1.	BUSINESS	4
ITEM 1A.	RISK FACTORS	11
ITEM 1B.	UNRESOLVED STAFF COMMENTS	17
ITEM 1C.	CYBERSECURITY	17
ITEM 2.	PROPERTIES	18
ITEM 3.	LEGAL PROCEEDINGS	18
ITEM 4.	MINE SAFETY DISCLOSURES	18
PART II		19
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	19
ITEM 6.	[RESERVED]	20
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	29
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	29
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	30
ITEM 9A.	CONTROLS AND PROCEDURES	30
ITEM 9B.	OTHER INFORMATION	30
ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
PART III		31
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	31
ITEM 11.	EXECUTIVE COMPENSATION	31
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	31
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	32
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	32
PART IV		33
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	33
ITEM 16.	FORM 10-K SUMMARY	33

	Number of Employees As of
Segment	December 31, ~~2022~~2023
Heavy Fabrications		~~309~~266
Gearing		~~134~~118
Industrial Solutions		4247
Corporate		1413
Total		~~499~~444

	●	the cost of raw materials used to make wind turbines, particularly ~~steel~~steel;
	●	the general increase in demand for electricity or “load ~~growth”;~~growth;”

	●	Perceived uncertainties as to our future direction may result in the loss of potential business opportunities and may make it more difficult to attract and retain qualified personnel, business partners, customers and others important to our success, any of which could negatively affect our business and our results of operations and financial condition;
	●	Action by activist stockholders may be exploited by our competitors, cause concern to our current or potential customers and make it more difficult to attract and retain qualified personnel;

	●	A successful proxy contest could result in a change in control of our Board, and such an event could subject us to certain contractual obligations under several material agreements, including our existing Amended and Restated 2015 ~~EIP agreement~~Equity Incentive Plan (as amended, the “2015 EIP”), and underlying award agreements and certain employment agreements;
	●	If nominees advanced by activist stockholders are elected or appointed to our Board with a specific agenda, it may adversely affect our ability to effectively and timely implement our strategic plans or to realize long-term value from our assets, and this could in turn have an adverse effect on our business and on our results of operations and financial condition; and
	●	Proxy contests may cause our stock price to experience periods of volatility.

		Owned /	Approximate
Operating Segment and Facility Type	Location	Leased	Square Footage
*Heavy Fabrications (1)*
Tower Manufacturing	Manitowoc, WI	Leased		194,000
Tower Manufacturing	Abilene, TX	Owned		175,000
Industrial Fabrications Manufacturing	Manitowoc, WI	Leased		~~113,000~~84,000
*Gearing and Corporate*
Gearing System Manufacturing—Machining and Corporate Administration	Cicero, IL	Leased		301,000
Gearing System Manufacturing—Heat Treatment and Gearbox Repair	Neville Island, PA	Owned		52,000
*Industrial Solutions*
Industrial Solutions Manufacturing	Sanford, NC	Leased		105,000

	Common Stock				Common Stock
	High		Low		High		Low
2022
2023
First quarter	$	2.36	$	1.58	$	5.92	$	1.77
Second quarter		2.17		1.52		5.20		3.35
Third quarter		3.59		1.47		4.59		3.10
Fourth quarter		2.83		1.57		3.46		2.05

	Year Ended						Year Ended
	December 31,						December 31,
	2022			2021			2023			2022
Net revenues	$	176,759		$	145,619		$	203,477		$	176,759
Net (loss) income	$	(9,730	)	$	2,847
Net income (loss)							$	7,649		$	(9,730	)
Adjusted EBITDA (1)	$	2,444		$	13,209		$	21,474		$	2,444
Capital expenditures	$	3,098		$	1,707		$	6,405		$	3,098
Free cash flow (2)	$	17,506		$	(2,038	)	$	(3,843	)	$	17,506
Operating working capital (3)	$	475		$	18,635		$	19,408		$	475
Total debt	$	8,311		$	6,827		$	12,153		$	8,311
Total orders	$	368,027		$	159,025		$	101,060		$	368,027
Backlog at end of period (4)	$	297,200		$	106,383		$	183,088		$	297,200
Book-to-bill (5)		2.1			1.1			0.5			2.1

