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 30, 2022~~March 31, 2023

☐

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~~May ~~4, 2022:~~8, 2023: ~~20,673,265.~~20,976,787.

Table of Contents

	*September 30,*			*December 31,*			*March 31,*			*December 31,*
	*2022*			*2021*			*2023*			*2022*

ASSETS
CURRENT ASSETS:
Cash	$	1,509		$	852		$	1,729		$	12,732
Accounts receivable, net		16,916			13,802			25,845			17,018
Employee retention credit receivable		—			497
Contract assets		3,489			1,136			1,909			1,955
Inventories, net		33,902			33,377			48,543			44,262
Prepaid expenses and other current assets		3,858			2,661			3,160			3,291
Total current assets		59,674			52,325			81,186			79,258
LONG-TERM ASSETS:
Property and equipment, net		45,497			43,655			45,270			45,319
Operating lease right-of-use assets		16,872			18,029
Operating lease right-of-use assets, net								15,946			16,396
AMP credit receivable								3,162			—
Intangible assets, net		2,902			3,453			2,560			2,728
Other assets		1,119			585			834			839
TOTAL ASSETS	$	126,064		$	118,047		$	148,958		$	144,540
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Line of credit and other notes payable	$	15,629		$	6,650
Line of credit and current portion of long-term debt							$	18,089		$	1,170
Current portion of finance lease obligations		1,967			2,060			1,663			2,008
Current portion of operating lease obligations		1,871			1,775			1,824			1,882
Accounts payable		21,436			16,462			25,794			26,255
Accrued liabilities		4,897			3,654			5,160			4,313
Customer deposits		3,076			12,082			21,751			34,550
Total current liabilities		48,876			42,683			74,281			70,178
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities		8,489			177			6,863			7,141
Long-term finance lease obligations, net of current portion		2,881			2,481			3,976			4,226
Long-term operating lease obligations, net of current portion		17,180			18,405			16,296			16,696
Other		24			167			20			26
Total long-term liabilities		28,574			21,230			27,155			28,089
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding		—			—			—			—
Common stock, $0.001 par value; 30,000,000 shares authorized; 20,944,873 and 19,859,650 shares issued as of September 30, 2022, and December 31, 2021, respectively		21			20
Treasury stock, at cost, 273,937 shares as of September 30, 2022 and December 31, 2021		(1,842	)		(1,842	)
Common stock, $0.001 par value; 30,000,000 shares authorized; 21,191,937 and 21,127,130 shares issued as of March 31, 2023, and December 31, 2022, respectively								21			21
Treasury stock, at cost, 273,937 shares as of March 31, 2023 and December 31, 2022								(1,842	)		(1,842	)
Additional paid-in capital		396,730			395,372			397,720			397,240
Accumulated deficit		(346,295	)		(339,416	)		(348,377	)		(349,146	)
Total stockholders’ equity		48,614			54,134			47,522			46,273
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	126,064		$	118,047		$	148,958		$	144,540

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, 2020		17,211,498		$	17		(273,937	)	$	(1,842	)	$	384,749		$	(342,263	)	$	40,661
Stock issued for restricted stock		241,806			—		—			—			—			—			—
Stock issued under defined contribution 401(k) retirement savings plan		26,265			—		—			—			258			—			258
Share-based compensation		—			—		—			—			219			—			219
Shares withheld for taxes in connection with issuance of restricted stock		(105,399	)		—		—			—			(847	)		—			(847	)
Sale of common stock, net		1,100,000			1		—			—			6,100			—			6,101
Net loss		—			—		—			—			—			(1,210	)		(1,210	)
BALANCE, March 31, 2021		18,474,170		$	18		(273,937	)	$	(1,842	)	$	390,479		$	(343,473	)	$	45,182
Stock issued for restricted stock		440,611			1		—			—			—			—			1
Stock issued under defined contribution 401(k) retirement savings plan		71,334			—		—			—			312			—			312
Share-based compensation		—			—		—			—			445			—			445
Shares withheld for taxes in connection with issuance of restricted stock		(124,814	)		—		—			—			(644	)		—			(644	)
Sale of common stock, net		797,697			1		—			—			3,247			—			3,248
Net income		—			—		—			—			—			10,252			10,252
BALANCE, June 30, 2021		19,658,998			20		(273,937	)		(1,842	)		393,839			(333,221	)		58,796
Stock issued for restricted stock		9,583			—		—			—			—			—			—
Stock issued under defined contribution 401(k) retirement savings plan		87,615			—		—			—			300			—			300
Share-based compensation		—			—		—			—			193			—			193
Shares withheld for taxes in connection with issuance of restricted stock		(2,940	)		—		—			—			(12	)		—			(12	)
Sale of common stock, net		—			—		—			—			(20	)		—			(20	)
Net loss		—			—		—			—			—			(2,105	)		(2,105	)
BALANCE, September 30, 2021		19,753,256		$	20		(273,937	)	$	(1,842	)	$	394,300		$	(335,326	)	$	57,152

BALANCE, December 31, 2021		19,859,650		$	20		(273,937	)	$	(1,842	)	$	395,372		$	(339,416	)	$	54,134			19,859,650		$	20		(273,937	)	$	(1,842	)	$	395,372		$	(339,416	)	$	54,134
Stock issued for restricted stock		480,595			—		—			—			—			—			—			480,595			—		—			—			—			—			—
Stock issued under defined contribution 401(k) retirement savings plan		146,790			—		—			—			282			—			282			146,790			—		—			—			282			—			282
Share-based compensation		—			—		—			—			192			—			192			—			—		—			—			192			—			192
Shares withheld for taxes in connection with issuance of restricted stock		(194,962	)		—		—			—			(411	)		—			(411	)		(194,962	)		—		—			—			(411	)		—			(411	)
Net loss		—			—		—			—			—			(2,404	)		(2,404	)		—			—		—			—			—			(2,404	)		(2,404	)
BALANCE, March 31, 2022		20,292,073		$	20		(273,937	)	$	(1,842	)	$	395,435		$	(341,820	)	$	51,793			20,292,073		$	20		(273,937	)	$	(1,842	)	$	395,435		$	(341,820	)	$	51,793
Stock issued for restricted stock		328,139			—		—			—			—			—			—

BALANCE, December 31, 2022																						21,127,130		$	21		(273,937	)	$	(1,842	)	$	397,240		$	(349,146	)	$	46,273
Stock issued under defined contribution 401(k) retirement savings plan		207,722			—		—			—			331			—			331			64,807			—		—			—			302			—			302
Share-based compensation		—			—		—			—			388			—			388			—			—		—			—			178			—			178
Shares withheld for taxes in connection with issuance of restricted stock		(82,946	)		—		—			—			(133	)		—			(133	)
Net loss		—			—		—			—			—			(2,703	)		(2,703	)
BALANCE, June 30, 2022		20,744,988		$	20		(273,937	)	$	(1,842	)	$	396,021		$	(344,523	)	$	49,676
Stock issued for restricted stock		7,000			—		—			—			—			—			—
Stock issued under defined contribution 401(k) retirement savings plan		94,773			—		—			—			302			—			302
Share-based compensation		—			—		—			—			180			—			180
Shares withheld for taxes in connection with issuance of restricted stock		(2,267	)		—		—			—			(2	)		—			(2	)
Sale of common stock, net		100,379			1		—			—			229			—			230
Net loss		—			—		—			—			—			(1,772	)		(1,772	)
BALANCE, September 30, 2022		20,944,873		$	21		(273,937	)	$	(1,842	)	$	396,730		$	(346,295	)	$	48,614
Net income																						—			—		—			—			—			769			769
BALANCE, March 31, 2023																						21,191,937		$	21		(273,937	)	$	(1,842	)	$	397,720		$	(348,377	)	$	47,522

