UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☒~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended ~~September 30, 2017~~March 31, 2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐~~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

BROADWIND, ~~ENERGY,~~ INC.

(Exact name of registrant as specified in its charter)

Delaware		88-0409160
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)	(I.R.S. Employer Identification No.)

3240 S. Central Avenue, Cicero, IL 60804

(Address of principal executive offices)

(708) 780-4800

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value	BWEN	The NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ☐ ~~Emerging growth company ☐~~☒		Smaller reporting company ☒
~~(Do not check if a smaller reporting company)~~
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period to comply with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of registrant’s common stock, par value $0.001, outstanding as of ~~October 26, 2017: 15,145,670.~~May 4, 2022:20,103,088.

PART I. FINANCIAL INFORMATION

Item ~~1.Financial~~1.Financial Statements

BROADWIND, ~~ENERGY,~~ INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)


	September 30,		December 31,		*March 31,*			*December 31,*
	2017		2016		*2022*			*2021*
	Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	41	$	18,699
Short-term investments		—		3,171
Restricted cash		—		39
Accounts receivable, net of allowance for doubtful accounts of $201 and $145 as of September 30, 2017 and December 31, 2016, respectively		9,271		11,865
Cash					$	773		$	852
Accounts receivable, net						18,898			13,802
Employee retention credit receivable						0			497
Contract assets						3,175			1,136
Inventories, net		15,409		21,159		39,067			33,377
Prepaid expenses and other current assets		2,060		2,449		2,482			2,661
Current assets held for sale		382		808
Total current assets		27,163		58,190		64,395			52,325
LONG-TERM ASSETS:
Property and equipment, net		56,452		54,606		44,545			43,655
Goodwill		4,882		—
Other intangible assets, net		16,549		4,572
Operating lease right-of-use assets						17,588			18,029
Intangible assets, net						3,269			3,453
Other assets		238		294		658			585
TOTAL ASSETS	$	105,284	$	117,662	$	130,455		$	118,047
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Line of credit and NMTC note payable	$	10,370	$	—
Current portions of capital lease obligations		991		465
Line of credit and other notes payable					$	13,855		$	6,650
Current portion of finance lease obligations						2,250			2,060
Current portion of operating lease obligations						1,798			1,775
Accounts payable		7,075		15,852		26,944			16,462
Accrued liabilities		6,551		8,430		3,402			3,654
Customer deposits		2,085		18,011		8,399			12,082
Current liabilities held for sale		323		493
Total current liabilities		27,395		43,251		56,648			42,683
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities		—		2,600		170			177
Long-term capital lease obligations, net of current portions		1,537		1,038
Long-term finance lease obligations, net of current portion						3,713			2,481
Long-term operating lease obligations, net of current portion						17,951			18,405
Other		3,603		2,190		180			167
Total long-term liabilities		5,140		5,828		22,014			21,230
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; 15,418,907 and 15,175,767 shares issued as of September 30, 2017, and December 31, 2016, respectively		15		15
Treasury stock, at cost, 273,937 shares as of September 30, 2017 and December 31, 2016		(1,842)		(1,842)
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding						0			0
Common stock, $0.001 par value; 30,000,000 shares authorized; 20,292,073 and 19,859,650 shares issued as of March 31, 2022, and December 31, 2021, respectively						20			20
Treasury stock, at cost, 273,937 shares as of March 31, 2022 and December 31, 2021						(1,842	)		(1,842	)
Additional paid-in capital		379,702		378,876		395,435			395,372
Accumulated deficit		(305,126)		(308,466)		(341,820	)		(339,416	)
Total stockholders’ equity		72,749		68,583		51,793			54,134
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	105,284	$	117,662	$	130,455		$	118,047

Table of Contents

BROADWIND, ~~ENERGY,~~ INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)

	*Three Months Ended March 31,*
	*2022*			*2021*
Revenues	$	41,844		$	32,728
Cost of sales		39,832			32,446
Gross profit		2,012			282
OPERATING EXPENSES:
Selling, general and administrative		3,902			4,410
Intangible amortization		183			183
Total operating expenses		4,085			4,593
Operating loss		(2,073	)		(4,311	)
OTHER (EXPENSE) INCOME, net:
Interest expense, net		(345	)		(229	)
Other, net		21			3,362
Total other (expense) income, net		(324	)		3,133
Net loss before provision for income taxes		(2,397	)		(1,178	)
Provision for income taxes		7			32
NET LOSS		(2,404	)		(1,210	)
NET LOSS PER COMMON SHARE—BASIC:
Net loss	$	(0.12	)	$	(0.07	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC		19,708			17,178
NET LOSS PER COMMON SHARE—DILUTED:
Net loss	$	(0.12	)	$	(0.07	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED		19,708			17,178

Three Months Ended September 30,

Nine Months Ended September 30,

2017


2016

2017

2016

Revenues

$
29,595

$
42,552

$
129,017

$
132,689

Cost of sales

28,581

37,221

117,757

119,254

Gross profit

1,014

5,331

11,260

13,435

OPERATING EXPENSES:

Selling, general and administrative

2,374

3,860

10,711

11,785

Intangible amortization

471

111

1,293

333

Total operating expenses

2,845

3,971

12,004

12,118

Operating (loss) income

(1,831)

1,360

(744)

1,317

OTHER (EXPENSE) INCOME, net:

Interest expense, net

(228)

(125)

(584)

(431)

Other, net

(12)

10

17

27

Total other expense, net

(240)

(115)

(567)

(404)

Net (loss) income before benefit for income taxes

(2,071)

1,245

(1,311)

913

Benefit for income taxes

(22)

—

(5,056)

(16)

(LOSS) INCOME FROM CONTINUING OPERATIONS

(2,049)

1,245

3,745

929

LOSS FROM DISCONTINUED OPERATIONS

(158)

(373)

(405)

(908)

NET (LOSS)  INCOME

$
(2,207)

$
872

$
3,340

$
21

NET (LOSS) INCOME PER COMMON SHARE—BASIC:

(Loss) income from continuing operations

$
(0.14)

$
0.08

$
0.25

$
0.06

Loss from discontinued operations

(0.01)

(0.03)

(0.03)

(0.06)

Net (loss) income

$
(0.15)

$
0.06

$
0.22

$
0.00

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC

15,095

14,876

15,013

14,824

NET (LOSS) INCOME PER COMMON SHARE—DILUTED:

(Loss) income from continuing operations

$
(0.14)

$
0.08

$
0.24

$
0.06

Loss from discontinued operations

(0.01)

(0.02)

(0.02)

(0.06)

Net (loss) income

$
(0.15)

$
0.06

$
0.22

$
0.00

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED

15,095

15,121

15,345

15,038

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

Common Stock

Treasury Stock

Additional

Shares

Issued

Issued

Paid-in

Accumulated

Issued

Amount

Shares

Amount

Capital

Deficit

Total

BALANCE, December 31, 2015

15,012,789

$
15

(273,937)

$
(1,842)

$
378,104

$
(308,785)

$
67,492

Stock issued for restricted stock

157,331

—

—

—

—

—

—

Stock issued under stock option plans

5,647

—

—

—

19

—

19

Share-based compensation

—

—

—

—

753

—

753

Net income

—

—

—

—

—

319

319

BALANCE, December 31, 2016

15,175,767

$
15

(273,937)

$
(1,842)

$
378,876

$
(308,466)

$
68,583

Stock issued for restricted stock

186,748

—

—

—

—

—

—

Stock issued under defined contribution 401(k) retirement savings plan

56,392

—

—

—

175

—

175

Share-based compensation

—

—

—

—

651

—

651

Net income

—

—

—

—

—

3,340

3,340

BALANCE, September 30, 2017

15,418,907

$
15

(273,937)

$
(1,842)

$
379,702

$
(305,126)

$
72,749

	*Common Stock*					*Treasury Stock*						*Additional*
	*Shares*			*Issued*					*Issued*			*Paid-in*			*Accumulated*
	*Issued*			*Amount*		*Shares*			*Amount*			*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		241,806			—		—			—			—			—			—
Stock issued under defined contribution 401(k) retirement savings plan		26,265			—		—			—			258			—			258
Share-based compensation		—			—		—			—			219			—			219
Shares withheld for taxes in connection with issuance of restricted stock		(105,399	)		—		—			—			(847	)		—			(847	)
Sale of common stock, net		1,100,000			1		—			—			6,100			—			6,101
Net loss		—			—		—			—			—			(1,210	)		(1,210	)
BALANCE, March 31, 2021		18,474,170		$	18		(273,937	)	$	(1,842	)	$	390,479		$	(343,473	)	$	45,182

BALANCE, December 31, 2021		19,859,650		$	20		(273,937	)	$	(1,842	)	$	395,372		$	(339,416	)	$	54,134
Stock issued for restricted stock		480,595			0		0			��			—			—			0
Stock issued under defined contribution 401(k) retirement savings plan		146,790			0		0			0			282			0			282
Share-based compensation		—			—		—			—			192			—			192
Shares withheld for taxes in connection with issuance of restricted stock		(194,962	)		—		—			—			(411	)		—			(411	)
Net loss		—			0		—			0			0			(2,404	)		(2,404	)
BALANCE, March 31, 2022		20,292,073		$	20		(273,937	)	$	(1,842	)	$	395,435		$	(341,820	)	$	51,793

Table of Contents

BROADWIND, ~~ENERGY,~~ INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Nine Months Ended September 30,


2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$
3,340

$
21

Loss from discontinued operations

(405)

(908)

Income from continuing operations

3,745

929

Adjustments to reconcile net cash used in operating activities:

Depreciation and amortization expense

6,571

5,138

Deferred income taxes

(5,056)

—

Stock-based compensation

651

592

Allowance for doubtful accounts

13

45

Common stock issued under defined contribution 401(k) plan

175

—

Gain on disposal of assets

(12)

(147)

Changes in operating assets and liabilities, net of acquisition:

Accounts receivable

5,281

(5,187)

Inventories

10,928

(2,013)

Prepaid expenses and other current assets

377

(982)

Accounts payable

(9,284)

7,118

Accrued liabilities

(4,037)

777

Customer deposits

(15,934)

11,541

Other non-current assets and liabilities

(45)

(744)

Net cash (used in) provided by operating activities of continuing operations

(6,627)

17,067

CASH FLOWS FROM INVESTING ACTIVITIES:

Cash paid in acquisition

(16,449)

—

Purchases of available for sale securities

—

(19,207)

Sales of available for sale securities

2,221

167

Maturities of available for sale securities

950

9,005

Purchases of property and equipment

(5,972)

(4,007)

Proceeds from disposals of property and equipment

5

479

Net cash used in investing activities of continuing operations

(19,245)

(13,563)

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from issuance of stock

—

19

Net proceeds from line of credit and notes payable

7,770

—

Payments on long-term debt

—

(2,799)

Principal payments on capital leases

(557)

(500)

Net cash provided by (used in) financing activities of continuing operations

7,213

(3,280)

DISCONTINUED OPERATIONS:

Operating cash flows

(40)

786

Investing cash flows

—

615

Financing cash flows

—

(12)

Net cash (used in) provided by discontinued operations

(40)

1,389

Add: Cash balance of discontinued operations, beginning of period

2

—

Less: Cash balance of discontinued operations, end of period

—

2

NET (DECREASE) INCREASE  IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

(18,697)

1,611

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH beginning of the period

18,738

6,519

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH end of the period

$
41

$
8,130

Supplemental cash flow information:

Interest paid

$
413

$
376

Income taxes paid

$
52

$
22

Contingent consideration related to business acquisition

$
1,140

$
—

Non-cash investing and financing activities:

Issuance of restricted stock grants

$
651

$
592

Equipment additions via capital lease

$
1,582

$
—

Red Wolf acquisition:

Assets acquired

$
26,491

$
—

Liabilities assumed

$
7,508

$
—

	*Three Months Ended March 31,*
	*2022*			*2021*
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,404	)	$	(1,210	)
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense		1,519			1,553
Deferred income taxes		(7	)		(5	)
Change in fair value of interest rate swap agreements		2			5
Stock-based compensation		192			219
Allowance for doubtful accounts		(23	)		(218	)
Common stock issued under defined contribution 401(k) plan		282			258
Loss (gain) on disposal of assets		3			(23	)
Changes in operating assets and liabilities:
Accounts receivable		(5,073	)		1,229
Employee retention credit receivable		497			(3,372	)
Contract assets		(2,038	)		(269	)
Inventories		(5,690	)		(13,552	)
Prepaid expenses and other current assets		179			699
Accounts payable		10,538			7,591
Accrued liabilities		(254	)		419
Customer deposits		(3,683	)		(1,764	)
Other non-current assets and liabilities		(45	)		3
Net cash used in operating activities		(6,005	)		(8,437	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(492	)		(612	)
Proceeds from disposals of property and equipment		0			23
Net cash used in investing activities		(492	)		(589	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit, net		7,207			3,223
Proceeds from long-term debt		125			595
Payments on long-term debt		(8	)		(150	)
Principal payments on finance leases		(495	)		(339	)
Shares withheld for taxes in connection with issuance of restricted stock		(411	)		(847	)
Proceeds from sale of common stock, net		0			6,101
Net cash provided by financing activities		6,418			8,583
NET DECREASE IN CASH		(79	)		(443	)
CASH beginning of the period		852			3,372
CASH end of the period	$	773		$	2,929

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

Table of Contents

BROADWIND, ~~ENERGY,~~ INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(InDollars are presented in thousands, except share, per share and per ~~share data)~~employee data or unless otherwise stated)

NOTE 1 — BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind, ~~Energy,~~ Inc. (the “Company”) and its wholly-owned subsidiaries Broadwind ~~Towers,~~Heavy Fabrications, Inc. (“Broadwind ~~Towers”~~Heavy Fabrications”), Brad Foote Gear Works, Inc. (“Brad Foote”), and ~~Red Wolf Company,~~Broadwind Industrial Solutions, LLC (“~~Red Wolf”~~Broadwind Industrial Solutions”). ~~See the discussion of the Red Wolf acquisition in Note 17 “Business Combinations” of these condensed consolidated financial statements.~~ All intercompany transactions and balances have been eliminated.

The ~~accompanying unaudited condensed consolidated~~ financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form ~~10-Q~~10-Q and Article 10 of Regulation ~~S-X.~~S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included.

Operating results for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, ~~2017. The~~ 2022, or any other interim period, which may differ materially due to, among other things, the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021.

The December 31, 2021 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. This financial information should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form ~~10-K~~10-K for the year ended December 31, ~~2016.~~ 2021.

