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

For the quarterly period ended ~~September~~June 30, ~~2021~~2022

☐

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)

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 ☒		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 ~~November 8, 2021:~~August ~~19,481,414.~~4, 2022:20,471,051.

Table of Contents

	*September 30,*			*December 31,*			*June 30,*			*December 31,*
	*2021*			*2020*			*2022*			*2021*

ASSETS
CURRENT ASSETS:
Cash	$	2,335		$	3,372		$	49		$	852
Accounts receivable, net		16,131			15,337			21,161			13,802
Employee retention credit receivable		503			0			0			497
Contract assets		1,491			2,253			3,330			1,136
Inventories, net		24,876			26,724			34,929			33,377
Prepaid expenses and other current assets		2,220			2,909			2,065			2,661
Total current assets		47,556			50,595			61,534			52,325
LONG-TERM ASSETS:
Property and equipment, net		44,239			45,195			44,454			43,655
Operating lease right-of-use assets		18,462			19,321			17,140			18,029
Intangible assets, net		3,636			4,186			3,086			3,453
Other assets		585			385			653			585
TOTAL ASSETS	$	114,478		$	119,682		$	126,867		$	118,047
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Line of credit and other notes payable	$	5,445		$	1,406		$	17,178		$	6,650
Current portion of finance lease obligations		1,886			1,427			2,170			2,060
Current portion of operating lease obligations		1,732			1,832			1,798			1,775
Accounts payable		13,773			18,180			26,105			16,462
Accrued liabilities		4,040			6,307			4,312			3,654
Customer deposits		7,680			18,819			4,293			12,082
Total current liabilities		34,556			47,971			55,856			42,683
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities		228			9,381			687			177
Long-term finance lease obligations, net of current portion		2,762			1,996			2,940			2,481
Long-term operating lease obligations, net of current portion		18,863			19,569			17,511			18,405
Other		917			104			197			167
Total long-term liabilities		22,770			31,050			21,335			21,230
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding		0			0
Common stock, $0.001 par value; 30,000,000 shares authorized; 19,753,256 and 17,211,498 shares issued as of September 30, 2021, and December 31, 2020, respectively		20			17
Treasury stock, at cost, 273,937 shares as of September 30, 2021 and December 31, 2020		(1,842	)		(1,842	)
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding								0			0
Common stock, $0.001 par value; 30,000,000 shares authorized; 20,744,988 and 19,859,650 shares issued as of June 30, 2022, and December 31, 2021, respectively								20			20
Treasury stock, at cost, 273,937 shares as of June 30, 2022 and December 31, 2021								(1,842	)		(1,842	)
Additional paid-in capital		394,300			384,749			396,021			395,372
Accumulated deficit		(335,326	)		(342,263	)		(344,523	)		(339,416	)
Total stockholders’ equity		57,152			40,661			49,676			54,134
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	114,478		$	119,682		$	126,867		$	118,047

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, 2019		16,830,930		$	17		(273,937	)	$	(1,842	)	$	383,361		$	(340,776	)	$	40,760
Stock issued for restricted stock		83,050			0		0			0			0			0			0
Share-based compensation		—			0		—			0			308			0			308
Net income		—			0		—			0			0			954			954
BALANCE, March 31, 2020		16,913,980		$	17		(273,937	)	$	(1,842	)	$	383,669		$	(339,822	)	$	42,022
Stock issued for restricted stock		199,636			0		0			0			0			0			0
Share-based compensation		—			0		—			0			248			0			248
Net income		—			0		—			0			0			529			529
BALANCE, June 30, 2020		17,113,616		$	17		(273,937	)	$	(1,842	)	$	383,917		$	(339,293	)	$	42,799
Stock issued for restricted stock		6,401			0		0			0			0			0			0
Share-based compensation		—			0		—			0			207			0			207
Sale of common stock, net		91,481			0		0			0			232			0			232
Net loss		—			0		—			0			0			(1,003	)		(1,003	)
BALANCE, September 30, 2020		17,211,498		$	17		(273,937	)	$	(1,842	)	$	384,356		$	(340,296	)	$	42,235

BALANCE, December 31, 2020		17,211,498		$	17		(273,937	)	$	(1,842	)	$	384,749		$	(342,263	)	$	40,661			17,211,498		$	17		(273,937	)	$	(1,842	)	$	384,749		$	(342,263	)	$	40,661
Stock issued for restricted stock		241,806			0		0			0			0			0			0			241,806			0		0			0			0			0			0
Stock issued under defined contribution 401(k) retirement savings plan		26,265			0		0			0			258			0			258			26,265			0		0			0			258			0			258
Share-based compensation		—			0		—			0			219			0			219			—			0		—			0			219			0			219
Shares withheld for taxes in connection with issuance of restricted stock		(105,399	)		0		0			0			(847	)		0			(847	)		(105,399	)		0		0			0			(847	)		0			(847	)
Sale of common stock, net		1,100,000			1		0			0			6,100			0			6,101			1,100,000			1		0			0			6,100			0			6,101
Net loss		—			0		—			0			0			(1,210	)		(1,210	)		—			0		—			0			0			(1,210	)		(1,210	)
BALANCE, March 31, 2021		18,474,170		$	18		(273,937	)	$	(1,842	)	$	390,479		$	(343,473	)	$	45,182			18,474,170		$	18		(273,937	)	$	(1,842	)	$	390,479		$	(343,473	)	$	45,182
Stock issued for restricted stock		440,611			1		0			0			0			0			1			440,611			1		0			0			0			0			1
Stock issued under defined contribution 401(k) retirement savings plan		71,334			0		0			0			312			0			312			71,334			0		0			0			312			0			312
Share-based compensation		—			0		—			0			445			0			445			—			0		—			0			445			0			445
Shares withheld for taxes in connection with issuance of restricted stock		(124,814	)		0		0			0			(644	)		0			(644	)		(124,814	)		0		0			0			(644	)		0			(644	)
Sale of common stock, net		797,697			1		0			0			3,247			0			3,248			797,697			1		0			0			3,247			0			3,248
Net income		—			0		—			0			0			10,252			10,252			—			0		—			0			0			10,252			10,252
BALANCE, June 30, 2021		19,658,998		$	20		(273,937	)	$	(1,842	)	$	393,839		$	(333,221	)	$	58,796			19,658,998			20		(273,937	)		(1,842	)		393,839			(333,221	)		58,796


BALANCE, December 31, 2021																						19,859,650		$	20		(273,937	)	$	(1,842	)	$	395,372		$	(339,416	)	$	54,134
Stock issued for restricted stock		9,583			0		0			0			0			0			0			480,595			0		0			0			0			0			0
Stock issued under defined contribution 401(k) retirement savings plan		87,615			0		0			0			300			0			300			146,790			0		0			0			282			0			282
Share-based compensation		—			0		—			0			193			0			193			—			0		—			0			192			0			192
Shares withheld for taxes in connection with issuance of restricted stock		(2,940	)		0		0			0			(12	)		0			(12	)		(194,962	)		0		0			0			(411	)		0			(411	)
Sale of common stock, net		—			0		—			0			(20	)		0			(20	)
Net loss		—			0		—			0			0			(2,105	)		(2,105	)		—			0		—			0			0			(2,404	)		(2,404	)
BALANCE, September 30, 2021		19,753,256		$	20		(273,937	)	$	(1,842	)	$	394,300		$	(335,326	)	$	57,152
BALANCE, March 31, 2022																						20,292,073		$	20		(273,937	)	$	(1,842	)	$	395,435		$	(341,820	)	$	51,793
Stock issued for restricted stock																						328,139			0		0			0			0			0			0
Stock issued under defined contribution 401(k) retirement savings plan																						207,722			0		0			0			331			0			331
Share-based compensation																						—			0		—			0			388			0			388
Shares withheld for taxes in connection with issuance of restricted stock																						(82,946	)		0		0			0			(133	)		0			(133	)
Net loss																						—			0		—			0			0			(2,703	)		(2,703	)
BALANCE, June 30, 2022																						20,744,988		$	20		(273,937	)	$	(1,842	)	$	396,021		$	(344,523	)	$	49,676

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

		*Nine Months Ended September 30,*						*Six Months Ended June 30,*
		*2021*			*2020*			*2022*			*2021*
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	6,937		$	480
Net (loss) income								$	(5,107	)	$	9,042
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense			4,758			4,761			3,095			3,164
Paycheck Protection Program loan forgiveness			(9,151	)		0			0			(9,151	)
Deferred income taxes			19			12			(9	)		21
Change in fair value of interest rate swap agreements			18			161			2			12
Stock-based compensation			857			763			580			664
Allowance for doubtful accounts			(434	)		47			30			(421	)
Common stock issued under defined contribution 401(k) plan			870			0			613			570
Gain on disposal of assets			(33	)		0
Loss (gain) on disposal of assets									3			(23	)
Changes in operating assets and liabilities:
Accounts receivable			(360	)		(5,898	)		(7,389	)		(1,856	)
Employee retention credit receivable			(503	)		0			497			(1,714	)
Contract assets			763			(1,475	)		(2,194	)		(412	)
Inventories			1,848			6,383			(1,552	)		(5,227	)
Prepaid expenses and other current assets			689			(303	)		596			1,024
Accounts payable			(4,321	)		(3,900	)		9,698			(1,342	)
Accrued liabilities			(2,285	)		678			656			(953	)
Customer deposits			(11,139	)		(4,193	)		(7,789	)		(3,349	)
Other non-current assets and liabilities	��		644			9			6			(36	)
Net cash used in operating activities			(10,823	)		(2,475	)		(8,264	)		(9,987	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment			(1,369	)		(1,597	)		(1,697	)		(765	)
Proceeds from disposals of property and equipment			33			0			0			23
Net cash used in investing activities			(1,336	)		(1,597	)		(1,697	)		(742	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit			120,485			142,348
Payments on line of credit			(116,446	)		(146,216	)
Proceeds from line of credit, net									10,687			4,754
Proceeds from long-term debt			613			9,530			125			387
Payments on long-term debt			(159	)		(1,003	)		(107	)		(157	)
Principal payments on finance leases			(1,197	)		(694	)		(1,003	)		(728	)
Shares withheld for taxes in connection with issuance of restricted stock			(1,503	)		0			(544	)		(1,491	)
Proceeds from sale of common stock, net			9,329			232			0			9,349
Net cash provided by financing activities			11,122			4,197			9,158			12,114
NET (DECREASE) INCREASE IN CASH			(1,037	)		125			(803	)		1,385
CASH beginning of the period			3,372			2,416			852			3,372
CASH end of the period		$	2,335		$	2,541		$	49		$	4,757

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

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

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 and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, ~~2021,~~2022, or any other interim period, which may differ materially due to, among other things, the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021.

