What changed in this filing

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Item 9A. Controls and Procedures

2022-03-02 compared with 2021-02-25 · 790 added, 430 removed, 702 unchanged (63% of the section changed)

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Evaluation of Disclosure Controls and Procedures

We seek to maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) 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 year reported on herein.

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Our management, including our CEO and CFO, assessed the effectiveness of our internal control over financial reporting as of December 31, 2021.

Management based this assessment on criteria for effective internal control over financial reporting described in “Internal Control—Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Management based this assessment on criteria for effective internal control over financial reporting described in “Internal Control—Integrated Framework (2013)”

issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management determined that our internal control over financial reporting was effective as of December 31, 2021.

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On February 28, 2022, Broadwind, Inc.

and its subsidiaries (collectively, the “Company”) entered into a Second Amendment (the “Second Amendment”) to the Amended and Restated Loan and Security Agreement dated February 25, 2019 between the Company and CIBC Bank USA, as administrative agent and sole lead arranger and the other financial institutions party thereto.

Among other changes, the Second Amendment waived the fixed charge coverage covenant for the quarters ending March 31, 2021 and June 30, 2021, added a new liquidity covenant applicable to the quarter ending March 31, 2021, and new minimum EBITDA covenants applicable to the quarters ending March 31, 2021 and June 30, 2021.

The foregoing description of the Second Amendment is not intended to be complete and is qualified in its entirety by reference to the Second Amendment to Amended and Restated Loan and Security Agreement, which is attached hereto as Exhibit 10.33 to this Annual Report on Form 10-K and is incorporated herein by reference.

and its subsidiaries (the “Company”) entered into a Fourth Amendment (the “Fourth Amendment”) to the Amended and Restated Loan and Security Agreement dated February 25, 2019 between the Company and CIBC Bank USA, as administrative agent and sole lead arranger and the other financial institutions party thereto.

Among other changes, the Fourth Amendment 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 and amended certain other provisions in connection with the discontinuation of LIBOR and replacement with the forward-looking term Secured Overnight Financing Rate (Term SOFR) administered by CME Group, Inc.

The foregoing description of the Fourth Amendment is not intended to be complete and is qualified in its entirety by reference to the Fourth Amendment to Amended and Restated Loan and Security Agreement, which is attached hereto as Exhibit 10.30 to this Annual Report on Form 10-K and is incorporated herein by reference.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

With the exception of the description of our Code of Ethics and Business Conduct below, the information required by this item is incorporated herein by reference from the discussion under the headings “Directors and Director Compensation,” “Corporate Governance,” “Executive Officers” and “Other Matters—Delinquent Section 16(a) Reports” in our definitive Proxy Statement to be filed in connection with our 2021 Annual Meeting of Stockholders (the “2021 Proxy Statement”).

“Corporate Governance,”

and “Executive Officers” in our definitive Proxy Statement to be filed in connection with our 2022 Annual Meeting of Stockholders (the “2022 Proxy Statement”).

Code of Ethics and Business Conduct

We have adopted a Code of Ethics and Business Conduct (the “Code”) that applies to all of our directors, executive officers and senior financial officers (including our principal executive officer, principal financial officer, principal accounting officer, controller, and any person performing similar functions).

The Code is available on our website at www.bwen.com under the caption “Investors” and is available in print, free of charge, to any stockholder who sends a request for a paper copy to Broadwind, Inc., Attn:

The Code is available on our website at www.bwen.com under the caption “Investors”

and is available in print, free of charge, to any stockholder who sends a request for a paper copy to Broadwind, Inc., Attn:

Investor Relations, 3240 South Central Avenue, Cicero, IL 60804.

We intend to include on our website any amendment to, or waiver from, a provision of the Code that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K.

EXECUTIVE COMPENSATION

Information regarding director and executive compensation is incorporated by reference from the discussion under the headings “Directors and Director Compensation” and “Executive Officers and Executive Compensation” in the 2021 Proxy Statement.

Information regarding director and executive compensation is incorporated by reference from the discussion under the headings “Directors and Director Compensation”

and “Executive Officers and Executive Compensation”

in the 2022 Proxy Statement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Certain of the information required by this item is incorporated herein by reference from the discussion under the heading “Security Ownership of Certain Beneficial Holders and Management” in the 2021 Proxy Statement.

Certain of the information required by this item is incorporated herein by reference from the discussion under the heading “Security Ownership of Certain Beneficial Holders and Management”

in the 2022 Proxy Statement.

The following table provides information as of December 31, 2021, with respect to shares of our common stock that may be issued under our existing equity compensation plans:

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to be issued upon

Weighted‑average

equity compensation

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Equity compensation plans approved by stockholders

Includes outstanding restricted stock awards pursuant to the Broadwind Energy, Inc.

2015 Equity Incentive Plan.

This plan has been approved by our stockholders.

Includes outstanding restricted stock awards pursuant to the Broadwind Energy, Inc.

2015 Equity Incentive Plan, as amended.

This plan has been approved by our stockholders.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this item is incorporated herein by reference from the discussion under the headings “Certain Transactions and Business Relationships” and “Corporate Governance” in the 2021 Proxy Statement.

The information required by this item is incorporated herein by reference from the discussion under the headings “Certain Transactions and Business Relationships”

and “Corporate Governance”

in the 2022 Proxy Statement.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated herein by reference from the discussion under the heading “Ratification of Appointment of Independent Registered Public Accounting Firm” in the 2021 Proxy Statement.

The information required by this item is incorporated herein by reference from the discussion under the heading “Ratification of Appointment of Independent Registered Public Accounting Firm”

in the 2022 Proxy Statement.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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These schedules have been omitted because the required information is included in the consolidated financial statements or notes thereto or because they are not applicable or not required.

The exhibits listed on the Index to Exhibits (pages 70 through 71) are filed as part of this Annual Report.

The exhibits listed on the Index to Exhibits are filed as part of this Annual Report.

FORM 10-K SUMMARY

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm ( PCAOB ID 49 )

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2020 and 2019

Consolidated Statements of Stockholders’

Equity for the Years Ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Broadwind, Inc.(the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

We have audited the accompanying consolidated balance sheets of Broadwind, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders’

equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

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The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit  

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Long-Lived Assets

As described in Note 7 of the consolidated financial statements, the Company’s evaluation of long-lived asset impairment involves the comparison of the undiscounted future cash flows of a respective asset group to its corresponding carrying value.

As described in Note 7 of the financial statements, the Company’s evaluation of long-lived asset impairment involves the comparison of the undiscounted future cash flows of a respective asset group to its corresponding carrying value.

This requires management to make significant qualitative and quantitative estimates and assumptions including estimates of future revenue growth rates, operating margins, and capital expenditures.

Changes in these assumptions could have a significant impact on the amount of undiscounted cash flows, which could have an impact on the impairment charge, if any.

The Company’s Gearing asset group experienced a decline in revenue and operating margin during the year-ended December 31, 2020.

Company management determined that the carrying amount of the Gearing asset group may not be recoverable based on the change in operating performance.

Accordingly, the Company performed an impairment assessment of the asset group as of October 31, 2020.

As part of the impairment assessment, it was determined that the reporting unit had undiscounted future cash flows that exceeded its estimated carrying value.

Additionally, there were no changes in facts or circumstances following the October 31, 2020 assessment through year-end which would alter the Company’s initial undiscounted future cash flows or carrying value estimates.

As a result, no impairment charge was recorded in the consolidated statement of operations for the year ended December 31, 2020.

Key financial assumptions used to determine the undiscounted cash flows of the asset group were developed by management.

We identified the long-lived asset impairment assessment of the Gearing asset group as a critical audit matter because of the high degree of judgement and subjectivity involved in auditing management’s assumptions regarding the primary asset determination, revenue growth rates, operating cash flow margins and capital expenditures utilized to determine the recoverability of the asset group’s long-lived assets.

The Company’s Gearing asset group has experienced reoccurring operating losses in consecutive years ending December 31, 2021, and the Company’s Heavy Fabrications asset group has experienced a decline in revenue and operating margin during the year ended December 31, 2021.

Company management determined that the carrying amount of the Gearing and Heavy Fabrications asset groups may not be recoverable based on the operating performances for each asset group.

Accordingly, the Company performed impairment assessments of the asset groups as of November 30, 2021.

As part of the impairment assessments, it was determined that each asset group had undiscounted future cash flows that exceeded their estimated carrying values.

Additionally, there were no changes in facts or circumstances following the November 30, 2021 assessments through December 31, 2021, which would alter each asset group’s initial undiscounted future cash flows or carrying value estimates.

As a result, no impairment charge was recorded in the consolidated statement of operations for the year ended December 31, 2021, for the Gearing and Heavy Fabrications asset groups.

Key financial assumptions used to determine the undiscounted cash flows of the asset groups were developed by management.

We identified the long-lived asset impairment assessments of the Gearing and Heavy Fabrications asset groups as a critical audit matter because of the high degree of judgement and subjectivity involved in auditing management’s assumptions regarding their asset group determination, each asset group’s primary asset determination, and projected revenue growth rates, operating cash flow margins and capital expenditures utilized to determine the recoverability of the asset group’s long-lived assets.

How the Critical Audit Matter Was Addressed in the Audit

The audit procedures performed related to the evaluation of Company management’s assumptions and estimates relating to their determination of recoverability of the Gearing asset group included the following, among others:

Evaluated the reasonableness of management’s determination of the primary asset of the asset group which included comparing the estimated future cash flows derived from the primary asset compared to other assets within the asset grouping.

Evaluated the reasonableness of management’s forecasted revenue, expense growth rates and capital expenditures by comparing the projections to historical results and industry expectations.

Evaluated the impact of changes to significant assumptions on the recoverability of the asset group.

Evaluated the reasonableness of management’s determination of the primary asset for each asset group which included comparing the estimated future cash flows derived from the primary asset compared to other assets within the asset grouping.

Evaluated the reasonableness of management’s forecasted revenue, operating cash flow margins, and capital expenditures for the asset groups by comparing the projections to historical results and industry expectations.

Evaluated the reasonableness of management’s determination that each asset group represented the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities by comparing the inputs and processes utilized within each asset group to each other to ensure the inputs and processes were not comingled and were independent of each other.

/S/ RSM US LLP

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Chicago, Illinois

February 25, 2021

BROADWIND , INC.

March 2, 2022

BROADWIND , INC.