In February 2017, the Company acquired Red Wolf and formed the Process Systems segment. Consequently, the Company has revised its segment presentation to include three reportable operating segments: Towers and Weldments, Gearing and Process Systems. All current results

There have been ~~presented to reflect this change. See Note 14, “Segment Reporting” of these condensed consolidated financial statements for further discussion of reportable segments.~~

~~Except for the business combination discussed in Note 17 “Business Combinations” of these condensed consolidated financial statements, there have been~~ no material changes in the Company’s significant accounting policies during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 as compared to the significant accounting policies described in the Company’s Annual Report on Form ~~10-K~~10-K for the year ended December 31, ~~2016.~~2021.

Company Description

Through its subsidiaries, the Company is a precision manufacturer of structures, equipment and components for clean technology and other specialized applications. The Company provides technologically advanced ~~high-value~~high value products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure ~~sector customers,~~sectors, primarily in the United States of America (the “U.S.”). The Company’s capabilities include, but are not limited to the following: heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, gearbox repair, heat treatment, assembly, engineering and packaging solutions. The Company’s most significant presence is within the U.S. wind energy industry, which accounted for ~~79%~~53% and 63% of the Company’s revenue during the first ~~nine~~three months of ~~2017.~~2022 and 2021, respectively.

Outside of the wind energy market, the Company provides precision gearing, specialty weldments and fabrication, kitting, and assemblies of industrial systems to a broad range of customers for oil and gas (“O&G”), mining and other industrial applications.

Liquidity

The Company typically meets its short term liquidity needs through cash generated from operations, its available cash balances, ~~and~~ the Credit Facility (as defined below)~~. The Company uses~~, equipment financing, and access to the ~~Credit Facility~~public or private debt and/or equity markets, including the option to raise capital from ~~time to time to fund temporary increases in working capital.~~the sale of our securities under the Form S-3 (as discussed below).

See Note 8,7, “Debt and Credit ~~Agreements”~~Agreements,” of these condensed consolidated financial statements for a complete description of the Credit Facility and the Company’s other debt.

Total debt and ~~capital~~finance lease obligations at ~~September 30, 2017~~March 31, 2022 totaled ~~$12,898,~~$19,988, which includes current outstanding debt and finance leases totaling ~~$11,361.~~$16,105. The ~~current outstanding debt includes $7,770 outstanding under the Company’s~~Company's revolving line of credit balance is included in the “Line of credit and ~~$2,600 related to~~other notes payable” line item in the ~~New Market Tax Credit Transaction (the “NMTC Transaction”). See Note 16 “New Markets Tax Credit Transaction” of these~~Company's condensed consolidated ~~financial statements for a complete description~~balance sheet.

Table of ~~the NMTC Transaction.~~

Contents

On August ~~11, 2017,~~ 18, 2020, the Company filed a “shelf” registration statement on Form ~~S-3,~~S-3, which was declared effective by the ~~SEC~~Securities and Exchange Commission (the “SEC”) on October ~~10, 2017.~~ 13, 2020 (the “Form S-3”) and expires 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

~~Table of Contents~~

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.

~~Prior to 2016,~~

On March 9, 2021, the Company ~~continuously incurred annual operating losses.~~ 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 1,897,697shares of the Company’s common stock thereunder during the firsttwo quarters of 2021. The net proceeds (before upfront costs) to the Company from the sale of such shares were approximately $9,725after deducting commissions paid of approximately $275and before deducting other expenses of $411.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed 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 ERC 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. The maximum tax credit that could be claimed by an eligible employer in 2021 was $7,000 per employee per calendar quarter. In the first and second quarters of 2021, the Company received ERC benefits of $3,372 and $3,593, respectively, which were recorded in “Other income (expense), net” in the Company’s condensed consolidated statement of operations. The Company did not qualify for the ERC benefit during the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of 2019. 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 the Company’s condensed consolidated balance sheet at December 31,2021. The remaining $497 for the uncollected ERC benefit was collected during January 2022.

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

If assumptions regarding the Company’s production, sales and subsequent collections from certain of the Company’s large customers, as well as receipt of customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, particularly in light of the COVID-19 pandemic, emerging variants and its effects on domestic and global economies, the Company may in the future encounter cash flow and liquidity issues. If the Company’s operational performance deteriorates significantly, it may be unable to comply with existing financial covenants, and could lose access to ~~the~~its Credit Facility. This could limit the Company’s operational flexibility, require a delay in making planned investments and/or require the Company to seek additional equity or debt financing. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash available to operate its businesses and to meet its financial obligations and debt covenants, there can be no assurances that its operations will generate sufficient cash, or that credit facilities will be available in an amount sufficient to enable the Company to meet these financial obligations.

Management’s Use of Estimates

The preparation of financial statements in conformity with 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 revenue recognition, future cash flows, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, health insurance reserves, 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, particularly in light of the COVID-19 pandemic.

NOTE 2 — REVENUES

Revenues are recognized when the promised goods or services are transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The following table presents the Company’s revenues disaggregated by revenue source for the three months ended March 31, 2022 and 2021:

	*Three Months Ended March 31,*
	*2022*			*2021*
Heavy Fabrications	$	27,272		$	22,777
Gearing		10,584			5,349
Industrial Solutions		4,073			4,604
Eliminations		(85	)		(2	)
Consolidated	$	41,844		$	32,728

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Revenue within the Company’s Gearing and Industrial Solutions segments, as well as industrial fabrication product line revenues within the Heavy Fabrications segment, are generally recognized at a point in time, typically when the promised goods or services are physically 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 tower sales within the Company’s Heavy Fabrications segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. 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 the three months ended March 31, 2022 and 2021, the Company recognized a portion of revenue within the Heavy Fabrications segment 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. Within the Gearing segment, the Company recognized revenue over time of $172 for the three months ended March 31, 2021 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 Company's projects are labor intensive, the Company uses labor hours as the input measure of progress for the applicable contracts. During the fourth quarter of 2021, the Company ceased recording revenue over time within the Gearing segment due to a change in terms. Within the Heavy Fabrications segment, the Company recognized revenue over time of $2,471 and $1,256 for the three months ended March 31,2022 and 2021, respectively. 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.

NOTE 3 — EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share for the three ~~and nine~~ months ended ~~September 30, 2017~~ March 31, 2022 and ~~2016,~~2021, as follows:

	*Three Months Ended*
	*March 31,*
	*2022*			*2021*
Basic earnings per share calculation:
Net loss	$	(2,404	)	$	(1,210	)
Weighted average number of common shares outstanding		19,707,815			17,178,136
Basic net loss per share	$	(0.12	)	$	(0.07	)
Diluted earnings per share calculation:
Net loss	$	(2,404	)	$	(1,210	)
Weighted average number of common shares outstanding		19,707,815			17,178,136
Common stock equivalents:
Non-vested stock awards (1)		0			0
Weighted average number of common shares outstanding		19,707,815			17,178,136
Diluted net loss per share	$	(0.12	)	$	(0.07	)

Three Months Ended

Nine Months Ended

September 30,

September 30,


2017

2016

2017

2016

Basic earnings per share calculation:

Net (loss) income

$
(2,207)

$
872

$
3,340

$
21

Weighted average number of common shares outstanding

15,094,991

14,876,308

15,013,312

14,823,525

Basic net (loss) income per share

$
(0.15)

$
0.06

$
0.22

$
0.00

Diluted earnings per share calculation:

Net (loss) income

$
(2,207)

$
872

$
3,340

$
21

Weighted average number of common shares outstanding

15,094,991

14,876,308

15,013,312

14,823,525

Common stock equivalents:

Stock options and non-vested stock awards

—

244,663

331,196

214,136

Weighted average number of common shares outstanding

15,094,991

15,120,971

15,344,508

15,037,661

Diluted net (loss) income per share

$
(0.15)

$
0.06

$
0.22

$
0.00

(1) Restricted stock units granted and outstanding of 623,191 and 1,171,093 as of March 31, 2022 and 2021, are excluded from the computation of diluted earnings due to the anti-dilutive effect as a result of the Company’s net loss for the three months ended March 31, 2022 and 2021.

~~NOTE 3 — DISCONTINUED OPERATIONS~~

The Company’s former Services segment had substantial continued operating losses for several years, due to operating issues and an increasingly competitive environment due in part to increased in-sourcing of service functions by customers. In July 2015, the Company’s Board of Directors (the “Board”) directed management to evaluate potential strategic alternatives with respect to the Services segment. In September 2015, the Board authorized management to sell substantially all of the assets of the Services segment to one or more third-party purchasers, and thereafter to liquidate or otherwise dispose of any such assets remaining unsold. The Company began negotiations to sell substantially all the assets of the Services segment in the third quarter of 2015. The exit of this business was a strategic shift that has had a major effect on the Company; therefore, the Company reclassified the related assets and liabilities of the Services segment as held for sale. In connection with the divestiture, which was substantially completed in December 2015, the Company sold $5,406 of net assets, resulting in a $2,096 loss. In addition, the Company has also recorded asset impairment charges to reduce the carrying value of the net assets held for sale to their estimated fair value.

~~Results of Discontinued Operations~~

Results of operations for the Services segment, which are reflected as discontinued operations in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2017 and 2016, were as follows:

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Three Months Ended September 30,

Nine Months Ended September 30,


2017

2016


2017

2016

Revenues

$
23

$
51

$
150

$
108

Cost of sales

(195)

(100)

(350)

(864)

Selling, general and administrative

14

(1)

(44)

(83)

Interest expense, net

—

(6)

—

5

Impairment of held for sale assets and liabilities and gain on sale of assets

—

(317)

(161)

(74)

Loss from discontinued operations

$
(158)

$
(373)

$
(405)

$
(908)

~~Assets and Liabilities Held for Sale~~

~~Services assets and liabilities classified as held for sale in the Company’s condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 include the following:~~

September 30,

December 31,

2017

2016
Assets:

Accounts receivable, net

$
21

$
172
Inventories, net

16

807
Prepaid expenses and other current assets

—

55
Assets Held For Sale Related To Discontinued Operations

37

1,034
Impairment of discontinued assets held for sale

—

(579)
Total Assets Held For Sale Related To Discontinued Operations

$
37

$
455
Liabilities:

Accounts payable

$
3

$
22
Accrued liabilities

39

121
Customer deposits and other current obligations

3

3
Other long-term liabilities

—

3
Total Liabilities Held For Sale Related To Discontinued Operations

$
45

$
149

NOTE 4 ~~— CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS~~

Cash and cash equivalents typically comprise cash balances and readily marketable investments with original maturities of three months or less, such as money market funds, short-term government bonds, Treasury bills, marketable securities and commercial paper. Marketable investments with original maturities between three and twelve months are recorded as short-term investments. The Company’s treasury policy is to invest excess cash in money market funds or other investments, which are generally of a short-term duration based upon operating requirements. Income earned on these investments is recorded as interest income which is netted against interest expense in the Company’s condensed consolidated statements of operations. The components of cash and cash equivalents and short-term investments as of September 30, 2017 and December 31, 2016 are summarized as follows:

September 30,

December 31,

2017

2016

Cash and cash equivalents:

Cash

$
41

$
16,821

Money market funds

—

1,878

Total cash and cash equivalents

41

18,699

Short-term investments (available-for-sale):

Corporate & municipal bonds

—

3,171

Total cash and cash equivalents and short-term investments

$
41

$
21,870

~~Table of Contents~~

~~NOTE 5~~ — INVENTORIES

The components of inventories as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 are summarized as follows:

	*March 31,*			*December 31,*
	*2022*			*2021*
Raw materials	$	24,461		$	16,148
Work-in-process		12,574			13,639
Finished goods		4,004			6,575
		41,039			36,362
Less: Reserve for excess and obsolete inventory		(1,972	)		(2,985	)
Net inventories	$	39,067		$	33,377

September 30,

December 31,

2017

2016

Raw materials

$
9,131

$
14,174

Work-in-process

5,348

5,321

Finished goods

3,565

3,342

18,044

22,837

Less: Reserve for excess and obsolete inventory

(2,635)

(1,678)

Net inventories

$
15,409

$
21,159

NOTE 5 — INTANGIBLE ASSETS

~~NOTE 6 — GOODWILL AND OTHER INTANGIBLE ASSETS~~

Goodwill represents the excess of the purchase price over the fair value of assets acquired, including identifiable intangibles and liabilities as part of the Company’s acquisition of Red Wolf. Goodwill is not amortized but is tested annually for impairment. The Company added $4,882 of goodwill as a result of the Red Wolf acquisition, which is included in the Process Systems segment. See Note 14, “Segment Reporting” for further discussion of the Company’s segments. As the Company’s acquisition accounting is incomplete, the Company may adjust the amounts recorded as of September 30, 2017 to reflect any revised valuations of the assets acquired or liabilities assumed.

~~Other intangible~~Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company’s acquisition of Brad Foote completed in 2007 as well as the noncompetition agreements, trade names and customer relationships that were part of the Company’s acquisition of Red Wolf Company, LLC completed in 2017. ~~See Note 17, “Business Combinations” of these condensed consolidated financial statements for further discussion of the Red Wolf acquisition. Other intangible~~ Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 5 1to 11 6years. The Company tests other intangible assets for impairment when events or circumstances indicate that the carrying value of these assets may not be recoverable. During the third quarter of 2017, the Company continued to identify triggering events associated with the Gearing segment’s current period operating loss combined with its history of continued operating losses. As a result, the Company evaluated the recoverability of certain of its long-lived assets associated with the Gearing segment. Based upon the Company’s most recent impairment assessment, the undiscounted cash flows derived from the Company’s most recent projections were less than the carrying amount of the relevant asset groups within the Gearing segment, and a possible impairment to these assets was indicated under Accounting Standards Codifications 360 (“ASC 360”). However, based on third-party appraisals and other estimates of the fair value of the assets, the Company determined that the fair value of these assets is in excess of their carrying amounts under ASC 360. In making the determination, the Company assumed that the assets would be exchanged in an orderly transaction between market participants and would represent the highest and best use of these assets. Based on the analysis, the Company determined that no impairment to this asset group was indicated as of September 30, 2017.

