BROADWIND, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto in Item 1, “Financial Statements,” of this Quarterly Report and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2020 . The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances including, but not limited to, those identified in “Cautionary Note Regarding Forward-Looking Statements” at the end of Item 2. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties including those arising as a result of, or amplified by, the COVID-19 pandemic. As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and the “Company” refer to Broadwind, Inc., a Delaware corporation headquartered in Cicero, Illinois, and its subsidiaries. (Dollars are presented in thousands except share, per share and per employee data or unless otherwise stated) KEY METRICS USED BY MANAGEMENT TO MEASURE PERFORMANCE In addition to measures of financial performance presented in our consolidated financial statements in accordance with GAAP, we use certain other financial measures to analyze our performance. These non-GAAP financial measures primarily consist of adjusted EBITDA (as defined below) and free cash flow which help us evaluate growth trends, establish budgets, assess operational efficiencies, oversee our overall liquidity, and evaluate our overall financial performance. Key Financial Measures Three Months Ended March 31, 2021 2020 Net revenues $ 32,728 $ 48,634 Net (loss) income $ (1,210 ) $ 954 Adjusted EBITDA (1) $ 1,217 $ 3,605 Capital expenditures $ 612 $ 670 Free cash flow (2) $ (9,393 ) $ (329 ) Operating working capital (3) $ 11,711 $ 8,844 Total debt (4) $ 14,456 $ 16,705 Total orders $ 34,214 $ 33,809 Backlog at end of period (5) $ 94,400 $ 127,401 Book-to-bill (6) 1.0 0.7 (1) We provide non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share based compensation and other stock payments, restructuring costs, impairment charges, and other non-cash gains and losses) as supplemental information regarding our business performance. Our management uses adjusted EBITDA when they internally evaluate the performance of our business, review financial trends and make operating and strategic decisions. We believe that this non-GAAP financial measure is useful to investors because it provides a better understanding of our past financial performance and future results, and it allows investors to evaluate our performance using the same methodology and information as used by our management. Our definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts. (2) We define free cash flow as adjusted EBITDA plus or minus changes in operating working capital less capital expenditures net of any proceeds from disposals of property and equipment. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our business for purposes such as repaying maturing debt and funding future investments. (3) We define operating working capital as accounts receivable and inventory net of accounts payable and customer deposits. (4) Total debt at March 31, 2021 includes PPP loans totaling $9,151. (5) Our backlog at March 31, 2021 is net of revenue recognized over time. (6) We define the book-to-bill as the ratio of new orders we received, net of cancellations, to revenue during a period. The following table reconciles our non-GAAP key financial measures to the most directly comparable GAAP measure: Three Months Ended March 31, 2021 2020 Net (loss) income $ (1,210 ) $ 954 Interest expense 229 673 Income tax provision 32 52 Depreciation and amortization 1,553 1,612 Share-based compensation and other stock payments 613 314 Adjusted EBITDA 1,217 3,605 Changes in operating working capital (6,649 ) (3,264 ) Employee retention credit receivable (3,372 ) — Capital expenditures (612 ) (670 ) Proceeds from disposal of property and equipment 23 — Free Cash Flow $ (9,393 ) $ (329 ) 18 Table of Contents OUR BUSINESS First Quarter Overview We booked $34,214 in new orders in the first quarter of 2021 , up from $33,809 in the first quarter of 2020 . Within our Heavy Fabrication segment, wind tower orders doubled as compared to last year as multiple customers secured 2021 production capacity. Industrial fabrication product line orders within the Heavy Fabrication segment decreased quarter-over-quarter primarily due to weaker industrial demand, which is largely driven by the timing of projects. Industrial Fabrications orders increased on a sequential basis from $ 3,526 in the fourth quarter of 2020 to $ 6,680 in the first quarter of 2021, a reflection of recovery in cyclical end markets. Gearing segment orders decreased 20% compared to the first quarter of 2020 primarily due to the timing of aftermarket wind gearing orders, which can fluctuate based on customer order patterns and decreased mining demand. Gearing orders increased on a sequential basis from $5,741 in the fourth quarter of 2020 to $9,921 in the first quarter of 2021, a reflection of recovery in cyclical end markets and an improving commercial environment. Orders within our Industrial Solutions segment decreased by 40% primarily due to the timing of orders associated with new gas turbine projects. We recognized revenue of $32,728 in the first quarter of 2021, down 33% compared to the first quarter of 2020 , primarily due to a decrease i n the Heavy Fabrications segment as tower sections sold decreased 46% compared to the prior year quarter. The segment was adversely impacted by continued supply chain disruptions , a temporary shut-down of our Abilene, Texas plant due to a weather-related event, a customer driven project delay and