AND SUBSIDIARIES

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CURRENT ASSETS:

$ 3,372  

Accounts receivable, net

13,802  

15,337  

Employee retention credit receivable

Contract assets

Inventories, net

33,377  

26,724  

Prepaid expenses and other current assets

Total current assets

52,325  

50,595  

LONG-TERM ASSETS:

Property and equipment, net

43,655  

45,195  

Operating lease right-of-use assets

18,029  

19,321  

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 118,047  

$ 119,682  

LIABILITIES AND STOCKHOLDERS’

CURRENT LIABILITIES:

Line of credit and other notes payable

$ 6,650  

$ 1,406  

Current portion of finance lease obligations

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Accounts payable

16,462  

18,180  

Accrued liabilities

Customer deposits

12,082  

18,819  

Total current liabilities

42,683  

47,971  

LONG-TERM LIABILITIES:

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Long-term operating lease obligations, net of current portion

18,405  

19,569  

Total long-term liabilities

21,230  

31,050  

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY:

STOCKHOLDERS’

Preferred stock, $ 0.001 par value;

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Treasury stock, at cost, 273,937 shares as of December 31, 2021 and December 31, 2020

( 1,842 )  

Additional paid-in capital

395,372  

384,749  

Accumulated deficit

Total stockholders’ equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

( 339,416 )  

Total stockholders’

54,134  

40,661  

TOTAL LIABILITIES AND STOCKHOLDERS’

$ 118,047  

$ 119,682  

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

BROADWIND , INC.

BROADWIND , INC.

AND SUBSIDIARIES

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For the Years Ended December 31,

$ 145,619  

$ 198,496  

Cost of sales

140,108  

180,495  

18,001  

OPERATING EXPENSES:

Selling, general and administrative

17,372  

16,846  

Intangible amortization

Total operating expenses

Operating income (loss)

OTHER EXPENSE, net:

18,105  

17,579  

Operating (loss) income

( 12,594 )  

OTHER INCOME (EXPENSE), net:

Paycheck Protection Program loan forgiveness

Interest expense, net

Total other expense, net

Net loss before provision for income taxes

( 1,129 )  

Total other income (expense), net

15,466  

Net income (loss) before provision for income taxes

Provision for income taxes

LOSS FROM CONTINUING OPERATIONS

INCOME FROM DISCONTINUED OPERATIONS

NET LOSS PER COMMON SHARE—BASIC:

Loss from continuing operations

Income from discontinued operations

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC

NET LOSS PER COMMON SHARE—DILUTED:

Loss from continuing operations

Income from discontinued operations

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED

NET INCOME (LOSS)

NET INCOME (LOSS) PER COMMON SHARE—BASIC:

Net income (loss)

$ 0.15  

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC

18,726  

16,746  

NET INCOME (LOSS) PER COMMON SHARE—DILUTED:

Net income (loss)

$ 0.15  

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED

19,388  

16,746  

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

BROADWIND , INC.

BROADWIND , INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

(In thousands, except share data)

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Paid-in Capital

BALANCE, Balance at December 31, 2018

BALANCE, December 31, 2019

16,830,930  

( 273,937 )  

$ ( 1,842 )  

$ 383,361  

$ ( 340,776 )  

$ 40,760  

Stock issued for restricted stock

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

360,359  

Share-based compensation

Shares withheld for taxes in connection with issuance of restricted stock

( 71,272 )  

( 139 )  

Sale of common stock, net

91,481  

( 1,487 )  

BALANCE, December 31, 2020

17,211,498  

( 273,937 )  

$ ( 1,842 )  

$ 384,749  

$ ( 342,263 )  

$ 40,661  

Stock issued for restricted stock

695,216  

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

289,519  

Share-based compensation

Shares withheld for taxes in connection with issuance of restricted stock

( 234,280 )  

( 1,423 )  

Sale of common stock, net

1,897,697  

BALANCE, December 31, 2021

19,859,650  

( 273,937 )  

$ ( 1,842 )  

$ 395,372  

$ ( 339,416 )  

$ 54,134  

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

BROADWIND , INC.

BROADWIND , INC.

AND SUBSIDIARIES

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CASH FLOWS FROM OPERATING ACTIVITIES:

Income from discontinued operations

Loss from continuing operations

Adjustments to reconcile net cash provided by operating activities:

Net income (loss)

$ 2,847  

Adjustments to reconcile net cash (used in) provided by operating activities:

Depreciation and amortization expense

Paycheck Protection Program loan forgiveness

( 9,151 )  

Deferred income taxes

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Allowance for doubtful accounts

( 426 )  

Common stock issued under defined contribution 401(k) plan

Gain on disposal of assets

Changes in operating assets and liabilities, net of acquisition:

( 33 )  

Changes in operating assets and liabilities:

Accounts receivable

Employee retention credit receivable

( 497 )  

Contract assets

( 6,653 )  

Prepaid expenses and other current assets

Accounts payable

( 1,736 )  

Accrued liabilities

( 2,676 )  

Customer deposits

( 6,737 )  

Other non-current assets and liabilities

Net cash provided by operating activities

( 66 )  

Net cash (used in) provided by operating activities

( 12,826 )  

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

( 1,707 )  

Proceeds from disposals of property and equipment

Net cash used in investing activities

( 1,674 )  

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from line of credit

156,004  

153,891  

Payments on line of credit

( 150,899 )  

Proceeds from long-term debt

Payments on long-term debt

( 161 )  

Principal payments on finance leases

( 1,672 )  

Shares withheld for taxes in connection with issuance of restricted stock

( 1,423 )  

Proceeds from sale of common stock, net

Net cash used in financing activities

DISCONTINUED OPERATIONS:

Operating cash flows

Net cash provided by discontinued operations

NET INCREASE IN CASH

Net cash provided by (used in) financing activities

11,980  

NET (DECREASE) INCREASE IN CASH

( 2,520 )  

CASH beginning of the period

CASH end of the period

$ 3,372  

Supplemental cash flow information:

Interest paid

$ 1,449  

Income taxes paid

Non-cash activities:

Issuance of restricted stock grants

Non-cash investing and financing activities:

Equipment additions via finance lease

$ 2,757  

$ 3,196  

Non-cash purchases of property and equipment

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

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

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Description of Business

Broadwind, Inc.

(the “Company”) is a precision manufacturer of structures, equipment and components for clean tech 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 most significant presence is within the U.S.

Broadwind, Inc.

(the “Company”) is a precision manufacturer of structures, equipment and components for clean tech and other specialized applications.

The Company’s most significant presence is within the U.S.

wind energy industry, although the Company has increasingly diversified into other industrial markets.

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wind energy industry, the Company provides products primarily to turbine manufacturers.

The Company also provides precision gearing and heavy fabrications to a broad range of industrial customers for oil and gas (“O&G”), mining, steel and other industrial applications, in addition to supplying components for natural gas turbines.

The Company has three reportable operating segments:

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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 concentrations, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S.

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The Company has expanded its production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and OEM components utilized in surface and underground mining, construction, material handling, O&G and other infrastructure markets.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

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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 in Neville Island, Pennsylvania.

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.

Industrial Solutions

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

The Company meets its short term liquidity needs through cash generated from operations, its available cash balances, through its credit facility (as further discussed in Note 9 “Debt and Credit Agreements” of these consolidated financial statements), equipment financing, access to the public and private debt and/or equity markets, and has the option to raise capital under the Company’s registration statement on Form S-3 (as discussed below).

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

The Company meets its short term liquidity needs through cash generated from operations, its available cash balances, through its Credit Facility (as defined and further discussed in Note 9 “Debt and Credit Agreements”

of these consolidated financial statements), equipment financing, access to the public and private debt and/or equity markets, and has the option to raise capital under the Company’s registration statement on Form S- 3 (as discussed below).

The Company uses the Credit Facility to fund working capital requirements.

Under the Credit Facility, borrowings are continuous and all cash receipts are usually applied to the outstanding borrowed balance.

As of December 31, 2020 , cash totaled $3,372, an increase of $956 from December 31, 2019 .

The Company had the ability to borrow up to $20,678 under the Credit Facility as of December 31, 2020 .

The Company also utilizes supply chain financing arrangements as a component of our funding for working capital, which accelerates receivable collections and helps to better manage cash flow.

As of December 31, 2021 , cash totaled $ 852 , a decrease of $ 2,520  from December 31, 2020 .

The Company had the ability to borrow up to $ 14,037  under the Credit Facility as of December 31, 2021 .

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.

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Fees incurred in connection with the agreements are recorded as interest expense by the Company.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

3 unchanged sentences

Debt and finance lease obligations at December 31, 2021 totaled $ 11,368 , which includes current outstanding debt and finance lease obligations totaling $ 8,710 , due over the next twelve months.

The current outstanding debt includes $1,245 outstanding under the Credit Facility.

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.

The current outstanding debt includes $ 6,350  outstanding under the Credit Facility.

On August 18, 2020, the Company filed a “shelf”

registration statement on Form S- 3, which was declared effective by the Securities and Exchange Commission (the “SEC”) on October 13, 2020 ( the “Form S- 3”

) and expires on October 12, 2023.

This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer any combination of securities described in the prospectus in one or more offerings.

Unless otherwise specified in the prospectus supplement accompanying the base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes.

The Company's registration statement on Form S-3 filed on August 11, 2017, which was declared effective by the SEC on October 10, 2017 expired on October 10, 2020.

On July 31, 2018, the Company entered into an At Market Issuance Sales Agreement (the "ATM Agreement") with Roth Capital Partners, LLC (the “Agent”).

Pursuant to the terms of the ATM Agreement, the Company may sell from time to time through the Agent shares of the Company's common stock, par value $0.001 per share with an aggregate sales price of up to $10,000.

The Company will pay a commission to the Agent of 3% of the gross proceeds of the sale of the shares sold under the ATM Agreement and reimburse the Agent for the expenses of their counsel.

The Company did not issue any shares of its common stock under the ATM Agreement in 2019.

During the year ended December 31, 2020, the Company reinstated the ATM Agreement and issued 91,481 shares of the Company’s common stock thereunder.

The net proceeds (before upfront costs) to the Company from the sale of such shares were approximately $321 after deducting commissions paid of approximately $10 and before deducting other expense of $89.

The ATM Agreement was terminated in accordance with its terms on October 12, 2020.

In April 2020, the Company received $9,530 in funds under the U.S.

Paycheck Protection Program (“PPP”) and made repayments of $379 on May 13, 2020.

Refer to Note 9, “Debt and Credit Agreements,” of these consolidated financial statements for more information, including information regarding potential forgiveness of the PPP Loans.

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

On March 9, 2021, the Company entered into a $ 10,000  Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC.

Pursuant to the terms of the Equity Distribution Agreement, the Company issued 1,897,697  shares of the Company’s common stock thereunder during the first two quarters of 

The net proceeds (before upfront costs) to the Company from the sale of such shares were approximately $ 9,725  after deducting commissions paid of approximately $ 275  and before deducting other expenses of $ 411 . 

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC.

As amended, 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.

During each quarter of 

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.

In the first and second quarters of 2021, the Company received ERC benefits of $ 3,372 and $ 3,593 , respectively, and under analogy to IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance”

were recorded in “Other income (expense), net”

in our consolidated statement of operations. The Company qualified for the ERC in the first quarter of 2021 because it experienced a reduction in gross receipts of more than 20% for the first quarter of 2021 compared to the first quarter of 2019, the relevant criteria for the ERC.

Since the Company qualified for the ERC in the first quarter of 2021, it automatically qualified for the ERC in the second quarter of 2021.