As of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021, the cost basis, accumulated amortization and net book value of intangible assets were as follows:


	September 30, 2017							December 31, 2016							*March 31, 2022*												*December 31, 2021*
							Remaining							Remaining											*Remaining*												*Remaining*
							Weighted							Weighted											*Weighted*												*Weighted*
					Net		Average					Net		Average						*Accumulated*			*Net*		*Average*							*Accumulated*			*Net*		*Average*
	Cost		Accumulated		Book		Amortization	Cost		Accumulated		Book		Amortization	*Cost*		*Accumulated*			*Impairment*			*Book*		*Amortization*				*Accumulated*			*Impairment*			*Book*		*Amortization*
	Basis		Amortization		Value		Period	Basis		Amortization		Value		Period	*Basis*		*Amortization*			*Charges*			*Value*		*Period*		*Cost*		*Amortization*			*Charges*			*Value*		*Period*
Intangible assets:
Goodwill	$	4,882	$	—	$	4,882		$	—	$	—	$	—
Noncompete agreements		170		(19)		151	5.3		—		—		—		$	170	$	(146	)	$	0		$	24		0.8	$	170	$	(139	)	$	0		$	31		1.1
Customer relationships		15,979		(4,647)		11,332	8.3		3,979		(3,726)		253	5.8		15,979		(7,361	)		(7,592	)		1,026		3.8		15,979		(7,284	)		(7,592	)		1,103		4.0
Trade names		9,099		(4,033)		5,066	10.7		7,999		(3,680)		4,319	10.8		9,099		(6,880	)		0			2,219		5.5		9,099		(6,780	)		0			2,319		5.8
Intangible assets	$	30,130	$	(8,699)	$	21,431	9.0	$	11,978	$	(7,406)	$	4,572	10.5	$	25,248	$	(14,387	)	$	(7,592	)	$	3,269		5.0	$	25,248	$	(14,203	)	$	(7,592	)	$	3,453		5.2

~~Table of Contents~~

As of ~~September 30, 2017,~~March 31, 2022, estimated future amortization expense iswas as follows:

2022	$	550
2023		664
2024		661
2025		661
2026		422
2027 and thereafter		311
Total	$	3,269

2017

$
471

2018

1,884

2019

1,884

2020

1,884

2021

1,884

2022 and thereafter

8,542

Total

$
16,549

NOTE 76 — ACCRUED LIABILITIES

Accrued liabilities as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 consisted of the following:


	September 30,		December 31,		*March 31,*		*December 31,*
	2017		2016		*2022*		*2021*
Accrued payroll and benefits	$	2,060	$	4,422	$	2,703	$	2,992
Fair value of interest rate swap						0		27
Accrued property taxes		532		99		188		0
Income taxes payable		79		127		16		1
Accrued professional fees		166		236		81		129
Accrued warranty liability		596		671		115		125
Accrued regulatory settlement		—		500
Accrued environmental reserve		898		1,241
Accrued self-insurance reserve		935		909
Self-insured workers compensation reserve						113		166
Accrued other		1,285		225		186		214
Total accrued liabilities	$	6,551	$	8,430	$	3,402	$	3,654

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NOTE 87 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 consisted of the following:


	September 30,		December 31,		*March 31,*			*December 31,*
	2017		2016		*2022*			*2021*
Line of credit	$	7,770	$	—	$	13,556		$	6,350
NMTC note payable		2,600		2,600
Other notes payable						272			274
Long-term debt						197			203
Less: Current portion		(10,370)		—		(13,855	)		(6,650	)
Long-term debt, net of current maturities	$	—	$	2,600	$	170		$	177

Credit Facility

On October 26, 2016, the Company established a ~~$20,000 three-year~~three-year secured revolving line of credit ~~(the “Credit Facility”)~~ with CIBC Bank USA (“CIBC”)~~, formerly known as The PrivateBank~~. This line of credit has been amended from time to time. On February 25, 2019, the line of credit was expanded and ~~Trust Company, to replace the Company’s prior credit facility with AloStar Bank of Commerce. Under the Credit Facility, CIBC will advance funds~~extended for three years when ~~requested against a borrowing base consisting of up to 85% of the face value of eligible accounts receivable of the Company, up to 50% of the book value of eligible inventory of~~ the Company and ~~up to 50% of~~its subsidiaries entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the appraised value of eligible machinery, equipment and certain real property up to $10,000. Borrowings under the Credit Facility bear interest at a per annum rate equal to the applicable London Interbank Offered Rate (“LIBOR”) plus a margin ranging from 2.25% to 3.00%, or the applicable base rate plus a margin ranging from 0.00% to 1.00%, both of which are based on the Company’s trailing twelve-month adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, share-based payments and restructuring costs). The Company also pays an unused facility fee to CIBC equal to 0.50% per annum on the unused portion of the Credit Facility, along with other ~~standard fees. The Credit Facility contains customary representations and warranties. It also contains a requirement that~~financial institutions party thereto, providing the Company onand its subsidiaries with a ~~consolidated basis, maintain a minimum Fixed Charge Coverage Ratio Covenant, along with other customary restrictive covenants.~~$35,000 secured credit facility (as amended to date, the “Credit Facility”). The obligations under the Credit Facility are secured by, subject to certain exclusions, (i) a first priority security interest in all accounts receivable, inventory, equipment, cash and investment property, ~~of the Company,~~ and (ii) a mortgage on the ~~Company’s~~ Abilene, Texas tower ~~facility.~~ and Pittsburgh, Pennsylvania gearing facilities.

On ~~February 10, 2017, a~~October 29,2020, the Company executed the First Amendment to ~~Loan and Security Agreement and Joinder to Loan and Security Agreement were executed to add Red Wolf as a borrower under~~ the ~~Credit Facility. On March 27, 2017, the parties executed a Second Amendment to Loan and Security Agreement and an~~ Amended and Restated ~~Revolving Note~~Loan Agreement, 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 ~~increase~~2.75% for London Interbank Offering Rate (“LIBOR”) rate loans and 0.00% and 0.75% for base rate loans, and extending the ~~amount~~term of the Credit Facility to ~~$25,000.~~July 31,2023.

~~Table~~On February 23, 2021, the Company executed the Second Amendment to the Amended and Restated Loan Agreement, which waived testing of ~~Contents~~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 to $2,500 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.

The Credit Facility contains customary representations and warranties applicable to the Company and the subsidiaries. It also contains a requirement that the Company, on a consolidated basis, maintain customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications.

In conjunction with the 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 original term of the 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 condensed consolidated financial statements as of December 31, 2021. The interest rate swap expired in February 2022.

As of ~~September 30, 2017,~~March 31, 2022, there was ~~$7,770~~ $13,556of outstanding indebtedness under the Credit Facility, with the ability to borrow an additional ~~$11,831~~$13,944. The Company was in compliance with all financial covenants under the Credit ~~Facility.~~Facility as of March 31, 2022.

Table of Contents

Other

In 2016, the Company entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, net of current maturities” line item of the Company’s condensed consolidated financial statements as of March 31, 2022 and December 31, 2021. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2021,2020,2019, and 2018,$114 of the loan was forgiven. As of March 31, 2022, the loan balance was $114. In addition, the Company has outstanding notes payable for capital expenditures in the amount of $355and $363 as of March 31, 2022 and December 31, 2021, respectively, with $185 and $186 included in the “Line of credit and other notes payable” line item of the Company’s condensed consolidated financial statements as of March 31, 2022 and December 31, 2021. The notes payable have monthly payments that range from $3 to $16 and an interest rate of approximately 4%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable mature in September 2028.

NOTE 8 — LEASES

The Company leases certain facilities and equipment. The leases are accounted for under Accounting Standard Update 2016-02, Leases (“Topic 842”) and the Company elected to apply each available practical expedient. The discount rates used for the leases are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio.

The Company has elected to apply the short-term lease exception to all leases of one year or less. During the three months ended March 31, 2022 and 2021, the Company had additional operating leases that resulted in right-of-use assets obtained in exchange for lease obligations of $0 and $907, respectively. Additionally, during the three months ended March 31, 2022 and 2021, the Company had additional finance leases that resulted in property, plant, and equipment obtained in exchange for lease obligations of $92and $263, respectively.

Some of the Company’s facility leases include options to renew. The exercise of the renewal options is typically at the Company’s discretion. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them.

Table of Contents

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

	*Three Months Ended March 31,*
	*2022*			*2021*
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$	288		$	186
Interest on finance lease liabilities		80			68
Total finance lease costs		368			254
Operating lease cost components:
Operating lease cost		698			759
Short-term lease cost		151			196
Variable lease cost (1)		226			230
Sublease income		(47	)		(46	)
Total operating lease costs		1,028			1,139

Total lease cost	$	1,396		$	1,393

Supplemental cash flow information related to our operating leases is as follows for the three months ended March 31, 2022 and 2021:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	869		$	887

Weighted-average remaining lease term-finance leases at end of period (in years)		2.9			1.9
Weighted-average remaining lease term-operating leases at end of period (in years)		8.7			9.5
Weighted-average discount rate-finance leases at end of period		6.2	%		9.0	%
Weighted-average discount rate-operating leases at end of period		8.6	%		8.5	%

(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.

As of ~~September 30, 2017, Line~~March 31, 2022, future minimum lease payments under finance leases and operating leases were as follows:

	*Finance*			*Operating*
	*Leases*			*Leases*			*Total*
2022	$	2,006		$	2,605		$	4,611
2023		1,921			3,388			5,309
2024		1,038			2,933			3,971
2025		634			3,015			3,649
2026		422			3,059			3,481
2027 and thereafter		722			14,045			14,767
Total lease payments		6,743			29,045			35,788
Less—portion representing interest		(780	)		(9,296	)		(10,076	)
Present value of lease obligations		5,963			19,749			25,712
Less—current portion of lease obligations		(2,250	)		(1,798	)		(4,048	)
Long-term portion of lease obligations	$	3,713		$	17,951		$	21,664

NOTE 9 — FAIR VALUE MEASUREMENTS

Fair Value of ~~Credit~~Financial Instruments

The carrying amounts of the Company’s financial instruments, which include cash, accounts receivable, accounts payable and ~~NMTC Note Payable includes $2,600 associated~~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 ~~New Markets Tax Credit Transaction~~carrying value of the Company’s long-term debt is approximately equal to its fair value.

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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 ~~further~~ in Note ~~16, “New Markets Tax~~7, “Debt and Credit ~~Transaction”~~Agreements,” of these condensed consolidated financial statements. AsThe fair value of ~~December 31, 2016, this was included~~the interest rate swap is reported in ~~Long-Term Debt, Net~~“Accrued liabilities” and the change in fair value is reported in “Interest expense, net” of ~~Current Maturities.~~these condensed consolidated financial statements. The ~~Company has no other term loans outstanding.~~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.

~~NOTE 9 — 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, the Company notes that 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. ~~The Company used market negotiations to value the Gearing segment’s assets.~~

The following tables represent the fair values of the Company’s financial ~~assets~~liabilities as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016:~~ 2021:

September 30, 2017


Level 1

Level 2

Level 3

Total

Assets measured on a nonrecurring basis:

Gearing equipment

$
—

$
—

$
345

$
345

Gearing Cicero Ave. facility

—

—

560

560

Services assets

—

—

37

37

Total assets at fair value

$
—

$
—

$
942

$
942

	*March 31, 2022*
	*Level 1*		*Level 2*		*Level 3*		*Total*
*Liabilities measured on a recurring basis:*
Interest rate swap	$	0	$	0	$	0	$	0
Total liabilities at fair value	$	0	$	0	$	0	$	0

	*December 31, 2021*
	*Level 1*		*Level 2*		*Level 3*		*Total*
*Liabilities measured on a recurring basis:*
Interest rate swap	$	0	$	27	$	0	$	27
Total liabilities at fair value	$	0	$	27	$	0	$	27

December 31, 2016


Level 1

Level 2

Level 3

Total

Assets measured on a recurring basis:

Corporate & municipal bonds and money market funds

$
—

$
5,049

$
—

$
5,049

Assets measured on a nonrecurring basis:

Gearing equipment

—

—

353

353

Gearing Cicero Ave. facility

—

—

560

560

Services assets

—

—

455

455

Total assets at fair value

$
—

$
5,049

$
1,368

$
6,417

~~Fair Value of Financial Instruments~~

The carrying amounts of the Company’s financial instruments, which include cash and cash equivalents, restricted cash, accounts receivable, 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.

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~~Assets Measured at Fair Value on a Nonrecurring Basis~~

The fair value measurement approach for long lived assets utilizes a number of significant unobservable inputs or Level 3 assumptions. These assumptions include, among others, projections of the Company’s future operating results, the implied fair value of these assets using an income approach by preparing an undiscounted cash flow analysis, a market based approach based on the Company’s market capitalization and market value third-party appraisals, and other subjective assumptions. To the extent assumptions used in the Company’s evaluations are not achieved, there may be a negative effect on the valuation of these assets.

~~The investment in select Gearing equipment, shown as $345 at September 30, 2017, is associated with the Company’s activities to update and consolidate the Gearing segment asset base.~~

The carrying value of the land and building comprising one of Brad Foote’s facilities located in Cicero, Illinois (the “Cicero Avenue Facility”) of $560 reflects the expected proceeds associated with selling this facility after environmental remediation is complete. As the Cicero Avenue Facility is not immediately available for sale, it has not been classified as Assets Held for Sale.

Following the Board’s approval of a plan to divest the Company’s Services segment, the Company has been able to evaluate the value of the segment’s assets on the open market; therefore, the Company has utilized this measurement to determine the fair value of the Services segment assets.

NOTE 10 — INCOME TAXES

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of ~~September 30, 2017,~~March 31, 2022, the Company has a full valuation allowance recorded against deferred tax assets. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2022, the Company recorded a ~~benefit~~provision for income taxes of ~~$5,056,~~$7, compared to a ~~benefit~~provision for income taxes of ~~$16~~$32 during the ~~nine~~three months ended September 30, 2016. The income tax benefit during the nine months ended September 30, 2017 included an income tax benefit of $5,060 from the partial release of the valuation allowance, net of Red Wolf’s current state taxes, resulting from the consolidation of the Company’s deferred tax assets with Red Wolf’s deferred tax liabilities upon acquisition.March 31, 2021.

The Company files income tax returns in U.S. federal and state jurisdictions. As of ~~September 30, 2017,~~March 31, 2022, open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards. As of December 31, ~~2016,~~2021, the Company had federal and unapportioned state net operating loss (“NOL”) carryforwards of ~~$210,820 expiring~~$277,310 of which $227,781 will generally begin to expire in 2026. The majority of the NOL carryforwards will expire in various years from 2028through ~~2036.~~2037. NOLs generated after January 1, 2018 will not expire.

~~It is reasonably possible that~~

Since the Company has no unrecognized tax benefits, they will ~~decrease by up to approximately $18~~not have an impact on the condensed consolidated financial statements as a result of the expiration of the applicable ~~statutes~~statues of limitations within the next twelve months. In addition, 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 Section 382 of the IRC 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 Section 382 of the IRC ~~Section 382,~~in 2010, the Company ~~has~~ determined that aggregate changes in stock ownership have triggered an annual limitation on NOL carryforwards and built-in losses available for ~~utilization.~~utilization, thereby currently limiting annual NOL usage to $14,284 per year. Further limitations may occur, depending on additional future changes in stock ownership. 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 be if the Company were able to use NOL carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes.

