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 March 31, ~~2020~~2021

☐

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, 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.)

3240 S. Central Avenue, Cicero, IL 60804

(Address of principal executive offices)

(708) 780-4800

(Registrant’s telephone number, including area code)

~~Broadwind Energy, Inc.~~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 every Interactive Data File required to be submitted 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 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 ☒ ⌧

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 May ~~1, 2020: 16,640,043.~~4, 2021:18,488,971.


	March 31,		December 31,		March 31,			December 31,
	2020		2019		2021			2020

ASSETS
CURRENT ASSETS:
Cash	$	2,743	$	2,416	$	2,929		$	3,372
Accounts receivable, net		16,244		18,310		14,326			15,337
Employee retention credit receivable						3,372			—
Contract assets						2,522			2,253
Inventories, net		40,754		31,863		40,276			26,724
Prepaid expenses and other current assets		2,600		2,124		2,204			2,909
Total current assets		62,341		54,713		65,629			50,595
LONG-TERM ASSETS:
Property and equipment, net		46,989		46,940		44,766			45,195
Operating lease right-of-use assets		19,932		15,980		19,401			19,321
Intangible assets, net		4,736		4,919		4,003			4,186
Other assets		300		314		422			385
TOTAL ASSETS	$	134,298	$	122,866	$	134,221		$	119,682
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Line of credit and other notes payable	$	16,350	$	12,917	$	5,076		$	1,406
Current portion of finance lease obligations		462		546		1,456			1,427
Current portion of operating lease obligations		1,579		1,326		1,743			1,832
Accounts payable		25,132		21,876		25,836			18,180
Accrued liabilities		4,392		4,911		6,731			6,307
Customer deposits		23,022		22,717		17,055			18,819
Total current liabilities		70,937		64,293		57,897			47,971
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities		355		505		9,380			9,381
Long-term finance lease obligations, net of current portion		594		673		1,891			1,996
Long-term operating lease obligations, net of current portion		20,324		16,591		19,748			19,569
Other		66		44		123			104
Total long-term liabilities		21,339		17,813		31,142			31,050
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; 16,913,980 and 16,830,930 shares issued as of March 31, 2020, and December 31, 2019, respectively		17		17
Treasury stock, at cost, 273,937 shares as of March 31, 2020 and December 31, 2019		(1,842)		(1,842)
Common stock, $0.001 par value; 30,000,000 shares authorized; 18,474,170 and 17,211,498 shares issued as of March 31, 2021, and December 31, 2020, respectively						18			17
Treasury stock, at cost, 273,937 shares as of March 31, 2021 and December 31, 2020						(1,842	)		(1,842	)
Additional paid-in capital		383,669		383,361		390,479			384,749
Accumulated deficit		(339,822)		(340,776)		(343,473	)		(342,263	)
Total stockholders’ equity		42,022		40,760		45,182			40,661
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	134,298	$	122,866	$	134,221		$	119,682

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

Three Months Ended March 31,

2020

2019

Revenues

$
48,634

$
41,660

Cost of sales

42,462

38,111

Restructuring

—

12

Gross profit

6,172

3,537

OPERATING EXPENSES:

Selling, general and administrative

4,309

3,828

Intangible amortization

183

203

Total operating expenses

4,492

4,031

Operating income (loss)

1,680

(494)

OTHER EXPENSE, net:

Interest expense, net

(673)

(536)

Other, net

(1)

(1)

Total other expense, net

(674)

(537)

Net income (loss) before provision for income taxes

1,006

(1,031)

Provision for income taxes

52

11

NET INCOME (LOSS)

$
954

$
(1,042)

NET INCOME (LOSS) PER COMMON SHARE—BASIC:

Net income (loss)

$
0.06

$
(0.07)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC

16,596

15,786

NET INCOME (LOSS) PER COMMON SHARE—DILUTED:

Net income (loss)

$
0.06

$
(0.07)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED

16,733

15,786

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

													Common Stock					Treasury Stock						Additional
	Common Stock			Treasury Stock			Additional						Shares			Issued					Issued			Paid-in			Accumulated
	Shares	Issued			Issued		Paid-in		Accumulated				Issued			Amount		Shares			Amount			Capital			Deficit			Total
	Issued	Amount		Shares	Amount		Capital		Deficit		Total
BALANCE, December 31, 2018	15,982,622	$	16	(273,937)	$	(1,842)	$	381,441	$	(336,253)	$	43,362
Stock issued for restricted stock	141,384		—	—		—		—		—		—
Stock issued under defined contribution 401(k) retirement savings plan	135,636		—	—		—		187		—		187
Share-based compensation	—		—	—		—		255		—		255
Net loss	—		—	—		—		—		(1,042)		(1,042)
BALANCE, March 31, 2019	16,259,642		16	(273,937)		(1,842)		381,883		(337,295)		42,762

BALANCE, December 31, 2019	16,830,930	$	17	(273,937)	$	(1,842)	$	383,361	$	(340,776)	$	40,760		16,830,930		$	17		(273,937	)	$	(1,842	)	$	383,361		$	(340,776	)	$	40,760
Stock issued for restricted stock	83,050		—	—		—		—		—		—		83,050			—		—			—			—			—			—
Share-based compensation	—		—	—		—		308		—		308		—			—		—			—			308			—			308
Net income	—		—	—		—		—		954		954		—			—		—			—			—			954			954
BALANCE, March 31, 2020	16,913,980	$	17	(273,937)	$	(1,842)	$	383,669	$	(339,822)	$	42,022		16,913,980		$	17		(273,937	)	$	(1,842	)	$	383,669		$	(339,822	)	$	42,022

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

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

Table of Contents

BROADWIND, INC. AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(UNAUDITED)~~

~~(in thousands)~~

Three Months Ended March 31,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$
954

$
(1,042)

Adjustments to reconcile net cash used in operating activities:

Depreciation and amortization expense

1,612

1,761

Deferred income taxes

22

(9)

Change in fair value of interest rate swap agreements

138

—

Stock-based compensation

308

255

Allowance for doubtful accounts

29

(14)

Common stock issued under defined contribution 401(k) plan

—

187

Gain on disposal of assets

—

(1)

Changes in operating assets and liabilities, net of acquisition:

Accounts receivable

2,037

(5,040)

Inventories

(8,891)

(10,274)

Prepaid expenses and other current assets

(476)

70

Accounts payable

3,545

8,132

Accrued liabilities

(657)

321

Customer deposits

305

(5,752)

Other non-current assets and liabilities

49

57

Net cash used in operating activities

(1,025)

(11,349)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(670)

(577)

Proceeds from disposals of property and equipment

—

1

Net cash used in investing activities

(670)

(576)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from line of credit

51,552

42,440

Payments on line of credit

(49,070)

(31,191)

Payments on long-term debt

(242)

(228)

Principal payments on finance leases

(218)

(236)

Net cash provided by financing activities

2,022

10,785

NET INCREASE (DECREASE) IN CASH

327

(1,140)

CASH beginning of the period

2,416

1,177

CASH end of the period

$
2,743

$
37

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

~~BROADWIND, 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, Inc. (the “Company”) and its wholly-owned subsidiaries Broadwind Heavy Fabrications, Inc. (“Broadwind Heavy Fabrications”), Brad Foote Gear Works, Inc. (“Brad Foote”) and Broadwind Industrial Solutions, LLC (“Broadwind Industrial Solutions”). All intercompany transactions and balances have been eliminated. The 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 and Article 10 of Regulation 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 months ended March 31, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, ~~2020. The~~ 2021, 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, ~~2019~~2020.

The December 31, 2020 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 for the year ended December 31, ~~2019.~~2020.

There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, ~~2020~~2021 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~ 2020.

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 products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure sectors, primarily in the United States of America (the “U.S.”). The Company’s capabilities include, but are not limited to the following: heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, heat treatment, assembly, engineering and packaging solutions. The Company’s most significant presence is within the U.S. wind energy industry, which accounted for 63% and 74% of the Company’s revenue during the first three months of ~~2020.~~2021 and 2020, respectively.

Liquidity

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

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

Total debt and finance lease obligations at March 31, ~~2020~~2021 totaled ~~$17,761,~~$17,803, which includes current outstanding debt and finance leases totaling ~~$16,812.~~$6,532. The current outstanding debt includes ~~$14,000~~ $4,468outstanding under the Company’s revolving line of credit. Long-term debt includes $9,151 of Payroll Protection Program loans (“PPP Loans”), which may be forgiven if the Company meets certain requirements. See Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the PPP Loans.