As a result of the Company averaging 

500 or fewer full-time employees in 2019, all wages paid to employees were eligible for the ERC (rather than only wages paid to employees not providing services).

During the third quarter of 2021 due to relatively higher revenues in 2021 as compared to the third quarter of 2019, the Company did not qualify for the ERC benefit.

The receivable for the remaining uncollected ERC benefit is $ 497  as of December 

31, 2021 and is included in the “Employee retention credit receivable”

line item in the Company’s consolidated balance sheet at December 

 The $ 497 receivable balance was collected during 

January 2022.  

The Company anticipates that current cash resources, amounts available under the Credit Facility, cash to be generated from operations and equipment financing, and any potential proceeds from 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.

Reclassifications

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

Summary of Significant Accounting Policies

Management’s Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S.

(“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 inventory reserves, warranty reserves, impairment of long-lived assets, and allowance for doubtful accounts.

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.

BROADWIND, INC.

Significant estimates, among others, include inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts, 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. 

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

Cash and cash equivalents typically comprise cash balances and readily marketable investments with original maturities of three months or less, such as money market funds, short-term government bonds, Treasury bills, marketable securities and commercial paper.

As of December 31, 2020 and December 31, 2019 , cash totaled $3,372 and $2,416, respectively.

For the years ended December 31, 2020 and 2019 , interest income was $0.

As of December 31, 2021 and December 31, 2020 , cash totaled $ 852  and $ 3,372 , respectively.

For the years ended December 31, 2021 and 2020 , interest income was $ 1 and $ 0 , respectively.

Revenue Recognition

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

Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned.

Cash payments to customers are presumed to be classified as reductions of revenue in the Company’s statement of operations.

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 versus shipment.

Cash payments to customers are presumed to be classified as reductions of revenue in the Company’s statement of operations.

The Company recognizes revenue under these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer.

Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.

During 2020, the Company also recognized revenue over time, versus point in time, when products in the Gearing and Heavy Fabrications segments had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contract by the customer.

Since the projects are labor intensive, the Company uses labor hours as the input measure of progress for the contract.

Contract assets are recorded when performance obligations are satisfied but the Company is not yet entitled to payment.

The Company recognizes contract assets associated with this revenue which represents its rights to consideration for work completed but not billed at the end of the period.

The Company did not recognize any revenue over time during the year ended December 31, 2019.

During 2021 and 2020, the Company also recognized revenue over time, versus point in time, when products in the Gearing and Heavy Fabrications segments had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contract by the customer.

Since the projects are labor intensive, the Company uses labor hours as the input measure of progress for the contract.

Contract assets are recorded when performance obligations are satisfied but the Company is 

not yet entitled to payment.

The Company recognizes contract assets associated with this revenue which represents its rights to consideration for work completed but not billed at the end of the period. 

Cost of Sales

Cost of sales represents all direct and indirect costs associated with the production of products for sale to customers.

These costs include operation, repair and maintenance of equipment, materials, direct and indirect labor and benefit costs, rent and utilities, maintenance, insurance, equipment rentals, freight, and depreciation.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses include all corporate and administrative functions such as sales and marketing, legal, human resource management, finance, investor and public relations, information technology and senior management.

These functions serve to support the Company’s current and future operations and provide an infrastructure to support future growth.

Major expense items in this category include management and staff wages and benefits, share-based compensation and professional services.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

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Accounts Receivable (A/R)

The Company generally grants uncollateralized credit to customers on an individual basis based upon the customer’s financial condition and credit history.

Credit is typically on net 30 day terms and customer deposits are frequently required at various stages of the production process to finance customized products and minimize credit risk.

Historically, the Company’s A/R is highly concentrated with a select number of customers.

During the year ended December 31, 2020 , the Company’s five largest customers accounted for 78% of its consolidated revenues and 65% of outstanding A/R balances, compared to the year ended December 31, 2019 when the Company’s five largest customers accounted for 79% of its consolidated revenues and 55% of its outstanding A/R balances.

Historically, the Company’s A/R is highly concentrated with a select number of customers.

During the year ended December 31, 2021 , the Company’s five largest customers accounted for 71 % of its consolidated revenues and 25 % of outstanding A/R balances, compared to the year ended December 31, 2020 when the Company’s five largest customers accounted for 78 % of its consolidated revenues and 65 % of its outstanding A/R balances.

Allowance for Doubtful Accounts

Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to A/R.

The Company’s standard allowance estimation methodology considers a number of factors that, based on its collections experience, the Company believes will have an impact on its credit risk and the realizability of its A/R.

These factors include individual customer circumstances, history with the Company and other relevant criteria.

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The Company monitors its collections and write-off experience to assess whether or not adjustments to its allowance estimates are necessary.

Changes in trends in any of the factors that the Company believes may impact the realizability of its A/R, as noted above, or modifications to the Company’s credit standards, collection practices and other related policies may impact its allowance for doubtful accounts and its financial results.

Inventories are stated at the lower of cost or net realizable value.

Net realizable value is the value that can be realized upon the sale of the inventory less a reasonable estimate of selling costs.

Cost is determined either based on the first-in, first-out (“FIFO”) method, or on a standard cost basis that approximates the FIFO method.

Any excess of cost over net realizable value is included in the Company’s inventory allowance.

Net realizable value of inventory, and management’s judgment of the need for reserves, encompasses consideration of other business factors including physical condition, inventory holding period, contract terms and usefulness.

Net realizable value is the value that can be realized upon the sale of the inventory less a reasonable estimate of selling costs.

Cost is determined either based on the first -in, first -out (“FIFO”) method, or on a standard cost basis that approximates the FIFO method.

Any excess of cost over net realizable value is included in the Company’s inventory allowance.

Inventories consist of raw materials, work-in-process and finished goods.

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Finished goods consist of components purchased from third parties as well as components manufactured by the Company that will be used to produce final customer products.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

5 unchanged sentences

Depreciation and amortization of property and equipment is recognized using the straight-line method over the estimated useful lives of the related assets for financial reporting purposes, and generally using an accelerated method for income tax reporting purposes.

Depreciation expense related to property and equipment for the years ended December 31, 2020 and 2019 was $5,546 and $5,814, respectively.

Depreciation expense related to property and equipment for the years ended December 31, 2021 and 2020 was $ 5,603  and $ 5,546 , respectively.

Expenditures for additions and improvements are capitalized, while replacements, maintenance and repairs that do not improve or extend the useful lives of the respective assets are expensed as incurred.

Property or equipment sold or disposed of is removed from the respective property accounts, with any corresponding gains and losses recorded within the operating results of the Company’s consolidated statement of operations.

The Company reviews property and equipment and other long-lived assets (“long-lived assets”) for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable.

Asset recoverability is first measured by comparing the assets’ carrying amounts to their expected future undiscounted net cash flows to determine if the assets are impaired.

The Company reviews property and equipment and other long-lived assets (“long-lived assets”) for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable.

Asset recoverability is first measured by comparing the assets’

carrying amounts to their expected future undiscounted net cash flows to determine if the assets are impaired.

In evaluating the recoverability of long-lived assets, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of such assets.

If the Company’s fair value estimates or related assumptions change in the future, the Company may be required to record impairment charges related to property and equipment and other long-lived assets.

If such assets are considered to be impaired, the impairment recognized is measured based on the amount by which the carrying amount of the assets exceeds the fair value.

See Note 7, “Long-Lived Assets” of these consolidated financial statements for further discussion of long-lived assets.

See Note 7, “Long-Lived Assets”

of these consolidated financial statements for further discussion of long-lived assets.

The Company leases various property and equipment under operating lease arrangements.

On January 1, 2019, the Company adopted ASU 2016-02, Leases (“Topic 842”) and ASU 2018-11 using the cumulative effect method.

On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2016 - 02, Leases (“Topic 842”

) and ASU 2018 - 11 using the cumulative effect method.

Adopting the standard resulted in the Company recognizing operating lease assets and liabilities on the balance sheet.

2 unchanged sentences

The cost basis and accumulated amortization of assets recorded under finance leases are included in property and equipment, while the liabilities are included in finance lease obligations.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

7 unchanged sentences

The Company estimates the warranty accrual based on various factors, including historical warranty costs, current trends, product mix and sales.

The changes in the carrying amount of the Company’s total product warranty liability for the years ended December 31, 2020 and 2019 were as follows, excluding activity related to the discontinued Services segment:

The changes in the carrying amount of the Company’s total product warranty liability for the years ended December 31, 2021 

and 2020  were as follows, excluding activity related to the discontinued Services segment:

As of December 31,

Balance, beginning of period

Reduction of warranty reserve

Increase (reduction) of warranty reserve

Warranty claims

Other adjustments

Balance, end of period

6 unchanged sentences

In connection with the preparation of its consolidated financial statements, the Company is required to estimate its income tax liability for each of the tax jurisdictions in which the Company operates.

This process involves estimating the Company’s actual current income tax expense and assessing temporary differences resulting from differing treatment of certain income or expense items for income tax reporting and financial reporting purposes.

The Company also recognizes as deferred income tax assets the expected future income tax benefits of net operating loss (“NOL”) carryforwards.

In evaluating the realizability of deferred income tax assets associated with NOL carryforwards, the Company considers, among other things, expected future taxable income, the expected timing of the reversals of existing temporary reporting differences and the expected impact of tax planning strategies that may be implemented to prevent the potential loss of future income tax benefits.

Changes in, among other things, income tax legislation, statutory income tax rates or future taxable income levels could materially impact the Company’s valuation of income tax assets and liabilities and could cause its income tax provision to vary significantly among financial reporting periods.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

5 unchanged sentences

Share-Based Compensation

The Company grants incentive stock options, restricted stock units (“RSUs”) and/or performance awards (“PSUs”) to certain officers, directors, and employees.

The Company accounts for share-based compensation related to these awards based on the estimated fair value of the equity award and recognizes expense ratably over the required vesting term of the award.

The expense associated with PSUs is also based on the probability of achieving embedded targets.

See Note 14 “Share-Based Compensation” of these consolidated financial statements for further discussion of the Company’s share-based compensation plans, the nature of share-based awards issued and the Company’s accounting for share-based compensation.

Net Loss Per Share

See Note 

14 “Share-Based Compensation”

of these consolidated financial statements for further discussion of the Company’s share-based compensation plans, the nature of share-based awards issued and the Company’s accounting for share-based compensation.

Net Income Per Share

The Company presents both basic and diluted net income (loss) per share.

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The following table presents the Company’s revenues disaggregated by revenue source for the years ended December 31, 2020 and 2019 :

The following table presents the Company’s revenues disaggregated by revenue source for the years ended December 31, 2021 and 2020 :

Year Ended December 31,

Heavy Fabrications

$ 101,994  

$ 155,198  

28,583  

25,136  

Industrial Solutions

The Company’s revenue is generally recognized at a point in time, typically when control of the promised goods or services is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services.