less demand in the current year. Gearing revenue was down $878 from the first quarter of 2020, driven by lower order intake in recent quarters from oil and gas (“O&G”) and mining customers, partially offset by increased revenue from aftermarket wind customers. Industrial Solutions revenue increased $565, representing a 14% increase compared to the prior year quarter, primarily due to the timing of new gas turbine customer installations. We reported a net loss of $1,210 or $0.07 per share in the first quarter of 2021 , compared to net income of $954 or $0.06 per share in the first quarter of 2020 primarily due to lower sales, supply chain disruptions, manufacturing inefficiencies associated with lower activity levels and the temporary shut-down of our Abilene, Texas Heavy Fabrications plant due to a weather-related event. This was partially offset by a $3,372 employee retention credit (described below) that has been recognized in Other Income (expense), net in our condensed consolidated statement of operations for the three months ended March 31, 2021. On March 27, 2020, the CARES Act was signed into law providing numerous tax provisions and other stimulus measures, including the Employee Retention Credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. The ERC is available through December 31, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter in 2021, a maximum of $10,000 in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is $7,000 per employee per calendar quarter. We qualified for the ERC in the first quarter of 2021 because we had a gross receipts decrease of more than 20% from the first quarter of 2019, the relevant criteria for the ERC. As a result of us averaging 500 or fewer full-time employees in 2019, all wages paid to employees were eligible for the ERC (rather than just wages paid to employees not providing services). During the three months ended March 31, 2021, we recorded a benefit of $3,372 in Other income (expense), net in our condensed consolidated statement of operations which is included in the line titled Employee retention credit receivable in our condensed consolidated balance sheet at March 31, 2021. COVID-19 Pandemic In March 2020, the World Health Organization recognized a novel strain of coronavirus (COVID-19) as a pandemic. In response to this pandemic, the United States and various foreign, state and local governments have, among other actions, imposed travel and business restrictions and required or advised communities in which we do business to adopt stay-at-home orders and social distancing guidelines, causing some businesses to adjust, reduce or suspend operating activities. The pandemic and the various governments’ response have caused significant and widespread uncertainty, volatility and disruptions in the U.S. and global economies, including in the regions in which we operate. Overall, through March 31, 2021 , we have experienced an adverse impact to our business, operations and financial results as a result of this pandemic due in part to the decline in order activity levels for Gearing and Heavy Fabrications. Additionally, in the first quarter of 2021, we continued to incur manufacturing inefficiencies associated with supply chain disruptions and realized employee staffing constraints due to the spread of the COVID-19 pandemic. Our facilities have continued operations as essential businesses in light of the customers and markets served. In response to the pandemic, we continue to right-size our workforce and delay certain capital expenditures. In future periods, we may experience weaker customer demand, requests for extended payment terms, customer bankruptcies, additional supply chain disruption, employee staffing constraints and difficulties, government restrictions or other factors that could negatively impact the Company and its business, operations and financial results. As we cannot predict the duration or scope of the pandemic 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. We have been able to serve the needs of our customers while taking steps to protect the health and safety of our employees, customers, partners, and communities. Among these steps, we have followed the guidance provided by the U.S. Centers for Disease Control and Prevention to protect the continued safety and welfare of our employees. 19 Table of Contents RESULTS OF OPERATIONS Three months ended March 31, 2021 , Compared to Three months ended March 31, 2020 The condensed consolidated statement of operations table below should be read in connection with a review of the following discussion of our results of operations for the three months ended March 31, 2021 , compared to the three months ended March 31, 2020 . Three Months Ended March 31, 2021 vs. 2020 % of Total % of Total 2021 Revenue 2020 Revenue $ Change % Change Revenues $ 32,728 100.0 % $ 48,634 100.0 % $ (15,906 ) (32.7 )% Cost of sales 32,446 99.1 % 42,462 87.3 % (10,016 ) (23.6 )% Gross profit 282 0.9 % 6,172 12.7 % (5,890 ) (95.4 )% Operating expenses Selling, general and administrative expenses 4,410 13.5 % 4,309 8.9 % 101 2.3 % Intangible amortization 183 0.6 % 183 0.4 % — 0.0 % Total operating expenses 4,593 14.0 % 4,492 9.2 % 101 2.2 % Operating (loss) income (4,311 ) (13.2 )% 1,680 3.5 % (5,991 ) (356.6 )% Other income (expense), net Interest expense, net (229 ) (0.7 )% (673 ) (1.4 )% 444 66.0 % Other, net 3,362 10.3 % (1 ) (0.0 )% 3,363 336300.0 % Total other income (expense), net 3,133 9.6 % (674 ) (1.4 )% 3,807 564.8 % Net (loss) income before provision for income taxes (1,178 ) (3.6 )% 1,006 2.1 % (2,184 ) (217.1 )% Provision for income taxes 32 0.1 % 52 0.1 % (20 ) (38.5 )% Net (loss) income $ (1,210 ) (3.7 )% $ 954 2.0 % $ (2,164 ) (226.8 )% Consolidated Revenues decreased by $15,906, primarily due to a 46% decrease in tower sections sold compared to the first quarter of 2020 . Heavy Fabrications was adversely impacted by continued supply chain disruptions, the temporary shut-down of our Abilene, Texas plant due to a weather-related event, a customer driven project delay and lower demand in the current year. Gearing revenue was down $878 from the first quarter of 2020, primarily driven by lower order intake in recent quarters from O&G and mining customers, partially offset by increased revenue from aftermarket wind customers. Industrial Solutions revenue increased $565, representing a 14% increase compared to the prior year quarter, primarily due to the timing of new gas turbine customer installations. Gross profit decreased by $5,890 primarily due to lower sales, a less profitable customer mix, increased manufacturing inefficiencies associated with lower volumes, the temporary shut-down of our Abilene, Texas Heavy Fabrications plant and continued supply chain disruptions. As a result, gross margin decreased to 0.9% during the three months ended March 31, 2021 , from 12.7% during the three months ended March 31, 2020 . Due to lower revenue levels, operating expenses as a percentage of sales increased to 14.0% in the current-year quarter from 9.2% in the prior year quarter. Net loss was $1,210 during the three months ended March 31, 2021 , compared to net income of $954 during the three months ended March 31, 2020 due to the factors described above, partially offset by the $3,372 employee retention credit recognized in Other Income (expense), net in our condensed consolidated statements of operations. Heavy Fabrications Segment Three Months Ended March 31, 2021 2020 Orders $ 20,797 $ 15,514 Tower sections sold 169 312 Revenues 22,777 38,368 Operating (loss) income (1,700 ) 3,541 Operating margin (7.5 )% 9.2 % Heavy Fabrications segment wind tower orders doubled compared to last year, as multiple customers secured 2021 production capacity. Industrial fabrication product line orders within the Heavy Fabrication segment decreased quarter-over-quarter primarily due to weaker industrial demand, which is largely driven by the timing of projects. Segment revenues decreased by $15,591 due to a 46% decrease in tower sections sold. The segment was negatively impacted by continued supply chain disruptions, a temporary shut-down of our Abilene, Texas plant due to a weather-related event, a customer driven project delay and lower demand in the current year. 20 Table of Contents Heavy Fabrications segment operating results decreased by $5,241 compared to the prior year. The quarter-over-quarter degradation in operating performance reflects the adverse volume impacts described previously. Operating margin was (7.5)% during the three months ended March 31, 2021 , a decrease from 9.2% during the three months ended March 31, 2020 . Gearing Segment Three Months Ended March 31, 2021 2020 Orders $ 9,921 $ 12,421 Revenues 5,349 6,227 Operating loss (989 ) (261 ) Operating margin (18.5 )% (4.2 )% Gearing segment orders decreased 20% primarily due to the timing of aftermarket wind gearing orders, which can fluctuate based on customer order patterns and decreased mining demand, partially offset by increased demand for O&G. Gearing revenue was down 14%, a reflection of lower order intake in recent quarters primarily within the O&G and mining markets, partially offset by increased revenue from aftermarket wind customers. Gearing segment operating loss increased $728 from the prior year period. This was primarily attributable to lower sales levels and manufacturing inefficiencies associated with the lower activity levels. Operating margin was (18.5)% during the three months ended March 31, 2021 , down from (4.2)% during the three months ended March 31, 2020 , driven primarily by the items identified above. Industrial Solutions Segment Three Months Ended March 31, 2021 2020 Orders $ 3,496 $ 5,874 Revenues 4,604 4,039 Operating (loss) income (14 ) 192 Operating margin (0.3 )% 4.8 % Industrial Solutions segment orders decreased by 40% from the prior year period primarily due to the timing of orders associated with new gas turbine projects. Segment revenue increased by 14% primarily due to the timing of new gas turbine installations. The decrease in operating income versus the prior-year quarter was primarily a result of a lower margin sales mix sold during the quarter. Corporate and Other Corporate and Other expenses during the three months ended March 31, 2021 decreased from the prior year period due to lower salaries and benefits and a reduction in incentive compensation. LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES As of March 31, 2021 , cash and cash equivalents totaled $2,929, a decrease of $443 from December 31, 2020 . Cash balances remain limited as operating receipts and disbursements flow through our Credit Facility (as defined in Note 7, “Debt and Credit Agreements,” in the notes to our condensed consolidated financial statements), which is in a drawn position. Debt and finance lease obligations at March 31, 2021 totaled $17,803. As of March 31, 2021 , we had the ability to borrow up to an additional $18,640 un der the Credit Facility. On March 9, 2021, we entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC (the Manager”). Pursuant to the terms of the Equity Distribution Agreement, we may sell from time to time through the Manager shares of the Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $10,000. The Company will pay a commission to the Manager of 2.75% of the gross proceeds of the sale of the shares sold under the Equity Distribution Agreement and reimburse the Manager for all expenses incident to the performance of its obligations under the Equity Distribution Agreement. During the quarter ended March 31, 2021, we issued 1,100,000 shares of the Company's common stock thereunder. The net proceeds (before upfront costs) to the Company from the sales of such shares were approximately $6,436 after deducting commissions paid of approximately $182 and before deducting other expense of $335. We anticipate that we will be able to satisfy the cash requirements associated with, among other things, working capital needs, capital expenditures and lease commitments through at least the next twelve months primarily through cash generated from operations, available cash balances, the Credit Facility, additional equipment financing, expected cash proceeds or savings from the ERC, and access to the public or private debt equity markets, including the option to raise capital from the sale of our securities under the Form S-3. If assumptions regarding our production, sales and subsequent collections from certain of our large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, particularly in light of the COVID-19 pandemic and its effects on domestic and global economies, we may encounter cash flow and liquidity issues. ​ If our operational performance deteriorates, we may be unable to comply with existing financial covenants, and could lose access to the Credit Facility. This could limit our operational flexibility, require a delay in making planned investments and/or require us to seek additional equity or debt financing. Any attempt to raise equity through the public markets could have a negative effect on our stock price, making an equity raise more difficult or more dilutive. Any additional equity financing or equity linked financing, if available, will be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other operating and financial restrictions on us. While we believe that we will continue to have sufficient cash available to operate our businesses and to meet our financial obligations and debt covenants, there can be no assurances that our operations will generate sufficient cash or that existing or new credit facilities or equity or equity linked financings will be available in an amount sufficient to enable us to meet these financial obligations. Sources and Uses of Cash The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2021 and 2020 : Three Months Ended March 31, 2021 2020 Total cash (used in) provided by: Operating activities $ (8,437 ) $ (1,025 ) Investing activities (589 ) (670 ) Financing activities 8,583 2,022 Net (decrease) increase in cash $ (443 ) $ 327 21 Table of Contents Operating Cash Flows During the three months ended March 31, 2021 , net cash used in operating activities totale d $8,437 com pared to net cash used in operating activities of $1,025 for the three months ended March 31, 2020 . This increase in net cash used was primarily due to our operating performance and an increase in operating working capital in the Heavy Fabrications segment. Investing Cash Flows During the three months ended March 31, 2021 , net cash used in investing activities tot aled $589, comp ared to net cash used in investing activities of $670 during the three months ended March 31, 2020 . The decrease in net cash used in investing activities as compared to the prior-year period was due to a decrease in net purchases of property and equipment. Financing Cash Flows During the three months ended March 31, 2021 , net cash provided by financing activities tot aled $8,583, co mpared to net cash provided by financing activities of $2,022 for the three months ended March 31, 2020 . The increase versus the prior-year period was primarily due to proceeds from the sale of securities under the Equity Distribution Agreement received in the current year and increased net borrowings on our Credit Facility in the current year. Other In 2016, we entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, less current maturities” line item of our condensed consolidated financial statements as of March 31, 2021 and December 31, 2020 . The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2020, 2019 and 2018, $114 of the loan was forgiven. As of March 31, 2021 , the loan balance was $228. In addition, we have outstanding notes payable for capital expenditures in the amount of $609 and $163 as of March 31, 2021 and December 31, 2020 , respectively, with $609 and $161 included in the “Line of Credit and other notes payable” line item of our condensed consolidated financial statements as of March 31, 2021 and December 31, 2020 , respectively. The notes payable have monthly payments that range from $1 to $36 and an interest rate of approximately 5%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from May 2021 to August 2022. 22 Table of Contents On April 15, 2020, we received funds under notes and related documents (“PPP Loans”) with CIBC Bank, USA under the Paycheck Protection Program (the “PPP”) which was established under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) enacted on March 27, 2020 in response to the COVID-19 pandemic and is administered by the U.S. Small Business Administration (the “SBA”). We received total proceeds of $9,530 from the PPP loans and made repayments of $379 on May 13, 2020. Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020 enacted on June 5, 2020 (the “Flexibility Act”), the PPP Loans, and accrued interest and fees may be forgiven following a period of twenty-four weeks after PPP Loan proceeds are received (the “covered period”) if they are used for qualifying expenses as described in the CARES Act including payroll costs and benefits (which must equal or exceed 60% of the amount requested to be forgiven), rent, mortgage interest, and utilities, which are subject to certain reductions based on the number of full time equivalent employees and the level of compensation for employees during such covered period. The amount of loan forgiveness will be reduced if the borrower terminates employees or significantly reduces salaries during such period, subject to certain exceptions. Subject to the terms and conditions applicable to loans administered by the SBA under the PPP, as amended by the Flexibility Act, the unforgiven portion of a PPP Loan is payable over a two year period at an interest rate of 1.00%, with a deferral of payments of principal, interest and fees until the date on which the SBA remits the loan forgiveness amount to the lender (or notifies the lender that no loan forgiveness is allowed), provided that the borrower applies for forgiveness within 10 months after the last day of the covered period (and if not, payment of principal and interest shall commence 10 months after the last day of the covered period). We used at least 60% of the amount of the PPP Loans proceeds to pay for payroll costs and the balance on other eligible qualifying expenses that we believe to be consistent with the terms of the PPP and submitted our forgiveness applications to CIBC Bank, USA during the first quarter of 2021. While we currently believe that our use of the loan proceeds will meet the conditions for forgiveness of the PPP Loans, we cannot provide assurance that we have not taken and will not take actions that could cause us to be ineligible for forgiveness of the PPP Loans, in whole or in part. The CARES Act also provided for the ERC, which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. The ERC is available through December 31, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter in 2021, a maximum of $10,000 in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is $7,000 per employee per calendar quarter. We qualified for the ERC in the first quarter of 2021 because we had a gross receipts decrease of more than 20% from the first quarter of 2019, the relevant criteria for the ERC. As a result of us averaging 500 or fewer full-time employees in 2019, all wages paid to employees were eligible for the ERC (rather than just wages paid to employees not providing services). During the three months ended March 31, 2021, we recorded a benefit of $3,372 in Other income (expense), net in our condensed consolidated statement of operations which is included in the line titled Employee retention credit receivable in our condensed consolidated balance sheet at March 31, 2021. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS The preceding discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2020 . Portions of this Quarterly Report on Form 10-Q, including the discussion and analysis in this Part I, Item 2, contain “forward looking statements”, as defined in Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements. Forward looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following, many of which are, and will be, amplified by the COVID-19 pandemic: (i) the impact of global health concerns, including the impact of the current COVID-19 pandemic on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary, in light of the COVID-19 pandemic; (v) our ability to continue to grow our business organically and through acquisitions, and the impairment thereto by the impact of the COVID-19 pandemic; (vi) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (vii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security, including with respect to any remote work arrangements implemented in response to the COVID-19 pandemic; (viii) the sufficiency of our liquidity and alternate sources of funding, if necessary; (ix) our ability to realize revenue from customer orders and backlog; (x) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (xi) the economy, including its stability in light of the COVID-19 pandemic, and the potential impact it may have on our business, including our customers; (xii) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xv) the effects of the change of administrations in the U.S. federal government; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xviii) our ability to utilize various relief options enabled by the CARES Act, including our ability to receive forgiveness of the PPP Loans; (xix) the limited trading market for our securities and the volatility of market price for our securities; and (xx) the impact of future sales of our common stock or securities convertible into our common stock on our stock price. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements including, but not limited to, those set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 . We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results. 23 Table of Contents Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Item 10(f)(1) of Regulation S-K under the Securities Act and as such are not required to provide information under this Item pursuant to Item 305I of Regulation S-K.