The December 31, ~~2020~~2021 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. This financial information should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021.

There have been no material changes in the Company’s significant accounting policies during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021.

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, gearbox repair, heat treatment, assembly, engineering and packaging solutions. The Company’s most significant presence is within the U.S. wind energy industry, which accounted for ~~66%~~53% and ~~72%~~68% of the Company’s revenue during the first ~~nine~~six months of ~~2021~~2022 and ~~2020,~~2021, respectively.

The Company typically meets its short term liquidity needs through cash generated from operations, its available cash balances, the 2016Credit Facility ~~(as~~and the 2022 Credit Facility, as applicable (each, as defined in Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements below), equipment financing, and access to the public or private debt and/or equity markets, including the option to raise capital from the sale of our securities under the Form S-3 (as discussed below).

See Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements for a ~~complete~~ description of the2016 Credit Facility, the 2022 Credit Facility and the Company’s other debt.

Total debt and finance lease obligations at ~~September~~June 30, ~~2021~~2022 totaled ~~$10,321,~~$22,975, which includes current outstanding debt and finance leases totaling ~~$7,331.~~$19,348. The Company's revolving line of credit balance is included in the “Line of credit and other notes payable” line item in the Company's condensed consolidated balance sheet. ~~Long-term debt at~~ ~~December 31, 2020~~ ~~included $9,151 of Payroll Protection Program loans (“PPP Loans”), which were forgiven by the U.S. Small Business Administration (“SBA”) during the quarter ended~~ ~~June 30, 2021.~~ ~~See Note~~ 7, ~~“Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the PPP Loans.~~

On August 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 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 March 9, 2021, the Company entered into a $10,000 Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC. Pursuant to the terms of the Equity Distribution Agreement, the Company issued 1,897,697 shares of the Company’s common stock thereunder during the first two quarters of 2021. The net proceeds (before upfront costs) to the Company from the sale of such shares were approximately $9,725 after deducting commissions paid of approximately $275 and before deducting other expenses of ~~$396.~~$411.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes. The ~~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 for wages paid through ~~December 31,~~ September 30,2021and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. ~~During each quarter of~~ ~~2021,~~ ~~a maximum of~~ ~~$10,000~~ ~~in qualified wages for each employee is eligible for the ERC. Therefore, the~~The maximum tax credit that ~~can~~could be claimed by an eligible employer in 2021 iswas $7,000 per employee per calendar quarter. In the first and second quarters of 2021, the Company received ERC benefits of $3,372 and $3,593, respectively, which were recorded in “Other income (expense), net” in the Company’s condensed consolidated statement of operations. The Company ~~qualified~~did not qualify for the ERC ~~in the~~ ~~first~~ ~~quarter of~~ ~~2021~~ ~~because it experienced a reduction in gross receipts of more than~~ ~~20%~~ ~~for the~~ ~~first~~ ~~quarter of~~ ~~2021~~ ~~compared to the~~ ~~first~~ ~~quarter of~~ ~~2019,~~ ~~the relevant criteria for the ERC. Since the Company qualified for the ERC in the~~ ~~first~~ ~~quarter of~~ ~~2021,~~ ~~it automatically qualified for the ERC in the~~ ~~second~~ ~~quarter of~~ ~~2021.~~ ~~As a result of the Company averaging~~ ~~500~~ ~~or fewer full-time employees in~~ ~~2019,~~ ~~all wages paid to employees were eligible for the ERC (rather than only wages paid to employees~~ ~~not~~ ~~providing services). During~~benefit during the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of ~~2019,~~2019. ~~the Company did~~ ~~not~~ ~~qualify for the ERC benefit.~~ The receivable for the remaining uncollected ERC benefit is ~~$503~~was $497 as of ~~September~~December 31, 2021 ~~30,~~~~2021~~and iswas included in the “Employee retention credit receivable” line item in the Company’s condensed consolidated balance sheet at ~~September~~December ~~30,~~31, 2021. The remaining $497 for the uncollected ERC benefit was collected during January 2022.

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

During the three and six months ended June 30, 2022, the Company sold account receivables totaling $30,133and $45,493, respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling $414 and $490, respectively. During the three and six months ended June 30, 2021, the Company sold account receivables totaling $32,694 and $54,011, respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling $79 and $133, respectively.

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

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

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.~~reserves, and valuation allowances on deferred taxes. Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates, particularly in light of the COVID-19 pandemic.

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

The following table presents the Company’s revenues disaggregated by revenue source for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021:

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

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

~~During~~Within the Gearing segment, the Company recognized revenue over time of $975and $1,532for the ~~nine~~three and six months ended ~~September~~June 30, 2021, respectively, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts. Since the Company's projects are labor intensive, the Company uses labor hours as the input measure of progress for the applicable contracts. During the fourth quarter of 2021, the Company ceased recording revenue over time within the Gearing segment due to a change in terms. During the six months ended June 30,2022 and 2021, the Company recognized a portion of revenue within the ~~Gearing and~~ Heavy Fabrications ~~segments~~segment over time, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts. ~~Since the projects are labor intensive, the Company uses labor hours as the input measure of progress for the applicable contracts.~~ Within the Heavy Fabrications segment, the Company recognized revenue over time of ~~$1,791~~$4,182 and ~~$4,220~~$7,409 for the three and ~~nine~~six months ended ~~September~~June 30, 2022, ~~30,~~~~2021,~~respectively. Within the ~~Gearing~~Heavy Fabrications segment, the Company recognized revenue over time of ~~$499~~$1,276 and ~~$2,444~~$2,429 for the three and ~~nine~~six months ended ~~September~~June 30, 2021, ~~30,~~~~2021,~~respectively. Contract assets are recorded when performance obligations are satisfied but the Company is not yet entitled to payment. Contract assets represent the Company’s rights to consideration for work completed but not billed at the end of the period. ~~During the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2020,~~ ~~the Company recognized revenue over time of $1,475 from~~ ~~one~~ ~~customer within the Gearing segment.~~

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

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

The following table presents a reconciliation of basic and diluted earnings per share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021, as follows:

The components of inventories as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 are summarized as follows:

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company’s acquisition of Brad Foote completed in 2007 as well as the noncompetition agreements, trade names and customer relationships that were part of the Company’s acquisition of Red Wolf Company, LLC completed in 2017. Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 1 to 65 years.

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021, the cost basis, accumulated amortization and net book value of intangible assets were as follows:

	*September 30, 2021*													*December 31, 2020*												*June 30, 2022*												*December 31, 2021*
												*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	$	(132	)	$	0			$	38		1.3	$	170	$	(111	)	$	0		$	59		2.1	$	170	$	(153	)	$	0		$	17		0.6	$	170	$	(139	)	$	0		$	31		1.1
Customer relationships		15,979		(7,208	)		(7,592	)	��		1,179		4.2		15,979		(6,979	)		(7,592	)		1,408		4.9		15,979		(7,437	)		(7,592	)		950		3.5		15,979		(7,284	)		(7,592	)		1,103		4.0
Trade names		9,099		(6,680	)		0				2,419		6.0		9,099		(6,380	)		0			2,719		6.8		9,099		(6,980	)		0			2,119		5.3		9,099		(6,780	)		0			2,319		5.8
Intangible assets	$	25,248	$	(14,020	)	$	(7,592	)		$	3,636		4.0	$	25,248	$	(13,470	)	$	(7,592	)	$	4,186		4.6	$	25,248	$	(14,570	)	$	(7,592	)	$	3,086		4.7	$	25,248	$	(14,203	)	$	(7,592	)	$	3,453		5.2

As of ~~September~~June 30, ~~2021~~2022, estimated future amortization expense was as follows:

Accrued liabilities as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following:

The Company’s outstanding debt balances as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted of the following:

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 and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the other financial institutions party thereto, providing the Company and its subsidiaries with a $35,000 secured credit facility (as amended to date, the ~~“Credit~~“2016 Credit Facility”). The obligations under the2016 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.

On October 29, 2020, the Company executed the First Amendment to the Amended and Restated Loan Agreement, implementing a payoff of a syndicated lender and a pricing grid based on the Company’s trailing twelve month EBITDA under which applicable margins range from 2.25% to 2.75% for London Interbank Offering Rate (“LIBOR”) rate loans and 0.00% and 0.75% for base rate loans, and extending the term of the2016 Credit Facility to July 31, 2023.