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

	*Nine Months Ended September 30,*						*Three Months Ended March 31,*
	*2022*			*2021*			*2023*			*2022*
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(6,879	)	$	6,937
Net income (loss)							$	769		$	(2,404	)
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense		4,581			4,758			1,605			1,519
Paycheck Protection Program loan forgiveness		—			(9,151	)
Deferred income taxes		(13	)		19			(5	)		(7	)
Change in fair value of interest rate swap agreements		(27	)		18			—			2
Stock-based compensation		760			857
Share-based compensation								178			192
Allowance for doubtful accounts		(18	)		(434	)		14			(23	)
Common stock issued under defined contribution 401(k) plan		915			870			302			282
Loss (gain) on disposal of assets		3			(33	)
Loss on disposal of assets								—			3
Changes in operating assets and liabilities:
Accounts receivable		(3,096	)		(360	)		(8,841	)		(5,073	)
AMP credit receivable								(3,162	)		—
Employee retention credit receivable		497			(503	)		—			497
Contract assets		(2,353	)		763			46			(2,038	)
Inventories		(525	)		1,848			(4,281	)		(5,690	)
Prepaid expenses and other current assets		(1,200	)		689			130			179
Accounts payable		4,968			(4,321	)		(784	)		10,538
Accrued liabilities		1,271			(2,285	)		847			(254	)
Customer deposits		(9,006	)		(11,139	)		(12,799	)		(3,683	)
Other non-current assets and liabilities		(149	)		644			(3	)		(45	)
Net cash used in operating activities		(10,271	)		(10,823	)		(25,984	)		(6,005	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(2,757	)		(1,369	)		(1,065	)		(492	)
Proceeds from disposals of property and equipment		—			33
Net cash used in investing activities		(2,757	)		(1,336	)		(1,065	)		(492	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit, net		7,966			4,039			16,945			7,207
Payments for deferred financing costs		(470	)		—
Proceeds from long-term debt		8,113			613			—			125
Payments on long-term debt		(261	)		(159	)		(634	)		(8	)
Principal payments on finance leases		(1,347	)		(1,197	)		(265	)		(495	)
Shares withheld for taxes in connection with issuance of restricted stock		(546	)		(1,503	)		—			(411	)
Proceeds from sale of common stock, net		230			9,329
Net cash provided by financing activities		13,685			11,122			16,046			6,418
NET INCREASE (DECREASE) IN CASH		657			(1,037	)
NET DECREASE IN CASH								(11,003	)		(79	)
CASH beginning of the period		852			3,372			12,732			852
CASH end of the period	$	1,509		$	2,335		$	1,729		$	773

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~~months ended ~~September 30, 2022~~March 31, 2023 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, ~~2022,~~2023, 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, ~~2021~~2022. and as supplemented by the risk factors set forth in Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q.

The December 31, ~~2021~~2022 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, ~~2021~~2022.

There have been no material changes in the Company’s significant accounting policies during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022.

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 manufacturing and 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 ~~51%~~50% and ~~66%~~53% of the Company’s revenue during the first ~~nine~~three months of ~~2022~~2023 and ~~2021,~~2022, respectively.

The Company typically meets its short term liquidity needs through cash generated from operations, its available cash balances, the ~~2016~~ ~~Credit Facility and the~~ 2022 Credit Facility ~~as applicable (each, as~~(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 7,8, “Debt and Credit Agreements,” of these condensed consolidated financial statements for a description of the ~~2016~~ ~~Credit Facility, the~~ 2022 Credit Facility and the Company’s other debt.

~~Total debt~~Debt and finance lease obligations at ~~September 30, 2022~~March 31, 2023 totaled ~~$28,966,~~$30,591, which includes current outstanding debt and finance leases totaling ~~$17,596.~~$19,752. The ~~Company's~~Company’s outstanding debt includes $16,945 outstanding from the senior secured revolving credit facility under the 2022 Credit Facility. The Company had $6,947 drawn on the senior secured revolving term loan as of March 31,2023. The Company’s revolving line of credit balance is included in the “Line of credit and ~~other notes payable”~~current portion of long-term debt” line item in the Company's condensed consolidated balance sheet.

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 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, par value $0.001 per share, 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 $9,725after deducting commissions paid of approximately $275and before deducting other expenses of $411.~~

On September 12, 2022, the Company entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC and HC Wainwright & Co., LLC (collectively, the “Agents”). Pursuant to the terms of the Sales Agreement, the Company may sell from time to time through the Agents shares of the Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $12,000. Any shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S-3 and the 424(b) prospectus supplement relating to the offering dated September 12, 2022. The Company will pay a commission to the Agents of 2.75% of the gross proceeds of the sale of the shares sold under the Sales Agreement and reimburse the Agents for the expenses incident to the performance of their obligations under the Sales Agreement. During the ~~quarter~~year ended ~~September 30,~~December 31, 2022, the Company issued 100,379 shares of the Company’s common stock under the Sales Agreement and the net proceeds (before upfront costs) to the Company from the sale of the Company’s common stock were approximately $323 after deducting commissions paid of approximately $9 and before deducting other expenses of $93. No shares of the Company’s common stock were issued under the Sales Agreement during the three months ended March 31, 2023. As of ~~September 30, 2022,~~March 31,2023,shares of the Company’s common stock having a value of approximately $11,667 remained available for issuance under the Sales Agreement.

On ~~March 27, 2020,~~ the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes. The ERC is available for wages paid through ~~September~~ ~~30,~~~~2021~~ ~~and is equal to~~ ~~70%~~ ~~of qualified wages (which includes employer qualified health plan expenses) paid to employees. The maximum tax credit that could be claimed by an eligible employer in~~ ~~2021~~ ~~was~~ ~~$7,000~~ ~~per employee per calendar quarter. In the~~ ~~first~~ ~~and~~ ~~second~~ ~~quarters of~~ ~~2021,~~ the Company received ERC benefits of $3,372 and $3,593, respectively, which were recorded in “Other income (expense), net” in the Company’s condensed consolidated statement of operations. The Company did ~~not~~ ~~qualify for the ERC benefit during the~~ ~~third~~ ~~quarter of~~ ~~2021~~ ~~due to relatively higher revenues in~~ ~~2021~~ ~~as compared to the~~ ~~third~~ ~~quarter of~~ ~~2019.~~ ~~The receivable for the remaining uncollected ERC benefit was $497 as of~~ ~~December 31, 2021~~ ~~and was included in the “Employee retention credit receivable” line item in the Company’s condensed consolidated balance sheet at~~ ~~December~~ ~~31,~~~~2021.~~ ~~The remaining $497 for the uncollected ERC benefit was collected during~~ ~~January 2022.~~

The Company 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~~ ~~nine~~months ended ~~September~~March ~~30,~~31, ~~2022,~~2023 and March 31, 2022, the Company sold account receivables totaling ~~$30,662~~$9,614 and ~~$77,099,~~$15,925, respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling ~~$615~~$131 and ~~$1,110,~~$78, respectively. ~~During the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2021,~~ the Company sold account receivables totaling $23,998 and $78,661, respectively, related to supply chain financing arrangements, of which customers’ financial institutions applied discount fees totaling $47 and $183, respectively.

The Company anticipates that current cash resources, amounts available under the 2022 Credit Facility, cash to be generated from operations and equipment financing, potential proceeds from the sale of Company securities under the Sales Agreement 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 the 2022 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.

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

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include revenue recognition, future cash flows, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, health insurance reserves, and valuation allowances on deferred taxes. Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these ~~estimates, particularly in light of the COVID-~~19 ~~pandemic.~~estimates.

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~~months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022:

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.

~~Within the Gearing segment, the Company recognized revenue over time of $499and $2,444for~~During the three ~~and~~ ~~nine~~months ended ~~September~~March ~~30,~~31, ~~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~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2022~~2023 and ~~2021,~~2022, the Company recognized a portion of revenue within the Heavy Fabrications segment over time, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts. Within the Heavy Fabrications segment, the Company recognized revenue over time of ~~$5,927~~ $1,858and ~~$13,336~~ $2,471for the three ~~and~~ ~~nine~~months ended ~~September~~March ~~30,~~31, ~~2022,~~ ~~respectively and recognized revenue over time of $1,791and $4,220 for the~~ ~~three~~2023 and ~~nine~~March 31, 2022, ~~months ended~~ ~~September~~ ~~30,~~~~2021,~~respectively. The Company ~~also~~ uses labor hours as the input measure of progress for the applicable Heavy Fabrications contracts ~~since~~because the projects are labor intensive. Contract assets are recorded when performance obligations are satisfied but the Company is not yet entitled to payment. Contract assets represent the Company’s rights to consideration for work completed but not billed at the end of the period.

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

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

The following table presents a reconciliation of basic and diluted earnings per share for the three ~~and~~ ~~nine~~months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022, as follows:

The components of inventories as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 are summarized as follows:

During the first quarter of 2023, the Company recognized Advanced Manufacturing Production tax credits (“AMP credits”) totaling $3,162 within the Heavy Fabrications segment. These AMP credits were introduced as part of the Inflation Reduction Act (“IRA”) which was enacted on August 16, 2022. The IRA includes advanced manufacturing tax credits for manufacturers of eligible components, including wind and solar components. Manufacturers of wind components qualify for the AMP credits based on the total rated capacity, expressed on a per watt basis, of the completed wind turbine for which such component is designed. The credit applies to each component produced and sold in the U.S. starting in 2023 through 2032. Wind towers within the Company’s Heavy Fabrications segment are eligible for credits of $0.03 per watt for each wind tower produced. In calculating the eligible credit, the Company relied on the megawatt rating provided by the customer. Manufacturers can apply to the Internal Revenue Service for cash refunds of the AMP credits for up to five years. After the firstfive years, the AMP credits are transferable and can be sold to third parties for cash. The Company recognized the AMP credits as a reduction to cost of sales in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2023. The assets related to the AMP credits are recognized as a long-term asset in the “AMP credit receivable” line item in the Company's condensed consolidated balance sheets as of March 31, 2023. There are currently several critical and complex aspects of the IRA pending technical guidance and regulations from the Internal Revenue Service and the U.S. Treasury Department. Any modifications to the law or its effects arising, for example, through technical guidance and regulations from the Internal Revenue Service and the U.S. Treasury Department could result in changes to the expected and/or actual benefits in the future, which could have a material effect on the Company, results of operations, financial performance and future development efforts.