	Year Ended December 31,												2022 vs. 2021						Year Ended December 31,												2023 vs. 2022
				% of Total						% of Total												% of Total						% of Total
	2022			Revenue			2021			Revenue			$ Change			% Change			2023			Revenue			2022			Revenue			$ Change			% Change
Revenues	$	176,759			100.0	%	$	145,619			100.0	%	$	31,140			21.4	%	$	203,477			100.0	%	$	176,759			100.0	%	$	26,718			15.1	%
Cost of sales		166,049			93.9	%		140,108			96.2	%		25,941			18.5	%		170,969			84.0	%		166,049			93.9	%		4,920			3.0	%
Gross profit		10,710			6.1	%		5,511			3.8	%		5,199			94.3	%		32,508			16.0	%		10,710			6.1	%		21,798			203.5	%
Operating expenses
Selling, general and administrative expenses		16,592			9.4	%		17,372			11.9	%		(780	)		(4.5	)%		20,705			10.2	%		16,592			9.4	%		4,113			24.8	%
Intangible amortization		725			0.4	%		733			0.5	%		(8	)		(1.1	)%		664			0.3	%		725			0.4	%		(61	)		(8.4	)%
Total operating expenses		17,317			9.8	%		18,105			12.4	%		(788	)		(4.4	)%		21,369			10.5	%		17,317			9.8	%		4,052			23.4	%
Operating loss		(6,607	)		(3.7	)%		(12,594	)		(8.6	)%		5,987			47.5	%
Other income (expense), net
Paycheck Protection Program loan forgiveness		—			—	%		9,151			6.3	%		(9,151	)		(100.0	)%
Operating income (loss)																				11,139			5.5	%		(6,607	)		(3.7	)%		17,746			268.6	%
Other expense, net
Interest expense, net		(3,218	)		(1.8	)%		(1,129	)		(0.8	)%		(2,089	)		(185.0	)%		(3,201	)		(1.6	)%		(3,218	)		(1.8	)%		17			0.5	%
Other, net		130			0.1	%		7,444			5.1	%		(7,314	)		(98.3	)%		(48	)		(0.0	)%		130			0.1	%		(178	)		(136.9	)%
Total other income (expense), net		(3,088	)		(1.7	)%		15,466			10.6	%		(18,554	)		(120.0	)%
Net (loss) income before provision for income taxes		(9,695	)		(5.5	)%		2,872			2.0	%		(12,567	)		(437.6	)%
Total other expense, net																				(3,249	)		(1.6	)%		(3,088	)		(1.7	)%		(161	)		(5.2	)%
Net income (loss) before provision for income taxes																				7,890			3.9	%		(9,695	)		(5.5	)%		17,585			181.4	%
Provision for income taxes		35			0.0	%		25			0.0	%		10			40.0	%		241			0.1	%		35			0.0	%		206			588.6	%
Net (loss) income	$	(9,730	)		(5.5	)%	$	2,847			2.0	%	$	(12,577	)		(441.8	)%
Net income (loss)																			$	7,649			3.8	%	$	(9,730	)		(5.5	)%	$	17,379			178.6	%


		Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 49)		35
Consolidated Balance Sheets as of December 31, ~~2022~~2023 and ~~2021~~2022		37
Consolidated Statements of Operations for the Years Ended December 31, ~~2022~~2023 and ~~2021~~2022		38
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, ~~2022~~2023 and ~~2021~~2022		39
Consolidated Statements of Cash Flows for the Years Ended December 31, ~~2022~~2023 and ~~2021~~2022		40
Notes to Consolidated Financial Statements		41

	*As of December 31,*						*As of December 31,*
	*2022*			*2021*			*2023*			*2022*