Table of Contents

On August ~~11, 2017,~~18, 2020, the Company filed a “shelf” registration statement on Form S-3, which was declared effective by the 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 the prospectus supplement accompanying the base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes.

On ~~July 31, 2018,~~March 9, 2021, the Company entered into an ~~At Market Issuance Sales~~Equity Distribution Agreement (the ~~“ATM~~“Equity Distribution Agreement”) with ~~Roth~~Craig-Hallum Capital ~~Partners,~~Group, LLC (the ~~“Agent”~~“Manager”). Pursuant to the terms of the ~~ATM~~Equity Distribution Agreement, the Company may sell from time to time through the ~~Agent~~Manager shares of the Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $10,000. The Company will pay a commission to the ~~Agent~~Manager of 3%2.75% of the gross proceeds of the sale of the shares sold under the ~~ATM~~Equity Distribution Agreement and reimburse the ~~Agent~~Manager for all expenses incident to the ~~expenses~~performance of ~~their counsel. As of~~its obligations under the Equity Distribution Agreement. During the quarter ended March 31, ~~2020,~~2021, the Company issued 1,100,000 shares of the Company’s common stock ~~having a value~~thereunder. The net proceeds (before upfront costs) to the Company from the sale of such shares were approximately $6,436 after deducting commissions paid of approximately ~~$9,967 remained~~$182 and before deducting other expenses of $335.

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 Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. The ERC is available through December 31, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter in 2021, a maximum of $10,000 in qualified wages for ~~issuance with respect to~~each employee is eligible for the ~~ATM Agreement.~~ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is $7,000 per employee per calendar quarter. The Company ~~has not used~~qualified for the ~~ATM Agreement~~ERC in the first quarter of 2021 because it had a gross receipts decrease of more than 20% from the first quarter of 2019, the relevant criteria for the ERC. As a result of the Company averaging 500 or fewer full-time employees in 2019, ~~or 2020.~~

~~Table of Contents~~

~~In April 2020,~~all wages paid to employees were eligible for the ERC (rather than just wages paid to employees not providing services). During the three months ended March 31, 2021, the Company ~~received funds under notes and related documents with CIBC under~~recorded a benefit of $3,372 in Other income (expense), net in the ~~new U.S. Paycheck Protection Program. For additional discussion, refer to Note 16, “Subsequent Events” of these~~Company’s condensed consolidated ~~financial statements.~~statement of operations which is included in the line titled Employee retention credit receivable in the Company’s condensed consolidated balance sheet at March 31, 2021.

The Company anticipates that current cash resources (which includes proceeds from the PPP Loans), expected cash proceeds or savings from the ERC, amounts available under the Credit Facility, ~~the loans received~~

~~by the Company under the U.S. Payroll Protection Program,~~ cash to be generated from operations and any potential proceeds from the 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. However, the Company does not anticipate that it will have the ability to generate a significant amount of capital from equity markets in the near-term as a result of the low trading volume of the Company’s common stock on the NASDAQ exchange and limitations on the aggregate amount of securities the Company may offer under the Form S-3 due to its public float size. The Form S-3 will expire on October 10, 2020.

If assumptions regarding the Company’s production, sales and subsequent collections from certain of the Company’s large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, particularly in light of the COVID-19 pandemic 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 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 and health insurance reserves. 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.~~estimates, particularly in light of the COVID-19 pandemic.

NOTE 2 — REVENUES

Revenues are recognized when ~~control of~~ the promised goods or services isare 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, ~~2020~~2021 and ~~2019:~~2020:


		Three Months Ended March 31,			Three Months Ended March 31,
		2020		2019	2021			2020
Heavy Fabrications	$	38,368	$	28,294	$	22,777		$	38,368
Gearing		6,227		10,027		5,349			6,227
Industrial Solutions		4,039		3,339		4,604			4,039
Eliminations						(2	)		-
Consolidated	$	48,634	$	41,660	$	32,728		$	48,634

Table of Contents

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 ~~control of~~ the promised goods or services isare 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

NOTE 3 — EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings per share for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, as follows:


	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2020		2019		2021			2020
Basic earnings per share calculation:
Net income (loss)	$	954	$	(1,042)
Net (loss) income					$	(1,210	)	$	954
Weighted average number of common shares outstanding		16,596,236		15,785,954		17,178,136			16,596,236
Basic net income (loss) per share	$	0.06	$	(0.07)
Basic net (loss) income per share					$	(0.07	)	$	0.06
Diluted earnings per share calculation:
Net income (loss)	$	954	$	(1,042)
Net (loss) income					$	(1,210	)	$	954
Weighted average number of common shares outstanding		16,596,236		15,785,954		17,178,136			16,596,236
Common stock equivalents:
Non-vested stock awards (1)		137,038		—		—			137,038
Weighted average number of common shares outstanding		16,733,274		15,785,954		17,178,136			16,733,274
Diluted net income (loss) per share	$	0.06	$	(0.07)
Diluted net (loss) income per share					$	(0.07	)	$	0.06

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the cost basis, accumulated amortization and net book value of intangible assets were as follows:


	March 31, 2020									December 31, 2019									March 31, 2021												December 31, 2020
									Remaining									Remaining											Remaining												Remaining
									Weighted									Weighted											Weighted												Weighted
					Accumulated		Net		Average					Accumulated		Net		Average						Accumulated			Net		Average							Accumulated			Net		Average
	Cost		Accumulated		Impairment		Book		Amortization			Accumulated		Impairment		Book		Amortization	Cost		Accumulated			Impairment			Book		Amortization				Accumulated			Impairment			Book		Amortization
	Basis		Amortization		Charges		Value		Period	Cost		Amortization		Charges		Value		Period	Basis		Amortization			Charges			Value		Period		Cost		Amortization			Charges			Value		Period
Intangible assets:
Noncompete agreements	$	170	$	(90)	$	—	$	80	2.8	$	170	$	(83)	$	—	$	87	3.1	$	170	$	(118	)	$	—		$	52		1.8	$	170	$	(111	)	$	—		$	59		2.1
Customer relationships		15,979		(6,750)		(7,592)		1,637	5.6		15,979		(6,674)		(7,592)		1,713	5.8		15,979		(7,055	)		(7,592	)		1,332		4.7		15,979		(6,979	)		(7,592	)		1,408		4.9
Trade names		9,099		(6,080)		—		3,019	7.5		9,099		(5,980)		—		3,119	7.8		9,099		(6,480	)		—			2,619		6.5		9,099		(6,380	)		—			2,719		6.8
Intangible assets	$	25,248	$	(12,920)	$	(7,592)	$	4,736	6.3	$	25,248	$	(12,737)	$	(7,592)	$	4,919	6.5	$	25,248	$	(13,653	)	$	(7,592	)	$	4,003		4.4	$	25,248	$	(13,470	)	$	(7,592	)	$	4,186		4.6

On October 26, 2016, the Company established a three-year secured revolving line of credit with CIBC Bank USA (“CIBC”). This line of credit has been amended from time to time. On February 25, 2019, the line of credit was expanded and extended for three years when the Company and its subsidiaries entered into an Amended and Restated Loan and Security Agreement (the ~~“Amended~~“2016 Amended and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the other financial institutions party thereto, ~~(the “Lenders”),~~ providing the Company and its subsidiaries with a $35,000 secured credit facility ~~(the~~(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, and (ii) a mortgage on the Abilene, Texas tower and Pittsburgh, Pennsylvania gearing facilities.

The Credit Facility is an asset-based revolving credit facility, pursuant to which the ~~Lenders advance~~CIBC advances funds against a borrowing base consisting of approximately (a) 85% of the face value of eligible receivables of the Company and the subsidiaries, plus (b) the lesser of (i) 50% of the lower of cost or market value of eligible inventory of the Company, (ii) 85% of the orderly liquidation value of eligible inventory and (iii) $12.5 million, plus (c) the lesser of (i) the sum of (A) 75% of the appraised net orderly liquidation value of the Company’s eligible machinery and equipment plus (B) 50% of the fair market value of the Company’s mortgaged property and (ii) $12 million. Subject to certain borrowing base conditions, the aggregate Credit Facility limit under the 2016 Amended and Restated Loan Agreement is $35 million with a sublimit for letters of credit of $10 million. Borrowings under the Credit Facility bear interest at a per annum rate equal to, at the option of the Company, the one, two or three-month LIBOR rate or the base rate, plus a margin. The applicable margin is 5.50% for LIBOR rate loans and 3.50% for base rates loans. Upon certain pay downs, a pricing grid based on the Company’s trailing twelve month fixed charge coverage ratio may become effective under which applicable margins would range from 2.25% to 2.75% for LIBOR rate loans and 0.00% to 0.75% for base rate loans. The Company must also pay an unused facility fee equal to 0.50% per annum on the unused portion of the Credit Facility along with other standard fees. ~~The initial term of the Amended and Restated Loan Agreement ends on February 25, 2022.~~ With the exception of the balance impacted by the interest rate swap (as ~~defined~~described below), the Company is allowed to prepay in whole or in part advances under the Credit Facility without penalty or premium other than customary “breakage” costs with respect to LIBOR loans.