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 0 to 5 years.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, the cost basis, accumulated amortization and net book value of intangible assets were as follows:

	*September 30, 2022*												*December 31, 2021*												*March 31, 2023*												*December 31, 2022*
											*Remaining*												*Remaining*												*Remaining*												*Remaining*
											*Weighted*												*Weighted*												*Weighted*												*Weighted*
						*Accumulated*			*Net*		*Average*							*Accumulated*			*Net*		*Average*							*Accumulated*			*Net*		*Average*							*Accumulated*			*Net*		*Average*
	*Cost*		*Accumulated*			*Impairment*			*Book*		*Amortization*				*Accumulated*			*Impairment*			*Book*		*Amortization*		*Cost*		*Accumulated*			*Impairment*			*Book*		*Amortization*				*Accumulated*			*Impairment*			*Book*		*Amortization*
	*Basis*		*Amortization*			*Charges*			*Value*		*Period*		*Cost*		*Amortization*			*Charges*			*Value*		*Period*		*Basis*		*Amortization*			*Charges*			*Value*		*Period*		*Cost*		*Amortization*			*Charges*			*Value*		*Period*
Intangible assets:
Noncompete agreements	$	170	$	(161	)	$	—		$	9		0.3	$	170	$	(139	)	$	—		$	31		1.1	$	170	$	(170	)	$	—		$	—		—	$	170	$	(167	)	$	—		$	3		0.1
Customer relationships		15,979		(7,513	)		(7,592	)		874		3.3		15,979		(7,284	)		(7,592	)		1,103		4.0		15,979		(7,646	)		(7,592	)		741		2.8		15,979		(7,581	)		(7,592	)		806		3.1
Trade names		9,099		(7,080	)		—			2,019		5.0		9,099		(6,780	)		—			2,319		5.8		9,099		(7,280	)		—			1,819		4.5		9,099		(7,180	)		—			1,919		4.8
Intangible assets	$	25,248	$	(14,754	)	$	(7,592	)	$	2,902		4.5	$	25,248	$	(14,203	)	$	(7,592	)	$	3,453		5.2	$	25,248	$	(15,096	)	$	(7,592	)	$	2,560		4.1	$	25,248	$	(14,928	)	$	(7,592	)	$	2,728		4.3

As of ~~September 30, 2022~~March 31, 2023, estimated future amortization expense was as follows:

Accrued liabilities as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 consisted of the following:

The Company’s outstanding debt balances as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 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 ~~“2016~~ ~~Credit Facility”). The obligations under the~~ ~~2016~~ ~~Credit Facility were secured by, subject to certain exclusions, (i) a~~ ~~first~~ priority security interest in all accounts receivable, inventory, equipment, cash and investment property, and (ii) a mortgage on the Abilene, Texas tower and Pittsburgh, Pennsylvania gearing facilities.

On ~~October~~ ~~29,~~~~2020,~~ ~~the Company executed the First Amendment to the 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 the~~ ~~2016~~ ~~Credit Facility to~~ ~~July~~ ~~31,~~~~2023.~~

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

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

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

~~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 fixed the interest rate on LIBOR borrowings for the entire original term of the ~~2016~~ Credit Facility at 2.13%, before considering the Company’s risk premium. The interest rate swap is accounted for using mark-to-market accounting. Accordingly, changes in the fair value of the swap each reporting period are adjusted through earnings, which ~~may~~ subject the Company’s results of operations to non-cash volatility. The interest rate swap liability is included in the “Accrued liabilities” line item of the Company’s condensed consolidated financial statements as of ~~December 31, 2021~~~~. The interest rate swap expired in~~ ~~February 2022.~~

On August 4, 2022, the Company entered into a credit agreement (the “2022 Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), ~~providing~~which replaced its prior credit facility and provided the Company and its subsidiaries with a $35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon the request of the Company and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. ~~The~~ ~~2022~~ ~~Credit Facility replaced the~~ ~~2016~~ ~~Credit Facility. All obligations outstanding under the~~ ~~2016~~ ~~Credit Facility were refinanced by~~In connection with the 2022 Credit Facility, onthe Company incurred deferred financing costs in the amount of $479 primarily related to the revolving credit loan, which is net of accumulated amortization of $64. These costs are included in the “Other assets” line item of the Company's condensed consolidated financial statements as of ~~August 5, 2022.~~March 31,2023.

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

The 2022 Credit ~~Facility~~Agreement, as amended, contains customary covenants limiting the Company’s and its subsidiaries’ ability to, among other things, incur liens, make investments, incur indebtedness, merge or consolidate with others or dispose of assets, change the nature of its business, and enter into transactions with affiliates. ~~In addition, the~~ ~~2022~~ ~~Credit Facility contains financial covenants requiring the Company to have a Fixed Charge Coverage Ratio (as defined in the~~ ~~2022~~ ~~Credit Facility) (i) as of the~~ ~~twelve~~~~-month period ending~~ ~~July 31, 2023~~ ~~through and including~~ ~~December 31, 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. The term loan also matures on August 4, 2027, with monthly payments based on an ~~84-month~~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 and its subsidiaries (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, if any, upon becoming a direct or indirect subsidiary, will be required to become a party to the Guaranty. Additionally, in connection with the ~~2022~~ Credit Facility, the Company incurred deferred financing costs in the amount of $470 primarily related to the revolving credit loan. These costs are included in the “Other assets” line item of the Company's condensed consolidated financial statements as of ~~September 30, 2022.~~

As of ~~September 30, 2022~~March 31, 2023, there was ~~$21,893~~$23,892 of outstanding indebtedness under the 2022 Credit Facility, with the ability to borrow an additional ~~$13,315.~~$10,567. As of ~~September 30, 2022,~~March 31,2023,the Company was in compliance with all financial covenants under the 2022 Credit Facility. As of March 31,2023, the effective interest rate of the senior secured revolving credit facility was 6.83% and the effective rate of the senior secured term loan was 7.33%. As of December 31,2022, the effective interest rate of the senior secured revolving credit facility was 6.55% and the effective rate of the senior secured term loan was 6.80%.

In ~~2016,~~ the Company entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Line of credit and other notes payable” line item of the Company’s condensed consolidated financial statements as of ~~September 30, 2022~~ ~~and~~ ~~December 31, 2021~~~~. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years~~ ~~2021,~~~~2020,~~~~2019,~~ ~~and~~ ~~2018,~~ ~~$114 of the loan was forgiven. As of~~ ~~September 30, 2022~~~~, the loan balance was $114.~~ In addition, the Company has outstanding notes payable for capital expenditures in the amount of ~~$2,111~~$1,060 and ~~$363~~$1,094 as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, respectively, with ~~$26~~$62 and ~~$186~~$88 included in the “Line of credit and ~~other notes payable”~~current portion of long-term debt” line item of the Company’s condensed consolidated financial statements as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022., respectively. The notes payable have monthly payments that range from $3 to $16 and an interest rate of approximately 6%5%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable mature in September 2028.

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

The Company has elected to apply the short-term lease exception to all leases of one year or less. During the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021,~~2022, the Company ~~had~~did not have additional operating leases that resulted in right-of-use assets obtained in exchange for lease ~~obligations of $187 and $907, respectively. Additionally, during~~obligations. During the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021,~~2022, the Company had additional finance leases that resulted in property, plant, and equipment obtained in exchange for lease obligations of ~~$1,773~~$0 and ~~$2,444,~~$92, 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 30, 2022~~March 31, 2023, 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~~value of the Company’s financial assets and liabilities as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 :

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of ~~September 30, 2022~~March 31, 2023, the Company has a full valuation allowance recorded against deferred tax assets. During the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023, the Company recorded a provision for income taxes of ~~$36,~~$23, compared to a provision for income taxes of ~~$101~~$7 during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022. On August 16, 2022, Congress enacted the IRA which includes advanced manufacturing tax credits for manufacturers of eligible components, including wind and solar components produced and sold in the U.S. starting in 2023 through 2032.No rulings have been made on the taxability of these credits. Due to the uncertainty of the credits, the Company assumed no tax impact for the three months ended March 31, 2023.