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

On November 8, 2021, the Company executed the Third Amendment to the Amended and Restated Loan Agreement (the “Third Amendment”) which waived the fixed charge coverage ratio default for the quarter ended September 30, 2021, suspended testing of the fixed charge coverage ratio covenant through September 30, 2022, added a minimum EBITDA covenant applicable to the three-month period ending December 31, 2021, the six-month period ending March 31, 2022, the nine-month period ending June 30, 2022 and the twelve-month period ending September 30, 2022 and added a reserve of ~~$5,000,000~~$5,000 to the ~~Revolving Loan Availability~~revolving loan availability through December 31, 2022. ~~For a more detailed description of the Third Amendment, refer to Item~~ 5 ~~of Part II of this Form~~ 10~~-Q.~~

The Credit Facility is an asset-based revolving credit facility, pursuant to which the CIBC advances funds against a borrowing base consisting of approximately (a) 85% of the face value of eligible receivables of On February 28, 2022, the Company ~~and~~executed 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. SubjectFourth Amendment to ~~certain borrowing base conditions, the aggregate Credit Facility limit under~~ the Amended and Restated Loan Agreement ~~is $35 million with a sublimit for letters~~(the “Fourth Amendment”) which reduced the line of credit ~~of $10 million. Borrowings under~~from $35,000 to $30,000, extended the ~~Credit Facility bear interest at a per annum rate equal to, at~~maturity date until January 31, 2024, waived the ~~option of~~minimum EBITDA covenant for the ~~Company, the one,~~ ~~two~~ or three-month period ended December 31, 2021, revised the fixed charge coverage ratio covenant as of December 31, 2022 for the trailing nine-month period after March 31, 2022, revised the minimum EBITDA covenant applicable to the three-month period ending March 31, 2022, the six-month period ending June 30, 2022 and the nine-month period ending September 30, 2022, revised the liquidity reserve to $2,500 and amended certain other provisions in connection with the discontinuation of LIBOR ~~rate or~~and replacement with the base rate, plus a margin. 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. With the exception of the balance impactedforward-looking term Secured Overnight Financing Rate (Term SOFR) administered by the interest rate swap (as 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.CME Group, Inc.

The2016 Credit Facility contains customary representations and warranties applicable to the Company and ~~its~~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.

In conjunction with the Amended and Restated Loan Agreement, during June 2019, the Company entered into a floating to fixed interest rate swap with CIBC. The swap agreement has a notional amount of $6,000 and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire original term of the2016 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 ~~September 30,~~December 31, 2021. The interest rate swap expired in February 2022.

On August 4, 2022, the Company entered into a credit agreement (the “ Wells Fargo Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), providing the Company and its subsidiaries with a $35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon the request of the Company and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. The 2022 Credit Facility replaces the 2016 Credit Facility. All obligations outstanding under the 2016 Credit Facility were refinanced by the 2022 Credit Facility on August 5, 2022.

The 2022 Credit Facility contains customary covenants limiting the Company’s and its subsidiaries’ ability to, among other things, incur liens, make investments, incur indebtedness, merge or consolidate with others or dispose of assets, change the nature of its business, and enter into transactions with affiliates. In addition, the 2022 Credit Facility contains financial covenants requiring the Company to have a Fixed Charge Coverage Ratio (as defined in the 2022 Credit Facility) (i) as of the twelve-month period ending July 31, 2023 through and including December 31, ~~2020~~2023 .of 1.0 to 1.0; and (ii) as of each twelve-month period thereafter to be greater than 1.1 to 1.0 and minimum EBITDA (as defined in the 2022 Credit Facility) on a month-end basis of $0 for the six month period ending June 30, 2022, $1,500 for the nine-month period ending September 30, 2022, $2,500 for the twelve-month period ending December 31, 2022, $3,600 for the twelve-month period ending March 31, 2023, and $5,100 for the twelve-month period ending June 30, 2023. The initial term of the revolving credit facility matures August 4, 2027 and the term loan also matures on August 4, 2027, with monthly payments based on an 84-month amortization.

Borrowings under the 2022 Credit Facility bear interest at the following rates depending on the classification of the borrowing:

• term loan - Daily Simple SOFR (a rate per annum equal to the secured overnight financing rate published by the SOFR administrator on the website of the Federal Reserve Bank of New York or any successor source), plus an applicable margin of 2.50%; and

• revolving credit loan - Daily Simple SOFR, plus an applicable margin of 2.00% to 2.50% depending on the excess availability on the revolving loan facility.

The 2022 Credit Agreement also contains customary events of default including, without limitation, non-payment of obligations, non-performance of covenants and obligations, material judgments, bankruptcy or insolvency, change of control, breaches of representations and warranties, limitation or termination of any guarantee with respect to the 2022 Credit Agreement or unenforceability of documentation related to the 2022 Credit Agreement. The Company is allowed to prepay in whole or in part advances under the 2022 Credit Facility without penalty or premium.

The obligations under the 2022 Credit Agreement are secured by, subject to certain exclusions, (i) a first priority security interest in all accounts, inventory, equipment, general intangibles, intellectual property, money and investment property, and (ii) a deed of trust, assignment of leases and rents and security agreement and fixture filing on the Abilene, Texas facility.

In connection with the 2022 Credit Facility, on August 4, 2022, the Company, its subsidiaries and 5100 Neville Road, LLC (collectively, the “Guarantors”) entered into a guaranty (the “Guaranty”) in favor of Wells Fargo, whereby the Guarantors guaranteed the full payment of all the obligations of the Company and its subsidiaries under the 2022 Credit Facility. Each of the Company’s additional subsidiaries, upon it becoming a direct or indirect subsidiary, will be required to become a party to the Guaranty.

As of ~~September~~June 30, ~~2021~~2022, there was ~~$5,284~~$17,037 of outstanding indebtedness under the2016 Credit Facility, with the ability to borrow an additional ~~$18,743.~~$10,178. The Company was in compliance with all financial covenants under the 2016 Credit Facility as of June 30, 2022.

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~~net of current maturities” line item of ~~our~~the Company’s condensed consolidated financial statements as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2021,2020, 2019, and 2018, $114 of the loan was forgiven. As of ~~September~~June 30, ~~2021~~2022, the loan balance was ~~$228.~~$114. In addition, the Company has outstanding notes payable for capital expenditures in the amount of ~~$161~~$714 and ~~$163~~$363 as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021, respectively, with ~~$161~~$27 and $186 included in the “Line of credit and other notes payable” line item of the Company’s condensed consolidated financial statements as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021. The notes payable have monthly payments that range from $1$3 to $16 and an interest rate of approximately 4%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable ~~have maturity dates that range from~~ ~~March~~ ~~2022~~ tomature in September ~~2024.~~2028.

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

The Company leases certain facilities and equipment. On ~~January 1, 2019,~~ ~~the Company adopted~~The leases are accounted for under Accounting Standard Update ~~(“ASU”)~~ 2016-02, Leases (“Topic 842”) and ~~ASU~~ ~~2018~~-11 ~~using~~ the ~~cumulative effect method and has~~Company elected to apply each available practical expedient. The ~~adoption of Topic~~ ~~842~~ resulted in the Company recognizing operating lease liabilities totaling $19,508 with a corresponding right-of-use (“ROU”) asset of $17,613 based on the present value of the minimum rental payments of such leases. The variance between the ROU asset balance and the lease liability is a deferred rent liability that existed prior to the adoption of Topic ~~842~~ ~~and was offset against the ROU asset balance during the adoption. The~~ discount rates used for the 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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, the Company had additional operating leases that resulted in right-of-use assets obtained in exchange for lease obligations of ~~$907~~$0 and ~~$4,380,~~$907, respectively. Additionally, during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, the Company had additional finance leases that resulted in property, plant, and equipment obtained in exchange for lease obligations of ~~$2,444~~$1,773 and ~~$2,253,~~$1,896, respectively.

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

As of ~~September~~June 30, ~~2021~~2022, future minimum lease payments under finance leases and operating leases were as follows:

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

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 interest rate swap expired in February 2022.

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.

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 ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021:

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of ~~September~~June 30, ~~2021~~2022, the Company has a full valuation allowance recorded against deferred tax assets. During the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022, the Company recorded a provision for income taxes of ~~$101,~~$22, compared to a provision for income taxes of ~~$103~~$77 during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021.

The Company files income tax returns in U.S. federal and state jurisdictions. As of ~~September~~June 30, ~~2021~~2022, open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards. As of December 31, ~~2020~~2021, the Company had federal and unapportioned state net operating loss (“NOL”) carryforwards of ~~$260,598~~$277,310 of which $227,781 will generally begin to expire in 2026. The majority of the NOL carryforwards will expire in various years from 2028 through 2037. NOLs generated after January 1, 2018 will not expire.

Since the Company has no unrecognized tax benefits, they will not have an impact on the condensed consolidated financial statements as a result of the expiration of the applicable statues of limitations within the next twelve months. In addition, Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize NOL carryforwards and built-in losses may be limited, under ~~IRC~~ Section 382 of the IRC or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of ~~IRC~~ Section 382 of the IRC in 2010, the Company determined that aggregate changes in stock ownership have triggered an annual limitation on NOL carryforwards and built-in losses available for utilization, thereby currently limiting annual NOL usage to $14,284 per year. Further limitations may occur, depending on additional future changes in stock ownership. To the extent the Company’s use of NOL carryforwards and associated built-in losses is significantly limited in the future, the Company’s income could be subject to U.S. corporate income tax earlier than it would be if the Company were able to use NOL carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes.

In February 2013, the Company adopted a Stockholder Rights Plan, which was amended ~~and extended~~ in February 2016 and ~~again in~~ ~~February 2019 (~~asapproved by the Company’s stockholders (as amended, the “Rights Plan”)~~. The Rights Plan is~~, designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under ~~IRC~~ Section ~~382.~~382 ~~The~~of the IRC. On February 7, 2019, the Board of Directors (the “Board”) approved an amendment toextending the Rights Plan for an additional three years, which was ~~most recently~~subsequently approved by the Company’s stockholders at the ~~Company’s~~ 2019 Annual Meeting of Stockholders ~~and has a term~~held on April 23, 2019. On February 3, 2022, the Board approved an amendment which included an extension of the Rights Plan for an additional three ~~years.~~years, which was subsequently approved at the 2022 Annual Meeting of Stockholders held on April 26, 2022.