The ~~Amended and Restated Loan Agreement~~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 a minimum quarterly fixed charge coverage ratio, along with other customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications. The Company was in compliance with all ~~financial~~ covenants under the Credit Facility as of March 31, ~~2020.~~2021.

On February 23, 2021, the Company executed the Second Amendment to the 2016 Amended and Restated Loan Agreement (the “Second Amendment”) which waived testing of the fixed charge coverage covenant for the quarters ending March 31, 2021 and June 30, 2021, added a new liquidity covenant applicable to the quarter ending March 31, 2021, and new minimum EBITDA covenants applicable to the quarters ending March 31, 2021 and June 30 2021.

In conjunction with the 2016 Amended and Restated Loan Agreement, induring June 2019, the Company entered into a floating to fixed interest rate swap with CIBC. The swap agreement has a notional amount of $6,000 and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire term of the 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 March 31, ~~2020~~2021 and December 31, ~~2019.~~2020.

As of March 31, ~~2020,~~2021, there was ~~$14,000~~$4,468 of outstanding indebtedness under the Credit Facility, with the ability to borrow an additional ~~$16,283,~~$18,640, under the Credit Facility.

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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, less current maturities” line item of our condensed consolidated financial statements as of March 31, ~~2020~~2021 and December 31, ~~2019.~~2020. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2020, 2019, and 2018, $114 of the loan was forgiven. As of March 31, ~~2020,~~2021, the loan balance was ~~$342.~~$228. In addition, the Company has outstanding notes payable for capital expenditures in the amount of ~~$2,363~~$609 and ~~$1,563~~$163 as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, with ~~$2,350~~$609 and ~~$1,400~~$161 included in the “Line of credit and other notes payable” line item of the Company’s condensed consolidated financial statements as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The notes payable have monthly payments that range from $1 to $36 and an interest rate of approximately 5%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from ~~April 2020~~May2021 to August 2022.

InOn April 15, 2020, the Company received funds under notes and related documents with CIBC, under the Paycheck Protection Program (the “PPP”) which was established under the CARES Act enacted on March 27, 2020 in response to the COVID-19 pandemic and is administered by the U.S. Small Business Administration (the “SBA”). The Company received total proceeds of $9,530 from the PPP loans ~~totaling $9,530 as part~~and made repayments of $379 on May 13, 2020. Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020 ~~Coronavirus Aid, Relief~~enacted on June 5, 2020 (the “Flexibility Act”), the PPP Loans, and ~~Economic Stability Act. Please refer~~accrued interest and fees may be forgiven following a period of twenty-four weeks after PPP Loan proceeds are received (the “covered period”) if they are used for qualifying expenses as described in the CARES Act including payroll costs and benefits (which must equal or exceed 60% of the amount requested to ~~Note 16, “Subsequent Events”~~be forgiven), rent, mortgage interest, and utilities, which are subject to certain reductions based on the number of ~~these condensed consolidated financial statements~~full time equivalent employees and the level of compensation for ~~additional details.~~employees during such covered period. The amount of loan forgiveness will be reduced if the borrower terminates employees or significantly reduces salaries during such period, subject to certain exceptions. Subject to the terms and conditions applicable to loans administered by the SBA under the PPP, as amended by the Flexibility Act, the unforgiven portion of a PPP Loan is payable over a two year period at an interest rate of 1.00%, with a deferral of payments of principal, interest and fees until the date on which the SBA remits the loan forgiveness amount to the lender (or notifies the lender that no loan forgiveness is allowed), provided that the borrower applies for forgiveness within 10 months after the last day of the covered period (and if not, payment of principal and interest shall commence 10 months after the last day of the covered period). The Company used at least 60% of the amount of the PPP Loans proceeds to pay for payroll costs and the balance on other eligible qualifying expenses that the Company believes to be consistent with the terms of the PPP and submitted its forgiveness applications to CIBC during the first quarter of 2021. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the PPP Loans, the Company cannot provide assurance that it has not taken and will not take actions that could cause the Company to be ineligible for forgiveness of the PPP Loans, in whole or in part.

adoption of Topic 842 and was offset against the ROU asset balance during the adoption. The discount rates used for leases accounted for under ASC 842 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, 2021 and March 31, 2020, the Company had an additional operating lease that resulted in right-of-use assets obtained in exchange for lease obligations of ~~$4,380.~~ $907and $4,380, respectively. Additionally, during the three months ended March 31, 2021, the Company had additional finance leases that resulted in property, plant, and equipment obtained in exchange for lease obligations of $263.

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.

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


	For the Three Months Ended		Three Months Ended March 31,
	March 31, 2020	March 31, 2019	2021			2020
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$ 129	$ 136	$	186		$	129
Interest on finance lease liabilities	26	29		68			26
Total finance lease costs	155	165		254			155
Operating lease cost components:
Operating lease cost	765	786		759			765
Short-term lease cost	132	146		196			132
Variable lease cost (1)	195	178		230			195
Sublease income	(45)	(44)		(46	)		(45	)
Total operating lease costs	1,047	1,066		1,139			1,047

Total lease cost	$ 1,202	$ 1,231	$	1,393		$	1,202

Supplemental cash flow information related to our operating leases is
as follows for the three months ended March 31, 2020 and 2019:
Supplemental cash flow information related to our operating leases is as follows for the three months ended March 31, 2021 and 2020:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases
Operating cash outflow from operating leases	$ 888	$ 875	$	887			888

Weighted-average remaining lease term-finance leases at end of period (in years)	1.2	1.6		1.9			1.2
Weighted-average remaining lease term-operating leases at end of period (in years)	10.5	10.9		9.5			10.5
Weighted-average discount rate-finance leases at end of period	9.2%	8.4%		9.0	%		9.2	%
Weighted-average discount rate-operating leases at end of period	8.8%	9.0%		8.5	%		8.8	%

As of March 31, ~~2020,~~2021, future minimum lease payments under finance leases and operating leases were as follows:

NOTE 9 — FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, which include cash, ~~and cash equivalents,~~ 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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The Company entered into an interest rate swap in June 2019 to mitigate the exposure to the variability of LIBOR for its floating rate debt described in Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements. The fair value of the interest rate swap is reported in “Accrued liabilities” and the change in fair value is reported in “Interest expense, net” of these condensed consolidated financial statements. The fair value of the interest rate swap is estimated as the net present value of projected cash flows based on forward interest rates at the balance sheet date.

The Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:

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

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

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

The following tables represent the fair values of the Company’s financial liabilities as of March 31, ~~2020~~2021 and December 31, ~~2019:~~

March 31, 2020


Level 1

Level 2

Level 3

Total

Liabilities measured on a recurring basis:

Interest rate swap

$
—

$
216

$
—

$
216

Total liabilities at fair value

$
—

$
216

$
—

$
216

2020:


	December 31, 2019								March 31, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	78	$	—	$	78	$	—	$	118	$	—	$	118
Total liabilities at fair value	$	—	$	78	$	—	$	78	$	—	$	118	$	—	$	118

The following table summarizes the Company’s restricted stock unit and performance award activity during the three months ended March 31, ~~2020:~~2021:

Weighted Average

Number of

Grant-Date Fair Value

Shares

Per Share

Unvested as of December 31, 2019

1,356,915

$
2.39

Granted

—

$
—

Vested

(121,132)

$
3.41

Forfeited

(89,464)

$
5.43

Unvested as of March 31, 2020

1,146,319

$
2.05

				Weighted Average
	Number of			Grant-Date Fair Value
	Shares			Per Share
Unvested as of December 31, 2020		1,332,884		$	1.86
Granted		80,015		$	2.06
Vested		(241,806	)	$	2.14
Unvested as of March 31, 2021		1,171,093		$	1.84

Under certain situations, shares are withheld from issuance to cover taxes for the vesting of restricted stock units and performance awards. For the three months ended March 31, 2021, 105,399 of such shares were withheld to cover $847 of tax obligations.