The Company files income tax returns in U.S. federal and state jurisdictions. As of ~~September 30, 2022~~March 31, 2023, 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, ~~2021~~2022, the Company had federal and unapportioned state net operating loss (“NOL”) carryforwards of ~~$277,310~~$288,462 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 Section 382 of the IRC or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of Section 382 of the IRC 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 in February 2016 and approved by the Company’s stockholders (as amended, the “Rights Plan”), designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under Section 382 of the IRC. On February 7, 2019 and February 3, 2022, the Board of Directors (the “Board”) approved ~~an amendment~~amendments extending the Rights Plan for an additional three ~~years, which was subsequently approved by the Company’s stockholders at the~~ ~~2019~~ ~~Annual Meeting of Stockholders held on~~ ~~April 23, 2019.~~ On ~~February 3, 2022,~~ ~~the Board approved an amendment which included an extension of the Rights Plan for an additional~~ ~~three~~ ~~years, which was subsequently approved at the~~ ~~2022~~ ~~Annual Meeting of Stockholders held on~~ ~~April 26, 2022.~~ years.

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 one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on February 22, 2013. Each Right entitles its holder to purchase from the Company one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $7.26 per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9% or more of the outstanding shares of the Company’s common stock as of February 12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares after that date.

As of ~~September 30, 2022~~March 31, 2023, the Company had no unrecognized tax benefits. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company had no accrued interest and penalties as of ~~September 30, 2022~~March 31, 2023.

There was no stock option activity during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and no stock options were outstanding as of ~~September 30, 2022~~March 31, 2023. ~~During the~~ ~~three~~ ~~months ended~~ ~~September 30, 2022,~~ ~~the Company recorded share-based compensation expense in the amount of $425 for liability awards that will be settled in shares in~~ ~~2023.~~ ~~The liability is recognized in the “Accrued liabilities” line item of the Company’s condensed consolidated balance sheet and has a balance of $425 as of~~ ~~September 30, 2022.~~

The following table summarizes the Company’s restricted stock unit and performance award activity during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023:

Under certain situations, shares are withheld from issuance to cover taxes for the vesting of restricted stock units and performance awards. For the ~~nine~~three months ended ~~September~~March 31, 2023, ~~30,~~~~2022,~~ ~~280,175~~no shares were withheld to cover ~~$546 of~~ tax obligations.

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022, 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 received a notice dated January 18, 2023 from WM Argyle Fund, LLC (“WM Argyle”), which allegedly owned approximately 1.0% of the Company’s outstanding shares at the time of submission nominating a slate of six candidates for election as directors at the Company's 2023 Annual Meeting of Stockholders. WM Argyle later reduced its slate from six nominees to three nominees and has filed a definitive proxy statement with the SEC in connection with the 2023 Annual Meeting of Stockholders. The Company remains open to ongoing engagement with WM Argyle. However, if the Company and WM Argyle cannot reach an agreement in connection with its nomination, there will be a contested election at the Company’s 2023 Annual Meeting of Stockholders and up to three of the Company’s incumbent directors could be replaced by WM Argyle’s nominees.

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.

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update No.2016-13, “Financial Instruments-Credit Losses (Topic 326),” which replaces the current incurred loss impairment methodology for most financial assets with the current expected credit loss (“CECL”) methodology. The series of new guidance amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables and contract assets. The guidance should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. The guidance is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company implemented CECL during the three months ended March 31, 2023. The impact on the Company's financial statements was not material. See Note 16, “Commitments and Contingencies,” of these condensed consolidated financial statements for a further discussion of CECL.

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 two facilities have a combined annual tower production capacity of up to approximately 550 towers (1,650 tower sections), sufficient to support turbines generating more than 1,100 megawatts of power. The Company has expanded production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and original equipment manufacturer (“OEM”) components utilized in surface and underground mining, construction, material handling, oil and gas (“O&G”) and other infrastructure markets.

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~~months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022 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.

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

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

The allowance for credit losses for prior periods was prepared in accordance with legacy GAAP. Based upon past experience and judgment, the Company ~~establishes~~established an allowance for doubtful accounts with respect to accounts receivable. The Company’s standard allowance estimation methodology ~~considers~~considered a number of factors that, based on its collections experience, the Company ~~believes will~~believed would have an impact on its credit risk and the collectability of its accounts receivable. These factors ~~include~~included individual customer circumstances, history with the Company, the length of the time period during which the account receivable ~~has~~had 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~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022 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~~at ~~September 30, 2022~~March 31, 2023 orand December 31, ~~2021.~~2022.

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, ~~2021.~~2022. 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.~~uncertainties. 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 ~~$84,457~~$39,602 in new orders in the ~~third~~first quarter of ~~2022, up significantly~~2023, down from ~~$42,597~~$52,693 in the ~~third~~first quarter of ~~2021.~~2022. Within our Heavy Fabrications segment, wind tower orders ~~increased 223% compared to the prior year quarter as tower customers secured 2022 and 2023 production capacity to support ongoing wind turbine tower installation projects.Partially offsetting the increase in tower orders within the Heavy Fabrication segment was a 41% decrease in industrial fabrication orders.Gearing segment orders increased 34%~~decreased 63% compared to the prior year quarter primarily due to ~~higher~~the timing of tower orders as a major wind tower customer secured relatively longer-term capacity during the fourth quarter of 2022 instead of ordering in more regular intervals as was the case in the prior year. Partially offsetting this decrease was a 113% increase in industrial fabrication orders primarily due to improved demand from ~~oil~~industrial customers and ~~gas~~demand for our Pressure Reducing Systems (“PRS”) units. Gearing segment orders decreased 12% from the prior year period primarily due to reduced demand from O~~&G”), industrial, and mining~~&G customers. Orders within our Industrial Solutions segment increased by ~~34%~~56% as compared to the prior year quarter, primarily due to ~~an increase in~~improved demand for new gas turbine ~~orders.~~content.

We recognized revenue of ~~$44,843~~$48,873 in the ~~third~~first quarter of ~~2022,~~2023, up ~~11%~~17% compared to the ~~third~~first quarter of ~~2021,~~2022. Within the Heavy Fabrications segment wind tower revenue increased 12% primarily ~~due~~as a result of less customer supplied materials in the current year quarter and increased steel content, which is generally a pass-through to ~~a 95% increase in industrial fabrications product line~~customers. Industrial fabrication revenue within the Heavy Fabrications segment increased 31% primarily due to increased demand from mining customers and ~~a 35% increase~~our PRS units in the current year quarter. Gearing segment ~~revenue. The increase in industrial fabrication~~ revenue isincreased 13% relative to the comparable prior year period primarily ~~attributable~~due to strong recent order intake from industrial customers and revenue recognized on our Pressure Reducing Systems (“PRS”) units. This increase was partially offset by a 26% decrease in tower sections sold. The Gearing revenue increase was primarily driven by stronghigher order intake in recent quarters from ~~O&G~~industrial customers, partially offset by a decrease in ~~aftermarket wind revenue.~~other markets served. Industrial Solutions segment revenue ~~decreased 5% compared to~~increased by 33% from the prior year ~~quarter,~~period primarily due to ~~global logistics delays.~~the timing of revenue recognized from international customers.

We recorded a net ~~loss~~income of ~~$1,772~~$769 or ~~$0.09~~$0.04 per share in the ~~third~~first quarter of ~~2022,~~2023, compared to a net loss ~~$2,105~~$2,404 or ~~$0.11~~$0.12 per share in the ~~third~~first quarter of ~~2021.This decrease~~2022.This increase in net ~~loss~~income was primarily due ~~primarily~~ to higher sales and the $3,162 recognized from the AMP credits (discussed below). This was partially offset by higher ~~material~~medical costs and ~~increased interest expense.~~proxy contest-related expenses.

During the first quarter of 2023, we were able to recognize advanced manufacturing tax credits (“AMP credits”) of $3,162 within the Heavy Fabrications segment. The ~~COVID-19 pandemic has disrupted business, trade, commerce~~AMP credits were a part of the Inflation Reduction Act (“IRA”) which was enacted on August 16, 2022. The IRA includes advanced manufacturing tax credits for manufacturers of eligible components, including wind and ~~financial markets~~solar components. Manufacturers qualify for the AMP credits based on the total rated capacity, expressed on a per watt basis, of the completed wind turbine for which such component is designed. The credit is applicable for each component produced and sold in the U.S. ~~and globally. Through September 30, 2022, we experienced an adverse impact to~~starting in 2023 through 2032. Wind towers within our ~~business, operations and financial results as a result~~Heavy Fabrications segment were eligible for credits of 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$0.03 per watt 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 follow the guidance provided by the U.S. Centers for Disease Control and Prevention.