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, becoming the beneficial owner of 4.9% or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board declared a non-taxable dividend of 1 preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on February 22, 2013. Each Right entitles its holder to purchase from the Company one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of ~~$4.25~~$7.26 per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9% or more of the outstanding shares of the Company’s common stock as of February 12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares after that date.

As of ~~September~~June 30, ~~2021~~2022, the Company had 0 unrecognized tax benefits. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company had 0 accrued interest and penalties as of ~~September~~June 30, ~~2021~~2022.

There was no stock option activity during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and 0 stock options were outstanding as of ~~September~~June 30, ~~2021~~2022.

The following table summarizes the Company’s restricted stock unit and performance award activity during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022:

Under certain situations, shares are withheld from issuance to cover taxes for the vesting of restricted stock units and performance awards. For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, ~~233,153 of such~~277,908 shares were withheld to cover ~~$1,503~~$544 of tax obligations.

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021, as follows:

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

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

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

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

The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets. The Company’s most significant presence is within the U.S. wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentration, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, the Company provides steel towers and tower adapters primarily to wind turbine manufacturers. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The 2 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.

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

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

“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 and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 is as follows:

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.

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.

The Company monitors its collections and write-off experience to assess whether or not adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes may impact the collectability of its accounts receivable, as noted above, or modifications to its credit standards, collection practices and other related policies may impact the Company’s allowance for doubtful accounts and its financial results. The activity in the accounts receivable allowance liability for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 consisted of the following:

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

In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question and/or are dependent on actual losses sustained by the customer. The Company does not believe that this potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations. There was no reserve for liquidated damages as of ~~September~~June 30, ~~2021~~2022 or December 31, ~~2020.~~2021.

Item 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, ~~2020.~~2021. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances including, but not limited to, those identified in “Cautionary Note Regarding Forward-Looking Statements” at the end of Item 2. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties including those arising as a result of, or amplified by, the COVID-19 pandemic. As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and the “Company” refer to Broadwind, Inc., a Delaware corporation headquartered in Cicero, Illinois, and its subsidiaries, as appropriate.

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

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.

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

We booked ~~$42,597~~$26,046 in new orders in the ~~third~~second quarter of ~~2021, up~~2022, slightly down from ~~$39,555~~$26,441 in the ~~third~~second quarter of ~~2020. Gearing segment orders increased 258% compared to the third quarter of 2020 primarily due to increased demand from oil and gas (“O&G”) and mining customers.~~2021. Within our Heavy Fabrications segment, wind tower orders decreased ~~38% versus~~82% compared to the prior year quarter as wind customers ~~continue~~continued to pause and delay orders due to uncertainty regarding the timing and likelihood of potential wind energy incentives provided by the federal government and elevated steel prices. ~~Consistent with the Company's diversification strategy, this reduction was partially offset by an increase in industrial~~Industrial fabrications product line orders, ~~of 262%~~within the Heavy Fabrications segment, increased 242% primarily due to improved industrial demand and increasing order volume for Pressure Reducing Systems (“PRS”) units. Gearing segment orders increased 14% compared to the prior year quarter primarily due to higher ~~order intake within all markets served as~~demand from industrial customers ~~resumed capital spending~~partially offset by decreased demand from oil and ~~inventory purchases.~~gas (“O&G”) customers. Orders within our Industrial Solutions segment ~~decreased~~increased by 9%8% as compared to the prior year quarter, primarily due to the timing of orders associated with aftermarket ~~projects.~~projects and projects from other diverse customers partially offset by a decrease in new gas turbine orders.

We recognized revenue of ~~$40,389~~$50,012 in the ~~third~~second quarter of 2022, up 8% compared to the second quarter of 2021, ~~down 26% compared to the third quarter of 2020,~~ primarily due to a~~37%decrease~~ 154% increase in ~~tower sections sold as a result of project delays and lower industry wide activity levels. Industrial~~industrial fabrications product line revenue within the Heavy Fabrications segment. The increase in industrial fabrication revenue is attributable to strong recent order intake from industrial and mining customers, in addition to revenue recognized on our PRS units. Overall Heavy Fabrications segment ~~increased 14% primarily due~~revenues were flat compared to ~~recognizing our first revenue associated with our Modular Pressure Reducing Systems (“PRS”) units.~~the prior year quarter as the industrial fabrications product line increase was offset by a 47% decrease in tower sections sold. Gearing revenue increased by ~~$437 from the third quarter of 2020,~~37%, primarily driven by ~~higher~~strong order intake in recent quarters from O&G and ~~steel~~industrial customers, partially offset by ~~decreased revenue from other industrial customers.~~a decrease in aftermarket wind revenue. Industrial Solutions segment revenue increased ~~$132 from the third quarter of 2020, representing a 3% increase~~43% compared to the prior year quarter, primarily due to the timing of new gas turbine and aftermarket projects.

We recorded a net loss of ~~$2,105~~$2,703 or ~~$0.11~~$0.13 per share in the ~~third~~second quarter of ~~2021,~~2022, compared to a net ~~loss~~income of ~~$1,003~~$10,252 or ~~$0.06~~$0.55 per share in the ~~third~~second quarter of ~~2020~~2021 primarily due to the absence of $3,593 of other income related to the employee retention credit recorded under the CARES Act and the $9,151 recognized as a ~~37% decrease in tower sections sold due to project delays and underutilization~~result of ~~plant capacity in~~forgiveness of the ~~quarter. This was partially offset by higher sales and improved manufacturing efficiencies in~~Paycheck Protection Program (“PPP”) loan during the ~~Gearing segment.~~second quarter of 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~~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 for wages paid through ~~December 31,~~September 30, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. ~~During each quarter of 2021, a maximum of $10,000 in qualified wages for each employee is eligible for the ERC. Therefore, the~~The maximum tax credit that ~~can~~could be claimed by an eligible employer in 2021 iswas $7,000 per employee per calendar quarter. We qualified for the ERC in the first quarter of the year because we experienced a reduction in gross receipts of more than 20% for the first quarter of 2021 compared to the first quarter of 2019, the relevant criteria for the ERC. Since we qualified for the ERC in the first quarter of 2021, we automatically qualified for the ERC in the second quarter of 2021. In the first and second quarters of 2021, we received ERC benefits of $3,372 and $3,593, respectively, which were recorded in “Other income (expense), net” in our condensed consolidated statement of operations. ~~During~~We did not qualify for the ERC benefit during the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of ~~2019, we did not qualify for the ERC benefit.~~2019. The receivable for the remaining uncollected ERC benefit ~~is $503~~was $497 as of ~~September 30,~~December 31, 2021 and iswas included in the “Employee retention credit receivable” line item in ~~our~~the Company’s condensed consolidated balance sheet at ~~September 30,~~December 31, 2021. The remaining of $497 for the uncollected ERC benefit was collected during January 2022.

~~In March 2020, the World Health Organization recognized a novel strain of coronavirus (COVID-19) as a pandemic. In response to this~~The COVID-19 pandemic ~~the United States~~has disrupted business, trade, commerce 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 various governments’ response have caused significant and widespread uncertainty, volatility and disruptionsfinancial markets in the U.S. and ~~global economies, including in the regions in which~~globally. Through June 30, 2022, we ~~operate.~~

~~Our facilities continued to operate as essential businesses in light of the customers and markets served. However, through September 30, 2021, we have~~ experienced an adverse impact to our business, operations and financial results as a result of ~~this~~the COVID-19 pandemic due in part to a decline in order activity levels, manufacturing inefficiencies associated with supply chain disruptions and employee staffing constraints due to the spread of the COVID-19 pandemic. In response to the pandemic, we continue to right-size our workforce and delay certain capital expenditures. In future periods, we may experience weaker customer demand, requests for extended payment terms, customer bankruptcies, additional supply chain disruption, employee staffing constraints and difficulties, government restrictions or other factors that could negatively impact the Company and its business, operations and financial results. As we cannot predict the duration or scope of the pandemic, including in light of the emerging variants, or its impact on economic and financial markets, any negative impact to our results cannot be reasonably estimated, but it could be material.

We continue to monitor closely the Company’s financial health and liquidity and the impact of the pandemic on the Company, including emerging variants. We have been able to serve the needs of our customers while taking steps to protect the health and safety of our employees, customers, partners, and communities. Among these steps, we ~~have followed~~follow the guidance provided by the U.S. Centers for Disease Control and ~~Prevention to protect the continued safety and welfare of our employees.~~Prevention.

Three months ended ~~September~~June 30, ~~2021,~~2022, Compared to Three months ended ~~September~~June 30, ~~2020~~2021

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 ~~September~~June 30, ~~2021,~~2022, compared to the three months ended ~~September~~June 30, ~~2020.~~2021.

Revenues ~~decreased~~increased by ~~$14,225~~$3,521 versus the prior year ~~quarter, which~~quarter. This increase was primarily ~~driven by~~due to a ~~37% decrease in tower sections sold in our Heavy Fabrications segment, reflecting both project delays and an industry-wide reduction in activity. Partly offsetting this was a 14%~~154% increase in industrial fabrications product line revenue ~~primarily due~~within the Heavy Fabrications segment. The increase in industrial fabrication revenue is attributable to ~~recognizing our first~~strong recent order intake from industrial and mining customers, in addition to revenue ~~associated with~~recognized on our PRS units. Overall the Heavy Fabrications segment revenues were flat compared to the prior year quarter as the industrial fabrications product line increase was offset by a 47% decrease in tower sections sold. Gearing segment revenue was up ~~$437~~37% from the ~~third~~second quarter of ~~2020,~~2021, primarily driven by higher recent order intake ~~in recent quarters~~ from O&G and ~~steel~~industrial customers, partially offset by ~~decreased revenue from other industrial customers.~~a decrease in aftermarket wind revenue. Industrial Solutions segment revenue increased ~~$132 representing a 3% increase compared to the prior year quarter,~~by 43%, primarily due to the timing of new gas turbine customer and aftermarket projects.