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, as follows:



	Three Months Ended March 31,				Three Months Ended March 31,
	2020		2019		2021		2020
Share-based compensation expense:
Cost of sales	$	22	$	30	$	26	$	22
Selling, general and administrative		286		225		193		286
Net effect of share-based compensation expense on net income	$	308	$	255	$	219	$	308
Reduction in earnings per share:
Basic earnings per share	$	0.02	$	0.02	$	0.01	$	0.02
Diluted earnings per share	$	0.02	$	0.02	$	0.01	$	0.02

Company provides steel towers and adapters primarily to wind turbine manufacturers. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers (1,650 tower sections), sufficient to support turbines generating more than 1,100 megawatts of power. 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 infrastructure markets.

Gearing

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

Industrial Solutions

The Company provides supply chain solutions, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market.

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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.

The accounting policies of 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 months ended March 31, ~~2020~~2021 and ~~2019~~2020 is as follows:

Heavy Fabrications

Gearing

Industrial Solutions

Corporate

Eliminations

Consolidated

For the Three Months Ended March 31, 2020

Revenues from external customers

$
38,368

6,227

4,039

—

—

$
48,634

Operating profit (loss)

3,541

(261)

192

(1,792)

—

1,680

Depreciation and amortization

963

512

104

33

—

1,612

Capital expenditures

381

168

120

1

—

670

													Heavy Fabrications			Gearing			Industrial Solutions			Corporate			Eliminations			Consolidated


	Heavy Fabrications		Gearing		Industrial Solutions		Corporate		Eliminations		Consolidated
For the Three Months Ended March 31, 2019
For the Three Months Ended March 31, 2021
Revenues from external customers	$	28,294		10,027		3,339		—		—	$	41,660	$	22,777			5,349			4,602			—			—		$	32,728
Operating (loss) profit		(222)		1,387		(285)		(1,374)		—		(494)
Intersegment revenues														—			—			2			—			(2	)		—
Net revenues														22,777			5,349			4,604			—			(2	)		32,728
Operating loss														(1,700	)		(989	)		(14	)		(1,608	)		—			(4,311	)
Depreciation and amortization		1,095		482		122		62		—		1,761		945			458			106			44			—			1,553
Capital expenditures		201		367		—		9		—		577		563			—			20			29			—			612

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Total Assets as of

March 31,

December 31,

Segments:

2020

2019

Heavy Fabrications

$
52,904

$
41,432

Gearing

46,802

47,022

Industrial Solutions

9,107

8,893

Corporate

239,429

239,629

Eliminations

(213,944)

(214,110)

$
134,298

$
122,866

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 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.

~~Warranty Liability~~

The Company warrants its products for terms that range from one to five years. 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 March 31, 2020 and 2019, estimated product warranty liability was $118 and $218, 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 three months ended March 31, 2020 and 2019 were as follows:~~

For the Three Months Ended March 31,

2020

2019

Balance, beginning of period

$
163

$
226

Reduction of warranty reserve

(25)

(19)

Other adjustments

(20)

11

Balance, end of period

$
118

$
218

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.

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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 three months ended March 31, ~~2020~~2021 and ~~2019~~2020 consisted of the following:



	For the Three Months Ended March 31,				For the Three Months Ended March 31,
	2020		2019		2021			2020
Balance at beginning of period	$	127	$	190	$	473		$	127
Bad debt expense		55		—		5			55
Write-offs		(19)		—		(222	)		(19	)
Other adjustments		(7)		(14)		(1	)		(7	)
Balance at end of period	$	156	$	176	$	255		$	156

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 March 31, ~~2020~~2021 or December 31, ~~2019.~~2020.

In March 2020, the World Health Organization characterized the novel coronavirus disease (“COVID-19”) a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The rapid spread of the pandemic and the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. The Company’s operations and those of its suppliers and customers, and the supply chains that support the Company’s and its suppliers’ and customers’ operations have been and continue to be affected by COVID-19. In response to the virus, the Company is following the guidance provided by the U.S. Centers for Disease Control and Prevention to protect the continued safety and welfare of our employees, business partners and their respective communities. In addition, the Company has taken various precautionary actions including, but not limited to, analyzing its supply chain to determine its exposure and identify alternative sourcing, reducing board of director and executive compensation, delaying applicable merit increases and other discretionary spending, restricting employee travel, encouraging employees that have the ability to work from home to do so, implementing social distancing best practices and preparing various contingency plans in the event the Company faces any material adverse impacts from COVID-19.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the United States in response to COVID-19. The Paycheck Protection Program (“PPP”) was formed as part of the CARES Act and is administered by the U.S. Small Business Administration (the “SBA”). The PPP allows certain companies to apply for aid through forgivable loans (“PPP Loans”). Under the terms of the PPP, certain amounts of the PPP Loans may be forgiven if they are used for qualifying expenses as described in the CARES Act. The Company applied for these loans through CIBC Bank and received total proceeds of $9,530. The Company intends to use proceeds from the PPP Loans primarily for payroll costs, in accordance with terms and conditions applicable to loans administered by the SBA. The PPP Loans have a 1.00% interest rate and are scheduled to mature starting on April 5, 2022.

~~For more information, refer to the Company’s supplemental risk factor included in the Company’s Current Report on Form 8-K filed April 17, 2020.~~

In connection with the Company’s rebranding efforts previously announced, following the approval of the Company’s stockholders at the Company’s 2020 Annual Meeting of Stockholders on May 1, 2020, the Company filed a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of Delaware, changing the name of the Company from “Broadwind Energy, Inc.” to “Broadwind, Inc.” effective on May 4, 2020. In connection with the Company’s name change, the board of directors of the Company amended the Company’s Second Amended and Restated Bylaws to reflect the Company’s new corporate name.

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, ~~2019.~~2020. 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 including those arising as a result of, ~~COVID-19.~~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, Inc., a Delaware corporation headquartered in Cicero, Illinois, and its subsidiaries.

(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,

2020

2019
Net revenues

$
48,634

$
41,660
Net income (loss)

$
954

$
(1,042)
Adjusted EBITDA (1)

$
3,605

$
1,715
Capital expenditures

$
670

$
577
Free cash flow (2)

$
(329)

$
(11,468)
Operating working capital (3)

$
8,844

$
17,607
Total debt

$
16,705

$
24,384
Total orders

$
33,809

$
24,006
Backlog at end of period

$
127,401

$
81,126
Book-to-bill (4)

0.7

0.6

~~(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.

	Three Months Ended
	March 31,
	2021			2020
Net revenues	$	32,728		$	48,634
Net (loss) income	$	(1,210	)	$	954
Adjusted EBITDA (1)	$	1,217		$	3,605
Capital expenditures	$	612		$	670
Free cash flow (2)	$	(9,393	)	$	(329	)
Operating working capital (3)	$	11,711		$	8,844
Total debt (4)	$	14,456		$	16,705
Total orders	$	34,214		$	33,809
Backlog at end of period (5)	$	94,400		$	127,401
Book-to-bill (6)		1.0			0.7

(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)	Total debt at March 31, 2021 includes PPP loans totaling $9,151.

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

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

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

~~(4)We define the book-to-bill as the ratio of new orders we received to units shipped and billed 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,
	2021			2020
Net (loss) income	$	(1,210	)	$	954
Interest expense		229			673
Income tax provision		32			52
Depreciation and amortization		1,553			1,612
Share-based compensation and other stock payments		613			314
Adjusted EBITDA		1,217			3,605
Changes in operating working capital		(6,649	)		(3,264	)
Employee retention credit receivable		(3,372	)		—
Capital expenditures		(612	)		(670	)
Proceeds from disposal of property and equipment		23			—
Free Cash Flow	$	(9,393	)	$	(329	)

Three Months Ended

March 31,

2020

2019
Net income (loss)

$
954

$
(1,042)
Interest expense

673

536
Income tax provision (benefit)

52

11
Depreciation and amortization

1,612

1,761
Share-based compensation and other stock payments

314

437
Restructuring costs

—

12
     Adjusted EBITDA

3,605

1,715
Changes in operating working capital

(3,264)

(12,607)
Capital expenditures

(670)

(577)
Proceeds from disposal of property and equipment

—

1
     Free Cash Flow

$
(329)

$
(11,468)

Table of Contents

OUR BUSINESS

First Quarter Overview

We booked ~~$33,809~~$34,214 in new orders in the first quarter of 2021, up from $33,809 in the first quarter of 2020. Within our Heavy Fabrication segment, wind tower orders doubled as compared to last year as multiple customers secured 2021 production capacity. Industrial fabrication product line orders within the Heavy Fabrication segment decreased quarter-over-quarter primarily due to weaker industrial demand, which is largely driven by the timing of projects. Industrial Fabrications orders increased on a sequential basis from $3,526 in the fourth quarter of 2020 ~~up from $24,006~~to $6,680 in the first quarter of ~~2019 driven~~2021, a reflection of recovery in cyclical end markets. Gearing segment orders decreased 20% compared to the first quarter of 2020 primarily ~~by a $5,286 increase in~~due tothe timing of aftermarket wind ~~Gearing~~ gearing orders, which can fluctuate based on customer order patternsand ~~other industrial~~decreased mining demand. Gearing orders increased on a sequential basis from $5,741 in the fourth quarter of 2020 to $9,921 in the first quarter of 2021, a reflection of recovery in cyclicalend markets and ~~a $3,004 rise in Heavy Fabrication orders, predominately driven by~~ an ~~increase in mining and other industrial customers, a result of~~improving commercial environment. Orders within our ~~ongoing~~

~~diversification efforts. Our~~ Industrial Solutions segment ~~realized a $1,513 increase in~~decreased by 40% primarily due to the timing of orders ~~for~~associated with new gas turbine ~~content, partially offset by a decrease in aftermarket demand.~~projects.