Three months ended ~~September 30, 2022,~~March 31, 2023, Compared to Three months ended ~~September 30, 2021~~March 31, 2022

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 30, 2022,~~March 31, 2023, compared to the three months ended ~~September 30, 2021.~~March 31, 2022.

Revenues increased by ~~$4,454~~$7,029 versus the prior year quarter. This increase was primarily due to a 95% increase in industrial fabrications product line revenue within the Heavy Fabrications segment compared to the prior year quarter primarily as a result of strong recent order intake from industrial customers and revenue recognized on our PRS units. This increase was partially offset by a 26% decrease in tower sections sold compared to the prior year quarter. Gearing segment revenue was up 35% from the third quarter of 2021, primarily driven by higher recent order intake from O&G customers, partially offset by a decrease in aftermarket wind revenue. Industrial Solutions segment revenue decreased by 5% from the third quarter of 2021 primarily due to global logistics delays.

~~Gross profit increased by $1,674 when compared to~~ the prior year quarter primarily due to an increase in wind tower revenue by 12% as a result of less customer supplied materials in the ~~higher sales volumes~~current year quarter and increased steel content, which is generally a pass-through to customers. Industrial fabrication revenue within the ~~Gearing and Heavy Fabrications segments, partially offset by higher material costs.~~

~~Due primarily to higher revenue levels, operating expenses as a percentage of sales decreased to 9.5% in the current-year quarter from 10.1% in the prior year quarter.~~

Net loss was $1,772 during the three months ended September 30, 2022, compared to a net loss of $2,105 during the three months ended September 30, 2021. This decrease in net loss was primarily due to the factors described above, partially offset by higher interest expense.

Wind tower orders increased 223% compared to the prior year quarter as tower customers secured 2022 and 2023 production capacity to support ongoing wind turbine tower installation projects. Industrial fabrications product line orders decreased 41% from the prior year quarter primarily due to lower mining demand. Heavy Fabrications segment ~~revenues~~ increased ~~7% compared to the prior year primarily due to a 95% increase inindustrial fabrication line revenues, which was partially offset by a 26% decrease in tower sections sold.~~

Heavy Fabrications segment operating income increased by $817 compared to the prior year quarter. The quarter-over-quarter improvement in operating performance is primarily a result of higher sales volumes and labor efficiencies, partially offset by higher material costs. Operating margin was 1.2% during the three months ended September 30, 2022, an increase from (1.6)% during the three months ended September 30, 2021.

~~Gearing segment orders increased 34% from the prior year period~~31% primarily due to increased demand from ~~industrial,~~ mining customers and ~~O&G customers.~~for our PRS units in the current year quarter. Gearing segment revenue ~~was up 35%~~increased 13% relative to the comparable prior year period primarily due to higher order intake in recent quarters from ~~O&G~~industrial customers, partially offset by a decrease in other markets served. Industrial Solutions segment revenue increased by 33% from the prior year period primarily due to the timing of revenue recognized from international customers.

Gross profit increased by $4,964 when compared to the prior year quarter, primarily due to the higher sales volumes within all segments and the $3,162 recognized from the AMP credits.

Due primarily to higher medical costs and proxy-contest related expenses, operating expenses as a percentage of sales increased to 11.7% in the current-year quarter from 9.8% in the prior year quarter.

Net income was $769 during the three months ended March 31, 2023, compared to a net loss of $2,404 during the three months ended March 31, 2022. This increase in net income was primarily due to the factors described above.

Within our Heavy Fabrications segment, wind tower orders decreased 63% compared to the prior year quarter primarily due to the timing of tower orders as a major wind tower customer secured relatively longer-term capacity during the fourth quarter of 2022 instead of ordering in more regular intervals as was the case in the prior year. Partially offsetting this decrease in orders was a 113% increase in industrial fabrication orders primarily due to improved demand from industrial customers and demand for our PRS units.

Segment revenues increased by 16% during the three months ended March 31, 2023 primarily due to a 12% increase in wind tower revenue as a result of less customer supplied materials in the current year quarter and increased steel content, which is generally a pass-through to customers. Industrial fabrication revenue within the Heavy Fabrications segment increased 31% primarily due to increased demand from mining customers and for our PRS units in the current year quarter.

Heavy Fabrications segment operating results improved by $3,251 as compared to the prior year quarter. The improvement in operating performance was primarily a result of reduced tower costs as a result of the AMP credits recognized of $3,162 and higher industrial fabrication revenues recognized in the current year quarter. Operating profit margin was 8.8% during the three months ended March 31, 2023 compared to (1.7%) during the three months ended March 31, 2022.

Gearing segment orders decreased 12% from the prior year period primarily due to reduced demand from O&G customers. Gearing revenue was up 13% relative to the comparable prior year period primarily due to higher order intake in recent quarters from industrial customers, partially offset by a decrease in mining and aftermarket wind revenue.

Gearing segment operating income improved by ~~$843~~$693 from the prior year period. This improvement was primarily attributable to higher sales, ~~partially offset by increased fixed~~the absence of ramp-up costs ~~to support volumes.~~incurred in the prior year, and a more profitable mix of product sold. Operating margin was ~~6.1%~~4.9% during the three months ended ~~September 30, 2022,~~March 31, 2023, an improvement from ~~(2.9)~~(1.1)% during the three months ended ~~September 30, 2021,~~March 31, 2022, driven primarily by the items identified above.

Industrial Solutions segment orders increased by ~~34%~~56% from the prior year period primarily due to ~~the timing of orders associated with~~improved demand for new gas turbine ~~orders.~~content. Segment revenue ~~decreased~~increased by 5%33% from the prior year period primarily due to ~~global logistics delays.~~revenue recognized from international customers. Operating ~~loss~~income increased versus the prior-year quarter primarily as a result of ~~lower~~higher sales and~~higher freight and packaging costs.~~ a more profitable mix of product sold.

Corporate and Other expenses during the three months ended ~~September 30, 2022~~March 31, 2023 increased from the prior year period primarily due to higher ~~compensation-related expenses.~~

~~Nine months ended September 30, 2022, Compared to Nine months ended September 30, 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 months ended September 30, 2022, compared to the nine months ended September 30, 2021.

Revenues increased by $17,091 versus the prior year period. Gearing segment revenue was up 52% from 2021, primarily driven by strong recent order intake from O&G, mining, and industrial 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 101% increase in industrial fabrications product line revenue. The industrial fabrications product line revenue increase was primarily attributable to higher recent order intake from industrial and mining customers, in addition to revenue recognized on our PRS units. Industrial Solutions segment revenue increased by 6%, primarily due to an increase in revenue from aftermarket projects, partially offset by a decrease in revenue from new gas turbine projects.

Gross profit increased by $3,600 when compared to the prior year period primarily due to higher sales volumes in the Gearing and the Heavy Fabrications segments, partially offset by higher material costs and ramp-up costs. As a result, gross margin increased to 6.0% during the nine months ended September 30, 2022, from 3.8% during the nine months ended September 30, 2021.

Due primarily to higher revenue levels and reduced legal and professional fees, operating expenses as a percentage of sales decreased to 9.3% in the current-year period from 11.0% in the prior year period.

Net loss was $6,879 during the nine months ended September 30, 2022, compared to net income of $6,937 during the nine months ended September 30, 2021 primarily due to the factors described above and the absence of the $6,965 employee retention credit (“ERC”) benefit and the $9,151 Payroll Protection Program (“PPP”) loan forgiveness recorded in the prior year.

Wind tower orders increased 106% versus the prior year period as tower customers secured 2022 and 2023 production capacity to support ongoing wind turbine tower installation projects. Industrial fabrications product line orders increased 10% from the prior year period primarily due to increased demand for PRS units and industrial products, partially offset by a reduction in mining demand. Heavy Fabrications segment revenues increased 7% primarily due to a 101% increase in industrial fabrication revenue primarily due to higher recent order intake from industrial and mining customers, in addition to revenue recognized from our PRS units in the current year. The increase in industrial fabrications revenue was partially offset by a 29% decrease in tower sections sold.

Heavy Fabrications segment operating loss improved by $1,862 compared to the prior year period. The improvement in operating performance was primarily a result of higher sales in the current year and the absence of one-time events that occurred during the prior year period including a weather-related event and a customer driven project delay, partially offset by higher material costs and costs associated with transitioning a portion of the workforce to support growth in the industrial fabrications product line. Operating margin was 0.0% during the nine months ended September 30, 2022, an improvement from (2.1)% during the nine months ended September 30, 2021.

Gearing segment orders increased 31% from the prior year period primarily due to increased demand from O&G, mining, and industrial customers. Gearing revenue was up 52% relative to the comparable prior year period primarily due to higher order intake in recent quarters from O&G, industrial, and mining customers, partially offset by a decrease in aftermarket wind revenue.