15,402  

18,299  

( 360 )  

$ 145,619  

$ 198,496  

A performance obligation is a promise in a contract to transfer a distinct product or service to the customer.

1 unchanged sentence

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.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

The Company recognizes revenue under these arrangements only when there is a substantive reason for the arrangement, the ordered goods are identified separately as belonging to the customer and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer.

Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.

During the year ended December 31, 2020, the Company recognized $1,438 of revenue from one customer within the Gearing segment and $815 from one customer in 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 contract.

Since the projects are labor intensive, the Company uses labor hours as the input measure of progress for the contracts.

Contract assets are recorded when performance obligations are satisfied but the Company is not yet entitled to payment.

The Company recognized $2,253 of contract assets associated with this revenue which represents the Company's rights to consideration for work completed but not billed at the end of the period.

The Company did not recognize any revenue over time during the year ended December 31, 2019.

During the year ended December 

2021, the Company recognized a portion of revenue within the Gearing and Heavy Fabrications segments over time, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts.

Since the projects are labor intensive, the Company uses labor hours as the input measure of progress for the applicable contracts.

Within the Heavy Fabrications segment, the Company recognized revenue over time of $ 5,665  and $ 815  for the years ended December 

30, 2021 and 2020, respectively. Within the Gearing segment, the Company recognized revenue over time of $ 2,444  and $ 1,438 for the years ended December 

31, 2021 and 2020, respectively.

During the fourth quarter of 2021, the Company ceased recording revenue over time within the Gearing segment due to a change in terms.

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.

1 unchanged sentence

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.

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Basic earnings per share calculation:

Net income (loss)

$ 2,847  

Weighted average number of common shares outstanding

Basic net loss per share

18,726,459  

16,745,531  

Basic net income (loss) per share

$ 0.15  

Diluted earnings per share calculation:

Net income (loss)

$ 2,847  

Weighted average number of common shares outstanding

18,726,459  

16,745,531  

Common stock equivalents:

Non-vested stock awards (1)

662,030  

Weighted average number of common shares outstanding

Diluted net loss per share

(1) Stock options and restricted stock units granted and outstanding of 1,332,884 and 1,411,277, respectively, are excluded from the computation of diluted earnings for the years ended December 31, 2020 and 2019 due to the anti-dilutive effect as a result of the Company’s net loss for those respective periods.

BROADWIND, INC.

19,388,489  

16,745,531  

Diluted net income (loss) per share

$ 0.15  

( 1 )   Stock options and restricted stock units granted and outstanding of 1,332,884 , respectively, are excluded from the computation of diluted earnings for the year ended December 31, 2020 

due to the anti-dilutive effect as a result of the Company’s net loss for that period.

BROADWIND, INC.

AND SUBSIDIARIES

10 unchanged sentences

Bad debt expense

( 229 )  

Other adjustments

( 206 )  

Balance at end of period

2 unchanged sentences

Raw materials

$ 16,148  

$ 14,586  

Work-in-process

13,639  

12,634  

Finished goods

36,362  

29,924  

( 2,985 )  

Net inventories

BROADWIND, INC.

$ 33,377  

$ 26,724  

BROADWIND, INC.

AND SUBSIDIARIES

6 unchanged sentences

Life (in years)

$ 1,423  

20,778  

Machinery and equipment

116,725  

113,266  

2 - 10  

Office furniture and equipment

2 unchanged sentences

Construction in progress

154,020  

150,373  

Less accumulated depreciation and amortization

( 110,365 )  

( 105,178 )  

Total property and equipment

As of December 31, 2020 and December 31, 2019 , the Company had commitments of $463 and $758, respectively, related to the completion of projects within construction in progress.

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.

Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 2 to 7 years.

During 2019, the Company identified a triggering event associated with its continued operating losses within the Industrial Solutions segment.

The Company relied upon an undiscounted cash flow analysis and concluded that no impairment to this asset group was indicated as of December 31, 2019.

However, in conjunction with the Company’s rebranding initiative, during 2019 the Company decided it would no longer utilize the Red Wolf trade name.

As a result, the Company accelerated the amortization of the trade name by $871 so that it was fully amortized in 2019.

During October 2020, the Company also identified a triggering event associated with its continued operating losses within the Gearing segment.

$ 43,655  

$ 45,195  

As of December 31, 2021 and December 31, 2020 , the Company had commitments of $ 1,227  and $ 463 , respectively, related to the completion of projects within construction in progress.

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 Gear Works completed in 2007 as well as the noncompetition agreements and customer relationships that were part of the Company’s acquisition of Red Wolf Company, LLC completed in 2017.

Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 1  to 6  years.

During November 2021, the Company identified triggering events associated with operating losses within the Gearing segment and a decline in revenue and operating margin within the Heavy Fabrications segment during the year ended December 31, 2021.

The Company relied upon undiscounted cash flow analyses and concluded that no impairment to these asset groups was indicated as of December 31, 2021.

During October 2020, the Company also identified triggering events associated with its continued operating losses within the Gearing segment.

The Company relied upon an undiscounted cash flow analysis and concluded that no impairment to this asset group was indicated as of December 31, 2020.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

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Noncompete agreements

$ ( 139 )  

$ ( 111 )  

Customer relationships

15,979  

( 7,284 )  

( 7,592 )  

15,979  

( 6,979 )  

( 7,592 )  

( 6,780 )  

( 6,380 )  

Intangible assets

Intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from 6 to 20 years.

Amortization expense was $733 and $1,683 for the years ended December 31, 2020 and 2019 , respectively.

$ 25,248  

$ ( 14,203 )  

$ ( 7,592 )  

$ 3,453  

$ 25,248  

$ ( 13,470 )  

$ ( 7,592 )  

$ 4,186  

Intangible assets are amortized on a straight-line basis over their estimated useful lives, which range from 6 to 20  years.

Amortization expense was $ 733  for the years ended December 31, 2021 and 2020 .

As of December 31, 2021 , estimated future amortization expense is as follows:

2027 and thereafter

$ 3,453  

ACCRUED LIABILITIES

1 unchanged sentence

Accrued payroll and benefits

$ 2,992  

$ 5,320  

Fair value of interest rate swap

5 unchanged sentences

Total accrued liabilities

BROADWIND, INC.

$ 3,654  

$ 6,307  

BROADWIND, INC.

AND SUBSIDIARIES

3 unchanged sentences

DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of December 31, 2020 and 2019 consisted of the following:

The Company’s outstanding debt balances as of December 31, 2021 and 2020 consisted of the following:

Line of credit

$ 6,350  

$ 1,245  

Other notes payable

1 unchanged sentence

Current portion

( 6,650 )  

Long-term debt, net of current maturities

As of December 31, 2020 , future annual principal payments on the Company’s outstanding debt obligations were as follows:

$ 9,381  

As of December 31, 2021 , future annual principal payments on the Company’s outstanding debt obligations were as follows:

$ 6,650  

2027 and thereafter

$ 6,827  

Credit Facilities

On October 26, 2016, the Company established a three-year secured revolving line of credit with CIBC Bank USA (“CIBC”).

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

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

The obligations under the Credit Facility are secured by, subject to certain exclusions, (i) a first priority security interest in all accounts receivable, inventory, equipment, cash and investment property, and (ii) a mortgage on the Abilene, Texas tower and Pittsburgh, Pennsylvania gearing facilities.

The Credit Facility is an asset-based revolving credit facility, pursuant to which the Lenders advance funds against a borrowing base consisting of approximately (a) 85% of the face value of eligible receivables of the Company and the subsidiaries, plus (b) the lesser of (i) 50% of the lower of cost or market value of eligible inventory of the Company, (ii) 85% of the orderly liquidation value of eligible inventory and (iii) $12.5 million, plus (c) the lesser of (i) the sum of (A) 75% of the appraised net orderly liquidation value of the Company’s eligible machinery and equipment plus (B) 50% of the fair market value of the Company’s mortgaged property and (ii) $12 million.

The Credit Facility is an asset-based revolving credit facility, pursuant to which the Lenders advance funds against a borrowing base consisting of approximately (a) 85 % of the face value of eligible receivables of the Company and the subsidiaries, plus (b) the lesser of (i) 50 % of the lower of cost or market value of eligible inventory of the Company, (ii) 85 % of the orderly liquidation value of eligible inventory and (iii) $ 12.5 million, plus (c) the lesser of (i) the sum of (A) 75 % of the appraised net orderly liquidation value of the Company’s eligible machinery and equipment plus (B) 50 % of the fair market value of the Company’s mortgaged property and (ii) $ 12 million.

Subject to certain borrowing base conditions, the aggregate Credit Facility limit under the Amended and Restated Loan Agreement is $ 35 million with a sublimit for letters of credit of $ 10 million.

Borrowings under the Credit Facility bear interest at a per annum rate equal to, at the option of the Company, the one, two or three -month LIBOR rate or the base rate, plus a margin.

The Company must also pay an unused facility fee equal to 0.50% per annum on the unused portion of the Credit Facility along with other standard fees.

With the exception of the balance impacted by the interest rate swap (as described below), the Company is allowed to prepay in whole or in part advances under the Credit Facility without penalty or premium other than customary “breakage” costs with respect to LIBOR loans.

On October 29, 2020, the Company executed the First Amendment to the 2016 Amended and Restated Loan Agreement (the “First Amendment”), 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 LIBOR rate loans and 0.00% and 0.75% for base rate loans, and extending the term of the Credit Facility to July 31, 2023.

BROADWIND, INC.

The Company must also pay an unused facility fee equal to 0.50 % per annum on the unused portion of the Credit Facility along with other standard fees. 

costs with respect to LIBOR loans.

On October 

29, 2020, the Company executed the First Amendment to the 2016 Amended and Restated Loan Agreement (the “First Amendment”), 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 LIBOR rate loans and 0.00 % and 0.75 % for base rate loans, and extending the term of the Credit Facility to 

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

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

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 and amended certain other provisions in connection with the discontinuation of LIBOR and replacement with the forward-looking term Secured Overnight Financing Rate (Term SOFR) administered by CME Group, Inc.

The Credit Facility contains customary representations and warranties applicable to the Company and the subsidiaries.

It also contains a requirement that the Company, on a consolidated basis, maintain a minimum quarterly fixed charge coverage ratio, along with other customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications.

The Company was in compliance with all covenants under the Credit Facility as of December 31, 2020 .

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

In conjunction with the 2016 Amended and Restated Loan Agreement, during June 2019, the Company entered into a floating to fixed interest rate swap with CIBC.

The swap agreement has a notional amount of $6,000 and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire term of the Credit Facility at 2.13%, before considering the Company’s risk premium.

The swap agreement has a notional amount of $ 6,000 and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire term of the Credit Facility at 2.13 %, before considering the Company’s risk premium.

The interest rate swap is accounted for using mark-to-market accounting.

Accordingly, changes in the fair value of the swap each reporting period are adjusted through earnings, which may subject the Company’s results of operations to non-cash volatility.

The interest rate swap liability is included in the “Accrued liabilities” line item of the Company’s consolidated financial statements as of December 31, 2020 and December 31, 2019.