Gross profit ~~decreased~~increased marginally by ~~$1,664 from~~$196 when compared to the prior year quarter ~~primarily due to reduced operating leverage associated with lower wind tower production. This decrease was partially offset by~~as higher sales ~~and improved manufacturing efficiencies~~volumes within the Gearing ~~segment.~~ ~~As a result, gross margin decreased to 5.1% during~~and Industrial Solutions segments were largely offset by lower sales volumes in the ~~three months ended September 30, 2021, from 6.8% during the three months ended September 30, 2020.~~Heavy Fabrications segment.

Due to ~~lower~~higher revenue levels, ~~higher commission~~lower legal expenses, and ~~an increase in employee costs,~~reduced salaries and benefits, operating expenses as a percentage of sales ~~increased~~decreased to ~~10.1%~~8.6% in the current-year quarter from ~~7.7%~~9.7% in the prior year quarter.

Net loss was ~~$2,105~~$2,703 during the three months ended ~~September~~June 30, ~~2021,~~2022, compared to ~~$1,003~~net income of $10,252 during the three months ended ~~September~~June 30, ~~2020. This erosion was~~2021 primarily due to the factors described above, ~~partially offset by a 47% reduction~~the absence of the $3,593 ERC benefit, and the $9,151 PPP loan forgiveness recorded in ~~interest expense.~~the prior year quarter.

~~Heavy Fabrications segment wind~~Wind tower orders decreased ~~38%~~82% versus the prior year quarter as ~~compared~~wind customers continue to ~~the third quarter of 2020 as customers delayed~~pause and delay orders due to uncertainty regarding the timing and likelihood of potential ~~U.S. federal~~ wind energy incentives provided by the federal government and elevated steel prices. Industrial ~~fabrication~~fabrications product line orders, also within the Heavy Fabrications segment, increased ~~262% quarter-over-quarter as customers resumed capital spending and inventory purchases in all end markets. Segment revenues decreased $14,765~~242% from the prior year quarter primarily due to improved industrial demand and increasing order volume for PRS units. Heavy Fabrications segment revenues were flat compared to the prior year as a ~~37%~~154% increase inindustrial fabrication line revenues was offset by a 47% decrease in tower sections sold due to the aforementioned project delays. This was partially offset by increased industrial fabrication revenues as we recognized our first revenue associated with our PRS units in the current year quarter.sold.

Heavy Fabrications segment operating income decreased by ~~$2,465~~$193 compared to the prior ~~year.~~year quarter. The quarter-over-quarter ~~degradation~~decrease in operating performance ~~reflects~~is primarily a result of lower sales volumes and costs associated with transitioning the ~~adverse volume impacts described previously, manufacturing inefficiencies caused by supply chain disruptions, and the underutilization of plant capacity~~workforce to support growth in the ~~quarter.~~industrial fabrications product line. Operating margin was ~~(1.6)%~~0.2% during the three months ended ~~September~~June 30, ~~2021,~~2022, a decrease from ~~4.7%~~0.8% during the three months ended ~~September~~June 30, ~~2020.~~2021.

Gearing segment orders increased ~~258%~~14% from the prior year period primarily due to increased demand from industrial customers, partially offset by reduced demand from O&G ~~and mining~~ customers. Gearing revenue was up 6%37% relative to the comparable prior year period ~~a reflection of~~due to higher order intake in ~~the current year, primarily~~recent quarters from O&G and ~~steel~~industrial customers, partially offset by a decrease in ~~revenue from other industrial customers.~~aftermarket wind revenue.

Gearing segment operating loss decreased ~~$804~~$297 from the prior year period. This was primarily attributable to higher sales partially offset by higher material costs, ramp-up costs, and ~~improved manufacturing efficiencies.~~increased fixed costs to support volumes. Operating margin was ~~(2.9)~~(5.8%) during the three months ended June 30, 2022, an improvement from (11.9)% during the three months ended ~~September~~June 30, 2021, ~~an improvement from (14.4)% during the three months ended September 30, 2020,~~ driven primarily by the items identified above.

Industrial Solutions segment orders ~~decreased~~increased by 9%8% from the prior year period primarily due to the timing of orders associated with aftermarket ~~projects.~~projects and projects from other diverse customers, partially offset by a decrease in new gas turbine orders. Segment revenue increased by 3%43% from the prior year period primarily due to the timing of new gas turbine and aftermarket projects. The ~~decrease in~~improved operating income versus the prior-year quarter was primarily a result of a ~~lower margin~~higher sales, ~~mix sold.~~partially offset by increased variable expenses such as freight costs.

Corporate and Other expenses during the three months ended ~~September~~June 30, ~~2021~~2022 decreased from the prior year period primarily due to lower ~~incentive compensation~~salaries and ~~decreased professional service expenses.~~benefits.

~~Nine Months Ended September~~Six months ended June 30, ~~2021,~~2022, Compared to ~~Nine Months Ended September~~Six months ended June 30, ~~2020~~2021

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 ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

Revenues ~~decreased~~increased by ~~$38,566~~$12,637 versus the prior year. Gearing segment revenue was up 62% from the ~~nine months ended September 30, 2020,~~first half of 2021, primarily driven by strong recent order intake from O&G and mining customers, partially offset by a decrease in aftermarket wind revenue. Heavy Fabrications segment revenues increased by 7% as lower tower demand was more than offset by a 105% increase in industrial fabrications product line revenue attributable to higher recent order intake from industrial customers and revenue recognized on our PRS units. Industrial Solutions segment revenue increased by 12%, primarily due to ~~a 29% decrease intower sections sold due to~~the timing of new gas turbine customer ~~driven project delays~~ and ~~a lower average selling price due to the mix of tower designs sold.~~ aftermarket projects.

Gross profit ~~decreased~~increased by ~~$10,773 from~~$1,926 when compared to the ~~first nine months of 2020~~prior year primarily due to ~~lower~~higher sales volumes ~~and due to manufacturing inefficiencies caused by supply chain disruptions, and a temporary shut-down of our Abilene, Texas plant due to a weather event~~ in the ~~first quarter of 2021.~~Gearing segment, partially offset by higher material costs, ramp-up costs, and increased fixed costs to support volumes. As a result, gross margin ~~decreased~~increased to~~3.8%~~ 4.8% during the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, from ~~9.7%~~3.1% during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

Due to ~~lower~~higher revenue levels, ~~higher~~lower legal expenses, and ~~an increase in professional service fees,~~reduced salaries and benefits, operating expenses as a percentage of sales ~~increased~~decreased to ~~11.0%~~9.1% in the ~~current year~~current-year from ~~8.3%~~11.5% in the prior year.

Net loss was $5,107 during the six months ended June 30, 2022, compared to net income of $9,042 during the six months ended June 30, 2021 primarily due to the factors described above and the absence of the $6,965 ERC benefit and the $9,151 PPP loan forgiveness recorded in the prior year ~~period.~~

~~Net income was $6,937~~during the nine months ended September 30, 2021, compared to $480 during the nine months ended September 30, 2020. The increase was primarily attributable to income of $9,151 recognized from the PPP Loan forgiveness and income of $6,965recognized from the ERC benefit. Both of these items were recognized in “Other income (expense), net” in our condensed consolidated statements of operations. This was partially offset by adverse volume impacts in our Heavy Fabrications segment.quarter.

Wind tower orders increased 25% versus the prior year as tower customers secured 2022 production capacity to support ongoing wind turbine tower installation projects. Industrial fabrications product line orders, also within the Heavy Fabrications segment, wind tower orders decreased 34% compared to the prior year period as customers delayed orders due to uncertainty regarding the timing and likelihood of potential federal wind energy incentives and elevated U.S. steel prices. Industrial fabrication product line orders, within the Heavy Fabrication segment, increased ~~48% year-over-year. Segment revenues decreased by $38,142~~54% from the prior year ~~period~~primarily due to strong demand for PRS units and strong industrial demand, partially offset by a reduction in mining demand. Heavy Fabrications segment revenues increased 7% primarily due to a ~~29% decrease~~105% increase in ~~tower sections sold and a lower average selling price~~industrial fabrication revenues primarily due to higher recent order intake from industrial customers and revenue recognized from our PRS units in the ~~mix of tower designs sold.~~ current year.

Heavy Fabrications segment operating ~~income~~loss decreased by ~~$10,633~~$1,046 compared to the prior year. The ~~year-over-yeardegradation~~improvement in operating performance ~~reflects~~is primarily a result of higher sales in the ~~adverse volume impacts described previously,~~current year and the ~~underutilization~~absence of ~~plant capacity, manufacturing inefficiencies caused by supply chain disruptions~~one-time events that occurred during the prior year such as the weather-related event and a ~~temporary shut-down of our Abilene, Texas plant due to a weather event~~customer driven project delay, partially offset by increased variable costs associated with growth in the ~~first quarter of 2021.~~industrial fabrications product line. Operating margin was ~~(2.1)~~(0.6)% during the ~~nine~~six months ended ~~September~~June 30, ~~2021, a decrease~~2022, an increase from ~~7.0%~~(2.4%) during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

Gearing segment ordersincreased ~~51%~~29% from the ~~nine months ended September 30, 2020~~prior year period primarily due to increased demand from O&G and industrial customers. Gearing revenue was up 62% relative to the comparable prior year period due to higher order intake in recent quarters from O&G and mining customers, partially offset by ~~the timing of~~a decrease in aftermarket wind gearing orders, which can fluctuate based on customer order patterns and market conditions. Gearing revenue was flat as lower order intake in the second half of the prior year from industrial and mining customers was offset by increased revenue from O&G and aftermarket wind customers.revenue.