~~Gearing segment operating loss improved by $2,017 from the prior year period. This improvement was primarily attributable to higher sales,partially offset by higher material costs, ramp-up~~medical costs and increased ~~fixed costs to support higher volumes.~~Operating margin was (0.2)% during the nine months ended September 30, 2022, an improvement from (10.3)% during the nine months ended September 30, 2021, driven primarily by the items identified above.

~~Industrial Solutions segment orders increased by 24% from the prior year period primarily due to the timing of orders~~professional fees associated with ~~aftermarket projects. Segment revenue increased by 6% from~~ the prior year period primarily due to an increase in revenue from aftermarket projects. The increased operating loss versus the prior year was primarily a result of higher variable expenses including freight costs.

~~Corporate and Other expenses during the nine months ended September 30, 2022 decreased from the prior year period primarily due tolower salaries and benefits.~~

On August 4, 2022, we entered into a credit agreement (the “2022 Credit Agreement”) with Wells Fargo Bank, National Association, as lender (“Wells Fargo”), providing the Company and its subsidiaries with a $35,000 senior secured revolving credit facility (which may be further increased by up to an additional $10,000 upon the request of the Company and at the sole discretion of Wells Fargo) and a $7,578 senior secured term loan (collectively, the “2022 Credit Facility”). The proceeds of the 2022 Credit Facility are available for general corporate purposes, including strategic growth opportunities. As of ~~September 30, 2022,~~March 31, 2023, cash totaled ~~$1,509, an increase~~$1,729, a decrease of ~~$657~~$11,003 from December 31, 2021. Cash balances remain limited as operating receipts and disbursements flow through our 2022 Credit Facility (as defined in Note 7, “Debt and Credit Agreements,” in the notes to our condensed consolidated financial statements), which was in a drawn position as of September 30, 2022. Debt and finance lease obligations at ~~September 30, 2022~~March 31, 2023 totaled ~~$28,966.~~$30,591. As of ~~September 30, 2022,~~March 31, 2023, we had the ability to borrow up to an additional ~~$13,315~~$10,567 under the 2022 Credit Facility.

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

On ~~March 9, 2021,~~August 18, 2020, we ~~entered into~~filed a ~~$10,000 Equity Distribution Agreement~~“shelf” registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (the ~~“Equity Distribution Agreement”~~“SEC”) ~~with Craig-Hallum Capital Group, LLC~~on October 13, 2020 (the ~~“Manager”~~“Form S-3”)~~. Pursuant~~ and expires on October 12, 2023. This shelf registration statement, which includes a base prospectus, allows us at any time to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, we would use the net proceeds from the sale of any securities offered pursuant to the terms of the Equity Distribution Agreement, we issued 1,897,697 shares of the Company's common stock thereunder during the first two quarters of 2021. The net proceeds (before upfront costs) to the Company from the sales of such shares were approximately $9,725 after deducting commissions paid of approximately $275~~and before deducting other expense of $411.~~shelf registration statement for general corporate purposes.

On September 12, 2022, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC and HC Wainwright & Co., LLC (collectively, the “Agents”). Pursuant to the terms of the Sales Agreement, we may sell from time to time through the Agents shares of our common stock with an aggregate sales price of up to $12,000. Any shares offered and sold under the Sales Agreement are to be issued pursuant to the Form S-3 and the 424(b) prospectus supplement relating to the offering dated September 12, 2022. We will pay a commission to the Agents of 2.75% of the gross proceeds of the sale of the shares sold under the Sales Agreement and reimburse the Agents for the expenses incident to the performance of their obligations under the Sales Agreement. During the ~~quarter~~year ended ~~September 30,~~December 31, 2022, we issued 100,379 shares of our common stock under the Sales Agreement and the net proceeds (before upfront costs) to us from the sale of our common stock were approximately $323 after deducting commissions paid of approximately $9. No shares of the Company’s common stock were issued under the Sales Agreement during the three months ended March 31, 2023. As of ~~September 30, 2022,~~March 31, 2023, shares of our common stock having a value of approximately $11,667 remained available for issuance under the Sales Agreement.

On August 4, 2022, we executed the 2022 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 $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 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 (as defined in Note 7, “Debt and Credit Agreements” in the notes to our condensed consolidated financial statements). 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 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, proceeds from the sale of securities under the Sales Agreement 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~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, net cash used in operating activities ~~totaled $10,271 compared~~totaled $25,984 compared to net cash used in operating activities of ~~$10,823~~$6,005 during the prior year period. The ~~decrease~~increase in net cash used during the current year period was primarily due to ~~improved operating performance~~an increase in accounts receivable and inventory, combined with a decrease in customer deposits, as expected and consistent with the ~~current year~~updated terms with a major customer. Increases in accounts receivable and ~~less operating working capital build, partially offset~~inventory were also driven by ~~the ERC and PPP loan forgiveness benefits which were recognized in~~increased production levels when compared to the prior year period.

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, net cashused in investing activities totaled ~~$2,757,~~$1,065, compared to net cash used in investing activities of ~~$1,336~~$492 during the prior year period. The increase in net cash used in investing activities as compared to the prior-year period was primarily due to an increase in ~~net~~ purchases of property and equipment.

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, net cash provided by financing activities totaled ~~$13,685,~~$16,046, compared to net cash provided by financing activities of ~~$11,122~~$6,418 during the prior year period. The increase was primarily due to increased net borrowings under ~~our~~the 2022 Credit Facility in the current year ~~partially offset by the proceeds from the sale of securities under the Equity Distribution Agreement received in the prior year.~~period.

In 2016, we entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Line of credit and other notes payable” line item of our condensed consolidated financial statements as of September 30, 2022 and December 31, 2021. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2021, 2020, 2019 and 2018, $114 of the loan was forgiven. As of September 30, 2022, the loan balance was $114. In addition, we have outstanding notes payable for capital expenditures in the amount of ~~$2,111~~$1,060 and ~~$363~~$1,094 as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, with ~~$26~~$62 and ~~$186~~$88 included in the “Line of Credit and ~~other notes payable”~~current portion of long-term debt” line item of our condensed consolidated financial statements as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022, respectively. The notes payable have monthly payments that range from $3 to $16 and an interest rate of approximately 6%5%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable mature in September 2028.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provided for the ERC, which is a refundable tax credit against certain employment taxes. The ERC is available for wages paid through September 30, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. The maximum tax credit that could be claimed by an eligible employer in 2021 was $7,000 per employee per calendar quarter. In the first and second quarters of 2021, we received ERC benefits of $3,372 and $3,593, respectively, which were recorded in “Other income (expense), net” in our condensed consolidated statement of operations. We did not qualify for the ERC benefit during the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of 2019. The receivable for the remaining uncollected ERC benefit was $497 as of December 31, 2021 and was included in the “Employee retention credit receivable” line item in our condensed consolidated balance sheet at December 31, 2021. The remaining balance of $497 for the uncollected ERC benefit was collected during January 2022.

There have been no material changes in our critical accounting estimates during the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~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, ~~2021.~~2022. 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:~~following: (i) the impact of global health concerns ~~including the impact of the current COVID-19 pandemic~~ on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants, including the advanced manufacturing tax credits (which remain subject to further technical guidance and regulations), and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) 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;~~necessary; (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;~~acquisitions; (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;~~security; (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)~~(xix) 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, ~~2021.~~2022, as supplemented by the risk factors set forth under the caption “Risk Factors” in Part II, Item IA of this Quarterly Report on Form 10-Q. 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 30, 2022.~~March 31, 2023.

There were no changes in our internal control over financial reporting during the three months ended ~~September 30, 2022~~March 31, 2023 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,~~13, “Legal ~~Proceedings”~~Proceedings And Other Matters” 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, ~~2021~~2022 continue to represent the most significant risks to the Company’s future results of operations and financial conditions, ~~without further modification~~except as set forth below.

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

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

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

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

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

The IRA also includes advanced manufacturing tax credits for manufacturers of eligible components, including wind and solar components (“AMP credits”). Manufacturers qualify for the AMP credits based on the electricity output for each component produced and sold in the U.S. starting in 2023 through 2032. The credit amount varies based on the eligible component, which includes solar components, wind energy components, inverters, qualifying battery components, and critical minerals. Tower manufacturers are eligible for credits of $0.03 per watt for applicable components produced. Manufacturers can apply to the Internal Revenue Service for cash refunds of the AMP credits for up to five years. After the first five years, the AMP credits are transferable and can be sold to third parties for cash. There are currently several critical and complex aspects of the IRA pending technical guidance and regulations from the Internal Revenue Service and the U.S. Treasury Department. Any modifications to the law or its effects arising, for example, through technical guidance and regulations from the Internal Revenue Service and the U.S. Treasury Department could result in changes to the expected and/or actual benefits in the future, which could have a material adverse effect on our business, results of operations, financial performance and future development efforts.