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In February 2013, the ~~Board~~Company adopted a Stockholder Rights Plan, which was amended in February 2016and approved by the Company’s stockholders (as amended, the “Rights Plan”), designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under ~~IRC~~ Section ~~382. The~~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 ~~ratified~~approved by the Company’s stockholders at the ~~Company’s 2013~~2019 Annual Meeting of ~~Stockholders. The~~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 ~~was amended and extended~~ for an additional three years, ~~on February 5, 2016, and such extension~~which was subsequently ~~ratified by the Company’s stockholders~~approved at the ~~Company’s 2016~~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, 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~~non-taxable dividend of ~~one~~1 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. Each Right entitles its holder

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to purchase from the Company one ~~one‑thousandth~~one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of ~~$9.81~~$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.

As of ~~September 30, 2017,~~March 31, 2022, the Company had ~~$18 of~~0 unrecognized tax ~~benefits, all of which would have a favorable impact on income tax expense.~~benefits. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company had 0 accrued interest and penalties ~~of $11~~ as of ~~September 30, 2017. As of December~~March 31, ~~2016, the Company had unrecognized tax benefits of $69, of which $42 represented accrued interest and penalties.~~2022.

NOTE 11 — SHARE-BASED COMPENSATION

~~Overview of Share-Based Compensation Plans~~

~~2007 Equity Incentive Plan~~

~~The Company has granted incentive stock options and other equity awards pursuant to the Amended and Restated Broadwind Energy, Inc. 2007 Equity Incentive Plan (the “2007 EIP”), which~~There was ~~approved by the Board in October 2007 and by the Company’s stockholders in June 2008. The 2007 EIP has been amended periodically since its original approval.~~

The 2007 EIP reserved 691,051 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates depends to a large degree. As of September 30, 2017, the Company had reserved 29,983 shares for issuance upon the exercise of stock options outstanding and no shares for issuance upon the vesting of restricted stock unit (“RSU”) awards outstanding. As of September 30, 2017, 253,659 shares of common stock reserved for stock options and RSU awards under the 2007 EIP had been issued in the form of common stock.

~~2012 Equity Incentive Plan~~

The Company has granted incentive stock options and other equity awards pursuant to the Broadwind Energy, Inc. 2012 Equity Incentive Plan (the “2012 EIP”), which was approved by the Board in March 2012 and by the Company’s stockholders in May 2012.

The 2012 EIP reserved 1,200,000 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates will depend to a large degree. As of September 30, 2017, the Company had reserved 37,205 shares for issuance upon the exercise of stock options outstanding and 19,093 shares for issuance upon the vesting of RSU awards outstanding. As of September 30, 2017, 618,908 shares of common stock reserved for stock options and RSU awards under the 2012 EIP had been issued in the form of common stock.

~~2015 Equity Incentive Plan~~

The Company has granted equity awards pursuant to the Broadwind Energy, Inc. 2015 Equity Incentive Plan (the “2015 EIP,” and together with the 2007 EIP and the 2012 EIP, the “Equity Incentive Plans”), which was approved by the Board in February 2015 and by the Company’s stockholders in April 2015. The purposes of the Equity Incentive Plans are to (a) align the interests of the Company’s stockholders and recipients of awards under the Equity Incentive Plans by increasing the proprietary interest of such recipients in the Company’s growth and success; (b) advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors and independent contractors; and (c) motivate such persons to act in the long-term best interests of the Company and its stockholders. Under the Equity Incentive Plans, the Company may grant (i) non-qualified stock options; (ii) “incentive stock options” (within the meaning of IRC Section 422); (iii) stock appreciation rights; (iv) restricted stock and RSUs; and (v) performance awards.

The 2015 EIP reserves 1,100,000 shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates will depend to a large degree. As of September 30, 2017, the Company had reserved 507,302 shares for issuance upon the vesting of RSU awards outstanding. As of September 30, 2017, 199,403 shares of common stock reserved for RSU awards under the 2015 EIP had been issued in the form of common stock.

~~Stock Options.~~ The exercise price of stock options granted under the Equity Incentive Plans 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.

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~~Restricted Stock Units (RSUs).~~ The granting of RSUs is provided for under the Equity Incentive Plans. RSUs generally vest on the anniversary of the grant date, with vesting terms that may range from 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.

~~The following table summarizes~~ stock option activity during the ~~nine~~three months ended ~~September 30, 2017 under the Equity Incentive Plans,~~March 31, 2022 and 0 stock options were outstanding as ~~follows:~~of March 31, 2022.

Weighted Average


Options

Exercise Price

Outstanding as of December 31, 2016

67,438

$
24.96

Granted

—

$

Exercised

—

$

Forfeited

—

$

Expired

(250)

$
107.00

Outstanding as of September 30, 2017

67,188

$
24.65

Exercisable as of September 30, 2017

67,188

$
24.65

The following table summarizes ~~RSU~~the Company’s restricted stock unit and performance award activity during the ~~nine~~three months ended ~~September 30, 2017 under the Equity Incentive Plans, as follows:~~March 31, 2022:

Weighted Average

Number of

Grant-Date Fair Value

Shares

Per Share

Unvested as of December 31, 2016

492,176

$
3.56

Granted

288,866

$
5.69

Vested

(226,267)

$
3.96

Forfeited

(28,380)

$
3.69

Unvested as of September 30, 2017

526,395

$
4.55

				*Weighted Average*
	*Number of*			*Grant-Date Fair Value*
	*Shares*			*Per Share*
Unvested as of December 31, 2021		918,448		$	2.73
Granted		187,005		$	1.92
Vested		(480,595	)	$	1.92
Forfeited		(1,667	)	$	1.91
Unvested as of March 31, 2022		623,191		$	3.10

~~The fair value~~Under certain situations, shares are withheld from issuance to cover taxes for the vesting of ~~each~~restricted stock ~~option award is estimated on~~units and performance awards. For 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 expected volatility of the price of the Company’s stock over the expected life of the awards and actual and projected stock option exercise behavior. No stock options were granted during the ninethree months ended ~~September 30, 2017.~~March 31,2022, 194,962 shares were withheld to cover $411 of tax obligations.

~~The Company utilized a forfeiture rate of 25% during the nine months ended September 30, 2017 and 2016 for estimating the forfeitures of equity compensation granted.~~

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the ~~nine~~three months ended ~~September 30, 2017~~ March 31, 2022 and ~~2016,~~2021, as follows:



	Nine Months Ended September 30,				*Three Months Ended March 31,*
	2017		2016		*2022*		*2021*
Share-based compensation expense:
Cost of sales	$	82	$	63	$	24	$	26
Selling, general and administrative		569		529		168		193
Income tax benefit (1)		—		—
Net effect of share-based compensation expense on net income	$	651	$	592	$	192	$	219
Reduction in earnings per share:
Basic earnings per share	$	0.04	$	0.04	$	0.01	$	0.01

Diluted earnings per share	$	0.04	$	0.04	$	0.01	$	0.01

~~(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 nine months ended September 30, 2017 and 2016. 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.

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As of September 30, 2017, the Company estimates that pre-tax compensation expense for all unvested share-based awards, including both stock options and RSUs, in the amount of approximately $1,475 will be recognized through 2019. The Company expects to satisfy the exercise of stock options and future distribution of shares of restricted stock by issuing new shares of common stock.

NOTE 12 — 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 of such 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.

NOTE 13 — RECENT ACCOUNTING PRONOUNCEMENTS

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 condensed consolidated financial ~~statements, except as discussed below. The Company is currently evaluating the impact of the new standards on its condensed consolidated financial statements.~~

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which amends the guidance in former Accounting Standards Codification Topic 605, Revenue Recognition, and provides a single, comprehensive revenue recognition model for all contracts with customers. This standard contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The entity will recognize revenue to reflect the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. This ASU permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirement in the year of adoption, through a cumulative adjustment. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) Deferral of the Effective Date, which amends the previously issued ASU to provide for a one year deferral from the original effective date. This ASU is effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. Early adoption is permitted for annual reporting periods beginning on or after December 15, 2016, including interim periods within that annual period. The Company will adopt the provisions of ASU 2014-09 and ASU 2015-14 for the fiscal year beginning January 1, 2018 and will be electing the modified retrospective approach. The Company has evaluated the impact of this guidance on its condensed consolidated financial statements. The Company has worked through a multi-phase plan to assess the impact of adoption on its material revenue streams, evaluate the new disclosure requirements, and identify and implement appropriate changes to its business processes, systems and controls to support recognition and disclosure under the new guidance. The Company is currently in the process of completing its analysis to finalize any adjustments necessary to existing accounting policies, and to support an evaluation of the impact on its results of operations and financial condition.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which is intended to improve financial reporting about leasing transactions. This ASU will require organizations (“lessees”) that lease assets with lease terms of more than twelve months to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Organizations that own the assets leased by lessees (“lessors”) will remain largely unchanged from current guidance. In addition, this ASU will require disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. This ASU will be effective for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), which clarifies the definition of a business. The amendments in this ASU provide a screen to determine when a set (group of assets and activities) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this ASU (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly

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contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. This ASU will be effective for annual reporting periods beginning after December 15, 2017 and interim periods within those fiscal years, with early adoption permitted under special circumstances. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the test for goodwill impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2, which compares the implied fair value of reporting unit goodwill with the carrying amount of that goodwill, from the goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The FASB also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. This ASU will be effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its condensed consolidated financial statements.

NOTE ~~14 —~~14— 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. In September 2015, the Board approved a plan to divest or otherwise exit the Company’s Services segment; consequently, this segment is now reported as a discontinued operation. All current and prior period financial results have been revised to reflect these changes. Effective upon the acquisition of Red Wolf on February 1, 2017, as more fully described in Note 17, “Business Combinations” in the notes to our condensed consolidated financial statements, the Company is reporting operations in a new segment, Process Systems.

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

~~Towers and Weldments~~

Heavy Fabrications

The Company ~~manufactures towers for~~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 ~~turbines, specifically the large and heavier wind towers that are designed for multiple megawatt (“MW”) wind turbines, as well as other specialty welded structures for mining and~~energy industry, although it has diversified into other industrial ~~customers.~~markets in order to improve capacity utilization, reduce customer concentration, 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 tower 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 (1,650 tower sections), sufficient to support turbines generating more than 1,100 MWmegawatts of power. ~~This product segment also encompasses the manufacture of specialty weldments for~~The Company has expanded production capabilities and leveraged 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 ~~industrial customers.~~infrastructure markets.

~~Process Systems~~

Gearing

The Company ~~acquired Red Wolf on February 1, 2017~~provides gearing and asgearboxes to a ~~result, aggregated its Abilene compressed natural gas (“CNG”)~~broad set of customers in diverse markets including; onshore and ~~fabrication business with Red Wolf to form the Process Systems reportable segment. This segment provides contract manufacturing services that include build-to-spec, kitting, fabrication~~offshore O&G fracking and ~~inventory management for customers throughout the U.S.~~drilling, surface and ~~in foreign countries, primarily supporting the natural gas electrical generation market.~~

~~Gearing~~

underground mining, wind energy, steel, material handling and other infrastructure markets. The Company ~~engineers, builds~~has manufactured loose gearing, gearboxes and ~~remanufactures precision gears~~systems, and ~~gearing systems~~provided heat treat services for ~~O&G, wind, mining, steel~~aftermarket and ~~other industrial applications.~~OEM applications for nearly a century. The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment ~~processes~~ in Neville Island, Pennsylvania.

~~Corporate~~

Industrial Solutions

The Company provides supply chain solutions, light fabrication, inventory management, kitting and ~~Other~~assembly services, primarily serving the combined cycle natural gas turbine market, as well as other clean technology markets.

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Corporate

“Corporate” includes the assets and selling, general and administrative expenses of the Company’s corporate office. “Eliminations” comprises adjustments to reconcile segment results to consolidated results.

~~Table~~The accounting policies of ~~Contents~~

the reportable segments are the same as those referenced in Note 1, “Basis of Presentation” of these condensed consolidated financial statements. Summary financial information by reportable segment for the three ~~and nine~~ months ended ~~September 30, 2017~~ March 31, 2022 and ~~2016~~2021 is as follows:

	*Heavy Fabrications*			*Gearing*			*Industrial Solutions*			*Corporate*			*Eliminations*			*Consolidated*
For the Three Months Ended March 31, 2022
Revenues from external customers	$	27,272		$	10,576		$	3,996		$	0		$	0		$	41,844
Intersegment revenues		0			8			77			0			(85	)		0
Net revenues		27,272			10,584			4,073			0			(85	)		41,844
Operating loss		(461	)		(112	)		(209	)		(1,291	)		0			(2,073	)
Depreciation and amortization		879			476			103			61			0			1,519
Capital expenditures		482			0			9			1			0			492

	*Heavy Fabrications*			*Gearing*			*Industrial Solutions*			*Corporate*			*Eliminations*			*Consolidated*
For the Three Months Ended March 31, 2021
Revenues from external customers	$	22,777		$	5,349		$	4,602		$	0		$	0		$	32,728
Intersegment revenues		0			0			2			0			(2	)		0
Net revenues		22,777			5,349			4,604			0			(2	)		32,728
Operating loss		(1,700	)		(989	)		(14	)		(1,608	)		0			(4,311	)
Depreciation and amortization		945			458			106			44			0			1,553
Capital expenditures		563			0			20			29			0			612

Towers and

Process







Weldments

Systems

Gearing

Corporate

Eliminations

Consolidated

For the Three Months Ended September 30, 2017

Revenues from external customers

$
15,971

$
6,054

$
7,570

$
—

$
—

$
29,595

Operating (loss) profit

(1,473)

115

(396)

(77)

—

(1,831)

Depreciation and amortization

1,122

477

609

59

—

2,267

Capital expenditures

1,423

11

232

2

—

1,668

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	*Total Assets as of*
	*March 31,*			*December 31,*
Segments:	*2022*			*2021*
Heavy Fabrications	$	46,026		$	37,131
Gearing		50,529			46,219
Industrial Solutions		11,004			10,825
Corporate		234,481			228,219
Eliminations		(211,585	)		(204,347	)
	$	130,455		$	118,047

Towers and

Process







Weldments

Systems

Gearing

Corporate

Eliminations

Consolidated

For the Nine Months Ended September 30, 2017

Revenues from external customers

$
99,194

$
12,312

$
17,511

$
—

$
—

$
129,017

Operating profit (loss)

7,177

(1,805)

(2,562)

(3,554)

—

(744)

Depreciation and amortization

3,283

1,278

1,847

163

—

6,571

Capital expenditures

4,812

421

564

175

—

5,972

Towers and








Weldments

Gearing

Corporate

Eliminations

Consolidated
For the Three Months Ended September 30, 2016

Revenues from external customers

$
37,970

$
4,582

$
—

$
—

$
42,552
Operating profit (loss)

4,050

(692)

(1,998)

—

1,360
Depreciation and amortization

1,007

638

50

—

1,695
Capital expenditures

1,984

39

17

—

2,040

Towers and








Weldments

Gearing

Corporate

Eliminations

Consolidated
For the Nine Months Ended September 30, 2016

Revenues from external customers

$
117,948

$
14,741

$
—

$
—

$
132,689
Intersegment revenues

—

18

—

(18)

—
Operating profit (loss)

10,016

(3,083)

(5,616)

—

1,317
Depreciation and amortization

3,066

1,918

154

—

5,138
Capital expenditures

3,593

368

46

—

4,007

Total Assets as of

September 30,

December 31,

Segments:

2017

2016

Towers and Weldments

$
22,137

$
45,367

Process Systems

23,695

—

Gearing

37,162

30,062

Assets held for sale

382

808

Corporate

247,888

244,184

Eliminations

(225,980)

(202,759)

$
105,284

$
117,662

NOTE 15 — COMMITMENTS AND CONTINGENCIES

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

~~Table of Contents~~

safety, and product content, performance and packaging. Certain environmental laws may 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.