ASSETS
CURRENT ASSETS:
Cash	$	12,732		$	852		$	1,099		$	12,732
Accounts receivable, net		17,018			13,802			19,231			17,018
Employee retention credit receivable		—			497
AMP credit receivable								7,051			—
Contract assets		1,955			1,136			1,460			1,955
Inventories, net		44,262			33,377
Inventories								37,405			44,262
Prepaid expenses and other current assets		3,291			2,661			3,500			3,291
Total current assets		79,258			52,325			69,746			79,258
LONG-TERM ASSETS:
Property and equipment, net		45,319			43,655			47,123			45,319
Operating lease right-of-use assets		16,396			18,029			15,593			16,396
Intangible assets, net		2,728			3,453			2,064			2,728
Other assets		839			585			630			839
TOTAL ASSETS	$	144,540		$	118,047		$	135,156		$	144,540
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Line of credit and current portion of long-term debt	$	1,170		$	6,650
Line of credit and current maturities of long-term debt							$	5,903		$	1,170
Current portion of finance lease obligations		2,008			2,060			2,153			2,008
Current portion of operating lease obligations		1,882			1,775			1,851			1,882
Accounts payable		26,255			16,462			20,728			26,255
Accrued liabilities		4,313			3,654			6,477			4,313
Customer deposits		34,550			12,082			16,500			34,550
Total current liabilities		70,178			42,683			53,612			70,178
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities		7,141			177			6,250			7,141
Long-term finance lease obligations, net of current portion		4,226			2,481			3,372			4,226
Long-term operating lease obligations, net of current portion		16,696			18,405			15,888			16,696
Other		26			167			15			26
Total long-term liabilities		28,089			21,230			25,525			28,089
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding		—			—			—			—
Common stock, $0.001 par value; 30,000,000 shares authorized; 21,127,130 and 19,859,650 shares issued as of December 31, 2022, and December 31, 2021, respectively		21			20
Treasury stock, at cost, 273,937 shares as of December 31, 2022 and December 31, 2021		(1,842	)		(1,842	)
Common stock, $0.001 par value; 30,000,000 shares authorized; 21,840,301 and 21,127,130 shares issued as of December 31, 2023, and December 31, 2022, respectively								22			21
Treasury stock, at cost, 273,937 shares as of December 31, 2023 and December 31, 2022								(1,842	)		(1,842	)
Additional paid-in capital		397,240			395,372			399,336			397,240
Accumulated deficit		(349,146	)		(339,416	)		(341,497	)		(349,146	)
Total stockholders’ equity		46,273			54,134			56,019			46,273
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	144,540		$	118,047		$	135,156		$	144,540

	*For the Years Ended December 31,*						*For the Years Ended December 31,*
	*2022*			*2021*			*2023*			*2022*
Revenues	$	176,759		$	145,619		$	203,477		$	176,759
Cost of sales		166,049			140,108			170,969			166,049
Gross profit		10,710			5,511			32,508			10,710
OPERATING EXPENSES:
Selling, general and administrative		16,592			17,372			20,705			16,592
Intangible amortization		725			733			664			725
Total operating expenses		17,317			18,105			21,369			17,317
Operating loss		(6,607	)		(12,594	)
OTHER INCOME (EXPENSE), net:
Paycheck Protection Program loan forgiveness		—			9,151
Operating income (loss)								11,139			(6,607	)
OTHER EXPENSE, net:
Interest expense, net		(3,218	)		(1,129	)		(3,201	)		(3,218	)
Other, net		130			7,444			(48	)		130
Total other (expense) income, net		(3,088	)		15,466
Net (loss) income before provision for income taxes		(9,695	)		2,872
Total other expense, net								(3,249	)		(3,088	)
Net income (loss) before provision for income taxes								7,890			(9,695	)
Provision for income taxes		35			25			241			35
NET (LOSS) INCOME		(9,730	)		2,847
NET (LOSS) INCOME PER COMMON SHARE—BASIC:
Net (loss) income	$	(0.48	)	$	0.15
NET INCOME (LOSS)								7,649			(9,730	)
NET INCOME (LOSS) PER COMMON SHARE—BASIC:
Net income (loss)							$	0.36		$	(0.48	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC		20,299			18,726			21,189			20,299
NET (LOSS) INCOME PER COMMON SHARE—DILUTED:
Net (loss) income	$	(0.48	)	$	0.15
NET INCOME (LOSS) PER COMMON SHARE—DILUTED:
Net income (loss)							$	0.36		$	(0.48	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED		20,299			19,388			21,491			20,299