We recognized revenue of ~~$48,634~~$32,728 in the first quarter of ~~2020, up 17%~~2021, down 33% compared to the first quarter of ~~2019,~~2020, primarily due to ~~sales growth in~~a decrease in the Heavy Fabrications segment as tower sections sold ~~surged 66%~~decreased 46% compared to the prior year quarter. The segment was adversely impacted by continued supply chain disruptions, a temporary shut-down of our Abilene, Texas plant due to a weather-related event, a customer driven project delay and less demand in the current year. Gearing revenue was down $878 from the first quarter of 2020, driven by lower order intake in recent quarters from oil and gas (“O&G”) and mining customers,partially offset by increased revenue from aftermarket wind customers. Industrial Solutions revenue increased $565, representing a 14% increase compared to the prior year quarter, driven primarily by customer demand to support the expected increase of wind turbine tower installations. This growth was partially offset by a lower average sales price on towers sold due to higher levels of customer supplied materials in the current year. Industrial Solutions revenue was up $700, or 21% primarily due to ~~higher near-term demand for~~the timing of new gas turbine ~~content, partially offset by weaker aftermarket demand. Gearing revenue was down $3,800 driven primarily by lower order intake~~customer installations.

We reported a net loss of $1,210 or $0.07 per share in the ~~second half~~first quarter of ~~2019 and as customers delayed approximately $1,000 of purchases into future periods.~~

~~We reported~~2021, compared to net income of $954 or $0.06 per share in the first quarter of 2020 ~~compared to a net loss of $1,042 or $0.07 per share in the first quarter of 2019~~ primarily due to ~~higher capacity utilization in towers and overall improved operating efficiencies, partially offset by decreased profitability in our gearing segment due to decreased~~lower sales, ~~a lower margin sales mix and~~supply chain disruptions, manufacturing inefficiencies associated with lower activity ~~levels.~~levels and the temporary shut-down of our Abilene, Texas Heavy Fabrications plant due to a weather-related event. This was partially offset by a $3,372 employee retention credit (described below) that has been recognized in Other Income (expense), net in our condensed consolidated statement of operations for the three months ended March 31, 2021.

On March 27, 2020, the CARES Act was signed into law providing numerous tax provisions and other stimulus measures, including the Employee Retention Credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. The ERC is available through December 31, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter in 2021, a maximum of $10,000 in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is $7,000 per employee per calendar quarter. We qualified for the ERC in the first quarter of 2021 because we had a gross receipts decrease of more than 20% from the first quarter of 2019, the relevant criteria for the ERC. As a result of us averaging 500 or fewer full-time employees in 2019, all wages paid to employees were eligible for the ERC (rather than just wages paid to employees not providing services). During the three months ended March 31, 2021, we recorded a benefit of $3,372 in Other income (expense), net in our condensed consolidated statement of operations which is included in the line titled Employee retention credit receivable in our condensed consolidated balance sheet at March 31, 2021.

COVID-19 Pandemic

In March 2020, the World Health Organization ~~characterized COVID-19~~recognized a novel strain of coronavirus (COVID-19) as a pandemic. In response to this pandemic, the United States and various foreign, state and local governments have, among other actions, imposed travel and business restrictions and required or advised communities in which we do business to adopt stay-at-home orders and social distancing guidelines, causing some businesses to adjust, reduce or suspend operating activities. The pandemic and the ~~President of~~various governments’ response have caused significant and widespread uncertainty, volatility and disruptions in the ~~United States declared~~U.S. and global economies, including in the ~~COVID-19 outbreak a national emergency. The rapid spread of the pandemic~~regions in which we operate.

Overall, through March 31, 2021, we have experienced an adverse impact to our business, operations and ~~the continuously evolving responses to combat it have had an increasingly negative impact on the global economy. Although our~~ financial results ~~were not materially impacted~~as a result of this pandemic due in part to the quarter ending March 31, 2020, our operations and those of our suppliers and customers, and the supply chains that support our and their operations have been and continue to be affected by COVID-19. Orderdecline in order activity levels for Gearing ~~Industrial Solutions~~ and ~~industrial fabrications have declined since~~Heavy Fabrications. Additionally, in the first quarter of 2021, we continued to incur manufacturing inefficiencies associated with supply chain disruptions and realized employee staffing constraints due to the spread of the COVID-19 ~~outbreak. Additionally,~~pandemic.

Our facilities have continued operations as essential businesses in light of the customers ~~have delayed scheduled purchases in~~and markets served. In response to the pandemic, we continue to right-size our ~~Gearing segment. For more information, refer to Note 16, “Subsequent Events” in~~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 ~~notes~~Company and its business, operations and financial results. As we cannot predict the duration or scope of the pandemic or its impact on economic and financial markets, any negative impact to our ~~condensed consolidated~~results cannot be reasonably estimated, but it could be material.

We continue to monitor closely the Company’s financial ~~statements in Part I, Item 1~~health and liquidity and the impact of ~~this Quarterly Report~~the pandemic on ~~Form 10-Q~~the Company. We have been able to serve the needs of our customers while taking steps to protect the health and safety of our ~~supplemental risk factor included in~~employees, customers, partners, and communities. Among these steps, we have followed the guidance provided by the U.S. Centers for Disease Control and Prevention to protect the continued safety and welfare of our ~~Current Report on Form 8-K filed April 17, 2020.~~employees.

Table of Contents

RESULTS OF OPERATIONS

Three months ended March 31, ~~2020,~~2021, Compared to Three months ended March 31, ~~2019~~2020

The condensed consolidated statement of 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 March 31, ~~2020,~~2021, compared to the three months ended March 31, ~~2019.~~ 2020.

Three Months Ended March 31,

2020 vs. 2019

% of Total

% of Total

2020

Revenue

2019

Revenue

$ Change

% Change

Revenues

$
48,634

100.0
%
$
41,660

100.0
%
$
6,974

16.7
%

Cost of sales

42,462

87.3
%

38,111

91.5
%

4,351

11.4
%

Restructuring

—

—
%

12

0.0
%

(12)

(100.0)
%

Gross profit

6,172

12.7
%

3,537

8.5
%

2,635

74.5
%

Operating expenses

Selling, general and administrative expenses

4,309

8.9
%

3,828

9.2
%

481

12.6
%

Intangible amortization

183

0.4
%

203

0.5
%

(20)

(9.9)
%

Total operating expenses

4,492

9.2
%

4,031

9.7
%

461

11.4
%

Operating income (loss)

1,680

3.5
%

(494)

(1.2)
%

2,174

440.1
%

Other expense, net

Interest expense, net

(673)

(1.4)
%

(536)

(1.3)
%

(137)

(25.6)
%

Other, net

(1)

(0.0)
%

(1)

(0.0)
%

—

—
%

Total other expense, net

(674)

(1.4)
%

(537)

(1.3)
%

(137)

(25.5)
%

Net income (loss) before provision for income taxes

1,006

2.1
%

(1,031)

(2.5)
%

2,037

197.6
%

Provision for income taxes

52

0.1
%

11

0.0
%

41

372.7
%

Net income (loss)

$
954

2.0
%
$
(1,042)