In connection with the Company’s restructuring initiatives, during the third quarter of 2012, the Company identified a liability associated with the planned sale of the Cicero Avenue Facility. The liability is associated with environmental remediation costs that were identified while preparing the site for sale. During 2013, the Company applied for and was accepted into the Illinois Environmental Protection Agency (the “IEPA”) voluntary site remediation program. In the first quarter of 2014, the Company completed a comprehensive review of remedial options for the Cicero Avenue Facility and selected a preferred remediation technology. As part of the voluntary site remediation program, the Company submitted a plan to the IEPA for approval to conduct a pilot study to test the effectiveness of the selected remediation technology. In the third quarter of 2015, the Company obtained additional information regarding potential remediation options and modified the remediation plan, which caused an increase in the estimated cost of remediation and resulted in the Company increasing its reserve associated with this matter by $874. The Company began active remediation of the Cicero Avenue Facility during the second quarter of 2017 and is currently awaiting a response related to the results from the remediation from the appropriate environmental agency. The Company will re-evaluate the reserve balance upon the remediation results having been reviewed and accepted by the appropriate environmental agency. As of September 30, 2017 and December 31, 2016, the accrual balance associated with this matter totaled $898 and $1,241, respectively.

~~Warranty Liability~~

The Company provides warranty terms that range from one to five years for various products supplied by the Company. In certain contracts, the Company has recourse provisions for items that would enable recovery from third parties for amounts paid to customers under warranty provisions. As of September 30, 2017 and 2016, estimated product warranty liability was $596 and $561, respectively, and is recorded within accrued liabilities in the Company’s condensed consolidated balance sheets.

~~The changes in the carrying amount of the Company’s total product warranty liability for the nine months ended September 30, 2017 and 2016 were as follows:~~

For the Nine Months Ended September 30,

2017

2016

Balance, beginning of period

$
671

$
601

Addition to (reduction of) warranty reserve

(82)

(21)

Warranty claims

7

(19)

Balance, end of period

$
596

$
561

Allowance for Doubtful Accounts

Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to accounts receivable. The Company’s standard allowance estimation methodology considers a number of factors that, based on its collections experience, the Company believes will have an impact on its credit risk and the collectability of its accounts receivable. These factors include individual customer circumstances, history with the Company, the length of the time period during which the account receivable has been past due and other relevant criteria.

~~Table of Contents~~

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 collectability of its accounts receivable, as noted above, or modifications to its credit standards, collection practices and other related policies may impact the Company’s allowance for doubtful accounts and its financial results. The activity in the accounts receivable allowance liability for the ~~nine~~three months ended ~~September 30, 2017~~ March 31, 2022 and ~~2016~~2021 consisted of the following:



	For the Nine Months Ended September 30,				*For the Three Months Ended March 31,*
	2017		2016		*2022*			*2021*
Balance at beginning of period	$	145	$	84	$	47		$	473
Bad debt expense		56		82		0			5
Write-offs		—		(5)		(23	)		(222	)
Other adjustments						0			(1	)
Balance at end of period	$	201	$	161	$	24		$	255

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.

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/or are dependent on actual losses sustained by the customer. The Company does not believe that this potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations. There was no reserve for liquidated damages as of ~~September 30, 2017.~~

~~Workers’ Compensation Reserves~~

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. Historical loss experience combined with actuarial evaluation methods and the application of risk transfer programs are used to determine required workers’ compensation reserves. The Company takes into account claims incurred but not reported when determining its workers’ compensation reserves. 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 positionMarch 31, 2022 or results of operations. Although the Company entered into a guaranteed cost program at the beginning of the third quarter of 2016, the Company maintained a liability for the trailing claims from the self-insured policy. As of September 30, 2017, the Company had $935 accrued for self-insured workers’ compensation liabilities.

~~Other~~

~~As of~~ December 31, 2016, approximately 11% of the Company’s employees were covered by two collective bargaining agreements with local unions at Brad Foote’s Cicero, Illinois and Neville Island, Pennsylvania locations. The current collective bargaining agreement with the Cicero union is expected to remain in effect through February 2018. The current collective bargaining agreement with the Neville Island union will remain in effect through October 2017. The Company has agreed upon a new bargaining agreement with the Neville Island union, which will become effective upon the expiration of the current agreement and will be in effect through October 2022. 2021.

See Note 16, “New Markets Tax Credit Transaction” of these condensed consolidated financial statements for a discussion of a strategic financing transaction, the NMTC Transaction, which originally related to the Company’s drivetrain service center in Abilene, Texas (the “Abilene Gearbox Facility”), and was amended in August 2015 to also include the activities of the Company’s heavy industries business conducted at the same location in Abilene, Texas (the “Abilene Heavy Industries Facility”). The Abilene Gearbox Facility focused on servicing the growing installed base of MW wind turbines as they come off warranty and, to a limited extent, industrial gearboxes requiring precision repair and testing. The Abilene Heavy Industries Facility focuses on heavy weldment fabrication and assembly for industries including those related to compressed natural gas distribution. Pursuant to the NMTC Transaction, the gross loan and investment in the Abilene Heavy Industries Facility and the Abilene Gearbox Facility of $10,000 is expected to generate $3,900 in tax credits over a period of seven years, which the NMTC Transaction makes available to Capital One, National Association (“Capital One”). The Abilene Heavy Industries Facility and/or the Abilene Gearbox Facility must operate and remain in compliance with the terms and conditions of the NMTC Transaction during the seven-year compliance period ending in the third quarter of 2018, or the Company may be

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~~liable~~

NOTE 16 — 12-MONTH EARNINGS STATEMENT

Pursuant to Section 11 of the Securities Act of 1933, as amended and Rule 158 promulgated thereunder, the following is an unaudited earnings statement for the ~~recapture of $3,900 in tax credits to which Capital One is otherwise entitled. The Company does not anticipate any credit recaptures will be required in connection with the NMTC Transaction.~~

~~NOTE 16 — NEW MARKETS TAX CREDIT TRANSACTION~~

On July 20, 2011, the Company executed the NMTC Transaction, which was amended on August 24, 2015, involving the following third parties: AMCREF Fund VII, LLC (“AMCREF”), a registered community development entity; COCRF Investor VIII, LLC (“COCRF”); and Capital One. The NMTC Transaction allows the Company to receive below market interest rate funds through the federal New Markets Tax Credit (“NMTC”) program. The Company received $2,280 in proceeds from the NMTC Transaction. The NMTC Transaction qualifies under the NMTC program and includes a gross loan from AMCREF to the Company’s wholly-owned subsidiary Broadwind Services, LLC in the principal amount of $10,000, with a term of fifteen years and interest payable at the rate of 1.4% per annum, largely offset by a gross loan in the principal amount of $7,720 from the Company to COCRF, with a term of fifteen years and interest payable at the rate of 2.5% per annum. The August 2015 amendment did not change the financial terms of the NMTC Transaction, but did add the activities and assets of the Abilene Heavy Industries Facility to the NMTC Transaction and allow for the possible sale of the Abilene Gearbox Facility assets, provided that the proceeds of such sale are re-invested in the Abilene Heavy Industries Facility.

The NMTC regulations permit taxpayers to claim credits against their federal income taxes for up to 39% of qualified investments in the equity of community development entities. The NMTC Transaction could generate $3,900 in tax credits, which the Company has made available under the structure by passing them through to Capital One. The proceeds have been applied to the Company’s investment in the Abilene Gearbox Facility assets and associated operating costs and in the assets of the Abilene Heavy Industries Facility, as permitted under the amended NMTC Transaction.

The Abilene Heavy Industries Facility and/or the Abilene Gearbox Facility must operate and remain in compliance with various regulations and restrictions through the third quarter of 2018, the end of the seven year compliance period, to comply with the terms of the NMTC Transaction, or the Company may be liable under its indemnification agreement with Capital One for the recapture of tax credits. In the event the Company does not comply with these regulations and restrictions, the NMTC program tax credits may be subject to 100% recapture for a period of seven years as provided in the IRC. The Company does not anticipate that any tax credit recapture events will occur or that it will be required to make any payments to Capital One under the indemnification agreement.

The Capital One contribution, including a loan origination payment of $320, has been included as other assets in the Company’s condensed consolidated balance sheet as of September 30, 2017. The NMTC Transaction includes a put/call provision whereby the Company may be obligated or entitled to repurchase Capital One’s interest in the third quarter of 2018. Capital One may exercise an option to put its investment to the Company and receive $130 from the Company at that time. If Capital One does not exercise its put option, the Company can exercise a call option at the then fair market value of the call. The Company expects that Capital One will exercise the put option at the end of the tax credit recapture period. The Capital One contribution, other than the amount allocated to the put obligation, will be recognized as income only after the put/call is exercised and when Capital One has no ongoing interest. However, there is no legal obligation for Capital One to exercise the put, and the Company has attributed only an insignificant value to the put option included in this transaction structure.

The Company has determined that two pass‑through financing entities created under the NMTC Transaction structure are variable interest entities (“VIEs”). The ongoing activities of the VIEs—collecting and remitting interest and fees and complying with NMTC program requirements—were considered in the initial design of the NMTC Transaction and are not expected to significantly affect economic performance throughout the life of the VIEs. In making this determination, management also considered the contractual arrangements that obligate the Company to deliver tax benefits and provide various other guarantees under the NMTC Transaction structure, Capital One’s lack of a material interest in the underlying economics of the project, and the fact that the Company is obligated to absorb losses of the VIEs. The Company has concluded that it is required to consolidate the VIEs because the Company has both (i) the power to direct those matters that most significantly impact the activities of each VIE, and (ii) the obligation to absorb losses or the right to receive benefits of each VIE.

The $262 of issue costs paid to third parties in connection with the NMTC Transaction are recorded as prepaid expenses, and are being amortized over the expected seven year term of the NMTC arrangement. Capital One’s net contribution of $2,600 is included in Line of Credit and Notes Payable in the condensed consolidated balance sheet as of September 30, 2017. Incremental costs to maintain the transaction structure during the compliance period will be recognized as they are incurred.

~~NOTE 17 — BUSINESS COMBINATIONS~~

~~Overview~~

On January 30, 2017, the Company announced that it had agreed upon the material terms to acquire Red Wolf, a Sanford, North Carolina-based, privately held fabricator, kitter and assembler of industrial systems primarily supporting the global gas turbine market, for approximately $18,983, subject to certain adjustments. The transaction closed on February 1, 2017, and Red Wolf is being operated as a wholly-owned subsidiary of the Company.

~~Accounting for the Transaction~~

The Company accounts for acquisitions in accordance with guidance found in ASC 805, Business Combinations. The guidance requires consideration given, including contingent consideration, assets acquired and liabilities assumed to be valued at their fair market values at the acquisition date. The guidance further provides that: (1) in-process research and development will be recorded at fair value as an indefinite-lived intangible asset; (2) acquisition costs will generally be expensed as incurred, (3) restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and (4) changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. ASC 805 requires that any excess of purchase price over fair value of assets acquired, including identifiable intangibles and liabilities assumed, be recognized as goodwill. Red Wolf’s results are included in the Company’s results from the acquisition date of February 1, 2017.

The purchase price of the transaction totaled $18,983, of which $16,449 was paid in cash and $2,534 was the expected value of contingent future earn-out payments. The contingent consideration arrangement requires the Company to pay the former owners of Red Wolf a payout if Red Wolf achieves a targeted profitability benchmark. The potential undiscounted amount of all future payments that the Company could be required to make under the contingent consideration arrangement is between $0 and $9,900. Annual earn-out payments may not exceed $4,950. The fair value of the contingent consideration arrangement of $2,534 was estimated by using a Monte Carlo simulation. Key assumptions include a short-term weighted average cost of capital of 15% and historical volatility of public company comparables.

During the third quarter of 2017, the Company released $1,394 of this contingency into operating income because management determined that Red Wolf’s full-year financial performance during the first year of ownership by the Company is unlikely to meet the threshold required to pay the first installment of the contingent earn-out. The release of the first installment of the contingent earn-out is reflected in the selling, general, and administrative line item in the condensed consolidated statements of operations. Following the release of this portion of the contingency, $1,140 remains in other long-term liabilities, relating to the potential final contingent earn-out that depends on financial performance during the second ownership year. Based on information currently known, the Company believes that the long-term contingency is still applicable.

The purchase price allocation is subject to certain potential adjustments, which have not yet been finalized. The Company’s allocation of the $18,983 purchase price to Red Wolf’s tangible and identifiable intangible assets acquired and liabilities assumed, based on their estimated fair values as of February 1, 2017, is included in the table below. Goodwill is recorded based on the amount by which the purchase price exceeds the fair value of the net assets acquired and is not deductible for tax purposes. The decrease in goodwill from March 31, 2017 is due to opening balance sheet changes noted in the table below.

~~The purchase price allocation as of March 31 and September 30, 2017 is as follows (in thousands):~~

Allocation as of 3/31/2017

Adjustments

Allocation as of 9/30/2017
Assets acquired and liabilities assumed:

Cash and cash equivalents
$ 63

$ (63)

$ -
Receivables
2,796

(96)

2,700
Inventories, net
4,998

179

5,177
Property and equipment, net
462

-

462
Intangible assets, net
13,270

-

13,270
Goodwill (estimated)
5,568

(686)

4,882
Liabilities assumed
(7,554)

46

(7,508)
Total purchase price
$ 19,603

$ (620)

$ 18,983

The allocation of the purchase price is based on valuations performed to determine the fair value of such assets and liabilities as of the acquisition date. As the Company’s acquisition accounting is provisional, the Company may adjust the amounts recorded as of September 30, 2017 to reflect any revised evaluations of the assets acquired or liabilities assumed. Goodwill from this transaction has been allocated to the Company’s Process Systems segment and is not deductible for tax purposes. The Company incurred transaction costs of $182 for the ninetwelve months ended ~~September 30, 2017 related to the~~

acquisition. These costs were expensed as incurred and were primarily recorded as selling, general, and administrative expenses on the Company’s condensed consolidated statements of operations. Red Wolf recorded revenues of $11,078 and a net loss of $536 for the period beginning from the acquisition date of February 1, 2017 and ending on September 30, 2017.