Gearing segment operating loss ~~increased $155~~decreased $1,174 from the prior year period. This was primarily attributable to higher sales partially offset by higher material costs, ramp-up costs, and increased ~~manufacturing inefficiencies.~~fixed costs to support higher volumes. Operating margin was ~~(10.3)~~(3.4%) during the six months ended June 30, 2022, an improvement from (14.7)% during the ~~nine~~six months ended ~~September~~June 30, 2021, ~~down from (9.5)% during the nine months ended September 30, 2020,~~ driven primarily by the items identified above.

Industrial Solutions segment orders ~~decreased~~increased by ~~22%~~17% from the prior year period primarily due to the timing of orders associated with ~~new gas turbine and~~ aftermarket projects. Segment revenue ~~decreased~~increased by 1%12% from the prior year period primarily due to the timing of new gas turbine and aftermarket ~~installations.~~projects. The ~~decrease in~~increased operating ~~income~~loss versus the prior year was primarily a result of a lower margin sales mix sold during the first nine months of 2021. Operating margin was (1.4)% during the nine months ended September 30, 2021, a decrease from 4.0% during the nine months ended September 30, 2020.higher variable expenses including freight costs.

Corporate and Other expenses during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 decreased from the prior year period primarily due to lower ~~incentive compensation~~salaries and ~~decreased professional service expenses.~~benefits.

As of ~~September~~June 30, ~~2021,~~2022, cash totaled ~~$2,335,~~$49, a decrease of ~~$1,037~~$803 from December 31, ~~2020.~~2021. Cash balances remain limited in the second quarter as operating receipts and disbursements ~~flow~~flowed through our 2016 Credit Facility (as defined in Note 7, “Debt and Credit Agreements,” in the notes to our condensed consolidated financial statements), which iswas in a drawn ~~position.~~position as of June 30, 2022. Debt and finance lease obligations at ~~September~~June 30, ~~2021~~2022 totaled ~~$10,321.~~$22,975. As of ~~September~~June 30, ~~2021,~~2022, we had the ability to borrow up to an additional ~~$18,743~~$10,178 under the 2016 Credit Facility. In addition to the Credit Facility, we also utilize supply chain financing arrangements as a component of our funding for working capital, which accelerates receivable collections and helps to better manage cash flow. Under these agreements, we have agreed to sell certain of our accounts receivable balances to banking institutions who have agreed to advance amounts equal to the net accounts receivable balances due, less a discount as set forth in the respective agreements. The balances under these agreements are accounted for as sales of accounts receivable, as they are sold without recourse. Cash proceeds from these agreements are reflected as operating activities included in the change in accounts receivable in the consolidated statements of cash flows. Fees incurred in connection with the agreements are recorded as interest expense.

On March 9, 2021, we entered into a $10,000 Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC (the “Manager”). Pursuant to the terms of the Equity Distribution Agreement, we issued 1,897,697 shares of the Company's common stock thereunder during the first two quarters of 2021. The net proceeds (before upfront costs) to the Company from the sales of such shares were approximately $9,725 after deducting commissions paid of approximately $275 and before deducting other expense of ~~$396.~~$411.

On ~~November 8, 2021,~~February 28, 2022, we executed the ~~Third~~Fourth Amendment to the Amended and Restated Loan Agreement (the ~~“Third~~“Fourth Amendment”) which reduced the line of credit from $35,000 to $30,000, extended the maturity date until January 31, 2024, waived the ~~fixed charge coverage ratio default~~minimum EBITDA covenant for the ~~quarter~~three-month period ended ~~September 30,~~December 31, 2021, ~~suspended testing of~~revised the fixed charge coverage ratio covenant ~~through September 30,~~as of December 31, 2022 ~~added a~~for the trailing nine-month period after March 31, 2022, revised the minimum EBITDA covenant applicable to the three-month period ending ~~December 31, 2021, the six-month period ending~~ March 31, 2022, the ~~nine-month~~six-month period ending June 30, 2022 and the ~~twelve-month~~nine-month period ending September 30, 2022, revised the existing liquidity reserve to $2,500 and ~~added~~amended certain other provisions in connection with the discontinuation of LIBOR and replacement with the forward-looking term Secured Overnight Financing Rate (Term SOFR) administered by CME Group, Inc.

On August 4, 2022, we executed the Wells Fargo Credit Agreement (as defined in Note 7, “Debt and Credit Agreements” in the notes to our condensed consolidated financial statements) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), providing us with a ~~reserve~~$35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon our request and at the sole discretion of ~~$5,000,000~~Wells Fargo) and a $7,578 senior secured term loan (collectively, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. The 2022 Credit Facility replaces the 2016 Credit Facility. All obligations outstanding under the 2016 Credit Facility were refinanced by the 2022 Credit Facility on August 5, 2022. For more information on the 2022 Credit Facility, please see Note 7, “Debt and Credit Agreement” in the notes to ~~the Revolving Loan Availability through December 31, 2022.~~our condensed consolidated financial statements.

We anticipate that current cash resources, amounts available under the 2022 Credit Facility, cash to be generated from operations and equipment financing, and any potential proceeds from the sale of further 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 receipt of customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, particularly in light of the COVID-19 pandemic, and emerging variants, and its effects on domestic and global economies, we may encounter cash flow and liquidity issues.

If our operational performance deteriorates, we may be unable to comply with existing financial covenants, and could lose access to the 2022 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.

The following table summarizes our cash flows from operating, investing, and financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, net cash used in operating activities totaled ~~$10,823~~$8,264 compared to net cash used in operating activities of ~~$2,475~~$9,987 during the prior year period. The ~~increase~~decrease in net cash used was primarily due to ~~our~~improved operating performance ~~(excluding~~in the ~~PPP loan forgiveness), the timing of accruals~~current year and ~~an increase in~~less operating working capital build, partially offset by the ERC benefits which were recognized in the ~~current~~prior year period.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, net cash used in investing activities totaled ~~$1,336,~~$1,697, compared to net cash used in investing activities of ~~$1,597~~$742 during the prior year period. The ~~decrease~~increase in net cash used in investing activities as compared to the prior-year period was primarily due to ~~a decrease~~an increase in net purchases of property and equipment.

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, net cash provided by financing activities totaled ~~$11,122,~~$9,158, compared to net cash provided by financing activities of ~~$4,197~~$12,114 during the prior year period. The ~~increase~~decrease was primarily due to the absence of proceeds from the sale of securities under the Equity Distribution Agreement ~~and increased net borrowings under our Credit Facility~~ in the current year, partially offset by increased net borrowings under our 2016 Credit Facility in the ~~absence of the PPP Loan (defined below) proceeds received in 2020.~~

In 2016, we entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, ~~less~~net of current maturities” line item of our condensed consolidated financial statements as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2021, 2020, 2019 and 2018, $114 of the loan was forgiven. As of ~~September~~June 30, ~~2021,~~2022, the loan balance was ~~$228.~~$114. In addition, we have outstanding notes payable for capital expenditures in the amount of ~~$161~~$714 and ~~$163~~$363 as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, with ~~$161~~$27and $186 included in the “Line of Credit and other notes payable” line item of our condensed consolidated financial statements as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. The notes payable have monthly payments that range from $1$3 to $16 and an interest rate of approximately 4%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable ~~have maturity dates that range from March 2022 to~~mature in September ~~2024.~~

On April 15, 2020, we received funds under notes and related documents executed under the Paycheck Protection Program (“PPP Loans”) with CIBC Bank, USA under the PPP which was established under the Coronavirus Aid, Relief, and Economic Security Act (“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”). 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 are eligible to be forgiven following a period of twenty-four weeks after PPP Loan proceeds are received (the “covered period”) if they are used for qualifying expenses as described in the CARES Act including payroll costs and 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. 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 consistent with the terms of the PPP and submitted our forgiveness applications to CIBC Bank, USA during the first quarter of 2021. During the second quarter of 2021, all loans were forgiven by the SBA and a gain of $9,151 was recorded in Other income (expense), net in our condensed consolidated statements of operations. 2028.

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 for wages paid through ~~December 31,~~September 30, 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~~The maximum tax credit that ~~can~~could be claimed by an eligible employer in 2021 iswas $7,000 per employee per calendar quarter. We qualified for the ERC in the first quarter of the year because we experienced a reduction in gross receipts of more than 20% for the first quarter of 2021 compared to the first quarter of 2019, the relevant criteria for the ERC. Since we qualified for the ERC in the first quarter of 2021, we automatically qualified for the ERC in the second quarter of 2021. In the first and second quarters of 2021, we received ERC benefits of $3,372 and $3,593, respectively, which were recorded in “Other income (expense), net” in our condensed consolidated statement of operations. ~~During~~We did not qualify for the ERC benefit during the third quarter of 2021 due to relatively higher revenues ~~we did not qualify~~in 2021 as compared to the third quarter of 2019. The receivable for the ~~ERC benefit. The~~ remaining ~~receivable for the~~ uncollected ERC benefit is ~~$503~~$497 as of ~~September 30,~~December 31, 2021 and is included in the “Employee retention credit receivable” line item in our condensed consolidated balance sheet at ~~September 30,~~December 31, 2021. The remaining of $497 for the uncollected ERC benefit was collected during January 2022.

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, ~~2020.~~2021. 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, including as a result of emerging variants:~~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 CARES Act; (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, ~~2020.~~2021. 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.

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 305I of Regulation S-K.

We seek to maintain disclosure controls and procedures (as defined in Rules 13a-15I and 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 supervision and with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the most recent fiscal quarter reported on herein. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, ~~2021.~~2022.

There were no changes in our internal control over financial reporting ~~including but not limited to changes resulting from the COVID-19 pandemic,~~ during the three months ended ~~September~~June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

The Risk Factors identified in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 continue to represent the most significant risks to the Company’s future results of operations and financial conditions, without further modification or amendment.

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

The foregoing description of the Third Amendment is not intended to be complete and is qualified in its entirety by reference to the Third Amendment to Amended and Restated Loan and Security Agreement, which is attached hereto as Exhibit 10.1 to this Quarterly Report on Form 10-Q and is incorporated herein by reference.None.

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

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

		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	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2526
Item 4.	Controls and Procedures	2526
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	2627
Item 1A.	Risk Factors	2627
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2728
Item 3.	Defaults Upon Senior Securities	2728
Item 4.	Mine Safety Disclosures	2728
Item 5.	Other Information	2728
Item 6.	Exhibits	2728
Signatures		2930

	*Three Months Ended September 30,*						*Nine Months Ended September 30,*						Three Months Ended June 30,						Six Months Ended June 30,
	*2021*			*2020*			*2021*			*2020*			2022			2021			2022			2021
Revenues	$	40,389		$	54,614		$	119,608		$	158,174		$	50,012		$	46,491		$	91,856		$	79,219
Cost of sales		38,315			50,876			115,054			142,847			47,618			44,293			87,450			76,739
Gross profit		2,074			3,738			4,554			15,327			2,394			2,198			4,406			2,480
OPERATING EXPENSES:
Selling, general and administrative		3,888			4,030			12,623			12,537			4,122			4,325			8,024			8,735
Intangible amortization		183			183			550			550			184			184			367			367
Total operating expenses		4,071			4,213			13,173			13,087			4,306			4,509			8,391			9,102
Operating (loss) income		(1,997	)		(475	)		(8,619	)		2,240
Operating loss														(1,912	)		(2,311	)		(3,985	)		(6,622	)
OTHER (EXPENSE) INCOME, net:
Paycheck Protection Program loan forgiveness		0			0			9,151			0			0			9,151			0			9,151
Interest expense, net		(269	)		(507	)		(816	)		(1,654	)		(776	)		(318	)		(1,121	)		(547	)
Other, net		185			(1	)		7,322			(3	)		0			3,775			21			7,137
Total other (expense) income, net		(84	)		(508	)		15,657			(1,657	)		(776	)		12,608			(1,100	)		15,741
Net (loss) income before provision for income taxes		(2,081	)		(983	)		7,038			583			(2,688	)		10,297			(5,085	)		9,119
Provision for income taxes		24			20			101			103			15			45			22			77
NET (LOSS) INCOME		(2,105	)		(1,003	)		6,937			480			(2,703	)		10,252			(5,107	)		9,042
NET (LOSS) INCOME PER COMMON SHARE—BASIC:
Net (loss) income	$	(0.11	)	$	(0.06	)	$	0.38		$	0.03		$	(0.13	)	$	0.55		$	(0.26	)	$	0.50
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC		19,418			16,866			18,460			16,741			20,244			18,761			19,977			17,974
NET (LOSS) INCOME PER COMMON SHARE—DILUTED:
Net (loss) income	$	(0.11	)	$	(0.06	)	$	0.36		$	0.03		$	(0.13	)	$	0.53		$	(0.26	)	$	0.48
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED		19,418			16,866			19,218			17,278			20,244			19,400			19,977			18,864

	*Three Months Ended September 30,*						*Nine Months Ended September 30,*						*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2021*			*2020*			*2021*			*2020*			*2022*			*2021*			*2022*			*2021*
Heavy Fabrications	$	28,675		$	43,440		$	87,282		$	125,424		$	35,575		$	35,830		$	62,847		$	58,607
Gearing		7,562			7,125			20,315			20,273			10,115			7,404			20,700			12,753
Industrial Solutions		4,213			4,081			12,357			12,516			5,049			3,541			9,121			8,145
Eliminations		(61	)		(32	)		(346	)		(39	)		(727	)		(284	)		(812	)		(286	)
Consolidated	$	40,389		$	54,614		$	119,608		$	158,174		$	50,012		$	46,491		$	91,856		$	79,219

	*Three Months Ended*						*Nine Months Ended*				Three Months Ended					Six Months Ended
	*September 30,*						*September 30,*				June 30,					June 30,
	*2021*			*2020*			*2021*		*2020*		2022			2021		2022			2021
Basic earnings per share calculation:
Net (loss) income	$	(2,105	)	$	(1,003	)	$	6,937	$	480	$	(2,703	)	$	10,252	$	(5,107	)	$	9,042
Weighted average number of common shares outstanding		19,417,675			16,866,134			18,460,444		16,741,481		20,244,176			18,760,910		19,977,477			17,973,896
Basic net (loss) income per share	$	(0.11	)	$	(0.06	)	$	0.38	$	0.03	$	(0.13	)	$	0.55	$	(0.26	)	$	0.50
Diluted earnings per share calculation:
Net (loss) income	$	(2,105	)	$	(1,003	)	$	6,937	$	480	$	(2,703	)	$	10,252	$	(5,107	)	$	9,042
Weighted average number of common shares outstanding		19,417,675			16,866,134			18,460,444		16,741,481		20,244,176			18,760,910		19,977,477			17,973,896
Common stock equivalents:
Non-vested stock awards(1)		0			0			757,976		536,920		0			639,150		0			889,874
Weighted average number of common shares outstanding		19,417,675			16,866,134			19,218,420		17,278,401		20,244,176			19,400,060		19,977,477			18,863,770
Diluted net (loss) income per share	$	(0.11	)	$	(0.06	)	$	0.36	$	0.03	$	(0.13	)	$	0.53	$	(0.26	)	$	0.48

	*September 30,*			*December 31,*			*June 30,*			*December 31,*
	*2021*			*2020*			*2022*			*2021*
Raw materials	$	15,101		$	14,586		$	23,251		$	16,148
Work-in-process		8,814			12,634			10,494			13,639
Finished goods		3,525			2,704			3,315			6,575
		27,440			29,924			37,060			36,362
Less: Reserve for excess and obsolete inventory		(2,564	)		(3,200	)		(2,131	)		(2,985	)
Net inventories	$	24,876		$	26,724		$	34,929		$	33,377

2021	$	183
2022		725	$	363
2023		664		664
2024		661		661
2025		661		661
2026 and thereafter		742
2026				422
2027 and thereafter				315
Total	$	3,636	$	3,086

	*Finance*			*Operating*						*Finance*			*Operating*
	*Leases*			*Leases*			*Total*			*Leases*			*Leases*			*Total*
2021	$	658		$	861		$	1,519
2022		2,143			3,474			5,617		$	1,358		$	1,738		$	3,096
2023		1,487			3,388			4,875			1,924			3,388			5,312
2024		561			2,933			3,494			1,041			2,933			3,974
2025		240			3,015			3,255			635			3,015			3,650
2026 and thereafter		55			17,101			17,156
2026											422			3,059			3,481
2027 and thereafter											413			14,043			14,456
Total lease payments		5,144			30,772			35,916			5,793			28,176			33,969
Less—portion representing interest		(496	)		(10,177	)		(10,673	)		(683	)		(8,867	)		(9,550	)
Present value of lease obligations		4,648			20,595			25,243			5,110			19,309			24,419
Less—current portion of lease obligations		(1,886	)		(1,732	)		(3,618	)		(2,170	)		(1,798	)		(3,968	)
Long-term portion of lease obligations	$	2,762		$	18,863		$	21,625		$	2,940		$	17,511		$	20,451

	*September 30, 2021*								*June 30, 2022*
	*Level 1*		*Level 2*		*Level 3*		*Total*		*Level 1*		*Level 2*		*Level 3*		*Total*
*Liabilities measured on a recurring basis:*
Interest rate swap	$	0	$	58	$	0	$	58	$	0	$	0	$	0	$	0
Total liabilities at fair value	$	0	$	58	$	0	$	58	$	0	$	0	$	0	$	0

				*Weighted Average*					*Weighted Average*
	*Number of*			*Grant-Date Fair Value*		*Number of*			*Grant-Date Fair Value*
	*Shares*			*Per Share*		*Shares*			*Per Share*
Unvested as of December 31, 2020		1,332,884		$	1.86
Unvested as of December 31, 2021							918,448		$	2.72
Granted		393,592		$	4.82		734,077		$	1.75
Vested		(691,994	)	$	1.93		(808,734	)	$	2.23
Forfeited		(108,144	)	$	2.95		(13,901	)	$	2.82
Unvested as of September 30, 2021		926,338		$	2.74
Unvested as of June 30, 2022							829,890		$	2.38

	*Heavy Fabrications*			*Gearing*			*Industrial Solutions*			*Corporate*			*Eliminations*			*Consolidated*			*Heavy Fabrications*		*Gearing*			*Industrial Solutions*		*Corporate*			*Eliminations*			*Consolidated*
For the Three Months Ended September 30, 2021
For the Three Months Ended June 30, 2022
Revenues from external customers	$	28,675		$	7,562		$	4,152		$	0		$	0		$	40,389		$	35,575	$	10,107		$	4,330	$	0		$	0		$	50,012
Intersegment revenues		0			0			61			0			(61	)		0			0		8			719		0			(727	)		0
Net revenues		28,675			7,562			4,213			0			(61	)		40,389			35,575		10,115			5,049		0			(727	)		50,012
Operating (loss) profit		(445	)		(219	)		(108	)		(1,248	)		23			(1,997	)
Operating income (loss)																				78		(585	)		32		(1,437	)		0			(1,912	)
Depreciation and amortization		967			463			105			59			0			1,594			862		555			98		61			0			1,576
Capital expenditures		294			306			0			4			0			604			718		476			9		2			0			1,205