	*Common Stock*					*Treasury Stock*															*Common Stock*					*Treasury Stock*
	*Shares*			*Issued*					*Issued*			*Additional*			*Accumulated*						*Shares*			*Issued*					*Issued*			*Additional*			*Accumulated*
	*Issued*			*Amount*		*Shares*			*Amount*			*Paid-in Capital*			*Deficit*			*Total*			*Issued*			*Amount*		*Shares*			*Amount*			*Paid-in Capital*			*Deficit*			*Total*
BALANCE, December 31, 2020		17,211,498		$	17		(273,937	)	$	(1,842	)	$	384,749		$	(342,263	)	$	40,661
Stock issued for restricted stock		695,216			1		—			—			—			—			1
Stock issued under defined contribution 401(k) retirement savings plan		289,519			—		—			—			1,193			—			1,193
Share-based compensation		—			—		—			—			1,541			—			1,541
Shares withheld for taxes in connection with issuance of restricted stock		(234,280	)		—		—			—			(1,423	)		—			(1,423	)
Sale of common stock, net		1,897,697			2		—			—			9,312			—			9,314
Net income		—			—		—			—			—			2,847			2,847
BALANCE, December 31, 2021		19,859,650		$	20		(273,937	)	$	(1,842	)	$	395,372		$	(339,416	)	$	54,134			19,859,650		$	20		(273,937	)	$	(1,842	)	$	395,372		$	(339,416	)	$	54,134
Stock issued for restricted stock		818,956			—		—			—			—			—			—			818,956			—		—			—			—			—			—
Stock issued under defined contribution 401(k) retirement savings plan		629,213			—		—			—			1,244			—			1,244			629,213			—		—			—			1,244			—			1,244
Share-based compensation		—			—		—			—			944			—			944			—			—		—			—			944			—			944
Shares withheld for taxes in connection with issuance of restricted stock		(281,068	)		—		—			—			(549	)		—			(549	)		(281,068	)		—		—			—			(549	)		—			(549	)
Sale of common stock, net		100,379			1		—			—			229			—			230			100,379			1		—			—			229			—			230
Net loss		—			—		—			—			—			(9,730	)		(9,730	)		—			—		—			—			—			(9,730	)		(9,730	)
BALANCE, December 31, 2022		21,127,130		$	21		(273,937	)	$	(1,842	)	$	397,240		$	(349,146	)	$	46,273			21,127,130		$	21		(273,937	)	$	(1,842	)	$	397,240		$	(349,146	)	$	46,273
Stock issued for restricted stock																						493,327			1		—			—			618			—			619
Stock issued under defined contribution 401(k) retirement savings plan																						380,247			—		—			—			1,336			—			1,336
Share-based compensation																						—			—		—			—			877			—			877
Shares withheld for taxes in connection with issuance of restricted stock																						(160,403	)		—		—			—			(735	)		—			(735	)
Net income																						—			—		—			—			—			7,649			7,649
BALANCE, December 31, 2023																						21,840,301		$	22		(273,937	)	$	(1,842	)	$	399,336		$	(341,497	)	$	56,019

	*For the Year Ended December 31,*						*For the Year Ended December 31,*
	*2022*			*2021*			*2023*			*2022*
Balance at beginning of period	$	47		$	473		$	17		$	47
Bad debt expense		—			9			127			—
Write-offs		—			(229	)		(47	)		—
Other adjustments		(30	)		(206	)		2			(30	)
Balance at end of period	$	17		$	47		$	99		$	17

	*December 31, 2022*												*December 31, 2021*												*December 31, 2023*												*December 31, 2022*
											*Remaining*												*Remaining*												*Remaining*												*Remaining*
											*Weighted*												*Weighted*												*Weighted*												*Weighted*
						*Accumulated*			*Net*		*Average*							*Accumulated*			*Net*		*Average*							*Accumulated*			*Net*		*Average*							*Accumulated*			*Net*		*Average*
	*Cost*		*Accumulated*			*Impairment*			*Book*		*Amortization*				*Accumulated*			*Impairment*			*Book*		*Amortization*		*Cost*		*Accumulated*			*Impairment*			*Book*		*Amortization*				*Accumulated*			*Impairment*			*Book*		*Amortization*
	*Basis*		*Amortization*			*Charges*			*Value*		*Period*		*Cost*		*Amortization*			*Charges*			*Value*		*Period*		*Basis*		*Amortization*			*Charges*			*Value*		*Period*		*Cost*		*Amortization*			*Charges*			*Value*		*Period*
Intangible assets:
Noncompete agreements	$	170	$	(167	)	$	—		$	3		0.1	$	170	$	(139	)	$	—		$	31		1.1	$	170	$	(170	)	$	—		$	—		—	$	170	$	(167	)	$	—		$	3		0.1
Customer relationships		15,979		(7,581	)		(7,592	)		806		3.1		15,979		(7,284	)		(7,592	)		1,103		4.0		15,979		(7,842	)		(7,592	)		545		2.1		15,979		(7,581	)		(7,592	)		806		3.1
Trade names		9,099		(7,180	)		—			1,919		4.8		9,099		(6,780	)		—			2,319		5.8		9,099		(7,580	)		—			1,519		3.8		9,099		(7,180	)		—			1,919		4.8
Intangible assets	$	25,248	$	(14,928	)	$	(7,592	)	$	2,728		4.3	$	25,248	$	(14,203	)	$	(7,592	)	$	3,453		5.2	$	25,248	$	(15,592	)	$	(7,592	)	$	2,064		3.3	$	25,248	$	(14,928	)	$	(7,592	)	$	2,728		4.3

	*December 31, 2021*
	*Level 1*		*Level 2*		*Level 3*		*Total*
*Liabilities measured on a recurring basis:*
Interest rate swap	$	—	$	27	$	—	$	27
Total liabilities at fair value	$	—	$	27	$	—	$	27