~~Pro Forma Results~~

The Company’s unaudited pro forma results of operations for the three and nine months ended September 30, 2017 and 2016 assuming the Red Wolf acquisition had occurred as of January 1, 2016 are presented for comparative purposes below. These amounts are based on available information of the results of operations of Red Wolf prior to the acquisition date and are not necessarily indicative of what the results of operations would have been had the acquisition been completed on January 1, 2016. The pro forma adjustments related to the acquisition of Red Wolf are based on a preliminary purchase price allocation. This unaudited pro forma information does not project operating results post acquisition.

~~This preliminary pro forma information is as follows (in thousands, except per share amounts):~~

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016
Total revenues
$
29,595

$
50,372

$
131,650

$
157,659
Net (loss) income*
$
(2,207)

$
2,148

$
(1,819)

$
9,746

Pro forma (loss) income per common share - basic
$
(0.15)

$
0.14

$
(0.12)

$
0.66
Pro forma (loss) income per common share - diluted
$
(0.15)

$
0.14

$
(0.12)

$
0.65

*The release of a portion of the tax provision related to the acquisition is presented within the nine months ended September 30, 2016 net income for pro forma as the release is considered to occur at the time of the acquisition.

~~NOTE 18 — RETIREMENT SAVINGS AND PROFIT SHARING PLANS~~

~~Retirement Savings and Profit Sharing Plans~~

~~Retirement Savings and Profit SharingPlans~~

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. Participating non union employees are 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. In accordance with the collective bargaining agreements in place at its two union locations, the Company’s Illinois based union employees are eligible to receive a discretionary match in an amount up to 50% of each participant’s first 4% of elective deferral contributions, and the Company’s Pennsylvania based union employees are eligible to receive a discretionary match in an amount up to 100% of each participant’s first 3% and 50% of the next 2% of 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. Beginning with the first quarter of 2012, the Company funded the matching contributions in the form of the Company’s common stock. Starting in the first quarter of 2014, the Company resumed funding the matching contributions in cash. Beginning in the third quarter of 2017, the Company resumed funding the matching contributions in the form of the Company’s common stock. Under the plan, elective deferrals and basic Company matching are 100% vested at all times.

~~For the nine months ended September 30, 2017 and 2016, the Company recorded expenses under these plans of approximately $600 and $615, respectively.~~March 31,2022.

	*In thousands*
Revenues	$	154,735
Cost of sales		147,494
Gross profit		7,241
Operating expenses		17,597
Operating loss		(10,356	)
Other income (expense), net		12,008
Net income before benefit for income taxes		1,652
Benefit for income taxes		(1	)
Net income	$	1,653
Net income per common share-basic	$	0.09
Net income per common share-diluted	$	0.08

Item ~~2.Management’s~~2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto in Item 1, “Financial Statements,” of this Quarterly Report and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2021. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances including, but not limited to, those identified in “Cautionary Note Regarding Forward-Looking Statements” at the end of Item 2. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and ~~uncertainties.~~uncertainties including those arising as a result of, or amplified by, the COVID-19 pandemic. As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and the “Company” refer to Broadwind, ~~Energy,~~ Inc., a Delaware corporation headquartered in Cicero, Illinois, and its ~~subsidiaries.~~subsidiaries, as appropriate.

(Dollars are presented in thousands except share, per share and per employee data or unless otherwise stated)

KEY METRICS USED BY MANAGEMENT TO MEASURE PERFORMANCE

In addition to measures of financial performance presented in our consolidated financial statements in accordance with GAAP, we use certain other financial measures to analyze our performance. These non-GAAP financial measures primarily consist of adjusted EBITDA (as defined below) 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.

Key Financial Measures

	Three Months Ended
	March 31,
	2022			2021
Net revenues	$	41,844		$	32,728
Net loss	$	(2,404	)	$	(1,210	)
Adjusted EBITDA (1)	$	(8	)	$	1,217
Capital expenditures	$	492		$	612
Free cash flow (2)	$	(4,487	)	$	(9,393	)
Operating working capital (3)	$	22,622		$	11,711
Total debt	$	14,025		$	14,456
Total orders	$	52,693		$	34,214
Backlog at end of period (4)	$	117,133		$	94,400
Book-to-bill (5)		1.3			1.0

(1)

We provide non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share based compensation and other stock payments, restructuring costs, impairment charges, and other non-cash gains and losses) as supplemental information regarding our business performance. Our management uses adjusted EBITDA when they internally evaluate the performance of our business, review financial trends and make operating and strategic decisions. We believe that this non-GAAP financial measure is useful to investors because it provides a better understanding of our past financial performance and future results, and it allows investors to evaluate our performance using the same methodology and information as used by our management. Our definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.

(2)

We define free cash flow as adjusted EBITDA plus or minus changes in operating working capital less capital expenditures net of any proceeds from disposals of property and equipment. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our business for purposes such as repaying maturing debt and funding future investments.

(3)	We define operating working capital as accounts receivable and inventory net of accounts payable and customer deposits.

(4)	Our backlog at March 31, 2022 and 2021 is net of revenue recognized over time.

(5)	We define the book-to-bill as the ratio of new orders we received, net of cancellations, to revenue during a period.

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

	Three Months Ended
	March 31,
	2022			2021
Net loss	$	(2,404	)	$	(1,210	)
Interest expense		345			229
Income tax provision		7			32
Depreciation and amortization		1,519			1,553
Share-based compensation and other stock payments		525			613
Adjusted EBITDA		(8	)		1,217
Changes in operating working capital		(3,987	)		(6,649	)
Employee retention credit receivable		—			(3,372	)
Capital expenditures		(492	)		(612	)
Proceeds from disposal of property and equipment		—			23
Free Cash Flow	$	(4,487	)	$	(9,393	)

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OUR BUSINESS

~~Third~~

First Quarter Overview

We booked ~~$17,675~~$52,693 in new orders in the ~~third~~first quarter of ~~2017, down~~2022, up from ~~$27,491~~$34,214 in the ~~third~~first quarter of ~~2016. The reduction of~~2021. Within our Heavy Fabrications segment, wind tower orders ~~was~~increased 112% compared to the prior year quarter as tower customers secured 2022 production capacity to support ongoing wind turbine tower installation projects.Industrial fabrications product line orders, also within the Heavy Fabrications segment, decreased 36% primarily due to weaker mining demand, which is largely driven by ~~decreased towers orders received in~~ the ~~current quarter, partially offset by a nearly four-fold increase~~timing of ~~$8,404, in orders in the~~projects. Gearing segment ~~as a result of~~orders increased 42% compared to the prior year quarter primarily due to higher ~~order intake~~demand from oil and gas (“O&G”) and ~~other industrial~~mining customers, partially offset by reduced demand from steel customers. ~~We are experiencing lower orders for wind towers~~Orders within our Industrial Solutions segment increased by 28% as ~~customers work off inventories built~~compared to ~~support~~ the ~~terms of the Production Tax Credit qualification period and~~prior year quarter, primarily due to ~~other market conditions. Our recently formed Process Systems segment received $5,345~~the timing of orders associated with aftermarket projects partially offset by a decrease in ~~the current period.~~new gas turbine orders.

We recognized revenue of ~~$29,595~~$41,844 in the first quarter of 2022, up 28% compared to the first quarter of 2021, primarily due to a 98% increase in Gearing revenue. Gearing revenue was driven higher by strong order intake in recent quarters from O&G and mining customers, partially offset by a decrease in aftermarket wind revenue. Heavy Fabrications segment revenues increased by 20% from the prior year quarter primarily due an increase in revenue associated with wind repowering projects in the current year combined with the absence of one-time adverse events that occurred during the prior year quarter such as the temporary shut-down of our Abilene, Texas plant due to a weather-related event and a customer driven project delay. Additionally, the industrial fabrications product line revenue within the Heavy Fabrications segment, increased 57% from the prior year quarter primarily due to higher recent order intake from industrial customers and revenue recognized on our Pressure Reducing Systems (“PRS”) units. Partially offsetting this was a decrease in revenue within our Industrial Solutions segment of $531, representing a 12% decrease compared to the prior year quarter, primarily due to the timing of new gas turbine and aftermarket projects.

We recorded a net loss of $2,404 or $0.12 per share in the first quarter of 2022, compared to a net loss of $1,210 or $0.07 per share in the first quarter of 2021 primarily due to the absence of $3,372 of other income related to the employee retention credit recorded during the first quarter of 2021 under the CARES Act, partially offset by the higher sales volumes discussed above.

On March 27, 2020, the CARES Act was signed 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 ERC 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. The maximum tax credit that could be claimed by an eligible employer in 2021 was $7,000 per employee per calendar quarter. In the first and second quarters of 2021, we received ERC benefits of $3,372 and $3,593, respectively, which were recorded in “Other income (expense), net” in our condensed consolidated statement of operations. We did not qualify for the ERC benefit during the third quarter of ~~2017, down from revenue of $42,552~~2021 due to relatively higher revenues in 2021 as compared to the third quarter of ~~2016.~~2019. The ~~addition~~receivable for the remaining uncollected ERC benefit was $497 as of ~~$6,054~~December 31, 2021 and was included in the “Employee retention credit receivable” line item in the Company’s condensed consolidated balance sheet at December 31, 2021. The remaining of ~~Process Systems segment revenue~~$497 for the uncollected ERC benefit was collected during January 2022.

COVID-19 Pandemic

The COVID-19 pandemic has disrupted business, trade, commerce and ~~increased Gearing segment volumes were offset by~~financial markets in the U.S. and globally. Through March 31, 2022, we experienced an adverse impact to our business, operations and financial results as a ~~58% reduction~~result of the COVID-19 pandemic due in ~~Towers~~part to a decline in order activity levels, manufacturing inefficiencies associated with supply chain disruptions and ~~Weldments segment revenue. The Towers and Weldments segment revenues decrease was~~employee staffing constraints due to ~~a 63% decrease in towers sold related to a slow down in demand following early purchases by customers to take advantage of safe harbor provisions~~the spread of the ~~Production Tax Credit~~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 ~~early months of 2017. The revenue~~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.

We continue to monitor closely the Company’s financial health and liquidity and the impact of the ~~tower unit sales decrease was partially offset~~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 ~~impact~~U.S. Centers for Disease Control and Prevention.

Table of higher steel content related to a more complex tower design and higher material costs, which are generally passed through to customers. Gearing segment revenues were up $2,988 or 65%, driven by improved order intake throughout the current year from O&G customers. The Company’s recently formed segment, Process Systems, which includes our Abilene, Texas compressed natural gas (“CNG”) and fabrication facility and Red Wolf Company, LLC (“Red Wolf”), recognized revenue of $6,054.Contents

We reported a net loss of $2,207 or $0.15 per share in the third quarter of 2017, compared to net income of $872 or $.06 per diluted share in the third quarter of 2016. The change in earnings was due primarily to the decrease in Towers and Weldments segment volume.

RESULTS OF OPERATIONS

Three months ended ~~September 30, 2017,~~March 31, 2022, Compared to Three months ended ~~September 30, 2016~~March 31, 2021

The ~~Condensed Consolidated Statement~~condensed consolidated statement of ~~Operations~~operations table below should be read in connection with a review of the following discussion of our results of operations for the three months ended ~~September 30, 2017,~~March 31, 2022, compared to the three months ended ~~September 30, 2016.~~ March 31, 2021.


		Three Months Ended September 30,								2017 vs. 2016				Three Months Ended March 31,												2022 vs. 2021
				% of Total				% of Total									% of Total						% of Total
		2017		Revenue		2016		Revenue		$ Change		% Change		2022			Revenue			2021			Revenue			$ Change			% Change
Revenues		$	29,595	100.0	%	$	42,552	100.0	%	$	(12,957)	(30.4)	%	$	41,844			100.0	%	$	32,728			100.0	%	$	9,116			27.9	%
Cost of sales	��		28,581	96.6	%		37,221	87.5	%		(8,640)	(23.2)	%		39,832			95.2	%		32,446			99.1	%		7,386			22.8	%
Gross profit			1,014	3.4	%		5,331	12.5	%		(4,317)	(81.0)	%		2,012			4.8	%		282			0.9	%		1,730			613.5	%
Operating expenses
Selling, general and administrative expenses			2,374	8.0	%		3,860	9.1	%		(1,486)	(38.5)	%		3,902			9.3	%		4,410			13.5	%		(508	)		(11.5	)%
Intangible amortization			471	1.6	%		111	0.3	%		360	324.3	%		183			0.4	%		183			0.6	%		—			0.0	%
Total operating expenses			2,845	9.6	%		3,971	9.4	%		(1,126)	(28.4)	%		4,085			9.8	%		4,593			14.0	%		(508	)		(11.1	)%
Operating (loss) income			(1,831)	(6.2)	%		1,360	3.1	%		(3,191)	(234.6)	%
Other expense
Operating loss															(2,073	)		(5.0	)%		(4,311	)		(13.2	)%		2,238			51.9	%
Other (expense) income, net
Interest expense, net			(228)	(0.8)	%		(125)	(0.3)	%		(103)	(82.4)	%		(345	)		(0.8	)%		(229	)		(0.7	)%		(116	)		(50.7	)%
Other, net			(12)	(0.0)	%		10	—	%		(22)	(220.0)	%		21			0.1	%		3,362			10.3	%		(3,341	)		(99.4	)%
Total other expense, net			(240)	(0.8)	%		(115)	(0.3)	%		(125)	(108.7)	%
Net (loss) income before benefit for income taxes			(2,071)	(7.0)	%		1,245	2.8	%		(3,316)	(266.3)	%
Benefit for income taxes			(22)	(0.1)	%		—	—	%		(22)	—	%
(Loss) income from continuing operations			(2,049)	(6.9)	%		1,245	2.8	%		(3,294)	(264.6)	%
Loss from discontinued operations			(158)	(0.5)	%		(373)	(0.9)	%		215	57.6	%
Net (loss) income		$	(2,207)	(7.5)	%	$	872	1.9	%	$	(3,079)	(353.1)	%
Total other (expense) income, net															(324	)		(0.8	)%		3,133			9.6	%		(3,457	)		(110.3	)%
Net loss before provision for income taxes															(2,397	)		(5.7	)%		(1,178	)		(3.6	)%		(1,219	)		(103.5	)%
Provision for income taxes															7			0.0	%		32			0.1	%		(25	)		(78.1	)%
Net loss														$	(2,404	)		(5.7	)%	$	(1,210	)		(3.7	)%	$	(1,194	)		(98.7	)%

Consolidated

Revenues increased by $9,116 versus the prior year quarter. Gearing segment revenue was up $5,235 from the first quarter of 2021, primarily driven by higher recent order intake from O&G and mining customers, partially offset by a decrease in aftermarket wind revenue. Heavy Fabrications segment revenues increased by 20% primarily due to an increase in revenue associated with wind repowering projects in the current year combined with the absence of one-time adverse events that occurred during the prior year quarter such as the temporary shut-down of our Abilene, Texas plant due to a weather-related event and a customer driven project delay. Additionally, the industrial fabrications product line revenue within the Heavy Fabrications segment increased 57% from the prior year quarter primarily due to higher recent order intake from industrial customers and revenue recognized on our PRS units. Industrial Solutions segment revenue decreased ~~from $42,552~~by 12%, primarily due to the timing of new gas turbine customer and aftermarket projects.