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

Recent increases in inflation and interest rates in the United States and elsewhere, inadequate access to capital and global economic instability could adversely affect our business, financial condition or results of operations.

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

The recent closures of Silicon Valley Bank and Signature Bank and their placement into receivership with the Federal Deposit Insurance Corporation (“FDIC”) created bank-specific and broader financial institution liquidity risk and concerns. Although the Department of the Treasury, the Federal Reserve, and the FDIC jointly released a statement that depositors at Silicon Valley Band and Signature Bank would have access to their funds, even those in excess of the standard FDIC insurance limits, future adverse developments with respect to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages. The failure of any bank with which we do business or with which our customers do business could reduce the amount of cash we have available for our operations or delay our ability to access such funds. Any such failure may increase the possibility of a sustained deterioration of financial market liquidity, or illiquidity at clearing, cash management and/or custodial financial institutions. In the event we have a commercial relationship with a bank that has failed or is otherwise distressed, we may experience delays or other issues in meeting our financial obligations. If other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability and our customers’ ability to access our cash and cash equivalents and investments may be threatened and could have a material adverse effect on our business and financial condition or results of operations.

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.	Unaudited 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	1817
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2724
Item 4.	Controls and Procedures	2724
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	2825
Item 1A.	Risk Factors	2825
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2926
Item 3.	Defaults Upon Senior Securities	2926
Item 4.	Mine Safety Disclosures	2926
Item 5.	Other Information	2926
Item 6.	Exhibits	2926
Signatures		3128

	*Three Months Ended September 30,*						*Nine Months Ended September 30,*						*Three Months Ended March 31,*
	*2022*			*2021*			*2022*			*2021*			*2023*			*2022*
Revenues	$	44,843		$	40,389		$	136,699		$	119,608		$	48,873		$	41,844
Cost of sales		41,095			38,315			128,545			115,054			41,897			39,832
Gross profit		3,748			2,074			8,154			4,554			6,976			2,012
OPERATING EXPENSES:
Selling, general and administrative		4,085			3,888			12,109			12,623			5,526			3,902
Intangible amortization		183			183			550			550			168			183
Total operating expenses		4,268			4,071			12,659			13,173			5,694			4,085
Operating loss		(520	)		(1,997	)		(4,505	)		(8,619	)
Operating income (loss)														1,282			(2,073	)
OTHER (EXPENSE) INCOME, net:
Paycheck Protection Program loan forgiveness		—			—			—			9,151
Interest expense, net		(1,234	)		(269	)		(2,355	)		(816	)		(488	)		(345	)
Other, net		(4	)		185			17			7,322			(2	)		21
Total other (expense) income, net		(1,238	)		(84	)		(2,338	)		15,657			(490	)		(324	)
Net (loss) income before provision for income taxes		(1,758	)		(2,081	)		(6,843	)		7,038
Net income (loss) before provision for income taxes														792			(2,397	)
Provision for income taxes		14			24			36			101			23			7
NET (LOSS) INCOME		(1,772	)		(2,105	)		(6,879	)		6,937
NET (LOSS) INCOME PER COMMON SHARE—BASIC:
Net (loss) income	$	(0.09	)	$	(0.11	)	$	(0.34	)	$	0.38
NET INCOME (LOSS)														769			(2,404	)
NET INCOME (LOSS) PER COMMON SHARE—BASIC:
Net income (loss)														0.04			(0.12	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC		20,506			19,418			20,156			18,460			20,869			19,708
NET (LOSS) INCOME PER COMMON SHARE—DILUTED:
Net (loss) income	$	(0.09	)	$	(0.11	)	$	(0.34	)	$	0.36
NET INCOME (LOSS) PER COMMON SHARE—DILUTED:
Net income (loss)													$	0.04		$	(0.12	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED		20,506			19,418			20,156			19,218			21,387			19,708

	*Three Months Ended September 30,*						*Nine Months Ended September 30,*
	*2022*			*2021*			*2022*			*2021*
Heavy Fabrications	$	30,640		$	28,675		$	93,486		$	87,282
Gearing		10,190			7,562			30,890			20,315
Industrial Solutions		4,020			4,213			13,142			12,357
Eliminations		(7	)		(61	)		(819	)		(346	)
Consolidated	$	44,843		$	40,389		$	136,699		$	119,608

	*Three Months Ended*						*Nine Months Ended*					*Three Months Ended*
	*September 30,*						*September 30,*					*March 31,*
	*2022*			*2021*			*2022*			*2021*		*2023*		*2022*
Basic earnings per share calculation:
Net (loss) income	$	(1,772	)	$	(2,105	)	$	(6,879	)	$	6,937
Net income (loss)												$	769	$	(2,404	)
Weighted average number of common shares outstanding		20,505,884			19,417,675			20,155,548			18,460,444		20,869,035		19,707,815
Basic net (loss) income per share	$	(0.09	)	$	(0.11	)	$	(0.34	)	$	0.38
Basic net income (loss) per share												$	0.04	$	(0.12	)
Diluted earnings per share calculation:
Net (loss) income	$	(1,772	)	$	(2,105	)	$	(6,879	)	$	6,937
Net income (loss)												$	769	$	(2,404	)
Weighted average number of common shares outstanding		20,505,884			19,417,675			20,155,548			18,460,444		20,869,035		19,707,815
Common stock equivalents:
Non-vested stock awards (1)		—			—			—			757,976		517,979		—
Weighted average number of common shares outstanding		20,505,884			19,417,675			20,155,548			19,218,420		21,387,014		19,707,815
Diluted net (loss) income per share	$	(0.09	)	$	(0.11	)	$	(0.34	)	$	0.36
Diluted net income (loss) per share												$	0.04	$	(0.12	)

	*September 30,*			*December 31,*			*March 31,*			*December 31,*
	*2022*			*2021*			*2023*			*2022*
Raw materials	$	21,512		$	16,148		$	29,993		$	27,644
Work-in-process		10,634			13,639			16,180			13,843
Finished goods		4,252			6,575			4,575			4,916
		36,398			36,362			50,748			46,403
Less: Reserve for excess and obsolete inventory		(2,496	)		(2,985	)		(2,205	)		(2,141	)
Net inventories	$	33,902		$	33,377		$	48,543		$	44,262

2022	$	180
2023		664	$	496
2024		661		661
2025		661		661
2026		422		422
2027 and thereafter		314
2027				320
Total	$	2,902	$	2,560

	*Finance*			*Operating*						*Finance*			*Operating*
	*Leases*			*Leases*			*Total*			*Leases*			*Leases*			*Total*
2022	$	728		$	887		$	1,615
2023		1,924			3,453			5,377		$	1,679		$	2,588		$	4,267
2024		1,041			2,998			4,039			1,392			2,998			4,390
2025		635			3,064			3,699			986			3,064			4,050
2026		422			3,059			3,481			774			3,059			3,833
2027 and thereafter		694			14,046			14,740
2027											671			3,098			3,769
2028 and thereafter											1,015			10,949			11,964
Total lease payments		5,444			27,507			32,951			6,517			25,756			32,273
Less—portion representing interest		(596	)		(8,456	)		(9,052	)		(878	)		(7,636	)		(8,514	)
Present value of lease obligations		4,848			19,051			23,899			5,639			18,120			23,759
Less—current portion of lease obligations		(1,967	)		(1,871	)		(3,838	)		(1,663	)		(1,824	)		(3,487	)
Long-term portion of lease obligations	$	2,881		$	17,180		$	20,061		$	3,976		$	16,296		$	20,272

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

				*Weighted Average*
	*Number of*			*Grant-Date Fair Value*
	*Shares*			*Per Share*
Unvested as of December 31, 2021		918,448		$	2.72
Granted		734,077		$	1.75
Vested		(815,734	)	$	2.23
Forfeited		(25,449	)	$	2.60
Unvested as of September 30, 2022		811,342		$	2.39

	*Heavy Fabrications*		*Gearing*		*Industrial Solutions*			*Corporate*			*Eliminations*			*Consolidated*			*Heavy Fabrications*		*Gearing*		*Industrial Solutions*		*Corporate*			*Eliminations*			*Consolidated*
For the Three Months Ended September 30, 2022
For the Three Months Ended March 31, 2023
Revenues from external customers	$	30,640	$	10,190	$	4,013		$	—		$	—		$	44,843		$	31,593	$	11,965	$	5,315	$	—		$	—		$	48,873
Intersegment revenues		—		—		7			—			(7	)		—			—		—		108		—			(108	)		—
Net revenues		30,640		10,190		4,020			—			(7	)		44,843			31,593		11,965		5,423		—			(108	)		48,873
Operating income (loss)		372		624		(191	)		(1,322	)		(3	)		(520	)		2,790		581		622		(2,711	)		—			1,282
Depreciation and amortization		852		477		98			59			—			1,486			858		596		94		57			—			1,605
Capital expenditures		976		64		20			—			—			1,060			662		385		18		—			—			1,065