As of December 31, 2020 , there was $1,245 outstanding under the Credit Facility.

The Company had the ability to borrow up to $20,678 under the Credit Facility as of December 31, 2020 .

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 consolidated financial statements as of December 31, 2021 

and December 31, 2020.

As of December 31, 2021 , there was $ 6,350  

outstanding under the Credit Facility.

The Company had the ability to borrow up to $ 14,037  under the Credit Facility as of December 31, 2021 .

In 2016, the Company entered into a $ 570 unsecured loan agreement with the Development Corporation of Abilene which is included in long-term debt, less current maturities.

1 unchanged sentence

During each of the years ended December 31, 2021 and 2020 , $114 of the loan was forgiven.

As of December 31, 2020 and December 31, 2019, the loan balance was $228 and $342, respectively.

In addition, the Company has outstanding notes payable for capital expenditures in the amount of $163 and $1,563 as of December 31, 2020 and 2019 , respectively, with $161 and $1,400 included in the “Line of credit and other notes payable” line item of the Company’s consolidated financial statements as of December 31, 2020 and 2019 , respectively.

As of December 31, 2021  and December 31, 2020, the loan balance was $ 114  and $ 228 , respectively.

In addition, the Company has outstanding notes payable for capital expenditures in the amount of $ 186  and $ 163  as of December 31, 2021 and 2020 , respectively, with $ 186  and $ 161  included in the “Line of credit and other notes payable”

line item of the Company’s consolidated financial statements as of December 31, 2021 and 2020 , respectively.

The notes payable have monthly payments that range from $ 1 to $ 16 and an interest rate of 4 %.

The equipment purchased is utilized as collateral for the notes payable.

The outstanding notes payable have maturity dates that range from February 2021 to August 2022.

On April 15, 2020, the Company received unsecured funds under notes and related documents (“PPP Loans”) with CIBC, 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”).

The outstanding notes payable have maturity dates that range from March  

2022  to September  

On April 15, 2020, the Company received funds under notes and related documents (“PPP Loans”) with CIBC, under the Paycheck Protection Program (the “PPP”) which was established under the CARES Act enacted on March 27, 2020 in response to the COVID- 19 pandemic and is administered by the U.S.

Small Business Administration (“SBA”).

The Company received total proceeds of $ 9,530 from the PPP Loans and made repayments of $ 379 on May 13, 2020.

Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020 enacted on June 5, 2020 (the “Flexibility Act”), the PPP Loans, and accrued interest and fees 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 conveys the loan forgiveness amount to the lender (or notifies the lender that no loan forgiveness is allowed), provided that the borrower applies for forgiveness within 10 months after the last day of the covered period (and if not, payment of principal and interest shall commence 10 months after the last day of the covered period).

The Company used at least 60% of the amount of the PPP Loans proceeds to pay for payroll costs and the balance on other eligible qualifying expenses that the Company believes to be consistent with the terms of the PPP and plans to submit its forgiveness applications to CIBC during the first quarter of 2021.

While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the PPP Loans, the Company cannot provide assurance that it has not taken and will not take actions that could cause the Company to be ineligible for forgiveness of the PPP Loans, in whole or in part.

BROADWIND, INC.

Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020 enacted on June 5, 2020, the PPP Loans, and accrued interest and fees are eligible to be forgiven following a period of twenty-four weeks after PPP Loan proceeds are received (the “covered period”) if they are used for qualifying expenses as described in the CARES Act including payroll costs and certain employee benefits (which must equal or exceed 60% of the amount requested to be forgiven), rent, mortgage interest, and utilities.

The amount of loan forgiveness is reduced if the borrower terminates employees or significantly reduces salaries during such period, subject to certain exceptions.

The Company used at least 60% of the amount of the PPP Loans proceeds to pay for payroll costs and the balance on other eligible qualifying expenses consistent with the terms of the PPP and submitted its forgiveness applications to CIBC during the first quarter of 2021.

During the quarter ended June 

2021, all loans were forgiven by the SBA and a gain of $ 9,151 was recorded in “Other income (expense), net”

in the Company's condensed consolidated statements of operations. 

BROADWIND, INC.

AND SUBSIDIARIES

4 unchanged sentences

On January 1, 2019, the Company adopted Topic 842 and ASU 2018 - 11 using the cumulative effect method and has elected to apply each available practical expedient.

The standard requires companies to recognize operating lease assets and liabilities on the balance sheet and to disclose key information regarding leasing arrangements.

ASU 2018-11 also allows an exception so that companies do not have to make the new required lease disclosures for periods before the effective date.

The Company has elected to apply the short-term lease exception to all leases of one year or less.

The adoption of Topic 842 resulted in the Company recognizing operating lease liabilities totaling $19,508 with a corresponding right-of-use (“ROU”) asset of $17,613 based on the present value of the minimum rental payments of such leases.

The standard requires companies to recognize operating lease assets and liabilities on the balance sheet and to disclose key information regarding leasing arrangements. The Company has elected to apply the short-term lease exception to all leases of one year or less.

The adoption of Topic 842 resulted in the Company recognizing operating lease liabilities totaling $ 19,508 with a corresponding right-of-use (“ROU”) asset of $ 17,613 based on the present value of the minimum rental payments of such leases.

The variance between the ROU asset balance and the lease liability is a deferred rent liability that existed prior to the adoption of Topic 842 and was offset against the ROU asset balance during the adoption.

As of December 31, 2020 , the ROU asset had a balance of $19,321 which is included in the “Operating lease right-of-use assets” line item of these consolidated financial statements and current and non-current lease liabilities relating to the ROU asset of $1,832 and $19,569 , respectively, and are included in the “Current portion of operating lease obligations” and “Long-term operating lease obligations, net of current portion” line items of these consolidated financial statements.

The discount rates used for leases accounted for under Topic 842 are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio.

Lease terms generally range from 3 to 15 years with renewal options for extended terms.

Some of the Company’s facility leases include options to renew.

The exercise of the renewal options is at the Company’s discretion.

As of December 31, 2021 , the ROU asset had a balance of $ 18,029  

which is included in the “Operating lease right-of-use assets”

line item of these consolidated financial statements and current and non-current lease liabilities relating to the ROU asset of $ 1,775  

and $ 18,405 , respectively, and are included in the “Current portion of operating lease obligations”

and “Long-term operating lease obligations, net of current portion”

line items of these consolidated financial statements.

The discount rates used for leases accounted for under Topic 842 are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio.

Lease terms generally range from 3 to 15  years with renewal options for extended terms.

Some of the Company’s facility leases include options to renew.

The exercise of the renewal options is at the Company’s discretion.

Therefore, the majority of renewals to extend the lease terms are not included in ROU assets and lease liabilities as they are not reasonably certain of exercise.

2 unchanged sentences

Rent expense for these types of leases is recognized on a straight-line basis over the lease term.

Operating rental expense for the years ended December 31, 2020 and 2019 was $4,396 and $4,264, respectively.

Operating rental expense for the years ended December 31, 2021 and 2020 was $ 4,302  and $ 4,396 , respectively.

In addition, the Company has entered into finance lease arrangements to finance property and equipment and assumed finance lease obligations in connection with certain acquisitions.

Finance rental expense for the years ended December 31, 2020 and 2019 was $829 and $666, respectively.

Amortization expense recorded in connection with assets recorded under finance leases was $619 and $560 for the years ended December 31, 2020 and 2019 , respectively.

BROADWIND, INC.

Finance rental expense for the years ended December 31, 2021 and 2020 was $ 1,379  and $ 829 , respectively.

Amortization expense recorded in connection with assets recorded under finance leases was $ 984  and $ 619  for the years ended December 31, 2021 and 2020 , respectively.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

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

Year Ended December 31,

9 unchanged sentences

Sublease income

( 187 )  

Total operating lease costs

Total lease cost

$ 5,681  

$ 5,225  

Supplemental cash flow information related to our operating leases is as follows for the twelve months ended December 31, 2021 and 2020:

1 unchanged sentence

Operating cash outflow from operating leases

$ 3,581  

$ 3,551  

Right-of-use assets obtained in exchange for new

operating lease liabilities

$ 4,777  

Weighted-average remaining lease term-finance leases at end of period (in years)

2 unchanged sentences

Weighted-average discount rate-operating leases at end of period

Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment.

Amortization associated with new right-of-use assets obtained in exchange for new operating lease liabilities is $291 and $1,633 for the years ended December 31, 2020 and 2019, respectively.

During January 2021, the Company entered into a contract for an additional operating lease of $907 that will commence during fiscal year 2021 and carries a lease term of three years.

Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment.

Amortization associated with new right-of-use assets obtained in exchange for new operating lease liabilities is $ 270  and $ 291  for the years ended December 31, 2021 

and 2020, respectively. 

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

$ 2,322  

$ 3,475  

$ 5,797  

2027 and thereafter

14,045  

Total lease payments

Less—portion representing interest

29,915  

34,896  

Less—portion representing interest

( 440 )  

( 9,735 )  

Present value of lease obligations

Less—current portion of lease obligations

20,180  

24,721  

Less—current portion of lease obligations

( 2,060 )  

( 1,775 )  

Long-term portion of lease obligations

BROADWIND, INC.

$ 2,481  

$ 18,405  

$ 20,886  

BROADWIND, INC.

AND SUBSIDIARIES

6 unchanged sentences

The Company accrues for costs related to loss contingencies when such costs are probable and reasonably estimable.

As of December 31, 2020 , the Company is not aware of any material pending legal proceedings or threatened litigation that would have a material adverse effect on the Company’s results of operations, financial condition or cash flows, although no assurance can be given with respect to the ultimate outcome of pending actions.

Refer to Note 18, “Legal Proceedings” of these consolidated financial statements for further discussion of legal proceedings.

As of December 31, 2021 , the Company is not aware of any material pending legal proceedings or threatened litigation that would have a material adverse effect on the Company’s results of operations, financial condition or cash flows, although no assurance can be given with respect to the ultimate outcome of pending actions.

Refer to Note 

18, “Legal Proceedings”

of these consolidated financial statements for further discussion of legal proceedings.

Environmental Compliance and Remediation Liabilities

The Company’s operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content, performance and packaging.

Also, certain environmental laws can 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.

1 unchanged sentence

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.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

10 unchanged sentences

When the damages are determined to be probable and estimable, the damages are recorded as a reduction to revenue.

During 2020 and 2019 , the Company incurred no liquidated damages and there was no reserve for liquidated damages as of December 31, 2020 .

Workers’ Compensation Reserves

As of December 31, 2020 and 2019 , the Company had $74 and $115, respectively, accrued for self-insured workers’ compensation liabilities.

At the beginning of the third quarter of 2013, the Company began to self-insure for its workers’ compensation liabilities, including reserves for self-retained losses.

The Company entered into a guaranteed workers’ compensation cost program at the beginning of the third quarter of 2016, but still maintains a liability for the trailing claims for the self-insured policy periods.