Gross profit increased by $1,730 when compared to the prior year quarter primarily due to higher sales volumes and the absence of one-time events that occurred in the prior year quarter in the Heavy Fabrications segment. This was partially offset by higher material and ramp-up costs in the Gearing segment and supply chain disruptions in the Heavy Fabrications segment. As a result, gross margin increased to 4.8% during the three months ended ~~September 30, 2016, to $29,595~~March 31, 2022, from 0.9% during the three months ended ~~September 30, 2017. Lower sales in our Towers and Weldments segment of $21,999 were partially offset by the addition of the sales from the Red Wolf acquisition, as well as by~~March 31, 2021.

Due to higher ~~sales in the Gearing segment of $2,988. The Towers and Weldments segment~~ revenue ~~decrease was due to a 63% decrease in towers sold. Gearing segment revenues were up 65% due to improved order intake in 2017, primarily resulting from the recovery in demand from O&G customers.~~

Gross profit decreased by $4,317, from $5,331 during the three months ended September 30, 2016, to $1,014 during the three months ended September 30, 2017. The decrease in gross profit was attributable to the revenue decline in our Towers and Weldments segment, partially offset by decreased labor compensation and other manufacturing costs in response to the revenue downturn. Despite aggressive cost reduction efforts, fixed overhead was underutilized and our gross margin decreased from 12.5% during the three months ended September 30, 2016, to 3.4% during the three months ended September 30, 2017.

Operating expenses decreased from $3,971 during the three months ended September 30, 2016, to $2,845 during the three months ended September 30, 2017. The decrease was attributable primarily to the reversal into income of the current portion of the Red Wolf earn-out payment of $1,394 and a reduction of incentive compensation expenses of $842, partially offset by $732 of operating and intangible amortization expenses associated with the acquisition of Red Wolf, an increase in $373 of self-insured medicallevels, lower legal expenses, and ~~$152 higher professional fees. Operating~~reduced salaries and benefits, operating expenses as a percentage of sales ~~increased from 9.4% in the prior-year quarter~~decreased to ~~9.6%~~9.8% in the current-year quarter from 14.0% in the prior year quarter.

~~Income from continuing operations decreased from income of $1,245~~

Net loss was $2,404 during the three months ended ~~September 30, 2016,~~March 31, 2022, compared to ~~a loss of $2,049~~$1,210 during the three months ended ~~September 30, 2017,~~March 31, 2021 primarily due to the factors described above and the absence of the $3,372 ERC benefit recorded in the prior year quarter.

Heavy Fabrications Segment

	Three Months Ended
	March 31,
	2022			2021
Orders	$	34,161		$	20,797
Tower sections sold		169			169
Revenues		27,272			22,777
Operating loss		(461	)		(1,700	)
Operating margin		(1.7	)%		(7.5	)%

Wind tower orders, which are within the Heavy Fabrications segment, increased 112% versus the prior year quarter as tower customers secured 2022 production capacity to support ongoing wind turbine tower installation projects. Industrial fabrications product line orders, also within the Heavy Fabrications segment, decreased 36% from the prior year quarter primarily due to weaker mining demand, which is largely driven by the timing of projects. Heavy Fabrications segment revenues increased 20% primarily due to an increase in revenue associated with wind repowering projects in the current year combined with the absence of one-time adverse events that occurred during the prior year quarter such as the temporary shut-down of our Abilene, Texas plant due to a weather-related event and a customer driven project delay. Additionally, industrial fabrication revenues increased 57% from the first quarter of 2021 primarily due to higher recent order intake from industrial customers and revenue recognized from our PRS units in the current year quarter.

Table of Contents

Heavy Fabrications segment operating loss decreased by $1,239 compared to the prior year quarter. The quarter-over-quarter improvement in operating performance is primarily a result of higher sales in the ~~factors described above.~~

~~Profitability decreased from net income~~current year quarter, and the absence of ~~$872~~one-time events that occurred during the prior year quarter such as the weather-related event and a customer driven project delay, partially offset by ongoing supply chain disruptions. Operating margin was (1.7)% during the three months ended ~~September 30, 2016, to~~March 31, 2022, a ~~net loss of $2,207 during the three months ended September 30, 2017, as a result of the factors described above, partially offset by a reduction in the net loss~~decrease from ~~discontinued operations due to a reduction in wind down expenses in our Services business.~~

~~Towers and Weldments Segment~~

~~The following table summarizes the Towers and Weldments segment operating results for the three months ended September 30, 2017 and 2016:~~

Three Months Ended

September 30,

2017

2016

Orders

$
1,764

$
25,329

Revenues

15,971

37,970

Operating (loss) income

(1,473)

4,050

Operating margin

(9.2)
%

10.7
%

Towers and Weldments segment orders were significantly below the prior year quarter. Tower demand has been lower during the current year quarter as customers work off inventories built to support the terms of the Production Tax Credit qualification period. Towers and Weldments segment revenues decreased by $21,999, from $37,970 during the three months ended September 30, 2016, to $15,971 during the three months ended September 30, 2017 due to a lower build rate in response to the reduced order intake. Partially offsetting the impact of a 63% decrease in towers sold was higher steel content due to a more complex tower design in production and higher material costs, which are generally passed through to customers.

Towers and Weldments segment operating income decreased by $5,523, from income of $4,050 during the three months ended September 30, 2016, to a loss of $1,473 during the three months ended September 30, 2017. The adverse impact of the sharp reduction in sales and production volumes was partially offset by $1,819 of significant reductions to manufacturing overhead and operating expenses. Operating margin decreased from 10.7% during the three months ended September 30, 2016, to a loss of 9.2% during the three months ended September 30, 2017.

~~Gearing Segment~~

~~The following table summarizes the Gearing segment operating results for the three months ended September 30, 2017 and 2016:~~

Three Months Ended

September 30,

2017

2016

Orders

$
10,566

$
2,162

Revenues

7,570

4,582

Operating loss

(396)

(692)

Operating margin

(5.2)
%

(15.1)
%

Gearing segment orders increased $8,404 from the prior-year quarter, primarily due to recovery in demand from O&G customers, which also caused significant revenue growth, from $4,582 during the three months ended September 30, 2016, to $7,570 during the three months ended September 30, 2017.

Gearing segment operating loss decreased by $296, from $692 during the three months ended September 30, 2016, to $396 during the three months ended September 30, 2017. The operating loss narrowed as a result of improved capacity utilization, which was partly offset by higher maintenance and tooling expense to ramp up and support the higher production levels. The operating margin improved based on the above items from (15.1%(7.5%) during the three months ended ~~September 30, 2016,~~March 31, 2021.

Gearing Segment

	Three Months Ended
	March 31,
	2022			2021
Orders	$	14,061		$	9,921
Revenues		10,584			5,349
Operating loss		(112	)		(989	)
Operating margin		(1.1	)%		(18.5	)%

Gearing segment orders increased 42% from the prior year period primarily due to ~~(5.2%~~increased demand from O&G and mining customers, partially offset by reduced demand from steel customers. Gearing revenue was up 98% relative to the comparable prior year period due to higher order intake in recent quarters from O&G and mining customers, partially offset by a decrease in aftermarket wind revenue.

Gearing segment operating loss decreased $877 from the prior year period. This was primarily attributable to higher sales partially offset by increased material and ramp-up costs. Operating margin was (1.1%) during the three months ended ~~September 30, 2017.~~

~~Process Systems Segment~~

~~The following table summarizes the Process Systems segment operating results for~~March 31, 2022, an improvement from (18.5)% during the three months ended ~~September 30, 2017:~~March 31, 2021, driven primarily by the items identified above.

Industrial Solutions Segment

	Three Months Ended
	March 31,
	2022			2021
Orders	$	4,471		$	3,496
Revenues		4,073			4,604
Operating loss		(209	)		(14	)
Operating margin		(5.1	)%		(0.3	)%

Three Months Ended

September 30,

2017

Orders

$
5,345

Revenues

6,054

Operating income

115

Operating margin

1.9
%

Nine Months Ended September 30,

2017 vs. 2016

% of Total

% of Total

2017

Revenue

2016

Revenue

$ Change

% Change

Revenues

$
129,017

100.0
%
$
132,689

100.0
%
$
(3,672)

(2.8)
%
Cost of sales

117,757

91.3
%

119,254

89.9
%

(1,497)

(1.3)
%
Gross profit

11,260

8.7
%

13,435

10.1
%

(2,175)

(16.2)
%
Operating expenses

Selling, general and administrative expenses

10,711

8.3
%

11,785

8.9
%

(1,074)

(9.1)
%
Intangible amortization

1,293

1.0
%

333

0.3
%

960

288.3
%
Total operating expenses

12,004

9.3
%

12,118

9.2
%

(114)

(0.9)
%
Operating (loss) income

(744)

(0.6)
%

1,317

0.9
%

(2,061)

(156.5)
%
Other (expense) income

Interest expense, net

(584)

(0.5)
%

(431)

(0.3)
%

(153)

(35.5)
%
Other, net

17

0.0
%

27

—
%

(10)

(37.0)
%
Total other expense, net

(567)

(0.4)
%

(404)

(0.3)
%

(163)

(40.3)
%
Net (loss) income before benefit for income taxes

(1,311)

(1.0)
%

913

0.6
%

(2,224)

(243.6)
%
Benefit for income taxes

(5,056)

(3.9)
%

(16)

—
%

(5,040)

(31,500.0)
%
Income from continuing operations

3,745

2.9
%

929

0.6
%

2,816

303.1
%
Loss from discontinued operations, net of tax

(405)

(0.3)
%

(908)

(0.7)
%

503

55.4
%
Net income

$
3,340

2.6
%
$
21

(0.1)
%
$
3,319

15,804.8
%

Income from continuing operations improved from income of $929 during the nine months ended September 30, 2016, to income of $3,745 during the nine months ended September 30, 2017, as a result of the factors described above and a $5,034 tax benefit due to the release of a portion of the tax provision related to the acquisition of Red Wolf.

Profitability improved from net income of $21 during the nine months ended September 30, 2016, to net income of $3,340 during the nine months ended September 30, 2017, as a result of the factors described above, and a reduction in the net loss from discontinued operations due to a reduction in wind down expenses in our Services business.

~~Towers and Weldments Segment~~

~~The following table summarizes the Towers and Weldments segment operating results for the nine months ended September 30, 2017 and 2016:~~

Nine Months Ended

September 30,

2017

2016

Orders

$
32,331

$
231,401

Revenues

99,194

117,948

Operating income

7,177

10,016

Operating margin

7.2
%

8.5
%

The significant reduction in orders is due primarily to the $137,000 multi-year tower order received in 2016, which supports deliveries until 2019, and also very strong demand for towers during 2016 and early 2017 to support qualification to meet the terms of the Production Tax Credit. Towers and Weldments segment revenues decreased by $18,754, from $117,948 during the nine months ended September 30, 2016, to $99,194 during the nine months ended September 30, 2017. The Towers and Weldments segment revenue decrease was due to a 22% decrease in towers sold beginning early in the second quarter, partially offset by higher prices due to a more complex tower design and higher material costs, which are generally passed through to customers.

Towers and Weldments segment operating income decreased by $2,839, from $10,016 during the nine months ended September 30, 2016, to $7,177 during the nine months ended September 30, 2017. The decrease was primarily attributable to the decrease in production volume, offset in part by a $1,040 decrease in incentive compensation and staffing reductions. Operating margin decreased from 8.5% during the nine months ended September 30, 2016, to 7.2% during the nine months ended September 30, 2017.

~~Gearing Segment~~

~~The following table summarizes the Gearing segment operating results for the nine months ended September 30, 2017 and 2016:~~

Nine Months Ended

September 30,

2017

2016

Orders

$
29,530

$
11,307

Revenues

17,511

14,759

Operating loss

(2,562)

(3,083)

Operating margin

(14.6)
%

(20.9)
%

~~Gearing segment orders were nearly triple the prior-year~~ period primarily due to ~~the recovery in demand from O&G customers. Revenues rose more gradually, up 19% from the prior-year period, as the business ramps up production to support the higher demand.~~

Gearing segment operating loss improved by $521, from $3,083 during the nine months ended September 30, 2016, to $2,562 during the nine months ended September 30, 2017. The improvement was due to the increase in production volumes partly offset by higher maintenancelower salaries and tooling expense incurred to bring additional machines into production, and the addition of operating expense to support the growth. The operating margin improved based on the above items from (20.9%) during the nine months ended September 30, 2016, to (14.6%) during the nine months ended September 30, 2017.

~~Process Systems Segment~~

~~The following table summarizes the Process Systems segment operating results for the nine months ended September 30, 2017:~~benefits.

Nine Months Ended

September 30,

2017

Orders

$
13,404

Revenues

12,312

Operating loss

(1,805)

Operating margin

(14.7)
%

We acquired Red Wolf on February 1, 2017 and as a result, aggregated our Abilene CNG with Red Wolf to form the Process Systems reportable segment. The nine month loss reflected low capacity utilization in the Abilene facility, due to weak CNG equipment demand, and the impact of $960 of intangible amortization associated with the Red Wolf transaction.