(2.5)
%
$
1,996

191.6
%

	Three Months Ended March 31,												2021 vs. 2020
				% of Total						% of Total
	2021			Revenue			2020			Revenue			$ Change			% Change
Revenues	$	32,728			100.0	%	$	48,634			100.0	%	$	(15,906	)		(32.7	)%
Cost of sales		32,446			99.1	%		42,462			87.3	%		(10,016	)		(23.6	)%
Gross profit		282			0.9	%		6,172			12.7	%		(5,890	)		(95.4	)%
Operating expenses
Selling, general and administrative expenses		4,410			13.5	%		4,309			8.9	%		101			2.3	%
Intangible amortization		183			0.6	%		183			0.4	%		—			0.0	%
Total operating expenses		4,593			14.0	%		4,492			9.2	%		101			2.2	%
Operating (loss) income		(4,311	)		(13.2	)%		1,680			3.5	%		(5,991	)		(356.6	)%
Other income (expense), net
Interest expense, net		(229	)		(0.7	)%		(673	)		(1.4	)%		444			66.0	%
Other, net		3,362			10.3	%		(1	)		(0.0	)%		3,363			336300.0	%
Total other income (expense), net		3,133			9.6	%		(674	)		(1.4	)%		3,807			564.8	%
Net (loss) income before provision for income taxes		(1,178	)		(3.6	)%		1,006			2.1	%		(2,184	)		(217.1	)%
Provision for income taxes		32			0.1	%		52			0.1	%		(20	)		(38.5	)%
Net (loss) income	$	(1,210	)		(3.7	)%	$	954			2.0	%	$	(2,164	)		(226.8	)%

Consolidated

Revenues ~~increased~~decreased by ~~$6,974,~~$15,906, primarily due to ~~higher production levels~~a 46% decrease intower sections sold compared to the first quarter of 2020. Heavy Fabrications was adversely impacted by continued supply chain disruptions, the temporary shut-down of our Abilene, Texas plant due to a weather-related event, a customer driven project delay and lower demand in the ~~Heavy Fabrications segment as towers sections sold increased 66%~~current year. Gearing revenue was down $878 from the first quarter of ~~2019,~~ 2020, primarily driven by lower order intake in recent quarters from O&G and mining customers,partially offset by increased revenue from aftermarket wind customers. Industrial Solutions revenue increased $565, representing a ~~lower average sales price on towers sold~~14% increase compared to the prior year quarter, primarily due to ~~higher levels of customer supplied materials in~~ the ~~current year. Industrial Solutions revenue was up $700 from the first quarter of 2019, primarily due to increased shipments~~timing of new gas turbine ~~content. Partially offsetting these improvements was a decrease in Gearing segment revenue of $3,800 due primarily to weak order intake in the second half of~~customer installations.

2019 primarily within O&G and other industrial markets. In addition, due to declining oil prices and general market uncertainty, customers delayed approximately $1,000 of purchases into future periods.

Gross profit ~~increased~~decreased by ~~$2,635~~$5,890 primarily due ~~primarily~~ to ~~higher capacity utilization in towers and overall improved operating efficiencies. This benefit was partially offset by~~ lower ~~gearing~~ sales, ~~across all core industries,~~ a ~~lower margin sales~~less profitable customer mix, ~~and~~increased manufacturing inefficiencies associated with lower ~~activity levels.~~ volumes, the temporary shut-down of our Abilene, Texas Heavy Fabrications plant and continued supply chain disruptions.As a result, gross margin ~~increased~~decreased to 0.9% during the three months ended March 31, 2021, from 12.7% during the three months ended March 31, 2020 ~~from 8.5% during the three months ended March 31, 2019.~~.

Due to ~~higher~~lower revenue levels, operating expenses as a percentage of sales ~~improved~~increased to ~~9.2%~~14.0% in the current-year quarter from ~~9.7%~~9.2% in the prior year quarter.

Net loss was $1,210during the three months ended March 31, 2021, compared to net income ~~increased to~~of $954 during the three months ended March 31, 2020 ~~from a net loss of $1,042 during the three months ended March 31, 2019~~ due to the factors described ~~above.~~ above, partially offset by the $3,372 employee retention credit recognized in Other Income (expense), net in our condensed consolidated statements of operations.

Heavy Fabrications Segment

Three Months Ended

March 31,

2020

2019

Orders

$
15,514

$
12,510

Tower sections sold

312

188

Revenues

38,368

28,294

Operating income (loss)

3,541

(222)

Operating margin

9.2
%

(0.8)
%

~~The increase in~~

	Three Months Ended
	March 31,
	2021			2020
Orders	$	20,797		$	15,514
Tower sections sold		169			312
Revenues		22,777			38,368
Operating (loss) income		(1,700	)		3,541
Operating margin		(7.5	)%		9.2	%

Heavy Fabrications segment wind tower orders ~~was~~doubled compared to last year, as multiple customers secured 2021 production capacity. Industrial fabrication product line orders within the Heavy Fabrication segment decreased quarter-over-quarter primarily due to ~~increased~~weaker industrial demand, for other industrial fabrications of $4,935, primarily from mining and other industrial customers resulting from ongoing diversification efforts. Partially offsetting this increase was a reduction in tower orders, primarily due towhich is largely driven by the timing of ~~customer purchases.~~projects. Segment revenues ~~increased~~decreased by ~~$10,074~~$15,591 due to a ~~66% increase~~46% decrease in tower sections ~~sold compared to the prior year quarter and the benefit~~sold. The segment was negatively impacted by continued supply chain disruptions, a temporary shut-down of ~~improved customer diversification. This was partially offset by a lower average sales price on towers sold primarily~~our Abilene, Texas plant due to ~~increased~~a weather-related event, a customer ~~supplied materials~~driven project delay and lower demand in the current year.

Table of Contents

Heavy Fabrications segment operating results ~~improved~~decreased by ~~$3,763~~ $5,241compared to the prior year. The quarter-over-quarter ~~improvement reflected~~degradation in operating performance reflects the ~~higher capacity utilization associated with tower production and overall improved operating efficiencies.~~adverse volume impacts described previously. Operating margin was (7.5)% during the three months ended March 31, 2021, a decrease from 9.2% during the three months ended March 31, 2020 ~~an increase from (0.8%) during the three months ended March 31, 2019.~~.

Gearing Segment

Three Months Ended

March 31,

2020

2019

Orders

$
12,421

$
7,135

Revenues

6,227

10,027

Operating (loss) income

(261)

1,387

Operating margin

(4.2)
%

13.8
%

	Three Months Ended
	March 31,
	2021			2020
Orders	$	9,921		$	12,421
Revenues		5,349			6,227
Operating loss		(989	)		(261	)
Operating margin		(18.5	)%		(4.2	)%

Gearing segment orders ~~increased 74% compared to the prior year period~~decreased 20% primarily due to ~~an increase in~~the timing of aftermarket wind gearing orders, which can fluctuate based on customer order ~~patterns.~~patternsand decreased mining demand, partially offset by increased demand for O&G. Gearing ~~segment orders also benefitted from an increase in other industrial customer demand. Revenue decreased 38% from the prior year quarter due primarily to~~revenue was down 14%, a reflection of lower order intake in recent quarters primarily within the ~~second half of 2019 within~~ O&G and ~~other industrial markets. In addition, due to declining oil prices and general market uncertainty, customers delayed approximately $1,000 of purchases into future periods.~~ mining markets,partially offset by increased revenue from aftermarket wind customers.

Gearing segment operating ~~results decreased $1,648~~loss increased $728 from the prior year period. ~~The decrease~~This was primarily attributable to ~~a decrease in~~lower sales ~~across all core markets, a lower margin sales mix~~levels and manufacturing inefficiencies associated with the lower activity levels. Operating margin was ~~(4.2%)~~(18.5)% during the three months ended March 31, ~~2020,~~2021, down from ~~13.8%~~(4.2)% during the three months ended March 31, ~~2019.~~2020, driven primarily by the items identified above.

Industrial Solutions Segment

	Three Months Ended
	March 31,
	2021			2020
Orders	$	3,496		$	5,874
Revenues		4,604			4,039
Operating (loss) income		(14	)		192
Operating margin		(0.3	)%		4.8	%

~~Industrial Solutions Segment~~

Three Months Ended

March 31,

2020

2019
Orders
$
5,874

$
4,361

Revenues

4,039

3,339

Operating income (loss)

192

(285)

Operating margin

4.8
%

(8.5)
%

Industrial Solutions segment orders ~~and revenues increased~~decreased by 40% from the prior year period primarily due to ~~stronger near-term demand for~~the timing of orders associated with new gas turbine ~~content, partially offset~~projects. Segment revenue increased by ~~lower aftermarket demand.~~14% primarily due to the timing of new gas turbine installations. The ~~revenue increase~~decrease in operating income versus the prior-year quarter was primarily a result of ~~recent strong order activity levels associated with an increase in global new gas turbine activity levels. The operating income improvement was~~ a ~~result of~~lower margin sales mix sold during the ~~revenue growth~~quarter.