Although the ultimate outcome of these matters may exceed the amounts recorded and additional losses may be incurred, the Company does not believe that any additional potential exposure for such liabilities will have a material adverse effect on the Company’s consolidated financial position or results of operations.

During 2021 and 2020 , the Company incurred no liquidated damages and there was no reserve for liquidated damages as of December 31, 2021  or December 31, 2020.

Workers’

Compensation Reserves

As of December 31, 2021 and 2020 , the Company had $ 166  

and $ 74 , respectively, accrued for self-insured workers’

compensation liabilities.

At the beginning of the third quarter of 2013, the Company began to self-insure for its workers’

compensation liabilities, including reserves for self-retained losses.

The Company entered into a guaranteed workers’

compensation cost program at the beginning of the third quarter of 2016, but still maintains a liability for the trailing claims for the self-insured policy periods.

Health Insurance Reserves

As of December 31, 2020 and 2019 , the Company had $550 and $344, respectively, accrued for health insurance liabilities.

As of December 31, 2021 and 2020 , the Company had $ 416  and $ 550 , respectively, accrued for health insurance liabilities.

The Company self-insures for its health insurance liabilities, including establishing reserves for self-retained losses.

2 unchanged sentences

Health insurance reserves are included in accrued liabilities.

While the Company’s management believes that it has adequately reserved for these claims, the ultimate outcome of these matters may exceed the amounts recorded and additional losses may be incurred.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

As of December 31, 2020 , approximately 14% of the Company’s employees were covered by two collective bargaining agreements with local unions at the Company’s Cicero, Illinois and Neville Island, Pennsylvania locations.

As of December 31, 2021 , approximately 18 % of the Company’s employees were covered by two collective bargaining agreements with local unions at the Company’s Cicero, Illinois and Neville Island, Pennsylvania locations.

The current five -year collective bargaining agreement with the Neville Island union is expected to remain in effect through October 2022.

A new collective bargaining agreement was negotiated and ratified with the Cicero Union and is effective from February 2018 and is expected to remain in effect through February 2022.

A new four -year collective bargaining agreement in regards to the Cicero, Illinois facility was negotiated in February 2022 and is expected to remain in effect through February 2026.

The Company expects to renegotiate a new collective bargaining agreement in regards to the Neville Island facility later in 2022.

FAIR VALUE MEASUREMENTS

The Company measures its financial assets and liabilities at fair value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date.

Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation.

Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date.

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.

2 unchanged sentences

The fair value hierarchy is defined as follows:

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

Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

For the Company’s corporate and municipal bonds, although quoted prices are available and used to value said assets, they are traded less frequently.

Level 3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

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

Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

For the Company’s corporate and municipal bonds, although quoted prices are available and used to value said assets, they are traded less frequently.

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.

Fair value of financial instruments

The carrying amounts of the Company’s financial instruments, which include cash, A/R, 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.

BROADWIND, INC.

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.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

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 9, “Debt and Credit Agreements,” of these 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 consolidated financial statements.

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 9, “Debt and Credit Agreements,”

of these 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 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 following tables represent the fair values of the Company’s financial assets measured as of December 31, 2020 and 2019 :

The following tables represent the fair values of the Company’s financial assets measured as of December 31, 2021 and 2020 :

December 31, 2021

11 unchanged sentences

Deferred provision

( 1,636 )  

( 304 )  

Total deferred provision

(Decrease) increase in deferred tax valuation allowance

( 1,940 )  

Increase (decrease) in deferred tax valuation allowance

Total provision for income taxes

During the year ended December 31, 2020 , the Company recorded an expense for income taxes of $48, compared to an expense for income taxes of $38 during the year ended December 31, 2019 .

The total change in the deferred tax valuation allowance was $(4,055) and $992 for the years ended December 31, 2020 and 2019 , respectively.

The changes in the deferred tax valuation allowances in 2020 and 2019 were primarily the result of partial losses of NOL’s associated with taking a worthless stock deduction related to the liquidation of the Services entity.

During the year ended December 31, 2021 , the Company recorded an expense for income taxes of $ 25 , compared to an expense for income taxes of $ 48  during the year ended December 31, 2020 .

The total change in the deferred tax valuation allowance was $ 1,944  

and ($ 4,055 ) for the years ended December 31, 2021 and 2020 , respectively.

In 2021, the change in the deferred tax valuation allowance was the result of increases in deferred tax assets pertaining to federal and state NOLs.

In 2020, the change in the deferred tax valuation allowance was the result of partial losses of NOLs associated with taking a worthless stock deduction related to the liquidation of the Services entity.

Management believes that significant uncertainty exists surrounding the recoverability of deferred tax assets.

As a result, the Company recorded a valuation allowance against the remaining deferred tax assets.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

7 unchanged sentences

Net operating loss carryforwards

$ 71,967  

$ 67,673  

Intangible assets

1 unchanged sentence

Total noncurrent deferred tax assets

79,802  

77,927  

Valuation allowance

( 72,010 )  

Noncurrent deferred tax assets, net of valuation allowance

2 unchanged sentences

Net deferred income tax liability

Valuation allowances of $70,066 and $74,121 have been provided for deferred income tax assets for which realization is uncertain as of December 31, 2020 and 2019 , respectively.

Certain prior year amounts have been reclassified to conform to current year presentation. Valuation allowances of $ 72,010  and $ 70,066  have been provided for deferred income tax assets for which realization is uncertain as of December 31, 2021 and 2020 , respectively.

A reconciliation of the beginning and ending amounts of the valuation is as follows:

Valuation allowance as of December 31, 2020

Gross decrease for current year activity

Gross increase for current year activity

Valuation allowance as of Balance at December 31, 2021

As of December 31, 2020 , the Company had federal and unapportioned state NOL carryforwards of approximately $260,598 of which $227,781 will begin to expire in 2026.

As of December 31, 2021 , the Company had federal and unapportioned state NOL carryforwards of approximately $ 277,310  

of which $ 227,781  will begin to expire in 2026.

The majority of the NOL carryforwards will expire in various years from 2028 through 2037.

1 unchanged sentence

The reconciliation between the statutory U.S.

federal income tax rate and the Company’s effective income tax rate is as follows:

For the Year Ended

1 unchanged sentence

federal income tax rate

21.0 %  

State and local income taxes, net of federal income tax benefit

( 6.6 )  

Permanent differences

Change in valuation allowance

Equity compensation

PPP loan forgiveness

( 59.6 )  

Effective income tax rate

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

7 unchanged sentences

federal and state jurisdictions.

As of December 31, 2020 , with few exceptions, the Company is no longer subject to federal or state income tax examinations by taxing authorities for years before December 31, 2016;

however, taxing authorities have the ability to adjust NOL carryforwards in open tax years that may have been carried forward from closed years.

The Company’s 2008 and 2009 federal tax returns were examined in 2011 and no material adjustments were identified related to any of the Company’s tax positions.

As of December 31, 2021 , with few exceptions, the Company is no longer subject to federal or state income tax examinations by taxing authorities for years before December 31, 2017;

however, taxing authorities have the ability to adjust NOL carryforwards in open tax years that may have been carried forward from closed years. 

 The Company’s 2008 and 2009 federal tax returns were examined in 2011 and no material adjustments were identified related to any of the Company’s tax positions.

Although these periods have been audited, they continue to remain open until all NOLs generated in those tax years have either been utilized or expire.

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 this section or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership.

Upon completion of the Company’s analysis of IRC Section 382, the Company has determined that aggregate changes in stock ownership have resulted in an annual limitation of $14,284 on NOLs and built-in losses available for utilization based on the triggering event in 2010.

To the extent the Company’s use of NOL carryforwards and associated built-in losses is significantly limited in the future due to additional changes in stock ownership, the Company’s income could be subject to U.S.

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.

Upon completion of the Company’s analysis of IRC Section 

382, the Company has determined that aggregate changes in stock ownership have resulted in an annual limitation of $ 14,284 on NOLs and built-in losses available for utilization based on the triggering event in 2010.

corporate income tax earlier than it would if the Company were able to use NOL carryforwards and built-in losses without such annual limitation, which could result in lower profits and the loss of the majority of the benefits from these attributes.

In February 2013, the Company adopted a Stockholder Rights Plan, which was amended in February 2016 and approved by our 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, the Board of Directors (the “Board”) approved an amendment 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 (the “2019 Annual Meeting of Stockholders”).

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, being or 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 $4.25 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.

BROADWIND, INC.

382 of the IRC.

The amendment is subject to approval by the Company's stockholders at the 

2022 Annual Meeting of Stockholders.

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, being or 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.

Since the record date, the Company has issued one Right with each newly issued share of its common stock.

Until the distribution date (unless earlier redeemed or exchanged or upon expiration of the Rights, as applicable), the Rights will be evidenced by certificates of the Company's common stock and will be transferred only with such certificates.

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.

BROADWIND, INC.

AND SUBSIDIARIES

6 unchanged sentences

Most recently, the Company has granted equity awards pursuant to the Broadwind Energy, Inc.

2015 Equity Incentive Plan, which was approved by the Board in February 2015 and by the Company’s stockholders in April 2015.

On February 19, 2019, the Board approved an Amended and Restated 2015 Equity Incentive Plan (as amended, the “2015 EIP,”), which, among other things, increased the number of shares of our common stock authorized for issuance under the 2015 EIP from 1,100,000 to 2,200,000.

The amendment and restatement of the 2015 EIP was approved by the Company’s stockholders at the 2019 Annual Meeting of Stockholders.

The purposes of the Company’s equity incentive plans is (a) to align the interests of the Company’s stockholders and recipients of awards by increasing the proprietary interest of such recipients in the Company’s growth and success;

2015 Equity Incentive Plan, which was approved by the Board in February 2015 and by the Company’s stockholders in April 2015.

The amendment and restatement of the 2015 EIP was approved by the Company’s stockholders at the 2019 Annual Meeting of Stockholders. On February 7, 2021, the Board approved the Second Amendment to the Amended and Restated 2015 Equity Incentive Plan which, among other things, increased the number of shares of our common stock authorized for issuance under the 2015 EIP from 2,200,000 to 3,200,000 .

The Second Amendment to the amendment and restatement of the 2015 EIP was approved by the Company’s stockholders at the 2021  Annual Meeting of Stockholders.

The purposes of the Company’s equity incentive plans are (a) to align the interests of the Company’s stockholders and recipients of awards by increasing the proprietary interest of such recipients in the Company’s growth and success;

(b) to advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors and independent contractors;

1 unchanged sentence

Under the 2015 EIP, the Company may grant (i) non-qualified stock options;

(ii) “incentive stock options” (within the meaning of Section 422 of the IRC);

(ii) “incentive stock options”

(within the meaning of Section 422 of the IRC);

(iii) stock appreciation rights;

2 unchanged sentences

Stock Options.

The exercise price of stock options granted under the 2015 EIP is equal to the closing price of the Company’s common stock on the date of grant.