~~Corporate and Other~~

Corporate and Other expenses improved by $2,062, from $5,616 during the nine months ended September 30, 2016, to $3,554 during the nine months ended September 30, 2017. The decrease was primarily attributable to the release of the current portion of the Red Wolf earn-out payment of $1,394 and a reduction of incentive compensation expenses of $741 due to weaker financial results.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

As of ~~September 30, 2017,~~March 31, 2022, cash ~~and cash equivalents and short-term investments~~ totaled ~~$41,~~$773, a decrease of ~~$21,829~~ $79from December 31, ~~2016, due~~2021. Cash balances remain limited as operating receipts and disbursements flow through our Credit Facility (as defined in Note 7, “Debt and Credit Agreements,” in the notes to ~~the acquisition of Red Wolf~~our condensed consolidated financial statements), which is in a drawn position. Debt and ~~a significant build of operating working capital. Total debt and capital~~finance lease obligations at ~~September 30, 2017~~March 31, 2022 totaled ~~$12,898, including the $2,600 related to the NMTC Transaction, which~~$19,988. As of March 31, 2022, we ~~believe will be forgiven at the completion of the term upon the put being exercised in 2018. We~~ had the ability to borrow up to an additional ~~$11,831~~ $13,944 under the Credit Facility.

On March 9, 2021, we entered into a $10,000 Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC (the “Manager”). 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 $275and before deducting other expense of $411.

On February 28, 2022, we 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 existing liquidity reserve to $2,500 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.

We anticipate that current cash resources, amounts available under the Credit Facility, ~~(as defined in Note 8 “Debt~~cash to be generated from operations and ~~Credit Agreements”). We anticipate that we~~equipment financing, and any potential proceeds from the sale of further securities under the Form S-3 will be ~~able~~adequate to ~~satisfy the cash requirements associated with, among other things, working capital~~meet our liquidity needs ~~capital expenditures and lease commitments through~~for at least the next twelve ~~months primarily through cash~~months.

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If assumptions regarding our production, sales and subsequent collections from certain of our large customers, as well as receipt of customer deposits and revenues generated from ~~operations, available~~new customer orders, are materially inconsistent with management’s expectations, particularly in light of the COVID-19 pandemic, and emerging variants, and its effects on domestic and global economies, we may encounter cash ~~balances,~~flow and liquidity issues.

If our operational performance deteriorates, we may be unable to comply with existing financial covenants, and could lose access to the Credit ~~Facility,~~Facility. This could limit our operational flexibility, require a delay in making planned investments and/or require us to seek additional equity or debt financing. Any attempt to raise equity through the public markets could have a negative effect on our stock price, making an equity raise more difficult or more dilutive. Any additional equity financing or equity linked financing, if available, will be dilutive to stockholders, and ~~any potential proceeds from utilization from the S-3 filing.~~

additional debt financing, if available, would likely require new financial covenants or impose other operating and financial restrictions on us. While we believe that we will continue to have sufficient cash available to operate our businesses and to meet our financial obligations and debt covenants, there can be no ~~assurance~~assurances that our operations will generate sufficient cash ~~that we will be able to comply with applicable loan covenants~~ or that existing or new credit facilities or equity or equity linked financings will be available in an amount sufficient to enable us to ~~pay our indebtedness or to fund our other liquidity needs.~~meet these financial obligations.

Sources and Uses of Cash

The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2022 and 2021:

	Three Months Ended
	March 31,
	2022			2021
Total cash (used in) provided by:
Operating activities	$	(6,005	)	$	(8,437	)
Investing activities		(492	)		(589	)
Financing activities		6,418			8,583
Net decrease in cash	$	(79	)	$	(443	)

Operating Cash Flows

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2022, net cash used in operating activities ~~totaled $6,627, compared~~totaled $6,005compared to ~~net cash provided by operating activities of $17,067 for the nine months ended September 30, 2016. The increase in~~ net cash used in operating activities of $8,437 during the prior year period. The decrease in net cash used was primarily ~~attributable~~due to our operating performance and less operating working capital build, partially offset by the ~~decrease~~absence of ERC benefits recognized in ~~customer deposits based on lower scheduled tower production.~~ the prior year period.

Investing Cash Flows

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2022, net cash used in investing activities ~~totaled $19,245, compared~~totaled $492, compared to net cash used in investing activities of ~~$13,563~~$589 during the ~~nine months ended September 30, 2016.~~prior year period. The ~~increase~~decrease in net cash used in investing activities as compared to the prior-year period was primarily ~~attributable~~due to ~~the $16,449 cash paid for the Red Wolf acquisition, $5,972~~a decrease in net purchases of ~~investments in~~ property and ~~equipment, mostly attributable to supporting the Abilene, Texas expansion, partially offset by the $2,221 liquidation of available-for-sale securities.~~ equipment.

Financing Cash Flows

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2022, net cash provided by financing activities ~~totaled $7,213, compared~~totaled $6,418, compared to ~~net cash used in financing activities of $3,280 for the nine months ended September 30, 2016. The increase in~~ net cash provided by financing activities of $8,583 during the prior year period. The decrease was primarily due to the absence of proceeds from the sale of securities under the Equity Distribution Agreement in the current year, partially offset by increased net borrowings under our Credit Facility in the current year.

In 2016, we entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, net of current maturities” line item of our condensed consolidated financial statements as of March 31, 2022 and December 31, 2021. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2021, 2020, 2019 and 2018, $114 of the loan was forgiven. As of March 31, 2022, the loan balance was $114. In addition, we have outstanding notes payable for capital expenditures in the amount of $355and $363 as of March 31, 2022 and December 31, 2021, respectively, with $185 and $186 included in the “Line of Credit and other notes payable” line item of our condensed consolidated financial statements as of March 31, 2022 and December 31, 2021. The notes payable have monthly payments that range from $3 to $16 and an interest rate of approximately 4%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable mature in September 2028.

The CARES Act provided for the ERC, which is a refundable tax credit against certain employment taxes. The ERC 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. The maximum tax credit that could be claimed by an eligible employer in 2021 was $7,000 per employee per calendar quarter. In the first and second quarters of 2021, we received ERC benefits of $3,372 and $3,593, respectively, which were recorded in “Other income (expense), net” in our condensed consolidated statement of operations. We did not qualify for the ERC benefit during the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the ~~prior-year period~~third quarter of 2019. 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 our condensed consolidated balance sheet at December 31, 2021. The remaining of $497 for the uncollected ERC benefit was ~~primarily due to receiving proceeds of $7,770 from the Credit Facility~~collected during ~~the nine months ended September 30, 2017.~~ January 2022.

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PART II. OTHER INFORMATION

~~Item 1.Legal Proceedings~~

Item 1.

Legal Proceedings

The information required by this item is incorporated herein by reference to Note 12, “Legal Proceedings” of the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

~~Item 1A.Risk~~

Item 1A.

Risk Factors

The Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2016, which could materially affect our business, financial condition, and future results. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results. There have been no material changes to the risk factors set forth identified in our Annual Report on Form 10-K for the year ended December 31, ~~2016 other than~~2021 continue to represent the ~~risk factor below:~~most significant risks to the Company’s future results of operations and financial conditions, without further modification or amendment.

~~Future sales~~

Table of ~~our common stock or securities convertible into our common stock may depress our stock price.~~Contents

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

Sales of a substantial number of shares of our common stock or securities convertible into our common stock in the public market, or the perception that these sales might occur, may reduce the prevailing market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities and may make it more difficult for our stockholders to sell their common stock at a time and price that they deem appropriate.

None.

Item 4.

Mine Safety Disclosures

On August 11, 2017, we filed a registration statement on Form S-3 (File No. 333-219931), which was declared effective by the SEC on October 10, 2017, to register securities that we may choose to issue in the future. Under the registration statement, we may offer and sell up to $50,000,000 in the aggregate of securities in one or more offerings.

Not Applicable.

Item 5.

Other Information

~~Item 2.Unregistered Sales of Equity Securities and Use of Proceeds~~

~~None~~None.

~~Item 3.Defaults Upon Senior Securities~~

Item 6.

Exhibits

~~None~~

~~Item 4.Mine Safety Disclosures~~

~~Not Applicable~~

~~Item 5.Other Information~~

~~Not Applicable~~

~~Item 6.Exhibits~~

The exhibits listed on the Exhibit Index ~~following the signature page~~ are filed as part of this Quarterly Report on Form 10-Q.

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~~SIGNATURES~~

~~In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~

	~~BROADWIND ENERGY, INC.~~


~~October 31, 2017~~	~~By:~~	~~/s/ Stephanie K. Kushner~~
		~~Stephanie K. Kushner~~
		~~President, Chief Executive Officer~~
		~~(Principal Executive Officer)~~
~~October 31, 2017~~	~~By:~~	~~/s/ Jason L. Bonfigt~~
		~~Jason L. Bonfigt~~
		~~Vice President, Chief Financial Officer~~ ~~(Principal Financial Officer)~~

~~Table of Contents~~

EXHIBIT INDEX

BROADWIND, ~~ENERGY,~~ INC.

FORM 10-Q FOR THE QUARTER ENDED ~~SEPTEMBER 30, 2017~~ March 31, 2022

Exhibit Number	Exhibit
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 Amended and Restated Bylaws of the Company, adopted as of May 4, 2020 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed May 6, 2020)
10.1	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)
10.2	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)
31.1		Rule 13a-14(a) Certification of Chief Executive Officer*
~~31.2~~		Rule 13a-14(a) Certification of Chief Financial Officer*
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Chief Executive Officer*
~~32.2~~		~~Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of~~Officer and Chief Financial Officer*
101		The following financial information from this Form 10-Q of Broadwind, ~~Energy,~~ Inc. for the quarter ended ~~September 30, 2017,~~March 31, 2022, formatted in ~~XBRL (eXtensible~~iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.
101.INS*	Inline XBRL Instance
101.SCH*	Inline XBRL Taxonomy Extension Schema
101.CAL*	Inline XBRL Taxonomy Extension Calculation
101.DEF*	Inline XBRL Taxonomy Extension Definition
101.LAB*	Inline XBRL Taxonomy Extension Labels
101.PRE*	Inline XBRL Taxonomy Extension Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*	Filed herewith.

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*Filed herewith.SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BROADWIND, INC.


May 6, 2022	By:	/s/ Eric B. Blashford
		Eric B. Blashford
		President, Chief Executive Officer, and Interim Chief Financial Officer
		(Principal Executive Officer and Principal Financial Officer)

		Page No.

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22 17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28 24
Item 4.	Controls and Procedures	28 24
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	29 25
Item 1A.	Risk Factors	29 25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29 26
Item 3.	Defaults Upon Senior Securities	29 26
Item 4.	Mine Safety Disclosures	29 26
Item 5.	Other Information	29 26
Item 6.	Exhibits	29 26
Signatures		30 28


	Common Stock			Treasury Stock			Additional
	Shares	Issued			Issued		Paid-in		Accumulated
	Issued	Amount		Shares	Amount		Capital		Deficit		Total
BALANCE, December 31, 2015	15,012,789	$	15	(273,937)	$	(1,842)	$	378,104	$	(308,785)	$	67,492
Stock issued for restricted stock	157,331		—	—		—		—		—		—
Stock issued under stock option plans	5,647		—	—		—		19		—		19
Share-based compensation	—		—	—		—		753		—		753
Net income	—		—	—		—		—		319		319
BALANCE, December 31, 2016	15,175,767	$	15	(273,937)	$	(1,842)	$	378,876	$	(308,466)	$	68,583
Stock issued for restricted stock	186,748		—	—		—		—		—		—
Stock issued under defined contribution 401(k) retirement savings plan	56,392		—	—		—		175		—		175
Share-based compensation	—		—	—		—		651		—		651
Net income	—		—	—		—		—		3,340		3,340
BALANCE, September 30, 2017	15,418,907	$	15	(273,937)	$	(1,842)	$	379,702	$	(305,126)	$	72,749


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017		2016
Basic earnings per share calculation:
Net (loss) income	$	(2,207)	$	872	$	3,340	$	21
Weighted average number of common shares outstanding		15,094,991		14,876,308		15,013,312		14,823,525
Basic net (loss) income per share	$	(0.15)	$	0.06	$	0.22	$	0.00
Diluted earnings per share calculation:
Net (loss) income	$	(2,207)	$	872	$	3,340	$	21
Weighted average number of common shares outstanding		15,094,991		14,876,308		15,013,312		14,823,525
Common stock equivalents:
Stock options and non-vested stock awards		—		244,663		331,196		214,136
Weighted average number of common shares outstanding		15,094,991		15,120,971		15,344,508		15,037,661
Diluted net (loss) income per share	$	(0.15)	$	0.06	$	0.22	$	0.00


2017	$	471
2018		1,884
2019		1,884
2020		1,884
2021		1,884
2022 and thereafter		8,542
Total	$	16,549


	September 30, 2017
	Level 1		Level 2		Level 3		Total
Assets measured on a nonrecurring basis:
Gearing equipment	$	—	$	—	$	345	$	345
Gearing Cicero Ave. facility		—		—		560		560
Services assets		—		—		37		37
Total assets at fair value	$	—	$	—	$	942	$	942



		Weighted Average
	Options	Exercise Price
Outstanding as of December 31, 2016	67,438	$	24.96
Granted	—	$
Exercised	—	$
Forfeited	—	$
Expired	(250)	$	107.00
Outstanding as of September 30, 2017	67,188	$	24.65
Exercisable as of September 30, 2017	67,188	$	24.65


		Weighted Average
	Number of	Grant-Date Fair Value
	Shares	Per Share
Unvested as of December 31, 2016	492,176	$	3.56
Granted	288,866	$	5.69
Vested	(226,267)	$	3.96
Forfeited	(28,380)	$	3.69
Unvested as of September 30, 2017	526,395	$	4.55



	Towers and		Process
	Weldments		Systems		Gearing		Corporate		Eliminations		Consolidated
For the Three Months Ended September 30, 2017
Revenues from external customers	$	15,971	$	6,054	$	7,570	$	—	$	—	$	29,595
Operating (loss) profit		(1,473)		115		(396)		(77)		—		(1,831)
Depreciation and amortization		1,122		477		609		59		—		2,267
Capital expenditures		1,423		11		232		2		—		1,668


	Total Assets as of
	September 30,		December 31,
Segments:	2017		2016
Towers and Weldments	$	22,137	$	45,367
Process Systems		23,695		—
Gearing		37,162		30,062
Assets held for sale		382		808
Corporate		247,888		244,184
Eliminations		(225,980)		(202,759)
	$	105,284	$	117,662


	Allocation as of 3/31/2017	Adjustments	Allocation as of 9/30/2017
Assets acquired and liabilities assumed:
Cash and cash equivalents	$ 63	$ (63)	$ -
Receivables	2,796	(96)	2,700
Inventories, net	4,998	179	5,177
Property and equipment, net	462	-	462
Intangible assets, net	13,270	-	13,270
Goodwill (estimated)	5,568	(686)	4,882
Liabilities assumed	(7,554)	46	(7,508)
Total purchase price	$ 19,603	$ (620)	$ 18,983