Corporate and ~~general operating efficiencies. The operating margin improved to 4.8%~~Other

Corporate and Other expenses during the three months ended March 31, ~~2020~~2021 decreased from ~~(8.5%) during~~ the ~~three months ended March 31, 2019.~~

~~Corporate and Other~~

~~Corporate and Other expenses increased by $418 during the three months ended March 31, 2020 primarily~~prior year period due to ~~increased salary~~lower salaries and ~~benefit related expenses~~benefits and a reduction in ~~the current year quarter.~~incentive compensation.

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES

As of March 31, ~~2020,~~2021, cash and cash equivalents totaled ~~$2,743 an increase~~$2,929, a decrease of ~~$327~~ $443from December 31, ~~2019.~~2020. Cash balances remain ~~minimal~~limited as operating receipts and disbursements flow through our Credit Facility, which is in a drawn position. Debt and finance lease obligations at March 31, 2020 totaled $17,761. As of March 31, 2020, we had the ability to borrow up to an additional $16,283 under the Credit Facility (as defined in Note 7, “Debt and Credit Agreements,” in the notes to our condensed consolidated financial statements)., which is in a drawn position. Debt and finance lease obligations at March 31, 2021 totaled $17,803. As of March 31, 2021, we had the ability to borrow up to an additional $18,640 under the Credit Facility. On ~~July 31, 2018,~~March 9, 2021, we entered into an ~~At Market Issuance Sales~~Equity Distribution Agreement (the ~~“ATM~~“Equity Distribution Agreement”) with ~~Roth~~Craig-Hallum Capital ~~Partners,~~Group, LLC (the ~~“Agent”~~Manager”). Pursuant to the terms of the ~~ATM~~Equity Distribution Agreement, we may sell from time to time through the ~~Agent~~Manager shares of the ~~Company's~~Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $10,000. The Company will pay a commission to the ~~Agent~~Manager of 3%2.75% of the gross proceeds of the sale of the shares sold under the ~~ATM~~Equity Distribution Agreement and reimburse the ~~Agent~~Manager for all expenses incident to the ~~expenses~~performance of ~~their counsel.~~its obligations under the Equity Distribution Agreement.

During the quarter ended March 31, 2021, we issued 1,100,000 shares of the Company's common stock thereunder. The net proceeds (before upfront costs) to the Company from the sales of such shares were approximately $6,436 after deducting commissions paid of approximately $182 and before deducting other expense of $335. We anticipate that we will be able to satisfy the cash requirements associated with, among other things, working capital needs, capital expenditures and lease commitments through at least the next twelve months primarily through cash generated from operations, available cash balances, the Credit Facility, additional equipment financing, expected cash proceeds or savings from the ERC, and access to the public or private debt equity markets, including the option to raise capital from the sale of our securities under the Form S-3. However, we do not anticipate that we will have the ability to generate a significant amount of capital from equity markets in the near-term as a result of the low trading volume of our common stock on the NASDAQ exchange and limitations on the aggregate amount of securities that we may offer under the Form S-3 due to our public float size. The Form S-3 will expire on October 10, 2020.

We anticipate that current cash resources, amounts available under the Credit Facility, the loans received under the U.S. Payroll Protection Program, cash to be generated from operations, and any potential proceeds from the sale of our securities under the Form S-3 will be adequate to meet our liquidity needs for at least the next twelve months.

If assumptions regarding our production, sales and subsequent collections from certain of our large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, particularly in light of the COVID-19 pandemic and its effects on domestic and global economies, we may encounter cash flow and liquidity issues. Additionally new or existing customers may request acceleration of production or we may accept new orders or modify existing orders to purchase steel opportunistically or to build products without deposits, which will reduce our liquidity. Further in advance of anticipated cash needs, we may also issue debt or sell equity or equity linked securities.

If our operational performance deteriorates, we may be unable to comply with existing financial covenants, and could lose access to the Credit 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 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 assurances that our operations will generate sufficient cash or that existing or new credit facilities or equity or equity linked financings will be available in an amount sufficient to enable us to 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, ~~2020~~2021 and ~~2019:~~2020:

	Three Months Ended
	March 31,
	2021			2020
Total cash (used in) provided by:
Operating activities	$	(8,437	)	$	(1,025	)
Investing activities		(589	)		(670	)
Financing activities		8,583			2,022
Net (decrease) increase in cash	$	(443	)	$	327

Three Months Ended

March 31,

2020

2019
Total cash provided by (used in):

    Operating activities

$
(1,025)

$
(11,349)
    Investing activities

(670)

(576)
    Financing activities

2,022

10,785
Net increase (decrease) in cash

$
327

$
(1,140)

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Operating Cash Flows

During the three months ended March 31, ~~2020,~~2021, net cash used in operating activities ~~totaled $1,025, compared~~totaled $8,437 compared to net cash used in operating activities of ~~$11,349~~$1,025 for the three months ended March 31, ~~2019.~~2020. This ~~decrease~~increase in net cash used was primarily due to ~~improved~~our operating performance ~~a lower~~and an increase in operating working capital ~~build~~ in the ~~current year period, largely as a result of the timing of new orders that included deposit provisions.~~Heavy Fabrications segment.

Investing Cash Flows

During the three months ended March 31, ~~2020,~~2021, net cash used in investing activities ~~totaled $670, compared~~totaled $589, compared to net cash used in investing activities of ~~$576~~$670 during the three months ended March 31, ~~2019.~~2020. The ~~increase~~decrease in net cash used in investing activities as compared to the prior-year period was due to ~~an increase~~a decrease in net purchases of property and equipment.

Financing Cash Flows

During the three months ended March 31, ~~2020,~~2021, net cash provided by financing activities ~~totaled $2,022, compared~~totaled $8,583, compared to net cash provided by financing activities of ~~$10,785~~$2,022 for the three months ended March 31, ~~2019.~~2020. The ~~decrease~~increase versus the prior-year period was primarily due to ~~lower usage~~proceeds from the sale of securities under the Equity Distribution Agreement received in the current year and increased net borrowings on our Credit Facility in the current year.

Other

In 2016, we entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, less current maturities” line item of our condensed consolidated financial statements as of March 31, ~~2020~~2021 and December 31, ~~2019.~~2020. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2020, 2019 and 2018, $114 of the loan was forgiven. As of March 31, ~~2020,~~2021, the loan balance was ~~$342.~~$228. In addition, we have outstanding notes payable for capital expenditures in the amount of ~~$2,363~~ $609and ~~$1,563~~$163 as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, with ~~$2,350~~ $609and ~~$1,400~~$161 included in the “Line of Credit and other notes payable” line item of our condensed consolidated financial statements as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The notes payable have monthly payments that range from $1 to $36 and an interest rate of approximately 5%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from ~~April 2020~~May2021 to August 2022.

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On April 15, 2020, we received ~~loans totaling $9,530 as part of~~funds under notes and related documents (“PPP Loans”) with CIBC Bank, USA under the ~~2020~~Paycheck Protection Program (the “PPP”) which was established under the Coronavirus Aid, Relief, and Economic ~~Stability Act. Please refer~~Security Act (“CARES Act”) enacted on March 27, 2020 in response to ~~Note 16, “Subsequent Events”~~the COVID-19 pandemic and is administered by the U.S. Small Business Administration (the “SBA”). We received total proceeds of $9,530 from the PPP loans and made repayments of $379 on May 13, 2020. Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020 enacted on June 5, 2020 (the “Flexibility Act”), the PPP Loans, and accrued interest and fees may be forgiven following a period of twenty-four weeks after PPP Loan proceeds are received (the “covered period”) if they are used for qualifying expenses as described in the ~~notes~~CARES Act including payroll costs and benefits (which must equal or exceed 60% of the amount requested to be forgiven), rent, mortgage interest, and utilities, which are subject to certain reductions based on the number of full time equivalent employees and the level of compensation for employees during such covered period. The amount of loan forgiveness will be reduced if the borrower terminates employees or significantly reduces salaries during such period, subject to certain exceptions. Subject to the terms and conditions applicable to loans administered by the SBA under the PPP, as amended by the Flexibility Act, the unforgiven portion of a PPP Loan is payable over a two year period at an interest rate of 1.00%, with a deferral of payments of principal, interest and fees until the date on which the SBA remits the loan forgiveness amount to the lender (or notifies the lender that no loan forgiveness is allowed), provided that the borrower applies for forgiveness within 10 months after the last day of the covered period (and if not, payment of principal and interest shall commence 10 months after the last day of the covered period). We used at least 60% of the amount of the PPP Loans proceeds to pay for payroll costs and the balance on other eligible qualifying expenses that we believe to be consistent with the terms of the PPP and submitted our forgiveness applications to CIBC Bank, USA during the first quarter of 2021. While we currently believe that our use of the loan proceeds will meet the conditions for forgiveness of the PPP Loans, we cannot provide assurance that we have not taken and will not take actions that could cause us to be ineligible for forgiveness of the PPP Loans, in whole or in part.