	*Total Assets as of*						*Total Assets as of*
	*September 30,*			*December 31,*			*June 30,*			*December 31,*
Segments:	*2021*			*2020*			*2022*			*2021*
Heavy Fabrications	$	32,989		$	40,438		$	41,648		$	37,131
Gearing		45,104			43,319			51,854			46,219
Industrial Solutions		9,623			10,244			11,769			10,825
Corporate		228,029			220,428			236,584			228,219
Eliminations		(201,267	)		(194,747	)		(214,988	)		(204,347	)
	$	114,478		$	119,682		$	126,867		$	118,047

	*For the Nine Months Ended September 30,*						*For the Six Months Ended June 30,*
	*2021*			*2020*			*2022*			*2021*
Balance at beginning of period	$	473		$	127		$	47		$	473
Bad debt expense		0			130			40			9
Write-offs		(432	)		(47	)		0			(429	)
Other adjustments		(2	)		(36	)		(10	)		(1	)
Balance at end of period	$	39		$	174		$	77		$	52

	Three Months Ended						Nine Months Ended						Three Months Ended					Six Months Ended
	September 30,						September 30,						June 30,					June 30,
	2021			2020			2021			2020			2022			2021		2022			2021
Net revenues	$	40,389		$	54,614		$	119,608		$	158,174		$	50,012		$	46,491	$	91,856		$	79,219
Net (loss) income	$	(2,105	)	$	(1,003	)	$	6,937		$	480		$	(2,703	)	$	10,252	$	(5,107	)	$	9,042
Adjusted EBITDA (1)	$	401		$	1,297		$	14,418		$	7,766		$	372		$	12,800	$	363		$	14,017
Capital expenditures	$	604		$	668		$	1,369		$	1,597		$	1,205		$	153	$	1,697		$	765
Free cash flow (2)	$	(3,251	)	$	7,256		$	(1,913	)	$	(1,737	)	$	(3,903	)	$	5,645	$	(8,391	)	$	(376	)
Operating working capital (3)	$	19,554		$	13,486		$	19,554		$	13,486		$	25,692		$	16,999	$	25,692		$	16,999
Total debt ~~(4)~~	$	5,673		$	17,673		$	5,673		$	17,673		$	17,865		$	6,620	$	17,865		$	6,620
Total orders	$	42,597		$	39,555		$	103,252		$	112,922		$	26,046		$	26,441	$	78,739		$	60,655
Backlog at end of period ~~(5)~~(4)	$	76,531		$	97,146		$	76,531		$	97,146		$	93,249		$	74,338	$	93,249		$	74,338
Book-to-bill ~~(6)~~(5)		1.1			0.7			0.9			0.7			0.5			0.6		0.9			0.8

	Three Months Ended September 30,												2021 vs. 2020						Three Months Ended June 30,												2022 vs. 2021
				% of Total						% of Total												% of Total						% of Total
	2021			Revenue			2020			Revenue			$ Change			% Change			2022			Revenue			2021			Revenue			$ Change			% Change
Revenues	$	40,389			100.0	%	$	54,614			100.0	%	$	(14,225	)		(26.0	)%	$	50,012			100.0	%	$	46,491			100.0	%	$	3,521			7.6	%
Cost of sales		38,315			94.9	%		50,876			93.2	%		(12,561	)		(24.7	)%		47,618			95.2	%		44,293			95.3	%		3,325			7.5	%
Gross profit		2,074			5.1	%		3,738			6.8	%		(1,664	)		(44.5	)%		2,394			4.8	%		2,198			4.7	%		196			8.9	%
Operating expenses
Selling, general and administrative expenses		3,888			9.6	%		4,030			7.4	%		(142	)		(3.5	)%		4,122			8.2	%		4,325			9.3	%		(203	)		(4.7	)%
Intangible amortization		183			0.5	%		183			0.3	%		—			0.0	%		184			0.4	%		184			0.4	%		—			0.0	%
Total operating expenses		4,071			10.1	%		4,213			7.7	%		(142	)		(3.4	)%		4,306			8.6	%		4,509			9.7	%		(203	)		(4.5	)%
Operating loss		(1,997	)		(4.9	)%		(475	)		(0.9	)%		(1,522	)		(320.4	)%		(1,912	)		(3.8	)%		(2,311	)		(5.0	)%		399			17.3	%
Other (expense) income, net
Paycheck Protection Program loan forgiveness																				—			0.0	%		9,151			19.7	%		(9,151	)		(100.0	)%
Interest expense, net		(269	)		(0.7	)%		(507	)		(0.9	)%		238			46.9	%		(776	)		(1.6	)%		(318	)		(0.7	)%		(458	)		(144.0	)%
Other, net		185			0.5	%		(1	)		(0.0	)%		186			18600.0	%		—			0.0	%		3,775			8.1	%		(3,775	)		(100.0	)%
Total other (expense) income, net		(84	)		(0.2	)%		(508	)		(0.9	)%		424			83.5	%		(776	)		(1.6	)%		12,608			27.1	%		(13,384	)		(106.2	)%
Net loss before provision for income taxes		(2,081	)		(5.2	)%		(983	)		(1.8	)%		(1,098	)		(111.7	)%
Net (loss) income before provision for income taxes																				(2,688	)		(5.4	)%		10,297			22.1	%		(12,985	)		(126.1	)%
Provision for income taxes		24			0.1	%		20			0.0	%		4			20.0	%		15			0.0	%		45			0.1	%		(30	)		(66.7	)%
Net loss	$	(2,105	)		(5.2	)%	$	(1,003	)		(1.8	)%	$	(1,102	)		(109.9	)%
Net (loss) income																			$	(2,703	)		(5.4	)%	$	10,252			22.1	%	$	(12,955	)		(126.4	)%

	Nine Months Ended September 30,												2021 vs. 2020						Six Months Ended June 30,												2022 vs. 2021
				% of Total						% of Total												% of Total						% of Total
	2021			Revenue			2020			Revenue			$ Change			% Change			2022			Revenue			2021			Revenue			$ Change			% Change
Revenues	$	119,608			100.0	%	$	158,174			100.0	%	$	(38,566	)		(24.4	)%	$	91,856			100.0	%	$	79,219			100.0	%	$	12,637			16.0	%
Cost of sales		115,054			96.2	%		142,847			90.3	%		(27,793	)		(19.5	)%		87,450			95.2	%		76,739			96.9	%		10,711			14.0	%
Gross profit		4,554			3.8	%		15,327			9.7	%		(10,773	)		(70.3	)%		4,406			4.8	%		2,480			3.1	%		1,926			77.7	%
Operating expenses
Selling, general and administrative expenses		12,623			10.6	%		12,537			7.9	%		86			0.7	%		8,024			8.7	%		8,735			11.0	%		(711	)		(8.1	)%
Intangible amortization		550			0.5	%		550			0.3	%		—			—	%		367			0.4	%		367			0.5	%		—			—	%
Total operating expenses		13,173			11.0	%		13,087			8.3	%		86			0.7	%		8,391			9.1	%		9,102			11.5	%		(711	)		(7.8	)%
Operating (loss) income		(8,619	)		(7.2	)%		2,240			1.4	%		(10,859	)		(484.8	)%
Other income (expense), net
Operating loss																				(3,985	)		(4.3	)%		(6,622	)		(8.4	)%		2,637			39.8	%
Other (expense) income, net
Paycheck Protection Program loan forgiveness		9,151			7.7	%		—			—	%		9,151			100.0	%		—			—	%		9,151			11.6	%		(9,151	)		(100.0	)%
Interest expense, net		(816	)		(0.7	)%		(1,654	)		(1.0	)%		838			50.7	%		(1,121	)		(1.2	)%		(547	)		(0.7	)%		(574	)		(104.9	)%
Other, net		7,322			6.1	%		(3	)		(0.0	)%		7,325			244166.7	%		21			0.0	%		7,137			9.0	%		(7,116	)		(99.7	)%
Total other income (expense), net		15,657			13.1	%		(1,657	)		(1.0	)%		17,314			1044.9	%
Net income before provision for income taxes		7,038			5.9	%		583			0.4	%		6,455			1107.2	%
Total other (expense) income, net																				(1,100	)		(1.2	)%		15,741			19.9	%		(16,841	)		(107.0	)%
Net (loss) income before provision for income taxes																				(5,085	)		(5.5	)%		9,119			11.5	%		(14,204	)		(155.8	)%
Provision for income taxes		101			0.1	%		103			0.1	%		(2	)		(1.9	)%		22			0.0	%		77			0.1	%		(55	)		(71.4	)%
Net income	$	6,937			5.8	%	$	480			0.3	%	$	6,457			1345.2	%
Net (loss) income																			$	(5,107	)		(5.6	)%	$	9,042			11.4	%	$	(14,149	)		(156.5	)%

Exhibit Number	Exhibit
3.1	Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008
3.2	Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed August 23, 2012)
3.3	Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed May 6, 2020)
3.4	Third Amended and Restated Bylaws of the Company, adopted as of May 4, 2020 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed May 6, 2020)
~~10.1~~	Third Amendment to Amended and Restated Loan and Security Agreement, dated November 8, 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*
31.1	Rule 13a-14(a) Certification of Chief Executive 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 and Chief Financial Officer*
101	The following financial information from this Form 10-Q of Broadwind, Inc. for the quarter ended ~~September~~June 30, ~~2021,~~2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.
101.INS*	Inline XBRL Instance
101.SCH*	Inline XBRL Taxonomy Extension Schema
101.CAL*	Inline XBRL Taxonomy Extension Calculation
101.DEF*	Inline XBRL Taxonomy Extension Definition
101.LAB*	Inline XBRL Taxonomy Extension Labels
101.PRE*	Inline XBRL Taxonomy Extension Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

	BROADWIND, INC.


~~November 10, 2021~~ August 9, 2022	By:	/s/ Eric B. Blashford
		Eric B. Blashford
		President, Chief Executive Officer, and Interim Chief Financial Officer
		(Principal Executive Officer and Principal Financial Officer)