Stock options generally become exercisable on the anniversary of the grant date, with vesting terms that may range from one to five years from the date of grant.

4 unchanged sentences

RSUs generally contain a vesting period of one to five years from the date of grant.

The fair value of each RSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the vesting term of the RSU award.

Performance Awards (PSUs).

1 unchanged sentence

Vesting of PSUs is conditioned upon the Company meeting applicable performance measures over the performance period.

The fair value of each PSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the term of the PSU award plan.

BROADWIND, INC.

The fair value of each PSU granted is equal to the closing price of the Company’s common stock on the date of grant and is generally expensed ratably over the term of the PSU award plan.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

The Company's equity incentive plans reserve shares of the Company’s common stock for grants to officers, directors, employees, consultants and advisors upon whose efforts the success of the Company and its affiliates depend to a large degree.

The Company's equity incentive plans prior to the 2015 EIP had reserved 1,891,051 shares of the Company’s common stock, and as of December 31, 2020, 888,748 shares of common stock reserved for issuance under these plans had been issued in the form of common stock.

As of December 31, 2020, no shares of common stock are reserved for equity awards under these plans.

The 2015 EIP reserves 2,200,000 shares of the Company’s common stock.

As of December 31, 2020, 856,095 shares of common stock reserved for issuance pursuant to stock options and RSU awards granted under the 2015 EIP had been issued in the form of common stock and 1,332,884 shares of common stock remained reserved for issuance of RSUs and PSUs outstanding under the 2015 EIP.

Stock option activity during the year ended December 31, 2020 was as follows:

Weighted Average

Aggregate Intrinsic

Weighted Average

Exercise Price

Contractual Term

(in thousands)

Outstanding as of December 31, 2019

Outstanding as of December 31, 2020

Exercisable as of December 31, 2020

There were no outstanding and exercisable stock options as of December 31, 2020 ,

The 2015 EIP reserves 3,200,000 shares of the Company’s common stock.

As of December 31, 2021, 1,317,031  shares of common stock reserved for issuance pursuant to stock options and RSU awards granted under the 2015 EIP had been issued in the form of common stock and 918,448  

shares of common stock remained reserved for issuance of RSUs and PSUs outstanding under the 2015 EIP.

The Company's equity incentive plans prior to the 2015  EIP had reserved 1,891,051 shares of the Company’s common stock, and as of December 31, 2021, 888,748 shares of common stock reserved for issuance under these plans had been issued in the form of common stock.

As of December 31, 2021, 

no  shares of common stock are reserved for equity awards under these plans.

There was no  stock option activity during the year ended 

December 31, 2021  and no  stock options were outstanding as of December 31, 2021.

During 2020, 54,362 stock options were forfeited and there were no stock options outstanding at December 31, 2020.  

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model.

The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables.

These variables include, but are not limited to, the Company’s expected stock price volatility over the expected life of the awards and actual and projected stock option exercise behavior.

There were no stock options granted during the twelve months ended December 31, 2021 and 2020 .

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

The following table summarizes information with respect to outstanding RSUs and PSUs as of December 31, 2020 and 2019 :

The following table summarizes information with respect to outstanding RSUs and PSUs as of December 31, 2021 and 2020 :

Weighted Average

2 unchanged sentences

Unvested as of December 31, 2020

1,332,884  

$ 1.86  

393,592  

$ 4.82  

( 695,216 )  

$ 1.92  

( 112,812 )  

$ 3.03  

Unvested as of December 31, 2021

918,448  

$ 2.73  

RSUs and PSUs are generally subject to ratable vesting over a three -year period.

1 unchanged sentence

During the years ended December 31, 2021 and 2020 , the Company utilized a forfeiture rate of 25 % for estimating the forfeitures of stock compensation granted.

The following table summarizes share-based compensation expense, net of taxes withheld, included in the Company’s consolidated statements of operations for the years ended December 31, 2020 and 2019 as follows:

For the Years Ended

3 unchanged sentences

Net effect of share-based compensation expense on net income

$ 1,541  

$ 1,156  

Reduction in earnings per share:

Basic earnings per share

$ 0.08  

$ 0.07  

Diluted earnings per share

$ 0.08  

$ 0.07  

Income tax benefit is not illustrated because the Company is currently in a full tax valuation allowance position and an actual income tax benefit was not realized for the years ended December 31, 2021 and 2020 .

The result of the income (loss) situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance.

As of December 31, 2020 , the Company estimates that pre-tax compensation expense for all unvested share-based RSUs and PSUs in the amount of approximately $1,492 will be recognized through the year 2022.

The Company expects to satisfy the future distribution of shares of restricted stock by issuing new shares of common stock.

The result of the income (loss) situation creates a timing difference, resulting in a deferred tax asset, which is fully reserved for in the Company’s valuation allowance.

As of December 31, 2021 , the Company estimates that pre-tax compensation expense for all unvested share-based RSUs and PSUs in the amount of approximately $ 1,177  

will be recognized through the year 2023.

The Company expects to satisfy the future distribution of shares of restricted stock by issuing new shares of common stock.

SEGMENT REPORTING

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

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

2 unchanged sentences

(in thousands, except share and per share data)

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

Heavy Fabrications

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.

4 unchanged sentences

domestic wind energy and equipment manufacturing hubs.

The two facilities have a combined annual tower production capacity of up to approximately 550 tower towers (1650 tower sections), sufficient to support turbines generating more than 1,100 MW of power.

The two facilities have a combined annual tower production capacity of up to approximately 550  towers ( 1650 tower sections), sufficient to support turbines generating more than 1,100 MW of power.

The Company has expanded production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and OEM components utilized in surface and underground mining, construction, material handling, O&G and other infrastructure markets.

2 unchanged sentences

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 in Neville Island, Pennsylvania.

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.

Industrial Solutions

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

BROADWIND, INC.

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

BROADWIND, INC.

AND SUBSIDIARIES

3 unchanged sentences

Corporate and Other

“Corporate” includes the assets and SG&A 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, “Description of Business and Summary of Significant Accounting Policies” of these consolidated financial statements.

“Corporate”

includes the assets and SG&A 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, “Description of Business and Summary of Significant Accounting Policies”

of these consolidated financial statements.

Summary financial information by reportable segment is as follows:

3 unchanged sentences

Revenues from external customers

$ 101,989  

28,583  

15,047  

$ 145,619  

Intersegment revenues

Operating profit (loss)

( 360 )  

101,994  

28,583  

15,402  

( 360 )  

145,619  

Operating loss

( 3,214 )  

( 2,593 )  

( 386 )  

( 6,401 )  

Depreciation and amortization

Capital expenditures

37,131  

46,219  

10,825  

228,219  

( 204,347 )  

118,047  

Heavy Fabrications

2 unchanged sentences

Revenues from external customers

$ 155,096  

25,104  

18,296  

$ 198,496  

Intersegment revenues

( 137 )  

155,198  

25,136  

18,299  

( 137 )  

198,496  

Operating profit (loss)

10,385  

( 3,883 )  

( 6,953 )  

Depreciation and amortization

Capital expenditures

40,438  

43,319  

10,244  

220,428  

( 194,747 )  

119,682  

The Company generates revenues entirely from transactions completed in the U.S.

1 unchanged sentence

All intercompany revenue is eliminated in consolidation.

During 2020 , one customer accounted for more than 10% of total net revenues and had an accounts receivable balance greater than 10% of current assets.

This customer, reported within the Heavy Fabrications segment, accounted for revenues of $105,366 and account receivables of $6,118 for fiscal year 2020 .

Additionally, another customer, in the Heavy Fabrications segment, accounted for more than 10% of total net revenues.

This customer had revenues of $25,237 during fiscal year 2020.

During 2019 , one customer accounted for more than 10% of total net revenues and had an accounts receivable balance greater than 10% of current assets.

This customer, reported within the Heavy Fabrications segment, accounted for revenues of $110,693 and accounts receivables of $8,428 for fiscal year 2019 .

During the years ended December 31, 2020 and 2019 , five customers accounted for 78% and 79%, respectively, of total net revenues.

BROADWIND, INC.

During 2021 , two  customers accounted for more than 10% of total net revenues. The customers, reported within the Heavy Fabrications segment, accounted for revenues of $ 59,278 and $ 25,946 , respectively.

During 2020 , 

one customer accounted for more than 10% of total net revenues and had an accounts receivable balance greater than 10% of current assets.

This customer, reported within the Heavy Fabrications segment, accounted for revenues of $ 105,366  and accounts receivables of $ 6,118  for fiscal year 2020 .

Additionally in 2020, another customer, in the Heavy Fabrications segment, accounted for more than 10% of total net revenues.

This customer had revenues of $ 25,237  during fiscal year 2020.

 During the years ended December 31, 2021 and 2020 , five customers accounted for 71 % and 78 %, respectively, of total net revenues.

BROADWIND, INC.

AND SUBSIDIARIES

6 unchanged sentences

The Company offers a 401 (k) retirement savings plan to all eligible employees who may elect to contribute a portion of their salary on a pre-tax basis, subject to applicable statutory limitations.

As of December 31, 2020 , all employees were eligible to receive safe harbor matching contributions equal to 100% of the first 3% of the participant’s elective deferral contributions and 50% of the next 2% of the participant’s elective deferral contributions.

The Company has the discretion, subject to applicable statutory requirements, to fund any matching contribution with a contribution to the plan of the Company’s common stock.

The Company periodically evaluates whether to fund the matching contribution in cash or in the Company’s common stock.

As of December 31, 2021 , all employees were eligible to receive safe harbor matching contributions equal to 100 % of the first 3 % of the participant’s elective deferral contributions and 50 % of the next 2 % of the participant’s elective deferral contributions.

The Company has the discretion, subject to applicable statutory requirements, to fund any matching contribution with a contribution to the plan of the Company’s common stock.

The Company periodically evaluates whether to fund the matching contribution in cash or in the Company’s common stock.

Under the plan, elective deferrals and basic Company matching is 100 % vested at all times.

For the years ended December 31, 2020 and 2019 , the Company recorded expense under these plans of approximately $1,101 and $1,002, respectively.

For the years ended December 31, 2021 and 2020 , the Company recorded expense under these plans of approximately $ 1,195  and $ 1,101 , respectively.

Deferred Compensation Plan

The Company maintains a deferred compensation plan for certain key employees and nonemployee directors, whereby certain wages earned, compensation for services rendered, and discretionary company-matching contributions may be deferred and deemed to be invested in the Company’s common stock.

Changes in the fair value of the plan liability are recorded as charges or credits to compensation expense.

Compensation expense associated with the deferred compensation plan recorded during the years ended December 31, 2020 and 2019 was $56 and $3.

The fair value of the plan liability to the Company is included in accrued liabilities in the Company’s consolidated balance sheets.

As of December 31, 2020 and 2019 , the fair value of plan liability to the Company was $71 and $15, respectively.

Compensation expense associated with the deferred compensation plan recorded during the years ended December 31, 2021 and 2020 was $( 55 )  

The fair value of the plan liability to the Company is included in accrued liabilities in the Company’s consolidated balance sheets.