The CARES Act also provided for the ERC, which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. The ERC is available through December 31, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter in 2021, a maximum of $10,000 in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is $7,000 per employee per calendar quarter. We qualified for the ERC in the first quarter of 2021 because we had a gross receipts decrease of more than 20% from the first quarter of 2019, the relevant criteria for the ERC. As a result of us averaging 500 or fewer full-time employees in 2019, all wages paid to employees were eligible for the ERC (rather than just wages paid to employees not providing services). During the three months ended March 31, 2021, we recorded a benefit of $3,372 in Other income (expense), net in our condensed consolidated ~~financial statements~~statement of operations which is included in ~~Part I, Item 1 of this Quarterly Report on Form 10-Q for more details.~~the line titled Employee retention credit receivable in our condensed consolidated balance sheet at March 31, 2021.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The preceding discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q 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, ~~2019.~~2020. Portions of this Quarterly Report on Form 10-Q, including the discussion and analysis in this Part I, Item 2, contain “forward looking statements”, as defined in Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)., that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements. Forward looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following, many of which are, and will be, amplified by the COVID-19 pandemic: (i) the impact of global health concerns, including the impact of the current COVID-19 pandemic on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary, in light of the COVID-19 pandemic; (v) our ability to continue to grow our business organically and through acquisitions, and the impairment thereto by the impact of the COVID-19 pandemic; (vi) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (vii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security, including with respect to any remote work arrangements implemented in response to the COVID-19 pandemic; (viii) the sufficiency of our liquidity and alternate sources of funding, if necessary; (ix) our ability to realize revenue from customer orders and backlog; (x) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (xi) the economy, including its stability in light of the COVID-19 pandemic, and the potential impact it may have on our business, including our customers; (xii) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xv) the effects of the change of administrations in the U.S. federal government; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xviii) our ability to utilize various relief options enabled by the ~~Coronavirus Aid, Relief and Economic Security Act;~~CARES Act, including our ability to receive forgiveness of the PPP Loans; (xix) the limited trading market for our securities and the volatility of market price for our securities; and (xx) the impact of future sales of our common stock or securities convertible into our common stock on our stock price. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements including, but not limited to, those set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2019, as supplemented by our Current Report on Form 8-K filed April 17,~~ 2020. We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Item 10(f)(1) of Regulation S-K under the Securities Act and as such are not required to provide information under this Item pursuant to Item ~~305(e)~~305I of Regulation S-K.

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We seek to maintain disclosure controls and procedures (as defined in Rules ~~13a-15(e)~~13a-15I and ~~15d-15(e)~~15d-15I under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. This information is also accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. Our management, under the

		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	1718
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2324
Item 4.	Controls and Procedures	2324
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2526
Item 3.	Defaults Upon Senior Securities	2526
Item 4.	Mine Safety Disclosures	2526
Item 5.	Other Information	2526
Item 6.	Exhibits	2526
Signatures		2728


	March 31,		December 31,		March 31,			December 31,
	2020		2019		2021			2020
Raw materials	$	24,325	$	22,759	$	25,406		$	14,586
Work-in-process		11,496		8,366		14,272			12,634
Finished goods		6,926		2,915		2,843			2,704
		42,747		34,040		42,521			29,924
Less: Reserve for excess and obsolete inventory		(1,993)		(2,177)		(2,245	)		(3,200	)
Net inventories	$	40,754	$	31,863	$	40,276		$	26,724

							Finance			Operating
	Finance		Operating				Leases			Leases			Total
	Leases		Leases		Total
2020	$	409	$	2,628	$	3,037
2021		527		3,387		3,914	$	1,317		$	2,668		$	3,985
2022		202		2,902		3,104		1,400			3,474			4,874
2023		34		2,884		2,918		732			3,388			4,120
2024		—		2,906		2,906		151			2,933			3,084
2025 and thereafter		—		20,119		20,119
2025								84			3,015			3,099
2026 and thereafter								—			17,103			17,103
Total lease payments		1,172		34,826		35,998		3,684			32,581			36,265
Less—portion representing interest		(116)		(12,923)		(13,039)		(337	)		(11,090	)		(11,427	)
Present value of lease obligations		1,056		21,903		22,959		3,347			21,491			24,838
Less—current portion of lease obligations		(462)		(1,579)		(2,041)		(1,456	)		(1,743	)		(3,199	)
Long-term portion of lease obligations	$	594	$	20,324	$	20,918	$	1,891		$	19,748		$	21,639



		Weighted Average
	Options	Exercise Price
Outstanding as of December 31, 2019	54,362	$	11.16
Forfeited	—	$	—
Outstanding as of March 31, 2020	54,362	$	11.16
Exercisable as of March 31, 2020	54,362	$	11.16


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‑Q10-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‑K8-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‑K8-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‑K8-K filed May 6, 2020)
10.1	~~Note~~Second Amendment to the Amended and Restated Loan and Security Agreement, dated ~~April 5, 2020~~February 23, 2021, among the Company, Brad Foote Gearworks, Inc., Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC, and CIBC Bank USA, as Administrative Agent for itself and all Lenders (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020)
10.2	Equity Distribution Agreement, dated March 9, 2021, by and between ~~Brad Foote Gear Works, Inc.~~the Company and CIBC Bank USA*
~~10.2~~	~~Note dated April 5, 2020~~Craig-Hallum Capital Group LLC (incorporated by and between Broadwind Heavy Fabricators, Inc. and CIBC Bank USA*reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed March 9, 2021)
~~10.3~~	Note dated April 5, 2020 by and between Broadwind Industrial Services, Inc. and CIBC Bank USA*
~~10.4~~	Note dated April 8, 2020 by and between Broadwind Energy, Inc. n/k/a Broadwind, Inc. and CIBC Bank USA*
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 Chief Financial Officer*
101	The following financial information from this Form 10-Q of Broadwind, Inc. for the quarter ended March 31, ~~2020,~~2021, formatted in XBRL (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.

	Total Assets as of
	March 31,			December 31,
Segments:	2021			2020
Heavy Fabrications	$	55,689		$	40,438
Gearing		43,181			43,319
Industrial Solutions		8,222			10,244
Corporate		227,891			220,428
Eliminations		(200,762	)		(194,747	)
	$	134,221		$	119,682


	Three Months Ended March 31,								2020 vs. 2019
			% of Total				% of Total
	2020		Revenue		2019		Revenue		$ Change		% Change
Revenues	$	48,634	100.0	%	$	41,660	100.0	%	$	6,974	16.7	%
Cost of sales		42,462	87.3	%		38,111	91.5	%		4,351	11.4	%
Restructuring		—	—	%		12	0.0	%		(12)	(100.0)	%
Gross profit		6,172	12.7	%		3,537	8.5	%		2,635	74.5	%
Operating expenses
Selling, general and administrative expenses		4,309	8.9	%		3,828	9.2	%		481	12.6	%
Intangible amortization		183	0.4	%		203	0.5	%		(20)	(9.9)	%
Total operating expenses		4,492	9.2	%		4,031	9.7	%		461	11.4	%
Operating income (loss)		1,680	3.5	%		(494)	(1.2)	%		2,174	440.1	%
Other expense, net
Interest expense, net		(673)	(1.4)	%		(536)	(1.3)	%		(137)	(25.6)	%
Other, net		(1)	(0.0)	%		(1)	(0.0)	%		—	—	%
Total other expense, net		(674)	(1.4)	%		(537)	(1.3)	%		(137)	(25.5)	%
Net income (loss) before provision for income taxes		1,006	2.1	%		(1,031)	(2.5)	%		2,037	197.6	%
Provision for income taxes		52	0.1	%		11	0.0	%		41	372.7	%
Net income (loss)	$	954	2.0	%	$	(1,042)	(2.5)	%	$	1,996	191.6	%

	BROADWIND, INC.


May ~~8, 2020~~7, 2021	By:	/s/ Eric B. Blashford
		Eric B. Blashford
		President, Chief Executive Officer
		(Principal Executive Officer)
May ~~8, 2020~~ 7, 2021	By:	/s/ Jason L. Bonfigt
		Jason L. Bonfigt
		Vice President, Chief Financial Officer (Principal Financial Officer)