	*Total Assets as of*						*Total Assets as of*
	*September 30,*			*December 31,*			*March 31,*			*December 31,*
Segments:	*2022*			*2021*			*2023*			*2022*
Heavy Fabrications	$	38,975		$	37,131		$	57,384		$	45,475
Gearing		51,356			46,219			53,261			51,944
Industrial Solutions		11,277			10,825			14,480			12,775
Corporate		241,385			228,219			78,590			62,809
Eliminations		(216,929	)		(204,347	)		(54,757	)		(28,463	)
	$	126,064		$	118,047		$	148,958		$	144,540

	*For the Nine Months Ended September 30,*						*For the Three Months Ended March 31,*
	*2022*			*2021*			*2023*		*2022*
Balance at beginning of period	$	47		$	473		$	17	$	47
Bad debt expense								14		—
Write-offs		(8	)		(432	)		—		(23	)
Other adjustments		(10	)		(2	)
Balance at end of period	$	29		$	39		$	31	$	24

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
	2022			2021			2022			2021			2023			2022
Net revenues	$	44,843		$	40,389		$	136,699		$	119,608		$	48,873		$	41,844
Net (loss) income	$	(1,772	)	$	(2,105	)	$	(6,879	)	$	6,937
Net income (loss)													$	769		$	(2,404	)
Adjusted EBITDA (1)	$	1,897		$	401		$	2,259		$	14,418		$	4,098		$	(8	)
Capital expenditures	$	1,060		$	604		$	2,757		$	1,369		$	1,065		$	492
Free cash flow (2)	$	223		$	(3,251	)	$	(8,169	)	$	(1,913	)	$	(23,335	)	$	(4,487	)
Operating working capital (3)	$	26,306		$	19,554		$	26,306		$	19,554		$	26,843		$	22,622
Total debt	$	24,118		$	5,673		$	24,118		$	5,673		$	24,952		$	14,025
Total orders	$	84,457		$	42,597		$	163,196		$	103,252		$	39,602		$	52,693
Backlog at end of period (4)	$	132,213		$	76,531		$	132,213		$	76,531		$	287,808		$	117,133
Book-to-bill (5)		1.9			1.1			1.2			0.9			0.8			1.3

	Three Months Ended September 30,												2022 vs. 2021						Three Months Ended March 31,												2023 vs. 2022
				% of Total						% of Total												% of Total						% of Total
	2022			Revenue			2021			Revenue			$ Change			% Change			2023			Revenue			2022			Revenue			$ Change			% Change
Revenues	$	44,843			100.0	%	$	40,389			100.0	%	$	4,454			11.0	%	$	48,873			100.0	%	$	41,844			100.0	%	$	7,029			16.8	%
Cost of sales		41,095			91.6	%		38,315			94.9	%		2,780			7.3	%		41,897			85.7	%		39,832			95.2	%		2,065			5.2	%
Gross profit		3,748			8.4	%		2,074			5.1	%		1,674			80.7	%		6,976			14.3	%		2,012			4.8	%		4,964			246.7	%
Operating expenses
Selling, general and administrative expenses		4,085			9.1	%		3,888			9.6	%		197			5.1	%		5,526			11.3	%		3,902			9.3	%		1,624			41.6	%
Intangible amortization		183			0.4	%		183			0.5	%		—			0.0	%		168			0.3	%		183			0.4	%		(15	)		(8.2	)%
Total operating expenses		4,268			9.5	%		4,071			10.1	%		197			4.8	%		5,694			11.7	%		4,085			9.8	%		1,609			39.4	%
Operating loss		(520	)		(1.2	)%		(1,997	)		(4.9	)%		1,477			74.0	%
Operating income (loss)																				1,282			2.6	%		(2,073	)		(5.0	)%		3,355			161.8	%
Other (expense) income, net
Interest expense, net		(1,234	)		(2.8	)%		(269	)		(0.7	)%		(965	)		(358.7	)%		(488	)		(1.0	)%		(345	)		(0.8	)%		(143	)		(41.4	)%
Other, net		(4	)		(0.0	)%		185			0.5	%		(189	)		(102.2	)%		(2	)		(0.0	)%		21			0.1	%		(23	)		(109.5	)%
Total other (expense) income, net		(1,238	)		(2.8	)%		(84	)		(0.2	)%		(1,154	)		(1373.8	)%		(490	)		(1.0	)%		(324	)		(0.8	)%		(166	)		(51.2	)%
Net loss before provision for income taxes		(1,758	)		(3.9	)%		(2,081	)		(5.2	)%		323			15.5	%
Net income (loss) before provision for income taxes																				792			1.6	%		(2,397	)		(5.7	)%		3,189			133.0	%
Provision for income taxes		14			0.0	%		24			0.1	%		(10	)		(41.7	)%		23			0.0	%		7			0.0	%		16			228.6	%
Net loss	$	(1,772	)		(4.0	)%	$	(2,105	)		(5.2	)%	$	333			15.8	%
Net income (loss)																			$	769			1.6	%	$	(2,404	)		(5.7	)%	$	3,173			132.0	%

	Nine Months Ended September 30,												2022 vs. 2021
				% of Total						% of Total
	2022			Revenue			2021			Revenue			$ Change			% Change
Revenues	$	136,699			100.0	%	$	119,608			100.0	%	$	17,091			14.3	%
Cost of sales		128,545			94.0	%		115,054			96.2	%		13,491			11.7	%
Gross profit		8,154			6.0	%		4,554			3.8	%		3,600			79.1	%
Operating expenses
Selling, general and administrative expenses		12,109			8.9	%		12,623			10.6	%		(514	)		(4.1	)%
Intangible amortization		550			0.4	%		550			0.5	%		—			—	%
Total operating expenses		12,659			9.3	%		13,173			11.0	%		(514	)		(3.9	)%
Operating loss		(4,505	)		(3.3	)%		(8,619	)		(7.2	)%		4,114			47.7	%
Other (expense) income, net
Paycheck Protection Program loan forgiveness		—			—	%		9,151			7.7	%		(9,151	)		(100.0	)%
Interest expense, net		(2,355	)		(1.7	)%		(816	)		(0.7	)%		(1,539	)		(188.6	)%
Other, net		17			0.0	%		7,322			6.1	%		(7,305	)		(99.8	)%
Total other (expense) income, net		(2,338	)		(1.7	)%		15,657			13.1	%		(17,995	)		(114.9	)%
Net (loss) income before provision for income taxes		(6,843	)		(5.0	)%		7,038			5.9	%		(13,881	)		(197.2	)%
Provision for income taxes		36			0.0	%		101			0.1	%		(65	)		(64.4	)%
Net (loss) income	$	(6,879	)		(5.0	)%	$	6,937			5.8	%	$	(13,816	)		(199.2	)%

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	Amendment No. 1 to Credit Agreement and Limited Waiver, dated as of ~~August 4, 2022,~~February 8, 2023, by and among Broadwind, Inc., Brad Foote Gear Works, Inc., Broadwind Industrial Solutions, LLC, Broadwind Heavy Fabrications, Inc., 5100 Neville Road, LLC and Wells Fargo Bank National Association (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed ~~August 8, 2022)~~
~~10.2~~	Guaranty, dated as of August 4, 2022, by Broadwind, Inc., Brad Foote Gear Works, Inc., Broadwind Industrial Services, LLC, Broadwind Heavy Fabrications, Inc. and 5100 Neville Road, LLC in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed August 8, 2022)
~~10.3~~	Severance and Non-Competition Agreement dated as of August 10, 2022, between Broadwind, Inc. and Thomas A. Ciccone (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 12, 2022)
~~10.4~~	Sales Agreement, dated September 12, 2022, by and among Broadwind, Inc., Roth Capital Partners, LLC and H.C. Wainwright & Co. (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed September 12, 2022)February 14, 2023)
31.1	Rule 13a-14(a) Certification of Chief Executive Officer*
31.2	Rule 13a-14(a) Certification of Chief Financial Officer*
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Chief Executive Officer*
32.2	Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Chief Financial Officer*
101	The following financial information from this Form 10-Q of Broadwind, Inc. for the quarter ended ~~September 30, 2022,~~March 31, 2023, 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 8, 2022~~May 11, 2023	By:	/s/ Eric B. Blashford
		Eric B. Blashford
		President and Chief Executive Officer
		(Principal Executive Officer)