As of December 31, 2021 and 2020 , the fair value of plan liability to the Company was $ 16  and $ 71 , respectively.

In addition to the employee benefit plans described above, the Company participates in certain customary employee benefits plans, including those which provide health and life insurance benefits to employees.

BROADWIND, INC.

BROADWIND, INC.

AND SUBSIDIARIES

4 unchanged sentences

The following table provides a summary of selected financial results of operations by quarter for the years ended December 31, 2021 and 2020 as follows:

$ 32,728  

$ 46,491  

$ 40,389  

$ 26,011  

Operating loss

( 4,311 )  

( 2,311 )  

( 1,997 )  

Net (loss) income

( 1,210 )  

10,252  

( 2,105 )  

Net (loss) income per share:

$ ( 0.07 )  

$ 0.55  

$ ( 0.11 )  

$ ( 0.07 )  

$ 0.53  

$ ( 0.11 )  

$ 48,634  

$ 54,926  

$ 54,614  

$ 40,322  

Operating income (loss)

Income (loss) from continuing operations, net of tax

( 475 )  

Net income (loss)

Income (loss) from continuing operations per share:

( 1,003 )  

Net income (loss) per share:

Gross (loss) profit

Operating loss

Loss from continuing operations, net of tax

Loss from continuing operations per share:

Net loss per share:

BROADWIND, INC.

$ 0.06  

$ 0.03  

$ ( 0.06 )  

$ 0.06  

$ 0.03  

$ ( 0.06 )  

BROADWIND, INC.

AND SUBSIDIARIES

4 unchanged sentences

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 litigation 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.

INDEX TO EXHIBITS

Membership Interest Purchase Agreement dated as of February 1, 2017, by and among the Company, Christopher J.

Brice , Lewis J.

Hendrix and Kimberley M.

Sutton (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed February 1, 2017)

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)

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)

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)

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)

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)

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)

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)

Section 382 Rights Agreement dated as of February 12, 2013 between the Company and Equiniti Trust Company, as rights agent, which includes the Form of Rights Certificate as Exhibit B thereto (incorporated by reference to Exhibit 1 to the Company’s Registration Statement on Form 8-A filed February 13, 2013)

Certificate of Designation of Series A Junior Participating Preferred Stock of the Company (incorporated by reference to Exhibit 2 to the Company’s Registration Statement on Form 8-A filed February 13, 2013)

First Amendment to Section 382 Rights Agreement dated as of February 2, 2016 between the Company and Equiniti Trust Company, as rights agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed February 8, 2016)

Second Amendment to Section 382 Rights Agreement dated as of February 7, 2019 between the Company and Equiniti Trust Company, as rights agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed February 12, 2019)

Section 382 Rights Agreement dated as of February 12, 2013 between the Company and Equiniti Trust Company, as rights agent, which includes the Form of Rights Certificate as Exhibit B thereto (incorporated by reference to Exhibit 1 to the Company’s Registration Statement on Form 8-A filed February 13, 2013)

Certificate of Designation of Series A Junior Participating Preferred Stock of the Company (incorporated by reference to Exhibit 2 to the Company’s Registration Statement on Form 8-A filed February 13, 2013)

First Amendment to Section 382 Rights Agreement dated as of February 2, 2016 between the Company and Equiniti Trust Company, as rights agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed February 8, 2016)

Third Amendment to Section 382 Rights Agreement dated as of February 3, 2022 between the Company and Equiniti Trust Company, as rights agent (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed February 3, 2022

Description of Securities (incorporated by reference to Exhibit 4.5 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019)

Lease Agreement dated December 26, 2007 between Tower Tech Systems Inc.

and City Centre, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007)

Lease Agreement dated December 26, 2007 between Tower Tech Systems Inc. and City Centre, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007)

Amended and Restated Lease for Industrial/Manufacturing Space dated as of May 1, 2010 between Tower Tech Systems Inc.

and City Centre, LLC (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010)

Severance and Non-Competition Agreement, dated as of December 15, 2011 between the Company and Robert R.

Rogowski (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014)

Severance and Non-Competition Agreement, dated as of July 8, 2014 between the Company and Erik W.

Jensen (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014)

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010)

and City Centre, LLC (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010)

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2010)

Broadwind Energy, Inc.

2015 Equity Incentive Plan (incorporated by reference to Exhibit A to the Company’s Schedule 14A filed on March 12, 2015)

Form of Executive Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010)

Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012)

2015 Equity Incentive Plan (incorporated by reference to Exhibit A to the Company’s Schedule 14A filed on March 12, 2015)

Form of Executive Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010)

Form of Restricted Stock Unit Award Agreement 

(incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012)

Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012)

Form of Stock Option Agreement (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012)

Form of Restricted Stock Unit Award Agreement (Non-Employee Directors) (incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015)

Form of Restricted Stock Unit Award Agreement (Extended Executive Team) (incorporated by reference to Exhibit 10.36 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015)

Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015)

10.10†

10.11†

Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015)

10.12†

Broadwind Energy, Inc.

2015 Equity Incentive Plan Restricted Stock Unit Award Notice (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018)

Second Amended and Restated Employment Agreement, dated May 20, 2016, between the Company and Stephanie K.

Kushner (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 24, 2016)

Amended and Restated Loan and Security Agreement, dated February 25, 2019, among the Company, Brad Foote Gearworks, Inc., Broadwind Services, LLC, Broadwind Towers, Inc., Red Wolf Company, LLC, the other Loan Parties and Lenders party thereto, and CIBC Bank USA, as Administrative Agent and Sole Lead Arranger (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018)

Severance and Non-Competition Agreement, dated October 23, 2017, between the Company and Jason L.

Bonfigt (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed November 28, 2017)

Severance and Non-Competition Agreement, dated as of May 4, 2018, between the Company and Eric Blashford (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 3, 2018)

At Market Issuance Sales Agreement, dated July 31, 2018, by and among the Company and Roth Capital Partners, LLC (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed July 31, 2018)

2015 Equity Incentive Plan Restricted Stock Unit Award Notice (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018)

Amended and Restated Loan and Security Agreement, dated February 25, 2019, among the Company, Brad Foote Gearworks, Inc., Broadwind Services, LLC, Broadwind Towers, Inc., Red Wolf Company, LLC, the other Loan Parties and Lenders party thereto, and CIBC Bank USA, as Administrative Agent and Sole Lead Arranger (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018)

10.14†

10.15†

Form of Performance Award Agreement (Broadwind Energy, Inc.

2015 Equity Incentive Plan) (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019)

10.16†

Form of Performance Award Agreement (Amended and Restated Broadwind Energy, Inc.

2015 Equity Incentive Plan) (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019)

10.17†

Form of Performance Award Agreement dated April 23, 2019 between the Company and Stephanie K.

Kushner (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019)

10.18†

Restricted Stock Award Agreement dated April 23, 2019 between the Company and Stephanie K.

Kushner (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019)

10.19†

Amended and Restated Broadwind Energy, Inc.

2015 Equity Incentive Plan (incorporated by reference to Exhibit D to the Company’s Schedule 14A filed on March 11, 2019)

Separation Agreement, dated December 23, 2019 between the Company and Erik W.

Jensen (incorporated by reference to Exhibit 10.25 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019)

2015 Equity Incentive Plan (incorporated by reference to Exhibit D to the Company’s Schedule 14A filed on March 11, 2019)

Note dated April 5, 2020 by and between Brad Foote Gear Works, Inc.

7 unchanged sentences

and CIBC Bank USA (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020)

Form of Performance Award Agreement (Amended and Restated Broadwind, Inc.

10.24†

Form of Performance Award 

Agreement (Amended and Restated Broadwind, Inc.

2015 Equity Incentive Plan) (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020)

10.25†

First Amendment to Amended and Restated Broadwind Energy, Inc.

1 unchanged sentence

First Amendment to the Amended and Restated Loan and Security Agreement and Other Loan Documents, dated October 29, 2020, among the Company, Brad Foote Gearworks, Inc, Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC, CIBC Bank USA, as Administrative Agent for itself and all Lenders and Siena Lending Group (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020)

Second Amendment to the Amended and Restated Loan and Security Agreement, dated February 23, 2021, among the Company, Brad Foote Gearworks, Inc, Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC, and CIBC Bank USA, as Administrative Agent for itself and all Lenders (filed herewith)

Third Amendment to Amended and Restated Loan and Security Agreement, dated November 8, 2021, among the Company, Brad Foote Gearworks, Inc., Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC and CIBC Bank USA, as Administrative Agent for itself and all Lenders (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021) 

Equity Distribution Agreement, dated March 9, 2021, by and between the Company and Craig-Hallum Capital Group LLC (incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K filed March 9, 2021)

Fourth Amendment to Amended and Restated Loan and Security Agreement, dated February 28, 2022, among the Company, Brad Foote Gearworks, Inc., Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC and CIBC Bank USA, as Administrative Agent for itself and all Lenders (filed herewith)

Subsidiaries of the Registrant (filed herewith)

Consent of RSM LLP (filed herewith)

Rule 13a-14(a) Certification of Chief Executive Officer (filed herewith)

Rule 13a-14(a) Certification of Chief Financial Officer (filed herewith)

Certification of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

Certification of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

Consent of RSM LLP (filed herewith)

Rule 13a-14(a) Certification of Chief Executive Officer and Chief Financial Officer (filed herewith)

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

The following financial information from this Form 10-K of Broadwind, Inc.

for the year ended December 31, 2020 , formatted in XBRL (eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets as of December 31, 2020 and 2019 , (ii) Consolidated Statements of Operations for the years ended December 31, 2020 and 2019 , (iii) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2020 and 2019 , (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019 , and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.

for the year ended December 31, 2021, formatted in Inline XBRL (eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets as of December 31, 2021 and 2020, (ii) Consolidated Statements of Operations for the years ended December 31, 2021 and 2020, (iii) Consolidated Statements of Stockholders’

Equity for the years ended December 31, 2021 and 2020, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.

Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

Indicates management contract or compensation plan or arrangement.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 25 th day of Feb ruary, 2021 .

BROADWIND, INC.

President and Chief Executive Officer

(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

President, Chief Executive Officer, and Director (Principal Executive Officer)

February 25, 2021

Vice President and Chief Financial Officer

February 25, 2021

(Principal Financial Officer)

/s/ Stephanie K.

Director and Chairman of the Board

February 25, 2021

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 2nd 

day of March, 2022

BROADWIND, INC.

President, Chief Executive Officer, and Interim Chief Financial Officer

(Principal Executive Officer and Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons (including a majority of the board of directors) on behalf of the registrant and in the capacities and on the dates indicated.

 TITLE 

President, Chief Executive Officer, and Interim Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)

March 2, 2022

/s/ Philip J.

February 25, 2021

/s/ Terence P.

February 25, 2021

March 2, 2022

/s/ Thomas A.

February 25, 2021

March 2, 2022

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures